New Clause.—(RURAL ELECTRIFICATION FUND.) (Hansard, 12 July 1954)

§ Mr. A. Woodburn (Clackmannan and East Stirlingshire)
I beg to move, "That the Clause be read a Second time."
I suggest that we also discuss with this Clause the Clause—"Provision for rural areas"—which is also in my name and those of some of my hon. Friends. Both have very much the same purpose. My hon. Friend the Member for Central Ayrshire (Mr. Manuel), who has his name to this Clause, is very concerned about the progress that is being made in rural electrification and regrets very much his absence today. I put it to the Secretary of State for Scotland that this is a matter of very great importance in the re-organisation of electricity supplies in Scotland.
We are all very glad to hear about the progress of the North of Scotland Hydro-Electric Board in connecting farms and isolated areas. It is something to be proud of that in Scotland, with its great extent of isolated countryside, such as in the Highlands, which it is difficult to supply with electricity, the people are having the advantage of modern science and that the building of the new station at Dounreay may make more electricity available in that area. It is also interesting to learn that, although at first it was expected that the Hydro-Electric Board would have to export a great deal of its electricity to the Southern part of Scotland, the continuing and expanding de-demand in the board's own area is using 111 up a very large percentage of the electricity that is being produced. In South-West Scotland probably more progress is being made in the electrification of rural areas than in any other part of the country.
If we are to make the best use of our labour on the farms as well as in the towns throughout Scotland, we must make the best use of power, which is certainly much more easily carried in the form of electricity than in any other form. We hope, therefore, that the Secretary of State will give us some idea of the progress that is now being made and that it is hoped will be made.
One of the most regrettable things about the Bill is that the Secretary of State, in assuming the task of the electrification of Scotland, has not given us any ideas of the progress that will be made and what the result of the Bill will be in relation to the subject matter of the new Clause. If a ticket is put up saying, "Under new management," people expect to see some new ideas. So far the Secretary of State has not produced any ideas to justify the Bill. When putting down this Clause, we certainly thought we would offer one idea and the right hon. Gentleman could give his opinions about it. We want to know whether he has any plans for improving the electrification of agricultural areas of Scotland, when extensions are likely to take place, and when Scotland is to get the benefits of electricity outside the great towns.
We should also like some information about the rationalisation of the charges. I know that some progress has been made about the huge differences between one area and another. In the old days, Edinburgh was supplying electricity for ½d. a unit whilst in Musselburgh, near by, the charge was many times ½d. That kind of distinction between two adjacent areas has been modified to some extent. We are bound to realise that if we make the distribution costs of electricity on the same basis in the country as in the town that constitutes a hidden subsidy, but, nevertheless, it is the same with the Post Office. We must aim at trying to give country areas the benefit of the cheaper rates.
As far as possible we want to encourage our people to keep on the land. If 112 one thing happening throughout the world today is menacing the future more than another it is that people who ought to be producing food are being driven into the towns and more and more town dwellers are building up a civilisation which may collapse for want of food. If we could take electricity into the country areas to give the people there an opportunity of power for the production of food, we should do something, not only to make it more pleasant to live on the land, but more productive to live on the land and, by giving people an opportunity of earning a living on the land, we should make the inducement to live in towns slightly less.
Even to a minor degree, such as by extending the facilities for wireless and television in the country cottage, we might be able to provide that extra inducement—an important one. It would give the country people amenities in the evenings which normally they might have to seek in towns. Even in the towns I am satisfied that many people who used to leave their homes to go to cinemas are now resting quietly at home and getting repose looking at television after a hard day's work. I hope that television will become an educative service and not degenerate into producing pictures which merely amuse and in no way instruct or elevate—

§ Mr. Speaker
The right hon. Member is certainly getting well away from the new Clause by discussing television.

§ Mr. Woodburn
Actually, television facilities would be one of the results of extending electrification to the rural areas, which at the moment is quite impossible owing to lack of electricity. If the Secretary of State will expound his ideas, I hope that among them will be the amenities which arise from electricity by way of producing power for milking and running the farm, and for what I believe to be of no less importance, the provision of entertainment for a man when he has finished work. All that comes from electrification of rural areas, I think that maintaining manpower in the rural areas will be one of the major contributions which electrification can make. The Secretary of State will be the "new management" which is to show Scotland how much better it will work under this Bill. We should like the right hon. 113 Gentleman to open his mind a little to us and show us what he has in mind in regard to these great plans he has when he takes over this task—

§ Mr. Speaker
If the Secretary of State attempted to do such a thing I should be compelled to intervene, because the new Clause proposes to set up a fund to which it will allocate a reasonable proportion of its profits each year for the extension of rural electrification and the lowering of charges. Hon. Members cannot enter on the whole question of electrification of the rural areas on the Report stage of the Bill.

§ Mr. Woodburn
I beg your pardon, Mr. Speaker, for expanding the debate at this stage. Perhaps the right hon. Gentleman will be able to say whether he is prepared to consider the suggestion made, or offer some hope he has in mind for extending electricity to the rural areas of Scotland. We await the illuminating speech he will make when he replies.

§ Captain J. A. L. Duncan (South Angus)
I hope that my right hon. Friend will not advise the House to accept the new Clause, because I do not think it is a very sensible one.

§ Mr. John Rankin (Glasgow, Tradeston)
On a point of order, Mr. Speaker. I understood that this new Clause required to be seconded, and I was under the impression that you had called me.

§ Mr. Speaker
The new Clause does not require a seconder, as it was moved by the right hon. Member for East Stirling-shire (Mr. Woodburn), who is a Privy Councillor.

§ Captain Duncan
My opposition is to the words in the new Clause and not to the words used by the right hon. Member for East Stirlingshire (Mr. Woodburn) in moving the Second Reading of the Clause, which are two entirely different things.

§ Mr. Woodburn
To save the hon. and gallant Member from getting worried, may I say that if the Secretary of State has better words which could be used, we shall not object to their being used.

§ Captain Duncan
What the right hon. Member is trying to do in this new Clause is to ask the Government to put 114 into the Bill provision for allocating sums over and above the ordinary charges—and out of the charges now imposed—to a fund for the extension of rural electrification and the lowering of charges. I am speaking for the North of Scotland Hydro-Electric Board, as I do not know anything about the board in the South.

§ Mr. A. C. Manuel (Central Ayrshire)
Where does the North come in?

§ Captain Duncan
The first words of the new Clause are. "Each board," so presumably one is the North of Scotland Hydro-Electric Board.

§ Mr. Woodburn
indicated assent.

§ Captain Duncan
The right hon. Member nods his head, showing that he is in agreement with me and in disagreement with his hon. Friend the Member for Central Ayrshire (Mr. Manuel).
This seems the wrong way to finance rural electrification. The Hydro-Electric Board comes to this House from time to time and gets a Bill through authorising a sum of money for capital development. I think that last time the amount was £100 million. As each scheme is brought forward, the Secretary of State certifies that that capital is necessary and it is raised on gilt-edged terms, on the cheapest terms in the market.
That seems the right way of doing it. In that way the board gets the money on the cheapest possible terms, but by this new Clause it is sought to alter the terms. The income of the board comes only from the consumer. If we add to the consumers' charges provision for the allocation of a special fund, we cannot at the same time lower the charges but, ipso facto, we shall be heightening the charge. To that extent this new Clause does not seem to carry out the wishes of the right hon. Member and his hon. Friends.
For those reasons I hope that my right hon. Friend will not accept the new Clause. Although the object of extending rural electrification is one which we all have and we all want the charges to be lowered, this seems the wrong way of achieving that object. What we want is to raise the capital on the most favourable terms, as is done under the original Act and successive Acts. We do not want any extra charges on the town or 115 country dweller in order to set aside a fund to reduce charges and for the extension of rural electrification.
In distribution to the farmer, it seems that the North of Scotland Board has a very sensible arrangement. It asks for a guarantee based on the capital expenditure involved in connecting farms to the mains supply. If I have any criticism to make of the Hydro-Electric Board, it is its failure from time to time to explain the capital costs of making these extensions. There have been complaints from time to time, but when they have been explained—it is the public relations aspect which is weak—it has been perfectly obvious that there was an explanation of cases in which charges were apparently high.
7.30 p.m.
Let me take, as an example, the case of a 33,000-volt line crossing a farm. The farmer says, "It is absurd that I should have to pay a guarantee of, say, £100 to bring lighting to my farm when the electricity line is going across it." He does not understand that a 33,000-volt current cannot be brought into his farmhouse; it has to be stepped down to 240 volts. To do that requires at least one transformer, probably two. The cost of this, plus the cost of the high-tension cable, is very heavy.
In undertaking schemes of development, as it is doing, the North of Scotland Hydro-Electric Board is doing so extremely economically, both to the taxpayers, who have to guarantee the capital, and to individual consumers. These development schemes connecting farm cottages seem to be very reasonable. That is the way in which to extend rural electrification, rather than to embark on what is proposed in this attractive new Clause—attractive in words but totally impracticable in practice.

§ Mr. Rankin
The hon. and gallant Member for South Angus (Captain Duncan) has founded his case against this new Clause largely on the performance of the North of Scotland Hydro-Electric Board. I have no complaint to make about that. Time and again, to the considerable mortification of Members opposite, I have cited the things which have been done by that board in extending electricity supplies in Scotland, and in 116 lowering charges. They did not show any particular enthusiasm for the things I said about the work that was done by that board.
Indeed, as we know, Members sitting on the Front Bench opposite opposed, on one particular occasion very vigorously indeed, a very vital scheme when it was introduced in the House, and to which the hon. and gallant Gentleman referred. However, I do not want to go into those matters—

§ Captain Duncan
What scheme?

An Hon. Member
Tummel-Garry.

§ Mr. Rankin
It is one of my earliest recollections in this House, and one of the greatest opponents was the hon. Member who is now Joint Under-Secretary—

§ Mr. Speaker
The hon. Member really must direct his remarks to the new Clause which is before the House.

§ Mr. Rankin
I have departed from that other matter, but I must draw your attention, Mr. Speaker, to the fact that I was provoked. I am sorry that I succumbed to the temptation which came from the benches opposite.
Leaving all that aside, I turn to the foundation on which the hon. and gallant Member built his case. In the context of the Bill, this new Clause, to which I subscribe and to which my name is attached, has only one reference so far as interpretation is concerned, namely, to the amalgamation of the South-East and South-West Electricity Boards. In the Second Reading debate I pointed out that the North of Scotland Hydro-Electric Board is not affected by this Measure. Appreciating what that board is doing, and will continue to do, our fear was about the two former boards that are now to become one board. We wanted to try to ensure that the new South of Scotland Board would carry on in the South of Scotland work analogous to that which has been carried on in the North of Scotland.
We are faced with the fact—and this is really the fear that promotes this new Clause—that one of the areas which is now to be taken over is a deficit area. How are we to finance further electrification and lower charges when the area of 117 one of the boards which is now to constitute the new South of Scotland Board is a deficit area? Last year, the accounts showed that the South-West Scotland Electricity Board had a deficit of more than £100,000. We put forward a new Clause of this character so that the Secretary of State for Scotland will be able to tell us how he proposes to carry on the necessary work which we hope will be carried on when the new board enters on its job.
I am certain that every one of us wants to see the new board doing well, but if part of its area is a deficit area, how is the board to do well? How is it to promote further schemes of electrification and lower charges when it already has a deficit, and when it is being removed altogether from the scope of the overall aid which would have come naturally from the British Electricity Authority had that area remained a constituent part of the great nationalised scheme which covers the whole of the United Kingdom. The Government are removing the new board from this source of help.

§ Captain Duncan
England.

§ Mr. Rankin
I am surprised to hear such a narrow nationalist outcry from the hon. and gallant Member for South Angus. If he imports a nationalist attitude into the discussion, the debate will probably become somewhat bitter. That is the last thing that I, for one, would seek to raise on this occasion. We are asking, by means of this new Clause, how the Secretary of State for Scotland will ensure electrical extensions.
The hon. and gallant Member for South Angus has stated that he does not think that the words are the proper ones to use. We shall not quarrel about the words. All we want is that the idea should be accepted. Is the hon. and gallant Gentleman or any Member on the benches opposite opposed to the idea of extending electrification throughout the South-West and South-East of Scotland? Are they objecting to the lowering of charges to the consumers? I take it that they agree with these things. That being so, I assume that, subject to proper wording, they will support the Clause.
Why did the hon. and gallant Gentleman go to the trouble of speaking? All he needed to do was to say that he supported us. When he spoke he opposed 118 us. Now he sits nodding his head in agreement with what I am saying. Does he oppose what I am saying? Apparently he cannot make up his mind now. He is in a worse state than ever; he does not know where he is. First, he gets up and opposes the new Clause. He sits down and listens to me for five minutes and then he supports the Clause. Now he does not even know where he is; he does not know whether he is for or against.

§ Captain Duncan
Might I interrupt the hon. Gentleman?

§ Mr. Rankin
Let me just finish my point. What a terrible pass Toryism in the East of Scotland has come to. It does not know where it is.

§ Captain Duncan
It knows exactly where it is. The point of the speeches of the right hon. Member for East Stirlingshire (Mr. Woodburn) and the hon. Member for Tradeston (Mr. Rankin) is that they want to extend rural electrification and to lower charges. Both sides agree on that, but what I do not agree with is the wording of the Clause, and I said so.

§ Mr. Rankin
The hon. and gallant Gentleman is easier meat than ever. He agrees with everything but the words. All right, We have no objection—

§ Captain Duncan
Well, change them.

§ Mr. Rankin
—as my right hon. Friend has already indicated, to handing the Clause over to the Secretary of State's technical experts if he will accompany his supporters and say that he accepts the principle in the Clause. I await a sign from him.

§ Captain Duncan
The Secretary of State accepts the principle.

§ Mr. Rankin
I do not want to cause any disruption in the Tory Party—it is unnecessary; there is enough already—but the hon. and gallant Gentleman says that the Secretary of State accepts the Clause. The only trouble the hon. and gallant Gentleman has is with the words. I am prepared to leave that matter with the Secretary of State. Will the Secretary of State accept it? Does he accept the principle contained in the proposed Clause, which has the support of at least one hon. and gallant Gentleman opposite?
However, nobody now knows where the hon. and gallant Gentleman is. First 119 he supports the Clause, then he does not support it, and then he half-supports it. He will have to make up his mind. Perhaps the Secretary of State will accept the principle in the Clause and we can then await the form in which he puts it. What he brings forward will have our support if it embodies the principle in the proposed new Clause.

§ Mr. Niall Macpherson (Dumfries)
The hon. Member for Tradeston (Mr. Rankin) invites my right hon. Friend to accept the proposed Clause, and he says that he does not mind whether he accepts the words provided he accepts the idea. The trouble is to know what the idea is.
The Clause calls upon the Secretary of State to impose a duty upon each board to: …allocate a reasonable proportion of its profits each year for the extension of rural electrification and the lowering of charges. The hon. Member asks how this can be done because one of the two districts which will form the new board made a loss last year.

§ Mr. Rankin
I did not say anything of the kind. I drew attention to the fact that one of the areas to be taken over made a loss last year, and I asked the Secretary of State what he was going to do to overcome that fact so that rural electrification might be extended and charges lowered, which, I presume, is his policy.

§ Mr. Macpherson
As my hon. and gallant Friend the Member for South Angus (Captain Duncan) pointed out, the implication was that it would be much better if electricity were developed in the South-West of Scotland from profits made in England. Apparently, profits are usually a very bad thing, but if they are made in England and used to develop Scotland the hon. Member for Tradeston does not think quite so evilly of them.

§ Mr. Rankin
That is too simple an argument.

§ Mr. Macpherson
The first point is surely that, as my hon. and gallant Friend said, the normal way of carrying out development is for the electricity authorities to borrow in order to do so and not to set aside profits for the purpose. I understand that that is what has been done on 120 the whole so far under the British Electricity Authority.

§ Mr. Manuel
Surely the hon. Member is not so naïve as he implies when he talks about the setting aside of profits. Obviously, the amount of profits set aside would go towards annual loan charges on a capital sum which would be borrowed. If a certain proportion of profits is being earmarked, we are not saying that is capital expenditure: it could be annual loan charges.

§ Mr. Macpherson
That seems to be stretching the wording of the Clause a long way. If one borrows, one has to service the loan. Presumably one would borrow on the basis that the consumption in the areas concerned would sooner or later supply the necessary revenue to service the loan.
The hon. Member for Tradeston indicated that he did not think all was well in the South-West Scotland area, which made a deficit last year. He asked my right hon. Friend what was happening now. I do so too. My information is that things have not gone too badly in the South-West of Scotland recently. I do not think the hon. Member need worry his head on that score.
The main point is whether what is proposed is the right way to go about it. The Clause refers to the allocation of a proportion of profits for the extension of rural electrification. I should have thought that that was not the right way to go about it. Also, surely criticism is implied on the two areas for not having proceeded fast enough with rural electrification. However, we know that the South-West of Scotland more or less pioneered this work in the free enterprise days when the local authorities made a very good start.
The fact is that, in the South-West of Scotland, according to my information, up to the end of this year the number of farms supplied with electricity in proportion to the total number was higher than was the case in any other part of the country. What is more, the South-East of Scotland area is the fourth highest in the country, and a combination of the two may very well provide almost the highest proportion. It really is not worth while telling this new board to do something which is obviously being done so well. If it were necessary in the first 121 place, why did not the Labour Government put it into the original nationalisation Act? Why do they make this proposal now when the South of Scotland Board is doing the job so well, and better than most?

§ Mr. Thomas Fraser (Hamilton)
If the hon. Gentleman thinks that everything in the 1947 Act was so satisfactory, why on earth does he think we ought to have these 19 Clauses in this Bill? The South-West of Scotland was doing very well.

§ Mr. Macpherson
The South-West of Scotland is doing very well already, and that is my argument. I believe that this particular Clause is unnecessary, but it is a very different thing to move from that statement and say that the whole Bill is unnecessary. The better the South of Scotland is doing, the more it should be allowed to go on by itself, and that is what we on this side want to do.

§ Miss Margaret Herbison (Lanarkshire, North)
If the hon. Gentleman says that we are doing so well, and that it is not necessary to have this Bill, why does not somebody on the Government Front Bench tell us why it is necessary to have the Bill at all?

§ Mr. Macpherson
The hon. Lady cannot have it both ways.

§ Mr. Deputy-Speaker (Sir Rhys Napkin Morris)
We are debating the new Clause not the Bill itself.

§ Mr. Macpherson
Thank you very much, Mr. Deputy-Speaker. It seems to me that the Opposition, at the moment, are putting forward a Clause which is not necessary. If they feel that the Bill itself is not necessary, why do they want to waste time in adding this new Clause?
The second point is that they are asking for profits to be set aside in order to lower charges. I do not know what on earth that can possible mean. Does it mean that the charges have to be increased first of all in order to lower them in the following year, or does it mean that the Opposition are not satisfied with the efficiency of the South-West and South-East of Scotland Boards, and think they can get a good deal more economy? I made inquiries about this, and I am told that, in the South-West of Scotland, the number of people employed in relation to revenue, unit consumption and 122 customers is something of the order of half the number in the case of the South of England. It is not much good setting aside profits to lower charges in that respect, and I submit that it is a waste of time of the House to bring forward a new Clause of this description.

§ Mr. Manuel
I hope the hon. Member for Dumfries (Mr. N. Macpherson) will forgive me if I do not follow him in the argument he was using against this Clause. It occurred to me that the whole trend of his argument was that, in the past, this work had been done satisfactorily in the area of the South-West of Scotland Electricity Board—and I presume also in the area of the South-Eastern Board—so that he felt that the special provisions for which we are asking in this Clause were unnecessary.
I agree with him whole-heartedly. My fear is that, because of the break-up of the British Electricity Authority, and because we are now to have the South-West of Scotland Area Board standing on its own feet—and the same applies to the other board—there may be a curbing of initiative, a cramping of their style and a lessening of the work which has been proceeding so satisfactorily since the British Electricity Authority came into being. Accordingly, I accept responsibility for having something to do with this new Clause. I felt that, once the principle was being hammered through the House, presumably because it was argued on the benches opposite, as well as up and down Scotland, this was going to be a great thing for Scotland, we ought to try to show that there were some dangers in it and try to take some steps to provide safeguards against those dangers.
I hope the Secretary of State will not dismiss this Clause offhand, because there has been some thought behind it, and, while it may appear to the hon. and gallant Member for South Angus (Captain Duncan) and the hon. Member for Dumfries not to have much substance, I think they will both agree on the principle outlined in it—that rural electrification should proceed apace, and that we should have a lowering of charges wherever that is possible. Any farmer in Scotland who wants electricity on his farm will tell those hon. Members that they want it a bit cheaper than it is now. If we agree about the substance of the new Clause, we disagree particularly about some of the 123 gingerbread that has been placed before Tory audiences at garden fetes up and down Scotland at which, if one rolls a penny on a board, one may possibly get 6d. at the end of it. The Front Bench opposite might know something about the luck at the weekend.
I have made some inquiries, and I have found that the present position is that the South-East of Scotland Board have connected 62 farms in the board's area, and that, since the beginning, 2,615 farms have been connected to the board's supply. That still leaves 3,447 farms without a supply, and I understand that in the future not all of these farmers would be willing to take the supply, though a large number of them would. I am sure that the Secretary of State is keen to see farms operating with the benefit of electricity, and that he will agree that farms today, and especially dairy farms, cannot operate most successfully unless they are provided with the necessary electricity. On the assumption that 85 per cent.—

§ Mr. Deputy-Speaker
As I read the new Clause, it deals merely with the duty of setting up a fund.

§ Mr. Manuel
May I ask you, Mr. Deputy-Speaker, if I would be out of order in trying to argue why that fund is necessary?

§ Mr. Deputy-Speaker
I think that would be out of order, particularly on this new Clause, which provides that each board in Scotland shall set up a fund to which it shall allocate profits. That is what it does, and nothing more.

§ Mr. Manuel
How then am I to speak about the lowering of charges if I am not allowed to talk about farms or rural electrification?

§ Mr. Deputy-Speaker
I have nothing to do with the drafting of the Clause. I merely say that this new Clause which has been proposed is limited to the terms set out on the Order Paper. I have had nothing to do with its drafting.

§ Mr. T. Fraser
The Clause reads: Each Board in Scotland shall set up a fund to which it will allocate a reasonable proportion of its profits each year for the extension of rural electrification and the lowering of charges. 124 Any argument in favour of rural electrification, and any point showing the need for it or for the lowering of charges, would therefore appear to be valid, and would appear to be the only valid argument in support of the setting up of a fund.

§ Mr. Deputy-Speaker
That would not be a valid argument at all or come within the terms of the Clause. The necessity for rural electrification may be what it may; the point does not arise here. We are concerned whether a fund should be set up for that purpose.

§ Mr. Fraser
I listened carefully to the speeches made from the Government Benches, and I submit to you, Mr. Deputy-Speaker, that they were miles wide of the point. The hon. Member for Dumfries (Mr. N. Macpherson) talked about what has happened in South-West Scotland under free enterprise, and the hon. and gallant Member for South Angus (Captain Duncan) made a long speech in which he talked about the borrowing powers of the North of Scotland Board. All of that was miles away from the Clause.

§ Mr. Deputy-Speaker
That may very well be. We had better get back to the proposed new Clause.

§ Mr. Manuel
I am sorry that your Ruling will sadly constrict my argument. I appeal to you Mr. Deputy-Speaker. I have gone to considerable trouble and some difficulty in trying to assess the commitments in the areas of both the boards. I have had communication with them and with the secretaries and chairmen on the work already completed.

§ Mr. Deputy-Speaker
The hon. Member must look for a better opportunity. I have nothing to do with the drafting of proposed new Clauses. The one we are discussing is concerned with a fund. It may be that what the hon. Member has to say is very important, but he must find another opportunity.

§ Mr. Manuel
I am sorry that the Ruling has been tightened when I got up to speak. Previous speeches in the debate went very much wider than mine; the rules are difficult to adhere to when we get that sort of example. Perhaps I can say that a fund is imperative because the commitments for farms alone in the South-East of Scotland will be £4 million 125 in the future and £5½ million if we take in all other properties. Loan charges, in borrowing at 7 per cent., will be £400,000 per annum.
Obviously, this all needs thought. I do not think these farms will get their supply. I do not see how the boards will get the money necessary to connect those farms and to repay the annual loan charges. Both the South-East and the South-West Boards will need to be very careful how they allocate their money. Possibly they can steer off other things. I do not know. They may be considering building suites of offices or other things that they would have the right to do, but if the choice is between those necessary things and the extension of rural electrification and lowering of charges, they will have to consider very carefully what to do.
The record of the South-West Board in rural electrification since it took over is splendid. I agree with the hon. Member for Dumfries that it was a record for Britain, unsurpassed by any other board. The board has covered 75 per cent. of the farms in its area, but there are still other farms to be connected. The total number of farms in the area is 9,720. The board has connected 7,160, leaving 2,560 still without an electricity supply.
It is estimated that of that number only 1,100 would take a supply and that the remaining farmers would not want it. I am certain that their reason lies in the installation charges, which are much too high. We have had the same definite indication in both board areas from members and chairmen that a proportion of farmers will not take the supply, even when it is offered. That is a deplorable situation.

§ Commander C. E. M. Donaldson (Roxburgh and Selkirk)
Does the hon. Member understand that a large number of farms have their own plant and that is one reason why some farmers will not take a board's supply?

§ Mr. Manuel
That may happen in isolated cases and is not as satisfactory as a supply from a board. That is the exception. As a general rule, the 1,100 cases have no supply of any kind. The board in each area has to consider how it can assist. Shall it be by a fund? In what way can it be done? There are 1,100 farms in the South-West area not 126 prepared to take a supply. We all agree with the extension of rural electrification and the lowering of charges, and if a further lowering of charges would bring in a proportion of that 1,100 it is the job of the Secretary of State for Scotland to make some such arrangement.
The words we have put in our proposed new Clause may not be suitable. If hon. and right hon. Gentlemen on the Government Benches agree that it is laudable to extend rural electrification and to reduce charges to within the compass of farmers and farm workers, I hope they will support us. Let us remember that the cot house should have electricity as well as the farm house, and that the ploughman's wife ought to be able to use an electric iron while the cows ought to be milked by electricity. I hope that hon. Gentlemen will give us some hope that steps will be taken to enable us to reach the ultimate agreed target.

§ The Joint Under-Secretary of State for Scotland (Mr. Henderson Stewart)
It might be helpful if I now say a word on this subject. We have had a fairish debate. It is clear what is in the mind of the Opposition in putting down the two proposed new Clauses, the second of which has been called.
I am much obliged to the hon. Member for Central Ayrshire (Mr. Manuel), because he put in the clearest possible language the reasons which moved him in putting down the Clause that we are discussing. He said that he saw dangers in the new set-up, as he called it, and principally that there might be a curbing of activity and a lessening of the work done by either of the two present boards. I am very much obliged to the hon. Member, because I now understand his point. I had some difficulty in appreciating it at first.
I quite appreciate that these fears may exist in the minds of hon. Members opposite and others, but I should like to say at once that the Clause is really unnecessary, because what it seeks to achieve is already provided for in the various Electricity Acts. I will take the matter step by step. As the House knows, the present Bill takes into account and applies to the south of Scotland, Section 1 (6) of the 1947 Act, which says that: In exercising and performing their functions the Electricity Boards shall, subject to and in accordance with any directions given by the 127 Minister or Secretary of State under this part of this Act…(b) secure, so far as practicable, the development, extension to rural areas and cheapening of supplies of electricity. That is precisely what the proposed new Clause seeks to do.
The only slightly new idea which it mentions is the setting up of a fund. If I may address myself to that question for a moment, I hope that I shall afterwards succeed in persuading the House that the proposed Clause is not necessary. As hon. Members know, these electricity boards have to take many things into account in planning their programmes. It is not a case of making profits out of which they can reduce their charges next year. These boards are not expected to make profits; they are expected to balance outgoings with incomings, so that over the years the two things cancel out. Provisions are laid down to that effect. They are not like private companies, which may aim at making substantial profits in order to establish funds for special jobs. These boards are not constituted in that way they are obliged to meet, so far as they think it wise, the varying requirements of their own areas.
In the South-East and South-West of Scotland many needs are apparent—including the needs of the towns and of the rural districts—and one has clearly to be balanced against the other. If I understand the argument correctly, the only thing hon. Members opposite really seek is an assurance from the Government that the machinery which is to be set up under the Bill will not allow a falling off in the steady advance of electrification, especially in rural areas, in the South-East and South-West of Scotland. I can give the House the assurance that it is the intention of my right hon. Friend to do his utmost to bring about that advance.

§ Mr. Manuel
I am very pleased with the Minister's reply so far. I merely wish to correct a mistake which I made in my speech. I said that in the South-West area 1,100 people would refuse the supply. That is the number who will take it, leaving 1,460 people who will not take it. I should like to know what steps the Government are taking to bring about conditions in which that 1,460 people will take it.

§ Mr. Stewart
I was coming to that point later in my speech, but I can reply to it immediately. The hon. Member is referring to the owners or occupiers of farms in South-West Scotland who have intimated to the board that they will not take the supply. As the hon. Member must know, the reason is that some of the people concerned are old people, who are not very worried about a supply of electricity, and financial considerations arise in other cases. We hope that this situation will change, but we cannot force people to accept a supply if they do not want it. I can assure the hon. Member, however, that we shall continue to try to persuade them to do what we all agree is the right thing.

§ Mr. William Ross (Kilmarnock)
The chances are that the refusal of one person to take a supply will mean that four or five others in the same area will not be able to get it, even if they want it. The question of charges must be kept very well in mind.

§ Mr. Stewart
That is perfectly right, and I appreciate the point. I think it will help hon. Members on both sides of the House if I refer to the present position in the South-East and South-West of Scotland, and the plans which the boards have in mind and will presumably carry out when they are joined together. I hope that I shall be in order in doing so.

§ Mr. Deputy-Speaker
I cannot see how the hon. Member can keep in order if he does so. This is a purely machinery Clause, to set up a fund for a specific purpose. It does not go beyond that.

§ Mr. Stewart
I am sorry. I should have been very glad to have met the points raised by hon. Members opposite. It may be that we can get over the difficulty in some other way.

§ Mr. Thomas Steele (Dunbartonshire, West)
If the Minister will turn to page 16 of the Bill, he will see that paragraph 11 of the First Schedule says that one of the duties of the South of Scotland Board will be to establish and maintain a general reserve fund. It also says that: The South of Scotland Board shall contribute to the general reserve fund such sums 129 at such time as the Board may determine, and the management of the said fund and the application of the moneys comprised therein shall be as the Board may determine. It looks as though the Bill provides for the establishment of some fund.

§ Mr. Stewart
That is quite true. That is one of the reasons I hoped that the Opposition would not feel it necessary to press this matter to a Division. I have already said that the Bill covers the object of the proposed Clause, and the hon. Member has added to the information which I gave the House by pointing out that a reserve fund must be set up. It seems that we are all agreed that the necessary authority is there.
I can give the broad assurance—which is all that I am allowed to do—that we intend to push ahead with rural electrification to the utmost of our ability. With that assurance, I hope that the right hon. Gentleman and his hon. Friends will not press this matter to a Division.

§ Mr. Ross
Will the hon. Member say a word about charges? There are schemes in the South-East and South-West of Scotland.

§ Mr. Stewart
I shall be very pleased to do so, if am I allowed to.

§ Mr. Deputy-Speaker
The question of charges does not arise in connection with this proposed new Clause.

§ Mr. Woodburn
On a point of order. If one moves the Second Reading of a new Clause—which, I take it, is equivalent to moving the Second Reading of a Bill—is it not legitimate that one should be able to give reasons why a fund is to be set up, and what is to be the purpose of that fund, especially when it is mentioned in the Clause? The proposed Clause says "for the purpose of," and I submit, with respect, that any purpose mentioned in the Clause would be within the realm of the debate.

§ Mr. Deputy-Speaker
I am objecting to something very much wider than that. The reason a fund should or should not be set up is obviously in order. The arguments to which I have been objecting are those concerned with rural electrification and charges in general.

§ Mr. T. Fraser
My hon. Friend the Member for Kilmarnock (Mr. Ross) asked the Joint Under-Secretary of State 130 whether he would say a word about the lowering of charges, which is specifically dealt with in the new Clause, and the hon. Gentleman, I think, was anxious to do so, but he understood, as I did, Mr. Deputy-Speaker, that you were ruling that he should not do anything of the kind.

§ Mr. Deputy-Speaker
If those remarks are related to the fund, well and good.

§ Mr. Ross
Surely the point is, Mr. Deputy-Speaker, that the Joint Under-Secretary of State is trying to justify himself in refusing this new Clause. One of the purposes of the fund is to lower charges. He has tried to show us that that is already catered for in the Bill. Is he not entitled to justify that?

§ Mr. Deputy-Speaker
The new Clause says: Each Board in Scotland shall set up a fund to which it wilt allocate a reasonable proportion of its profits…for the extension of rural electrification and the lowering of charges. Those are the purposes for which it is to be set up, and they include the lowering of charges, but how the charges should be lowered and the subject of the lowering of charges in itself cannot, I think, be discussed. The purpose is to lower charges, but the Clause is not concerned with the charges themselves.

§ Mr. T. Fraser
The purpose of setting up the fund is to provide for the extension of rural electrification and for the lowering of charges, and it seems to me, Mr. Deputy-Speaker, that if we are not entitled, on Second Reading of the new Clause, to discuss rural electrification and the lowering of charges, the only thing we can discuss is the setting up of the fund, but then we shall be discussing the setting up of a fund in vacuo, for we shall not be discussing the purposes for which the fund must be used. It would seem to me that if we are not free to discuss the purpose for which the fund is to be set up, the new Clause might as well not have been called at all.

§ Mr. Deputy-Speaker
We can discuss the setting up of the fund and its purpose to lower charges, but a general discussion of charges is outside the scope of the new Clause.

§ Mr. Manuel
I understand that one area board has annual loan charges at 7 per cent. and that another has loan 131 charges at 6 per cent. What about lowering these charges? Should they not be lowered?

§ Mr. Deputy-Speaker
The hon. Member may not speak a second time.

§ Mr. Cyril Bence (Dunbartonshire, East)
I should not have intervened tonight had I not heard the most amazing discussion I ever have heard. I did not suppose, when I became a Member of Parliament, that I should witness such a performance as I have witnessed tonight. The Joint Under-Secretary of State gives reasons why he must oppose the proposals in the new Clause, and then it is pointed out by my hon. Friend the Member for Dunbartonshire, West (Mr. Steele) that what we are proposing in the new Clause is already provided for in the Bill. The Joint-Under Secretary of State argues against the proposals and says they are unnecessary. Yet they are already provided for in the Bill. The Government apparently have not read the Bill, for they did not know that the Bill provides for what we are asking should be included in it, though it seems that so long as the Bill provides for what we propose, then what we propose is all right.

§ Mr. N. Macpherson
The hon. Gentleman cannot have read the First Schedule, because it sets out what the purposes of the reserve fund are.

§ Mr. Bence
My right hon. Friend, when he moved the new Clause, was being quite sincere when he said that he was quite willing to have the wording of the new Clause altered. He was being quite honest when he said he was not satisfied that the wording was altogether right. What he was concerned with was that the authorities should be in a position to create funds to be used for specific purposes, notably for rural electrification.
The hon. and gallant Gentleman the Member for South Angus (Captain Duncan) pointed out, quite rightly—and I hope I shall keep in order in following him—that large-scale industry does not as a rule carry out capital development out of profits. I agree with him wholeheartedly. That is why I have always, in debates on taxation, disagreed with hon. and right hon. Members opposite that taxation should be lowered, because industrialists could not find the capital 132 for capital development, and that is why I have always said that that argument is "phoney." Now the hon. and gallant Gentleman has admitted it. Major capital development is not carried out from profits at all. It is carried out by floating new capital, and the hon. and gallant Gentleman wants the electricity authorities to do so, too. So does the Secretary of State. The right hon. Gentleman, it is worth noting, thinks that private industry should be permitted to save its profits to plough back. Earlier today we were discussing an investment allowance to encourage it to do so.

§ Mr. Deputy-Speaker
The hon. Gentleman said that he hoped he would keep in order. I think that now he is going very far beyond the new Clause.

§ Mr. Bence
I am thinking in terms of this fund. I like the idea of a business having a fund that it can apply to the promotion of any new invention or any new techniques that may be developed. I never did like the idea of borrowing a lot of money from bankers and insurance companies, because my parents always told me, "Never keep a monkey on the roof if you can help it." I think that to borrow money from bankers or insurance companies is to invite a monkey on the roof. I have an idea that our nationalised industries and State enterprises and local authorities have always had a lot of monkeys on the roof, and have had them for a very long time.
When my right hon. Friend moved this new Clause he was anxious to enable the electricity authorities, by the provision of such a fund as this, to undertake capital developments without keeping any monkeys on the roof. The Joint Under-Secretary of State says, "It is all right for private industry to keep monkeys off the roof but not for the nationalised boards; they can borrow money: they can go to the City of London and get plenty of money at 7 per cent." Hon. Members opposite say that the public corporations, the electricity authorities, should not be allowed to make savings out of profits to create funds for capital development. Instead, they must borrow money under a State guarantee. Hon. Members opposite say, "They can pay 7 per cent. by State guarantee, so make them borrow, but if it is a private industry, let it make its profits while it can 133 and plough them back—and give it an incentive to do so." Why not give an incentive to the Scottish Electricity Boards to collect their resources and carry out capital development with them?
This is a question of carrying out capital development by means of savings accrued from the enterprise rather than by means of the creation of new money. We hear much from hon. Members opposite about inflationary pressure and we all know that the greater part of that pressure arises from the creation of new money. If we are to undertake expensive capital development, surely it is better to undertake it by creating a fund out of current earnings instead of dissipating those earnings through paying dividends or paying 7 per cent. to the moneylenders. It is less inflationary to undertake it out of current charges, because in that way we shall withdraw purchasing power and use it for capital purposes, whereas if we borrow money the whole of that purchasing power, except for 7 per cent. interest, continues to circulate.
My right hon. Friend's suggestion is eminently suitable for present circumstances. As far as possible, we should carry out capital development through a fund created out of current earnings. We do not want all the electricity expansion to be in the big cities before supply is extended to the more remote parts of the rural areas. My hon. Friend the Member for Central Ayrshire (Mr. Manuel) does not want to see increased capital development within the cities while the rural areas are starved of essential supplies.
If electricity were carried to the rural areas at a charge within the capacity of agricultural workers and farmers, I do not think they would refuse it. They refuse it only because they know that the charges to be imposed are beyond their means. They cannot earn in their occupations enough to cover the cost of installation.
I hope the Secretary of State will seriously consider the spirit behind the new Clause and will see whether he can find a form of words to ensure that a reserve fund will be built up and that priority in its use will be given the rural electrification.

§ Mr. David J. Pryde (Midlothian and Peebles)
I cannot understand the stubborn attitude of the Joint Under-Secretary 134 of State, for no one knows better than he what this Clause is calculated to achieve. He knows perfectly well that the South-East Scotland Electricity Board had handed to it the most difficult electrification problem in Scotland, because the South-East of Scotland was an area into which private enterprise had made no attempt to bring electricity.

§ Mr. Deputy-Speaker
We are back to the old point; this goes beyond the new Clause.

§ Mr. Pryde
I wanted simply to show why we are so insistent on the creation of this fund. We have always had difficulty in getting electrification of the rural areas of the South-East of Scotland. I had to call on the assistance of the National Union of Mineworkers in order to bring pressure to bear—

§ Mr. Deputy-Speaker
All this may he true, but it must be raised on another occasion.

§ Mr. Pryde
We suggest that the creation of this fund will solve the Secretary of State's problem under the new set-up, because what we need in South-East Scotland is not new administration but cash. I trust the Secretary of State will accept our view.

§ Mr. Woodburn
This Clause was moved in order to get some ideas from the Secretary of State on rural electrification. Instead of getting anything from the Secretary of State, we had a lot of impromptu assistance from back benchers opposite, who seemed to be able to explain all about this Clause. But they found that the Joint Under-Secretary and my hon. Friends made their arguments look quite foolish.
The Joint Under-Secretary of State, far from refuting the necessity for a fund, pointed out that provision already exists for a fund, and my hon. Friends pointed out to the Joint Under-Secretary, for his edification, that the Bill does provide for a fund. In view of the assurance from the Under-Secretary that a fund is provided—

§ Mr. Deputy-Speaker
I do not want to interrupt the right hon. Gentleman, but I understand that he moved this Clause. I take it that he is now speaking without the leave of the House.

§ Mr. Woodburn
I was going to ask leave to withdraw it.

§ Mr. Deputy-Speaker
The right hon. Gentleman cannot make a second speech without the leave of the House.

§ Mr. Woodburn
With the leave of the House, I should like to say that the Joint Under-Secretary gave us his assurance, and I think that on the whole we are satisfied, that provision exists in the existing Acts and in this Bill for the provision of a fund, even though some of his hon. Friends object to a fund, and, with this assurance, I beg to ask leave to withdraw the Motion.

§ Mr. T. Fraser
On a point of order, Mr. Deputy-Speaker. I think that you ruled that my right hon. Friend the Member for East Stirlingshire (Mr. Woodburn) could not speak a second time without the leave of the House. I think I am not wrong in submitting that any hon. Member even a back bencher, who moves a Motion on a new Clause is entitled to reply to the debate.

§ Mr. Deputy-Speaker
I believe that the position is that only the mover of a substantive Motion has the right to reply.

§ Mr. Woodburn
Is a new Clause not a substantive Motion?

§ Mr. Deputy-Speaker
No, I am afraid not.