HC Deb 04 February 1953 vol 510 cc1987-96

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

10.31 p.m.

Sir Harold Roper (Cornwall, North)

I am very pleased to have the opportunity tonight of speaking on the subject of rural electrification. It is a subject which holds a very wide interest throughout the country, particularly in the South-West where we have rather special problems.

I raise the subject in no spirit of criticism of the South-Western Electricity Board. I have a very full sympathy with the many in Devon and Cornwall who are still without electricity on their farms, and it is on their behalf that I raise the subject. However, credit must be given where credit is due, and I am glad to pay my tribute not merely for the helpful co-operation that I have always received from the Board, but also for the very material results which the Board have achieved in the rural areas.

During the 12 months ended September last—the latest period for which national figures are available—new connections were made in the South-Western area to no fewer than 1,438 farms. That is far more than we have ever had before, and it is far higher than in any other area in the country. That is easily explained; at the outset the South-Western area was particularly backward with rural electrification, and it has a great deal of leeway to make up.

Sir William Darling (Edinburgh, South)

By "in the country" does my hon. Friend mean in England and Wales or in the United Kingdom?

Sir H. Roper

I mean in the whole of the 14 electricity areas, including the two in Scotland. The South-West has the record figure.

Cornwall had a very full share of the new connections; and, again, since September—during the last three months of 1952 connections were made to farms in Cornwall at an annual rate of no fewer than 684 new connections a year.

In giving these figures, I do not in any way intend to indicate that I am satisfied. We cannot be satisfied when in the country as a whole there are still only some 40 per cent. of farms connected to the electricity supply, and the South-Western area is considerably below that figure. My purpose tonight is not so much to discuss the current rate of progress as to look to the future and consider the maintenance of the rate. As matters stand at present, it seems to me that there is a serious prospect that the rate may not be maintained.

It is not necessary to dwell any length of time on the uses for which electricity in the countryside is required. It is a grim business rising at six o'clock on a cold and frosty morning without electricity in the house; we must have it for domestic purposes. We also want it for the farm processes. Here I must also mention water supply.

In the country as a whole at the time of the Farm Survey, fewer than 50 per cent. of the farms had a piped water supply, and in Devonshire and Cornwall we were far behind that percentage. I would say here that if we had electricity it would, I think, come in useful in helping to solve the water problem. But the compelling argument is that we must grow more food at home; and if we are to grow more food we must have labour; and if we are to have labour we must have amenities to counteract the greater material comforts which tend to attract people to the towns.

Turning to the terms of the Electricity Act, 1947, Section 1 (6) places on the Board the duty to secure, so far as is practicable, the development, extension to rural areas … of supplies of electricity. As to the interpretation of that subsection, the then Minister of Fuel and Power, the right hon. Member for Easington (Mr. Shinwell), spoke with emphasis on the Second Reading Debate in favour of rural electricity. He said it was essential in order "to check the decline in rural population," and again—to paraphrase his exact words—electricity would come in useful for assisting mechanisation.

Later, in the discussion in Standing Committee, in reply to my hon. and gallant Friend the Member for East Grinstead (Colonel Clarke), who had pressed for a stronger reference to rural electricity in the Bill, the Minister said that he was "pushing against an open door." Later in the same speech, the Minister said that "inasmuch as the Government exercises any power in these matters it is the full intention to secure the provision of an ample electricity supply in the rural areas." So it is evident that there is a wide measure of agreement on both sides of the House.

Our difficulties in rural expansion in the South-West are particularly severe. The percentage of our total area which is classified as "rural" is the highest in England and Wales. Further, we have the lowest density of population of all the areas, including the two in Scotland. Partly for this reason but mainly because of the geographical position of the South-West, the overall cost per unit paid by the occupants of domestic premises is the highest of all the 14 areas. The cost per unit for farms in the South-West compares less unfavourably on paper, but the true position is concealed by the adoption in the South-Western area of the system of line rentals. The line rental system increases heavily the cost to those farmers to whom it applies, but, that extra cost is not added on to the statistics in arriving at the cost per unit, so the true position is concealed.

I do not propose tonight to discuss the merits of the line rental system. The farmers do not like it, and our consultative committee accepted it only with reluctance. Whether the farmers' contribution to the capital cost is made by a line rental payment or by a minimum guarantee, I have a feeling that the real objection is to the severity of the charge rather than to the actual form which it takes. It is sufficient for my purpose tonight to note that as the Act is being interpreted this contribution has to be made.

The point I wish to stress is that as development is proceeding and connections are being taken further and further afield from the main supply system, so the burden of the line rental charge becomes heavier and heavier and, sooner or later, we shall find ourselves in the position that rural extension will be halted because the charge has become prohibitive. In the country as a whole the greatest handicap to rural extension is probably Government restriction of capital expenditure. But in the southwestern area it would appear that the high cost of line rental is a factor likely to bring it to a stop even more than Government restriction of capital.

I know that in some cases improvement grants under the Hill Farming Act and the Livestock Rearing Acts can be approved for the installation of electricity, but those are special cases which touch only the fringe of the problem. If we are really out to develop rural electricity as the Act lays down, material assistance will, sooner or later, be necessary.

Last year I was informed that the central authority was to carry out a detailed review of the circumstances in the southwestern area. I hope the Parliamentary Secretary will tell us something about that review and whether, as a result of it, or possibly of his own independent consideration, any Government action is contemplated. Section 5 of the Electricity Act empowers the Minister to give such directions of a general character … as appear to the Minister to be requisite in the national interest. Section 44 again states that if there is any surplus revenue the Minister has the power to give directions, even of a specific nature, about the disposal of the surplus. I hope that in exercising that power he will give full consideration to the needs of the rural areas. In this matter it is for the Government to take the initiative. The need to grow more food is not the direct concern of the Electricity Authority, it is the concern of the Government; and the Government have the power to take action under Section 5 of the Act.

I think it would be correct to argue that assistance designed to increase the production of food at home should come not from the consumers of electricity but from the taxpayers generally, but if I sought to develop that point I should be ruled out of order, because, clearly, legislation would be involved.

A last point—it is a small point but one which involves an important matter of principle. It relates to the apportionment between the area boards of the annual payment in lieu of rates. This year a change has been made. Hitherto, it has been based on an adjusted net revenue. Now, this year, the capital element has been introduced on a much more important scale. The South-Western Electricity Board protested against the change. Nevertheless, the Government approved the principle. It is true that the decision was based on the advice of two independent advisers.

I asked a Question in the House about this on 27th October. I asked the reason for the Government's acceptance of this decision and the answer I received was that the Minister saw no reason to dissent from the recommendation made by those two advisers. The objections of the South-Western Electricity Board were, first, that the new method is a departure from standard rating practice and, secondly, that it bears most heavily on the predominately rural areas. In fact, is has actually raised the share to be paid by the South-Western Electricity Board by no less than 22.2 per cent.

The Government never answered these criticisms and I remain unsatisfied that the Government were justified in taking the line they did. They have a responsibility to watch the national interest wider than that of the Electricity Authority. They are responsible for the general wellbeing of the countryside, including the need to grow more food, and it is unfortunate that they accepted a solution which, even in a small degree, tends to aggravate the position for the rural areas. It is a matter of detail, but it is important, and it raises doubts as to whether the Government are really alive to the need of giving all the assistance they can to the rural areas—under the terms of the Act "so far as practicable"—if rural extension is to go ahead.

To summarise: the main issue I am raising tonight is that, as extension proceeds, the cost to the individual is becoming greater than the revenue to be earned from the service which is to be provided. Yet extension is necessary in the broader national interest, and we are in danger that it will be brought to a stop unless, by a deliberate act of the Government, action is taken to prevent it. I hope that the Parliamentary Secretary will be able to tell us what action he proposes to take.

10.49 p.m.

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

I am sorry to disappoint so many hon members who wished to participate in this debate. I have every sympathy with them, having often suffered in the same way myself by being cut out when one has something to contribute, but my hon. Friend the Member for Cornwall, North (Sir H. Roper), who has raised this question tonight, and has raised it in the most constructive and helpful way possible, has covered such a lot of ground that, if I am to do any justice to his argument, I must begin straight away. I hope what I say will be of some interest and assistance to other hon. Members who are particularly interested in the affairs of the South-West area.

May I first say something about the problem of the rating assessment. It is a difficult problem and one which my hon. Friend has not got quite straight. I do not wish to go into full details of it, because it is complicated and would take up rather an unnecessary amount of time, but, broadly speaking, what happened was that at vesting day, or shortly after, the Authority and the boards agreed together that, in accordance with the arrangements set out in the Electricity Act, they would meet the lump sum liability for rates under arrangements they would enter into between themselves.

The Authority's proportion of that lump sum and the boards' total contribution were based upon the value of the assets which they had respectively taken over, and then the lump sum, or the contribution which the boards had together agreed to make towards the lump sum, based on the value of their assets, was split up between the boards on the basis of the revenue which they had received from the sale of electricity between themselves.

That worked for three years, but, throughout that period, the South-East Scotland Board were increasingly protesting. I mention this particularly because I expect that my hon. Friend knows that the area of that particular Board is, if anything, more of a rural area than even the South-Western Board's area. They are the two big rural areas, and, though I am not going to enter into a competition or try to judge which is the more rural, both are exceedingly rural. Under that system, it was that rural area which was being hit. It was decided that an alternative method must be devised, and, accordingly, it was again agreed between all the boards and the Authority that the best thing to do would be to have an independent inquiry to decide the fairest way of assessing these contributions.

The then Minister agreed to that proposal, and, accordingly, two independent advisers, Sir George Erskine and Sir Harold Howitt, two very distinguished and able gentlemen, spent a great deal of time, energy and ability in devising the present system, which is that, instead of basing the contributions of the boards purely upon the revenue from the sale of electricity, it is based on a variety of percentages of different interests—40 per cent. on fixed assets, 20 per cent. on gross income, 20 per cent. on the sale of units, and 20 per cent. on the net surplus.

That system, let me say quite clearly and definitely, was never approved by the South-Western Board because they were hit by it. It increased the amount of their contribution by 22 per cent., but they were not the only Board which were hit. Some of the industrial areas were hit as well, and it was not the only rural area which was hit. In its affect, it resulted in a decrease of the contribution of some very big rural areas—in the South-East Scotland Board's area, of 17 per cent.—and, therefore, it is not a question of rural areas versus industrial areas at all, but is simply the effect of that particular basis, which has now been agreed to, though not by the South-Western Board, which are acting under a direction in the matter, but agreed by the Minister, to operate for a period of three years to see how it comes out in the end.

The important thing to remember is that, as a result of the increased cost of this rating contribution, the maximum increase in the case of a unit of electricity is raised by .007 of one penny, which is not very much.

Mr. F. H. Hayman (Falmouth and Camborne)

Are we correct in understanding from what the hon. Gentleman has said that it has really been a case of the South-West rural area making a big contribution to offset the losses of the South-East Scotland Board?

Mr. Joynson-Hicks

No, that would not be the correct way of representing it. For instance, the Eastern area also had their contribution raised, by 19 per cent., which is very close to the top figure.

My hon. Friend suggested one particular principle on which I think that at present I would have to join issue with him, because he brought himself directly into conflict with the recommendations of the Ridley Committee. In his suggestion that there should be some national or other means of assistance for the electrification of the rural areas on a non-economic basis he is going contrary to the recommendation of that Committee, which the Government accepted, that, by and large, charges for supply should be related to costs. That is the difficulty which one comes up against.

I am glad that my hon. Friend indicated the true position as it is laid down in the Electricity Act. He made clear that the obligation in the Act is not to connect every resident in an isolated area. The obligation is to promote rural electrification. This the South-Western Board have done; and have been doing it at considerable speed. My hon. Friend asked particularly about a committee, and whether we would pay attention to it and review its report. I can tell him that that committee, which is a committee of the British Electricity Authority and the Board, is still sitting and has not yet issued a report.

In the few minutes which I have left let me give the House some figures to put the picture into perspective. As has been said, this is a difficult area. Apart from the thinness of the population throughout the area, that population is badly located. Three-quarters of the premises which the Board have in their area are concentrated into 500 square miles. The remaining quarter are scattered over 5,000 square miles. That shows that it is a difficult administrative problem to provide electricity throughout the area.

Considerable electrification had been going on before vesting day, but even by 1950, 55 per cent. of the area was out- side the reach of the distribution network. That is a substantial amount. Since vesting day the Board have installed 500 miles of underground cable, 1,300 miles of overhead cable, and 1,800 transformers. During the 12 months ended the 31st September, 1952, they have connected 1,438 farms. That is a record for 12 months. The Board now have 11,291 farms connected, and their percentage increase is the greatest of any board throughout the country. That is a very fine effort.

Mr. W. A. Wilkins (Bristol, South)

Yes, except that it has been made largely at the expense of the Bristol consumers.

Mr. Joynson-Hicks

There is one very important thing to remember, namely, that two out of five of these farms do not use electricity for farming purposes. That is serious, because if they do not, what justification is there on the ground of production for any subvention? If these farms are not taking the maximum supply when they are given a supply, and are not maintaining full use of electricity. what justification is there for the Board and other consumers in the area going to the trouble and expense of putting in uneconomic electricity for them?

In this short time available I have endeavoured to make clear that the Board are doing all they can to bring electricity into the rural areas. I do not think, however, that a case has been made out for any sort of subvention at the present time.

Question put, and agreed to.

Adjourned accordingly at Eleven o'Clock