HC Deb 18 October 1950 vol 478 cc2173-88

10.15 p.m.

Mr. Black (Wimbledon)

I beg to move, That an humble Address be presented to His Majesty, praying that the Order, dated 28th July, 1950, entitled the Electricity (Severance Compensation) Regulations, 1950 (S.I., 1950, No. 1278), a copy of which was laid before this House on 28th July, be annulled. These Regulations arise out of Section 23 of the Electricity Act, 1947, and they govern the apportionment to local authorities, who were formerly electricity undertakers, of the £5 million compensation fund payable in respect of losses on severance. Incidentally, may I mention that the Bill as originally presented did not provide for the payment of this compensation fund of £5 million, but that this fund was secured as a result of the efforts and the persistence of the Opposition at that time. I do not wish, at any rate tonight, to discuss the basis of the apportionment laid down in the Regulations.

The Prayer to annul these Regulations is brought forward as the only Parliamentary method available of ventilating a fairly simple grievance which it is desired to bring to the notice of this House. In order to avoid the charge being made that if the Regulations were annulled further delay would occur in the payment of the compensation to local

authorities, may I make it quite clear that this Prayer is brought forward to enable this one simple question to be debated and brought to the attention of the House.

The publication of these Regulations follows about two-and-a-half years after vesting date in respect of electricity, and the grievance felt by the local authorities in the matter arises from the circumstance that they have already been compelled to wait for about two-and-a-half years to know the basis on which this fund is to be distributed among them; and what is perhaps even more important, to receive the respective shares of the fund to which they are entitled.

I think it will not be a matter of controversy that the loss on severance suffered by the electricity undertakings runs from vesting date, that is to say 1st April, 1948, and the delay in the publication of these Regulations has had at least two difficult consequences for the local authorities. The first is that they have not been able to make any estimate as to the individual amounts which they will be entitled to receive out of the fund, so that for three years past they have been unable to take any credit into their rate accounts in respect of the sum they will be receiving. From that it follows that for three years past these local authorities, who were formerly electricity undertakers, have had to levy a larger rate than they would have had to levy had they known the amount of compensation they would receive, and had they been able to take credit for that compensation in their rate accounts. That is the first grievance—that ratepayers in these areas have had to pay a needlessly high rate on this account for no less than three years past.

A second and equally important grievance arises from the fact that the local authorities have lost interest for about two-and-a-half years on this fund of £5 million. If we assume that the ultimate distribution of the fund will take place on 31st December next—if we assume that as a convenient date for calculation purposes—at 3 per cent. compound interest, the loss experienced by the local authorities amounts to no less a figure than £426,000.

There is the further grievance in the view of the local authorities that, whereas on the one hand they will have been kept waiting for the money for nearly three years by the time this fund is distributed and will receive no interest on the money when they do receive payment, in a payment to be made the other way round, that is to say, a payment to be made by the local authorities to the British Electricity Authority, there is the express provision that interest is payable by the local authorities. I refer to the interest which is payable under the Electricity (Pensions Rights) Regulations, 1948, governing the transfer of the superannuation relative to electricity employees from the local authorities to the British Electricity Authority. In these regulations it is specifically laid down that the local authorities shall pay interest at 3 per cent. compound.

So we reach the position that, where money is payable by the British Electricity Authority to the local authorities, no matter how great the delay in payment may be, there is no provision for the payment of interest. On the other hand, where there is money payable by the local authorities to the British Electricity Authority, there is provision for payment by the local authorities of 3 per cent. compound interest, and that, I suggest, is a wholly unfair and entirely unjustifiable arrangement.

I have spent a good deal of my life in the world of business, and in the business world it would not be necessary to spend one minute in discussing a problem of this kind between two private businesses or companies. It is obviously axiomatic in private business that if, in two-way transactions between firms or companies, interest was to be paid, such interest would be paid on transactions both ways, each party paying to the other party interest on any amount owing, or, of course, if there were no interest payable, the fact of no interest being payable would govern the transactions both ways between the two firms or companies.

Here, we have yet another example of a State corporation being placed quite unfairly in the position of receiving interest, on the one hand, on moneys due to it, but, on the other hand, paying no interest on moneys which it owes. The Minister, by his unwarrantable delay in the publication of these Regulations has, in fact, taken out of the pockets of the local authorities £426,000 which they would have enjoyed had the payments been made on the vesting date, and has put into the pockets of the British Electricity Authority a like sum being interest that it has obviously been possible to earn on this £5 million fund which ought to have been paid out on 1st April, 1948, but which, even now, has not been paid out.

I hope that the Parliamentary Secretary is not going to base his defence of what has been done in this matter on the ground that it is not within his power to order under the Act payment of interest by the B.E.A. It is recognised that power to impose in the Regulations the obligation on the part of the B.E.A. to pay interest on the compensation fund does not exist, but the fact that that power does not exist should, I submit, have made the Minister scrupulously careful to produce the Regulations without any delay at all after the vesting date so that the money could have been paid out on the vesting date or immediately afterwards. In that event, of course, the question of interest would not have arisen, or would certainly not have arisen in the acute and aggravated form in which it now arises two-and-a-half years later.

I hope also that the attempt will not be made to shelter behind the fact that the local authorities themselves have been consulted as to the basis to be adopted for the division of this fund, and that the delay therefore arises as a result of these discussions and negotiations with the local authorities. On the comparatively simple point involved, it is really absurd to suggest, if the suggestion is going to be made, that it was impossible to decide at an earlier time than two-and-a-half years after the vesting date what is the appropriate basis on which to divide up or apportion this money among the local authorities concerned. Indeed, this delay, with the consequent detriment to the interests of the local authorities and with the corresponding advantage and benefit to the B.E.A., has created the most unfavourable impression possible in the minds of the local authorities who already feel very sore at being dispossessed on entirely unfair terms of their electricity undertakings.

10.29 p.m.

Mr. Erroll (Altrincham and Sale)

I beg to second the Motion.

I hope that the Minister will not use the defence that were this Prayer to succeed and the Order to be annulled, it would lead to still further delay, because he knows as well as I do that this procedure is the only one available to us for ventilating the very genuine grievance felt by the local authorities affected by this Order, namely, that they are called upon to pay interest to the British Electricity Authority, but that when it works the other way round they get no interest payment at all. I also hope that he will give us some explanation for the extraordinary long delay of two-and-a-half years in producing this very simple little scheme. It surely could have been done much sooner.

10.30 p.m.

Sir Ian Fraser (Morecambe and Lonsdale)

The clerk to the Urban District Council of Alveston, an important town in my constituency, has asked me to voice the feeling of this council, which I gather is shared by many minor local authorities, that the arrangements of which this Order forms an important part are inconvenient to the councils, inconvenient to the citizens and unfair financially to the councils as well. It appears that before these general arrangements were made it was the custom for this urban district council, and possibly for others, to collect from the citizen, say, £15 a year—£5 for rates, £5 for electricity and £5 for gas—in one demand, and to issue one receipt for the sum of money thus collected. The work was done in one office and a limited and efficient staff could carry out this work for 2,000 or 3,000 citizens.

Now, apparently, three separate offices, three separate sets of clerks, three separate sets of bills and three separate sets of receipts have to be used. It is leading to a grave waste of public money, an inefficient use of clerical labour and an extra bit of trouble for every citizen, for no apparent purpose that can be understood. I want to add this particular complaint to the one which has been so ably expounded by my hon. Friend who moved the Motion. I want also to confirm the complaint that the compensation has been unduly delayed and that so far as minor local authorities are concerned, it is considered by them to be inadequate.

10.32 p.m.

Colonel Clarke (East Grinstead)

Like the hon. and gallant Member for More-cambe and Lonsdale (Sir I. Fraser), I wish to speak in support of the local authority of my constituency who are suffering under the present arrangements—or lack of arrangements. They are a progressive authority with many commitments, and naturally they are anxious to collect the money justly due to them as soon as possible. It has been said that there has been two-and-a-half years' delay. I submit that this delay is more like three-and-a-half years, and do so upon these grounds. I was present in the Standing Committee when this proposal was first made by the present Minister of Defence and during that Debate the Parliamentary Secretary to the Treasury made this statement: I was asked how local authorities would receive their moiety of this global sum. I cannot, of course, state that with any exactitude or go into details. This is a matter which should be discussed with the local authorities, and steps are now being taken, with the Minister of Fuel and Power to get these discussions going, so that the money can be apportioned fairly between the authorities …"—[OFFICIAL REPORT, Standing Committee E; 17th April, 1947; c. 1061.] That was said on 17th April, 1947—three-and-a-half years before we get this very inadequate Order from the Government. I admit that a great deal of trouble must have been taken in its drafting because it is a highly complex document and difficult to understand, but why is it necessary to take three-and-a-half years from the time the Parliamentary Secretary to the Treasury said that these discussions had been initiated? I hope the Parliamentary Secretary to the Ministry of Fuel and Power will account for that extra year's delay.

10.35 p.m.

Mr. Molson (The High Peak)

I should like to put the case of the Urban District Councils' Association against the basis on which this compensation is being paid. The urban district council of New Mills in my constituency is very much affected by this basis. The idea of this additional compensation, which was inserted in the Bill as it was passing through Committee, was in order to deal with the additional cost imposed on local authorities as a result of severance. This was particularly the case with the smaller authorities, who had been able to employ the same officials to act as managers and administrators of the small electricity concerns as were engaged in the other activities of the council.

In the larger authorities, the management of their very big electricity concerns was a whole time job for the officers and their staffs. In the vast majority of the larger authorities the whole of these staffs have been transferred to the Electricity Authority, and, therefore, they are relieved of the burden of maintaining these officers. The small local authorities now have a smaller range of activities over which to spread the cost of these officials.

As the Parliamentary Secretary to the Ministry of Fuel and Power will no doubt remember, discussions took place with the Urban District Councils' Association in January, 1948, when it was represented to the Ministry of Fuel and Power that the fairest way in which this compensation could be distributed among the local authorities would be on the basis of consumers alone. The small local authorities were precluded by one of the earlier Electricity Acts from generating electrical power themselves, and, therefore, it follows that if one of the criteria for distributing this compensation takes into account the amount of current generated, in addition to the amount of current sold otherwise than in bulk, it must have a harmful effect on those authorities which were precluded by Act of Parliament from generating their own electricity. All this was represented to the Ministry of Fuel and Power as being an additional reason why it would be unfair to the smaller local authorities if the total amount of compensation were evenly distributed among all the local authorities, or if it took into account all the current generated and sold otherwise than in bulk.

The amount of compensation which will be received by the New Mill Urban District Council under the present Regulations will be only £1,351. If it were calculated on the basis of the number of the consumers the compensation would be £2,057. What is the case for the small authority I am representing also applies in general to other small authorities throughout the country. The Urban District Councils' Association have made a calculation that for the larger authorities compensation per consumer will amount to 14s. 10d., whereas for the smaller authorities the compensation will be only 12s. 8d. a consumer. In view of the fact that these are called the Electricity (Severance Compensation) Regulations it might be assumed that the basis for the distribution of this sum might have taken into account the additional injury done to the smaller local authorities by the severance of their electricity concerns from the other matters for which they are responsible. For these additional reasons I support what my hon. Friends on this side of the House have said in moving that these Regulations be annulled.

10.40 p.m.

Mr. Vane (Westmorland)

I should like to support the case for the smaller local authorities, which my hon. Friend the Member for The High Peak (Mr. Molson) had put forward. After so long a delay one would like to think that the Minister would be able to say that after many difficulties he had been able to meet all objections. It is strange that after so long a delay nearly every hon. Member in this House, except those representing large urban constituencies, finds that he is still receiving communications from local authorities objecting wholeheartedly to the basis of compensation which the Minister is now putting forward. It seems extraordinary that the compensation offered to the smaller local authorities should be less than those of the large cities, where electricity undertakings are being transferred en bloc and the loss is proportionately smaller.

There is one other point which the House ought to consider. In a short time the same sort of arguments are going to be put forward from the Government benches for the gas undertakings, and hon. Members should be quite clear on the matter and make up their minds to vote against these proposals. The delay has been so long that a little further delay will make no matter, provided we reach a basis of agreement which will satisfy and do justice to what I might call without detriment the weaker vessel. More is that so since in a short time if these Regulations receive the approval of the House, we shall have them presented in the case of the gas undertakings as something that deserves support, and against which criticism would not in any case be justified. I sincerely hope, therefore, that the House will reject these proposals and demand that they be brought forward in a more satisfactory form.

10.43 p.m.

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

Whilst the hon. Member for Westmorland (Mr. Vane) hoped that the House would reject these proposals, I understood from the hon. Member for Wimbledon (Mr. Black) and the hon. Member for Altrincham and Sale (Mr. Erroll) that that was not the intention at all. They implored me not to use the argument that if these Regulations were annulled there would be more delay. I am not going to use that argument because to use it would be merely to state the obvious. However, I am at a loss to know what the Opposition really want, whether it is to vote against these Regulations or whether they want answers to their questions.

Mr. Brendan Bracken (Bournemouth, East and Christchurch)

The hon. Member will know in time.

Mr. Robens

The right hon. Gentleman says that we shall know in time.

Mr. Bracken

We very much want an answer to the points. The question of voting is another thing, but we want to hear answers to the points which have been raised by all hon. Members.

Mr. Robens

The right hon. Gentleman has not got a personal interest in this, because the undertaking at Bournemouth does not vest in the area board. He ought to be careful, because in Bournemouth they have been running socialised industries for a long time. It may be that he does not know all about it.

As the House already knows, the Act provides £5 million for compensation to the local authorities for the severance of their electricity undertakings. The Act gave no power to the Minister to pay anything at all in the way of interest, and it must have been perfectly obvious at the time the Bill was passing through the House that compensation could not be given on the day after vesting date. So the House must have been aware that there would be some time lag, and at that time there was no indication that the House wanted interest payment on top of the £5 million which subsequently appeared in the Act. So that any argument now, however right it may appear to be in relation to interest payment, is of no real value because to provide interest payment a new Act of Parliament giving power to do that would require to be passed.

On this matter of compensation I ought to make it clear that the compensation is not for the loss of the undertakings. Indeed, the hon. Member for Wimbledon (Mr. Black) stressed this point, that it was to compensate local authorities for severance when in point of fact certain overhead charges would go on until they had reorganised either their office administration or in whatever direction the overhead charges lay for which they were getting no income. Therefore this £5 million was in respect of that matter alone.

It would have been perfectly easy to produce a set of Regulations within a few weeks of vesting day by the Minister merely deciding on the formula and proceeding to put the Regulations into operation. But I am certain that no hon. Member in any part of the House would regard it as a right and proper thing for the Minister to produce Regulations which affected local authorities until he had consulted those authorities. Therefore, consultation with local authorities took place. As a matter of interest, I will tell the House that we consulted the Association of Municipal Corporations, the Metropolitan Boroughs Standing Joint Committee, the Urban District Councils' Association, the Rural District Councils' Association, and, in Scotland, the Counties of Cities Association, the Convention of Royal Burghs, and the Association of County Councils in Scotland.

It has been clearly brought out by hon. Members opposite that there is a difference of view between the various types of local authority on how this £5 million should be divided. The small urban authority feels that the division should be weighted perhaps more in its favour than the large boroughs. Therefore it was frankly impossible to have a formula which would have 100 per cent. agreement from all these local authorities' associations, because the needs of their constituents varies considerably. After we had met the associations they of necessity had to go back to their constituents, and then come back and have further discussions. It would have been very easy at any stage to have said, "We have had enough discussion, let us get on with the Regulations." But we did not do that. We went on and on trying to secure 100 per cent. agreement. We did not get that 100 per cent. agreement. But we got a fair measure of agreement on the formula which is now before the House.

That formula was that we should divide the £5 million as to 75 per cent. in proportion to the number of consumers, as to 12½ per cent. in proportion to the revenue of the undertakings, and as to 12½ per cent. in proportion to the number of units generated and sold, excluding the bulk sales. That seemed to us, after listening to all the arguments, to be fair and to give justice to all the associations, although I well understand that a group of local authorities may feel that the formula does not weight the distribution sufficiently in their favour. Incidentally, this was, of course, subject to a maximum result of one pound per consumer. We felt at the Ministry that this formula did, in fact, favour the smaller undertakings rather than the larger ones.

I have explained that I do not myself regard the long period which has elapsed as being one of unnecessary delay. Indeed, we began these discussions three months before vesting day. So it is clear that it cannot be said that the Ministry of Fuel and Power did not make a start as early as it could. It seems to me that to begin this kind of negotiation three months before vesting day does not indicate that there was, on the part of the Ministry, any desire for delay.

I ought perhaps to tell the House that as the Gas Regulations are something similar—and there is a considerable sum involved, although it is £2,500,000 instead of £5 million—we thought it right and reasonable to conduct the negotiations at the same time. It might well be that if we had left gas we might have saved some time on electricity, but taking the two together we have, I think, saved a considerable amount of time on the Gas Regulations, upon which I understand hon. Gentlemen opposite intend to have something to say on another occasion.

I said at the beginning that this compensation was to deal with certain losses in relation to severance. It is also perfectly clear that in a large number of instances in the first year local authorities did not suffer because, as the B.E.A. Report in paragraph 70 says, 285 out of 327 authorities went on doing the same sort of work. To some extent, therefore, the losses were on a diminishing scale.

So the Regulations provide for the distribution of the £5 million in accordance with the wishes of Parliament. We have not the power to deal with the matter of interest, as I have said. If there has been a long time before the appearance of these Regulations it is because we have wanted to take the local authorities with us, and I think that by and large they meet a fair measure of justice to the local authorities.

10.52 p.m.

Mr. Brendan Bracken (Bournemouth. East and Christchurch)

The Parliamentary Secretary has told us about his consultations with the local authorities. He has recited a list of important authorities in the country, but he has said nothing about the smaller ones. He has not told us what they told the Minister. Were they satisfied? Obviously they were not. From what my hon. Friends have said, it appears that they are deeply grieved by the delays of the Ministry and the method of compensation. In fact, the present situation is so utterly unsatisfactory that we must have another opportunity of dealing with the matter. The Parliamentary Secretary talks in a glib way of what they intend to do, urging the local authorities to be patient, and saying that the Government know best. Let me ask him this question. Who assesses these properties?

Mr. Robens

What properties?

Mr. Bracken

The properties of the local authorities. The Parliamentary Secretary has told us that three months before it was decided to nationalise they started consultations with the local authorities. If that is the case, the burden of responsibility resting on the Minister is a grievous one. He is—I will not say stealing the properties of the ratepayers of the country—

Sir William Darling (Edinburgh, South)

He has stolen £1 million worth in Scotland!

Mr. Bracken

My hon. Friend encourages me to use violent language.

Sir W. Darling

In the city of Edinburgh the amount in question for electricity resources is £1,042,000, and they have not received a penny.

Mr. Bracken

Having received that encouragement and used the word "stealing" rightly, and having shown a certain timidity in stressing it, I now ask the Parliamentary Secretary to listen to what has been said to him; and what has been said, too, by my hon. Friend the Member for Edinburgh, South (Sir W. Darling), who was a Lord Provost of the greatest distinction, and a man who has served his country in so many ways. When it comes from such a person, we should pay the most serious attention to it. Moreover, it is not easy to swindle the people of Edinburgh, which the Parliamentary Secretary wishes to do, and I am glad that one of the city's senior Members has said that the word "steal" describes what the Minister has done. It is generally accepted that the Government are stealing this property, and are not prepared to pay for it.

Then, there is a most peculiar remark of the Parliamentary Secretary, which was that his right hon. Friend never thought that local authorities required interest. The Chancellor of the Exchequer would be very cross indeed, I am certain, if his nominees on the Board of the Anglo-Iranian Oil Company, or the Board of the Suez Canal did not require interest on their money. I am sure that the right hon. and learned Gentleman would sack those directors on the spot. The fact is that the local authorities have been treated with the most complete contempt; I am sure my hon. Friend the Member for Edinburgh, South, would agree with me that they have been "bilked."

Mr. Harold Davies (Leek)

Some of the Scottish towns get the biggest compensation of the lot, and 150 of these undertakings lost £7 million.

Mr. Bracken

I am certain that the hon. Member's attack on Scotland will be remembered by his constituents. HANSARD will record what he has said, namely, that the Scots have been overpaid; that will not appeal to the Scots.

Mr. Davies

We want a little more in Leek, compared with Edinburgh.

Mr. Bracken

If the hon. Member would get up from his seat and tell us what he wants we might follow him. Apparently he is apologetic, and is worried about what is going to happen in Leek at the next election.

Let me say that we are completely unsatisfied with the explanation we have had from the Parliamentary Secretary, but we all know he has done his best when his master is away, probably addressing some learned society on what should happen to mankind in the year 2050. But let me say that we are going into this matter with the greatest possible care. We are immensely surprised that many hon. Members who represent Scottish constituencies have not complained of what has happened, because here we have the best example of what we know as Whitehall's intolerance of the small local authorities. Whitehall cares nothing for them; it filches their money, steals their property, and then comes to the House of Commons, and says, "We consulted them three months before we determined to nationalise."

If my hon. Friend would agree not to force a Division, but withdraw, I think we can agree; but we are told that the Procrustian bed prepared by the Minister for the smaller local authorities in matters of electricity is also to be used for gas. That warning is something that we take great notice of and I can tell the Minister that when we begin the next Session we are going into these matters with great care and the hon. Member for Leek (Mr. Harold Davies), who apparently despises the rights of the citizens of Edinburgh—

Mr. Harold Davies

I am grateful to the right hon. Gentleman for giving way but he is so covered with a miasma of misrepresentation that it out-wizards the Wizard of Oz and bewilders his own side. I am convinced that having lost the entire logic of the argument so far as the protection of local authorities and small local authorities is concerned, he must recognise there are no hon. Members in this House more than the hon. Members on this side who protect local authorities.

Mr. Bracken

I think you will agree, Mr. Deputy-Speaker, that the long-winded interruption of the hon. Member for Leek reminds one of a rather bad speech made by the Minister of Health after a very good dinner. The Parliamentary Secretary should have been supported by his Minister here tonight, but we hope to see the Government in full array next Session and then we shall do our duty by these small local authorities who are being swindled by the present Government.

11.2 p.m.

Sir William Darling (Edinburgh, South)

I had not intended to intervene in this Debate and I apologise for intervening now, but very definitely the Parliamentary Secretary has either misinformed or misled the House. It is undoubtedly the case that not only have the local authorities in England been denied the interest on their £5 million compensation, but those local authorities which had surpluses have had those surpluses taken away from them and they are getting no interest.

I speak on behalf of the South-East Scotland Electricity Board which secured, at the expense of the ratepayers, by careful municipal management, a surplus of £1,042,000. That sum is no longer the property of the ratepayers, who earned it and who saved it. It has been confiscated—vested is the word—by the British Electricity Authority, and the citizens of Edinburgh and the South-East of Scotland are being denied their very proper share in that undertaking. It has been taken completely from them. The rates of electricity has been raised and no interest has been paid on the sum of money appropriated.

These are unpalatable facts but when we hear hon. Members like the hon. Member for Leek (Mr. Harold Davies) pretending that the defence of the local authorities is in the hands of hon. Members opposite, it is too scandalous a statement to pass without challenge. I am glad to have opposite me the hon. Member for Edinburgh, Central (Mr. Gilzean), who is the distinguished leader of the Labour Party on the Edinburgh Town Council. He will confirm, as he cannot deny it, that under his leadership and careful management, the Edinburgh Council built up these substantial reserves. He would also confirm, and I challenge him to come to his feet and support me, that this £1,042,000 has been taken from Scotland and is now going to impecunious local authorities in England who managed their businesses so badly that there were deficits.

Not only that, but they are not being paid interest on the sum of compensation. It is a matter of the gravest importance, and if the Parliamentary Secretary to the Ministry of Fuel and Power has not the permission of the House to reply again, then I see the hon. Lady the Joint Under-Secretary for Scotland sitting in her place and she can reply. It is a shameful grievance that £1,042,000 of public money should be taken from the citizens of Scotland and Edinburgh and given to the funds of the British Electricity Authority.

Mr. Black

I beg to ask leave to withdraw the motion in view of the fact that this matter will be raised again.

Motion, by leave, withdrawn.