§ Order for Second Reading read.
§ 3.32 p.m.
§ The Minister of Fuel and Power (Mr. Gaitskell)
I beg to move, "That the Bill be now read a Second time."
The gas industry is one with which this House has had a long association. It is interesting to record that the first gas company authorised by Parliament had its first works and gasholder in Great Peter Street, Westminster. The first installation of street lamps, I am informed, was on Westminster Bridge, and when they were erected the lamplighters refused to light them for fear of being blown up, and the engineer of the company had to go along and light the lamps himself to show they were harmless. Perhaps, similar feelings of anxiety may have been expressed in some quarters today about the purposes of this Bill, but I shall endeavour myself, metaphorically speaking, to light the lamps and show that they are harmless.
It is a far cry from those early days to the present. The gas industry, which it is the purpose of this Bill to reorganise under public ownership, is nowadays not an industry which is providing light only, but a highly organised processing industry. Its function is to carbonise coal, and therefrom to produce gas, coke, and coal tar; and from the purification of the gas and from the distillation of the tar many valuable by-products are produced which form part of the basic materials of our chemical industry. Gas is not the only carbonising industry. The coke oven industry does very much the same thing, though, of course, there are technical differences arising from the fact that the purpose of coke ovens is to produce coke and the purpose of gasworks is to produce gas.
Nor does every unit in the gas industry carry processing of by-products to the same extent. Only the very large undertakings, like the Gas Light and Coke Company, produce a wide range of coal tar products. Smaller undertakings, for the most part, sell the tar to tar distillers. Therefore, the borderline which we have adopted in deciding what exactly should be transferred to public ownership is historical as much as logical. We do not take over 219 the coke ovens and we do not take over the tar distilleries as such: but we do take over gasworks which conduct tar distillation themselves.
I have already referred to the variation in size between the different parts of this industry; and, indeed, they are remarkable. At one extreme we have the Gas Light and Coke Company selling no less than 56,000 million cubic feet per annum; at the other, extremely small town gasworks selling a few million cubic feet per annum only. We shall be occupied with these variations in greater detail later on. Statistically, the picture of the industry is this. There are over 1,000 undertakings, of which some 350 are non-statutory and mostly very small, and nearly 700 statutory undertakings, of which about 400 are company undertakings and the rest municipal. In all, the companies supply just under two-thirds of the total quantity of gas and the municipalities just over one-third. That is the picture of the industry with which we are concerned.
What is the case for this Bill? What is the case for the reorganisation of the industry under public ownership? One argument which is put forward is a very simple one. It is that since the coal and electricity industries have already been nationalised, the gas industry must be also. This is not just an aesthetic argument based on the beauties of symmetry. It is based on something much more fundamental. The question the House has to consider is, Can we really conceive of the gas industry, in its present antiquated form, being able to compete effectively with electricity? [HON. MEMBERS: "Oh!"] I say "compete" deliberately, and will explain what I mean by that a little later on. Furthermore, how can we really achieve co-ordination in the sphere of fuel and power as a whole—which it is, after all, one of the purposes of my Ministry to carry out—unless we have public ownership in all three cases? I will refer to these arguments again in a minute. I think they are powerful; but I would not for one moment suggest to the House that the main case for the Bill rests upon them.
The case for the public ownership of the gas industry is very powerful on its merits and without reference to what is happening in other fields of fuel and 220 power. This case I now propose to develop. It rests upon three propositions: first, that the present structure of the industry is not conducive to maximum efficiency; second, that the present legislative framework is a major obstacle against achieving great efficiency; third, that from every angle the most suitable structure for an efficient gas industry can be achieved only by organisation under public ownership. Let me take these three propositions in turn.
Many reports, pamphlets, documents have been published on the subject of the gas industry in recent years; and if there is one thing on which they are all, more or less, agreed—with varying degrees of emphasis, but all agreed—it is on the need for larger areas, for greater integration. I could quote from these documents at considerable length, but, frankly, I do not think it is necessary to do so. I do not think this is in dispute between the two sides of the House. One could refer to the British Gas Federation's Report of 1933; one could refer to the report in 1946 of the Association of Gas Corporations; one could refer in detail to the Heyworth Report. I will content myself with one quotation from the Heyworth Report, paragraph 230, which says:The direction of the required change is clearly marked, namely towards groupings into larger units. This is preponderantly the view of the Industry itself. It is in no sense a revolutionary idea; it is entirely consistent with past history, which shows a steadily accelerating trend towards integration.The Heyworth Report goes on to elaborate the objects which, in the opinion of the Committee, larger units could achieve—reduction of production costs, improvement in labour conditions, a more intensive study of distribution problems, ensuring the provision of improved appliances, raising the general level of consumer services, greater concentration of development in "fringe" and rural areas, further extension of coke grading and selling effort, and expansion of research and its application. I do not know whether the Opposition would wish to question the detailed arguments which the Heyworth Committee have set forth in this matter, but there they are, and they seem to me absolutely conclusive.
Rather than search for further evidence of a documentary character to support this case, I would prefer to attempt to clothe the bare bones of generalisation 221 with a few concrete illustrations. To start with, let me take an area with which I am fairly familiar the West Riding of Yorkshire, in which my constituency is situated. There are in this area a large number of fairly big local authorities—the Corporations of Leeds, Halifax, Bradford and so on. There is also one of the more modern developments under private enterprise—the West Yorkshire Grid, created by the United Kingdom Gas Corporation. When that grid was set up and coke ovens constructed at Hemsworth to feed it, the local authorities opposed it as far as they possibly could; they would not allow the pipes which were to form the grid to pass through their areas, far less actually take gas from it.
Yet to anybody who looks at the matter objectively, here is an overwhelming case for planning the area as a whole on the basis of the coke ovens which are there already. It would be possible to achieve this if we had a single authority for gas in that area. It is not possible to achieve it without that. As a matter of fact, two or three years ago my Ministry did their best to get together the various authorities in that district in order that we could plan some sort of grid. We had to abandon the attempt; it was impossible to make them work together.
Then one could take South Wales, an area which I happen to know because I went down there some time ago to study this particular problem. There, on the one hand, are 30 or 40 small gas undertakings, and, on the other hand, a number of steel works and, in addition, coke ovens. There is a project by the National Coal Board to build large coke ovens—a large plant at a place called Nantgarw. There can be no doubt that, when this coke oven plant is built, and when the steel works have available a surplus of gas resulting from their conversion to oil, the greater part of that area can be supplied by coke oven gas. It will not be necessary to have a lot of small and not very efficient gasworks. In order to have this a grid must be constructed. We have started to plan it, and have been much assisted by the gas engineers in the area; but we are naturally faced with extremely difficult problems of finance and administration so long as all these separate undertakings exist. One cannot see how all the benefits which should follow from unified planning in that area are truly to be 222 achieved, until there is an Area Board for the district.
I will mention one other rather remote but interesting possibility, as I think the House will agree. In South-East England there is an area which has been developed on a moderate scale and gas has been supplied to, I would not say rural areas, but at any rate semi-rural areas. There are a number of seaside towns in the area and also a part of London. The peak load in London falls in the winter, but in the seaside towns it falls in the summer, when they are full of visitors. Those two could very conveniently be combined. Here again, I believe that for that area—although I would not be so certain of this example as the other two, because I am not so familiar with it—a gas grid might be very efficient.
I conclude that the evidence of the need for greater integration is overwhelming. By this I do not mean that all small works are inefficient, nor that the advantage of the larger groupings will accrue everywhere to the same extent; but on balance there can be no doubt about it. I would go further and say that, unless there are larger areas, and unless there is integration, the prospects of the gas industry surviving and developing as it should are, in my opinion, extremely remote. This, I believe, would be a pity, because I also believe this to be an industry with great possibilities.
The second proposition is that the present legislative framework is restrictive. This, too, is not, I think, really in dispute, but perhaps it needs a little explanation. It is some 150 years since coal gas was first used for lighting. When a little later, at the beginning of the last century, the gas industry began to develop solely for lighting purposes, laisser faire was the general doctrine pervading the minds of the Government and the country. The consequence was that, although in fact Acts of Parliament were necessary in order to enable undertakings to dig up the streets to lay pipes, and so on, nevertheless, competition between them was encouraged. The theory, of course, is well known. With free competition there is the greatest incentive towards reducing costs with, therefore, the greatest opportunities for development and the best results for the consumer. Whether or not that doctrine may be true in other fields, there can be no doubt but that 223 it just did not apply in the case of public utilities like gas, because it meant different undertakings trying to supply exactly the same consumers; and, apart from the inconvenience which must have resulted from digging up the streets, an appalling waste of capital was involved.
So, quite early on, before the middle of the century, the conception of free competition had disappeared, being replaced by the conception of the statutory monopoly. An undertaking, a company, or, for that matter, a municipality came to Parliament and got its private Act; it got permission to supply gas, and to have a monopoly of the supply of gas in a particular area. In return, certain restrictions and controls were imposed, particularly over dividends and prices. As to this, I would express the opinion myself—and, indeed, it is the opinion of many people in the industry—that the control of dividends, as it was actually applied at that time, was either ineffective or was a deterrent to development in the industry. However, I am not concerned with that at the moment. The point is that, so long as there are monopoly areas combined with technical requirements for large-scale production and distribution, we do not naturally and automatically get towards what are the best areas from the technical point of view.
In the cases of other industries it may well be that where there are advantages in large-scale production, the natural forces of competition lead to that result. It may be brutal, and small firms may go to the wall, but at least that result is achieved. But this cannot be the case with statutory monopolies, because the undertaking which has the monopoly cannot be driven out. It can be bought out, but its price is usually a very heavy one. In fact, one can say that large-scale production and distribution in gas has resulted only, first, from the growth of population, and secondly, from amalgamations which were expensive because of the number of existing undertakings, and because of the Parliamentary proceedings they involved, and which were difficult, if not impossible, where it was a question of combining local authority and company areas.
I turn to the third and more controversial proposition, that public ownership is the only way of achieving this result. I express the view that those who 224 oppose this really do so on the grounds of prejudice only. I ask them as far as possible, even at this late date, to drop their prejudices and approach this matter quite objectively. We are all agreed that we need larger areas and greater integration, and this greater integration will achieve benefits for the consumer, because it will enable gas and the other products to be produced more efficiently—
§ Mr. Gaitskell
Yes, Sir. It is the same thing. I understood that hon. Members opposite agreed that these larger areas were desirable.
What are the alternatives? We could, of course, do nothing at all. We could leave things to drift on, with amalgamations here and there, at the slow leisurely pace at which this sort of thing happened before the war. I venture to say that the gas industry has no future if that is the course to be followed, and that the prospects of it being able to serve the public efficiently are remote—even the industry itself accepts that. Today, there has appeared a new document. A report by the British Gas Council. I do not know how far hon. Members have been able to study it. It has perhaps been difficult for them to do so in the time at their disposal. I confess that I have only glanced at it myself, but I should like to deal with the proposition which they now put up, perhaps a little belatedly, as an alternative to nationalisation. They suggest:The methods of geographical integration adopted in the past should be encouraged, facilitated and aided by an integration tribunal, to which could be referred any integrating proposals which could not be agreed, compliance with the findings of the tribunal being obligatory.That, I admit, is a step in the right direction. The tribunal is to have some sort of powers, but there is no initiative. Nothing is to come from the centre. If anyone wants an amalgamation and gets into an argument he can go to the tribunal, but there is no indication if integration takes place, of who will control the new body.
Can it be seriously suggested that private amalgamations are not extraordinarily complex and difficult things to carry out as everyone who has had 225 experience in industry knows? Can we seriously suppose that a tribunal of this kind could and would hand over local-authority undertakings to private-enterprise undertakings, or, for that matter, private-enterprise undertakings to local-authority undertakings? That is not a job for a tribunal. It is a job for a Government. It is a matter of policy, and only this House can decide a matter of that sort. I suggest that these new proposals, while welcoming them as a step in the right direction, are inadequate for the purpose.
I prefer the view of the Heyworth Committee. They say:We do not make specific recommendations regarding 'the difficulties and weaknesses' known and admitted by the industry, because we consider that a basic change in the structure of the industry is the only approach that can produce really effective results quickly.After discussing the various alternatives, they say:But, in fact, it is not necessary to decide whether or not the provision of additional machinery would, or would not, bring about acceleration of integration within the different forms of structure. A glance at the map of the structure of the industry as it is today will make it clear that no degree of success along this line of approach could produce a pattern of grouping even approximating to the ideal. Predetermination of boundaries is the only approach which will produce a workable pattern, and although the discussions within the industry itself did not actually lead to this recommendation, it is consistent with the main content of their evidence.Upon what objections is the opposition to nationalisation based? I have searched the documents, and I will take first some comments contained in the document of the British Gas Federation, published in 1943. Why did they oppose nationalisation? They opposed it, firstly, because nationalisation would create controversy. But the absence of nationalisation also creates controversy, unless we are to ignore all those who are in favour of nationalisation. Secondly, they state that nationalisation cannot be introduced for some years. That is now a little out of date. Thirdly, they say that nationalisation cannot be applied to the gas industry in the absence of similar treatment for its competitors. That is also a little out of date.
There is not very much new in this latest document by the British Gas Council. What are the arguments this time? They have avoided some of the 226 earlier ones. We are told that nationalissation will cause "delay, difficulty and confusion." How absurd that is. I ask any objective person to put side by side with the proposal for nationalisation, the British Gas Council's proposals for a gradual process of amalgamations. Does that involve more or less delay, than outright nationalisation? As to difficulties and confusion, "confusion" is certainly the proper word to apply to such vague proposals as those made by the Gas Council. As for difficulties, there are certainly always difficulties and great difficulties in the way of any private amalgamations. That is the lesson which the Heyworth Committee had so clearly in mind.
We are told that nationalisation involves additional expenditure, but not why it should do so—[An HON. MEMBER: "Look at the Money Resolution."] I am told to look at the Money Resolution, and I suppose that the hon. Member has in mind the provision of capital for the industry. Is it not desirable that the industry should spend that capital in any case? It is absolutely essential that it should spend that money, because of the very parlous state of many of the gas undertakings at the present time. If one is to talk about additional expenditure, I should have thought that the extra cost of amalgamations under private enterprise, with the buying out of all the parties concerned, was a very important factor.
Then we are told that the business of producing and selling gas is a specialised and technical job. It is indeed, but atomic research is highly specialised, and that is organised under the Government. Are we to assume that municipal undertakings which have conducted this business successfully for a number of years are incapable of carrying out this highly specialised and technical business? Why should it be assumed, as the British Gas Council assumes, that there will be no initiative, responsibility, enterprise and inducement? All these things, as the Heyworth Report recognises, are more likely to be achieved under public enterprise than under private enterprise. It is one of the main criticisms of the Committee that the industry in its present form did not have the initiative it should have, and required organising into wider areas.
227 It has been assumed that there will be no competition with electricity. That view has been put forward from a number of sources. I want to deal with this in detail a little later. Let me say at once that it is a complete misconception of the plan of nationalising these industries that all competition between gas and electricity should disappear. If that were the case, why should we not have set up exactly the same boards to run gas and electricity? We have set up entirely separate boards, and we intend that competition, restricted in certain ways, shall continue between them.
§ Mr. Gaitskell
The right hon. Gentleman had better wait, because he may find himself in agreement with these ways when we come to them. The parallel between gas and electricity is striking. In both cases technical developments have made existing areas out of date; in both cases the existence of statutory rights has blocked development into larger areas; in both cases the position has been complicated by the co-existence of municipal and private enterprise; in both cases there have been committees on the subject. The first, the McGowan Committee appointed in 1935, favoured larger areas, but was against nationalisation. The Heyworth Committee wanted larger areas, and favoured nationalisation.
§ Mr. Gaitskell
Of course it did, or, public ownership, if Members opposite prefer that phrase. The fact is that the political atmosphere had changed in those 10 years, and that the new approach, however strange and inappropriate it might have seemed to the McGowan Committee in 1935, seemed natural and logical to the Heyworth Committee in 1945. The leisurely, timid, satisfy-every-vested-interest approach of the McGowan Committee seemed utterly out of place to the Heyworth Committee 10 years later. That is the case for the Bill on its merits.
How do we propose to apply the principle of public ownership? For that, we must turn to the Bill itself. I do not propose to go through it in detail, as there will be plenty of opportunities for that later, but I want to pick out some of its essential features and explain why 228 we have decided what we have decided. A part of the Bill follows closely the lines of the Electricity Act. That is natural as the circumstances are so similar. After all, the Electricity Act was passed by this House, and was, no doubt, improved in its passage, and we should do well, as we have done, to take various parts of this Bill from that Measure. But there are important differences, perhaps the most important being that in this Bill the Area Boards are the centre of the picture whereas, in the case of electricity, the British Electricity Authority was established as the generating authority and given considerable powers to coordinate the policy of the Area Boards.
Here, we begin with the Area Boards whose duty it is to develop, and maintain an efficient co-ordinated and economical system of gas supply for their areas. It is their duty to develop and maintain the efficient and economical production of coke. They have other powers too—to produce by-products, to promote the welfare, health and safety of their employees, to submit capital development plans and reduce, so far as is practicable, the price of gas and coke. It is on the Area Boards that all these duties and powers are laid. In short, they are the main instruments through which the benefits of the reorganisation of the industry under public ownership and into larger areas will accrue to consumers so that better and cheaper gas and coke will be available than would otherwise be the case. That is the real test, and it is the job of the Area Boards to see to it that they achieve that result.
We have decided to give the Area Boards the main responsibility not, let me say, because we think there has been over centralisation in other cases, but because in this case it is proper. There is no question of a national grid here; gas is a local service, and we think that to a great extent it should be decentralised. But we do not go so far as the Heyworth Committee in having no central body at all. We believe that there must be a central body of some kind, but that it should be mainly advisory and federal in character, and we therefore propose to establish a Gas Council consisting of Area Board chairmen together with a chairman and vice chairman appointed by the Minister. The function of that Council is to advise the Minister, and represent the industry as a 229 whole. It will negotiate with the trade unions, co-ordinate research, production and training and will be the long-term borrowing authority. In certain cases and certain instances, it will also have some powers over the Area Boards. May I explain what they are?
It is the function of the Gas Council to set up a guarantee fund to which the Area Boards will contribute. The purpose of the fund is, in effect, to give the Treasury the security which they naturally require if they are to guarantee the British Gas Stock through which the industry will raise the finance it requires. The Area Boards can draw on the guarantee fund if they are unable to meet the capital charges on their part of the British Gas Stock. If they do not come to the Council because they can pay their way, the Council leaves them alone, but if they come to the Council because they are in financial difficulties, and say, "Will you help us to pay our debts to the Treasury?" then the Council can issue directions, subject to the approval of the Minister, until they get out of the mess they may have got into. That is a simple and democratic device for achieving a low rate of interest, which we desire to see, without continual intervention from the centre.
§ Mr. S. O. Davies (Merthyr)
The right hon. Gentleman is now dealing with a most important aspect of this Bill. Can he tell us explicitly what powers he will have as Minister, answerable to Parliament for the running of this new privately-owned industry? Once the service has been nationalised, will Parliament have the right to put Questions to the Minister about it?
§ Mr. Gaitskell
The position is exactly the same in this Bill as in the other nationalisation Acts. The Minister has certain powers over the Area Boards and the Gas Council. If he exercises those powers he is answerable to Parliament, but he is not answerable, and cannot be made answerable, if he is not responsible.
§ Mr. Gaitskell
I hope my hon. Friend will excuse me if I do not give way as this point is likely to be debated shortly in the House, and I am anxious to get on with my exposition of the Bill. It is not my desire to avoid a discussion, but I have another job on hand at the moment.
230 It has often been argued that the Boards, not only in this case but in certain other industries, including electricity, should be run by the local authorities. The answer is plain. The areas of the local authorities are quite unsuitable for this purpose. There might be 50 or 100 local authorities in one of the new areas, and I do not see how the job can be left to them in the circumstances, especially as there are many who have no experience of management of this industry. But we do want participation by the local authorities, and we have provided for that through the consultative councils on which they will have a considerable measure of representation. I need only refer to one difference from the Electricity Act. Here, the consultative councils, if they wish, can make representations to the Minister, after consultation with the Area Board, and if the Minister thinks that these representations show any defect in the Area Board's general plans and arrangements, he must refer the representations, for inquiry and report, to an independent person appointed after consultation with the Lord Chancellor. That, in fact, was an undertaking given during the passage of the Electricity Bill in another place. An undertaking was given that that would be done in the case of electricity, and we have actually put it in the Bill in the case of gas.
The only other thing on the structure of the industry to which I want to refer is the character of the areas. The White Paper explains why they differ from the areas recommended in the Heyworth Committee's Report. Some people have asked, "Why do we not have the same areas for gas as for electricity?" I can see certain advantages in that from the point of view of joint planning, and there will have to be a certain amount of joint planning. It would be nice to have the same areas, and, in due course, a greater approximation may be possible. At present there must be divergencies.
In the first place, the boundaries have to be drawn so as not to cut the existing distribution network and so as not to cut through existing undertakings. In the case of electricity, this meant bringing the boundaries of the northern area as far south as York, because York has been supplied by the North-Eastern Electric Supply Company up to now. In the case 231 of gas, there is no need for this. Therefore, York goes into the Yorkshire area. Where, of course, it is more appropriate on other grounds. Similarly, in electricity, Birmingham was separated from Coventry because of the boundaries of the existing power companies, but that is not necessary in the case of gas. Again, in the case of electricity, there was need to balance the urban and rural loads, and because of that we made the London area as small as possible, thus throwing into other areas parts of the outer suburban districts of London. In the case of gas, we have an entirely different position. We have north of the Thames the Gas Light and Coke Company practically controlling the whole area already. The sensible thing is to divide London into two, as we have done, according to the existing boundaries. The grid also very much affected the electricity area boundaries, and that does not apply in the case of gas.
I now turn, for a few moments, to the compensation provisions of the Bill. The procedure is the same as in electricity. All the assets and liabilities of the undertakings are to be taken over, which means that the only people who have any claim to compensation are the shareholders. Everything else is taken over. Consequently, compensation is paid for their securities valued at Stock Exchange prices, and they have the option of choosing the higher of the two dates given in the Bill. In the case of unquoted shares, there is provision for valuation by agreement, or, failing that, by arbitration. There is one difference here. In the case of gas, we recognise that some of the share prices in 1945—that is the pre-election period—were undoubtedly low, because of the low dividends paid at that time owing to war conditions, including war damage and particularly evacuation. Therefore, we provide that, in certain cases, additional sums may be paid, either by agreement or through arbitration. This, I think, is fair and deals with what might otherwise have been a difficult point.
I need not argue the full case for our method of compensation. We have had so many arguments on this subject already that I doubt whether there is anything new to say about it. No doubt, there will be opportunities, between now and the final passage of the Bill, for 232 further talk on that subject. My own point of view is that this is the easiest, simplest and fairest method of compensation. At any rate, the gas industry recognise that the idea of a valuation of the assets of the industry is right out of court. They accept, in fact, our method of compensation for securities taken over, although they do not entirely agree with our particular method of settling the value of the shares.
In the case of municipalities, we have adopted the same procedure as for electricity. We regard the transfer from a municipal undertaking to a new Board as a transfer from one public authority to another, and, on that basis, we say, "Take it over as it is, with its assets and liabilities." We provide a sum of £2 million for severance, as we did in the case of electricity, although as there were many more undertakings and much more in the way of possible loss through severance, the sum provided for electricity was £5 million.
There is one matter, however, in connection with the compensation for municipal undertakings to which I must refer. The Electricity Act made no provision to prevent municipal undertakings "dissipating their assets." I mean by that disposing of their assets in certain ways so that they would not be available to the new Boards. It is true that certain statutory restrictions exist. We did not add to those restrictions in the Electricity Act. We assumed that, as they were public bodies, there was no need to do so. I am sorry to have to tell the House that in certain cases our confidence in the local authorities in this matter has been misplaced. There have been cases where large rebates have been granted to consumers as a sort of parting present from the municipal undertakings. One may say, "That is not a very serious matter. It will only happen this time; it will not recur; why worry about it?" But in present circumstances, when we should be discouraging electricity consumption, the granting of rebates—up to as much as 50 per cent. in one case—is quite inappropriate.
I have, therefore, today made an order prohibiting the granting of rebates other than normal cash discounts to consumers. At the same time, because it would be a necessary part of any such order, I am preventing undertakings from reducing 233 their prices. The same things, to some extent, have been happening in the case of gas. Therefore, there will be a similar order in the case of gas as well. That is all we propose to do on electricity, but in the case of gas, where there have been already some abnormal transfers from reserves—I give notice that we shall move a Government Amendment on the Committee stage prohibiting as from today the transfer for general purposes of sums from any reserve which was clearly set aside for the use of the gas undertaking, as distinct from the general body of ratepayers. It is a pity that we have to do that, but I am sure that it is necessary in the circumstances.
I wish to say a few words about co-partnership on which some remarks have been made in the Press. It is a term which covers a lot of different things. It may mean a proportion of profits being allotted to employees with or without obligation to acquire shares and with some participation in management. It may mean a proportion of profits distributed as a bonus without any particular incentive to acquire shares and without participation in management. It may mean some vaguer, looser form of profit sharing as part of remuneration for service. It may mean no more than that some part of the profits are set aside for the purpose of benefit funds and welfare schemes.
There are actually very few cases in the gas industry or, indeed, as far as I know, in any other industry where the employees or their representatives take an active part in managing the business. Further, the Gas Light and Coke Company, by far the largest undertaking in the country, now has a so-called partnership scheme which really is not one at all; it is a scheme for a bonus based on the total gas output which, of course, is not necessarily related to profits. Finally, we must remember that less than half the employees in the industry are covered.
However, there is no hostility on our part to co-partnership schemes. There are certain things we cannot do, and cannot go on with in the industry when it is nationalised. Clearly, we cannot go on with the existing schemes because the companies go out of existence altogether, and there are legal and financial reasons which make it impossible for them to go on. Nor is it possible to have 234 a scheme which would succeed them whereby shares are issued to employees based on profits because there will not be any shares in these nationalised undertakings. [HON. MEMBERS: "Oh."] No, there are no equity holders. I said "shares," but I am prepared to add that we are not interested in making excessive profits in nationalised undertakings.
Therefore, what we have done is to provide for compensation for the copartners as shareholders just as for the other shareholders and, at the same time, compensation for the loss of rights which they suffer as the co-partnership schemes come to an end. That is provided for in the personal compensation Clause. What can be done, on the other hand—and it is open to the boards concerned, in consultation with the workers' representatives to do it if they wish—is to go on with incentive schemes of various kinds. As far as I can see, it would be perfectly open to the North Thames Board to continue the kind of arrangement that the Gas Light and Coke Company have at the moment. Secondly, we shall certainly continue and extend the consultative machinery, and specific provision is made for that. Thirdly, we shall also specifically continue and extend the benefit and welfare arrangements. What we cannot do is to continue the pure co-partnership schemes, and I may say that the trade unions with whom we have discussed this matter are fully in accord with this, and do not appear to regret the end of co-partnership in its narrower sense.
With regard to the co-ordination of fuel and power, I think it will be agreed that there is a widespread desire in the country—and the right hon. and gallant Member for Pembroke (Major Lloyd George) will agree with me here—that the separate fuel and power industries should each be co-ordinated—that in a sense is one of the functions of my Ministry—and that there should be effective co-ordination in the field of fuel and power as a whole. What does this mean? Some subjects generate heat. I always feel that the subject of the co-ordination of fuel and power is more apt to generate fog than anything else; certainly, I have read more vague and woolly statements on this subject in the last year or two than on almost anything else. Let us be clear about one thing. Co-ordination is a means, not an end. It is not something that has any virtue for its own sake, and 235 the end is the satisfaction of the consumers' needs for fuel and power at the minimum cost to the community. Co-ordination seeks to achieve this end by arranging the relations between the fuel and power industries, the scale of their activities, and the purposes they serve so as to get the best results.
What do we mean by the best results? First, obviously, we mean getting a greater technical efficiency from coal. A great deal of attention has been paid to this subject, and much credit is due to all concerned. It has been stimulated by the shortage of coal, but we must understand that the days when we had vast quantities of cheap coal produced at cheap cost in life and limb are over. We shall not return to them and we cannot afford to be wasteful of coal as we have been in the past. Of course, this does not mean that we disregard all other costs. We must certainly count the steel and the labour needed in getting more out of the coal. Nor must we neglect the additional costs involved in, for instance, smoke pollution, which is a heavy social and economic burden disregarded in the ordinary price-cost relationship of the industry. So when we speak of coordination, we mean that we aim to get the best results from our resources, and we must take into account all the resources and all the results.
How can co-ordination achieve this? The best answer is by giving some illustrations. Perhaps the simplest and most obvious is the one to which specific reference is made in the Bill, namely coordination between the development of coke ovens and gasworks. It is really astonishing that this problem was not tackled years ago. Here you have in many areas of the country the coke oven industry going on its own sweet way and the gas industry going on its own sweet way. Twenty years ago a Committee on Fuel and Power recommended, as in so many other spheres, that something should be done, but nothing was done. It is commonsense, is it not, that in working out how best to satisfy the needs for gas in a region you should take into account the potentialities of all the carbonising plant? I know there have been advances here and there. For instance in the Sheffield area in West Yorkshire, to 236 which I have referred, and in the Newcastle area, but there are great possibilities. I have given one illustration in South Wales, which will have served to show the House what we shall expect to achieve in this way as a result of the Bill.
We have provided that the National Coal Board and the Gas Area Boards must co-operate in the capital development of carbonisation. They are jointly to work out schemes. If they do not agree, there is provision for separate schemes and for the Minister to adjudicate between them. In the last resort, if there is deadlock, and the Minister finds it is necessary that some property should be transferred from the one to the other, he may order an inquiry and, if he is satisfied as the result of the inquiry that it is necessary to do so he can make an order which gives effect to this transfer. However, that order itself is subject to special Parliamentary procedure, so it is a last resort which I hope we shall never have to use.
Let me give some other illustrations of the need for co-ordination. It is a well-known fact that at the moment 70 per cent. of the heat is wasted even in the most modern generating stations. We have heard a lot of talk about district heating as a possible way of making use of this waste heat, and there are some district schemes now being put into operation. However, many of these are not thermal electrical schemes at all, and I cannot help feeling that you cannot separate off the question of district heating from that of the size and location of generating stations. All this will have to be looked into. Furthermore, it seems to me that we want to look at the fuel and power needs of an area as a whole—the need for gas, electricity, hot water, steam and so on—and try to satisfy them as a whole.
I have even heard it suggested by some of my scientific friends that there are great possibilities about combining gasworks and power stations. I do not know how much there is in that, but clearly it must be looked into and can only be achieved by very close co-ordination between the two industries. Then there is underground gasification, in which some hon. Members opposite are interested. Experiments have been taking place in Belgium and the United States, and there has also been 237 some progress in Russia. Clearly there would have to be the closest co-ordination between the National Coal Board and the Gas Boards on anything of this kind.
I am hoping shortly to announce the appointment of a Scientific Advisory Council to the Ministry of Fuel and Power, and of a Chief Scientific Adviser who will in all probability be chairman of the Council. Their first job and an essential one will be to co-ordinate the research in fuel and power as a whole. We shall have on that Council the chief scientific officers of the nationalised industries, together with some independent scientists.
May I pass finally to say a word or two also on co-ordination, but at the consumption and distribution end? It is not our view—let me make it perfectly plain—that we should dictate to consumers what fuel they should use. To do this and to ignore consumers' preferences would not in our view give us the best results, and freedom for consumers to choose is something which, as a long-term proposition, I regard as an essential part of a civilised society. At present, shortages restrict our choice and we have not as much steel as we should like so that we cannot offer gas and electricity to everybody. But the general principle must be upheld, though obviously the level of costs would rule out some possibilities completely. Nor should we overlook the value of retaining competition between electricity and gas. It has been a stimulus in the past and it can bring benefits to the community in the future, provided it is subject to certain safeguards; but this does not mean that there should be no co-ordination whatever in this field.
First of all, we should supply full information services to consumers so that they can make a proper choice between the different types of fuel offered to them. Secondly, as I have already hinted, while consumers should be free, their choice can and should be influenced by reference to costs. It is essential however—this is perhaps the most vital point I want to make—that the charges for different fuels should reflect the true cost of production and distribution to the community. We want to avoid if possible a position where different Boards impose high charges on consumers who have no alternative because the Boards have a monopoly, while cutting charges far below costs to consumers who are fortunate enough to be 238 able to choose. The principle must be that charges should correspond to real costs.
Another illustration is this. It has sometimes been said that too little attention has been paid to the peak load question in electricity and too little attention paid to framing tariffs so as to reflect capital costs, because these are a substantial part of the costs in electricity and those who use electricity at peak periods therefore add to the capital costs very considerably. Contrasted with electricity, gas fortunately has at any rate one great advantage in that it can be stored, and it may well be that some modification in the form of tariffs here would be appropriate. I am not passing judgment on what is a highly technical and difficult subject, but giving this as an illustration of the principle that costs and charges must coincide. It will not be an easy job to work this out but I believe that with the co-operation of the Boards concerned we should be able to build up a body of experience and knowledge from which what one might describe as a code of fair conduct should emerge. It is not a question of dictating to Boards out of the blue on their price policy and not a question of setting up some tribunal to tell them what they should do, but a question of getting them round the table and trying to arrange the form of their charges and price policy as a whole so that it fits in with the needs of the community.
To sum up, co-ordination is not dictation. It is certainly not dictation to the consumer and it is not dictation to the Board; it is designed to use our fuel resources so as to get the best results. The means of doing this are varied—greater research, greater exchange of knowledge, planned capital development, and a rational and fair prices policy. We shall achieve these ends because I am confident that under the Ministry the various Boards will come to regard themselves not as wholly separate entities, their loyalty entirely concentrated on the products with which they are concerned, but as partners in a common enterprise to provide for the community the best fuel and power service available.
This Bill is not, as some would have us believe, the fulfilment of an obstinate doctrinaire's dream; it is an essential 239 part of the Government's plan for reconstructing and co-ordinating the fuel and power industries of the country. The gas industry is an industry with great possibilities, and though much has been achieved in the past despite many handicaps, those possibilities will never be realised unless a fundamental change is made in the structure of the industry. The high technical standards and the efficient management which have been characteristic of some undertakings in the past must now be extended to the whole industry. Science must be given its full opportunity. There must be drive and progress, not in one or two enterprises but in every area in the country.
In the last 25 years many thousands of words have been uttered and many thousands of sentences written about our fuel and power industries. Everything was said and nothing done. Yet in all these cases there was really no doubt about what should be done. The technicians, the workers in the industry, knew what was required, and opinion has steadily crystalised more and more in the same direction. In essence the three latest and very non-political reports—the Reid Report, the McGowan Report and the Heyworth Report—tell the same story. What is this story? It is that the structure is antiquated, that it is stifling the industry, that there must be larger areas and that there must be co-ordination. I know that their attitude differs on public ownership. The first was opposed to it, the second was hesitant and the third was favourable. The climate had changed in the meanwhile, but the signposts in each of those Reports were unmistakeable, and we are following them. After 25 years of talk under other Governments, this Government has acted. The logical step of transferring these three great industries to public ownership has at last been taken and the basis has now been laid for the efficient planning in the interests of the community of our great fuel and power resources.
§ 4.37 p.m.
§ Mr. Brendan Bracken (Bournemouth)
The launching of his first Bill is no small ordeal for a Minister; and what a bulky Bill it is—100 pages full of knotty and baffling technicalities. If I, a private 240 Member, complain of the weary hours I have spent on the Bill, how much more is the right hon. Gentleman entitled to sympathy, for he himself is a man of many burdens and acquainted with trouble, mostly started by his colleagues. No one can complain of any lack of clarity or industry in the Minister's performance of a difficult duty, but a complaint will come from the North of England owing to the right hon. Gentleman's incautious reference to Bradford. It was a most unfortunate choice, because in Bradford there is an alderman named Leach, a well-liked former Member of this House, a former Minister, a leading figure in every way in the Bradford Socialist Party. What does Alderman Leach say about this Bill? He says that it will rob Bradford of over £2 million. I must warn the right hon. Gentleman that when next he goes to Bradford, he will get an "infra-red" reception.
I admired the Minister's dexterity in handling the Heyworth Report, a dexterity which he derived from long association with his former guileful master, the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton). That apprenticeship has indeed been a great advantage to the right hon. Gentleman. The Minister came not only to praise the Heyworth Report today; he came to praise it and to bury it. Whatever can be said about this Bill, no one can assert that it embalms the important recommendations of Mr. Geoffrey Heyworth and his colleagues. These gentlemen were bold enough to say that their planis essentially one that stands as a whole; its parts are interdependent and additions are as likely to upset its balance as deletions.The Minister will not deny that he has made many additions and many deletions, and he has, in fact, greatly upset the balance of the Heyworth Report. We hold that the Heyworth Report is good in parts, but that it is pessimistic and necessarily superficial. I suppose if one were to set a leader of the gas industry, a chartered accountant, a water engineer, a trade union leader and an eminent professor to inquire into Lever Brothers, the results would not be any more acceptable. Though we must criticise the Heyworth Report, we are not wanting in appreciation of the fact that Mr. Geoffrey Heyworth, who rendered great service to the State during the war, and his colleagues gave 241 up a great deal of their energies in delving into the gas industry.
We are told in that Report that the gas industry nowadays produces more heat than light. Let us try to reverse this process in debating this Bill. Let us consider it in the light of the warnings recently given us by the Prime Minister and the Chancellor of the Exchequer about Britain's parlous economic and financial situation. We agree with those warnings. We were criticised as pessimists for saying the same thing two years ago. Some politicians and newspapers have asked, "Why make so much fuss about nationalising gas? It is a respectable, outmoded industry with few managerial problems—a sleepy old monopoly, in fact." We shall try to show the House that gas is one of the most vital of all British industries. It is not only a great distributor of fuel and power, but is a great and ever-growing chemical industry, with an immense and fascinating future. In considering its future, let us abjure arid, academic arguments about the relative merits of Socialism and private enterprise. There is a time and place for those, but they cannot help in settling the future of this great industry. Rather let us test this Bill by the Lord President's commonsense rule that it is up to the nationalisers to prove their case.
§ The Lord President of the Council (Mr. Herbert Morrison)
The right hon. Gentleman is quite right in what he says; but I did add that it is up to the anti-nationalisers to prove that it is best to leave things alone.
§ Mr. Bracken
I am grateful to the right hon. Gentleman. That is exactly what I intend to do in my speech this afternoon.
Government supporters generally rest their case for nationalising an industry on three grounds—firstly, that Parliament should control an industry like gas that effects most of the homes of the country and many of the industries of Britain; secondly, the State should step in where private enterprise has been manifestly inefficient; and thirdly, the State must take over an industry suffering from chronic labour troubles. There is a fourth argument used by those who strongly favour nationalisation of gas, and it is the trilogy argument put forward by the Secretary of State for War. According to that argument, gas is complementary to electricity 242 and coal—I think the Minister of Fuel and Power this afternoon showed that he was in agreement with his former master on this matter—and so the gas industry should be nationalised.
The Opposition recognises that those four arguments are important ones, and must be fully answered to justify our attitude to this Bill. Let me try forthwith to deal with them. The first argument advocating Parliamentary control over the gas industry can be answered quite briefly. Parliament has been watching and debating the affairs of the gas industry for more than 136 years. There are more than 2,100 Acts of Parliament relating to gas, and no less than 1,172 Special Orders. Indeed, the Heyworth Report asserts that Parliamentary controls have retarded the development of the gas industry. I have said all that need be said about the abundance of Parliamentary controls over the gas industry.
Now for the second nationalisation argument. Are we dealing with an inefficient industry? The British gas industry is recognised as the most efficient in Europe, and has plenty of admirers in the United States of America. The quality that I most admire about the industry is its liveliness. It could not have survived without this attractive quality. The gas industry has had to fight for its life. The impact of electricity on the gas industry was devastating. The pioneers of electricity gloated over the impending doom of gas. They were more arrogant than the railway promoters prophesying the ruin of the stage coaches, or the motor makers contemplating the doom of the hansom cab.
Electricity and, later on, oil competition braced the gas industry to do great things. Dr. Johnson said that if a man knows he is to be hanged, it concentrates his mind wonderfully. Electricity concentrated the mind of gas as well as its energies, when it discovered that the fate outlined by Dr. Johnson might come its way. To survive, gas had to encourage personal service, salesmanship and zeal in finding new markets for its products. Competition has always been keen between gas and electricity. Sometimes it has been unfair. The Minister must know that municipalities owning electricity undertakings passed unfair bylaws and overplayed the merits of the all-electric house. Broadcasting greatly 243 advantaged electricity competition. The answer of gas to such competition was wholly admirable. Let them all come! No, the gas industry cannot be nationalised on the ground of inefficiency, because it is led by men eager to develop its manifold opportunities. If there be truth in the sombre warnings of the Prime Minister and the Chancellor of the Exchequer, this is not the time to wrest it from the capable hands of its present leaders.
Let us consider the third argument for nationalisation. Ought this industry to be taken over by the State because of labour troubles? In this respect gas is a model for all British industries and a model for His Majesty's Government as an employer of labour. No serious labour troubles have marred its growth for nearly 30 years. It affords the best example of co-partnership in Britain. Later on, I shall have something to say about this Bill's destruction of co-partnership. Meanwhile, I assert that there is no justification for nationalising the gas industry because of faulty labour relationships.
Now let me turn to the fourth argument, the trilogy, which is the copyright of the Secretary of State for War, who unfortunately is not present. The right hon. Gentleman declared that gas was part of his trilogy—coal, gas and electricity. "Trilogy" means three tragedies in quick succession. How apt was the right hon. Gentleman's choice of language. The right hon. Gentleman believes that gas is complementary to coal and electricity. For their own good reasons, those in the electricity industry have been pushing a lot of propaganda into the right hon. Gentleman's mind. They always wished that that view should prevail, for their own very good reasons. Gas should not be complementary to electricity, but, in the public interest, it should be fiercely competitive.
I wish to say a word or two about the right hon. Gentleman's reference to coal. Although gas is the best customer of coal, the industries are not complementary. Their prospects and problems are wholly different. "Complement" is defined, I believe, as "to make complete, or perfect." If the gas industry is tied to the Coal Board inside the Ministry of Fuel and Power, it will not be made perfect; it will be hamstrung. The 244 nationalised gas industry will be the last and least of the trilogy. If anyone doubts this, let him consider how gas has fared under the Coal Board's monopoly.
The faulty allocation methods of the Coal Board greatly handicap the gas industry today. Gas plants are designed to carbonise good quality coal, and not meant to absorb the dirt, slates, and stuff that looks like broken tombstones, which have often been sold at high prices by the Coal Board. Before the war the gas industry sampled all coal before placing orders. If deliveries were not up to standard, the supplier was changed. Now they must take the stuff sent them by the Coal Board, and be thankful. It would be wrong to assert that all the coal supplied by the Coal Board to the gas industry is always bad, but the quality is disconcertingly uneven. The Coal Board have many problems, and one must not be over censorious. It is, however, true that in a vast monopoly quantity is always preferred to quality. Today the gas industry cannot get the service it received from its former suppliers, and to add to its grievances, it is known that too much good gas-making coal is sent to domestic and industrial consumers, although they, too, get their ration of dirt and slate.
If the gas industry is to prosper, it must be led by men of independence, who will stand up to the Coal Board. What hope have such men in a Ministry of Fuel and Power that must for long be dominated by coal interests? They have great political power. Some of the most respected Members of this House represent mining constituencies. The gas industry neither possesses, nor seeks, political influence. So much for the trilogy argument.
I have tried as clearly as I could to answer the four main arguments for nationalising gas. There is nothing in that answer that claims perfection for the industry. Many improvements and developments have been deferred through no fault of the industry. The most urgent, as the Minister said today, is integration. I agree entirely with the Minister's argument in favour of integration. So does everybody connected with the gas industry. In that part of his speech he stated the case, also admirably stated by the Gas Council, and indeed, by all connected with the industry. The gas industry has striven for years for integration, but Parliamentary indifference before 245 the war, and Government decrees during and since the war, have discouraged integration. When the right hon. Gentleman the Lord President of the Council and I were Members of a Government, that Government laid it down that there should be no amalgamation of gas companies during the war. That was an arbitrary act on our part, and the industry has suffered as a consequence.
Integration, however, made good progress before the war. I do not want to overstate this, but quite substantial progress was effected. But, as the right hon. Gentleman said today, it is very difficult to bring about integration without a great deal of labour and expense. That is partly due to Parliament's jealous care of everything the gas industry does. We are more responsible as Members of this House than anyone else for preventing the integration of smaller companies who could not possibly afford the money necessary for amalgamations.
The Minister today did not deal sufficiently with the point that integration does not mean rigid unification. Villages far from the madding crowd cannot quickly benefit, or may never benefit from integration. There are certain villages in this country which no sane man could ever believe would benefit from integration. But, although geographical integration is sometimes impossible, functional integration has made great progress. Both are still capable of very wide development. How can integration be best effected? The past record and present burdens of Government Departments disqualify them from the task. The Opposition are often criticised, particularly by the Lord President in his less amiable moods, for not putting forward constructive suggestions. May I put one forward now?
§ Mr. Bracken
I thank the right hon. Gentleman for his permission. Let the Government appoint Gas Commissioners, with wider powers, and better paid staff, than those possessed by the Electricity Commissioners. They should be empowered to call upon the industry for plans for integration, to amend them if necessary in the public interest, and also given the power to compel them to be carried out. They should, in fact, be given general powers to supervise the 246 industry. The right hon. Gentleman was less than fair to the gas industry this afternoon when he said that the recommendation for integration through a tribunal was only made recently. It was in fact made over five years ago. I am not recommending a tribunal, but commissioners. I do not mind if my suggestion is not accepted—I am not an arrogant man—but I think it better in the public interest to appoint commissioners.
Those commissioners should also simplify the mass of confusing regulations that hamper the full development of the gas industry. Most of these regulations are due to the activities of the House of Commons. I maintain that such commissioners should not be mere creatures of the Ministry of Fuel and Power. I further say that the House should maintain its ancient interest in the gas industry by helping to stir up the commissioners.
Can anyone assert that the Minister of Fuel and Power has the time or the staff necessary to fulfil the tremendous responsibilities conferred by this Bill? Is the right hon. Gentleman satisfied that he has? I do not think he is, so I will not ask him to answer the question at the moment. I think he will agree that his civil servants are grossly overworked. Their coal responsibilities are more than enough to occupy their time. Up to the present moment the Coal Board is no striking example of the team spirit. Is the Minister satisfied that there are no divisions on the Board now? Has he received no resignations recently? It is, of course, no secret that a scheme of reorganisation is in preparation for the coal industry, and the Ministry of Fuel and Power have given up a great deal of time to examining that scheme.
On 1st April—what an appropriate day—the Minister becomes responsible for the huge electricity industry. That will cast more burdens on his civil servants. The Minister exercises a certain control over oil. As the right hon. Gentleman and his staff are painfully aware, that control is no sinecure. With all these undischarged responsibilities, the Minister now asks Parliament to give his Department the chief responsibility for the management and policy of the gas industry. Anyone who doubts that the Minister and his Department are not assuming wide responsibilities for the management and policy of the gas 247 industry should read this Bill again. I have tried to calculate the number of places in the Bill in which the Minister is mentioned in order to obtain powers, and I notice that in 28 places the Minister is authorised to make regulations which have the effect of law. In 19 places the Bill authorises him to give directions on vital questions affecting management. The Minister may think that a laughing matter, but I am afraid we do not. In 20 places his approval or consent is required. Can anyone, therefore, say that the Minister has not got a tremendous responsibility for the management and policy of the gas industry?
The Gas Council set up by this Bill was referred to at some length by the Minister today. I hope he will not think me disrespectful if I describe it as a farcical body. There is a passage in the biography of Sir John Sinclair, the first President of the Board of Agriculture, which well describes members of the Gas Council:It was said of Sir John Sinclair without any ironical intent that Mr. Pitt valued his simple assent more than his advice.The Minister has certainly taken care to ensure a supply of simple assenters for his Gas Council. This wonderful Council was described to us by the Minister this afternoon. It has a chairman and a deputy chairman. They are not required to give full-time service. They may or may not have any experience of the gas industry; they may be bankers, stockbrokers, manufacturers or even former Ministers. The rest of the Council will consist of the chairmen of the 12 Area Boards. These area chairmen will be the Minister's deputies in managing hundreds of gas undertakings in widespread areas. Does the Minister really believe that in the midst of their heavy administrative labours they can find time to rush off to London to sit on the Gas Council? If they do, how can they think and plan?
It is a perfectly absurd arrangement to set up a Gas Council all the members of which, of course, are nominees of the Minister and are 12 of the busiest men in England, bringing them from all parts of the country to meet a chairman and a deputy chairman, who may know nothing about the gas industry and who do not even have to devote their full time to the service of the industry. I 248 beg hon. Members in all quarters of the House to hesitate before handing over the gas industry to an overworked Minister and a Council of puppets. The Council has no adequate authority. Perhaps the Minister planned it so, for all its members are his nominees. All decisive power rests with him; he does not deny that. How much better, therefore, would it be for him to accept my suggestion and appoint Gas Commissioners who can really attend to integration, instead of this absurd Council of his own nominees who have neither the time, nor, in many cases, the knowledge, to undertake this important work.
I say that at the moment to hand over the gas industry to the sort of Council devised by the Minister will create chaos in the gas industry. Surely, we have enough economic and industrial troubles without creating more. Has the right hon. Gentleman an insatiable appetite for trouble?—because if he has, the gas industry will certainly help to temper it in a little while. Have the Government learned nothing from their unhappy experience of the Coal Board and civil aviation? Therefore, why not let the industry, under the supervision of Gas Commissioners, get on with the task of integration?
§ Mr. Bracken
The Government will. Surely the hon. Gentleman does not suppose that the Opposition will. When integration has been achieved the formidable risks inherent in hasty nationalisation will sensibly diminish, and by that time—I should think it will take at least five years to complete integration—the Minister's experience of coal and nationalised electricity may also diminish his faith in a nationalised gas industry. I am pretty certain that by that time we will have a new Minister, anyway.
As the House will have noticed, I have been studiously moderate so far. This is but a part of the case against this boa constrictor Bill. The gas industry is much more than a distributor of fuel and power. Listening to the Minister this afternoon, one would imagine that the gas industry did a little bit of work in carbonising but that it did not amount to very much. I would inform the Minister that the gas 249 industry is not only a great chemical industry, but it has tremendous potentialities. It is the pioneer in treating coal as capital. I agree with what the Minister said this afternoon about the great wastage of coal in this country. We all accept the view that coal is Britain's only great natural asset, but we go on squandering it. We have squandered it in the past and we are squandering it today.
The by-products of coal are much more important than coal as mere fuel. The gas industry has done a great deal to create new industries from coal, and if the Minister has a little time he ought to study the list of by-products of the gas industry. It will take him a certain amount of time because they are numbered in hundreds. The gas industry has created many new industries, and it can create many more if the resourcefulness and the zeal in research of its leaders are not chained by bureaucratic controls. I was hoping that the Minister would pay some tribute to the gas industry for being the only important industry in this country which for many years spent great sums of money on research, but he was silent on that point. Perhaps he did not realise it.
Perhaps the Minister does not realise another matter of the greatest possible importance, namely, that this is the age of chemistry. A new industrial revolution is upon us, and the gas industry can play a great part in restoring prosperity to Britain. Britain's recovery cannot be achieved through many of our traditional exports. That fact is only too well known to the Chancellor of the Exchequer and to the President of the Board of Trade. Countries which before the war concentrated upon primary production are now rapidly industrialising themselves and are planning to compete with some of our traditional exports. Last September I was in a country which, before the war, was mainly an agricultural country. I saw factories going up all the time, to make goods which we can make much better in England, which will not only supply a market in which we obtained prosperity before but which will also play a part in developing that country's export trade. I beg the House to believe that if we depend on our traditional exports, there is no future for Britain. Our great hope now lies in developing the new industries.
250 As I said to the Minister, this is an age of chemistry. I also maintain that these countries, which before the war concentrated upon primary production and are now planning to compete with our own traditional exports, have great advantages which we, of course, do not possess. Many of them have abundant raw materials that strengthen that competition.
The outlook for Britain would indeed be black if science had not come to our rescue by creating a new industrial revolution. Britain can become a vast laboratory from which will spring many new industries. We have the chemists and we have the physicists. We have the most skilful workmen in the world to translate their discoveries into industries or processes. That is our great hope for years to come. Gas has been the pioneer of new industries that have sprung from our laboratories. It can be the parent of many more. The leaders of the gas industry fully agree with the chief scientific adviser of the Government, Sir Henry Tizard, appointed, I think, by the Lord President of the Council. His contention is that by using modern scientific methods Britain can step up her industrial output by 50 per cent.
Gas as the creator of new industries is deeply interested in helping to provide power for other industries, and particularly for new industries. As a power producer, the gas industry prides itself on being able to give personal service to new industries, however small. It is fair to say, in words devised by a former associate of the Lord President of the Council, Mr. Leslie, that the gas industry rightly boasts that its spirit of service is not equalled by any other industry. Mr. Leslie did a very good job of work in seeing that that point of view was put across to every industry in the country. Mr. Therm is eager and skilled in designing plant and supplying power to small and big enterprises. He can take on a job, whether it is for those who are engaged in vast industrial operations or for a very small man who wishes to start an industry in an old garage or any other sort of place, where he has a roof to cover his head. Gas will particularly delight in helping new industries if it can give a knock to its old foe, electricity. That indeed will add to its happiness.
Gas is today a heat provider for more than 4,000 industries and trades, which 251 is a very significant figure. The Minister talked of the gas industry in a patronising way and said that if it was not nationalised it would probably disappear in the course of some years. Let me tell the Minister that in the gas industry the demand for industrial gas has increased by something like 70 per cent. since 1938. I beg the Minister not to come here giving us his airy generalisations about the terrible future that awaits the industry if it is not nationalised. According to the Heyworth Report, the industry may hope to increase its consumption by 20 per cent. within 10 years. The truth has been that the increase in the industry has run three and a half times more quickly than Mr. Heyworth and his colleagues expected. I would advise the Minister to study the history of the gas industry a little more carefully before he makes generalisations about its coming death if the virtues of the Bill should be withheld from it.
Let me sum up the case for allowing to the gas industry the measure of freedom it has enjoyed. During its long life it has been the good servant of most of Britain's homes. It renders inestimable service to industry. Its charges have always been regulated by Parliament. It is the pioneer of many new industries and it can start many more. It is eager and qualified to serve the many and complicated needs of the new industries by which prosperity can be restored to Britain.
There is another powerful argument against the Bill. It is one that the Minister has made no real attempt to deal with this afternoon. Some passages in his speech increased my doubts about the Bill. One of the main charges against the Bill is that it creates a complete fuel and power monopoly. The Prime Minister told us that we are engaged in pricing ourselves out of the export market. We are, indeed. From all over the world one hears the same story, that British goods are too expensive. The Prime Minister was not exaggerating when he said that we are pricing ourselves out of our export markets. Fuel and power costs enter into all our exports. Many of our competitors have easily mined coal, natural gas, and an abundance of water power to produce cheap electricity. If Britain is to survive such competition we 252 must strive to produce fuel and power at the lowest possible cost.
Does the Minister believe that a rigid power monopoly will reduce costs, whether it is controlled by the Government or by capitalists? Of course, it will not. There is a strange irony in the fact that the President of the Board of Trade has announced that he hopes to introduce a Bill in this Session to curb monopolies, but here we are now witnessing his colleague, the Minister of Fuel and Power, setting up the biggest monopoly in our history. Why not allow the gas industry to serve as a spur to the coal and electricity monopoly of the Government? The Minister should remember that his cherished Heyworth Report recommends that gas should be enabled to compete effectively and without restriction with other fuel industries. It is foolish to believe that there can be free competition for gas if it is to pass into the control of the Ministry of Fuel and Power, which is also the master of the coal industry and of the electricity industry, and is deeply concerned with oil.
The Ministry can settle the nature and price of fuel used by every industry in Britain. I predict that gas will be the Cinderella of such a Ministry. What protection has the consumer against this monstrous monopoly? The Bill gives him no protection. I read two reports in the Press today of statements made by chairmen of national boards. Sir Ben Smith, Chairman of the West Midland Coal Board, said that only two mining divisions under the National Coal Board made a profit last year. Are the other divisions still losing money? Will there be any further increase in the cost of coal, and consequently of gas? Lord Citrine, chairman of the British Electricity Authority, is reported to have said that the price of electricity must be raised as soon as possible. What a prospect for the consumer. The consumer is afforded no real protection in the Bill, save by the setting up of a Consultative Council of Consumers—whatever that may mean. Their position is very much like the status of the Bishop of Sodor and Man in another place. He is allowed to sit, but he is not allowed to vote or even to speak.
I have not been able to deal with more than a small part of the effects of the Bill. I am sorry that I have spoken for so long, but the Bill is so important that I feel 253 that we must put the best possible case against it. I assure the Minister that we shall have many Amendments to offer in the Committee stage. I must make reference to two glaring defects—the compensation terms offered to the owners of the industry and the Government's conduct in destroying the most hopeful system of co-partnership in Britain. The Minister himself admitted that his ideas of compensation have been freely borrowed from the Electricity Act, without any regard to the fact that they are wholly inapplicable, not to say unjust to the owners of the gas industry.
Furthermore, the compensation machinery in the Electricity Act will break down when applied to the gas industry. Many owners of gas stocks are inheritors of investments which are rarely quoted in Stock Exchange lists; others have never appeared in those forbidding columns; and in this respect I speak with authority, the compensation offered to local authorities is, as Alderman Leach says, a mockery of fair dealing—[Interruption]. I did not say "robbery," I said a mockery of fair dealing. The Minister proposes to take over their properties at less than a quarter of their worth. This is Socialist accountancy with a vengeance, taking over the properties of municipalities, in some cases municipalities with a large majority of comrades, at less than a quarter of their value.
I hope that Members of this House, whatever the party they belong to, will see that justice is done to local authorities and even to stockholders. They have had the rawest deals through the nationalisation of their properties. I hope that the Minister will reconsider the terms of compensation. At any rate, I hope to have an ample opportunity of dissecting this monstrous ramp when we reach the Committee stage. Meanwhile, all I shall say is that the compensation terms in this Bill are more worthy of Senor Miranda than the British Treasury, so savagely mulcted by him.
Let me say a word about the wanton extinction of co-partnership in this Bill. The Minister was very hesitant in his attempts to explain away the abolition of co-partnership. Is it a fact that the Minister yesterday, at No. 10, Downing Street, had to meet a number of aggrieved gentlemen who are protesting against the terms of this Bill? I do say that co- 254 partnership as defined by the right hon. Gentleman is something quite different in fact. Co-partnership must not be looked upon as a mere aspect of profit; it is something greater and better. It is the glad acceptance of a full identity of interests between owners of the industry, employees and consumers. It can answer the Government's prayer for an effective incentive to steady production. I know that, as the Minister said today, co-partnership is not popular with many trade union leaders—and many employers. These diehards have much in common. I have some little experience of the F.B.I. and I have some experience of the bosses of the trade union system, and I have never met a more remarkable collection of diehards in all my born days.
I aver that co-partnership is one of the best ways of providing the good life that our people deserve. It can provide not only social security, and we in this party take a good deal of interest in social security because, with the Liberal Party and with the right hon. Gentleman's party, we were partners in devising the great system of social security which we hope and believe will not be ruined by financial improvidence. But I ask the Lord President, who I understand is to answer for the Government, to consider that co-partnership not only provides social security but also gives us social progress. The idea that lies behind co-partnership is one of the most constructive of our time.
It is, of course, well known that co-partnership has been practised in U.S.A., in Britain and in many other countries. It has not flourished greatly. That, I think, is partly due to the fact that the industries which adopted it never attempted to convert other industries to the marvellous potentialities that lie in this idea. I believe that a proper system of co-partnership would solve most of the Government's present labour difficulties. I believe that if the trade union leaders would only realise it, co-partnership is the best possible way of giving a fair deal to all employed in the industry. Some of my hon. Friends who hope to speak in this Debate will give up most of their time to this great subject. We hold it to be a matter of paramount importance to the industrial future of Britain, and in our future discussions on this Bill we shall try to persuade the Minister to spare the co-partnership system.
255 Considering persons who have read the recent speeches of the Prime Minister and the Chancellor of the Exchequer are reinforced in their view that Britain's future is in the balance. Let me tell the Lord President that we are not rounding recovery corner. We are, in fact, up against the worst economic crisis in our long history. It can be solved. We of the Opposition have no wish to exploit our country's difficulties—on the contrary. We will co-operate wholeheartedly with the Government in anything that will solve the deepening economic crisis, but it would be unreasonable to expect us to give any support to a Bill like this, a Bill which clinches a rigid fuel and power monopoly that will add to the cost of living at home and will price us out of export markets in many lines.
In many lands the faint of heart and the small of brain believe that Britain's industrial strength is waning. We of the Opposition reject this defeatist trash, but because we believe that this Bill will hinder our recovery and will encourage the vultures hovering over our dwindling export markets, we shall oppose this Bill in all its stages. Let me end by telling the Lord President, the real begetter of this Bill, that Britain will never recover under a power miser.
§ 5.29 p.m.
§ Mr. Williamson (Brigg)
May I first congratulate the Minister on his fine speech in support of the nationalisation of this industry? May I also congratulate the Government on the expedition with which they have moved since 1945 in regard to the fuel and power section of industry? Coal and electricity are under public ownership, and there can be no case in principle why the gas industry should not be brought into line. I say to the right hon. Gentleman opposite that it is not for the gas industry to act as a spur to the other two industries; it is for the gas industry, with its tremendous potentialities, to which my right hon. Friend referred, to take its place in the fuel and power industry of the nation.
This is the time to pay a tribute to the gas industry and to all those engaged in it for the tremendous assistance which it has given to the prosperity of British industry in the past. The staff and labour 256 employed in the gas industry have served it with a loyalty and devotion which I believe will be continued when this industry is nationalised. There have been no major industrial disputes for 30 years. That is due in no small measure to the very good and happy relationship which exists between the management and the trade unions, through the machinery of that very fine National Joint Industrial Council—one of the first to be formed. Those of us who have taken a great interest in this council hope that some similar kind of machinery can be created for the future under the terms of this Bill.
I do not think it is sufficient to regard the bringing into public ownership of the gas industry as just a change of ownership. There is no doubt, and the right hon. Gentleman opposite must agree, that the potentialities of the gas industry to serve as a fuel and power asset to British industry have never been brought into full deployment. Here we have an industry with small, inefficient stations and waste of transport. There have been instances where coal has been brought to the rail head, has been handled and taken out of the trucks, loaded into lorries and carted in those lorries 200 or 300 yards to the gas works, and then unloaded again. There is no time for that sort of thing to take place today.
The gas industry has not itself used any method of integration in the past. Holding companies have taken a very close interest in many of these undertakings, but the right hon. Gentleman knows it was done on an inefficient basis even by the holding companies. A holding company, which was primarily concerned in the South of England, was taking an interest in other industries in the North of England, and in Scotland. I say to the right hon. Gentleman that it is vitally important that the gas industry should be brought under control under one authority—the Ministry of Fuel and Power—so that it may be used as an efficient industry, side by side with electricity and coal.
There are three main objectives which should dominate our future policy. One is the progressive development towards integration on the production and on the distribution side, and the efficient utilisation of plant and labour. Secondly, we should ensure regular, adequate and uninterrupted supplies of gas and coke, at 257 the right prices. National prosperity depends on an abundance of fuel at the right price, as price can affect our internal and external price arrangements. Therefore, it is essential to bring the industry to the highest possible state of efficiency. Thirdly, it will be essential, and vitally necessary, to provide good wages and conditions. Those conditions should not be sacrificed in order to provide cheap fuel. Working conditions in the gas industry are not the most congenial, and wages must be such as will attract the best type of labour into this industry.
I am making no charge whatever against employers who have sat through the years on the National Joint Industrial Council, but this industry has not had a fair deal in many respects. I would mention one instance which occurred during the war, when the wages of other workers were being increased, because of war conditions. The Board of Trade clamped down on gas prices, and employers had to use that against the employees' representatives when they asked that they might be treated similarly to other workers. It is not to the advantage of the industry that the men should lose confidence in the appropriate body which is responsible for negotiating their conditions and seeing that they are given a fair deal.
There is no industry which has had to employ such a variety of labour as the gas industry. There has been in the past few years Irish labour—a great deal of Irish labour—German, Italian, Poles, and even troops, not because there was a trade dispute on, but because the vital supply of gas might have been cut, had it not been for the use of troops by the appropriate Department. I hope, therefore, that there will be a review of the wages and conditions within the industry. I believe it is justified, because it is an industry which is not a congenial one, and must therefore be made attractive.
With regard to co-ordination, when this Bill becomes an Act I believe it will be detrimental if coal, electricity and gas are to be carried on as three separate entities. The Minister did mention this question of co-ordination, but I would ask what machinery is being devised in order that there can be complete and efficient co-ordination? How is the total energy load to be adjusted to the best advantage between the different fuels? Who is to 258 say which fuel or which form of fuel is best for which purpose? The Minister himself, under the Fuel and Power Act of 1945, is charged:with the general duty of securing the effective and co-ordinated development of coal, petroleum and other minerals and sources of fuel and power in Great Britain … and of promoting economy and efficiency.It will not promote economy and efficiency to allow three separate industries to go on the even tenor of their ways without some authority being able to give some direction, and advise as to what forms of fuel are best for certain purposes.
Something was said by the right hon. Gentleman opposite about our coal resources, and the need for the conservation of coal. Coal has become harder to win, and, in my view, we cannot rely on an increasing output of coal. We can rely on an increasing demand for fuel of all kinds. It is vital, therefore, that the coal which we do get is used to the best advantage. That is where the gas industry in future can play a major part. I hope that I shall not weary the House by referring to an extract from the Simon Report on domestic fuel policy in 1945–46. In a reference to heavy domestic consumption of coal in Britain, it says that 62 million tons of coal in the form of coal, coke, gas and electricity—or over one-third of the whole of the fuel consumed in Britain—is used domestically. It says:As regards the warming of the house, most houses for the lower income groups are exceedingly badly heated. Normally, space heating is provided by an open coal fire, which is so inefficient that only one room, or indeed even only part of one room, is heated by a quantity of fuel that could be made to warm the whole house.Four million houses were built in the interwar years.The area of the houses properly warmed for comfort during the winter is probably smaller in England than in any other civilised countryWhat an indictment. We are a coal producing nation. To sum up, the Report says:We are using excessive quantities of coal; we are providing inadequate heating in the houses; we are pouring out masses of soot and tar into the atmosphere. In our view we cannot afford to maintain our low standards of heating; we cannot afford to continue to depress and destroy the life of our cities by smoke pollution; we cannot afford to waste our limited national coal reserves.259 I quote that in support of my argument that it is vital that coal must be increasingly carbonised. It must produce coke, gas and by-products. We must treat our coal as a valuable asset—the most valuable asset that we have. We must treat it as it is treated by those nations which have no coal of their own and import it from us. They cannot afford to waste it. I hope that this great gas industry will be used in such a way that it conserves our fuel supply.
There are two other points I wish to make. Something was said about competition between gas and electricity. I think reference was made to all-electric houses. I hope that we shall have no more of that nonsense. Because some people, usually the newly-married, thought that they would like to have all-electric houses, they were built without being fitted for gas or other forms of heating. When the people had been in occupation for three or six months and the bills began to come in, they went to the council and said that they wanted gas to be installed. These matters must have some attention. There must not be competition between the gas and the electricity industries in the form in which we understand competition. They must work together. Of course, there must be some spur to promote efficiency.
No one but a fool would advocate any system which was not directed towards the fullest efficiency of both the electricity and the gas industry. We do not want the position where electricity salesmen approach consumers and say, "Do not have a gas cooker; have an electric cooker," and gas salesmen go to the same people and say, "Do not have an electric cooker; have a gas cooker," with the result that the consumer does not know which is the best. Reasonable advice must be given so that the best appliances can be used in such a way that the most suitable form of fuel is applied to the most appropriate purpose.
I would say to the right hon. Member for Bournemouth (Mr. Bracken) that there has not been any real co-partnership. There has been a payment which has been called co-partnership, or profit sharing. That has been in addition to wages, but it has not applied throughout the industry. I say without hesitation that the organised trade unions involved 260 are not sorry to see the last of that system. They are not sorry, because it is right that a proper wage should be paid in the first place. What is the use of talking about subsidising wages? Of course, there should be an incentive scheme for production. I suggest that in many instances these co-partnership schemes have militated against trade union organisation. To some extent they have militated against the workpeople being able to secure the proper conditions. It is for that reason that I say that we will not be sorry to see the last of these co-partnership schemes.
The Minister rightly said that there can be incentive schemes. This industry is to be brought into public ownership. We should not want to infect the minds of more people than is absolutely necessary with the bug of profit. Therefore, these profit sharing and co-partnership schemes must go. I welcome this Bill. When it becomes an Act I am sure that the gas industry under public ownership, working side by side with coal and electricity, will make a great contribution to the future prosperity of British industry.
§ 5.47 p.m.
§ Sir Peter Bennett (Birmingham, Edgbaston)
I join with the right hon. Member for Bournemouth (Mr. Bracken) in congratulating the Minister on the very clear way in which he put over his case. I should also like to congratulate my right hon. Friend the Member for Bournemouth on the way he pulled it to pieces. Now we know where we are. My right hon. Friend hinted that instead of each of us attempting to cover the whole of this Bill, the scheme of hon. Members on this side of the House would be to concentrate upon certain details. I wish to speak on one particular point. I will not follow the line taken by the hon. Member for Brigg (Mr. Williamson). I listened attentively to his speech. I have often congratulated hon. Members on their maiden speeches. I do not know whether on this occasion I ought to congratulate the hon. Gentleman on making his swan song. We have always listened to him with interest and, if he is going to a higher realm, I am sure that it will be the wish of the House that I should congratulate him sincerely.
Before I come to my main point, I must say a word on behalf of my own City of Birmingham. There are a number 261 of members of the Birmingham City Council in this House, and other hon. Members have served on that body. I do not know whether they intend to voice the view of that municipality, but I could not let the House feel that Bradford was the only place in the country with strong views on this subject. At a recent jewellers' dinner the Lord Mayor of Birmingham was present with an array of Ministers of the Crown. They included the Home Secretary, the Attorney-General, the Parliamentary Secretary to the Board of Trade and Members of the House of Lords who belong to the Labour Party.
The Lord Mayor took the opportunity of saying some very hard words to them. He explained in no uncertain manner what the City of Birmingham thought of the scheme for taking over their municipal undertakings. Voices like that are quieter today. I do not know why. At that time the Lord Mayor was in an impartial position. Before that he was the leader of the Labour Party on the city council. He is now almost free from the ties of his impartial office and once more he is beginning to voice his own views. The Birmingham City Council feel very strongly that they are not being treated fairly. They think they know what is the best manner of dealing with a complicated local position in our city of a thousand trades, and they have developed their municipal undertaking for the benefit of the industry of the city. We all know what local pride is, and they are now very much concerned about their undertaking being taken away from them. They are also very concerned about the financial arrangements under which this is to be operated, and, rightly or wrongly, they think that this scheme is wrong.
I know the argument which the Minister will put up—that this is just a transfer from one public body to another and that it is all for the public good—but the city council do not feel that way at all, because in our city there is an immense amount of work yet to be done, and they feel that they have been sinking a lot of money in this undertaking whereas they might very well have spent it on some of the things that still remain to be undertaken. Birmingham is a very complicated city through which to drive a car, as most hon. Members who have been there will know, and when the centre of the city was constructed it was not built for the dense 262 volume of motor traffic which we have today. There are therefore such jobs like the building of ring roads and the taking over of properties both for widening and rebuilding, and there is an enormous expenditure entailed in all these things. Then, we have to rebuild the outer ring of slum property and complete the city centre, and that will take many millions. Hon. Members can imagine how our city council feel about this prospect, now that they have spent all these millions on industrial development, when other cities unlike us already have a modern city centre and fine wide roads because they, have spent their money thus. In contrast with them, we now find that we have to provide the extra money for doing these things which other people already possess. I must put this point to the House, because I dare not go back to the city and say I have not done so.
Now I come to the point which I want to make as a manufacturer about Clauses 1 and 2. These concern the Gas Council's powers to manufacture, sell and supply the equipment, plant and fittings. I am not arguing here on the question of distribution; other people on this side of the House, as well as on the other, will do that. I am concerned with the manufacture of the plant. The only limit which has been put on the Gas Council and the Area Boards is that they must not export the goods. They can make all this plant and these fittings which other people have done in the past. I want to tell the Minister that manufacture and distribution are two totally different problems.
The gas industry, like the rest of the chemical industry, has grown up and has been developed by trial and error through a great many years. It has not suddenly been created, but the Government seem to think that they can create these organisations by passing Acts of Parliament. We cannot create an industry which has contributed so much to the community in that way. The industry has to grow, and it grows from very small beginnings. Some people succeed, and others fail. This industry, which has been providing the plant, equipment and fittings, is now in jeopardy because the State is going to take over, or is taking the power to take over, the manufacture of this equipment.
263 I know we shall be told that there is no need for the people who are now manufacturing this plant to be downhearted, that they can still compete, and, if their goods are right and the best that can be produced, they will get the business, but, if the State is going to take all the bread-and-butter lines and leave to private enterprise only development and research, I can assure the right hon. Gentleman that there will be no research and development. We can only go into research and development when we base them on the full circle of manufacture. It is the bread-and-butter stuff which pays the rent, and, when we have a large output, we are able to devote a large amount of our income to research and development and to making new discoveries. Public bodies are not good hands at trial and error, and if I were sitting on a public board I do not think I should be. I do not think that I should want to admit in public all the mistakes that I had made. I sometimes tell my people not to mind admitting making a mistake, because I make mistakes myself and they are the ones that cost the money, but, fortunately, I have not got a committee sitting over me which can probe into my mistakes in the full daylight of every day. We make mistakes, we overcome them and we come out all right in the end, but a public body will not work on that principle, because their main object is to avoid making mistakes, and, if one does not make mistakes one does not make anything. I cannot blame civil servants for not wishing to be publicly chastised for making mistakes, and their first object therefore is not to make them.
If we are to have our equipment manufacture run by Area Boards, we are not going to have much risk-taking. We cannot imagine anyone going to the Treasury and saying, "I want £100,000 for a new development on which I am taking a chance." The Treasury protects our money, and the people asking for the money for development will have to answer to the Treasury for it. If we are to have these plants for the gas industry, I think we must leave them to the people who know how to do the job and who have developed it in the past. This is a nation which has made its way by adventure, and I want to see adventure still left open to people who will 264 take a chance. If we do not do that, there are other nations who will take the chances instead, and, therefore, I ask the Government, if they must take over distribution, not to interfere with or take over that part of the industry which is concerned with the manufacture of the plant.
As regards the fittings trade, I have been in touch with the people concerned during the weekend. They say that it is no good telling them that they can have the export business if the Government machine—the Area Boards—are going to make the fittings for the home trade. We cannot divide the export trade and the home trade and put them into two separate compartments. Our export trade in the past has largely been based on the excess over the home market, and we must get the full volume in order to do it. We can understand the people who are concerned with developing gas fittings being very much concerned when they see in this Bill power being given to the Area Boards to make their own gas fittings, while at the same time they are being told to go on increasing their output for the overseas market. Our only hope of getting the overseas trade is to have a run at the whole lot.
I, therefore, ask the Government Front Bench, when the reply to this Debate is made, to say something that will reassure our manufacturers that they will be given opportunities in the future to develop their industry as they have done so successfully in the past, and that our fittings manufacturers may be told that they will not have the basis of the export trade, which is the home market, run by somebody else and taken away from them.
§ 6.0 p.m.
§ Mr. Ernest Davies (Enfield)
The hon. Member for Edgbaston (Sir P. Bennett) took us first on a Cook's tour of his constituency, and ended by coming into conflict with one of his colleagues who is suggesting that, in the Financial Resolution, the amount of money to be put at the disposal of the Gas Council and the Area Boards should be cut down rather than that it should be left at their disposal for the purposes set out in the Resolution. He argued that Government Departments or public boards were not willing to take risks. But the record, so far as our nationalised industries, from the B.B.C. down, in regard to research and the 265 expenditure of public money on developments such as television, and, more recently, mechanisation in the coal mines, is certainly comparable with that of private enterprise.
Regarding the question of manufacture—the point on which he closed—the hon. Member argued that the export trade could not be divided from the home trade. He assumed that the home trade was going to be taken away from existing manufacturers and given to the public boards. I do not know for what reason he assumed that. Presumably, the Minister, or whoever winds up this Debate, will tell him what is intended as regards the use of the power given to the Gas Council and the Area Boards in respect to the manufacturing of plant and fittings. I should have thought that the reason why that power was included in the Bill was to enable the Boards to be protected, and to be in a position, if it was not possible for them to obtain the fittings they required at reasonable prices, to manufacture them for themselves.
I believe that, at the present time, very few gas companies are actually engaged in such manufacture. In other words, the power is included in the Bill largely for the purpose of acting as a yardstick for comparison with private enterprise. If, as the hon. Member for Edgbaston suggests, private enterprise is driven to sell overseas because of the competition from the public boards, then his opinion of private enterprise cannot be very high. I agree with him that it is just as well not to divide the export trade from the home trade. I would like to see removed from the Bill the prohibition on the manufacture for export which is at present imposed upon the Gas Council. I would much prefer them to be in a position to compete with private enterprise on equal terms.
I am sure that right hon. and hon. Members were delighted at the brief and rare visit to this House of the right hon. Member for Bournemouth (Mr. Bracken). It appears that he has returned from hibernating at Bournemouth, for a short period at least. I listened very carefully to his speech this afternoon, and to the many irrelevancies it contained. It did not appear to me that he succeeded either in demolishing the case for nationalisation made by my right hon. Friend the Minister of Fuel and Power, or in putting up 266 any alternative to the scheme of nationalisation now before the House. He suggested that the case of inefficiency was not proved, and that there was no reason for nationalising the industry. But if he had listened carefully to my right hon. Friend the Minister, he would have realised that no accusation of inefficiency was made against the gas industry.
What the right hon. Gentleman failed to do was to refer to the fact that there has not been a complete extension of gas supplies to rural areas. He also failed to refer to the discrepancies between prices in different areas, and to the other failures of the gas industry to develop in the way it would have been able to develop if, in the first place, it had not been hampered by so many statutory limitations, and, secondly, if it had integrated itself and formed itself into a far smaller number of units, and been able to operate on a larger scale.
Regarding the Bill itself, the right hon. Gentleman had very little to say indeed. He hardly dealt with it except in the one particular, that of the Gas Council itself. He attacked the Gas Council as being the puppets of the Minister because the chairman of the Area Board appointed by the Minister would serve on the Gas Council with the chairman and deputy-chairman of the Gas Council. As an alternative to these puppets, as he called them, he suggested that there should be Commissioners appointed by the Minister. What is the difference between Commissioners appointed by the Minister and members of the Area Boards and of the Gas Council appointed by the Minister?
§ Mr. Nigel Birch (Flint)
We want them appointed in the same way as the Electricity Commissioners are appointed by the Minister, on conditions laid down after consultation with the various bodies, and because they are people who know something about the industry and not merely because they happen to be politically desirable.
§ Mr. Ernest Davies
As the hon. Member is aware, in the Bill as it is now framed, there is a limitation on those whom the Minister shall appoint, and as to the field from which such people shall be drawn, both in regard to the Gas Council and the Area Boards. It is difficult to see the difference between the relationship which the Commissioners would bear to the Minister and that which 267 the members of the various boards would bear to him. I think that the administrative structure, as set out in the Bill, is a distinct advance on previous nationalisation Measures, inasmuch as it is on a federal basis, as the Minister pointed out this afternoon. There is the Gas Council at the centre with the Area Boards appointed for the 12 different regions. This federal structure enables a very large measure of decentralised administration to take place, and also a devolution of responsibility, which is so essential to the successful operation of any industry, whether it be privately or publicly operated.
If we have too centralised a Board, and if it operates as a centralised functional Board in particular, it is apt to create a certain amount of what may be called "vertical bureaucracy," because, in each area, from top to bottom, there is a vertical reference back from the bottom to the top, which delays the operations of the industry. By the definition in the Bill of the functions of the Gas Council, on the one hand, and by the persons who are to constitute the Council on the other, it is quite clear that it is the intention of the Minister that the Gas Council shall be a supervisory, policy-making and planning body, and not a functional and executive body. That, as I have said, is a distinct improvement upon the more centralised Boards which have, so far, ben set up in other nationalised industries and have operated on a functional basis. Regarding the Area Boards, if the policy of creating them largely as supervisory bodies and not on a functional executive basis is also accepted, they will be more efficient and successful in carrying out their tasks.
§ Mr. Scollan (Renfrew, Western)
Before my hon. Friend leaves that point, will he say from where he gets the idea that the Gas Council is a planning authority? There is nothing in the Bill to that effect.
§ Mr. Ernest Davies
The Gas Council is to advise the Minister and to assist in the efficient exercise by Area Boards of their functions, and one of those main functions will obviously be planning and the development of the industry.
There are one or two points which I would like to put to the Minister 268 on which I hope he will give further information when the reply is made to the Debate. In the first place, I would suggest that, in view of the fact that local authorities already carry out the supply and distribution of gas to the extent of one-third of the industry, so far as is possible these existing agencies should be used by the various Area Boards. It is true that we have to have complete integration and co-ordination of the industry, but if existing agencies can be used to the fullest extent possible I think we shall retain the link with the local community, and retain the good will and interest of the community which is being served, far better than by establishing larger bodies which become somewhat remote from the actual consumer and which are more likely to cause a certain amount of conflict with him.
I think there is in a larger body a great deal of danger that the community will feel increasingly that it is a remote body which becomes impersonal and lacks local knowledge. The use of existing agencies is something which, I think, public enterprise should do. If not, it will mean that the consultative councils, which are being set up, instead of working in harmony with and supplementing the public Boards, will be inclined to be antagonistic and to work in disharmony, which is something we want to avoid.
On this matter of consumers' consultative councils, I would like to suggest to the Minister that there should be urgency in setting them up. I say that because it seems to me that there is inclined to be a gap between the vesting date, the day on which the industry is taken over by public enterprise, and the setting up of the consultative councils. That gap is not covered by the Minister, because the Minister refuses to take responsibility on matters of detail—which is quite right so far as detail is concerned. It means that the consumer is temporarily unprotected, and I would urge upon the Minister that when he is considering the setting up of the Gas Council and the Area Boards he should also be working to set up the consultative councils so they could come into operation, if not at the same time, then with as short gap as possible. That, of course, has not been done in the existing nationalised industries.
269 A further point I would like to make on consultative councils is this. They seem to be rather on the large side—from 20 to 30 members—and, further, the chairman is to be appointed by the Minister. When the personnel of these consular consultative councils is largely to be drawn from nominations made by local authorities, I cannot see why those persons who are nominated and appointed to the councils cannot elect their own chairman. I should have thought that if the chairman of this council was elected by the members, it would have been felt that there was a closer relationship between the Area Board and the consumer than will be the case if the chairman of the consultative council, who is to serve on the Area Board, is appointed by the Minister and not by those persons whom he represents.
The Minister referred to the fact that if consumer councils make representations to him, after they have consulted with the Area Board, and if he considers there is a defect in the machinery of the Area Board, he will refer the matter to a third party and will then have the choice of either carrying out what the third party recommends or not. When matters come from the consumer, after being dealt with by the consultative council and the Area Board, and reach the Minister, I cannot see what advantage there is in the Minister going into this machinery of delay to prevent the representations being dealt with on the spot, or speedily, especially when it still remains his choice whether or not he shall carry out the recommendations of the third party.
These consumer councils, important as they are, and important though it is that they should be set up speedily, as I have suggested, cannot in any way become a substitute for Ministerial responsibility. They should deal with local matters, with matters of day-to-day operation as they affect the consumer in the locality, and it is agreeable to see that there is provision made for small committees to be set up or for representatives to be appointed for every locality which is served by gas. Having dealt with local affairs, and having acted, as it were, as a buffer between the Board and the Minister and as a channel for representation, the consumer councils will not be dealing with matters of policy or with matters of general national interest, which remain the Minister's responsibility.
270 I think the disputes we have had in this House recently over the extent of Ministerial responsibility would largely have been avoided if there had been these consumer councils set up at the same time as the Boards themselves. In such cases, it would not have been necessary for Members of Parliament to put down Questions on day-to-day operations, questions of detail, and presumably hon. Members would have been concerned only with putting down Questions on much larger issues. It would then, perhaps, have been easier for the Minister to decide which Questions it was correct for him to answer, or where to assume his responsibility to this House. But, as the Minister himself said this afternoon, there is no difference between the wording of Clause 7 of this Bill, defining his responsibilities to the Gas Council and to the Area Boards, and the wording in other nationalisation Measures. Clause 7 reads:The Minister may give to Area Boards generally or to a particular Area Board or to the Gas Council such directions of a general character as to the exercise and performance by those Boards or that Board or the Gas Council of their functions as appear to the Minister to be requisite in the national interest, and they shall give effect to any such directions.In Questions which have been put in this House to the Minister in connection with the Coal Board, and more particularly to the Minister of Transport regarding the transport industry, I think there has been too narrow an interpretation of that wording. The Minister has not interpreted the wording sufficiently liberally in regard to the responsibility which he has accepted.
I know it is extremely difficult to draw a line of demarcation between what is considered day-to-day operations—matters of detail—and matters of national interest, of planning, general policy and so forth. I think the interpretation has been too narrow when Ministers—as they have done—have swept aside everything except the very largest issues—even matters which affect a large section of the community and would normally be considered by the ordinary Member as a matter of national interest affecting it. I know the Minister will exercise a measure of control over policy in the gas industry and I hope consequently he will answer to this House to that measure of control. We all know there are informal conferences, if not 271 formal conferences, between Ministers responsible for nationalised industries and those people who are operating them at the present time.
We know the Minister is having an influence upon policies which are being carried out by the boards of nationalised industries. If he is doing so, if he is meeting those boards and influencing their policies, he is acting for this House in the matter, and he should answer to this House for the policies which he is discussing and deciding upon with the boards. In the second place, he should act as the mouthpiece for the boards to this House. Further, he should be willing to serve as a channel of communication for representations from Members of the House to the boards, if he does not accept the responsibility of taking any action in a matter which is raised. Hon. Members expect—and rightly expect—their right to question the Minister in the House and to protect the public interest to be preserved.
It may be argued that the wording of Clause 7 is too general to enable a liberal interpretation to be made of the Minister's responsibilities to this House. If that is so I suggest that the wording of the Clause should be changed so that we know exactly what the Minister's responsibilities are. I therefore, ask the Minister, if he does not think the Clause as worded now gives him the responsibility to act as the mouthpiece of the House to the Area Boards and the Gas Council, and to accept Questions from Members on anything concerning general matters, to consider leaving out the words "of a general character," so that the Clause will read:The Minister may give to Area Boards generally or to a particular Area Board or to the Gas Council such directions as to the exercise and performance by those Boards or that Board or the Gas Council of their functions as appear to the Minister to be requisite in the national interest.If the Clause were amended in such a way it would become quite clear that the Minister could give directions where the national interest is affected. We should thus remove words which could be used as a cloak of his responsibilities. I suggest to the Minister that Members of the House have a right to know, while this Bill, is going through the House, exactly the extent of his responsibilities, 272 and the extent to which he will be willing to accept those responsibilities in this House and to answer for the conduct of the nationalised industry. One of the main advantages of a nationalised industry is that of public accountability; and if we do not have that public accountability, we are in a worse position with regard to nationalised industries than we are with regard to private enterprise.
§ Mr. Orr-Ewing (Weston-super-Mare)
The hon. Gentleman said that the Minister, in giving directions, acts on behalf of this House. Surely, he means that the Minister is acting on behalf of the Government which is a very different thing from having responsibility to the House? I hope he means that.
§ Mr. Ernest Davies
Yes, I certainly mean that he would be acting on behalf of the Government as a Member of the Government; but if the Minister acts for the Government he is responsible to this House, since the Government are responsible to this House.
On the question of compensation, I regret in some ways that the Minister has followed the precedent set in the case of the transport industry and followed in the electricity industry, of taking the Stock Exchange values as the basis of compensation. In the case of the nationalisation of the railways under the Transport Act, it was a rough and ready way of assessing compensation. In my view, in the last resort it turned out to be a very generous basis on which to do it. Stock Exchange values can be criticised on a large number of grounds. They lead to anomalies, particularly as between one class of shareholder and another. They are no real test of values, either on an earnings basis or on an assets basis, though on the whole they favour earnings, which may be high for quite unsocial reasons. In the long resort they result in unnecessarily generous treatment, because the Stock Exchange value is apt to be an optimistic prophet. It is a poor prophet, but generally it is an optimistic one.
§ Mr. I. J. Pitman (Bath)
Is the hon. Gentleman aware that the dividends are controlled very vigorously and have a ceiling? The argument he is advancing does not seem to me to apply.
§ Mr. Ernest Davies
It is perfectly true that the dividends in the case of statutory 273 gas undertakings are controlled to a very large extent, but that does not alter the fact that the value of Stock Exchange shares does depend upon future prospects, and on the general view of the future of the industry, that is taken by investors at any particular time. However, I do not want to pursue this matter to any length.
I do, however, want to suggest that in the case of the gas industry, that, because of the fact that the Area Boards are to become responsible for the capital burden which will be imposed upon the Boards—the capital burden created by the distribution of the compensation stock—the burden will be unequal as between Area Boards; that the total stock from one area to another will vary when compared measured on a comparable basis of production, and so forth; and that, as a consequence, the uneven costs and consequent charges in those areas, differing from area to area, will be perpetuated. If the basis in the case of the coalmining industry had been followed, and a global sum had been determined, and apportioned between the different districts, and if each district became responsible on a comparable basis, there would be a greater possibility of a more equal cost for the production of gas throughout the country and, consequently, greater equality in charging. It seems to me that the present discrepancies between areas will be largely perpetuated.
To conclude, I would say that this Bill is a distinct advance on the other nationalisation Measures which we have had up to the present time; that it is an imaginative Bill; that the Minister has shown imagination in framing it; and I hope he will show equal imagination in carrying it through. I suggest that he should so proceed with the appointments of the consultative councils in the very early stages of the operation of the Bill when it becomes an Act, that we can have a real measure of consumer control and democratisation of this industry from the beginning. Further, I suggest that in his appointments of the boards he uses a little more imagination than has been used in some cases in appointments to existing boards; that he does not draw overmuch upon displaced directors of private companies, and that he does not follow necessarily the precedents of the high salaries which, in a great number of cases, have been paid. 274 I wish the Minister success in carrying through this Measure. If he uses a little more imagination, and if he succeeds in democratising this industry, he will be more successful in the earlier stages with gas nationalisation. It will be another step towards socialisation in Britain.
§ 6.30 p.m.
§ Mr. I. J. Pitman (Bath)
As an about to be displaced company director, in the words of the hon. Member for Enfield (Mr. Ernest Davies), I not only salute you, Mr. Speaker, him and the House, but I crave indulgence for declaring an interest. When talking on nationalisation it seems to be my fate to have an interest to declare. In the case of the Bank of England I foretold that it would be for my financial advantage, at any rate in the short view, and I said that my opposition was both sincere and disinterested. I do not know what my advantage will be in this case—I will not prophesy—but my opposition is equally very forceful and very sincere.
I should like to speak from the organisational angle. I am sorry that the Lord President of the Council is not here, for he is very interested in organisation and is a great expert in it. Since it was the Coalition Government which appointed the Heyworth Committee, I am sure he would not deny that all sides are agreed that a Bill and action for dealing with the gas industry is highly desirable. The question is only, organisationally what is the best action to take in that respect?
I propose to deal with the problem under four headings: first, interest rates; secondly, integration; thirdly, identification of interest of the employee in his employment; and fourthly, the point that only a single unit can give effective control and co-ordination. I have taken those four headings because I believe them to be the only four points which are claimed as the advantage in nationalisation over any other form of organisation. I shall seek to show in each one of those that there is an alternative way, that nationalisation is not the only means of achieving what is desired, and that there are other and better ways.
First, interest rates. I put that first because I believe people do not appreciate sufficiently that, hidden below the nationalisation arguments is the fact that 275 after nationalisation the nationalised industry will be operating at an advantage in relation to its operation before, by reason of the fact that the interest rates will be less. The Railway Executive, in comparison with the old boards, will have an initial and great advantage in having to meet less charges for interest before they meet their expenses. Inherent in the claim for nationalisation always is this advantage of lower interest rates; but that is not an advantage so far as the nation is concerned; it is purely a transfer from one pocket to the other.
We on this side of the House say that, if it is desired to redistribute the national income, then Income Tax, Surtax and Estate Duties are far better means than nationalisation. Moreover, if it is desired to do that by reducing interest charges we say that there is no need to go to the lengths of nationalisation to achieve that end. It can be achieved by the very brilliant proposal of Geoffrey Heyworth, in the report of whose Committee it is suggested that we should not only limit the interest rates paid out, but guarantee them—let no company pay more, but let it be certain of paying that and give it freedom to conduct its affairs on the strength of the limitation. We are constantly accused of not making practical suggestions. As an alternative to nationalisation, I make the practical suggestion, and one which will give the benefit of lower interest rates, that is to say that the brilliant recommendation of the Heyworth Committee should be carried out.
Now let me deal with integration. That, of course, has been going on steadily and selectively. Wherever there has been a case for integration it has steadily been taking place; but by overcoming all the barriers to integration which the cumbersome and expensive procedure of proceeding by Act of Parliament in this House has imposed. In 1943, the National Gas Council, as the Minister said, recommended that integration was desirable. Similarly, that came out clearly in paragraph 230 of the Heyworth Committee Report, which the Minister quoted. It is something which stands out as an obvious requirement of the gas industry. However, there is no need to have national ownership and nationalisation to achieve integration. Integration has been going on naturally. 276 Not only is nationalisation not necessary for integration, but integration can be achieved either on the Heyworth Committee lines or on the National Gas Council lines of 1943.
Again, if the Minister wants a further practical proposition, let him create, or take powers to create, in every gas company of the country and on every council a share or seat having no other rights, but having voting rights equal to 50 per cent. of existing votes. Then let him see whether there is obstruction to intelligent integration. There is less obstruction than he thinks, but if there is any let him deal with it as a matter of personnel selection in the selection of the board concerned. He will find that he will never have to use those voting rights.
My third point is in connection with the claim that, because of the identity of interest between employee and the State as employer, under nationalisation there are better working results. We, on our side, prefer profit sharing and co-partnership as a means of achieving better working results. The Minister is not here, so possibly I may use the word "basic." The basic price company—of which the Bath Gas Company, of which I am a director, is an outstanding example of efficiency—is a fine system of profit sharing and of copartnership. A "bogey" is set by the Minister for the price of gas, and if management and workers together can save on that bogey, then the consumer has to get one-third by reduction of price, the stockholder one-third by a slight increase above the already limited dividend, and the work people get the other one-third in a payment. Now half of that payment is used towards the issue of stock which the workers themselves hold. I can assure the hon. Member for Brigg (Mr. Williamson) that there is no under-cutting of rates of wages on that system. Moreover there is nothing like the holding of shares in a company to identify the worker with the enterprise.
Does nationalisation really identify the worker with his property? I wish to quote from a speech of the hon. Member for West Middlesbrough (Mr. Cooper) speaking in this House on 22nd July last, in the Adjournment Debate on organisation in nationalised industries. He is extremely interested in and good at organisation, like the Lord President. He was speaking of what he had found out 277 from talking to bus conductors about nationalised industries:The opinion of the public, as yet, is such that they do not feel that sense of enthusiasm they should feel for an industry which is publicly owned."As yet." How long has the Post Office been going? Is it really true that the Post Office worker has "that enthusiasm for public ownership" which he certainly has had time to develop and is his interest likely to be in any way comparable with that under a genuine profit sharing and co-partnership scheme? Later on, the hon. Member says:If any Member of this House were to ask of anyone employed in a nationalised industry the question 'What does nationalisation mean to you compared with the previous conditions under which you worked?' I think he would find that the chief reaction was a sense of dissatisfaction and discontent."—[OFFICIAL REPORT, 22nd July, 1947; Vol. 440, C. 1180, 1185.]I believe that what he said is true. This alleged identification of interest because of nationalisation is something upon which this House will be very unwise to build.
My fourth point is on this question of central control through a single unit. The hon. Member for Enfield has shown how hon. Members opposite are trying to have it both ways. Some of them are saying that the chief point of nationalisation is that it gives central, unified co-ordination and control, so that the Minister can say to a gasworks that it shall take its coal from such and such a person and shall charge its consumers so much. They definitely want central control, and the fullest possible co-ordination and control by imposed central authority. Others are running away from that idea and saying that nationalisation is not going to work in that way. They are saying there must be decentralisation, and that direction should scarcely be used at all. Hon. Members opposite must make up their minds. They are like the drunken man wanting to know which of the two next public houses shall be his next port of call, who slithers from one to the other because he is unable to make up his mind. Meanwhile we are justified in taking it that they really mean Socialism. We are justified in taking it that they mean to direct and control from the centre, and I shall therefore deal with the matter from that aspect.
Now there can be central direction and control only by creating a big central 278 organisation, with central buildings and a large staff. Both have to be paid for, and the question arises—and this is an organisational problem—whether from that extra expenditure we shall get anything worth while. All I will say in reply is that size is seldom an advantage and that one of the curious effects of bringing into force the anti-Sherman trust laws in America, was that when the big units with central buildings and inflated centralised staffs were not allowed to have them but had to carry on with 48 businesses in the 48 States, their profits went up. The profits went up not solely because of the saving in head office expenses, but also because the smaller units did a much better and cheaper job.
If there is one thing I blame the Minister for, it is for having given this House no time to discuss the Heyworth Report. I do not think any major issue of this kind has ever been approached so needlessly without the preliminary discussions which might have taken place. The big difference between the Heyworth Report and this Bill is that this Bill is proposing one central unit to cover the whole of Britain as the ultimate administrative head. On the other hand, the Heyworth Report lays down 10 million therms, or 2,000 million cubic feet, as the optimum above which efficiency in operation tends to degenerate or at least not to improve. Ten million therms is, roughly speaking 1/215th of the total production covered in this Bill. We on this side should definitely say that the effective organisation for the gas industry in this country is one of a 100 or 200 units, run under independent responsibility, and with central direction of only policy and of top personnel selection.
The final indictment of central control is the inevitability of national "salary scales." The hon. Member for Brigg (Mr. Williamson) said a lot of sensible things. One thing which is clear, is that if this industry is nationalised, there will inevitably have to be "salary scales" for the whole of Britain. There will be the same rate of pay for the job, and in order to get any increases it will be necessary to go to the Chancellor of the Exchequer. That is inescapable with central control residing in this House. I ask Members opposite to realise that this issue of centralised control inevitably means that each wage increase has to be negotiated on a 279 national scale, costing millions of the taxpayers' money, and that all the progress which has in the past been achieved by little incursions into the compliance of one small individual employer will, in future, be denied to the trade union movement.
Finally, I wish to make clear three points of principle. If we had had our way, it is pretty certain that we should, whatever the organisation, have fostered competition by putting gas, electricity, coal and coke under separate Ministries, rather than under one Minister who is put into the position of being able to say, if there is any trouble with gas in any particular area, that the complaining consumer will have to take coke or electricity, or some other fuel which he controls. Secondly, local councillors and local gas directors have done astonishingly good work in the past, and it is of enormous value that they should be allowed to continue to render their services, as they are more responsive to the local people than a Minister, who does not act until we put down a Question in this House, or write a letter to him, which, incidentally, obtains its effectiveness only by virtue of the fact that the Member could have raised the matter by a Question. Both sides will thus agree not only on the question of competition, but also on the question of local men being retained.
There must be an end to the hampering restrictions which have kept down the gas industry. There have been 2,100 Acts, and there have been throttling limitations and restrictions at all stages. All this should be done away with. We on our side should certainly do that, and we should see that no one was exploited, and we should have the dividend limitation which I am advocating. On what would have been my fourth point, I was delighted to hear that the Minister was at variance with the hon. Member for Enfield. The Minister has turned his back on a socialised gas industry. He wants the charge to be in relation to the cost, and not a "socialised" charge like the 2½d. stamp. He wants recovery of cost and variations in charges not a standard charge which is universal, which, as I understand it, is what the hon. Member for Enfield is recommending. It will no longer be possible for the Lord President to claim that this is not so much a nationalised as a socialised industry. 280 He may be able to say that it is nationally owned, but after what the Minister has said, this will be the end to any question of a socialised industry, and I am very glad of it. I am glad because a socialised industry, particularly socialised gas and electricity, merely means that we are subsidising the landlord at the expense of even the poorest.
Finally, this Bill is bad, because whereas the situation is one which calls for greater freedom, the Bill substitutes different and, I suspect, more onerous shackles on an industry for which the real problem is to loose its existing ones.
§ 6.50 p.m.
§ Mr. Pargiter (Spelthorne)
This Bill can be regarded as the logical conclusion of the Government's intention to nationalise the fuel and power industries of this country in the interests of all types of consumers. In considering this Measure, we must take into consideration the past history of the gas industry, in which there have been many small and inefficient plants which have wasted both heat and valuable by-products. That is the picture at one end; at the other, there is the picture of the large holding companies, divorced from the actual production of gas, and looking at the business purely in terms of stock values and dividends. Between these extremes there has been a large number of local authority undertakings which should now be integrated into one system. I hope the time will come when the coal, electricity and gas industries will be integrated to a far greater extent than is envisaged today. In the production of gas there has always been a great deal of waste heat which ought to have been applied to some other form of power production, and there should be some integration of gas and electricity production, if only to secure the most efficient use of the fuel which is supplied to those industries.
One of the aspects of the Bill I would like to talk about in particular is gas examination and gas meter testing, which are dealt with in Clauses 51 and 52. I have never been in favour either of individuals or organisations being judges in their own case. It seems to me that the proposal of the Bill to take away safeguards which were thought to be necessary previously—that gas meter testing and gas examination should be the responsibility of the local authority—should be 281 reconsidered. I am not suggesting that all local authorities operated efficiently, but I know one or two which were very efficient. I have always looked upon a person who appoints someone else as being responsible, and I doubt whether the person below that level is really impartial. I therefore hope that the Minister will consider whether it is possible to devise means by which local authorities will accept the responsibility which they have had in the past, so that consumers may be sure that whatever test is applied it will not necessarily be a test in which the Minister is judge in his own case. It is very necessary that there should be some impartiality in this matter because of the great variations there can be in the quality of gas. That is due to the different ways in which gas can be produced. Great care must be taken in its examination to ensure the proper pressure of gas in the mains at all times.
One point on which the Bill is silent, and about which many local authorities will be concerned, is the question of payment in lieu of rates. In view of the legal decision about this matter in the case of the transport and electricity industries, will a similar provision be made for the gas industry? If so, we ought to know what the provision will be, because it was found necessary considerably to alter the original proposal in connection with other undertakings. If a similar provision follows here, I think it will be subject to a good deal of discussion and anxiety on the part of local authorities. I am aware, of course, of the complicated system of rating which is applied to the gas industry, and of the direct and indirect production figures which make up the accounts of gas undertakings. While I have not the least objection to this complicated procedure being ironed out, local authorities will wish to know what provision will be made for them in connection with this matter. I welcome this Bill; I hope it will be the forerunner of the proper co-ordination of power supplies of this country. It is long overdue. The Heyworth Committee reported that some form of integration was absolutely necessary, and that they could see no alternative to public ownership—
§ Mr. Pitman
Is not that going too far? The Heyworth Committee clearly said that integration was desirable, but they 282 did not proceed to the next stage, which the hon. Gentleman has just mentioned.
§ Mr. Pargiter
They said that they were unable to see any alternative to public ownership, allied to increased powers to meet the need. That, to my simple mind, implies nationalisation. This bold Measure is designed to complete the cycle which the Government have put into operation. I hope the industry will go on to more efficient standards. We have heard about the freedom of choice as between electricity and gas. That will be made more readily available as a result of this Bill, and the conservation of our main asset, coal, will be enhanced. In addition to increasing supplies of gas and electrical power, industrialists and private consumers will reap the advantages of a non-profit-making undertaking.
§ 6.59 p.m.
§ Mr. Norman Bower (Harrow, West)
The hon. Member for Spelthorne (Mr. Pargiter) referred to the Heyworth Committee which, he said, recommended public ownership of the gas industry. I would put it to him that their Report was based almost entirely on the supposition that competition between gas and electricity would continue, and was drawn up before there was any prospect at all of the electricity industry being nationalised. Now that the electricity industry has been nationalised, and there will no longer be competition between the two industries, we are entitled to assume that the whole basis of the Heyworth Committee's Report has been automatically destroyed.
§ Mr. Pargiter
Surely the basis of that Report was that there should be public ownership of the industry.
§ Mr. Bower
I will not go into all the detailed arguments now, except to say that the Heyworth Committee made it clear, in summing up their recommendations, that they regarded it as most important that there should be competition between gas and electricity. They assumed that the electricity industry would remain under its ownership as it then existed. That is no longer the case. Nothing that has been said so far in this Debate by hon. Members opposite has convinced me that the Government have adopted a wise course, even from the standpoint of their own tactical position 283 in introducing this Bill at the present time. The Minister said that he took the view that because coal and electricity had already been nationalised it was, therefore, a good thing that gas should be nationalised as well. He went on to say that he did not regard that as being a good thing from any doctrinaire standpoint. Despite the Minister's personal statement on that point, I am drawn to the conclusion, by the statements from other hon. Members of his party, and by the fact that the Government have introduced this Bill at this stage, that what they really desire is a nice big, tidy monopoly, with nothing left outside that can spoil the picture, or create an unsymmetrical effect, or constitute a source of difficulty or inconvenience in the future.
I submit that is a very good reason why gas should not be nationalised at the present time. [An HON MEMBER: "Why?"] I will try to explain. Reference has been made by the right hon. Member for Bournemouth (Mr. Bracken) to the statement of the Lord President of the Council that the nationalisers must prove their case. What better method could be devised of letting the nationalisers prove their case than to allow electricity and gas, the one publicly-owned and the other privately or municipally-owned, to operate side by side in fields more or less comparable, so that the relative advantages and disadvantages of each method of ownership and operation can be easily seen and assessed?
§ Mr. John R. Thomas (Dover)
Surely, the hon. Gentleman is not putting the argument that, in order to compare the advantages or disadvantages of nationalisation, he would make a comparison between two different industries? Surely, there can be no comparison?
§ Mr. Bower
I am suggesting precisely that in this case. I suggest that in services such as gas and electricity, which convey more or less the same commodity, and operate in fields more or less comparable, a comparison could very easily be made. The fact that they have always been in competition should make it easy to assess the relative advantages and disadvantages of two methods of ownership by comparing the publicly-owned and the privately-or municipally-owned. If the nationalisers want to prove their case, that is what they should allow to happen. If, after a 284 reasonable period of time, the alleged advantages of the publicly-owned industry were proved up to the hilt, that would be the time for the Government to introduce this Bill, and criticism from this side of the House would be very largely disarmed. By introducing the Bill now, the Government are deliberately depriving the people of the best opportunity of judging the issue dispassionately and of making a fair comparison between the respective merits of public and private ownership.
The Minister of Health said recently, in making one of his more profound but possibly less guarded remarks, that "bigness is usually the enemy of humanity." That is a statement with which I agree. This is a case in point. By setting up this joint monopoly, the Government are doing all they can to ensure that in this country henceforth the administration of the provision of fuel and power will be neither efficient nor humane. All the evidence that we have today from the replies which people receive to their complaints about the poor quality of the coal they are getting go to show that the consumer is receiving scant consideration, and there is nothing in the Bill to indicate, except in the most general terms in the Clauses applying to the consumers' councils, that the needs of the consumer are likely to be adequately safeguarded. All the safeguards which the individual consumer derives from the existence of competition—and I submit that they are the surest and most effective safeguards yet devised—are being ruthlessly swept away.
I want to say a word with reference to compensation, particularly as it concerns the stockholders in the gas companies. I submit that to take the Stock Exchange prices, either actual or notional, is more unfair in the case of gas than in the case of electricity or the railways. It is well known that gas stocks are, for the most part, very tightly held, much more so than in either of the two other cases I have mentioned. That means that the holders retain them for long periods of time and rarely part with them.
§ Mr. Ernest Davies
If they are tightly held and there is a demand for them, would not that mean that the price was certain to be higher owing to supply and demand?
§ Mr. Bower
Not necessarily. If there is a small market, that does not necessarily mean that the price is artificially high. The fact that there are one or two sellers on a particular day willing to sell their shares, possibly to raise money for some special purpose, such as the payment of Death Duties, to one or two buyers, at a certain price, means nothing at all, because the vast majority of those holders are unwilling to sell. They do not want to sell on the dates mentioned in the Bill, and they do not want to do so now.
If the Government, or anyone else, had gone into the market to try to buy up all the holdings in order to secure control of the undertakings they would, by this method, have had to pay a higher price than that quoted on the Stock Exchange at any particular date. The reason for that is, not that they were necessarily worth very much higher prices on the basis of the dividends then being paid, or now being paid, but because the holders consider that their shares represent solid and valuable assets in going concerns in which they are anxious to retain their interest; and because it offers them virtual continuing security of income to which they attach great importance. I submit that the only fair method of compensating these people is to say that expectation of income is not the arbitrary thing that it will be if this method of compensation is adopted.
There is no evidence that this Bill is likely to benefit the public or that it is desired by the employees of the undertakings, which was, of course, the argument used with considerable effect in the case of coal. Not only will the employees lose money on their co-partnership rights, which is likely to be a source of considerable irritation, and thereby possibly a danger to the public, but no one can pretend that the psychological element arising out of years of bitterness and strife, which played such a large part in the demand for the nationalisation of coal, is in any way present in the case of gas, where, as has already been pointed out, with minor exceptions the most harmonious relations have prevailed for a great number of years.
Finally, I oppose this Bill because it makes no contribution whatever to the solution of the grave economic problems which are at present facing this country and which are becoming more formidable 286 every day. On the contrary, by causing further dislocation and throwing still further and heavier burdens on to the Civil Service, it is calculated only to impede and retard the process of recovery.
§ 7.10 p.m.
§ Mr. A. Edward Davies (Burslem)
I want to say a few words on this Bill, because it has such a vital effect on the industry in the district which I represent, namely, the pottery industry in North Staffordshire. Generally over the last decade or 20 years there has been an increasing interest in and dependence on gas for the firing of this type of work. In North Staffordshire we are most concerned, because great progress has been made in this new method of firing our wares and it has given us very excellent results.
Gas, as opposed to the use of raw coal, gives us less smoke, less manual labour, greater precision in obtaining results, and generally leads to more scientific treatment. Moreover, we are not unaware of the great economy to the country and to the district as a result of the use of gas as opposed to raw fuel. I have some interesting figures which were given to me a few days ago by one of our eminent gas engineers. He said that if a ton of fuel were made available at one of our potteries for the firing of our china and earthenware, and we were to compare it with what would be done by the same amount of fuel where the gas process is brought into play, we should find that we would get the same work done but in the latter case at the end we should have 10 cwt. of coke, three gallons of benzol and 15 gallons of tar. These are very considerable items.
I have already mentioned the great advantage which comes from the removal of smoke in an area like North Staffordshire, and in South Staffordshire, which is known as the Black Country, there is considerable interest in that aspect of our social life. Anything which will do something to let us have more sunshine should be encouraged with all our strength. The local authority, which is the main producer of gas in Stoke-on-Trent and in North Staffordshire, is concerned that there should not be any interference with the supply of gas for the firing of china and earthenware. A great deal of work has already been done and a great deal of success has been achieved. Already 120 ovens depend upon gas for their firing and a large number of others are to be 287 converted. I suppose there must be some further 300 or 400 ovens which can be fired by gas, and if the comparative details which I have given the House as to the use of raw material and gas are true, as I believe they are, it will be generally agreed that every encouragement should be given to the use of gas in the ovens for the firing of china and earthenware.
Under this new set-up, we in North Staffordshire are going to be part of one of those large areas. We shall be under the West Midland region, and what we want to know is whether we can count on that intimacy between established pottery manufacturer and the man interested in light engineering and depending on gas for his business. Such has been the case in the past. We have been excellently served. We in North Staffordshire will be part of an area which will probably have its headquarters in Birmingham. If that is so, the House will see the basis of our apprehensions, and I am wondering whether the Area Board composed of half-a-dozen or eight or nine persons is to be further broken down.
In the first place, I should like to ask the Minister how he is to choose the members of the Area Boards. Who will nominate these people, if anybody? Are the local authorities being considered? Has any consideration been given to the size or the interests of the areas involved? What we want—and it is the same problem as that which was exercising the mind of the hon. Member for Bath (Mr. Pitman)—is something of the personal touch in these undertakings. The hon. Member for Bath expressed the fear that where there was centralisation and great grouping there would be an absence of the personal touch, and he added that among workers there was a sense of frustration; there was not that easy access between the small firm and the centralised Board, nor that intimacy between the employer and the workpeople. That is not peculiar to socialised undertakings but is a feature of all large-scale monopolies and combines.
What I have said is a fair statement of the position, and it is exercising the minds of Members on these benches no less than the minds of hon. Gentlemen opposite. We are most anxious that this personal touch should be conserved, that 288 the needs of the locality should be understood and that there should be redress of grievances where they arise. We are told that in this Bill provision is made for consumers councils, but I wonder how effective they will be? I notice there is to be some special provision for the consumers in the districts to make their voice heard. Take the West Midland area, which is like any of the other areas in the country. It is a huge area in terms of physical space. What is happening in Birmingham is of very little concern to the people at the other end of the area.
What we have to make sure is that there is some kind of intimate understanding of our problem and some kind of access to the people who are responsible. We do not want to be trooping from one end of the county to the other, or into a neighbouring county, to have some day-to-day details attended to. While I support this Bill, what I am saying is a useful comment on it, and it is the desire of the Government and of the Minister that we should be aware of these things and do what we can to conserve that intimacy and extend it.
I wonder whether there is to be any further breakdown of the Area Boards. Could we not have some people in an area like North Staffordshire considering the problems of that area, not working against the interest of the region as such, but comparing its day-to-day problems with those of the people in the immediate neighbourhood as well as submitting proposals to the region? We do not want our engineers, scientists and commercial people to spend their time journeying from one area to another.
I join with other hon. Members in expressing our appreciation to the members of the local authorities who have served on the gas committees and, in my opinion, have done an excellent job of work. I know that has been the case in my own area, and I know that what has happened there has happened elsewhere. We have been well served by the permanent officials, too, and we ought to give them confidence in this undertaking and give them that interest which the hon. Member for Bath was seeking in this new undertaking. It can best be done along the lines I have indicated. Let them know that they will have some latitude in which to work, that their views will be heard and that the executive action will not be 289 a matter for the Boards. Policy is certainly a matter for the Boards, but day-to-day administration must be in the hands of the executives who have served us so well. That is not to say that we should not safeguard the interests of the ordinary man in the industry, from the labourer right up through the industry.
The hon. Member for Brigg (Mr. Williamson) was right when he said that much good work has been done by the gas workers. I believe they have been one of the most neglected sections of industry in this country. While we know that the problems which face the country at present are very difficult and we are asked to restrain ourselves, I do not accept the view that the Government's intention is that wages should be frozen with all the anomalies which exist at present. Indeed, they have said that if there is some kind of anomaly or inadequacy which calls for attention and redress, they will listen to the matter. Here is a case where they will have to listen if there is to be harmony in the industry.
I wish the Bill well in its passage through its various stages. I listened with great enjoyment to the Minister expounding the various Clauses and adducing his arguments. I think he did well, in spite of some of the difficulties and fears I have expressed. I feel we have a chance before us to build up this industry which has a long tradition and which has done good work but which, in the nature of things has to be adapted to larger units. That can best be worked out in relation to the other aspects of the fuel and power industry—coal and electricity.
§ 7.24 p.m.
§ Mr. Hugh Fraser (Stone)
I am fully in accord with the hon. Member for Burslem (Mr. Edward Davies) in at least the first part of his speech. As representing a North Staffordshire constituency, I will carry my accord into the Lobby against this Bill. I must confess that the introduction given to this Bill by the Minister of Fuel and Power seemed to lack both heat and light. We on this side of the House expected that when producing one of their nationalisation Measures the Government would at least hold out to the public some hope of great progress. There was very little of that except in the last few moments of the Minister's speech when he talked about correlation, became slightly confused on the topic of 290 the co-ordination of electricity and gas—in France where that has happened a loss of 18 milliards of francs has been reported—and lightly skimmed over that. It was in a slightly dimmed blaze that the Minister made his chief point, which was that integration was to be achieved and could only be achieved by nationalisation. It has been clearly demonstrated by the right hon. Member for Bournemouth (Mr. Bracken) and the hon. Member for Bath (Mr. Pitman) that there are other methods of achieving integration.
It has also been pointed out from this side of the House that much more is at issue than a matter merely of a few million cubic feet of gas or a few million therms. There are enormous possibilities of development in this industry; that is what the country as a whole is interested to know about and that is what it has failed to hear about from the Minister. His great claim was that this Bill offers a successful hope of integration. He has claimed that it is a federal principle, as though he were a Hamilton engaged in a mortal duel with an Aaron Burr. That analogy might be carried further, for it was Hamilton that died.
Is that regionalisation or federalisation—whatever the right hon. Gentleman likes to call it—the same thing as integration? It has been demonstrated by the hon. Member for Bath that that is not necessarily so. The Heyworth Report pointed out that the unit envisaged is too big. There is a grave danger that these so-called units of integration, these Boards, will merely mean that all gas holdings in an area cease to be privately or municipally held and are merely held in the name of the Area Boards and that no physical integration of any sort occurs. The point of the Hon. Member for Burslem was that the people of Stoke-on-Trent would be gravely embarrassed by such a future. He pointed out that municipal undertakings at the moment have a very intimate and close relationship between their business executive and persons employed in various trades in their districts.
In the case of the large-scale areas, the question of integration is not in the least clear. The only moment when the Minister's speech flew up to a fairly grandiose level was when he was talking about the national gas grid and putting the surplus gas from London down to Brighton. Such a thing would not apply 291 to an area like North Staffordshire. That was the only flight the Minister took, and it seemed to some of us it was a flight which had not been extremely well thought out.
To refer again to the great boast of integration made by the Minister, there is one extremely important point on which he has made no effort to carry out any integration. This Bill might well be called not merely the Gas Bill but the Gas and Coke Bill, because the two objects of the Boards are to produce gas and to produce coke. In his opening gambit, the Minister dismissed, with what he called historical as well as logical remarks, any attempt on his part to take under his aegis the coke ovens, which at the moment produce more than 12 per cent. of the total gas production of this country, and 53 per cent. of which ovens are now controlled by the National Coal Board. Surely, here is a case for integration.
§ Mr. Gaitskell
Perhaps I may refer the hon. Member to the Clause in the Bill which provides for full co-ordination in this matter, to which I also referred in my speech.
§ Mr. Fraser
Surely the right hon. Gentleman realises that he made a distinct differentiation in his speech between integration and co-ordination? He went so far as to divide his speech into the relevant sections, one of integration and the other of co-ordination. The point is that he has shirked the issue of the actual integration of these coke ovens owned by the other section of his Ministry with the gas producing units. It has been pointed out by the gas experts that such an integration is not only possible but desirable, and yet he has avoided it completely.
As far as integration goes, the case put forward by my hon. and right hon. Friends is almost unanswerable. It is agreed by all hon. Members that the unit must be made larger, but the unit to be achieved is not a large one but the optimum unit, and that can only be achieved on a functional integration. The right hon. Gentleman in his Bill has obviously failed to carry out the one functional integration which could be carried out with the greatest of ease, the integration of the Gas Boards with the coke oven dependency of his Ministry.
292 We shall reject the Bill because all the advantages which it can offer are not commensurate with the cost it would inflict upon the community, especially at such a time as this. Perhaps the right hon. Gentleman regards the passage of this Bill as a form of trilogy. That trilogy has been completed in France, and perhaps we on this side of the House may regard it as a symbol of that third-force now rumoured to be gaining ground in Europe whose motto is not liberty, fraternity and equality, but loss, disaster and neither light, heat nor power.
§ 7.32 p.m.
§ Mr. Edward Porter (Warrington)
I had no intention of taking part in this Debate until I read a portion of the speech made by an hon. and learned Member of this House, Sir David Maxwell Fyfe, M.P., at Morecambe, on 21st November last—
§ Mr. Speaker
I think the hon. Member meant to refer to the right hon. and learned Member for West Derby (Sir D. Maxwell Fyfe).
§ Mr. E. Porter
I am sorry, Mr. Speaker. The right hon. and learned Member for West Derby is reported as having made this statement:I believe the prevention of nationalisation is a positive benefit to the country.He then went on to give four reasons why nationalisation was a failure, and said that it damps down initiative, it limits the freedom of the worker, it increases prices to the consumer, and it makes provision for "jobs for the boys"—the greatest example of industrial patronage and jobbery this country has ever seen.This afternoon we had the pleasure of listening to something like that from the right hon. Member for Bournemouth (Mr. Bracken). I have been a member of a gas committee for over 30 years and, as a trade union official, have been compelled to take an interest in gas departments and their employees all over Lancashire. In reply to the right hon. and learned Member for West Derby, I want to say that when the municipalities took over gas works the same unfortunate statements were made, that the municipalities would not be able to run them, that they would be an absolute failure. The same remarks were applied to water works, electricity undertakings and the 293 transport systems of which the various local authorities have control at present. When I first became a member of a local authority it had three Labour members, and today my colleagues control that council of 56 members. When an election of officers on that local authority took place we used to hear then what was said recently by the right hon. and learned Gentleman. Quite candidly I think that the right hon. and learned Gentleman was speaking from his own experience. I realise there is some bitterness about the Labour Party being in a majority in this House because, for the first time in its existence, it has the privilege of selecting judges, recorders, and so on, a privilege which the Tory Party had ever since they became a party in this country.
Municipalities at present control one-third of the gas output of this country. Some years ago the United Kingdom Gas Company applied to our local authority to buy out our gas department. It is not many years since that company started, but today they control 76 gas companies in England, Scotland and Wales and their headquarters happens to be in Manchester. When hon. Members talk about centralisation, this huge gas combine has adopted the following methods: in 1943 they purchased in one section of Yorkshire 12 local gas companies, in another section seven local gas companies. In both sections they discharged all the managers and made one manager responsible for one group of gas companies, and from Harrogate to York they sacked six gas engineers and made one gas engineer do the work. It is fair to state that they have attempted to reorganise the various gas companies of which they took charge, but because they could not purchase all the companies they would have liked, they have found themselves hampered in making progress at the rate they expected.
What is taking place in the gas industry from a company point of view at present? I am sorry that the right hon. and gallant Member for Pembroke (Major Lloyd George) is not present because, in mentioning names, I want hon. Members to understand that I do not desire to introduce personalities. In what we call the Southern area of this country from a gas producing point of view, there is a gentleman who is much opposed to this Bill. He is known as William Henry Bennett. 294 He happens to be the chairman of 32 gas companies. How in heaven's name he manages to supervise them, he alone knows. Mr. Bennett is a director of 34 companies, and chairman of 32. On 11th April, 1947, the South Eastern Gas Corporation announced that the right hon. and gallant Member for Pembroke had been appointed a director of 24 subsidiary companies of the corporation. I am not casting the slightest doubt on the right hon. and gallant Member or on anyone else. What I am puzzled about is how they manage to be directors of so many companies. When one finds gentlemen in this country holding so many directorships, it seems quite easy to say that nationalisation can be and is a success.
The Sheffield Gas Company is a wonderful concern, due to the fact that big undertakings in the steel industry operate in that city. They consume more gas than is consumed in any other big city or town in this country. They work in co-operation with the Sheffield City Council. Sheffield City Council are allowed to send three of their members to the monthly meetings of the Sheffield Gas Company. That is splendid co-operation, but this is how it works; the directors of the Sheffield Gas Company for every meeting they attend receive £50, but the representatives of Sheffield City Council who attend receive a vote of thanks.
I would like to ask those who oppose nationalisation to think over these things. Within 14 miles of Manchester Town Hall there are no fewer than 50 separate gas undertakings. Over a period of years several attempts have been made, both by gas companies and municipalities, to amalgamate those undertakings; but they have entirely failed, and there is no hope for them, except by nationalisation. They recognise that it is impossible to get agreement.
What I have never been able to understand about the Opposition is that they go to meetings and make the statement that nationalisation is a complete failure, and in some way or other they expect even Conservative audiences to believe that statement to be correct, without giving the slightest evidence of where nationalisation has been a failure. I have taken the precaution to visit the offices of several foreign Governments in this city in order to obtain first-hand information. I have gone to offices which are in communication with 295 our Colonial Office, and from them I have received courteous replies. I have received all kinds of documentary information giving a complete history of each industry.
I find that in Holland the State coal mines are a success and in Poland the railways have been nationalised for many years. At present Poland has adopted a method to get over her present difficulties by which all industries employing more than 100 employees on any shift are to be nationalised. The largest cotton mill in the world happens to be in Poland and employs close upon 10,000 operatives. That is nationalised. In India the whole of the railway system is owned and worked by the Central Government. In Hungary there are State railways. In Canada an advertisement appears in Conservative newspapers which says:Canadian national railways. The largest railway on the American Continent.They control steamships, hotels, holiday resorts, telegraphs, airlines and air express services. I went to the Canadian Government offices and asked the simple but important question, "Is nationalisation a success?" They simply replied, "We would not be operating it unless it was a success," and they gave me all the particulars about it.
§ Mr. Bracken
When the hon. Member goes to the Canadian Government he should ask them to tell him something about the Canadian Pacific Railway, which is a much more prosperous and powerful railway, and that is not nationalised.
§ Mr. Porter
I am talking about things which have been nationalised, which hon. Members opposite have tried to make out to Tory audiences are a complete failure, whereas in our Colonies, and in other countries, they have proved a huge success. In New Zealand the same happy state of affairs applies. In Sweden the railways and the air services are controlled. The Sudan Railways are nationalised, as are the steamer services and hotel services, which we are told are among the finest in the world. South Africa, controlled by a Tory Government, I am told, have the good sense to own the railways, road transport services, electricity, docks and harbours. In Norway, State railways have been in 296 existence for many years, and at present, under the direction of an Englishman, they are erecting a huge nationalised steel works in the north of the country. I saw with pleasure a fortnight ago that the Norwegian Government have gone a step further, and have decided to control the football pools on matches played in that country. By and large one is able to say that the whole of our Colonies have controlled these huge services for many years. In Czechoslovakia the Secretary General of the Federation of Czechoslovak Industries wrote:A new social and economic regime has been established in the Soviet Union by way of a great social revolution. Czechoslovakia, because of different economic and social conditions, of different historical development and political tradition, is approaching a similar goal in a different way, on her own decision and with the agreement of the vast majority of her people. The two pillars on which Czechoslovak democracy is building her new economic regime are the nationalisation of big industry and banks and economic planning. Both measures have received the democratic sanction of the people who, through their representatives, elected in free and secret elections, unanimously agreed to them and regard them as the means to a new and happier era in the history of the Czech and Slovak nations.They are nationalising the whole of the banks, the private insurance companies, mining, iron and steel and electric power. Nationalisation is not a new thing in other countries.
In conclusion, I wish to refer to a statement which was made some years ago by a prominent member of the Birmingham City Council, and a leader of the local Conservative Party. He said, on behalf of the industry, that it was necessary that gas, electricity, transport and water, along with other public services, should be managed and brought to their highest pitch of efficiency so that in every way they could assist the various industries of Birmingham to compete with countries abroad. Taking that broad view, and bearing in mind that for years to come this country will have to fight to send its goods abroad, I believe there is no other way of achieving that except by planning and nationalising the main industries of this country.
§ 7.52 p.m.
§ Mr. Heathcoat Amory (Tiverton)
The hon. Member for Warrington (Mr. E. Porter) will forgive me if I do not attempt to follow him in the rather melancholy world tour on which he conducted us to 297 survey the results of nationalised undertakings. I suppose that if one cannot get the currency nowadays to go on an actual world tour, the next best thing is to go on an imaginary tour. I confess that I should prefer a less depressing itinerary and a more stimulating quest.
I wish to speak very briefly on one aspect of this Bill, namely, the position of co-partners. I want to support what my right hon. Friend the Member for Bournemouth (Mr. Bracken) has already said on that subject. It is a thousand pities that the provisions of this Bill appear to kill stone dead the various co-partnership schemes which have been developed so successfully within this industry over a long period. I am sure hon. Members in all quarters of the House who are involved in industry will agree when I say that the great enemy with which we have to deal in British industry today is not, I am glad to say, bitterness or active strife so much as apathy. That is the thing we should eliminate if we possibly can.
If we are to do so we should, first of all, examine our prejudices—and we all have them—and our preconceived notions, and try to reason out this matter objectively. In trying to do so, I look on co-partnership in this way: I am one of those who do not believe that nationalisation will lead to increased efficiency or well-being in the gas industry; but that, hon. Members may say, may be one of my prejudices. The important point is that if this industry is to be nationalised, we must ensure that we do all we can to make it work well for the benefit of all those concerned. Surely, the reasonable thing is to preserve whatever in the existing structure of the industry is stimulating, efficient and progressive, and develop those things further in the new structure.
It seems to me that one can reduce this problem to two simple questions. First, has co-partnership had good results to date, and does it seem to work in the right direction? Secondly, if it does, is it possible and practicable to continue it in some form under the new organisation? Applying myself to the first question, I know that some hon. Members opposite do not much like the principle of co-partnership. They fear conflicting loyalties and some interference with solidarity of the trade union movement. Personally I 298 always respect the opinions of hon. Members opposite who are trades unionists, because I believe they are practical and knowledgeable men who know their job. I respect their opinions, even when I do not agree with them.
But, looking at the history of this industry, are there in fact any grounds for that particular suspicion? It seems to me that relations within the industry have been exceptionally good, harmonious and friendly. Joint consultation has been well developed and works successfully, and the conditions of employment have steadily improved. Nor do I think there can be any doubt that such co-partnership schemes as exist are valued by those who belong to them. The figures are impressive. I believe that 59 companies run schemes covering nearly half of those employed in the industry. The total capital owned by co-partners reaches the substantial figure of about £4½ million, and between the wars I believe the total sum distributed as bonus came to the very large figure of nearly £6 million. Add to that the fact that joint consultation is being actively developed and that under some schemes there are worker-directors, and I suggest we are faced with an achievement which it would be utterly wrong to ignore.
If I may refer for a moment to my own experience in industry, such as it is, I have always found that joint consultation is still more effective if and when it is combined with an element of profit-sharing. It seems to add point, reality and spice to the discussions, and makes figures more alive and have more meaning. These two elements mix well and seem to reinforce one another. Ministers have been and are at pains to tell us that under nationalisation there will be still wider opportunities for the display of incentive, interest and participation of employees in running the industry. That is good, but, with a stroke of the pen, this Bill seems utterly to destroy the achievements of the gas industry in this field over 60 years. That, surely, is reactionary, wrong and very wasteful. With apathy the greatest danger, the Government seem to be stamping out a movement which really is leading in the direction of industrial democracy, which has proved successful in a limited way, is undoubtedly capable of further 299 growth, and is much valued by those who participate in it.
That brings me to the second question: is it practicable to continue this principle in some form under nationalisation? Obviously, it is not practicable in the case of many schemes in their old form. As the right hon. Gentleman said, there will be no shares, and if these Area Boards run true to nationalisation form, it may well be that they will not be unduly burdened with profits either. Surely, however, there are ways in which the principle can be applied.
I was glad to hear from the right hon. Gentleman that Area Boards might find ways in which to provide incentive schemes of one kind or another. We really want him however to give a blessing in a more positive form than that. One presumes that it will continue to be a governing aim under nationalisation to encourage the greatest possible efficiency on the part of individual operating units. If that is so, whatever the system of accountancy selected, there obviously must be a basic cost. I presume that operating units will be encouraged to seek a reduction in cost below that basic cost. The difference between the basic cost and the cost that a unit succeeds in reaching should be divided in some way, so that the employees share in that difference, by way of profit bonus.
Apart from this, there is the other advantage of co-partnership in its encouragement of saving. I should have thought it possible to work out some scheme for issuing some kind of special employee stock, a special form of British gas stock, to be paid for by the employees either out of their normal savings or out of their bonus. Something obviously can be done in that way. If, however, in spite of all this, the answer is to be "No," and co-partnership must go, I would then suggest that the question of compensation to co-partners requires to be more positively dealt with in this Bill than it is at present. In particular there should be compensation for employees on more generous terms than in the case of ordinary shareholders, on the grounds that co-partnership stock is generally subject to restrictions on the power of sale and that compulsory transfer is bound to involve the co-partners in loss of income.
300 In conclusion, I beg the Minister and hon. Gentlemen opposite to realise that the way to industrial democracy involves various approaches and should take different forms. It is a question of trial, faith and patience and, above all, of being on our guard against prejudices and oversimplified notions. The Government ought to hesitate before they throw away something which, in the minds of co-partners, is tangible and personal, in order to achieve something which is remote and impersonal. I ask the right hon. Gentleman to look again at the history of this industry before deciding to abolish a practice which, without a shadow of doubt, has encouraged incentive, interest, harmony and thrift, four things which, above all, are required throughout British industry today.
§ 8.4 p.m.
§ Mr. Perrins (Birmingham, Yardley)
I intervene primarily to correct an erroneous impression which may have been created by the hon. Member for Edgbaston (Sir P. Bennett) who, I regret to say, is not at the moment in his place. Those who heard his contribution would get the impression that Birmingham is opposed to this Measure because he said he dared not go back to the city without making that fact known. I represent one of the Birmingham constituencies within which is the largest of the Birmingham gas undertakings. I am very proud of the associations which Birmingham has with the gas industry. I do not propose to quote from Government publications. There is a publication put out by the British Gas Council. The opening words from this publication, which is called "The Flame" says that in February, 1792, William Murdoch, an Ayrshire man, representing the interests of the great Birmingham engineering firm of Bolton and Watt, developed the gas industry in the city I help to represent.
From my point of view and I think from the point of view also of most hon. Members on this side of the House, Birmingham will be even more proud of the part which was played by a man who sat in this House for many years, representing Plaistow. I refer to the late Mr. Will Thorne. Many hon. Members will recall the fine work that he did in organising the gas workers who were thought to be unorganisable. People who were associated with Mr. Thorne have told us 301 how the men threw their twopences into a bucket on a great open space, close to where now stands Beckton Gas Works.
I claim to know something about the people in the industry because I have had the privilege of serving as a trade union official. Hon. Members can take it from me that the manual workers in the industry have for many years looked forward to the time when the industry would be nationalised. They are not the only section who want to nationalise the industry. I have met similar wishes among supervisors, technical staff and managers. We who are close to industry are aware of these facts. Hon. Members on the other side ought to be aware of them also. If they are not, they simply display their ignorance of the people in the industry, who have for years felt that the best thing that could happen to the industry is that it should be nationalised.
In Birmingham we have developed gas technically for many years. Our gas department provides a very good service. When one moves out of the city one finds a tremendous belt of possibly 2,500,000 people, especially in the quarter to which I am proud to belong. It is known as the industrial black belt and includes Wednesbury, Darlaston, Willenhall and other places. There is a small gas undertaking. Because the area of supply is small it is limited in scope. Obviously such small undertakings never could develop the technical side of gas production and apply it to industry in the same way as larger undertakings. Lay the foundations, having regard to present circumstances. The Birmingham heat treatment department could serve the needs of a wide territory and the knowledge they acquire can be applied to any industry using metals.
The hon. Member for Tiverton (Mr. Amory) spoke about co-partnership. The workers in industry did not exactly welcome co-partnership. We know that co-partnership has militated against industrial organisation, and the people who participated in such schemes realised that they were making far greater profits for individual holders of shares than they ever got for their share. We felt that it was a brake on the machine. Why bother about something that is now going? There cannot be maintained, in the same set-up, co-partnership in certain limited undertakings while at the same time a vast 302 number of undertakings are left absolutely untouched.
There are matters to which I hope we shall hear reference in detail in the winding-up speech. For years I was a member of a gas committee, and we found we had by-products in our gas undertaking for which there was no industrial use, and they had to be wasted. I speak of the liquor plant. At a later stage someone began to take the liquid away from us in bulk. We had no powers to deal with that. There is a tremendous avenue to be explored in regard to liquor and other by-products. I am hopeful that the nationalisation of this industry will open up a new era. I think it will. There is no industry which is more ripe for nationalisation than is gas. Many of these undertakings are already municipally owned, and the men in them are used to working under a limited form of public ownership.
The hon. Member for Edgbaston said that the leader of the Labour group, the Lord Mayor at the time, spoke on the matter at the jewellers' dinner. When I heard him mention that I wondered whether he had tasted of the cup that inebriates while it cheers, until I recollected that he was a total abstainer and that that could not have been the case. I remember hearing that gentleman, when the Prime Minister was made a freeman. He did not say that he was opposed to nationalisation but that he rather regretted, and one can understand anyone regretting this, that at this stage the great Birmingham gas undertaking was passing out of the control of Birmingham Corporation. There is a difference between that and being opposed to nationalisation. One can have regrets of that character without necessarily opposing the principle.—[Laughter.] Oh, yes, one can. The hon. Member laughs. Let me give him an illustration. For many years I was a member of an urban authority. Amalgamation proposals were brought forward. To a man the urban council were hostile, but that did not necessarily mean that people could not see that there was something to be said for a greater unit. We all know the words,Breathes there the man, with soul so dead,Who never to himself hath said,This is my own, my native …
§ Lieut.-Colonel Elliot (Scottish Universities)
The hon. Member has got the quotation wrong. It ends, "my native land."
§ Mr. Perrins
Then there is no need for me to complete what the hon. and gallant Member knows. The only point I am making is that there can be what is called in the case of parish a parish pump attitude and approach. I have often said that the same thing applies to a larger city. Except that the pump becomes a water tower, it is exactly the same approach. I have read this Bill and I feel that there is much good contained in it, and, therefore, I welcome it. The whole of the workers engaged in the more than 1,400 undertakings will welcome the Bill because they feel that with the State as their employer they need not fear that they will not receive satisfaction and a fair and square deal, and that there will be opportunities for a great widening and amplification of the scope of the industry.
§ 8.16 p.m.
§ Brigadier Prior-Palmer (Worthing)
As always we are interested when we hear a speech from an hon. Member who has an intimate and detailed knowledge of his subject. I hope that when I am speaking on Service matters the hon. Member for Yardley (Mr. Perrins) will come and listen to me with interest equal to that with which I have listened to him. We on this side disagree with a lot that he has said, but we realise that he believes implicitly in what he has been saying. The only point upon which I should like to cross swords with him is that of whether the workers, as he calls them, in the gas industry are solidly in favour of nationalisation. If they are, I would say it is because they do not realise what will be the effects of nationalisation upon them in the final analysis. They have never had any experience of it, and it is not uncommon to feel that a state other than the one we are in is bound necessarily to be a better one. That is not a strong argument.
There is only one valid reason for which any legislation can be introduced into this House, that is the argument of the general good of the general whole. Whether or not it is to the benefit of the workers in the industry is to my mind a point, but not such a big point as whether it will be a benefit to the millions of people who use 304 gas. That is a more potent and stronger point. The Minister today has not made out a case and has not shown in any way that this Measure will benefit the users of gas any more than they were benefited in the past.
§ Mr. David Jones (The Hartlepools)
Will the hon. and gallant Member deal with the millions of people who want gas but under the present set-up cannot get it because it is unprofitable to take it to them?
§ Brigadier Prior-Palmer
I will. What hon. Members seem to forget is that there may be reasons. We have been at war for six years and but for that the steady progress which the gas companies were making would have continued, and many more people would have had gas, in the same way as many more people would have been housed. It is no use the hon. Lady shaking her head. It is a fact, not a statement of opinion.
§ Brigadier Prior-Palmer
Does the hon. Lady suggest that everything would have stood still during the past six years if there had not been a war?
§ Mrs. Braddock
There are thousands of people in cities in rooms who have neither gas nor electricity, and there is no possibility of ever getting it under private enterprise.
§ Brigadier Prior-Palmer
I absolutely deny that. The hon. Lady has no evidence whatever to show that they would never have got it under conditions as they were previously, any more than any farm worker at the present moment can see himself, under this Socialist Government, getting water or electricity or a house.
This great industry has been enjoying a state of steady progress through the years, in spite of the bitter competition from electricity which, at one time, it was considered would be lethal to the gas industry. Despite that competition, the industry has still progressed and is still virile and is still one of the finest industries in this country. The industry has shown progress and enterprise in face of competition. They have had complete industrial harmony for 40 years. There has not been a single strike, and we have had cheap gas. As a reward, there 305 has been introduced this iniquitous Bill, which bears very similar aspects to some of the other nationalisation Measures which have been introduced into the House of Commons. One of them is this question of the power of the Minister. We see it in all legislation which is introduced by the Socialists in this House. Why is it that the Minister is given power of nomination over the Area Boards? Why should not that be left to the Council which is to be appointed? If a Minister has power to nominate over the Area Boards, why should he refuse to reply to Questions on the Floor of the House in relation to those powers? That is a question we would like to have answered. It was not adequately answered by the Minister in his initial speech.
There are very large aspects of the Heyworth Report with which we entirely agree. We agree that there was room for amalgamation, provided it was combined with flexibility, but we do not agree with nationalisation or public ownership as the complete answer, for the reasons which have already been given by many hon. Members who have spoken and for some reasons which I propose to give.
§ Brigadier Prior-Palmer
I do not propose to give way. Will hon. Members allow me to continue my speech? I have sat and listened here the whole afternoon without interrupting one of the Gentlemen opposite who said much with which I did not agree.
§ Mr. Murray
I would merely ask the hon. and gallant Gentleman to develop his argument on amalgamation.
§ Brigadier Prior-Palmer
I am asked to elaborate my argument on amalgamation. I promise I will speak only for a short space of time. I do agree with the Heyworth Report in that amalgamation is necessary in the case of smaller areas and gas companies, but I say that nationalisation is not the solution to the problem.
I mentioned the word "flexibility." I would like to know why it is that the recommendations of the British Gas Council with regard to the setting up of district management groups below the Area Boards has not been followed. There, again, we have another of the great weaknesses of these nationalisation Measures. 306 It surely must be obvious to the Minister, from what has been happening in the coalmines, that even the sub-area boards in the coalmining areas are too far removed from the problems of the individual pits to be able to deal with the day-to-day problems which arise. That has emerged as a result of the nationalisation of coal. One would have expected that the Minister would have learnt his lesson, and would have followed the recommendations of the Gas Council in this respect.
We had one reference, during the speech of the Minister, to the Financial Resolution, and the question of capital expenditure. One of the features of this Bill which I hope will be remedied during the Committee stage is that no ceiling whatever has been placed on the amount of capital expenditure which the Minister is empowered to allow under this Bill. If that passes on as it is without emendation, it will mean a large amount of the cost will fall on the gas user. I hope that point will be borne in mind when we come to other stages of the Bill, and in the reply this evening.
In relation to compensation, here again we have the old Socialist theory. I have never heard yet—and I sat through the whole of the Committee stage of the Transport Bill—why it is not possible to adopt the principle of the maintenance of income. Surely, that must be the only equitable way in which to deal with compensation? So many hon. Members opposite have got a completely erroneous idea in this matter. They seem to imagine that there are a few rich capitalists whom they are hitting by these Measures. It is not so. They are hitting a vast number of people who have spent their whole lives working and who have saved up out of their own incomes, for their old age, and have invested their money, and provided their own insurance.
I can speak with intimate knowledge on this matter, because there are thousands of them in my own constituency. Those people, as the result of various Measures which have been passed by this Government, are now in a very desperate state indeed. It is a race between the selling out of their capital—which they are having to do in order to exist—bankruptcy, and death, and one of those three is going to win. It is entirely due to the terms of compensation under the Transport Act, and various other Measures 307 which have been passed by this Government, and now it is being perpetrated in this Bill. It is a very serious blot on the legislation of this Government. It has been stated by one right hon. Gentleman opposite that those sort of people do not care two hoots. That has been contradicted by many hon. Members who have spoken, including hon. Members opposite, but they do not put their contradiction into practice. I suggest something should be done with regard to compensation in relation to those people. I make that plea to the Minister in all sincerity.
We have heard enough about co-partnership from this side of the House to show what we feel in the matter. I deprecate that any measure should be taken to kill what is at the moment only a child. It could grow into a healthy, strong being if it were given encouragement. We all know what are the objections of the trade unions towards it. They are not valid objections, but are purely selfish. We, on our side of the House, stand foursquare behind co-partnership, and as a result of this Debate we know precisely where hon. Gentlemen opposite stand in this matter. I hope that the workers of this country will take note of it.
It would be very interesting to know why this Bill has been introduced at this moment. With the Coal Board and coal nationalisation on the Minister's plate, and with things not going very well in the country, one would have imagined that right hon. Gentlemen opposite would have had enough to do to keep them busy in their offices for 14 or 15 hours a day dealing with administrative problems without cluttering up their desks and civil servants with further unnecessary nationalisation. If, when the country was stable again, they were prepared to bring in Measures of this sort there might be something to be said for it, but to do it at this juncture, having regard to the fact that the gas industry is perfectly sound, is quite indefensible. The time is not opportune and a case has not been made out for it. It is perfectly clear that it is just part of the Socialist theory that they must, while they still have time, get control of every individual in this country politically before they go out of power. I for one, for that reason if for no other, will vote against this Bill.
§ 8.30 p.m.
§ Mr. Ivor Owen Thomas (The Wrekin)
The last speaker mentioned, as two reasons for opposing this Measure, that the time was not opportune and that the passage of the Bill will do nothing to improve matters. I suggest that the time for Measures such as this would never be opportune for hon. Gentlemen opposite. Further, they could never be convinced that proposals of this kind would be either desirable or effective. Therefore, it is right to be frank and brutal and to say that we on this side of the House look at a matter of this kind from an entirely different angle. It has been suggested that such a Measure as this should be deferred until times are normal. I do not think that it can be claimed that times ever have been normal. I do not understand the meaning of that term when used in connection with the circumstances of life at any given moment.
The position of hon. Gentlemen opposite in relation to a Measure of this kind is that they are not able to look at the proposals on the basis of merit. The gas industry is an essential part of the industrial structure of this country. The Minister mentioned that fact at the beginning of this Debate and almost every other hon. Member who has spoken has agreed with him. This Government have already placed upon the Statute Book two vital Measures of reorganisation in connection with the fuel and power industry. I refer to coal and electricity. I was glad to have the opportunity of serving on the Standing Committee which considered the nationalisation of electricity.
This Bill rounds off, as it were, the achievements of the Government in their attempt to bring some order out of the chaos which had developed throughout the fuel and power industry, especially in the years between the two wars. Almost every argument advanced for the nationalisation of the coal and electricity industries could be advanced equally well for the nationalisation of the gas industry. For one thing, gas comes from that fundamental commodity, coal, as does electricity. I hope that it will not be too long before the production of electricity in this country will to a very large extent not be so much dependent upon coal. I hope that we shall have rapidly developing enterprises such as the proposed Severn barrage scheme. Even after schemes such as that have been achieved, it must be 309 realised that gas as a product from coal will be essential for a long time. I cannot foresee the time when gas, and particularly its by-products, will not be essential for the proper maintenance of social life.
The gas industry is split up into a multiplicity of separate concerns—a collection of municipal undertakings, private companies and holding companies of varying sizes covering different areas and sometimes overlapping into other areas. Anyone who studies the problem of the future development of the industry must be driven inevitably to the same conclusion as that arrived at by members of the Heyworth Committee which issued its Report in December, 1945. That Committee was set up not by a Labour Government but by a National Government. It would be ridiculous to suggest that the Committee approached their task full of Socialist ideals and determined to arrive at the conclusions ultimately contained in their Report.
Presumably the Committee were appointed because they knew something about the gas industry and were able to decide what was necessary to solve the problems involved. I do not know whether any of the members of that Committee were Socialists, but it is obvious from the Report that they have adequate and overwhelming grounds for arriving at the conclusions and recommendations ultimately set out. The Committee sat for a long time. It was the last of a number of Committees which examined the same problem and, to a large extent, the findings of previous Committees coincided with the findings of this one.
Organisation for the purpose of producing gas at an economic price in sufficient quantity for all the requirements of the country cannot possibly be achieved on the existing basis of organisation and ownership. Nothing which has been said by hon. Members opposite has even attempted to disprove that contention. It is generally accepted that the present conditions in the gas industry cannot be allowed to continue indefinitely. Something must be done to reorganise the industry, to bring about a greater measure of satisfactory development and to produce gas at an economic price so that it will be available over the whole of the country to the millions of consumers. 310 Last but not least, steps must be taken to enable the whole undertaking to employ the workers under the best possible conditions at the highest possible rate of wages.
It is obvious that in the organisation of a huge undertaking such as this, which is now split up into thousands of separate units, there is unlimited waste. There is waste in the manner in which the materials required to carry on the industry are utilised. Each concern buys its own materials separately. We have had in recent years the setting up of holding companies owning the capital of a number of small undertakings and acting, as it were, as organising agencies to cover the whole of such small or middle sized undertakings. Organisation achieved by a holding company presumably can only be achieved over the area in which the holding company happens to operate. Such holding companies are entirely excluded from the field of the municipalities so far as gas production and distribution are concerned. But the fact that we have found such organisation possible by holding companies is an overwhelming argument, in my opinion, for the application of the principle of one greater holding organisation, greater than can be established under the principles of private ownership. In any case, if it is good for the industry itself that a holding company should be set up to achieve economies in organisation and distribution, and in the financing of the various units within that organisation, then that good can be extended as proposed in the Bill.
However, the proposal to set up Area Boards as public organisations answerable to the Minister and to this House is something essentially different from what is proposed or favoured by hon. and right hon. Gentlemen opposite. For the sole purpose of an organisation such as that proposed by this Bill will be the creation or development of an efficient gas industry for the general benefit of the country as a whole; whereas the main purpose of a holding company, I claim, and the main purpose of a private gas company, I claim, is not essentially the production of a satisfactory gas service, but the making of a profit out of the production and the distribution of gas.
§ Mr. Pitman
Is the hon. Gentleman aware of the limitations upon the statutory 311 gas companies which prevent the making of a profit even for its retention in the business as an additional reserve?
§ Mr. Thomas
I am aware of those restrictions, but I think it can be taken for granted that every private company endeavours and, to a very large extent, succeeds, in making profits and declaring profits up to the maximum allowed. What I say is that the test of a gas company, the test of any public corporation, is not necessarily the amount of surplus it can make after making charges for the commodity it sells, but the efficiency of its service and the reasonableness of the price charged, having regard to all the factors that are involved, including the general standard of the wages and conditions of those who are employed by it.
That, I think, must be kept in one's mind in approaching the proposals in this Bill, and in considering public ownership as opposed to a continuance of private ownership. In approaching proposals for public ownership in place of private ownership we have to realise that we look at them from entirely different standpoints. I do not think that there is any Member on the benches opposite who seeks to prove that at this stage in the history of this country we have an efficient gas industry.
§ Mr. Thomas
The hon. Member may claim it, but I say it cannot be proved, because the facts are overwhelmingly against such an assertion. There are various sizes of undertakings, there are varying charges, there are varying standards of service, and there is waste through the lack of co-ordination over the whole of the industry. There is waste in the failure over a large field—if not in the greater part of the industry—to set up, within the present regime, efficient buying agencies for the purchase of the raw materials and all the appliances that are required in the industry. If instead of this multiplicity of concerns—including, I admit, even municipal undertakings as well as the private undertakings—we had an organisation based on the proposals contained in the Bill, a public corporation answerable to Parliament, we should be able to effect remarkable economies in 312 the whole administrative arrangements of the gas industry as a whole.
I mentioned varying prices. The fact that there are varying prices cannot be challenged. The remarkable thing about it is that when there is an amalgamation—I am not speaking of municipal concerns but of private concerns—there is greater uniformity effected sometimes. Therefore, even in the small amount that has been achieved there is an example of what can be gained in standardisation, not only of prices but of the quality of the service itself. Whatever saving and whatever improvements have been accomplished through the establishment of holding companies, can be achieved more effectively by a properly co-ordinated plan covering the whole of the country.
§ Mr. Thomas
I am not questioning the Minister's assertion in regard to today's presentation of the Bill. What I am saying is that even if we take an area, according to the proposals in this Bill, we shall have the possibility of uniformity and the levelling of charges; and even if uniformity over the whole country cannot be immediately achieved, that does not necessarily rule out the possibility of achieving greater uniformity some time in the near future. In other words, unless there is a fundamental change in ownership, control and organisation, we shall not achieve uniformity in prices and charges, even over an area; there will still be multiplicity of charges and overlapping of services, which are the present characteristics of the industry.
What alternative is put forward by the opponents of this Bill? I have already referred to the unanimous recommendations of the Heyworth Committee, none of whose members was, to my knowledge, a Socialist. The Committee arrived at their conclusions on the bare facts of the situation. If the main recommendations of the Committee are not carried out—
§ Mr. Thomas
If the main recommendations are not carried out, then, were hon. Members opposite in power they would 313 have to produce some alternative. What is their alternative? Have they any alternative, save to continue the present position? I have tried to discover what is in the minds of hon. Members opposite, not only by listening to their speeches, but by reading what they have written on this and related problems. They can get no further in their outlook than private ownership. They cannot see beyond the goal of private profit. They cannot realise that the solution of the problems of such an industry rests on some new approach not only of organisation but of ownership itself. Ultimately, the nature of ownership determines the nature of organisation and the failure or success of any attempt at organisation. As the whole approach of hon. Members opposite to this and related problems is so different from our approach, it is too much to expect them to arrive at the same conclusion as ourselves. Our differences must be accepted as inevitable.
It must be emphasised that this Bill is a natural development from previous Measures passed by this Government. This Bill was as inevitable as the Electricity Act and the Coal Industry (Nationalisation) Act, and rounds off public ownership of our fuel and power industry. Taking the mining industry as an illustration, is it not well for this country that the old régime has gone? If it is proven, as it is overwhelmingly in the Heyworth Report, that the full benefits of a reorganised coal industry cannot accrue without reorganised gas and electricity industries, is it not inevitable that a Socialist Government should regard the nationalisation of those industries as essential a part of the development and reorganisation of the whole fuel and power industry as was the nationalisation of the coalmines?
I do not appeal for support from hon. Members opposite for a Measure of this kind, because such an appeal would fall on deaf ears. I appeal to them, however, to face the overwhelming fact that this Measure will put an end to private ownership and to the era of profit-making in the field of the essential services of this country. If those who follow us cannot produce better results after a century of public ownership than have been produced in the case of the coal, gas and electricity industries by private enterprise, 314 then I agree that nationalisation has been a failure. One thing does not need proving, and that is that private ownership has failed in the case of these industries to deliver the goods. It has failed for the simple reason that the ultimate purpose of private ownership is to produce profits for the few.
I welcome this Measure, in the hope that there will be a further development at a later stage in the use of water power from the Severn barrage. I hope that we shall have an opportunity to pass a Bill setting up an organisation which will enable this country to utilise to the fullest extent the water power now running to waste. I wish this Bill well, and I am convinced that when the time comes our confidence in it will not have been misplaced.
§ 8.58 p.m.
§ Colonel Crosthwaite-Eyre (New Forest and Christchurch)
I have listened for 20 minutes to the hon. Member for The Wrekin (Mr. I. O. Thomas) developing a number of suppositions, none of which did he try to correlate either to what the Minister said earlier today, or to the facts which are common to both sides of the House. He devoted himself to a short peroration, in which he said that if I sat on the other side of the House, it would be necessary for me, having secured for myself and my party the nationalisation of electricity and coal, to nationalise gas and water as well. He said that the Bill was inevitable, that private ownership had failed, whereas the Heyworth Report, which he and the Minister quoted, shows that the target set for the gas industry has been doubled under private ownership. Does that show that private ownership has failed? If this Report is something which Members look upon as a sort of Holy Gospel which has descended upon them, then let them have knowledge of that Report, and knowledge of what the industry has achieved, instead of making puerile and facile statements which are founded on prejudice and show that they have not taken the trouble to study the elementary documents relevant to this Debate.
§ Mr. I. O. Thomas
Would the hon. and gallant Gentleman explain his implication that the findings of the Committee are not based on facts?
§ Colonel Crosthwaite- Eyre
It is obvious that the hon. Member has not 315 only not read the Report, but does not understand what this Debate is about. We are not discussing whether the Report is founded on fact. The Report put forward certain targets. The industry has doubled those targets, and I am asking whether that shows that private enterprise has failed? I suggest that rather does it show that the statement that the industry has failed is completely untrue.
We were told by the hon. Member for The Wrekin that the buying agencies have proved to be a source of grave disruption to the industry. Has he any idea of the circumstances in which the gas industry has had to buy its fuel since the coal industry was nationalised? Before the coal industry was nationalised it was possible for a gas company to demand coal, not only from a certain pit but from a certain seam. Now that cannot be done. Now, a big station has to accept an overall allocation of coal from a certain area, or even from any area, as the Coal Board orders.
§ Mr. Gaitskell
Is the hon. and gallant Gentleman aware that the allocation of coal supplies to gas works did not begin on 1st January, 1947, but several years earlier, when the right hon. and gallant Gentleman the Member for Pembroke (Major Lloyd George) was Minister?
§ Colonel Crosthwaite-Eyre
There was no intention, on my part, of trying to make party politics out of this matter. I am trying to show what happens under Government control, and I do not care whether that control comes from the Minister or from this side of the House. I am saying that before the war a gas company could order coal from a certain colliery, or seam. I challenge the Minister to deny that a company now has to take whatever coal is given to it from a certain area or a combination of areas. That means that it is impossible to get maximum efficiency from the gas retorts. The hon. Member for Spelthorne (Mr. Pargiter) and the hon. Member for The Wrekin assumed that the Heyworth Committee were in favour of nationalisation. The hon. Member for Spelthorne went so far as to say that integration was equivalent to nationalisation. No doubt they have not bothered to read the Report—I have not seen any Member opposite with a copy of the Report in his hands, 316 although that may be an accident—but if they will look at paragraph 242 they will see these words:It is not economically possible for gas to be provided everywhere. A national grid is not practicable, nor can selling prices usefully be determined on a national basis.Then there is this vital phrase:Complete centralisation can, therefore, safely be rejected as inappropriate.
§ Colonel Crosthwaite-Eyre
Then we are told by the hon. Member for The Wrekin that this Bill is the end of profit-making. That I can quite appreciate. I am prepared to believe that is true, particularly when I read that the Minister on 1st April—which as the right hon. Member for Bournemouth (Mr. Bracken) said is a most appropriate date—in ushering in the Electricity Board intends to increase the price of electricity by 50 per cent. I think that is a particularly generous gesture.
§ Mr. Gaitskell
I must contradict that, because it may give rise to misapprehension. I have made no such statement.
§ Mr. Alpass (Thornbury)
Is it in Order for the hon. and gallant Gentleman to impute unworthy motives to the Minister, and, when the Minister repudiates them, not to have the courtesy to withdraw?
§ Colonel Crosthwaite-Eyre
The Chairman-designate of the Board has made certain statements. If the Minister cares to repudiate them, I am prepared to accept his statement.
§ Mr. I. O. Thomas
Would the hon. and gallant Gentleman give the source of the statement to which he has now referred?
§ Colonel Crosthwaite-Eyre
I am taking the statements made by Lord Citrine. If the Minister likes to repudiate them, I will be the first to accept that.
§ Mr. Gaitskell
I understand that Lord Citrine said that it would be necessary, at some time, to put up electricity prices. He said that because, at the moment, as I indicated myself in an earlier speech, in certain instances costs are not covered 317 by the charges at present made. I also made reference to that subject at one stage in my speech today.
§ Mr. Gaitskell
There is one further word which I want to say. I ask the hon. and gallant Gentleman what the fact that under their present ownership some electricity undertakings are not paying their way has to do with the profit or loss made in a nationalised industry? In any case, I would like to point out that no reference, so far as I know, has been made to a 50 per cent. increase.
§ Colonel Crosthwaite-Eyre
On the latter point, I understand that in the Press today that figure was mentioned. If the Press is not correct, I am the first to withdraw. I go back to my main statement that the electricity charges are bound to go up. The Minister has now agreed that private enterprise cannot make a profit. Whose fault is that? The Minister's, because the price of coal has gone up. One cannot blame the electricity companies for putting up their prices and then not pin responsibility on the Coal Board of which the Minister is, at least nominally, the head.
The Minister made a most persuasive speech this afternoon, but he did not come to grips with any single one of the major problems which must face this House. He did not attempt to answer the fundamental question as to whether he believes that gas and electricity should be in competition. I hope that at some stage in this Debate we shall get an answer on that point. It is quite clear that, under this Bill, gas is to be the Cinderella of the Ministry of Fuel and Power. Both the Coal Board and the Electricity Board are given powers in relation to their younger brethren on the Gas Board of a nature which will make the economic working of gas impossible. I hope that we shall get some statement to show why this is.
I should also like to have some statement about the reconstruction policy of the industry. The Minister today accepted an interruption made by me when I suggested to him that the sums of money which would be required by him under public ownership were wildly in excess of what private enterprise would need in 318 reconstructing the industry. He took me up on that. Let me refer him to the Government's White Paper on capital expenditure, in which it is said that for the two years immediately following acquisition, the Government, of which the Minister is a member, consider the gas industry needs £70 million. Why on earth will he demand £250 million from this House tomorrow night? No doubt somebody will be able to answer that. It is undoubtedly true that the value of the pound is changing very rapidly, but I cannot believe, despite the flood of White Papers that come out, that the value of the pound has changed so quickly between the time the Chancellor of the Exchequer issued the White Paper and the time the Minister informed the Financial Secretary to the Treasury what he wanted in the Money Resolution. But if I am wrong, I hope the Ministry of Fuel and Power will put in a teleprinter in order that the latest information will be available to him.
I only want to deal tonight with one or two of the major points which the Minister did not try to debate. There is this question of compensation. He made a great speech in which he put up a large number of Aunt Sallys which nobody wished to knock down, but he then deftly bought three balls and bowled the lot down himself. However, he confined himself on the question of compensation to three statements in three short sentences. First, he said that this Bill contained the same terms as for electricity; secondly he said, "I have said so much about electricity that I do not want to say any more;" and thirdly, that this was the easiest, simplest and fairest way of dealing with the matter. He then left the subject rather rapidly.
Let us look for one moment at what we are doing. The Minister and the Financial Secretary to the Treasury, during the passage of the Electricity Bill, made many statements to the effect that if an industry was to be taken over, not only had compensation got to be fair but it had got to be paid to the rightful owners. Last year, as the Minister is no doubt aware, we discussed this subject at some length, but this year, despite the education we tried to give him, he has committed the same fundamental sin, in that he is taking over the assets of a company by buying the shares. He is still of the belief 319 apparently that there is some relation between the assets of the company and the shareholder in law, whereas, in fact, the assets of the company and the shareholders are entirely divorced. The assets belong to the company and the shareholders own the company, but to say that the shareholders own the assets is a complete travesty of the law, as he himself knows.
One need only point out what happened recently in a case in which the Government took over Shorts of Rochester. There at the arbitration the value of the shares was given as somewhere about 29s. 3d. The company appealed, since the Government were taking over the assets of the company. At the appeal it was discovered that the value of the shares when representing the assets was 41s. 9d., a difference of 12S. 6d. a share. Mr. Justice Evershed, in delivering judgment—and I hope the Minister will bear this in mind—said that shareholders were not in the eye of the law part owners of the undertaking. The undertakings were something different from the totality of the shareholders.
Here, again, we have the Minister solemnly telling us that it is fair to take over the shares of an undertaking and acquire their assets when he knows as well as any Member in the House that in buying shares we merely buy a stake in the company and in no sense participate in the assets of that company. Again one has only to look at one company, the famous shipping company, the P. & O., whose shares today are valued at about 52s. 6d., but the liquid assets alone of that company show a return to the ordinary shareholder of £7 a share. If the Minister were nationalising shipping and took over the P. & O. at 52s. 6d. a share, would he say that he was treating those shareholders fairly? He could not. From the illustrations I have given he must see that the whole basis of his argument is wrong.
On several occasions the Financial Secretary has said, and committed the Government to the belief, that the assets of a company can be taken over by recompensing the shareholders. I would like to ask the Minister, or whoever is to reply, one simple question. Do they still believe that to be true? Do they still believe, despite Mr. Justice Evershed's opinion, that they can acquire the assets of a company by compensating the share- 320 holders? I do not know whether the Minister would like to answer me now—perhaps he might like time—but I hope we shall get a firm and clear answer to that, because of the difference between the robbery which the Government are now executing under this Bill and the fair payment of compensation with which their lips have been adorned both in this House and upstairs during Committee stage. Let there be no confusion about this—the Government's terms for compensation are not only illegal and inadequate but sheer robbery. There is no other term for it. When the Minister talks about "simple, easy and fair," either he has not a clue to what these terms mean or he is deliberately avoiding the issue by using that negligent wave of the hand he learnt from the former Chancellor of the Exchequer and at the same time confining himself to three short sentences. He cannot have it both ways. I hope that during this Debate someone will tell us which is true.
I would also like to ask the Minister another question concerned with the different terms of compensation which he has made available. Why has he decided to depart from the Electricity Act which has so far guided him about non-statutory undertakers? Under that Act they were given the advantage of arbitration. For some reason they are not getting that advantage under this Act. They are now to be disposed of either at their Stock Exchange value, should one be available—which it is not—or on a theoretical basis; but there is no appeal, as there is under the Electricity Act, to an independent tribunal to assess the rate.
§ Mr. Gaitskell
Unless agreement is reached between the Minister and the stockholders' representative, a difference about the matter of unquoted shares is referred to arbitration.
§ Colonel Crosthwaite-Eyre
I quite agree. Perhaps I did not express myself as clearly as I should have done. I apologise to the Minister. I meant that under electricity the non-statutory undertaker could appeal against the valuation set on his undertaking. Here in the case of gas there is no appeal against a theoretical Stock Exchange value. I would like to know why that is, and also why, of all the types of gas undertaking, the ancillary undertaking has the opportunity to get a valuation other than a 321 theoretical Stock Exchange valuation? Why does the Minister choose an ancillary undertaking for terms better than for the companies, great and small, statutory and non-statutory, which have served the country so well? That is a most mysterious thing. Perhaps the Minister can find the answer before the Debate closes.
Compensation is being meted out in the case of mortgages and debentures on one of the most extraordinary premises that can be imagined. All debentures, whether they are quoted or not, are to be settled at an actual or hypothetical Stock Exchange valuation. All mortgages if they are quoted, will be settled at a Stock Exchange valuation but, if they are not quoted, will be settled in full. A year ago we asked the Minister this question—again may I have the Minister's attention?—what will happen when you have a mortgage debenture? Is that a mortgage or is it a debenture? The Minister at that time was unable to produce an answer and I hope that, after a year's thought on this subject, he will (a) tell us why it is that mortgages and debentures are separated, and (b) what is a mortgage debenture—is it a mortgage or is it a debenture?
With regard to compensation to directors, when we discussed the Electricity Bill we gained some valuable concessions from the Minister for this class of person and, having heard the Minister during those Debates upstairs, I was sorry to see how much prejudice he has carried from the Electricity Bill into this one. He says that directors are to be personally responsible under certain conditions if they pay more dividends, if they dissipate their assets, if they do this that and the other. Again, I want an answer from him. Supposing you assume, as apparently the Ministry does, that all directors are crooks and rogues, what is to stop the company that wishes to dissipate its assets from appointing men of straw who then can dissipate them? The Ministry may come back on these men of straw under the provisions of this Bill, but it could not get a penny from them. All that the Clause is doing is to penalise directors as a class, and that is either playing to the benches behind the Minister in order to stir up a little cheap and local enthusiasm or deliberately deceiving this House as to the purpose for which the Clauses were introduced.
322 I was profoundly shocked by this Bill. It has all the sloppiness of the Electricity Act from which, apparently, the present Ministry of Fuel and Power have learned nothing. In it all the injustices that they perpetrated then, and on which they could not answer on the Floor of this House, are perpetrated again. The Minister, introducing this Bill, thought it not even worth his while, or the while of this House, to take up one of the challenges put to him in the course of the introduction of the Electricity Bill. He dismissed them all with the airy wave of the London School of Economics and said, "That is simple, fair and easy." If that is to be the standard of legislation of this House, I hope that we shall reject this Bill. It is without justice, without any promise for the future; it denies to an industry that justice and that future which it should have, and leaves us not in the position of having done something useful, but in that of having perpetrated a Measure which is not just either to those who work in the industry or have supported it, and does nothing to secure the future we all want.
§ 9.24 p.m.
§ Mr. Mitchison (Kettering)
Let me begin by leading our country cousin, the hon. and gallant Member for the New Forest and Christchurch (Colonel Crosthwaite-Eyre) down the road from the London School of Economics to the more congenial atmosphere of Unilever House. After all, the Heyworth Report was produced by a Committee, the chairman of which was none other than that most experienced businessman, Mr. Geoffrey Heyworth. I appreciate the difficulty of right hon. and hon. Gentlemen when they find a report on the industry so wholly uncongenial to all they have been saying, and tallying in so many respects with the proposals in this Bill. The Heyworth Committee consisted of practical people, and I believe the chairman is chairman of the largest company in the world. They said that within the limits of the existing structure the industry today is reasonably efficient, but that the existing structure is restrictive of further future progress. That is set out in some considerable detail.
Let us look at the proposals. It does us no harm after hearing what the hon. and gallant Member said, to consider exactly what was said in this Report. With that political honesty which we find in him 323 so often, he read out some sentences about the division of the country into regions—
§ Mr. Mitchison
If the hon. and gallant Member looks at paragraph 242 he will see that it is headed—Division of the Country into Regions.He will find in the next sentence the point of the sentence which he read out.
§ Mr. Mitchison
Let me finish this point.Division of the country into regions has obvious attractions, and is the solution we recommend.I asked the hon. and gallant Member to continue with the sentence, but he declined to do so. Quite clearly that section of the Report is discussing what it says it is discussing, the proposed structure, and is coming down in favour, as this Bill comes down in favour, of the division of the country into regions.
§ Colonel Clarke
I wish to point out to the hon. and learned Member that the division of the country into regions comes in paragraph 240, and not in paragraph 242.
§ Mr. Mitchison
If the hon. and gallant Gentleman goes a bit further down the page, he will find that there is also a reference to it in paragraph 243, and the headline refers, as usual in the case of a headline, to all the paragraphs which follow, and not merely to the paragraph immediately following. I cannot profess to be an expert journalist, but I think that obvious.
§ Colonel Crosthwaite-Eyre
My only point in quotingComplete centralisation can therefore safely be rejected,was that no one on this side of the House has ever objected to reasonable centralisation of the gas industry.
§ Mr. Mitchison
What the hon. and gallant Gentleman unfortunately did was to identify complete centralisation with nationalisation, but there is not a word of that in this Report. I propose to show that what the Heyworth Committee suggested is substantially the form of 324 nationalisation in this Bill, with one exception.
I wish first to say a word about compensation. We on this side of the House have rather more regard to the public service of gas and the position of gas consumers, actual and prospective, and I do not propose to spend the length of time which was taken up by the hon. and gallant Member in discussing the question of compensation. I would only say one thing to him. He knows, as everyone in this House knows, by now, that similar terms to these have been offered to other shareholders and taken by other shareholders under Acts which are not wholly dissimilar from this Measure. It seems to me obviously unfair that what has been done in one case should not be done in another case, and that shareholders in one Bill should get preferential treatment over shareholders in another. As I have said before, I entirely fail to appreciate why the market valuation of a share should be any more inaccurate than the market valuation of a cow. Where there is a market valuation, I am no more prepared to measure shareholders' rights by dividends than the rights of owners of cows on the hypothesis of a continuing flow of milk.
Moreover, it will be noticed that in the Heyworth Report the average rate of interest at that time on shareholdings in gas companies was round about 4 per cent. I suggest that the difference between that rate and the rate which these shareholders will get from the guaranteed stock they are to receive under this Measure is favourable to them, and represents for their benefit no more than the real difference in risk between a Government guarantee and a stock in an industry which has grave difficulties to face in any circumstances owing to the competition of electricity. There can be no doubt about that, and I am surprised that so much time has been taken up in discussing the question of compensation.
As to directors, I am a director, and have been for many years, and I never knew before all the things to which I should become entitled if and when I ceased to be one. I find that directors, at any rate, have some remarkably eloquent advocates on the opposite side of the House, but there are other people than directors to be considered and those 325 are primarily the users of gas. [HON. MEMBERS: "Hear, hear."] I am glad to hear that loud applause from hon. Members opposite, for that means they should be the first to recognise that the existing structure of the industry holds no or little promise of future development. [An HON. MEMBER: "Oh."] I am merely quoting from the Heyworth Report. It suggests that all gas undertakings should be acquired by public boards, and that there should be given, in place of gas stock, stock issued by those boards, guaranteed by the Treasury and bearing interest at a fixed rate. What is there inconsistent between those proposals and the proposals in the Bill, which merely varies them by making the issuing authority for the gas stock to be given as compensation one central body instead of the various regional boards? There is no substantial difference whatever.
The terms of reference of this Committee were to examine the organisation and structure of the industry. They went as near as they possibly could, within their terms of reference, to say outright what would have been beyond their terms of reference, that the right thing to do with this industry was to nationalise it—[An HON. MEMBER: "No."] I am convinced that that is the conclusion which would be reached by anyone who has taken the trouble to read this Report and to consider it impartially, just as it was reached by public opinion at the time when the Report was published.
Is it really sense, having regard not merely to the gas industry, but to the whole fuel position in this country, to leave gas unnationalised, to leave it in no way subject to the general direction of the Ministry of Fuel and Power, to leave it under some form of private enterprise, when we have already nationalised both coal and electricity? Surely, these three main branches of the whole fuel industry in this country must be organised with reasonable similarity and reasonable co-ordination? To nationalise two of them, and leave out the third, would be a step that only the most unreasoning political prejudice could possibly support. I say as a matter of plain ordinary business sense that, even if hon. Members opposite disapproved, and still disapprove, of the nationalisation of the mines and electricity, they must at least recognise the fact that those two branches of the fuel industry have been nationalised, and it 326 is against the public interest, bad sense, and wholly unworkable to leave out now from nationalisation a branch of the fuel industry which is obviously closely allied to those two, and can, and must, be run broadly on the same lines.
§ 9.36 p.m.
§ Mr. Peter Roberts (Sheffield, Ecclesall)
Having listened to this Debate, and winding it up from this side of the House, I want to deal with the one question which people in the country and Members on all sides of the House have been asking, and which has not been answered. We have heard a great deal in recent times of the dollar crisis, of inflation, Communist infiltration and overworked Ministries—in fact of our prosperity hanging in the balance. One question which we want to ask now is, why is gas being nationalised at this time? It is that fundamental question which has not really been answered at all by the Government.
The whole tone of this Debate was set by the brilliant speech of the right hon. Member for Bournemouth (Mr. Bracken). It was by far the best speech which we have heard this afternoon. He asked why it was necessary, in order to bring about reorganisation which everybody admits is needed, to bring this industry under public ownership and central control. I wish to show that the arguments which have been adduced by the Minister himself, and by hon. Members on the other side of the House who have come into this Debate, have not really seriously tackled this question of principle. On this Second Reading Debate it is a question of principle of nationalisation that we are discussing.
With regard to the remarks of the hon. and learned Member for Kettering (Mr. Mitchison) on the Heyworth Report and also those of the hon. Member for The Wrekin (Mr. I. O. Thomas), it must be made clear at the outset—and I do not think the Minister will disagree—that the Bill, as it is now presented, is not on all fours with the Heyworth Report. That is a point which must be understood, not only in the House, but in the country. I am not going over the kind of arguments which we have heard about the various sections of the Heyworth Report. Suffice it to say that the Heyworth Report states that centralisation is not necessary in the organisation, and they do not bring directly into public ownership the shareholdings of the industry. Further than 327 that, the industry itself, the British Gas Council, has come out against these nationalisation proposals, and that fact should be fully understood. I refer to their document, dated 23rd January, 1948, in which they make it quite clear, in page 27:Nationalisation of the gas industry, which political project has become as untimely, in present circumstances, as it is unjustifiable…The industry itself, and a large body of public opinion, are against this Bill. It is only the Socialists who are in favour of it. Therefore, one must look to see what are the reasons why they should try to bring in this Bill at this time. I remember some of the Minister's previous speeches. In this Debate gone was the fiery eloquence he used when he talked about coal. Gone, too, was the rather monotonous conviction he had when he talked about electricity. All that was left was a certain hesitancy which seemed to be born of overwork and the knowledge that his Ministry was already overworked and understaffed. He felt that it was another burden to be added to him. I do not think that he showed very much enthusiasm. He made three main points. The first was on the question of efficiency. During all these nationalisation Debates we have had Ministers and hon. Members opposite disparaging one industry after another. In the case of gas, that is the most unjustifiable of all. The Minister used the word "antiquated" with regard to this industry. That cannot be true.
§ Mr. Roberts
When the Minister reads HANSARD I think he will see that the impression was that the industry and the way it was working were antiquated. I go even further. The hon. Member for The Wrekin said that it was inefficient. The Heyworth Report does not say that the industry is inefficient. In point of fact, our engineering trades are conducting a great export drive on gas holders, gas engine equipment and mains. It is deplorable that Members of the Government should come down to the House and try to write down the industries which they are trying to nationalise. We had that in the case of coal and electricity. I hope we shall not have it in the case of gas.
§ Mr. I. O. Thomas
On the question of efficiency, has the hon. Member read the two sub-paragraphs of Paragraph 227 in the Heyworth Report? They ought to be read in conjunction. It is essential that attention should be called to the two main points which emerge:
- "(1) that within the limits of the existing structure the industry today is reasonably efficient, and
- (2) that the existing structure is restrictive of further progress. In other words…"
§ Mr. Roberts
I was coming to the point mentioned by the hon. Member. This deals with reorganisation, which we all agree is necessary.
§ Mr. Roberts
I have read it. There is no point in reading again a point upon which we are all agreed. I am dealing with the question of inefficiency. We are agreed that reorganisation and larger units are necessary. That does not mean that we must have nationalisation. That is no justification for this Bill as such. It is no claim for the principle of nationalisation. The second point made by the Minister was that the existing legislation was restrictive. We agree, but that is no point for nationalisation either. That can be remedied in other ways, as my right hon. Friend showed.
Therefore, one had to wait for the third point of the Minister before we really got down to the fundamental question, "Why nationalise gas now with all our various troubles and difficulties?" All the Minister said with regard to centralisation under public ownership was that the alternative is the old slow pace. That was the only constructive suggestion he made. Is that an argument why we should have the principle of nationalisation applied to the gas industry? There are alternatives. My right hon. Friend mentioned them. To come down with only [...] weak flicker of enthusiasm in his eye, and to say that we should nationalise the gas industry because there is no other alternative, is not a sufficient argument for the Minister to put before the House. I have listened most carefully to all the speeches from the other side of the House—all but one, and I had a report on that—and in listening I asked myself this question: why bring in the principle of 329 gas nationalisation now? Not one of the speeches gave any real answer, and the majority of them did not even try to answer it. It is not only a question of trying to convince me; it is public opinion outside that has to be satisfied.
The Leader of the House has said that the nationalisers must prove their case, it seems to me a very weak argument to say, "Nobody will believe us so why should we try?" I listened to the speech of the hon. Member for Enfield (Mr. Ernest Davies). He made certain points which seemed to be Committee stage points, but he did not touch on the principle of the Bill. The hon. Member for Yardley (Mr. Perrins), to prove his case for nationalisation, said we must have integration in the industry. That is no argument for nationalisation, and was but repeating the second point that the Minister made. So we come to the end of this first day of the Debate without having any really constructive argument put up for nationalisation. I am sorry that one hon. Member opposite, the hon. Member for Dagenham (Mr. Parker), has not spoken, because he, at least, has tried to prove the case in a publication called "Labour Marches On." It would have been better called "Labour Staggers On."
§ Mr. Roberts
He refers to the basic industries, and to taking them over by nationalisation, and says:Their ownership by the Government will, therefore, give very wide powers over the whole industrial life of the nation.I believe that is the fundamental reason for this nationalisation. If it is, let us hear that it is. Let it be made quite clear that the reason for bringing in gas nationalisation now is the establishment of Socialist control over the industrial life of the nation. If it is so, I shall oppose it to the very limit of my power. I am quite certain that we on this side of the House are not going to see the object of the Socialist Party of bringing in their Socialist control over the life of this country brought in in this guise.
An argument that we on this side of the House have been trying throughout this Debate to make is that about competition. I think it is accepted—it was certainly accepted in the Heyworth Report—that to get efficiency it is necessary that we 330 should have competition. The hon. Member for West Harrow (Mr. Bower) made a very good point on that, and quoted paragraph 277 of the Report. It must be remembered that, despite the records of the past, despite the rise of 150 per cent. in the price of coal over the last 10 years, certain gas companies have reduced their prices by 16 per cent.
Here, I must take up a remark which the Minister made, in an interruption, about the price of electricity. It seems quite clear that the Government, because they are to take over electricity in the near future, and realising that their control is over-centralised, and because the troubles they are having in the coal industry are forcing up the price of electricity, are making a definite propaganda campaign to make it seem that the price of electricity is going up now under private enterprise. That must be very carefully watched. The Minister came to my home town, Sheffield, the other day and quite startled some of his own Socialist supporters by making the unguarded statement that under public enterprise prices have to go up considerably. Moreover, we have had the recent report from Lord Citrine. It is clear that, whatever the Government may say, we cannot accept the contention that the rise in the price of electricity is not coincidental with their nationalisation plans. As to competition, we have to think in practical terms of what that means. The Heyworth Committee and consumers generally look to competition as a safeguard of their interests.
In the last year there has been the example of what is happening with regard to the supply of coal to the gas industry itself. I can quote one instance, not of a few tons but thousands of tons a month, of coal supplied to coke ovens making gas. In the last year, the amount of dirt in that coal has increased from something like 10 per cent. to 18 per cent., which is the latest figure. Complaints are made, but they have no effect: the muck is still being put in with the coal. The amount of moisture has risen from 9 per cent. to 15 per cent. in thousands of tons per month, making an enormous quantity of extra dead weight which has to be carted about and put into coke ovens, and from there to blast furnaces. Representations have no effect; the muck still comes along. If that is happening at 331 the present moment, how much worse will it be when there is no competition?
The Minister says the safeguard for the consumer is the consumers' council. I cannot think the Minister really means that, for his past experience cannot lead him so to believe. The hon. Member for Enfield made a very good point when he said that practically a whole year went by before consumers' councils were set up for the coal industry. That is the amount of weight the Minister attaches to them. Consumers cannot look to the consumers' councils, as such, to safeguard their interests.
The third point made on this side of the House was in regard to municipalities. We had a very interesting speech from the hon. Member for Edgbaston (Sir P. Bennett) pointing out the position of Birmingham. These municipalities are losing control over their undertakings; and with the large areas which are envisaged it is not likely that they will get very much control on the Area Board. Again, let me give an example of what happened in Sheffield in regard to electricity. That is a city of over half a million people, with a great municipal electricity undertaking. Yet they have no representation on the Area Board at all at present. I do not know whether they are to have any. Even if there is one representative—for I hope we shall get at least one—it will only be one in 30. It is no substitute for a great municipal undertaking, which appreciates the local conditions, to have one representative on a large Area Board.
I have not time to develop points which have been hammered home from this side of the House with regard to profit sharing and labour relations. The hon. Member for Bath (Mr. Pitman) and the hon. Member for Tiverton (Mr. Amory) both dealt with those aspects extremely well. Also, there is no need for me to repeat the arguments put forward with regard to capital structure and compensation. However, there is a point which I must put to the Minister, and which we shall have an opportunity of discussing further on the Financial Resolution. One of his arguments this afternoon seems to have been that there must be nationalisation in order to build up the capital structure of the industry. If that is so, how does he reconcile that with the plan of the Chancellor of the Exchequer on capital expenditure? It is no good coming to 332 the House at this stage and saying that there must be nationalisation in order to pull down small, inefficient coke ovens and gasworks, and to build new coke ovens and gasholders, and new ammonia scrubbing plant and gas mains all over the country, when there is not the steel or other material, or even the willingness of the Government, to start it. That is no argument for nationalisation at this time.
In the six minutes left to me, I make this belated plea to the Minister. Even if he turns a deaf ear to it, I hope it will be appreciated in the country. An ordinary prudent business man who makes an experiment studies its working. The nationalisation of coal was an experiment, whether we agree with it or not, and one would have thought that the Minister would have studied how it went to see what mistakes were made. Lord Hyndley has admitted in the Press that mistakes are being made; and those of us who have knowledge of the industry know that mistakes are being made. One would have thought the Government would want to see how that experiment worked out in order to be able to formulate later plans. But no; they rush on and nationalise transport and electricity, and now gas, before they can really use to good effect the knowledge they have gained. That does not seem to me to be a reasonable, practical or businesslike way of doing things.
Despite what the hon. Member for Warrington (Mr. E. Porter) said about other industries, the facts are against the Minister. France has had the most recent experience of nationalising coal. They are expecting to lose about £33 million this year, and I suppose that we shall be lucky if we lose only £10 million. They have also nationalised gas in France, and from January, 1947, to January, 1948, the price of gas has gone up from six francs per cubic metre to ten francs, but even so, they are likely to make a loss of £30 million, together with the electricity industry. That is very close to our shores, and it is an example which the Minister might watch. I ask him most seriously to consider whether he is really wise in rushing on with gas nationalisation at this time, with these examples before him.
It has been said that we on this side do not put forward constructive proposals, but on this occasion my right hon. Friend the Member for Bournemouth has put forward a constructive proposal in his 333 speech, and my hon. Friend the Member for Bath has also put forward constructive proposals, all of which are designed to give the Minister what he wants in efficiency, and the elimination of unnecessary legislation. The only issues between us are public ownership, centralisation, and the cutting out of competition. I should have thought that the question of co-ordination was not so much between industries, as between the various Ministerial Departments. It is there that co-ordination is necessary. It is no good the Minister of Works and the Minister of Health planning houses with open grates and various fuel-burning appliances, while the Minister of Fuel and Power is, on the other hand, saying that we must have co-ordination of fuel measures. The whole job of the Government is to co-ordinate the various Government Departments, and not to go down to industry to say where a gas main shall be laid, or where coal shall be sent.
It seems to me that no argument has been put forward by the Government in support of this Measure. I reiterate that we are as anxious as the Government to help the consumers to get as efficient a service as possible, and also to help in the efficiency of the industry, but we are fully convinced that that can best be done through competition. We are equally convinced that the organisation under the Minister of Fuel and Power, with all the various Ministerial devices and departments, will not bring that competition about, and that in the long run it is bound to increase the price of the commodity they are selling.
I will quote only one example, and that is in the case of coal. In the Yorkshire area, we have had an increase in the price of coal in the last year, but how much of that increase has gone to the miners? The consumer pays on the one hand, but what about the miner? In the Yorkshire area, only 30 per cent. of the increase has gone to the miner, and over 60 per cent. has gone in increased maintenance and administration charges. The figures can be checked up, as they were issued for the third quarter of last year and are comparable with the average of the year 1946, allowance being made for the difference in disposable and saleable coal, but the 334 general picture is the same. It seems to me indisputable that no proper case has been made out for the consumer, for the worker in the industry, or on this question of competition, as to why we should nationalise this industry at this time. The Government will get support from this side of the House for any reasonable proposals which they can prove will be helpful to the efficiency of the industry, but this Bill they are putting forward is not what we consider to be in the national interest.
§ Debate adjourned.—[Mr. Snow.]
§ Debate to be resumed Tomorrow.