HC Deb 05 April 1949 vol 463 cc2013-22

Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Pearson.]

11.13 p.m.

Mr. Rankin (Glasgow, Tradeston)

I desire to draw the attention of the Minister to the exceptional difficulties imposed on the citizens of Glasgow by the recent increase in electricity charges. In my own division accounts for the recent winter period are twice, and in some cases three times, the charge which was imposed for the corresponding period last year. As a result of that very heavy increase many of my constituents are compelled to use candles as a source of illumination in their homes. We are glad to know that my right hon. Friend on the one hand, has brightened the streets and shops of our country by turning on the lights again, but we are dismayed at the fact that, on the other hand, he has plunged many of our homes into darkness by turning off the lights through this heavy increase in charges. My hon. Friend, the Parliamentary Secretary to the Ministry of Fuel and Power will be well aware of the intensity of feeling which has been created by this imposition, especially in my own city of Glasgow. I think he will recognise that the dissatisfaction which has been expressed from many quarters is well founded.

There are two aspects of this question. First, there is the increase in the normal rate and secondly, the sur-charge. So far as the normal rate is concerned, the increase on No.1 secondary rate from.6d. to.75d. has not provoked a great deal of protest, but the increase on the No. 2 secondary rate from.4d. to.75d. has created much and well-merited protest, because that charge affects the great bulk of consumption. Generally, we recognise the need for some increase in electricity charges for the country as a whole and there is no protest from that point of view, but there is certainly a well grounded protest with regard to the method by which this increase has been brought about.

From the City of Glasgow the Minister has extracted a total sum of £264,000 by the increases in No.1 and No. 2 secondary rates, when the estimated deficiency for the current year is £131,945. He has taken from the citizens more than double the amount of the estimated deficit. We feel there was another way to achieve his purpose. He did not require to impose such a steep increase at once. He might have gained his end by a gradual process. If, to begin with, he had increased the No. 2 secondary rate from.4d. to.5d., he would have obtained a sum of £55,850 and that sum, added to the balance of £76,065 which Glasgow handed over when the electricity undertaking was vested in the South-Western Area Board, would have yielded a sum which would have met the estimated deficit for the present year. He would have achieved his object without in any way hurting, as he is hurting, the citizens by this heavy impost. We accept the idea that there has to be some levelling of electricity charges in order to provide the rural areas with cheaper electricity, but in seeking to do that my right hon. Friend the Minister has placed too heavy an imposition on our city. I know he will say that he is taking the long view. I do feel that there are times when we can take too long a view. In fact, the length of the right hon. Gentleman's view on this particular occasion reminds me of the story of the old man who was dying. His wife had been sitting at his bedside in a room illuminated by a little candle. She had been there for a large part of the evening and was beginning to grow weary. She said, "Well, John, I think I will go away to bed. If you feel like passing out before the morning would ye mind to blow out the candle?" I do feel that my right hon. Friend's long view is comparable to that old lady's—it is just too long a view in the circumstances.

My hon. Friend may say that he has no responsibility here. Legally, of course, that is true. But the British Electricity Authority, I am perfectly certain, has been forced to yield to my right hon. Friend in regard to the imposition of the general charge, and particularly with regard to the surcharge, to which I want now to turn. The purpose of the surcharge was to control domestic consumption and prevent the possibility of industrial and commercial breakdown. Such a purpose, I agree, is entirely laudable. But the method of achieving it is not. It is argued that by means of the rebate which is offered to the consumer in the summer he should not have to pay more than if the tariff remained the same throughout the year. That sounds all right in theory, but to get it, the consumer will require during the summer period to use three and a half times the amount of electricity which he used during the winter. That is something which he is not likely to achieve for the simple reason that the summer period includes the holidays and the long clear evenings when very little electricity will be consumed.

I would suggest that in any event the purpose which my right hon. Friend seeks to secure through the surcharge will be met by the very heavy increase in the No. 2 secondary rate. Finally, I would like to refer to the psychological effect of these increases. So far as many of my constituents are concerned, these heavy charges will make them afraid to use electricity. I submit that that is a false economy, because electricity is the best way to burn coal. As a result of that fear, the revenue of the British Electricity Authority will be reduced, and this will create the very state of affairs which the increase in the normal rate was intended to prevent, namely, an unbalance between income and expenditure which may lead in the long run to a further increase in the normal rate. Therefore I present to my hon. Friend two demands. The first is that he will credit to the next issue of accounts the amount of the surcharge collected in the last issue. That is quite easily worked from the administrative point of view, and I am assured that it would cause no difficulty. Secondly, he should give us tonight, an assurance that the differential rate will not be imposed next winter on the simple ground that the heavy increase of 87½ per cent. on the No. 2 secondary rate will achieve the purpose for which the surcharge was imposed.

11.25 p.m.

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

We have listened to the speech of my hon. Friend and have, I think, been impressed with the clarity with which he has put his case; but, I hope the House will bear with me if I go back a little into the history of this surcharge. for which my right hon. Friend is responsible. It is well-known in the House that, by reason of the war, there was, and still is, a grave shortage of generating plant. That shortage involved the special problem of the peak load; a problem which, unless drastic action was taken, would have meant that industry would have had to shut down because power would not be available for it. The regional boards for industry took up this matter and I must, as I have done from this box on previous occasions, pay tribute to management and workers for the way in which they were prepared to accept any order to stagger hours and spread the load, thus avoiding the dislocation of industry through shortage of electric current at peak load hours. But that, in itself, was not sufficient. It was not right that industry, having done all this, should find that its supply was being jeopardised by reason of domestic and commercial consumers having no obligation, except the moral obligation, of being careful with consumption of electricity at peak load hours. Therefore, last year, the additional task of spreading the load in commercial premises was undertaken.

Then, the third—the domestic—consumer, had to be attended to, because the growing load of the domestic consumer was such that the spreading of the load in industry was being jeopardised, and the industrial scheme would have come to nought. My right hon. Friend set up the special committee, known as the Clow Committee because the chairman was Sir Andrew Clow, and the members were technical men in the electricity industry. They were members of the area boards, in some cases; there were representatives from commerce, and from women's organisations, and there was a representative of the organised trade unions. It was a very representative committee, and not a lay committee, but one which had upon it men with great technical and administrative knowledge. This committee issued a report, and in it were a number of recommendations for dealing with this problem of spreading the load. These recommendations called for mechanical devices; the use of the "ripple control" and so on; matters which, even if adopted, could not possibly have been brought into operation for the winter of 1948–49.

There was then one recommendation which, however, could be brought into operation for that winter season. That was the domestic surcharge. In other words, the recommendation of a price disincentive. The object was to make the cost to the consumer of electricity deliberately more dear in the winter, and cheaper in the summer.

This was not revolutionary. It was not something new. Many undertakings have had this differential summer and winter charge. The London and Home Counties Joint Electricity Authority have had it, the Blackburn Corporation have had it, and I could recite a whole list of electrical undertakings who have always charged more for electricity in winter and less in summer. From the point of view of the economics of the electricity industry one wants obviously to even out the load throughout the year and there seems to be sense in it. But in this matter it was not the economics of the industry but the sheer necessity of making sure that no one industrial organisation should stop their machines and stop production by reason of the heavy load at peak hours by domestic consumers.

It would have caused great unemployment and loss of goods for export and it would have given a great blow to the economic recovery of this country. We had one example of that when we had a severe winter and when, through loss of fuel and consequent loss of power, some colossal amounts of goods were lost to this country and unemployment went up very rapidly. We were not prepared to run that risk and therefore we adopted the recommendation of the Clow Committee's report which could be put into effect for this winter. My hon. Friend did mention that the price of electricity had been raised to a minimum of.75 of a penny per unit. That is perfectly true. That was done not as the result of any direction by my right hon. Friend or at any request but by the area boards in putting their organisation on a business basis.

After all, in Glasgow, the city about which my hon. Friend has spoken, in 10½ months before nationalisation they had lost £76,000 on the revenue account. Their charges were not high enough to cover their costs. It is true, therefore, that when one raises the minimum charge to.75 of a penny and then one puts on a surcharge of.35 of a penny one gets a double lift and it is that double lift which, I think, caused the shock and hardship to which my hon. Friend referred. I do not want to go too deeply into that matter of why the minimum rate was raised to.75 of a penny. It has received considerable publicity in the Scottish newspapers and I am reminded of the statement made by the South-West Scotland Electricity Board in which they made it perfectly clear, in that part quoted by the "Glasgow Herald" on Saturday, 26th March, 1949, as to why it was necessary to raise the price of electricity to.75 of a penny.

I have the statement here but I do not think it really devolves on me to go into that in great detail. My hon. Friend knows all about that. Sufficient to say that what he has suggested in relation to the financial arrangements that may have been made cannot be regarded as good business in the long run. Clearly, an area board, as it is responsible to the area as a whole, must bring these undertakings up to an economic level and must, as the Act requires, maintain its services.

Mr. McGovern (Glasgow, Shettleston)

In connection with the surcharge, do I understand that the surcharge was recommended? I heard a Minister in another place admit that the Board had rejected the surcharge and that the Minister had imposed it.

Mr. Robens

The Minister issued no directions in relation to the surcharge but what he did was to accept the recommendation of the Clow Committee's report and make it known to the area board chairmen that he would like that recommendation carried into effect and the area board chairmen carried out the request of the Minister.

Mr. Rankin

Could the Minister make one point clear? He has stated that the purpose of the charges was to put uneconomic units on a sound financial basis. Is he suggesting that Glasgow was on an uneconomic basis?

Mr. Robens

All I would say is to repeat what I said on the loss in the 10½ months and that was £76,000, which was equivalent to a loss in a full year of approximately £90,000, and if the undertaking had remained under the control of the Corporation and no changes had been made, the loss in the year ended 31st March, 1949, would have been £140,000.

Mr. Rankin

Is not my hon. Friend aware that one reason for the loss of £76,000 was the fact that when Glasgow, in 1944, asked for permission to raise the unit charge, that permission was refused?

Mr. Robens

I am not casting any reflection on the way in which Glasgow Corporation ran their undertaking. We know they were not permitted during the war to raise their charges. I am merely saying this is the reason why it was necessary to raise the minimum charges up to 75.

Rebates follow in the nine months and it means in fact that, whereas Glasgow has a minimum charge of 75, and they are now paying 1.1d. because of the surcharge, the price of electricity in the next nine months will be reduced to.65 of a penny; so this is a considerable reduction on the winter charge and, of course, it was intended to be a disincentive. That was just its whole purpose and a great deal of publicity was given to this and it was hoped that domestic users would regard this matter in the grave light in which we regarded it and would recognise the importance of saving on the peak load especially. It was hoped that this price disincentive would operate in that way.

It must be confessed that, while it is true that we have had a mild winter and there have been no large-scale industrial stoppages caused by the shortage of electricity for power and lighting, and while no one can say exactly as to what proportion is attributable to the surcharge involved, it has had some effect. It has been one of the factors that has helped in that way. The surcharge was put into operation at the request of my right hon. Friend because that was the only recommendation arising from the Clow Committee that it was possible to put into operation in the winter of 1948–49. I will not say it will not be put into operation next year at all. It may well be, but I hope, as a result of what has taken place this winter, that we shall not have the same problems that we have had this time and that there will be economy in the use of electricity in the winter.

I must also confess that I have seen a lot of figures from hon. Members representing the Glasgow area, where the surcharge has caused so much trouble—but it is quite easy to produce figures. I do not want to be unfeeling about this, but there have been exaggerated cases. I have seen some accounts of the "enormous" increases they would generally run to and one would say that is a very terrible thing indeed, but they are not in the general run. May I quote from an interview which Mr. Pickles, the Chairman of the Board, gave to the "Glasgow Herald" on 19th February, because in some way it is something of a reply to my hon. Friend? He said: The effect of the tariff increase and surcharge, while admittedly heavy in a limited number of cases, had been exaggerated in some cases. Over 80 per cent, of the domestic accounts issued in Glasgow had involved an increase of less than £1 for the winter charges, both in tariff and surcharge. In fact,"— this is really most interesting— the average increase over 70,000 accounts issued was 7s. 9d. in respect of tariff and 10s. 6d. in respect of surcharge—a total increase for the quarter of 18s. 3d.

Mr. McGovern

In my case it was £9.

Mr. Robens

In my own case it was £12, so I have some sympathy with these.

Commander Galbraith (Glasgow, Pollok)

In general, the account for electricity of practically every citizen of Glasgow was more than double, whatever the amount may seem to the hon. Gentleman.

Mr. Robens

I can only say that I am sure of what the Chairman of the Area Board, speaking with all the facts in his possession, states, and I can only repeat what I have already said in relation to what he said, that the average increase over 70,000 accounts was 7s. 9d. in respect of tariffs and 10s. 6d. in respect of the surcharge.

Commander Galbraith

How many accounts did the hon. Gentleman talk about?

Mr. Robens

I said 70,000, but I went further and said that in over 80 per cent. of the domestic accounts issued in Glasgow the increase involved was less than £1.

Commander Galbraith

The hon. Gentleman did not mention 70,000 accounts.

Mr. Robens

Yes, I did. I read this from the extract I have made from Mr. Pickles' talk which was quoted in the "Glasgow Herald." This electricity problem is a great one. Power stations cannot be built over-night and we shall have this recurring problem. Users of electricity can make a great contribution if they will look at their fuel usage over the year as a whole. What I mean is this: here we have winter when electricity is highly priced and the nine summer months when it is at a low price. What I would like people to do is to try and conserve their coal and their solid fuel during the summer, using that for their heavy base load for the winter and using electricity during the summer.

The Question having been proposed after Ten o'clock and the Debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Seventeen Minutes to Twelve o'Clock.