NORTH OF SCOTLAND HYDROELECTRIC BOARD (REPORT AND ACCOUNTS)

HC Deb 27 January 1958 vol 581 cc103-66

6.56 p.m.

The Secretary of State for Scotland (Mr. John Maclay)

I beg to move, That this House takes note of the Report and Accounts of the North of Scotland Hydro-Electric Board for 1956. I confess that I found myself in rather a dilemma in deciding what type of speech to make. There are many points I should like to cover and might reasonably have expected to cover, but the time available is not very long. It is extremely important that the maximum number of hon. Members on both sides should have an opportunity of contributing to the debate, so I have erred on the side of keeping my speech short. I hope that I will, none the less, be able to cover points of interest and importance.

This debate affords a welcome opportunity to discuss the operations of the North of Scotland Hydro-Electric Board. The latest published Report and Accounts of the Board relate to the year 1956. They were published in February last year; but even though we do not have before us the Board's Report for 1957, which is already in the printer's hands, we have the advantage of the first Report of the Select Committee on Nationalised Industries published, in October. This gives us a fairly recent commentary on the Board's activities and should undoubtedly help the debate.

The House will no doubt wish to express its gratitude to the Committee for the thorough work it has done in presenting its first Report. The general conclusion of the Select Committee is favourable to the Board and to its members and this conclusion must have given heartening encouragement to the Chairman of the Board, Mr. Tom Johnston, to his fellow members and to all the employees of the Board, whatever other comments may be made on the Board's work.

The Board's Report for 1956 showed that it made steady progress both in developing water-power resources and in extending its distribution system. Seven generating stations were brought into commission, with a total capacity of 102,000 kilowatts. In 1957 further progress has been made: another four stations with a capacity of 69,000 kilowatts were commissioned, bringing the Board's total hydro-electric capacity at the end of 1957 up to 729,000 kilowatts. In 1957 the Board also commissioned a steam set of 30,000 kilowatts in Dundee.

On the distribution side, the Board in 1956 connected 13,382 consumers, and in 1957 it added 12,433 consumers to the supply, bringing the total number of consumers in its area up to 364,202, to be precise. As a result of difficulties in 1955 and 1956, including the drought, it started 1957 with a debit balance of £612,577. I am glad to tell the House, however, that its operations in 1957 have broken even and that it is hopeful that in the coming year it will be able to make a significant inroad on its debit balance. I think we can all regard this progress as satisfactory. This does not mean to say that there are no criticisms, and I should like now to deal with some of the principal ones which have been voiced in this House and before the Select Committee.

As I have said, on distribution the Board has made real progress in territory of unusual difficulty for an electricity authority. Almost everywhere in the Highlands one sees its distribution lines, but of course I know well that not everyone is likely to be satisfied. Let us look at the Board's record. In the whole of its district 86 per cent. of potential consumers have been connected. Indeed, in the Highland part of its area—the seven crofting counties—the figure is 88 per cent. The figures for farms and crofts by themselves are admittedly lower than these, but at the end of 1957 the Board had connected 61 per cent. of the farms and 60 per cent. of the crofts in its area—some of them in very remote situations. Against this record two questions can be asked—how quickly will the remainder of the population be given supplies, and what charges will the Board ask for new connections?

In the end both of these matters are determined by finance. The Board, like all the others, has a statutory responsibility to balance its budget. It is also subject to the same kind of restrictions on capital expenditure which must apply at present to other nationalised industries and to the Government themselves. One or other of these factors may influence the speed at which the Board can carry out the rest of its work. It is not, therefore, able to give a time-table for the completion of the electrification of its district, but in 1958 I know that it hopes to connect over 10,000 consumers.

Another matter on which there is concern is the connection charges levied by the Board. The Board is, of course, entitled to make such charges. Every electricity board does so. At the beginning of its work it was its declared intention to give connections without charge or guarantee to premises within reasonable distance of main transmission lines. Under the 1947 Act the Board's area of distribution was greatly extended and it has been faced with steeply rising costs. Much against its wishes, it has been forced to alter its policy of free connections and to ask new consumers in the outlying areas where the connection charge is high to make some contribution to the cost of bringing the lines to their doors.

Between 1953 and 1956, therefore, it introduced the present arrangements, which require distant consumers in most cases to pay a capital contribution and to guarantee a minimum revenue. The Board regrets that this change in policy was necessary, but it is worth pointing out that the Select Committee found no fault with its decision. I should like to make it clear, however, that where the Board has signed agreements to provide supplies for no connection charge or on more favourable terms than obtain today, it will of course honour those obligations, even though it may be some little time before it does so.

Next I come to the question, or rather group of questions, concerning the cost and economics of the Board's programme. The first question might be put thus: "The Hydro-Electric Board was allowed to spend many millions in 1957. Granted that the schemes were desirable, can we as a country afford them?" The answer is that the Board's annual capital investment programme is scrutinised by the Government with the greatest of care in relation to the total amount of capital investment that we can afford. We have this year asked the Board to limit its capital expenditure to £18 million in 1958 and £15,500,000 in 1959. This will still allow the Board to continue the constructional schemes now in progress and should permit a start being made on other major schemes if they are approved. It will also permit distribution work at approximately the same rate as in 1956.

At this point it may be appropriate to deal with the general question of acquisition of land and compensation. The Board has, of course, power to buy land it requires and other rights by agreement; it can also acquire them—land and other rights—compulsorily under the authority of constructional schemes. The settlement of terms—including what is technically known as compensation for injurious affection—is a matter for agreement in the first place, for the Act provides for arbitration only if the parties fail to agree. The Board's practice is to avoid compulsory proceedings wherever possible. Therefore, when it is preparing a constructional scheme—that is, before it has finally adjusted its terms or reached the stage of formal publication—it seeks at the earliest possible stage to inform the owners and others likely to be affected so as, if possible, to agree with them on the land required for the scheme and the arrangements for any payment of compensation. Such arrangements are, of course, conditional on the scheme being authorised and entitlement to compensation does not arise till then.

Since all these matters are to be settled either by agreement or by statutory machinery, the Secretary of State has always taken the view that it would be improper for him to intervene or to seek to exercise any control which might be held to prejudice the discretion given to the Board or the rights of an owner to have his compensation settled impartially, For the same reason the Board is not asked to disclose the amount of payments or compensation made in any particular case; but of course if it chooses to do so in agreement with an owner it is free to do so.

It would not be proper for me to enter into a discussion about questions connected with any scheme which has not yet been approved. I think, however, that the general line taken hitherto is the right one.

The second question is, "Will these schemes pay their way?" The Board has to balance its budget and naturally its tariffs must not in practice be out of scale with the level of charges in other parts of the country. That means that it does not pay the Board to promote schemes which are not likely to be economic; apart from this, however, the Secretary of State, before confirming any hydro-electric scheme, examines among other things the economic aspects of the scheme. If any hon. Member is interested in this procedure, I suggest that it is well worth while looking at the Select Committee Report and, in page 71, at the evidence given by the then Secretary to the Scottish Home Department, Sir Charles Cunningham, who went into it very fully.

Knowing the way in which costs have risen, how can we be sure that new schemes will be based on sound estimates? The Select Committee noted in paragraph 55 of its Report the discrepancy between estimated costs and the final costs. This, it says, has been partly due to the rise in the price of materials and labour, and partly because of faulty estimating. The Board agrees that some inaccurate estimating had taken place in the early days before the necessary experience of post-war conditions had been gained. The Board is confident, however, that the estimates for current schemes will prove to be much closer to the final cost, and in its future reports the Board will give information as recommended by the Committee so that the House will be able to keep a check on this. I might mention that the Board tells me that some of these which cost more than estimated are in fact also producing more revenue than was expected.

Mr. Arthur Palmer (Cleveland)

Would the right hon. Gentleman care to deal with the other point made by the Select Committee, as to whether the Board should in future look more closely at other sources of energy and not confine itself exclusively to water power?

Mr. Maclay

I will deal with that in the rest of my speech, but before I do so there are one or two other points I want to make.

On another specific recommendation of the Committee the Board agrees to continue its efforts to obtain "fixed price" contracts and to invite competitive tenders for all contracts. Those who have read the Reports will know that the exceptions previously were water wheels and turbine alternators are the only exception at present.

There is also concern with the general question—this is the point raised by the hon. Member for Cleveland (Mr. Palmer)—of whether hydro-electric schemes are economic compared with other forms of generation. The Select Committee wondered, though it did not attempt to form a judgment on the question, whether the Board might not build more steam stations and fewer hydro stations in future.

The initial capital outlay of hydroelectric schemes is admittedly high, but this is offset by two factors in favour of these schemes, namely, their long life and low running costs. The effect of these counter-balancing factors is seen in the comparison of unit costs, which in the last resort must be the criterion. The average cost of producing electricity at existing hydro schemes was 0.59d. per unit in 1957—and I would mention that this was 7½ per cent. lower than the corresponding cost in 1956 and brought it back to the 1955 level. At existing steam stations, those in England and Wales for example, the average cost per unit went up to 0.86d. in 1956–57. This indicates the margin on which the Board relies to cover its less economic distribution.

The newest steam stations situated near coal fields may produce very cheaply, and more cheaply than hydro-electric stations that can be built now. That, however, is not a true comparison. The costs of a new steam station built in the Highlands and operating at the load factor of the Hydro-Electric Board's system would be very much higher and, I am assured, appreciably above the cost at which electricity will be produced at the schemes now under construction. Above all, hydro-electric stations are particularly fitted to provide peak load power, and the value of the peak load power produced from the hydro-electric schemes, as the Select Committee pointed out, is reflected in the price which the South of Scotland Board is prepared to pay for it. This advantage may well be enhanced if pumped storage schemes, which the Board is promoting, enable cheap base load power in the South of Scotland to be linked to cheap peak load power from hydro-electric stations.

The connection between nuclear stations and pumped storage is very important, and the Board is considering carefully this very important factor. This suggests the conclusion that any assessment of the hydro-electric schemes must be based on a consideration of the best way, not simply of producing electricity, but of bringing electricity to the Highlands, and, secondly, of producing peak load power for the needs of industry. So far no better method than hydroelectricity has been put forward. I repeat that the importance of the connection between nuclear and hydro-electric power stations is being very carefully studied.

Mr. Gerald Nabarro (Kidderminster)

My right hon. Friend will be aware that Sir Christopher Hinton published a paper a few months ago in which he stated that the cost of nuclear power would be.66d. per unit, based on 80 per cent. load factor, compared with a load factor in these hydro-electric stations of only 28 per cent.; and as my right hon. Friend has referred to the cost from hydroelectric stations of .59d. per unit, would he now say something of the comparative costs of nuclear hydro-electric power?

Mr. Maclay

I think I had better not try to go into detailed figures of that kind at this stage of this debate, but I am very conscious of the importance of the whole nuclear issue in this matter, and so is the Board. One could give quite a lot of figures, but the crux of one of the problems is that we have to have pumped storage in relation to the site of the nuclear station, and the special requirements of nuclear stations of plentiful water supplies as well as special conditions for pumped storage, but all these things are very much under consideration by the Board, and I assure the hon. Gentleman that that is so.

I promised to be as short as I could, and I propose to sit down straight away, because I think I have covered some of the matters causing concern, and because I think that it is only right that the maximum number of interventions possible should be allowed in this relatively short debate. I entirely agree myself—even after discussing the various criticisms that have been made—with what the Select Committee said in its conclusions, and I quote: In the fourteen years of its existence the North of Scotland Hydro-Electric Board has impressively justified the faith of its progenitors. I feel satisfied that, with careful attention to the several comments and criticisms that have been made, we will get equally good progress in the years to come.

7.15 p.m.

Mr. G. M. Thomson (Dundee, East)

First, I ought to apologise for the absence from this debate of my hon. Friend the Member for Hamilton (Mr. T. Fraser), who should have opened it. I am rather conscious that I have to begin this debate with the immortal but always disappointing words of the Lord Privy Seal—"I have been asked to reply".

Perhaps I ought to begin by getting rid of Lord Lovat right at the beginning. I have no intention of debating in detail the controversy that has arisen about this particular piece of compensation. My hon. Friend the Member for the Western Isles (Mr. Malcolm MacMillan), who will wind up the debate from this side of the House, has been intimately concerned with this controversy, and he will have studied the Secretary of State's statement and, no doubt, will deal with it more fully at the close of the debate. I will merely content myself with commenting that Lord Lovat' s arithmetic seems rather curious. To refer to £100,000 as "merely a fraction of £200,000" is a very odd sort of calculation.

In its way, this is an historic debate, because I think it is the first debate which this House has had on an Annual Report and Accounts of the North of Scotland Hydro-Electric Board, although the Board has now been in existence for fifteen years. There have been complaints, and they were voiced to the Select Committee, about this absence of debate on these Annual Reports. I think that in some ways it is rather strange that this sort of complaint should be made, because if one looks back to the original introduction of the Hydro-Electric Bill in this House, in 1943, we find that one of the major fears about this project was that it would be subject to far too much Parliamentary discussion and interference.

Indeed, there was an attempt to deny a Second Reading to the Bill, not on the ground that the project was not admirable, but on the ground that it would suffer too much Parliamentary discussion. This is one of the fears, together with the fear about damage to amenity in the Highlands, which has, in the event, proved to be quite groundless. The situation has, in fact, gone the other way. We have talked, perhaps, too little about the Hydro-Electric Board. I think it can be taken as certain that the absence of frequent Parliamentary debates on the affairs of the Hydro-Electric Board is a tribute to the excellent work which it has been doing. If the Board had been seriously wrong in any of its general policies, we may be sure that Parliament would have spent plenty of time discussing its affairs.

This, of course, is not the view that was expressed to the Select Committee by the hon. Member for Caithness and Sutherland (Sir D. Robertson) and some of his hon. Friends. In this House, we always respect the forthrightness of the hon. Gentleman on this matter, and, to judge from the information which he gave in his evidence to the Select Committee, he clearly considered that the Hydro-Electric Board had not been serving his constituents in the Highlands of Scotland as well as it might do. It may be a little presumptuous of me, but may I give him my own impressions of his constituency?

I served in the Caithness area in the early part of the war, and I then found the County of Caithness as near as one can get to a Russian tundra. It was bare, bleak, windswept and absolutely treeless. I went back to the hon. Member's constituency a few months ago, and I still found the County of Caithness bare, bleak and windswept, but, in one important way, it was not now altogether treeless, because everywhere I saw veritable forests of electric pylons. It was the biggest single change in that landscape, which now has a labyrinth of electric cables going on their poles out into the bare countryside and into the remote crofts.

I am sure that, as the hon. Member says, some of his constituents need electricity badly, and are finding it very difficult to get, but I think that this matter has to be seen in some sort of perspective. I am told that 85 per cent. of the households in Caithness have, in fact, been linked up by the Hydro-Electric Board, but I am also told, very greatly to my surprise, that there are 480 of the hon. Member's constituents who have had electricity laid on to them by the Board, but who, so far, have failed to provide their own electric wiring, under the terms of the agreement to use it.

That is one aspect of the problem there of which we have so far heard nothing. I am privileged to be able to tell the hon. Member for Caithness and Sutherland something about his own constituency. No one will deny that he is a very assiduous representative of that part of the country, but, in all humility, I suggest to him that in fighting for the rights of those of his constituents who have not yet got electricity perhaps he is in some danger of not seeing the wood for the electric poles.

The hon. Member is, or course, supported on this point by a number of other hon. Members representing Highland constituencies. We all understand their point of view, and sympathise with it. In fact, we find the kind of views that they expressed to the Select Committee singularly refreshing. It is very nice indeed to find Conservative Members criticising a nationalised industry, not because it is insufficiently private enterprise, not because it is insufficently profit making, but because it is insufficiently Socialist and provides insufficient services.

I would only say to them that in attacking the Hydro-Electric Board for inadequacy in linking up remote consumers, they make their criticisms to the wrong address, and I hope that those who have the good fortune to catch your eye, Mr. Speaker, will direct their attacks straight at their own Front Bench, because, undoubtedly, the immediate distribution difficulties that the Board has arise from the Government's own economic policies.

For some years there has been one credit squeeze after another; there has been the rise in interest rates, and the cuts in capital expenditure which the Government have imposed on their public boards. In 1956, according to the Annual Report, the increased interest rates amounted to £250,000 more than they would have done had there been no such increase. I am told that in 1957 this increase will amount to another £150,000. I would comment to hon. Members opposite from Highland constituences on the number of remote consumers who might have been connected had these sums of money been available to the Board for distribution purposes.

In this matter, the Government have turned down the advice of their most important Highland advisory body—the Highland Panel. At the start of the credit squeeze, the Panel pleaded with the Government to exempt the Highlands from the full impact of the Government's restrictive measures, and I should have thought that that was elementary economic planning. If the country is in economic difficulties, one does not expect equal sacrifices from everyone, but rather that we should share them according to ability to shoulder them. One would have thought the Highlands the kind of area where special treatment was deserved, but the Government turned down the recommendation of their own Panel absolutely flat.

We have had further evidence of it this evening from the Secretary of State. He has told us of the further cuts he is asking the Board to make in its capital expenditure programme. He tells us that the capital expenditure programme for 1958 is to be set at £18 million, and for 1959 at £15½ million—a reduction of £2½ million in this vital national Scottish service. That, of course, is not the whole story. Capital expenditure in 1956—the last year for which we have figures—amounted to £22 million, so that the reduction over the years from 1956 to 1959 will be about £6½ million—

Mr. Nabarro

As the hon. Gentleman is making an attack on a Conservative Government for circumscribing capital investment in this Board, would he not give us a true comparison? Would he not give us the aggregate of the investment sanctioned by the Socialist Administration between 1945 and 1951, and compare that with the aggregation sanctioned by the Conservative Government between 1952 and 1957? He will then find that the aggregation, in real terms—that is, discounting the declining value of money—is far greater in the last six years than it was in the preceding six.

Mr. Thomson

Hon. Members opposite have a tendency to live in the past whenever figures are used. Normally, these comparisons are rather irrelevant, because the general economic conditions in the country are different now from what they were in the immediate post-war years. In the case of hydro-electricity the comparison is particularly irrelevant, because the scheme is in an utterly different stage of development now from that existing just after the war.

I do not think that there can be any doubt that the immediate burden of the difficulty that the Board faces is a direct result of the economic policy of Her Majesty's Government, and of the fact that they do not discriminate, as they should, in favour of the special problems of the Highlands.

However, it must be faced, I think, that even if the Government had not imposed these restrictions on expenditure, the Board would still have faced real difficulties in the matter of joining up the remoter consumers. These are difficulties that are both geographical and financial, and the hon. Member for Caithness and Sutherland is quite right when he says that they are difficulties that lie deeper than what, we hope, are the temporary problems of the credit squeeze and the financial restrictions—

Mr. Maclay

Just for the record, perhaps, I may point out that the figures that the hon. Gentleman was quoting for previous years were not the final out-turn of those years. He will realise that what was allowed for was not what was actually spent.

Mr. Thomson

I am grateful to the right hon. Gentleman for that correction. The fact remains that, from the figures he has given the House, it is a very substantial cut.

On the linking up of the remoter consumers, I think that the Secretary of State is perfectly right. The Hydro-Electric Board has done reasonably well considering that it has imposed on it the duty of balancing its budget. It is very significant that, as the right hon. Gentleman said, the percentage of connections to households in the crofting counties—much the most difficult area in Scotland—is higher than the percentage for the whole of the Board's area.

The Board continues to go ahead steadily, spending £1 million a year on linking up consumers in the remoter areas alone, and it is worth while understanding the kind of financial difficulty that is involved. I am told that to do this amount of distribution work in these remote areas involves a total cost, as investment, of £200,000 a year to pay off, and that the actual revenue that can be expected from these particular connections is only about £60,000 a year. Therefore, the balance to be made up—the subsidy, if hon. Members like to call it that—is £140,000 a year. This, of course, comes from the profits on the sales of electricity to the South of Scotland.

The hon. Member for Caithness and Sutherland, in his evidence to the Select Committee, urged that one solution of this difficult problem for the people in the Highlands was that the Board should suspend capital works and concentrate its energies much more on distribution. That, I think, is a misunderstanding of the realities of the situation. The figures that I have given show that if the Board is to go on connecting more and more of the remoter consumers it can get the necessary money only by generating more and more electricity to send to the south. It is only by making a profit in that way that the Board has the means to spread electricity to the remoter crofts and farms within the crofting counties.

I suppose that the Board could meet this problem, partly at least, from its own resources by putting up its tariffs. I represent a lowland industrial city within the Board's area. I would have no hesitation at all in asking my constituents to dip into their pockets to help to subsidise the provision of electricity for the people in the Highland areas. I think that they face particular hardships. The Highland way of life is worth preserving. On any sort of basis of national planning it is worth doing. I wish the hon. Member for Kidderminster (Mr. Nabarro) would not make funny faces about the social conditions in the Highlands.

Mr. Nabarro

What the hon. Gentleman is saying is in direct contradiction to the best Report that we have had since the war on electricity economics. Sir Edwin Herbert made the point in his Report that the subsidising of sparsely populated areas by thickly populated areas was to be deprecated. Why should an exception be made in the case of the Highlands?

Mr. Thomson

The hon. Member, rather to my embarrassment, is starting to make my speech a little in advance of what I was going to say. I do not think the hon. Member has ever fully appreciated the social dividends of Highland hydro-electricity. My constituents are perfectly willing to help to subsidise Highland electricity, but I do not think that the constituents of a city like Dundee or Aberdeen should be expected to bear an unfair share of that subsidy on their own electricity accounts, while the citizens of Glasgow or Edinburgh or Kidderminster or Birmingham or London, who have much more populated areas in which to distribute electricity, do not bear that subsidy.

I think that the Herbert Committee, which the hon. Member mentioned, was perfectly right in the recommendations that it made. Where rural electrification requires a subsidy because it is uneconomic, it should be made as a national charge on the Exchequer and should not be carried out in an area with particular geographical problems like the North of Scotland area. I hope that the Government—and the Joint Under-Secretary should address himself to this point—will do more to make sure that people in the Highlands can get grants under such things as the Agriculture (Improvement of Roads) Act and the Crofters Act for the actual connecting up of electricity to their homes and that the whole matter shall not be paralysed because these people are expected to do all sorts of other things at the same time.

I have said that I think the Hydro-Electric Board has acted reasonably in this matter of the linking up of remote consumers, but it is not sufficient for a Board like the Hydro-Electric Board to act reasonably. It must manifestly appear to act reasonably. One of the impressions that I took from the evidence of the Select Committee was that the Committee was not too happy about that aspect of the work. In particular, it is quite certain that the Consumers Consultative Council of the Hydro-Electric Board faces the same, if not greater, difficulties as the consumers' committees of other nationalised industries. This is a very difficult problem, but it must be causing the Hydro-Electric Board particular difficulties.

I would refer the House to the interesting evidence that was given on this matter by the hon. Member for Caithness and Sutherland at page 106 of the Committee's Report. He was asked by the Chairman about the work of the Consultative Council, and the Chairman pointed out that in the council's report there was reference to only eleven complaints for delays in affording supplies during the year 1956. The hon. Member was asked by the Chairman what his experience was on this matter. He said: I think I would have no difficulty in giving you a couple of hundred in my own constituency who have actually written to me. The Chairman of the Select Committee made this comment, which I commend to the Government: Then it is pretty obvious that the people are operating through their Members of Parliament? I do not think there is much doubt that the real consultative committee for the North of Scotland Hydro-Electric Board, certainly in the Highland area, consists of the Members of Parliament concerned.

I think that the Government, in consultation with the Board, might give some attention to this problem. I do not know the answer to it; it is very difficult. But one of the fascinating things about the working of this arrangement is to find out whom the Chairman of the Consultative Council actually represents. He sits on the Board. I ought to explain that I am not making any personal remarks about the person who is the chairman. I am talking about the machinery now. The Chairman of the Consultative Council sits on the Board by virtue of his office as Chairman of the Consultative Council. But, in practice, it is agreed that when one comes to particular problems it is difficult to find out whether the Chairman of the Consultative Council is influencing the Board in the interests of the consumers, or whether the member of the Board comes down to chair the Consultative Council and influence it in the interests of the Board.

This is a very difficult problem, but I hope that some more attention will be given to it in order to relieve hon. Members for the Highland constituencies from some of the heavy burdens that they have been taking—not because I want to relieve them of work, but because I do not think this is the most effective method of dealing with this kind of problem.

There are problems of the Board's own direct relationship with its own consumers, particularly with those who have made application, who have signed the preliminary contract and are waiting for long periods for a supply of electricity. It was indicated in the evidence that they had to await the distribution of leaflets rather haphazardly, or representations from particular bodies. I think it would be better if it were suggested to the Board that they ought from time to time to send out an individual circular signed by the Chairman of the Board, written in simple and plain terms, telling those who are waiting what the position is. It would work very much better if that were done.

I do not wish, any more than the Secretary of State, to stand between the House and this debate. We have waited a long time for it and we have only a short time ahead of us. I myself have read the Reports of the Hydro-Electric Board and the evidence of the Select Committee, which has done such excellent work on this subject, with great interest, and I have come to the same conclusion that the Secretary of State quoted, namely, that the Hydro-Electric Board has served Scotland well. I believe that its general achievement towers, like Ben Nevis, over all the various obstacles, geographical and administrative, that it has faced and will undoubtedly face in the future.

In one way I think that the achievement of the Hydro-Electric Board can be claimed as unique. Other nationalised industries took over existing private or local authority enterprises, but the Hydro-Electric Board has had to do the main part of its work—not all of it, but the main part of its pioneering work—in virgin territory. It has brought electricity to over 110,000 households in rural areas. No local authority or private enterprise had ever been able in the past to bring electricity to those places. If there had been no Central Electricity Authority today, if there were no South of Scotland Electricity Board today, no doubt the people in those areas would have their electricity, less efficiently than under the nationalised arrangements, but that is a matter for argument.

There can, however, be no argument about what would have happened if there had been no Hydro-Electric Board. People in great areas of the Highlands would never have had the modern amenities of electricity. There are crofters and farmers in the Highland area who are still unable to get electricity, and that is unfortunate. But it is important to see this matter in perspective, particularly in this debate. We must remember that there are many times more households which would never have had any electricity at all if it had not been for the Hydro-Electric Board. They would still have been living, working and cooking by oil—that is, if they had still been living in the Highlands.

No one can measure the Hydro-Electric Board's contribution in keeping in the Highlands people who would otherwise have left. The Highland problems of the drift south and of the lack of industry still remain very much with us, but that is not the fault of the North of Scotland Hydro-Electric Board. The answer lies in much more vigorous policies of Highland planning than we have had or are likely to get from the present Government.

7.40 p.m.

Sir David Robertson (Caithness and Sutherland)

The hon. Member for Dundee, East (Mr. G. M. Thomson) has proved a very worthy substitute for the hon. Member for Hamilton (Mr. T. Fraser). I am sure that when he reads the speech the hon. Member for Hamilton will realise that. I must deal very briefly with this gross libel on beautiful Caithness. I have seen pictures of the Russian tundra and of the ghastly wastes of Siberia, and I think that the picture of Caithness has been spoiled for the hon. Member for Dundee, East by the fact that he was a serving soldier there during the war. Wherever a soldier is stationed he grouses. It has been spoilt for him also by the fact that the next time he went there it was as a political campaigner. That also might have coloured his picture of the county. Any unprejudiced person who went to Caithness would greatly love the place and would hardly be patient until he returned there. The hon. Member must see the exiles from Caithness in various parts of the world, as I have done, to appreciate that point.

This is a historic night, as the hon. Member has said. It is also a rather shameful night when one thinks that both political parties have allowed fifteen years to elapse before arranging for public accountability for this the first of our nationalised industries. I have been pressing for a debate of this kind for a long time, and I do not apologise to anybody for that fact. The North of Scotland Hydro-Electric Board is rightly protected by Parliament against day-to-day interference, but a great many things have been going wrong in the Board's area and the Board has been at fault and in breach of the conditions imposed upon it.

I and my hon. Friends have not been able to question the Board on these matters, and for years we have been trying to get various subjects ventilated. We want to praise the Board where praise is due and to correct those matters which have gone wrong. The hon. Member for Dundee, East, referred to evidence given by Highland Members before the Select Committee. I should like to thank the Committee for receiving us and for helping us to secure this debate. If it had not been for the Select Committee, I do not think that we should have had this three hours' debate on a Monday night. The Select Committee went into matters very fully. Its views are just as much worth consideration as is my view.

I took part in the debate which ultimately resulted in the creation of the North of Scotland Hydro-Electric Board. I was not in favour of creating a nationalised Board but, although I was then a London Member, I was in favour of securing power and light for the Highlands, because otherwise we should never be able to cure the depopulation, which is the greatest affliction of the Highlands. People leave the Highlands because they are compelled by circumstances to do so. Where they wish to leave we, of course, give them every assistance, but the great majority would be happy to stay in these lovely counties if they had work and wages. It has been a question in the past of either staying and starving or taking the high road to Australia and New Zealand.

When I went to the area in 1950, I came to the conclusion that 19 children out of 20 had no chance of staying there. That conclusion will give hon. Members opposite some impression of how deeply I felt on the subject. In the debate we had on the subject in those days—1942—the present Chairman of the North Scotland Hydro-Electric Board, who was then a distinguished Secretary of State for Scotland, pulled a rabbit out of the hat and in the last paragraph of his speech announced the birth of the Board. The Board has since undoubtedly done a good job, but it is subject to criticism.

I should like to justify a remark which I made off the cuff to the chairman of the Select Committee, and I am sure that it would interest the House to hear of one or two cases which support those remarks. The details are worth retailing. One of the earliest cases which I heard of was that of 40 landholders, who are bigger than crofters in Scotland. They are the tenants of a Government agricultural estate at Castletown, which is one of our largest communities. It is not a remote place in the glens and mountains. It is right on the main road between Wick and Thurso. These people were told that electric power was to be brought into the area. They had their homes wired at their own expense. After waiting some time for the electricity they asked why they could not be connected. They were told that the Board was waiting on the Air Ministry which objected to the power being brought there because it had an aerodrome nearby.

After trying to get information at Wick they came to me. I went to the Ministry and asked whether it was true that it was objecting to the power being brought into the area. I said. "You have a derelict aerodrome there. It has not been operational since the war. How dare you deny electricity to these people?" The officials there said, "We have not denied it at all. We know nothing about it." When I referred the matter back to the Board I found that that was true.

It was the cost that worried the Board. It did not want to face the cost of taking the electricity to an agricultural area. But farms are never on main streets, and when light and power are taken to an agricultural area they must be taken far and wide by the very nature of the siting of the farms. After a great deal of trouble and delay, electricity was brought to these 40 landholders. They are producers of high-quality stock, and if anybody had the right to electricity they had.

Then there was the case at Bower of from 50 to 70 farmers and crofters who were denied electricity. In this case they were told that the Admiralty has a radar station near there and that the electric power lines would interfere with it. It was found later that the Admiralty knew nothing about that. Because the people realised that radar was important they did not like to say anything about it.

It is at this point that I was brought in. Other electricity undertakings lay all cables in towns, cities and even rural areas, underground. Every cable in London is underground, but because this Board is working largely in rural areas it can get away with erecting poles almost anywhere. One of the very few places in Caithness—and there is none at all in Sutherland—where this question of putting cables underground cropped up was Bower. When the Board was asked to pay the cost of digging the ditches and putting the cables underground it refused to do so, and it made that the excuse for leaving 50 to 70 of the best farmers in the North without electricity year after year.

Mr. G. M. Thomson

The hon. Member should tell the House that these people are now connected, by agreement with the Admiralty, at a saving of £8,000, which works out at £160 per consumer. Since the hon. Member is interested in saving money, so that more consumers may be connected with the mains, does he not now regret his opposition?

Sir D. Robertson

I am unable to accept the hon. Member's figure. A figure was supplied to me by the Board. As far as I can recollect, there was a saving of one-fifth of the cost. I helped the Board to get the Admiralty to make its conditions relating to underground cables less strict; but it was a statement of truth that these people were deprived of electricity for several years because the Board did not want to face the cost of digging the ditches. It is true that these people are now supplied with electricity.

At Newton Hill, within the small burgh of Wick, there are 15 householders who are denied electricity. Their houses have been wired for years, but up to now there has been no hope of their getting a supply. Once again it is a question of underground cables. They were told that the Post Office objected to the supply because it would interfere with the important radio station at Wick, which does valuable work for the fishing fleet and the Merchant Navy. It would not interfere if they put the cables underground.

Hon. Members must agree with me that there is something radically wrong when this can happen. If it happened here there would be an outcry, and those 15 householders are just as much entitled to electricity as any other citizens. All the other people in Wick have it. Of course, the electricity will cost more than carrying it on poles above the ground, but the Board must take the rough with the smooth. The justification for its formation was that it was better for a nationalised board to deal with the difficult conditions in the Highland area. As the House knows, the Act imposes on the Board the duty to take electricity to consumers in rural areas. There are the controlling words "where practicable," but I have never known it not to be practicable unless it is argued that it is impracticable because it would cost more.

It was argued in the debate in 1942 that private enterprise would not undertake this difficult work. Yet the late George Balfour performed a miracle. He harnessed the Loch Rannoch, Loch Tummel, and Loch Ericht, and during eleven difficult years often walked the streets trying to find capital to keep going. He achieved his object. The undertakings became profitable and paid decent dividends. When he came to this House to get additional powers, after a hearing in Edinburgh before a Committee of Lords and Commons, which unanimously decided in his favour, Mr. Tom Johnston had other views in wartime and they prevailed.

Another case is that of Noss Head, an important lighthouse just outside Wick, where there are three keepers' cottages without lights. In that case the Board took the view that because these were owned by the Northern Lighthouse Commissioners, they should undertake the work. This view runs through all the other remarks I shall make. These fellows are entitled to electricity but the Board has said that some other Government agency should pay. It is wrong.

Then there is the Causeway Mire, the historic centre of Caithness, on the road running from Latheron up to Thurso. There are 15 crofters and farmers along the road who have been waiting for electricity for years. This would cost money, but the moment it gets away from Main Street the Board says, "Nothing doing." This place was put high on the priority list for 1956, but because of the credit squeeze the project was dropped. It means that 15 farmers are without electricity, and yet they were the main people the Act was meant to serve.

At the Hill of Wester there is a croft beside the county road. A capital contribution of £781 was asked from the crofter. This is not out in the remote Highlands but just a mile or two outside Wick and close to the main road. He was also asked for £4 a year line rent for seven years. In other words, the Board said to the man, "Never in your lifetime will you get electricity." In the Burgh of Thurso a retired farmer was quoted £200 for a connection within the burgh limits. I was able to intervene in that case and a reduction to £91 was made plus a guarantee of £18 for seven years.

In Bilbster, a young man working for the railway in Wick, who was getting married and wanted a house, found one a few miles outside Wick on the railway within a short distance of the main road. He asked me to try to help him to get electricity. I have been trying for the last four years but he has not got it yet. He was asked to make a capital contribution of £340. That was a denial of his right to have electricity and yet the Act states that he should have it. Then there are 206 forestry workers' houses without electricity. These are not all in my constituency, and I took the figure from a letter of the Hydro-Electric Board. The Board will not give connections to these forestry workers, again because they are employed by another Government Department. It is a case of any excuse to avoid facing a more expensive connection. At Brack Loch, Lochinver, a crofter, Mr. Mackenzie, who is a fine rearer of high grade cattle, was asked to make a capital contribution of £470 plus a guarantee of £120 a year. As an alternative he could make a capital contribution of £1,470 with no guarantee.

Here is another case. Miss Macrae, a teacher of weaving, who had worked most of her life in Glasgow, came back to the place near Lochinver where she was born to teach the local girls weaving and afforestation on a croft. She was asked to make a capital contribution of £200 or pay £36 per annum for seven years. Much to my regret she gave in. So the poor soul, who went back to benefit her people, has had to pay £36 a year whether she uses the electricity or not. There are a bunch of crofters outside Dornoch at Rearquhar, one of whom is James Anderson. He was asked to pay £1,000 plus a guarantee.

This is not a happy recital, but these are facts which can be justified by my hon. Friends who represent the other Highland constituencies who can produce similar lists. The Board cannot just work along Main Street and deny these other people their rights. I assure the House that my hon. Friends and I will not let up on this. We expect support from the Secretary of State for Scotland. When I took to my right hon. Friend the case of the 15 residents in Newton Hill, Wick, I told him he was obstructing me in my work, but he washed his hands of the matter and said that it was the job of the Hydro-Electric Board. It is not so. He is the Minister responsible and these people are entitled to have electricity. I expect the Minister to be on my side, helping me instead of saying that it is not his business.

Now about losses. We have heard from the hon. Gentleman the Member for Dundee, East and from the Secretary of State about the losses incurred in 1955. It is true that these were due to an altogether exceptional drought. That is no reason for panic. In my opinion, the Board has done well in fighting losses up to now, and this would not have been possible without the Act, which brought the profitable areas of Aberdeen, Dundee and Perth into the coffers of the Board. I have no objection to that. It was very desirable. The Act dealt only with the seven crofter counties and this area must have been a great help to the Board.

In 1956 the Board was only £165,000 to the bad after charging £4,273,984 interest on capital and capital redemption of £1,960,113. That is a satisfactory situation for the shareholders, at least half of whom are the National Debt Commissioners, the Government. The Board not only has a great lasting asset in the great dams, power houses, transmission lines and other works of the Hydro-Electric Board, but interest has been paid out of the profits and there has been capital redemption of almost £2 million. Yet we talk about a loss of £165,000 to a Board which has had to carry tremendous burdens on work not in operation.

These schemes take years to come into operation, and all the while they have been under construction there has been the interest on capital to meet. At the present time on the balance sheets that we are discussing there is an item of more than £3 million in interest in respect of the construction of hydro-electric generating stations which are not yet operating. That must represent about £60 million of the Board's capital, and it is not bringing in a penny but is giving rise to interest charges and all kinds of expenses.

Consequently, why should there be all this panic about taking one year with another, dropping everything and saying that electricity cannot be taken to certain people because the Board cannot afford to do it? The whole thing could be done for a few thousand pounds.

I am informed—the Secretary of State has confirmed it—that in 1957 the Board paid its way. It has borne all the charges to which I have referred—the interest on capital, and the redemption of capital, running into millions of pounds—and has paid its way. It still has like a millstone round its neck £60 million of capital investment which does not bring in a penny but causes expense.

The Board should change its policy, drop its schemes and pause. It has expanded at a terrific pace. No one can deny it. It has rushed on madly with one scheme after another. Now it has reached a stage where it ought to stop and finish its current work, and then reflect on what it has done, and, finally, concentrate on its objective, which is not 85 per cent. distribution but 100 per cent. distribution. If it achieves that, the profits that it requires will flow from it.

I strongly urge the Board not to submit any new schemes. I strongly urge it not merely to accept deferment of some schemes but to stop its schemes altogether, completing only those which are nearly finished. Those which are half constructed should be put on a care and maintenance basis. What I have suggested would be an economical and sensible thing to do, and it would help the nation at this time of financial stringency. It would be an anti-inflationary move.

I wonder whether hon. Members realise that these schemes have cost three, four or even five times the estimates submitted to Parliament. The Board is very blameworthy in this respect it cannot escape blame. It says that every tender is a competitive one, and yet in the end a scheme which is estimated to cost £4 million probably costs more than £9 million. The Board is responsible for this, because it picks the men who make the estimates.

How can a fixed price tender be swollen three times while the work is being carried out? I believe the cause is unrestricted overtime, men working 12 hours a day, with time and a half on Saturday and double time on Sunday. I believe the publicans have benefited greatly from the work on the Shin scheme on which fantastic wages have been paid.

This matter must be probed. It is thoroughly unsatisfactory. No one must wonder at my saying that there is something wrong with the contractors, unless they are not fixed price tenders. The contractors should be encouraged to operate shifts and cut out unrestricted overtime. To its credit, the Labour Party fought for years for an eight-hour day decent conditions, but that does not apply to hydro-electric jobs.

Sir James Hutchison (Glasgow, Scotstoun)

I listened to the evidence on this very point before the Select Committee. We were concerned over the question of the out-turn of estimates compared with the original. These were not fixed-price tenders. It was not possible to get fixed-price tenders.

Sir D. Robertson

That is a very interesting intervention. To find out what was happening, I went to one of the largest civil engineering contractors and asked, "Do you work on a fixed price or cost-plus basis?" The reply was "Cost-plus is a thing of the past. We work on fixed price tenders at home and abroad." I asked whether a shift system was worked, and I was told that it was. I asked whether my informant could tell me where his firm was doing a job similar to the big hydro-electric works in my constituency, and I was told that it was concerned in a massive waterworks scheme in a remote part of the North of England where the work went on for twenty hours a day, there being two shifts of eight hours plus two hours' overtime. The firm believed that two hours' overtime was enough for a man day after day. That meant that 20 hours a day were spent on the construction work and the remaining four hours of the day were spent in maintaining the machines.

I should be glad to give to hon. Members who are interested the name of the man concerned. It is a household name. The firm is building a big canal in Egypt, the biggest since the Suez Canal, which will enable tankers to get to Iraq. The men work right round the clock there, on three shifts a day. Yet on the hydroelectric scheme to which I have referred the men work one shift with unrestricted overtime. If the accounts are probed, I believe that unrestricted overtime will be found to be one of the reasons why the costs have been so high.

As a businessman of some experience, I feel very strongly that the best thing the Board could do would be to pause and rest awhile and forget its plunging into the expenditure of capital on hydroelectric schemes. Apart from the fact that it needs to rest and to reflect, there is all over Great Britain today a tremendous glut of coal. There is far more coal available than we shall use this winter unless we stop mining for a while. There is a glut even in the Highlands. We have millions of tons of coal everywhere.

Mr. Thomas Oswald (Edinburgh, Central)

The hon. Gentleman's statement is wrong. People in the West of Scotland are complaining at the moment of a shortage of coal. Complaints are being made right down the West of Scotland. It is probably something like what happened in 1947 when the Tory Party blamed the Labour Party for the bad winter.

Sir D. Robertson

I am stating a fact. A week ago about 30 million tons of coal were in stock in this country.

We also have nuclear power stations being erected in different parts of the country. That would be another justification for the Board pausing a little. If the Board paused, I believe that it would find that the profits about which it is so worried would come about in abundance, and then it would be able to reduce its charges and things would be much happier and better for us all.

8.9 p.m.

Mr. J. Grimond (Orkney and Shetland)

I, too, welcome the opportunity to consider the work of the North of Scotland Hydro-Electric Board. I share the anxiety of other hon. Members that it should have taken so long to get the matter discussed in the House. Clearly, even now there will not be sufficient time—there very seldom is in debates of this sort—to examine the Report in detail or go into the facts and figures before us. We all have constituency points or points relating to the North of Scotland to raise, and there is little time to do that and also to examine what the Board has been doing.

I seriously suggest that the House requires a different way of examining these Accounts. There is a great deal to be said for having a committee to do the work regularly and in reasonable time. That is necessary to do justice to Reports such as these. The Board has done some good work and has produced a good Report, The Secretary of State has given us some information which I was very glad to have, but I want to ask a few more questions about the crofting counties. As I understand it, expenditure on distribution next year will be much the same as this year—about £1 million. Can the right hon. Gentleman indicate how much of that is expected to be spent within the crofting counties? Although the total number of consumers in the Board's area is high, the total number of crofts connected is not nearly as high; it is only 60 per cent. of the average.

I, too, am very concerned about costs. The hon. Member for Caithness and Sutherland (Sir D. Robertson) referred to this matter. It is common knowledge, at least a common suspicion, in the Highlands that the prices charged by contractors for any work in the Highlands, not only hydro-electric work, are extremely high. The whole system by which contracts are made needs investigation, particularly when we are told that the cost of raw materials, for instance, copper, is falling. Is that fall reflected in tenders, and can we be assured that general costs and wage payments in these schemes are being kept under control?

Can anything be said about taking electricity to the islanders? While in the Inner Hebrides some consumers have been connected to the supply, apart from the mainland of Orkney and Shetland and one island in the Orkneys, where the owner paid for electricity herself, the supply has hardly touched the people of the outer islands.

I pass from that to the subject of the capital contribution and the Board's charging system. I have raised this matter year after year. I do not intend to go over all the ground again. This matter still causes the widest dissatisfaction and still leads to unnecessary friction between the Board and small farmers and crofters who cannot understand the basis on which they are charged and who sometimes feel that the charges asked of them are such as to lead to a total denial of electricity to them.

That brings me to the topic of public relations between the Board and would-be consumers. This, I agree, is a very difficult matter. The Board obviously has to find out how many people want electricity and, in the process of doing that, is all too apt to give the impression that electricity is coming in the near future, with the result that people wire-up their houses, and then there are capital cuts or an alteration of plans resulting in a supply not being provided.

In the island of Uist there has been some confusion because the Board put up poles which it is now taking down again because some people have withdrawn from the scheme. If we could have an assurance that the present charging system, bad as it is, is not to be altered for the worse and if we could have some indication from the Government of how far they are prepared to help, especially under the Agriculture Acts, and whether they can do something for the crofting districts which do not fit in to the Agriculture Acts, we could allay some of the dissatisfaction which now certainly exists. I also ask that the Board should do its best to join up those odd pockets all over the Highlands where little groups of consumers appear to have been by-passed for technical reasons, something which again leads to much dissatisfaction.

When the Board was originally set up, it was hoped that industry would follow in its wake. In many Highland areas that has not happened and I was very glad to hear the Secretary of State say that the Board is giving serious consideration to developments in nuclear power. In an area such as mine which relies on diesel generation, electricity is not relatively cheap. Nuclear development may make it more possible to spread light industry over the countryside and bring electricity to those places so far unable to have it.

I want to deal with the farming position. There are powers to give grants to farmers under the Livestock Rearing Scheme and under the Development Grant Schemes. Can we be told about what is happening with these schemes in the Highlands? The reason it has been possible to bring electricity to many areas in Scandinavia is that there are Government grants for the purpose and other consumers do not have to subsidise the more difficult areas. How many schemes in the crafting areas have been approved? What help is given to crofters for drawing up and co-operating in schemes?

I want to follow what the hon. Member for Dundee, East (Mr. G. M. Thomson) said about the Consumers' Consultative Council. I do not in the least criticise members of the Council, least of all the Chairman with whom I have spoken and who has been very helpful. However, the position is absolutely unsatisfactory. The Chairman of the Council is Vice-Chairman of the Board and is bound to have a certain division of loyalty. No one believes that he can fight for the consumers. That belief may be wrong, but it is natural. No one knows enough about the Council and no one knows to whom to go. The Council is set up in such a way that it cannot do its job and is, therefore, relatively unsuccessful.

I now turn to a matter directly affecting Orkney and I apologise for perhaps wearying the House about it. However, the matter is rather urgent. It affects the future of the generating station at Lyness. I have raised this matter again and again. After a debate on the Navy Estimates two years ago, I was later told by the Civil Lord that Since shortly after the war the Admiralty had been ready to make part of the capacity of the generating station available for the supply of the civilian population on Hoy. I was also told that Negotiations with the Board commenced in 1948. The letter from the Civil Lord giving me that information went on: Last October, we were told by the Hydro Board that they were unable to extend their distribution lines to the area concerned. That is as clear a statement as one would want that the Admiralty had offered electricity and that the Board had declined the offer.

In a letter of 26th April, 1956, the Chairman of the Board gave his reasons for refusing the Admiralty's offer. He agreed that negotiations had taken place, but said that the restrictions on capital expenditure made it impossible for the Board to proceed and that, in any event, it would be very expensive. He said that the Admiralty had attached two conditions—it reserved the right of priority over the supply and reserved the right to terminate the supply on three months' notice.

I had further correspondence about this with the Secretary of State and with the Board, but it was not until this autumn that I learned through Mr. Johnston that the Board had had no firm offer from the Admiralty. He later sent me a copy of the letter to the Admiralty in which he said: It is clear from your letter that the Admiralty are only now offering to negotiate terms and give no indication of prices. Meanwhile, the Board hope it will be possible for you to find an occasion to let it be known that they have never had the opportunity to refuse to take over the plant. This last is a rather curious statement but the conclusion is that these two bodies never got together to discuss a firm offer. This is a Department of the Government on the one hand and a nationalised industry on the other. What goes on? Do we have to bring them into a room and make them shake hands before each knows what the other is doing?

Later, apparently, there was a meeting between the Board and the Admiralty. The Board has told me, as I understand it, that the Admiralty expects to be paid for the installation and that even if the Board got it free, it would cost a considerable sum, about £115 per annum for each consumer to have a supply.

I imagine that the whole scheme for using this station, even for Admiralty employees, will fall to the ground, because the Admiralty has now said that it wants an answer by the middle of February. The Admiralty has been closing this base for two years or more and yet it has suddenly demanded an answer from the Board by the middle of February. If I am doing an injustice to either authority, I shall no doubt be told. I must say that it is a sad story.

There is a great feeling in my constituency that outlying districts and islands have not been joined up in accordance with the duty laid on the Board. We agree that that is difficult, but here is a generating station with a line already laid down from Lyness to Longhope. This gives an opportunity for reassuring the people in the North that the Board and the Government are keen to get into difficult areas and to do something for people in remote an as, who will be heavily enough charged if ever they get electricity at all. Although the cost will be heavy in this case, it will not necessarily be heavier than virtually selling off the station, or allowing it to lie on a care and maintenance basis. I beg the Government to consider this matter again. This is an opportunity for doing something for an outlying island, hard hit, and in danger of further depopulation.

I want also to say this: the Board has brought in a scheme for the use of bottled gas which is certainly better than nothing, but it must be put on record that bottled gas is no substitute for electricity and I cannot allow it to be thought that it is.

I must not take up the, time of the House further. I regret that there is no time to go into the record of the Board in more detail, because in many respects it is a fine record. We seldom get these opportunities to air our grievances, and possibly give the impression that we are more dissatisfied with the work of the Board than is the case.

Many tributes have been paid to the Board with which I agree, but I should also like to put in a word for the Board's local managers, officials and workers. It is not easy to explain to crofters these different schemes and why they cannot be supplied with electricity; nor it is easy to maintain electrical lines in winter in the North of Scotland. I should, therefore, like to say a word on behalf of the local people in my area who have done a wonderful job.

8.21 p.m.

Mr. John MacLeod (Ross and Cromarty)

I also welcome this opportunity to congratulate the Board on bringing forth such a comprehensive report. It is generally agreed—and it is certain to come out in this debate—that the Hydro-Electric Board has brought many benefits to north Scotland. I want to emphasise some of the points raised.

The Committee on Nationalised Industries seemed well satisfied with the Board's present activities. The Committee pointed out the distinction between this Board and other nationalised industries—namely, that its function is not only to supply, as a business concern, electric power to the North of Scotland, but also to collaborate so far as its powers and duties permit in the social and economic betterment of that vastly populated area. I am just as worried as the hon. Member for Caithness and Sutherland (Sir D. Robertson). It is disturbing to see these schemes work out two or three times more costly than expected. However, we have something that would never have happened if it had not been for the Hydro-Electric Board. I cannot conceive that the people in the Highlands would be getting electricity now unless it had been for the Hydro-Electric Board.

Mr. Nabarro

I do not derogate from the argument for electricity by one means or another for 100 per cent. of the population of the Highlands. Where the hon. Gentleman is manifestly wrong in his reference to social matters is that the Act of 1943 provided for that and it was always thought that the provision of electricity would be accompanied by the immigration of light industries to the Highlands. Has that happened?

Mr. MacLeod

I think it is happening now. Industries are coming to Inverness in particular. I agree that industries for which we had hoped have not come, but other social amenities have come. Let me say this—

Mr. Nabarro

Do not be too long, about it.

Mr. MacLeod

Let me have my say. The hon. Gentleman can have his chance if he is lucky enough to catch Mr. Speaker's eye.

Mr. Nabarro

If the hon. Member gives me time to say it.

Mr. MacLeod

The Committee pointed out that the problems of the uneconomic undertakings were more acute in North Scotland than in any other area. As has been stressed by other hon. Members, we have reached the stage where rural electrification in the Highlands is being slowed down, not only because of the present economic situation, but because it is more difficult and more expensive to bring electricity into certain remote areas. The Board has done a very good job in my constituency, where there are more constructional schemes going on just now than in any other area. Electricity has been brought into very remote parts of my constituency, and I welcome that.

We have reached the stage mentioned by other hon. Members which might be called "the hard core". I would like to know what the answer is, because as has been pointed out by my hon. Friend the Member for Caithness and Sutherland and the hon. Member for Orkney and Shetland (Mr. Grimond), and as I pointed out in a debate in November, dealing with a case in Torridon, which is a borderline case, there is a whole community which has been denied electricity because of these capital charges. What is the answer? I think the Board has to meet its obligations, but if, as it says, it cannot do it at present, surely it ought to be able to make use of other forms of grants. As the hon. Member for Orkney and Shetland pointed out, there is the Agriculture Act, 1957, for farm improvement schemes, and there is the Hill Farming and Livestock Rearing Acts. But there appears to be an anomaly regarding crofters, in that grants are given for equipment but not to enable electricity to be brought into the poorest areas. This question is mentioned on page 68 of the Report: Regulations issued under the Act have made grants available for the supply of electrical equipment but not for the supply of electricity itself. It was felt that this would merely emphasise the distinction between crofters who already had a supply and those who were still without it. That is one of the most unfortunate positions today. There are people in the same areas who are asked to pay exorbitant capital charges as well as a guarantee living beside people who had the electricity free only a few years ago to their gable ends. It creates a very unfortunate feeling among the people in the area.

This problem must be tackled by the Board, probably by announcing some form of programme. The Secretary of State said that it could not do that, but it would surely be better to tell the people when they can expect a supply. The people of Torridon have been offered bottled gas but, as the hon. Member for Orkney and Shetland pointed out, bottled gas is no alternative for electricity, especially in an area which is hoping to have television. I do not suppose that we can get television through bottled gas. That is the kind of problem that we shall aggravate.

I do not want to delay the House very much longer, but I want to emphasise the other social aspects of the Board's activities. There is the question of roads, for example, which is touched upon in the Report. There is no doubt that many mistakes have been made in cases where the Board has replaced roads which have been flooded. It is only natural that the Board should expend a sum equivalent only to that required to replace the portion of the road which has been flooded, but opportunities have been lost in this way.

In Invermoriston the Board has replaced a road more or less as it was before, but it should have been replaced by a road allowing at least two cars to pass comfortably. We must remember that the tourist industry is tremendously important to the Highlands. The Board has done much towards the development of this rapidly expanding industry, but there is a wastage of money and materials in the rebuilding of roads which have been flooded. These roads have been replaced more or less to their pre-flooded status, and they are already out of date. It is appalling to travel on them in summer, and I hope that the Joint Under-secretary will be able to guarantee a change of policy, and say that a more realistic approach will be adopted, especially in the case of trunk roads.

Another on the Board's activities is the improvement of fishing conditions in the lochs. This may seem to be a small point, but it is one of the few activities in which everybody can take part. I hope that the Secretary of State will examine the point made by the Board about the tremendous amount of poaching which is taking place in the lochs which it is stocking. It is very important to the development of our tourist industry, and the Board is doing a good job in this respect.

I criticise the Board merely in respect of what I have called the remote, hard core cases. I hope that the Secretary of State will take responsibility and not leave everything to the Board, as he did in November last, in replying to the debate I had then.

8.32 p.m.

Mr. Arthur Palmer (Cleveland)

I am sorry that the hon. Member for Caithness and Sutherland (Sir D. Robertson) has left the Chamber, because I was personally delighted to hear his pleasing references to the late Mr. George Balfour, a former Member of the House. I believe that he sat for Hampstead, although he vas before my time. He founded the Grampian Company, but in the case of one of his other companies, by which I was trained as an engineer, there was no need for him to walk the streets. It was in the West End of London—a rather different territory.

Sir J. Hutchison

My hon. Friend asked me to apologise for him if the hon. Member for Cleveland (Mr. Palmer) rose in his absence. My hon. Friend has had nothing to eat, and he wanted to seize the chance of having a little dinner.

Mr. Palmer

I am grateful to the hon. Member, and I quite understand.

My excuse for intervening is not simply that I try to view these matters professionally—

Mr. Nabarro

The hon. Member's is an authoritative voice.

Mr. Palmer

—or that I happened to be a Member of the Select Committee. My special immediate qualification is that I went to the North of Scotland on Friday. I did not reach Caithness—Aberdeen was far enough for me on that occasion—but I did penetrate into the outer fringe of the Board's area, and I met quite a few members of its engineering staff. I want to echo what the hon. Member for Orkney and Shetland (Mr. Grimond) said. I am sure that it was not a deliberate omission on the part of the Secretary of State, or of my hon. Friend the Member for Dundee (Mr. Thomson) that no direct tribute was paid to the staffs and work people of this undertaking, but they obviously do a remarkable and sound job, under the most difficult climatic conditions, on behalf of Scotland.

If what I shall say seems slightly critical of some aspects of the Board's economic policy, I want it to be understood that I speak very much as a friend of the Board and as one who certainly supports the nationalisation of electricity. But I think that debates of this kind are valueless unless hon. Members on both sides are prepared to look realistically at the economies of publicly-owned undertakings. If sound economic principles are followed, there is in the long run a much greater chance of them winning public approval.

I was interested in what was said by the Secretary of State about the attitude of the Hydro-Electric Board in the future to the further development of water power. As was revealed in the figures given to the Select Committee, it has so far developed about one-third of the potential resources so that there is still a great way to go. If that programme is completed on the basis of water power alone, there will be of course a tremendous expenditure of capital. Knowing the difficulties of the country at the present moment in the general matter of captial resources, I think it fair to ask the Board to be quite certain that it is using capital in the most economical fashion possible.

The situation has been changed from what it was at the time when the Board was started in 1943. This has occurred, as has been pointed out by other hon. Members, through the fast development of nuclear energy. I know the answer given by the spokesmen of the Board to the Select Committee was that water power is more than sufficient and will meet its needs. In short the Board is continuing to have a marked bias towards water power. Figures were produced for the Select Committee purporting to show that water power was still cheaper. I know that the figures produced by the Board may show superficially that that is the case, but it makes two assumptions which should not be overlooked. First that the load factor will be permanently low. That is not inherent in the plant but in the habits of the population, and there is a danger that if that assumption be made the undertaking, after a time, may develop a vested interest in a low load factor, which would be a pity.

Secondly, the assumption is made that the capital cost of these undertakings can be spread over a very long period. I know the argument that they are heavy civil works and can, therefore, safely carry, shall we say, 70 years life. But I think that in the course of the next 70 years there will be a tremendous further development in nuclear power; particularly in view of the kind of news we had on Friday of how it may be possible at some near time to obtain nuclear energy from hydrogen. In that case an assumption of 70 years for the depreciation of capital in technical competition is, I think, slightly unrealistic.

Mr. Humphrey Atkins (Merton and Morden)

Am I not right in thinking that in the case of many permanent works the period is, in fact, 80 years?

Mr. Palmer

Yes.

In my opinion—I think that the Select Committee also was of the same opinion—although I do not wish to be dogmatic, the Board must in the future regard itself more and more as a normal electricity undertaking. After all, in a sense that was forced upon it by the fact of the 1947 Act, which added to the original water power area more densely populated districts such as Perth, Aberdeen and Dundee. I want to assure the hon. Gentleman for Kidderminster (Mr. Nabarro) of that, as he may be thinking he has made a convert to his point of view.

Mr. Nabarro

I am pleased that the hon. Gentleman has got around to that. I have been pleading this very argument for ten years. At long last the hon. Member for Cleveland (Mr. Palmer), the only really authoritative voice on electricity matters on the Opposition side of the House, is converted precisely to my view.

Mr. Palmer

The difference between us is that the hon. Member for Kidderminster has been studying the matter for a number of years but has not made very much progress upon it. He does not approach the question of nationalisation with the same sympathy as I do towards public ownership.

Mr. Nabarro

I have converted the hon. Member.

Mr. Palmer

Anyhow, I am pleased to read from the Report that the Board is considering the building of a nuclear station. If it is combined with pumped storage it will be a most hopeful economic development for the future.

One of the difficulties about the Board is that, mentally, it is a little too much turned in upon itself. It is a self-contained generating and distribution authority like the newer South of Scotland Board. The fact that it is rather mentally turned in upon itself has resulted not only in an out-of-proportion emphasis upon water power but, as the Select Committee pointed out, in failure to obtain competitive tenders. This was unfortunate, to say the least.

I appreciate and respect the sentiments which led the Board to confine itself to a large extent to Scottish manufacturers. One can understand and respect that point of view, yet it would have been useful, at least as a check on the tenders it had obtained, if tenders had been invited from English manufacturers or from overseas.

I am prepared still to argue that it was a pity, as with the 1954 South of Scotland Electric Board, to isolate this Board from the general electricity system of the rest of Great Britain, especially when ore considers the present European tendencies towards economic integration, Nevertheless, I accept the situation and I am prepared, as a mere Englishman, to agree that if the Scots want control of their electrical affairs, even if they are not to have political home rule, they should get it.

I would make a suggestion for the future. We are now to have under the 1957 Act an Electricity Council for the greater part of the Kingdom, not as an executive body—it cannot tell any electricity board what it should do—but as a co-ordinating and advisory body. Would it not be as well if the two Scottish Boards were represented upon it? That would do away with the tendency for them to live a mental life of their own in financial and engineering matters.

All this may sound unduly critical, but I do not want to be understood that way. From the general social point of view, in the best sense, the Board has a fine record of achievement, as the Select Committee discerned. From my personal experience of electrification, I believe that the rural electrification carried out by the North of Scotland Hydro-Electric Board compares very favourably with that of any other electricity board in the Kingdom. It is a remarkable record of achievement.

Financially, also, I think the Board has conic through very well. It has had to fight recently against two calamities. The first was the drought. It is always surprising to the English to think of a drought occurring in Scotland. It seems almost as unlikely as finding a pacifist in the cavalry club. The second calamity is having Her Majesty's present Ministers in charge. That is not a natural calamity, but one which may be put right in time. Under that second calamity the Board has had to put up with paucity of capital, price interference—which has not been touched on in the debate, but which was discussed at some length by the Select Committee—and has had to battle against ever-increasing interest rates. With that kind of adverse background, I think the Hydro-Electric Board has a fine record of success.

Having made some criticisms of detail, I say finally that the activity, work and achievement of bodies such as the Hydro-Electric Board justifies my socialist belief in public ownership.

8.47 p.m.

Sir Colin Thornton-Kemsley (North Angus and Mearns)

On the achievements of the Hydro-Electric Board on one, I think, will disagree with the hon. Member for Cleveland (Mr. Palmer) and other hon. Members who have spoken from both sides of the House this evening. I think that most of us in speaking about the Board are very conscious of the fact that although it represents about 25 per cent. of the land area of Great Britain it has within that area only about 2.2 per cent. of the total population.

It has done a very remarkable job. For example, from the time it took over there were only about 7 per cent. of the farms in its area connected with electricity supply and now something like 60 per cent. are connected. In my area of North-East Scotland the number of consumers connected since the Board took over the area in 1948 has increased by 70 per cent., which is a very considerable achievement. Although many of us have been critical, and will be critical tonight, in this short debate we have time only to make criticisms and insufficient time to stress the value of the achievements of the Board, which we all appreciate.

I am, of course, aware that in April, 1956, the Board changed its policy in regard to new consumers. It then decided it could no longer rely on a minimum annual guarantee, but would have to make a capital charge. I was a little surprised to hear my right hon. Friend say in his opening speech that that capital charge was required in remote areas—outlying areas, I believe, were the words he used. My experience is that it is now asked in all cases, even those close to fairly considerable towns. The effect of that in many cases is disquieting and disappointing.

I want to tell the House the experience which is practically universal in my constituency. Throughout the County of Kincardine and the North-East of Scotland area of the Board we find exactly the same happening. First, there is a canvassing of the area and contracts are entered into as a result of which production programmes are made, wiring of houses carried out and hopes raised, then there are years and years of delay and one excuse after another is made by the Board. First of all, it was shortage of materials, and next shortage of manpower. Then it was the credit squeeze, and then the Government's restrictions on capital expenditure.

Any excuse has been used to cover the Board's failure to fulfil its promises on time, and this is the disquieting fact. When these people complain and write to their Members of Parliament, as they do in the last resort, the Board comes along and says, "All right, if you want the supply, which we have contracted to give you without charge, we will make a charge of anything up to £1,000, which is the penalty"—and I use the Board's own phrase—"for jumping the queue."

That is not an uncommon experience. It happens time and time again. We get the canvass, and contracs are entered into. I confess an interest here, because I have a contract which I entered into over two years ago, but excuses have been made and we still have, not got the supply. Houses are wired for electricity and so on, and private plants are becoming unusable. One wonders what to do, and then the Board says, "All right, you want the supply, you can pay £1,000"—or whatever the sum may be—"and that is your penalty for jumping the queue."

My right hon. Friend, in his opening speech, said—I took down his words fairly carefully—that where the Board had agreed to make free connections, it will do so, even if—I think I am quoting his words—it means some delay. I hope that I am not unduly suspicious, but that did raise a feeling in my mind that that could be the secret of this continual delay in fulfilling the Board's contracts. The Board has contracted, in case after case, to make free connections, and it is now binding that it has to delay for one reason or another. Now, the Board says that it will still make these free connections, but it is able to secure from some other people capital contributions for jumping the queue, and so the delays go on. I hope indeed that that is not a deliberate policy of delay in order to secure capital contributions from people who are becoming more and more exasperated at the failure to get supplies.

There is only one other matter I wish to mention, and I do it with the very greatest diffidence. It is not a personal matter at all. I would not be right if I did not follow up the Questions I have asked in this House and did not express my own disquiet about this matter. Last November, I asked my right hon. Friend the Secretary of State the date of the first appointment of the members of the Board, the date of the expiry of their present appointment and their ages. I did that quite deliberately, because I have the impression that the Board is very much too old for what ought to be an enterprising, expanding, virile public authority. I have the greatest respect for our old friend and former colleague, Mr. Thomas Johnston, but his period of office as Chairman has been extended to the time when he will be either 74 or 75 years old. That fact would not be so bad if he had a young Board behind him.

Mr. E. G. Willis (Edinburgh, East)

What about the right hon. Member for Woodford (Sir W. Churchill)?

Sir C. Thornton-Kemsley

If the hon. Member for Edinburgh, East (Mr. Willis) is to make sedentary interjections, I shall not reply to them.

Mr. Willis

I hope the hon. Gentleman remembers the age of the right hon. Member for Woodford when he, in fact, was Prime Minister.

Sir C. Thornton-Kemsley

I am not forgetting that, and there are, of course, exceptions to every rule; but I cannot believe that all these elderly gentlemen in the top places on the Board have the mental capacity of my right hon. Friend the Member for Woodford (Sir W. Churchill), nor anything like the drive and energy that he displayed during the war. Mr. Thomas Johnston will be 74 or 75 years of age when his present term of office expires; Sir Hugh Mackenzie, the Deputy Chairman, 72, and Sir George McGlashan, 74.

When I asked this Question in November, my hon. Friend the Joint Under-Secretary of State told me, with great glee, that the retirement of someone who was then 69 years of age was being accepted, and that someone else was to be put in his place. I looked anxiously to see who it would be. I cannot believe that it was deliberate, but it happened to be a very prominent Socialist from my own constituency—chairman of the co-operative society, and so—on an estimable man, but when his present appointment expires he will be 76 years old—

Mr. Emrys Hughes (South Ayrshire)

Will the hon. Gentleman give us the average age of the directors of the big banks in Scotland?

The Joint Under-Secretary of State for Scotland (Mr. Niall Macpherson)

I think that my hon. Friend would like to be corrected on a point of fact. The age of the member of the Board to whom he is referring is, in fact, 66.

Sir C. Thornton-Kemsley

I am grateful to my hon. Friend for that correction. I certainly meant to give his age as 66. Nevertheless, I think that it is serious when four or five of the leading men are between 66 and 76 years of age. We should have younger men, with drive and energy on this body. I assure the House that this is not a personal criticism. I admire those gentlemen, but I think that we need younger men, and men with more technical and practical experience of the production of electricity and of engineering problems—

Mr. G. M. Thomson

Would the hon. Gentleman agree that, in an industry that is providing electricity for domestic consumption, it might be a good thing to have a woman on the Board?

Dame Irene Ward (Tynemouth)

Hear, hear.

Sir C. Thornton-Kemsley

My right hon. Friend said, and I was glad to hear him say it, that the capital allocation to the Board will allow it to carry through in the next two years the same distributive rate as it carried through in 1957. I hope that I did not misunderstand my right hon. Friend, and I hope, too, that he will ensure that this is done. I hope, moreover, that he will make sure that the first priority is given to making the connections that were promised by the Board upwards of two years ago. These people should be at the head of the queue, and I trust that my right hon. Friend will satisfy himself that that will, in fact, be the case.

8.58 p.m.

Mr. John Taylor (West Lothian)

We had considered that it might be wise to confine the speeches from this side of the House to those of hon. Members who reside within the area of operations of the North of Scotland Hydro-Electric Board, plus an authoritative and erudite contribution from my hon. Friend the Member for Cleveland (Mr. Palmer). However, I think that it would be appropriate, for a few minutes, to hear the voice of just one Scottish Member who does not reside within that area but who has, nevertheless, always taken a lively interest in the Board's affairs.

I feel that the criticisms that have so far been made have, to some extent, been justified, but that they have not, perhaps, taken sufficient account of the very important factor of—and I hate to use the word—the psychology of the people of the Highlands. Had we not had the Hydro-Electric Board, Scotland would have been in a much poorer condition than it is today. There were no other means by which the number of people now enjoying the benefits of electricity in remote areas could have had those benefits than by the formation of the Board. Bearing in mind the justification for many of these criticisms, I want to express a word or two of unqualified praise for the Board, its record, its history and its work.

I think that only a Scot could appreciate and understand the background of the Hydro-Electric Board and the full implications of its operations. I must apologise to the hon. Members for Orkney and Shetland (Mr. Grimond) and for Ross and Cromarty (Mr. John MacLeod) for not being able to hear their speeches in full. I understand from comments made since that they have drawn attention to the additional contributions of the Hydro-Electric Board to Scottish social and communal life. These benefits are many but they are largely unseen. When we talk about the cost of heavy capital investment for these big schemes, we must bear in mind that it is not merely the cost and the production of a source of hydro-electricity that is involved. In the course of the creation of these schemes, great value has accrued to the social life of the areas concerned, apart from the supply of electricity.

One has in mind, for example, in looking at the excellent and, from my point of view, model Tummel Garry scheme, the fact that the Board has felt obliged to give very special attention at considerable cost to what are generally described as amenities. In the Highlands these amenities are very important. They are very costly. The creation of a new loch is not merely the flooding of a valley or a strath. Regard is had for the general formation of the terrain, for the making good of any unsightly spots and the creation of special architectural features which will blend with the landscape, and these cannot be done in the normal way that a commercial business would do them.

In addition to that, we have the erection of power stations of a particularly pleasing character built with local stone, and the result of that has been that in several cases quarries that had closed down and had been decrepit for years are now in full operation as a direct result of the encouragement given to them by the Hydro-Electric Board to supply sufficient local stone of good quality for the erection of the power stations and the subsequent encouragement of those quarries to remain in production for the supply of building material all over the area.

In the middle of the war, the then Secretary of State for Scotland, the right hon. Thomas Johnston, had to go to the then Prime Minister and ask for a considerable sum of money to begin this scheme. It was part of the original intention, and it has always been in our minds, that the purpose of this scheme was not only to supply electricity which, but for the scheme, would not be supplied to the Highlands; it was not only to supply electricity to the remote areas, but it was to provide in the Highlands of Scotland a source of employment and a means of arresting the depopulation of that important area.

Insufficient attention has been given in criticisms to the actual problems of remoteness. When one goes into the farthest glens and sees the power cables marching across the hills one realises how remarkable is this achievement. The cables represent the effort, the energy, the thought and the expenditure which has gone into the supplying of these very remote areas. The job would be regarded as uneconomic, as of course it is, in other parts of these islands as well. That is not fully appreciated.

Complaints have been mentioned. Of course there are complaints. We in the area of the South of Scotland Electricity Board receive about the same percentage of complaints, for exactly the same reasons as those given by the hon. Member for North Angus and Mearns (Sir C. Thornton-Kemsley), as is received by the North of Scotland Hydro-Electric Board. They are the same because it is the intention and the plan of the Board to supply current to a certain area. A canvass is made and customers are secured. The original plans are laid and the early work is put into operation. The prospective consumers are told that the plans have been approved and they proceed with wiring their premises, anxious and eager to have the radios, the washing machines, the television sets and the electric irons and other accoutrements of civilised housekeeping. They jump the gun, but the delays which occur are true delays.

There are difficulties about tenders, about capital expenditure and high interest rates. These difficulties delay schemes in the South of Scotland just as much as they do in the area of the North of Scotland Hydro-Electric Board. Every hon. Member knows, and certainly every Member who represents a county constituency, that he has occasion to write frequently to the chairman or officers of the Board to say that such and such a scheme has been approved but has not been put into operation for eighteen months or more and that his constituents are getting restive.

The hon. Member for North Angus and Mearns also mentioned the age of the members of the Board. These members, one imagines, are very carefully chosen. One notices that they are people with very long and valuable experience of social life and of other important factors in Scotland and that most of them are experienced in the North of Scotland. To say that the Chairman of the Board, Mr. Tom Johnston, is too old for his job—because that is the only inference to be gathered from the hon. Member's words—is to display ignorance of that gentleman's capacity, virility and foresight.

Mr. Emrys Hughes

Is he not six years younger than the Lord Chief Justice?

Mr. Taylor

I am not acquainted with the age of the Lard Chief Justice, but I know that in the case of Mr. Johnston it is not a matter of years but of virility, of vigilance and of foresight, and that he has shown those qualities throughout his life.

I mention that point because it gives me the opportunity to say that if one mixes with the actual operational staff, the engineers and electricians who are in executive capacities working for the Board, one finds a body of young men, enthusiastic and extremely able, operating and managing this great concern on the technical side.

Their keenness and enthusiasm is the more to be commended when one recalls how many live in remote areas without much social life, their lives being confined practically to their own job and to their interest in it. As one who has met many of them, enjoyed their company, and observed how enthusiastic they are about the development of a scheme and the benefits it will bring, one can feel only that if in every section of industry there were the same enthusiasm, we should have few worries about the future.

This may sound like an unduly uncritical paean of praise for the Board. I make it deliberately because the Scots, who are supposed to be a hardheaded race, are really a sentimental one. We are the most sentimental people in these islands, and what appeals to us about the Board is the romance of this adventure of the conquering of the elements and the harnessing of the one we have in the greatest supply, water, for the service of ordinary people.

The original intention of the Board was to bring domestic electricity to homes that would not otherwise have it. The Board is fulfilling that obligation and is doing it to a much greater extent than we visualised when operations began fifteen years ago. It has rendered a great service to the nation, it is well served by a good technical staff. Although it is right that the criticisms, financial and economic, which have been made tonight should have been made, because that is our duty, it is just as well that one other Scot representing a Lowland constituency, should look at the picture on the other side and tell the House how we feel the Board has tholed its assize, dree' d its weird, and not let down the people of Scotland in general and the people of the Highlands in particular.

9.13 p.m.

Mr. Malcolm MacMillan (Western Isles)

I am genuinely regretful that the hon. Member for Kidderminster (Mr. Nabarro) has not been able to take part in the debate. He will appreciate that it is no fault of my own, because we should like to have heard his contribution, which would, I have no doubt, have been very lively. It worries me that more hon. Members on both sides of the House have not been able to speak tonight, and I am afraid that the debate has suffered for that reason.

Like the hon. Member for Caithness and Sutherland (Sir D. Robertson), I deeply regret that we have not had many more debates of this kind; and I hope there may be further opportunities later in the Session for a discussion of these matters. After all, the activities of the Hydro-Electric Board touch the life of the Scottish people, particularly the Highland people, at almost every point. They affect the domestic life of many hundreds of thousands of people throughout the Highlands and the northern cities and towns. They affect the life of the people on the crofts and farms and, indeed, of the whole of the upper half of Scotland, if I may call it that, including Aberdeen, Perth, Dundee and the rest, as well as the life of the industrial workers, in the textile mills in places like Stornoway, Thurso and Wick.

In my view, the activities of such a body should in the interest of everyone be under more frequent, regular, and close scrutiny, and to a large extent that is the purpose of this debate. I will return to the point about Parliamentary scrutiny, because it is important at every point of the Board's activities. Indeed, the present Chairman of the Board, Torn Johnston, said in February, 1943, on the Second Reading of the Bill which created this Act: It is therefore necessary in the Scottish national and public interest that the activities of the new Board, whether in the development survey stage, the constructional scheme stage, or the distribution scheme stage, should always be subject to a Minister who is answerable to Parliament."—[OFFICIAL REPORT, 24th February, 1943; Vol. 387, c. 193.] We would all agree with that, but I think that we should go further and say that regular and full debates, with ample time for dealing with the Reports and Accounts, would greatly add to the reality of that public accountability. I repeat that I can only hope that we shall have opportunities later in the Session. My hon. Friend the Member for Dundee, East (Mr. G. M. Thomson), and other hon. Members, in particular the hon. Member for Caithness and Sutherland have emphasised the important aspect of public accountability.

Whatever the criticisms there may have been from both sides of the House, some justified and some, perhaps, less justified, we in the Highlands and Islands look upon the Board as a friend. Above all the minor criticism, there is the sense that the Board is a friend of the people, encouraging them to progress and to improve the social and economic life of the area. I join the hon. Member for Orkney and Shetland (Mr. Grimond) in his tribute to the area managers and other employees of the Board. Some of them have to go out in all weathers, and it is remarkable what a quick and efficient job they do whenever there is a breakdown of any kind in remote areas. They are like the Post Office linesmen. The Board seems to be able to obtain the same high-quality type of employee who can give a good account of himself in the most difficult circumstances and weather.

In the Highlands, the Board has done so many fine jobs that we tend to place it almost beyond criticism, except, perhaps, for minor things. It has proved a friend to thousands of crofters in Orkney, Caithness, the Western Isles, Argyll and Inverness—to remote places as well as to cities like Aberdeen. Dundee and Perth, The Board has brought light in the domestic sense to the homes of thousands of crofters who used to have to potter about with messy and expensive paraffin lamps. It has also introduced a new lively pulse of industrial power into those areas, without which there would be no hope at all of kindling an interest in industry, which was so desperately needed there for many years. The areas may now have, at least, a little attraction for industrialists because electric power is provided. Whenever someone has shown a little enterprise by starting up small industry and has gone to the Board and asked for power, the Board has helped him out. If it has not been able to give the man a permanent supply from hydro-electric sources, it has provided a temporary supply from diesel or other sources to tide him over. I do not know of a case in my area, at any rate, where the Board has let down an industrialist who wanted to set up an industry.

Along the fringe of the Board's area, there are, however, still places among the islands and in parts of the mainland, where communities have not yet been given electricity supplies—places like the Island of Barra and part of the Uists and some of the smaller islands in the Outer Hebrides. I have no doubt that Shetland and other parts have their problems, and some parts of the mainland are in the same position. At the end of the day, these areas are the places which need electricity most because at the moment they are the places which are the least attractive to industrialists and the least capable of developing their natural resources from land or sea until power is provided and processing factories are set up to employ and retain the people. Without power and without better transport and adequate water supplies there is no hope of creating industries there which will give employment and prospects of a livelihood to the young people and induce the population to remain there. In the last five or six years, about 8,000 people have gone from these areas, which is a higher rate of depopulation than even pre-war.

These basic services, including electricity, must come first, because the industries will not come in ahead of them. They must come soon for a further reason, which is—and we cannot emphasise it too much—that the young people are drifting away in their thousands, disenchanted with the labour of the soil and the labour of the sea, which in these times is not giving them a standard of life anywhere near to that of the average industrial area.

For a time after the war, when there was a Labour Government, we thought that we had stemmed depopulation. For 100 years we had had commissions and committees investigating the Highlands' problems and spawning new committees and new commissions all the time, each one in its turn producing a report recommending that someone should go further into the matter. So it went on, generation after generation, and very little was done; a little patchwork here, a little ambulance work there. The main problems remained. People continued to drift away generation after generation, leaving the old, until populations became so small that in many villages the process reached the "point of no return" and passed away.

In 1936, the House unanimously accepted a Motion recognising and deploring distress, economic distress, in particular, in the Islands and Highlands of Scotland and urging effective and prompt steps to remedy it. I am not aware that anything happened after that up to 1939 and the war. In areas like Wick and Campbeltown and Stornoway and Lerwick unemployed men could not escape by going to Glasgow and could not escape even by emigration to America, because America had unemployment too, and would not accept them. In Glasgow there were hundreds of thousands between the dole and public assistance in their own streets, looking for non-existent jobs and hanging about in demoralising despair.

Even a small place like Stornoway in 1937 had more than 3,500 men unemployed with no prospect of employment in an area with no prospect of economic development. One of the factors among those economic difficulties was the absence of electric power, and the absence of any interest in or prospect of developing industry in that area. That continued till war came.

Then came the post-war planning phase, and in that Torn Johnston took a very prominent and imaginative part, indeed,—a very practical part as well. The criticisms of the hon. Member for North Angus and Mearns (Sir C. Thornton-Kemsley) tonight came very ill from him. Had he made a fraction of the contribution which Tom Johnston made to Scottish and Highland development, it might have been for him to make some criticisms.

In 1943, when the North of Scotland Hydro-Electric Board was set up, the Highlands began to look forward to the possibility of industrialisation and I am glad that tonight we have some opportunity—though short enough—of examining what the Board has been trying to do in the last fourteen or fifteen years.

After the war the Board gave employment to thousands of men in their own homeland—something which had never been done on that scale before—with great constructional schemes and the rest. Thousands of people began to enjoy electric power and light in their homes for the first time. By 1949–50, something else had happened to which the Board made a great contribution in many ways.

The population drift seemed to have halted for the time being at least. I remember that on the Highland Advisory Panel we thought that this was a triumph indeed; and that action by the Government and public enterprise had helped to do something which had never been done before, to stem at least the drift of population from these areas.

From 1851, when there were 396,000 people in the Highlands and 1951, when there were only 286,000, the Highlands have seen a terrible fall in the populations of most of the areas except, perhaps from Inverness, Stornoway and the small urban areas. But the biggest fall of all came not in those years of unemployment, but between 1951 and 1956. There must be something to account for that. I leave hon. Members opposite to give us all the answers. The drift away in those years—mostly of the young, enterprising and understandably impatient—was about 50 per cent. worse, on average, than it was in the years which everybody says were the years of depression and unemployment, the 1930s. Somebody must answer for that fall of 8,000 between 1951 and 1956. The present Government has much to answer for.

Without the Board's contribution in that situation, how much worse would things have been? I leave that for the hon. Member for Kidderminster to answer. Perhaps he can tell us what it would have been like if the Board had not been continuing with its great constructional schemes, thereby providing employment and a livelihood for people who would otherwise have emigrated. The Board alone cannot solve those major problems. We sometimes expect it to do far too much. The House must ask itself what help the Board requires, and what is obstructing its progress.

I believe that there are many such things. It may be that there was here and there an internal weakness. Perhaps the Board is partly to blame; the hon. Member for Kidderminster may be right in certain of his criticisms. I have no doubt that lie thinks he is, and we sometimes agree with him. It may be that the Board, in taking on as much as it did in the early days, had tried to do too much and is now feeling the strain a little more than it would if it had taken more time to plan.

We must remember, however, that these were the years of demobilisation, when thousands of men were returning to an area which had suffered disenchantment after previous wars, when men came back and could not find jobs, and had to go across the Atlantic, to New Zealand, and all over the world. The Board was in a hurry, and we encouraged it to be in a hurry and told it to get on with the work. In spite of the difficulties created by the war and by the immediate post-war conditions, the Labour Government encouraged the Board in those years, and if the Board overdid matters by speeding things up too much against an optimistic time table it was for good reasons, and we were all in it together.

Then, there was the second element of soaring costs. Perhaps it should have been anticipated that after the war there would be great competition for all our resources—raw materials, labour and everything else—and that more foresight should have been exercised. But none of us told the Board that it would come up against the problem of soaring costs on the scale which materialised.

Again, the Board has suffered from acts of Government as well as what are sometimes termed "acts of God." They do not always coincide, especially when a Tory Government are in office. The Board has suffered from restriction of capital expenditure and the use of its resources. It has suffered grievously through one deliberate act of Government policy in recent months and years, namely, the "economic squeeze," which accounts largely for the very big deficit carried forward from the year 1955–56. Now, with the 7 per cent. Bank Rate on top, the Board is bound to be in difficulties, for which hon. Members opposite will have to be responsible.

The Board has also suffered obstruction by landed and other financial interests. I can see the hon. Member for Stafford and Stone (Mr. H. Fraser) keeping an eye on me in case I go back to the attack against the old firm again; but I have no intention of slanging anybody tonight.

At this moment a project is in the planning stage, which the Board is anxious to get on with, namely, the Strathfarrar and Kilmorack scheme, but the gentleman that I am concerned with very much more than Lord Lovat is Sir Robert Spencer-Nairn, who is concerned not so much with refusing to accommodate the Board on a financial basis, but appears to be merely anxious that the scheme shall not go through at all. I could almost swear that he had been inspired by the hon. Member for Kidderminster in this respect.

Mr. Nabarro

I wonder if the hon. Member has read the whole of the proceedings of the public inquiry into the Strathfarrar and Kilmorack scheme, as indeed I have, and the objections voiced by Sir Robert Spencer-Nairn through his representatives? Is he aware that they most largely rested on amenity grounds, whereas my objections, which will be voiced in due course when I pray in this House against the Order for the scheme, are solely on economic and financial grounds?

Mr. MacMillan

I am surprised at the hon. Gentleman's innocence, because the word "amenity" is the most abused word used by anybody who has opposed hydro-electricity from the start on all sorts of grounds.

Mr. Maclay

To avoid any hon. Member getting into trouble, may I say that this matter is sub judice at the moment?

Mr. MacMillan

I apologise, and I shall leave it there. I can still talk in general terms. The matter of the name arose because the gentleman happened to be the most relevant to this case. There is no doubt and can be no doubt in anybody's mind but that the Board has suffered years of obstruction and delay while costs were soaring and difficulties were created by the activities of landed interests. These interests have been well represented on the other side of the House over the past ten years. Some of them have dug themselves in like heels—that can be permitted in any sense—and have not permitted the Board to go ahead. For every month's and every year's delay, the costs were rising and everybody was bound to suffer. This House should take power by democratic process in Parliament to dig those heels out. We have allowed this thing for too long while the Board has to pay tribute to every feudal interest, not to mention the nouveaux riches nabobs of the Highlands. [Interruption.] Parliament can help the Board in this regard, at least, by getting rid of these obstructions that retard economic and social development of the area and the work of the Board.

Mr. Nabarro

"Nabarro", not "nabob".

Mr. MacMillan

I am sorry, but I was not quick enough in following the hon. Member for Kidderminster's interruption. Does he recognise the description given a long time ago about the type of obstructionists that I am talking about: It is noteworthy that the nobles of the country (Scotland) have maintained quite despicable behaviour from the days of Wallace downwards—a selfish, ferocious, famishing, unprincipled set of hyenas, from whom at no time, and in no way, has the country derived any benefit whatever. If that was true in the days of Thomas Carlyle it certainly is not any less true or expensive to the community today.

I now come again to a narrower issue in accountability. It does not seem right to me that the House should not have available to it broken down details and statistics of the amounts payable to individuals by way of compensation, That should happen in every case and if there is nothing to hide there should be no reason why it should not be made known to the public. Action has been taken in the case of Strathfarrar-Kilmorack. We have the figure. Lord Lovat was good enough ultimately to give us the figures, but he did not have to. I am sure others would not have been so forthcoming even under pressure. We should insist that the Board should break down those figures and publish them, too, in all cases, whether compensation sums are agreed in early negotiations or after formal objections have been heard.

I think we have the right to ask for accountability by the Board in all such cases. I thought that the Board was being more than generous in the case of Lord Lovat. I think hon. Members opposite may take another view; but £100,000 could do a lot to help to provide electricity for those people who are being refused it in my constituency. That refusal applies to thousands of people in my constituency, apart from those in other parts of the country, and they want to know why, when large-scale compensation is still being paid elsewhere. To give £100,000 to anyone, however well meaning and deserving, means that the Board, on its own plea that it has no other money, is depriving other areas of the simple right to enjoy the benefits of electricity.

Mr. Hugh Fraser (Stafford and Stone)

I would point out that this assessment of £100,000 with which my brother was concerned was worked out purely as a negotiated matter between himself and the Board, with, of course, two independent assessors evaluating the property which was to be taken over. I am not going into the question of whether it is a high figure or a low figure, but it is not a mere question of marginal acres of land, it is a question of 18 miles of river fishing and so forth. We must stick to the idea that there should be compensation, provided that it is just.

Mr. MacMillan

I am obliged to the hon. Member; it is a refreshing thing for me to be able to agree with him even in part. Compensation was given in respect of "reduced opportunities for angling on 18 miles of excellent fishing"—

Mr. Fraser

And for netting which, of course, is very heavy in that area.

Mr. MacMillan

—but the point is that we know that the payment by the Board for the flooding of marginal land was only what Lord Lovat called a mere nominal sum.

Mr. Neil McLean (Inverness)

On a question of fact, this land is not "marginal land." That expression was introduced by the hon. Member for the Western Isles (Mr. Malcolm MacMillan). Actually it is wintering for sheep.

Mr. MacMillan

I am obliged to the hon. Member, but Lord Lovat used the phrase himself that compensation for the land was a "mere nominal sum." He further said it was not a question of the reduction of or damage to salmon stock. Therefore, it narrows down to £100,000 compensation paid in respect of reduced angling opportunities—netting as well if you like—on a certain stretch of river. I think the public have a right to know the reason as well as the sum. I think it a good thing that Lord Lovat gave the figure, but I consider that in its accounts the Board should mention in detail every one of these transactions, and I doubt whether any hon. Member would dispute that that would be a good thing.

Mr. Emrys Hughes

Does not it mean that if Lord Lovat invested his £100,000 at 6 per cent. with the Inverness County Council he would get £6,000 a year, or £1,000 a year more than the Secretary of State for Scotland or the Chancellor of the Exchequer, for doing nothing?

Mr. MacMillan

No doubt. Meantime, I think that anyone who goes in for football pools any longer is daft if he can go in for salmon pools instead. In that sort of pool one does not gamble; it is a "dead cert". One waits for a little bit of paper to turn up saying that £100,000 is rolling in. That is the thing to do—go in for salmon pools and pray for a rainy day.

I do not wish to say anything that may sound or seem in the least bit slanderous about Lord Lovat. I am not concerned with him individually. I did not even know his politics until he started to become really abusive, and then I assumed that he must be a Tory. Apart from that, there is no personal animosity on my part towards him and I think that in Inverness everyone concerned has a high regard for Lord Lovat. But he represents a class of the community which in certain respects is obstructing development in the Highlands, wherever land and fishing interests are concerned.

It may be true that ultimately the "wolf shall lie down with the lamb… and a little child shall lead them"; but I do not think that the public interest will ever lie down in peace with Lord Lovat and the rest of the Highland landlords, however well intentioned they claim they are. Ultimately, this House must say that if the Highlands are to be fully developed and the public interest sustained, and if vast spending of money is to be guaranteed by this Parliament and the Treasury, some of the outmoded privilege of that caste and the obstruction and expense which it entails for this nation must be stripped away. The sooner that is embodied in legislation, the better it will be for all of us.

9.40 p.m.

The Joint Under-Secretary of State for Scotland (Mr. Niall Macpherson)

I would like to join the hon. Member for Dundee, East (Mr. G. M. Thomson) in expressing regret that the hon. Member for Hamilton (Mr. T. Fraser) is not here, particularly because of the reason. I will congratulate the hon. Gentleman himself on what I think was his first performance at the Dispatch Box. Without wishing to appear in any way patronising may I say, as is usually said after a maiden speech, that we shall welcome the hon. Gentleman there very often?

At the outset, I would deal with what the hon. Member for Western Isles (Mr. Malcolm MacMillan) has been saying. By his last few remarks he spoiled the tone of the debate. The House would do well to remember that it is a generally accepted principle that we do not deprive people, whether they be very great landowners or owners of a but and ben, of their property without fair compensation. That being so, the question is, What is to be fair compensation?

The hon. Gentleman says that in all cases there should be no power to object on the part of private interests. That is something on which this House has always laid great stress. For example, we have recently had the Franks Tribunal trying to strike a balance between the interests of the individual and those of the community. It has to be remembered in this particular case that the Act lays down procedure which has to be followed in these circumstances. The Board prefers to proceed by negotiation. The hon. Gentleman seems to think that is wrong.

Mr. Malcolm MacMillan

No.

Mr. Macpherson

He seems to think that when the Board has proceeded by negotiation it should at least publish the figures. That has never been done so far. What happens is that the Board makes provision in the Estimates for the constructional scheme for the amount of compensation, and my right hon. Friend the Secretary of State has to judge whether that is a proper amount in relation to the scheme and whether the scheme is economic.

Mr. MacMillan

The Minister has twice misrepresented me. I did not say that I objected to compensation. I think it is most important. The Secretary of State has the advantage over us in that he knows what figure is embodied in the overall figure. We do not.

Mr. Macpherson

What I ought to have said is, "land and compensation." This is a matter for negotiation between the Board on the one hand and the parties on the other. It is not one for the Secretary of State to come into, because he has not the means of judging which the parties have. The Board has expert advisers who are fully qualified to be arbitrators, and the landowner is very often represented by somebody equally qualified. They get together and decide on a figure. That is the way the thing works.

I assure the hon. Gentleman that the figure agreed upon in this case has been considered by both parties to be fair compensation. The only way, or the best way, to arrive at fair compensation is for the parties to settle it among themselves. It has never been the custom, nor would it be possible, for the Secretary of State to override a bargain of that kind, once it had been made.

Mr. G. M. Thomson

Quite apart from that, why should the taxpayer not know how much of his money has been spent? Why should the Board not do what any local authority does, publish in its minutes the sums paid in compensation?

Mr. Macpherson

The amount that appears in the estimate of the scheme is for land and compensation. I refer the hon. Member to the statement of capital expenditure, in which land and compensation are referred to under almost every single item.

Mr. Thomson

There is no detail.

Mr. Macpherson

There is no detail there, but why should there be?—[HON. MEMBERS: "Why should there not be?"] On the one hand, agreements have been freely entered into and, on the other hand, there are the results of arbitration between the parties. The total figure is partly of estimated compensation, because we do not know what the arbitrators will arrive at, and partly formed from figures arrived at—I say this deliberately—subject, of course, to the scheme being confirmed. It is a contingent figure. If the cost for land and compensation were to look too high, it is quite on the cards that the Secretary of State would not feel able to agree to the scheme going ahead on the grounds that it was not economic.

Mr. Malcolm MacMillan

Would he explain to the House that he was refusing it in respect of too high a figure for compensation without disclosing that figure? In fairness to this House, it is reasonable to ask for some figure to be given.

Mr. Macpherson

I really do not think we can pursue this matter in this debate. It would be a very great mistake if this debate—the first of the kind we have had on this Board—were to be wholly taken up by one particular instance. No doubt it gives rise to a particular principle, but on a matter which has not given rise to difficulty—

Mr. Nabarro

And on a scheme which has not yet started.

Several Hon. Members

rose—

Mr. Speaker

Order, there is little time left.

Dr. J. Dickson Mabon (Greenock)

Could I put a reasonable point?

Mr. Macpherson

No, I am afraid I cannot give way.

Dr. Mabon

It is a public scandal.

Mr. Macpherson

It is of great value that we have had this debate. As the hon. Member for Dundee, East said, it is a great tribute to the Board that these debates have not been frequent and regular. None the less, it is of value that we should have close scrutiny now. The hon. Member for the Western Isles said that the Board was beyond criticism except on minor things, and for my part I would join him in the tributes paid both to the Board and the staff for the success they have had.

The purpose of the debate as I see it is to examine the working of the Board in the light of Government policy, and certainly not vice versa. The first question we have to ask is, is the Board doing its duty? By any test I think we have to agree that it is, and I do so gladly. The number of kilowatts installed by the Board has risen from 87,000 kilowatts in 1949 to 729,000 in 1957. The hon. Member for Western Isles wonders if it has gone a little too fast on that. In generation, the number of million units has risen for hydro-electric power from 322 to 1,624.

I think my right hon. Friend gave the figure for connections, which have risen from 188,000 odd by nearly 176,000 at the end of 1957. The number of farms connected has risen from 1,400 in 1949 to 11,854 in 1957, and sales rose from 50 million units to 97 million units. The number of crofts connected has risen from 550 to about 13,000. We must agree, in the light of those figures, that the Board is doing a good job.

The next question is whether the Board has been doing it in the most economical way. One of the great advantages of a debate like this is that it gives an opportunity, as the hon. Member for Cleveland (Mr. Palmer) said, to look realistically at the economics of the matter. The Select Committee itself asked whether investment was not excessive. Perhaps it could be reduced if different methods were employed. It has been suggested by my hon. Friend the Member for Caithness and Sutherland (Sir D. Robertson) that the Board should pause and consider—that it should lay off in a time of scarce capital and high interest rates. Finally, it has also been suggested that the reason for that is that hydro-electric power may perhaps be replaced or rendered obsolete by nuclear generation.

Here again, I think one has to look at the whole principle of what the Board is trying to do, and here I am afraid I must be exceedingly brief. Reference has been made to the average cost per kilowatt installed of hydro-electric power as compared with thermal power, and of course hydro-electric power is very much higher. Doubts have been expressed by the hon. Member for Cleveland as to whether it is wise to depreciate an asset of that character over so long a period of time, even though the asset may last—

Mr. Palmer

In view of the technical developments.

Mr. Macpherson

Yes, in view of the technical developments, and that is a matter for serious consideration. There is, of course, the effect on the cost per unit of these factors. The cost per unit in hydro-electric power has gone down, and I would reinforce the point made by my right hon. Friend by saying that it went down from .64d. per unit in 1956 to .59d. per unit in 1957, whereas in England and Wales in 1955–56 it went up from .78d, to .86d. Partly, no doubt, one of the reasons for that as far as the Hydro-Electric Board is concerned was the climatic conditions, but the point is that this comparison does not show the position quite as favourable for hydroelectric development as I think it really is.

The hon. Member for Cleveland also made reference to the load factor in the North of Scotland area as being between 35 and 45 per cent., and he wondered if it would be permanently low. In any case, the point is that, with a load factor of that character, hydro-electric power, which can be turned on or off more or less at will, is ideally suitable, as also in order to supplement the peak load demands of the South of Scotland Board. As has been said, it is on that peak load demand that the North of Scotland Board makes the profit which enables it to go in for unecomonic distribution developments.

On the subject of nuclear developments, it may well be in the future that for the base load for the North of Scotland area a nuclear station in the North-East area may be the right thing, but in any case it will not be available, I should say, until 1965. In the meantime, we shall have nuclear developments coming on from the South of Scotland which will be ideally suited to supplying energy in off-peak periods for pump storage, and so enable the Board to make that kind of profit at the peak periods which it needs in order to develop distribution in the more uneconomic areas. The difference in price there is very marked, and reflects, of course, the marginal advantage to the South of Scotland Board in having this additional supply of electricity without having to establish marginal plants of its own.

Before dealing, in the closing minutes, with what has been said about distribution, I should like to make a brief reference to the cuts in capital expenditure to which reference has also been made. My hon. Friend the Member for Caithness and Sutherland thought that we should pause, and pause more than we are doing. On the other hand, the hon. Member for Dundee, East thought that we should be going ahead more rapidly with the development of distribution. Those are the two opposite points of view.

I have to put it to the House that the Government must look at the position from the whole national point of view. We are, at the moment, on the verge of developing nuclear power stations, into which a great deal of the national Exchequer must go. It will also be to the advantage of the North of Scotland Hydro-Electric Board that those nuclear stations should be developed because, as I have shown, it will be able to make an additional profit from that. I therefore do not think that it is unreasonable that the capital expenditure for 1958 should be £18 million, as against an estimated £20.8 million for 1957—which, however, will not nearly be reached—and an estimate of £15½ million for 1959.

It may be said with reasonable confidence that this expenditure will not hold back the Board from a reasonable amount of development, and I can give my hon. Friend the Member for North Angus (Sir C. Thornton-Kemsley) the assurance that distribution development will run on, not just at the 1957 level—which, though not for any reasons of Government restriction, happened to fall rather below that of 1956—but at the 1956 level. That is expected to be done.

We must, of course, have the greatest sympathy for those areas which have not been enabled to have a supply of electricity so far, but in that regard it is only fair to refer to the evidence that Mr. Tom Johnston himself gave to the Select Committee. He said that even when the Act was going through, both the former Lord Advocate, now Lord Reid, and he had explained to the House of Commons that perhaps there were areas so remote that it would be impossible under the Act, with its present financial arrangements, to provide them with electricity.

Hon. Members on both sides have expressed the view that perhaps an alteration in the Board's powers is required. That is the kind of thing that this debate was no doubt intended to explore. In looking at the whole of the exercise of the powers of the Hydro-Electric Board, it was no doubt proper that we should explore whether or not those powers were exactly right. In that connection I might, perhaps, refer to the position of the Chairman of the Consultative Council which, I can assure the two hon. Gentlemen who referred to it, will have continued attention, though I cannot go into that now.

I would say that, in our view, the North of Scotland Hydro-Electric Board has fulfilled its functions extremely well. We believe that we are providing the means for it to continue to do so, and I would ask the House to accept the Motion.

Question put and agreed to.

Resolved, That this House takes note of the Report and Accounts of the North of Scotland Hydro-Electric Board for 1956.