§ Order for Second Reading read.
§ 11.18 a.m.
§ The Minister of Fuel and Power (Mr. Geoffrey Lloyd)
I beg to move, "That the Bill be now read a Second time."
This Bill increases by large amounts the upper limit of the borrowing powers of the Gas and Electricity industries and thereby exercises a controlling influence upon the capital development plans of these two industries during the next six years. Since these two great industries provide the essential basic services for every industry, and almost every home, in the country, their plans must be based on an appreciation of the economic prospects of the nation.
At the present time, as a result of the economic policy of the Government, inflation has been controlled; production is rapidly expanding on a sound basis; the average real earnings are rising and the national income is increasing. Hon. Members will have noticed that only this morning the publication of the latest figures shows that the number of people 2502 in civil employment is the highest peacetime figure ever recorded in the history of our country.
It is the policy of the Government to do everything possible to maintain these progressive conditions. The House will agree that the plans of the fuel and power industries for the future should be framed in this context. If we are to arrive today at a proper decision in regard to the development of the gas and electricity industries in the years immediately ahead, we ought to give proper consideration to the complementary contributions of coal and oil. Only in this way shall we be able to judge the right place of gas and electricity in the general fuel and power position.
Since we are primarily discussing the capital development of gas and electricity, it is essential to bear in mind the capital plans of the coal industry upon which the secondary fuel industries so intimately depend. I therefore propose to make a brief reference to this important subject, but before I do so I should like to mention a very important difference between coal on the one hand, and gas, electricity and oil on the other.
The characteristic feature of the coal industry—and I know that the hon. Member for Ince (Mr. T. Brown) will support me in this—is that on the change of shift at a large mine there are to be seen hundreds of men streaming away from the pithead, whereas when one visits the installations of the other three industries, one is struck by the control system of what I might call the room with the hundred dials. Two or three men are inspecting the elaborate control panels which register the revolutions of the mighty turbines or the flow of hot gases through gigantic retorts.
Thus it will be understood that in the coal industry labour costs amount to some 60 to 70 per cent. of total costs, while in electricity the position is almost completely reversed. There capital costs amount to some 60 to 70 per cent. of total costs. It is not very surprising when we concentrate our attention on capital to find that in the new pits the average capital cost is about £6 per ton of coal produced, but that to process this coal in the gas and electricity industries involves capital costs varying between £40 and £60 per ton.
2503 Turning to the capital plans in the coal industry, I would say that it is well known that the coal industry, following the conclusions of the Reid Report, is engaged on a great programme of capital re-equipment. I reminded the House on the Second Reading of the Mines and Quarries Bill that when this work is completed four-fifths of our coal will be coming from virtually new mines. The programme is very large. It is also well known that it has fallen very much into arrears.
What is not so well appreciated is the remarkable acceleration in this work which has taken place during the last three years. During that time the annual capital expenditure has doubled, and this year it is expected to rise by another £14 million and to reach an annual total of £67 million. The House will be interested to know that, on the basis of this improved performance, the capital expenditure for collieries up to 1960, which is the period we are considering in relation to gas and electricity, is now estimated to be of the order of £450 million. That is an increase of over £100 million on the expenditure originally contemplated for this period under "The Plan for Coal."
Before I leave this branch of the subject, I should like to make one last point. In mining, as has been found not only here but in South Africa and other parts of the world, that large part of capital expenditure which is concerned with the actual sinking and underground construction of mines takes a long time before it yields its result in production. This is especially true of the modern methods of horizon mining which are now being adopted and which involve the construction of long and large modern underground roadways before production starts at all. I am advised that, broadly speaking, it takes nearly 10 years to bring completely new mines into production and about seven years to complete a major underground reconstruction.
Thus, from this point of view, it is clear that today we are suffering from the low rate of work of this kind in past years. We must face the fact that the improved rate of capital expenditure will, to a large extent, produce its results only when some years have passed. In the Bill the borrowing limits of electricity are 2504 raised from £700 million to £1,400 million, and of gas from £250 million to £450 million. That, with money that is to be provided by the industries themselves, will allow an estimated investment up to 1960 of £1,440 million for electricity and £366 million for gas. These estimates are backed by comprehensive development programmes submitted to me by the industries under the terms of the statutes. These programmes have been carefully examined in my Department and discussed with the industries. As a result, I am satisfied that they are on the right general lines.
I should like to say that I regard the industries themselves as wholly responsible for the engineering and other technical details, my policy being to secure first-rate men for the controlling boards and to leave them the fullest measure of freedom to manage the industries within the framework of general policy agreed with me. Nevertheless, capital investment is kept under constant review. The industries cannot borrow any money without specific authority from my right hon. Friend the Chancellor of the Exchequer and myself. Authorisations are given, usually every quarter, to ensure that the progress of investment is regularly watched, and there is a more comprehensive review every year.
What is the need for this vast expenditure? I would say first that it is to meet the ever-growing demands for power in industry and on the farm and for fuel, light and labour-saving devices in the rapidly increasing number of homes. In my view, both programmes are based on conservative estimates of future demand, although, especially in the case of electricity, the figures are large. It is a remarkable fact that for very many years past the demand for electricity in every western country has doubled every 10 years and shows no signs of saturation even in the most highly developed industrial countries. I feel sure that I do not have to argue in the House today the desirability of an increased consumption of electricity by industry and commerce.
We are all convinced that modern standards of living and greater competitive power depend upon increased productivity, and productivity unquestionably depends to a very large extent upon the increasing use of electrically-powered machine tools and other equipment.
§ Mr. Harmar Nicholls (Peterborough)
My right hon. Friend referred to discussions he had with the Chancellor and said that the Treasury and he would decide every quarter what amount of extra borrowing power would be taken up. That extra borrowing power is £900 million and the Minister said that it was to help productivity and that this was done with the support of industry. Can my right hon. Friend tell me whether he has made actual contact with industry? Has industry shown him that its real shortage at this moment is one of power? Has industry told him—
§ Mr. Lloyd
I appreciate my hon. Friend's object in putting his question. Perhaps I might for the moment say that my purpose in making these references was that, whereas we are seeking Parliamentary sanction for the figures in the Bill, I was endeavouring to show the House that when that sanction was obtained the industries would not have the sums automatically available to them. The matter will be watched and they will have to receive authorisation from the Chancellor of the Exchequer and myself. I am sure that the Parliamentary Secretary will deal in more detail with the points raised by my hon. Friend, and perhaps he will now allow me to continue my speech.
§ Mr. Nicholls
Might I just make a point? I did not really make the point that I had in mind. I wanted to ask my right hon. Friend if, when he made his contacts with industry, he was told of other shortages which would affect productivity. Was congestion on the roads mentioned? In my opinion, that is the greatest difficulty.
§ Mr. Speaker
Order. We are now dealing with the Motion for the Second Reading of the Bill. There will be an Amendment before the House later.
§ Mr. Lloyd
If I may now continue, I should like to say that on this subject it is indeed a sobering thought that the United States, with three times our population, has an annual increase in electrical consumption 10 times as great as ours. Nor should we underestimate the value of developing electricity and gas consumption in the home. Ingenious 2506 gas and electrical devices are the robot servants helping to raise the standard of living in a democratic age of full employment. Electricity demand is expected to be 54 per cent. higher in 1960 than in 1953, and gas demand is expected to be 16 per cent. higher.
In the second place, this great expenditure is necessary to complete the reorganisation and renovation of these industries, leading to better service and greater efficiency and, in particular, to the more economical use of coal. Both industries from their very beginning have had a magnificent record in utilising coal with constantly increasing efficiency.
Gas, the carbonisation industry, is by its very nature an economical user of coal by virtue of the fact that it extracts the maximum benefit from the coal itself, and modern carbonisation plant becomes continually more efficient.
The electricity industry also from its earliest days has made immense exertions to achieve economy in fuel and also, be it said, to equip itself for the purpose of using the lowest grades and the cheapest forms of coal available. Very considerable further progress is expected in the future on the basis of these programmes.
Already the newest generating plants in use are one-third more efficient than the present-day average. Large machines of 200 megawatts capacity each are being designed, each machine being big enough to provide the whole electrical requirements of a city like Bristol or Leeds. Indeed, British designers are operating right at the forward edge of engineering knowledge in this most progressive industry.
On the basis of present efficiency, the programme we are considering for electricity would require an extra 20 million tons of coal a year, but owing to the increased efficiency of the new plant it is estimated to be an increase of 14 million tons only. That is a saving of 6 million tons of coal a year in 1960 directly due to the higher operating efficiencies resulting from this capital programme. In the case of gas the actual extra consumption is estimated to be 2 million tons instead of 3 million tons, thus giving a saving of 1 million tons a year in 1960.
In view of what I have already said about the inevitable slowness of the results from the capital reconstruction of collieries, the House will appreciate the 2507 great importance of these annual savings of coal by these great consuming industries which are equivalent or in some way superior to an increase in production of coal of a like amount.
Having dealt with the very important question of coal economy, I must now deal with a related subject of great importance with which these development plans deal, namely, the use by the gas and electricity industries of other fuels besides coal. We all realise that for many years to come these industries will fundamentally depend upon coal for an overwhelming proportion of their production, but I am sure that we should all agree on the desirability, if possible, of lightening the load on the coal industry.
Because of its fundamental importance to the future, I must give pride of place to atomic development. I would point out, in the first place, that on the basis of all existing knowledge the enormous power of nuclear fission is bound to flow towards the industries and the homes of the country through the medium of the electricity supply industry. We should remember, therefore, that in expanding this industry we are preparing the way for atomic power. It is possible that if atomic developments progress as quickly as we have grounds to hope, design, and, it may be, construction of nuclear power stations of an advanced type will be undertaken before 1960. Preparing for this possibility, the British Electricity Authority is establishing a nuclear power branch in its engineering department. It has appointed to a high post a nuclear power engineer and it intends to pursue these developments vigorously.
From the point of view of our discussion today, it is important to realise that the nuclear power stations will be very expensive in their actual construction, although, of course, they will use no conventional fuels and their own fuel costs will probably be reasonably low. These stations will, therefore, be run flat out at full load day and night, as far as it is practicable to do so, so that they will make the biggest possible savings of coal.
Turning to gas, the programme includes expenditure on the search for natural gas. For this there is co-operation with 2508 the D'Arcy Exploration Company, which is an organisation of great experience. If the search is successful, it will be a great new national resource for the country and it will mean a very great saving in coal. A small find has already been made and there is a feeling of considerable hope among those who are actually doing the work.
Between the present time and the time when massive contributions are made by nuclear power, there will be a period when it will be extremely valuable for the country to have some other supplement of our fuel and power resources and a means of lightening the heavy load which is being carried by the coal industry. There is only one source capable of making a sufficiently massive contribution, and that is oil. This is one of the largest and most virile industries in the world. Its production is at present expanding at a rate faster than coal ever did even in the greatest days of the coal industry. For example, last year oil made a greater contribution to the energy requirements of the United States than coal, and this year oil has taken first place in supplying the energy requirements of the free world as a whole.
Having had intimate experience of the capacity of this industry during the war years in the handling of war oil supplies, I thought of the possibility of getting oil to help coal when I first took up my present appointment. I examined the position at that time, but it was quite hopeless, for, as a result of the loss of Abadan, supplies were very tight and there was a huge expenditure in dollars.
That position has now entirely changed, and the resilience of this industry has triumphantly overcome those difficulties. In this new situation I began to examine this problem again, many months ago, with special reference to the gas and electricity industries. In particular, I inquired into the possibilities of using oil instead of coal at new powerstations conveniently situated near the new refineries. I discussed the whole question with the chairmen of the three nationalised fuel and power industries at one of the regular meetings of the Minister's Co-ordinating Committee. The case that stood out was the new power station which was being built at Marchwood on Southampton Water, which, according to 2509 the circumstance of its operation, would be consuming from 600,000 to over 1 million tons of coal a year.
I asked the chairman of the British Electricity Authority to discuss the position with the chairman of the Esso Petroleum Company, and I think the House will be pleased to hear that, following these talks, the British Electricity Authority is going to equip the March-wood power station with dual firing apparatus, which will be able to utilise either coal or oil. Arrangements have been made with the petroleum company to supply oil at a price which makes the cost of generation of electricity the same as if coal were used.
Having decided to use oil at this power station, the Authority is now examining the question whether it would be desirable to install dual firing apparatus in a considerable number of power stations in river estuaries, which can be conveniently fed by tanker from the refineries. The preliminary survey indicates that a dual firing system would be technically possible at estuarial stations which, by 1958–59, would have a coal consumption of between 10 million and 11 million tons a year. I should add that the purpose of this inquiry is not to decide to burn oil at these power stations now, but to decide whether they should be equipped for dual firing so that they could burn oil at short notice should it prove desirable. I think the House will agree that this is a very interesting proposal, because it will give much more flexibility in the fuel supply arrangements not only of the British Electricity Authority but of the country as a whole.
I should also like to tell the House that the gas industry has made great progress in the development of a catalytic process of making town's gas directly from fuel oil without the use of any coal at all. Two processes have been developed, one by the West Midlands Gas Board, in Birmingham, and the other by the South-Eastern Gas Board, in Sydenham. These processes are of particular interest because the saving of coal would be in the high grades of gas carbonisation coals which are at present used by the gas industry. It has reached the point where each gas board has decided to install at least one of these plants, and at present some 13 of them are either 2510 under construction or out to tender. They will have a capacity of 22 million cubic feet of gas when they are in operation in some two years' time, and this will mean a yearly saving of about 400,000 tons of good carbonisation coal. There are obviously possibilities of a much bigger development of this process, and thus the saving of bigger quantities of scarce carbonisation coal in the years thereafter.
Earlier in my speech I made a reference to the fact that it was the policy of the Government to leave all the operational and engineering questions in relation to these industries to the freest possible responsibility of the boards themselves. I think I shall carry the House with me when I say that Parliament has already considered that, from time to time, there should be a stocktaking, to see whether these responsibilities are being carried in the best and most efficient way, in the national interest. Therefore, I should like to mention that it is our intention to institute an independent inquiry into the working of the nationalised electricity supply industry.
I am happy to say that we have obtained the consent of Sir Edwin Herbert to preside over this inquiry. His long acquaintance with that industry and his independent position fit him preeminently for this task. For the period of the inquiry Sir Edwin has freed himself from any professional obligations within the electricity supply industry. He will have associated with him Mr. F. C. Bagnall, the Managing Director of British Nylon Spinners; Professor Ronald S. Edwards, the distinguished economist; Mr. Albert Healey, Director of the Dunlop Rubber Company; Mr. Lawrence Robson, the well-known accountant, and Mr. Jack Tanner, lately president of the Amalgamated Engineering Union and last year's chairman of the Trades Union Congress.
The terms of reference which I have given to Sir Edwin, after consulting the Chairman of the British Electricity Authority are:To inquire into the organisation and efficiency of the electricity supply industry in England and Wales in the light of its working under the Electricity Act, 1947, and to make recommendations.
§ Mr. Arthur Palmer (Cleveland)
As the right hon. Gentleman knows, an internal inquiry has been conducted by the British Electricity Authority and by the area boards into the organisation of the industry. This inquiry is sometimes known in the industry as the Carpenter Committee or the Self Committee. Is the inquiry to which the right hon. Gentleman has referred to supersede this internal inquiry?
§ Major W. J. Anstruther-Gray (Berwick and East Lothian)
Did I hear my right hon. Friend state specifically that this inquiry was to take place only in regard to England and Wales? Are not the part of the British Electricity Authority in Scotland and also North of Scotland Hydro-Electric Board to be included in this inquiry?
§ Mr. William Ross (Kilmarnock)
Would it not have been better if the right hon. Member had postponed the reorganisation of the industry in Scotland, in view of this inquiry?
§ Mr. Ross
Scotland had this reorganisation without an inquiry, but the Minister has now decided that it is necessary to institute an inquiry into the efficiency of the industry in England and Wales. Surely it would have been wiser to have had an inquiry in respect of Scotland before legislation was introduced?
§ Mr. Lloyd
I conclude by saying that the Government's fuel policy thus aims at three objectives—first, to get more coal; secondly, to use the coal better, and thirdly, to supplement supplies of coal 2512 with other kinds of energy—atomic energy as soon as possible, natural gas if it can be found, and oil forthwith. As to the means by which these ends are to be sought, the Government's policy is to combine full-blooded competition between the fuel and power industries with co-ordination in the national interest.
This combination of twin principles has its analogy in the field of private enterprise. Great concerns like General Motors, and also, I understand, the British Motor Corporation and Unilever in this country, encourage fierce competition between subsidiary companies and different products within the framework of general policy worked out at the centre by the parent company. The Government believe that none but the consumer himself can wisely judge the type of fuel and power which best suits the circumstances of each unique requirement. We therefore reject, as the Ridley Committee rejected, the view that each consumer should be told what form of fuel and power to use, whether by the gentleman in Whitehall or by anybody else.
Likewise we reject the view that each fuel industry should be directed to meet this demand and not that. We believe in freedom of consumer choice, and we believe that the nationalised industries are most likely to avoid stagnation and the inherent tendencies of all large public bodies to be insensitive to consumers' tastes if, within broad limits of national policy, they are left free—and, indeed, encouraged—to compete with one another.
However, as Minister of Fuel and Power I am responsible to this House for making sure that each nationalised industry in fact and in practice does accept the Government's view of the national interest. Thus I have satisfied myself through detailed consultation between my officers and the Boards concerned that the plans of the electricity and gas industries for their development are on the right lines, and that they are consistent with the three ends of national policy that I have just mentioned to the House. The House, therefore, can properly be advised to enlarge their borrowing powers to the extent for which the Bill provides.
When, as I hope, the Bill becomes law, it will enable me to sanction, with the 2513 approval of the Chancellor of the Exchequer, the raising of such loans within the limits prescribed as may be needed, in my judgment, to finance from time to time the capital works required in the nation's interest. In judging that interest we shall do our best to strike a proper balance between the claims of our industries, farms and homes for fuel and power, on the one hand, and the claims of the rest of our economy for capital investment, on the other. The pace at which we can improve our capital equipment in electricity and gas will be carefully watched. I commend this Measure to the House in the confidence that, as our economy continues to expand, the national interest will require during these six years expenditure by these two industries on the scale envisaged in the Bill.
§ 11.52 a.m.
§ Mr. Philip Noel-Baker (Derby, South)
I rise on behalf of my right hon. and hon. Friends to welcome the Bill and to say that we shall give it our wholehearted support. Every productivity report that we have had shows that we need more power. We need, as the Minister has said so well, more power in our homes to lighten the burden on the housewives; and gas and electricity both have a great part to play in that task.
We need more electricity in industry. The outstanding fact about British industry today is that we use one unit of electricity per man hour for every 3½ units that United States workmen can use, and that gap, as the Minister has said, is widening every year. We need more electricity in agriculture. Probably no single change could do so much to increase our food production as the electrification of all our farms. But in many spheres of industry and other work, gas may be more efficient than electricity and we believe, therefore, that both gas and electricity should be developed and that more investment on a massive scale is required.
The Minister has said that more investment in coal is the essential condition for making these additional loans to gas and electricity worth while; and that is true. We are too ready to forget the tremendous reorganisation and re-equipment that were required after the Second World War. The Reid Report gives a dramatic account of what we required to change: the whole layout of the 2514 mines; mechanisation at the face; underground haulage systems; the winding system and the surface plant. In urging horizon mining the Report was urging investment of tremendous sums of money on which we could not expect a return at an early date, providing for new level roadways 14 feet by 10 feet and cut through stone.
The Reid Committee said it would readily understand if many people thought that that would be too costly, but it was the mature judgment of the members of that Committee, which, I am sure, experience will justify, that nothing but the best practice followed anywhere in the world and suitably adapted to British conditions would suffice to meet our needs. I am sure they were right in saying that wemust be ready to scrap ruthlessly any methods or machines which are inadequate for the task ahead.It was to carry out the recommendations of the Reid Committee that the National Coal Board prepared its National Plan, and there is one passage in it that I would read to the House, because we too readily forget its import:Much of the £520 million"—that was at 1950 prices—for collieries would certainly have to be spent to prevent output from falling and costs from rising. Machinery and equipment must be maintained and replaced as it wears out. Poorer and thinner seams have to be worked as time goes on; and each year as more coal is removed from the ground, workings become deeper and less accessible.…the Board consider that a capital expenditure of the order of £350 million would be required over the next 15 years to prevent a decline in output.That is about £20 million to £25 million a year to prevent a decline in output.
The investment at the beginning was less than we could have hoped for. Perhaps the Labour Government made a mistake in not allowing higher figures and encouraging the Board to try to beat them. But in any case the Board was gravely hampered by the shortage of mining engineering skill. It is overcoming that difficulty, but let us remember that even now, with the increase of investment of which the Minister has spoken, and which we welcome, we cannot expect to hurry this thing too much.
In 1949, Sir Charles Reid made a preliminary forecast of what the national plan might be. He made a study based 2515 on the target of from 240 million tons to 250 million tons by 1965, a rise in output per man shift of 1.5 tons or 30 cwt. a man shift. His study ended with this double warning:The task of reconstructing the British mining industry is an immense one, which will take years to near achievement. It would be wrong however, to suggest that the industry could quicken the pace of reconstruction.On the rate of progress of O.M.S., the Coal Board is up to the standard that Sir Charles suggested would be possible. We hope that it will rapidly increase. It has increased output by £40 million above the level of 1945, and by so doing has already saved the nation from disaster. It has done a good job.
We welcome this investment in coal. We regard it as an indispensable condition of the success of this Bill. But the efficient use of coal by the gas and electricity industries, as the Minister has said, is also very important. Efficiency in the use of the coal we get is quite as important as increasing total output.
Electricity is incomparably more efficient than any other form of power in the factories and workshops. One can switch it off when it is not needed. It has advantages of every kind. As the Minister has said, the carbonisation of coal for making gas saves immensely valuable by-products that are lost if we burn raw coal, and gas can itself be used with a very high degree of efficiency both in the home and in many processes in the factories as well.
These industries, therefore, are making an increasingly efficient use of the coal which they get. I think that the record of both the B.E.A. and of its area boards is very good. Since the B.E.A. took over it has increased the production of electricity by 47.3 per cent., consumption is 2½ times as high as before the war, the number of consumers is increasing by nearly half a million a year, and the total number of consumers is 19 per cent. higher than on vesting day. The price for all users—the average price of electricity for all purposes—is only 24.9 per cent. above what it was in 1938–39. That is a miraculously low figure.
The Authority and the boards have not only paid their way, but have a large accumulated surplus of over £28 million. They own 285 power stations 2516 with a total output capacity of over 15,500,000 kilowatts. At 31st March, 1953, the increase in their capacity in the year on which they were reporting was 9 per cent. The total increase since vesting day was then 37.8 per cent.
The increase in capacity has been very remarkable. The highest achieved in any one year before the war was 765 megawatts in 1937. In the early years of the Authority there were difficulties over materials and other things, but in 1947 the increase was 347; in 1948, 566; 1950, 965; 1951, 1,113—and in the calendar year 1952 it reached 1,539 mega watts. That is another miraculous achievement and should be remembered to the very great credit of the B.E.A. I would venture to add that that figure could never have been achieved unless the industry had been nationalised—[HON. MEMBERS: "Oh"] It was in a state of chaos when the Authority took over.
This result has been achieved by large-scale investment. That investment must go on because, as the Minister has said, the demand for electricity will continue to increase by leaps and bounds. We must hope that demand will double every 10 years, as the Minister said it has done in the past. Indeed, we should try to make it increase faster still. We need investment not only to meet the added demand, but also to be able to cut out many of the power stations which the B.E.A. today must use. As much as two-fifths of the generating sets, and two-fifths of the boilers, used in their power stations are more than 25 years old.
Twenty-five years ago it took about 3 lb. of coal to make a unit of electricity. Today, the most efficient modern generating stations need only 1 lb. of coal. The increase year by year in the thermal efficiency of the stations is increasing, but many stations still have to be used where the thermal efficiency is 7, 8. 10, or 12 per cent. as compared with the 28, 29 and even 30 per cent. which can be got in the modern stations.
We welcome very much the Minister's proposal to make a further large investment in this vital national need. We welcome also the appointment of the Inquiry. I shall be happy to see an inquiry conducted by really impartial people—and with the full agreement, as 2517 I understand, of the B.E.A. itself. I am sure that Sir Edwin Herbert will be a good chairman. If he is as successful in this as he was in the chairmanship of the Everest Committee we may look for fine results.
The gas industry has, in my view, done extremely well. I shall not trouble the House with many details of the Report of the East Midland Gas Board, which serves the constituency which I represent. But it has made economies in its administration which, as the Chairman says, are running at a rate well in excess of £800,000 a year. It has increased the capacity of its generating stations by 35 per cent. On taking over the Board needed 11.36 tons of coal for each 1,000 therms of mixed gas produced. After four years it needed 11.1 tons, a reduction of close on 2.5 per cent. in the coal consumed. The Board used less oil per ton. It made more coke available per 1,000 therms. The breeze increased by nearly 40 per cent. The tar increased. It made price concessions worth £160,000 a year to its consumers. It laid 350 miles of mains last year, an increase of 45 per cent. on the previous year's record of 240 miles.
Of all those figures by far the most significant is that 350 miles of new gas mains. That is the key to the new policy of gas grids by which the cost, the efficiency and the serviceability of gas will be chiefly increased. It enables the inefficient, costly old gasworks to be cut out and used as storage and distributing centres only, the gas being made at large-scale, modern efficient works. The elimination of older gas works can give a tremendous result. In Wales, there are two new gas grids, nearing completion and already in operation, both associated with coke oven supplies and both splendidly efficient. A South Lancashire grid was created by laying 125 miles of new mains linking 20 gas-making stations and cutting out 19 old, inefficient works.
The system makes it possible to link up smaller villages and towns. It usually provides better gas, it goes far to cutting out the reduction of gas pressure when the weather is very cold, it saves new capital expenditure in replacing inefficient plant, and it largely reduces running and administrative costs. I remember one example of a smaller gas works in a southern town with a very famous 2518 church. The gas company had been a private undertaking paying high dividends, but not keeping its plant and machinery noticeably up to date.
§ Mr. Noel-Baker
It is Romsey.
The chairman of the board told me that in the first year of nationalisation that works was closed and new mains put in to link the town with more efficient production plants. The Board had made a saving of £50,000 of new capital expenditure which, otherwise, would have been required to modernise the plant. It out annual administration costs by £10,000 a year and supplied better gas to the consumers. The chairman of the board which carried through that operation told me that, in the longer future, he thought that in his area he might be able to reduce the 168 plants which he had inherited to about a dozen, with immense economies to all concerned. That sort of thing means large-scale investment and the sooner we do it the greater the economies we shall make for gas consumers and the nation as a whole.
The Minister told us the other day that the total saving of coal made by the electricity and gas industries due to improved technical efficiency since nationalisation, had amounted in the case of electricity to 12 million tons and in the case of gas to 2 million tons since vesting day. That is going forward, and each year the saving will increase.
§ Mr. Nabarro
I am sure that the right hon. Gentleman would not wish to mislead the Muse. The saving will only increase year by year if the new plant brought into operation is a direct replacement of the old, thermally-inefficient plant, brut unless the replacement is carried out there will not be an increase in the amount of coal saved year by year.
§ Mr. Noel-Baker
Certainly, that is the principal way. There are more efficient methods of administration which could help to produce the same result, but, primarily, it must be new plant. That is exactly what I am arguing. That is why we need this Bill, to provide a larger maximum amount of investment for these two basic industries on which we all depend.
2519 The Minister said that despite the in- vestment in orthodox methods we must consider new methods of increasing our power supplies, both for electricity and gas. A great deal of research work is, I believe, going on—and it is costly—in improving the orthodox methods of gasifying coal. There has been a good deal of expansion in the study of the production of gas from coals which are more plentiful, but not of good quality for producing gas. Again, that is vital. It may mean large-scale new investment in gas works. The use of methane from the mines has been the subject of many hopeful experiments in South Wales and in Lancashire.
Then there is the total gasification of coal. I remember that in 1950 an expert told me he hoped that his process for total gasification could be made commercial in three years, by last year, i.e., and I believe; there is now a plant going up in the West Midland area in which this will be tried out on a commercial scale. If it succeeds, it should give us a great return. There is the underground gasification of low grade, narrow and dirty seams. At one stage the experiments were hopeful, and if they succeed it gives us an immense reservoir of potential heat from coal which cannot be used unless underground gasification succeeds.
There is the search for natural gas. I always thought that we ought not to be without natural gas supplies in view of our great coal deposits. I feel sure that if this research is pressed, we shall find some- thing and be able to do, not perhaps as well, but fairly well, in comparison with Canada and the United States. I am glad to hear that the B.E.A. is going to try out oil at the Marchwood Power Station. although I confess that I like to use home sources of fuel rather than imported sources as much as we can.
Above all, I am very glad that the Minister is to press forward for nuclear power plants. I helped to make the decision that such a plant should be erected. It was only a pilot experiment. I think that in the coming years we should be willing to suffer a loss, perhaps a very considerable loss, in getting electricity and power from nuclear stations because of the immense and long-term importance of what it will mean to our country.
2520 It is sometimes said by people who think that they are well-informed that the capacity of the nationalised industries to borrow freely, and at a low rate of interest, makes them wasteful, and such people argue that this Bill will increase that wastefulness. I have never seen a shadow of evidence to suggest that that is true. I think that the B.E.A. and the gas boards inherited a good many undertakings where the standard of efficiency left a good deal to be desired. When I held the right hon. Gentleman's office, I was always being told that the B.E.A. was making things worse, that its staffs were inflated, and so on. I made many investigations, and all the evidence suggested that the very opposite was true.
The present Parliamentary Secretary told us, only nine months ago, that the expansion in electricity which was going on had gone "hand in hand with efficiency." He said that that was shown by the fact that during the past year, while expansion was still continuing, the non-industrial staff in the electricity industry actually fell. I do not believe that this Bill will make the industries less efficient or encourage any tendency to waste resources.
I support the Bill because it means a larger investment in plant for the production of power which our nation so urgently needs. But I am wholly mystified by the suggestion that the loans issued by the gas and electricity industries should not carry a Government guarantee. If the guarantee were going to put an extra profit into someone's pocket, I could understand it. But in this there is no element of private profiteering.
The whole nation—14 million consumers of electricity, 13 million consumers of gas, the whole of industry and commerce, agriculture, and, in a rapidly increasing measure, almost every household, will get cheaper electricity and gas because of the Government's guarantee. It is an important offset to the added burden of the higher cost of living and, therefore, a very real help to our competitive position in the export markets of the world.
I end by saying that nationalisation has certainly succeeded in nearly every way, but in nothing more than in the response which it has evoked from those who lead and serve upon the national 2521 boards. People of every party and of none have given devoted and loyal service to the nation in these great basic industries on which we all depend. They have worked harder and for less reward than in the private employment from what they came. They have set a splendid example and put up, without complaining, with a lot of unmerited abuse. They ask for the authorisation of these borrowing powers, and it is because this Bill is a vote of confidence in them that we give it our warm support.
§ Mr. Speaker
Notice has been given of two Amendments to this Question, and I select that in the name of the hon. Member for Bristol, North-West (Sir G. Braithwaite).
§ 12.17 p.m.
§ Sir Gurney Braithwaite (Bristol, North-West)
I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof:this House, while approving liberal provision of capital for the development of the country's industrial assets, declines to give a Second Reading to a Bill which gives further borrowing powers to electricity and gas undertakings while restrictions continue on the development of many other projects of equal importance, and which is presented in advance of a White Paper on the Capital Expenditure Programme of Her Majesty's Government.This Amendment, in the name of myself and my hon. Friends, I hope to show is in no sense hostile to the proposals contained in the Bill. It is exploratory in its intention. May I say, in all good temper, in view of the nature of both these Amendments—the one which I now move and the one in the name of the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) and his hon. Friends—that I think that it would have been proper for a representative of the Treasury to hear what we have to say, and to reply to some of the points which will doubtlessly be deployed.
I rubbed my eyes in astonishment on reading the contents of this unobstrusive one Clause Measure. I rubbed them in astonishment in view of the mechanics of it all. It was only on 28th May that we were discussing in this House a Private Member's Motion, sponsored by my hon. Friend the Member for Peterborough (Mr. H. Nicholls), relating to roads and the borrowing of £500 million for that purpose. That suggestion was put up for comment and criticism and the Parliamentary Secretary to the Ministry of 2522 Transport, in his reply to the debate, said—and I think the House will note his words when debating the Bill now before us:To take £500 million out of the money market for this special purpose would quite obviously cause a very serious disruption of the money market and would embarrass the Treasury and local authorities in raising funds for all the other purposes of central and local government.—[OFFICIAL REPORT, 28th May 1954; Vol. 528, c. 860.]I have had to make appearances at the Treasury Box from time to time replying to debates. As other hon. Gentlemen who have been in that predicament know full well, one always has to await the brief which arrives from the Treasury as soon as one gets on to matters financial. I used to throw some of them out of the window, being unequal to facing the ridicule to which I should have been subjected from hon. Members on both sides of the House.
I make no complaint of the comments of my hon. Friend, but who told him that a benevolent loan of £500 million would disrupt the money market? My hon. Friend has cause for complaint. In the words of the hymn:Thou didst tread this earth before us,Thou didst feel its keenest woe;Even King Canute was not so ill served by his courtiers, because the tide engulfed my hon. Friend even as he spoke. That was on the Friday. On the Monday there went through, with the greatest smoothness and expedition, in the money market an operation of £300 million. It is quite true that it was a conversion and no new money was called for, but it was an acid test of British credit.
Was my hon. Friend told that this Bill was lurking in the shadows? Here is a scheme for £900 million of new money. I want to ask—I should like to ask the Financial Secretary to the Treasury, but I ask whoever is to reply to the debate—will this disrupt the money market? Why should £500 million cause destruction on 28th May and £900 million construction on 9th July? The House is entitled to know.
Moreover, the present issues of gas and electricity stock which it is now proposed to add, vast as they are, mature 25 to 30 years from now. So would my proposed road development loan. I do not oppose this treatment of the nationalised industries. I say good luck to them if 2523 they can get away with it; but when my right hon. Friend the Minister emphasized, as he quite properly did in his speech, the importance of productivity, I was able to go the whole way with him there. But productivity is stultified and sterilised without communications following upon the production of the goods.
I found myself in agreement with nearly everything that the right hon. Member for Derby, South (Mr. Noel-Baker) said when discussing the financing of the gas and electricity industries. I do not think he will quarrel with me if I add that this is an opportunity for endeavouring to discover, looking further, what is the Government's capital investment policy.
§ Sir G. Braithwaite
As the right hon. Gentleman has told us that before, I hope he will not find himself in too serious disagreement with what I was going to say on the question of capital investment policy, which is the corollary of economic planning, and must be so.
Hon. Members who have enjoyed Charles Dickens' masterpiece "David Copperfield" may remember a female character, a Miss Rosa Dartle, who was in the habit of asking pointed and pertinent questions, generally regarding affairs of the heart. She always ended by saying. I am only asking for information. I want to know." So do I. Gas and electricity are now at the wicket and look like batting until four o'clock, but who is coming in next? What are the priorities? [An HON. MEMBER: "The Pests Bill is next."] Perhaps the pests have their pads on and are waiting—I do not know.
I remind hon. Members on both sides and the Minister—here again, I wish it were a Treasury Minister—that during the lifetime of this Parliament the Government have twice accepted Motions, both carried nemine contradicente, one moved by the hon. Member for Willesden, West (Mr. Viant) on 20th June, 1952, and another moved by my hon. Friend the Member for Peterborough on 28th May this year, for increased expenditure on roads. Surely, there is the next batsman. It is estimated that every mile of motorway in this country could 2524 save operating costs to the tune of £25,000 per mile per year. That is just an example of the sort of thing that we should like to know.
I do not deny that the plans of the gas and electricity authorities, which we have heard unfolded this morning, are numerous and urgent, but so are the hundreds of schemes for road modernisation. After all, the nationalised industries, because they are young—they have come into existence only since the war—have no half-completed schemes commenced in 1939 and now languishing for lack of capital.
My right hon. Friend the Minister of Fuel and Power has plenty of cause for anxiety just now. One even wonders whether the vast projects envisaged by these borrowing powers can be serviced at the existing level of coal output, but other hon. Members will doubtless give us the benefit of their expert knowledge on that aspect of the problem. Somehow, however, one feels that our capital investment programme has got out of gear. If roads cannot be financed from revenue, they should have the same facilities as are given to gas and electricity under this Bill. But this need—it is a paramount need; I do not think hon. Members will differ as to its importance—is only an example of others which, doubtless, my hon. Friends will deploy during the debate.
That is why in our Amendment—and I notice it is referred to also in the Amendment of the hon. Member for Stoke-on-Trent, South—we mention the importance of the publication of a White Paper on the Capital Expenditure Programme of the Government. It is difficult to discuss the merits of the Bill this morning, or, indeed any others, until before us we have that broad conspectus. Our whole object in tabling the Amendment was to get on to a rather broader front than we are at the moment in dealing with this matter.
I hope very much that the Treasury will think it worth while to send a Minister along to put in an appearance. After all, we are asking for £900 million of borrowing power—
§ Sir G. Braithwaite
Yes, indeed. I am obliged to the hon. Member, although that in itself might not be a reason for the attendance of a Treasury Minister. What, I believe, is important is that a representative of the Treasury should listen to this debate unfolding and to the concern, which exists on both sides of the House, for the development not only of gas and electricity, important as they are, but of the other matters. Productivity will languish without communications. All these things ought to be discussed. Indeed, I go further. I have a great respect for my hon. Friend the Parliamentary Secretary to the Ministry of Fuel and Power—we are old friends and colleagues—but I feel that a representative of the Treasury might well have wound up this debate today.
I hope that my hon. Friend, if it is he who is to reply to the debate, will be able to deal with the points which I have deployed and which my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke), who will be speaking later, will be discussing as well. I say in all good temper that if we get no reply at all on that aspect of the matter then, in Parliamentary language, we shall have to reserve our position when the Question is put from the Chair at the end of the debate.
§ Sir G. Braithwaite
I had hoped that the hon. Member, with his temperate habits, would not have thrown an interjection into this pleasant atmosphere this morning. The effects of tea and cocoa are nearly always disruptive.
We shall not be wasting our time if the representatives of Her Majesty's Government take this opportunity of enlightening us as to their intentions in this vital field of capital investment.
§ 12.30 p.m.
§ Viscount Hinchingbrooke (Dorset, South)
I beg to second the Amendment.
The custom has grown up in this House that the appearance of a comparatively minor Bill leads to a wide-ranging discussion upon the particular service or industry concerned. Many hon. Members know that that is our procedure on British Transport Commission Bills from time to time. That is the procedure 2526 today, because from the Minister of Fuel and Power and from the right hon Gentleman the Member for Derby, South (Mr. Noel-Baker) we have had imaginative and exciting eulogies of the fuel and power industries. They were speeches which could well be delivered on the Third Programme, but speeches which, by custom in this House, are now delivered here.
I only felt today that as there are Amendments on the Order Paper, one of which is designed to throw out the Bill altogether, a passing reference to them would have come well from my right hon. Friend. The appearance on the Treasury bench of a Treasury Minister would also have come well, and unless some of the arguments adduced today on this Amendment are dealt with under a promise of consideration, like my hon. Friend the Member for Bristol. North-West (Sir G. Braithwaite), I shall reserve my rights and my position when it comes to 4 o'clock.
§ Viscount Hinchingbrooke
"The Times" in a leading article on 10th June said:There are no signs yet that a satisfactory means has been found for promoting a sound investment policy in the nationalized fuel and power industries.Earlier in the leading article it pointed out what we know to be the case, that in normal industries investment comes as to two-thirds from earnings within the industry itself and one-third from outside borrowing.
The position is completely reversed in the case of electricity and gas. My right hon. Friend gave the figures this morning. The amount required for electricity up to 1960 is £1,442 million, of which only £435 million is to come from earnings. The capital required by gas to 1960 is £366 million, of which only £92 million is to come from earnings; that is to say, that two-thirds of the resources wanted are to be borrowed. That reverses the normal practice in private industry, and this Bill aids and abets this very unsatisfactory process.
In my view, the over-liberal provision of capital is something which is extravagant and encourages profligacy and waste, and we have had experience in this 2527 House on the amount of waste in these nationalised industries.
§ Viscount Hinchingbrooke
When the trumpet gives a certain sound the troops prepare themselves for the battle. When Bills of this order are passed in the House it is the signal for the executives throughout the British Electricity Authority and the area boards to stride forward. Power stations go up all over the country, burning steam, oil and natural gas, and using water power and atomic energy. Production is stepped up on a large scale and in order to give a satisfactory picture of what is going on consumer demand is artificially stepped up as well. Show-rooms are elaborately decked out and people are urged to install more and more automatic devices and live in a kind of all-electric glitter.
I have here a letter which is signed "O.A.P.", if hon. Members know what that is. It says:Dear Sir—I read in today's papers of your efforts to check the waste of money in gas and electricity offices.Not quite right, but good enough.It is shocking to see the English Government go in for the hire purchase of clocks and all sorts of electric articles which should be left to shopkeepers to sell for cash. A large number of salesmen try to persuade people to buy on hire purchase something they do not really want and, of course, they have their own office staff.Then follows, I suppose, a local reference to the effect of State competition generally.Pre the Government taking over, both these firms showed very handsome profits but not now. I only wondered if you could do something to show where the money is going.The lady is right. People are induced on a large scale to buy these electric items. The advertisements of B.E.A. are growing larger and larger all the time, and very much more beautiful and attractive.
§ Viscount Hinchingbrooke
Here in my hand is a result of this advertising, and nothing could be more attractive. It is the picture of a boy and a girl sitting beside a stream with a pack and a stick. What are they saying to each other? 2528 "Darling, I love you"? No. They are not looking at each other. "Do you see that trout rising over there?" No. that is not what he is saying. We read what it is. "You should visit your local electricity services where you will see loads of wonderful new ideas for saving work and while you are there you must not forget to ask for E.D.A.'s new book 'Life with Electricity'."
§ Mr. H. Nicholls
Is it not more likely they would be saying, "Darling, we are sitting here because we cannot walk on the roads, they are so crowded"?
§ Viscount Hinchingbrooke
Possibly my hon. Friend is right.
At this point I should like to allow myself one short but general criticism of the nationalised industries which I voiced in the House in the past and which on this Bill it might be appropriate to voice briefly again. When industries are nationalised, that is the end of good internal economy. These industries expand not by practical housekeeping, or by stimulation or correction of the law of supply and demand, or 'because consumers are willing to pay, but they expand by Act of Parliament, by Ministerial direction and because a few able civil servants behind the scenes have got the power and the opportunity to work their will.
The really serious thing about nationalisation is its dependence on the relative values of political power. In private business the great majority of executives look, as it were, at the base of the pyramid, at their customers and at what those customers will pay and what service they want. Private industry expands or contracts on consumer choice. But in nationalised industries the executives do not look at the base of their industry but at the apex. They are interested in what licences and authorities the Department will give, in what Ministers, or combinations of Ministers they can get after. They are interested in what Parliament will vote.
If it is a lucky nationalised industry and it has a good pressure group behind it, productivity ascends on a logarithmic scale. Electricity, gas and atomic energy are lucky and coal is luck by half. But if the pressure group is a bad one the industry stays where it is. The railways are unlucky, the telephone service is on 2529 a meagre diet and the roads are starving; £15 million for the roads in three years, £150 million for gas in the same time, and £700 million for electricity.
Who is responsible for this? I do not blame Her Majesty's Government particularly, because Her Majesty's Government are operating a system. I am criticising the system. The situation under the late Government was far worse. There was no road programme at all, or only one on paper. Now we have at least the beginnings of one. There were no telephones, and railway journeys were an absolute nightmare.
§ Viscount Hinchingbrooke
Things have now improved enormously. However, there is still some organisation behind the scenes. Who are these people? Who decides against power cuts in electricity but in favour of traffic jams on the roads? What mandarins exist in the Treasury, grinning behind their capital investment programmes and saying that it is in the national interest that oil, electricity, gas, housing, schools, aircraft, and motors should go rocketing ahead but that the rest of the public and private sector should remain unsatisfied? What principles and priorities determine that in all-electric houses the plugs should be earthed and the fires guarded against danger to our children but when those children go out and are smashed up on the roads there is no telephone in the house to call a doctor? Is that planning or not?
§ Viscount Hinchingbrooke
I am not asking for central planning. I do not believe in it. I believe that it is what the Greeks call "Hubris." It is an arrogant assumption that the State can determine what suits the private citizen. But being against such planning, I want to know that our Conservative Government is holding the ring clear for free and fair access to the market by all corners and ensuring that private industry, the roads and the Post Office shall be able to go surging ahead just as much as electricity and gas.
If we are frightened about the inflationary consequences we should channel the applications for capital or else let the 2530 Bank rate do the work. This Bill makes absolute nonsense of the appeal against inflation. Borrowing is envisaged of almost £1,000 million. There is a device called the Capital Issues Committee. It has been most successful in limiting private borrowing on the Stock Exchange, I have analysed the capital issues applications in 1953. The analysis shows that public companies, as distinct from nationalised bodies and local authorities, borrowed only £150 million. The Capital Issues Committee sees that the private sector of the economy is disinflationary but nobody says to the nationalised boards, "You call a halt to the harm that you are doing to the national policy of disinflation."
During the debate on the Budget, the right hon. Member for Leeds, South (Mr. Gaitskell) attacked Her Majesty's Government for seeing that the nationalised sector of industry was highly productive but that the private sector remained unsatisfied and relatively unprotected. I think that that shot went firmly home. My right hon. Friend the Chancellor of the Exchequer was unable to answer it, and neither were the other Treasury Ministers. It goes very hard when today we are confronted with a Bill on Second Reading which undermines the process of disinflation, or may undermine it, a process which my right hon. Friend is encouraging, so soon after the charges made against us during the Budget debates.
The Chancellor has done extremely well by investment allowances and other means in encouraging private industry to spring forward. But he could go further. His directives to the banks seem to be still in operation. Small partnerships and businesses which want an overdraft to start up on the industrial road find it a little difficult, unless the business is designed to promote exports, avoid imports or help the rearmament programme. Even today the directives to the Capital Issues Committee seem to be as harsh as they were a year or so ago.
We have had Parliamentary Questions on this subject recently. My hon. Friend the Member for Kidderminster (Mr. Nabarro) put one not long ago about the operations of the Capital Issues Committee, but nothing seems to be done to change the basis upon which it is working. The main principles were laid down 2531 on 4th December, 1951. They were only added to by a letter of the Chancellor's on 1st February, 1953, in respect of the sterling area and the intention to carry out the decisions of the Commonwealth Conference. Since that date there has been no change whatever in the instructions issued, and they are still holding back issues on the Stock Exchange for private enterprise.
§ Mr. Nabarro
Would my noble Friend comment on the refusal of the Capital Issues Committee to grant facilities for raising extra capital on the money market to the United Dominions Trust, largely for the purpose of financing private industrial expansion, whereas under this Bill we are giving vast additional borrowing powers to a nationalised body to stimulate such inessential purposes as hire purchase and sales promotion of electrical appliances for the home.
§ Viscount Hinchingbrooke
My hon. Friend gives a most cogent and apposite example of the point I am trying to make. It surely is time to wind up the Capital Issues Committee and to alter the directives that are sent to the banks. The Capital Issues Committee has done its job. It has done far too good a job in my opinion. It has not touched the nationalised industries, but it has successfully contracted the industrial base of our own Conservative philosophy.
There is one final question I wish to put to my right hon. Friend, or whoever replies to the debate. Is it not time now that Parliament should debate a White Paper annually on the capital formation of all industries and services relative to one another and to the Government's own borrowing? The Economic Survey shows gross fixed investment for 1953 at £2,312 million, the actual borrowing for which was £1,104 million. These are figures of very great significance in our economy, perhaps more so in their effect on the economy than the actual Budget figures of twice that amount. Yet in this House we spend endless days on the Budget, on the Finance Bill and upon the Estimates. There is not one single special day devoted in the House to this question of relative capital investment. I believe the time has come to alter some of the proceedings of our financial debates so as to enable that to be done.
2532 If such a day were provided, I would ask a few questions about this situation. I would ask for details of the capital investment programme, if there were one. If it did not exist, I would ask whether it was necessary to create it. If it was not necessary to create it, I would ask why the Departments and their nationalised industries are allowed to dominate the markets? I would ask, should they be divorced of their Treasury guarantee and allowed to fight for themselves? I would ask, should the Capital Issues Committee now be released from its stranglehold on private enterprise and turned on to the nationalised industries themselves? I would ask why it is that one nationalised industry can get quicker access to the market than another. And, finally, why are the roads—always the roads and never anything else—the Cinderella of the public services?
I very much trust that my right hon Friend, or the Parliamentary Secretary, in winding up, will be able to touch on some of the points which we are and shall be raising, because they are of very great significance, not only to development of our Government's own policy, but to the internal economy of the nation.
§ 12.54 p.m.
§ Mr. Ellis Smith (Stoke-on-Trent, South)
Those who have known the noble Lord the hon. Member for Dorset, South (Viscount Hinchingbrooke) for many years have a great respect for his courage, independence and integrity, but he is an example of those who stand for 18th and 19th century ideas compared with those who are supporting the second Amendment on the Order Paper:That this House, while approving liberal provision of capital for the development of the country's industrial assets, urges that in future a long-term plan shall be prepared which shall be presented for consideration with a White Paper on the Capital Expenditure Programme of Her Majesty's Government.Hon. Members who put their names to that Amendment, stand for 20th century ideas, they support all that is best in life and the scientific development which is taking place. Therefore, although we respect the noble Lord, there is a fundamental cleavage between us, which should find expression in this House in the hope that the Government will adopt the best policy in the national interest. It was with ideas of that kind in mind that we 2533 placed on the Order Paper the Amendment in my name and phrased it so that it should not be construed as an attempt to defeat the Bill.
We accept the Bill wholeheartedly, but we shall proceed to make a critical examination of the Minister's remarks and of the Administration and try to make constructive proposals. I have no hesitation in saying that unless the country sooner or later—we hope sooner—accepts the ideas contained in this Amendment, 20th century ideas of world development, we shall pay very dearly for the conservatism it continues to operate.
I had great cause to be pleased with the statement made by the Minister this morning with reference to the use of oil at several power stations in the South of England. That proved how correct some of us were eight or nine years ago. In the debate on one of the first Economic Surveys issued to this House I was critical because of its proposals for economising at the expense of the proposed construction of oil refineries.
While I was making those criticisms of those proposals I was watching a right hon. Gentleman on the Front Bench. I was super-critical, or perhaps "super-suspicious" would be the correct word. I proceeded to make a speech, which is on record, and the following day, at tea-time, the right hon. Member for Dearne Valley (Mr. Wilfred Paling) came to me and said, "That was a good speech you made yesterday." I replied, I am pleased to hear that, but what was the right hon. Gentleman saying to you? "The right hon. Member for Dearne Valley said, "He was saying how sound it was." So I was proved wrong in my suspicion, but right in the criticism I had been making of the Economic Survey.
The man responsible for the proposals in that Economic Survey was the man who prevented the Labour Government from applying Labour's real economic policy and Labour's real proposals for planning, Sir Edwin Plowden. During the Minister's speech today I was only prevented from interrupting by the fear of prejudicing myself in the eyes of Mr. Speaker and therefore restrained myself, but I was tempted to say, "Send a telegram to Sir Edwin Plowden, indicating the work which is now being done." I hope that Labour in particular and the country in general will draw the lessons 2534 which ought to be drawn from this matter.
It was my privilege to serve my time and to be associated with some of the greatest men this country has produced at British Westinghouse, Trafford Park. I have seen thousands of great but "unknown" men working in research, in development and construction. Many have led the world in electrical development, but neither this House nor any Government has yet proved worthy of the great work that was done in those workshops. That is not proved even today. The scientists, engineers and workmen associated with such men have often led the world in scientific and electrical development. I contrast them with the Plowdens, who have held this country back because of their out-of-date ideas which found expression behind the scenes.
I was a little uneasy when the Minister was making his proposals for an outside inquiry into the British Electricity Authority. I understand that the Board has accepted the idea and that the organisations associated with the industry have accepted the proposals.
In my view, it is a very dangerous precedent. I do not like it. At the same time, an honest man fears no one. I suppose that is the attitude of the Board. It has such a good case, such a great record, that it does not mind who carries out the investigation. That is the Board's business, but so far as I am concerned, I do not like the idea because of the dangers attached to it.
§ Mr. Nabarro
Will the hon. Member bear in mind that on 25th October, 1950, his right hon. Friend the Member for Derby, South (Mr. Noel-Baker), supported by the right hon. Member for Lewisham, South (Mr. H. Morrison), proclaimed that they wished to see an independent inquiry into each of the nationalised industries at five to seven-year intervals? As electricity has now been nationalised for nearly seven years surely the time is now propitious.
§ Mr. Smith
This is a democracy, and they are entitled to their opinion. I am speaking for myself, and I have so much confidence in my own ideas, through being associated with the people with whom I am associated, that I also venture 2535 to suggest that I am speaking for the working class.
Let me make it quite clear that I think there should have been, if anything, a Parliamentary inquiry—
§ Mr. Smith
The hon. Member may not think himself qualified; he can speak for himself. He may not be qualified; he may not have been in industry or had anything to do with the electrical industry, but I know hon. and right hon. Members on both sides of the House who are closely associated with industry and scientific development. They would have been competent to have carried out an inquiry and, based upon their report, we could have had a Parliamentary discussion.
In the May publication of the Manchester School of Economic and Social Studies—I take this as a change from the London School of Economics—there is an examination made of the development of the public corporation from the point of view of Labour's history. If an inquiry is needed in the nationalised industries it is with regard to what I am about to say. The present organisation and administration of the nationalised industries is a legacy from the Willie Grahams and Philip Snowdens of the past and the Liberal Party's "Yellow Book." Modern, mid-twentieth century ideas need to be incorporated into the labour policy being pursued in the nationalised industries.
The Coal Board, the British Electricity Authority and the Gas Council are a big step forward, and—I emphasise this for the benefit of the noble Lord—have made a great contribution towards saving Britain since the end of the war. They have made a valuable economic contribution. They now need a radical examination, however, first, in respect of their relation with Parliament, because in my view it is very unsatisfactory that we should have periodical examinations made, with a long period between them. This is the centre of democracy; it is here where the examination should be made, by the people's elected representatives, and not by some unknown people superimposed to conduct an inquiry into those bodies.
When a question of law arises we leave it to the lawyers; when it is a question 2536 of health we leave it to the medical profession. Yet those who have never been in industry have the audacity to claim to be constantly intervening and carrying out examinations into industries in which they have never played any part. Even Mr. Frank Hodges, at the 1918 conference of the Miners' Federation, said that unless accompanied by an effective form of working class control, he did not believe that nationalisation would do any good for anybody. The record has proved that to be wrong to a certain extent because the contribution made by the nationalised industries to the development of our economy stands as a great achievement.
We need, however, now to harness the emotions and patriotism of our people. to give them a greater say in their own industry, to stimulate their interest, their pride in achievement, and to give them a target to aim at, something to work for and something to live for. I suggest that we shall be more and more forced to consider, if we are to get the best from our people and keep in the forefront of democratic development, drawing out our people and stimulating their interests in their everyday activities.
Again, in the case of the Gas Council, the record is one of great achievement. In the North-West, where I have an interest, the gas board there covers a population of 6½ million people—1¼ million more than the Scottish Board—a board for one country—and more than twice the population covered by the Welsh Board. These facts need to be put on record, because it is time that the contribution of that great industrial area to our economy should be reflected in the House.
The same applies to the great contribution being made to our exports by the North Staffordshire pottery industry. That industry is very concerned about the increasing competition from other countries, and I make to the Minister a plea that he should watch the gas charges in order that that industry can also be given some satisfaction in its efforts to reduce to a minimum the overhead charges for whatever material it is using.
I congratulate the Gas Council. Its publication speaks for itself. There is no need to repeat any of the statistics contained in the two publications that 2537 can be obtained at the Vote Office. They are a credit to whoever prepared them and to those who have been responsible for the work which has enabled them to be published. Therefore, on behalf of our people, I congratulate the Gas Council, and the North-West Board in particular, for the great work that has been done.
The engineer of the North-West Area Board has already gone some way towards meeting the point I have been advocating earlier. He has addressed meetings of trades councils, trade unions and Co-operative branches. Wherever he has gone he has been greatly appreciated, and has stimulated interest in the work of the Gas Council. He has illustrated his speech with graphs, pictures and charts. I suggest to the Minister that more and more of this kind of thing needs to be done both by the Gas Council and the Electricity Authority. This is a development of democracy, stimulating interest and pride in achievement, and we need more and more of it.
I now wish to deal with the noble Lord and all those who support his backward ideas, and all those in any part of the House who may be associated with ideas like those held by Mr. Ivor Thomas, who said he preferred to be a real Conservative outside the Labour Party than remain one inside it. In 1925, a report was published by the Severn Barrage Committee which all hon. Members ought to have read—the hon. Member for Kidderminster can pull his face as much as he likes, but his ideas are responsible for holding back this country.
§ Mr. Nabarro
If the hon. Member wishes to know from where the principal opposition to the Severn barrage came perhaps he would recognise that it was centred in the National Union of Mineworkers, because of the number of unemployed miners at that time.
§ Mr. Smith
The report of 1925 said that a prima facie case had been made out for the further expenditure of public money in the prosecution of this inquiry. In 1933, a further report was issued which recommended that the Government should authorise the preparation of a complete tidal power scheme. The 2538 tides were tested by a model made at the Manchester University. It was proved that the amount of electrical energy derivable from the barrage scheme would be varying and intermittent, depending on the tide, unless combined with some secondary storage scheme. But it was said that once the scheme was completed the cost of the power produced by it would be represented mainly by the loan charges in the capital outlay.
In 1945, we had a further report which proved beyond doubt that it was a good business proposition for this country to embark on this large-scale capital expenditure because the cost would be saved within a relatively short time. I speak from memory, but I think that at the same time there would have been a saving of approximately £1 million a year. So interested was I in this scheme that I spent a day with one of the greatest authorities on hydro-electric power, poring over specifications and drawings. His name ought to be mentioned, because he is such a great man. It was Mr. Stubbs, one of the directors of Fodens Motor Works who was working at Metropolitan Vickers, giving them the benefit of his advice and experience, as a result of which a scheme was being prepared.
It is a monument to the conservatism of Britain that there has been so much delay regarding the harnessing of the tides. In facilities for the development of hydro-electrification we are more blessed than any other country in the world, but we have spent less on hydro-electrification than any other country. In this report, which is obtainable in the Vote Office, we read:The possibility of tidal power (e.g., the Severn barrage) is being re-examined, and experiments are being carried out to assess the practical and economic potentialities of wind power.While we are talking, other countries, including Switzerland and many other Continental countries, America and Russia, have proceeded during the past 20 years to obtain electrical power from the development of hydro-electrification. I hope that neither the Government, nor any of the forces around the Government, will be responsible for holding us back from obtaining electrical energy from nuclear power. We led the world in harnessing nuclear energy for destructive 2539 purposes, and that should be emphasised, particularly to the Americans.
It was not until the air raids on this country made it too dangerous to continue carrying on the research and experiments here, that our young scientists at Trafford Park and Rugby went to America. Now, as a result of research in this country, we are again leading the world in the attempt to obtain electrical energy from nuclear power. I hope that we shall not be left behind on the question of hydro-electrification.
In America great progress has been made in this matter. In Russia, electrical power is being obtained from nuclear energy. They have a power station already working. All this reveals the need for us to encourage our scientists and engineers. The necessary capital should be placed at their disposal to enable them to continue the work which they are doing so well. It is most essential that we should support the statement made by the Minister this morning about placing more horsepower at the disposal of industry.
Yesterday, I wandered round that productivity exhibition at Olympia, where there are many lessons to be learned. I became a little cynical; and one must be careful not to become too cynical because it is apt to spoil one's life. But as I looked round at all the well dressed men there, it reminded me of the people with whom I am associated, who are being forced to work micro-motion schemes, who are having films taken of every motion they make so that their piece work prices can be assessed down to seconds. In Britain, there are still too many people watching too few do the work.
§ The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. L. W. Joynson-Hicks)
The hon. Gentleman has referred to the exhibition at Olympia. I should like to ask whether he was satisfied with the display of model gas turbines which we had there, and about which I am reminded by what he has said?
§ Mr. Smith
My main concern is about our economic position, and the fact that those who work at the coal face must work at a tempo which no one outside the industry has any idea of unless he has seen it. The same applies to industry generally, where the workers must be reinforced by having more electrical power at their disposal. Productivity reports resulting from delegations visiting America, which are filed in the Library, all reveal that our people need more horsepower and electrical energy to assist them to get better results.
It is because we wish to see 20th century ideas applied, and not the ideas of the 18th and 19th centuries, that we support the Bill.
§ 1.19 p.m.
§ Mr. J. Enoch Powell (Wolverhampton, South-West)
There is a form of speech known to the grammarians which goes by the name of oxymoron, which is a combination of opposites in the same sentence or phrase. I confess that, when I read the Amendment on the Order Paper in the name of my hon. Friend the Member for Bristol, North-West (Sir G. Braithwaite), I thought that it was an exercise in oxymoron.
Although my anxiety was somewhat diminished by the speech of my noble Friend the Member for Dorset, South (Viscount Hinchingbrooke). I still feel that both in the Amendment and, to a certain extent, in the speech of my right hon. Friend the Minister of Fuel and Power, there exists this combination of irreconcilably opposite methods of achieving a result which all of us in this House want to see achieved, and that is to secure that our resources, both human and material, are directed in the most advantageous way as between consumption goods, maintenance and new capital, and, within the field of new capital, among the various alternative claimants for the new capital which is to be raised.
In that object we are all at one. There are, broadly, two methods—and I think only two—by which it can logically be achieved. I feel that in much that has 2541 been said in this debate there is danger of confusing those two perfectly distinct, and indeed opposite, methods. One method is to allow demand through prices to express itself as profitability, so that the comparison of profitability determines the flow of resources in one direction or another. That is one arguable and consistent method of achieving the object.
The other method is to concentrate control of those resources—material and human—ultimately in one place and to make the allocation as a deliberate operation. Since it is to be a deliberate and embracing operation, it must necessarily, in the order of things, be a centralised operation—a central plan.
I conceive that any attempt to compromise between those alternatives, still speaking of economic advantage and keeping myself within the field of allocation for economic advantage, must represent a sacrifice. We may find ourselves, by compromising and by the attempt to marry opposites, in danger of having the worst of both worlds. At present, under the legislation of which the Act which this Bill amends is a small part, the British economy exemplifies neither one method nor the other.
In the private sector it is in the main profitability which directs the direction of new investment, subject, as has been pointed out already, to the overriding negative control and negative intervention of the Treasury under the Borrowing (Control and Guarantees) Act, 1946. On the other hand, when we come to the sector of nationalised industry, the direction of investment is influenced by the existence of a Treasury guarantee, which creates relatively favourable conditions for attracting capital, and by the fact that Treasury control involves a positive decision on the part of the Government to allocate this tranche of investment to one industry and another tranche to another. Therefore, investment both as between the two sectors, private and nationalised, and, within the sector of nationalised industry, as between one industry and another, is controlled and directed upon different and indeed upon conflicting principles.
The Government, in their negative control of private investment and in their more positive control of investment in the nationalised industries, are constantly 2542 making a series of decisions which can be regarded either as part of what is at most a partial plan or as arbitrary decisions taken ad hoc from time to time. I am afraid that it is the latter impression which one usually gets from the examples of this decision which come to the surface.
I would refer the House to a very clear case of "pull devil, pull baker" which is mentioned in the Fifth Report of the British Electricity Authority, where there is revealed in paragraph 57 a tremendous battle between the Authority and the Treasury when the Government wanted electrical equipment to be exported and the Authority wanted it to be used in its own investment programme. One sees at the end of that paragraph that discussions were still proceeding at the end of the year under review.
Decisions which the Treasury makes in these matters are, in the nature of things, ad hoc decisions governed more by the capacity of the competitors and of the advocates to plead their case than by any possibility of comparing the ultimate advantage which will accrue from the investment of a given capital sum in one direction or another.
It seems to me that it is essentially illogical to isolate, as we do, the two groups of investment—private investment and investment in the nationalised industry. Can there really be any rational ground for deciding upon the scales and direction of investment in the gas and electricity industries on one principle and deciding on the scale of investment in the automobile and chemical industries on a quite different principle? That is what is happening at present. Within the two fields, can there be a logical justification for deciding as between the automobile and chemical industries in one way and as between the gas and electricity industries in another? That is what is happening under this dichotomy of our economy as between the private and the public sector.
I recognise that no immediate, sudden alteration in this rather haphazard and contradictory structure which we have inherited from our predecessors opposite is practicable. It is impossible to expect relative profitability to be expressed except where the price mechanism is already in operation. A prior condition 2543 of a rational method of investment in the nationalised industries is a rational price structure in the nationalised industries. Until the relative profitability of one undertaking to another, and consequently the relative advantage of further investment in one direction or another, can be read off on the scale of price, we are, so to speak, blindfold.
Consequently, we are obliged to recognise that this Measure, as an interim Measure, is necessary. It would be impossible suddenly to terminate the present method of authorisation of capital investment in the nationalised industries. It would be impossible suddenly to terminate the Treasury guarantee, but we must work towards a position in which that guarantee can be withdrawn and in which there will be open competition in the money market as between all the various national industries without a deliberate advantage being attached arbitrarily to one group of them.
As I have said, the prior requirement for that is that the price structure in the nationalised industries should be able to reflect not only the cost of the services but the relative demand for the services. The recognition of a need for a drastic alteration in price policy in the nationalised industries is growing today at a rate which it would have seemed optimistic to expect a year or two ago.
I should like to draw attention to a remarkable speech made earlier this week by the president of the National Union of Mineworkers. It was a speech of which the main part was devoted precisely to this question of the price structure of the coal industry. It will be realised that the price structure of the coal industry necessarily dominates and overshadows the price structure of the gas and electricity industries. Unless we can get the price structure in the coal industry right, it is no use talking about the price structure of the gas and electricity industries. The president of the National Union of Mineworkers said:A good deal of our coal has been sold to industry at less than the cost of production.…If it were sold at marginal prices, as some economists have proposed, prices would rise by not less than £1 per ton. This would make a very great difference to the board's balance-sheet. It would be an easy means of removing the debit on those accounts…Increases in the prices of the more valuable carbon and other coals do not cover the cost 2544 of production. The issue has therefore to be faced…I would particularly draw the attention of the House to this formulation:…is a nationalised coal industry to be required by the Government to transfer its product to major private enterprise, high-profit-making industry, at uneconomic prices, thus enabling remunerative profits to be made by private industry which are often inflated and unwarranted? We say this should stop.There are increasing numbers of people inside and outside the House who believe that it should stop. They believe that coal and the other products of our nationalised industries should be sold upon the same principles as govern the sale of other goods and services throughout the country. They believe that that fundamental alteration in our attitude to prices in the nationalised industries is the necessary preliminary to escaping from the irrational form of our capitalisation as it is going on at the present and to which it is one of the functions of this debate to draw attention.
I believe, and I hope that my right hon. Friend will find it possible, to make successive steps both in the direction of reform in the price structure of the nationalised industries and in the direction of bringing the capital structure of the nationalised industries and their financial arrangements into a more integral and rational relationship with the economy as a whole.
§ 1.33 p.m.
§ Mr. Ernest Davies (Enfield, East)
We have just listened to an extremely interesting, if somewhat academic, speech on the economics of price within the nationalised industries. I am sure that the House has listened with great interest to the hon. Member for Wolverhampton. South-West (Mr. Powell), but it struck me as he was deploying his arguments that if he carried them to their logical conclusion we should have complete chaos in the capital investment market through the lifting of all controls on investment and of the Treasury guarantee, which he suggested. The test as to how capital investment was to be used would be not the national interest but the profitability of the use of that capital investment.
§ Mr. Powell
How does the hon. Gentleman distinguish between the national interest and the most advantageous use of the national resources?
§ Mr. Davies
I am pointing out, in relation to the argument which the hon. Gentleman used, that I do not think the national interest is best served by the profitability test which he suggested. We all desire the best use of the national resources, but the Opposition think it necessary to guide the use of national resources in the directions in which they will best serve the community and be of the greatest service to it.
§ Mr. Robert Carr (Mitcham)rose—
§ Mr. Davies
I allowed the hon. Member for Wolverhampton. South-West to intervene, but I cannot permit the hon. Gentleman, who has not so far participated in the debate, to do so.
I remember how during the period between the wars, when there was no control on capital investment, the Labour movement was constantly drawing attention to the fact that the capital which was available was being used for purposes which would not contribute most to the welfare of the community or to the raising of the standard of living. We saw capital investment going into the erection of luxury flats, cinemas, greyhound racing tracks and so on when factories, schools and hospitals were needed very much more.
§ Mr. Powell
Who went to the greyhound racing tracks? Those people were deciding by going there that they wanted greyhound racing tracks rather than the other things.
§ Mr. Davies
It is entirely a matter of judgment as to what is of greatest value to the community. When there is a shortage of housing or schools or hospitals, it may be of greater benefit to the community to provide the latter rather than luxuries and means of recreation. I do not want to pursue this argument further; I want to deal more with the Amendment which has been moved.
The hon. Member for Bristol, North-West (Sir G. Braithwaite) and the hon. Member for Wolverhampton, South-West share the view that we all do, that we should make the best use of the capital which is available, but we differ as to how that can best be done. However, there is also some question whether the very large sum of money which the House is asked to approve for borrowing 2546 by the electricity and gas industries should receive the priority which the Minister has asked the House to give it.
The Minister has certainly made a case for the investment of this money in the industries. We are all convinced of the value of expanding the gas and electricity industries. It cannot be stated that the nationalised industries are receiving preferential treatment in this respect because we can show that certain nationalised industries are receiving inadequate capital in comparison with electricity and gas. The railways and the roads are public industries, and they are receiving far less favourable treatment than the gas and electricity industries.
If this huge sum is invested in the electricity industry and the production of the industry is increased in the way we desire it to be increased, I doubt whether its product will be used in a way which will contribute most to industrial production unless the industries which will consume the electricity are at the same time modernised. It is one thing to increase electricity production for the purpose of aiding industry, and it is another thing to increase it for the purpose of domestic consumption. We all desire that housewives shall be able to use labour-saving devices, electric irons and washing machines and so on, but there is a question of priority, and there might be a greater saving of coal and a greater contribution to industrial production, or a reduction in cost of production, if priority were given, for instance, to the electrification of the railways rather than to increasing electricity consumption in the home. We all probably want both to happen, but there is a question of priority.
The argument which I wish to put forward is that there is a very strong case for increasing capital investment in the transport industry, particularly in the case of the railways and the roads. Unless we do that, and unless we get our priorities right in this respect, we may find that we get our respective industries out of balance. We may increase the production of gas and electricity to a great extent but not develop the industries which will use the products in such a way that they can make the contribution towards industrial production which they ought to be in a position to 2547 make. That danger certainly arises in the transport industry.
Railways are one of the greatest potential industrial consumers of electricity, and they are the most wasteful users of coal. The Minister argued convincingly about the need to save coal, and said that coal is consumed more economically through electricity than in any other way. If the railways are electrified there will consequently be a great saving. I believe that some locomotives waste 90 per cent. of the coal they consume.
§ Mr. Davies
The Parliamentary Secretary suggests that an even greater percentage is wasted. This country has fallen very far behind the rest of Europe, and certain other countries, in the modernisation and development of its railway system. We have engaged in very little electrification. Since the war, the Liverpool Street—Shenfield line and the Sheffield—Manchester line have been electrified. Apart from those two schemes, nothing has been done by way of electrification, and yet our railway system carries a denser volume of traffic than any other comparable railway system. At the same time, it is one of the most old-fashioned and antiquated. Some hon. Members will have travelled on the recently electrified French railways. They have admittedly cost a substantial sum of money, but it has been shown that France's investment in electrification has amply paid. If France can afford to embark on such schemes, surely we can?
The sum which we are being asked to approve today, if compared with that which has been spent by other industries—nationalised or otherwise—is somewhat out of proportion. During the years 1946 to 1952 the sum of £218 million has been spent on the railways and only £43 million on the roads, making a total of about £261 million for the two. If we add to that the amount which has been invested in road passenger undertakings—£169 million—and in goods vehicles—£80 million—we arrive at a grand total of only £510 million. That compares with the figure of £679 million for the electricity industry alone, as shown in the White Paper which we are now considering.
2548 I do not say that it has not paid handsomely to make that investment in the electricity industry, and I agree that we should continue to invest large sums in it, but I consider that it is wrong to spend far less on the transport industry than on the electricity industry. If we are increasing one we should increase the other at the same time. For some reason we seem to have got our priorities a little out of proportion.
The Minister has indicated that there has been a very great increase in the production of electricity, and has said that there will be a still greater increase during the coming years. I would point out to him that the same situation exists in other industries. During the four years from 1948 to 1952 over 500,000 more motor cars and over 200,000 more commercial vehicles came on to the roads. That is comparable to the increased use of electricity, and yet we have spent only £43 million on the roads during the time that we spent over £600 million on the electricity industry. I hope that this debate will draw attention to the necessity for reconsidering the overall capital investment programme.
It would not be so bad if we were now saying, "The programme has been out of proportion up to the present, but from now on it will be brought into proportion." But that does not appear to be the case. We are being asked to agree to increase the borrowing powers of the gas and electricity authorities by £900 million. During the period from 1st April, 1953, to 31st March, 1960, the White Paper shows that the external borrowings required by the electricity industry will amount to over £1,000 million, and for the gas industry to £274 million. During the same period, on the basis of the statement made by the Minister of Transport on 8th December last, only £74 million is to be invested in the roads. The Minister said that the amount to be spent on the roads would rise to £15 million in the year 1958, at which figure it would be stabilised.
The House has shown that it is not satisfied with the amount spent on road improvements, because it has passed two Motions on the subject. The last one, on 28th May, which was moved by the 2549 hon. Member for Peterborough (Mr. H. Nicholls), demanded an even more extensive road programme, because the one envisaged was not sufficient. During the debate on that Motion the Parliamentary Secretary suggested that it was impossible to borrow £500 million for road improvements, as was suggested by one hon. Member, because it would disrupt the market in a very short time, but a few days after that statement was made this Bill was published. If it is possible to borrow £900 million in seven years—an average of about £130 million a year—it is surely possible to borrow £100 million a year for road improvements and new road construction.
It is claimed, of course, that investment in gas and electricity brings in a return, that there is no demand on the Treasury, because, although the Treasury has to give a guarantee, the industries earn revenue and pay their way. Although we do not get an actual return in pounds, shillings and pence from the roads, we do get a return in the great saving in costs of production resulting from more efficient transport. The return gained from wise investment in a more extensive road programme would certainly pay industry handsomely. The Parliamentary Secretary on that occasion—and the Minister on another—rejected the idea of borrowing for the purpose of expanding the road programme, but they have not produced a single convincing argument why it is impossible to borrow in order to construct new roads.
I should have thought that it would have helped this Government, who are so anxious to keep expenditure down, to have encouraged below-the-line borrowing rather than to insist on straightforward above-the-line expenditure as far as the Budget is concerned. At present the Government are seeking through a committee, presided over. I believe, by the Secretary of State for Commonwealth Relations, to find ways and means of cutting down expenditure, presumably with a view to having a nice election Budget next year. Here, however, is a way whereby we can increase expenditure without its being reflected in the Budget, by going below the line through borrowing. It has been done in the past, and there is no reason why it should not be done now for the roads.
2550 As already stated, we on this side of the House welcome the Bill, but I am glad that the hon. Gentleman the Member for Bristol, North-West has moved his Amendment, because it has not only given the House an opportunity to draw attention to the need for getting our priorities right in regard to investment but it has, I think, shown that it is necessary that there should be an overall review of the capital investment programme today, that it should be seen in which direction the capital that is available can be most usefully employed to increase production and to keep costs down and generally to assist in raising the standard of living of this country. We therefore welcome the Bill, and consider that it is a credit to the nationalised industries that they have so successfully invested these large sums in the past and are now confident that they can invest them satisfactorily in the future.
§ 1.52 p.m.
§ Colonel O. E. Crosthwaite-Eyre (New Forest)
The hon. Gentleman the Member for Enfield, East (Mr. Ernest Davies) has spoken with his usual authority on matters pertaining to transport, but he has spoken with that lack of authority that usually characterises hon. Members opposite whenever they approach questions of finance. He has, for instance, said that we could cut down expenditure by borrowing below the line and so hiding it from the public, but not putting it into the Budget by way of taxation. That seems to me one of the most curious arguments, especially as it was so strenuously denied by Sir Stafford Cripps and also by the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell).
The hon. Gentleman also produced the argument that we on this side of the House have combated time after time, that he himself and his hon. and right hon. Friends, with their knowledge, are so wise about what they call the national interest, about better utility and better service, that they are more capable of planning the investment of this country, more capable of it than the people concerned in industry, and the people who have to borrow the money, and who have to do so, moreover, without the advantages of a Government guarantee. They think that they are so wise that they are the people to judge and to say what should be done. It is all the more 2551 remarkable after the five years in which they wallowed in that theory and lost millions of pounds on groundnuts and Gambian eggs.
§ Colonel Crosthwaite-Eyre
It is all very well for hon. and right hon. Gentlemen opposite to protest, but those are the facts, and that is the philosophy of hon. and right hon. Members opposite, the philosophy that has led the hon. Gentleman the Member for Enfield, East to get up so often and tell the House we must go in for this better standard, we must do this, that and the other. He is not the only one. Many of them have done it, and within a couple of years they have had to come back to the House and report that they have made a serious national capital loss that has to be written off. The people engaged in industry know far better than any hon. or right hon. Gentleman opposite what money should be borrowed and on what terms it should be borrowed and to what use it should be put, and they serve the country far more than right hon. and 'hon. Members opposite who have to come to the House to admit their mistakes with a regularity that, to put it 'mildly, is monotonous.
The right hon. Gentleman the Member for Derby, South (Mr. Noel-Baker) raced 'through a mass of figures, some of which I thought much more suitable for his local newspaper than for this House, including one about the distribution of tar, and one or two similar ones. I understand that the right hon. Gentleman was a sprinter of some considerable note in the past. Listening to him I felt he might have accompanied the Red Queen and Alice, for the faster they ran the less progress they made. He may remember that when Alice asked, "Are we not nearly there?" the Red Queen answered, "We passed there 20 minutes ago."
In considering the Bill, we have two problems to face. The first is a simple one. How much more electricity and gas should be made? Secondly, how much electricity and gas can we afford to make? It is no good saying we are going to have masses of money for a programme of expansion if we cannot carry out the expansion. I was very sur 2552 prised to hear the right hon. Gentleman the Member for Derby, South devote so much time to eulogy of past accomplishments. I should be the first Member of the House to acknowledge all the progress that has been made—that we have, since vesting day, for instance, increased our sales of electricity by 50 per cent., that we have 19 per cent. more customers. One could produce more such figures, but that is not the point we have to face today.
While we all pay tribute to what has been done, what we now have to do is to see whether the programme we now set out to achieve is a logical one and one which will produce the results to which the House is committed. With great respect to the right hon. Gentleman the Member for Derby, South and to the other hon. Members opposite who have spoken in the debate, I feel that they spoke ex parte, as they so often do, from some sort of theory and for some sort of development, be it concerned or not with this Bill.
I feel that we are up against a problem. My right hon. Friend has given us certain most interesting figures in the debate. I think the most interesting were that the present programme for new power stations, assuming the present thermal efficiency, would entail the consumption of a further 20 million tons of coal a year, though because of increased efficiency it could be reduced to 14 million tons per annum. He added that certain power stations can be changed over to oil burning by 1960 with a saving of 11 million tons. If my calculations are correct, that means that by 1960, if this programme goes through, and my right hon. Friend achieves everything he is setting out to do with this increased efficiency and transference to oil, we shall still be burning 3 million tons more coal in electricity plants.
We have to view that against the fact that consumption at the moment is rising at the rate of 6 million tons a year but that we are not getting the increased output from the coal industry which we had all hoped to see. That increase is far less than we expected, and certainly less than the Ridley Committee told us was the minimum that we could expect by 1960, being of the order of 260 million tons per annum.
2553 The right hon. Gentleman the Member for Derby, South rather coldly congratulated my right hon. Friend on his achievement in getting the British Electricity Authority to transfer from coal to oil, for dual burners. I was on to the right hon. Member for Derby, South about this in 1950, and it has taken four solid years of argument with him and with his successor—
§ Mr. Geoffrey Lloyd
I think that I must intervene to say that I had no pressure on this matter from the right hon. Gentleman. I took the initiative here myself.
§ Colonel Crosthwaite-Eyre
No, what I meant was that I had talked to my right hon. Friend on this question. I did not mean that the right hon. Member for Derby, South had pressed him, but merely that I had.
§ Mr. Lloyd
I thought that I had made It clear that when I first came to office I examined the matter and conditions were quite impossible because of the loss of Abadan. I hope that my hon. and gallant Friend is not suggesting that this policy is due to his pressure. It is a policy which I have initiated myself—but I have always been very glad to discuss these matters with him.
§ Colonel Crosthwaite-Eyre
Far be it from me to take credit where credit is not due to myself. All I say is that I have made representations to my right hon. Friend and I am very glad that he has now found it possible to do this.
With regard to dual burners we have at Fawley the biggest oil refinery in Europe, and also at Marchwood what is to be the biggest electricity station in the South of England. The two are only two or three miles apart and it does seem to me an overwhelming case for the one to supply the other. In fact I hoped that it might be a triple burner so as to use natural gas as well as oil—but perhaps I can press my right hon Friend about that afterwards.
§ Colonel Crosthwaite-Eyre
If my right hon. Friend will go anywhere near Southampton Water, he will see two flames 60 feet high of suitable gas.
2554 I am sorry if I have gone outside the representations I have made, but I would say that unless we put these estuarial power stations on the basis that they can burn both oil and coat I do not see the slightest chance of our being able to carry through this programme of development laid out in the Bill. We should also know the number of stations involved. My right hon. Friend the Minister only referred to a considerable number, but I hope that the Parliamentary Secretary will tell us how many of these stations there are, where they are, and how many are old stations already in existence, and how many are new stations planned under this programme.
I am quite certain that Members on both sides will agree that with the known shortage of coal, with the known fact that we are not to get that increase in coal production which we want, our only hope of getting the fuel and power we need is by using oil. The sooner we have a firm programme to that end the sooner can we see the end of this constant balance in which we are always on the point of a fuel and power disaster.
I would also like to ask what my right hon. Friend is doing about some of the auxiliary methods of production. For instance, what is he doing in regard to the development of burning peat? That has had great success in Ireland and there is a prototype station in Scotland. I believe that in Ireland there are two stations working very efficiently on the 20,000 kilowatt cycle. I hope that we shall hear more of this, because the more peat we use the more land it is possible that we can return to agricultural use.
§ Mr. Ellis Smith
Perhaps I can tell the hon. and gallant Member that 20 years ago at Metropolitan-Vickers I worked on machinery which was exported to Russia for the manufacture of electricity from peat.
§ Colonel Crosthwaite-Eyre
I am obliged to the hon. Member. I have seen some very interesting pictures in "The Times" today. I hope that we may hear something more about that.
There is another point which I wish to bring to the attention of the House. Every time we increase electrical production we are, by very inference, increasing the peak load. The more there 2555 is a slow increase in what might be called the constant-hour demand so there is a much more rapid and high peak. That seems to be the experience, particularly in the last few years. I am not one of those who feel that one should try to iron out the peak by a differential tariff. I am sure that that would fall on the shoulders of the domestic consumer in particular. We should, however, try to give a real lead to industry to flatten out this peak.
My hon. Friend the Member for Kidderminster (Mr. Nabarro) has spoken on this many times, and I know that the right hon. Gentleman has also spoken on it, but we are doing far too little to that end. All these suggestions of, say, pre-heating factories by electricity during the night and so on are not being followed up and used as they could be with a little more imagination, if one might say so, on the part of those responsible for our fuel policy.
A lot has been said about oil today, but we shall only get success in an oil policy if we can balance the output from the oil refineries. It is no good asking the refineries in this country to produce the oil which we want if they cannot sell the petrol they have to produce in order to get the oil now demanded by this House. The incidence of our system of taxation is preventing the use of that petrol. I think that there is an overwhelming case for reducing the burden of the petrol tax to enable us to get the oil we want in bulk for consumption, particularly by the new proposed electricity stations. Perhaps from what I, and certainly from what other hon. Members speaking earlier, have said, it will appear that never has there been a clearer case for having a concise, studied and co-ordinated fuel policy than at the present time.
It is no good saying that we should spend more millions on one aspect of fuel or less on another. Until the thing is co-ordinated we are really guessing, and guessing in the dark. Until we can have the fuel supplied by coal, oil, gas and electricity all co-ordinated to one end, I suggest that all we can do is to move from one crisis to another and to have debates rather like the one we have had today in which many people have put forward individual problems and their immediate need for solution. Everyone 2556 is interested in this problem, but until we get a national policy we shall not succeed. If this debate has done nothing else, I hope that it will have convinced my right hon. Friend that he has the full will and co-operation of every hon. Member in promoting success to the electricity and gas industries through this Bill. He must, however, see that it is a true means to prevent the bugbear that has hung over us all, for all too long, of an annual fuel crisis.
§ 2.10 p.m.
§ Mr. Arthur Holt (Bolton, West)
I follow the hon. and gallant Member for New Forest (Colonel Crosthwaite-Eyre) with pleasure. I think that he should be called "learned Member" also, because he speaks with very great authority on the use of fuel and a whole lot of things in connection with it. Nevertheless, I should like to comment on one or two things which he said before my voice, which had almost gone yesterday, goes again.
One major point which the hon. and gallant Member made was: how much electricity or gas do we want, and secondly, how much can we afford? He said that after an attack on the hon. Member for Enfield, East (Mr. Ernest Davies) on his ideas for planning. As so often happens in the speeches of engineers and technicians who understand the details of these things, it is very difficult for them to keep their fingers out of this direct wish to plan. I should like to offer one or two comments on that particular aspect.
For instance, he said that if the oil is not available in the estuaries for these electricity power stations, then there would be a considerable shortage of coal and the plan could not be carried out. I tried to draw attention in the House the other day to the fact that there are, of course, at a price and under certain adverse conditions, sources of fuel outside this country. I think that one of the unfortunate difficulties which we face at the moment is our quite inadequate lack of information when discussing this subject. It is undoubtedly true that some of our pits are producing coal at a very great loss. Although the Continental prices of coal are very much more than the average price as put out by the National Coal Board, it is probably true, if we take the worst cases, that we could 2557 buy coal cheaper from the Continent than we could produce it in the worst pits here.
I think we should know, before putting up so many power stations how much coal or oil would be required. That is proper information to have. What we do with that information afterwards is another matter, and there I do not go all the way with the hon. Member for Enfield, East. He is apparently concerned with making people use electric fires instead of going to greyhound racing tracks. I remember a debate, a year ago, on industrial development and productivity, and I think that the right hon. Member for Blyth (Mr. Robens) had been remarking that we should produce the kind of things which our customers abroad wanted and not ice cream-making machinery. We should deliver to them power plants and machinery for irrigation, and so on.
I chipped in to say that if customers abroad wanted ice cream-making machines and not generators, what concern was that of ours, and why should we give them generators? Surely we should give them what they want. I understand the feeling of many hon. Members of the official Opposition when people seem to make a very bad choice, but the alternative is obvious. If we do not give countries abroad what they want. they will not buy from us.
Many of the things which have already been said by the hon. Member for Wolverhampton. South-West (Mr. Powell) and others are very true, and the Government must give consideration to the question of how they are to conduct the capital expansion programme. Are they to do it on a central planning basis, or are they to allow it to be governed by the forces of the free market? It is difficult to get information on these matters.
To those who are wedded to the idea of doing it through a centrally controlled system, I recommend them to read an article in "Lloyds Bank Review," for July, by Professor Devons, entitled. "Statistics as a basis for policy." There are many quotations which one could make from it, but I will try to be brief. He points out that there is very little information given about the Capital Issues Committee and the Investment 2558 Programme Committee, and that little has been published about the proceedings and the criteria which they use in arriving at their decisions. He goes on to say:I suspect that the allocation of investment is much better thought of as a result of political administrative struggles and pressures than as a rational choice.We have to realise that whatever we do in this respect there are risks. I think that if the Electricity Authority had to go to the capital market, just like any other industry, it would be a very good thing.
§ Mr. Nabarro
They go to the market at present. Is the hon. Gentleman suggesting that they should be placed in the same position as free enterprise concerns, and have no advantage of Treasury guarantee, such as is proposed in this Bill?
§ Mr. Holt
That does not mean to say that if they go into the market to get their money they probably would not get it. Obviously, they could get all they wanted—at a price. I am not so keen in urging them to do that on a large scale. I think that particularly in the case of electricity and gas, and even coal, in present circumstances with the prices which could be obtained, those undertakings could themselves provide all the money they require to carry out their investment programmes over the next 10 years. I do not think there is any doubt about that.
We have, of course, to face the fact that that would put up the price. The hon. Member for Kidderminster (Mr. Nabarro) is very keen on fuel economy, and so am I. The Economic Secretary said yesterday—and no doubt the hon. Member for Kidderminster heard him say it—on this question of fuel saving, that it ought to be worth while for people in industry to buy new machinery to carry out fuel saving because they would get their money back in four years. In many instances, that is not the case. Often, when one looks at a perfectly good scheme into which one would like to put money, one finds that one cannot get 2559 one's money back for perhaps more than 20 years.
There are many things in industry on which one can get one's money back in 10 years or less. That is why so many of the plans for fuel economy are not carried out. If fuel were dearer then these schemes would become more attractive. I think it would be in the country's interest if coal, to begin with, were made more dear, which would have the effect of putting up the price of electricity and gas. We should get better ultilisation of our resources, and I do not think that in the end it would make probably a half-pennyworth of difference to the ultimate costs of a large range of our products. I think that the country could afford it.
The alternative, if we do not do that is to have a fuel policy in which the Minister of Fuel and Power or some other body decides that we must not use electric stoves for space heating or immersion heaters and issues a direction. I therefore believe that we have to get back to a pricing policy—a free market pricing policy, if that is preferred—and that if there is any difficulty in getting coal supplies, we must get down to the question of the cost in some of our pits. If we can buy coal from abroad cheaper than from those high cost pits, we must certainly do so and not consider that it is against the national interest so to do.
I hope that in the course of the next few months the Government will do one of two things. They should bring to the light of day the Investment Programme Committee and all its doings and let the House discuss it. It would be an interesting discussion, but probably still rather futile. We shall not get anywhere until the nationalised industries are sent to the money market for their money, in the same way as other industries—
§ 2.22 p.m.
§ Mr. B. T. Parkin (Paddington, North)
I hope I heard the representative of the Liberal Party aright when the hon. Member for Bolton, West (Mr. Holt) said that he seriously advocated that in certain circumstances it should be recognised that the sale of coal was such a profitable proposition that that industry and other nationalised industries should be able to provide for their own requirements out of the profits that they could extract from the community. That is an important pronouncement on the part of the hon. Member's party and it will have some little attention among the electorate if it is seriously advocated at a later time. The hon. Member will, perhaps, forgive if I do not follow him too closely in his examination of the Bill.
I expected, in the first place, when this matter came before the House, that a few people would turn up to pay their tributes and hand in their bouquets to these industries and to say how brilliantly they had been organised in the last few years and how important it was that this little Bill should go through. I should not have thought it necessary to add anything to those remarks. But what brought me here was the report that we were to have, in support of an Amendment which appeared on the Order Paper, another display of new thinking from the party opposite. I am a little disappointed that some of the signatories of the Amendment have not yet put in an appearance, and I hope that they will yet find time to come in to tell the House exactly what they have in mind.
I followed closely the speech of the hon. Member for New Forest (Colonel Crosthwaite-Eyre), who, I thought, might be associated with that move. His enthusiasm for the Bill mounted as his speech developed. His first few remarks were, of course, brief and consisted of scolding hon. Members on this side for not having any authority in matters of finance.
§ Mr. H. Nicholls
I note the hon. Member's interest in the signatories to the Amendment. The debate started at 11 o'clock. At what time did the hon. Member come in to check who was here?
§ Mr. Nicholls
Oh, no. I was here at the beginning of the debate, at 11 o'clock. I first noticed the hon. Member about three-quarters of an hour ago.
§ Mr. Parkin
I was addressing my remarks to the Amendment, Mr. Deputy-Speaker, and was about to apologise to the noble Lord the Member for Dorset. South (Viscount Hinchingbrooke) for missing part of his speech; but I have not missed any other speeches on the Amendment.
I was hoping that something constructive and positive would be put forward today from the rebels on the back benches opposite which would be an alternative to the policy of the Treasury Bench, of which, apparently, we are today to remain in ignorance. I gather that the Treasury does not intend to fortify the Ministry of Fuel and Power with its guidance and support on the matters that we are discussing.
It would appear, after all, that that was not the purpose of the Amendment which has been moved. It would appear that it was an attempt to make a few speeches, to discredit the planners in the old way and to make a plea for complete freedom of investment in what is conveniently called the private sector of industry. That is an important point of view, but I do not think it was pressed very hard by hon. Members who put their names to the Amendment.
The hon. Member for Bristol, North-West (Sir G. Braithwaite) made a few remarks about roads before he went off, as he said, to reserve his position; but not much was said about the alternative attractions in the economy today which would be drawing away capital from the project outlined in the Bill. Our difficulty is that hon. Members opposite do not have a new programme, they do not have a new philosophy, and their attitude of mind is still suitable only for an economy which has a large surplus which it cannot absorb. It is based on the fact that there must be a lot of free investment, a great deal of which will be lost through inefficiency.
2562 There was a time when hon. Members opposite had that enormous surplus, and it did not matter very much whether investment was planned or not. They were very glad not to exaggerate the booms and slumps which their economy naturally produced, because a few healthy bankruptcies could bleed the body economic in a suitable way.
§ Mr. Parkin
That is the sort of thing I expected the noble Lord would have dealt with in his speech. I thought that he and his hon. Friend would have dealt in an all-party manner with the problems arising, not from the past, but from today—the problems not of an economy which had a vast surplus which it could not absorb, but of an economy which ought to be organised to use all its resources and not risk wasting money.
I thought that the noble Lord might have been able to say something about our problems after the war, when the first task was to increase the fuel and power resources of the country in order to maintain full employment. The noble Lord knows perfectly well that before the war it was impossible to keep everybody at work because the fuel and power industries could not have kept the machines turning over. That is why, in those days, we used to be asked to buy electric shavers and toasters and anything else which would use up electricity, because men and machines were standing idle.
§ Mr. Parkin
Do hon. Members opposite foresee a recurrence of the situation in which the economy has more surplus than it can absorb?
§ Mr. Douglas Glover (Ormskirk)
Does the hon. Member agree that the figure of coal production in 1938 was 238 million tons? Would it not be a very good thing if the mines were producing the same quantity today?
§ Mr. Parkin
I do not think the hon. Member will dispute that before the war the country's fuel and power resources—they have increased in efficiency as a result of electricity developments—were not sufficient to maintain the industrial workers in full employment; they could 2563 not have kept the factories going. [Interruption.] Does the hon. Member for Kidderminster (Mr. Nabarro) wish to say something?
§ Mr. Parkin
I hope to get that on the record.
A few things might have been said by hon. Members opposite about the competition in the economy today for surplus capital. After all, hon. Members have not been very good at fulfilling their prophecies, because they claim that if Income Tax were reduced they and their friends would save a lot of money and invest it where it was wanted. That one at least has not come off. We should like to know how they feel.
I am sorry that the hon. and gallant Member for New Forest is not in his place at the moment, because I wanted to ask him a question about the attitude of the newspaper with which he is closely associated. The "Financial Times Industrial Review" recently declared that 1955 would be a boom year for hire-purchase. The money is available, but is hire-purchase the right way to re-equip?
Do hon. Members opposite really wish to stick to their view—I hope that if they do that they will say so, because this is the kind of debate that gives them the opportunity—that it does not matter what kind of machine is being bought, whether it is something to produce more electricity, for re-equipment of a small factory, a candy floss machine or a "What the butler saw" machine, it should be bought on hire-purchase without any reference to the national interest or where the money is best invested in the national interest?
Is it wrong for Members on this side of the House to talk about the national interest when discussing the investment programme? I observe that no hon. Member on the opposite side of the House has risen to say that it is wrong. What is most worrying hon. Members opposite? We had a very fine example of it this morning in the "Financial Times," which let the cat out of the bag as to what is really worrying hon. Members. That paper says it is the success of their own private building programme. It gives a great deal of space—
§ Mr. Parkin
May I respectfully make this point? I was just about to explain my position. During the debate one hon. Member discussed expenditure on roads as something which was quite relevant to the Bill and the Amendment, and I was dealing with the problem of investment in industry generally, a subject which is introduced in one of the Amendments because this Bill seeks to tie up a large section of the savings of the community in certain nationalised industries.
One hon. Member, in support of the Bill, concentrated his remarks on the need for expenditure on roads as an alternative, and I thought that I should be in order if I referred to another alternative, namely, the housing programme, which certainly concerns hon. Members opposite, because one of their financial mouthpieces this morning gave a lot of space to this subject when dealing with the capital available for investment.
We are told by a political correspondent in this paper that the boom in private building has exceeded all official estimates. It says that the rate of starting private house building has greatly exceeded the rate of completion, and adds:That is above the Government's long-term aim … The Government would, in fact, be glad to see the housing programme settled down…That, of course, is entirely relevant to the problems with which the Treasury have to deal, even if a representative is not willing to come, here and discuss the matter.
§ Mr. Parkin
The "Financial Times" says that the striking growth of private building has taken the Government by surprise.The Government is not seeking, formally, to discourage local authorities from building more houses, but does believe that the worst 2565 of the post-war shortage of housing has now been overcome … A certain tapering off of the council house programme has already been apparent.This, apparently, is an argument to encourage hon. Members opposite not to be alarmed. It is also an indication that if the increase in private building is alarming them, the position can be offset by measures to discourage local authorities from pursuing their programme of building houses to let. I feel very deeply on that subject, representing, as I do, a constituency greatly concerned with building houses to let. The "Financial Times'' gives a headline to this:Slum clearance, Balanced by cuts.
§ Mr. Angus Maude (Ealing, South)
On a point of order. Would it be in order for hon. Members on this side of the House subsequently to discuss the housing record of the last Government?
§ Mr. Speaker
I was about to intervene that the hon. Member was going a little wide of the Amendment which is before the House. It is true that the Amendment draws attention to other projects besides that of gas and electricity, but that would not support an argument devoted, as the hon. Member seems to be devoting his, to the question of housing. It is in order to argue that there are many other projects deserving of attention, but the debate should not be twisted into a debate on a subject other than the main one, which is gas and electricity.
§ Mr. Parkin
I am much obliged. Mr. Speaker, for the encouragement that I feel is in your Ruling, because I would not dream of twisting the debate to one of housing. I was making quotations from the newspaper and drawing the conclusion from what has happened. If there is another day perhaps hon. Gentlemen opposite may tell us what are their views about hire-purchase.
The point about this article in the "Financial Times" is that it draws a distinction between controlled investment in housing through local authorities and the uncontrolled investment in housing through the indiscriminate granting of licences to provide builders for any sort of houses, anywhere, irrespective of for whom they are intended, by whom they are controlled and by whom they are financed. It is 2566 impossible to estimate how much of the national resources by the end of the year will have been tied up in uncontrolled housing programmes.
§ 2.38 p.m.
§ Mr. Gerald Nabarro (Kidderminster)
I hope I may have the opportunity of bringing this debate back to the subject matter of the Bill, namely, the borrowing powers of the British Electricity Authority, the Gas Council and the gas boards. While I have one or two comments to make upon the proposals in this short but financially very important Bill, my criticism will not perhaps go as deep as that of some of my hon. Friends, particularly in the fuel and power aspects of the proposals.
Let me first say what I concede to be the rôle of these two very important nationalised industries. In the case of the gas industry, it is surely that it should recognise as a first requirement of its policy that it is a two-fuel industry; that it is responsible for the production of adequate town's gas supply for industrial and domestic purposes; and also responsible for the production of large quantities of smokeless fuel as a very important contribution not only to our national economy but also to health requirements, notably in the heavily built-up industrialised and urban areas.
The capital investment envisaged in this Bill should, in my view continue to accelerate progress towards the creation of a two-fuel industry. In the case of the very large capital investment proposed for the electricity industry, namely, additional borrowing powers of £700 million, may I express that purpose metaphorically, it is to "redress the balance of power."
I have no criticism at all of these two very worthy objectives, but from the financial viewpoint I say that the investments made by these nationalised undertakings, year by year, must conform to twin desiderata. They are, first, that every £1 million invested in any of the nationalised fuel and power industries must lead to the maximum and earliest possible increased output of fuel and/or power. Secondly that every £1 million invested in any of the fuel and power industries must lead to the greatest possible conservation of coal. Those are 2567 the twin desiderata. They are the principles which should guide the development of these nationalised industries. I believe that these views will be found unexceptionable in all parts of the House, although they have not been expressed in those terms, in this debate.
There are one or two important and valid points of criticism in connection with the proposals in this Bill. I am not satisfied about the Parliamentary accountability of the finances of the nationalised industries. I do not seek to clamp on the nationalised industries an onerous or rigorous day-to-day, week-to-week, month-to-month, control of their executive and administrative affairs, but I desire to ensure that very large sums of money voted by this House as borrowing powers for capital investment purposes, are properly and efficiently used by those nationalised industries and that there is a regular and periodical Parliamentary review of what they are doing.
I am asking the Prime Minister next Tuesday whether he will now make a statement with regard to the proposals of the Select Committee on Nationalised Industries, for the last Report of that Committee was published more than a year ago. If we go through the next five years, as we have gone through the last five in connection with the nationalised fuel and power industries, there will continue to be a substantial waste of the money resources which this House votes in respect of borrowing powers for capital investment, within those industries.
§ Mr. Glenvil Hall (Colne Valley)
The hon. Member said that this House voted large or vast sums to these nationalised industries. Could he indicate what large or vast sums the House has voted to the two industries which we are now discussing?
§ Mr. Nabarro
If the right hon. Gentleman will refer to the appropriate nationalisation statutes, he will find the details. We are seeking to vote increased borrowing powers for capital investment purposes, and the two considerations are tantamount to exactly the same thing.
I want more regular Parliamentary accountability for, and scrutiny over, the programmes of nationalised industries and I want parity of conditions between 2568 private enterprise industry and nationalised industry in access to the money market. My right hon. Friend the Minister of Fuel and Power—and I say these words very slowly and with great deliberation—has decided on a policy of free and unfettered competition between the various fuel and power industries. On occasion I have quarrelled with that point of view, because of the shortage of coal and for not other reason, but if there is to be free and unfettered competition between those industries there must be parity of conditions upon which those industries raise their money for capital investment.
The Bill requires an additional borrowing power sanction £900 million. It is subject to Treasury guarantee. Another important fuel and power industry—the oil industry—which is privately owned, has no Treasury guarantee attached to any capital sums which it may seek to borrow on the market. If there is to be free competition between the nationalised industries, I aver that there should be conditions of parity as between them in the way they raise money. That would mean elimination of Treasury guarantee for the nationalised industries. I maintain that would not lead to any increase in costs.
§ Mr. Noel-Baker
Would the hon. Member agree that the oil companies should also dispose of their profits and surpluses as the nationalised industries do?
§ Mr. Nabarro
The oil companies are very conservative in their dividend policy.
I pass to the most important practical consideration, which I thought was very carefully and cogently explained by my hon. and gallant Friend the Member for New Forest (Colonel Crosthwaite-Eyre)—that is, the coal production position. There is no doubt that the coal production position of this country is static. Output in 1952 was 225 million tons, in 1953 it was 224 million tons, and this year, pro rata to a full year, it will be approximately 225 million tons. There is not much prospect of any more. I am sorry to be depressing, but I do not believe that we shall raise much more coal in the next few years.
My right hon. Friend has put a very rosy interpretation on the coal equivalent of the capital investment proposals in this 2569 Bill. He has said that, after allowing for the increased efficiency of the gas and electricity industries between now and 1960, the net extra demand for coal will be about 14 million tons per annum by 1960.
§ Sir Victor Raikes (Liverpool, Garston)
Is it not a fact that the figures given included open-cast as well as deep-mined coal, and we assume that open-cast coal mining will have ceased by 1960?
§ Mr. Nabarro
My hon. Friend is extremely well-informed and is absolutely correct. I was not going into too meticulous detail about the coal position because I felt that I might incur your displeasure, Mr. Speaker.
My right hon. Friend the Minister of Fuel and Power has suggested that the shortage of coal for the gas and electricity industries annually, to meet the investment programme envisaged in this Bill will be 14 million tons per annum by 1960, but no regard was paid to the position of the steel industry, which will also need a great deal more coal. Neither was regard paid to the need for more coal in British industry generally and to the expanding Conservative Party housing programme, which in the course of the next six years will produce approximately 2 million more houses and therefore a substantial further additional demand for coal.
The Ridley Report put the facts quite clearly and so did the published evidence to that Committee of the Federation of British Industries. The Ridley Committee did not say and the Federation did not say that the shortage of coal will be only about 14 million tons per annum by 1960. The Federation of British Industries put it as high as 50 million tons and the Ridley Committee's estimate of the shortage per annum, making no allowance for increased exports, was 25 million to 35 million tons per annum, by 1960.
The capital investment proposals contained in the Bill are wholly insupportable by the prospect of any increase in our national coal production, deep-mined and open-cast combined. We are driven back to measures of restriction If we are to implement the proposals of the Bill we must have full regard to the consideration of very much greater efficiency on The part of industry, private and nationalised alike, and of householders in 2570 the way in which they use their coal supplies.
We are driven back to considerations of that kind, but with emphasis on greater efficiency, and I want to refer to the intervention which I made in the speech of the right hon. Member for Derby, South (Mr. Noel-Baker). It is true, of course, that by adding a large new mega-wattage annually from new and additional generating capacity, one saves coal, by reference to a part of the old generating capacity that is thereby replaced, and by the fact that the additional capacity is of the most modern character and therefore requires less coal to be consumed, per unit of electricity generated.
What the right hon. Gentleman failed to observe in the course of his speech—perhaps he failed to observe it for brevity—were the statistics printed on page 213 of Appendix 20 of the Annual Report of the British Electricity Authority for the year ended 31st March, 1953. They make it quite clear that, notwithstanding the additional megawattage required year by year in our electricity economy, we are still in the position of "a dog chasing its own tail." Although the additional megawattage is being provided, still many old and inefficient power stations are left in use.
They are left in use for the very reasons given by my noble Friend the hon. Member for Dorset, South (Viscount Hinchingbrooke), because of the gigantic Press and publicity campaigns which urge everyone to use more and more electricity for every conceivable purpose, for the electric iron, the electric fire, electric blanket, and electric water heaters, and so on, which is only an invitation for the profligate and wasteful use of coal, notably at peak hours. One cannot encourage the installation of domestic appliances of those types without that encouragement carrying in its train the use of those appliances at peak hours. They are rarely switched off at peak hours, and there is thus much consequential waste of coal by bringing into short term use many inefficient old power stations.
I have one further major point to which to make reference. My right hon. Friend is absolutely correct, and I feel sure he is supported by every hon. Member on this side of the House, in seeking to meet the marginal shortage of coal—for it 2571 is a marginal shortage—year by year by accelerating the use of oil for industrial purposes. My right hon. Friend related the most interesting case of the March-wood power station, close to the Fawley oil refinery on Southampton Water, in the constituency of my hon. and gallant Friend the Member for New Forest (Colonel Crosthwaite-Eyre). My right hon. Friend and my hon. and gallant Friend drew attention to the fact that it was economical so to do in estuarial waters. But that is not quite correct; it is not only economical so to do in estuarial waters, but it is economical so to do wherever there are provisions and facilities available for cheap transportation of fuel oil from the port of discharge.
I give my right hon. Friend an example which he might carry in mind, as for many years, he was Parliamentary Private Secretary to Mr. Stanley Baldwin when he was Prime Minister and I have the good fortune to have inherited a large part of the constituency of the late Mr. Stanley Baldwin. My right hon. Friend will recall that there is a large power station at Stourport-on-Severn, at the highest point of the Severn, where barges can come up from Avonmouth into which ocean-going tankers proceed for discharge. The barges travel up the Severn to the large Midland storage depots of the Regent Oil Co., which is a few hundred yards from the Stourport-onSevern generating station. That station has a capacity of 300,000 kilowatts installed and uses approximately 500,000 tons of coal per annum. Out of that 500,000 tons per annum, 100,000 tons are transported to the power station in little "thimblefuls" by lorries—which is possibly the most extravagant and uneconomical method of transporting coal—instead of by the use of the canals on which the Stourport-on-Severn generating station is situated.
I thought my right hon. Friend was a little euphemistic when he said that estuarial waters only provide economic facilities for using dual burning of coal and oil in our major power stations. I want consideration to be given to any power station to which access is available by cheap barge and water transport, for I believe that by using oil burning power stations and not necessarily only on estuarial waters, we can make a major 2572 contribution towards solving this acute coal problem.
I shall support this Bill. Probably in Committee I shall ask that we may consider reducing the sums voted so that there may be more regular Parliamentary accountability and scrutiny as to how these large sums of capital are to be spent. It is essential that we in this House shall have full regard, at regular intervals, to the important capital investment requirements of these two major fuel and power industries, without which an expanding industrial economy and rising standard of life in Britain cannot be sustained.
§ 2.56 p.m.
§ Mr. Norman Smith (Nottingham, South)
Hon. Members opposite have pursued a rearguard action in their revolt directed against the main ingredient of Socialism in this Conservative Bill. The hon. Member for Kidderminster (Mr. Nabarro) in particular made a very strong plea that nationalised industries should go into the market on the same terms as oil companies, but he cannot have that. That is impossible in the nature of our economy and in the age in which we live.
The national output must go in one of four directions—consumption, new capital, defence, or exports. No Government, in the condition of Great Britain in this post-war epoch, dare leave the magnitude and direction of exports, production or defence expenditure to the free play of private enterprise operating in the market. Therefore, in the nature of things, hon. Members opposite are doomed. They cannot have what they want. In particular, as between the nationalised concerns and the oil companies, the hon. Member for Kidderminster cannot have the parity for which he asks. There must be the Treasury guarantee in the case of the nationalised industries which it would be wrong to give in the case of the oil companies. I will tell the hon. Member why. The nationalised industries are seeking only to serve the community, but the oil companies are seeking also to make a profit.
If the hon. Member wants to be convinced of the truth of what I say and to have an illustration of the difference between the two, let him put himself in the position of someone who, last year, on the advice of his stockbroker, bought oil shares—I could name three or four 2573 concerns—and look at the price today. The price is very much up on the Stock Exchange. The nationalised industry does not seek to enrich absentee investors who, in their dealings with the Stock Exchange, are in identically the same position as the working men who vote for me and study the form of race horses.
The noble Lord the hon. Member for Dorset, South (Viscount Hinchingbrooke) made a very massive contribution to the debate. I felt sorry for him. He has many qualities and attributes that commend him to this House, but his is a lost cause. In particular, he wanted to get rid of the Capital Issues Committee. He wants investment to depend not upon the fiat of a Government or the arbitrary decision of a Committee put up by the Government to adjudicate on the respective merits of different directions of investment. The noble Lord wants it left to the free play of the market, as determined by the respective returns upon different sorts of investment. I am sorry for him. He cannot have it. Supposing what he wants had been operated in this country from V.J. day onwards, does he really think that the country would be in the comparatively healthy position which it is now in? Does he think there would be the buoyancy of output, that we should be getting the right kind of output? I wish to put this to him—
§ Mr. Smith
It is fair to say, from my point of view, being concerned with representing the industrial working class, that the standard of living of our working class here is far higher than that of the working people in Western Germany. Moreover, we have no unemployment as they have.
When the noble Lord was speaking a couple of hours ago, I could not reconcile the views which he was expressing with his known gentleness of attitude and kindliness of disposition. All the things he was pleading for would mean that the people who put me in this House would once more be lining up at the Employment Exchange—[HON. MEMBERS: "Rubbish."]—that is what it comes down to. The noble Lord wants the direction of investment in fuel and power and everything else to depend upon the profitability of investment and the tempta 2574 tion to the individual to put up his money for the investment. Does the noble Lord think that the gentleman in Throgmorton Street knows best? There is a much better case for saying that the gentleman in Whitehall knows best, than for saying that.
The noble Lord complained, rather bitterly, I thought, that in these nationalised industries there is a much larger proportion of investment from outside—that means from the money market under Treasury guarantee—than from inside, which means putting a levy on retail prices and making the retail consumer pay, not only for the coal or whatever he is consuming also but for the mining machinery of the future, which he will never have. It will never accrue to him; he will only get the usufruct of it, in common with everyone else.
I believe that the experience of my lifetime has proved beyond a peradventure that the gentleman in Whitehall does know better than the gentleman who frequents the coffee houses of Throgmorton Street—
§ Mr. F. A. Burden (Gillingham)rose—
§ Mr. Smith
No, I shall not give way to the hon. Member for Gillingham (Mr. Burden), who has only just come into the House; he has been absent all day. I wish it to go on record that he has not been present in the debate.
After all, experience speaks much more eloquently than words. After the First World War those who held the views which are held by the noble Lord had their way in the direction of capital Investment. It was left to capitalist enterprise in the market. After the Second World War we did the sort of thing which the Parliamentary Secretary will no doubt defend when he winds up the debate. After the First World War there were 20 years of unemployment, trade depression and all the other misery of that period. After the Second World War a Tory Government, seeing that the nationalised industries get a priority on Treasury guarantee as public services, are able to boast that there is full employment and that everything is prosperous. The prosperity of this country today is a direct consequence of what we on this side did in relation to this matter. 2575 Everyone who came out of the First World War knows it.
I wish to finish with a fairly simple analogy on the question of the gentleman in Whitehall knowing best, as he undoubtedly does. [HON. MEMBERS: "Oh."] Those who fought in the First World War did so under static conditions. There was a long line from the Belgian coast to the Swiss frontier. I was in a battery. I knew roughly what was going on in my battery, a little about the batteries to the right and left and still less about the battalion in front of us. We knew nothing of what was going on all along the rest of the line, and it would have been fantastic for any battery or battalion commander to have said, "I know the direction in which to move to win the war." That must be for the G.H.Q., with a knowledge of what is going on all along the line.
The day has gone for ever when the direction of capital investment will be determined by the kind of considerations advocated today by the hon. Members for Wolverhampton, South-West (Mr. Powell), Dorset, South and Kidderminster, who I noticed, in their several pleas, were asking that things should be done not only to suit their party but also to discredit the nationalised industries.
The hon. Member for Wolverhampton, South-West put up an extremely clever plea—I know he has more brains in his little finger than I have in my whole head. He put up the diabolically clever plea that there should be dearer coal, a plea reinforced in other quarters on the benches opposite. Their arguments will come to nothing. This Socialist Bill of the Tory Party is going through. We are winning. It is our ideas that go ahead, and hon. Members opposite are but the spokesmen of a decayed and backward civilisation.
§ 3.5 p.m.
§ Mr. Arthur Palmer (Cleveland)
For a Friday, we have had a stimulating debate. There has been very considerable difference of emphasis between the speakers on both sides of the House; and after listening to my hon. Friend the Member for Nottingham, South (Mr. Norman Smith) it is evident that there are, on occasions, even differences of subject. But, taking my right hon. and hon. Friends generally, I think that I shall be right 2576 if I say that we regard this Bill as a necessary and inevitable Measure in the natural progress of the British gas and electricity industries.
If the Amendment is to be taken as it is worded it is misguided and very ill-informed. I hope that the Parliamentary Secretary and his right hon. Friend will look at it with care, because after all, according to its wording, it represents a direct censure upon them. The names of the right hon. Gentleman and of his Parliamentary Secretary, I take it, are both on the Bill, and the Amendment asks that the House should not give a Second Reading to the Bill. For that reason it seems to me that both the Parliamentary Secretary and the right hon. Gentleman should take the Amendment seriously.
But whether they take it seriously or not, hon. Members on this side of the House certainly see this Amendment for what it really is. It aims at discrediting and embarrassing nationalisation. That is the principal aim. It aims at pretending that nationalisation is wasteful of capital resources, inefficient and, of course, quite unlike go-ahead, flexible free enterprise.
I do not know just how far those hon. Members whose names are attached to the Amendment are connected with that other group in the Conservative Party responsible for the pamphlet, "Change is our Ally." I will give the authors of it credit by saying that it is well written, but the ideas contained in it are among some of the most reactionary which we have heard from the Conservative Party for some years. I think that the House and the country should take note of the last paragraph on page 67, which reads:In practice, however, it may prove that without commercial autonomy of smaller units, than the electricity areas and the gas boards the full benefits of informed user choice cannot be obtained.So far, so good, but then it goes on:In that case, if it arose, the question of reorganising the industries—or even of denationalisation—would come to the fore.We have a right to ask from this side of the House whether the nationalisation of fuel and power industries remains the policy of Her Majesty's Government. We may be told that this is an unofficial pamphlet, but I think that it is worth while putting that question to the Parliamentary Secretary. I think that he will 2577 be saved, or rather his right hon. Friend will be saved, from too much embarrassment because, so far as I can see, his fuel and power rebels are divided into three groups. There are the sponsors of the Amendment, there are those responsible for the pamphlet, and then we have the hon. Member for Kidderminster (Mr. Nabarro), who is in a camp entirely by himself.
Hon. Members on this side of the House regret the implied challenge to the principle of nationalisation in the public utility field. We would like to think that nationalisation in the public utility field was now common ground between hon. Members on both sides of the House. Then we might be able in a rational frame of mind to argue about changes in organisation and policy according to experience, and it would be an excellent thing if we could do that.
In that connection, I think I am speaking for my right hon. and hon. Friends generally when I say that we welcome the inquiry which is to be carried out now, after about seven years' experience, into the organisation of the British Electricity Authority and the area boards. We do not think that that inquiry in any sense implies censure on the publicly-owned electricity supply industry. We have always said, with my right hon. Friend the Member for Lewisham, South (Mr. H. Morrison), that it would be a good thing if, from time to time, there was a check on the working out of nationalisation.
§ Mr. Ellis Smith
Some of us have qualifications about that. It should be done in Parliamentary circles.
§ Mr. Palmer
I listened carefully to my hon. Friend's speech. I know that he takes that point of view, but I am probably speaking for other representative schools of opinion in the Labour Party.
I wish to ask whether it will be possible for the trade unions and the staff associations in the electricity industry to make representations to that committee of inquiry? Obviously, as they have had day-to-day experience of the working out of the organisation, they would like to put their point of view.
We think that it is reasonable to question the Minister on all aspects of electricity and gas policy before giving assent to the Bill. That is the obvious 2578 constitutional duty of the House; but to refuse, as the Amendment would appear to refuse, new capital approval in a stubborn fashion seems to be negative and irresponsible. What is it that we all want from British industry, whatever our views about ownership may be?
Whether we are individualists, like the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) or collectivists like myself, whether we think that the Government are very nearly perfect, or whether we pray every day for a new Labour Government as soon as possible, there is as common ground between us the view that the country must have vastly increased production. It must have increased effort and efficiency in industry so that we can continue to live as a nation in a world which is becoming increasingly competitive.
It cannot be seriously doubted that increased productivity means that we must have more power from the basic industries, such as electricity and gas. It is no use saying that we must have more electricity in industry, more labour-saving appliances in the home, more rural electrification for increased agricultural productivity, if new capital is not made available for the provision of extra power stations. The one does not make any kind of sense without the other. The same argument applies, of course, not only to generating stations but to transmission lines and distribution systems.
For obvious reasons, my remarks are mainly about electricity. I know more about that industry than about the gas industry. I do not think that, in principle, there is any objection to Members speaking occasionally on subjects which they understand. In any case, the electricity industry is usually far more under fire from public critics than the gas industry. The view is sometimes expressed that every time a new power station is brought into commission here is yet another instrument for using precious coal wastefully. I have heard that argument put, sometimes in a fairly well informed fashion, but more often in a most misinformed fashion.
What are the facts? The Minister supplied the answer in the House on 21st June when he told me that since vesting date 12 million tons of coal had been saved in the electricity industry and 2 million tons had been saved in the gas 2579 industry through increased efficiency. In his answer to a supplementary question the Minister made the point that nationalisation could not take too much credit for the saving because there were even more striking economies before the war when the industries were part-privately owned.
That may be the Minister's contention, but it is by no means the whole story. During the war years the efficiency of generating stations and gas plants fell back. The nationalised industries which took over two or three years after the war have had to take up the slack left by the inevitable neglect of the war years.
But since the latest new British Electricity Authority power stations have been coming into operation we have had the most rapid rise in efficiency in the history of the electricity supply industry. The efficiency curve has been rising over the last 20 or 30 years, but at present it is going up extremely steeply indeed. Taking the Minister's argument at its face value, it would be true to say that since about 1920 the gas industry has required 12 per cent. less fuel per unit of output and the electricity supply industry 56 per cent. less fuel per unit of output. The present average thermal efficiency of British power stations is about 23 per cent. and the thermal efficiency of the best stations about 31 per cent.; it is expected that by 1960 the average thermal efficiency of the best power stations will be 33–35 per cent.
I give these figures to show that, so far from wasting capital, the electrical power industry in particular is one of the finest investments possessed by the nation. Not only does it relieve human beings from darkness, dirt and needless physical toil, but in present circumstances is a means of conserving scarce coal resources.
The other day I worked it out that in the last five or six years the gas and electricity industries have saved on an annual basis, through increased efficiency, an amount of coal equal to the recent average increase in the output of the coal mining industry. My figure is, of course, subject to check, and I appreciate that it is a relative statement only. In the absolute sense, power stations and gas works, of course, go on using more and more coal each year, but that is only another way of saying that coal produc 2580 tion is not large enough to meet the needs of the nation with our rising population and our hopes still of an increasing standard of life.
To get matters in correct perspective, we should remember that the electricity and gas industries do not absorb energy in the main for their own purposes—
§ Mr. Geoffrey Lloyd
Before the hon. Member leaves the question of fuel efficiency in these industries, might I point out that the only reason for my intervention on another occasion was to stop the propagation of the idea that fuel efficiency began when the industries were nationalised? The real point about fuel efficiency in the gas and electricity industries has been that it has been part of those industries and was started when those industries were born under private enterprise.
Perhaps I might also point out that the consumption of coal for 1960 under the programme that we are discussing will probably be some 50 million tons a year. If the industries were at the efficiency level of 1920 we should need 150 million tons a year for the electricity industry alone. By far the greatest part of the saving was realised in the time when the industry was under private enterprise.
§ Mr. Palmer
I thoroughly appreciate the Minister's argument, and I do not want to overstate my case. What I am trying to point out is that since nationalisation not only have these industries, and the electricity supply industry in particular, maintained their traditional record of technical efficiency, but, if anything, they have slightly improved upon it, particularly over the last two years since the new British electricity power stations have been coming into operation. It might have been argued that that would have happened anyhow, without nationalisation, but that is a completely hypothetical situation which history will never allow us to investigate. It was saying that we have to remember that the electricity and gas industries do not use coal or fuel in their own right; they pass their energy on for the use of industry generally.
Now I want to refer to a subject which may be a matter of controversy as between hon. Members on both sides of the House. I agree with the hon. Member 2581 for Kidderminster that, given full employment with British industry going full bore, it is likely that in the 1950s and 1960s our coal supplies will always be short. We must, therefore, look to alternative devices and fuels for salvation. We must consider everything: the harnessing of tidal power, interconnection with Europe, hydro-electric schemes; and even the use of peat, as was suggested by the hon. and gallant Member for New Forest (Colonel Crosthwaite-Eyre)—although I should like to see him working in a power station and trying to burn peat. We must also press on with nuclear energy development. It cannot be doubted that the British Electricity Authority and the Gas Council are already doing very much, but I hope that the right hon. Gentleman will make it his business to push them forward even faster.
I was glad to hear of the progress made in turning some power stations over to oil firing systems. It is important to resist the natural bias of designers and operating engineers against oil fuel. They dislike it because it is messy and expensive. There is often as much technical conservativism amongst them as is found politically upon the benches opposite. Arguments have been advanced that it is unwise, for defence reasons, to use oil fuel. I think that is the view of my right hon. Friend the Member for Derby, South (Mr. Noel-Baker), but I am sure that he will not mind if I disagree with him about it. I feel that, in the event of another war, if we could not import fuel we should lose the war anyhow.
§ Mr. Geoffrey Lloyd
I should like to point out that the power stations to which the hon. Member has just referred are turning over to a dual firing system. If necessary, they can be made to burn coal at short notice.
§ Mr. Palmer
Legislation which has either been passed or is in the last stages of being passed has the effect of placing the British Electricity Authority on a sort of probation. If it proves itself a proficient pupil of the Atomic Energy Corporation it might be allowed an atomic power station of its own, one day. That is a very bad situation, which has been brought about by a quite unnecessary piece of legislation, designed to fit the pre-conceived notions of a noble 2582 adviser of the Prime Minister and not the realities of the fuel and power situation.
I do not believe that there was ever any need to have a separate Atomic Energy Authority. The British Electricity Authority should have been given permission to build atomic power stations as part of its normal activity. I believe that two-thirds of the secrecy which surrounds the industrial use of nuclear energy could be swept away without the loss of national security. Industry, both publicly and privately owned, should be allowed to turn its natural ingenuity to the use of nuclear fuels. We want the maximum and not the minimum number of brains working on the problems of nuclear energy. That is why I dislike the syndicalist atmosphere now surrounding the Atomic Energy Authority; I appeal to the right hon. Gentleman, in the interests of fuel and power conservation in this country, to stand up strongly to his noble Friend.
Electrical development in this country is now suffering a great deal not so much at the hands of the right hon. Gentleman but at the hands of his hon. Friends, both noble and otherwise, because not only have we the noble Lord in another place, with his own independent ideas for a source of energy, but we have the Secretary of State for Scotland, who is still in this House, and who is establishing for himself a separate little electrical empire, in the South of Scotland. All this has been done on grounds of political expediency.
I would put two questions to the Parliamentary Secretary, who is to reply to this debate, about the new Scottish development, because it has a bearing on the Bill. As I understand, £70 million of the sum specified in the Bill is included on behalf of the new South of Scotland authority. If that is the case, when the transfer takes place, will there have to be a new Bill, or can the loan transfer be passed on automatically? The other question concerns the super grid, this great new way of transmitting electric power at 275,000 volts that is to go north and into Scotland. In the electricity industry quite a number of people are wondering what detailed arrangements are to be made between the new independent Scottish authority and the British 2583 Electricity Authority for control of the super grid and the original grid as well. We must remember that in approving this new loan expenditure we are approving money for the super grid.
I come to the main argument that was used by the noble Lord the Member for Dorset, South and also the hon. Member for Bristol, North-West and endorsed by the hon. Member for Kidderminster, whom I do not see in his place at the moment. It is the argument that the nationalised industries, the electricity and gas industries in this case, get their capital much too cheaply. That argument has been used a good deal by hon. Members on the opposite side of the House today.
§ Mr. Palmer
Yes, indeed, it seems, as my hon. Friend says, to have been, perhaps, the main theme of the debate as viewed from the other side.
I would remind them that the old Central Electricity Board—I think I am right in saying this, but I have had no opportunity of checking the facts and I am speaking from memory—under the 1926 Act of a Conservative Government, had a Treasury guarantee for its loan capital. So this idea is not anything new in the history of public electricity supply at least.
I think it is true that the C.E.B. did not find it necessary to invoke the Treasury guarantee, the financial circumstances at that time being what they were, but, nevertheless, there was always that Treasury guarantee power in the background. It seems curious that what the Conservatives were prepared to do in 1926 they should object, in retrospect, to a Labour Government doing in 1947. It could be said that we took some example from them.
The argument of the critics as I see it is that the loan capital for nationalised industries, for gas and electricity, should be raised at market rates without a Treasury guarantee. That would place a brake on development they argue, increase the price of the product and lower the demand for new capital. I am an engineer and not a financier, but that seems to me to be the argument as I understand 2584 it. In answer to it I would say—and I am sure I take all my hon. and right hon. Friends with me in my view—that nothing could be more fatal to the future of this country, industrial and otherwise.
The industrial history not only of Britain but of the United States of America and the nations of Western Europe shows that the development of electrical power production in particular—and it may be in smaller degree the use of gas—goes forward in a straight-line relationship with the growth of national productivity and prosperity. Though international comparisons are always difficult to make I should like to give the House electric power investment figures relating to seven Western European nations—Belgium, France West Germany, Holland, Italy, Norway and Sweden. It will be noted that I have left out both the United States and the Soviet Union. The case of the United States is perhaps a special one, while so far as the Soviet Union is concerned statistics are a little difficult to get.
Today, in those countries which I have named, the average investment in electrical power production since the end of the war is 9 per cent. of total industrial investment. The comparative figure in the United Kingdom is 7 per cent., in spite of the fact that in this country, as the hon. Member for Kidderminster pointed out, we need still above all, to replace much of the obsolete plant left to us because of the difficulties of the war years. Yet hon. Members opposite argue that we are now investing too much in electrical power production. The case for the Bill has been thoroughly made out and if, by evil chance, the Amendment is pressed to a Division I hope that the House will reject it for the poor and feeble thing it is.
§ 3.32 p.m.
§ The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. L. W. Joynson-Hicks)
I think that the whole House will agree that on what is the Second Reading of a very important Measure we have enjoyed a wide-ranging debate, covering the great field essential to consideration of matters of such fundamental importance as the fuel and power industries. The House will probably be sympathetic with me when I say that it is a debate very difficult to reply to in the space of one short speech. I shall 2585 endeavour to answer as many of the questions as possible hut, in the event of my failing to cover all the ground I can assure hon. Gentlemen that what they have said will be very carefully studied in the OFFICIAL REPORT, and I shall try to write to them about any point on which I can offer a reply and which I have not covered.
May I first answer one or two points made by the hon. Member for Cleveland (Mr. Palmer), who wound up on behalf of the Opposition? He asked me particularly to state the Government's view about the future of the nationalisation of the fuel and power industries. That is exceedingly easy to answer, because I can refer him to the statement made by my right hon. Friend the Prime Minister as recently as 3rd November, 1953. My right hon. Friend then said:We abhor the fallacy, for such it is, of nationalisation for nationalisation's sake. But where we are preserving it, as in the coal mines, the railways, air traffic, gas and electricity, we have done and are doing our utmost to make a success of it, even though this may somewhat mar the symmetry of party recrimination."—[OFFICIAL REPORT, 3rd November, 1953; Vol. 520, c. 23.]I have no hesitation whatsoever in basing myself firmly on that statement.
The hon. Member for Cleveland then asked whether the representatives of the employees in the electricity industry, through their trade unions, would be able to be heard by the Herbert Committee. The answer to that is most certainly, yes. There is no question about it.
Another question which the hon. Gentleman asked me was the position with regard to the £70 million previously allocated for the proposed Scottish Boards when the legislation setting them up comes into operation. The answer to that is contained in the White Paper which preceded this Bill. If the hon. Gentleman will refer to the White Paper, he will see a paragraph, on page 4, which says that these figures—that is, the capital requirements for the electricity industry—cover also the areas of the South-East and South-West Scotland Areas Boards:In the Electricity Reorganisation (Scotland) Bill, £75 million is provided for these areas and if this is deducted a net total requirement of £1,419 million is left, or say, £1,400 million.That is the amount we ask for in this Bill.
2586 Another question which the hon. Gentleman put to me was about the transference of power over the grid system between England and Scotland. My recollection is that when we were discussing the Scottish Bill we covered that point, but there will also be another opportunity of covering it in the debate next week. Briefly, the arrangements will be worked out in the industries themselves between the two authorities.
§ Mr. Palmer
In the Scottish Bill there is a definite arrangement for co-operation between the North of Scotland Board and the South of Scotland Board, but no similar arrangement between the South of Scotland Board and the Electricity Authority.
§ Mr. Joynson-Hicks
I accept that from the hon. Gentleman. The words I used were that arrangements would be worked out between the two authorities. I think that they are capable of doing that without having a statutory mandate requiring them to do it.
I now turn to the Amendment moved by my hon. Friend the Member for Bristol, North-West (Sir G. Braithwaite) and my hon. Friend the Member for Dorset, South (Viscount Hinchingbrooke). I think that I could almost take the words used by my hon. Friends, in moving and seconding the Amendment, when they said that the discussion which they introduced was really more appropriate for a discussion upon the Economic Survey than upon the Second Reading of this Bill.
I have great sympathy with and great appreciation of what they said. The subject matter which they raised and discussed is one of the utmost importance, and one which, I think, this House rejoices in not only having the opportunity but the obligation and responsibility of discussing. But as my hon. Friend himself said—and I put down his words at the time—it may be necessary to alter the proceedings for our financial debates.
Whether that be so or not, I think that he would agree with me that the Second Reading of this Bill does require that discussion of the subject matter, which he sought to introduce in a fully-resounding and proper manner, is necessarily very curtailed. Therefore, may I say to my hon. Friends that, while we have heard and listened with sympathy, as well as 2587 with considerable respect, to what they have said, and while we appreciate the points of view which they have raised, I do not think that it would be fitting for me on this occasion to attempt to reply to them. But we will ensure that what they have said comes to the knowledge of my right hon. Friend the Chancellor of the Exchequer, and that he has every reason to appreciate not only the sentiment but also the depth of feeling with which my hon. Friends spoke.
§ Sir G. Braithwaite
It was, of course, because the Amendment on the Order Paper was bound to raise certain matters which are extraneous to his Departmental duties that we pleaded for the attendance of a representative of the Treasury. It is always better to hear the spoken word than to read HANSARD.
§ Mr. Joynson-Hicks
I appreciate what my right hon. Friend has said but I am tempted to suggest that had my right hon. Friend been present on the Front Bench my hon. Friend would have been led away into slight extravagances which might have incurred Mr. Speaker's displeasure on the question of order.
§ Mr. Joynson-Hicks
Before leaving the Amendment, I should like to express one or two sentiments particularly with regard to the control of capital issues. My hon. Friends seemed to fail to appreciate the extent of the control from the same point of view as we do. I appreciate that they were looking at it from a different point of view. I do not suggest that theirs is wrong and mine is right, but I should like them to appreciate it from the point of view of the public service industries as well.
The Capital Issues Committee, which is an agency of the Government, exercises a control over the private sector, as my hon. Friend indicated; but the control which is maintained over the public issues of the public service sector is a direct control by the Chancellor of the Exchequer himself., Therefore, there is tighter and more detailed control available in that case because it is the more direct control.
I was asked whether these issues disrupt the money market. The answer is 2588 that the issue is not one of £900 million, the overall sum which is referred to in this request for borrowing powers, nor is it even the sum of £500 million to which my hon. Friend the Member for Bristol, North-West referred. It was quite clearly set out by my right hon. Friend, who, when moving the Second Reading of the Bill earlier today, said that if the Bill becomes lawit will enable me to sanction, with the approval of the Chancellor of the Exchequer, the raising of such loans within such limits as may then be prescribed, as may be needed in my judgment to finance from time to time the capital works required in the nation's interests.That makes it quite clear that there is no question of an uncontrolled sum being thrown on to the market at an unforeseeable time, but that when these public issues are made, they are only made subject to the authorisation of my right hon. Friend and with the approval of the Chancellor of the Exchequer. I do not think, therefore, that there is the slightest chance in this connection for there to be any disruption of the money market.
§ Mr. Joynson-Hicks
At the moment we happen to be discussing the electricity and gas proposals.
Another point which was raised is the proportion which investment in the public service industries bears to the total capital investment throughout the country. It is remarkable how level it has kept. From 1949 to 1953, inclusive, capital investment in the electricity industry, reckoned as a proportion of the total capital investment of the country, has varied only between 7.8 per cent. and 8.3 per cent., which is rather higher than the hon. Member for Cleveland thought. In the gas industry it has varied between 1.9 per cent. and 2.3 per cent. Between them, therefore, these two industries have during the past five years regularly represented approximately 10 per cent. of the capital investment of the country.
It is rather interesting to see how during the last year capital investment was spread, particularly in comparison with other industries. Transport and communications—that includes the Post Office—took 11.9 per cent.; manufacturing industries took 23.6 per cent.; other 2589 industries took a total of over 10 per cent.; whereas housing, upon which it was essential to make such a concerted drive, took no less than 27.3 per cent. That shows the general distribution of the capital investment of the country.
If we may return once more to the Bill, I should like to clarify one point to which reference has been made, namely, the effect of the long-term nature of the proposals for investment in these industries. Statutory borrowing powers, which are the subject matter of this Bill, are related to actual cash borrowings by these industries, such as gas and electricity, which are developing the whole time and necessarily enter into commitments ahead of their actual cash expenditure. The present extension of borrowing powers covers the commitments entered into in the past as well as new expenditure in the future. We intend to notify Parliament if and when future commitments are added which exceed the statutory limits proposed in the Bill.
I should also like to turn to the exceedingly well reasoned and able speech of my hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). I do not think there is a great deal in the earlier part of it with which I personally want to disagree, but I feel that the controls on the private sector of industry are neither so great as he felt nor are they so positive as are those upon the public sector. With regard to his remarks about prices, again I feel I must say that I cannot accept the suggestion which I understood him to make that to some industries the price of coal is being kept too low.
I was not able to be here when the hon. Member for Bolton, West (Mr. Holt) spoke, but I was fully informed of the line that he took and I do not think he will expect me to agree with what he said. I can well understand that it would have been a very popular line of thought in the latter part of the 19th Century, though it would have been out of date by the end of the 19th Century. We have progressed since then.
§ Mr. Joynson-Hicks
The real point we want to get down to is capital expenditure and there has been a remarkable 2590 variation of opinion in this House upon that point this afternoon. There have been demands for greater expenditure, and the matters which have been mentioned which would involve that greater expenditure include such things as electrification of the railways and gas turbines, which are going to be a substantial development when they come along. Reference was also made to fuel cells, which is a matter which we can well afford to bear in mind as a possible development.
Mention was made of atomic energy, and I would say, in answer to the hon. Member for Cleveland that he need have no apprehensions as to the relationship between the British Electricity Authority and the Atomic Energy Authority. It is not a question of the British Electricity Authority being on probation or anything of that sort. The position of the relationship between the two has been made quite clear in speeches by my hon. and right hon. Friends from this Dispatch Box, and I need not go into detail. I assure the House that we are absolutely satisfied that the relationship is very close, is perfectly well understood and is being carried out in absolute agreement between the authorities and the parties concerned.
In connection with the demand for even greater expenditure, reference was made to rural electrification. Hon. Members in all parts of the House must have found exceedingly gratifying the remarkable progress which has been achieved since authority was given by my right hon. Friend a year ago to increase substantially the allocation of capital investment for rural electrification. That has had and is continuing to have the most remarkable results, particularly having regard to the very substantially increased costs of making rural connections at present, compared with the cost even 10 years ago. That cost has increased not only as the result of the increased cost of wages and materials but also because of the decreased number of connections that can be made per mile as a result of electrification being carried out farther into the country districts and farther away from the main concentrations of habitation.
All this shows the lines and gradually developing pattern of our fuel policy. It shows quite clearly also that our fuel 2591 policy does not start at the consumer's end. I believe that to be erroneous. It may be that my hon. Friend the Member for Kidderminster may want to join issue with me on that point on another occasion. [HON. MEMBERS: "Where is he? "] The right way to start a national fuel policy is not by dictating to the housewife whether she can use an electric iron or not, or can use it at a particular time or not, or whether she must use a gas fire instead of an electric fire. That is the wrong end to start a policy. The right end is at the production end, where it is not only much more easy to co-ordinate and control and advise and guide the people concerned but where it is also far more effective. A very great deal is being achieved in the co-ordination of these services.
The future additional gas production envisaged as a result of the Bill will be, as to 35 per cent. taken from sources which are not owned by the gas boards, that is to say, from the National Coal Board and the steel coke ovens. Again, there is co-ordination of the use of refinery tail gases, butane and propane and of the use of methane. Reference has also been made to the use of Diesel engines for shunting purposes on the railways. Electricity plants are efficient users of coal and an increase in the consumption of electricity helps to spread the load.
Therefore, I would say to my hon. Friend the Member for Kidderminster that the greater the variety of services, the greater the diversity of use and consequently the higher the load factor. The domestic load is a seven days a week load and the industrial load is substantially an eight hours per day five days per week load. The industrial load represents approximately a 25 per cent. load factor, whereas the combined load represents approximately a 45 per cent. load factor.
§ Mr. Noel-Baker
Are the Government going to back up the policy of the Minister of Labour of double-shift working, so that the industrial load shall be spread over 16 instead of eight hours?
§ Mr. Joynson-Hicks
I can assure the right hon. Member that that point is one that we very strongly support. It is one 2592 to which the Minister of Labour has referred at this Box on various occasions
In addition to the need for increased industrial electricity, there is the need for increased domestic electricity. New houses are going up at a very great rate and my right hon. Friend the Minister of Housing and Local Government is seeking to assist to the utmost degree the modernisation of structurally sound old dwellings, which will involve increased use of gas, electricity and smokeless fuels. The movement towards smokeless zones requires the use of smokeless fuels of which gas and electricity are the standbys and carry the main smokeless load. We wish to see that the public service using these fuels are equipped to play their full part in meeting the national demand. It is for that purpose that we believe the provisions in this Bill meet the need. But the programmes will be subject to scrutiny and the approval to borrow will be closely watched.
§ Mr. Geoffrey Bing (Hornchurch)
Will the hon. Gentleman deal with the very interesting phrase he used. "smokeless load"? What exactly is a smokeless load? Will he explain that more fully to the House?
§ Question, "That the words proposed to be left out stand part of the Question," put, and agreed to.
§ Bill accordingly read a Second time.
§ Committed to a Committee of the whole House.—[Mr. Studholme.]
§ Committee upon Monday next.