HC Deb 30 May 1952 vol 501 cc1773-87

11.4 a.m.

Mr. I. J. Pitman (Bath)

In dealing with this subject of consumer representation I want to make it clear that the matter of public ownership is not in question. There was a very good debate on 25th October, 1950, which was opened by the right hon. Gentleman the Member for Lewisham, South (Mr. H. Morrison). We had, he will remember, a most interesting and I think full debate on nationalisation, during which many hon. Members now opposite dealt with the question of consumer representation. The issue, therefore, is that of public ownership managed by a public corporation.

I want to make it clear that there is a distinction between public ownership with management by a local authority, as, for instance, the electricity undertakings of local authorities, as we used to know them, and public ownership by Her Majesty and management by Her Majesty's Ministers, as for instance in the Post Office, and, on the other hand, public ownership, where management is separated from ownership. The problem in the latter case has been brilliantly stated by Mr. R. H. Thornton, of B.O.A.C., who put it this way: As shareholder, the nation expects a healthy trading account, whereas as a consumer it expects the moon. We will not be dealing today with the aspect of "shareholder" ownership, be— cause the public ownership aspect is not in debate and was, anyhow, dealt with very effectively by the Minister. The debate is only about the second part of the problem —the representation of the consumer, and particularly in regard to organisation of consumer criticism.

Consumer representation for public ownership with public management by the local authority or by Parliament has been effective and satisfactory, because it is a representation by persons who are independent of the management, who are critical of the management and are powerful, and who generally conduct their affairs in public. The public, moreover, are fully informed and are really satisfied with its representation.

The consumer representatives in the public corporations, which we are discussing today, are, on the other hand, subservient to and at the mercy of the management, they are powerless and they are, generally speaking, used by management to placate criticism by consumers rather than by consumers to criticise management. Their proceedings are generally conducted in secret and the public as a whole is dissatisfied.

The facts about the working in practice of these consumer representatives are very well stated in two publications. The first is "Consumer Representation in the Public Sector of Industry," by A. M. de Neumann, and the other, an article in the "Journal of Public Administration," on "The Consumer Councils for Gas and Electricity" by J. W. Grove. It is interesting to note, incidentally, how he uses the expression "consumer councils" for gas and electricity—which only shows how confusing has been our nomenclature in the different public corporations.

My first point is, then, that these councils are subservient to and not independent of the management whom they are appointed to criticise. Let us look at the facts. First of all, the chairman has either £1,000 or £750 a year, dependent on the industry and this sum is paid by the management. Secondly, the secretary of the consumers', or consultative council is seconded by the board in question, and vetoes have been put on the independent selection and appointment of its own secretary by the consultative council itself. Thirdly, the pay, pension, promotion and future career of the secretary are very much at the discretion of the board, and he looks to them for his future. Fourthly, very often the two bodies—the board, which is the management, and the consumer council or consultative council, which is the critic—are living and working cheek by jowl in the same town and the same office.

I secondly made the point that the council is at the mercy of the management. After all, knowledge is power. The technicalities of the subject make the expert dominant and while people coming along from the board are all experts those on the consultative council have rarely got sufficient knowledge to tackle the expert. Secondly, the information on which the council has to work in criticism of the management comes only from the management itself.

It is necessarily only a selection of the information which is sent out and it is the management which can select, and the timing of its circulation is often such that the consultative councillors have not really had time to prepare their case and deal with the information provided. Finally, the initiative is open to the management to use the council, much more than the initiative lies with the council to criticise the management and keep it on its toes to serve the consumer.

Thirdly, I made the point that the council has no power to follow through. It can only recommend. It is true that it can appeal to the Minister, but in the field of prices the Minister is entirely powerless to deal with these area boards because the boards are under statutory duty to make two ends meet, taking three or four years with another. Therefore, it is open to the area chairman and his board to say to the Minister, "I cannot carry out the general direction about prices which was given to me because in my and the board's opinion that will militate against my statutory duty." As we know, the Minister cannot give specific directions; he can give only general directions. So in the field of prices, at any rate, the Minister is, in effect, powerless to give any support to the consultative council, which is powerless anyway.

Fourthly, I made the point that the workings of the Councils are generally secret and that the Press is usually excluded. It is exceptional for the main business of the consultative council or consumers' council to be conducted in public with the Press admitted. For instance, in London, the Electricity Council uses a General Purposes Committee to conduct its deliberations in secret and holds only four short meetings in public a year, and during those meetings the chairman is ever reminding the councillors that "the gentlemen of the Press are present," and generally sees to it that the effective work of the Council and of the General Purposes Committee is carried on behind closed doors.

My fifth point was that the councils tend to placate criticism rather than to be critical, which is their function. As an instance of that I would give the Eastern Electricity Board, where, recently, the chairman sent out a general circular saying that the duty of the Board was to standardise prices. That is wrong. That is not in the Act at all. The duty of the Board is to simplify and standardise methods of charge; that is to say, for example, that while there may be a standard method of charge for fruit, say, per lb., there need not necessarily be the same charge per lb. for oranges as for strawberries. Here, in this instance, we find the consultative council making the same mistake in the interpretation of the Act. This is surely more than a coincidence and we may conclude that the council has been used to placate public opinion in advance of a radical change affecting many of these consumers adversely. Again, in the South-West, in regard to gas, the council is used generally to placate criticism and not to initiate it.

These are five charges against the councils as they now are working in practice. Nobody could possibly say that these charges could be applied to this House or that Members of this House are the "stooges" of the Postmaster-General in their duty of representing the consumer versus the management of the Post Office. Nobody, I think, could say, that the gas engineer of the local authorities gas undertaking was dominant over the council or city corporation. Yet that is precisely what is being said generally, that these consultative councils are acting as a stooge by which the management can have an effective and, be it noted, numerous and expensive public relations officer for gaining the acceptance by the public of what they have done, and gaining advance acceptance of, and commitment to, what they intend to do.

I would claim that the public is universally extremely dissatisfied particularly over prices. For instance, in Bath the price of gas has gone up 273 per cent. since the clays before the war. The public generally hoped that nationalisation would lower prices, and they feel that a basic source of the trouble has been that the consumer is not being adequately represented. Everybody would agree that the consumer is much weaker than he used to be, that when there were small undertakings, locally run, he was, then, in a far stronger position to make his wishes felt than he is today with these large aggregations.

I would liken the consumer councils at the moment to a company trade union. The management nominate the president. He is one of their board members paid by them to act as president. They pay the secretary of the union and the union is seen to work largely in the interests of the company, largely in secret, not telling its membership what is happening.

We as a House ought now to begin thinking of what is to happen in the future for consumer representation. It will be remembered that in that debate of 25th October, 1950, it was agreed that the House should have, like the B.B.C., an early review by an independent committee. The first of the nationalised industries we are discussing comes up for review in 1953, the next in 1954 and the next in 1955. So it is not too early to do some constructive thinking in this field.

I want to put forward some such suggestions in line with a paper which I gave to the British Institute of Management on this subject, to which the hon. Member for Edge Hill (Mr. Irvine) was good enough to refer in the debate I have mentioned. First, we must take a policy decision that the council is to be on the side of the consumer and not on the side of management; that it should be advocate for the consumer against management, not for management against consumers. Secondly, we must therefore discontinue the present loyalty of the chairman and the secretary to the board, to the management they are there to criticise. We must make them loyal only to the consumer.

Then we must appoint a central staff office to serve consumer councils and consumer representation generally. After all, that is what the staff of the Public Accounts Committee do for this House in its consumer representation, and it is exactly what the town clerk's and city treasurer's offices do for the council in their erstwhile control of their undertakings. That will give the consumer council information and help which is essential for criticism. For instance, we want to know what is the basis of depreciation. Have they written up alf the assets to the present replacement value and then put on a swingeing charge for depreciation quite different from the charges in the old days? A consumers' council must have the staff office to go into that with skill before it can do the job properly.

Then we need to bring the local authorities more into consumer representation. I believe that the hon. Member for Widnes (Mr. MacColl) will agree with me in this. Is there any reason why the local councils, with their representative on the consumers' council, and with this staff from the Public Accounts Committee, as it were, attending to brief them, should not keep the management on its toes in regard to the way the service and prices have their impact on their area? Remember that the areas are too big for consumer representation in any way.

I would certainly continue the area meetings, but I should have the councillors here too, briefed by their staff officers from the centre. Again, I say that all these meetings should be in public. I have made the point that the consumer councils are powerless. Their only power is as it were, the publicity against wrongness which they can evoke in support of rightness.

I should say, finally, that we have a soluble problem. We in Parliament, and those in local authority corporations have solved all these problems. We are not subservient, but are independent. We are not at the mercy of Ministers; we have our Public Accounts Committee and other arrangements to help us protect the consumer; we have power to follow through. We have the ability to admit the Press, and no harm results, but only good. Publicity surely does only good, secrecy only harm. There are, I believe, lots of skeletons in the cupboards in these industries, and the frequent desire of the consultative councils to shut the door on them and not to have them examined is evidence that they are there. These councils will never do their job of satisfying the public that justice has been done until they open those doors and admit the public and the Press.

11.22 a.m.

Mr. James MacColl (Widnes)

We are all grateful to the hon. Member for Bath (Mr. Pitman) for giving us this opportunity of discussing in, I hope, a quite dispassionate and non-partisan manner, a very real problem which has arisen as a result of nationalisation, and which everybody, whether they believe in nationalisation or not, must want to see solved satisfactorily.

In speaking on this subject I feel slight embarrassment. in that I am rather like the mother who claimed to be an authority on the upbringing of children on the ground that she had buried 10 of them. My claim to be an authority on the subject of consumer councils is that have been purged from two of them. I have, however, had an opportunity, before I suffered that indignity, of seeing two very different councils—the Domestic Coal Consumer Council and the London Electricity Consultative Council—at work.

With what criticisms the hon. Member made, I have very little quarrel, except that I thought he was unfair in saying that before nationalisation the consumer was in a better position. That may have been true in some areas, in the case of small companies dealing with very small areas. I certainly do not think that it was true in London, nor do I think it was true generally in the country, except where a local authority was managing the service, when there was, of course, public accountability. I do not think that anybody who lived, as I did, under a private utility company which supplied gas or electricity, would suggest that the consumer was not in an incomparably better position today.

Mr. Pitman

I was a director of the Bath Gas Company for 18 years. That was a local company, and I can tell the hon. Member that the limitation by the Board of Trade, and then the Minister of Fuel and Power, on profits was severe and complete—we could not make more than a certain profit—and the way in which the local authority acted as advocates for the consumer to the Minister in getting him to prevent increases in price or to require reductions in price, was very effective consumer representation, certainly in Bath.

Mr. MacColl

I had not appreciated that the complaint against the nationalised industries was that they were making too much profit. I thought the complaint was rather that in their contact with the consumer, they were impersonal and arbitrary. In that respect, my impression is that under nationalisation, except where previously the supply was by a local authority, they are more susceptible to the views of individual consumers.

The question of meeting in public is a difficult matter and one which every local authority has had to tackle. In theory, one can make a very good case for saying that the public representatives ought to meet in public, but anybody who has served on a local authority knows that if meetings are held in public, the real decisions are taken at the level at which the public are excluded. A very good example of this is the working of education committees who have to meet in public. The result is, certainly in London and, I imagine, in a good many places, embarrassing questions are settled in subcommittees where the public are kept out.

There may be something in using the analogy of what the hon. Member called a "company union" aria saying that that union ought to meet in the presence of the people whom it represents; but no trade union carries on negotiations with an employer with its rank and file sitting around. It has to go into negotiation, there has to be give and take and bargaining in private, and a report has to be made back to the rank and file. One of the great difficulties about consumer representation is that there is no organised rank and file to whom one can report back.

The hon. Member also drew an analogy with a Member of Parliament and asked why a Member of Parliament was more independent and better able to voice criticism than is a consumer representative. There is an important reason for this, which is not, perhaps, generally appreciated. The reason why the Member of Parliament can do his job at all is that nothing is too petty or too small for him to consider. If he is sensible, he takes up every trivial question about which constituents write to him, instead of saying that they are not matters for him. It is on the basis of accumulating a vast mass of small, petty and insignificant details that he picks up his general picture of how the whole vast administrative machine is working.

The consumer council is not able to do that, because it works with a commercial undertaking. The general practice is that matters of small detail—the irritating petty complaints—are dealt with through the ordinary channels of the public board, and only the bigger questions come before the consumer council.

In the London Electricity Council, a report was received by each area of the board at every meeting of the district committee of all the complaints that had been received by the board, and any outstanding questions were reported to the district committee. I agree, however, that the district committee is dependent on what the board chose to tell them or on what the public may write to them.

The public dissatisfaction with consumer councils arises from the fact that in the present situation there is not very much that a consumer council can do. On the two councils of which I have been a member, I am not certain that we would not have discharged our duties by holding one meeting of each of them, by passing a resolution in the Domestic Coal Consumer Council to say that we wanted cleaner coal and more of it, and by accepting a resolution in the cousultative council that we wanted more electricity.

Those really are the matters in which the public are primarily interested, and are matters in which there arise the technical difficulties of the industry, problems of capital investment, and so on. Once the answer is received that "We are doing all we can, and there is nothing more that we can do"—whether or not that argument is accepted is not relevant to what I am saying—there is very little that the council can do except to go on repeating again and again the same questions.

It has, therefore, been particularly difficult for consumer councils to do their job efficiently. I should, however, like to take an illustration from what the hon. Member said to show that the councils do, in fact, manage to do some work. He referred to depreciation. It so happens that I reported back to my local authority on the general work of the London Electricity Board during the year. One of the members of the borough council took up this precise question whether the reason why the board were not increasing their prices was not due to the fact that they were under-depreciating. I was able to take that back to the consultative council and get a full report on that from the board to pass to the local authority. In fact, worked properly, there is very reasonable liaison in the gas and electricity consumer councils between the local authority and the central board. It is very much better than in the case of the coal consumer councils, which are altogether too centralised and not sufficiently local.

We cannot assume that there is immediate war between the consumer and the board. In fact there is always a pull between the interests of the consumers as a whole and the interest of individual consumers. A good many of the complaints which come before the consumer councils are from individual people who want some special service which will require a lot of money to provide. The problem facing the council and the industry is whether extra money should be spent to meet the idiosyncracies of an individual consumer at the expense of the general community.

That is not a problem which can be solved immediately, nor can we say that there is a plain answer, yes or no. Clearly it is a question of principle, a question which should be taken into account from both points of view by the consultative council as much as the board. Although I share the criticism of the present situation made by the hon. Member for Bath, and I think that the whole system of consumer councils requires overhauling, in many cases the boards do make a serious attempt, not just to pull wool over the eyes of the consumer councils, but to bring them into the picture.

Certainly the London Electricity Board went to great pains indeed to summon meetings of the appropriate district and central committees of consumer councils, when the annual report was published, giving the kind of detailed account which a good company chairman would give to his shareholders, but which in fact is very rarely given. If any consumer representative in the electricity field does his job properly, and takes the trouble to attend meetings, he can interpret to the general public what the members of the board think adequately enough for them to make criticisms of the policy of the board.

I share with the hon. Member for Bath his sense of the weakness of the whole system, but in London, Mr. Randall, the Chairman of the London Electricity Board, has gone out of his way to try to make the thing work and to bring consumers into the general picture. I am not optimistic about the possibilities of a very easy solution of the problem. I do not share the optimism of the hon. Member for Bath. As I said in the debate in 1950, I am inclined to think that we should abandon the whole idea of consumer councils and divide the work between the local authorities and a Select Committee of this House.

But if we maintain consumer councils I think they should be multi-purpose. There is no need for a gas council and an electricity council. We want one consumer council representing the interests of the consumers of all kinds of fuel. because after all those interests are complimentary. In that way we may get an organisation which can have an independent staff, and that is a vital matter.

11.34.a.m.

The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. L. W. Joynson-Hicks)

I am sorry to cut short this debate, because I know that a number of my hon. Friends were anxious to participate in it, and I think that the House would have welcomed their contributions. But we are running to a time-schedule, even though it is unofficial. I have a considerable amount to reply to, and the subject is one which deserves a full answer.

My right hon. Friend will appreciate the fact that this debate has taken place. The whole question of these consultative councils is in the experimental stage, and the best way to get an experiment to work Well is by revealing problems and difficulties and discussing them, and having a consultation about them. There is one thing which I should like to emphasise at the outset; I cannot share the impression conveyed by my hon. Friend the Member for Bath (Mr. Pitman) that, by and large, very little good is resulting from the activities of the consultative councils.

I do not think that is so. There is a considerable amount of good emanating from them. I examined the current issue of "The Gas World" to see if there was any reference in it to consultative councils, and I found a substantial article about them. There is a report of the current meetings of two of the consultative councils, and the article is headed "A Freedom of Choice; Victory for Gas." That gives a rather different impression.

It is a victory that was achieved by the consultative council. It is an account of the pressure brought to bear on the board by the consultative council to fight harder for the installation of gas, as against electricity, in connection with arrangements being made by a local authority for installing services on a housing estate. Whether or not that was the right thing to do is another matter which does not appertain to this debate, but it is an illustration of the activities of consultative councils, whether well guided or not.

There are several further illustrations in that issue. If one turns to the annual reports of the boards, with which are included reports of the consultative councils, there again are shown many instances of the activities of the councils in which they have successfully taken up matters with the board, and persuaded the board to put right something which was not right from the point of view of the interests of consumers.

Another thing about the councils, as hon. Members have said, and as the hon. Member for Widnes (Mr. MacColl) made particularly clear, is that they are not all developing along identical lines. That is a good thing. There are variations in outlook in different parts of the country, and circumstances vary. It would be a mistake if any action were taken to endeavour to canalise the work of these councils. It is a good thing, in my opinion, that some proceed on the lines of having district committees, while others have district representatives; and that some, according to their circumstances, are doing more work in committee than others. In this way the individuality of local circumstances is revealed, and I think that is a sign of good development.

Another aspect which must be considered is whether or not it is desirable that the two consumer councils in the coal industry should proceed on their own way. My hon. Friend the Member for Bath made same reference to that. One question which can be considered is whether or not it is desirable that they should have local committees. If there are local committees it is necessary to get the right people to serve on them. In the electricity and gas industries we have 150 local committees, and it is by no means easy to get the right people to represent consumer interests. In the coal industry there is a different set-up. The consumer goes direct to the merchant instead of to the nationalised industry, and I think it would be a pity to extend the local committee system of consumer representation in the coal industry.

My hon. Friend made various suggestions about methods whereby consideration could be given to the improvement of the present system. That is what we want to achieve. Although the consultative councils, and the consumers' councils too, are doing good work, I would certainly not subscribe to the suggestion that they could not do better work, and I think they would agree with that.

My hon. Friend made a very pertinent remark in his reference to the relationship of the chairman to the consultative council on the one hand and the board on the other, because he is ex officio a member of the board. The secretary, who must necessarily be one of the most informed persons on the consultative council and upon whom the council must necessarily rely to a great extent, is again an official of the board.

It may well be that greater confidence would be given to the public if reconsideration could be given to this matter. For instance, it might be that the board representative on the council should be vice-chairman or hold some other post than chairman, so that there would be an independent chairman. It is essential to maintain the contact between the board and the consultative council—

Mr. E. Shinwell (Easington)

I imagine that a member of the board occupies an official position for the purpose of maintaining contact with the consumers' council so that they shall be fully informed about what is going on. As I set up the consumers' councils in the first instance, I should like to say that it certainly was not my intention that any member of the board should occupy an official position.

Mr. Joynson-Hicks

I am grateful for support from such an important source as the right hon. Gentleman for the suggestion that I was making. The tact remains that at the moment the chairman of the consultative council is always a member of the board. As the right hon. Gentleman indicated, this arrangement might well be revised. It might be feasible to have as secretary a retired official of the board, who knows the work, instead of an active official.

Publicity is a matter of the greatest importance. It is true that the consumer councils in the coal industry do not admit the Press to their meetings. They have considered this very carefully, and it is not by chance that they do not do it. After mature deliberation, they have come to the conclusion that it is in the better interests of the consumers for them to meet in private because the work that they do is of a very different character to the work done by consultative councils in the areas. They feel that they can negotiate the problems brought to them in a freer and more confidential spirit if they meet, so to speak, in committee than if they meet in public.

The other consultative councils all meet in public with the Press present. They have the opportunity, which is taken in some cases, to allow matters to be referred to committees and for reports to be made back to the council. When they go into committee they meet in private. That is the local authority custom and it is natural that it should apply in the consultative councils because so many members of the consultative councils are members of or are nominated by local authorities.

Mr. MacColl

I am sure that the hon. Member does not wish to mislead the House. The London Electricity Council meets twice out of three times in private. The hon. Gentleman rightly said that one meeting in three is held in public. The agenda for that meeting is very carefully selected.

Mr. JoynsonHicks

The hon. Gentleman has greater experience of that than I have, but I am in some doubt as to the accuracy of his statement.

Mr. MacColl

I was on the council when it was set up.

Mr. Joynson-Hicks

I have gone as far as 1 can. I wish that I could continue a little longer because there are many things to be said. The debate has been of considerable assistance in giving us an opportunity of expressing our views, which I have not the slightest doubt will be read with the greatest interest by the members of the consultative councils, and in giving Parliament an opportunity of considering whether or not it might be desirable to make some variation in either the administrative set-up or the actual constitution of the councils themselves.

Colonel Ralph Clarke (East Grinstead)

Before my hon. Friend sits down, following the intervention of the right hon. Gentleman the Member for Easington (Mr. Shinwell) about members of boards sitting on these councils in a consultative capacity, might I suggest that it is only logical that they should also not be voting members?