§ (The Lord Sudeley.)
§ SECOND READING.
§ Order of the Day for the Second Reading read.
§ LORD SUDELEY
, in moving that the Bill be now read a second time, said, that the enormous growth of electric lighting in this country, the number of Companies which had been formed for the purpose of furnishing electric light, and the large amount of capital which had been invested in these concerns were sufficient grounds for legislation on this subject, as well as to prevent the growth of monopolies as against the public interest, and to take care that Corporations should have facilities, if they thought it desirable, to purchase these undertakings at a fair rate some future time. This was an attempt on the part 568 of the Board of Trade to grapple with the whole question of the administration of electrical supply—at present in its infancy; and by means of a general Bill to deal with it not only in its present stage, but in its future development. The Gas and Water Companies showed how soon an enormous monopoly might grow up adversely to the public interest. Thus, trading Companies had frequently obtained powers under their Acts of Parliament, which had not always been used for the benefit of the consumer, who had suffered, not only in the price paid, but in the quality and quantity of the article he paid for. In these circumstances, the Government had given great consideration to this subject, and they had come to the conclusion that there should be a central authority who could be put in motion at less expense than would be incurred in obtaining an Act of Parliament. They had thought that the Board of Trade would be a fitting central authority, and it was determined that that Board should grant licences to such Companies as they might think fit, and to make Provisional Orders. Early in this Session a number of Electric Lighting Bills had been introduced, and they had been referred, together with this Government measure, to a Select Committee, where they were very carefully considered. Several Amendments were made in the Government Bill, and the Private Bills had been put aside until this Bill should become law. The representatives of all these Companies were examined before the Select Committee. He was aware that it had been stated that the representatives of the Gas Companies had complained that they had not received proper consideration; but the fact was that, although they all withdrew immediately the Preamble of the Bill had been declared proved, their case was most thoroughly examined in all its bearings, as the counsel for the Municipal Corporations supplying gas remained and argued their case before the Committee, so that it could not be said that the gas interests were not fairly considered. In 1879, a Select Committee went very thoroughly into the whole question of electric lighting, and this Bill was based on their Report. In that Report they stated that—It is desirable that local authorities should have power to give facilities to companies or private individuals to conduct experiments. Any 569 monopoly given to a private company should be restricted, to the short period required to remunerate them for the undertaking, with a reversionary right in the municipal authority to purchase the plant and machinery on easy terms. The Legislature should show its willingness, when the demand arises, to give all reasonable powers for the full development of electricity as a source of power and light.Since then there had been a very great development of electricity; but there was no doubt that electric power was still in its experimental stage; and it was desirable that facilities should be given to Companies or private individuals to carry on experiments in the simplest and cheapest manner. The leading features of that Bill were—first, that it would prevent any monopoly growing up against the interest of the consumers; and next that it would provide for the making of experiments. Power was given by the Bill to the Board of Trade to grant licences to Companies and private individuals for a period of five years, such licences only to be granted with the concurrence of the local authority. In the interest of the general public it was desirable that the process of obtaining licences should be simple and cheap. If the Companies had to go before Parliament, and to incur an expense of £10,000 or £20,000, the whole question of electricity was likely to be hung up for years. The undertakers, on applying to the Board of Trade, would have to show that they had a good case, and that the character of their scheme was good. The Board of Trade would institute an inquiry, and, with the concurrence of the local authority, would grant a licence. The measure further provided that at the end of 15 years it should be open to the local authority to purchase the plant and machinery of the Company on fair and reasonable terms, the basis of the purchase being the actual value of the existing plant without compensation for future profit. The price to be given for the undertaking was to be the fair market value, to be ascertained in the manner sketched out in the Bill, without goodwill; it would be the fair market price less depreciation—such a price as would be obtained by the Company if they were selling to another Company without goodwill and with a reasonable allowance for wear and tear. In regard to the period of 15 years, it should be remembered that in the case 570 of a patent the monopoly was given for 14 years only, but the present Bill gave one year beyond that time. A precedent for this provision had been laid down in the Tramways Act, although in that case the period was 21 years. Clause 16 afforded protection to the public by providing that persons who were supplied with electricity should be supplied on the same terms. It was also provided that the consumers should have power to use what form of lamp they liked, in the same way as in case of gas. The main objection to the Bill came from the Gas Companies, who naturally opposed electricity, and. did not, of course, like a rival. The Gas Companies did not, in so many words, say that they objected to electricity; their objection was to the system of licences, by which they feared that they would be gradually ousted from the field. The reply to that was that the Gas Companies had no monopoly in lighting. That was specially laid down by the Committee of 1879, who stated—Gas Companies, in the opinion of your Committee, have no special claims to be considered as the future distributors of electric light. They possess no monopoly of lighting public streets or private houses beyond that which is given to them by their power of laying pipes in streets. Electric light committed to their care might have a slow development. Besides, though Gas Companies are likely to benefit by the supply of gas to gas-engines which are well suited as machines for producing electric light, the general processes of gas manufacture and supply are quite unlike those needed for the production of electricity as a motor or illuminant.This view was again adopted by the Committee which sat the other day. If the Gas Companies were allowed to oppose those licences it was clear what would be the result. Persons wishing to supply electricity for experimental purposes would have to apply for powers to Parliament, at a cost of £10,000 or £20,000; and they could hardly do that. When the experimental stage was past, or whenever the local authority was not willing to take the matter up, and a Provisional Order was applied for, the Gas Companies would have the fullest opportunity of appearing before Parliament to state their case. The Select Committee which sat the other day were of opinion that if the proposed licences were done away with, and if the introduction of electricity were thrown upon the Gas Companies, it would be highly 571 detrimental to the public interest. If the Bill passed, the Board of Trade would be able to take care that such regulations were made as would provide for the interests of the public, and would be able to control the limitation and conditions of supply, and to take such steps as were necessary for the public safety. It was thought most desirable that they should not be in the position in which they were placed as regards the administration of railways, where it was their duty to criticize with no power to correct, and to make recommendations which they could not enforce. If the present terms failed to give that encouragement to electrical supply which it was the object of the Board of Trade to afford, those terms would hereafter have to be altered. It could never be to the public interest, neither was it the wish of the Government or Parliament, to strangle a useful enterprize by refusing it proper means of remuneration. The Select Committee which sat in the other House was a very strong and representative one. It was presided over by Mr. Edward Stanhope, and had given great attention to all the details of the Bill. He would not now trouble their Lordships with any further particulars; but, bearing in mind its great public importance, he trusted they would give a second reading to the measure.
§ Moved, "That the Bill be now read 2a."—(The Lord Sudeley.)
§ LORD EMLY
regretted that a Bill of such importance should come before their Lordships at so late a period of the Session, when it was impossible for it to receive the advantage of the deliberations of a Select Committee. But he thought their Lordships all agreed that the Board of Trade, upon whom important powers were to be conferred, possessed the confidence of the public. It was natural that the Bill should be opposed by Gas Companies; but he failed to see what locus standi they had for their objections any more than the Stage Coach Companies when railways were first introduced. The great difficulty in the Bill was, of course, the 27th—the Purchase Clause. A Committee of their Lordships' House had reported that every facility should be given to the extension of electric lighting. From the nature of the case all operations in that direction must, for some time to come, 572 be experimental. So much uncertainty still obscured many important questions connected with electricity—for instance, its capability of being stored, its generation by water power, and so forth—that it was impossible that any undertaking could be immediately successful. Under these circumstances, it seemed to him that a power of purchase exerciseable by the local authorities after 15 years—that was, at the time when the undertaking would become profitable—was likely to deter any person from embarking on any scheme contemplated by the Bill. It would be possible, however, to remedy some of the defects of the measure in Committee.
§ THE EARL OF CRAWFORD AND BALCARRES
said, he would like to draw their Lordships' attention to the fact that the clause to which the noble Lord (Lord Emly) referred established a principle that very nearly approached confiscation. The principle it established was that a person should not invest money in this kind of property for a longer period than 15 years. Noble Lords would probably be aware that when a piece of machinery was laid down in a certain place for a definite object, if it had only been worked for a period of three weeks and it was desired to sell it, its value had decreased 50 per cent. It was impossible to sell machinery again at a remunerative price after it had been once placed and used, and this was an important point to consider in connection with the fair valuation of the plant of a Company. He would like to ask the Government whether this Bill was to be taken as a precedent; because if it was it would be a matter of extreme danger, as local authorities might want to buy up the undertakings of Gas and Water Companies at the value of the pipes. He did not wish to oppose the second reading, as the subject was one which greatly interested the public. He believed he was right in saying nearly £9,000,000 had been invested in Electric Light Companies; and that, one would imagine, was a reason why Her Majesty's Government should not endeavour by any legislation to completely choke the enterprize at the very commencement. The statement of the noble Lord, that if the Bill did not work well it might be reconsidered, was most reassuring; and if the noble Lord could only say the Government would recon- 573 sider the 27th clause touching the point he had alluded to it would give great satisfaction.
THE EARL OF CAMPERDOWN
failed to see that any just objection could be taken to the 27th clause. What they desired to do was to avoid the creation of one of those gigantic monopolies which had been found so detrimental to the public interests in the past. Nothing of the character of confiscation was contemplated. The term confiscation could only be applied to existing property belonging to existing persons. In the present case, there was neither one nor the other. Again, no objection could fairly be brought against the limit of time fixed in the Bill. The Companies would have 15 years during which to realize a profit, and if they were not satisfied with the conditions of the undertaking naturally they would not proceed with the work. He would remind the House that many tramways had been constructed on leases running from 14 to 21 years, although some persons had expressed the opinion that they ought to have a 40 years' lease. It was very desirable that, where possible, the lighting of towns should be done by the local authorities; and if such conditions as were imposed by the Bill had been enforced in the case of Gas and Water Companies, enormous sums of money would have been saved to the ratepayers.
§ EARL CAIRNS
said, that this clause was a most material part of the Bill. The noble Lord (Lord Sudeley) had said that many objections had been raised to it on behalf of the Gas Companies. That might be so; but the observations he was going to make were foreign to any question which might interest the Gas Companies. The noble Lord said that all that was intended was to grant a 15 years' lease, and that everyone knew what a 15 years' lease was. But there were very few instances of Parliament having granted a 15 years' lease, such as was now proposed. It was not a very good principle, and they were not armed with such a quantity of precedents as the noble Lord seemed to think. The science of electricity was still in its infancy. If they desired to encourage the development of the science, they must hold out reasonable inducements for that purpose. But what inducements did such a Bill as this hold out? A certain time 574 was fixed, during which the exclusive right was given to a body of persons to light by electricity; but, no matter what expense they might be put to, at the end of that time their plant and machinery were to be bought at a valuation—most probably at very little more than the price of old metal. The noble Lord who had introduced the Bill said the clause had been approved of by the Committee; but he himself did not read the Resolution as expressing approval of it. The local authority was to purchase only the "undertaking," which was a word of art, meaning trade or business. The noble Earl had said it was not intended that the undertaking should be bought as a going concern. Then, why not say so in so many words? Instead of that it was to be bought at so much for the plant and fixtures. Care ought to be taken that there should be no impediment thrown in the way of the development of so important an enter-prize, and all he urged was that their Lordships should not pass the Bill in too great a hurry. He should be glad to see the measure proceeded with in other respects if the clause bearing on that point were held over for future consideration. He did not see why it should not stand over until next Session. He could not imagine anything more momentous in the interests of electricity than the effect of this clause.
THE EARL OF KIMBERLEY
observed that the question of confiscation was entirely out of the case, as they could not confiscate that which did not exist. The important question was—Did the terms of this Bill offer a sufficient encouragement to the Electric Light Companies to come forward? In the first place, they had no practical experience at present to guide them; nor was it possible to fix any precise limit as to profits. In this Bill there was no limitation of profits. There had been an attempt by Act of Parliament in the case of the Gas Companies to check the monopoly by a limitation of profits. The case of Tramway Companies was a precedent for the proposition that a lease might be granted for 21 years to a Company, and that at the end of that period the undertaking might be sold to the local authority. He agreed that they ought to be cautious, though cautious in the interests of the public. If ultimately it should be thought desirable to extend the 575 powers of these Companies, that might be done by further legislation. At present this was a mere experiment, the object being to avoid the dangerous monopoly which had been given to Gas and Water Companies. With regard to the Resolution of the Committee, he did not agree that the Bill failed to carry the Resolution into effect. It appeared to him, on the contrary, that Clause 27 gave full effect to that Resolution, the word "undertaking" being expressly used in the clause. In his opinion, there was much to be said in favour of the Bill as it stood, and he hoped their Lordships would agree to the second reading, on the understanding that the points referred to would have full consideration in Committee.
§ THE MARQUESS OF SALISBURY
said, that the noble Earl had referred to the limitation of profits in the case of the Gas and Water Companies. But there was no analogy between that and compulsory purchase.
§ THE MARQUESS OF SALISBURY
said, the attention of the Committee could hardly have been called to the effect of the words they had employed. He thought that the terms offered to the Electric Companies were not quite fair. As the matter stood, these Companies would have to carry on their undertakings with the full consciousness that all the risks would be theirs, and all the profits would go to the public—that was to say, if they failed no one would come forward to help them, and if they succeeded the municipality would step in and sweep up all the benefits. The noble Earl opposite had said, in defence of the policy of the Bill, that they should be very cautious on behalf of the public. For his part, he apprehended that their first duty was to consult the interests of the public, not by thinking merely of the profits which the municipality might or might not make some 15 years hence, but by thinking how soon good would come to the consumers of an article which would benefit them enormously. It was the public who would suffer if these Companies were not allowed to come into the field, and if this new instrument of power, which science had discovered, were compelled to remain useless and unfruitful for several years. The 576 noble Earl opposite talked about going to Parliament next year. But they all knew the difficulty that existed in bringing any legislative undertaking to completion.
THE LORD CHANCELLOR
said, he heard with some little surprise the suggestion of his noble and learned Friend (Earl Cairns) that the Bill should be passed, leaving out the Purchase Clause. It was most necessary that it should be known what the terms of purchase were to be. He thought that he could reassure his noble Friends by stating some facts which were in the possession of the Government. There was no wish to discourage the enterprize in any way; but, at the same time, they were anxious not to repeat the fatal errors which were made in the cases of the Gas and Water Companies. It would, no doubt, be satisfactory to noble Lords to know that not only had all the Companies expressed themselves as satisfied with the arrangements proposed in the Bill, but the Board of Trade had information to the effect that one Company, when the Bill passed, would make as many as 95 applications; and there were besides a great number of cases where applications were ready to be made on the footing of the Bill, showing that the persons who best understood the matter and were most interested would not be discouraged in their enterprizes if the Bill passed in its present form. It must be remembered that the Bill contained no limitation as to profit; and he thought that the term of 15 years would give the Companies a tolerably certain prospect of a good harvest being made.
§ LORD ABERDARE
held that it was absurd to contend that the properties of the Electric Lighting Companies could be bought as old iron at the expiration of the term mentioned in the Bill. They would have to be looked upon as going concerns which would increase in value.
THE EARL OF MILLTOWN
thought that some limitation should be put upon the amount of profit that could be made by the Electric Lighting Companies.
§ EARL FORTESCUE
thought it would be better to err on the side of precaution; but was understood to add that the terms of the Bill would discourage the application of science in this direction as freely as it was applied in others.
§ LORD TRURO
said, that this Bill was not intended to diminish in any way the profits of the Electric Lighting Companies. The action of the Gas Companies in former years had, no doubt, caused some apprehension as to what might happen in the present case; but, as he understood the Bill, the Government were fully prepared to ensure the Companies the legitimate profits which all Companies who embarked in schemes of such a speculative character had a right to expect.
said, that it should be remembered that these Companies would have to compete with Gas Companies, who already possessed very extensive powers, towards whom Parliament had been too liberal; whereas by this Bill it was proposed to be the reverse, as indicated by noble Lords representing the Government.
§ Motion agreed to; Bill read 2a accordingly, and committed to a Committee of the Whole House on Tuesday next.