HC Deb 04 April 1957 vol 568 cc640-76
Mr. Renton

I beg to move, in page 43, to leave out lines 29 and 30 and to insert "Section forty-nine".

This is a consequential Amendment again following upon the first new Clause relating to the supply of electricity to railways. Section 49 is no longer required, so, for the sake of completeness and tidiness, we are adding it to the list of enactments to be repealed.

Amendment agreed to.

5.58 p.m.

Mr. Renton

I beg to move, That the Bill be now read the Third time.

Although a number of changes and improvements of substance and detail have been made in the Bill, its essential character remains the same. On behalf of my right hon. Friend and myself I should like to acknowledge the help which has been given by hon. and right hon. Gentlemen on both sides of the House, and the lively interest shown by hon. Members who have taken part in our discussion. I hone that I shall not be causing offence to any hon. Member. especially on my own side of the House, if I acknowledge especially the constant interest which has been taken in the Bill by the hon. Member for Cleveland (Mr. Palmer), who has attended every one of the many meetings of the Standing Committee and of the House and has scarcely ever been absent from a Sitting. I know that he has done a great deal of hard work in connection with the Bill.

The Bill will come into operation on 1st January, 1958, instead of, as originally suggested, 1st April. My noble Friend will be making the appointments to the Electricity Council and the Generating Board soon after the Bill receives the Royal Assent. Those bodies will then have to start their negotiations with the Central Electricity Authority and, by Clause 23, the negotiations should be completed by 1st November. These negotiations are to decide how the assets and liabilities of the Central Authority are to be distributed between the Electricity Council and the Generating Board. If the parties to those negotiations fail to agree by 1st November, it will be for the Minister to decide how that is to be done, but we hope that they will not fail to agree. There is no reason why they should not agree.

The main structure of the industry will be as originally proposed in the Bill, a separate Generating Board, independent area boards, an Electricity Council which, as the Bill now stands, will have a chairman, two deputy chairmen, three other independent members, plus the chairman and two other members of the Generating Board and each of the area board chairmen. We had much discussion in Committee as to the powers and duties of the Electricity Council, and that was the most important matter on which the two sides of the House disagreed, but we have preserved the essential character of the Electricity Council, and it might be convenient if I briefly summarise what that character will be.

In the first place, it will be consultative; in the second place it will be advisory—advisory both to the boards and to the Minister; thirdly, it will provide a number of common services for the boards and those services will now include the payment of Income Tax and Profits Tax on behalf of the industry; fourthly, I should mention that the Council will have no truly executive functions. The only executive function which it will have is one which we hope it will never have to exercise. That is in Clause 17 (7), under which the Electricity Council may give directions to a board which fails to discharge its obligations to make payments to the Central Guarantee Fund.

By inserting what is now Clause 8 we provide a formal procedure enabling the Electricity Council to consider and advise upon disputes between boards. If the Council should fail to resolve any difference which may be referred to it under that procedure it may refer it to the Minister and if he finds a defect in a board's general plans and arrangements he may give directions for removing the defect. I should stress, however, that the Electricity Council is not bound to refer the matter to the Minister, and that the Minister cannot act unless it does so.

Mr. Warbey

Before the hon. and learned Gentleman leaves the question of the functions of the Electricity Council will he, as I understood him to say that, properly speaking, it has no executive functions, say something about the function under Clause 16 of estimating the requirements of the boards for borrowed capital and making allocations to them? We understood from the Parliamentary Secretary's earlier description that that would be a quite important executive function.

Mr. Renton

The hon. Member for Ashfield (Mr. Warbey) will remember that we discussed that fairly fully in Committee. As he has mentioned, I gave a fairly long description of it and of how I thought the Clause would work. I noticed during the Report stage yesterday that he referred to it, but, if I may say so, he somewhat misread what I had said. I would invite his attention to cols. 491 to 493 of the OFFICIAL REPORT of the Standing Committee, where he will find what I then said. Quite candidly, I do not think it would be appropriate for me to go over all that ground again.

I would simply say that the boards have the responsibility of deciding upon capital development programmes. It is the boards which have the obligation of letting the Electricity Council know what they will require, if anything, by way of stock, but the machinery for raising the stock and for allocating to the boards what they have said they require will be the responsibility of the Electricity Council. Of course, in all that process there will be consultation on the Electricity Council, and each board's suggestion as to what stock it should receive will be the subject of discussion there. I will not add to that but simply refer the hon. Member to the much more lengthy description that I gave in Committee.

I think that all hon. Members have welcomed the strengthening of the powers of the consultative councils—strengthening in the Bill as it stood and, to a lesser extent, since it was introduced. I should point out that we have added to Clause 12 provisions which will now enable the consultative councils to consider the complaints of individual consumers with regard to what are called special agreements. That was the suggestion of my hon. Friend the Member for Clitheroe (Mr. Fort).

Perhaps the most vital Clause in the Bill is Clause 11, which confers the: duty upon each board of paying its own way, taking one year with another. Hon. Members, especially those from the South-West Area of the country, expressed concern about the effect of this on rural development. I speak as a Member representing a rural constituency, and wish to say a little about the view which the Government take of the effect that the Bill will have upon rural development. because that is a most important matter.

After the Resolution of this House in June, 1953, the Central Authority and the area boards entered into the Morton hampstead Agreement. That Agreement provided for assistance to be available from central funds for any board which was unable to take its share of the programme then announced. The programme announced was for the connection of 57,000 farms in five years, ending in April next year, 1958. Another way of expressing that programme was that it would by that date bring electricity to 70 per cent. of the farms of the country. The Morton-hampstead Agreement also provided for a [...] per cent. of farms to be connected in the next five years. but did not apply that 15 per cent. to all the boards. There were two or three boards which, it was felt, would not be able to add a further 15 per cent. in five years and one of those boards was the South Western Area Board.

I should also mention that the South Western Board, as hon. Members will know, was the only one to receive a subvention from the central fund. What has happened as a result of the agreement so far? The first five-year programme has gone ahead much better than anyone expected it would, and the national figure of 70 per cent. of farms to be connected should be passed this autumn.

Mr. C. R. Hobson

On a point of order, Mr. Deputy-Speaker. Is it in order on Third Reading to discuss what is not in the Bill.

Mr. Deputy-Speaker

No it is not.

Mr. Renton

I did hope that it was in order to discuss what was the view of the Government about the effect of the Bill, and particularly the effect of a Clause in the Bill which places a particular responsibility on the area boards. Of course I am in your hands. Mr. Deputy-Speaker.

Mr. Deputy-Speaker

I did not stop the hon. and learned Gentleman. I was asked whether it was in order to discuss what is not in the Bill and I said that was not in order, but that is all that I said.

Mr. Renton

I hope that I shall not be transgressing if I conclude what I have to say about rural electrification. It might be of some convenience to the House if some latitude were allowed to me.

Some boards, including the South Western Area Board and the Eastern Area Board, have already, within four years, completed their five-year programme. Therefore, the prospects for the second five years are excellent, especially, I should say, for the South-West because it has done so very well. The Government have decided that when the Central Electricity Authority's central reserve funds are divided, as they have to be under the Bill, the Electricity Council should give special consideration to those boards which have particular difficulties, including difficulties arising from rural electrification in remote areas.

Therefore we are confident that the boards can carry their own burden. In saying this I should emphasise that the agricultural community generally needs electricity at times other than those of the peak urban and industrial loads; so that expanding the period of the full use of the capital invested in the industry will help to keep down the general cost for all consumers. Each type of consumer, therefore—

Mr. David Jones (The Hartlepools)

Will the hon. and learned Gentleman give way?

Mr. Renton

May I finish my sentence? I wish to conclude this point, because it is important.

Therefore, I say that each type of consumer has an interest in promoting rural electrification, and we consider it is quite proper that some of the capital cost should be borne, as it has been in the past, by users as a whole.

Mr. Jones

Is the hon. and learned Gentleman now telling the House that, while the principal reason for introducing this Bill at all was to decentralise power from the centre to the area boards, the Government apprehend that the consequences of what they are asking is that the division of the available reserve fund will be more generous to those boards which will meet with difficulty, in spite of the fact that the reason for introducing the Bill was that no difficulties would arise?

Mr. Renton

That would certainly not be a fair interpretation of what I have been saying, or of the intention of the Government. With respect, I would say that had the hon. Gentleman heard a little more of the earlier discussions, he would not have made that intervention.

In other words, as my noble Friend said recently in another place, in general, the cost of rural electrification should fall on the whole body of consumers. My noble Friend was referring to consumers of electricity generally within each area, but we have always made it plain that under this Bill we do not consider that the consumers in any one area should be subsidised by consumers in the rest of the country. That is the point.

Mr. Palmer

I have no objection to what the hon. and learned Gentleman is saying, but I am rather surprised that he is going into such detail about this point unless he has a guilty conscience about it. Would the hon. and learned Gentleman say that the South-Western Electricity Board is happy about its future? Is it not a fact that it will have to use much of the central reserve fund for its own reserve purposes?

Mr. Renton

That will be a matter for the Board to decide. The hon. Gentleman asks whether the South-Western Board will be happy about its future. All I can say is that the board is very much happier now than it was a few weeks ago when there was a certain amount of discussion between some members of the board and hon. Members on both sides.

Mr. Hobson

On a point of order, Mr. Deputy-Speaker. I fail to see where there is any question of the South-Western Board in the Bill. If this latitude is to be allowed to hon. Members, it will make for a lengthy discussion during this Third Reading debate.

Sir Harold Roper (Cornwall, North)

Further to that point of order. Is not this matter relevant to Clause 7, which gives the Minister certain powers of direction? I feel that this matter may well be dealt with under the provisions of Clause 7 and that therefore, Mr. Deputy-Speaker, you might regard it as relevant.

Mr. H. Morrison

Further to that point of order. Regarding the last point made by the hon. Member for Cornwall, North (Sir H. Roper), may I submit that were it conceded, the Minister could talk about anything under the sun relating to the electricity supply industry.

May I also submit to you, Mr. Deputy-Speaker, that the job of the Minister, surely, is to ex plain the provisions of the Bill and his remarks should be confined to what is in the Bill? What the hon. and learned Gentleman is saying is not so much an explanation of what is in the Bill as an exposition of the administrative policy of the Ministry, and of what was the Central Authority which now, unhappily, is being abolished. His would be a very nice speech on a Supply Day but not on the Third Reading of this Bill. I understand his motive, which is to provide propaganda for the rural constituencies. But it is his job to expound the provisions of the Bill and not to engage in propaganda, or describe the administration of the Ministry and the Central Authority.

Mr. Deputy-Speaker

I have always understood that the rule on Third Reading is that one can deal only with what is in the Bill. Of course, in doing that, T think it reasonable to go on to say what the Bill will do.

Mr. Renton

May I put it in this way? Clause 11 of the Bill requires area boards to stand on their own feet financially. Anxiety has been expressed during the passage of the Bill through the House about the effect of that provision upon the development of rural electrification—a matter which, under a part of the 1947 Act not repealed, is a duty that will be upon the industry in the future. As we are now legislating for the future of the industry, I should have hoped that this subject was in order.

We have no doubt that the completion of the programme of rural electrification announced in 1953 will take place—

Mr. Hobson

On a point of order. We are debating the Third Reading of this Bill and now we are having an exposition of rural electrification from the hon. and learned Gentleman. Does that set a precedent which subsequent speakers may follow?

Mr. Speaker

I have just come in and have heard only a few words by the Parliamentary Secretary. If what he is saying is a description of the effect of the Bill upon the subject, that would be in order, but I must be permitted to hear a little more before I pronounce on it.

Mr. H. Morrison

Further to that point of order. What the hon. and learned Gentleman is doing—it is within the recollection of hon. Members—is expounding what has been, and what is, the programme of rural electrification, all of which happened before the Third Reading of this Bill. Therefore it cannot be related to this Third Reading debate. Moreover, if the hon. and learned Gentleman were impartial, he would give credit to the Labour Government.

Mr. Speaker

I should like to hear a little more of how the hon. and learned Gentleman connects this matter with the Bill.

Mr. Renton

May I summarise the position by saying that we do not consider that Clause 11 of the Bill will have an adverse effect upon the rural electrification programme announced in 1953.

The only point I wish to add is that under Clause 3 (3) it will be the duty of the Electricity Council to watch rural electrification, and all other important developments for which the industry is responsible, and to advise the Minister about them from time to time. My hon. Friend the Member for Cornwall, North (Sir H. Roper) intervened to suggest that under Clause 7 the Minister would have the right to give directions. I would simply say that in the ten years of the industry's history no directions have, so far as I am aware, been given at all about matters of a general character affecting the public interest. We hope that the industry will assume its responsibilities and at the same time exercise its commercial judgment in a way which will enable its functions to be carried out without the Minister having to intervene.

That is all I wish to say about rural electrification. Since this Bill was introduced the nuclear power station programme has been announced, and we hope that this Measure may help the electricity supply industry to carry out that programme effectively. My right hon. Friend will be glad to reply to any points which hon. Members may wish to raise.

6.20 p.m.

Mr. Palmer

May I first thank the hon. and learned Gentleman the Parliamentary Secretary to the Ministry of Power for the very kind reference he made to myself? Having said that, I must say that I rather regret that he did not direct his remarks more closely to the subject of the Bill, because there were a number of interesting controversies in Committee and on Report which I should have thought were appropriate for discussion now.

It is certainly my intention, as far as I can, to confine my remarks to the general purposes of the Bill, as I understand it, but before doing so I think that I should say a word about the attitude of hon. Members on this side of the House towards the Bill. When it appeared, we discussed it through those processes of party democracy which we use on this side—and which are rather different from the kind of party democracy which we have had described for us in the columns of theManchester Guardianas operating on the other side.

We were anxious to decide the correct attitude to the Measure. We could, of course, have said that since it was brought in by a Tory Government our attitude should be straightforward, root-and-branch opposition. There were two reasons for our not adopting that attitude. The first was, perhaps, a philosophical one while the second reason—or set of reasons—was intensely practical. I will, if I may, deal shortly with the philosophical point first.

It can be said that we on this side are democratic Socialists and therefore look on society as being in a process of continuous evolution, on occasion according to laws of its own as well as by the conscious political acts of those of us who will changes through legislative processes. The essence of our democratic socialism is that society must evolve. When we socialised this industry, as we did by the 1947 Act, we transferred it from private hands to the whole of the democratic nation. Once the change is made, and once the great parties of the State accept that change as being permanent, it seems to us reasonable that all parties can play a part in improving the actual organisation in the light of experience.

We felt that we should look at the Measure strictly on its merits. That is not to say that, on occasion, when changes affecting nationalised industries are brought in by the, we hope, short-lived Governments of the other party, we shall not quarrel about the merits or details of those changes. As an Opposition, it is our duty to do so. However, I do not think that we should necessarily resent attention being given by any Government to the problems of the organisation and control of publicly-owned bodies, provided—and this point I cannot overemphasise—that the principle of public ownership is not in question. Had it been in question in this case I have not the slightest doubt that my right hon. and hon. Friends would have fought the Bill relentlessly.

The second set of reasons which determined our attitude come under the heading of the practical. There are practical justifications for the Bill. First, there was the Herbert Report which we have looked at in great detail both in Committee and in the House. The investigation by the Herbert Committee is the first examination we have had of the problems of a nationalised industry by an outside, impartial committee. It was the kind of occasional inquiry which has already been mentioned this afternoon, a kind of check on the efficiency of a nationalised industry which was suggested by my right hon. Friend the Member for Lewisham, South (Mr. H. Morrison)—a most practical and useful suggestion, if I may say so. I will come to the merits of the inquiry in a moment.

Further, some of us on this side of the House take a great interest in the everyday problems of the nationalised industries, and we had some knowledge of this electricity supply industry and its needs. Also, I think that we took into consideration the fact that the country is now embarking on a great programme of nuclear energy development, and it is useful that we should now have one functional Generating Board which can, in an uninhibited way, look at the practical technical problems of nuclear energy for power purposes. Those are the practical aspects that operated in our minds when we looked at the Bill and decided our view.

Most electricity supply legislation has been preceded by some kind of impartial inquiry. The 1919 Act was preceded by the Williamson Report, the 1926 Act by the Weir Report, and the 1947 Act was, in a sense, the result of some recommendations made by the McGowan Committee. The Report of the Herbert Committee, on which, in a sense also, this Bill is founded, was cogent in argument and lucid in style. Even Members of Parliament could understand it, and that, I think, is going quite a long way.

That Report was not necessarily right in every conclusion, and the Government have done what I think they had the right to do. They have accepted certain conclusions and rejected others. On this side we have taken the same view. We have had our varying opinions upon the merits and demerits of the various parts of the Report. We have been, according to our ideas of correct public policy, selective in our approach, and I can think of nothing wrong in that. As my right hon. Friend said earlier, outside Committees make recommendations, but it is the business of Ministers to decide which of the recommendations they will accept and which they will reject.

From the discussions in Committee there has emerged—in spite of the general acceptance on this side of the broad principle of the Bill—a recognisable pattern of difference between the two sides. I do not agree with what the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) said, I think it was yesterday, that Socialists, by their nature, stood for centralisation—and Tories, I suppose it followed, stood for decentralisation. That is much too simple, too much of a generalisation, and it does not, in fact, fit the facts.

Had we stood for centralisation in relation to this Bill—the effect of which is generally accepted to be greater decentralisation we should certainly have voted against it. Also, if we on this side of the House stood automatically for centralisation in public ownership we should never have introduced the 1947 Act in the form we did, because that Act already gives a measure of decentralisation to the area electricity boards. It seemed to me that the divisions between us which emerged upstairs were not over decentralisation or centralisation as a principle, but were concerned with which particular functions should be centralised and which should be decentralised. On that, there was a quite legitimate and proper difference between the two sides.

In human organisation, there are certain things which can be dealt with locally by the man on the spot and there are other things which must be decided at higher level, as a matter of broad policy. This is a difficulty inherent in human affairs which has come down to us through the ages. Those of us who try occasionally to study the history of military campaigns notice, for instance, how this problem and difference crops up time after time. It springs, I believe, from the very nature of human affairs. Emotionally, I rather fancy that most of us, who are good democrats, have a bias towards decentralisation. I certainly tend automatically to resent the large organisation. It is an emotional feeling; but, in life in a real world. the issues must be looked at on their merits.

Both sides were united about the centralisation of certain things. For instance, in respect of generation and bulk transmission, the wholesale side of the industry, the Bill puts a new Board in charge; but generation and bulk transmission remain centralised. Again, both sides were united about the need for decentralising distribution. We have in fact carried rather further the principle already contained in the 1947 Act, that the area boards are now to have financial responsibility to balance their accounts, managing their affairs financially, taking one year with another. That is the retail side, and on that issue of decentralisation as opposed to centralisation both sides were at one.

The differences arose mainly, I think, over financial control. For instance, we on this side of the House said that capital allocation must be—and here we were with the Herbert Committee—decided by the Councillor, if not by the Council, then by the Minister himself; we thought that it should not be left open. Again, there was a strongly marked difference of opinion between the two sides over the bulk supply tariff. We said that the bulk supply tariff was a key to the financial success or otherwise of the area boards, and if they had to pay too much for their electricity, or if unreasonable terms were imposed upon them by the Generating Board, they would be in deep water financially and the Clause of the Bill which puts upon them the responsibility to balance their own accounts would not have the validity one would hope for it. These are not matters of principle but matters of judgment or of fact. As to who is right about them, I suppose that, in the end, only time will indicate, if time does in the end indicate anything at all.

There were other parts of the Bill about which there was very real controversy. I was glad that the Parliamentary Secretary—though I thought, with respect, that he went on much too long—refereed to rural electrification. There was certainly a long debate in Committee on rural electrification. We then took, and still take, the view that the Government were running away from the need to electrify the countryside and to bring the advantages of electricity to every part of the country; but they do not want to admit it because of the political difficulties it would cause them in rural constituencies.

Another controversy, which has been quite violent at times and which we experienced again yesterday, centred upon the right to manufacture. As we see it, the Minister has weakened his Bill in this respect. He has surrendered to his more extreme, doctrinaire supporters, who have seemed in the last few months keen to kick the furniture about before they, as tenants, are evicted by the electorate. These are differences which are really not of organisation but of emphasis and public policy. We certainly have not lacked keen debate on these issues.

We on these benches have been genuinely anxious to improve the Measure, and, I would at this time like to express our thanks to the Paymaster-General. Quite a number of Opposition Amendments have been accepted, some in principle, having been redrafted since Committee stage. There is a fairly long list of them. First, we felt that the right of area boards to generate should be somewhat curtailed; and that has been done. The composition of the Council has been altered, in response to representations and suggestions we made; we are very glad about that. We wanted a consolidated statement of accounts; we are to have that. We are now to have one comprehensive annual report—a very great improvement in the Bill.

As to joint consultative machinery, there were discussions with the trade unions, and the provisions of the Bill have been brought into line with the suggestions made by the trade unions, We have today dealt again with compensation to employees, and an Amendment has been accepted. Also this afternoon we have dealt with the continuation of trade union agreements. A subject in which I am particularly interested, because I follow these matters a little in the industry, is education and training. We have done something in the Bill to bring education and training in the industry into the general sphere of joint consultation. The right hon. Gentleman and his hon. and learned Friend have been courteous throughout and, certainly on these points at least, accommodating. I would, however, suggest that it is the Bill, the future Act of Parliament, which has gained from the suggestions we have made.

These battles are now behind us. They may be continued—I do not know—in the rather tranquil atmosphere of another place. As my final word I should like to say—and I am sure I take the whole House with me in this—that, although we in Parliament can legislate for good or for ill, practical creation in human success and endeavour is with the workers, the technologists, and the managers of this enterprise outside. We can legislate, but we cannot go beyond. Let us hope that, through this Bill when it eventually reaches the Statute Book, we shall have assisted the great work that these employees of the industry do in providing electric power for the nation.

6.38 p.m.

Mr. du Cann

I want to refer to one matter only, the effect of Clause 11 upon rural electrification. As everybody knows, rural electrification is becoming increasingly difficult because the easiest properties have been dealt with. The more remote farms and more difficult or inaccessible villages have now to be tackled. In total, looking at the country as a whole, something like two-thirds of the job has been done and one-third remains to be done.

Clause 11, as we know, puts the obligation for financing the whole of the work upon the area boards themselves. In my view, it is absolutely proper and right that that should be so. I do not believe that it will drive up the price of electricity for those boards which have particular problems except by a very small amount indeed. It is well worth bearing in mind in this context that some boards have all manner of other problems besides rural electrification which involve large amounts being spent in capital development. Reinforcement is an example.

There is some possibility that area boards with these special problems, in particular the problem of rural electrification, may be helped by the provisions of the Second Schedule, paragraph 6, when the distribution of the present central reserve fund, to which my hon. and learned Friend has already referred, is considered.

I want simply to ask my hon. and learned Friend to be good enough, as I am sure he will, to bear in mind a particular matter in this connection. As a rural Member, it seems to me more than likely that the rural development charge will have to increase. It should be borne in mind that it is not only a question of bringing electricity to farms in the rural areas. When talking of rural development, one tends to think first and foremost of farms, and that is, perhaps, right, but there are many other rural premises—cottages and so on—besides farms. Many people, such as the baker and the grocer, serve the farmers in these areas. Farmers can get grants under the Hill Farming Acts or, in the future, under the Agriculture Bill, but those other people cannot get any of these grants.

For the future, one needs to watch the situation which is likely to exist if the rural development charges go up. This may well mean that some people who have been looking forward to having electricity—and we must not forget that people living in isolated parts of the United Kingdom, like Exmoor, have few amenities—may not be able to have it. It would be a great pity if the rate of rural electrification were slowed down in any way. I know that my hon. and learned Friend, as he has said, has this matter very much in mind, but when considering the distribution of the central reserve funds, it is a point which should be borne particularly in mind.

6.42 p.m.

Mr. H. Morrison

I wish to speak only for a short time on Third Reading, and particularly concerning one aspect of the Bill. Once again, I agree with my hon. Friend the Member for Cleveland (Mr. Palmer). I know what a great interest he has taken in electrical matters for a good many years. I agree with him that one must not assume that because we have transformed an industry from a mix-up between public and private ownership, as was the case in this industry, and make it a coherent national undertaking with area organisation, we should never examine it to see whether the set-up, the structure or the administrative system is right or whether there is undue centralisation.

I agree with my hon. Friend in that respect. My bias is also for decentralisation, although we might have to consider now and again whether there is undue decentralisation. Personally, however, I would give the benefit of the doubt to decentralisation. One of the things I did at the Ministry of Home Security was to send a Minute to Whitehall civil servants to say, "We will never do in Whitehall what can be done in the regions." I am sure that that is a right principle on which to act.

I would say the same of electricity and other forms of public ownership, including transport, that where we can conveniently decentralise it is right to do so. Some of the provisions in the Bill in that respect are right. Therefore, it is right that we should have had the Herbert Committee and should have asked it to look at the set-up, the administration, management and organisation in a broad way to see whether there were any changes that that Committee would recommend. I emphasise, however, as my hon. Friend has said, that no matter how high a regard we may have for the Members of that Committee, we are not obliged as a result of that investigation to agree with everything that the Committee recommended.

There are some things which have come into the Bill that we do not like. We do not like the limitation which the Government have put upon the manufacturing powers of these public authorities. I do not say that the Government should have gone mad with the use of the manufacturing powers, but it is desirable that these public authorities should have them, particularly in regard to some of the Reports of the Monopolies Commission. I should have thought that it was a necessary safeguard for the public interest. The trouble with the Government is that they have an inferior regard for the public interest and an exaggerated regard for private interest. Therefore, they have put in this provision. There are other things too that I do not like.

There is one rather important point upon which I do not agree with my hon. Friend the Member for Cleveland. Presumably, the Labour Party must have considered all these things at a time when I happened to be abroad, when it came to its own conclusions and I was not here to help in arriving at those conclusions. I am sure that nobody will object if I put this point of view about the action of the Government in the Bill in abolishing the Central Electricity Authority and taking away the generating functions from the Central Authority, including the new Central Authority, and setting up a further element of management: namely, the Generating Board.

I always thought that one of the boasts of the Conservative Party was that it was opposed to the multiplication of administrative machinery and the finding of jobs on public hoards. Here, the Government are finding a new bunch of jobs on a new public board. They have removed the generating function from the old Central Authority and are putting in a special board of its own. One does not want to break up the whole national generating functions.

My doctrine of public administration in this respect is never to leave a Minister or an organisation, if one can avoid doing so, with nothing to do. Do not leave it up in the air. I always thought that the Ministry of Town and Country Planning, which once existed by itself, was all the better when it became the Ministry of Housing and Town and Country Planning and, later on, something else and Planning. if it is left with town and country planning alone, people can get rather a little bit far removed from the daily life of the world. It is a good thing to mix them up with bricks and mortar or something physical so that they are handling things, doing things and administering things, as well as the making and settling of plans, important as that is.

The Central Electricity Authority had contact with the area authorities. There was a great amount of delegation to the area authorities, and if more was wanted it could have been provided for. I would not in any way object in principle to that being examined.

The Central Electricity Authority also handled the generating side of the industry. The generation of electricity s apply is largely an engineers' job. It is highly technical, but it needs thinking about and it needs planning over a period and a considerable degree of thought. I should have thought that it was a good thing that the generating side should have been associated with the Central Authority and a good thing for the Central Authority that it should have something physical and of importance to do.

Having abolished the generating functions of the Central Authority and set up an additional board, the Government are then in the difficulty of what to do with the residual powers of the old Central Electricity Authority. They have, therefore, created a central Council. The Parliamentary Secretary said that it is to have practically no executive functions—at least, he hoped that it would not execute anything.

This is a poor sort of boast that we should deliberately create a body with no executive functions. That is not a healthy life for any authority. It is a miserable boast that the Government are to see that it has no executive functions. The result will be that those people will have to find something to do. The temptation will be for them to buzz around with all the other numerous electricity authorities, including the Generating Board, and see whether they cannot find something for idle hands to do. It seems to me to be a waste of effort and a waste of money. It does not seem to be fair to put important people on a central council and then in effect deny them having important things to do, except this list of rather unimportant things.

It is no good bringing in the analogy of the Gas Council. The gas industry is quite a different order of things. There, we have not the great transmission system of the national grid. Whether the gas industry will ever get to that stage, I do not know. There it has been right to base the essential part of the industry on the areas. It is something like the Constitution of the United States where the States are supreme and not the Federal Government. In the case of gas, we established the area gas boards and merely set up the Gas Council for consultative and coordination purposes.

The analogy with the Gas Council breaks down because, in electricity, we have the generating and grid system. Therefore, I regret the change which has been made. I do not think it is for the good. It is rather by the long-haired and theoretical that this has been done. The Bill would have been better had it not been done, but whether there would have been much left of the Bill had it not been done I do not know.

I think it is a great pity in public administration to cut off the doing of things—physical administration—because that in turn improves the responsibility and quality of the general administration. But there it is, and I can only hope that the Bill will not do much harm. I think that is a very bad fault in the Bill, and I am sorry that the Government accepted that recommendation.

6.53 p.m.

Sir Harold Roper (Cornwall, North)

I want to say a word or two on one point only following on what my hon. Friend the Member for Taunton (Mr. du Cann) said. That is the effect of Clauses 1 and 11 of the Bill, which withdraw the means to continue financial assistance for rural electrification from a central fund.

I was a little disappointed with my hon. and learned Friend's reply in that I did not find in it quite the assurance that I would have desired in thinking that we could rely on his support to ensure that rural electrification would go ahead. He expressed the view that it would go ahead under the terms of the Bill as it stands, but I would have preferred something a little more positive in his approach.

Like my hon. Friend the Member for Taunton. I come from the South-West Area, which is a special case in that the need there is greater than in other areas. We have so far achieved only 55 per cent. electrification of our farms, and that has been carried out largely at the expense of the rural consumers in the South-West Area. There is no question that the South-Western Electricity Board in the past has relied to some extent, may be a small extent, on the finance which it has received from the central fund. It was relying on a continuation of that financing.

The cost of reaching these farms is high. As time goes on they become more and more scattered and remote, costs rise, and their incidence on the urban consumer tends to become greater and greater. The recommendation of the Herbert Committee is accepted in the Bill —it would be out of order for me to reopen that question—but the Herbert Committee went further than that. It expressed the view that such issues as subsidisation of rural extension should be dealt with as an act of policy by the Government, and I should have appreciated a word from the Minister on that point.

In an intervention, I suggested that the matter might be dealt with under Clause 7 of the Bill. I did so because that is a Clause under which the Minister is empowered to initiate action. His reply was—and again I was a little disappointed —that it could be covered by Clause 3 (3), which places upon the Electricity Council the function of making recommendations. I feel that this is not a matter to be dealt with from purely a commercial point of view. It is one where one would like to see the initiative taken by the Minister.

It is the Herbert Committee's conception that rural electrification is not to be regarded purely as a commercial issue. It should be treated as a matter of policy by the Government whether, for instance, a social desirability is involved. I think that we all agree, when we see the hundreds of millions of pounds being paid out to keep our agricultural industry in a prosperous condition, that it is illogical to take a narrow view in treating the supply of electricity purely on the basis of commercial justification. There is nothing more important in the rural districts. It is a matter requiring positive action by the Government. I may be out of order, Mr. Speaker, in commenting on what is not covered by this Bill, but I am a little disappointed that the Minister cannot give us a more definite assurance.

6.58 p.m.

Mr. Warbey

We have had an interesting time following the Bill through the legislative machine, and we have made a number of improvements in it, although, as the Irishman said, some of the improvements have been for the worse. Not the least interesting part of our discussions have been those which have involved skirmishes between the different political philosophies of the two sides of the House.

As this is the first Bill involving a major reconstruction of a nationalised industry, it was inevitable that some hon. Members opposite should take the opportunity which it afforded to try to wreck. so far as they could, the nationalisation principle, if they could not rationalise the industry out of existence. We have also had an attempt on the part of the Minister and the Parliamentary Secretary to justify certain Clauses in the Bill on general theoretical grounds which have turned out, on examination, not to hold water. We shall, no doubt, have an opportunity on other occasions to revert, for example, to the theoretical consideration which the Paymaster-General has advanced in support of his contention that in principle nationalised industries ought to raise their capital in the same way as private industries.

The right hon. Gentleman's theoretical justification for that was that the criterion by which we should judge whether capital investment was a good thing was the return on the invested capital. That, of course, is a criterion which we on this side of the House could not possibly accept. I doubt whether the Paymaster-General himself, on reflection, would accept it in practice. I should have thought that he would not accept the view that one should judge our defence programme expenditure, on guided missiles and the hydrogen bomb, on that basis, because there is very little financial return from that capital investment. The same applies to our education programme.

Presumably, however, the right hon. Gentleman would like to judge by that test the importance and the success, from the point of view of public policy, of the nuclear power programme for the generation of electricity under the Bill. It would be a completely wrong test to apply. The right hon. Gentleman knows that if we are to have any kind of public planning at all that test falls to the ground completely.

We have just had another example, illustrated by the speeches of the hon. Member for Taunton (Mr. du Cann) and the hon. Member for Cornwall, North (Sir H. Roper) of how, once more, Tory philosophy, as enshrined in the Bill, does not work. In decentralising the structure of the industry, through the Bill, the Government have also tried to decentralise its financial operation and, following their philosophy, they have put Clause II in the Bill and have got themselves into all kinds of difficulties as a result.

The Parliamentary Secretary made a soothing speech about rural electrification. He tried to claim that Clause 11 would not hold up rural electrification or make electricity more expensive to consumers in rural areas, but he did not succeed in convincing either the hon. Member for Taunton or the hon. Member for Cornwall, North. He certainly did not succeed in convincing my hon. Friends, including the hon. Member for Falmouth and Camborne (Mr. Hayman). In view of the provisions in the principal Act in this respect, ways and means will have to be found of getting round the principle enshrined in Clause 11. Although the Minister has rejected the method which we on this side of the House have advocated, some other methods must be found.

Again, I thought that I detected in the Parliamentary Secretary's reply to an earlier interjection by the hon. Member for Cornwall, North a further implicit reflection of Conservative philosophy when he almost expressed horror at a suggestion that the Minister, in practice, would make any use of powers contained in Clause 7 (1) to give directions to the Electricity Council and the boards. He made what is, of course, a purely technical point that directions are rarely if ever given, but he knows very well that the whole purpose of subsection (1) and of the Clause as a whole is to ensure that the nationalised industry is carried out in conformity with public policy.

In practice, there are consultations, in the course of which the Minister privately indicates his view to the units governing the industry. That view, having gone through a process of discussion, is then generally expressed in decisions which are apparently independently taken by the governing bodies of the industry. The Minister, in that case, does not have to make a direction, but it is entirely wrong to suggest that this is a purely negative function and that the Government can sit back and do nothing, letting the industry run entirely by itself with the Government having only reserve power to intervene in the last resort should the industry appear to be diverging in a major degree from the public interest.

We on this side of the House regard the powers in Clause 7, like similar powers in our own 1947 Act, as being a vital part of our conception of the way in which nationalised industries work. I beg hon. Members opposite to appreciate that we nationalise industries not because we have any particular grudge against private enterprise but because we believe that it is only by bringing those industries under public ownership and control that we can ensure that they serve the public interest and that great fundamental industries like that of electricity supply are conducted in conformity with the general national interest.

Here there is a conflict of view. There was a time when we thought that the Conservative Government would continue the general line of policy which the Labour Government had instituted in this matter. But we have seen that they have begun to run away from it and to abandon the concepts of national planning in favour of a free-for-all. We hope that they will not do that with the electricity industry. We hope that they will ensure that national planning is carried out in terms of public policy.

I thought that the statement made by Lord Mills in another place a day or two ago on the nuclear energy programme indicated that the Government had now arrived at fairly firm ideas about how the generating programme of the industry should be conducted over the next ten years or so. Those ideas are embodied in the programme announced by the Minister, about which we arc shortly to have a White Paper.

That process is certainly not arrived at by the Minister talking and doing nothing. It can be arrived at only by the Minister taking a very active part indeed, exercising to the full the powers given to him in Clause 7, and ensuring that all our energy resources are used and expanded in the national interest, and that the capital investment available in the country is allocated not in accordance with what would be the largest capital return but in accordance with what would be of the greatest benefit to the greatest number in the community.

7.9 p.m.

Mr. Hayman

Most of the Bill, which has now reached its final stage, is occupied with the Government's decision to abandon the Central Electricity Authority and to transfer its powers elsewhere. The House having reached that decision and the Bill having reached this stage, we must accept it, but we ought to put on record our appreciaiton of the work done by the Central Electricity Authority and by the area boards up to now.

This has been a nationalised industry and these bodies have had to undertake the immense task of re-organising the industry from a mass of private firms and local authority undertakings. As the Herbert Committee's Report said, they did this work most efficiently. A great debt is due to the staffs and workmen of the Authority and of the area boards.

We are glad that the Minister, in the course of our long discussions in Committee, saw fit to grant us some substantial concessions. I should like to put on record my appreciation of the flexibility he has shown towards us and our arguments, even though he did not accept all that we put forward. I refer, in particular, to the composition of the Electricity Council and to the general appreciation shown throughout the Bill of the excellent work done by the consultative committees throughout the country since the industry was nationalised. They have been given additional powers which I am sure will be justified, and I believe that the Minister will be glad that this has been done.

I suppose I have said too much about rural electrification already, but it is important. Even now 45 per cent. of the farms in the South-West which could take electricity have not been electrified. I say again that the main cost of rural electrification will fall upon the big cities of Bristol, Plymouth, Exeter and upon the town of Torquay. They have carried a great burden up to the present because, when the tariff was unified some years ago, they had to bear a steep increase. In spite of Clause 11, under which the area boards must finance all their schemes of rural electrification, I am sure that the 45 per cent. I have mentioned will never be dealt with in that way, but that is something which remains to be seen.

The hon. Gentleman the Member for Taunton (Mr. du Cann) said that it is not only farms in the countryside which need a supply of electricity but also the houses of other people who live there. During the Committee stage I drew attention to the fact that in one small hamlet in my constituency each tenant of twelve council houses was called upon to find £42 for the connection charge as well as having to pay all the subsequent ordinary charges. Since we have electrified the best parts of the areas, the further parts will prove an increasing liability, and the further charges on the ordinary people of the countryside will become much heavier. This will impede the completion of rural electrification.

In spite of all the propaganda of the party opposite in the country, in which they refer to nationalisation as an awful bogy which will bring great disaster on us, they themselves have brought to its final stages in this House a Bill which continues a great nationalised industry. I am sure that they, as well as we on this side of the House, realise that the electricity industry will continue to be efficient, and that we can look forward to a continuation of excellent work from chose who serve it from top to bottom.

7.15 p.m.

Mr. C. R. Hobson

Now that we have come to the closing stages of the Bill, I think we can all say that this Measure for the setting up of an electricity industry cabinet, which is really what it does, has had an easy passage. This was largely because, on its Second Reading, it was apparent that it would be an agreed Measure.

We all regret the absence of the hon. Member for Kidderminster (Mr. Nabarro), whose ebullience certainly livened the proceedings in Committee. It would not have been too bad if the hon. Gentleman had left it at that, because we always enjoy a little light relief. The unfortunate thing about his presence on the Committee, and the entourage which he was able to gather around him, was that it resulted in the Minister being compelled, because of that pressure group, to weaken the Bill. I propose to say something about that in a few minutes.

I want to refer now to the speech made by the hon. Member for Cornwall, North (Sir H. Roper) about the South-Western Electricity Board. I appreciate his dilemma, and I appreciate the need for greater rural electrification, which was stressed by my hon. Friend the Member for Falmouth and Camborne (Mr. Hayman), but he singularly failed to pay regard to the cost to the ratepayers of Bristol, Exeter and Plymouth of the rural electrification scheme. I cannot talk about something which is not in the Bill, but there is nothing in it to lighten their burden. There are, however, certain other ways and means of dealing with that problem, and I suggest that if the hon. Gentleman reads the speeches made in Committee he will find some valuable suggestions for speeding rural electrification without being unfair to the citizens of large cities.

The Central Electricity Authority, as such, is no longer the boss, and as I said on the Second Reading, that is to be welcomed. There is a need, as there was in the original Act, for the separation of generation from distribution, but, at the same time, there should be some authority constituted to co-ordinate their activities.

In that regard, we have gone back to what was the practice before nationalisation, where there was the Central Electricity Board responsible for generation—the national link—and the Electricity Commissioners who exercised financial control over the distribution network. It was then left to the private companies and the municipal authorities to control their own areas. Now, instead of control by the companies and the municipalities of their own areas, we have within this Bill the Electricity Council which, of course, has complete overall control.

The Bill is considerably weakened by the fact that the Central Electricity Authority is now no longer in a position to manufacture plant. It is true that power was never used, but it was an important reserve power. What I think is still wrong with the Bill is that the plant required for maintenance has not been defined. I do not want to weary the House, as I did yesterday for twenty minutes on this theme, when I gave what I thought were practical examples of the difficulties into which we shall be led when the powers that be have to operate this Measure. Certainly there will have to be some definition later.

In having given way to the hon. Member for Kidderminster in this connection. the Minister has put himself into precisely the same difficulty as we were in during the Committee stage when we were discussing Clause 2 and trying to define what is a fitting and what is not a fitting. The door is open to someone to challenge what is plant for maintenanance in this Bill. That will be a weakness—

Mr. Maudling indicated dissent.

Mr. Hobson

The Paymaster-General shakes his head, but I assure him, as one who was fourteen years in a power station, that he will find this a problem. For instance, will it be said that the necessary gear for testing boilers—

Mr. Maudling

There is no reference to plant now. The Generating Board is allowed to manufacture anything—plant, fittings, anything they like, for the purpose of repair and maintenance.

Mr. Hobson

My concern is about the definition of what is repair and what is maintenance. I gave examples of the difficulties that would arise. I should be out of order if I referred to them now, but if the right hon. Gentleman will take the trouble to read the contribution I made yesterday, he will find that I gave specific examples of difficulties which I thought would arise. For instance, gear for the testing of boiler pressures, which have to be tested at 2½ times the working pressure. In most firms the maintenance departments make the pumps for the purpose of fitting and testing. It could be argued that the plant can be bought outside.

The other weakness in the Bill is with regard to railways. Here again, we have this stupid provision whereby there are to be bulk charges for the railways, which cannot use the energy purchased in bulk for the purposes of traction, for their own workshop practices. Indeed, the Paymaster-General said that the railways would have to buy their electricity for workshops from the area boards. That really does seem madness. It is thoroughly impracticable, and only results in two sets of profit, and I object to profit being given in that manner even to a nationalised concern. It is an ugly pattern. There should be certain benefits given to a large consumer, and one of them should be that when he purchases the energy in bulk, he should be allowed to use that bulk energy for the purposes which are necessary for his business or industry.

I think that the strengthening of the Consultative Councils is welcome, and I was particularly pleased to see that the hon. Member for Clitheroe (Mr. Fort) was successful in getting an Amendment through the Committee stage. I am not so sure whether he did it with our help or not, but we certainly did not oppose him. Indeed, I think there were three occasions on which we saved the Government from humiliating defeat, and it is largely as a result of our activities that the right hon. Gentleman is able to smile and be placid on Third Reading, because of the support which we gave him in defence of our principles of nationalisation.

There is one weakness still in the Bill. The bulk buyer now has a direct approach to the Consultative Council if he has a grievance, and it may be just as well if we gave consideration to the plight in which the private consumer sometimes finds himself, because in so many areas people do not know who is their representative on the Consultative Council.

I think my right hon. Friend the Member for Lewisham, South (Mr. H. Morrison) performed a service to the House in his intervention today, and I hope that his remarks have been noted by the Paymaster-General, because there is no one who has had greater experience in general administration and structure than my right hon. Friend. I thought he pointed out what could be a potential weakness, and certainly that will have to be watched. It is absolutely essential to recognise that the new Electricity Council has a real job to do, and it may be, of course, that in the light of experience a review may be made of its functions.

Tribute has been paid to the industry, and I do not propose to do so on Third Reading, because I paid my tribute to it on Second Reading. We shall watch the operation of this Act very closely indeed. It remains to be seen whether there is the extent of devolution that we have been told will now happen. We shall have to see how it works out in practice.

7.24 p.m.

Sir F. Soskice

We have now arrived at the concluding stage in our deliberations in this House on the Bill. I should like, at the outset of my concluding observations, to pay a tribute, which many of my hon. Friends and hon. Members opposite have paid before, to Lord Citrine and those who made this industry, both in the Central Electricity Authority and in the area boards, the acknowledged success which, on all sides of the House and on both sides of the Commitee, it was recognised to be—a success which was underlined in the Herbert Committee Report, in particular in the passage which I had occasion to read in our discussion earlier today.

While I am paying tributes, I would also assume the pleasurable task of paying tribute to others who have contributed to our debates. I should have thought that all hon. Members would be glad to join in the tribute paid to my hon. friend the Member for Cleveland (Mr. Palmer), and I join with his name that of my hon. Friend the Member for Keighley (Mr. C. R. Hobson), both of whom have brought to our debates the great advantage of practical experience over a very long time in the industry which is under discussion.

In that regard, they have the advantage over us who speak from study, from hearing the arguments and from a rather theoretical aspect of the industry. Their practical experience has supplemented the want which was apparent, certainly in my own contributions, and to a lesser extent probably in other hon. Members' contributions to the debate. I feel sure that we also enjoyed and felt great benefit from the intervention by my right hon. Friend the Member for Lewisham. South (Mr. H. Morrison), who brought to bear in this stage of our debate the great weight of his long experience and authority.

May I pass from one side of the Rouse to the other, and offer a word of tribute to the two much harassed Minister, who helped us very much in our consideration of this Bill? They have had to encounter the badinage which is the fate of all Ministers, and we have felt regretful when we have had some criticism to offer against them personally. They faced it throughout with that stolid imperturbability which all Ministers must display who know that they are 100 per cent. guilty, and we respect them for that.

We agreed to the Bill, in particular because we thought that, after nearly ten years of life, there was a case for considering a remodelling of the industry on the lines suggested in the Herbert Committee's Report. When the industry was first set up under public ownership, it seemed to us that there was a far greater need for a strong central cohesion than might be necessary at a later stage of the industry, when it was well under way and it had displayed that of which it was capable. It has taken its part in our national life, and it serves a most valuable and useful need in the forwarding of our economic life in general.

It was with that thought in mind that we felt that the Government were justified in saying that the time had arrived when some measure of decentralisation should be tried, and, as my hon. Friend the Member for Keighley has just said, we will watch most closely the operation in practice of the Bill and the further progress of this industry in its new and amended form.

My right hon. Friend the Member for Lewisham, South felt hesitation, which indeed, on our first consideration of the terms of the Bill when it was first published, many of my hon. Friends on this side of the House also felt. The question was posed and actively canvassed and discussed whether it was right to dismantle the Central Electricity Authority and substitute in its place the Generating Board and what we regard as perhaps a slightly too colourless Electricity Council invested with the somewhat amorphous functions which the Bill reposes in it.

The clash of view on the Bill developed early in our debates upon it—indeed at the Second Reading of our discussions, because it was at that stage that the then Minister of Fuel and Power indicated that it was the intention of the Government to depart from the recommendations of the Herbert Committee in relation to the Electricity Council itself.

The Herbert Committee recommended that the Council should have considerable supervisory powers, including a power to give directions to the boards, and if it had had those powers it would have been placed more in the position envisaged by my right hon. Friend the Member for Lewisham, South who voiced his criticisms as to the creation by the Government of the Electricity Council, floating in the air—as he described it—and not anchored down to any practical responsibilities.

That was an anxiety which we felt very greatly when we first saw the terms of the Bill, and that anxiety has not yet altogether been allayed. It was for that reason that, in the course of our discussions both in Committee and on Report, we made constant endeavours to strengthen the Council and give it more defined and specific functions to perform and more influence in the general governance and direction of the industry. We thought that it should be more in a position to bring the industry together, in order to make sure that it served an overall need, and to prevent it falling apart and becoming a series of twelve electricity boards meeting on occasions round a table to discuss common and uncommon problems under the guise of an Electricity Council.

The Government have met us to some extent in that regard. They have strengthened the personnel of the Council, although they have not felt able to accept the various proposals which we made which would have required the Council to discharge executive functions. Nevertheless, we feel that the Government have at any rate shown some disposition to recognise the validity of our views in the matter. When we considered whether we should divide upon the question, "That the Bill be read the Third time," we carefully weighed what the Government had done as a result of our representations, and I think it is the view of my right hon. and hon. Friends that, although we should have desired the Council to figure more in the capacity envisaged for it by the Herbert Committee, we nevertheless think that with its personnel strengthened, as the Government have strengthened it, it does not fall so far behind what we should desire it to be that we should feel compelled to review the attitude we took to the Bill during its Second Reading.

Two points very actively engaged our minds, as has been apparent in the course of our debate on Report. We felt profoundly that the Government were making a serious mistake in curtailing the powers of the Generating Board to manufacture electrical plant. We thought—and we still think—that that is a great mistake.

The second matter was that which was raised by Amendments moved by some hon. Members opposite, seeking to take away the power of the Board to guarantee electrical stock. The Government, as one knows, gave way upon the first point, but fortunately managed to hold out on the second. We attach importance to those two points because we think that it is wholly wrong to regard the industry as analogous to a purely private industrial concern. It never was, and it never will be, because the Statute and the public need require of the industry that it shall serve all and sundry. It cannot—as private industry and private commercial concerns can—choose its customers. It cannot cream off profits, and it cannot disregard that sphere of operations which will bring no profit and will probably bring a loss. It is under a duty to undertake, in its service to the nation, both the profitable and the unprofitable.

In those circumstances we feel that the industry has an extra special burden placed upon it—a burden which public interest must impose upon it. We therefore believe that it is essential that an industry struggling under that disadvantage should have public credit behind it. For that reason we think that it would have been a very serious error on the part of the Government if they had listened to the proposals of those who believe in the divine beneficence of the money market, and had robbed the industry of the Treasury guarantee which we believe must stand behind it.

It was for the same sort of reason that we felt very incensed with both Ministers when they capitulated upon the question of the right of the industry to manufacture its own plant. We think that it should have that right, whether or not it has been exercised hitherto. It has become almost a matter of principle. We cannot see—and in this context it is necessary only to quote the Minister's own argument—why the industry, burdened as it is, should not have the facilities available to it that any private concern has. We believe, as a matter of principle, that it is adopting a wholly wrong approach towards a nationalised industry—and here again I simply repeat the arguments used by the Minister himself when he was in a more courageous mood—to hamstring a nationalised industry in this way.

The Government's attitude upon that matter gave us serious doubts whether we should any longer give our consent to the Third Reading. Having weighed the whole question, however, and bearing in mind that after ten years of life and ex perience it is reasonable to see whether the industry should now be remodelled —not basically changed, but remodelled in some particulars—we have come to the conclusion that we shall not divide upon the proposal that the Bill should be given a Third Reading.

Everybody would wish this great industry well. We shall watch its progress and do all we can to assist it both to expand and to make itself sufficiently powerful to carry the great and increasing burdens which must ever be imposed upon it, not least that which will now rest upon it with the advent of nuclear power as a great source of energy in the development of our non-warlike industry. In those circumstances, and for the reasons that I have given, I hope that the House will agree that the Bill should now be given a Third Reading.

7.37 p.m.

Mr. Maudling

I feel that I should begin by thanking hon. Members. particularly those who were members of the Standing Committee, for creating the atmosphere in which the discussion on the Bill has proceeded. I was particularly grateful for their courtesy because, as the House will he aware, I came fresh to the Bill just before the commencement of the Committee stage, and had to pick up a good deal as I went along. I was helped a great deal by many of the reasonable suggestions put by hon. Members on both sides, a number of which—though, I admit, not all—have been incorporated in the Bill. I should like particularly to thank my hon. and learned Friend the Parliamentary Secretary for the assiduous assistance that he has given me throughout and for the tremendous help that he has been through all stages of the proceedings.

In the course of this discussion on the Third Reading, three main points have arisen. There is the question of the manufacture of plant; the question of rural electrification and the main question of the basic structure of the industry. Upon the question of the manufacture of plant, I would first refer to what was said by the hon. Member for Keighley (Mr. C. R. Hobson). I still do not think that he is quite clear as to the amount of latitude given in the matter of manufacture. The Bill now says that the Generating Board has power to manufacture anything—plant, fittings or anything else— which it requires for maintenance purposes, irrespective of its ability to buy the plant or fittings outside. The provision is as broad as that. I do not think that the difficulties to which the hon. Member referred need arise in practice.

I appreciate the point of view of the right hon. and learned Member for Newport (Sir F. Soskice) in the matter, but I think that he was slightly exaggerating when he used the word "hamstring" to refer to an Amendment introduced to take away a power which his hon. Friend the Member for Edmonton (Mr. Albu) and one or two others described as an essential one although it has never been used. I think it relevant to point out that the argument which has mainly been used in defence of the power to manufacture has been the argument of protection against exploitation by price rings. That is counterbalanced by the fact that we have the restriction on trade practices which should afford proper supervision and protection for the Electricity Authority in this regard.

The second point to which I wish to refer is that of rural electrification. The argument has been advanced that the provisions in the Bill will hold up the progress of rural electrification, I do not accept that at all. I have studied as closely as I can the economics of the various area boards and I think it right to say—as did the Herbert Committee—that the balance of load in all the respective areas is pretty even. They have been drawn geographically in such a way as to give a varied and evenly balanced load to each I have studied the forward estimates of the South Western Board, and I am satisfied that nothing which has been done in this Bill will in any way impede the planned progress of rural electrification.

I come finally to the third important point, the structure of the industry, on which we have had many discussions during the Committee stage and the Report stage; and we have also had the benefit of a most interesting intervention by the right hon. Member for Lewisham, South (Mr. H. Morrison), who has devoted so much thought to these matters. I think it is generally agreed that the Government were right to set up the Herbert Committee. I think it was useful at this stage in the advance of a nationalised industry to have an impartial study of the industry. What the Report said about the industry can be fairly summed up, I think, in this way. The Report said that the industry and the people running it have done a good job, and could do still better if certain changes were made to its structure. The Committee pointed out certain faults which it saw in the industry, certain personal frictions that arose, and a reluctance to devolve decisions as much as should be done.

The Committee pointed out that problems of devolution of responsibility had not yet been fully solved, and suggested that, as a result, the industry was not bringing in new young people as fast as it should do, and modern methods of management and economic study had not been as widespread and were not being pushed forward as fast as they should be. The general expression of the Report was that this industry could do even better, were there a separation between generation and distribution, and more devolution in management. Those are the two principal things that the Bill is bringing into effect.

With the first point, separation of generation and distribution, the right hon. Member for Lewisham, South does not agree. He feels that a case for it has not been made out. I think I am right in saying that the House and the Standing Committee felt in general that the Herbert Committee had made a strong case for this; that the function of generation, which is a wholesale business, and the function of distribution, which is, by and large, a retailing business, should be kept separate. The conclusion of the Herbert Committee was that the present set-up had led to difficulties and friction which should be avoided; and so we decided as one of the principles of the Bill to separate generation and distribution.

Mr. H. Morrison

But surely generation was under the control of the Central Electricity Authority and distribution under the area boards, so that they were effectively separated.

Mr. Maudling

Yes, but the area boards were under the Central Authority, so that there was not an effective separation.

Mr. Morrison

Surely it is an exaggeration to say that the boards have not a considerable autonomous life of their own. If they had not enough autonomy, then, by all means, provide for that autonomy. But generation was a separate function from distribution, which was under the area boards. Generation was under the Central Authority, so I do not think that that excuse will wash.

Mr. Maudling

I do not think it is a question of washing excuses. I have never encountered an excuse that washed anything. If the right hon. Gentleman will look at the Report of the Herbert Committee, he will see that it dealt with this matter in some detail and produced solid arguments for the complete separation of the two functions.

The second point is the matter which was discussed most, either directly, or by inference, throughout our proceedings. I refer Lo the degree to which responsibility should be devolved or left to the Central Authority. We have accepted the two principles which the Herbert Committee supported. We want maximum devolution, and I think everyone agrees that in a modern industry no single unit should be larger than is necessary to get the full benefit of the advantages of large-scale operation—to derive the full "economies of scale."

Proceeding on those two principles we came to the conclusion that the right thing to do was to treat the various boards, the Generating Board and the various area boards, as separate entities responsible in their own right as much as possible for providing a service on an economic basis and paying their own way. In our Bill we have followed more the logic of the Herbert Committee than its recommendations.

When the Herbert Committee suggested the respective functions of the Central Authority and the various boards, it put in the control of the Central Authority functions which should belong either to the Minister or to the area boards. In some ways the Herbert Committee wanted to take from the Minister powers which he has at the moment, for example, the power of approving the capital programme of the industry as a whole. for which he is responsible to this House. I feel that hon. Members would not like to see that taken from the Minister. On the other hand the Committee put into the hands of the Central Authority powers which—

Mr. Morrison

Hang on to the Ministerial power.

Mr. Maudling

—would take away from the responsibility and independence of the area boards. For example, the Herbert Committee suggested that the Central Authority should approve the capital and revenue budgets of the area boards. In a number of other recommendations it seemed to me that the Committee was taking responsibility from the Minister, and that on the other hand it was taking from the area boards their rights and duties to be independent. So we came to the conclusion that to interpose an executive council between the Minister and the area boards would not work.

We felt that the right structure was to have the industry based fundamentally on the area boards and the Generating Board, each with their respective functions and service, and paying their own way; with a central Council primarily of a consultative character, with certain executive functions designed to assist the Minister and advise him when he has to reach a decision on such fundamentally important matters as approving the capital programme of the whole industry.

I think that it is on this question of organisation that the main arguments have centred, and they have been arguments of degree rather than principle. As was said by the hon. Member for Cleveland (Mr. Palmer), time, if it shows anything, will show who is right. Now that this Bill is nearing its Third Reading, I think we all feel that we should wish it success and hope that through it we shall succeed in bringing to the industry the sort of benefits which we all hope will be provided, and which we on this side of the House claim will be provided, by the Bill.

May I conclude by paying my tribute to the work which has been done and is still being done by the Central Authority under the remarkable leadership of Lord Citrine, with the full support of this industry in its nationalised form? No one is proposing by this Bill that the industry should be denationalised. What we are seeking to do is to make the existing setup more efficient. I hope that we are doing so, and we all wish well to the industry in its future tasks.

Question put and agreed to.

Bill accordingly read the Third time and passed.