§ Order of the Day for the House to be put into a Committee, read.
§ LORD REDESDALEsaid, that these Bills were of such an important character that they deserved to be considered in Committee of the Whole House. The powers which the promoters sought were very extensive. They proposed to raise two millions of money, to purchase land, to fix the price of gas, and to do a great many other things which affected the interests of the whole metropolis. He thought it desirable, therefore, availing himself of the power that was vested in him under the Standing Orders, to move that they be referred to a Select Committee of the Whole House.
§ Moved, "That the House be put into a Committee on the said (the Gaslight and Coke Company Bill) Bill."—The Lord Redesdale.
THE EARL OF CAMPERDOWNsaid, these Bills were promoted by two private Companies—there was nothing whatever on the face of the Bill or that which followed on the Notice Paper to show that they were promoted by public bodies, or that they could in any way be considered as public Bills. They were supported, however, by the President of the Council, representing the Board of Trade; and he could not help thinking that it was somewhat irregular on the part of the head of a public Department to promote a Bill without letting Parliament know that it was in reality a Bill of a public character. The Gas light Companies, he might add, had in their hands the lighting of nearly the whole of the metropolis; and this was not all, for another Bill had been introduced into the House of Commons within the last two or three weeks, in defiance of the Standing Orders, the object of which was to amalgamate three out of four Companies, and which was now being hotly contested before a Committee of that House. Now, if that Bill came up to their Lordships' House all the Standing Orders would have to be suspended, and a measure would thus be passed without adequate consideration, which related to Companies whose 1944 capital amounted to two millions and a half.
§ THE MARQUESS OF SALISBURYwas understood to say that he believed the Board of Trade repudiated all connection with the Bill now before the other House to which the noble Earl referred.
THE EARL OF CAMPERDOWNsaid, he had reason to suppose that the Bill was supported by that Department; but be that as it might, the result of all that had occurred in regard to those measures was that he now felt himself obliged to enter into an argument on questions of the purest detail, which in reality ought to be referred to a Select Committee. In fact, he looked upon the whole course of proceeding in the case of those Bills as most unsatisfactory.
§ Motion agreed to; House in Committee accordingly.
THE EARL OF CAMPERDOWNrose to move the insertion of a clause of which he had given Notice. His object in doing so was this—these Bills allowed, under certain conditions, that the dividends should be paid up to any amount. Now, at present, the Gas Companies had what was known as a Parliamentary dividend, which was a practical guarantee of 10 or 7 per cent or less, according to the rate at which their capital had been raised. Under no circumstances could they at present go beyond 10 per cent; but by these Bills it was proposed to introduce a new principle—that of a fixed initial price, with a sliding scale. It had been the almost invariable custom in the case of the transfer of the supply of gas from private Companies to the local authority, to make the transfer at so many years' purchase of the statutory dividend. Gas was being manufactured more cheaply every day, and the consequence would be that under the powers given by these Bills the dividends would be proportionately increased. It was not likely that a Company which was guaranteed 10 per cent would accept an unguaranteed dividend that was not to be more than 10 per cent—they might, if they exercised the power proposed to be given by these Bills, demand 12 or even 15 per cent. The result would probably be that it would be found impossible to buy the Company up, and it would become perpetuated. His proposal did not interfere with the rights of 1945 the existing shareholders; he gave them 10 per cent, but he asked that they should not be given any more. In conclusion, he might remark that the clause he was about to propose had received the approval of the noble Duke (the Duke of Richmond and Gordon), to whose opinion he was sure their Lordships would attach due weight. The noble Earl then moved, after Clause 24, to insert the following clause:—
For the purpose of estimating the value of the capital of the company in the event of the purchase of the undertaking or any part thereof by any public or local authority, whether by agreement or otherwise, the several descriptions of stock or shares in such capital authorised before this Act shall, notwithstanding anything in this Act contained be considered as entitled only to such dividends respectively as were authorized in respect thereof before the passing of this Act; and the stock or share capital raised under this Act shall for such purpose as aforesaid be estimated as entitled to a dividend of 10 per cent."—(The Earl of Camperdown.)
§ THE MARQUESS OF SALISBURYdeprecated the course adopted by the noble Earl (the Earl of Camperdown), of recommending his clause to their Lord ships on the personal authority of the noble Duke (the Duke of Richmond and Gordon), who was not in his place, and who, if he expressed an opinion in favour of the noble Earl's project, no doubt did so without prejudice to any more mature judgment which he might subsequently form. He was very much inclined to think, however, that the noble Earl was mistaken in believing that the noble Duke (the Duke of Richmond and Gordon) had expressed approval of the clause. He doubted exceedingly whether the noble Duke would have done so without consulting his Colleagues in the Government. But, however, that might be, he had to demur altogether to the proposal of the noble Earl opposite. He wished to protest, in the first place, against the view insinuated or stated by the noble Earl, that the Government were in this matter taking part with the Gas Companies against the consumers. The Gas Companies were quite strong enough to take care of themselves; and if the Government opposed the clause it was because they thought it would bear hardly on the consumer; and that if drawn up by the noble Earl in the public interest, it was marked by more zeal than knowledge. The Bill was earnestly supported 1946 by the Corporation of London and the Metropolitan Board of Works, both of whom were elected Bodies, and who had always maintained a careful watch over the action of the Gas Companies; and in view of such a recommendation in its favour, he was sure their Lordships would, at all events, give it very careful consideration before they consented to destroy its leading principles—which was what the clause proposed to do. A Committee which considered the gas question very fully last year, under the presidency of Mr. Forster, recommended to Parliament what was known as a sliding scale. For many years before the Companies had enjoyed a guaranteed dividend of 10 per cent; the effect of which was that they had no inducement to improve their process of manufacture, to exercise economy, or to benefit the consumers in any way; and Mr. Forster's Committee, with the view of remedying that state of things, proposed that, starting from the price which the Companies were then allowed to charge—namely, 3s. 9d.—and from the dividend of 10 per cent which they were allowed to earn, there should be a sliding scale up and down; that for every 5s. of dividend which the Companies were allowed to earn in excess of 10 per cent they should grant to the consumer the reduction of 1d. That was the proposal of of this Bill. That arrangement, however, the advantage of which to the consumer was obvious, the noble Earl opposite asked them to disturb. The Bill, in addition to those provisions, contained a set of clauses to which he would now draw their Lordships' attention—and it was right their Lordships should bear in mind how adverse the Bill was to the Companies. Owing to the advantageous position which they occupied, the Companies, it appeared, were able to command £200 for every £100 of nominal capital, and that extra £100 was divided among the shareholders. The Bill put a stop to that, and provided that capital should be offered by auction, and that the premium obtained should be carried to the capital account of the Company. Upon this the noble Earl opposite came forward with his proposition. He proposed to leave the sliding scale for the present to work unimpeded—to allow the Companies to raise their dividend to 12 per cent and lower the price of gas to 3s. 1d.; but he would allow that 12 per 1947 cent to be earned by the shareholders in security for a single year only, reserving to Parliament absolute power to step in whenever the dividend was above 10 per cent, and sweep away from the shareholders their advantages, paying them merely the price calculated on the old dividend of 10 per cent. Now, if the noble Earl's clause were carried, what would be the position of the shareholders? Although they would no longer have their guaranteed 10 per cent, they accepted the Bill as it stood, trusting by good management to raise their dividend to 12 per cent. But now the House was asked to step in and say to the Companies—"You shall earn this 12 per cent for one year, but we shall have power to buy you out the next." Of course such a prospect as that would be very damaging to the Companies; for, whatever advantage they might have for a single year, their shares would certainly not have an increased value in the market. He asked them not to think of the interest of the Companies, but to think of the consumer, and to say which of the two would be the more advantageous alternative—that the Bill should pass without that clause, or that no Bill should pass? The capital concerned was about £6,000,000 sterling. Let them assume that the price of gas went down, and that the dividend rose. That was the hypothesis on which the noble Earl went and on which they must argue. If the price of gas fell to 3s. 1d. the dividend would rise to 12 per cent. If there was a wish to buy up the Companies, on that £6,000,000 of capital, there would be a loss, taking 20 years' purchase, of £2,400,000—the amount of the additional 2 per cent was £2,400,000. That was the sum which the noble Earl asked them to save to the public purse, and it was only to be saved in the event of there being a Municipality of London to buy up the Companies. What would their Lordships give for the chance of there being such a Municipality for the next 20 years? As for the Corporation of London and the Metropolitan Board of Works, they would not dream of embarking in any such unprofitable and dangerous speculation. On the other hand, while the dividend rose the price of gas fell, and, consequently, the consumers would gain 8d. per 1,000 cubic feet of gas. The consumption during 1875 was 9,000,000,000 of cubic feet, 1948 and it increased at the rate of about 7 per cent every year. The accounts would have to be adjusted upon the results of the year 1877; and then the amount of gas on which they would have to calculate would be 10,000,000.000 of cubic feet. At 8d. per 1,000 that would give them £330,000. In less than eight years that would accumulate to the £2,400,000 which was the terror of the noble Earl. But if they took into the calculation the annual increase of 7 per cent in the consumption, they would find that in six years' time the gain to the consumer by the fall of the price would come up to that £2,400,000 which, if the Municipality purchased, would be lost to the ratepayers through the rise of dividend. If, then, they caused that Bill to drop, the loss to the consumer in six years would more than equal the loss that was feared in the case of compulsory purchase, and as time went on it would, infinitely exceed it. He believed that that idea of a municipal purchase was a mere chimera. If within six years a Municipality of London sprang into being which was willing and able to purchase these Gas Companies, there would be some slight loss in consequence of the arrangements under this Bill, and the absence of the clause of the noble Earl; but if a Municipality of London did not appear after six years, the absence of this Bill would cause a loss every succeeding year to the consumer which would have no end. He hoped their Lordships would not allow it to be said that for idle dreams they had taken from the consumer the real and practical benefit of cheap gas.
§ VISCOUNT CARDWELLpointed out the fallacy of assuming, as the noble Marquess had done, that there would be no reduction in the price of gas, if they did not pass that particular Bill. The noble Marquess had answered his own argument when he told them that the consumption of gas was increasing so rapidly that the price must necessarily fall. Their object, he contended, should be to secure the benefit of that fall for the consumer, and not to give a considerable portion of it by that proposal in perpetuity to the producers. This Bill was, in fact, promoted by a Department of Her Majesty's Government—he had heretofore thought that there was a clear separation between Public and Private Bills—and the main object of this Pri 1949 vate Bill was to repeal a most material provision of a Public Act, introduced by the Board of Trade, for the protection of the consumer. Under the Act there were clauses which provided for the revision of the price of gas as the increase of its consumption enabled it to be reduced; but it was now proposed by this Bill to substitute for those clauses a sliding scale by which they would divide between the consumer and the producer the advantage of the continually accruing reduction of price. The Companies had their 10 per cent secured to them; that was all they were entitled by law to obtain, and yet those who wished to protect the just interests of the consumer were now compared to Bashi-Bazouks. Under the Acts of both 1847 and 1860 the London Gas Companies had had advantages conferred upon them which were not accorded to provincial gas companies, for they obtained a minimum as well as a maximum of 10 per cent, and if the present measure were passed they would be placed in a still better position, for they would obtain a share of the profit which ought to go to the benefit of the consumer. He objected to this partiality being shown towards them in a Bill which was promoted by a Government Department, and which was brought under the consideration of that House on the 27th of July, when their Lordships were told that if they made the slightest alteration in the Bill it could not pass into law during the present Session. He did not believe that the introduction of this clause would destroy the Bill; but he would rather it did, than see the Bill passed without the clause under such circumstances.
THE LORD CHANCELLORexplained that, as the Bill embodied a compromise which had received the sanction of 8,000 shareholders, of the Corporation of the City of London, and of the Metropolitan Board of Works, as the representatives of the public interest, it would be impossible to materially alter the Bill without again submitting it to the consideration of the shareholders, and that was tantamount to throwing it over for the present Session. The Bill had been passed through a Select Committee of the House of Commons and had met with its approval. He denied that the measure was promoted by Her Majesty's Government, as was said, further than that the Board of Trade 1950 had sanctioned it as being for the public interest. This being a private agreement between two parties it could only be dealt with by a Private Bill. He regretted that it should have come up to their Lordships so late, but it had had to pass through a Select Committee of the other House. He admitted the right of their Lordships to deal with every line of every Bill that was brought before them, but he entreated the House to consider whether in the position at which the question involved in the Bill had arrived, it would be wise by adopting the clause of the noble Earl to leave the gas consumers of London in such a position as that they might be called upon to pay 5s. per 1,000 feet for gas instead of a maximum of 3s. 9d. as provided by the Bill.
§ LORD CARLINGFORDfelt compelled to assume that if the clause of his noble Friend (the Earl of Camperdown) was adopted there would be an end of the Bill for the present Session, and therefore the question, as it appeared to him, was, whether the fact that, under the Bill the shareholders in the Companies might now possibly obtain somewhat higher dividends and at some future time sell their properties for a larger sum than would be paid in other circumstances, that disadvantage to the consumer was not counterbalanced by the settlement that would be brought about by the provisions of the Bill. He thought, on the whole, that the advantages that would flow from the Bill were greater than the disadvantages that might be feared from it.
EARL NELSONsaid, he was a Member of the Committee which had been alluded to, and the Bodies which had been appointed the legal protectors of the gas consumers made no objection to the proposals which had been embodied in the Bill under consideration. The public had received advantage from the amalgamation of Companies that had been made, and he therefore doubted the wisdom of interfering with the grounds on which the Companies were induced to amalgamate.
§ On Question? The Committee divided: Contents 24; Not-Contents 27: Majority 3.
§ Resolved in the Negative.
§ Bill reported without Amendment,