HC Deb 06 April 1970 vol 799 cc34-160

Order for Second Reading read.

3.35 p.m.

The Paymaster-General (Mr. Harold Lever)

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

The Bill deals with the electricity industry, which is one of the great industries of this country. It disposes of £4,000 million of net assets in England and Wales. It employs about 200,000 men and women and operates about 200 power stations and nearly 19,000 miles of overhead lines and underground cables in the C.E.G.B. grid, and over 300,000 miles in the area boards' mains. I mention the statistics so that the House will approach the Bill with a proper air of—[Interruption]

Mr. Speaker

Order. It is difficult to address the House against multifarious conversations.

Mr. Lever

I trouble the House with those statistics so that hon. Members may approach the Bill with the solemnity and interest appropriate to our great electricity industry.

The Bill deals with the reorganisation of the industry and arises from a statement made by one of my predecessors. The House might like, first, to consider briefly the present organisation of the industry, which was set up by the Electricity Act, 1957. There are three parts. At the centre is the Electricity Council, whose statutory responsibility is to promote and assist the maintenance and development by electricity boards of an efficient, co-ordinated and economical system of electricity supply. There is then the Central Electricity Generating Board, the prime function of which is to produce electricity and sell it in bulk to the area boards.

Finally, there are 12 area electricity boards which buy electricity from the Generating Board in bulk and distribute it to consumers. It is important to note that in this organisation the Electricity Council is not an authoritative supervising or policy-making body. The Council consists of 21 members—the 12 area board chairmen, three members from the C.E.G.B. and six members appointed by the Minister.

The Government thought that it was time that we had another look at the industry's structure, including the question whether the present distribution of functions between the central body and the boards is right. My predecessors accordingly put in hand such a review and considerable consultations were undertaken with all the interested bodies and persons. First, we reviewed the area board system. We came to the conclusion that whatever the structure of the industry it was important for the activities of distribution, sales and consumer service to be decentralised in the interests of efficient service to the consumer.

The present 12 area boards satisfy the important criteria of being large enough to give economies of scale but not too big to outrun managerial capacity, and are of a size which allows the management to foster and maintain sound relations with the public. There does not seem to be any good reason for thinking that efficiency would be improved if we made these units larger or smaller, so we intend to leave the area boards as they are.

There are very strong reasons for centralising the design, development and control of power generation and bulk transmission, because of the major economies which can be achieved by large unified supply systems where planning and generation for the whole country are centralised. We have had the C.E.G.B. as a result of this concept as the single generating authority for England and Wales, operating about 200 generating stations and shifting huge quantities of power via the national grid from the areas of cheapest supply to those where it is needed. It seemed to us that the vast capital investment in the national grid and the concentration of power stations in the areas of cheap fuel make it desirable to continue to retain central control of the running and development of this generating system as a whole.

The present arrangements for the overall planning and control of the whole system—that is, area boards and the Generating Board—are another matter. Reflection leads us to the conclusion that here something more effective as a link between the manufacture of electricity and its distribution and supply to the consumer ought now to be undertaken rather than to continue the existing Electricity Council.

This Council has too much of a purely advisory character. Its very composition reflects this, with its 21 members. The membership is probably too large for a closely-knit planning body linking the manufacturing and distribution sides of this great industry. Even more important, whether in the matter of investment programmes and the industry's use of resources, or in the increasingly vital areas of commercial policy such as the structure of tariffs, the Council can advise, but cannot lay down an industry view binding on the boards.

It is only fair to say that the existing form of organisation has produced much voluntary co-operation between boards, which have made substantial progress in adjusting their separate policies and practices in accordance with the overall need of the country and of the industry as a whole. But the fact that the Council has been able to overcome many of the limitations of its advisory character does not prevent this lack of authority at the centre from constituting a source of some weakness in the organisation of the industry, and the Government have concluded that this weakness is not acceptable in an industry so large and important.

This is a single industry, selling a single product. We do not think that it is right that the factory and the shop, so to speak, should be left to go their independent ways subject only to voluntary co-operation. The central body ought to be strengthened and put in a position to guide the industry's strategy, otherwise the industry may prove unable to meet the increasingly fierce challenge from its competitors in the decades to come. The difficulty, of course, is to decide how far to go and how to preserve, in a new organisation, the undoubted benefits which have arisen from the independent responsibilities of the area boards and of the Central Electricity Generating Board in the past.

What we have decided to do, and what the Bill provides for, is to reconstitute the Electricity Council as a small policy-making body able to take central strategic decisions for the industry as a whole, but to leave the executive operation of the industry with the existing statutory boards—that is, both the manufacturing board and the area boards—which will continue to have wide-ranging statutory responsibilities for the effectiveness of their undertakings, including particularly responsibility for their financial results. I now turn to how the Bill will achieve this.

Clause 1 reconstitutes the existing Council as the Electricity Authority, at the same time reducing its maximum membership from the present 21 to 12. Members will not be representatives of particular interests, but will be there to make their own personal contributions to this central policy-making function. Accordingly, instead of the 12 area board chairmen as on the present Council, only two, chosen by the Minister, will be on the new Authority. There will be two members drawn from the Central Electricity Generating Board instead of the present three—that is, the chairman of the C.E.G.B. and another member of the C.E.G.B., chosen by the Minister.

The Authority will have a chairman and two deputy chairmen. It is my intention that the chairman and one of the deputy chairmen will be full-time. The chairman of the C.E.G.B. will normally be appointed to be the second deputy chairman. There will be six other members, some of whom will be part-time. I have it in mind also to appoint a member to be specially concerned with economic planning and finance.

Mr. Arthur Palmer (Bristol, Central)

Will my right hon. Friend clear up a point which is causing concern among the unions in the industry? Is it intended to appoint a person to the Authority specifically responsible for labour relations?

Mr. Lever

That is one of the factors which will no doubt be considered in making the appointments, but the whole point of the new body is that, apart from the chairman of the C.E.G.B. and the two area board chairmen, the strategic planning authority of this central body will be mainly undertaken in terms of membership by those who are contributing from their personal expertise rather than representing particular interests. I agree that this does not exclude giving very full consideration to the point raised by my hon. Friend the Member for Bristol, Central (Mr. Palmer), which is very important.

Before passing to the Authority's functions, I want to emphasise that this change in composition does not mean that the Authority will not pay attention to the problems and needs of the individual boards. Obviously, it is important that there should be consultation on issues which affect them, but to mark its importance the Bill specifically requires the Authority to make adequate arrangements for consultation.

The Authority will continue, under Clause 1 (1) to have the functions of the present Council as conferred by the Electricity Act, 1957. Clause 4 gives it, in addition, the function of settling, subject to the Minister's approval, the capital investment programme of the industry as a whole, including the programmes of individual boards. This power is conferred in wide terms and will put the Authority in a position to decide for itself in what detail it will require proposals to be made, according to circumstances. I envisage that the Authority's control, however, will be broad enough to leave detailed management of capital programmes with individual boards.

Another important function of a central body is to keep both the organisational structure of the industry and the actual performance of the individual parts under review. Clause 3 confers this duty on the Authority. It will thus be open to the Authority to make recommendations for the improvement of a board's performance. Here, however, I should point out the limitation of the Authority's function. It is not intended to divest the individual boards of their statutory responsibility for the finances and efficiency of their own undertakings. So the Authority, if it has recommendations to make, will, in general, only be able to point out a remedy. It will not be able to insist that it shall be adopted, except on certain aspects of central policy.

The important question of the powers which the Authority is to have in central policy is dealt with by Clauses 5 and 6. Here we were faced with the problem of whether we should give a very wide power of direction to the central Authority. That seemed to me undesirable, however, because, when one gives such very wide power, the implication is that one intends it to be exercised, and this may well have led to a state of affairs in which detailed directing power would be exercised by the Authority over the different boards.

On the other hand, if I sought to define in the Bill in detail every conceivable area in which it might become appropriate to give directions, this might have been tedious and in any event might not have been complete, because one cannot envisage all the circumstances in which such directing power might have occurred.

I think that right hon. and hon. Members likely to be on the Standing Committee will be grateful to me at any rate for coming to the decision that the right thing to do is to set out the powers which we know ought to be conferred and to leave power by regulation to extend or diminish the directing power of the Authority, using the negative Resolution procedure. This is really what has been done.

Sir John Eden (Bournemouth, West)

Before the right hon. Gentleman leaves that point, can he tell us what particular aspects he would have in mind as to the proper areas in which directions might later be needed?

Mr. Lever

I was coming to that point.

We have decided that the specific powers should relate to capital investment, which I have already mentioned, and also to pricing policy. Subsection (1) of Clause 5 gives the Authority powers over pricing policy. As I say, I will in a moment deal with the point raised by the hon. Gentleman. In form, those powers allow the Authority to give boards directions as to the factors they are to take into account and the weight they are to give to them in fixing tariffs and in determining prices, in deciding whether to enter into agreements for supply in cases where tariffs are not appropriate and individual agreement is required, and in determining the terms of any such agreements.

I cannot speculate too far on what factors the Authority might want boards to take into account in this field, but it might, for example, say that in determining prices for different classes of consumer the boards should have regard to the long run marginal cost of such supplies; or that in settling the terms of supply contracts they should have regard to the desirability of long term contracts. But this is very much a field in which the Authority itself will have to do some pioneering work in detailing its price policy.

I do not, however, expect, in relation to this or any other power of direction, a snowstorm of formal documents. I would expect the Authority and the boards to play their respective parts in just the same way as do the component parts of any other industry: by discussion, argument, agreement, conversations, letters and all the normal machinery of co-operation.

For my part, I always refer to these powers of direction as fall-back positions necessarily incorporated when dealing with a statutory body, but not intended to be used but merely as defining the areas of responsibility which it is expected in the ordinary course of business will become understood and responded to.

I should emphasise, also, that it is pricing policy and not prices themselves which the Authority will settle. The level of prices will remain the responsibility of the individual boards. This must be so, because it is a corollary of the financial responsibility of the boards.

Sir Harry Legge-Bourke (Isle of Ely)

If the right hon. Gentleman visualises the Authority being concerned mainly, in relation to terms, with giving instructions to the area boards over tariffs and over capital expenditure, what does he visualise as being the power of the Authority under Clause 6?

Mr. Lever

I have said that I shall deal later with that aspect. I had to clear out of the way important comments on specific powers before dealing with a point which I take to be the same as that mentioned by the hon. Member for Bournemouth, West (Sir J. Eden).

The other aspect of the Authority's powers is dealt with by Clause 6, which allows the Minister to make Statutory Instruments defining new fields in which the Authority may give directions to the boards.

Mr. Peter Emery (Honiton)

There is a point on Clause 5 which I am certain the Minister will find it convenient to deal with now, and before turning to Clause 6. Will the Paymaster-General clear up in our minds the contrast and variation between this Bill and the Gas Bill, whereby here the boards are restricted by Clause 5(7) from giving undue preference yet are allowed to have differential tariffs. This appears sometimes to be a contradiction. Further, why is this restriction necessary in this Bill when it was thought unnecessary in respect of the supply of gas?

Mr. Lever

I appreciate that the hon. Gentleman thinks that it would be convenient to deal with that aspect now, but I had intended to deal with it more comprehensively a little later, and perhaps the hon. Gentleman will allow me to do so.

I was dealing with the powers of the Authority under Clause 6. The Clause allows the Minister to make Statutory Instruments defining new fields in which the Authority may give directions to the boards. The Clause is drawn deliberately in wide terms to allow the Minister to ensure that the powers of the Authority match the requirements as it develops. The provision in subsection (3) of Clause 6 for variation and revocation means that conferment of powers is not a one-way affair: powers can be withdrawn or revised if they are found to have outlived their usefulness, or are otherwise unsuitable. Further, and very important, the application of the negative Resolution procedure means that Parliament has a full voice in whatever is done by way of an increase or reduction in the Authority's powers.

Hon. Members want to know how it is envisaged that the powers of Clause 6 shall be exercised. From what I have already said it will be gathered that the powers clearly need to be exercised in consultation with the Authority. As soon as the Authority has been appointed and has had an opportunity to consider its task, I propose to discuss with it the question of what further powers should be conferred.

The three questions that I would want to discuss with the Authority fairly early on in its life are purchasing policy, standardisation policy and research policy. These questions are important, because what the supply industry does in these fields has a vital influence on the health and stability of the electrical manufacturing industry, because there should be no unnecessary duplication in the research programmes of the two sides. I am very ready to listen to what hon. Members on either side may have to say about what other powers we might have, and what hon. Members think of those three subjects which I have chosen as being the first for discussion when the Authority comes into being.

That really completes my review of the provision which the Bill makes towards reorganisation. We have an open mind about the three subjects that are to be discussed with the Authority.

On the question of undue discrimination, the law provides that in fixing tariffs, and in making agreements for supplies in cases where tariffs are not appropriate, electricity boards shall not show undue preference to any person nor exercise any undue discrimination against any person. Clause 5 (7) repeats this protection in respect of the fixing of tariffs. The electricity supply industry is, however, obliged to compete with other fuels in the industrial field where, for example, it may well be open to a major user to generate his own electricity using oil or some other fuel.

In such cases, if a board is to compete it has to negotiate a special agreement, the terms of which must inevitably reflect the competitive situation, and if by so doing it obtains or retains a customer whom it would otherwise have lost, then, as long as some contribution is made to overheads and profit, the industry and its consumers are better off. In ordinary terms, I do not think that one would say that this sort of commercial negotiation amounted to undue discrimination. It is a normal practice of every commercial firm. It is done by the oil companies and, as the hon. Member for Honiton (Mr. Peter Emery) has pointed out, it will be done by the gas people.

I could, perhaps, have left out the need to give legal clarity on this point, but, on the whole, it is just as well to remove any possible doubt. For this purpose, we have made it clear that this sort of agreement will be permissible. I think that what I have said clears up the point that the undue discrimination rule as a whole applies to tariffs which are in general application, but to remove any doubt individual contracts negotiated will not be affected by that rule.

Mr. Palmer

My right hon. Friend has not yet explained why, in these modern circumstances, a board should not have normal commercial freedom to charge what it thinks the market will bear.

Mr. Lever

The board has the normal commercial freedom to charge what the market will bear. All that is said is, "In your general tariff, when you supply all and sundry, you must not make a distinction between the hon. Member living next door and me. You must not charge the hon. Gentleman 5d. per unit and me 1s. per unit". That obviously would be wrong. Two neighbouring domestic consumers are both entitled to a common tariff. But if an hon. Gentleman opposite had a huge factory and wanted to buy an enormous quantity of electicity, he would want a special individual contract, and the board would have complete commercial freedom to charge him as much or as little as it thought it paid it to do so.

However, in general, to protect and preserve the rights of consumers, the board will not undertake large scale contracts at a loss or in a way which would impose a burden on other consumers. On the contrary this greater flexibility will benefit the other consumers, because the board will normally get some contribution to overheads or profits out of the big contracts which might have been lost if this flexible power had not existed. I emphasised that, none the less, this power will be carefully watched. We do not want it to be operated on the wrong lines. That is why the board is given this measure of control.

Clause 9, in essence, gives back to the electricity supply industry the manufacturing powers which it possessed under the original nationalisation statute, but subject to some Ministerial control on their exercise. The most important part of this restoration process is that the Central Electricity Generating Board is being empowered to manufacture electrical plant and fittings. This power, however, is to be exercised only with the Minister's consent, and in giving that consent the Minister may impose conditions and he may subsequently withdraw a consent or require discontinuance of any particular activity.

The Generating Board retains its power to manufacture items required, whether by itself or the area boards, for research, development or the maintenance of plant. Its general powers to carry on ancillary activities is relieved of the present restriction which excludes manufacturing. This will, among other things, make it clear that the C.E.G.B. is empowered to turn waste ash into a useful building material and to extract sulphur for sale from flue gases—and it is dubious whether it has power to undertake such an activity except by subcontracting.

The manufacturing powers of the Scottish electricity boards, which at present are those possessed by the old Central Electricity Authority before 1957, are being brought into line with those now given to the C.E.G.B. In their case, Ministerial control will be exercised by the Secretary of State for Scotland.

It would be a mistake to regard these new powers as being in any way an attack on or a criticism of the plant industry; or, for that matter, as being in conflict with the great and anxious consideration which the Government have been giving to the rationalisation and restructuring of that industry. The point is that, in principle, the supply industry should have the right to manufacture itself articles which it needs for the efficient performance of its functions if that is the most sensible, economic and efficient way of getting them. The gas and coal industries and all private industry can already do this.

That right was taken away from the industry by the Conservative Administration in 1957. We are restoring it. But, in so doing, we are recognising the special difficulties of the electrical manufacturing industry and the implications which new incursions into this field would have for its stability and efficiency. To this end, we have provided for Ministerial control to ensure that the industry will use these powers only with specific approval.

I hope that I shall be permitted, without giving offence, to say a few words on this subject to hon. Members opposite. When issues of this sort arise, they tend to inspirit the tired reflexes of members of the Tory Party and to involve them in a great deal of energetic theologising. I hope that they will keep these uninspiring echoes of Macaulay and Marx within bounds so as not to obscure the central purpose of the Bill and that they will not argue as if this was the main purpose of the Bill. The Bill's main purpose is to provide a more modern structure for this great national industry.

Sir H. Legge-Bourke

As one who finds Thackeray difficult to read, Macaulay even worse and Karl Marx unintelligible, may I say that my main concern is whether what is written into the Statute is absolutely clear should it ever be challenged in the courts or elsewhere. We are concerned about the extent to which all this depends upon Ministerial discretion, which may change according to the whim of the Government of the day.

Mr. Lever

If I correctly understand the hon. Gentleman's tastes in 19th century literature, I was not restricting my comments to one author. I was hoping to keep to the minimum of display of the accumulation of clichés of the last half century on the subject of private and public ownership which tend to emerge in debates of this kind if one does not have a care. I hope that, without giving offence, I can invite hon. Members opposite to take as read most of the passionate declamatory phrases uttered on this subject during the last 50 years.

If defining the powers properly is what troubles hon. Members, may I say that we can look at that matter in Committee. The main purpose is the sensible one of giving this great industry power to manufacture its own tools of trade should it be sensible and economical to do so. This power is given to the coal and gas industries, and it is automatically possessed by any equivalent private industry.

If anybody wants to conjure up nightmares of subsidised, creeping Socialism and the like, most of these bogeymen have been paraded from time to time before this and other Parliaments, and I wonder whether—[Interruption.] I do not notice that the coal or gas industry has shown any proclivity to engage in foolish or subsidised competition in fields in which private enterprise is able to do the job. If the hon. Gentleman will give me particulars, and he convinces me that this is so, I shall be glad to put a curb on such activities, as I assume any Conservative Minister, should there be one at some distant date, would do.

Mr. Emery

I should be delighted to provide information for the Minister. He knows that the National Coal Board went into brick production. It lost money and is trying to set off the loss. It is this sort of loss that we want to avoid.

Mr. Lever

The Bill does not give power to manufacture bricks. The power is to manufacture electrical plant and the like. I am not able to give a long-distance explanation of any particular investment in brick manufacturing by the Coal Board. That is a separate question. No hon. Gentleman should become greatly excited about a power of this kind, which is a logical and sensible power which private industry automatically has and which must and should be conceded to this industry.

It must be a matter of the discretion of hon. Members within the range of their oratory on particular subjects. I did not want to give offence by suggesting that it would be ill received if they were to adduce the arguments which have been heard so many times in the House and to raise the same bogeyman.

To sum up, the purpose of the Bill is to set up a central body in the electricity supply industry which will be able to take strategic policy decisions for the industry as a whole. We have sought to frame its powers in a way which will allow them to develop to meet an inevitably changing situation.

Mr. Alex Eadie (Midlothian)

Could my right hon. Friend give an assurance that, in the framing of the Bill, the C.E.G.B. will not attempt to curb criticism—for example, written criticisms in its magazine? I have personal experience of this matter. It refused to print letters which I had written to it. It is a matter of public condemnation that the Board should do such a thing.

Mr. Lever

My hon. Friend is raising without notice problems of editorial responsibility on which it would be incautious of me to express an immediate opinion. In general, I am anxious that hon. Members—and, indeed, members of the general public—should have free expression of criticism, but my hon. Friend will know that unless I add to my functions the editing of the C.E.G.B. magazine it is unlikely that I could have the direct and benign influence that he would wish. If, however, my hon. Friend gives me any example in which he thinks that a policy of deliberate suppression of criticism is occurring, I could seek in a friendly way to draw the attention of the chairman of the Board to what is happening.

Mr. Eadie

I have written to him, but he has done nothing about it.

Mr. Lever

My hon. Friend might care to have a word with me on the subject, and we will examine it together.

The new Electricity Authority is to be a compact body able to take the strategic decisions for the industry as a whole. We have sought to frame the powers to allow them to develop flexibly to meet changes in the situation. At the same time, and equally important, we have sought to preserve the sense of responsibility and initiative, together with the understanding of local needs and problems, which comes from the existence of strongly independent boards.

Whatever the distribution of formal powers, the future efficient working of the industry will depend, as it does in every enterprise, on the willing and active cooperation of everyone in the industry. This has been always readily forthcoming in the past. I am confident that it will equally be so in the future under the framework organisationally provided in the Bill.

4.12 p.m.

Sir John Eden (Bournemouth, West)

We will vote against the Bill tonight when the Question is put, "That the Bill be read a Second time". We will do so because we disapprove of the powers which are sought in Clause 9. The powers there, as the Paymaster-General has briefly explained, are designed to extend the opportunity of the Central Electricity Generating Board to manufacture. We regard this proposal as totally unwarranted and unnecessary.

We cannot see that it will bring any benefit to the consumers of electricity. It is most certain that it will result in an increased burden on the taxpayer. There is no commercial justification for it. It will give no solution to the present problems of the electrical manufacturing industry. Indeed, it will tend to disrupt the home market, it will endanger the export potential of the industry and I can find no demand for these powers.

The nearest that I can get to it was the reference by the present Government in the Queen's Speech in 1965 when they said that they would seek to remove statutory limitations impeding the proper use of the manufacturing resources of the nationalised industries. This is one of the pledges that I wish the Government had not attempted to honour.

The right hon. Gentleman has endeavoured to brush it all aside. He has said that this is nothing very important, that the Minister will see that it is not abused and that it is wanted only to enable the Generating Board to process pulverised fuel ash. This may be initially all that will be asked for. It may well be that to begin with there will be no further attempt to make use of the powers which the Bill proposes to give. We have, however, to be concerned not with a declaration of intention or with the attitude of a certain Minister who is, at best, a transient figure. We must be concerned with the terms of the Statute itself and we are bound to take as a matter of great seriousness the possibility that these powers will be used over a considerably wider field than has been indicated by the Minister.

Mr. Palmer

Is the hon. Gentleman aware that in the first draft of the Bill which became the 1957 Act, right the way through until the Report stage, Conservative Ministers at the time defended this power and it was dropped only on the insistence of their own back benchers?

Sir J. Eden

I have had an enjoyable Recess reading the Committee stage of the 1957 Bill. I am aware of the most interesting debate that took place, in which the hon. Gentleman played a part. I am also aware of the robust points of view advocated from the Conservative benches, then the Government back benches, which ultimately persuaded the Government of the day that it would be wiser not to carry these powers further on in the statute.

The Paymaster-General owes the House a better explanation for the inclusion of these powers in the Bill. He took us back to the 1947 Act and said that it was merely going back to what was contained then and putting back on to the Statute powers which the Generating Authority had in those days. He has not, however, justified the need for bringing them forward now or the need for the variations between the 1947 Act and what is proposed in the Bill, which would enable the Generating Board—subject to Ministerial consent, I accept—not only to manufacture plant, but to sell it in this country and, perhaps, even overseas.

I will return later to the Clause 9 powers. They are a matter of transcendental importance. Because these powers are sought through the medium of the Bill, we shall be voting against it on Second Reading.

As the House will well know, the question of reorganisation was the only matter with which the Bill was originally to have been concerned. The reorganisation was first mentioned by the Minister of the day in March, 1968. I believe that the working party had already reported by the summer of 1968. Since then, as the Paymaster-General has said, extensive consultations have taken place. The consultations resulted finally in the statement of the then Minister of Power on 18th July last year, from which it was clear that the Government were then not completely certain as to the form which should be taken by the legislation which they anticipated.

The Paymaster-General has further underlined this by his references to Clause 6 and to the fact that he is deliberately leaving a wide area of matters of considerable significance to be determined at some date. This is allowing for a considerable degree of Ministerial discretion. It quite properly requires us to examine closely what may be the purpose for it. I say to the right hon. Gentleman that I think that, on balance, this is the right way to go about it. It is obviously extremely difficult to try to determine in statutory form the structural organisation and pattern for a major industry, or for any industry, for that matter; to settle these things in advance, while still allowing the necessary degree of flexibility for the industry as a whole, is an extremely difficult if not an impossible task.

I think, therefore, that it is right to have areas left open in this way, but, of course, this is really one of the reasons why we are fundamentally opposed to the whole concept of nationalisation itself, because Ministers seek to intervene in matters which are properly left to the commercial judgment of the managers of the industries themselves.

The Bill apparently is designed to deal with two main points of criticism which have emerged since 1957. The first was that under the existing legislation the Electricity Council found itself without sanctions over the individual area boards and with inadequate powers, to deal with organisation and with the very important matters of investment of capital resources, over the industry as a whole. The control of capital resources is certainly of vital significance in an industry of this kind which makes enormous demands on the economy. The second main criticism which the Bill apparently was designed to meet was one which has been directed against the Central Electricity Generating Board and which, I think, is best summarised in the phrase that it is insulated from market pressures.

As I see it, this was the primary purpose for bringing the legislation to the House, to try to meet these two main points of criticism. I should like for a moment or two to look at those points of criticism. It is probably fair to say that they are not without some justification. Attention has recently been focussed on the difficulty which the Generating Board has had in meeting demands placed on it for the supply of electricity. This has resulted in the C.E.G.B. having to make, albeit small—none the less it has had to make them—voltage reductions, and this at a time, the House will know, when it was working on a margin of 17 per cent. spare capacity. Clearly, as this has happened there is cause for anxiety, and at this moment I put it no higher than that.

In fact, the forecast maximum demand for 1969–70 was 54,000 megawatts. If all the installed capacity which had been planned for that year had been in commission there would have been about 63,000 megawatts available. As things turned out, I believe I am right in saying, the Board was able to meet demand only up to 38,200 megawatts, leaving about 3 per cent. of demand to be shed by reducing voltage and frequencies. So, if the installed capacity planned had been available that would have been 80 per cent.—not 17 per cent., but 80 per cent. —above maximum demand, and if that had come about it would obviously have represented an appalling waste of capital resources.

So we see two features of this problem here: first, that in spite of the enormous investment in capital plant which had been planned demand was not fully met; and, secondly, that had that capital expenditure taken place as had been planned it would have been vastly in excess of requirements. This is the dilemma in which we find ourselves. I know that the Select Committee is looking at this very carefully, and it is certainly not for me to comment in advance of seeing its report. However, I know that this pattern has given rise to a great deal of heart-searching within the Generating Board itself and within the electricity industry as a whole, and I know, also, that it has caused a great deal of concern amongst manufacturers of heavy plant. Undoubtedly, the whole of the industry, from whatever point of view, is unhappy about the situation which has emerged.

This question of forecasting demand is in itself an extremely difficult art. Whether it is an art or a science I never quite know, but, whichever it is, it is difficult; to have to try to anticipate demand for five or six years or more ahead and plan plant capacity often involving new technology, new designs, is an extremely difficult and uncertain task. Unhappily, we must expect things to go wrong from time to time, but if things go radically wrong, as I believe they have done, over a considerable period of time—going back from the days of the previous Conservative Government through to the present Government, where we see the totally opposite situation emerging—then we have to look carefully not just at the state of the art, but at the structure and organisation of the industry itself which has resulted or could have resulted in this particular situation.

The forecast maximum demand, as I said, for 1969–70 was 54,000 megawatts. As hon. Members will know, this has now been a fairly static figure over a period of years and has resulted in difficulties for the manufacturing industry to which I shall refer later in my speech. What we must consider is whether the proposals set out in the Bill will help to meet the problem I have defined in forecasting demand for and production of capacity and whether there is any hope that in the future the sort of situation which has arisen will not have to be repeated.

We should also take fully into account the position in so far as it affects the area boards. The right hon. Gentleman told us that he thought it was right to go back to the structure pre-1957 when generation was more directly involved in distribution. In so far as that is the objective I think it right to try to do this. As he put it, this is a single industry selling a single product. The Herbert Committee of 1956, looking into the structure of the industry then, felt that the whole of the supply industry was really insufficiently competitive, and it also said that what was then called the Central Electricity Authority had too many powers centralised in its own hands. The Authority of those days was responsible for generating electricity, providing bulk supplies, co-ordinating distribution by area boards and exercising general control over their policy and finance.

This question of a single industry and a single product is an important one, and I agree with the right hon. Gentleman's comments here. I think that the degree of separatism which appears to have developed since 1957 is bad. There is an element of what I might call the "we and they" attitude which cannot be conducive to the proper development of the industry as a whole. The division that has emerged between production and retailing, or, as the right hon. Gentleman called it, between factory and shop, seems to have become too rigid and artificial but we must be careful, in trying to meet justifiable criticisms, that we do not go too far in the other direction and overcorrect the malaise or the fault which we discern.

The right hon. Gentleman, on behalf of the Government, proposes to return completely to centralised administration. He is, admittedly, keeping a separate generating board and is not returning to a single authority doing the whole lot. This I fully accept. He is, none the less, establishing a single central authority over the whole industry, which will have some powers of direction over both generating and distribution. The Bill could have gone just a limited way only towards meeting the criticisms. It could have stopped with the proposal contained in Clause 2, which deals with the composition of members of the generating and area boards, to allow for that degree of cross-bonding which it was felt within the industry to be desirable. But the Government propose to go much further. They propose to set up this new central authority and, in the process of doing so, may go a long way towards damaging the management integrity of the area boards.

I want to look at this fairly closely. As the right hon. Gentleman recognised, these area boards are, in their own right, extremely important and substantial business concerns. Yet it is proposed that these boards, with certain exceptions, should largely be excluded from the decision-making authority of the industry. Secondly, the Bill increases substantially the powers of the Minister over the industry as a whole.

It is clear from a study of the figures that the efficiency of the area boards has been improving over the years. They have introduced new management techniques. They are working for a much more flexible use of industrial manpower. The employment in area boards today is no higher than it was 10 years ago, although electricity sales have more than doubled in that time. They have introduced bonus incentive schemes. They have brought in interesting computer techniques, all of which are designed to assist management in the more efficient execution of their job.

Another great advantage of the area boards as at present constituted is that they have the capacity to experiment and to initiate. Many progressive ideas on tariffs which are now adopted throughout the industry would not have materialised if approval had first had to be obtained from a central authority. We shall want to consider this matter carefully in Committee, to ensure that the intentions of the right hon. Gentleman that the area boards shall still be free to meet their full financial responsibilities without intervention from the centre are honoured in the terms of the Statute.

There is a large measure of management decentralisation in an industry like this which is absolutely essential. Unless we have this degree of management decentralisation we shall not attract to the industry the quality of management necessary for the job. I pay tribute to the quality of the managers—certainly those I have had the privilege of meeting—in area boards and throughout the industry; there is no doubt of their very high standing and that they are in the forefront of industry as a whole. The Bill must not damage this, and the powers sought must not destroy the quality of management already in the industry.

The Government are proposing a compromise between the holding company and the need for the industry at area board level still to retain financial responsibility. The wording of Clause 5 gives cause for concern. The right hon. Gentleman picked on the actual words which I think require still further explanation. Clause 5(1) states: The Electricity Authority may give directions to an Electricity Board…with respect to the factors to be taken into account and the weight to be given to them respectively— This seems to be a new feature in a statute of this kind and will require further explanation in Committee.

Overall investment control is a desirable objective. Undoubtedly, there is a case for some form of investment appraisal machinery on an industry basis, but the area boards should still be left free to determine exactly what they require to carry out their functions properly. They must be required, in a sense, to prove their capital needs, but, so far as possible, they should be left free to get on with the job of managing them themselves. Clause 4 may well go too far in allowing the Authority to enter into the detail of area board responsibilities.

No matter how efficient the boards may be, they can directly influence only about 25 per cent. of their costs. They have little control over the bulk supply tariff, which accounts for 75 per cent. of their costs. It is at this aspect of the industry that we should look most closely, and it is to cure the criticisms about the cost of this and the efficiency on the generating side that the Bill must chiefly be concerned.

As I have said, the Generating Board has been the target for criticisms. The criticisms are, generally, that it has been insulated from demand, that it has a tight market and, as a result of being a monopoly buyer of products, it also has dependent suppliers. Report No. 59, Command 3575 of the National Board for Prices and Incomes made some criticisms about this feature of the Generating Board. Paragraph 49 says: The pricing policies of the C.E.G.B. render it entirely immune to the consquences of a fall in demand, and we cannot regard this as conducive to efficiency on the part of the C.E.G.B. The Wilson Committee's Report, which examined the reason for the delays in the commissioning of plant, also had a number of criticisms to make about the position in which the C.E.G.B. found itself. Paragraph 87 says: The C.E.G.B.…is a monopoly and a publicly owned body.… It also experiences the inherent difficulties of any very large organisation and…competitive pressures on it are not strong. We should consider whether the competitive pressures on it are improved and whether the inherent difficulties of this large organisation are likely to be eased or made worse by the Bill. It may very well be, from a study of the Bill so far, that they are likely to be made, if anything, a little worse.

There is no doubt at all—and I am sure that every hon. Member would recognise this—that there is a tremendous amount of engineering skill in the Central Electricity Generating Board. It has demonstrated this in the close association it has had with the construction and manufacturing industry. But it seems possible that it has gone too rapidly into some of the large power station units. This at any rate appeared to be the criticism of the Wilson Committee's Report. There may well be full justification for taking into account the views, for example, of Mr. Ronald Richardson, the chairman of the North-West Area Board, who recommended a much more flexible plant mix rather than too great a concentration on the large prototype plants. However this may be, there is no doubt at all that there is an abundance of skill within the Generating Board.

One of the chief criticisms of the present situation is that there is possibly too great a concentration of talent here and that this has not yielded sufficient benefits in terms of increasing productivity or improving efficiency. In 1967 Sir Ronald Edwards, writing in the "Lloyds Bank Review", had some fairly adverse comments to make about the thermal efficiency of the generating plant then in service. He said: The burden of increased costs would have been less serious if the average efficiency of generating plant in use had been rising. This would have led to economy both in coal consumption and in labour costs. It is perhaps unfortunate that the benefits of some of the new plant have not been fully realised yet, for undoubtedly this would have led to greater advances in thermal efficiency than have yet to come about. The fact remains that in 1958–59 the Board reported its expectation of reaching a thermal efficiency of about 30 per cent. by 1964–65 yet it appears that by 1967–68 after increasing its investment in generating plant by £2,000 million to £3,250 million it had only just about reached 28 per cent. of thermal efficiency. It is clear that if the marginal improvement of thermal efficiency had taken place, it would have resulted in substantial reduction in the demand for fuel and considerable savings running into literally tens of millions of pounds. When one looks at figures of this kind one becomes a little dismayed. I accept that they are complex, but they amount to a column of criticism and growing indictment against the decisions which have been taken by the Board and the industry as a whole over the past years and which may very well have resulted in the unnecessary expenditure of very large sums of money.

The Board has obviously been aware of this and has already been taking certain steps to try to put this right. It has had management consultants in and has set up regional directors and it has now introduced a number of other changes within the organisation. Clearly, this has not gone far enough and the Bill is an attempt to try to ease the situation. One thing that the Bill has not done is to depart from the single Generating Board. The right hon. Gentleman made this clear in opening when he said that the Government thought that it would be right to keep the development and control of power stations and bulk transmission in the hands of a single board or authority.

I wonder whether the alternatives have been fully considered by the Government. I have to wonder that because it is a matter for regret that the Government did not produce a White Paper on this subject. They have had plenty of opportunity to do so. They have been engaged in consultations over a very long time now—and I do not say anything against that—but I think that they ought to have shared some of their thinking with the public and with hon. Members. They should have produced a White Paper. They were asked to do so and the then Minister said that he would give the matter some consideration, but nothing has materialised. There has been no proper argument and no proper deployment of reason by the Paymaster-General to justify his remaining convinced that a single Generating Board is right.

It may very well be that this is the correct decision to take but, as hon. Members are well aware, there are a number of other views held by people of great distinction within the industry and outside it. The Government should have given much more close support in arguments for their decision. They should certainly have published a White Paper setting out the alternatives which they had considered and their reasons for rejecting them and coming down in favour of the present position.

Mr. Harold Lever

The hon. Member for Bournemouth, West (Sir John Eden) has a point on the White Paper which must be given whatever weight hon. Members think right. I considered deploying in my Second Reading speech arguments in detail on the alternative and interesting possibilities other than the centralised system. I came to the conclusion that for the convenience of hon. Members this might be explored more fully in Committee, rather than during the Second Reading debate, and I did not feel that I could, without a really extensive survey of the interesting alternatives, do justice to them in a few casual words in the Second Reading speech.

Sir J. Eden

I certainly would not have wished that a matter as important as this should have been dismissed by the right hon. Gentleman in a few casual words. I absolutely agree with him. But I think that he should have first put the matter in the form of a White Paper so as to give not just hon. Members but the whole industry the chance to consider these matters in the light of the information which had been brought to the Government's notice and in the light of the recommendations of their own working party. Second, with respect to the right hon. Gentleman, I think he could well have made some reference to these alternatives during his speech, for it is not good enough just to leave this to the Standing Committee.

What I have sought to show is that there is some substance for substantial criticisms against the existing Generating Board. There are a number of ways in which these criticisms could be met. The Government have chosen one of them—the one which admittedly does least to disturb the present position—and that in itself is an important factor and may well be the over-riding merit. A whole range of other possibilities deserves consideration, but until we have some explanation from the Government we do not know what significance they have attached to those other possibilities.

I will not detail them now, but there are two main possibilities to mention briefly. There is the alternative of developing the industry along the lines of a number of all-purpose boards, and there is the alternative of keeping generation separate from distribution to the extent that is proposed in the Bill and as it is now, but having more than one generating board.

On 22nd August, last year, referring to this, the Electrical Review said: Many people, not least among the Board's own employees, favour splitting the C.E.G.B. up into two or three Generating Boards, or, better still, combining distribution and generation in several all-purpose boards similar to the South of Scotland Board. The experience and results of the South of Scotland Board justify a much closer look to see whether there are any lessons to be learned which could be applied to the structure of the industry in England and Wales. As it is, we do not have changes and we have inadequate reasons why the Government have stuck to the single generating board.

The possibility of two generating boards should have been closely considered. Two boards would probably be broken upon the lines of a North and a South board. The arguments in favour of such a proposal are not primarily those associated with the need for competition. Where there is merit is in having some test of comparability, some yardstick by which to judge performance, measure standards, and assess validity of decisions, a yardstick which is now completely lacking. The Government are very keen to develop the doctrine of inter-firm comparison throughout industry, and yet there is no inter-firm comparison with the single Generating Board and it may well be that a more flexible approach would yield considerable benefits.

I am well aware of the argument that in this country we have a single integrated system with a single national high-tension grid, and I shall be discussing these matters more fully in Committee. The grid, certainly the 400 kV grid should undoubtedly stay as it is.

The Electrical Review made an interesting comment on this subject in an article on 18th April, 1969, saying: The 400 kV grid now nearing completion will serve system requirements up to 1980. After that, when there is a better regional balance of generating capacity and interregional transfers of load are thus less significant, the technical arguments may favour a regional division of the industry. The development of highly efficient smaller stations could also by then make local generation more competitive. That would be an interesting direction for the future development of the industry. There is probably a strong reason why the Government should have moved a step in that direction, if not the whole way, in the Bill.

In fact, what they have done is to keep the monolith intact. To use the Generating Board phrase, "the old firm" goes on; the old firm continues. Its influence will undoubtedly grow, particularly as a result of the composition of the new Authority and the fact that it will be represented at every area board level. The impact of the Generating Board on the economy as a whole and on manufacturers and particularly exports will continue to be felt. There is not likely to be any change as a result of these proposals and the effect on manufacturers is already a cause for concern. There is considerable disquiet about the present position of a single monopoly buyer with a number of dependent suppliers.

I am glad that Clause 6 will give the Minister a chance to consider the problem of procurement and standardisation for the future. However, the right hon. Gentleman did not refer to the proposals in, for example, Professor Richardson's Report to B.E.A.M.A., and these are extremely important. We should like further consideration to be given to the desirability of the better phasing of orders to take account of the need to ease the path of the manufacturing industry.

I recognise the rôle of the Generating Board in promoting the export potential of the manufacturing industry. The Board has already done much in this direction and I know that it is well aware of the importance of its task. However, the recently published report of the Electricity Generating Economic Development Committee highlighted some of the current difficulties of the manufacturing industry. Paragraph 3.22 of that report says: Factory efficiency is greatly helped by a steady home market load so that fluctuations in home demand intensify the problems of the manufacturer. There have certainly been substantial fluctuations in home demand and as a result the problems of manufacturers are acute. The report went on: A stable market is needed if the industry is to have the background conditions on which to plan its future, and to improve its efficiency and its export performance. I am not aware that the Bill helps to meet that in any way and yet it is one of the chief criticisms levelled against the industry as now organised.

The Government appear to have only one answer to the problems of the manufacturing industry, and it is to give manufacturing power to the Central Electricity Generating Board. They have not sought to meet the many interesting proposals of Professor Richardson and others. All they have done is to say to the manufacturing industry, "We recognise your difficulties and we are sympathetic about the problems now confronting you, but all we can offer to help you out of this situation is to give powers of manufacture to the State-owned monopoly".

The right hon. Gentleman said that these were reserve powers, that they would not be used unwisely, and that he would see that that was so. But the powers are there none the less, and when powers form part of a Statute, it is more than likely that the day will come when they will be used. There is no practical and economic justification for these powers. There is no justification for them on the ground of capacity. There may need to be further changes in the organisation of the manufacturing industry before long and the threat of State manufacture may discourage further investment rather than the reverse.

Clause 9 of the Bill provides powers which are additional to those contained in the 1947 Act. The Times Business News leader of 11th March summed up in as concise a form as it is possible to find anywhere the very propose criticisms of the powers in the Bill. It said Such a solution"— namely, that the Generating Board should become its own manufacturer— is just as unfair to the taxpayer as the present situation is unsatisfactory to the manufacturers, apart from the fact that it is a little too neat politically to be seen as being wholly commercially motivated. There is no doubt that it is extremely unsatisfactory to the taxpayer.

Mr. J. T. Price (Westhoughton)

Before the hon. Gentleman makes any weighty pronouncements on the ideological argument about the manufacturing powers vested in the Generating Board, he would be well advised to look at the practice in the railway industry in which this same struggle has been taking place for years. Even if the British Railways workshops get work for their own system, they have to compete with private industry before they get the contract. We have had many battles in this House on this ideological basis. Therefore, the hon. Gentleman should look at the matter on its merits. It is not as open and shut as he thinks.

Sir J. Eden

I agree with the hon. Gentleman that we should look at the matter on its merits. One of the factors to bear in mind is the extent to which capacity is available in the manufacturing industry and the extent to which this has been influenced by fluctuations in the demand placed on it from its single buyer. But what the Government propose is that these points of weakness in the relationship between the single monopoly buyer and its dependent manufacturers shall be aggravated by extending the powers to the buyer itself to become its own producer of the plant it needs.

Mr. Harold Lever

I do not know how the hon. Gentleman can say that the difficulties of the industry could conceivably be aggravated by extending the powers. It could only be aggravated by the specific misuse of those powers. It is nonsense to say that the extension of the powers aggravates the difficulty.

Sir J. Eden

The point of aggravation will be reached when these powers are used. Presumably the purpose of the Government in giving powers in this Bill to a nationalised industry is so that they shall be used. We were warned against this many years ago by the Herbert Committee in 1956. That committee warned us of the dangers of the central authority undertaking manufacture and the cost that this would involve to the taxpayer. The committee said that this would require investment in plant and buildings on a huge scale and the requirement of skilled labour which was fully engaged.

In January, 1966, the C.B.I. issued a booklet on manufacturing powers of nationalised industries and said that Direct manufacturing competition propels the State into a field of risk-taking for which it is at best extremely doubtfully suited, and it applies the taxpayers' money or pledges his credit in ventures for which tax revenues or State loans are not a satisfactory source of capital. I agree with that and with their further endorsement in relation to the electricity industry that Once the principle of the restriction of the nationalised authorities to the supply of electricity has been breached, no private manufacturer could be confident that the first step would be the last.

Mr. Palmer

The 1957 Act followed the Herbert Report, and Conservative Ministers proposed these powers in the draft of their Bill.

Sir J. Eden

And wisely they were removed before the Bill became law. This is what we seek to achieve in regard to this Bill. It may be too much to hope, but there is no harm in hoping that the present Government will have the same wisdom as the previous Government. As the Financial Times point out today in a supplement on the electricity industry: The Electricity Bill will also confer on the Authority freedom to manufacture itself. But therein lies a danger, for the manufacturing industry tends to operate on profit margins that leave all too little for the sometimes urgently needed upgrading of design and manufacturing technology. Undue pressure by the monopoly customer could have two effects, neither advantageous to the taxpayer. It could simply lead to an increase in estimates tendered, and it could further retard technological progress. If these powers are not intended to be used the fact that they are on the Statute Book must influence the relationship between the monopoly buyer and its dependent suppliers. We do not welcome this development. It does nothing to solve the problem of the relationship between the two. There is a danger that it will aggravate it and in the process substantially damage the economy.

It is clear that these powers which are sought by the Government are not the least bit commercially motivated. In fact they are wholly politically motivated. They are similar to the powers sought for the Gas Council in regard to oil. They are similar to the powers sought for the passenger transport authorities and for the Post Office in the extensive powers of manufacture which they have been given.

When we return to office, if this Bill, unwisely, has gone through to the Statute Book unaltered, we shall see to it that these extended powers of manufacture are removed. But, for now, we will do our best to influence the Government with the close reasoning of our arguments, in the hope that they will see wisdom before the Bill is read a Third time.

5.8 p.m.

Mr. Arthur Palmer (Bristol, Central)

As the House knows, I have always taken a close interest in the electricity supply industry, because I was trained in that industry as an engineer and to a great extent have earned my living from it subsequently.

The electricity supply industry has always had an intimate association with legislation. Its legislative history is long, both before and after nationalisation. It has tended to attract reorganisation by means of statute roughly every 10 years since its foundation. I will not go back to 1882, but the Act of 1919 was the first move towards central control when the old Electricity Commissioners were instituted. There was semi-nationalisation on the wholesale side by the Conservative Party's 1926 Act when the former C.E.B. was set up.

Then in 1937 there was the McGowan Report which proposed the rationalisation of distribution. It was only the war that prevented immediate legislation. In 1947 the Labour Party put forward its nationalising Act and there was Conservative revision of nationalisation in 1957. Since the industry seems therefore to need a new Act of Parliament every 10 years or so it is not really surprising that we should in 1970 have an Electricity Bill before the House.

The industry has grown on a vast scale along with the growth of the national economy, and throughout there has been inevitably a trend towards larger and larger operating and management units. A question to which the industry has not yet succeeded in finding an answer, nor indeed have the Government, is just how large these management units should be, though the industry has experimented a great deal internally on this question. The other question which has not been answered, and which was dealt with in part by the hon. Member for Bournemouth, West (Sir J. Eden) is what is the right mix of functions within the managements units. Should the industry be organised in units which give unified control right the way from the generator terminals to the consumer terminals, or should there be an arrangement such as exists in the United Kingdom south of the border, but not in Scotland, involving a separate organisation for generation and bulk transmission on the one hand and distribution on the other?

From study and experience of the industry, I accepted at one time, almost without qualification, the centralised solution for generation. But as time has gone on the case for combining generation, transmission and distribution in unified organisations has become I think stronger. It is interesting to look at overseas practice. In most countries, the combination of generation, transmission and distribution is the usual arrangement, often irrespective of the system of ownership.

However, the Bill—and I intend to be a little critical here—makes no contribution as such towards answering these questions. Nor did the hon. Member for Bournemouth, West. He was extremely cautious. In one sentence he put his weight one way, in the next sentence he put it the other. He did not find a solution. I am not surprised. The industry itself has had great difficulty in finding a solution. The plain fact is that my colleagues in the Government in proposing a new organisation for the affairs of the power supply industry are not in a position as yet to decide any real changes except to set up a new controlling body.

There is something in the point made by the hon. Member for Bournemouth, West. It is a great pity that we have not had a White Paper. I have pressed for one for some time. Before the 1947 Act, we had the benefit of the McGowan Report. Before the 1957 Act, we had the advice of the Herbert Report. But this time there has not even been a White Paper available to the House. The Minister had more information in fact to guide him in the reorganisation of the nuclear power industry, because at least he had a detailed Report from the Select Committee on Science and Technology. We should have been happy if we had had the time to consider the electricity supply industry and to provide some technical guidance at least.

The trouble started with my right hon. Friend the Member for Greenwich (Mr. Marsh), who was then the Minister, because he made what I think in retrospect was a mistake: he set up an internal committee to report to him. It is obvious that if one appoints a committee made up of people already in the industry it will recommend a minimum of change. The appointment by my right hon. Friend the Member for Greenwich of a secret internal committee—not even the names were revealed officially, although most of us knew them of course—had the unfortunate effect of stultifying healthy argument and open controversy in which the industry's experts could have joined. That would have happened if evidence had been given before an outside body. There are plenty of precedents for that kind of procedure. I suspect that the internal committee was of little value in the end to the Government because its members were not prepared to look much outside the world with which they were familiar. The things which they had been doing for so long seemed good to them and they could hardly have been expected to come forward with fresh ideas.

My right hon. Friend has done the best in the circumstances. One of the great personal advantages of my right hon. Friend the Paymaster-General as a politician is that he knows when not to do too much. He is probably a balancing factor within the Ministry of Technology these days. He proposes therefore in the Bill that the new Electricity Authority should reorganise the industry as it goes along. That is the significance of Clause 3, which gives more or less continuous power to the new central body to propose reorganisation without asking the House to pass major legislation. This has been my right hon. Friends' solution. They have said, "Let the central authority develop reorganisation proposals as it goes along".

The principle of a strong central direction on major policy issues is essential to a nationalised industry. Without it far too much will come on to the Minister's desk. This has been happening since the 1957 Act. Questions which should have been settled within the industry have often arrived on the Minister's desk even if he did not want them.

I do not say that I have been opposed to some of the principles of the 1957 Act. The greater autonomy given to the area boards at that time was perfectly sound. It was based on the Herbert recommendations. But, in 1957, the Conservative Government disregarded one of the other principal recommendations of the Herbert Report, which was that an independent central authority should be set up, and instead they established the boneless wonder of the Electricity Council. The only explanation given to the House by the Conservative Minister at the time—and I will reveal his name later—who drafted the Bill was that it had worked well for the gas industry. It certainly had not.

As the hon. Member for Bournemouth, West said—I do not think that he was a Member of the House at the time—looking back in retrospect, and with the advantage of hindsight, it is a bad system. It has caused some strained personal relations. It has been confusing to members of the public, who have not been able on many occasions, to distinguish between the Chairmen of the C.E.G.B. and of the Electricity Council. From time to time it has been bad for the morale of employees. It is a system, to use an old phrase, of having "two kings in Brentford". This is the ironical point. Some little time ago, Mr. Aubrey Jones, then the Chairman of the Prices and Incomes Board, examined critically through his board the bulk supply tariff of the C.E.G.B. and its adverse effects. But it was the same Mr. Jones who was the Minister of Power who produced the draft of the Bill which placed the generating side in such a position that it could dominate the area boards financially without itself being in contact with the ultimate users and consumers.

In a previous parliamentary incarnation, I had the privilege of acting for my Front Bench in Opposition on the Bill. If the hon. Member for Bournemouth, West has studied the debates in 1957, he will know that we criticised this arrangement. Lord Robens—then a Member of this House—was associated with me—or, to put it in a better order of respect, I was associated with Lord Robens, who was the principal Opposition spokesman. We made precisely this criticism: the system would not work well, and it was not in accordance with the report of the committee which the Conservative Government had set up.

That brings me to a point of substance about the present Bill. There is no change in the obligation of the area boards to balance their accounts independently, which means fixing their tariffs themselves, and there is no longer a central reserve fund as there was in 1947. But how is this obligation to be reconciled with the new power of the central Authority to direct the boards on tariffs? If it too closely directs the area boards, combined with an adverse bulk supply tariff, it will be extremely difficult for the area boards to act in a commercial fashtion. I hope there is an answer to this question. It is a fundamental question which needs an answer.

I turn to the right-to-manufacture issue. I thought that this would be the main quarry in today's sport, and I have not been wrong about it The hon. Member for Bournemouth, West told us that the Opposition are troubled about it. Just how troubled is a little doubtful, but I will assume that they truly are bothered. The suggestion was that it was doctrinaire Socialism. But history throws a rather different light on the issue.

First, before nationalisation, many of the large power companies had the right to manufacture. My old company, the London Power Company, had the right to manufacture in its Private Act. This was a fairly normal electricity supply practice prior to nationalisation.

But what is most fascinating—my interruptions have brought out this point—is that the Conservative Bill of 1956–57, which set up the C.E.G.B., proposed to give precisely this right to manufacture to the new C.E.G.B. It was removed later, but throughout the whole of the Committee stage the right to manufacture was stoutly defended by the right hon. Member for Barnet (Mr. Maudling), who was then the Paymaster-General.

That right hon. Gentleman gave three justifications for the right to manufacture. His first argument was that an individual or a corporation—I suppose that a corporation is an individual in law—should not be forced to buy unless it wished; secondly, that this power was a protection against high prices—I am quoting, remember, an eminent Conservative Front Bench spokesman who had hoped to be Leader of his party—and, thirdly, that public corporations should not be confined and that they should be able to act commercially. These were his three cogent arguments, and my right hon. Friend the present Paymaster-General could have not done better. Therefore, it is a little overplayed for hon. Gentlemen to come along and say that this is revolutionary. Some of my hon. Friends would prefer that we should be more revolutionary than we are, but this is mild stuff and it should be seen as nothing more.

Mr. J. T. Price


Mr. Palmer

I doubt it. When right hon. and hon. Gentlemen opposite get into office and run nationalised industries they tend to get into the frame of mind of acting according to the good sense of the situation—Socialists at second hand if one likes. The trouble was that the right hon. Member for Barnet did not have the courage of other people's convictions in the end. When faced by the hon. Member for Worcestershire, South (Sir G. Nabarro), who was then the hon. Member for Kidderminster, he ran away, but he protested to the end. I think that this puts the argument today into correct perspective.

Sir J. Eden

The hon. Gentleman is talking about what happened some years ago. Will he say in what way he thinks that the power to manufacture in Clause 9 is likely to help to overcome the present difficulties confronting both the supply and the manufacturing industries?

Mr. Palmer

From time to time there may be occasions—those with experience of the industry know this—where it is necessary for possibly certain components to be manufactured internally, and there can be considerable savings. This provides some kind of a check on the manufacturers. Indeed, the threat of fairly small components being manufactured by the Central Electricity Generating Board in the last few years has had a useful restraining influence on manufacturers. I believe that circumstances do arise where it is very much in the public interest and in the interest of the electricity industry generally, including manufacturers, that this power should be retained.

Mr. J. T. Price

Will my hon. Friend bring out another aspect of the argument about manufacturing powers to be invested in nationalised industries—namely, that often a nationalised industry might be a monopoly buyer, but it may be receiving goods from the private sector of industry which may be a monopoly producer of, for example, cables? The argument works both ways. The restraining effect of having manufacturing powers vested in a nationalised industry can be a deterrent against over-charging by somebody outside who has a monopoly share of the market.

Mr. Palmer

I take my hon. Friend's point, and do not disagree. If hon. Gentlemen opposite want further reinforcement of my argument, I point to the fact that they ran into difficulties later. Because they took this power away from the C.E.G.B., when it was necessary for some of the nuclear power stations to manufacture plutonium, the right to manufacture this substance had to be restored through the later Nuclear Installations Act. I should need to check this, but I believe there were difficulties later on in this respect.

I have often been critical about the way that the industry is run, but I have never withheld my admiration for the men and women who run and work in it. I have known them all my life. What was said about them by the hon. Member for Bournemouth, West was very fair. The workers in the industry, from the chairmen of boards to apprentices, are among the best in British industry today. We may haggle, argue and split points on the form of organisation set out in a Statute, but in the end it is people who count, because the worst kind of organisation can be overcome by the sensible cooperation of the best people.

The industry also stands well with the public. I admire the hon. Member for Bournemouth, West—it cannot be easy for a Conservative Member to praise a nationalised industry—for saying that the electricity boards stood in good repute with the public. He was very fair about that. The boards have a good reputation for service to the consumers. As a Bristol Member I should like to pay tribute to Mr. Irens, the Chairman of the South-Western Electricity Board. He is a great public servant in the South-West. He is also chairman of the Regional Planning Council.

The industry's relations with the public are good. Therefore, it is well suited for forward steps in both employee and consumer control. The industry's labour turnover is small. Through joint consultation, the industry's employees are used to studying its problems on their own account. The consumers' interest is obvious. I think, therefore, that this should have been an opportunity for the controlling boards to have more direct employee and consumer representatives. This is merely applying, within our system of public ownership, practices which are now fairly common on the continent of Europe.

I am surprised that nothing has been done in the Bill about improved employee representation, particularly as over the weekend my right hon. Friend the Member for Bristol, South-East (Mr. Benn), my Bristol neighbour, the Minister for Technology, made a speech about this, and I rather suspect that it is the forerunner of further speeches. The Bill does not go as far as the steel Act does in improving worker representation. This is a most striking omission, particularly coming from Labour Ministers such as my right hon. Friends.

On the matter of consumer representation, apart from putting more consumers, through the local authorities, on to the area boards, we should strengthen the local consultative councils. They should have much more independence. I think that there is a case for the President of the Board of Trade having some say in the appointment of consumer representatives.

There is one striking omission about the electricity supply industry, and that is in the matter of national consumer consultation. This is particularly acute now that we are to have a new executive electricity authority. There is a national council for the coal industry, and one for the transport industry, but there is no central consumer council for the electricity supply industry. The Co-operative Movement, with which I have close associations, has done a fair amount of work on this issue, and it is a strong advocate of a central consumer council for electricity and gas. This is very important, particularly to large commercial users of electric power.

Apart from the questions which I posed at the beginning about the span of the management organisation and the mix of the organisation, the new central authority as it is being given these new legal conditions, and as it will be freer from statutory sanction than has been the case in the past, should turn its attention, I think, to four challenges which face the electricity supply industry in the 1970s.

There is, first, the amenity challenge. Electricity needs to improve its planning reputation with the public. Its reputation is high in many directions, but it needs further to improve its reputation by embarking on a policy of "minimum offence" for power stations and transmission line constructions.

The second challenge is the all-electric one. Air conditioning and the concept of "heat from light" for new buildings are promising new reinforcements to the ideal of electricity as the all-purpose energy source. If we could have more air conditioning, and the development of the type of building where all the internal heat is derived from the lighting, this would be a great step forward. I have seen a number of these buildings in the United States, and at least two experimental buildings are being started in this country. One of them is part of the new offices of the South-Western Electricity Board in my constituency. This is a most promising development, and properly used would vastly improve the system load factor.

The third challenge is the primary source challenge. The industry needs to be free to take a more commercial approach to coal, oil, nuclear fission and natural gas within the limits set by Government policy. Here the industry has not been as free to make its own choice as it could and should be. In the matter of nuclear reactors—and this subject was well examined by the Select Committee on Science and Technology—the industry should get out of the mood of regarding the nuclear reactor as something still different and exotic. There is a whole group of nuclear reactors from which to choose, and from the point of view of the export trade it is important that the C.E.G.B. should look at the steam-generated heavy-water reactor and not see itself tied to the advanced gas-cooled reactor. Oil must be used increasingly for suitable power station locations if we are to keep the industry economic. In the matter of natural gas—and my hon. Friend knows that I have pressed this from time to time in the House—the industry should be free to purchase natural gas where it can make use of it, in the same way as any other industrial consumer.

I do not think that my friends in the coal industry need have any fears. Coal will remain the dominant fuel for electricity generation for many years, and the problem of the coal industry may yet be whether there is enough cheap coal to supply the new conventional stations that are coming along, including the monster Drax station.

Mr. Emery

On the question of natural gas, would not the hon. Gentleman agree that there is something strange about the Bill, in that the National Coal Board has the right to enter into agreements to explore for gas in the North Sea and the Irish Sea, as has the Gas Council, but the other nationalised industry is precluded by Statute from adopting a similar course?

Mr. Palmer

I have been in favour of nationalised industries carrying out such exploration in the North Sea and the Irish Sea, either on their own or in partnership with other enterprises, and I am in favour of the electricity industry having this power. The explanation for the omission is perhaps that at one stage the previous Chairman of the Electricity Council was not enthusiastic about the idea; but that is no reason why the Government should have accepted his advice. I think that that is the practical explanation. I am delighted to hear the hon. Gentleman being so enthusiastic about a nationalised industry being able to prospect in the North Sea and Irish Sea for gas. If we have a convert, that is all to the good.

Industrial use is the last challenge which I have in mind facing the industry. Should public electricity supply enter into a realistic alliance with industrialists for the joint generation of power where mutual benefit will result? It may surprise the House to know that 23 years after nationalisation 20 to 25 per cent. of the industrial power of this country is privately generated. I doubt whether the Ministry knows where all the private generation is. I have made inquiries, and I understand that there is no detailed record in the Ministry of private generation for industrial purposes. But there figure I have quoted shows that there is still great scope for more realistic industrial tariffs and agreements between boards, and on occasions between boards and private companies for the joint planning of industrial power stations where, because the industrial power stations also provide process steam, this has made it difficult in practice for the public supply authority to compete. Industry also receives investment allowances for private generation.

The electricity boards, the C.E.G.B. included, have a great present opportunity to reduce the margin of industrial power used in this country which is private generated, but they must do it under economic conditions.

I believe that the Bill is necessary, and that it is another legislative step forward in the advance of this great basic industry. It is an industry with which I have been proud to be associated for many years. It gives so much which is of value to modern life, and it should be the business of Parliament to assist it in every way it can. In spite of the critici- cisms which I have made of some aspects of the Measure, I think, as I say, that this is a necessary Bill, and I hope that the House will give it a Second Reading.

5.40 p.m.

Sir George Sinclair (Dorking)

My hon. Friend the Member for Bournemouth, West (Sir J. Eden) has already set out clearly my party's main objections to the Bill. I agree with the points he made. I want to object to two omissions in the Bill which I hope the Paymaster-General will make good either in winding up the debate or in Committee. The first is public accountability—whether through Parliament or direct to the public—and the second safety, which is an important aspect of the electricity supply industry, although it is not mentioned in the Bill and it was not mentioned by the Paymaster-General in his introduction.

In effect, the Bill will reduce the overall control of the electricity supply industry by the Minister and further insulate him from responsibility for the day to day operations of the proposed Electricity Authority. This also means insulating the supply industry from detailed accountability to Parliament. This may well be a desirable move, but it should be accompanied by other checks.

My next question is about accountability to the public outside Parliamentary channels; and here I apologise for turning to a constituency matter, but that is the source of my experience. The board operating in my constituency—the South-Eastern Electricity Board—has shown its contempt for any notion of accountability direct to the public. I shall not weary the House with instances, except two matters concerning safety. In its annual reports the board makes no mention either of an investigation and critical report on its work by the Minister's own inspector or of the debate on electrical safety in the board's area which took place in the House. Secondly, it took no action on its own defective standards of workmanship, in spite of persistent and professional local complaints made by a constituent of mine—an electrical consulting engineer—until he eventually succeeded in persuading the Ministry itself to investigate.

In any case, the machinery for liaison between the boards and the public—the consultative councils—is too close to the boards themselves to take a robust and, if necessary, critical line on behalf of the consumers. I am in agreement with the contribution made by the hon. Member for Bristol, Central (Mr. Palmer) on the subject of the reconstitution of consultative councils. These councils are serviced by the boards whose activities they are designed to oversee. The boards provide their premises and secretarial staff, and the councils rely on the boards for their technical advice. They are not independent bodies to which the public can with confidence take their grievances and worries.

I personally wonder whether it is sound that the proposed Authority, with its responsibility for the whole supply industry, should be further insulated from responsibility to Parliament and to the public, and should be judge and jury in its own cases.

Electricity has become at once the key motive power and the key control element in our economic and, indeed, our domestic life. We all know that riots can break loose in the kitchen when there is a power cut. There is virtually no modern heating system—no matter what fuel it uses—or a single commercial or industrial concern, public utility, Government Department, or even source of fuel, that does not rely directly or indirectly on a mains electricity supply. In these days, except in the remote country, where a few pumps are hand operated, we cannot get petrol from most petrol stations unless the electrical pumps are working.

Under emergency conditions the country could manage without any of the other individual sources of energy for a protracted period, if not indefinitely, but the complete structure and economy of this country would grind to a halt within a few hours without a mains electricity supply. To that extent it might be said that whoever controls the electricity supply industry has the country at his mercy. It is, therefore, important to have a proper and well understood system of accountability to Parliament and to the public.

My main concern today is to speak about safety. It was a report of the Ministry's own inspector on the defective and dangerous state of the South-Eastern Electricity Board's service terminals in consumer premises in my constituency that led me to take an interest in the safety factor, especially in homes. I raised the matter in an Adjournment debate on 14th December, 1967, and have done so in a series of Questions to the Minister before and since then. One of the matters that worries me most about the Bill is that it makes no mention of safety—just as the Paymaster-General made no mention of it in introducing the Bill. It seems that under the very general provisions of Clause 6(1) the Minister would be able to make new orders, for example, to introduce up-to-date safety regulations; but not to mention safety in a Bill such as this is an important defect. I hope that it does not symbolise a complacent attitude by the Paymaster-General towards safety.

Some statements made by a former Parliamentary Secretary to the Ministry of Fuel and Power—the hon. Member for Willesden, East (Mr. Freeson)—suggest complacency on the subject of safety I want to quote two passages from his speech in the Adjournment on 14th December, 1967. He said: The electricity industry enjoys a very high record of safety, and it would be quite wrong to spread unnecessary alarm or suggest that there is any general or serious problem. That statement was made after he had had to bite on a very critical report from his own inspector. In his speech he went on: The industry is very safety conscious, and a great deal of work is going on all the time to improve on the high standards already achieved".—[OFFICIAL REPORT, 14th December, 1967; Vol. 756, c. 777.] To do the Minister justice, he recognised some deficiencies and, basing himself on the report of one of his own inspectors on the inadequate and dangerous state of some of the South-Eastern Board's service terminals, on 5th February he wrote to me saying: Bad workmanship and neglect of maintenance as well as obsolescence were included in the number of items requiring attention. He had previously written to me saying that the position in the Dorking and Epsom districts was found to be in line with the average for the S.E.E. Board. Not only the Dorking and Epsom districts but the whole board area is affected. In spite of the statement about the safety record of the industry, there is an urgent need to tighten up the safety regulations and the machinery for control. I shall seek reassurances from the Minister on both those points.

For a moment, let us consider the safety record of the industry. In December, 1968, an Electricity Council expert told British Industry Week that the number of people killed every year by electricity was only between 50 and 70. He went on to say that fire was more a cause for concern. In "Fire Facts and Figures", published by the Fire Protection Association, the following passage appeared: In 1965, there were 121 large fires definitely attributable to electrical faults and accounting for 26.7 per cent. of the damage from these fires where the cause was known. The figures for 1966 are similar, so that neglect and carelessness with electricity can be estimated to account for about a third of the country's estimated £82 million fire bill. The same journal reported: In 1968, the nation's annual fire bill was over £100 million, of which the biggest single known cause was electricity. The Journal of the Fire Protection Association reported in August, 1969: The Home Office estimates that in 1968, the number' of people killed by electrical accidents in the home was 76 (by electric shock). According to the Fire Protection Association on 3rd December, 1969: The nation's fire bill for the first nine months of 1969 was over £92.8 million.

The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Alan Williams)

I accept the hon. Gentleman's point, but will he not recognise that many of these fires are probably due to faulty appliances purchased by consumers and are not the fault of the supply industry as such? I think that that is a legitimate point.

Sir G. Sinclair

That may be so, but again and again the point is made that additional safety regulations are required, and that is underlined by the experience in my constituency which has been revealed by the Ministry's own inspector.

I want to spend a few moments on the electricity supply regulations. The ruling regulations were made in 1937. They are supported by a hotch potch of other regulations, some made before and some since, incorporated in other legislation such as the Factories Acts and the Cinematograph Acts. They are administered by various Ministries, and they leave important gaps and unclear lines of demarcation, all of them well known in the industry and, I am sure, to the Ministry. The regulations need complete revision in the light of modern requirements. They must be made more comprehensive. The whole of industry knows this. It is an urgent task to which the Minister should give far higher priority.

There are two main reasons for the urgency. The first is the overriding need for the better safety of people in Britain, who are becoming more and more dependent on electricity both in their homes and for their work. The second reason is that safety requirements within the European Economic Community and in some other countries of Europe are far more stringent than in the United Kingdom. As one example I cite only our attitude towards press screw terminals which are currently used by our electricity boards but are banned by West Germany, Holland, Belgium, Austria, Switzerland, Norway, Sweden and Denmark, apart from the United States and Canada. Surely the Government should now be urgently engaged in harmonising our safety regulations with the best practices in Europe.

As for the machinery for keeping safety standards under review and enforcing them, in paragraph 904 of its Report for the Session 1967–68 the Select Committee on the Nationalised Industries, questioned whether a department with an interest in production should be responsible for safety". The question is even more relevant today, especially to electricity supply, for the three reasons which I have already mentioned. First, everyone in the country is becoming more and more dependent on electricity. Second, this Bill will reduce Ministerial and, therefore, Parliamentary responsibility for the day-to-day operations of the proposed authority and the boards subordinate to it. Third, outside Parliament, accountability to the public is already inadequate because of the nature of the consultative councils.

Has not the time come for the Minister to consider setting up an independent authority to supervise the operation of the safety regulations for the use of electricity, and to enforce them? I hope that the Minister in winding up, will say whether under Clause 6(1) he has the powers to make new and comprehensive safety regulations and to set up an independent authority to supervise their enforcement. If he has, perhaps he will say whether he proposes to take these two steps, which are already long overdue.

5.56 p.m.

Mr. Maurice Edelman (Coventry, North)

The hon. Member for Dorking (Sir G. Sinclair) has made a very proper reference to the social importance of electricity and the fact that it concerns every person in the country. As an hon. Member representing an industrial constituency which relies largely on electricity for its industrial production, I feel that this debate is a major one, and I regret that it is so sparsely attended. After all, not only is the supply of electricity of major importance to the economy of the whole country; it is important to the housewife domestically and affects us all in our homes. Here is a moment when we can express our views, and I am sorry that so far the debate has not attracted more attention than it has.

The hon. Member also pointed out that electricity has effects which go far beyond any question of the organisation of the industry referred to in the Bill. In due course, I will deal with the philosophy of nationalisation as it relates to the electrical industry and to the theme of participation which was touched on by my right hon. Friend the Minister of Technology over the weekend.

Clearly, those of us who have always believed that nationalisation can and should be an effective instrument of public control have also believed that, unless it involves the participation of the whole community through its agencies, it merely becomes a sterile instrument of the State and not one which has the social significance in which hon. Members on this side of the House believe.

I find it extraordinary that right hon. and hon. Gentlemen opposite should attack a Bill which, by its definition, is concerned with efficiency. Right hon. and hon. Gentlemen opposite always criticise nationalisation. They argue that it leads to a diffusion of responsibility and, for that reason, somehow undermines the efficiency of private enterprise. However, as the Preamble makes clear, the Bill's object is to provide central direction on issues of major policy. To the extent that it means a reinforcement of the efficiency of electricity as a nationalised industry, I am astonished that right hon. and hon. Gentlemen opposite should not have given it a warmer welcome.

In the Daily Telegraph of 11th April there appeared an editorial, admirable in parts, headed "A Double-Edged Bill". If one studies that, one can see that even right hon. and hon. Gentlemen opposite feel obliged in some way to pay tribute to the fact that the Bill proposes a reorganisation of the industry which will have the effect of making it more efficient. It says: There is little objection in principle to the Bill's main purpose to tighten up the structure of the electricity supply industry. The proposed Electricity Authority will replace the Electricity Council with powers to exercise a wider rôle, notably in the key areas of capital development and pricing policy. The editorialist concedes: This may prove on balance beneficial. Prima facie, it certainly will prove beneficial for that reason, and therefore the Bill should have a warm welcome on both sides of the House.

But when we come to the other side of the coin—or perhaps we should call it the other edge of the sabre—the Bill is not so acceptable. In the eyes of hon. Gentlemen opposite and the editorialist it is not acceptable that the Government should seek, under the cover of structural reform, to give the Central Electricity Generating Board wide power to manufacture electrical plant and fittings. It is well known that in the 1970s, certainly towards the middle of the decade, there will be far more capacity available for the manufacture of equipment than is now required. It is equally true that in the past the supply of equipment has been oriented towards the various boards in such way as to lead the companies supplying the equipment to assume that the boards were captive milch cows that could to some extent always be depended on to supply the necessary profits for the suppliers to carry on. That is a false philosophy and a wrong one. It has meant that in the supply of electrical equipment there has not been that dynamism, energy, and determination to cut costs competitively which hon. Gentlemen opposite claim is the merit of free enterprise. Recently the suppliers have become progressively more plaintive about the profits they are making from their customers not giving them a yield comparable to that in other industries.

Mr. Kenneth Lewis (Rutland and Stamford)

The hon. Gentleman is making an interesting point, but may I put the opposite point of view—that it is because there have been so many firms competing that they have been given the keenest prices? They have had to compete to supply the electricity industry, and the industry has had a choice and has been able to keep margins down. The Bill could create a situation where the electricity industry, in setting up its own plant-producing and manufacturing company, would put some of the firms, or even all of them, out of business.

Mr. Edelman

It is curious that the hon. Gentleman, who advances the argument that the suppliers have been operating on low profits, should not accept that efficiency is obviously one way in which they can increase their profit margins.

The Bill proposes that the Authority should have the power to manufacture equipment. This may well be a shot in the arm which will stimulate the productive capacity of the present private suppliers. It is remarkable—and this has some relevance to the record of G.E.C.—A.E.I.—English Electric—that powerful firms of that kind, which have had captive customers, should not have shown enough foresight to go into the export markets in a much larger way. I do not deny that quality of their export performance, which is considerable, but, quite clearly, large firms in the electrical equipment supply industry, with a captive customer in the home market of such a size as to provide them with a very large proportion of their turnover, should increase their exports in the present time of national need to a point where they can make a contribution to the nation's exports comparable with the very large capital investment in their industry.

Hon. Members will have read the Richardson Report on this very subject. There is no condemnation in the report of State participation in the manufacture of electrical equipment. On the contrary, Mr. Richardson, who is very distinguished in their field, has come out with a rather arbitrary proposal that there should be some form of price consultation between the equipment suppliers and their customers in such a way as to give the suppliers a notional figure by which they can frame their estimates and thus obtain a profit more consistent with their capital investment.

That may be one way of dealing with the matter. But, if hon. Gentlemen opposite are so concerned philosophically with the normal play of the market, it is extraordinary that they should not eagerly accept the thought that the new Authority should be capable of entering into manufacturing should it wish to do so. I do not know whether my hon. Friend the Joint Parliamentary Secretary would agree that the powers in the Bill are permissive; there is no instruction to the Authority to set up competitive works and challenge what has been almost the monopoly of a few companies.

However, I do not want to dwell unduly on this point, except to expose some of the professions of hon. Gentlemen opposite who, while paying lip-service to the idea of competition, shrink away like timid virgins once they feel its hot breath. I want to talk about what I think is a defect in the Bill, which has been referred to by hon. Members on both sides and should be emphasised. It is the question of participation. Like many other words of that kind, it has become a vogue word in this country as well as its country of origin, but it has a deeper significance to which we should pay some attention. The concept of participation was a French invention. A French deputy called Vallon introduced an amendment to a Bill encouraged by President de Gaulle for worker participation on the boards of industrial companies. For a short time the thought of participation was much encouraged, and when it was thought to have the blessing of President de Gaulle it even became popular in the Gaullist party. But since then the idea of participation has waned, and in the past year it has been one that student revolutionaries rather than so-called sober politicians have been more inclined to encourage.

Yet beneath the trendiness of this term there is something extremely serious which I believe to be inherent in Socialism—the idea that all those concerned with the economy, those concerned with production, whether managers, directors, workers or technicians, should also have a share in deciding the way in which that production is carried on. That goes beyond the idea merely of consumer consultation. It is producer consultation. It is a different concept and one which is still novel in practice, although it has been much discussed in theory.

Although in the debate there has been much talk about consultation, I do not see any adequate reference in the Bill to the question of consultative boards, either national or regional, so that those concerned with production or consumption may have an adequate say. Probably it is the experience of almost every hon. Member that the greater part of his post is concerned with complaints by individuals about organisations, whether free enterprise or nationalised, where the individual feels himself remote from the centre of authority so that if he has a complaint, or what seems to him a legitimate complaint, he has difficulty in obtaining for it the attention of those concerned who have power in the matter. Time and again, especially since nationalisation and the delegation of authority to various agencies which the Minister leaves to conduct their own day-to-day affairs, the individual has felt himself to be more and more remote from the centres of power.

In an age of small industry, it was possible for an individual to go to the local shopkeeper or even the local manufacturer with his complaint about electrical equipment or whatever it might be. He would talk to the technician and ask that the work be put right. Over a certain area that is still true, but, generally speaking, as industry has become larger, whether nationalised or in private hands, the individual has found it more and more difficult to track down the sources of power which determine whether his complaint can be examined, let alone put right.

In an age where participation of the individual, either as consumer or producer, is all important; at a time when, more and more, the concept of the individual as being not just a cog in the machinery of production but a conscious participant has become more important and relevant to our society; at a time when young people, especially students, are becoming more and more disillusioned about a pre-fabricated consumer society in which their own participation seems to become less and less, I regret very much that, in a Bill such as this, proper emphasis has not been placed on consultation, whether of producers or of consumers.

I hope that, as the Bill goes through, Amendments will be introduced to ensure that participation, which is of profound social significance let alone of profound economic significance, receives greater attention. I would like to be sure that, when any of my constituents has an individual complaint, that complaint will not have to go along the circuitous path of being referred to me, then to the area manager and then down the chain of command to wherever the complaint is properly attributable. I hope that there will be more and immediate sources of reference from the complainant to those complained about in the electricity industry.

In this Bill, which is concerned with improving both the efficiency and the communications within the industry, there is a great opportunity for my right hon. Friend the Minister of Technology to put some of his theories into practice. If he fails to do so, his weekend speech at Bristol will be no more than a theoretical and academic exercise with no relevance to the realities of life or the realities of work on the factory floor and to the consumer in her household. Here is an opportunity for him to take such action as really will make participation not simply a slogan but a reality, and I hope that he will act in that sense.

6.16 p.m.

Sir Harry Legge-Bourke (Isle of Ely)

The debate has, to some extent, turned somewhat on the philosophy towards nationalised industries as between the two parties. After long consideration, I have come to the conclusion that, whatever might be the desirability or undesirability of having an industry nationalised, once it is nationalised there must be a very good case indeed before denying it the ordinary commercial and industrial scope that would be open to any industry not nationalised. This point is high-lighted in the Bill, not least in so far as Clause 9 is concerned, in which the Generating Board will be given power to manufacture.

One has to ask oneself whether it would be a good or a bad thing, supposing that this industry were not nationalised, that those generating electricity should have the right to manufacture some of the equipment they might need or some of the appliances they might wish to sell to consumers of their current. The more I look at that, the more I become suspicious of any move towards putting the main customer also in the position of being supplier of some of his own needs which go with his main need.

The main need of a generating board—indeed, the main purpose—was very well set out in the Report of the Select Committee on Science and Technology, which looked into the nuclear reactor programme. Paragraph 14 of the Report said: The principal statutory duty of the Central Electricity Generating Board is to develop and maintain an efficient, co-ordinated and economical system of electricity supply. I do not think that that observation has ever been challenged, and if one accepts it one has to ask whether or not it is desirable that the Board should be given the powers to manufacture in order to achieve its main objective. I am doubtful about it, and it is because I am doubtful, and because I think that I would still be doubtful if the industry were not nationalised, that I support what was said on the matter by my hon. Friend the Member for Bournemouth, West (Sir J. Eden).

I have always taken the view also that, once an industry has been nationalised, it is the duty of this House to do its best to enable those responsible for its operations to do their job as effectively as possible. In so far as my constituency is concerned, I think that the Eastern Electricity Board has done a splendid job. It had a lot of leeway to make up. Ours is not an easy area to supply. The board's consumer relationships are extraordinarily good. Like my hon. Friend the Member for Dorking (Sir G. Sinclair), however, I am not at all impressed by the work of the consultative councils. I do not think that they are achieving what they were originally set up to achieve. They are not sufficiently close to the ordi- nary consumer to satisfy his needs. I know that when constituents complain to me I always go straight to the Eastern Board itself, and not through the consultative council.

I get all the minutes of the consultative council as they are issued. They are certainly very voluminous, but I am very doubtful about what they achieve. There is need to look at the consumer consultative side of the problem, and in that respect the Bill is disappointing. I hope that what my hon. Friend the Member for Dorking has said will have been carefully noted so that the matter can be further considered.

At the same time, I must emphasise that I have found the officers of the Eastern Electricity Board very prompt in dealing with complaints. I congratulate them on what they have done. In addition, ours is one of the very few boards of any nationalised industry which can now hold out a major prospect of a reduction in its charges to the consumer. That is a very considerable achievement, and I hope that the Bill will not make that policy more difficult to pursue.

Here we come to the nub of the whole principle underlying the Bill. I am glad that the right hon. Gentleman the Paymaster-General has returned to the Chamber, because I interrupted him to express an anxiety I always have when I hear Ministers giving the most lavish assurances of their good will and benevolence, and of their intention never to misuse powers granted under a Statute. From the moment one hears that consultations are to take place with the Minister one realises that it depends a little on what the political attitude of the Minister is likely to be.

Ministerial attitudes change from Government to Government, and one thing with which the Paymaster-General, with his legal background, would agree is that whatever Ministers may declare to be their intention, Statutes are interpreted by the courts, and the courts are interested in what is in the Statute and not in what a Minister may have said when introducing the Bill, or in any assurances given during the Bill's passage in Parliament. We are therefore entitled, as an Opposition, to probe fairly deeply into what is in the Government's mind.

The right hon. Gentleman has been very frank in responding to our request to declare the powers he considers the Authority, after consulting with the Minister here and there, would exercise. I understand those powers to relate to capital expenditure and to charging policy and, under Clause 6, to the three matters of purchasing, standardisation and research.

The right hon. Gentleman was out of the Chamber when my hon. Friend the Member for Dorking referred to the great need to look again at safety. I imagine that that might be brought in under Clause 6.

A permissive power for the Minister to do this or that would mean putting into the Bill something giving a considerable licence, and a licence which would inevitably be coloured politically—I do not for one moment say dishonourably—according to the complexion of the party in power at the time—

Mr. Harold Lever

The hon. Gentleman must draw an appropriate distinction between two ways of conferring power on a Minister. If the Bill had said that the Minister should have power to direct in addition to the powers conferred in the Bill specifically with the approval of the Minister, that would be one thing, and a lot of what the hon. Gentleman says would have great force. But that is not the case. The Bill provides that the Minister shall have power by regulation to extend the powers of direction, in which case they are subject to the negative procedure and so to Parliamentary control. It is therefore not just the Minister, but the Minister and the House of Commons which will have to approve.

Sir H. Legge-Bourke

I am grateful to the Paymaster-General for his intervention. This obviously refers particularly to Clause 6, but I also think of a sort of general supervision involved, for example, in Clause 4, which states: The Electricity Authority and every Electricity Board in England and Wales…shall act in accordance with a general programme settled from time to time by the Electricity Authority and approved by the Minister. So a categorical power is given to the Minister to approve, and he has the final say, even if we suppose that the Authority wanted to do something quite contrary to the policy of the Government of the day.

Here we have nationalisation in theory with a vengeance, because whatever may hitherto have been in Statutes the Bill gives power to the Minister to override, if necessary, an Authority composed of those who one would assume would not be members of the Authority if they were not pretty expert in wielding the sort of power they are to have. Here we have a potential for political intervention. I do not suggest that it would be a main and normal motivation of Ministers to exercise that power, but the scope is there for political authority to be exercised should the Minister be so minded.

One must recognise that although we may respect his vigour and enthusiasm, and all that, the present Minister of Technology is not exactly by nature a decentraliser, and we may find that other Ministers will be more keen to exercise ministerial power under Clause 4 than even the present Minister of Technology. That is why I return to the importance of what we actually write into the Bill; and of not merely relying on Ministerial assurances from time to time.

Mr. Eric Lubbock (Orpington)

The hon. Gentleman will appreciate that the powers conferred on the Minister by Clause 4 are negative in character, in that the Minister can only fail to approve programmes submitted to him by the Authority. He has no power to direct the Authority to include certain items in its programme.

Sir H. Legge-Bourke

That I fully accept, but under Clause 6 the Minister could put to the House proposals on which the House could vote, and as a Minister is a member of the Government and the Government has a majority we know very well what would happen.

Mr. Harold Lever

The hon. Gentleman must not confuse two things. Clause 6 gives to the Minister the power, with the approval of Parliament, to make regulations extending the power of direction of the Authority—not his own power—to enforce its will on the boards. That is a separate question. What the hon. Gentleman is dealing with in referring to Clause 4 is, as the hon. Member for Orpington (Mr. Lubbock) has rightly pointed out, a veto power in the Minister to control, by withholding approval if necessary, the capital expenditures of the Authority. I am puzzled to know what the hon. Gentleman wants me to do. Does he want me to withdraw the power to control capital expenditure, thus leaving, quite unprecedentedly for any Government, this industry to fix its own capital programmes without any kind of ministerial conrol?

Sir H. Legge-Bourke

I am grateful to the Paymaster-General for his intervention, and especially for the last part of it, because I was about to go to that very matter.

First, however, I want to refer again to what the hon. Member for Orpington (Mr. Lubbock) has said. I agree that Clause 4 gives a negative power; in other words, the Minister can say to the Authority, "Go back and think again, because I do not like that one" without telling it exactly what it should come up with. I accept that.

Then we come to the question of charging, under Clause 5, where there is an obligation to consult the consumers. I hope that this will be looked at again, because of the inadequacy of the present consultative machinery. The Electricity Authority will have considerable powers to dictate to any area board in England and Wales over tariffs, and Clause 5(1) says that the Board "shall comply" with the directions, or diktat, of the Authority. There is no question, apparently, of any further consultation. One hopes that the Authority will be composed of sensible enough people to ensure proper consultation, but would the Minister not think it right to write into that Clause something to allow the area boards to express their views to the Authority rather more strongly than the Clause would empower them to do?

The right hon. Gentleman referred to the ministerial power to control capital. What concerns me most is what we learned during the Select Committee's deliberations on the nuclear reactor programme about the extraordinary stranglehold which the Treasury still has over the C.E.G.B.'s capital programmes which have been approved in principle over five years. The Treasury is holding up the capital allocation passed at the beginning of the financial year for a programme which the Treasury has approved as being for five years.

There is specific evidence on this from Sir Stanley Brown in the Report of the Select Committee on Science and Technology, 1966–67 Session, on the United Kingdom Nuclear Reactor Programme. One of my questions, No. 894, was: What is the particular thing over which the Minister reserves the right here to restrict you? That was talking about the industry's capital investment programme. Sir Stanley replied: I think you have put your finger upon what has always appeared to me to be a very difficult point: that is, the traditional method of controlling public funds in this country, dating back, I understand, to Stuart times, is by means of an annual Treasury budget. The difficulty here is that we are in fact put in a straitjacket financially which does not hold, to the best of my knowledge, in any commercial firm. We do our planning; we prepare our estimates of the cost involved and we are held to those estimates. We are also required to prepare an estimate of the rate at which that capital shall be expended year by year, and we are also held to the totality of those estimates year by year. This is an extremely difficult field in which to manoeuvre. Nevertheless we have done it, and we do it with some success. In normal commercial practice of course, a project is settled, the price is estimated, and if it is built to the price at the time, then honour is satisfied. In our case, we have to go further and estimate the incurrence of capital year by year. It is that annual expenditure which is approved. I know of no commercial undertaking which could operate on those terms. These powers are dear to the Treasury's heart—even if it approves a five-year capital outlay for improving the resources for electricity generation, it still can prevent the C.E.G.B. from getting its capital allocation, which has already been agreed in principle. This must have a damaging effect on the commercial competitiveness of the C.E.G.B. and the area boards.

We shall not get the competitiveness of this industry right unless we make the Treasury look again at its procedures in these matters. This is Government involvement willy-nilly in a commercial exercise involving a vast outlay of capital. Sums of £80 million to £100 million for one project are quite normal. The commercial competitiveness as between coal, oil and nuclear fuel should always be borne in mind. At the moment, Parliament has not yet decided what it wants an industry to do which it is leaving nationalised. Is it to be so subject to parliamentary control and oversight of public expediture that it is denied the commercial right to do what would be sensible if it were not nationalised? Or is it to be encouraged to take the sort of risks which a commercial undertaking would take?

I agree with the hon. Member for Coventry, North (Mr. Edelman) that this industry has the country in a stranglehold and could bring it to a standstill very quickly. Therefore, it is inevitable that Government will be deeply involved in it, but I am far from believing that the proposed amendment of the law to involve the Government, or to give powers to the various parts of the machinery of this industry, is correct.

I suspect that the Bill is merely perpetuating one of the major faults which is at the root of all nationalisation Bills: that we have not yet decided, as a Parliament or as a nation, whether or not an industry which is to stay nationalised—sometimes because no one wants to buy it back and sometimes because we think that it is too important to sell—should be under firm public control, on the basis of a Government Department, or whether it should be allowed to operate commercially.

The Bill seems almost to have the worst of both worlds. It keeps enormous amounts of political power in the Minister's hands and gives a dictatorial central power to the Electricity Authority, and it still expects the boards and the C.E.G.B. to be highly competitive. These two things are self-contradictory, and that is why we are right to urge the House to reject the Bill.

6.37 p.m.

Mr. Peter Doig (Dundee, West)

The Bill makes very little change in the position of the Scottish electricity boards. But Scotland has peculiar problems. For instance, it has far larger remote areas than any other part of Britain. It is totally uneconomic to supply mains electricity to remote farms, where miles and miles of cable would be required. The present boards, particularly the Hydro-Electric Board, have made great strides in supplying these remote areas.

I do not know who devised the carve-up between the two Scottish boards, but it was not a very fair one. The South of Scotland Electricity Board, for example, supplies the smaller of the two remote areas, yet it has by far the bulk of Scotland's population to subsidise it—that in Glasgow and Edinburgh, the two largest cities in Scotland. In the North of Scotland, however, under the Hydro-Electric Board, there are only the two smaller of Scotland's four largest cities—Dundee and Aberdeen—and they have to subsidise not only all the north-east of Scotland but also all the north-west—

Sir Douglas Glover (Ormskirk)

On a point of order. I have just been reading the Long Title of the Bill, which refers specifically to England and Wales. Is the hon. Member in order in devoting all his speech to Scotland?

Mr. Speaker

If the hon. Member looks at the last Clause of the Bill, he will see that a number of the Clauses do refer to Scotland.

Mr. Doig

The hon. Member will see from the names of the promoters of the Bill that one of them is the Secretary of State for Scotland.

It would therefore appear to me that those remote areas require to be dealt with by a much fairer method instead of making a comparatively small section of the population pay the total subsidy for supplying these remote areas.

I do not know whether the Bill could incorporate Clauses to make it legal for people in remote areas to manufacture their own electricity. I know that a former Secretary of State for Scotland, the late Tom Johnston, by means of a windmill manufactured all the electricity he required for a considerable period for his own house—and he was the pioneer of the hydro-electric schemes. Hon. Members may regard this as laughable, but surely, since those days, machinery has improved to the point that it is now possible to devise adaptation to farm machinery—and farms are more mechanised than ever before.

These remote areas are mainly farming areas. It would appear to me to be quite feasible that modern methods could devise adaptations for things like tractors, which are used on farms but which are not used during the night, when they could be adapted to generate electricity

I should like to know from my right hon. Friend whether, if it is not already possible to do so, he can incorporate in the Bill provision so that people in remote areas, where the boards cannot and will not supply electricity, may manufacture their own by whatever methods they can devise. Not only could they do this for themselves, but if there happened to be a half a dozen houses in a remote area, it might well be economic for one person to manufacture electricity and sell it to the others in the area. If that is not possible under the Bill, will my right hon. Friend consider including such a provision in it? I suggest that this is something that could be done and should certainly be considered.

I pay tribute to the Hydro-Electric Board in the North of Scotland for what it has done in the past and I query whether it will have the power to carry on doing this when the Bill becomes law. The board has not confined itself to supplying or even selling electricity. It has also promoted the attraction of new industries to Scotland and to the remoter parts. It has promoted a number of social facilities to attract tourists. All this is part of the present set-up. Will it be possible to continue that when the Bill becomes law?

It may not be known to hon. Members that when the North of Scotland Hydro-Electric Board first proposed its big-hydro-electric dam at Pitlochry, there was an outcry that it would destroy tourism. The strange thing is that that dam is now the No. 1 attraction for tourists in Pitlochry. The board has done other things of that kind. I want to be certain that it will have power to continue doing the type of things that it is now doing, but I am not at all sure whether it will have that power when the Bill is passed.

I also suggest to my right hon. Friend that there should be much better appeal machinery, to which reference was made by the hon. Member for the Isle of Ely (Sir H. Legge-Bourke). In my opinion, the existing set-up is not at all satisfactory. To give an example, a constituent recently wrote to me complaining that his meter was registering 100 per cent. wrong; it was charging twice as much as it should have charged. This was admitted by the Hydro-Electric Board when I wrote to it, and I have a copy of the letter from the chairman.

I took up the matter with the chairman of the board. My constituent wanted appeal machinery which would allow him to put his argument against that of the experts on the board to decide what would be fair compensation for the excessive charging which had been going on for a period of time, which nobody could assess. The board admitted that the meter was 100 per cent. faulty. The dispute concerned the length of time it had been faulty and how much my constituent had paid in excess.

The Consumer Council refused to take up the matter with the board. So much for the Consumer Council. When I wrote to the chairman of the board, he looked into the matter but he refused to allow an outside expert to decide when the meter became faulty. The board itself, of its own free will, decided what it thought was a fair figure of compensation. That figure having been offered, however, there appears to be no appeal machinery by way of reference to outside experts against an arbitrary decision of that nature.

Where that kind of situation arises, it shows that the appeal machinery in connection with nationalised industries as a whole is faulty. It needs tightening up and improving. I feel that provision should be incorporated in the Bill to improve the appeal machinery, because in its present form it is far from satisfactory.

The Bill should also include provision to protect tenants of houses who have an electricity prepayment meter put into their house. The situation which has been referred to me over and over again by constituents, as it has been also to other hon. Members, is that when a house is broken into and the meter is damaged, the tenant is responsible not only for repair of the meter and payment for it, but also for the contents of the meter. This applies even if it can be shown and admitted that the tenant has taken all reasonable precautions to protect that property of the electricity board.

It seems to me that that is wrong. The meter is the property of the electricity board, yet the tenant is held responsible for the meter and its contents. Again, this is totally unsatisfactory. I should like to see a change, because the only thing that the electricity boards have as yet been prepared to accept is that if all reasonable precautions have been taken and the person concerned is poor, the board will carry all or some of the responsibility and expense. If, however, the tenant is not a poor person, notwithstanding that he has taken all reasonable precautions to protect the board's property, he is still held responsible for the full cost of the damage and the contents of the meter.

Provision should be included in the Bill to curb the dictatorial powers of the electricity boards in matters of this kind. There should be better appeal machinery so that appeal can be made to an independent body. It is quite unsatisfactory that in the last analysis, the only appeal is to the chairman of the very board which is asking the consumer to pay the money and who, understandably, is reluctant to accept responsibility. These points should be considered during the passage of the Bill.

6.49 p.m.

Mr. Rafton Pounder (Belfast, South)

In the few remarks which I wish to make in this debate I say clearly at the outset that I am a layman, purely and simply a consumer of electricity, a person who dislikes intensely his quarterly bill. My knowledge of what makes what and how is of a severely limited nature. It was, threfore, with a layman's approach that I read the Bill. However, I soon became more than a little concerned by some of its contents and by two aspects in particular, and to a lesser extent by a third—the question of tariffs. There are three points I wish to make. The first is on Clause 1 and the rôle of the area boards. The second is on Clause 9, which is quite clearly a Clause of very considerable importance. The third is on Clause 5 dealing with tariff policy.

When one reads the Bill one wonders why it appears to have taken roughly two years from the time it was first mooted to the time it comes before the House in its present form. Such an inordinate delay leads one to believe that there was a certain amount of fairly hard fighting behind the scenes in drafting the Bill, and one would like the veil to be lifted, and one hopes it will be in Committee, to see who was fighting about what and who ultimately won.

The reduction from 12 to 2 in the representation of the area board chairmen on the central Authority strikes me immediately as a point which one needs to know a great deal more about in order that one's anxieties may be adequately allayed, because it would appear to be a downgrading of the importance and the value of the area boards, and this surely, in itself, is bound to be a matter of concern and regret. It has been shown, certainly in the gas industry, and by many people in this Chamber tonight who are involved in Committee on the Gas Bill that there has been a very important rôle for the area boards in the gas industry. I think that the same arguments about the value and importance of those boards can validly be applied to the electricity industry as well. One does not want to rehash all the old arguments about how good the boards are and the rest of it. Suffice it to say that both major parties in this House are convinced believers in regionalism. Regionalism means a great deal more than the building of factories or the building of harbours or whatever and the provision of employment; it extends also to the function and importance of service industries associated with the regional infrastructure, if I may use the word, and that must involve the power supply industries: gas and electricity.

There is a very real danger of over-centralisation, the idea that the man in Whitehall knows best. It reminds me of what was said by a journalist visiting Northern Ireland recently during one of our troubles there, when he said, "It is very different from Sussex." One accepted his point, but I think it underscores the idea that the person on the spot is more likely to have a better idea of the needs of the area than a person, with the best will in the world, who comes from a completely different part of the country. Therefore, one must regret the idea and intention envisaged in this Bill to downgrade the rôle and authority and importance of the area boards.

One would also like to know how the two area board chairmen—the lucky two—are to be selected. Whether this is to be by the drop of a hat, or however it may be done, perhaps we may receive clarification.

There is also the converse argument, which is this. One notices in the Bill that a member from the Central Electricity Generating Board is to be on each area board. Is he to appear as a big white chief from London, or what is his rôle to be? How dominant is he to be?

I hope that, having made a legitimate plea for the area boards, I shall not be thought inconsistent if I move from that to welcome centralisation of capital expenditure programmes, because where there are vast sums of money involved—and we are talking in terms of enormous sums in this industry—it seems reasonable that there should be a central guiding hand. While there may be a case, and I think it is an unanswerable case, for central direction of major policy, surely there is advantage in local managerial responsibility and know-how, in local initiative. How can that be retained if, as would appear to be the case from Clause 1, area boards are to be downgraded and perhaps deprived of much of the degree of autonomy which they possess at present?

In the 1957 Act it was stated that area boards were to be given some discretion in tariff fixing. Obviously, it is right that this should be so. It was with more than a little alarm—for it struck me as extraordinary—that I read that, in the bulk supply tariff system which operates in the electricity industry, when at peak times the C.E.G.B. is required to bring in older plant with higher running costs these extra capacity charges can be assessed only at the end of the year, while the area boards have to fix their tariffs at the beginning of the year. They do not know what indent there will be from the C.E.G.B. at the end of the year. This inevitably will upset their costings; it will upset their financial arrangements. This seems to me a very odd way indeed by which to organise the finances of a major industry. It seems that an area board is utterly at the mercy of the fluctuating demands which may or may not be made by the C.E.G.B., which is in turn cushioned from market changes.

I hope that before anyone jumps up on a point of order I may quickly say that one thing I welcome in the Bill is Clause 14(4) which excludes Northern Ireland from the operation of the Bill. I hope it is not out of order to make the very brief point that the electricity industry in Northern Ireland is on a two-tier basis, with Belfast as one unit and the rest of the province taken separately as another unit and run by two quite separate authorities. The significant thing is that the price of electricity in Belfast is just about half that in the rest of Northern Ireland. This makes me wonder whether there is not a very strong argument for giving a certain amount of freedom not only in distribution but perhaps also in generating to local boards. I think that the illustration from Ulster underscores that argument.

One accepts that this year, because the weather was not as severe as it might have been, there was none of those ghastly power cuts which have been a feature in the past, but, nevertheless, one is still entitled to ask, just how efficient is the electricity industry in this country at this time? Most people would accept that the industry has quite a number of shortcomings. Therefore, one has to look at the Bill to see how far it may meet those shortcomings or whether it would merely aggravate the existing situation.

In Clause 9 one can find nothing other than a source of aggravation when one considers that there are very few manufacturers of heavy electrical plant in this country. I think their financial statements indicate that they are going through a fairly rough time. Is this, then, the time for a completely new factor, the C.E.G.B., to go into the market and manufacture its own requirements? This does seem quite the wrong way to tackle an industry in crisis, as the heavy electrical plant manufacturing industry would appear to be, and certainly not an activity in which an industry such as the electricity industry should be involved. One would have thought that where one is operating, as one is here, with a monopoly one would obviously want arrangements for competitive costings and good estimates of plant requirements which the industry may require from manufacturers, and I fail to see how this would not be more efficient than the idea of going out on one's own with only a limited degree of knowledge. I realise, of course, that there have been considerable anxieties about future requirement planning in the industry. One does suspect, certainly from one's reading of the fate of some 500 megawatt generators, that all is far from well. Is this, therefore, the right time for the C.E.G.B. to start manufacturing, when the experts themselves have many problems?

The capacity of the industry is not growing as planned or as required. It was hoped to have 17 per cent. spare capacity by 1970, but this has not happened. This may well have been due to over-optimism, but what was the basis of that over-optimism? When major shortfalls occur one has legitimate grounds for asking what is wrong. It is perfectly clear that all cannot be well in an industry when this happens. Is it the weakness of the inflexible monolith of the C.E.G.B.—

Mr. Lubbock

This matter is being investigated by a Sub-Committee of the Select Committee of Science and Technology.

Mr. Pounder

I am indebted to the hon. Member for this information, and I trust that the findings of the Sub-Committee will be available when the Bill goes into Committee, because they will obviously be of great help in consideration of the Bill.

There appears to be too great a distinction between the generating and distribution sides of the industry. They need to work more closely together than they have done in the past. There does not appear to be any provision in the Bill to encourage a closer fusion between these two aspects of the industry.

My hon. Friend the Member for Bournemouth, West (Sir J. Eden) highlighted the lack of commercial disciplines in the industry. May I go further and ask whether it is not inherently wrong that the industry should not be geared to consumer requirements, but should appear to be saying, "This is what we have to offer. You can take it or leave it as you wish." There are other competitors in the energy market and no major industry should imagine in 1970 that it can bludgeon its way with its consumers. Those consumers will turn to another form of energy supply, and the electricity industry will have lost not merely in the short run but also in the long run.

Although there has been a considerable reduction in the over-staffing of the industry in the last two or three years, if one takes the American industry as a yardstick by which to judge the efficiency or otherwise of the British industry, it would appear that the British industry is considerably over-staffed. This implies that there are grounds for a thorough examination of the validity of the productivity targets by which the standards in the industry are operated.

As an accountant, I find that the financial pages inevitably draw me like a magnet, but the financial pages of this industry do not give grounds for great enthusiasm or optimism. This industry has a massive capital expenditure on which a reasonable return is required, but the return is about 7 per cent. I think both sides of the House agree that we must look at the industry, and indeed any other nationalised industry, in commercial terms, and here again the industry is falling short by comparison with commercial disciplines. The tragedy is that at the end of the day it is the taxpayer or the consumer—often both—who has to foot the bill for the inefficiencies of the industry.

7.5 p.m.

Mr. Eric S. Heffer (Liverpool, Walton)

May I first make one or two comments on the speech of the hon. Member for the Isle of Ely (Sir H. Legge-Bourke). I am sorry he is not here, as I found his speech a very interesting one. He put his finger on a dilemma which confronts all those who are passionately concerned with the concept of public ownership but who, at the same time, recognise that within this concept lies the danger of bureaucracy clogging up the wheels. The same danger exists in privately-owned monopolies and in all modern, large-scale industry.

The hon. Member for Isle of Ely said that we in this country had not really made up our minds whether we wanted public ownership which was directly accountable to Parliament and therefore possibly not a commercial project, or whether we wanted public ownership on a commercial basis. I do not see any contradiction between the two aims. We want public accountability for publicly-owned industries and we also want them to be commercially sound.

In certain other countries there are new concepts of public ownership to which I am much attracted. In Italy, for example, there are State industries which are often not known as State industries. They continue under their previous private enterprise names and, although they are owned and controlled by the State, do not have the tight parliamentary control that we have had in this country. I suggest that we should experiment and try out various forms of public ownership. I see no reason why there should not be competition within and between publicly-owned industries. Public ownership is designed to get rid of the class basis of our society which is perpetuated by privately-owned industry in the hands of a few. Competitive publicly-owned industry could eliminate the class basis of society and enable the consumer to get the best product. This may not be entirely in line with the thinking of some of my colleagues, and it could be considered heretical, but it is an important point if we are to advance in the concept of public ownership.

The hon. Member for Isle of Ely said that there must be good reasons why an industry once nationalised should be unscrambled. He also said that a publicly-owned industry should be commercially sound. That is precisely what is proposed in the Bill. The very Clause to which he objects is one which he should accept in support of his concept of public ownership. Therefore, I cannot understand why he should have argued so passionately against that particular part where it was completely in line with his point of view.

I want, briefly, to draw the attention of the House to the historical reasons why we developed public ownership in the electrical supply industry. Everyone knows that we could not have put our industry back on to a good footing without public ownership in the electrical supply industry after the end of the Second World War. It was an absolute necessity in order to build a series of great power stations to provide the power which we required to develop our industries, and it was absolutely essential that we should have a publicly-owned industry. I worked for a time on the building and construction of one of the largest power stations in the north-west. That would never have been built unless it had been built by the publicly-owned industry. It was absolutely essential that that project and other such projects should have come into operation as a result of nationalisation.

It is very important that we put this into its proper context. At that particular time hon. Members opposite were no more enthusiastic about public ownership than they are about Clause 9 in the Bill now. They never are enthusiastic about public ownership because they do not believe in it. I am not suggesting that there is anything wrong in them not believing in it, because that represents their whole political philosophy. But I believe that public ownership in certain industries—particularly in an industry of this kind—is absolutely essential.

I come now to the question of fair competition. I understand, in reading the views of the association of the manufacturers, that the association considers that this Bill is unnecessary and irrelevant. It says that not only is it unnecessary but that it is positively dangerous, and so on. Of course it says this and this is echoed by the Front Bench opposite and by some of the back benchers opposite. They also think that it is unnecessary and dangerous.

Mr. David Lane (Cambridge)

Before the hon. Gentleman leaves the very interesting philosophical argument which he was developing about public ownership and its merits, could he tell us why he believes it has been possible, to take one example, for the American industry, which is mainly privately owned and on just as huge a scale as he has been describing, to do evidently so much better than the industry in this country in the last 15 years in individual productivity on the generating side and in thermal efficiency?

Mr. Heffer

It is not entirely true to suggest that the whole of the American industry is privately owned. There is the Tennessee Valley Authority, a publicly-owned authority which, incidentally, carries out its own manufacturing decisions and, that is all that is being suggested in the Bill. It is not true to say that the whole of the American electricity supply industry is totally in the hands of private enterprise. Surely the important thing is that in any case it does not follow that the Americans are much more superior than we are in his field.

I suggest that one of the reasons why we have not gone ahead as fast as we should have done is precisely because the 1957 Act restricted us from going ahead. That is what the Bill will put right. It will give greater powers to the Authority than the Electricity Council has at present. It will obviously mean that we can have a much more efficient industry than we have had up to now. With these greater powers provided under the Bill, it will be able to extend further than in the past.

On the question of unfair competition, I am absolutely amazed at hon. Members opposite and how they can argue consistently that we must have a competitive system. They say that we must have a system where one firm can compete with another. But immediately a nationalised industry, a publicly-owned industry, is given the same rights as private enterprise, then the screams which come from the opposite side of the House are absolutely unmerciful. Hon. Members opposite do not believe in nationalised industries having the right to compete with private enterprise although they think it is perfectly all right for private enterprise to compete with private enterprise. There must be a mental blockage in their minds when it comes to the question of the public-owned industry having the same right. Then they talk about unfair competition and they say that it is not right and gives nationalised industries an unfair advantage over private enterprise, and so on.

I never understood their point of view on this and I never will—except that it comes down to the fact that they wish to perpetuate a class system, with the privilege that goes with the class system of the ownership of the means of production, distribution and exchange. It can only be that, and there can be no other reason, because if they did not believe that they would be advocating that the publicly-owned industries should have the same rights and the same ideas in relation to manufacture and competition as has private enterprise.

Today the idea has been put forward of employee representation which does not appear at all in the Bill. I regret that it does not appear because it seems to me that once again we are missing a very good opportunity to develop our basic ideas which are accepted on this side of the House on the whole question of in- dustrial democracy. I remember that my hon. Friend the Member for Poplar (Mr. Mikardo) at a Labour Party Conference making a speech introducing a booklet called "Industrial Democracy" issued by the National Executive of the Labour Party. In that speech he commented democracy should not end at the factory gates it should be taken in through the factory gates. I have long argued that we have a lopsided democracy in this country. We have a political democracy but not an industrial democracy, and we have never had an industrial democracy. The trade unions have grown, and to that extent they are able to exert a certain amount of pressure, and they inject a certain amount of democracy into industrial relations. But that is not full industrial democracy. We need to understand that in modern society with the growth of large-scale industry the worker at the point of production becomes increasingly alienated and remote from any control over his environment. He feels more and more that he is a mere cog in the whole process of production. One has only to speak to a worker in a motor car factory who works on the belt to know precisely how he feels about the decisions made in his industry. That is one of the reasons why one gets the sudden flare-up with the workers taking quick decisions and stopping production. We have to overcome that problem and to recognise that in an industrial society it is a very real problem and that the way to overcome it is to inject forms of industrial democracy inside our industry.

That means democratic forms of management and not bureaucratic forms of management. Although I welcome the fact that the Steel Board has provisions for a number of worker-directors on the board, even that is not what I mean, because a worker director on the board after a time can equally become part of the establishment and remote from his fellow-workers. I mean something more than that. There is a whole body of Socialist opinion which we seem to have ignored in this country for far too long. I am not thinking about the great Russian Marxists and the anarchists like Kropopkin but people like G. D. H. Cole, who is part of our British tradition and heritage. In book after book and pamphlet after pamphlet he advanced the concept of industrial democracy through forms of democratic management. We used to call it workers' control. I do not particularly like that term, and I prefer to call it democratic management with direct representation of the workers on the board of management and so on, representatives elected by themselves and responsible to the workers who elect them.

The Labour Party is again missing a first-class opportunity to show that the speeches of my right hon. Friend the Minister of Technology and our pamphlet "Industrial Democracy" were not so much hot air, not a dream for the future which we did not really mean, but something to put into operation now, in an experimental form. I am not suggesting that one we have experimented with something, that has to be the last word. In this matter we shall have to move by trial and error, for there is no other practical way. There have been experiments in Yugoslavia where there are workers' councils which direct the industries in which those concerned work. Some have been sucessful and some have not been so successful. We should be bold enough and radical enough to experiment along these lines, and I regret that the Bill does not do so.

One of the reasons why the Government have not made this experiment is that some top trade union people in the electrical industry are opposed to this concept. But I do not believe that every top trade union leader represents the fount of all wisdom. They can sometimes be wrong. They are wrong on this subject of representation of workers. Their view arises from their belief that it means taking away some of their power. I am not against that. I am for the distribution of power as widely as possible. That is why we should have experimented in this direction, and I hope that even at this late stage there will be sensible and balanced Amendments in Committee taking at least a step towards this sort of concept.

There have been some very good speeches in the course of the debate. I should like to compliment particularly my hon. Friend the Member for Bristol, Central (Mr. Palmer) on an excellent speech, and I hope that the Government will take note of what he said.

I am a passionate believer in public ownership, but varied forms of public ownership, which is why I want the widest possible experimentation. I understand the Opposition in their objection to Clause 9 and to the whole idea that publicly-owned industries should have the right to manufacture. Even though this provision is only permissive—and I think that it should have been obligatory—it strikes at the power and influence of the big corporations in the electrical industry. We have seen examples of what happens with the big corporations in the electrical industry, with the mergers which have thrown our people on the streets. It cannot be said that there is real competition in the industry, as there was in the past, because the present tendency is towards larger and larger concentrations. That is modern society. We have to ask ourselves, "Monopoly for whom and on whose behalf?". Is it to be on behalf of the people as a whole, monopoly control by the State in the interests of the people with forms of democratic managements and control, or monopoly on behalf of a very small group of people operating such monopolies in the interests of a small class?

The time has come for the development of large-scale public ownership, not for private ownership, of which we have had too much. I hope that in our consideration of the Bill we shall discuss Amendments introducing forms of democratic management and worker participation in the broadest sense. I trust that Amendments will strengthen the powers of the Authority so that it may go ahead to involve itself in all types of manufacture in the industry. I am pleased to support the Government this evening, and I hope that in Committee the Bill may be made even better.

7.26 p.m.

Mr. Eric Lubbock (Orpington)

At times, the debate seems to have turned into a discussion of the merits or demerits of public ownership, even though only a small part of the Bill is connected with that topic. The important issue to which the House should address itself is whether the suggested scheme of reorganisation for the electricity industry, which has been in public ownership for many years, is the best for the industry, particularly for the consumers and employees.

In this connection, much of what was said by the hon. Member for Liverpool, Walton (Mr. Heffer) about employee participation would have been supported by any Liberal assembly in the last few years when employee representation has been one of the main items on the agenda. I agree with him and with the hon. Member for Bristol, Central (Mr. Palmer) and the hon. Member for Coventry, North (Mr. Edelman) that a great opportunity has been missed by the Government to incoporate proposals for employee representation on the Authority and the area boards, too.

The hon. Member for Coventry, North was wrong when he said that participation was a word coined by M. Vallon and made respectable when endorsed by General de Gaulle. Employee participation in the management of industrial enterprises has been part of Liberal policy ever since I can remember and I am only too delighted that it now appears to be a subject proper to be discussed by Labour Members. I hope that, a good example having been set by two parties, sooner or later we shall have even the Conservatives discussing employee representation on the boards of directors, even though that may be somewhat foreign to their thinking at the moment. They will come round to it, as the Tories usually do, about 10 years too late.

The advantages of public ownership in the electricity supply industry cannot be disputed. That the nationalisation of the industry in 1947 was for the benefit of the country has been proved by subsequent events. It was not that large power stations would not have been built, but that the inter-connected system would have been built later and the consumer would not have had the benefits of the lower capital costs per unit of output which go with larger-sized generating units. The hon. Gentleman has history on his side when he says that nationalisation has proved to be of benefit to the industry as a whole.

Should the industry be reorganised in the method outlined in the Bill? My preference—and here I agree with the hon. Member for Bristol, Central—would have been for a system combining generation transmission and distribution under a single management. Without the advantages of a White Paper such as the hon. Gentleman suggested should have been placed before the House before the Bill was brought before us, it is difficult to decide on the merits of these two alternatives. A third alternative would be to make all the area boards subsidiaries of the new central Authority. That alternative could also be argued, but without detailed knowledge before it the House is not in a position to look at the alternatives dispassionately and to come to a conclusion as to which is the best.

Taking the Bill as one finds it, I do not share the doubts expressed by some hon. Members, including surprisingly the hon. Member for Walton who referred to the danger of bureaucratisation. He qualified that by saying it was equally a risk in firms large or small. I believe that centralisation such as that proposed in the Bill, particularly in respect of capital expenditure, is absolutely essential if the industry is to progress. I would have said so even if one had had the combination of generation transmission and distribution along the lines of the South of Scotland Electricity Board. I still feel that in matters such as capital expenditure it would have been necessary to clothe the central Authority with far greater powers than it has at the moment.

One criticism of the Bill is that the matters to be dealt with in Clause 6 are not spelt out in detail, but are left to be the subject of Orders later on. I apologise for not having heard the speech of the Paymaster-General in introducing the Bill, but I understand that he said the main items that it was expected would be the subject of Orders under Clause 6 were purchasing, standardisation and research. If the right hon. Gentleman's thinking has reached as far as the listing of headings, there is no reason why he should not go a little further and when the Bill goes into Committee insert the necessary powers right from the start, so that we shall not have to argue about the Orders later on. We could then see what is proposed and could make up our minds whether the Orders are extensive enough or, as some people would feel whether they are not too extensive, with the area boards being left with a greater degree of commercial freedom.

On the matter of capital expenditure which is dealt with in Clause 4, it is right that in many respects the area boards should have a lesser degree of commercial freedom than they enjoy at the moment. As the House knows, I have asked Questions about the computer ordering policy of area boards. One discovers that each board has ordered different computer systems for quite ordinary jobs, such as payroll and the invoicing of customers, and so on. Each has developed its own software for this purpose and a great deal of public money has been wasted by the failure to have a central programme, such as is provided for in Clause 4. No doubt in other major fields of capital expenditure, apart from computers, the same considerations apply and by this means we ought to be able to obtain substantial economies.

On the question of tariffs and the directions to be given by the Authority, the hon. Member for Bristol, Central posed an important problem, which has not been followed up in subsequent speeches but which I hope will be dealt with in the Government's reply to the debate. It involves the question of how financial targets can be given to area boards while at the same time directions as to their tariff policy can be given to them by the Authority. These two arguments seem to me to be inconsistent. If one says to the area boards, "You will earn 12.5 per cent. return on your capital employed", and if at the same time the central Authority says to them, "You will not charge any more for the next six months than you have done under the recent increase", then it is impossible for the area boards to meet their financial targets.

Mr. Palmer

Would not the hon. Gentleman agree that the rate at which the bulk supply tariff is fixed in regard to area boards is quite critical and that it is important that it should be fixed independently? Would he not agree that the Bill is not clear on that matter?

Mr. Lubbock

I agree with that point. It has already been pointed out that bulk supply tariff accounts for the greater proportion of the area board's total expenditude. Obviously it is the determining factor in the tariffs where they are able to charge to the consumer.

The other important consideration to be borne in mind is the degree of self-financing which area boards are required to achieve. As we have just seen—I must be careful to keep in order—if one suddenly alters the amount of self-financing of a public enterprise, as has been done on the telecommunications side of the Post Office, then a great increase in charges is bound to result, in that case 5s. in the £. If the central Authority were to give a direction to the area boards that in fixing their tariffs they were to achieve a much higher degree of self-financing than they have achieved in the past, that immediately would tend to have effects on tariffs and on the charges they would have to make to their customers.

Another important point in connection with tariffs was touched upon by the hon. Gentleman the hon. Member for Bristol, Central—who has taken a good many words out of my mouth. He spoke of the scope for more realistic industrial tariffs. So far the freedom of the Generating Board to enter into special agreements with industry for bulk supplies at preferential rates has been applied only in the aluminium smelting industry in relation to which, for balance of payments reasons, the saving is put at £39 million per annum. The Government have encouraged agreements between the aluminium smelting companies and the generating boards on a long term basis to enable a new industry to be established in this country which otherwise would not have occurred.

I had some correspondence in 1967 with the then President of the Board of Trade, the right hon. Member for Battersea, North (Mr. Jay), in which I said that if this argument applies to the aluminium smelting industry, then it may be that other primary products which use a great deal of energy in their manufacture would be suitable for the same treatment. Some were mentioned in the "Little Neddy" Report on the Chemical Industry for that year, including silicon and silicon carbide, calcium carbide and graphite. Those products were named by that report as being wasteful materials since their production involves a large amount of electricity. I said to the then President, "If you can arrive at a conclusion with the aluminium smelters where a saving of £39 million is possible on the balance of payments by establishing an indigenous industry in the United Kingdom, why should not the same arguments apply to these other materials?".

Indeed the list is almost endless. Chlorine is another important raw material whose production involves a great deal of electricity and in relation to which there is scope, if the tariffs are right, for attracting industry to embark on large capital investment programmes which would achieve a great saving on our balance of payments.

I ask the Joint Parliamentary Secretary to say what is the policy on this matter. At the end of their term of office, will this Government pat themselves on the back and say, "Very well, we have created a new aluminium smelting industry", and is that to be the end of the matter? Or will there be a conscious policy between the Minister and the new central Authority to try to promote new energy-intensive industries and to encourage those which are already in existence?

The hon. Member for Bristol, Central also referred to the primary source problem—the extent of the freedom of the electricity industry to make commercial decisions as among coal, gas, oil and nuclear sources. This also is an important point which the Bill does not cover. Will the new Authority, and under it the C.E.G.B., have power to invest in gas-fired stations or nuclear stations if it chooses, or will there, for some time to come, be continued pressure on these bodies to use only indigenous coal?

At the moment, the C.E.G.B. always has to ask the permission of the Ministry of Technology before making conversions. These permissions may be withheld if the Government think that a decision will be politically unpopular or that it would be unwise to depend too heavily, perhaps, on imported oil. One does not know exactly how these decisions are made.

I agree with what several hon. Gentlemen have said, that, once an industry has been nationalised, it should be given absolute commercial freedom unless some very important considerations of national interest are involved. If it is necessary to continue for some time with the protection of the coal industry—I accept that that is so—we shall have another Coal Industry Act, to follow on the one which we passed in 1967. This is the right mechanism for assisting the N.C.B.—to pay money to the C.E.G.B. to com- pensate it for the difference in the cost of generation which it incurs by using coal instead of some other fuel which, ideally, it would have chosen. It should not be for the Ministry of Technology to withhold consent for conversion of stations from coal to gas or oil and thereby force the C.E.G.B., and the other area boards which the Bill does not cover, into uneconomic positions.

Another problem, dealing with primary source problems, is not dealt with in the Bill but I am sure that it could have been, judging from the Long Title. This was taken up by the hon. Member for Bristol, Central in a Question the other day. That is, what the Ministry of Technology's policy is on contingent guarantees to the generating boards in respect of new nuclear reactor systems which they might like to introduce. This is not an academic or hypothetical question. We have not yet had an order by any of the boards for a steam-generating heavy water reactor, despite the fact that the prototype at Winfrith is working very well. We are trying to sell this reactor overseas, and overseas customers who discuss the matter with the reactor vendors in the United Kingdom tend to say, "This is operated by the U.K.A.E.A. This is not part of your national electricity generating system and if the S.G.H.W. is really as good as you pretend, why is it that neither the C.E.G.B. nor either of the Scottish boards has placed an order?" I understand that the hon. Gentleman did not get a proper reply to his Question and I should like one tonight.

Under the Bill, are the Government prepared to give contingent guarantees to boards which introduce either the S.G.H.W. or at a later stage, perhaps the H.T.R. or the sodium-cooled fast breeder reactor, to compensate for any unforeseen contingencies during its operation and in its early years? If the hon. Gentleman were prepared to do that and to incorporate it in the Bill, it would be a great stimulus to our nuclear reactor industry.

I have left Clause 9 until last, because I think that it should have occupied less of the time of the debate than it has. I realise that, as the hon. Member for Coventry, South said, the Daily Telegraph editorial said that there was little objection in principle to the Bill's main purpose. The reason why the Opposition have decided to vote against it tonight, I believe, is entirely on the basis of Clause 9, which strikes me as a Committee point. I should have thought that it was best, if one were opposed—as I am—to conferring these powers on the Authority, to argue the matter in Committee. Then, if one were not successful, when the Bill came back, one would be entitled to vote against Third Reading because the Government had refused to listen to perfectly reasonable arguments in Committee.

I agree with the hon. Member for the Isle of Ely (Sir H. Legge-Bourke) that, generally, once an industry is nationalised, a very good case has to be made out for denying it the power to do things which it would have the power to do if it were in private ownership. He then asked two important questions—should the industry be its own supplier, and is it necessary to have these powers to fulfil its statutory responsibility? I would add a further question of equal importance—is it right to sap the confidence of manufacturing industry, as this proposal has done, at a time when that industry is in severe difficulties, through no fault of its own but through the tremendous fluctuations in the plant ordering programme of the C.E.G.B. and other area boards?

I do not need to elaborate on this, When the Wilson Report was published only recently, and when there has been mounting evidence of the difficulties which this industry has been suffering over the last year. I cannot understand the hon. Member for Coventry, South saying that the electrical industry has got fat on the profits of selling to a monopoly customer. That is an extraordinary point of view and is certainly not borne out by an examination of the profit and loss accounts of any of our major electrical manufacturers.

Mr. Heffer

Would not the hon. Gentleman agree that the last part of his argument, which I found absolutely fascinating, was a typical Liberal position of facing both ways on these sort of questions? He is neither on one side nor on the other: he does not know where he is in relation to this matter.

Mr. Lubbock

I am not sure to which remark the hon. Gentleman is referring. If he would like to expand on that, I should be glad to hear his view, but I do not think that I have said anything inconsistent with my earlier remarks. If he wants to take issue with them, by all means let him intervene again. Is he arguing that the electrical industry has made large profits in the last couple of years, at a time when there has been such a distinct dearth of orders? That was my last remark before he intervened, and if he disputes it, I should be delighted to discuss it—

Mr. Heffer

I was talking of the hon. Gentleman's attitude to public ownership and to Clause 9, to which he then says he is totally opposed.

Mr. Lubbock

Yes, I am saying that. I was saying that there are good pragmatic arguments—this has nothing to do with doctrine—for leaving Clause 9 out of the Bill. Earlier, an hon. Gentleman was comparing these powers with those conferred on the Gas Council to prospect for oil in the North Sea. I can see good arguments for allowing those powers, as the Council is prospecting for gas anyway. This is not in order on this Bill, so I will not go into detail, but we voted for those proposals. So we are not opposed to public ownership as such, providing that there are good arguments for extending it, as there were in that case. But so far, I have heard nothing in this debate to convince me that the power to manufacture should be conferred by this Bill, and there are several reasons, which I have tried to give, why it should be left out.

What I am saying is that we are prepared to argue this case in detail with the Government. We hope that it will be gone into thoroughly in Committee. We do not propose to vote against Second Reading, but, unless Clause 9 is altered by the time the Bill returns to the Floor of the House, we shall be forced to vote against it then.

7.50 p.m.

Mr. Sydney Bidwell (Southall)

I want to take up where the hon. Member for Orpington (Mr. Lubbock) left off and expand on the intervention of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer). The reason we are apparently dividing the House tonight and why there has been any measure of interest in what is taking place tonight is the presence of Clause 9 in the Bill. The hon. Gentleman went such a long way with most hon. Members on this side in support of the Bill that I could not understand his implacable opposition to extending manufacturing rights to nationalised industries. If he supports the general idea, why does he wish to fetter or hamstring any nationalised part of the economy in entering this sphere? We have had this before in debates about nationalised sectors of the economy, especially the railway industry, which forms part of my background.

I suggest that Clause 9(2) suitably meets the hon. Gentleman's point and should lead to his joining hon. Members on this side in the Division Lobbies tonight. All that he said earlier about the possibilities in Committee of arguing, changing and amending applies with equal force to the whole of Clause 9, which, in subsection (2), says: The Generating Board shall not manufacture any electrical plant or electrical fittings except with the consent of the Minister. That kind of attitude could equally be displayed by the leading spokesman for the Opposition on this matter today. Although he accused hon. Members on this side of supporting a doctrinaire attitude, his attitude can only be explained by doctrinaire reasons.

We read in the Press of a promise of a hotting up of opposition to the Government as we run up towards the General Election compaigning period. It is said that the General Election compaigning period is on now and that this is part of the kind of "whizz-kid" operation that we can expect on the part of up and coming candidates for a future Conservative Government and so on. If this is a sample, it is a grim and dismal affair today.

Why is this attitude taken by the hon. Member for Bournemouth, West (Sir J. Eden)? It is for the same age-old reasons: that matters of this kind—extension of public ownership and the rôle of public ownership—spell the demise of capitalist economic order to give way to a higher plane of civilised existence, namely, a democratic Socialist order. That is what the debate has been about over the last 70 years or so in this House of Commons, and it is taking place again now if in somewhat muted terms.

The opposition to giving manufacturing rights to the nationalised sector of the economy is because when it is shown to be sensible, efficient and applicable, it eats into the whole edifice of the capitalist economic system. That is to what hon. Gentlemen opposite object, and that will be successfully exposed.

In his concluding remarks, the hon. Member for Bournemouth, West spoke of the Conservative Party coming back into power. It is precisely because the general ideas for which we stand, some of which are incorporated in this Measure and in the other wider Measures we have argued over the years, are designed to be in the interests of the vast majority of people in this country that the Opposition, who are in favour of private pickings, will not come into power at the next General Election. The success of public enterprise not only in the utility and supply industries, but also in the manufacturing spheres, is a cruel pill for them to swallow.

I have been through the Bill very carefully. It is such a gentle approach to the whole question that I cannot see how hon. Gentlemen can be sufficiently steamed up to lead the House into a Division tonight. The Government's presentation of the Bill was for general Labour doctrinaire reasons, but it is a gentle approach to the idea of improving the Socialist mix of a mixed economy, and it is very gentle in the way that it suggests how a future Government, if there should be a future Government which is anti-Socialist, can approach it. The Clauses give ample scope for the Minister not to give approval to this, that, and the other, beyond the extent to which the sector of public ownership and enterprise remains now.

The people who put forward these ideas today have had no hesitation in the past about saddling the railways with the burden of being common carriers so that the private enterprise aspect of transport could take the profitable pickings. Happily, that policy has been changed. That is the kind of backwardness that the Opposition would like to impose upon the electricity supply industry.

I am concerned about another aspect of the supply and use of electricity which is a commonplace to the average consumer—the electric lamp. If the new powers in the Bill lead to a closer look, and even to a threat to those involved in the manufacture of electric lamps, that we should have electric lamps that do not conk out after they have been burning for a few hours, I should be happy to applaud the passage of the Bill tonight.

There is talk about restrictive practices over a wide area in the supply of electrical goods. We all know that when we buy an electric lamp it is sensible to have it tested in the shop before taking it home. If it lights we pay for it and take it away and the supplier has no more liability. If, when we put it in the lamp socket, it blows, that is our funeral and we have to go back and buy another. That often occurs. Although the bulk of the labour and cost involved in the manufacture of an electric lamp is in the shell or casing and the body and holding, the vital part is the tiny piece of wire inside. I want to know why that is not made stronger to take a much longer burning period than we have now. That goes not only for that piece of electrical equipment with which ordinary people are so familiar, but also for a whole range of electrical equipment supplied to the consumer. So I hope that the new set-up in the industry which is proposed by the Bill will have a closer look at those matters.

In preparing to participate in the debate I obtained a copy of the March issue of an excellent paper printed by a modern union, the Electrical, Electronic and Telecommunications Union/Plumbing Trades Union. That has come about as a result of an amalgamation between the old E.T.U. and the Plumbing Trades Union. Hon. Members on both sides of the House subscribe to the idea of fewer trades unions. That is going on all the time, but it is sometimes not applauded in the way that it should be. The union to which I have referred is an efficient, modern union—it spends a great deal on its educational programme and so on—but I was surprised that there was no reference to the Bill in the March issue of its journal. There may be a reference to it in this month's issue, but that has not yet caught up with me, perhaps because of the intervention of the Easter holiday. I understand that the union gives the Bill its warm approval. It approves the general ideas of reorganisation set out in this Measure.

Like my hon. Friend the Member for Walton, I do not take ideas from top-ranking trade union leaders on the question of worker or employee participation in the management of industry, because I know that, over the whole range of trade union leadership, there are many and varying ideas about how far the unions should be involved, and how far there should be a management-worker entity in developing ideas on industrial democracy, but I am disappointed that in this Measure there is no Clause similar to that in enactments relating to other publicly-owned industries to provide for an extension of industrial democracy. I hope that such a provision will be inserted in Committee.

I think that the Bill should receive the approval of the House. I very much enjoyed the speech of my hon. Friend the Member for Bristol, Central (Mr. Palmer). He showed us how the hon. Member for Bournemouth, West contradicted the attitude adopted by the Deputy Leader of his party in earlier days. Today's debate has exposed the poverty of the Opposition's attitude to this Measure, and their general attitude that they must oppose the Government at every stage up to the General Election. This attitude will blow back in their faces and ensure that there is a continuation of Labour Government.

8.3 p.m.

Mr. Peter Fry (Wellingborough)

The Paymaster-General asked us on this side of the House not to become too excited over Clause 9. We should, he implied, not worry too much over the bogey of nationalisation, not hark back to Macaulay and Marx. I assure the right hon. Gentleman that I wish to hark no further back than to Marsh and Mason.

The fact that pairing names in that way is reminiscent of old style music hall comedians is perhaps apt when one considers how laughable are the Government's efforts, as exemplified in the Bill, in dealing with the real problem facing the heavy electrical plant industry. Indeed, it would be funny if it were not so sad. What is even sadder is the apparent injunction not to become too concerned over the part of the Bill with which we disagree, but to look mainly at that part of the Bill which deals with the reconstruction of the Electricity Council into the Electricity Authority.

When the President of the Board of Trade made a statement on this subject on 18th July he made no mention of what is in Clause 9, and he had had plenty of time to consider what should go into the Bill, as the working party had reported a year earlier. It is the Government who have added Clause 9, and one wonders why this has been done. I suggest to the right hon. Gentleman that it is his party which looks back, usually in anger, and not ours. It is his party which has as its aim the control of the means of production.

We were given the impression this afternoon that Clause 9 did not matter too much, that it was a harmless Clause concerned mainly with matters such as turning waste ash into building materials and producing sulphur from certain gases. The whole tone of the right hon. Gentleman's speech was intended to play down the importance of this Clause.

What, then, is the real purpose of including this Clause in the Bill? Is it mainly a sop to the more extreme sections of the right hon. Gentleman's party who passionately believe that universal State control is the panacea for all evils? Is it a little window-dressing to prove to their own supporters that the Government are really Socialist after all?

If that were really the case, we on this side should perhaps be glad that the Government realise that further extensions of nationalised industries and further incursions into the private sector are potentially dangerous to the economy of the country. We should allow them the chance of humouring some of their colleagues on the back benches, though those back benches are rather empty at the moment. We should be pleased, but I doubt whether those same back benchers would be very pleased or amused.

As has already been said this afternoon, we have to read the Bill as it appears before us. The Generating Board has been given extensive powers of manufacture. I agree that this is to be done with the Minister's consent, but it is, none the less, a substantial increase in power. Although that power is subject to Ministerial control, who can doubt that under the present composition of the House considerable freedom will be given to the Generating Board? One wonders how this discretion will be wielded by a Socialist Minister, and in what direction.

Is not the real truth of the matter that this is a further means of nationalisation by the back door, a more crooked path than a more obvious take-over, a more crooked path which is typical of this Administration? The private sector will be placed in an intolerable situation. The State electricity industry is a monopoly buyer. It can therefore produce its own plant, presumably at whatever price it decides, and can anyone seriously contend that the private supplier can compete on fair terms? Any losses which are incurred will be borne not by the private sector but by the taxpayer and the consumer.

I, for one, was glad to hear the speech of the hon. Member for Liverpool, Walton (Mr. Heffer), because he set out clearly the real intention behind the Bill. We have been given words of sweet reason, such as one reads in Book 2 of Paradise Lost, to try to deny that this is the true aim of the Clause, but I have a feeling that these honeyed words are deadly in intent for the private sector, and as evil as were the purposes behind that other great debate. In that respect, therefore, the right hon. Gentleman's speech this afternoon was a disappointment.

I feel that the Bill affords us the opportunity of debating an industry which has had considerable problems in recent years. Many of these problems have arisen just because the C.E.G.B. has been so inflexible, just because it has been isolated from normal market pressures, and I should like to give one main example of the current problems which it has been facing.

At Tilbury there is a coal-powered station which the Board has requested the Minister to convert to oil. A figure of about £3 million has been quoted as the annual saving of conversion. But this request raises certain interesting questions. What is the capital cost of the equipment installed at Tilbury? Is it adequate for the job that it has to do? Is it not true that the mills installed there—incidentally, of foreign manufacture and design—are of a type that has exploded on several occasions, with loss of life? One wonders why we should bother to convert power stations.

Does not the conversion amount to an admission of bad planning and of having bought the wrong equipment? In other words, has there not been a great boob on someone's part? I hope that the new Electricity Authority will prevent such a problem arising. Those who have to pay for the disastrous mistakes made by Government Departments and nationalised industry—the ordinary taxpayers and consumers, who have no choice as to the power they use—are entitled to some reassurance that money will not be similarly lost on projects such as this in the future.

I could list other examples of bad planning. At Aberthaw, in South Wales, a power station was due to open in March, 1968, but, according to my latest information, only one of its boilers is working, due to supply difficulties. On the other hand, at Kingsnorth the contractors who have supplied the appropriate equipment have been paid 95 per cent. and not the usual 80 per cent. of the price because of the appalling delay in the bringing into operation of the power station.

Is it any wonder that the Wilson Report called for more decisive management? It would appear that that is what the C.E.G.B. needs. The new Authority is a step in the right direction. Let us hope that it will lead to greater efficiency. It would appear that the Generating Board has quite enough work to do in solving its own problems without any of the implications suggested in Clause 9.

I hope that the new Authority will see that the area boards do not spent vast sums of money on advertising—usually against other nationalised industries—before it is clear that adequate capacity is available in a board's area. Many people have bought electrical appliances only to have to suffer power cuts later and to be told that the cuts have had to be made because of an insufficient supply. Bad as are the finances of many I.T.V. companies, we do not want to embark on this process to bolster their revenue.

Because of the implications of the Bill—because I fear that it is yet a further step in nationalisation, following the Gas Bill and the Ports Bill—I oppose its Second Reading.

8.12 p.m.

Mr. J. T. Price (Westhoughton)

I have not come here to deliver a prefabricated speech about the Bill. It is a very modest administrative Measure, of 14 Clauses. When I first read it I thought that there was little material in it to occupy the time of the House for six-and-a-half hours, from half-past Three to Ten o'clock.

It rarely happens that the House has an opportunity to debate questions of policy affecting a nationalised industry—so rarely that Members seize upon any opportunity that presents itself to extend the debate beyond the terms of the Measure before them. I am grateful to you, Mr. Deputy Speaker, and to your predecessors in the Chair tonight, for being tolerant with us.

I do not want to be thought too meticulous when I say that the most important Clause is Clause 4. The words "Clause 4" have a nostalgic ring about them for certain members of the Labour Party. We remember that a "Clause 4" was the starting point for a great debate on the fundamental objectives of the Labour Party. The Clause 4 in the Bill is of a different order, but is nevertheless important. It provides for the first time that the new Electricity Authority shall have power to direct and control the investment policies of the area boards which distribute current to consumers.

I know that those who have sponsored this proposal can put up a very good case. Some hon. Members have dealt with this point briefly. I hesitate merely to rehash what has already been said, but what has not been said is that when we deposit these wide powers with the Electricity Authority the area boards will bring pressure to bear upon it concerning their requirements for capital development—just as claims are now made upon the national Exchequer from all the competing people who want a supply of capital.

I have been examining the requirements for capital in the electrical industry. One of the most outstanding characteristics of that industry, in terms of generating a supply of current for domestic and industrial consumers, is its voracious appetite for capital. I do not complain about that; I have been in the House long enough to remember the period—13 years—when the Labour Party was in opposition and when I had the doubtful honour of occupying the benches opposite for the whole time. We were then constantly faced with the complaint that the tremendous demand for electric current and energy was not being met by adequate Government investment. We then had winter after winter when factories had to close down and some sections of industry were completely incapable of carrying on because the supply of current available from the Generating Board and its auxiliaries was not sufficient to meet the demand.

This Government, whatever their shortcomings, and whatever criticisms may be levelled against them by those who disagree with them, have at least seen—during the last five years, in particular—that the electrical industry has been supplied with capital adequate to develop its power stations and supply the necessary current to consumers. The days when we had breakdowns, power cuts and shortages are no longer with us. It would need a very hard winter—I do not say that it could never happen again, but it is less likely to happen—to bring back power cuts, because sufficient capital has been ploughed in to rectify some of the shortcomings that existed in the 13 years of Conservative Government.

I do not want to give too many statistics at this time of night, but I find that in the last budgetary year, as described in its accounts, the Generating Board budgeted for and spent £353 million and the area boards spent a further £139 million—a total of £492 million. Roughly £500 million was available for the electrical industry. That is a very high figure.

When debating this sort of point in connection with other public industries I have sometimes taken the opportunity to ask whether we can go on as we are now doing, providing a financial basis. Most of the capital required by the electricity industry is, I take it, provided below the line in the Budget by budgetary methods. In some ways, we are unique as a great industrial nation in doing it in that way. We are not the only nation with great nationalised industries. All advanced countries have a sector of industry under public or semi-public control. However, other countries do not rely entirely on their Budgets to provide the necessary capital for them. I have never understood why we completely ignore the lesson to be learned from the operations of the Italian system, which has been regarded as the economic miracle of Europe for many years. In Italy, industries in the public sector are able to raise the capital that they require in the market, with the Government guaranteeing only 10 per cent.

These are not matters intended to be provided for in a small Bill of this kind, but when we come to grant wider powers to the proposed central Electricity Authority to control the investment policies of its area boards, we have to consider another matter as well. If hon. Members care to consult the last published accounts of the Electricity Council, they will find this reference to reserves on page 61: The Capital Development Accounts of five Boards have been transferred to their Area Reserves which are regarded as general reserves for the purposes of the boards, including those purposes for which their Capital Development Accounts were established…". Am I to understand that when this Bill comes into operation all the private reserves which have been allocated to the area boards for their capital development programmes will be abolished completely and transferred to the central account?

This is an important question, because there will be a tug-of-war not only between the north and south of England about which is the most entitled to have its capital development scheme met; there will also be a tug-of-war, for example, between Wales and England. My hon. Friend the Parliamentary Secretary is a Welshman, so he had better watch out because there will be a Red Dragon argument about this one. These reserves are earmarked for specific purposes in the areas in which the reserves are generated.

It occurs to me to ask whether any limit has been fixed on the percentage of capital which has to be self-generated by the electrical industry. When it was first nationalised in 1947, the industry was required to produce only a very nominal part of its investment programme from its own revenues. I think that the figure was about 5 per cent. I am advised now that, owing to Government policy—both Conservative Government and later Labour Government policy—there has been a constant demand in all the nationalised sectors for the industries to generate a higher and higher percentage of their capital requirements out of current revenue. I am told that the latest figure is of the order of 18 per cent. According to last year's accounts, the electricity industry wanted £500 million. That means that it had to produce 18 per cent., or £90 million, out of revenue.

When building great industrial complexes like the electricity industry, which is a vast technical process involving tremendous capital requirements, there is a limit to how far one is justified in requiring the consumer to provide ready money in order to finance long-term capital projects which may have a life of 50 years. Some of the older generation of Socialists understood the principle quite well. To the late Hugh Dalton of blessed memory it was heresy. He wrote a leading work on public finance which is still a text book in some universities and an important authoritative work. Have this Government realised that, in constantly putting ever-increasing pressure on the nationalised industries to produce an even higher proportion of their revenue for capital purposes, the result is that they will overcharge the consumer for the end product which they supply? I hope that some reference will be made to this point in the closing stages of this debate.

I wonder now if I dare say a word about computers—this miracle of the modern age. Everyone imagines that, provided that the right drill is followed and that the right information is fed into these voracious monsters, the right answers will be produced. I beg to doubt that. Certainly it is true when answers are required to technical and engineering questions, but frequently the answers to administrative questions are unsatisfactory and unpleasant to the consumer. Many people are troubled by the bills sent to them by electricity boards. Sometimes they have one or two noughts too many, sometimes there are one or two too few. One hears frequently of cases where a bill is adjusted to nothing, the consumer does not bother to pay it by sending off a cheque for nothing, and the result is a reminder saying that the bill is still unpaid.

The people who man these remote monsters and produce the answers through a highly technical electronic process have created a system in which a person who does not pay his account for two or three weeks, entirely due to an oversight, can be faced with an extremely unpleasant situation. Because the computer is plugging away and pushing through information to the next department, the result is that two men arrive from the electricity board, knock at the door, and say, "We have come to cut off your electricity because you have not paid your bill". The housewife gets into a panic because her husband is at work and she does not know that the men can be ordered away unless they have a search warrant, so they get to work and switch off the power. It may be that the account is in dispute over some technical fault which has come to light. Nevertheless, this inflexible process grinds on and all kinds of petty injustice is created as a result. I came to this House to represent consumers in my constituency, and I am not here to represent electricity boards. I consider that the person at the receiving end of the process should be our prime consideration.

I merely draw attention to the sort of case which occurs, but it in no way diminishes my great regard for the success of the electricity industry. It has been one of the success stories of the century. The Central Electricity Generating Board has rescued a fragmented industry largely run by private enterprise. Some local schemes were municipally-owned, but other privately-owned schemes were quite unable to supply the capital requirements of a growing industry.

I get a little worried when I look at the smiling face of the hon. Member for Bournemouth, West (Sir J. Eden), who wants to get this over at 10 o'clock after shooting off barbed darts at us all night. I get worried when people become so ideologically befogged that they cannot see, because they do not like nationalisation per se, that the nationalised electricity industry has been a tremendous success story. Certain weaknesses have been revealed, of blemishes similar to those revealed by great public corporations like I.C.I. and Lever Brothers. They are well-run corporations, but sometimes the right hand does not know what the left is doing. Hon. Gentlemen opposite are wrong to tell me that for ideological reasons the Electricity Authority or the board of any nationalised industry should not be entrusted with wide powers of this kind. The mere economics of size apply equally to I.C.I. as to a nationalised industry. I could give amusing examples of the right hand not knowing what the left is doing, but I should be out of order. I am trying to keep the debate on an even keel and not to be too polemical.

For many years, during our days in opposition and since my party came to power, I have constantly pressed the Government to deal with the question of giving the nationalised sector manufacturing powers. This has particularly applied to the railways. I represent a very large railway complex in Lancashire, at Horwich, which is one of my townships. Sometimes hon. Members opposite have said that I and my colleagues did not know anything about business. But we know quite a lot about it. When we have an industry into which we have ploughed a great deal of public money and have rightly paid compensation to the previous capitalist owners, we cannot afford to allow spare capacity to hang around doing nothing because there is not enough work to do in servicing its own equipment. The railways were an outstanding example. A couple of years ago we put a Measure on the Statute Book to give them commercial freedom. No railway workshop, however short of work, could offer its capacity in the market to obtain jobs to keep the men working in it and to add to the economic welfare of the industry, in which public money had been invested.

There has been a little bit of a political flutter on this matter tonight, perhaps to please some of the old Primrose dames in Bournemouth and other places who would not know one end of an economic argument from another. I know that they are very charming ladies, but it is wrong for an hon. Gentleman to come here at this time of night and seriously argue that a great industry dealing with £500 million of investment every year shall have restrictions placed upon it, so that if it has spare capacity it cannot make even a nut and bolt for itself but must put the work out to private enterprise.

My railwaymen at Horwich have always been closely in touch with me about their problems. They have had to obtain the work done in the railway workshop in competition with private enterprise. They do not automatically obtain the work even under the present system with a Labour Government in power. If a private contractor has the plant and machinery and submits a tender that is much more favourable than that submitted by British Rail, the work goes out to private enterprise. Sometimes redundancy has been created as a result.

Do not let any hon. Member imagine that the evils of monopoly are peculiar to a nationalised industry. In this day and age the old classical conceptions that hon. Gentlemen learned at university from Marshall and Pigot and all the old pundits have gone by the board. We are living in a large-scale world; that age is dead. They are troglodyte, Luddite arguments when hon. Gentlemen say that we must constantly restrict the nationalised industries and not let them use the machinery and tackle we have bought with good public money raised by taxation. I shall be happy to have anybody come on to my wicket in Lancashire at the next General Election. I would be in no difficulty about this matter. Hon. Members have indulged in an emotional splurge because we happen to be on the eve of an election.

I had not intended to bore the House for very long with this oration, but there were one or two things I wanted to get off my chest. Having dealt with a few things that I hope are of topical interest. I should like to say a word about the machinery for making the consumer's presence felt. The most important element in human society is the consumer. Whether or not we have a nationalised industry or one run by private entrepreneur capital—the classical private sector industry, the man who controls great institutions and organisations will tend to suppress and repress, and perhaps be a little overbearing on, the ordinary people who are remote from him unless they have sufficient control over him. This is as true of nationalised chiefs as of the chiefs of private industry running the great corporations. There is no distinction in principle.

I should like to see the consumers' consultative councils greatly strengthened. In their present form they are in all sectors just little polite ornaments to go through a series of motions and make people outside believe that their voice is being heard. This is not the first time that I have said that in the House. I am not very much concerned about whether or not the Government like it, because it happens to be true. Whoever sits on the Government Front Bench must be told that it is a very strongly-held opinion on this side of the House.

My hon. Friend the Member for Liverpool, Walton (Mr. Heifer) made an interesting and very good, aggressive speech in the old tradition.

Mr. Emery


Mr. Price

I was very interested when my hon. Friend talked about democratic control and so on. There was a time when many people in this country were swayed by syndicalist ideas emanating from a famous French philosopher Bergson, ideas to the effect that industries should be controlled by the people who worked in them. That theory did not hold water here except in certain industries where, largely as a matter of practice, there was almost a carve-up between the employers and their workers.

Incidentally, I am glad to see that my right hon. Friend the Paymaster-General has returned. There were a few things that I should have liked to say to him.

We no longer believe that syndicalism is feasible. "Workers' control" was an old slogan held by many people to be valid, but I do not think that it would work. When the Labour Government led by Clem Attlee came to power in 1945 and went on to put on the Statute Book various major Acts like those nationalising the mines, railways and other sectors of industry, feelers were put out to, for example, the mineworkers' union. The proposal was put to the N.U.M. leaders that part of the executive control of the mining industry should be vested in representatives of the employees' side through the unions. They turned it down. They said that they wanted a clear division and to hammer out between themselves and the management the most equitable and just bargain on terms and conditions of work.

The N.U.M. leaders were right. I am no devoted follower of those who think that merely because one takes a man from his bench and puts him in the boardroom he will represent the workers in a rather different way from the way of other types of boss. Such a belief is illusory. When that man goes into the boardroom, he becomes a different sort of person within six or twelve months. I hope that I am not going out of order, Mr. Deputy Speaker.

Mr. Deputy Speaker (Mr. Harry Gourlay)

A Second Reading debate is very wide, but I think that the hon. Gentleman might relate his remarks to the Bill.

Mr. Price

That is what I was trying to do, Mr. Deputy Speaker. I was trying to put a philisophical slant on something that is otherwise totally uninteresting.

Mr. Heffer

Will my hon. Friend accept that I was arguing not that there should be trade union control or trade unionists as such sitting on the boards, but that the workers themselves should elect representatives on the boards? I accept his point entirely that the trade unions have the right and duty to protect the workers, sometimes even from people the workers may well have elected. This has proved to be the case in Yugoslavia, and it is a point we have to take into consideration in any experimentation in this matter.

Mr. Price

I am obliged for that most helpful intervention. I am not denying that there should be a more accurate reflection of the point of view of the working side of industry in the boardrooms than there is. But it should not be by some kind of delegation to the boardroom. We have, if I may call it so, a bastard system in which all kinds of excellent people are put on nationalised boards for one reason or another. My right hon. Friend will be able to tell us more accurately what these holy mysteries are about. He knows what happens. At a much lower level, consultative councils are full of devoted people who spend much of their time going to cosy meetings talking of this and that. The trouble is that they have no kind of executive influence upon the people who make the policy of the industry.

All I am making a plea for, in modest and measured terms, is that when the Bill is passed we give more attention to the question of democratic control, to give a truer reflection of the two sides of industry in the higher echelons of management, and to give a more accurate and serious opportunity to those prepared to sit on consultative councils to reflect, through a voice in decisions, the grievances and complaints brought to them by consumers.

Apart from this, the Bill will have my blessing. It is nonsense that we should have to vote on it tonight. The Opposition are forcing a vote as a completely bogus operation purely for current political reasons. This is an administrative Measure. I hope that my right hon. Friend and others devising Government policy on these matters will pay serious attention to some of the things I have mentioned.

8.43 p.m.

Mr. David Lane (Cambridge)

I cannot follow the hon. Member for Westhoughton (Mr. J. T. Price) in his airier flights of fancy, but I agree with him about the importance of strengthening the consumer protection machinery. I am sorry that, because I was delayed in getting here, I missed the Paymaster-General's speech, except for a few words of his peroration, but I enjoyed hearing my hon. Friend the Member for Bournemouth, West (Sir J. Eden), who marshalled very well the doubts and misgivings that we have about the Bill and not merely about Clause 9.

Unfortunately, few of us have heard the debate. I wish that more hon. Members had been present. At best, the Bill, like many other Measures put forward by the Government, has had a lukewarm reception, even among hon. Members opposite. Any Bill about the electricity industry would be important because of the sheer size of the industry. The hon. Member for Westhoughton mentioned some figures with which we are all familiar. I had a chance last week on the way to and from Yorkshire to see the physical scale of the latest power stations, some not yet completed.

It means that we should look all the more critically at proposals in such a Bill as this. I believe that the bigger the industry the more its structure should lean to flexibility rather than rigidity, which is the reason for my first doubt about the Bill. Among the nationalised industries, the electricity industry has been more successful than some but, even so, we are all conscious of serious criticisms to which many hon. Members on both sides have referred.

We now have a Bill which, being kind, one can describe as a patchy Bill. Some of the things in it are welcome, and I hope to mention those that I support but, looking at the Bill as a whole, there is no certainty that it will bring substantial improvement to the efficiency and service of the industry. The Government like to preach about restructuring industry. They here had an opportunity to practise what they preach, but they have not take the opportunity. I only wish that instead of making so many high-flown philosophical speeches all over the country the Minister of Technology would spend more time making sure that legislation coming from his Department was well founded. Here, out of a mountain of cogitation, we have no more than a mouse of reform, and I am not sure that it is salutary reform at that.

We have the objectionable feature of the powers given under Clause 9. We have a possible increase in the public sector and in public activities when the economy cries out for a decrease in the public sector. I am glad that my hon. Friend denounced this feature so strongly, and that we are to divide the House.

I do not, as some have, criticise the Government for the delay in bringing forward this Bill. It involves very difficult decisions about structure, just as decisions about forecasting in this industry are exceedingly difficult. Nevertheless, I join with those who have lamented that we did not have a White Paper before the introduction of the legislation.

I welcome the apparently closer linkage we are to have between the generating and the distribution and sales sides. In one sense we are bringing the C.E.G.B. nearer to the market, but I wonder whether the Bill goes far enough in that direction? It is likely to leave the C.E.G.B. still in a very dominant position, and I have a feeling that what the industry needs is an even more radical restructuring still. I suspect that after all these changes, and cross-appointments, and so on, we shall be left with the balance too far in the direction of centralisation.

I call to mind words used by the then Minister of Power, now President of the Board of Trade, on 18th July last year. The right hon. Gentleman said: By this reorganisation, I hope to obtain the advantages of the central direction of major policy which is at present lacking, while at the same time retaining the advantages in terms of managerial responsibility and local initiative which is the feature of the present system of largely autonomous boards."—[OFFICIAL REPORT, 18th July, 1969; Vol. 787, c. 1092.] Those words were echoed by the Paymaster-General today in the few sentences of his speech that I was able to hear. What is far more likely to happen, particularly with the area boards, is what my hon. Friend the Member for Bournemouth, West described as damage to management integrity.

Then there is the possibility of Ministerial intervention. At least here we have the consolation, and this is one of the good features of the Bill, that any fresh step in this direction will be subject to debate and scrutiny by the House.

Over and above all this there is the basic relationship between the Ministry and the industry. Looking at the history of the nationalised industries, including this industry, it is hard not to conclude that year by year since the original legislation there has been too much involvement by Whitehall. We must devise a structure, and I fear that this Bill does not do it, which will take Whitehall more out of the control and management of the nationalised industries. There is no sign of such a new attitude from this Government, and it will have to wait for their successors. In the meantime, I fear that there will be a continuation of possible confusion, excessive intervention and divided and uncertain responsibility.

I join other speakers in welcoming the control over investment in Clause 4, but I should like assurance on two points—either today or later on. Will this lessen the duplication or even triplication of scrutiny which schemes have hitherto had to endure from one place or another before being approved? Second, will this hold out any hope of reducing what many of us feel has been the excessive unit capital costs of electricity expansion over the last 20 years?

Much has been said already about Clause 5, the provisions concerning tariffs and undue preference. I would like more information about how the Government expect these changes in tariff setting and procedures to operate. Will this lead to more uniformity? Will there be enough scope for variety and local tariff changes? Will this leave enough responsibility with the area boards? I have grave doubts on all these points.

The question of undue preference has been mentioned earlier in connection, for example, with the problems over aluminium smelters. That debate particularly concerned the National Coal Board's powers and the rather different Section in the coal nationalisation Act about undue preference. The balance between commercial freedom and unreasonable discrimination is very difficult to strike, but there has been a feeling in the electricity industry for a long time that it has been unfairly restricted, compared with the coal industry, in its commercial freedom.

We need more explanation about whether the greater freedom which will be given to this industry can extend to special contracts for large industrial customers. The hon. Member for Orpington (Mr. Lubbock) mentioned smelters and possible other examples of wider commercial freedom, but I still do not know how far the Government mean this change to go.

I turn to protection and convenience of consumers. As someone who depends 100 per cent. on electricity in my constituency home, I join in the tributes paid. I would certainly echo that of my hon. Friend the Member for Bournemouth, West to the achievements of the area boards in increasing efficiency in various directions, compared with the less satisfactory progress by the C.E.G.B. I also echo what my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) said about the performance in our area of the Eastern Electricity Board. It has made good progress in recent years. Some things have gone wrong, but its general record has been excellent and its consumer service satisfactory.

Consumer attitudes to electricity show approval of its convenience but resentment still of the high price for a number of purposes. There is irritation, too, about certain details like joint reading of meters. Another aspect of this—it would not be covered by the Bill, of course—is the excessive charging by some landlords in houses of multi-occupation. I mention these things merely to illustrate the uneasiness of many consumers and the need for more to be put into the Bill to ensure a better deal for them in future. This includes industrial consumers.

The hon. Member for Bristol, Central (Mr. Palmer) mentioned private generation. We are in danger of letting the system continue as a too rigid system, when surely there would be advantage in widening the possibility for private generation by industrial consumers. That is the kind of greater flexibility that I hope we shall see at some point during the next few years.

I endorse what other hon. Members have said about the need to strengthen the representation of consumers on area boards and, above all, to improve the effectiveness of the consultative councils. The hon. Member for Dundee, West (Mr. Doig) was eloquent about this. More and more, we seem to need a drastic reshaping of those councils. One possibility idea would be to get rid of councils tied to individual industries and to replace them by a more all-embracing council in each area which could look at consumer complaints from nationalised industries as a whole. There is no sign in the Bill of any original thinking on this important matter. Here again is a missed opportunity, and I hope that this, too, may be put right in Committee.

The last feature to which I wish to refer is the power in Clause 9 for the Central Electricity Generating Board to extend into new sorts of plant manufacture. The hon. Member for Bristol, Central enjoyed some teasing about what may or may not have been said by the then Government party, its spokesman and its back benchers in 1957; apparently he forgets, as so many hon. Members opposite forget, that time marches on and circumstances change. The climate today is entirely different. The scale of plant and many other things are different.

We were chided again by the hon. Member for Coventry, North (Mr. Edelman) about our championing of competition in general but not competition from nationalised industries. The hon. Member entirely, I dare say deliberately, missed the point of our criticism. It is the potential unfairness of this competition about which we are concerned, and rightly so. This provision of the Bill represents a failure by the Government to face the real problems of the heavy plant manufacturing industry. It may open the door to yet another instalment of unnecessary nationalisation, aggravated by unfair competition. In a provision like this in a new Bill, the onus is on the Government to prove that it is necessary, not only according to doctrine, but according to practical tests. They have not begun to show this convincingly in their justification of Clause 9 of the Bill.

This is the worst possible time for the heavy plant makers to have yet another problem and uncertainty introduced into their operations. There is the risk of further burdens and strains upon them. There is the risk, too, of more losses to the taxpayer, which hon. Members opposite below the Gangway in their enthusiasm seem entirely to overlook. At best, this will be an irrelevant distraction. At worst, it will do serious damage to an important part of British industry, quite apart from the taxpayer.

Mr. Harold Lever

Is not the hon. Member wrong in encouraging anxiety among the plant makers when there is no basis for it? Secondly, I do not follow his assumptions that any competition, when it occurs, must necessarily be unfair or subsidised and must necessarily be generally against the public interest. Why does the hon. Member make that assumption?

Mr. Lane

I am not making the assumption that it is always the case, but from past experience there is the fear that it may be. That is what worries us about this provision. However, I do not want to delay the House further on this point; I know that other hon. Members are anxious to speak.

Summing up, to set against the valuable features of the Bill, two or three of which I have mentioned, there are a great many risks in what the Government propose. There is the risk of more undesirable centralisation, less competition, less flexibility and less management responsibility. There is no effective new incentive in the Bill, as I read it, to higher efficiency and lower costs. These dangers, plus the new potential powers in Clause 9, tilt my judgment against the Bill.

I wish that the Government had waited a year or two longer so that a better conceived Bill could have been brought in by the next Government. As they have not done so, I hope that we shall do our best this evening to send the Bill back for further thought.

9.0 p.m.

Mr. Gordon A. T. Bagier (Sunderland, South)

The closing remarks of the hon. Member for Cambridge (Mr. Lane) contained the nub of the problem so far as the Opposition are concerned. On the whole, we have debated the Bill all the afternoon with reasonableness about the new structure under which the Electricity Authority and Generating Board will act, and I do not think there is a difference of opinion between the two sides of the House about that, except about detail, which the Minister has already said he will deal with in depth in Committee. Clause 9 is the one which seems to disturb hon. and right hon. Members opposite. I can understand this. This involves their basic philosophy, which is not to agree to any extension of public ownership, particularly when it involves competition in a sector which is profitable to private enterprise.

The hon. Member for Cambridge talked about unfair competition. I can recall unfair competition being placed on the nationalised railway industry by hon. and right hon. Gentlemen opposite when they were in Government, so that it was practically impossible for that industry to compete against the private sector. It was practically impossible by legislation, and it was not until just two or three years ago that the railway workshops were put in a position of competitiveness. I can understand the reluctance of the Opposition to see any extension of this sort of public enterprise, and I can see their tremendous enthusiasm for resisting it from the way they have packed the Chamber this afternoon. They feel strongly about extension of a publicly-owned industry.

There is a thing which worries me and I should like to put it to my hon. Friend the Joint Parliamentary Secretary who is to reply to the debate. It arises from Clause 9. The hon. Member for Bournemouth, West (Sir J. Eden) said this afternoon that the management in the electricity industry was some of the highest calibre of management in the country. Under that sort of management I have no doubt that the industry will make a good job of whatever powers the Minister may give it. Therefore, if we accept the new principles of Clause 9, and the Generating Board has enlarged powers and becomes a producer—and becomes an effective producer, as I am quite certain it will, judging by what the hon. Member for Bournemouth, West said about the management—then what worries me is what will happen if by some mischance the Opposition become the Government. They may do with the electricity industry what they did with the profitable section of another public enterprise industry—flog it at give away prices, which is what they did under the Transport Act, 1953, when they gave away the profitable section of the road haulage industry. This is what worries me a wee bit, the possibility of hon. and right hon. Members opposite flogging this industry to their friends at giveaway prices.

We have this afternoon talked about the possibility of a closer liaison between trade unions and management, and all my colleagues on this side of the House certainly agree about the importance of that. We want to see the sort of cooperation which takes place inside industry, and, to be fair, in large sections of the private sector of industry, where the benefit of that is seen as well. It is seen as sensible, to make the job tick right from the shop floor level, to consult at every level of management expertise, and it is not necessarily all in the hands of the managers. We can get help from the shop floor. So I hope that in Committee we shall be able to examine in some depth how much help can come from the trade unions for managerial functions.

My heart bleeds at some of the deep-felt thoughts of hon. and right hon. Members opposite about how difficult and how bad it must be for Ministers to intervene. Of course, it is bad, in their view, when the Ministers are our Ministers. It was not all that bad when it was their Ministers who were involved. I can understand their chagrin at this, but—who knows?—if they sit there long enough they may be able to produce an alternative which they may be able to implement if at some future date— though heaven forbid—they have opportunity to intervene from being in Government. This is the basis of their problem. We are debating a publicly-owned industry, and the biggest difficulty of the Opposition is to create an argument on which to divide the House. We have seen the struggle to raise arguments to create an excuse for a Division.

Mr. Heffer

Massive opposition.

Mr. Bagier

We are debating the public sector, and whenever the public sector is debated we see the rising of the masses—although there has been only a small rising this afternoon. No doubt when we go into the Lobbies those who support their friends in the private sector will defend what they believe in. The Opposition believe that it is right for the private sector to compete when there are profits but wrong for the public sector to take any part in activities which involve profit or competition. Whenever the Opposition have been in power they have made certain that the sectors left in public ownership have been those which they have found the least profitable.

This has been an interesting debate which has underlined clearly and concisely the differences between the two sides of the House. The Opposition believe that the private sector should be left completely unbridled—except when it comes to my right hon. Friend for money. They do not want to be publicly accountable for it, although they do not mind asking for the money. We on this side of the House believe in public enterprise without the bridle which was put on it by the Opposition.

Mr. Kenneth Lewis rose—

Mr. Deputy Speaker (Mr. Harry Gourlay)

Interventions lengthen speeches.

Mr. Kenneth Lewis

I have been trying to contain myself for the last 10 minutes. Does the hon. Gentleman admit that the Bill is an extension of nationalisation? In spite of the playing down that we have had, is he announcing that this is an extension of nationalisation, as we have said all along, and on which we shall vote at 10 o'clock?

Mr. Bagier

I am glad the hon. Gentleman thinks that I have the power to extend nationalisation. The Bill is simply taking some of the shackles off public enterprise and allowing it to compete with the private sector, which the hon. Gentleman and his friends fight so hard for.

9.8 p.m.

Mr. Patrick NcNair-Wilson (New Forest)

One of the interesting features of the debate has been the interrogative nature of so many of the contributions. The reason, I think, is that the House has been debating a Bill without an opportunity to study at an earlier stage a White Paper setting out what the Bill was to be about. This has led to a debate which has fluctuated between those who have taken up a clear stance for or against private or public enterprise, and those who have had specific points which they wanted to raise about the electricity industry.

We shall vote against the Bill for the simple reason that we believe it unwarrantably extends the public sector and is a form of nationalisation in a Bill which should be devoted to the reorganisation of the electricity industry. This is a practice with which we have become familiar. We have seen a similar tactic with the Gas Bill and we shall no doubt see it with others. The Government bring to the House a highly technical piece of legislation and slip into it something which is naked political doctrine, and that is why we shall vote against it.

We have a most extraordinary situation of a Government in their dying months legislating for this sort of public intervention with industry when so many desparately important things remain to be done. They run away from industrial relations and the cure to those problems and bring this sort of legislation for us to consider.

The Bill will do nothing at all for the consumer. If the Bill had never been brought to the House the ordinary consumer of electricity would not have been affected in any respect. But if it becomes law it may very well become a very expensive burden upon the taxpayer. The importance of the industry was mentioned in some detail by the hon. Member for Bristol, Central (Mr. Palmer), who is an expert on the industry. He pointed out that for more than 100 years the industry has been subject in one way or another to parliamentary intervention, but a number of things have happened in this period of time.

Perhaps the most important has been the tremendous increase in demand for electricity, and there has also been the increase in competition which electricity has had to face. Thirdly, there are the great technological advances which have been made in the industry. The story of electricity has not always been a happy one and in the most recent past there has, I think, been real grounds for concern. We have had shortages. Some of us thought that perhaps in 1970 we would be past the period of shortages. Some of us believed, perhaps quite wrongly, on the information given that there would be surplus capacity, but we all know that last autumn and during the winter we have had to pay the price of technological problems and the technical problems which might arise in any new product.

I will never forget going to Bankside on a bitterly cold February afternoon in 1965, and watching the dials with the experts. I will never forget the terrible feeling of frustration which they had as they realised that they had insufficient capacity to meet the demand.

Mr. Heffer

That was four months after the Tories went out of power.

Mr. McNair-Wilson

I must say that it came as a great disappointment to many of us this year that, in spite of the investment, we are still facing these problems. The hon. Member for Sunderland, South (Mr. Bagier) said a moment ago that it was a legacy, but the Conservative Party at least laid the plans for the increase in capacity. My criticism of the Government is simply this: there may be a blame for the failures we had during this winter, and it may be apportioned to the manufacturer, the C.E.G.B., or whomever one likes, and I am not looking for a scapegoat. But I think it was quite wrong that the Government took a very long time before inquiring into this matter and still we do not have the Select Committee's report to this day. This was an inquiry demanded by many people and I think that it was a great tragedy that we had these problems and that nobody saw fit to come into the open and explain to the people what had really gone wrong, so that industry itself could be prepared for what was a difficult winter.

I believe, therefore, that one of the most important requirements of the present time is to restore confidence in the industry and the confidence of the people in the industry itself. There are those who have seen the problems which I have been describing and have really wondered when they can be solved.

Mr. Palmer

I am sure that the hon. Gentleman will wish to be fair to the Select Committee on Science and Technology. We took independent action ourselves to conduct the inquiry and the report will be available very soon.

Mr. McNair-Wilson

I am most grateful to the hon. Member for Bristol, Central, who I know was instrumental in getting the inquiry. But I am criticising the Government for not having done something on their own. What I am saying is that there is a need to restore confidence.

The Bill will not help in any of these respects. The Bill is the second in a line which seeks to do one thing apparently—and that is to reorganise an industry. But is is something quite separate. It is nationalisation by stealth, and its genesis appears to be a desire to reorganise an industry which has been causing some concern, to centralise the control of that industry and to control investment and to extend the new power into manufacturing.

Unfortunately, the right hon. Gentleman was less than clear about what he hoped to achieve by this reorganisation. I am not altogether surprised, because he has taken a number of reserve powers in Clause 6, and Clause 3 which will enable him to return to it. If we had had a White Paper, we might have been able to clear his mind before he drafted the Bill.

The new Electricity Authority suffers from a major defect. It is in the repretation from the area boards. The area board chairmen will be represented by only two in the new structure. While I am prepared to accept any advice that the two chosen will be reasonable men, it is not reasonable to expect those two individuals accurately to reflect the problems of the whole country. However competent they are, to some extent they must be more familiar with some problems than with others.

What the Government have succeeded in doing with the new Authority is to remove from the decision-making point the fighting troops, because it is at the area board level that the fighting troops of this industry exist. This is a serious defect and I hope that it will be considered in Committee. This reorganisation does not mention the strengthening of consumer involvement, the strengthening of the consultative councils, or consumer representation.

The two area board chairmen on the Authority will be selected. Perhaps the Parliamentary Secretary will say how that selection is to take place. It has been said time and again that success or failure of the industry will depend on its management. Among the boards there will be those individuals who will question the choosing of the representatives at the centre. This reorganisation will hardly present an encouraging picture to a man wishing to rise in the industry and who finds that the avenues at the top are limited. This situation is not dissimilar from that in the British Steel Corporation in which many appointments are made from outside by Ministers. This weakens the enthusiasm of those already in the management of the industry.

The centralisation which the Bill describes means the break-up of the old federal structure of the industry. From the point of view of a Minister, especially a Socialist Minister, it is no doubt administratively tidy to be able to define centralisation as the Bill does. But the old federal structure at least meant that there could be a degree of independent judgment. The disappearance of that federal structure and that degree of independent judgment is something the industry will lament as the years go by.

I would agree with my hon. Friend the Member for Dorking (Sir G. Sinclair) that it is a pity there is no reference in the Bill to the problem of safety. In the Gas Bill, which is now in Committee, there are important new powers in respect of safety. I should have thought a similar situation would apply to this Bill to cover defective appliances or wiring and that firmer powers in respect of safety would be useful since electricity is now such a vitally important matter.

I now want to look briefly at the two other aspects of the Bill which are unsatisfactory. Clause 5 deals with the tariff structure. The Electricity Authority will give directions to the boards with respect to the factors to be taken into account and the weight to be given when coming to a conclusion. We must ask ourselves how this will differ from the present structure. If it is to differ substantially—and my hon. Friend the Member for Isle of Ely (Sir H. Legge-Bourke) drew attention to the point that the Clause says that the Board "shall comply "—then we are removing from the area boards a substantial amount of responsibility.

If the situation involves centralisation and direction from the centre on tariffs, then as my hon. Friend the Member for Belfast, South (Mr. Pounder) said, we must redefine the responsibilities of area boards. I confess that if I were an area board chairman, I should be wondering what my job would be once the Bill goes through Parliament. It is no secret to the Minister that the Herbert Report pointed to the temptation that might confront a Government to propose what may be administratively or politically convenient rather than what was strictly justifiable on economic grounds. The Parliamentary Secretary will have to explain how the new tariff structure will differ from the powers currently held by the boards.

We intend to vote against this Bill in principle because of Clause 9, which introduces a totally new dimension into this industry. It is new in that it goes much further than anything before. Hon. Members have drawn attention to the 1957 Bill and the arguments which took place then. I do not come to this House to defend what was said in 1957. As my hon. Friend the Member for Bournemouth, West, pointed out, the leadership saw the light and that provision never became law. We can only hope that the right hon. Gentleman may take the same line before this Bill becomes law.

It is characteristic of the Labour Party to look back—back even to the beginning of the century when nationalisation was the cure-all for everybody. On this side of the House we prefer to look forward to what is necessary in commercial terms for the effective running of an industry.

Mr. Palmer

Will the hon. Gentleman say what is wrong with Labour Ministers in 1970 doing what Conservative Ministers wished to do in 1957? I see nothing wrong in that.

Mr. McNair-Wilson

If we started drawing comparisons between what was going on in the minds of different right hon. Gentlemen, we should be here a very long time.

The fact that the right hon. Gentleman tried to damp down the question of Clause 9 so early immediately made me suspicious. He did not try to produce a convincing argument for this Clause, but rather warned the Opposition not to refer to the kind of thing to which I intend to refer. I cannot believe that this was a sensible way in which to encourage hon. Members on this side to accept this new concept.

The question which must be answered is whether Clause 9 is included because the industry wants it or because the Government want it. As my hon. Friend the Member for Wellingborough (Mr. Fry) said, this is backdoor nationalisation. I cannot believe, from my experience of the industry, that anyone in it genuinely wants Clause 9. There is no shred of evidence that, if the C.E.G.B. had these new powers, any of its problems would disappear. There is the well-known problem of the monopoly customer. It is essential for the industry, the customer and the manufacturer to have a fair deal. It may be very difficult to operate this mix correctly. But the industry should be able, in the interests of the customer, to shop around, to ensure that it gets the best product at the right price.

Therefore, although there may be very few manufacturers left, I would draw attention to what the Daily Telegraph said on 11th March this year: The C.E.G.B., as the dominant purchaser of heavy electrical plant, has hitherto exercised its influence in favour of having fewer suppliers, in the interests of rationalisation. What then can the Government be up to in proposing powers which would enable the Board to set up in direct and potentially unfair competition with private industry? This is important. This very narrow group of manufacturers offers competition in quality, delivery and price, and to replace that structure arbitrarily, under Clause 9, with something which may be extremely costly to establish and is as yet totally ill-defined, makes me wonder what the Minister is trying to achieve.

Is he trying to achieve better results or a lower cost for the product? Does he believe, as I think the right hon. Gentleman suggested, that it will encourage the private sector? Several hon. Members talked about "sharpening" the private sector by introducing the Bill. My guess is that it will do precisely the opposite, that it will discourage investment in the private sector, because no one wants to compete with a body which has its hand in the taxpayers' pocket. The private sector will merely become weaker and weaker.

Then, we must ask how the Minister intends to set up such a manufacturing capability. Will he buy it? He may well have to; and of course he has the taxpayers' money to play with, so no doubt it will be easy to do. Or will he set it up independently? If so, he will require large design teams and a great deal of money. But, whatever he does, if the Clause is implemented, there will be a danger of producing over-capacity in certain areas. Therefore, I suggest that the Minister should look at the alternatives, because nobody in the industry wants Clause 9.

First, it is a cyclical industry. Therefore, a producer always has the problem, on one occasion, of having a substantial demand, only to be followed soon afterwards by a slump in demand. Therefore, I suggest that we have better forecasting and phasing of orders and more standardisation of specifications.

It is extraordinary that the things to which the right hon. Gentleman is nodding his head, quite rightly, are the very things which he told the House this afternoon he wanted to look at under Clause 6. So why not have Clause 6 looked at and Clause 9 taken out altogether? It seems pointless to have both.

Another point which might be relevant is to give export assistance to the industry in this period when the cycle leads the home market into a slight trough. Despite what the right hon. Gentleman said in an interjection to one of my hon. Friends, that what we were saying was shaking the confidence of the industry, I can assure him that the industry's confidence is already badly shaken not by what anybody on this side has said, but because it cannot understand what the Minister has in mind. Perhaps the Parliamentary Secretary will be able to shed some light.

The Bill is unnecessary and unhelpful. If, as I have suggested, there is a need to restore confidence, there is also a need to get to a period where we no longer have the false dawns which have been facing the electricity industry for so long—that capacity was sufficient only to find there was a shortage.

I should like to see the point where matters like thermal efficiency, which have been promised to improve and have failed, will improve. I, like everybody in this House, should like to see the British nuclear industry doing much better. I should like to see the advanced gas-cooled reactors being sold in a more formidable way than has been the practice so far.

My hon. Friend the Member for Cambridge (Mr. Lane) said that freedom and flexibility are required. This is true. I think that the old federal structure of the industry, for all its failings, provided this. It worked and there was a check which enabled the industry to have a certain independence. The new Authority will be unbalanced. It is over-centralised. It may run directly as a copy of the centralisation which has now been instituted for the gas industry, but I suggest that the gas and electricity industries are totally different.

The effects on management of this niece of legislation will be serious. There is nothing on safety; there is nothing on consumer liaison. The Bill poses more questions than it answers, and there is this dangerous Clause 9. No document has ever been more accurately described as a bill than this piece of paper and we will vote against it.

9.33 p.m.

The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Alan Williams)

When the debate started, I, like the hon. Member for Bournemouth, West (Sir J. Eden), looked around the Chamber and felt that there were few volunteers for the Committee stage of the Bill. I am glad that during the afternoon the situation and the enthusiasm of hon. Members to volunteer to participate in the Committee stage have improved.

Although it has been a quiet debate—

Mr. Emery rose—

Mr. Williams

I am sure that the hon. Member for Honiton (Mr. Emery) will allow me at least three sentences before he interrupts. We are not on the Gas Bill.

It has been a quiet debate, and for that reason it has benefited in quality because it has been wide-ranging. I think that all hon. Members who have sat through the debate will agree that points have been made constructively from both sides. The debate has been without heat, though with certain differences. I should like to deal with as many points as possible, and I assure hon. Gentlemen that those arguments which are not covered during my speech will be considered before the Bill goes to Committee.

Before going on to the major part of my speech I should like to deal with a point raised in both the opening and the winding-up Opposition speeches about the forecasting and technical problems involved. I do not wish to go into detail about the technical problems, because my hon. Friend the Member for Bristol, Central (Mr. Palmer) and his colleagues are at present carrying out a detailed investigation into them.

I think that the House should be aware of the difficulties of forecasting six years ahead. Whether one regards this as a nationalisation issue or not, I am sure that the House appreciates that any industry which has to do its planning and its investigating on the basis of looking six years ahead in a competitive environment runs the risk of miscalculation, of optimism, or, as has happened on occasions in the past, of pessimism about future demands. It is a matter not only of analysing the trend in the total demand in the power market, but of trying to analyse the share of that market which will be secured by any one of the power industries, and at a time when a new fuel, natural gas, is coming on to the market, it is even more difficult to make these projections.

In saying that I am defending hon. Gentlemen opposite, rather than on this side of the House, since it was their projections which decided the capacity level this year. I say that in no partisan manner. We all recognise how difficult it is to make accurate forecasts, and I hope that neither side will make party political points about this issue. There has to be some form of look ahead, some form of forecasting. The aim is to learn from inevitable mistakes in as varied and unpredictable a sphere as this, and to try next year to make more sophisticated projections for the following six years. I am sure that everyone will applaud the attempts being made by the industry to improve the quality of forecasting, while recognising that the technique is still far from perfect.

The reasons for the change proposed in the Bill are generally accepted by both sides of the House. I am speaking of the reasons for the general organisational change. In doing my homework—the hon. Member for Bournemouth, West assured us he spend his Recess doing his—I read, as I always do, every word said by the hon. Gentleman on this matter, and I noted his comment at the time when the then Minister of Power announced his intention to bring forward legislation, that "any move that helps to end the split between generation and distribution is to be welcomed."

It is recognised on both sides of the House that production and sales have been too sharply differentiated. As several hon. Members have said today, the production side of the C.E.G.B., because of the cost which it imposes on the area boards, is responsible for three-quarters of their costs. For this reason it is important that there should be a cross-fertilisation of ideas and of understanding between what my right hon. Friend described as the factory and the shop. The central body created in 1957 was deliberately made rather weak. It is not able to determine general policy, nor to decide the allocation of resources. Its functions are research and industrial relations, but it is primarily an advisory and consultative body.

That is not what we need in the industry at the moment. Conversely, we do not want to go back to the old system. This is the difficulty in which we find ourselves. It is a problem which faced hon. Gentlemen opposite when they were trying to decide the right balance in 1957. We have tried to offer a middle way between the over-centralisation of the original British Electricity Authority and the inadequate powers of the present Electricity Council by building in flexibility in the distribution of powers by way of the Clause that allows the Minister to extend the direction-making power of the Authority.

What is the nature of the change? The hon. Member for New Forest (Mr. Patrick McNair-Wilson) said that he preferred the federal structure. I am sure that the hon. Member for Bournemouth, West will remember the Gas Bill, on which his hon. Friend the Member for Honiton and I disputed at considerable length, with considerable good will but not with much beneficial effect to either of us, the distinction between federal and centralised systems. The point that I tried to make clear to the hon. Member—and I am sure that any failure to do so is a lack of clarity on my part rather than any lack of will to believe on his part—is that a federal structure can mean a very wide range of allocations of power between the centre and the individual federated units. I quoted American examples from the retailing industry, and I commend them to the hon. Member for the New Forest who, I am sure—assuming that he takes the Bill to Committee—will become as avid a reader of my utterances as I have become of his.

Because we want to increase centralisation, but not too strongly, we recognise that the present Council, with 21 members, is too unwieldy a body. It is ideal for its present purpose, in that it provides a forum, but a forum is not what we want in a policy-making body. We do not want too much discussion; we want a certain amount of action. We are trying to devise a balance, because with the discussion needed goes the desirability for a few decisions emerging at the end of it.

There will therefore be 12 members on the Authority, a full-time chairman, and a full-time deputy chairman. In addition to bringing production expertise on to the Authority, there will be two members from the C.E.G.B.—the Chairman plus one other member. As my right hon. Friend has already indicated, it is expected that generally the Chairman of the C.E.G.B. will be the second deputy chairman of the Authority. There will also be two regional chairmen. I stress that they are not there as representatives of individual regions.

We must be clear about the objectives of this central body. It is to decide general policy. For representations from individual regions we have built in a consultative procedure under which the Authority must consult the area boards. The two regional members on the Authority are there to bring marketing expertise from their sector of the industry, just as the C.E.G.B. representatives are bringing in production expertise from their side of the industry. In addition, there will be six other members appointed by my right hon. Friend with the intention of producing a balance of knowledge, know-how, skill and whatever is required on the Authority.

My right hon. Friend has indicated that in selecting the six other members he will take into account the need to have at the board level people with an understanding of the problems and points of view of those from the working sectors of the industry. We believe that it is appropriate that a nationalised industry should not just be happy to keep abreast of the best practices of private industry in relation to worker participation but should also look to the possibility of pioneering participation.

The powers and functions of the central authority will be the existing powers under the 1957 Act, plus a new function of settling the capital investment programme for the industry. This is a major centralising factor in the Bill, but it will be subject to the Minister's approval.

Equally, we have built in the possibility of the giving of directions. I use the word "possibility". As my right hon. Friend said, he does not anticipate a snowstorm of directions on different matters passing between the relevant parts of the industry. The important factor about a direction is that, in the event of there being what otherwise would be an un-resolvable difference of opinion, it is clear which side has the ultimate decision-making power. There will be a power to give directions on pricing policy. This is statutorily provided. But it is on policy and not on prices as such. It is not on the tariffs. It is on the policy to be taken into account in deciding pricing. It might be relevant to the terms on which special agreements are to be negotiated.

I thought that the hon. Member for Orpington (Mr. Lubbock) made an extremely helpful speech, though, of course, I disagree with him on certain parts of it. He asked what would happen if, despite having been given a financial objective, an area board found itself with a direction on policy which made it impossible to reach that objective. He said, for example, that it might be told that it was not to increase its prices for six months. That would not be permitted under the Bill. The Bill states that the tariffs are the responsibility of the area boards. There would be no power to direct that there should not be an increase within six months. In giving its directions on pricing policy, we would expect the central authority to take into account the financial objectives of the boards before making its decisions.

We have also indicated that it may be necessary to widen the direction-giving power. This Bill allows a degree of flexibility based on experience. As we are now experimenting with the degree of centralisation, it is useful to have this flexible approach rather than spell out a set list and say, "All this at this stage should have the power of the direction and all that should not". The Bill allows flexibility based upon practical experience. My right hon. Friend indicated that he envisaged that there would possibly be directions relating to research policy, purchasing policy and equipment standardisation.

Hon. Gentlemen opposite have asked whether it would be possible to have a direction on safety. It would not, because the directions relate to those powers vested in the central authority, and safety is a responsibility in which the Minister lays the regulations. We are dealing with an organisational Bill. It is for that reason that safety was not included. Safety comes under the Electricity Supply Acts and the regulations based upon those Acts. The Minister's power to make safety regulations already exists. I understand that a revision of the regulations is taking place at the moment and that it is hoped to produce a revised, up-to-date code. However, it will be produced independently of this Measure on the basis of powers already available. That is why safety is not mentioned. We share the, concern of the hon. Member for Dorking (Sir G. Sinclair) about safety matters, but I do not think that this is, legislatively, the right place to deal with them.

In addition, the Electricity Authority will keep under review the performance of the individual boards and will be able to advise, but not direct, on improvements in that performance. It will keep under review the organisation structure and report to the Minister on any changes that may be required. This again may lead to a more flexible approach to balance of organisation and powers in the future.

Various alternatives have been suggested. In judging whether they are right or wrong, we must recognise that what we are trying to do is to alter the balance between the component parts and not completely restructure the organisation of the industry. Therefore, it was not a major overhaul that was needed but more a tilting of the balance towards the centre, with the possibility built into the Bill of further tilting in that direction should that appear necessary.

One suggestion was that should be fewer and larger area boards. Most hon. Members would probably find this rather difficult to accept, because I think that we all appreciate the importance of the boards not being too remote from the consumer. In any case, we must bear in mind that the average turnover of an area board is £100 million a year, and the average board has about 1½ million consumers. So to reduce the number of boards would mean stretching managerial resources considerably.

There has been a suggestion in Wales that we should have a separate Welsh board instead of North Wales being associated with Merseyside and there being a separate South Wales Board. It comes as a considerable surprise to me as a Welshman to find a Welshman putting forward such a proposal. I could understand it if hon. Members representing English constituencies suggested it, but it is a little peculiar to hear nationalistic elements in Wales suggesting that we should have a Welsh distribution board since the North Wales section of its area board is substantially a rural area and therefore pro- bably a loss-maker, while the South Wales board is already a loss-maker. In 1968–69 it lost £1½ million. It does not seem to be building on strength to take the loss-making sector of one board and add it to the loss-making potential, already proven, of another. The people of Wales would be well advised to ignore this nationalistic advice, although I suspect that it may lead to pressures from hon. Members for North Western constituencies who feel that this is a piece of Welsh home government that they would like to see.

A possibility put forward by my hon. Friend the Member for Bristol, Central was that the C.E.G.B. should become in effect a service company controlled by the area boards, with the chairmen of the areas being its directors. The suggestion was based on the argument that this would give the generation side of the industry contact with the consumer. We are against this proposal. The telling argument is that the C.E.G.B. is itself a vast organisation with a turnover of £1,000 million and a huge investment programme, particularly in plant and machinery. It would not be managerially practicable, or desirable in the interests of efficiency, to have the chairmen, who already have a major task with the business undertakings they control, also trying to control so large an organisation as the C.E.G.B. as a side job.

Turning quickly to the question of manufacturing powers—

Hon. Members

Hear, hear.

Mr. Williams

I am glad that hon. Gentlemen on the Front Bench opposite are showing more interest in the problem of manufacturing powers than their hon. Friends have shown throughout the day. I am glad to note that the only factor which seems to have been effective in bringing hon. Members opposite into the Chamber to fight at this late stage of the debate is that the Chamber is, in sitting terms, convenient for the Lobby into which they are about to be dragooned.

In dealing with manufacturing powers, we should bear in mind that before nationalisation and after it, until 1957, the power to manufacture plant and machinery still rested with the electricity industry. This did not harm the electrical plant manufacturing industry. As my hon. Friend the Member for Bristol, Central pointed out, even the Conservative Bill of 1957 carried power to manufacture plant. Indeed, on the Second Reading of that Bill, there was no indication of any intention by the then Government to remove such power, and, in Committee, Government spokesmen argued in favour of its retention.

Our proposals in the Bill give manufacturing powers to the Central Electricity Generating Board. The Board has existing powers and there are to be these additional powers. I should reiterate the point made by my hon. Friend the Member for Bristol, Central, and by my right hon. Friend that when we speak of "new" powers in this context we really mean the renewal of old powers, which did no harm to industry, although hon. Members opposite claim that private manufacturers are devastatingly threatened by their reintroduction now.

The Board would be allowed to manufacture plant which could be sold anywhere. The hon. Member for Bournemouth, West asked whether this would include the ability to export. If the Board goes into plant manufacture—and it has no intention at this stage of doing so—I am sure that the hon. Gentleman would agree that, in terms of a return on public investment and of the national economy, it would be foolish of it not to take advantage of export opportunities which might arise. Taking into account the scale of operations, if undertaken, we would not put any limit on the ability to export. In the manufacture of fittings, the Board would be governed by the conditions for supply and sale to the area boards.

Sir J. Eden

Surely there is nothing to prevent the area boards from reselling the fittings so manufactured?

Mr. Williams

Indeed, not. That is the intention. The reason it is being done through the area boards is that they have the marketing outlets. They have marketing experience and direct contact with the consumer. I am spelling out the distinction between the two sets of provisions.

Hon. Members opposite, when they object to these provisions, should bear in mind the words of the Paymaster-General—[Laughter.] He said: We must give them"— the nationalised industries— the maximum degree of commercial freedom in order that they may work as efficiently as possible, and it is very difficult to see how we are to give proper commercial freedom if we do not leave the Board "— that is, the Generating Board— free to manufacture its equipment."—[OFFICIAL REPORT, Standing Committee D, 7th February, 1957; c. 77.] That, as I have said, was the Paymaster-General—the Paymaster-General of 1957, who is now the Deputy Leader of the Opposition. That was the definition which the right hon. Member for Barnet (Mr. Maudling) put forward during the Committee stage of the 1957 Act. If hon. Members opposite are interested, I have several other fascinating quotations from the right hon. Gentleman in support of giving independence to the nationalised industry in plant manufacture.

Question put:—

The House divided: Ayes 285, Noes 218.

Division No. 90.] AYES [10.0 p.m.
Albu, Austen Bennett, James (G'gow, Bridgeton) Butler, Herbert (Hackney, C.)
Allaun, Frank (Salford, E.) Bessell, Peter Butler, Mrs. Joyce (Wood Green)
Alldritt, Walter Bidwell, Sydney Callaghan, Rt. Hn. James
Allen, Scholefield Binns, John Cant, R. B.
Anderson, Donald Bishop, E. S. Carmichael, Neil
Archer, Peter (R'wley Regis & Tipt'n) Blackburn, F. Carter-Jones, Lewis
Armstrong, Ernest Blenkinsop, Arthur Castle, Rt. Hn. Barbara
Ashley, Jack Boardman, H. (Leigh) Coleman, Donald
Ashton, Joe (Bassetlaw) Booth, Albert Conlon, Bernard
Atkins, Ronald (Preston, N.) Boston, Terence Corbet, Mrs. Freda
Atkinson, Norman (Tottenham) Bottomley, Rt. Hn. Arthur Craddock, George (Bradford, S.)
Bacon, Rt. Hn. Alice Bradley, Tom Crawshaw, Richard
Bagier, Gordon A. T. Bray, Dr. Jeremy Crosland, Rt. Hn. Anthony
Barnes, Michael Broughton, Sir Alfred Dalyell, Tam
Barnett, Joel Brown, Rt. Hn. George (Belper) Darling, Rt. Hn. George
Baxter, William Brown, Hugh D. (G'gow, Provan) Davidson, Arthur (Accrington)
Beaney, Alan Brown, Bob (N'c'tie-upon-Tyne, W.) Davies, E. Hudson (Conway)
Bence, Cyril Brown, R. W. (Shoreditch & F'bury) Davies, G. Elfed (Rhondda, E.)
Benn, Rt. Hn. Anthony Wedgwood Buchan, Norman Davies, Dr. Ernest (Stretford)
Davies, Ifor (Gower) Jenkins, Hugh (Putney) Pannell, Rt. Hn. Charles
Davies, S. O. (Merthyr) Jenkins, Rt. Hn. Roy (Stechford) Park, Trevor
Delargy, H. J. Johnson, Carol (Lewisham, S.) Parker, John (Dagenham)
Dell, Rt. Hn. Edmund Johnson, James (K'ston-on-Hull, W.) Parkyn, Brian (Bedford)
Dempsey, James Jones, Dan (Burnley) Pavitt, Laurence
Dewar, Donald Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Pearson, Arthur (Pontyprldd)
Dobson, Ray Jones, T. Alec (Rhondda, West) Peart, Rt. Hn. Fred
Doig, Peter Judd, Frank Pentland, Norman
Dunn, James A. Kelley, Richard Perry, Ernest G. (Battersea, S.)
Dunnett, Jack Kenyon, Clifford Perry, George H. (Nottingham, S.)
Dunwoody, Dr. John (F'th & C'b'e) Kerr, Mrs. Anne (R'ter & Chatham) Prentice, Rt. Hn. Reg.
Eadie, Alex Kerr, Russell (Feltham) Price, Thomas (Westhoughton)
Edelman, Maurice Latham, Arthur Price, William (Rugby)
Edwards, Robert (Bilston) Lawson, George Probert, Arthur
Edwards, William (Merioneth) Leadbitter, Ted Randall, Harry
English, Michael Ledger, Ron Rees, Merlyn
Ennals, David Lee, Rt. Hn. Frederick (Newton) Rhodes, Geoffrey
Evans, Albert (Islington, S.W.) Lee, Rt. Hn. Jennie (Cannock) Richard, Ivor
Evans, Fred (Caerphilly) Lee, John (Reading) Roberts, Rt. Hn. Goronwy
Evans, Ioan L. (Birm'h'm, Yardley) Lestor, Miss Joan Roberts, Gwilym (Bedfordshire, S.)
Faulds, Andrew Lever, Rt. Hn. Harold (Cheetham) Robertson, John (Paisley)
Fernyhough, E. Lewis, Ron (Carlisle) Robinson, Rt. Hn. Kenneth (St.P'c'as)
Finch, Harold Lipton, Marcus Rodgers, William (Stockton)
Fitt, Gerard (Belfast, W.) Lomas, Kenneth Roebuck, Roy
Fletcher, Rt. Hn. Sir Eric (Islington, E.) Loughlin, Charles Rogers, George (Kensington, N.)
Fletcher, Ted (Darlington) Luard, Evan Rose, Paul
Foley, Maurice Lubbock, Eric Ross, Rt. Hn. William
Foot, Rt. Hn. Sir Dingle (Ipswich) Lyons, Edward (Bradford, E.) Rowlands, E.
Foot, Michael (Ebbw Vale) Mabon, Dr. J. Dickson Shaw, Arnold (Ilford, S.)
Ford, Ben McCann, John Sheldon, Robert
Forrester, John MacColl, James Shinwell, Rt. Hn. E.
Fowler, Gerry MacDermot, Niall Shore, Rt. Hn. Peter (Stepney)
Fraser, John (Norwood) Macdonald, A. H. Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Freeson, Reginald McElhone, Frank Silkin, Rt. Hn. John (Deptford)
Galpern, Sir Myer Mackie, John Sillars, J.
Garrett, W. E. Mackintosh, John P. Silverman, Julius
Ginsburg, David McMillan, Tom (Glasgow, C.) Slater, Joseph
Golding, John McNamara, J. Kevin Small, William
Gordon Walker, Rt. Hn. P. C. MacPherson, Malcolm Snow, Julian
Gray, Dr. Hugh (Yarmouth) Mahon, Peter (Preston, S.) Spriggs, Leslie
Greenwood, Rt. Hn. Anthony Mahon, Simon (Bootle) Steele, Thomas (Dunbartonshire, W.)
Gregory, Arnold Mallalieu, E. L. (Brigg) Stonehouse, Rt. Hn. John
Griffiths, Eddie (Brightside) Mallalieu, J. P. W.(Huddersfield, E.) Strauss, Rt. Hn. G. R.
Griffiths, Will (Exchange) Mapp, Charles Summerskill, Hn. Dr. Shirley
Gunter, Rt. Hn. R. J. Marks, Kenneth Thomas, Rt. Hn. George
Hamilton, James (Bothwell) Marquand, David Thornton, Ernest
Hamilton, William (Fife, W.) Marsh, Rt. Hn. Richard Thorpe, Rt. Hn. Jeremy
Hamling, William Maxwell, Robert Tinn, James
Hannan, William Mayhew, Christopher Tomney, Frank
Harper, Joseph Mellish, Rt. Hn. Robert Tuck, Raphael
Hart, Rt. Hn. Judith Mendelson, John Urwin, T. W.
Haseldine, Norman Mikardo, Ian Varley, Eric G.
Hazell, Bert Millan, Bruce Wainwright, Edwin (Dearne Valley)
Heffer, Eric S. Miller, Dr. M. S. Wainwright, Richard (Colne Valley)
Henig, Stanley Milne, Edward (Blyth) walden, Brian (All Saints)
Herbison, Rt. Hn. Margaret Mitchell, R. C. (S'th'pton, Test) Walker, Harold (Doncaster)
Hilton, W. S. Molloy, William Wallace, George
Hobden, Dennis Moonman, Eric Watkins, David (Consett)
Hooley, Frank Morgan, Elystan (Cardiganshire) Watkins, Tudor (Brecon & Radnor)
Horner, John Morris, Alfred (Wythenshawe) Weitzman, David
Houghton, Rt. Hn. Douglas Morris, Charles R. (Openshaw) Wellbeloved, James
Howarth, Robert (Bolton, E.) Morris, John (Aberavon) White, Mrs. Eirene
Howell, Denis (Small Heath) Moyle, Roland Whitlock, William
Howie, W. Mulley, Rt. Hn. Frederick Willey, Rt. Hn. Frederick
Hoy, Rt. Hn. James Murray, Albert Williams, Alan (Swansea, W.)
Huckfield, Leslie Newens, Stan Williams, Alan Lee (Hornchurch)
Hughes, Rt. Hn. Cledwyn (Anglesey) Oakes, Gordon Williams, Mrs. Shirley (Hitchln)
Hughes, Hector (Aberdeen, N.) Ogden, Eric Willis, Rt. Hn. George
Hughes, Roy (Newport) O'Halloran, Michael Wilson, William (Coventry, S.)
Hunter, Adam O'Malley, Brian Winnick, David
Hynd, John Oram, Bert Woodburn, Rt. Hn. A.
Irvine, Rt. Hn. Sir Arthur Orme, Stanley Woof, Robert
Jackson, Colin (B'h'se & Spenb'gh) Oswald, Thomas Wyatt, Woodrow
Janner, Sir Barnett Padley, Walter
Jay, Rt. Hn. Douglas Page, Derek (King's Lynn) TELLERS FOR THE AYES:
Jeger, George (Goole) Paget, R. T. Mr. J. D. Concannon and
Jeger, Mrs. Lena (H'b'n & St. P'cras, S.) Palmer, Arthur Mr. Walter Harrison.
Alison, Michael (Barkston Ash) Atkins, Humphrey (M't'n & M'd'n) Baker, W. H. K. (Banff)
Allason, James (Hemel Hempstead) Awdry, Daniel Balniel, Lord
Archer, Jeffrey (Louth) Baker, Kenneth (Acton) Barber, Rt. Hn. Anthony
Beamish, Col. Sir Tufton Harvey, Sir Arthur Vere Orr, Capt. L. P. S.
Bell, Ronald Harvie Anderson, Miss Orr-Ewing, Sir Ian
Bennett, Dr. Reginald (Gos. & Fhm) Hastings, Stephen Osborn, John (Hallam)
Berry, Hn. Anthony Hawkins, Paul Page, John (Harrow, W.)
Biffen, John Hay, John Pearson, Sir Frank (Clitheroe)
Biggs-Davison, John Heald, Rt. Hn. Sir Lionel Percival, Ian
Birch, Rt. Hn. Nigel Heseltine, Michael Peyton, John
Black, Sir Cyril Higgins, Terence L. Pike, Miss Mervyn
Blaker, Peter Hiley, Joseph Pink, R. Bonner
Boardman, Tom (Leicester, S.W.) Hill, J. E. B. Pounder, Rafton
Body, Richard Hogg, Rt. Hn. Quintin Powell, Rt. Hn. J. Enoch
Bossom, Sir Clive Holland, Philip Price, David (Eastleigh)
Boyd-Carpenter, Rt. Hn. John Hordern, Peter Prior, J. M. L.
Boyle, Rt. Hn. Sir Edward Hornby, Richard Pym, Francis
Braine, Bernard Howell, David (Guildford) Quennell, Miss J. M.
Brewis, John Hunt, John Ramsden, Rt. Hn. James
Brinton, Sir Tatton Hutchison, Michael Clark Rawlinson, Rt. Hn. Sir Peter
Bromley-Davenport, Lt.-Col. SirWaiter Iremonger, T. L. Renton, Rt. Hn. Sir David
Brown, Sir Edward (Bath) Irvine, Bryant Godman (Rye) Rhys Williams, Sir Brandon
Buck, Antony (Colchester) Jenkin, Patrick (Woodford) Ridley, Hn. Nicholas
Bullus, Sir Eric Jennings, J. C. (Burton) Ridsdale, Julian
Burden, F. A. Jones, Arthur (Northants, S.) Robson Brown, Sir William
Campbell, B. (Oldham, W.) Jopling, Michael Rodgers, Sir John (Sevenoaks)
Channon, H. P. G. Kaberry, Sir Donald Rossi, Hugh (Hornsey)
Chataway, Christopher Kershaw, Anthony Royle, Anthony
Chichester-Clark, R. Kimball, Marcus Russell, Sir Ronald
Clegg, Walter King, Evelyn (Dorset, S.) St. John-Stevas, Norman
Cooke, Robert King, Tom Sandys, Rt. Hn. D.
Cooper-Key, Sir Neill Kitson, Timothy Scott, Nicholas
Cordle, John Knight, Mrs. Jill Scott-Hopkins, James
Corfield, F. V. Lambton, Antony Sharples, Richard
Craddock, Sir Beresford (Spelthorne) Lancaster, Col. C. G. Shaw, Michael (Sc'b'gh & Whitby)
Crouch, David Lane, David Silvester, Frederick
Crowder, F. P. Langford-Holt, Sir John Sinclair, Sir George
Cunningham, Sir Knox Legge-Bourke, Sir Harry Smith, Dudley (W'wick & L'mington)
Dalkeith, Earl of Lewis, Kenneth (Rutland) Speed, Keith
Dance, James Lloyd, Rt. Hn. Geoffrey (Sut'nC'dfield) Stainton, Keith
d'Avigdor-Goldsmid, Sir Henry Lloyd, Ian (p'tsm'th, Langstone) Stodart, Anthony
Dean, Paul Lloyd, Rt. Hn. Selwyn (Wirral) Stoddart-Scott, Col. Sir M.
Deedes, Rt. Hn. W. F. (Ashford) Longden, Gilbert Summers, Sir Spencer
Digby, Simon Wingfield McAdden, Sir Stephen Taylor, Sir Charles (Eastbourne)
Dodds-Parker, Douglas MacArthur, Ian Taylor, Edward M. (G'gow, Cathcart)
Doughty, Charles Maclean, Sir Fitzroy Taylor, Frank (Moss Side)
Douglas-Home, Rt. Hn. Sir Alec Macleod, Rt. Hn. Iain Temple, John M.
Drayson, G. B. McMaster, Stanley Thatcher, Mrs. Margaret
du Cann, Rt. Hn. Edward Macmillan, Maurice (Farnham) Tilney, John
Eden, Sir John McNair-Wilson, Michael Turton, Rt. Hn. R. H.
Elliot, Capt. Walter (Carshalton) McNair-Wilson, Patrick (NewForest) Van Straubenzee, W. R.
Elliott, R. W.(N'c'tle-upon-Tyne, N.) Maddan, Martin Vaughan-Morgan, Rt. Hn. Sir John
Emery, Peter Marples, Rt. Hn. Ernest Vickers, Dame Joan
Errington, Sir Eric Marten, Neil Waddington, David
Fisher, Nigel Maude, Angus Walker-Smith, Rt. Hn. Sir Derek
Fletcher-Cooke, Charles Mawby, Ray Wall, Patrick
Fortescue, Tim Maydon, Lt.-Cmdr. S. L. C. Walters, Dennis
Foster, Sir John Mills, Peter (Torrington) Ward, Christopher (Swindon)
Fry, Peter Mills, Stratton (Belfast, N.) Ward, Dame Irene
Galbraith, Hn. T. G. Miscampbell, Norman Weatherill, Bernard
Gilmour, Ian (Norfolk, C.) Mitchell, David (Basingstoke) Wells, John (Maidstone)
Glover, Sir Douglas Monro, Hector Wiggin, Jerry
Glyn, Sir Richard Montgomery, Fergus Williams, Donald (Dudley)
Godber, Rt. Hn. J. B. Morgan, Geraint (Denbigh) Wilson, Geoffrey (Truro)
Goodhart, Philip Morrison, Charles (Devizes) Wolrige-Gordon, Patrick
Gower, Raymond Mott-Radclyffe, Sir Charles Woodnutt, Mark
Grant-Ferris, Sir Robert Munro-Lucas-Tooth, Sir Hugh Worsley, Marcus
Gurden, Harold Murton, Oscar Wright, Esmond
Hall-Davis, A. G. F. Nabarro, Sir Gerald Wylie, N. R.
Hamilton, Lord (Fermanagh) Neave, Airey Younger, Hn. George
Hamilton, Michael (Salisbury) Nicholls, Sir Harmar
Harris, Frederic (Croydon, N.W.) Nott, John TELLERS FOR THE NOES:
Harris, Reader (Heston) Onslow, Cranley Mr. Jasper More and
Harrison, Brian (Maldon) Mr. Anthony Grant.
Harrison, Col. Sir Harwood (Eye)

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).