CIVIL DEFENCE (GAS UNDERTAKINGS) (Hansard, 11 February 1954)

§ The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. L. W. Joynson-Hicks)
I beg to move, That the Draft Civil Defence (Gas Undertakers) Regulations, 1954, a copy of which was laid before this House on 2nd February, be approved. Now we come to the other side of the picture. My right hon. Friend, as the designated Minister, has powers to make Regulations for ensuring the due functioning of the gas industry, and these are the Regulations which have been laid before the House and which we are anxious to make. In them hon. and right hon. Gentlemen will see that the first Regulation provides that the Minister may serve a notice on any gas board to ensure that they shall report what measures for the due functioning of their undertakings they are taking. Conversely, the Minister also has power under the Regulation to call upon the board to take such measures for the due functioning of their undertakings as he may think fit.
I am delighted that the right hon. Member for Derby, South (Mr. Noel-Baker) has been so patient, and I am grateful to him. I now come to the matter in which he is interested, and it is a substantial one. The second Regulation authorises 1479 the Minister to pay in these circumstances out of moneys provided by Parliament, grants not exceeding 52¾ per cent. of the expenses. In the 1939 Act the figure was 50 per cent. The reason for the present rate is that it is based on a cumbersome and technical mathematic calculation which depended upon the rate of tax. The object of this grant is that it shall be in substitution of the benefits which the industry would be able to derive if it was paying for these due functioning measures out of income and was able to set them off against its tax liabilities and set them off against its tax liabilities and depreciate them in the ordinary commercial manner.
What is done, therefore, is that the Treasury and the industry calculate together and agree upon what the tax benefit would be, and this is paid to the industry as a grant on the initial capital expenditure which it incurs. The industry undertakes that it will not claim depreciation or any other tax benefits against the expenditure for which it has received a grant.
I hope that the right hon. Gentleman will not press me as to how that calculation comes out at 52¾ per cent. I can only assure him that this is the figure which I am advised has been agreed between the Treasury and the industry. For the rest, I do not think there is anything which will be of general interest to the House in these Regulations. The additional Sections of the 1939 Act which are revived are primarily of a formal character—the serving of notices, penalties and the requirement by the Minister that he shall be entitled to receive proper accounts. That is probably the most important of the requirements contained in Regulation 4.
I think the House now knows what kind of work it is intended to deal with under the due functioning measures. So far as the gas industry is concerned, it is much the same as in the case of the electricity industry.

Mr. James MacColI (Widnes)
There is a further explanation which I should like to have from the Parliamentary Secretary. The point arises out of the First Report of the Select Committee on Estimates, 1953–54. In answer to question 1480 No. 1551, on 27th April last year—a long time ago—we were told in evidence: In the last resort I do not think the nationalised industries, being nationalised industries, would refuse to go ahead with projects which we think are essential for defence but naturally they do show or will show reluctance to saddle boards with substantial expenditure unless the position is clear. It is rather our anxiety to get these grant regulations through so that we can go to industry and say, 'Everything is clear for you now. Press ahead as fast as you can.' That was April last year. It is now February, 1954.
Apparently the Ministry has been wishing all through that period to get ahead with these Regulations. As I understand it, there is no difficulty at all about presenting these Regulations in connection with the gas industry. It is perfectly clear that they are being laid in pursuance of Section 8 of the Civil Defence Act, 1948, and there is no doubt that they can be laid in pursuance of that Section.
I accept the explanation from the Parliamentary Secretary that there was a legal difficulty in the case of electricity. Whether those difficulties were solved as they should have been is another matter which it would be out of order to discuss now, but in this case there is no trouble at all about the parent Act. If we were told very nearly a year ago that there was a danger of the industries being held up because they did not know where they were, why has it taken until now to lay these Regulations? I hope that the Parliamentary Secretary can answer that point.
If I may anticipate my right hon. Friend the Member for Derby, South (Mr. Noel-Baker), the only other question I want to put is about the grant. I have made a calculation, which I hope is correct, that 52¾ per cent. is approximately 10s. 6d. in the £. That seems to have had some connection with 9s. 6d. in the £, which at one time was connected with Income Tax. I do not want to worry the House with details of the calculation, but I have checked it and I think that it is right. One divides by five.

§ Mr. F. Blackburn (Stalybridge and Hyde)
Do not go into any explanation.

§ Mr. MacColl
I think that my hon. Friend is right. It would be wise not to lay oneself open too much. 1481 If Income Tax is now altered, should not there be an alteration in the percentage, and will there be a change in the grant every time there is an alteration in the Income Tax? If so, that seems to me rather confusing. To anyone with experience of local government it seems an extraordinarily mysterious way of doing it. I thought that one had ranged through all the possibilities of queer grants in the ordinary financing of social services, as my hon. Friend the Member for Newcastle-upon-Tyne, East (Mr. Blenkinsop) used to do. But this is unique. No one in his wildest dreams would ever think that a local authority would be paid on the basis of 52¾ per cent. Why is it necessary to have this queer figure? How is it calculated, and will it vary every time the Income Tax is changed?

§ Mr. Philip Noel-Baker (Derby, South)
I do not want to stand between my hon. Friend the Member for Widnes (Mr. MacColl) and the Parliamentary Secretary, but I hope that in administering these Regulations and using these powers the Parliamentary Secretary will pay the greatest attention to valves for isolating sections of the gas system. Power stations are dangerous targets, as I have explained. Gas plants are very dangerous targets, because gasometers may explode and fire may spread along the mains. I do not know what we can do about it except isolate the system in sections by means of valves. I hope that the hon. Gentleman will bear that in mind.

§ Mr. Joynson-Hicks
We share the view of the right hon. Gentleman that his point about valves is important. I have no doubt that it will be noted. Possibly I slightly misled the hon. Member for Widnes (Mr. MacColl) with my remarks about the 52¾ per cent. That percentage was originally based upon the tax element, in the manner to which I referred, but 1482 it has now become a fixed item and no longer fluctuates. So, once the hon. Member can digest and become accustomed to that figure he will be quite comfortable with it. He need not fear that it will change or upset him in any way.
There is one other point which I noted in the course of the remarks of the hon. Member—the delay since April. There is not there the same substance as there was in the question of delay which he was raising a little earlier. We are still in the same financial year. So long as the industry were assured, as they were assured, that the recoupment, or grant would be able to be made to them during the financial year, they were quite happy.