§ 3.31 p.m.
§ The Minister of Fuel and Power (Mr. Philip Noel-Baker)
I beg to move,That this House takes note of the First Annual Reports and Statements of Accounts of the British Electricity Authority and of the Area Electricity Boards; of the Report of the Minister of Fuel and Power for the period 1947–49; and of the Annual Report of the North of Scotland Hydro-Electric Board for 1949.We are to discuss today the First Report and the Statement of Accounts of the British Electricity Authority, the First Report and Statement of Accounts of the 14 area boards, the Report of the Minister of Fuel and Power on electricity and the Report of the Hydro-Electric Board of the North of Scotland, which comes under my right hon. Friend the Secretary of State for Scotland.
The Reports of the British Electricity Authority and the area boards cover the period from August, 1947, to March, 1949; that is to say, it is already 15 months since the period ended. I do not think the Authority can be blamed for this delay. The Reports were published in January of this year. Was 9½ months too long for their preparation? As a normal practice, yes; but on this occasion the Authority and the Boards were faced with difficulties which will not arise again. It would have been an evident mistake to publish the Report without the Accounts; and in their first year the Authority and the Boards had to produce uniform accounts out of the diverse practice of the 558 undertakings which they took over. That was an immense task, which caused inevitable delay.
The outstanding problem of this first period was the setting up of the new national system which Parliament decreed in 1947. It was often felt—and, indeed, it was predicted in the House—that the change of system would bring widespread dislocation in the industry, and would do so at a time when the nation was in no condition to sustain the shock. I think that the Report, and the experience of those who use electricity in their homes and factories, have proved that these fears were unfounded. The Authority and the Boards have had a very difficult task in 248 setting up their new administration. They had to consolidate these 558 separate undertakings with their differing plants, with differing efficiency, with differing tariffs, and with widely varying problems of every kind. They had to consolidate them, to amalgamate the workers and the staff, co-ordinate and unify the finances, and keep the services running without the interruption of a single hour.
There have, of course, been two troubles in these early years. There has been trouble with the programme of new generating plant. It was, I am afraid, a very probable result, in post-war conditions, of the old system under which the Central Electricity Board laid down the programme, while the separate undertakings, municipal and private, placed the orders at their own discretion for the buildings and the plant. The House will remember how it sometimes happened that the machinery was ready to be delivered while the civil engineering work had fallen behind. Later on, delivery of boilers, and then the supply of pipes and valves, were bottlenecks. I am glad to say that the Authority have much improved the phasing of all this new construction work, and have found new sources of supply for boilers and tubes. The work on the power stations is now progressing well, and I hope that that particular trouble is now a matter of the past.
The second worry has been load-spreading and load-shedding, both of which are a nuisance to the consumer. Load-spreading has been carried out with great patriotism by all concerned, and it has made load-shedding much less grievous than it otherwise would have been. It is sometimes thought that load-shedding is an all-British phenomenon, and indeed that it has been the Government's fault. In fact, it is due to the basic fact that the demand for electricity at the peak hours of the day has greatly exceeded the available supplies. The same thing has happened in the United States. In the 25 years up to 1948, the output of United States power stations was more than trebled, yet in that year, so Mr. Warne, the Government delegate, told the World Power Conference the other day, more than half the undertakings in the United States, public and private alike, had to make what he called "maximum load curtailments."
249 The American language is more genteel than ours, but the result to the consumer is just the same. Mr. Warne reported that even in those regions where power had been enormously increased, the undertakings could not meet the maximum demands. They had to delay new industrial undertakings because they could not give the power, and to refuse to install heating and other apparatus in the people's houses and so on. It is legitimate to guess that we might not have had load-shedding if the construction of power stations had not been interrupted by the war, but in any case, as I shall show, we are beginning to make some progress, as my right hon. Friend, the Minister of Labour, explained the other day, we hope load-spreading next winter will be less onerous, both for industry and for the housewife, than it was last year. The House will agree that neither of these troubles can be blamed on the Authority. Their take-over from their predecessors, the transition to their new institutions and administration, has been singularly smooth and deserves congratulations to all concerned.
No one could know for certain what the out-turn of the first period would be. In fact, the Authority made a loss of £600,000 on the current supplied to the area boards, and the boards made a surplus of close on £5 million on their dealings with their industrial and domestic consumers. The net surplus for the industry was, therefore, £4,400,000, which is a modest figure on a total revenue of nearly £198 million.
The surplus was not made out of dear electricity. The House knows that the increase in the price index for all commodities since 1938 was 80 per cent. up to 1948. The average revenue per unit of electricity sold in 1948–49 was not 80 per cent. above 1938, but 12.6 per cent., and the amount per unit paid by the consumer for lighting, heating and cooking, that is, for the normal domestic and commercial uses, was not as much as it was in 1938, but 9 per cent. below. That result, a surplus of £4.4 million with cheap prices for electricity, was achieved in spite of a considerable rise in the number of people whom the Authority and the boards employ.
On paper the increase from vesting date up to 31st March, 1949, was 26,000. In fact, 15,000 of the 26,000 was a paper 250 increase only. The real increase was 11,000, about 8 per cent.; 7,000 of these 11,000 were needed because of the adoption of a 44 hour and a five day working week. The rest were due to deferred maintenance of the distribution system owing to the war, to the increase of work in rural areas, where the proportion of labour is higher than in the towns, and to the fact that the Authority and the boards now rely more on their own specialist services, legal advisers, architects, surveyors, accountants, and so on, instead of calling in consultants from outside as they used to do.
The numbers will go on growing as the industry expands, and the industry is expanding at a prodigious rate. The increase in the quantity of electricity generated has been, remains and will be stupendous. In 1929–30 it was 10,000 million units; in 1939–40 it was 25,500 million units; in 1948–49 it was 43,000 million units; and in the calendar year, 1949, it was 48,000 million units. It has almost doubled since before the war. The increase in 1948–49 over the preceding year was 10.5 per cent.
At the end of the period covered by the Report, the boards were supplying 12,200,000 consumers, an increase of half a million since vesting date, and two million more than before the war. Some of the two million have been country people. The easiest index to rural development is the number of poles used for distribution. In 1938 it was 100,000; in 1947, when we were just recovering from the war, it was 92,000; in 1949, 150,000, and this year probably about 175,000. In 1948 the number of farms actually connected to the mains was 9,200, and the capital expenditure in country districts was £5½ million. If this index of the poles is right, the number of farms which will be connected this year will be more.
The increase in electricity generated this year as compared with 1948–49 is again more than 10 per cent., and the Authority expect that this increase will go on. Their total capacity last year was about 13,000 megawatts. They predict that in 20 years' time, in 1970, it should be 30,000 megawatts if they are to meet the national demand. It has trebled since 1938 and will treble again by 1970. Is that really the future? It accords with the estimates put forward 251 by Mr. Warne for the United States. But is it healthy, necessary and right? What is this demand that goes on growing so voraciously from year to year?
Last year Mr. Francis Noel-Baker, the then Member for Brentford and Chiswick, raised on the Adjournment of the House the fact that in the Borough of Brentford, out of 5,260 premises, more than 1,600 within five miles of Hyde Park Corner were without electric light, and so strong was the desire of his constituents for electricity that HANSARD records that he raised the matter at 5.55 a.m.
Recently my hon. Friends the Members for Middlesbrough, West (Mr. G. Cooper), and Sunderland, South (Mr. Ewart) have asked me whether we could not instruct the area boards to replace gas lighting in the North-East of England with electric light. I can hold out no present hope that the boards could do so, because the capital cost would have been immense—about £1 million for Newcastle alone. There are still a quarter of the houses in the country which have no electricity supply and the householders who already have it, buy new gadgets, like fires, cookers, refrigerators, water heaters, and the rest, and use more current every year. There are only two million more consumers, a 20 per cent. increase in numbers since 1938, but they are using two and a half times as much current for domestic purposes as they did then.
§ Mr. Noel-Baker
I am not talking about supplies of coal, but I will come to that later, and I hope the right hon. Gentleman will be more than satisfied with what I have to say.
Hon. Members in all parts of the House are constantly asking me to give more electricity to the farms. Farmers want it for their houses, they want to make artificial sunlight at 4 a.m. in order that their hens may lay more eggs; they want it for milking cows, for running dairies, for chopping fodder, for drying grass, and for a score of other jobs. The National Coal Board have replaced their old steam-raising plant in the Rhondda with electric power, and so have saved 4½d. a ton on the cost of mining coal. They 252 want to do it in all their mines. The other day a manufacturer in the Midlands told me he planned to build a big new plant, which I think he said would cost £2 million, to make bicycles for export. The market is waiting and he can export the lot, but the plant would be all-electric. He will start when he knows he will be connected and the power will be there.
The Anglo-American Council on Productivity and Industry, in their first Report in 1948, talked about the relations between the amount of energy available per employee and the productivity of labour. They said:In the United States this figure is approximately twice that in the United Kingdom. This fact, in our opinion, accounts in large measure for the greater output per man hour in many industries in the United States.That is the demand. I think most hon. Members will believe that we ought to meet it if we can. But can we? Can we catch up with present plans or make the great long-term expansion which the Authority foresee? The Authority have begun to make real progress with their generating programme. In 1945, because of war conditions, we only got 181 megawatts of new capacity installed; in 1947, it was 340; in 1948, 566; in 1949, 703; and this year we hope it will be about 900. The Authority have a programme for the next five years of 47 new stations and 35 extensions of stations which now exist. On 61 of these, civil engineering or building has begun, and on 48 they have started the erection of the plant.
Perhaps it is easier to grasp the immense scale of this capital investment programme if we take the cost in cash. This year it will be not less than £102 million—£54 million for generation, over £5 million for transmission and £35 million for distribution to consumers. These are immense sums, and in later years they will be even more. Of course, the capital cost per kilowatt is far more today than it was before the war. The Authority have to pay more for civil engineering and builders, whose costs have gone up. They must pay more to the manufacturers for machinery and plant. Indeed, the present capital cost of new generating capacity is £54 7s. per kilowatt, which compares not unfavourably with the United States, but is three times what it was before the war. The Authority raised £150 million on the market the other day at 3½ per cent. and even 253 at that favourable rate of interest the future interest and depreciation charges will be pretty high. Working costs are higher than they used to be. It is well known that that applies to wages and to supplies of all kinds. Coal has risen less than many other things, but it has risen more than the prices for electricity which the Authority receives.
What economies in operation can the Authority hope for to offset this heavy rise in costs? In the longer future they will certainly get a saving on the standardisation of their machinery, their cables, switchgear equipment, transformers and the rest, and there will be increasing economies in transmission and distribution now that the whole system can be organised as a single national unit and the load can be allocated to the best advantage. Little could be expected during the first year. Nevertheless the Report speaks of a capital saving of £1,400,000 by national load allocation in 1949. There were other substantial savings in the areas as well, nearly £500,000 in two areas alone.
§ Mr. Pickthorn (Carlton)
I am very sorry to interrupt the right hon. Gentleman, but it might be much easier to follow his speech if he will give us the reference to each paragraph, if it is on his notes.
§ Mr. Noel-Baker
I am very sorry, but I am afraid that it is not on my notes. I occasionally have it, but not here.
Hon. Members may have read about the super-grid which some day will transmit current of 300,000 volts or more. One of the results may be that more power stations can be situated at the pitheads. That would save the very heavy cost of transporting coal. There are other factors in the selection of power station sites. Immense quantities of water are required. I am told—I found it difficult to believe but I am sure it is right—that a 300 megawatt station requires 12 million gallons of water an hour, about as much as the whole of London uses. The cost of coal transport is an important item and perhaps some day the super-grid may make big savings there. The Authority have made considerable savings by close cooperation with the Coal Board on the fuel they receive. The loss of electricity due to unsuitable fuel has been cut from 3.3 per cent. in 1946–47 to 2.5 per cent. in 254 the following year and 1.2 per cent. in 1948–49. This cut of 2.1 per cent. is equivalent to the addition of about 250 million—
§ Mr. Geoffrey Lloyd (Birmingham, King's Norton)
Can the right hon. Gentleman give us the pre-war figure?
§ Mr. Noel-Baker
I am afraid I have not it here. It was not substantially above or below. It is below now. My hon. Friend the Parliamentary Secretary will deal with it. The saving to which I was referring has meant an additional 250 megawatts of power, that is to say, an output equal to the output of a new large station.
They have made savings by cutting down the loss due to breakdown of plant, to overhauling and such things. In 1948 the saving was 15.1 per cent., in 1949 12.1 per cent., and today 11.4 per cent. They have got that result by improved planning of the programme of overhaul, and by having expert repair squads which could be sent at a moment's notice to any station where they might be required. That saving of 3.7 per cent. gave the Authority an additional 400 megawatts of power. It was a considerable result, but on this item, with 11 per cent. of loss—before the war the plant was newer—they have still a long way to go.
Much more important than any or all of these factors is the more efficient use of coal. Hon. Members know the basic figures about the use of coal because the figures are very familiar. It has been estimated that the overall national average of efficiency is about 18 per cent. and that 82 per cent. of the heat value of coal is wasted. It is lost in smoke and in other ways. If we could raise that average from 18 per cent. to 28 per cent. we should save 60 million tons of coal. With that background in their minds, let hon. Members consider the use of coal for electricity. I hope that the right hon. Member for Bournemouth, East and Christ-church (Mr. Bracken) will do so, because 97 per cent. of all our electricity is made from coal. The coal consumed last year was 29 million tons.
The most efficient plant and the least efficient plant of the Authority show an immense difference. The oldest plants, with old boilers, often use their coal with an efficiency of less than 10 per cent., but the modern stations with 255 modern boilers use it with an efficiency of from 25 per cent. to 28 per cent. Some of them are at the standard which, if it were a national average, would give us the equivalent of 60 million tons of coal. The best of the modern stations give nearly three times as much electricity per ton as the oldest and the worst. As the cost of coal is now two-thirds of the total cost of electricity generation, it is plain that as the Authority modernise their plants, they have room for big savings.
§ Mr. Drayson (Skipton)
If there is to be a saving of 60 million tons of coal as is envisaged, will that mean that fewer miners will need to be employed?
§ Mr. Noel-Baker
For the whole of the measurable future we shall need all the coal we can possibly get, and it will be some time before we can save the 60 million tons. The Authority have the prospect of big economies in time to come. Already, since the vesting date, they have raised the efficiency of the stations from 20.86 to 21.5 today.
There is the basic nightmare problem of the peak. Nothing helps so much to reduce the cost per unit or to give real economy and help to electricity as the reduction of the peak load and the better spreading of the load throughout the night and day. For many years the best brains in the industry have been devoted to this problem of the peak. They have accomplished something. By offering cheaper electricity they have induced industry to carry out certain processes at night. I am sure that a constant, urgent drive is still required, especially upon the storage of electric power.
There is scope for the increased use of domestic and industrial storage water heaters which heat the water at night and with which it can be sometimes arranged to cut off the current automatically before the morning peak begins. Experiments are taking place with a storage fire or radiator. This might be important on a cold morning because the present domestic electric fires add about 10 per cent. or 1,000 megawatts to the morning load. There are electric battery vehicles, which as my right hon. Friend the Minister of Transport has said, have many great advantages in the modern city because they have no fumes, no noise and no dirt and the batteries are charged 256 at night. Big expansion of their use would give a big night load, and it would save imported fuel as well.
In every branch of electricity there is still great scope for scientific research, and I am glad that the Authority are constantly putting more resources into research, especially research into storage batteries, on which I believe an intensive effort is required, and into other storage and control devices which might give real results in relation to the problem of evening out the load.
How will all this affect the costs of the electricity supplies? No-one can venture any safe prediction. In Appendix 25 of the Authority's Report, there is a chart which shows that total costs have risen in an almost unbroken curve since 1935. In the last year, 1948, the curve flattens out and dips slightly down. In paragraph 256 of the Report, there are detailed figures which explain the curve and why it changed. Since March, 1949, the downward trend has continued. Sir Henry Self believes that the average costs may be held below the maximum level to which they rose in the early part of 1948.
In any case, I believe that we can rely on the Authority and on the area boards to do their utmost to make themselves and keep themselves increasingly efficient year by year. They will be stimulated in that endeavour by Debates like this one, by the joint consultative machinery which they have established with their workers and their staff, by the work of the Consumers' Consultative Councils, by the healthy emulation which is growing between the area boards, by their competition with the rival industry of gas, and by the spirit of service which both electricity and gas have always shown. I think that, like the National Coal Board, they will find that what they are spending on the training and education of their workers, their staffs and their engineers will be the most rewarding of all the investments they have made.
Perhaps within a measurable future they will call on new resources to meet what seems to be an insatiable demand. Leaving out atomic energy, there are still the winds and the tides. They have already got experimental wind stations in the Orkneys and on the Cornish coast. The Americans have had one in actual production in Vermont, at a place called Grandpa's Knob. When we can afford 257 the capital investment and when we have done the necessary research, I think we shall find not only that we can use the winds but that there are other places besides the Severn where we can use the tides.
Whatever the future may hold, I hope the House will think that the British Electricity Authority have made a smooth and satisfactory start in their arduous but vital task, that they are already substantially increasing the electricity which they supply, that they have made big economies in operation and that they may hope for more, that they are just completing an intensive study of their tariff problem, that they are calling science and invention to their aid, and, perhaps most important, that they have done much to create and to consolidate the goodwill and the team spirit of those whom they employ.
Electric power—we have seen it here— may greatly help to raise the living standards of the people. T.V.A. is only the most dramatic example of a world-wide process. I think that these first Reports augur well for the future of the Authority and the boards and for the welfare of the nation whom they serve.
§ 4.5 p.m.
§ Mr. Geoffrey Lloyd (Birmingham, King's Norton)
Yesterday we had an almost entirely non-party Debate, and I have been wondering what our Debate today would be like in this respect. When we discussed the Report of the National Coal Board, my right hon. Friend the Member for Bournemouth, East and Christchurch (Mr. Bracken) said that he thought that in the House we ought to approach these Reports in an objective spirit and more from the point of view of a company at its annual general meeting than, so to speak, in a rough party manner. Of course, I agree with my right hon. Friend, but quite frankly I see the difficulties in the matter for hon. Members on all sides of the House, because we must face the fact that the boards have been set up in the course of one of the main political controversies between the great parties, and I have a feeling that it may take some time for the temperature to fall to that point where our Debates can be so completely non-controversial and objective that the polemical note will not enter into them at all.
When I was wondering in what spirit the House would consider the Reports 258 today, it occurred to me that hon. Members opposite seem in recent months to have changed their tone to a considerable extent about the whole question of nationalisation. I have been wondering whether these Reports have caused some change in their attitude Of course, it may have been some more practical matter, such as the result of the General Election, or it may have been both.
I must also take note of the fact—I think that hon. Members will allow me to do this—that recently some Ministers have betrayed a greater sense of the value of private industry than has sometimes been the case in the past, and I suppose that we ought to bear in mind when we are considering these matters that overriding in the background is the international situation which may lead this country into rougher waters, in which case, of course, we should have to make do with what we have in the shape of public and private enterprise as they are organised at present. However, I trust that we shall not have to make do with the present Government.
Having made that slightly controversial statement, I should now like to turn definitely to the Report and to say that I am sorry that I cannot give it unqualified praise. I think it will be agreed that the accounts and the statistical section are good, but, for my part, I agree with "The Economist" when it stated that the rest of the Report is:Turgid in manner and labyrinthine in arrangement.At the same time it would not be fair if I did not acknowledge the great value that should be attached to some statements which have been made by Lord Citrine and also to the particularly valuable paper which Sir Henry Self delivered at the British Electrical Power Convention quite recently, which I am sure will have been read with great interest by hon. Members on all sies of the House and which helps us very much to appreciate some of the points which are dealt with in a more abstruse manner in the Report itself.
We wish to be fair to the British Electricity Authority and, even more particularly, I should like to say that we are encouraged in our desire to be fair to them by reason of the fact that they have been fair to their predecessors. One can hardly go through a dozen pages in the Report—and we know that there are a very large 259 number of pages—without seeing some tribute to the Authority's predecessors. For example, in regard to the bulk supply part-time tariff, they go into the reasons which led the previous undertakings to work upon the principle of a two-part tariff, and they say that the:Empirical formula had worked remarkably well before vesting day and the Authority had no hesitation in adapting it for application to their bulk sales to area boards.Again and again Lord Citrine and other spokesmen of the Authority have gone out of their way to point out that the Authority have succeeded to a virile and progressive industry which was in very good shape. I will not weary the House with details, but instances constantly recur throughout the Report, and we appreciate that.
One part of the heritage to which the Authority succeeded was, of course, the Central Electricity Board set up by a Conservative Government, and I wish to point out that when that was done, it was done in order to facilitate a major technical advance in the industry, the establishment of the grid. There is no change which has been brought about by His Majesty's present Administration, no comparable great technical advance, which has been either necessitated by the new organisation or is likely to be brought about by it; and Sir Henry Self in his paper does go out of his way—
§ The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. Robens)
The right hon. Gentleman will not overlook the new super-grid.
§ Mr. Lloyd
I am glad to see the new super-grid is coming in, but I would point out that there was nothing whatever to prevent the old Central Electricity Board from improving its grid and producing the super-grid; so that the arrangements made by a previous Conservative Government would entitle them to claim the technical improvement of the grid system quite easily without the present arrangement.
I was about to say that Sir Henry Self paid tribute, and was right when he said that the grid was an essential feature in winning the war. The Authority have acknowledged the considerable assets they received, and I think I am entitled to claim, as is obviously the case, that with those assets, including the grid, there was 260 a wealth of technical personnel engaged in the industry, on the one hand by private enterprise and on the other by the Central Electricity Board, assisted by a Conservative Government in the past.
§ Mr. Lloyd
I entirely agree. If the hon. Gentleman wishes me to go into the past, he will recollect that from the very beginning of electricity supply in this country, both the Conservative and Labour Governments recognised that it was inevitably a monopoly service and had it strictly controlled by Parliament. However, I would not wish to be led too far away into that feature of the past.
The right hon. Gentleman has contributed to the lack of fierce party controversy in this House today by a notably unaggressive defence of the British Electricity Authority and the actions of his Department. Indeed, he struck the note so low that it almost seemed that—leaving on one side for the moment the admittedly important economies he claimed—that his main point was that the Authority had come into operation without any terrible dislocation occurring to the industry of this country—which does not seem to me to be a very strong form of defence. I would remind the House of the difference between the tone of the statements being made today and the promises made to the country by the party opposite in regard to this very matter of electricity. In "Labour and the Nation" they said:Public ownership of gas and electricity undertakings will lower charges. …well, that is what they said—
§ Mr. Pannell
"Labour and the Nation" is a definite document about the 261 party and recognised by those in the party. It was written before the war, and so the right hon. Gentleman will understand that there is some point in my remark.
§ Mr. Lloyd
I entirely accept it. I would not dispute with the hon. Gentleman with regard to details of the technical literature of the party opposite. I think I am dealing with a statement made after the war. But in any case the same statement was repeated during the Second Reading of the Bill by the then Minister of Fuel and Power; so there can be no doubt that, generally speaking, both before and after the war, a promise was held out that charges would be lowered as a result of the nationalisation of electricity.
The brutal fact is, of course, that almost the first act of the Authority was to raise charges by nearly a shilling in the £. I know that coal played a big part in this matter. I know that it was making its influence felt even before the vesting day, and it made its influence felt decisively after the vesting day. But I want to refer to what the right hon. Gentleman said about the comparison with prices before the war. He said that they were 9 per cent. less than before the war.
§ Mr. Lloyd
Yes, for domestic consumers. The right hon. Gentleman seemed to claim that as an achievement of the British Electricity Authority; but, after all, the Report which we are discussing is for the period from 1947 to 1949, and that is only a very short part of the period between 1939 and the present day. If we are to regard it as an achievement, I ask the right hon. Gentleman, in fairness, to agree that that achievement must also be counted to the credit of the private enterprise authorities which were handling this matter during far the greater period of time which elapsed from the beginning of the war until the period of the Report; and in fact right throughout the war, when on the whole charges were rising even more.
It is the case that just before vesting day the electricity prices to domestic consumers were not 9 per cent., but 13 per cent. lower than before the war. I think the right hon. Gentleman will admit that this is a fair point 262 to make, and that if it is an achievement it must at least be shared between the public authority and the private enterprise undertakings which came before.
Coal has, of course, been a very serious problem for the new Authority. It is not only the question of the rise in the price of coal; it is also the question of the fall in the quality of coal. That falls again into two classes. First, there is the fall in the calorific value of the coal supplied to the Authority. Lest we tend to under-estimate this, the Deputy Chief Engineer has himself stated that the fall in the calorific value of the coal means an extra payment of £4 million a year by the Authority. That is an official statement by the Deputy Chief Engineer of the Authority.
Not only is there a fall in the calorific value of the coal, but there is also the related question of the increase in ash content of the coal; and again we know from the same authority that it costs 4s. a ton to dispose of the ash. I have made a slight calculation, which is always open to correction by hon. Gentlemen opposite. The Authority used 28 million tons of coal during the year under review. The ash content was approximately 15 per cent., which was a rise of 5 per cent. compared with the time before. There fore, that means that the British Electricity Authority had somehow to dispose of 4,200,000 tons of ash at a cost, in addition to the cost of the coal they bought, of £840,000 a year, which I think is a demonstration of the very severe problems the Authority are facing owing to the in ferior quality of the coal being supplied by the National Coal Board. If we look at the future, we are bound to take account, as Sir Henry Self—
§ Mr. Lloyd
If the hon. Gentleman consults the paper of Sir Henry Self, he will find that the Authority had the greatest difficulty in disposing of their ash. It was a technical problem of great complexity, because of the liability of the ash to become airborne in certain circumstances and the fact that they had to purchase chalk pits and quarries and arrange at considerable expense to pack it in those receptacles. It does not, therefore, look as though it was a very profitable 263 sideline for the British Electricity Authority to dispose of their ash. We must realise, of course, that the Authority have to face the 16⅔ per cent. increase in the Transport Commission's charges, which involves them in £1,500,000 a year extra for railway charges and £250,000 by canal.
The Report strikes a warning for the future when it tells us—this point was touched upon, but not developed, by the right hon. Gentleman—of the great cost of the new capital equipment and its inevitable effect, unless other economies can be found, in causing a rising trend of costs in the future. That is the case even though the Authority are now able to borrow upon a gilt edged basis. Indeed, Sir Henry Self has made a calculation for 1955–56—I admit that he calls it "an imaginary exercise in prophetic arithmetic "but he is doing his best to look ahead that period—and says that it yields "a barren prospect for 1955–56." Again, he warns of the danger of rising prices. He says that with this kind of consideration—that is, the rising costs of capital equipment, among other things—there is a serious danger that we may not be ableto maintain a balance without any serious disturbance of the level of retail tariffs.With regard to the overall result, he says:Obviously we cannot accept the emergence of a financial result of the order indicated.He concludes by pointing out that in the whole of this calculation he has made no allowance for certain reserves which he regards as essential to put against certain hypothetical results that may happen in the next few years.
I had intended to deal with the problem of rural electrification in some detail but I will refrain from doing so in order to spare the House the extremely technical argument which it involves. I might, however, be allowed to say in passing that once again very considerable promises were made, this time in "Labour Believes in Britain," which, I believe, is a fairly up-to-date document.
§ Mr. Lloyd
I am sorry if I gave the wrong title, but I am not so familiar as the hon. Gentleman with the nomenclature of the party opposite. I know, 264 however, that mine was an up-to-date statement. This is "Labour Believes in Britain," which is undoubtedly the Socialist manifesto for the 1950 Election. It says:In the next five years, now that electricity services are publicly owned, more rapid progress will be made with rural electrification.
§ Mr. Lloyd
I should like hon. Members to read this very interesting paper by Sir Henry Self. I will not take them through all the stages of the argument relating to the two-part tariff, to the necessity for that tariff because part of it relates to the capital charges and part to the running costs, and to the fact that we cannot have what Sir Henry Self calls the "postalisation" of electricity from a tariff point of view over the whole country, for technical reasons which he develops. He then finishes with these words:Unless, therefore, the consumers or communities concerned make some special contribution towards the extra costs incurred, development in rural areas cannot proceed rapidly, particularly in view of the investment cuts imposed by the Government.The House will see, therefore, that the note of "Labour Believes in Britain" is very different from that adopted by this responsible member of the Authority when he tries to translate that matter into a practical programme for the future.
One of the most disgraceful episodes with which the Report deals is the responsibility of neither the Authority nor the right hon. Gentleman; it is the responsibility of his predecessor, when he insisted on imposing what is called the "Clow differential." I wonder whether the Minister would be good enough to tell us the correct pronunciation of this name?
§ Mr. Robens
There is no indication of any Ministerial direction being given to the Authority at all.
§ Mr. Lloyd
No, but I fear that under the circumstances in which these gentlemen hold office after having been appointed by the Minister, a serious request from him has almost the same force in actual practice as a direction. Anyway, it is absolutely without doubt that the Authority always realised the technical and general objections to this differential. They never wanted to operate it, but as a result of some action by the Minister, whether it was technically a direction or was a very earnest request, they were prevailed upon to do it. It was a complete failure, and there have been complaints from all over the country.
This is really something that could not have happened under ordinary private enterprise conditions, because, in those circumstances, the Minister would not have had the same degree of authority. He would not have had the degree of moral suasion which would enable him to force the electricity undertakings, at his will, to put up the price of electricity during those winter months as, in fact, he did. Even the Authority, who, I have no doubt, are, in general, a little frightened of the Minister, go so far as to say that they were most reluctant to implement this charge. They doubted its efficacy and believed that hardship would result. I hope that without any alteration of the Act or anything of that kind, we can ask the Minister to be very careful indeed in the way he interferes in the action of the British Electricity Authority.
§ Mr. Lloyd
No, it is not. We know that the request was put by the Minister—that is not denied; and it was most reluctantly agreed to.
We on this side have from time to time said, and it has been challenged by hon. Members opposite, that some of the private consumers of products and services of the nationalised boards were somewhat nervous about making complaints and having them ventilated even in this House, at any rate to the extent of giving their names, because, human nature being what it is, they were frightened of certain retaliatory action by the monopolies with which they were compelled to continue to deal. I happen to have been, in a corporate capacity, a very large consumer of the British Electricity 266 Authority in my capacity as a governor of the B.B.C.
I tell the House once again that I speak with a certain experience on the question of nationalised boards. I have been a member of one of them. It is true that it is one of the more respectable nationalised boards, which was set up by a past Conservative Administration—for very good reasons. I was appointed as a member of the Board of Governors of the B.B.C. by the present Prime Minister, in pursuance and in continuation of the healthy convention—which, I understand, is never understood by party politicians of other countries—which was started originally by a Conservative Government, of including among the members of the Board, not a representative of the official Opposition, but somebody who happened to be a member of the party forming the official Opposition.
In that capacity in which I was during my enforced holiday from this House and also with the advantage of Parliamentary privilege, I would like to say this: there is no doubt that when I was a Governor of the B.B.C. we found more difficulty through negotiating our tariffs all over the country for consumption by our installations, when the British Electricity Authority had been established. In the old days there was a much more friendly and accommodating attitude by the old electricity undertakings, but, when the British Electricity Authority came into being, we found that old friendly attitude between our technicians and theirs had gone and there was a much more "take it or leave it" attitude. I do not want to stress this too far, but there was much less spirit of accommodation and much less spirit of being prepared to meet the particular difficulties on a fifty-fifty basis and much more of this rather standoffish, official and bureaucratic take it or leave it attitude.
§ Mr. Lloyd
The difficulties of the corporations arise out of their obligations to the consumer, but here is a public authority which feels it has a certain grievance about its treatment by another authority. I only hope that the difficulties I have mentioned have passed away since I was a Governor, or that they will speedily do so, because I think that with good faith on both sides they can be co-operative.
§ Mr. Robens
I take it that we can now secure details of these charges from the B.B.C., and have them investigated.
§ Mr. Robens
Serious charges have been made against the Authority in their treatment of the B.B.C. I listened carefully to the right hon. Gentleman. He gave no evidence of this at all, but said it was his experience. Now I am asking whether he will be prepared to give the evidence, or if we can approach the B.B.C. and secure the evidence of where they have been badly treated and have it investigated.
§ Mr. Lloyd
The hon. Gentleman must not attribute to me more than I have said. I was careful to say that I did not wish to push it too far and I deliberately restricted my remarks to the question of a more standoffish attitude and did not make a charge of any definite action of a price kind against the B.B.C. I finished by saying that I did not want to exaggerate the matter and that I hoped it had already been dealt with, or could be improved by a more co-operative attitude.
I would like to say a word about the publicity expenditure of the British Electricity Authority. In common with many hon. Members, I have been greatly charmed by the delightful pictures of power stations appearing in the Press recently. Usually they have a swan floating in the foreground, but the one I have here has a yacht in the foreground. I congratulate the Authority on commissioning very good artists to produce these delightful pictures. But I must point out that this cost £439,000 in the year of the Report we are considering. I ask the Minister and the Board to consider whether that very large amount is really justified, particularly having regard to the fact that the National Coal Board, for example, spent, in 1949, only £54,599 for this purpose. I am not saying that the two are entirely alike, but at first sight this great disparity in the amount is something which causes one to wonder whether it is really justified.
I also raise the point of whether this is really calculated to be a form of 268 propaganda in favour of nationalisation. We get these posters, "Another Great Power Station by the British Electricity Authority," and the impression is given that the power station is entirely the work of the Authority. I think I am right in saying—the right hon. Gentleman will correct me if I am wrong—that nearly all, if not every one, of the power stations which appear so magnificently in these advertisements were either planned, or started, long before the British Electricity-Authority came into being. My anxieties in this matter have been somewhat increased, because I saw a statement by an advertising consultant who is employed by the British Electricity Authority which I thought rather extraordinary. He said:The advertising agent is in a similar position to counsel at the Bar. For ten years, on behalf of Edmundsons, we have been pleading the case for free enterprise in electricity distribution. We are now about to work for the nationalised industry in the Midlands area, and to plead the case for nationalisation. Turncoats? Not at all. There are points to be made on both sides of this argument, and we shall now make the points for the other side. …I would ask the right hon. Gentleman and the Authority to consider the statement of this gentleman, because I hope we can have an assurance that it will not be continued.
I wish to say a word about research and, here, I hope I can be objective—[Laughter.] I should have said that I hope I can be particularly objective. As far as I can see the authority is spending £55,576 in the year under review of the Report on research. I happen to be keen on research and for many years I have cast rather envious eyes on the tremendous research allocations of the great companies in the United States. I have noticed with great encouragement that in recent years the big companies here have been doing the same, for example, one of the big electric power groups spends £1 million a year, and I.C.I, spend £4 million a year, on research and development. I am wondering whether the figure of £55,000, which is all I can find either for the Central Council or area boards is all that is spent on research.
With regard to the actual organisation of research, I congratulate the Board on appointing Sir Harold Hartley as Chairman of the Research Council. I must admit I am somewhat prejudiced in this 269 matter because I appointed him as head of a similar council, the Chemical Warfare Department when we were working on F.I.D.O. and P.L.U.T.O. and I have the greatest opinion of his capacity. I see that Sir Geoffrey Taylor, one of the finest mathematical physicists of Cambridge, is also a member of the Board. I hope we shall have good results from this Council. I would like to go into detail on this subject, but I cannot do so.
§ Mr. P. Noel-Baker
I can give the right hon. Gentleman the figures; £55,000 does not include direct research by the Authority in its own generating stations or transmitting stations; there is more than that. The figure this year is £250,000, of which £70,000 is for generating stations, and so on. I think that is about as rapid a development as can be expected.
§ Mr. Lloyd
When I look at the qualifications of the members of the Authority—I speak with some sympathy because, once any body of English people is constituted into a public board they develop great loyalty to the institution, and I am sure they are working very hard. I find that they are very high in many respects. There are Lord Citrine, Sir Henry Self, a distinguished civil servant, Sir John Hacking, a distinguished engineer, and Mr. Bussey, a distinguished technical trade unionist—they are the full-time members of the Board, and then there are the part-time chairmen of the area boards—but I am struck by the fact that I cannot find a single person who represents purely business or managerial abilities. In the case of a board of this nature I believe that there is something lacking when, in addition to the rich variety of talent at present represented upon it, there is not someone who contributes the hard-headed managerial side. I would ask the Minister to consider whether, at some future time, that point might not be remedied.
§ 4.41 p.m.
§ Mr. Tomney (Hammersmith, North)
The Minister was rather apologetic in his introductory remarks about this Report. I assure him that he need not have been because this is an excellent Report. If the progress outlined in this first Report can be maintained, this country will quickly become the foremost in the world in the generation and 270 distribution of electricity. The Report covers a wide and comprehensive field, and Members will wish to speak on various aspects. If, as I proceed, I introduce certain new notes, I hope that the Minister will take due note of them, because they will be issues of fact affecting the general public and it is by its capacity to serve the interests of the general public that the success or otherwise of the British Electricity Authority will eventually be measured.
The Minister outlined in some detail the need for the nationalisation of the industry and the necessity for agricultural electrification. In these days all Members of the House agree that it is our capacity to produce which will ensure our survival. The position of the consumer in relation to the benefits to be gained from this industry is something which is readily and easily understood. I know that we have only touched the fringe of electrical development. It is practically new—about 50 or 60 years old.
The most welcome feature, so far as our daily life is concerned, consists of the diverse electrical appliances which can help to make our work considerably lighter. These are in the hands of private manufacturers. We have the unique situation of the Electricity Authority of the nationalised industry developing the prime power while the appliances which use that power are being manufactured by private enterprise. To secure for the consumer the full benefit of complete electrification it will be essential for those commodities to be made available to the public as cheaply as possible. To that end I suggest that the Minister could, in the future, give some thought to the possibility of coming to arrangements with the manufacturers and the Authority for the eventual scaling down of the prices of the necessary electrical commodities and equipment which will make our lives so much brighter and will make the housewife's work so much lighter.
In the field of fluorescent-type lighting there will be great development. I was concerned with fluorescent-type lighting in its early days, from its inception. Its one fault today, above all others, is that it is much too expensive. We must find a common formula between the Electricity Authority and the manufacturers whereby we can quickly ensure the use of this great boon in our streets for direct 271 lighting in the public service. It is very necessary and it is at least 1,000 per cent. more efficient than present lighting.
The most searching criticism which one could make against the Electricity Authority concerns a matter which any Member of this House who has been a member of a local authority has come up against. I refer to the difficulty of the soot and dust nuisance. We know in some detail from investigations that it is primarily due to the low grade quality coal which electricity stations have been using during the last few years instead of the high grade coal which has been going to export markets. This nuisance has been widespread in practically every town where electricity is generated. The Minister and the British Electricity Authority are in process of developing and installing what are known as arresters to prevent this nuisance. I urge all possible speed in dealing with this question, because it is causing a great deal of annoyance to people in the vicinity of the electricity generating stations.
I have carefully read the staffing arrangements outlined in the Report. It is obvious that when one develops an industry of this character one must, in the initial stages, employ a great number of staff to get the organisation working and put into shape. I find, according to my calculations, that the ratio of staff employed to manual workers is something like one clerical and administrative worker to four manual workers. That is much too high. If we can establish a ratio of 1 to 20 for an industry of this character, we shall be able to reduce costs and make the industry more efficient. Taking a broad view, power stations, once established, are not susceptible to everyday change. They are static. I ask the Minister to look closely at this aspect of the matter, because the present staffing ratio is seriously over-weighted.
The standardisation of voltages and current and tariffs is proceeding. That has been required for a number of years. There is also the question of the standardisation of fittings, lack of which causes great waste and inconvenience when one moves from point to point and from district to district. I hope that that aspect of the matter will be tackled with all possible speed.
272 In the field of labour relations, referred to in the Report, benefits have been conferred. As one who has for some years been concerned in trade union negotiations on conditions and wages, I read with great interest the conditions which the employees in this industry, both manual and administrative now enjoy with regard to holidays with pay. I think it is well worth the while of the Post Office to note that only few trade unions represent the personnel of this industry. That makes for efficient co-ordination and agreement. Those unions are the National Union of General and Municipal Workers, the A.E.U., the E.T.U. and the Transport and General Workers' Union. They have operated on an area basis and a works committee basis. This industry has been absolutely free from labour troubles, which is a credit to the management, the Minister and the trade unions concerned.
We should try to extend the conditions accorded to these men to the whole of British productive industry. All manual workers are entitled to the same conditions as those employed by the British Electricity Authority—two weeks' annual holiday with pay and public holidays for day workers, and three weeks' annual holiday with pay for shift workers. In addition, they have full pay for a period of 13 weeks if ever they are seriously sick. Those are conditions which reflect the general good will of the Authority towards the men employed by it, and no doubt those feelings are reciprocated. At any rate they have been so far, because there has been no major upset in the labour relations between the Authority and the trade unions.
I now come to a point peculiar to London, and probably peculiar to the London Area Board. It is obvious that despite the advent of the new towns in and around London, there are just as many people coming to London today as ever before, and it is obvious that, due to the scarcity of building ground available, the development of flats will have to take place in London for a considerable number of years to come, if not permanently. We have a position wherein the same Minister is in charge of fuel and of power and, as the boards develop, it should be possible for them to get together on problems affecting particular localities-, and especially an area like London which is, in general, a city of flat-dwellers.
273 For example, the White City flats in my own constituency at Hammersmith represent probably the greatest conglomeration of flats on one site in London, most of them five storeys high. Every one is coal-heated and the difficulty is that the householder can store only 2 cwt. of coal. I suggest that, where we have to build flats in London, they should be completely electrified; that the Minister should get together with the British Electricity Authority, with the architects, and the local authorities to make absolutely certain that the electric fires, ovens and immersion heaters put into these flats are of the best quality; that adequate maintenance service is available, and that they are on a loan basis.
If we proceeded to adopt such measures it would mean that we should no longer have to transport coal from the pithead a long way to London, which is entirely uneconomic. London flat dwellers will have to face the possibility that in future their homes must be completely electrified, both for the sake of themselves, the national economy, the Coal Board and the Electricity Authority. Those are matters upon which detailed later development can be entered into by the various councils and authorities concerned.
The right hon. Member for Birmingham, King's Norton (Mr. Geoffrey Lloyd) made the charge that we stated in our manifesto that we would lower charges for electricity. The right hon. Gentleman is perfectly right. We shall. But there is a great amount of capital expenditure and development to be undertaken first. However, the more use is made of electricity, the cheaper it becomes, so it is perfectly within the bounds of possibility that within the space of a few years we shall have the cheapest tariffs throughout the world.
Where I think great praise is due to the Electricity Authority is in the magnificent way they have got on with the job, both men and technicians, in these parlous days of England's national economy. It is obvious that we must have electric power available to every village and hamlet in this country in abundant supply, because we are not yet half way towards solving our problems. Therefore I give this Report the warmest welcome, and if the Electricity Authority can carry on—as I think they will do if we can avoid 274 any international upset—on these magnicent lines, we shall be a long way towards solving our economic difficulties.
§ 4.55 p.m.
§ Mr. Pickthorn (Carlton)
Mr. Deputy-Speaker, I must begin by apologising to you and to the House: I hope that I am not noticeably less virtuous than the average of hon. Members about actually sitting in the Chamber, but hon. Members will know that now and then one gets caught in a conflict of engagements, and I apologise for speaking tonight though I do not mean to be here after 7 o'clock.
I agree with most of what was said by the hon. Member for Hammersmith, North (Mr. Tomney) except, perhaps, the rather excessive ritual eulogies into which he burst at the end of every alternate paragraph. I deeply agreed with him about the nuisance of soot and dust and so on, and if it is worse in the White City than it is in the Pimlico neighbourhood, I should be much surprised. I very much agreed with him also about the administrative costs—perhaps I shall return to that later—and the high proportion of clerical workers to manual workers and of administrative costs to actual production and distribution costs.
About the standardisation of voltage, and fittings, I thought the hon. Member was a little less than just to the past, and I thought there was also perhaps a moral for the future. It is easy to think that in your time—whenever that may be—things have reached, if not perfection at least normality, and that, therefore, you can fix them there. And there is serious risk—and even Socialists must agree a risk more serious with state enterprise than with other enterprise—that in pursuit of standardisation you may actually get something like fossilisation. Certainly, if voltage had been standardised too early it would most certainly have been standardised at a figure which we should now all think wrong. And the delays in standardisation of voltage in the years before the war were not delays due to the separate commercial units generating and transmitting electricity.
I wish to ask the Minister—at least I should if the Minister were here, and as I shall not be here all day myself I am not complaining of that in the least—whether great care is being taken in the pursuit of standardisation to see that we 275 do not run into fixing things too rigidly. Because my information from some old friends of mine in the industry is that they are afraid that may be happening. And as a comparatively small footnote to that, may I ask is every effort now being taken to try to influence from the aesthetic point of view the improvement of electrical appliances?
It is a curious thing that electric light fittings are rather like printing: it is in the cradle of printing history that the best things occur, what collectors call incunabula for that reason. I would not like to say that the electric light shades made in the 1890's were immensely valuable objects of art but, compared to almost any of the ones made now, they were surprisingly good. That is a matter which I think a centralised influence might perhaps be directed towards.
I want to say a few words about what the Minister began by telling us. I thought he was a good deal less than generous to his predecessors in title. We are bound to make these comparisons. First of all there is nothing else to compare this Report with except the pre-Socialist world, so that the comparison must be made. And secondly, all the Reports--the main Report, the Minister's own Report, and the area Reports themselves—have an awful lot of stuff about what had already happened before they took over and a great deal of stuff about what is going to happen when everything is going well.
So we also are bound to look back and forth in time, and we are bound to make these comparisons, and there was some want of generosity in the matter. The Minister made it a credit to his office and, still more, to the Authority, that the take-over had happened without chaos. To whose credit is that? I take it that nobody would doubt that if the previous management had been either incompetent or malignant, the ease and smoothness of take-over would have been extremely difficult. It would have been perhaps even impossible.
§ Mr. Pickthorn
I apologise to the right hon. Gentleman if he said that it was a matter of congratulation for them all. 276 That certainly was not the impression I got, or the note I took down. I thought that it was a matter of congratulation to the Authority.
§ Mr. Noel-Baker
I said "to all concerned." Everybody knows that the vast majority of the people now working in electricity are those who worked in it before.
§ Mr. Pickthorn
But the Minister really is not meeting my point. If I may say so, this is really not quite worthy of him. He is now saying that it is a matter of credit to all concerned, meaning all who are still in the industry. Whatever he may have said an hour ago, the House has heard what he said just now.
§ Mr. Pickthorn
That is quite different from what the Minister said before, or just now. My point is that it is to the people who then went out of the industry to whom really a very great share of the credit is due, and there ought to have been some moment at which that credit was specifically and plainly given. This afternoon might have been such a moment.
§ Mr. Pickthorn
A great many people engaged in the direction and management of electricity production and transmission before vesting day are not now so engaged. It is perfectly certain that if they had not been honest and competent men, the take-over would have involved a much heavier handicap on our industry and general social life than it did. That is all I am saying, and that, I think, ought to have been said from the other side.
Incidentally, I do not want to go into the rather small and captious points about employees and directors, and so on, but I think that we ought to be told about loans. If the right hon. Gentleman looks at the Report—like him, I have forgotten the number now—there is a paragraph about loans. It is there stated how much is still due on loans to employees, mainly, I think, for buying cars and houses. Upon that, I should like to ask whether really that is the best way of providing them with transport and housing. It may be that it is in many cases, but clearly there are objections to the method.
277 Secondly, the paragraph says, I think rather loosely or else with distinct want of candour, that at this date there were no loans outstanding to members of the authorities or the boards. If there ever have been such loans there should, in accordance with company practice and indeed, I believe, with company law, have been a statement showing the existence and the date of paying off of those loans.
Then I want to ask the Minister one or two very general questions. I apologise for being very interrogatory, but I think every one of us must be extremely interrogatory with these Reports. Hon. Gentlemen opposite must see that, in a sense, we can make the best of both worlds in our arguments on these Reports. If we can understand them thoroughly, well, then, that is to our credit. If we cannot understand them thoroughly, then hon. Gentlemen who may understand them better than we, either because they are abler, or because they are more versed in the matter, or because they have been able to devote much more time to them, should be a little tender with us and should remember that if there is to be any reality in what is called social democracy, if there is to be any reality in public control of these enormous concerns like nationalised electricity, then somehow the Reports must be made such that quite ordinary Members of Parliament—if I dare put myself in that category—should be able pretty quickly to get the guts of them and not to make any very grave mistakes. If I have not got the guts of the Reports and do make very grave mistakes, I submit that that should be considered a reflection as much on the Report as upon me.
One of the general questions I want to put to the Minister is this: many of us at the time when this enterprise was started thought it a mistake to separate so completely generation from transmission. That is not a matter upon which there need necessarily be any party line, although I think, in the main, the two parties were split more or less along the Floor of the House. But, obviously, it need not be so. I should like the Minister to tell us whether, either from studies of these Reports or from their knowledge of what has happened since the date of the compilation of these Reports, they are still certain that it is right that generation and transmission should be so far apart from each other as this. 278 Before I come to my main point, I should like to say a few words about what is called research. As far as I can guess, there is not really any research very much necessary for this purpose, in the strict academic sense of research. It is not primary research that is wanted. What is wanted is investigation of the methods of exploiting economically what the scientists already know perfectly well. I should like some assurance that it is fully understood that it is not really research which is, or should be, the Authority's concern in any very strict sense, but rather the application of it. And it is not to be measured by expenditure.
Then I come to the question which is less general and which I want to put. I begin by saying that nobody more distrusts my understanding of accounts than I do; if I do not put a question mark at the end of every one of my sentences, it is only in order to avoid monotony and not because I wish to be dogmatic. The accounts show a profit, if I may use the word. Apparently it is all right, I think, with nationalised boards, that there should be a profit. The accounts show a profit of something under £4,500,000, and that is taken as one of the reasons why the Report ought to be welcomed. I want to ask whether that profit really is a true profit. I think that it is extremely difficult to get at.
We all know that in the production of electricity the capital cost represents a higher proportion of the cost than, I think, it does in any other great industry. I think we all agree upon that. Secondly, we all agree that during the last 10 years, partly because of the faults of the wicked foreigners, without whom, someone once remarked, foreign affairs would be so much easier, and partly for other reasons, the value of money has gone down. That is another way of saying that the cost of everything else has gone up.
The Report admits more than once that the cost of capital replacement must be expected to go up, and to go up rather fast, in the near future. I do not think that the right hon. Gentleman would suggest that I have said a word that is not perfectly fair so far. It is with that background that one has to consider whether the reserves—which I think hon. Gentleman will find in either A.1 or A.2— 279 which, if I remember aright, are a little over £3 million, are enough, and whether the profit really is a profit.
May I look into the profit point a little further? First of all, comparing it with the last year of the pre-Socialist accounts, the Authority has an advantage of £3 million in a year in that it has that much less to pay in interest and dividends. I think that is right. It has that much less to pay. Then, secondly, the Authority does not pay, as was paid before, something getting on for £1 million to the ratepayers to the relief of rates. So that is something near to about £4 million which the Authority is spared.
Then, thirdly, since the Authority has the whole of electricity production and transmission as a single business, it is rather like the man who tucks away his winnings on the stock exchange in the losses on his farm. It is able to do that; if they were separate producers and transmitters, successful ones would have to pay Income Tax, but the Authority in this year pay no Income Tax at all. [Interruption.] It is no good the hon. Gentleman shaking his head: the fact is that no Income Tax was paid. If he would look at the Report, he will see the fact, and the Authority's disquiet about the fact, where it says something like, "We are considering whether we ought not to have some kind of taxation reserve fund." I do not know how much it ought to be, but clearly something added on to the £4 million, because it is clear that we ought to add something, and I have heard it very highly put, in connection with another tax advantage: that is to say, the Authority has taken into one year's accounts the whole of the 40 per cent. of the initial allowance on capital expenditure.
I do not know if that is approved; I do not think any commercial concern would have done that. I think not, and I think it is a proper question to put to whoever will wind up the Debate, to explain these things to us and say whether it is true, if that calculation is right, comparing this year's accounts with the last year's accounts of private enterprises, that there is at least an advantage of £9 or £10 million on the public enterprises side as against the private enterprises. I know there is some difference of view at the moment and that some people will put it higher at £12 million and even £15 million. 280 I want to know whether that is true or not, because, if it is true it does not seem to me—or put it this way; suppose I take over a concern from any hon. Gentleman opposite, take it over as a going concern, and at the end of the year, I say, "Look here, I have done jolly well and made £400 profit"; when he could demonstrate that, in fact, I was saved £1,500 of unremunerative expenditure which he had always had to meet, he would not be quite so dithyrambic about my results as the hon. Member for Hammersmith, North (Mr. Tomney) was a few minutes ago.
I put all these questions genuinely as questions because I am fully conscious that I may be leaving out important factors or wholly misunderstanding something; but I think these are questions that ought to be put and I hope they are the sort of questions which we have always been adjured to put, that is, the sort of questions which shareholders would ask.
I do not want to go into the smaller points. There are rather a lot of smaller points on matters of advertisement and so on, about Haddon Hall and about it being re-christened Electricity Hall—with a wild flourish of literary ingenuity, somebody re-christened it Electricity Hall—all these visits abroad and picnics all over the world. We all know there is the sort of chap in every walk of life who does frightfully like going on jaunts, picnics and foreign tours, to luncheons and dinners and all that, congresses and conferences, but we ought to ask, just as any shareholder would ask if there were a very considerable element in a company's accounts concerning jaunts and picnics, conferences abroad and all that. I am not dealing with any other company, but only this one, and is it not reasonable that these questions should be asked? I think they are fair questions to put, though I do not wish to lay too much weight upon them.
I come back to another big thing—the intangible assets. The hon. Gentleman will be familiar with the intangible assets. I have done my best, and I hope there is nothing improper about endeavouring to be familiar with an intangible asset—I have done my best to make myself familiar with them, and I have not been very successful. One or two things I think do appear about the intangible assets. They are down at £64 million, roughly speaking, and we may add on, for purposes of my present argument, the £5 281 million which is so-called compensation for the severance loss suffered by the municipalities.
There was a process by which the word "compensation" has been deprived of its meaning, to those who like using words for argument, and one of the steps by which "compensation" was invalidated for that purpose was that, when the municipalities argued very strongly against the Bill that they were going to lose because they would still have their overheads while large branches were taken away from their concerns, Ministers argued against that as long as they could, and finally said "Oh, let them go somewhere or other; we cannot work this out but give them £5 million and call it compensation."
If we add that £5 million to the £64 million, it gives us something like £70 million of intangible assets, including what was paid for municipal severance loss. I hope the hon. Gentleman is following me. That is being amortised over 90 years, and the question I want to put is this: Is that the best commercial practice? Can it be explained how this capital sum arose, because I do not think that is clear. I believe I could explain it and get it right from the Report, but it would take me too long a time and I could not be sure that it was right at the end; even if I was, hon. Gentlemen opposite probably would not believe me. Therefore, may we have it from someone with authority on the Treasury who could make it not only clear but convincing? If the hon. Gentleman wishes to do it himself, will he explain how this £70 million arose and why it is to be paid off over 90 years, and would he accept the assumption that a commercial concern would have said five years if it was frightfully conservative, 15 years if it was frightfully unconservative or foolish, and perhaps about 10 years if normal ordinary chaps but not Socialists? Why 90 years? I ask the hon. Gentleman, can he tell the House why it is 90? And I hope he will not say that it is because there is a period of 90 years of paying for stock, because the two things do not have any connection with each other at all. I hope he will not put up that argument.
If we add, on the facts that I have submitted as being open to correction, if we add to the £10 million or so which is for the expenses which the Authority did 282 not have to carry and which the private enterprises used to carry, the difference between one-ninetieth and one-tenth of £70 million—it is not a difficult calculation but it is too difficult for me to do in my head, and I leave it to the hon. Gentleman—if we add it, it comes to something very considerable.
That really is, I think, the main thing I wanted to say, and I hope in my endeavour to be clear I have not been too lengthy. There is one small technical point I wanted to mention and which I think ought to be looked at, although I will gladly give way if some legal expert tells me I am talking nonsense. [AN HON. MEMBER: "Why legal?"] Because the question I am going to put is a legal one, and I have the modesty to suppose that a peron engaged in another occupation knows more about that occupation than I do. If the hon. Gentleman will look at Section 45 of the Statute, he will see that the duty is placed upon the Minister to redeem the capital and depreciation of assets. The word is "and" not "or." There was a good deal of agitation at the time, but I could not bear to look up the Committee stage, because I can never bear to read my own speeches and I do not see why I should read those of others. But the point did not escape attention, and we were told then it was all right. I do not feel at all sure it is all right, and if hon. Gentlemen will look at Section 35, and then if they will look at paragraphs in the Report which refer to Section 35, they will see that the Authority is obviously very worried about the matter.
One can see how it happened. Of course, the municipal people supplying electricity paid off their loan from year to year as their asset got older and older, and they were thus able to borrow more money when they wanted a new asset. That was the right and proper way to do it. That is not, of course, how private enterprise did it. They did it by putting so much to a depreciation reserve each year in order that it should be enough in the end. What the Statute really makes Ministers do is to do both things. I feel extremely dubious whether, in fact, the Authority and the Minister are doing what the Statute enjoins, though I am quite prepared to admit that what the Statute enjoins really is impossible. If I am right—and, again, I am not in the 283 least tying myself to my opinion in the matter—then clearly there ought to be some revision of the Section.
This is the very last thing I will say, about this general question of depreciation. I thought I understood it very well when I just flipped over the pages of the Report very quickly. I made the mistake of lunching early today and spending three hours grappling with the Report, and I am not sure that I understand it now. One point sticks in my mind, and I do not see any way out of it. I hope the hon. Gentleman will answer it. It is quite clear that both the municipalities and the companies did, in fact, in the two ways I have indicated, save enough money, taking one year with another—to use the sanctified phrase—to buy new tools and machinery when needed. That is obvious, as, otherwise, we should at some moment not have any electricity, and the fact that we could stand up to the long lag of the war, I think, makes that plain that replacements had been adequate. But it is not plain on the face of the Report that the Authority is now putting enough money by, whether it is argued that it is putting by more or less.
In the old days the rule was that one must put by enough to pay off in x number of years laid down by the Central Electricity Board for some equipment—10 years for some, 15 years for others, and so on. But, in fact, that is not what the prudent municipal authority or company did. In fact, the one paid off loan and the other put away, either in the same reserve or in some other reserves with varying names, what they guessed would be enough, and more than enough, to cover any cost of replacement. The important point to the consumer is that the prices he pays from day to day shall be enough to enable the Authority to make replacements without putting up the price. That is what matters to the consumer.
I will not try to go through the accounts and explain them to hon. Gentlemen because I am not sure I understand them myself, but anyone who reads through the Report very carefully and who struggles with the accounts in an amateur and not unintelligent manner will be left extremely dubious. I think that the least the House should demand is some reassurance that in striking this profit of £4 million, and 284 so on, the Minister is quite convinced that the Authority is, in fact, putting away enough reserve to be sure of covering replacement costs, and not merely to amortise its physical assets for a conventional number of years. I am sure that is necessary. It was not necessary for anyone to insist on that in the old days because electricity suppliers and distributors would have gone out of business if they had not done so. But now the hon. Gentlemen opposite and the Authority are the suppliers and distributors, and if they do not do this we shall suffer all at once. I think it is our duty to ask this question every year until we are quite certain that the result is a matter of course.
§ 5.25 p.m.
§ Mr. Emrys Roberts (Merioneth)
I thought that the right hon. Member for Birmingham, King's Norton (Mr. Geoffrey Lloyd) who opened the Debate for the party above the Gangway was somewhat inconsistent when he said that party considerations should not enter into this Debate and then proceeded to be very provocative. He was more concerned to justify what Conservative Governments had done before the war than to deal with major questions arising out of the various reports. Indeed, he did not deal with the big problems of the general distribution of electricity or of generation, both of which are major problems at this time. I believe that no industry is more important to the industrial and agricultural development of this country at present than the electricity industry.
I wish to look at these reports and at the position from the point of view of the rural areas and of Wales. I speak as one who, with my party, supported the public ownership of electricity, and I still believe that it is only on the basis of the unified ownership of electricity generation and distribution by a public authority that we can ensure the supply of electricity in adequate quantity for every area, rural as well as urban, at a cheap standard rate.
I wish to make some remarks regarding both the distribution of electricity in Wales and the problem of its generation. I will deal, first, with the question of rural electrification. At present, several complaints are being received from Welsh rural authorities about the lack of progress in rural electrification. It will be noted, however, from these reports that at least a survey has been made in Wales 285 of all premises more than half a mile away from an existing supply point, comprising 45,000 premises, and that, for the first time, I believe, a tentative design for a distribution network has been prepared. Furthermore, proposals for the complete electrification of North Wales have been approved, but, at present, only one selected section in each county is considered to be appropriate for priority treatment.
It is worth while reflecting that the total cost of the electrification of North Wales is about £12 million, and that the time to be taken to carry out that electrification will be from 10 to 15 years, or probably more. It is an indication, of course, of the lack of progress made in the years before the war. Indeed, in the matter of rural electrification Wales is far behind any other part of this country. On 20th July this year I asked the Minister of Agriculture to give the figures for farms with mains electricity. He informed me that in 1943, 27 per cent. of the farms in England had mains electricity, in Scotland, 11 per cent., and in Wales only 9 per cent. In 1950, the percentages were: England, 36 per cent.; Scotland, 16; and Wales only 10. The figures not only show how small is the proportion in Wales but that the rate of progress is very slow. How badly this position compares with that in a country such as Sweden, where 60 per cent. of the farms are electrified.
There are complaints of the lack of progress being made, and complaints of delays in answering letters, and of the lack of adequate information and explanation. A point which the area boards have failed to appreciate is the need for informing local authorities fully of their development plans. The Ministry is far too prone to act merely as a post office for the letters of Members of Parliament, just passing them on to the Electricity Authority or the area board. The Electricity Authority have no consistent sytem for dealing with letters from Members of Parliament. In this respect, they might very well copy the practice of the British Transport Commission, where all letters from Members are answered personally by the Chairman of the Commission. Members' letters might well be answered, not by the area board or by any official, but by the Chairman of the British Electricity Authority himself.
286 There is also the question of tariff uniformity. One gathers from the Report of the British Electricity Authority that the question of simplifying tariffs and working out standard types of tariff is being done. That is undoubtedly a big task. But there is no clear assurance in the Report that the object of the Authority is to promote uniform scales throughout the country. Paragraph 362 of the Report is somewhat equivocal. It says:It does not follow that a complete national uniformity of charge for each class of consumer is either practicable or desirable.I put this question to the Minister of Fuel and Power in a supplementary question some time ago, and he indicated that the intention was to work out a uniform selection of tariffs throughout the country. One of the chief objects of public ownership is to have a country-wide net-work, with current available everywhere, in the smallest village and in the largest towns, at the same price. I should like the Parliamentary Secretary to deal with this point when he replies. Is that to be the long-term object of public ownership of electricity? If it is not, it ought to be. In many parts of North Wales the current still costs far too much, and that, often, on the very doorstep of the generating station—if it is available at all.
§ Commander Galbraith (Glasgow, Pollok)
The hon. Member has been referring to standard charges throughout the whole country. Does he not remember that, at the time of the passing of this Act, assurances were given that lower charges in Scotland would not be brought up to the much higher charges in other parts of the country?
§ Mr. Emrys Roberts
I am not concerned with assurances as to the position in Scotland, but I thought it was a principle of public ownership that there would be uniform charges throughout the country. I wonder if the hon. and gallant Member means to repudiate that principle by his intervention.
§ Mr. Geoffrey Lloyd
Has the hon. Member not read the paper delivered by Sir Henry Self at the British Electrical Power Convention, which I quoted this afternoon? One of the passages shows that in his opinion, at least, the difficulty of standard charges is so great that the scheme must be postponed for a long period.
§ Mr. Emrys Roberts
I am not concerned with what Sir Henry Self said, although he may be a member of the Board. I am concerned with official Government policy, and I am entitled to ask what that policy is. Neither the hon. and gallant Member for Glasgow, Pollok (Commander Galbraith), nor the right hon. Member for Birmingham, King's Norton, who intervened, gave any indication of Conservative policy on that point. I take it from that, that they are not in favour of standard charges throughout the country.
I next turn to refer to electricity generation and the proposals for hydroelectric schemes in North Wales. It is strange that these schemes are not dealt with in the reports from the boards, though preliminary schemes were put forward during the period which the reports cover. When I first read of these schemes I felt there was in them an appeal to the imagination, in the conception that from the streams and waters of North Wales we should generate sufficient current to light up our villages, towns and farms.
Since then, they have provoked a considerable amount of controversy. Surely the right attitude to adopt towards them is neither unqualified acceptance on the one hand—which some people have shown—nor complete rejection, on the other. Some parts of these schemes are completely unacceptable but other parts are acceptable. The main consideration is this, that the voice which matters when we consider these schemes is the voice of the people of Wales themselves. It is our land and our heritage; at present, there are far too many claims of a technical or Departmental character upon that land.
I believe the people of North Wales want to develop all the hydro-electricity possible, and that with sympathy, skill and real comprehensive planning that can be done in a manner that will not spoil the wild grandeur of the Welsh mountains and valleys. The British Electricity Authority have been singularly inept in the way they have presented their proposals. The plans, photographs and designs are woefully inadequate. There has been no systematic effort to discuss these proposals with the local authorities concerned, though some have been consulted; and there has been a lack of understanding of Welsh national feeling.
288 As an illustration on my criticism, I am told that one of the spokesmen of the British Electricity Authority, referring to Aber waterfalls said that normally the waters would have to be dried up when the scheme was in operation, but, when visitors were around, the waterfalls could be switched on for their benefit. It cannot be pretended that Wales, as a whole, is dependent, at present, on outside resources for current. On 10th May, the Minister of Fuel and Power told me that for the year ended 31st December, 1949, the consumption of electricity in Wales was 2,752 million units, while the generation was 2,823 million units. Therefore, one cannot argue that, at present, Wales needs these schemes because she is not self-sufficient in electrical resources. I know that demands are increasing, but coal stations are being opened or planned and we ought to know what their contributions will be.
My conclusion is that the development of Welsh electrical resources and their distribution will never be satisfactory in the hands of a body so constituted as the Merseyside and North Wales Area Board, because that body covers an area in which there is no real community of outlook. On the Report stage of the Electricity Bill, on 25th June 1947, I proposed an Amendment designed to constitute one electricity board for all Wales, and for Wales alone. The then Minister rejected that Amendment, but I believe that public opinion is now gathering behind such a proposal.
Such a body would have a real interest and a special stake and responsibility in Wales. It would have an incentive to promote and protect all the resources of Wales in one comprehensive programme without being too much obsessed with technical considerations alone. This, I believe, is the first legislative necessity—not a Private Bill for particular schemes, but a Bill to amend the Electricity Act in order to set up an electricity board for Wales. I believe it is only then that we can start to think aright about the matter.
§ 5.42 p.m.
§ Mrs. Castle (Blackburn, East)
The right hon. Member for King's Norton (Mr. Geoffrey Lloyd) described my right hon. Friend's speech as one of unaggressive defence. Listening to the speech of the right hon. Member for King's Norton, I could only describe it as 289 one of unenthusiastic attack. Both in the speech of the right hon. Gentleman and in the speech of his hon. Friend the Member for Carlton (Mr. Pickthorn), we have had a series of small, trivial details paraded before us in an attempt to discredit the work of the British Electricity Authority and the area boards which is going ahead so promisingly. Indeed, I was very interested to hear, as a recurring note in the right hon. Gentleman's speech, a complaint that the fine work of the private companies had not been recognised, so that claims for credit for the achievements now being recorded—
§ Mr. Geoffrey Lloyd
I did say of the Authority that I very much appreciated the way in which they had recognised the work of their predecessors.
§ Mrs. Castle
I was making a different point, if the right hon. Gentleman will allow me to finish. He was staking claims to credit on behalf of the private companies and I am, therefore, quite justified in pointing out that there must be some credit to be claimed for the work done by the Authority. We have before us an encouraging picture. We have a picture of success, and the right hon. Gentleman tried to obscure the fact by saying that in any case, even if there is success, it cannot be due to nationalisation.
I thought this afternoon we had a complete answer to some of the rather wild speeches made during the General Election campaign by the right hon. Member for Woodford (Mr. Churchill) and by Lord Woolton, who went up and down the country, and spoke on the radio, telling us, in one sweeping generalisation, that all nationalised industries made a loss. Now this industry has not made a loss, so the hon. Member for Carlton asks if it is really a "true profit." I never heard him inquire, on other occasions, whether it was a "true loss."
The right hon. Member for Woodford and Lord Woolton also told us that where nationalised industries did not make a loss, they put up the prices. Here the prices have not been put up—[Hon. Members: "Oh."]—indeed not; the average does not show a price increase. Indeed, the line of complaint now is that we have not had a reduction of prices and—
§ Mr. Fort (Clitheroe)
If the hon. Lady will turn to the Report, she will see that the average price per unit sold has risen 290 considerably above what it was before the war and, indeed, was higher in 1948 than in 1947.
§ Mrs. Castle
I was not making a comparison with before the war; I was making a comparison with before nationalisation. I believe I am correct in saying that during the election campaign the right hon. Member for Woodford said there had been increases in transport rates as a result of nationalisation, but in fact there had been no increase at all. He, too, was making a comparison with the pre-war figure and not with the pre-nationalisation figure, which is the relevant figure in this case.
We have been told, with great shakings of the head, that if nationalisation had been a success there would have been spectacular reductions in prices and that this was the promise made at the time of nationalisation. Certainly that is the objective of nationalisation; and we claim that that objective is being successfully pursued and that we can already show in 101 cases—if hon. Members really want to get the facts and not to make propaganda points—that although we are yet in the very early days of nationalisation, there have been some quite spectacular economies.
I have been reading the Report of my own regional board, the North Western Electricity Board, and on page 18, in paragraph 86, there are a couple of examples which I should like to read. The first says:It was anticipated that the abolition of the boundaries of the former undertakings would enable the Board to make arrangements to meet consumers' needs more economically. In one instance where a former undertaker had planned a reinforcement of the system at a cost of £300,000, the Board were able to provide the full requirements for £150,000 by using high voltage lines outside the area of the former undertaker.The other instance reads:To provide extensions a former undertaker had planned to spend £220,000. The Board, by utilising facilities which would not have been available but for nationalisation can provide for the requirements at a cost of £100,000. These two cases alone have thus saved £270,000 as a direct result of nationalisation.There are two simple instances, from one out of the 14 area boards, and I offer them to the House as proof of the fact that there is evidence to be found—if hon. Members want to find the facts— 291 that already we are seeing successful results of this integration which we sought as one of the primary results and aims of nationalisation.
§ Mr. Bracken
Has the hon. Lady contacted any housewives in these areas, because they would have told her that the cost of their electricity has been greatly increased? Or does she not take any interest in housewives?
§ Mrs. Castle
I do not intend to answer the "have you finished beating your wife" aspect of that question. I will only say that reductions in cost of production are reductions in costs of production, and the fact that there are also other elements of difficulty in the situation, arising from increased costs of raw materials, does not offset the advantages of integration; indeed it increases the need for administrative economies of this kind. The point made by the right hon. Member is quite irrelevant.
I am one of those who have been pressing that more of the time of the House should be spent on the examination of our nationalised industries and, in particular, I have been pressing for this Debate. I wanted the spotlight to be turned on our nationalised electricity industry because I knew that nothing but credit could result to it from having the spotlight turned upon it and from seeing that the public at last were given some genuine information on the position instead of the propaganda prejudices broadcast during the election and during recent months.
The fact is that, under public ownership, exciting and adventurous new possibilities are opening out already on the technical side.[Laughter.] The right hon. Gentleman's laughter shows that, as usual, the right hon. Gentleman is out of touch with the subject the House is discussing. His laughter is no answer to the facts of the situation. If only hon. Members opposite were not all the time so terribly anxious to repudiate and discredit their own publicly owned industries, they would be joining in this attempt to use this exciting new possibility to the utmost for the benefit of the consumers. I repeat, there are exciting possibilities on the technical side, exciting new opportunities for the staffs inside this great industry, and new opportunities for the con- 292 sumers as we go forward with our experiments in the techniques of public accountability.
The right hon. Gentleman who opened for the Opposition was a little anxious today because he was really afraid that a nationalised industry, as a result of the publication of some photographs, was going to get some credit for its achievements. His view was, "Alas, this is propaganda for nationalisation. What a terrible thing." Really, what this industry, in common with other nationalised industries, has been battling against in the last few months has not been propaganda for nationalisation: it has been a propaganda campaign of distortion and discredit which has been carried on by the Press and by hon. Members opposite. I should like to give just one example of this, because I think it is a warning to the public that, before they rush to hasty judgments of the situation, they ought to be aware of this technique of misrepresentation which is being used to distort the facts in an attempt to prevent them from getting to know the facts.
Some time ago there appeared in the "Sunday Express" an article by a Mr. Selkirk Panton on the industrial revival of Germany. It was headed with some dramatic title like "The smoking chimneys of Berlin are a warning to Britain." It was published on 4th December, 1949; and it referred in particular to the Berlin West Power Station. The article said as follows:This giant station was built by the Germans in six months. British electricity experts in Berlin say that it would take four to five years to build such a station in Britain"—the obvious inference being that, of course, the Germans, set free from their shackles, and allowed under private enterprise to forge ahead, were going to build a power station in six months, whereas our industry, shackled by nationalisation, would take four or five years.
A member of the British Electricity Authority, Dame Caroline Haslett, happened to have been in Berlin a short time before and to have seen that particular power station, and she had studied its problems at first hand. So she wrote mildly to the editor pointing out that the article was a complete misrepresentation of the situation; that, in fact, this Berlin West Power Station was built in the 293 'thirties; that during the war the Germans had planned an extension of it, and that when the Russians came they stripped out the turbines from both the original building and the extension to the turbine room; and she pointed out that what had, in fact, taken place was that into the empty turbine room and the new boiler house the Germans had installed two high-pressure Benson boilers, a high pressure generating set, and two low pressure sets. She said, quite mildly, that this was rather different from constructing, from the drawing board to the finished generator, an entirely new power station. Of course, that letter was not published by the Editor of the "Sunday Express."
I quote that to this House as an example of the way there has been and still is, a rushing into print or into speech by the critics of nationalisation with a hundred and one distorted charges and prejudices in order to leave just one definite impression; that nationalisation is a failure. But never by any chance, if hon. Members opposite and a large section of the Press of this country had their way, would it be allowed to leak out to the British public what in truth is going on.
I will give the House just another simple example. We have had the Clow winter surcharge scheme, which the right hon. Gentleman mentioned. When that scheme was introduced, it was not only criticised as being ineffective. That would have been fair enough. I myself did not like the scheme because I though it was unjust. However, it was not only criticised on various legitimate grounds, but in many quarters hostile to nationalisation it was suggested that this was a way of getting a little extra revenue and that, in fact, this surcharge would never be offset by rebates. That suggestion was made openly in certain newspapers. In fact, the revenue from the surcharge was never put by the various area boards to revenue account at all. It was set on one side for repayment to consumers in the form of a rebate. That rebate has taken place or is now taking place, and no balance of additional revenue is accruing to the nationalised industry.
So there are many ways in which this House, if it were really looking on this industry now as its own concern, to be developed to the utmost for the benefit 294 of the employers, the employees, and the consumers as well, could make a hundred and one constructive suggestions, and take a great deal of satisfaction from the picture of its development.
On the question of staff there is one point to which I want to draw attention because I think it shows how enlightened an employer the British Electricity Authority is. That is the graduate training scheme for the technical engineering staff. The Authority has got a very excellent technical training scheme out, because it urgently needs an addition to its highly skilled technical staff, which is inadequate in numbers at present for the vast developments that are taking place.
There is one point to which, as a woman Member of the House, I particularly want to draw the attention of the House and to put on record to the credit of the British Electricity Authority. It is that the opportunities being offered to graduates under the scheme are offered equally to men and women, and that the posts which will follow from the training taken up will also be equally accessible to the men and the women in the employment of the Authority. This is a sign of how enlightened the Authority is, and credit ought to be given to it. Those who in this House pay lip-service to this kind of equality between men and women ought to be adding their meed of praise to the Authority for this.
I want tonight to turn to one aspect that has not yet been raised in this discussion, strangely enough. I was rather surprised that the right hon. Gentleman opposite did not mention anything at all in his speech for the Opposition about the opportunities for the self-expression of the consumers that there are under this great new public ownership scheme. I must say I am sorry that my right hon. Friend did not mention it either, because I believe that one of the most important by-products of public ownership is the opportunity that is given to the consumers to be associated with the work of the public authority in an organised way.
Now, this is something quite new. I do not think we have yet perfected the technique; but I would say this to the consumers of Britain, that it is only in a publicly-owned authority that they get any chance to be consulted at all. 295 Private enterprise in this country has no techniques of consumer consultation or accountability to the consumer at all, and that, in my view, is something which we ought to remedy in the future, and I hope that, at the next General Election, we shall have a chance to lay suggestions before the British public.
But here we have our nationalised industries, and it is becoming the fashion in certain quarters to sneer at the work which has been done or which has not been done by the consultative councils which have been set up to represent the consumer's point of view. Those who sneer at the consultative councils quote mostly as an example the work of the Domestic Coal Consumers' Council, which is, of course, a central body without at present any regional councils associated with it. But as we have gone forward with our nationalisation plans, as we have progressed from one experience to another, we have been moving forward in our techniques of consumer consultation, and in the electricity industry we have gone further than in any other industry, and are much nearer to getting a really effective consultation.
The House will be aware that under the Statute there is to be appointed a consultative council for each area, attached to each of the 14 area boards. On these consultative councils there are some 20 to 30 persons, of whom from one-half to three-fifths are local authority members appointed by the Minister, with the idea that the local authority representatives are those best able to represent the point of view of the man and woman in the street; the rest are appointed by the Minister to represent special interests in agriculture, industry, commerce, labour and some of the women's organisations.
I know that in many areas these bodies are still feeling their way towards a really effective activity, and I am not pretending tonight that we have yet got in these councils a sufficiently vigorous representation of the consumer. But we have got a very hopeful embryo, which I hope every hon. Member will take personal responsibility for encouraging in their areas, because I think that we members can do a great deal in drawing public attention to the existence of these consumer councils, 296 and in helping to make them feel more important and more effective. Certainly in the electricity industry the councils have got access, not only to the central authority if they disagree with the policy of the area board, but if necessary over the head of the central authority to the Minister. In some areas—in my own region, for example—the councils take their work very seriously, and the Press are invited to the meetings—and most take full advantage of it.
I, therefore, hope that as a House of Commons we shall be concerned to see that public ownership brings to the public a greater sense of having a say in affairs; and that we shall study these councils in our own localities and try to see how far they are becoming effective, or can be made more effective. The chief criticism of these consumers' councils is that the public is not properly aware yet of their existence, and is not taking proper advantage of their facilities. In my own region, when it was suggested to the consultative council that perhaps the public did not know where to go with their complaints, and did not even know they had a right to air their complaints, the council at once started to discuss with the area board whether it might not be possible for there to be displayed on the counter of every service centre where the member of the public goes to pay his accounts a notice giving the name of the nearest consumer representative for the locality—because, of course, under the regional council a number of district committees also operate.
Another suggestion that has been made is that the name of the nearest consumer representative might be printed on the back of the account which is sent to the consumer. There are a dozen ways in which the public can be made more aware of these councils and of their work, and I hope that the area boards in the different localities throughout the country will co-operate in helping to bring home to the public the fact that, thanks to their ownership of this industry, they have a right to be heard and a right of appeal through the consultative council, if necessary to the Minister himself.
I want now to make some suggestions to the Minister as to how we might improve the work of these councils. I think it should be made obligatory for them to admit not only the Press but the public 297 to all their meetings. I think we might have to bring pressure to bear on some councils to do that. One of the biggest safeguards for ensuring that the public are aware of what is going on in these councils is to have the Press admitted, and if it were put to them most of the consultative councils would not try to keep the Press out. It is wrong if, as I believe is the case, some of them are meeting in secret, and there should be an established rule that the Press and the public should be admitted to their meetings.
Secondly, I suggest that in order to increase the independence of these consultative councils their financing—the provision of their accommodation, their small secretariat, and their expenses allowances—should be borne out of the Minister's Vote and not out of the finances of the British Electricity Authority, so that they can be truly independent, and be acting, in a sense, as the agents of this House, on the one hand in helping the area boards to know what the consumer feels and wants, and on the other in conveying to the consumer some of the difficulties the area boards are going through. It would be preferable if the chairman of the consultative council were not a member of the area board, as he is at present. If he is a member, while it is true he is able to keep in touch with the work of the area board, he does on the other hand become a man of divided loyalties, whereas as chairman of the consumers' council he should be recognised as occupying a vital position in his own right, and one to which we shall give increasing status.
I am anxious to see these consumers' councils developed and made a reality, not because I think the Authority has become bureaucratic and remote; on the contrary, all the evidence I can collect is of the great spirit of service being shown by the staffs of the British Electricity Authority and of the Area Boards, in whatever capacity they may serve. I have had hundreds of testimonials to that effect, showing the way in which from the humblest meter reader up to the most important official there is a genuine desire to give a high standard of service and to have a spirit of public accountability, and nothing I say tonight must be taken as in any way reflecting on that attitude that they are showing.
On the other hand, if we do create these big public monopolies it is right and 298 proper that the consumer should be given new safeguards. Whereas the ultimate safeguard to the consumer must always be the careful watch which we in this House keep on the affairs of the nationalised industry, none the less we do know that we, as busy Members of Parliament, are not able to devote sufficient time to detailed supervision and contact in the various areas. I see these consumers' councils as invaluable supplements to the supervision of this House, and they must be taken very seriously by us and by the Minister. I therefore ask the Minister, in order to give them new life and new authority, to consider the suggestions I have made so that they can go forward and become more vigorous, more independant and more public in their activities.
§ 6.10 p.m.
§ Lord Malcolm Douglas-Hamilton (Inverness)
I will not attempt to follow the hon. Member for Blackburn, East (Mrs. Castle) in any controversial argument. I want, instead, to take the House to another part of the world which has not yet been discussed—the North of Scotland—and to discuss the North of Scotland Hydro-Electric Board. It came into this House with a measure of great approval on both sides of the House, and was piloted through the House by the gentleman who is now its very able chairman, Mr. Tom Johnston. The activities of the Board are watched with great interest throughout Scotland because on what the Board does will depend to a great extent the future prosperity of the Highlands.
I would like to start by paying a tribute to the North of Scotland Hydro-Electric Board. I think that it has shown remarkable resourcefulness in overcoming many of its problems. During last year it supplied 62 hamlets and villages with electricity for the first time, 12 million units were sold for industry in the Highlands, including agriculture, and the total number of consumers was over 222,000, which is a great achievement. We are, however, feeling a certain amount of uneasiness about the future. As the scheme grows it is inevitable that certain snags will arise. Hitherto, there has been a quite satisfactory distribution in the areas which have been supplied, but lately the Board has shown a certain reluctance to supply rural areas, and for a very good reason.
299 I have here a case in the Kilmorack area, a township consisting of 80 crofters, and it is pointed out by the Deputy Chairman, Sir Edward MacColl, that to cover this area will cost £18,500, with a running cost of £3,700, whereas the amount that will be received back from the area will be at most only £800. That, of course, is very unprofitable. In consequence, he has asked the consumers in this area to contribute £10 per head in capital charge and to guarantee £10 a year. No one has any objection to paying £10 a year. A crofter will certainly use that amount of electricity, but it is a lot to a crofter to pay £10 capital down, which, after all, will not make very much difference to the loss the Board incurs.
The warning that I want to utter is that this is not an isolated case. It is symptomatic of what is happening in one or two other places. The warning is obviously this: there will be a tendency to put increased charges, or increased capital charges, on local areas. I would like to know if the Secretary of State has any statement to make in connection with that matter. It will obviously handicap development in these local areas. The principle was accepted when the Bill was passed that only by the profit on the export of electricity to the national grid could the Board extend the distribution system in the North of Scotland to any great extent. At the same time, there is no doubt that it was in the mind of Mr. Tom Johnston and the House when the Bill was passed that the first category of people to whom electricity should be supplied should be the ordinary consumers in such parts of the North of Scotland as were outside the limit of supply by other authorised undertakings. It is very important that we should use this Board for the development of industry in the Highlands of Scotland.
There are three very good reasons why this should be done. First, to maintain and restore the population in the Highlands; second, with regard to the distribution of industry and getting more industry into the Highlands, which will also help the more congested industrial areas; and, third the strategic aspect. The most suitable industries for development in the Highlands are those whose raw materials are available on the spot, though this is not necessarily the only type of industry 300 suitable for development for strategic reasons.
The other day the President of the Board of Trade, in answer to a Question of mine, said that it might be difficult to persuade private enterprises to come up to Corpach in the Fort William area. I think that if they get sufficient inducement it will be easy enough. One of the biggest inducements for private enterprise will be cheap power. The tendency is for a tremendous increase in the cost of construction of the hydro schemes, and, therefore, a tendency for the cost of power to rise.
Mr. Tom Johnston hoped that electrical, chemical and metallurgical industries might be established in the Highlands. Lately, there has been uneasiness because of these increased costs, and that has rather tempered the high hopes that were once held. The tendency will be for the rural areas and industry in Scotland to be neglected and more power will tend to go on to the grid. Supposing that, in the long run, it does not bring a profit to the Hydro-Electric Board. It is true that a profit is shown this year, but I cannot find any entry at all in the accounts for depreciation or amortization. I would like the Secretary of State to give some answer on that point.
If we are to meet difficulties in the future of the kind that I have indicated, I think that there is need to take stock. We have great confidence in the Board as at present constituted, but Parliament gives its charter to the Board, and if the Board cannot provide for development in the Highlands, then Parliament must take action. At present there is a certain amount of irritation among those who are living near to these hydroelectric schemes because they are not getting the power they require. We must take advantage of these schemes to enable life to be better in the Highlands, to improve the amenities in the homes and to improve the amenities of the whole country by enabling the Highlands to make their full contribution to industry.
§ 6.19 p.m.
§ Mrs. Eirene White (Flint, East)
The right hon. Gentleman who opened this Debate for the Opposition spent some of his time in making a few little quips and pleasantries at the expense of the Authority for their activities in the field of public relations. Surely the criticism 301 of these large public bodies is usually that they are altogether too remote and too impersonal, and I should have thought that he might have rejoiced, in this instance, to find a public body which regarded public relations as a creative art rather than a disagreeable duty to be neglected and scamped whenever possible.
I am happy to pay tribute to the Authority for the care and attention which they give to this aspect of their work. I think they have shown that they are much the most alive of the large public corporations to the need of keeping the public not only informed but generally interested in the progress of the undertaking. If I had any criticism to make of them, it might perhaps be that their sense of salesmanship is too keen and their eagerness to convince too great, so that possibly they are running into the danger of arousing a feeling among people that they are being over-persuaded. I say this with particular reference, which I hope the Minister may be able to pass on to Lord Citrine and his colleagues, to the scheme now raising so much controversy in North Wales, the hydro-electric scheme in Snowdonia. I believe that since the Authority took over they have not been generating any more electricity in hydro-electric stations in North Wales, but the amount of emotion they have been generating increases almost from day to day.
We had this weekend the spectacle of the noble Lady the Member for Anglesey (Lady Megan Lloyd George) making an ascent of Snowdon—not, of course, all the way, but just far enough to reach a platform—where to the accompaniment of Welsh harps she orated in defence of Snowdonia. As a fellow Celt, with all the resources of Welsh history and mythology and literature to draw upon, I could have suggested various spirits of Eryri which she might have invoked. I was not merely politically disappointed when I found that the spirit whose aid she did enlist was that of the robust Liverpudlian, William Ewart Gladstone—
§ Mrs. White
No. He was born in Liverpool—Rodney Street. He was, in any case, not a Welshman, except for residence for some time in my consti- 302 tuency. The views of the Grand Old Man on the hydro-electric scheme in Snowdonia might have been interesting, but I do not think he would necessarily have shared the sentiments of the noble Lady and her fellow travellers.
There will be another opportunity to discuss the details of this scheme. It will probably be out of order to do so on this occasion, but I should like to take the opportunity of saying publicly, what I have already told Lord Citrine and his colleagues in private, that I hope it will be realised that in this matter it will be wise to hasten slowly. I particularly emphasise the fact that these seven or eight schemes for hydro-electric generation in North Wales are not mutually dependent, but can be developed separately. I would most strongly urge that the Authority should not embark upon the most controversial of these schemes at the outset, but that they should take certain of the schemes which are not controversial in the minds of any reasonable persons, such as the Rheidol scheme for the Aberystwyth district. We can then see just what is meant by the construction involved, and the people of Wales may have a more adequate opportunity of judging whether they wish to have this kind of development in the Snowdon area.
I might also say, in passing, that we enjoy the hospitality extended to us by Scotland, but that it is not the same thing for a few specialised persons to take trips to see the development that is taking place there, partly because those who go to see these schemes have already made up their minds, and partly because the scale of operations at Snowdonia is so much smaller than in most parts of Scotland. There is not the room in Snowdonia to hide a mistake. One error of judgment may blot a most precious landscape in perpetuity. I plead, therefore, that we should have more evidence before we in Wales are asked to make up our minds finally on a controversial scheme, and that the relatively non-controversial schemes should be proceeded with as soon as is technically possible.
I ask that those concerned in this matter should try to take a balanced view. There are strong technical and economic advantages in rural distribution with the low voltage lines of the hydro-electric 303 stations. We also know that in North Wales our coal supplies are inadequate, and we should therefore make use of other means Providence has granted us for improving the standard of life for those who live in North Wales, not just those who come there for a short holiday period; we want a fair compromise between technical possibilities and natural beauty. We do not want to be asked to commit ourselves at the outset to selling our birthright of Snowdonia; nor do we want to appease those who are prepared to exploit the whole range of emotions for the promotion of their cause.
This may appear to be a matter of local Welsh interest, but those concerned know that that is not the case. We have had a large number of letters on this subject in the columns of "The Times." The matter concerns the hearts of the right hon. Gentleman's constituents in Birmingham who come to visit my native country. The noble Lord the Bishop of Winchester has also entered the fray. I ask the Minister to make representations to Lord Citrine and his colleagues on this matter.
I should like to say, in more general terms, that much as I welcome this Debate, a very important and necessary one, upon the Report of the British Electricity Authority, some of us have been a little disappointed that the undertaking the Lord President of the Council gave earlier in the Session, that we should have a general debate on nationalised industries has not been fulfilled. My hon. Friend the Member for Blackburn, East (Mrs. Castle), for example, has raised some very interesting points in relation to consumers' councils. I am sure it would be of great value if at some time we could have a more genaral debate on the position of consumers in relation to all the nationalised industries, and not just one industry, so that it would be possible to discuss, within the rules of order, the comparative arrangements made by the different boards to deal with the problem which in many ways is similar as between one industry and another.
I am convinced, from the studies I have made of consumer representation, that it will be extremely difficult to secure any satisfactory basis until it can be linked up with the popularly elected local 304 government bodies in the country. We have a most virile system of local government, and sometimes it is complained that we are removing certain functions from our local authorities. Surely this is a sphere in which our local authorities might be revived, if that is necessary. Surely this is something in which they might find a fresh field for service to the public, and something whereby the public may find a fresh link with their representatives.
I have in mind that in county or county boroughs the consumers should be able to turn to the county hall, or to the town hall, and know to whom they can make their suggestions and complaints. The fact that the person they are dealing with will be a popularly elected representative will give this matter the publicity which it does not at present receive. For example, I have here a quotation from a letter from a member of an electricity consumers' consultative council, in which she says:Most members like myself have not been approached by a simple consumer, due to the fact that the public are largely unaware of our existence. The Press has not been co-operative. This has not been done deliberately, but we have no news value.As an ex-journalist, I can say that that is probably quite true.
I feel that we should have an opportunity of discussing the whole of this very important question both of the democratic representation of consumers in the nationalised industries, and the general protection to the consumers' interest, which is not quite the same thing. I am thinking, for example, of the question of price. We in this House are not competent to discuss in detail whether or not a monopoly of this kind is charging the correct price. In the railways we have the Railway Rates Tribunal, a quasi-judicial body, but we have not any such body in the other nationalised industries.
Even a body like the Railway Rates Tribunal is not necessarily a completely effective check, because, as I understand the work of the Tribunal, it can consider evidence placed before it and it can examine the accounts of the body concerned, but it cannot investigate the efficiency of the industry and the real price which ought to be charged with the cost which could be achieved in an efficient industry. In fact, this whole question of the protection of the consumers 305 in that wider sense is something which we should be discussing in this House on a suitable opportunity.
I do not think the opportunity is here and now, because we are supposed to be discussing a particular industry. I hope the opportunity will come, but I conclude by saying that even if we cannot discuss all these matters as effectively as we might wish, at least we have now, under the system of public ownership of these important industries, the opportunity, which neither this House nor the people of this country ever had before, to study in detail in these admirable Reports the workings of the industries on which so much of our prosperity depends.
§ 6.33 p.m.
§ Mr. Crouch (Dorset, North)
I should first of all like to refer to two matters which were mentioned by the Minister of Fuel and Power in his opening speech. He mentioned the increase in the number of poles used in 1950 as compared with 1938, and said that those poles were being used in the country. Did he mean that they were used entirely in the countryside, or did he mean that the poles were used in the town as well as the country. In other words, when he used the word "country" did he mean "countryside" or not?
§ Mr. Crouch
The other question I want to ask is in reference to a difference of some 2,000 farms that were connected with electricity. The Minister, in his speech, made one statement, and the Report makes another. Between the two there is a difference of 2,000. Perhaps, later, the Parliamentary Secretary will correct the position and tell us which is the true one—that in the Report or that quoted by the Minister. In the Report the figure is 7,000; the Minister, I think, said 9,000.
May I turn for a few minutes to the position of the countryside? It is from the soil of rural England that men and women come to make this country great, and receive their infant nurture. In former times they quickly enjoyed the advantages of new inventions. So far as electricity is concerned, they have been left very much behind. I have always maintained that the people of the country- 306 side are entitled to the same amenities as those who live in the cities. Two reasons are often given for the neglect to provide electricity in the countryside. One is that owing to the scattered nature of our villages the cost of installation is very high. In paragraph 409 of the Report it is stated that while an average of only 10 people per mile are consumers in the countryside, as many as 300 per mile in the city use electricity. That I admit.
Another reason given is that in the countryside the majority only use electricity for lighting purposes. I agree that the cost of installation is high in comparison with the city, but, in my view, it is much higher than need be. In the first place, too much time and money is spent in surveys, checks, and rechecks at various levels. There is too much form filling and raising of objections by various people. As an illustration I would point to a case in which it was agreed that a new housing estate should be electrified, the electricity to be supplied by underground cable in order to preserve local amenities. Later, it was decided that overhead lines should be used. Today the part of this estate which is so far completed, containing something like 60 houses, is, on account of this check and recheck, using paraffin for lighting, heating and other purposes.
Having ultimately agreed on a route, the management and labour is not always economically directed. What business man would send a gang of men, on a Saturday morning, on an hour and a quarter's run to do one hour's work, and then have them journey back again? This has happened in the area controlled by the South Electricity Board. I suggest that no business man would have done that. He would have found a job near at hand to occupy these men and give them other work to do for these few hours on a Saturday morning.
Now to my second point. Electricity, when first introduced, was used for lighting purposes, but it is only during recent years that it has been used for power and that industry has made full use of that power. It will be some years before the inventive brain of man will develop the necessary and suitable machinery for the needs of the countryside. Those machines that are available are used to great advantage, but we have 307 only touched the fringe of the problem of the use of electric power in rural areas.
Another point which makes the farming community reluctant about the installation of power for existing plant is the frequent cuts that have occurred in recent years. That particularly applies to the incubation and production of poultry. I have asked the Minister to ascertain the correct figure of the new installations last year. According to the Report we have something like 87,690 farms connected to electricity. That represents something like 25 per cent. of the farm and rural users. If the boards will come out with a full policy for the rural areas they will find that the countryside will buy current in increasing quantities as machinery becomes available.
I understand that it would require a capital expenditure of something like £4 million to connect the whole of the area operated by the Southern Area Board. The interest on that sum would be about a quarter of a million pounds per annum. If that sum were spread over all the consumers it is surprising what a small amount it works out at. I believe there are about one million consumers, and the cost per consumer would be about 5s. each. If the whole of the rural areas were electrified the cost would work out at an additional charge of something like 1d. per consumer per week.
The production of food at home is more necessary today than ever before. The full use of electricity would not only cheapen production, but would relieve man of much of the heavy manual labour that he still has to do. When we have complete electrification of the countryside we shall have a happier and much more contented rural population.
§ 6.42 p.m.
§ Mr. Pannell (Leeds, West)
This Debate is concerned with what is called the public accountability of nationalised undertakings. I shall not go into the question of whether consultative committees are right but I will refer if I may, to one or two things that come under that heading rather than to make political points. Other hon. Members have said that they would do the same thing, but they have appeared to me to stray very far from that path.
Every hon. Member should declare his interest, and I would point out that it was 308 my job as chairman of the finance committee owning an electricity undertaking to look at the accounts of that undertaking for at least 10 years, before nationalisation. I suppose it was inevitable that nationalisation should have some teething troubles. I would mention the misguided enthusiasm of one of our area managers who took—and this is not a political point—all the lorries out of the municipal garage and, owing to an enthusiasm for private enterprise, put them into a local garage which employed non-union labour. My union had to come up against that sort of thing, which is not the kind of instance which hon. Members on the other side would seize upon. They would not say that nationalisation stood or fell by incidents of that sort.
I was interested to hear the reference to Sir Henry Self. I remember his coming to the annual conference of the Institute of Municipal Treasurers and Accountants and speaking about the proposed structure of the nationalised undertakings. I made certain points at that time, which was some years ago, that I intend to repeat now. I think that the structure of salaries in the nationalised undertaking is completely wrong in the British Electricity Authority.
It started with a wrong conception in this House or with the Minister at the time by setting the chairman's salary at £8,500 a year. There has been no difficulty on the part of the great political parties in finding people who thought it was a considerable honour to occupy a position, such as Chancellor of the Exchequer, at £5,000 a year. What I am going to say may be an unfashionable line to take but when we call people to the public service in a great undertaking, and on behalf of Parliament, the salary level for a Cabinet Minister should be the ceiling for the chairman of the board. We should get the same sort of people appointed. Does the hon. Member for Edinburgh, South (Sir W. Darling) wish to make a point?
§ Mr. Pannell
It is not necessarily correct that lay people managing an undertaking should get as much or more money than the technical heads of departments in that undertaking. Would it not 309 be better for the conception of public service if there were not that sort of salary? It has had a most unfortunate effect upon the British Electricity Authority. I have examined the pyramid of salaries with some care and I find that the salaries are all related to that of the chairman. I have a great personal regard for the chairman. We are fortunate in having a man of the calibre of Lord Citrine, especially as his origins were in the electrical industry, but all the salaries in the British Electricity Authority are set from that point and the effect upon the bargaining machinery of local authorities has been disastrous.
Some of us have been engaged for many years in trying to perfect a system of salaries in the technical, clerical, and administrative grades of local authorities. We have obtained a national charter approved by N.A.L.G.O. and by the Ministry of Health. The effect of the race for people from local government service was to attract those from the middle range of salaries at rates of remuneration 50 per cent. higher—in some cases—than those people could expect to get in local government service.
I made this point at the conference of the Institute of Municipal Treasurers and Accountants in the presence of Sir Henry Self. I did not expect much response from the delegates, who were county, borough and city treasurers and who might have been expected to have a vested interest in the matter. But I was amazed by the number of treasurers who came to me afterwards and said that that had been their experience in regard to men who were now lost to their own authorities. I say, therefore, that the structure of salaries in the British Electrical Authority is wrong. Nationalisation will not succeed in the long run unless we get a new conception of public service into these undertakings, and particularly into the executive heads at national board level, comparable to the type of man we expect to occupy the Front Benches on either side of the House.
Another point, which was raised by my hon. Friend the Member for Rochdale (Mr. J. Hale) in an Adjournment Debate, is how far the gas and electricity undertakings of the country can integrate certain of their services. I do not believe either of those authorities can function 310 as a separate empire, particularly in regard to meter reading and other common services. The electricity undertaking will be judged not by a Bill on the Floor of the House but by the bill which is delivered in the houses of the consumers and whether or not too many people are running round reading meters.
The right hon. Member for King's Norton (Mr. Geoffrey Lloyd) seemed to pay some sort of tribute to the private power companies which existed before the take-over, but until I drew his attention to the point he never mentioned the part which the local authorities played in the development of electricity. He suggested that the Minister had made an unaggressive defence. The local authorities have played a conspicuous part. It was significant that the hon. Member for Carlton (Mr. Pickthorn) rather tended to deride the point made by my right hon. Friend about the peaceful take-over—
§ Mr. Pickthorn
I must have been very unexpressive if I gave that impression. I was not trying to deride it at all.
§ Mr. Pannell
I accept that from the hon. Gentleman, but I am sure that other hon. Members must have been in the same difficulty as I, about it. At the same time, he questioned whether the profit of £4,500,000 was an actual profit or not, and he mentioned the relief of rates which used to be given by local authorities which owned undertakings. That is all very well, but I can point to Tory local authorities which gave relief of rates while maintaining uneconomic tariffs when they knew that the industry was to be nationalised. In many cases such relief of rates was fraudulent.
§ Mr. Pannell
If the hon. Gentleman does not know, I put it down to his lack of knowledge of local authorities.
§ Mr. Pannell
In the greater London region no fewer than 33 authorities had completely uneconomic tariffs just before nationalisation. They would not put their tariffs up. Anybody who moved in local authority financial circles met the gibe, "Let the Government get the discredit for it." It is a factor which cannot be entirely left out of consideration when we look 311 at the way tariffs have risen. A right hon. Gentleman who used to be the Secretary of State for Scotland was subjected to a considerable amount of heckling at a vesting day dinner because he charged Scottish local authorities with doing that same sort of thing. Some Tory local authorities attempted to sabotage nationalisation before it came about—[HON. MEMBERS:"Oh!"]—and it does not lie in the mouths of hon. Gentlemen opposite to say whether this is a correct profit or not.
§ Mr. J. R. Bevins (Liverpool, Toxteth)
The hon. Gentleman is accusing Tory local authorities of acting immorally in this matter. Will he also tell the House how the local authorities were not compensated by the Government?
§ Mr. Pannell
I am perfectly well aware of that, but the hon. Member, who has had much local authority experience, knows full well that that is a completely different question. The Government were hardly encouraged to treat the local authorities as responsible people when they maintained uneconomic tariffs in the face of nationalisation.
§ Mr. Pannell
The hon. Member has not been here long, and by that rather foolish interjection he indicates that he knows nothing about the subject under discussion, or the local authorities either. The hon. Member for Carlton said that the relief of rates was a consideration which we should not ignore. All I say is that the relief of rates which occurred before nationalisation took place was tinged with the considerations about which I have been speaking. There is no question that the Government acted honestly. In 1945 the Government indicated that they in tended to do this, and once they had the mandate of an overwhelming majority of the people of the country, what was to be expected? From that point the party opposite attempted to sabotage nationalisation before—
§ Sir W. Darling
Can the hon. Gentleman give an example of a local authority which actually lowered its tariffs prior to nationalisation, preferably a local authority in Scotland?
§ Mr. Pannell
What local authorities did not do was to advance their tariffs to an economic level. If nationalisation had not taken place, or a Tory Government had been returned to power, the local authorities would have been bound to raise their tariffs.
§ Sir W. Darling
Is the hon. Gentleman aware that in the City of Edinburgh we maintained our rates and handed over assets of £1 million to the Government?
§ Mr. Pannell
I had the benefit of listening to the hon. Member speaking in a Debate as far back as 1938 about the rising curve of public expenditure. He used to boast about the fact that Edinburgh's rates were 7s. 11d. in the pound. I believe that the gibe in the Debate at that time was that a certain Queen had "Calais" engraved on her heart and the hon. Gentleman wanted "7s. 11d." engraved on his tombstone.
§ Sir W. Darling
Surely the hon. Member is not deriding public economy. Surely he believes in low rates.
§ Mr. Pannell
Certainly, and, consequently, I cannot understand why it is that the ex-City Treasurer of the queen of Scottish cities should attempt to defend the practices of Scottish local authorities before nationalisation, in the way that he does now.
§ Mr. Pannell
I have said that no fewer than 33 local authorities in the greater London area failed to maintain economic tariffs in face of increasing prices prior to nationalisation, and that but for nationalisation—
§ Mr. Pannell
Yes, but they never made application to do so. It is all the same in the last resort. Everybody in local government circles knew that this sort of thing was going on. But for nationalisation, the tariffs would have been raised anyway. Anyone who had experience of the tariffs of neighbouring local authorities and private power company undertakings knows that it is true. I know of a case where a local authority was charging 2½d. a unit while the private 313 power company which was its neighbour charged more than 6d. a unit. It is largely the local authorities who have made the contribution in the past and it is the local authorities who have restricted the rapacity of the private power companies.
The take-over was a peaceful one because, in the main, the best elements of the industry were a form of municipal socialism represented by the local authorities themselves. The Government took over the whole of the outstanding loans as a form of public debt. I believe that the industry has served a great public need. A very promising balance sheet has been presented to us; it is not the sort of balance sheet about which the Minister need be unaggressive and we shall not be unaggressive about it when we continue to preach nationalisation throughout the country.
§ 6.59 p.m.
§ Mr. Erroll (Altrincham and Sale)
Naturally, a large number of points will be brought forward in the course of the Debate, and the impression may thereby be given of a singularly ragged Debate. I hope that I shall be forgiven if I do not follow the hon. Member for Leeds, West (Mr. Pannell), in his rather intimate incursions into the rating system, particu larly of Scotland. Before proceeding any further—
§ It being Seven o'Clock, and there being Private Business set down by direction of The CHAIRMAN OF WAYS AND MEANS,under Standing Order No. 7 (Time for taking Private Business), further proceeding stood postponed.