SCOTLAND (RURAL ELECTRICITY SUPPLIES) (Hansard, 28 May 1957)

§ Mr. H. R. Spence (Aberdeenshire, West)
I am grateful for this opportunity of raising the question of rural electricity supplies in the North of Scotland. It is my purpose to bring to the attention of the Minister the state of affairs which has arisen not through the fault of any particular Department, but by the process of events both practical and economic.
I wish to cite, in particular, what has happened in my own constituency. We have seen the Hydro-Electricity Board gradually spreading its network of supplies over almost the whole of Scotland. Some parts have been receiving supplies in advance of others, and a great part of my own county of Aberdeen is already amply supplied by the grid network Islands of isolation have grown up, for the reason that when the grid network was originally thought out emphasis was put upon getting the maximum number of consumers for any length of line. In the initial stages of its development, the Board went to the larger centres and the more populous areas.
There are one or two peculiar results. One is that in my constituency there is an island of no supply literally within a mile or two of Aberdeen, in the parish of Balmedie. Again, just near Inverurie, the parish of Keith Hall, has no supply at all. The Hydro-Electric Board has indicated that as soon as funds permit it will electrify these areas, but the credit squeeze has meant that the plans have been put off again and again.
I think all would agree that electricity is essential for any large modern farm; I am concerned at the position in which the agricultural part of the constituency is finding itself when it tries to get a supply put in under present conditions in these islands of isolation. The cost of installation of grid electricity used to be a comparative minor consideration, provided that the user could give a guarantee of fairly constant use of current, but the cost has gone up. The position now is absurd. The cost of putting 371 electricity into farms which are not actually close to the main distribution lines is absolutely prohibitive.
I will quote from a letter which I received only on Monday. It gives the precise figures for installation of electricity on three farms in the Keith Hall area, Tweeddale, Laggat and Altons. The cost of installation is £4,120, a sum out of all relation to modern economic balance. It is wrong that farms which, through no fault of their own—their geographical position—should face such a high capital charge to get electricity. This is due to the peculiar way in which the grid system has developed and the economic circumstances which have arisen since the inception of the whole idea.
We have to consider not only these islands of isolation and the position of farms in them, but also the general pattern of the development of electricity in rural cottages. There are many cases in which supplies have been promised and then, apparently through no fault of the authority, the project has been dropped owing to the credit squeeze. Again and again we find houses wired for electricity and fitted with all the essential domestic requirements for electricity and yet no mains electricity available and no immediate prospect of it becoming available.
I should like the Minister to consider what action should be taken to help solve all these problems. First, there is the problem of seeing that a whole county is covered by a grid of electrical supplies and that there are not these awful blanks left which produce their own aggravated problems. Secondly, I think he must consider how the question of this very high installation cost can be met, and, thirdly, whether it is really necessary that the credit squeeze shall be applied so drastically to the Hydro-Electric Board in cases where there are housing schemes or groups of houses built and wired in expectation of a grid supply which now find no grid supply forthcoming.
I have a letter from the Hydro-Electric Board, signed by the chairman, which, I believe, is addressed to all Scottish hon. Members, asking them to do what they can in the consideration of forthcoming legislation to facilitate the introduction of electricity to rural cottages for farm 372 workers, blacksmiths and those whose livelihood is obtained from the land. It emphasises the discontent of those who have moved into houses expecting to enjoy the benefits of the grid and all it brings and finding they have to do without. I appreciate the intractable nature of this problem and I am grateful of the opportunity of raising it tonight and giving the Minister the opportunity of replying, if he can helpfully, to the points I have put before him.

§ The Joint Under-Secretary of State for Scotland (Mr. Niall Macpherson)
My hon. Friend the Member for Aberdeen-shire, West (Mr. Spence) is, I think, aware of the limitations of the authority of my right hon. Friend the Secretary of State in the matter he has raised. I should point out at the outset that my right hon. Friend has no responsibility either for the order in which applicants are connected, or for the terms on which they are connected. Apart from the Government's overall control of capital investment, my right hon. Friend has no responsibility for the rate at which applicants are connected.
My hon. Friend will be aware that Section 10 (1) of the Hydro-Electric Development (Scotland) Act, 1943, lays upon the Board the duty so to exercise their functions under the Act as to secure that the revenues …are not less than sufficient to meet their outgoings properly chargeable to revenue account taking one year with another. The capital costs of distribution, as my hon. Friend will be aware, are largely met by borrowing. Such development may be economic and he has referred to the way in which development took place in the past. That is where the revenue resulting is more than sufficient to meet the annual charge and the operational cost, but much of the development which remains to be done is unlikely to prove economic.
To connect a few consumers miles of lines may be needed. The rate of such development must, therefore, depend on the ability of the Board to make a surplus. Uneconomic expenditure must be related to the Board's earning capacity on the whole of its activities. It cannot undertake new distribution on a more extensive scale than its finances permit.
373 I should make it plain that it has never been the policy of the Government of any political persuasion to subsidise the electricity industry. Each board has to take the rough with the smooth in its own area. My hon. Friend asked three particular questions. He asked us to do what we could to see that a whole county is covered. He asked how to meet the costs of installation, and about the credit squeeze. Let me answer, first, on the credit squeeze. Last year, the Board was requested by the Government to curtail capital expenditure on distribution by 10 per cent. This year its proposals have been approved in full. It is, therefore, true to say that it is not the case that there is a drastic application of the credit squeeze to the Hydro-Electric Board in existing circumstances.

§ Mr. Spence
But would the Minister agree that there is drastic application by the Board of the credit squeeze as its excuse for not going on with the various schemes?

§ Mr. Macpherson
Well, that is a matter within the responsibility of the Board itself. Undoubtedly the credit squeeze has played its part, because it is only to the extent that it can make a surplus that it can meet the charges for uneconomic development.
My hon. Friend's second point was about installation costs. Grants towards installation of electricity are available in several ways. They can be made available as part of a comprehensive hill farming scheme, and nearly half the schemes in Scotland which have been approved or are under consideration include proposals for installing electricity and wiring, and the estimated cost of those which have been approved or are under consideration is about £500,000.
Secondly, grants are available as part of the cost of improving or converting houses or cottages, subject to a minimum expenditure of £100 and a maximum grant of £400 per house or cottage. Thirdly, as part of the cost of labour and materials towards the improvement of the dwelling house of a croft, which is outside this particular area.
But there is an additional point, that now grants are to be made available for individual improvements, including electricity for the farm, but not the farmhouse or cottage, to holdings which are eco- 374 nomic or will become so as a result of the improvement, provided that the expenditure is likely to produce a reasonable return.
My hon. Friend mentioned the costs of installation, but not of tariffs, but as they are linked I will deal with them together. The question of charges to be made for bringing electricity in the first place, or for the actual supply of electricity, is a question undoubtedly for the Board, as he will find if he looks at Section 10 of the Hydro-Electric Development (Scotland) Act, 1943, and there are only two limitations on their absolute discretion in the matter of tariffs. They must not show undue preference to any person or class of persons, and, secondly, the consultative council for the district is charged with the duty of considering any matter affecting the distribution of electricity in the area, including the variation of tariffs.
Under Section 7 (8) of the Electricity Act, 1947, the consultative council may make representations to the Secretary of State on any matter which it has submitted to the Board and which has been considered by the Board, and the Secretary of State may, if he thinks fit, give directions to the Board after consultation with it, but only if he considers that a defect is disclosed in the Board's general plans and arrangements for carrying out their functions.
My right hon. Friend could not properly give a direction which detracted from the Board's statutory duty to fix tariffs. No such representations about connecting charges in outlying areas have been made to the Secretary of State by the North of Scotland District Consultative Council, and I understand that no such representations have been made to the Council in recent years.
My hon. Friend dealt with plans and with the fact that certain projects of the Hydro-Electric Board have been postponed. The Board, naturally, makes its own plans for phasing development, and in pursuance of its plans it negotiated agreements for supply with about 1,500 persons, that is to say, about a quarter of the potential consumers in the area with which my hon. Friend is mainly concerned, namely, West Banff, Strathbogie and Strathdon. That was up to April, 1956. I understand that these agreements 375 still stand. My hon. Friend says that in some cases wires still stand, waiting for the agreement to be implemented.
Unfortunately, when the Board reduced its capital investment programme by 10 per cent. at the Government's request in 1956, it decided that the areas in which development should be suspended should include the areas of West Banff, Strathbogie, and Strathdon. Moreover, in April, 1956, the Board introduced revised arrangements, limiting its capital contribution and requiring consumers with whom agreements were made thereafter to pay a capital contribution as well as give a minimum guarantee.
While the Board must adhere to its planned phasing of development, it is willing to connect a consumer, or group of consumers, out of turn, so to speak, provided that the consumer or consumers are prepared to pay the whole cost of bringing the supply. I imagine that what my hon. Friend has in mind about the farms which he mentioned is that these are farms in respect of which the extension of distribution has been temporarily postponed. I think he said that the project had been dropped, but that is not so. The project has been postponed.
My hon. Friend said that if they wanted to get a supply immediately they 376 would have to pay the full cost of bringing the electricity there. That may happen in certain cases, for example, where there is a private supply which has to be replaced and it is urgent to replace it. In those cases, it may be worth while for the applicant to get his supply out of turn—because it is outside the phased plan—provided that he pays the full cost.
I will gladly look into the matter which my hon. Friend has raised about these farms, but I would suggest to him that since the order of meeting the needs of various areas is a matter for the Board, in which my right hon. Friend has no authority to intervene, the best thing would be for the three farmers in question, if they consider they are being unduly by-passed, to take their complaints to the local committee of the North of Scotland Consultative Council, which in this case, I understand, is the General Purposes Committee of the Aberdeen County Council.
That is the correct channel through which to make this approach, but there is no doubt that my hon. Friend has done a service in raising this matter in the House tonight, and I hope that this short debate has served to make clearer where the various responsibilities lie.