§ Order of the Day for the Second Reading read.
§ The LORD CHANCELLOR (LORD BIRKENHEAD)
My Lords, the subject-matter of this Bill is technical and complicated, but I fear that I cannot render any useful service in moving the Second Reading unless I ask your Lordships to follow me in detail (though it may be somewhat wearisome) through the clauses of the Bill. As everyone will realise, the subject is one of extraordinary importance, and I think your Lordships will have cause to complain if I do not—according to the measure of my capacity—give some assistance, in a Bill so technical, to those of your Lordships who may propose to take part in the later discussions upon it.
576 I am desirous, in the first place, of calling special attention to the unusual care and deliberation with which these proposals are recommended to the House. The Bill is the result of the deliberations of two Departmental Committees established by the Board of Trade. The first was the Committee on Electrical Trades, presided over by Sir Charles Parsons. This Committee, after making a most patient and laborious investigation of the questions referred to them—they heard evidence and spent a great deal of time on their, inquiries—made a Report. As the result of that Report the Board of Trade appointed a second Committee, under the chairmanship of Sir Archibald Williamson. The subject-matter of this inquiry was limited to electrical power supply, and the terms of reference were as follows—To consider and report what steps should be taken, whether by legislation or otherwise, to ensure that there shall be an adequate and economical supply of electrical power for all classes of consumers in the United Kingdom, particularly industries which depend upon a cheap supply of power for their development.This Committee, at an early stage in their discussions, unanimously came to certain conclusions of which it is proper your Lordships should be apprised. They were as follows—(1) That when British industry is subjected to the tests of keen international competition after the war, its success will depend upon the adoption of the most efficient methods of machinery so as to reduce manufacturing costs as much as possible.(2) That a highly important element in reducing manufacturing costs will be the general extension of the use of electrical power supplied at the lowest possible prices; and it is by largely increasing the amount of power used in industry that the average output per head, and, as a consequence, the wages of the worker, will be raised.(3) That the present system by which the supply of electricity is divided into a large number of small areas by separate authorities is the result of a policy adopted at a time when the applied science of electrical engineering was in its infancy, and is incompatible with anything that can now be accepted as a technically sound system.(4) That the inter-connection of existing electrical supply stations, however desirable in itself, cannot alone meet the requirements of the situation.(5) That a comprehensive system for the generation of electricity and, where necessary, re-organising supply, should be established as soon as possible.Such were the general conclusions intermediately reached by the Committee and made available for the guidance of those 577 to whom initiative in this matter was committed. On the Committee, and as a result, of the publication of the line upon which their investigations were proceeding, three representatives of the Electrical Trades Committee were appointed, the idea being to reinforce the Committee on the technical side. The Committee reported on April 19, 1918, and to those of your Lordships who are willing to examine their recommendations in detail I may observe that the summary of recommendations contained in page 17 is dealt with in an elaborate and general Report, a more detailed study of which I venture to recommend to those interested in this matter.
The Bill for which I ask a Second Reading to-night is the result of the unanimous recommendations of this Committee, and I would make bold to say that the subject, which from one point of view is one of novelty, and from any point of view controversial, has been commended, to your. Lordships by great unanimity on the part of the very competent and experienced persons who have been asked to advise the Government. As to the general nature of the provisions, the Bill provides in the first place for the establishment of a body of Electricity Commissioners, who shall be subject to the general directions of the Board of Trade and whose expenses of administration shall be covered, not by the State, but by a fund contributed to by all the electrical supply undertakings.
The Commissioners are to administer, so far as they are applicable, the provisions of the existing Electric Lighting Acts. They are to have power to conduct experiments and trials for the improvement of electricity, to appoint advisory committees to assist them, and to delimit districts so as to bring about a more comprehensive anal a better and cheaper system of generation by gradually shutting down a large number of small power stations and by erecting larger modern capital stations. It is not contemplated by the scheme of the Bill that the Commissioners should themselves discharge functions so difficult, but under Clause 5 they may adopt one of various methods which are therein indicated. After delimiting the area which is best suited for an efficient distribution of electricity, they may, firstly, invite the undertakers, authorities, and other interested within the district to formulate schemes for the setting up of a general electricity authority, and 578 may select from such schemes that which they think best; secondly, if no good scheme is submitted to them they may themselves formulate a scheme for the establishment of a joint authority; and, thirdly, they may establish a district electricity board. Broadly speaking, the difference between the two authorities is that the joint authority will probably be one which will be voluntarily formed by the people within the district, and a district electricity board is an organisation set up by the Commissioners in the last resort where no satisfactory voluntary scheme has been formulated.
If a district board is formed all the generating stations within the district (other than those which are badly placed or are so equipped that it seems wiser to leave them alone) are to vest in the district board, and provision is made in Clause 7 for the terms on which the stations and the main transmission lines may be acquired. There are three broad classes of undertakers contemplated in the scheme of the Bill—namely, first, local authorities; second, electric lighting companies; third, power companies. The purchase price of local authorities' stations is to be paid by one of two alternative methods—either (1) by taking over their obligations of interest and sinking fund outstanding, or (2) the cost of the station, less depreciation. The important provision is contained in the Bill that if any money has been expended on capital out of the revenue of the undertaking such expenditure shall be taken into account. In the case of both electric lighting and power companies the price is to be the cost of the lands, buildings, and actual plant less depreciation, with some allowance for severance if a loss springing from that cause call be established. The same clause contains another important provision that if there are any special terms of purchase which have been authorised by Parliament in a special case the arbitrator may take such terms into consideration. There are contained in a later part of the Bill—in Clauses 12 and 13—certain protective provisions for companies whose stations have vested, to which, with your Lordships' leave, I will make a further reference in a moment.
Broadly speaking, the Bill has been drafted upon the general principle that the Commissioners shall control and generally administer all the provisions of this Bill and of the existing Electric Lighting Acts, 579 but that the Board of Trade shall act as a court of appeal from their decisions with, in proper cases contemplated by the Bill, ultimate determination by Parliament. In the case of the establishment of a scheme under the provisions of Clause 5 already referred to, either for a joint authority or for a district board, the Order made by the Commissioners has to be referred to the Board of Trade and has to be laid before Parliament, and it must before it becomes operative, be made the subject of an affirmative Resolution in each House of Parliament. It is, as your Lordships will, I think, readily concede, highly important that for the future all new generating stations, whether they be public or private, should be erected in accordance with general regulations as to type of current, frequency and pressure, which the Commissioners may prescribe.
Your Lordships are well aware of the importance which, under the existing conditions, is to-day attached to the realisation of the closest possible approach to standardisation. In the past, in electrical lighting matters, there has been an extraordinary and most inconvenient variety of pressures and frequencies which has prevented those concerned from acting together, and, of course, increased enormously the varieties of apparatus which manufacturers have found it necessary to make. It has also greatly increased the cost of such manufactures. In Greater London alone there are seventy authorities at this moment owning over seventy generating stations, and among these there are no less than fifty different types of system, ten different frequencies, and twenty-four different voltages. It is, and has been for some time, a commonplace that the frequency, in an area of these dimensions, should either be uniform, or that the maximum varieties should not exceed two kinds.
With the object of introducing this great and beneficent change in this respect Clause 9 was incorporated in the Bill, and the effect of that clause, if your Lordships approve of it, will be that after the Bill is passed no new public generating station, or an extension of an existing one, can be carried out without the consent of the Commissioners, and any new private generating station must conform with the Regulations as to frequency and pressure. Special provision has been inserted at the request of the Railway Companies' Associa- 580 tion for their protection. I will not say more on that point at the moment. There is a proviso (a) that where large electrochemical businesses are set up in which electricity is the dominant factor, the associated people may set up a generating station for their joint purposes; and a proviso (b), in the same clause, that where there is a class of works like blast furnaces which have waste heat which they can turn into electricity and supply, say, an associated steel works or steel rolling mills, the energy so generated from the blast furnaces can be used by them for their joint purposes, but in such a case any surplus energy generated shall be at the disposal of a district board or others who find themselves in a position to make use of it.
Clause 11 deals with the powers of district boards to supply electricity. This is what is known as the Kitson clause, and is taken from the provisions which are generally inserted in Power Companies' Acts. The object of the clause is to ensure an adequate supply of electricity in all parts of the district, and subsection (3) of the clause says—Subject to the limitations herein before contained on the powers of a district electricity board to supply electricity, the Electricity Commissioners may by Order impose on any District Electricity Board an obligation to supply electricity.In Clause 12 there is a provision for the transfer of electrical undertakings to a district board. Local authorities may, with the consent of the Commissioners, agree with the district board to surrender the remainder of their undertaking, their generating station having already been vested under Clause 7. In the case of companies, under the terms of Section (2) of the Electric Lighting Act, 1888, local authorities have the right to purchase the whole electrical undertaking of a company in their area. The clause provides that that right of purchase should be transferred to the district board—a right which I am hopeful your Lordship will think they will use prudently and usefully.
There is an important provision in subsection (4) which is ancillary to the purchase terms of a company's generating station in Clause 7—namely, that within two years from the date of vesting the generating station the company can require the district board to buy the rest of their 581 undertaking upon the terms of paying the capital expenditure of the whole undertaking less any sum which may have been paid as the price of the generating station. The companies now being subject to the terms of Act of 1888 which represents in its language the "then value," any undertaking bought to-day would mean having to pay the replacement cost at some two and a-half times the original cost and then deducting a proper rate of depreciation the actual value would represent something like one and a-half times the capital actually invested. The problem of purchasing under such circumstances is naturally one not to be lightly approached. To purchase at that rate would be an undue burden upon the new district boards, and this clause is a compromise with the companies, and ensures that at any rate they will receive the whole of their capital properly expended refunded to them. The clause is inevitably technical and not easy to express in very popular or immediately intelligible manner. If any of your Lordships feel a difficulty about it I shall hope to have an opportunity of explaining it in greater detail at a later stage of the Bill.
I now ask your Lordships to glance at Clause 13. In Clause 13 there are special provisions for power companies which enable any part of the area of a power company not then being supplied by them to be transferred to a district board, but as a quid pro quo enable the Commissioners to give to the power companies the right to supply for all other purposes in the remainder of their area, except those parts in which an authorised distributor is already working. It is provided that a power company whose generating station is vested in a district board may within twelve months require that board to purchase the whole of the power company's undertaking on the terms of paying the fair market value as a going concern.
The question may be asked, What reason or policy has decided that differentiation should be made between the power companies and electric lighting companies? There is, I think, a reason. Electric lighting companies are subject to purchase, and have only a limited tenure, whereas Parliament has thought proper to confer upon the power companies unlimited tenure and to impose upon them no purchase terms. It has in these circumstances been considered just by all those concerned 582 that optional terms of purchase given to power companies should differ from those of the other companies, and that they should be purchased as a going concern at fair market value.
In Clause 15 there are important, provisions to enable district boards or undertakers to abstract water for condensing purposes from various sources, but only on the condition that not less than 95 per cent. of the water is returned in a condition not less pure than when abstracted, and at such a temperature when returned that it shall not cause injury to public health, or to fisheries, or to the navigation of canals or inland waterways. There is a further important provision that the Board may make arrangements for the utilisation of water power or waste heat or other form of energy, and may also dispose of any form of energy such as surplus steam or hot water for heating purposes, and it is possible that an Amendment may be proposed to your Lordships by the Government to this clause saving the rights of the gas undertakings, with which it is not proposed to interfere.
Sub-clause (5) is not without importance. That sub-clause enables a board to establish by-product plant, no doubt with the intention of meeting the time, whenever it arrives, when coal may be carbonised in such a way that the best residual products can be distilled, and utilising the gas evolved in the process either for steam raising or for producing electricity in some other way. I am very conscious that the recital of, or attempt to explain, these very technical provisions is one in which lucidity is extremely difficult to attain, and is very unlikely to interest any but those who have some knowledge of these difficult matters—difficult not only in relation to their nature but difficult technically.
The rest of the Bill may be very rapidly summarised. It is really ancillary to the main points, of which I have given a very short statement. In Clause 17 there is an important provision which compensates officers and servants deprived of employment through the operation of the Act—a clause which is to some extent based upon Section 7 of the Ministry of Transport Act. If your Lordships look at Clause 19 you will find an important provision which enables the Board of Trade, after consultation with the Commissioners, before the establishment of a district board or joint authority, to construct stations or main 583 transmission lines out of a sum not exceeding £20,000,000 which the Treasury may issue to the Board of Trade. The object of this clause is to enable certain emergency stations to be constructed without loss of time in districts—I am sorry to say there are several of these—in which there is a real famine of power. The clause is designed, having regard to the emergency of the moment, to avoid a delay of perhaps twelve or eighteen months pending the period during which the district board could be finally set up in a district.
Clause 20 contains an important provision based upon a similar clause in the London Electric Supply Act, 1908, which enables any two or more undertakers to arrange for the giving and taking of a supply of electricity one from another. It is believed that this provision will meet a want which has been seriously felt in the past. Pending the establishment of a district board or joint authority at present in most cases there is no alternative except complete sterilisation for the time being, or to permit every little generating station in the district to be extended to meet the growing demands. Clause 20 enables some of the better selected stations to be extended beyond the scope of their immediate area, and will thus minimise waste of money, and the eventual waste of coal, by reducing the number of stations, increasing their size and possibly also the size of the plant contained in them. It is hoped that this provision will have the effect of increasing the efficiency of such stations.
I need not, I think, deal with Clause 21, but a word should be said about Clause 22, which contains a most important provision dealing with the use of overhead wires. The use of such wires, the growing importance of which is apparent, has been largely restricted in the past owing to the veto of small local authorities. Hereafter the Board of Trade, under the provisions of Clause 22, will be able to give its consent over the head of a dissenting local authority, although the clause gives, in fairness, any local authority which may object an opportunity of being heard. The only other clause which I think requires individual mention is Clause 24, which deals with the supply of apparatus by district boards and local authorities. There was some controversy on this point, as some of the local authority representatives on the Committee, and some of the Labour 584 representatives, desired to give local authorities the power to sell apparatus. The experienced persons who have offered advice and assistance were at one time in danger of disagreement. The attempt to give to local authorities power to sell apparatus, which was strongly pressed in Committee by Labour representatives, was successfully resisted.
I have dealt, I think, with all the clauses which require elucidation. I have, indeed, some doubt as to how far on Second Reading, not having the advantage of an indication from the House as to what particular clauses it was interested in, I was justified in making so great a claim upon the patience and attention of your Lordships. It is, however, impossible to grasp a measure of this technical importance without some attempt at least in the direction of a general exposition; and I have only to add that while the Government presents this Bill to the indulgence and consideration of the House with a strong feeling that it would have been impossible to equip themselves with the advice of more competent persons before legislating on such a matter, they are nevertheless well aware that many members of this House are highly competent to offer counsel in such a matter, and in the course of the Committee stage it is hardly necessary to say that the views of those of your Lordships who desire to express themselves on the details of this measure will be most attentively considered. I beg to move.
§ Moved, That the Bill be now read 2a—(The Lord Chancellor.)
§ LORD DOWNHAM
My Lords, I do not rise to express any hostility to the main provision of the Bill. I take it that the main provision is to be found in Clause 1, which sets up Electricity Commissioners for promoting, regulating, and supervising the supply of electricity. I think that the setting up of Electricity Commissioners or some Department of the State for promoting and supervising and regulating electricity is long overdue, and that many of these extraordinary—I can only call them so—differences of system which we have experienced to our regret and our loss would not have been our lot had there been long ago some Government Department presided over by those who were competent to direct and control us in regard to the various systems of electricity. Therefore 585 I am entirely favourable to the Bill so far as it sets up Electricity Commissioners.
But while I listened, as we all listened, with great pleasure to the way in which the Lord Chancellor went through the clauses of the Bill very carefully, and the way in which he dealt with many of them, I felt, as every one of your Lordships must have felt, that after all there was one subject which he never touched at all, and upon which he threw no enlightenment—and that is the question of finance. Finance now is the great main difficulty at the bottom of almost every measure that His Majesty's Government brings forward. There have been three editions of this Bill. The first was a very bad edition as it was introduced in the House of Commons; the second was a better edition as it emerged from the Grand Committee in the House of Commons; and the third was a vastly improved edition as it emerged from the final debate in the other place. But in each of these editions lies this clause, that the bodies that are to be set up are to give "a cheap and abundant supply of electricity." That is the promise that is made to the people in this Bill. "Only let the Government set up Electricity Commissioners, only let them have the opportunity of setting up district electric boards all over the country, and you (the people) will have a cheap and abundant supply of electricity for all purposes, domestic, industrial, and even agricultural." What ground is there for any such hope? Let us look at some of the figures.
The idea underlying this Bill is derived from a very clever and able Report by the Committee, some passages of which have been quoted by my noble and learned friend on the Woolsack. The idea is to break England up into sixteen districts, and in these sixteen districts to place great super-stations for the generation of electricity, managed I suppose by supermen. What is going to be the cost of putting up these enormous stations in these sixteen districts? You cannot put up and equip a station at a lower price than £30 per kilowatt. I speak in the presence of greater authorities than myself, but I think my figures will not be controverted, and that they are moderate. But taking the average we must reckon 200,000 kilowatts at £30 per kilowatt; that is £6,000,000 for each station, and £96,000,000 for your sixteen stations. That is for the setting up of the station or stations. There might be one 586 station or there might be several stations for serving each one of these sixteen areas. After that the capital must be found for the main transmission lines and for the transforming apparatus. I think we may safely reckon another £50,000,000 for that —call it £150,000,000 of capital money. At what price is it to be raised? What is it to cost? I believe that Treasury Bills are now at 5½ and the new and most tempting Housing Loan is to be floated at 5½ per cent. I doubt whether 5½ per cent. soon will be attractive to the investor in some of these Government Loans. But when we come to think that a great electrical company on the North-east coast is now wanting £1,500,000 and is offering 7 per cent. to those who desire to invest, we can see how difficult it is going to be to obtain these large capital sums at the present moment.
The £150,000,000 is merely to build and equip your stations, and for your main transmission lines and transforming apparatus. What about the maintenance? We are promised a cheap and abundant supply of electricity. That depends to a large extent on the capital charges and to a large extent on the maintenance charges. Your Lordships may take it that in London, of the total charges for generating and distributing electricity 42 per cent. is due to capital charges. Therefore your Lordships will see how important it is that the capital charges should be kept low if you are going to give a cheap and abundant supply of electricity. Let us look at the maintenance charges. "A cheap and abundant supply of electricity," with coal at double the price that it was in the prewar period! And what about wages? Double. What about the rates? They will be double before long if we go on at the present rate. If we put up these sixteen stations and have to spend £150,000,000 on them and have to pay the present wages, the present price for coal, and the present rates, there may be an abundant supply of electricity, but what is the good of holding out the hope to the people that there is going to be a cheap supply. Of all that we have never heard a word from His Majesty's Government. I observe that in all the speeches made on their behalf no figures were ever given to prove that Clause 6 could be carried out, or that by any such measure as this you could get a cheap and abundant supply of electricity.
Then is the Bill no good? I do not say so. I say the Bill is of use so far as 587 setting up Electricity Commissioners is concerned. There is no doubt that if you appoint these Electricity Commissioners, if they are men of good practical knowledge and sound common sense, they will undoubtedly be able in certain localities—taking into account, of course, the relative prices of coal and wages and matters of that kind at the present time—to effect some economy, and they will be able to procure a good deal of efficiency. There is no doubt that it would have been a splendid thing for London if we had had Electricity Commissioners years ago who would have brought the companies and the municipal undertakings together, married them to one another, and said: "Now we are going to give you advice and help. We will persuade you if we can; if not, I confess, for my part, we will compel you to unite your undertakings in some way or other, so that you shall not spend money stupidly on small stations which you will not want, and that you will only join in building big stations. We will help you with money, if necessary. We will regulate the price of your current in the interests of the consumers; but we shall never forget that, if we are to attract capital into any industry, it must have a fair reward and a fair rate of interest, and it must have security that the capital will be repaid at the end of it." That is what I am hoping from the Electricity Commissioners.
I am glad to see that this Bill has undergone a transformation in its passage through the Grand Committee and through the House of Commons. As this Bill was introduced it was really a bad Bill, because it practically smothered the companies and it invited the nationalisation of one of the most perilous and most difficult to carry on of our industries. I am an opponent of nationalisation. I do not believe that nationalisation is ever going to get the best out of our industries for the people. It was proposed in the Bill—and it is still there in this Bill—to divided England into areas, to set up all these enormously expensive stations, to put the control of them under such hotch-potch bodies as are pitched into this Bill, called district electric boards. On these boards, we are told, the consumer and the labour element and, I suppose, the woman element would be represented, and anybody that they could get to serve on the boards, with remuneration, we are told (there is always remuneration) and with, I suppose, travelling expenses, sub- 588 sistence allowances and that sort of thing Those are Soviets, and expensive Soviets they would be. A great many of them would be people without any stake or interest in either efficiency or an economic supply of electricity. I do not believe that a body of that sort can govern anything with satisfaction to anybody.
I am glad to see that the district electricity boards are withdrawn, and that under this Bill the Electricity Commissioners will say to the present undertakers, whether they be companies or municipal undertakings, "Present your scheme for a district. We will give you every help in framing that scheme. It must be for a large area. Let us look how you are going to combine your undertaking; let us look at what money you are likely to find for your undertakings." I believe that by that means, if only the present undertakers are treated with justice and equity, those undertakers will be only too willing to come together to provide schemes whereby the smaller power stations and smaller lighting stations may be scrapped, larger stations combined, the best use made of all the undertakings over different areas, with a desire not only to obtain what they ought to obtain—a proper dividend for those who look to them for a dividend—but a full supply of electricity for domestic, industrial and possibly some day—a long day off I think—agricultural purposes.
It is because the Bill now puts that in its forefront and because I have heard it said in another place that there is the intention to use the present undertakers and to get them together to make the best possible use of their stations, that I for one not only do not oppose it but believe that much benefit may be derived from this Bill, if only the Electricity Commissioners are imbued with the idea that the best thing you could possibly do is to make use of the present undertakers and to make the work attractive to them, and as far as possible, instead of driving out the capital of the private investor, to attract the capital of the private investor to this industry. If you are to do that you must show that you are willing to treat those who have invested in this great and somewhat perilous undertaking as pioneers, with justice and equity.
As the Bill was first shaped and introduced by this Government it was most unfair to the private investor. Those who put their money in electricity, now something like thirty years or more ago, did it 589 on the faith of a Parliamentary undertaking. That Parliamentary undertaking, I regret to say, is not carried out in this Bill, nor anything like it. I am not one of those who would say to the Government, "Oh, but we have got a Parliamentary undertaking which, unfortunately for you, does not suit you at all, and we hold you completely to the bargain." I am quite sure the Government would hold the private investor to his bargain if they had got the best of it. I will not go so far as that or say that the private shareholder or the private investor is in these days to take advantage of a post-war situation. But I do say that if we are to surrender that position, if we no longer hold the Government to carrying out the Parliamentary bargain which was made in a most complete way, we are at least entitled to favourable terms for those who invested their money in this great undertaking.
After all, something like £80,000,000 of money has been found by the public for this industry. I am certain that at the present moment there is nothing more useful to the Government than to attract private money into the various undertakings for which they are making themselves responsible. It is impossible for the Government to go on as they are doing, launching great enterprises without counting the cost, and then themselves to have to finance these great undertakings at a rate possibly of 6 or even 7 per cent. I am certain of this, that high policy ought to induce this or any other Government to attract the private investor so far as they can to great undertakings like electricity. For my own part, I believe still that, although the average interest on the whole of the money that has been put into electricity in London—I speak of London of which I do know —is only a trifle over 5 per cent., if these shareholders knew that they were going to be treated with perfect fairness and equity by the Government there would be millions more of money that would still find its way into this industry, and that investors would be content with a rate of interest not higher than that which the Government themselves will have to offer one day or another, if they are going to obtain the millions and millions of money needed for these undertakings. I am certain that at the present moment this Government ought to establish as far as it can complete confidence in those who have money that, if they put the money 590 into these great semi-State undertakings—because they are that—they will be assured that when the time comes any bargain made with them will be most faithfully kept, and that they, at all events will not find themselves in any way defrauded on the day of reckoning.
I hope I may not be adjudged to be unworthy to speak on this matter because I have been a director of an electric light company for over thirty years. I do not myself think that we directors ought to be disqualified from expressing opinions on matters on which, after all, we must have gained some experience. And at least I beg your Lordships will recognise that, if I am a director of a company, I am, after all, one who has taken a vivid interest in all London life and London interests for more than thirty years, and I am not likely to subordinate public interests to my private interests and private views. When we come to debate this matter in Committee I shall find that I shall be obliged to put down some Amendments to this Bill, and I shall hope then to join in discussing the details of this measure.
§ LORD MOULTON
My Lords, I have been connected with the development of electricity in the public service from the very first, and I have taken so much interest in it that I cannot allow this occasion to pass without expressing my sincere regret that the Government should have taken up the policy which is represented by this Bill. It is the policy which underlies the Bill of which I am thinking most. We heard from the Lord Chancellor a very clear exposition of the meaning of the very numerous, very technical, and very verbose clauses which naturally constitute a Bill of this scope; but all the time I was asking myself, as one of these clauses after another was read, Is that the Bill? And I came to the conclusion that, after reading the whole of the Bill, you found yourself just as far as ever from any expression of what the Bill was intended to mean, and what the Bill would work out to be when it became law. To my mind it is a Bill which shows that the Government have determined to take into their hands a most important industry which has grown into its present magnitude by private enterprise, though hampered at every turn by the Government—I do not refer to this Government in particular, but to the whole official policy with regard to electricity from the commencement. You may say 591 that they are going to nationalise this industry, but to my mind they are going to bureaucratise it; an industry which ought, above all others, to think of the private needs of every manufacturer, and the needs of domestic life, and shape its actions so as best to subserve those interests—that industry is going to be handed over to Government management where there will be that which has always characterised Government management in this country, and I think in most democratic countries—namely, a sluggishness of response to needs unless they get important enough to make themselves felt in Parliament; an absence of initiative in those that have the conduct of it, an absence of that daring which makes industries great; so that the country will suffer from a tardy development of that which the Bill itself regards as so vital—all these will be the consequences of this Bill.
When was the scheme of the Bill brought forth? It was in an Inquiry during the war about something that we ought to do after the war. I think I can appeal to the memories of your Lordships to bear me out when I say that at that time one felt all the burdens of the war and looked forward to a time of peace when we should be freed from them. One of the burdens was the enhanced price of everything. Another of the burdens was the crippling of production by reason of war work. We looked to peace to get back to normal conditions. There was at the time a great idea of reconstruction; that the nation, depressed by the almost immeasurable burden of the war, with its elasticity crushed by it, would suddenly be freed and be its old self. These schemes were sketched out in view of such a Millennium. But the Bill was not brought up then; the Bill is brought up after months of experience of peace. What have we found? We have found that we are crushed with debt, that our power of production is much less than it was before the war, and that the credit of the country makes it a very serious question how to find the money to carry on even the necessary machinery of Government.
In these circumstances is it a wise policy for the Government to take a large and widely-diffused industry out of private hands, and—for there is no concealment about it; the Bill would never have had any popular support if the intention had not been put forward by those who represented the Government—greatly multiply its size, at a time when borrowed money must be 592 found on which to do it? If ever there was a moment when we ought to be chary of buying future benefit with borrowed money it is the present. The tempting bait that has been held out by the Government has been that there will be a glorious development of electricity; that every one, down to the people who live in agricultural districts, will get abundant and cheap electricity thanks to this enterprise of the Government—and the whole of that is going to be done on borrowed money when we have upon us a debt of over £8,000,000,000. Ought there not to have been a reconsideration of schemes like this, which were fashioned when there was a prospect of such a change in the future as that to which the Government had looked forward, but which will have to be carried out in a future when prices are higher than they were during the war, when the difficulty of getting work done is quite as great, and when there is a restlessness throughout the country which makes it unwilling and almost unable to stand any extra strain upon its power of production?
One would have thought, as I most certainly think, that the fundamental policy of the Government should have been to get all the industries which had been languishing during the war into their normal productive condition. The rate of exchange and the need of getting food from abroad make it abundantly necessary that at this moment, and from this moment, the production of the country should be as high as it possibly can be. Is it a wise policy to spend countless millions in schemes which can only take effect years hence, and the pushing of which at the present moment will hamper still more that small command of labour and that small command of production which these industries, these languishing industries, need for their normal development? Surely the policy ought to have been to postpone these grandiose schemes until the normal industries of the country had received that of which they stand in such need.
Would that have hindered any great good to the country which is to come from schemes of electricity like this? On the contrary. We could then have examined their cost. There is no man in this House, or, I should think, in the other House, or, I should think, in the Government itself, who has any idea of what the financial demands will be for carrying out this scheme. If we are to enter into such 593 a scheme, which is an irrevocable step—having once taken the step we cannot go back—which requires undoubtedly hundreds of millions of pounds to carry it out as it was promised by the Government, to give all over England this abundant supply of electricity, you would have thought that, even if we were at the height of our prosperity, we should carefully examine the question of the capital expenditure to which we committed ourselves by accepting this policy. As it is, I am sure I am not exaggerating when I say that there has not been the slightest adumbration of an estimate of what will be the sums of money required. And yet this Bill is brought on to be got through in the first session after the war, when there is—at all events at the present moment there is—almost a physical impossibility to set about the work; instead of being brought on later after there had been mature thought of the cost it would involve.
More than that, it is not merely that the Government have not reflected on the cost. It is quite clear that they have not reflected on the consequences, unless it is their deliberate intention that this industry, which will become—I might say is already—vital to the prosperity of the country, is to fall into national hands and to be worked as a national undertaking. That, surely, is a momentous decision for them to take; and what is it at this moment which justifies such a great change in our policy and entices us to commit this industry into Government hands? I should have thought that any one who carefully considered the industrial condition of the country would say that there never was a moment when it was more important that industry should be brought more closely into contact with the individual than it is now. We have got labour troubles. Every body knows that labour troubles are more formidable and are less likely to be successfully solved when they have to go into official hands than when the individual has to work himself out of his trouble by his own free action. That has shown itself again and again. When I say that, I mean that the rights of the employer as well as of the employed should be fairly determined. I do not call it a success if trouble is quieted by an unworthy abandonment of the position of the employer, any more than if it is quieted by an unworthy abandonment of the position of the employed. My experience during the war has taught me that in these great industries 594 it is important to keep the political element—the feeling that the Government are the only persons with whom you have got to deal—out so far as you possibly can, if you want the ultimate settlement to be a fair one.
Now, to take an industry not specially suited for Government handling—for there is no industry where the initiative and resource and freedom of action of the individual is more important—to take this industry and select it for nationalisation, seems to me to be a thing that requires defence on this occassion, and not the particular clauses by which you acquire a part, or the whole, of a private undertaking. These are the details. The thing that we want to realise and set before our eyes is the policy of which the Bill is the expression, and the policy is that of taking up a huge scheme without considering its finance, and to press it forward without considering the influence it will have in checking the repair to all the ordinary producing machinery of the country which has been rendered necessary by these five years devoted entirely to war work. That is the policy of the Bill.
Further, it is a policy, and to this I do not shut my eyes, of still further complicating our civilisation. There is nothing more true than that the growth of science increases the power of mischief in the individual; although it also increases the power of the community to do good. The individual is terrible now as he never was before. The community finds itself hampered as it never expected to be. Why should we seek in these circumstances, without waiting to see to what extent these troubles are transitory, to make our industrial life more complex? Why should we supply our big towns with the absolute necessaries of light and heat by means of mains hundreds and hundreds of miles long, all of which are subject to destruction by a mere individual fanatic, or in pursuance of a policy of hostility to society. Why at this time, before we have succeeded in making all classes alike realise that confusion is death to the community and death to the hopes of all, should we put ourselves more than ever into a position where the life of the community can be attacked—where its ordinary life can be stopped—by the mischievous action of a few?
Surely in most of the difficulties that come before us in this year of trial the great need of the country is patience. In this 595 case above all, the Government should have waited before pledging itself to an unknown expense and to a task quite unlike anything it was accustomed to. I feel, not that the clauses of the Bill need verbal amendment, but that the policy upon which it is based is a retrograde and injurious step in the history of British industrial life.
§ VISCOUNT MIDLETON
My Lords, I think the House will hardly have been prepared for the character which the debate has assumed since the Lord Chancellor addressed us. Not merely have very strong arguments been put forward with regard to the fairness of the proposals in the Bill—those, of course, are matters which may be dealt with in Committee—but the point that companies have sunk capital under the Parliamentary bargain (which those of us who were in the House of Commons in 1888 know was most carefully considered, and was the result of an Amendment to the Act of 1882 which had been proved to be unworkable) is a serious question, and we now have an impeachment of the Government that this Parliamentary bargain is to be broken in two respects to the disadvantage of companies who raised large sums on the authority of the arrangement then made. That, of course, is a matter which is capable of being amended in Committee.
I do not think, however, that the most sanguine member of the Government can think that the arguments which have just been used by the noble and learned Lord (Lord Moulton) can be met by any Amendments in Committee. It is an impeachment of the whole policy of the Bill—an impeachment not merely on financial grounds but on the grounds of the probable success of the experiment, and on technical grounds which have not, hitherto, been brought forward in either House of Parliament. We all feel that the speech deserves a reply from the Government Bench. There are some of us who would desire to enforce those arguments. Looking at the proposal to spend £20,000,000 immediately under this Bill—the noble and learned Lord suggested that this £20,000,000 is only the forerunner of many more millions, if any sort of advantage is to be gained from the scheme of the Government—I cannot help asking, Ought we not to have this Bill accompanied by facts and figures and estimates which would show that these £20,000,000 and the other millions are not going to be thrown away?
596 We are asked to pass a Bill proposing to take over a great industry which has not proved, as Lord Downham pointed out, very liberal in dividends up to now. It is stated that the whole amount invested in electric companies does not produce more than 5 per cent. at present. I have heard it put at a lower figure. The Bill proposes to pay six per cent. to any company pending its being actually taken over, so that at the outset it is necessary for the public to spend a great deal more than private companies. It is, of course, impossible for the public to work as cheaply as private companies, and the estimate by which it is proposed to give cheap electric lighting for large areas can only be carried out if the Government is able to work at a much cheaper cost than private companies.
I earnestly ask the Government to consider whether, before they attempt to proceed further with this Bill, they should not send it to a Select Committee of this House. I will not move in that direction, but I feel that the arguments which have been used are not to be disposed of by a simple statement of the intentions of the Government, or even by a Division. I think we have a right, in the present most dangerous financial condition of the country, to know what we are really going to get before entering into another vast field of expenditure. The Housing Bill, as we pointed out a few months ago would be the case, is already in the breakers owing to finance. Some other undertakings of the Government are in a similar condition. Are we therefore right in passing blindfold this measure as to which the ingenuity of the Lord Chancellor was not able to frame any sort of estimate? I feel this point so strongly that I beg to move that the debate be now adjourned.
§ Moved, That the debate be adjourned.—(Viscount Midleton.)
§ THE LORD CHANCELLOR
My Lords, I am a little sorry that my noble and learned friend (Lord Moulton) who has made such a powerful speech did not think It worth his while, as is sometimes done with advantage, to inform me of his intention, on the Second Reading of the Bill, to challenge directly the whole principle and policy upon which it is framed. Lord Downham was good enough to communicate with me his intention to speak, and he courteously indicated his degree of difference from the Government. 597 Had I known that the noble and learned Lord, whose experience and authority upon these matters are very great, had intended to challenge most directly the whole policy the affirmation of which is involved in a favourable vote on the Second Reading, I should most certainly not have exposed myself to his criticism that I had explained details of a complicated Bill without spending sufficient time on the championship of the main principle of the measure. I confess that I was misled by the unanimity of every early proceeding in the history of this Bill, by its progress in the House of Commons, by the complete failure of any person or any authority to make any communication to me as to the course of this Bill in your Lordships' House—I was certainly led to the conclusion that as to the policy of the Bill there was no conflict here, any more than there had been a conflict elsewhere.
My noble and learned friend has made his attack. I confess that I should have been prepared and even willing to reply to that attack, and to all the main articles of his indictment here and now; and however little equipped I may be in these technical matters, I do not feel that I should have been lacking in material to do so. If my noble and learned friend had read the Report of the Committee to which I have made reference I make bold to express the opinion that he could not possibly have used a great number of the arguments which he has pressed upon the House; and I was singularly unimpressed by his contention that this Report was made by a Commission—whose ability and representative character he could not challenge 598 —in the year 1918, when the war was not quite concluded. It was made at that date for the express purpose of advising the Government and the country as to the steps which ought conveniently to be taken in the interest of the community immediately on the conclusion of hostilities. Having regard to the attack which my noble and learned friend has made in his speech, which ought to be answered, if your Lordships think you would prefer not to hear the answer which I am prepared to offer here to-day, and seeing that there are others who are desirous of taking part in the debate, I am not prepared, having regard also to the nature of this Bill, on behalf of the Government to resist the desire which has been expressed. Indeed, the Government consent to the Motion to adjourn the debate, and we will arrange that there shall be a full opportunity for considering the points made by my noble and learned friend and any other points which your Lordships may desire to discuss.
§ On Question, Motion to adjourn the debate agreed to, and the debate adjourned accordingly.