AMENDMENT OF ELECTRICITY DEPOSIT CHARGES (Hansard, 10 March 1970)

§ Mr. Keith Speed (Meriden)

I beg to move, That leave be given to bring in a Bill to amend the powers of electricity supplying authorities to demand deposits from consumers and to amend the rate of interest on those deposits. Under the Electric Lighting (Clauses) Act, 1899, now 71 years old, electricity undertakings have the right to demand security from consumers. That security may take the form of a cash deposit. All boards, I believe, carry out this practice, although my experiences have been with the Midlands Electricity Board.

I asked the Minister of Technology, in a Question some months ago, whether the Government had any intention of amending or changing the 1899 Act. I was told, quite briefly, that they had no such intention.

In practice, when the board seeks a deposit from consumers, it does so in two circumstances. First, it can seek a cash deposit from a would-be consumer who applies for an electricity supply where the Board suspects or doubts the financial risk involved. Although the electricity boards deny this, I have evidence to the effect that would-be consumers going into certain types of property, particularly rented flats and apartments, are particularly hard hit by boards which almost invariably seem to demand a deposit.

The way that the boards work out the cash deposit required is to estimate one and a half times the heaviest quarter's bill for the new consumer. The consumer may then have to pay a deposit of anything from £50 to £70.

The second circumstance when boards may demand deposits is where consumers have been slow in settling their accounts. Again, in that situation one and a half times the heaviest quarter's account is normally sought. If agreement on the sum asked by the board from the consumer cannot be reached, the 1899 Act allows this sum to be determined and fixed by a magistrates' court.

It is interesting to note that these sums, which can amount to £50, £100, or even more, carry a rate of interest of 4 per cent. per annum, which is taxable, so 1121 there is a net return of 2½ per cent. on these sums which consumers have to deposit with the boards. I shall come to this point later.

I have had considerable correspondence —I know that other hon. Members have, too—with the electricity boards. As far as I can see, the boards try to operate these provisions in a fair and humane way. But no doubt mistakes can and do occur. We are all human, and many officers of the boards are involved in carrying out these policy decisions.

I know from experience—I believe that other hon. Members have similar experience—that much anxiety, doubt, worry and hardship can be caused by this deposit scheme being levied on would-be or existing consumers. I have heard from the director of a company in Birmingham which owns 53 furnished lettings that on occasions new tenants coming in who ask for a supply of electricity have had to wait up to 12 months before connection because they have not been able to find the considerable sum demanded as deposit.

I do not query the deposit scheme as such. Public money is involved, and, clearly, the electricity boards must have a fall-back position. But my Bill would safeguard that position and retain the deposit scheme, but would amend the 1899 Act in three specific and humane ways.

First, it would clearly establish that if a new consumer could show satisfactory evidence of having paid his accounts promptly to any previous electricity board or gas undertaking, or if he could give a bank reference or name a guarantor living in any part of the United Kingdom, the deposit would not be required from him by the board.

1122 Secondly, a consumer who has difficulty in paying his accounts would not be asked for a deposit until he had had the opportunity of discussing the matter with an officer of the board and trying to make mutually satisfactory arrangements for clearing up any outstanding debts that he may have with the board. This discussion could take place either at the board's offices or in the consumer's home.

Thirdly, where a deposit is nevertheless imposed, a consumer should be told in writing of his right to go to a magistrates' court if he disagrees with the sum that the board is asking for deposit—in other words, if there is any dispute over the figure demanded.

Finally, the interest paid by the board on such deposits should be the current Bank Rate, not 4 per cent. I see no reason, where money is demanded from existing or would-be consumers, why they should lend to industries, whether nationalised or private, considerable sums at an artificially low rate of interest.

This will be a modest Bill, but I believe that it could relieve much anxiety and hardship to ordinary men and women and will bring into law formally the professions of good faith by the electricity boards. Therefore, I commend the Bill to the House.