HC Deb 04 April 1962 vol 657 cc435-9
14. Mr. Ross

asked the Secretary of State for Scotland what was the nature of the consultations he had with the South of Scotland Electricity Board prior to his setting the financial objectives of the Board for the next five years.

15 and 16. Mr. Millan

asked the Secretary of State for Scotland (1) if he will state the total net surplus set by him as the financial objective of the South of Scotland Electricity Board for the five years 1962 to 1966 inclusive, the increase this represents over the actual net surplus for the five years to 1961, and the amount that this increase represents per electricity consumer in the Board's area;

(2) what estimate he made of the price increases which will have to be borne by consumers in the area of the South of Scotland Electricity Board when determining the new financial objectives which he has set for the Board.

19. Mr. Steele

asked the Secretary of State for Scotland what discussions he has had with the Electricity Consultative Council for the South of Scotland District regarding the financial objectives of the South of Scotland Electricity Board and their effect on consumer prices.

Mr. Brooman-White

My right hon. Friend's consultations with the South of Scotland Electricity Board were by correspondence and were concerned with the level of financial return for the next five years and the Board's proposals for achieving this. The objective agreed will enable the Board to finance from revenue more than 50 per cent. of its capital requirements. It was appreciated that to achieve this objective as well as to meet various increases in costs a rise of about 10 per cent. in the Board's revenue would be necessary. The financial objective is not related to the net surplus but to the gross earnings. It is estimated that to meet this the Board's income must exceed its expenditure on revenue account by about £22 million over the five-year period compared with £1½ million during the five years 1957 to 1961. The Board referred the proposed increases to the Consultative Council and it agreed with them. My right hon. Friend had no discussions with the Council, as it is not one of its functions to advise the Secretary of State about tariff increases.

Mr. Ross

The hon. Gentleman used the word "agreed". Is he aware that a cursory reading of the Report of the South of Scotland Electricity Board demonstrates, first, that it considers that it is achieving its aim in getting cheap electricity on a sound financial framework; and, secondly, that far from this being an agreed objective it has been one dictated by the Government which has compelled the Board to raise revenue up to about £6 million by raising its tariffs purely to meet the arbitrary figure of 12½ per cent. on net capital laid down by the Government against the judgment of the Electricity Board?

Mr. Brooman-White

I think that the contributions from revenue are needed to carry on the Board's business and to finance the development which the Board must undertake in the future if it is to meet consumer needs.

Mr. Ross

Was it agreed or imposed?

Mr. Millan

Whatever the long-term view may be, do the Government think that this is a suitable time, with the wage pause and appeals to industry to keep costs down, to impose a 10 per cent. increase in electricity prices in Scotland?

Mr. Brooman-White

In answer to both supplementary questions, I think that the hon. Member for Kilmarnock (Mr. Ross) misunderstood. I said that the Consultative Committee agreed with the Board's proposals. As to the point raised by the hon. Member for Glasgow, Craigton (Mr. Millan), the general position is that it is impossible to distinguish on the figures available between any increases necessarily incurred by price and cost changes and those resulting from the point in the White Paper about the necessity for improved financial arrangements being made by the Board in the future.

Mr. Steele

As this is in line with the Government's policy to ensure that the Board should be able to be more self-financing than in the past, can the Under-Secretary say what percentage of self-financing was done by the Board in the first period and what is the percentage that it is expected to have in the next five-year period? Can the hon. Gentleman also say whether the Secretary of State or the Board asked the Consultative Committee to look at this and whether it was agreed that a higher percentage should go on domestic tariffs than on industrial tariffs?

Mr. Brooman-White

I cannot answer these detailed points without notice. On the question of capital requirements of the Board, the hon. Gentleman will no doubt have seen the comments in the White Paper. I think that the relevant paragraphs are 14, 15 and 16.

Mr. Nabarro

Is it not a fact that all these matters of self-financing of electricity boards in Scotland are properly the subject of inquiry by the Mackenzie Committee at the present time?—[HON. MEMBERS: "NO."] Oh, yes—and should not hon. Members opposite be invited to give evidence to the Mackenzie Committee in the same fashion that I have already given evidence myself?

Mr. Malcolm MacMillan

On a point of order. Mr. Speaker—

Mr. Nabarro

May I have an answer first?

Mr. Speaker

Order. I am being addressed on a point of order.

Mr. Malcolm MacMillan

There seems to be a suggestion on the part of the hon. Member for Kidderminster (Mr. Nabarro) that some limitation is automatically placed on the rights of hon. Members to ask Questions of this kind because a Committee is sitting. Is this equivalent to it being sub judice in the legal sense? This is an important point. The hon. Member has suggested that hon. Members have no right to ask these Questions while the Mackenzie Committee is sitting.

Mr. Nabarro

Further to that point of order—

Mr. Speaker

I do not think that it is one. I do not think that we need bother about views of that kind expressed by hon. Members. I do not think they raise a point of order.

Mr. Brooman-White

It is true that the Mackenzie Committee is inquiring into the finances of electricity in Scotland. I entirely accept everything that my hon. Friend has said about that. [HON. MEMBERS: "Oh."] Perhaps hon. Members would listen to what I am saying. I accept that point. The question that I was answering was with reference to increased charges by the South of Scotland Electricity Board.

Mr. Strachey

What justification can the Under-Secretary give the House for this whole doctrine that this body must raise its capital for development out of revenue and not borrow it like other undertakings, public and private?

Mr. Brooman-White

I think that the justifications are contained in the White Paper.

Mr. Ross

Would the hon. Gentleman answer a very simple question: was the financial objective imposed upon the Board or was it agreed?

Mr. Brooman-White

There were consultations with the Board and the Board accepted the necessity to make the necessary changes.

Mr. Ross

Owing to the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment.