§ Debate upon the Motion for the Second Reading resumed (according to Order).
§ VISCOUNT HALDANE
My Lords, those of your Lordships who were present on Wednesday last and those of us who have read in the OFFICIAL REPORT the debate that then took place, must feel grateful to Lord Midleton for being a vigilant watchdog of economy. He is always wakeful about these matters, but I think the noble Viscount was hardly aware of the real purpose and significance of this Bill. Put in a few words, it is a Bill which is constructed for the purpose of greatly increasing the national production of electrical power, largely saving the consumption of coal, and providing means whereby not only production but wages may be very substantially increased.
If I ask your Lordships to bear with me while I make some observations on the Bill, the reason is a very simple one. The genesis of the Bill was in the time of the first Coalition Government—Mr. Asquith's Government. I was asked to undertake the Chairmanship of a Committee which should investigate the serious position into which it was believed we were getting by the enormous wastage that took place in the use of our coal resources. I should not stand here and venture to suggest that anything I have to say upon a problem which is a mixed one of science and of industry was valuable, were it not for one circumstance. As Chairman of that Committee I was there in a judicial capacity. I presided over some of the very first experts in the 674 country on the questions concerned, and also over very prominent representatives both of Capital and of Labour. We had some of the most eminent coal owners on the Committee; we had Mr. Smillie himself as the representative of Labour; and such experts in the chemical aspects of the case as Sir George Beilby, perhaps the greatest authority in the world, and Mr. Charles Merz, an equally eminent authority on the electrical side, who has made a great success in practice in the organisations which have been created under his auspices in the northeastern counties of England. That Committee came to unanimous conclusions; and the results of the deliberations embodied in their conclusions have taken shape in this Bill. I have said this because it will be necessary for me to touch upon aspects of the case for the Bill which have not hitherto been developed in the debate.
We raise in this country an enormous quantity of coal for various purposes—for home consumption something over 180,000,000 tons every year. A further amount, a large part, goes for export; a considerable part to domestic consumption; another part for a series of purposes which are not connected with industrial power, and not less than 80,000,000 tons for the purpose of developing industrial power. To cut a long story short, the result of the investigations of the Committee was to demonstrate that we could get the same motive power in our industries from 25,000,000 tons of coal as we obtain from 80,000,000 tons. Think of that! Rather less than one-third of the coal would give you all the power you have to-day. The reserves of coal in this country, although large, are not inexhaustible. We have in reserve to-day something like 580 times the amount of coal we get out every year—your Lordships must not run away with the notion that this suggests something inexhaustible so far as this generation of humanity is concerned—that is, coal which is not deeper than 4,000 feet. But 4,000 feet is an enormous depth to work. The cost of working becomes progressively greater, the difficulties from temperature and mining increase, and the coal in prospect is much dearer than the coal you have at present. One of the advantages which the United States of America possess in this respect is that so much of the coal is still on the surface. We have worked out our surface coal, and the result is that the price of coal is constantly increasing.
675 It is therefore in the highest degree desirable that we should economise in the consumption of coal. I do not for myself leave out of sight that probably in the course of the next fifty or one hundred years other sources of energy will become available besides coal, and in that case the demands on the mines will be progressively less than they are to-day. Still, it is of great importance that we should use our coal to the greatest advantage. I have told your Lordships that according to the investigations of the expert Committee, which worked for nearly two years, we could get for 25,000,000 tons the power for which we now use 80,000,000 tons. Suppose we still go on using much more than 25,000,000 tons. Suppose we use 75,000,000 tons. What then? In addition to an enormously increased production we should have about three times the amount of very cheap power available; and if every workman had even double the power at his disposal that he has to-day his production and his wages would be greater. That is one of the reasons why the Labour Party is in favour of the general principle of this Bill. Nobody ought to be pledged to details in a matter so technical as this.
How is it that the great wastage to which I have referred arises? I will tell your Lordships very shortly. At the present time we generate motive power for our industries—I include large installations of light—from about 600 generating stations, which have sprung up wherever convenient all over the country. I am speaking, not of private generating stations, but of public stations. The calculation of the expert Committee was that the work could be done far more efficiently with sixteen generating stations. I do not pledge myself to that figure; nor do I suppose the Committee would desire to pledge itself. It was the closest we could work out. But, at any rate, the number of generating stations would be enormously fewer than under the present system, and even if they amounted to thirty it would be a great reduction as compared with the number at the present time. These great new generating stations, on which the industry of the nation would largely depend, would not be left to hazard. The country was mapped out. A study was made of the most fruitful coal fields and the best waterways, and it was proposed that great super-power generating stations should be put down as close as possible to the coal 676 fields, and, if possible, where there were waterways which might carry the coal cheaply and easily. There were more reasons than one for this. A great wastage arises at the present time from the coal having to be conveyed by railway to the small generating stations dotted about the country, to the number of 600. It is very expensive. Railway freight is a substantial item. In the second place, the coal deteriorates in transit and there is a good deal of small coal which does not pay to load into trucks. By eliminating much of railway carriage you eliminate, to a large extent, an important factor in the wastage of coal and its extra cost at the works.
That is not all. With great super-generating stations it is possible to erect works for obtaining the by-products in a very different fashion from that which obtains to-day. You may produce your coke at less cost, and secure a number of by-products which we lose to-day. You would also be able to produce gas. One of the reproaches against the Bill is that it does not take account of the gas industry. It is a great mistake. Nobody desires to hurt that industry; nor does anybody think that the principle of the Bill, even if carried into operation, would injure the gas industry. Gas is produced in a costly fashion at the moment; we have not adopted the principle of generating gas at large generating stations and sending it at high pressure long distances, which obtains in Canada. I think I have said enough to show that the gas problem was not left out of account, both in respect of the production of gas proper and in respect of by-products, which are a very great source of revenue if you can obtain them in their full variety and quantity.
I turn now to what is another aspect of the matter. You get the power at these great power stations, you carry it along underground cables, which are well fenced in, and you are in a position to electrify not only industrial works but the great railways. I remember Sir Guy Calthrop, who was the general manager of the London and North-Western Railway, and who was a member of my Committee, saying "As soon as this comes into operation the London and North-Western Railway will have an eye upon its own electrification." That has not been waited for. The North-Eastern Railway Company has done a great deal in electrification, and 677 according to the newspapers proposes to do a great deal more. Mr. Charles Merz, a distinguished member of the Coal Concentration Committee, who has been an enthusiast about this problem, himself created in conjunction with great men of business in Northumberland and Durham a system of power stations for producing power of the kind of which I have spoken. What was the result? Not only have the works and the collieries taken power from that source, to their very great profit, but the North-Eastern Railway Company runs its local line on the electrical system, and are now proposing to extend it to the main line. Why? If you take the figures of cost for the production of power in these two north-eastern counties where they are served by this new system, and compare them with the actual charges in Lancashire, where private companies with small generating stations produce the power, the contrast is startling. What costs a fraction under ½d. per unit in Northumberland and Durham costs about 1½d. on the average in Lancashire—three times as much. There is the very confirmation of the figures which I have been giving—of the result of producing electrical power on a large scale at the pit heads; and it is the more impressive because, owing to the absence of legislation, it was not possible in these two counties to carry out the, system with the full advantages which there, would be were the provisions of this Bill embodied in an Act.
So much for the plan which underlies this Bill and really is its genesis. The purpose of what is proposed is, as I have shown your Lordships, very largely to increase the productive power of the workman in this country and of the works, and we are not too soon in turning our attention to this subject. It has been done extensively in the United States. In Illinois and in the neighbourhood of Chicago works of this kind exist on a large scale. Our fellow subjects on the Rand, in South Africa, have developed the same kind of system. In Germany, in Westphalia, it is done on a large scale; and in these places its success has been such that the testimony is unbroken to the enormous increase of output which they get at a reduced cost. Here the British workman on an average compares with the American workman in this way: The American workman has 56 per cent. more motive power at his disposal than the British workman. He is at a great advantage. He gets 678 larger wages and puts out more on the average, and the explanation is a simple one—he has a cheap form of energy available in practically unlimited quantities.
We have never really thought out the electricity question in this country. We have left it to private enterprise. I have read the speech made by my noble and learned friend Lord Moulton against this Bill when it was under discussion last Wednesday. My noble and learned friend is a master of the application of science to industry, but there was nothing about the application of science to industry in his speech. It was entirely directed to the plea—Let our private industry go on, to interfere with it is very bad; and he denounced the Bill as bureaucratic, and used other observations calculated to appeal to your Lordships' sympathies against undue interference by the Government. I hope that I have put before your Lordships one or two indications which prove that he was ignoring the immense case for this Bill. What does the nation require more than anything else in the days which are ahead? Increased production is the thing which we are all talking of. Yet when a Bill comes up which, if it is worth anything, is valuable for the facilities which it affords for increased production, the first thing which we hear is a plea for the existing state of things, because it is not good for the State to interfere. I am against State interference whenever it can be dispensed with, but there are occasions when systems grow up which are so antiquated and bad, and yet are on so large a scale that it is impossible for the private individual to rescue himself from them. That is the system with regard to electric power to-day.
In whose interests is this Bill brought in? It is largely in the interests of the consumer. I dare say there are producers who make good dividends, but I believe they will make better dividends with a better system. But be that as it may, if we have only to consider the interests of the consumer, he is the most important person with whom we are concerned, because unless the consumer is able to get motive power for his works, and light and heat for his house, on a reasonable scale, it is useless for us to talk of the conditions of this country with regard to production as being conditions which we are in earnest in trying to set right.
679 I have spoken of the Committee with which I was concerned, and if it rested there your Lordships might say, "That is a body of cranks who have sat together—people with a special idea which they wish to push"; but our conclusions were considered by a Committee which was sitting at the same time. Sir Charles Parsons, the inventor of the turbine system, presided over a Committee for the Development of Electrical Tools and Machines, and Sir Charles Parsons endorsed our conclusions. Then the Board of Trade, anxious that in a matter of such enormous importance there should be no mistake, referred the subject to a special Committee presided over by Sir Archibald Williamson. That Committee again endorsed our conclusions. Then there were a series of negotiations. I myself saw much of Sir Albert Stanley, then President of the Board of Trade, on the subject. He took the keenest interest in the matter, for very good reasons. In London, as your Lordships know, there are an altogether undue number of generating stations on a small scale. They are small and extravagant, and we pay enormously too high prices for both light and power; but there is one very efficient one and that is the electrical generating station at Lot's Road, of the Underground Railways, of which Sir Albert Stanley was and is now the controlling head. The Lot's Road station is an example of the kind of power station which we want to have here. Sir Albert Stanley, whose experience was not only derived from this country but from America, where he used to be, is a very keen supporter of this Bill. It has now passed into the hands of his successor. It has been sifted, it has been re-cast, it has been tested in the light of criticism, and there it stands after the long sifting which it had in the other House as the only measure of a practical kind which is brought forward for increasing the production of this country so far as power is concerned.
The Bill does something more, if it is anything more than a vain delusion, than reduce cost. Your Lordships may not be aware of other sources of waste which are operative to an enormous extent in this country. The coal as it is used to-day is not used at the pit head to generate electricity, but is taken by rail to various places—small towns and great—and there it is put into the steam engine and used to generate motive power directly from the steam engine. The steam engine is one of the most wasteful forms of creating 680 energy. It wastes by far the greater part of the energy which coal furnishes to it in the form of heat—a form of energy which is no good for motive purposes. But it does more than that. The furnaces only partly consume the carbon of the coal, and the result is that power in the shape of unconsumed carbon is to be found all over the neighbourhood where the engines of the furnaces are operating. Elaborate calculations have been made in regard to this, by which it has been ascertained that Manchester and Salford, which have about a million inhabitants, are put to an annual cost for cleaning due to the imperfect consumption of coal in the furnaces of no less than £1,000,000 a year. In Chicago it has been calculated that the cost imposed upon the citizens by reason of the inadequate system by which coal is still consumed directly is £8,000,000 a year. Very careful researches have been made into that subject in the United States. I have given your Lordships another source of economy. If heat could be furnished by electricity not merely for power but for domestic use, and if gas could be furnished at high pressure and on improved principles in the way that I have been suggesting, then the private householder would be very much better off than he is at the present time.
I remember going into the office of a colleague of mine on this Committee and being very much impressed by what I saw. He was a man of great inventive genius. What impressed me was the wonderful fires that I saw there, and the wonderful light, and I said "Dear me, I am surprised that you burn coal still." Oh," he said, "look close." I did so, and found that he had ingeniously introduced electrical wires into blocks of quartz, and got light, and glow and heat analogous to that you would have from coal; and he said: "I am bound to tell you that it is rather extravagant. I have to pay in London something not very far off 2d. a unit for this, and I produce it for myself in the north at under a ½d. a unit, and the only thing I can say for myself is that I save very nearly the amount I spend, in dispensing with charwomen and cleaning which I should have to pay for if I burned coal." That is an illustration of the far reaching field of these reforms. It is not merely industrial power —though I think that is most important—but it is the better conditions for the household—conditions the extension of which we cannot yet see, but which will be 681 great as soon as the matter becomes a practical one.
I have put before your Lordships what is really the essence of the reform contemplated by the Bill and proposed to your Lordships by my noble friend on the Woolsack. It is a Bill either to reduce the present consumption of coal for industrial motive power to a third, or, if all the present consumption of coal is used, to produce three times the power which we get at the present time. For myself I prefer the second alternative. We shall then get increased production, increased wages, and we shall have in the end I think very much better conditions in the home as well as in the factory. Of course this proposition is one of enormous difficulty. It covers so large a field, so much has grown up, that the private person cannot help himself. To my knowledge already in the north of England, in the districts where electric smelting is required on an ever-increasing scale and where the steel industry is a main industry, the steel manufacturers are combining together and trying to supply themselves, because even they find it very difficult to give employment to a super-power station on such a scale and at such a place as would meet the necessities of the case. They are clamouring for it, and some are trying to do it without the aid of the State, but if the aid of the State is to be at their disposal then it become, possible to do this upon a very large scale and to do it for the benefit of everybody.
Having said so much about the foundations of the Bill I will, if your Lordships will bear with me for one or two minutes more, say something about how the Bill proposes to carry this into operation, because on that ground I think that there is a certain amount of misapprehension. First of all about money—and I will come to that again in a moment—there are two sums of a very large amount proposed to be made available, one of £20,000,000 by the Board of Trade, and the other £25,000,000 advanced from the Treasury. I have looked carefully into the security for this, comparing it with the revenues from actually existing works, and I do not think that there is a single penny of that vast expenditure which ought not almost certainly to come back to the State. Of course if it is very badly managed I admit that you cannot secure that. If the Government does very foolish things then it will be the Government that is responsible, 682 but the principle and the business arrangements of the Bill are such that all that money ought to come back. Therefore, so far from regarding this as an extravagant Bill I look upon it as a Bill which does the minimum in the nature of financial guarantee which is necessary—but only in the nature of guarantee—to enable the great companies and the great producers to pool together and come under a common roof.
What is the truth about the Bill? The first principle is to set up Electricity Commissioners. They are to be five—three experts, and two people of public standing. That ought not to be an expensive body so far as the State is concerned, because the salary and expenses are to come out of the industry, and as that is already a going concern there ought not to be much difficulty under that head. But what are the Electricity Commissioners to do? Your Lordships will find an answer to that if you look at the group of clauses beginning with Clause 5. They are to survey the country, and to divide it into provisional districts. When they have selected a district—which ought of course to be a district with access to a great coalfield and also with access if possible to waterways —there is to be a local inquiry if there be questions as to whether the boundaries they have selected are the best, and when they have a district settled in this way one of two things may happen.
In the first place, opportunity is to be given to the producers of electricity—and not only to the producers but to the consumers concerned—to the great railway companies and to the public, for forming voluntarily what is called a local electricity authority (quite a different thing from a local electrical board) which will manage the thing. There was such a desire felt in connection with this Bill to let people manage their own affairs as far as possible that this scheme was hit upon after inquiry inviting the people within the district, when it was once settled, to form a local electricity authority, which is a voluntary association but, when founded, will be incorporated and will have the powers with which this Bill proposes to arm it. Supposing they cannot agree, then the Electricity Commissioners will form a district electricity board, again with representatives of the interests concerned, producers amid consumers alike; and that board will be more of a local government character and it again 683 will have the power which the Bill proposes to entrust.
Then the authorities thus constituted—and your Lordships see that the voluntary principle is left free to operate in the constitution of the authority—a duty is imposed on the board to obtain an abundant and cheap supply of electricity to be constantly available. And the method by which that is to be done is by the substitution of these great super-generating stations for the small generating stations in the neighbourhood. The great generating stations are carefully preserved for the electricity authorities or board. The rest of the works are not interfered with. The provisions of the Electricity Acts 1882 and 1888 are the provisions which regulate the terms concerning it. No doubt we shall hear that the terms are very careful terms in the interests of the State, but before we come to any conclusion about that it will be well to look to what are the existing regulations on the subject—the old Electricity Acts and the terms which they impose. That is a matter for Committee, and it is not a matter with which I propose to trouble your Lordships at this moment.
Another provision of the Bill is that the Authority, whichever it is, voluntary or compulsory, is to devote itself to the recovery, by the most scientific processes available, of by-products. There is to be research. We have not waited for that. Following upon the Report of the Committee of which I was chairman, the Government have created the Fuel Research Board, over which Sir George Beilby presides, and which has worked out an enormous amount of information upon byproducts. We had, in that respect, very great help from some of the most eminent gas producers, and I have no doubt that the mass of knowledge which is now accumulated will be found to have anticipated a good deal of work which it is proposed should be done by these electrical authorities.
I come now to the question of finance. It is intended that this system should be wholly self-supporting. In order to enable the local authorities to build the great generating works, and in order to get over temporary financial difficulties it is proposed to lend a sum of £25,000,000, or, at least, to guarantee the interest and sinking fund on money borrowed up to that amount. That may be necessary, or it may not be necessary. It may have to be 684 exceeded. That will be a question for Parliament hereafter. All that we are concerned with at this stage is to see that a right amount, and not an excessive amount, is made available and that security is provided for that purpose—the security, of course, of the rates and charges already levied for the purpose of obtaining electrical power. Then the Board of Trade, in order to prevent delay while things are being got into order, are enabled to advance a sum of £20,000,000, a sum which, again, is to be recoverable, to be repaid, interest and sinking fund, and which is only to be applied in case some delay arises in dealing with the necessities of the district, owing to the incapacity of the local authority for getting itself on to a proper footing.
What will be the result of this Bill? No man can look into the future. I cannot stand here and assure your Lordships that it will turn out exactly as I have suggested. But I think it will, and I think so because I have given as much time and study as I could, and I have kept as closely as I could to the figures. Still, we are in a region where you are looking into the future and where we cannot be sure. But the one solid, basic fact which we have, and about which there is no doubt, is that this Bill will increase the production of this country enormously if these provisions are carried into effect. It is estimated by those concerned that there will be a saving to the country—not only an industrial saving but a saving in wastages— of not less than £100,000,000 a year. That is a round figure, but I went pretty carefully into it at the time and I am bound to say I did not think it was an over-statement. It was worked out by those very familiar with the matter. Some items may be questioned, other items may have to be added to, but this is unquestionable, that a great change of this kind cannot fail to produce great results.
We are face to face with this proposal, which comes up for Second Reading. I earnestly hope that your Lordships will be disposed to give the Bill a Second Reading. I am no member of the Coalition Party. I am perfectly independent. I am a Liberal, but I am more interested in dealing with this tremendous question of production than I am with almost any other problem in public life. I look upon this Bill as the first and most practical step that has been taken to do something really great in this direction. And I look upon it as a proposal the principle of which is unexceptionable. 685 The provisions of the Bill are certainly good enough in themselves to merit consideration in Committee if the principle is once accepted.
There was a suggestion that the matter should be referred to a Select Committee. I should deprecate that almost as much as I should deprecate the rejection of the Bill on Second Reading, because time presses. Your Lordships cannot realise, unless you compare industrial conditions here with industrial conditions in the United States, the peril we are in from antiquated methods and from slowness in getting to work. This Bill was not received in at all too unanimous a spirit in the House of Commons, but it passed through there really unscathed. Many changes —whether improvements or not—were made in Committee. The Bill got a thorough sifting, and it comes up to your Lordships after much consideration. Under these circumstances I earnestly hope that your Lordships will think fit to give a Second Reading to a measure which extends far beyond the question of to-day, and involves deeply the future of this country.
§ LORD INCHCAPE
My Lords, I have nothing whatever to say against electricity. I believe it will have a great effect, as the noble Viscount said, in increasing production in this country. But I feel obliged to associate myself with what fell from Lord Moulton the other day when this Bill was under discussion. No man has done more to serve the nation throughout the war than Lord Moulton. No man has had greater experience of the working of industry by Government Departments. I do not wish to dogmatise, but I hold that the backbone of the success of this country has been in the past, and will be in the future, not Government control or nationalisation of industry, but individual enterprise and initiative.
Here we are to-day at our wits' end how to get rid of the enormous floating debt which is round our necks, falling due every day. At the present moment we have short-dated Treasury Bills outstanding to the amount of £1,089,000,000; we have advances under Ways and Means of something like £259,000,000—money borrowed from the Bank of England; we have Exchequer Bonds falling due within the next two months to the extent of £141,270,000; in March we have £21,500,000 falling due; and in December 686 next £49,500,000. Altogether our short loans amount to not less than something in the neighbourhood of £1,500,000,000. As far as I am able to judge, if this Bill becomes an Act all the electrical undertakings of the country will eventually be nationalised and practically the whole of the electricity of the country will be in the hands of the Government, with great cables everywhere which, if I mistake not, may prove at times a considerable danger as it will make direct action infinitely easier.
Apart from this, I regard with considerable alarm the expenditure on the part of the Government which the passing of this Bill will involve. Government securities are falling daily and are now on a 6 per cent. basis. The American exchange continues to go against us; and whereas it took nearly five dollars before the war to purchase £1 sterling it now takes less than four dollars. The Chancellor of the Exchequer is constantly urging the Members of the House of Commons not to countenance measures which will involve him in further borrowing, and yet we have before us to-day a Bill which will necessitate borrowing—immediately, I take it—from £20,000,000 to £30,000,000, and eventually anything from £100,000,000 to £250,000,000. To launch out on a capital expenditure of this amount on electrical plant at a time of greatly inflated prices, would, I suggest, be extremely bad business and not likely to provide us with the cheap electricity which it is supposed that Government administration of the industry would ensure. The deeper we get into debt the more are we disposed to spend. It is a veritable Rake's Progress. We seem to have lost all sense of proportion; we are embarking on schemes of all kinds irrespective of whether they are economically sound or not. I have been an optimist all my life, and I am so still. I have never hesitated to spend £1,000,000 if I were satisfied that it would bring in £2,000,000 —but I have always been careful to see that the £1,000,000 was there before I committed myself. In this case the Government would be entering on a project which had cost £100,000,000 or £200,000,000 with a bank rate of 6 per cent., with 5 per cent. War Loan £5 below the issue figure; with prices of material on the summit of the wave, with £1,500,000,000 worth of Government Bills falling due, and with the money which they will have to borrow being worth to-day probably 687 only one-half what it will be worth when they have to repay it.
So far as I can judge, no well and thoroughly-thought-out scheme has been propounded to show what the return will be. The noble and learned Viscount puts it at something like £100,000,000 a year. That will never be seen. It is purely problematical; it will never be shown in the balance sheet of this Government scheme. All we are promised is cheap electricity. I do not believe we will get it. So far, anything provided by the Government has not been cheap—as a rule it has been rather nasty. Look at, or perhaps I should say listen to, the telephones. This scheme means more Government offices, more jobs, inure fat Government appointments, at the very time when the country is crying out for reductions and when the Government is endeavouring to reduce all round. Speaking as a business man, my advice to your Lordships is to leave the supply of electricity to private enterprise, surrounding with proper safeguards any concessions which may be granted. Do not commit the country to a huge expenditure involving more borrowing which will further depreciate Government stocks and which may land us in financial disaster.
Look at the fiasco of the house-building programme. We are now reduced to an attempt to borrow from the small towns and villages at 5½ per cent. How much money will be obtained in this way? I think I am safe in saying that it will be only a drop in the bucket. That we should contemplate the raising of money required for this project at a time when a Lottery Loan was seriously considered in the other House—which Loan, if it had been adopted, would have damaged our credit all over the world—when the question of a Capital Levy or a forced loan is being spoken about, is beyond my comprehension. In my humble opinion it would be unspeakable folly to deprive the people of the capital which they have invested in legitimate private enterprises in order to put it into this Government scheme. The Prime Minister said at Manchester, only the day before yesterday, "The life of the nation springs from individual impulse and energy." Why, therefore, should the Government burden themselves with this gigantic undertaking? Why does it not do as America has done —namely, give free scope to private enterprise 688 to provide electrical power for the industries of the country and for the use of the citizens?
§ LORD ERSKINE
My Lords, I think it is very fortunate that another day has been given for the discussion of this very interesting and far-reaching Bill, one of the biggest measures that your Lordships' House has had before it for some months. I listened with the closest attention and interest the other night to the speech delivered by the noble and learned Lord, Lord Moulton, who is one of the greatest living authorities on the question of electric supply, and I felt, as he unfolded his arguments, that noble Lords became convinced that an important Bill such as we were discussing needed the closest scrutiny and could not be adequately and fairly debated in the few hours we had at our disposal last Wednesday night.
In my humble opinion, this Bill is unnecessary at the present time, unfair in many particulars, and distinctly dangerous. I consider it unnecessary at the present time because it will entail the expenditure of many millions of pounds—many more millions than those mentioned by the noble Lord, Lord Downham, in his interesting speech the other night—at a time when we are literally staggering under the weight of our financial obligations, and when every penny we possess should be spent on building new cottages and houses or in repairing old ones, or in putting our country roads in order, or in reconstructing our industries after the terrible war through which we have just passed. If we embark on this enormous expenditure we shall have to employ thousands and thousands of men who could be more usefully employed; we shall be using tons and tons of materials that could be used in the method and manner I have named; and, when all is said and done, even if we do proceed on the lines of this Bill, there is absolutely no guarantee that the public will get cheaper electricity or more efficient electric power.
I consider it unfair since there is a double breach of Parliamentary bargain, because under Section 2 of the Electric Lighting Act, 1888, these electric supply companies are entitled, if purchased, to the following terms at the end of their tenure, which tenure is guaranteed under this section for a minimum period of 42 years—namely, the then value of all lands, buildings, works, plant, and material suitable to and used 689 for the purpose of their undertaking, such value in case of difference to be determined by arbitration and such value to be their fair market value at the time of purchase without any addition for goodwill. The Bill provides, under Clause 7, subsection 2 (b), that existing generating stations and main transmission lines belonging to a company working under Provisional Orders can be taken over compulsorily forthwith by a new authority under the Bill, on the terms of paying such sum as may be certified by an auditor appointed by the Electricity Commissioners to have been the costs of lands, buildings, plant, works, etc., suitable to and in actual use, less depreciation.
It will be seen that there is here a double breach of the Parliamentary bargain— firstly, compulsory acquisition of generating stations before the, expiry of the minimum period guaranteed under the Act of 1888; and, secondly, the price to be paid for these stations is much less than the companies would receive if the terms of the Act of 1888 were applied. The companies had the legal right to expect that they would not be disturbed during the full period of this concession, and their capital has been raised on this assurance. Are these companies to receive no adequate consideration for all the pioneer work they have done in the past, carried out by private enterprise and private capital? They received very little encouragement from the local authorities, who would not allow them to obtain electric supply powers within their areas, nor would they undertake the task themselves. The consent of a local authority to the granting of a Provisional Order was a necessary preliminary condition.
A. further defect in the Bill is the unequal treatment meted out to power companies in respect of that portion of their undertakings working under Provisional Orders and to electric lighting companies also working under Provisional Orders. In both cases the Orders are granted on similar conditions, are identical as to tenure and purchase, and are governed by Section 2 of the Electric Lighting Act of 1888. Yet the Bill provides that in respect of Provisional Order undertakings worked by a power company the terms of purchase are to be the fair market value as a going concern, subject to arbitration under the Arbitration Act, 1889. In the case of electric lighting companies working under 690 similar Orders the purchase terms, as already stated, are to be the amount of the capital expenditure properly standing in the books of the company as certified by the Board of Trade auditor. This differentiation between power companies and electric lighting companies in respect of an identical asset is absolutely unjustifiable, and no good reason for it has been put forward by the Government. Many electric lighting companies are to-day in fact power companies, seeing that over 90 per cent. of their total output is used for power purposes; and further, many electric lighting companies are distributing through a number of undertakings over a number of separate areas, and in some cases the total area is equal to that of some of the power companies.
I consider the Bill dangerous because it leads distinctly down the hill marked "Nationalisation." It is nothing more nor less than a flank attack on the citadel of private enterprise. If this Bill is passed, unless radically altered, Labour may well raise a shout of triumph. It will place the whole supply of electricity in this country in the hands of municipal and local authorities who, I think, are the handmaidens of the Labour Party. I earnestly trust, therefore, that. the Bill will go to a Select Committee of the House, when the full glare of publicity will be focussed upon it, its defects made bare, and breathing time be given so that the country may determine whether the expenditure of these vast sums of money is justified at a time when we are simply borne down by the weight of our financial obligations.
§ THE MARQUESS OF SALISBURY
My Lords, I can assure the noble and learned Viscount who sits behind me (Lord Haldane) that we have had no desire whatever, in the hesitation which we have shown in respect of this Bill, to oppose ourselves to any necessary modification in the law with a view to producing greater power and greater effect from electrical development. On the contrary, I think all of us recognise that some measure is required in order to give power for the purpose (if I may use the word) of "co-ordinating" electrical undertakings in this country. So far as I am concerned I should not attempt, even if I had the capacity to do so, to discuss with the noble and learned Lord the scientific part of his argument. He is a master of the subject, and I know 691 that he has given, as he always does, an immense amount of time in a most public-spirited manner to the consideration of the scientific side of it, and he loves to allow his mind to dwell on the great prospect of reform, without, perhaps, that close attention to the details by which these reforms are to be carried out which we should have expected from the legal mind.
The noble Viscount told your Lordships that this subject had been under the consideration of the Committee over which he presided, and under the consideration of Sir Archibald Williamson's Committee. That is perfectly true. But I do not think either of the Committees dealt with the details of this Bill. They dealt with the great advantage of co-ordinating all electric power, how it ought to be developed; but they did not deal with the details, and the details seem to me to be of the very greatest importance in such a Bill as this. Those of your Lordships who have listened to the debate will have become convinced that there is a prima facie case for the contention that this Bill will entirely crush out all private enterprise in electrical development. I know that this is not the intention of the noble and learned Lord. I caught a phrase of his in which he said that he hoped private enterprise would have every opportunity under this Bill of going forward, but unfortunately the terms, so I am told, would crush out private enterprise altogether.
It is alleged that there is a breach of Parliamentary bargain. These Provisional Order companies were assured of a certain undisturbed life, and that life is to be arbitrarily and prematurely cut short. That, of course, is a tremondous deterrent to private enterprise. It is said— I hope you Lordships will not think I am qualified to confirm the accuracy of these contentions —that the terms which are offered are unfair, and of such a character as to deprive many of these companies of the capital which they thought belonged to them. I will not go into the financial details, but it is contended that they are to be compensated upon the terms of money as it was before it fell in value, and that what they will get will be the depreciated money. This, it is urged, is very unfair, and on the face of it seems to be unfair. If such an injustice is done by Parliament it would, of course, be fatal to private enterprise. Lastly it is said that under the Bill there is a power in the district board to take over 692 all private enterprise, and that this will constitute a "Sword of Damocles," hanging over the heads of these companies. The result will be complete stagnation of development; no one will put one half-penny into the business of developing electricity on private lines.
These are serious contentions. They have not been investigated; they have not been the subject of consideration by any Committee except, of course, the Committee of the House of Commons. No Select Committee has considered them, no Departmental Committee; and no technical investigation into these terms has been held. The result is that, not in respect of the principle but in respect of the terms of the Bill, it seems to be generally condemned by all the interests involved. I read the Report of Sir Archibald Williamson's Committee, but it does not recite the evidence which was submitted to it, and one is deprived of knowing what the tenour of the evidence was unless one reads the evidence itself.
I have been much struck by the communications from a large number of the interests involved which have been made to me personally since this Bill was under consideration last week. A letter was published in The Times by Mr. Garcke, the President, of the British Electrical Federation. He said—The Bill, however, is not wholly bad.… The good parts of the Bill relate to the appointment of independent Commissioners, with power to examine the whole situation and to deal with, or empower others to deal with, particular proposals; the remainder of the Bill is awful from every point of view—national, municipal, and private enterprise.The companies responsible for producing electricity can be placed in three categories —Provisional Order companies, power companies and municipal corporations. May I read an extract which has been submitted to me on behalf of the power companies? It is as follows—Shortly the effect of the Bill in its present form, if it should become law, will be that the electricity companies will be left, perhaps in some cases for many years, in a state of uncertainty as to whether they are to continue to be the owners of their generating stations and their undertakings, or are to be deprived of their property upon inequitable terms. Such a state of affairs will make it impossible for the electricity companies to offer adequate security to attract fresh capital, and will consequently prevent any further development. The Bill, if it becomes 693 law, will have the effect of eliminating private enterprise in the supply of electricity in this country.The Provisional Order companies, or those who speak in their name, refer to the resolutions which were arrived at by Sir Archibald Williamson's Committee, and say—But the resolutions above mentioned do not necessarily entail district boards. The witnesses cannot be taken as being in support of this method of administration, as the same was not, so far as can be ascertained, the subject of their evidence.…The Bill as now before the Lords differs from the Williamson Report in the important aspect of discouraging private enterprise; in fact, in almost driving it out of business.The Association of Municipal Corporations, of which I have the honour to be a member, have submitted to me this official statement—They [the Association] are, however, extremely doubtful about the financial provisions of the Bill, and particularly the financial position of the proposed district electricity boards. These boards will have to raise a very large amount of capital, and although power is taken for the Government to lend money to them the amount would, of course, be wholly insufficient to meet the requirements of the country. The boards, on the other hand, will have no rating powers, and it seems to be very doubtful whether they will be able to offer a sufficiently attractive security to enable them to raise the money they require.So that none of the people now engaged in electricity accept the provisions of the Bill. That is a most formidable thing—that your Lordships should be asked to assent to a Bill in a few days without further inquiry, to assent to provisions which have never been inquired into, and which will have the effect, according to these great authorities, of destroying private enterprise in the whole of the electricity development, and of establishing a financial system which it is alleged is quite unworkable.
I think I have said enough to show that your Lordships will be well advised at any rate to pause before you agree to such a measure. I do not want to dwell upon the points which have been so ably put before us both last week and to-night. The noble Lord, Lord Inchcape, is a great commercial and industrial authority, and he has spoken in terms of very great solemnity of the financial position of this country and of this new commitment which is being proposed. A hundred and fifty millions more money are to be raised! Why, my Lords, how can we fit that with the professions of economy which we hear 694 from the Treasury Bench? How is it possible for us with a light heart to assent to this policy of adventure in finance? I should have thought that the contemplation of the situation of housing finance at this moment must make the Government very uncomfortable. How is the money to be raised for the housing? How are the localities to raise their part of it? I really do not know, my Lords. I doubt whether the local investor is going to be attracted by it, and then, as my noble friend behind me said in a very useful contribution to the debate, these sixteen gigantic power stations which it is proposed to erect involve the building of a great new plant.
I know that my noble and learned friend will admit that. Where are they going to get the great new plant from? Where are the bricks coming from? Who is going to build them? How can we do it? We have got to build 500,000 cottages. How can we do all these things at the same time? When the noble and learned Lord (Lord Haldane) sat on his Committee they were days when we were sanguine. Everything seemed to be possible to people who spent without winking £7,000,000 a day. That was the champagne period. Now we have got the headache, and we must remember that what seems in our cups to be quite possible does not seem quite possible next morning. We must pause, my Lords, before we allow ourselves to be hurried into these heavy commitments and may I just say one word further? After all the very essence of this Bill, upon the very face of it and in the text of the Bill, is the supply of cheap electricity. But if you cannot raise the capital money except at very high interest, how are you going to supply cheap electricity? Of course heavy capital charges, and the interest you have to pay upon them, will affect the cheapness of the supply unless, indeed, electricity is to be the subject of a subvention from the State, like the railways or bread. That, of course, might be the proposal, but that would be, my Lords, only a proposal for one further step on the downward path to bankruptcy. Therefore my Lords me must pause.
Your Lordships were discussing the other night whether the people of this country were as sure, even the most extreme of them, of the advantage of a nationalised system, as they were a few months ago. I believe there is a great change coming over the feelings of this country, even 695 amongst the extreme members of the Labour Party. They are not sure that nationalisation is the best method of dealing with great public enterprise. If it be true, which is alleged, that this Bill will have the effect of crushing out private enterprise, then we are engaged to-night, if we pass this Bill finally, in producing in the case of electricity a system of nationalisation. Let us pause before we do that. I think I have said enough to show that although we are fully in sympathy with some necessary legislation for co-ordinating electrical effort and for removing obstacles which lie in the way of its proper progress, yet we do not feel prepared without further consideration to assent to all the details of this Bill. That, of course, would lead necessarily to the conclusion that speaking for myself I should not advise your Lordships to oppose the Second Reading of the Bill—by all means let us assent to the proposed legislation upon this subject which is required—but it does lead to the conclusion that at a future stage we may have to ask your Lordships to take what steps may seem good to make those necessary inquiries before we assent to the details of the Bill.
§ LORD ASHTON OF HYDE
I will not detain your Lordships very long, but I do not think I entirely agree with the noble Marquess who has just sat down in thinking that this Bill will completely destroy private enterprise. I agree that it may, and very likely will, take all the bulk supply of electricity gradually out of the hands of private enterprise, but there is a great deal of difference between bulk supply and the distribution of electricity, and although I believe the bulk supply will gradually come into the hands of the public, authority, at the same time I think there is still ample room under this Bill for the distribution of electricity to remain in the hands of the smaller companies, as it is now.
I must say this about the Bill, that I think it is premature. I agree with the noble Lord, Lord Inchcape, in what he says as to the serious problem of raising the very large amount of money which will be required for the purposes of this Bill. The noble Lord, Lord Downham, told us the other day that at least £150,000,000 would be wanted for setting up these sixteen power stations and supplying electric mains to convey the power to the various districts. That is an enormous amount of money to 696 raise at the present moment. I therefore I think from that point of view that this Bill is premature and that it would have been very much better if we had allowed the subject to rest for two or three years so that we might see better where we stood in a financial sense.
I should like to make one other remark, and it is upon such a large matter that it is more than a Committee point. I do feel that the companies are going to be rather hardly treated under the terms of this Bill. The proposal is, I understand, that these power-houses shall be bought at what may be called pre-war prices, and that the companies owning them shall no longer have the advantage that they thought they possessed when they launched out on their enterprise of having a forty-two years run before they could be bought out. Anybody who has followed the question of electrical supply knows, especially in the case of the bulk companies—and it is also true of the distributing companies—that it is a very long time before these companies become paying concerns. I have in my mind a company in Yorkshire which was launched under very good auspices and which is mainly a bulk supplying company. That company never paid a dividend at all for the first ten years of its existence, and if now that company is to be bought out at practically cost price it seems to me that that will be a very real hardship to it, for the company made no dividends over a long period, anticipating that in course of years, as the amount of electricity supplied increased, they would be able to get a good return on their money. It is, therefore, very hard on these people that they should be taken over on terms which give them no compensation whatever for all the work that they have done, and for the years when they were earning nothing. I do not think that is fair to the companies. It is of course a matter that can be dealt with in Committee, but this Bill has already been passed by another place, and I am rather afraid that the Government may not listen to anything that may be said on the matter. It is, however, a very great hardship.
The only other point that I desire to raise is whether these great power stations are absolutely necessary, especially at the present time. We have heard from the noble Viscount, Lord Haldane, that they will be run at considerably less cost than smaller installations, but I 697 believe, with all respect to Lord Haldane, that, there are a good many people who think that there is a limit at which that advantage will stop, and the question is whether that advantage does not stop very much before you get to these super-stations. The noble Viscount, Lord Haldane, mentioned that these great super-stations existed and worked with great success, I think in South Africa, Australia, and America. No doubt they do, but I am not quite sure whether in most if not all of those cases that great success results not from the use of coal but from the use of water power. Coal is a great deal dearer than it was even when the noble Lord's Committee sat, and it is a very great question whether these super-stations will be able to supply cheap electricity under present conditions and with the present price of coal.
If you put up these great stations and rely for enormous areas on one station or one group of stations to supply all the electricity, there certainly will be great danger, as was hinted I think by the noble Lord, Lord Inchcape, and certainly by Lord Moulton the other day, in the case of labour troubles. A very small number of men would be able to stop entirely the supply of one of these great power stations. What would be the result? All the industries of huge districts would be stopped, and millions of workers very likely would be thrown out of employment, and the trade of the country disorganised. That is a point which deserves serious consideration.
§ LORD EMMOTT
My Lords, the air has been cleared considerably this afternoon, and as I understand there is not to be a Division against the Second Reading of this Bill it removes one matter on which I should have had a few words to say. It seems to me that for some of the principles of this Bill there is a case. The present areas are unsuitable areas, and by the formation of larger areas and the supply of electricity on a larger scale I think that in some cases supply may be cheapened. There is also the question of standardisation, currents, and other matters of that kind—technical matters of which personally I know little—but there is a case for the appointment of Commissioners, and for the re-consideration of the whole of our electrical supply. Therefore I should personally have regretted to see your Lordships throw out this Bill on Second Reading 698 by a majority. At the same time I think that the whole matter requires great consideration, and much more consideration than it has had.
Apart from the question just mentioned by my noble friend opposite, Lord Ashton, as to the danger of currents being cut off by one or two disaffected people, there is also another matter in connection with large power stations. If ever we are involved in another war the situation of these stations must be very widely known, and they might be made the object of concentrated aeroplane attacks, and if those attacks were successful the result might have a most serious effect upon the carrying on of our industries. However, in the very few observations that I want to make I desire chiefly to criticise part of the fundamental grounds on which this Bill is advocated—that is to say the claim that there is to be a saving of £100,000,000 by it. Of course, those figures apply to the old years, and only as figures of old years shall I criticise them. If your Lordships have the Report of the Coal Conservation Committee in your hands—the Committee presided over by my noble and learned friend Lord Haldane—and you will turn to page 19, the second reason that is given for saving is contained in paragraph 34 of that page, and includes this sentence:A possible saving in coal consumption is expected for domestic purposes (the consumption for which purpose is now probably 35,000,000 tons per annum).In regard to that matter I believe it is a generally admitted fact that open fires only give 25 per cent. of the real heat value of coal, and that gas fires give 50 per cent., and that from coal there might be subtracted in the form of gas and coke as much as 75 per cent. of the original heat of the coal, but the highest claim made for electricity does not exceed 12 or 13 per cent., and the average given of electrical supply at the present time in heat is not above 7 or 8 per cent. Therefore instead of being able to save by supplying electricity for domestic heat we should make an enormous loss. We should add to our consumption of 35,000,000 tons of coal for this purpose, and make say something like 70,000,000 or 90,000,000, so I think part of the £100,000,000 is already gone under that head.
I come, to another claim. I think it is the first point of this Paragraph 34 699 —the general question of the saving of £27,500,000. My noble and learned friend opposite (Viscount Haldane) will tell me if I am correct, but I take it that that is based upon the calculation that the large amount of coal used now for the purpose of providing power might be saved by the more economic use of the coal in the supply of electricity represented by the rate of 1½ lbs. per indicated horse-power per hour, instead of the figure of 5 or 6, or whatever the figure may be that is now used. That is all very well if every manufactory could immediately turn off from its present method of supply, steam and so on, to a supply by electricity, supposing the figures as to electricity are correct. In other words, that calculation is made on the basis that two-thirds of the present coal consumption for power purposes, the value of which at the time those figures were made was estimated at £40,000,000 per annum, could be saved. Now, that money could only be saved if the present users of coal for steam and other purposes used electricity instead.
I think that the whole matter was looked at by the Committee too much from one angle. Here is a criticism of it from a real expert, Professor Cobb, a criticism which, I think, appeared in an article in the Edinburgh Review of January this year. It is highly important—The whole Committee concurs in the conclusion of its parts and adopts their recommendation as a whole. In so doing it succumbs, apparently, to the temptation of following the path of least resistance and avoids some of the difficulties which it would have encountered if it had attempted to summarise the conclusions and recommendations in one report. Sectional and even individual opinion is given expression without the recognition of any necessity for reconciling the difference of detail and sometimes of principle applied. This may have been found the only practicable method, but it has an obvious disadvantage in so far as the Report is expected to justify and indicate the way to action. Thus, while the Power Generation and Transmission Sub-committee—that is one of the sub-committees of the Coal Conservation Committee—points to great central stations generating power by steam and collecting surplus gas and waste heat as the proximate ideal, and asks that large powers of compulsion should be granted to officials for the purpose of realising that ideal, the Carbonisation Sub-Committee—another sub-committee of the same general committee—is evidently of the opinion that steel works and coke ovens should be so combined and laid out as to use their own gas and heat for the generation of all the power they require in gas engines.700 I point out that these two conclusions are different and absolutely inconsistent, and that we cannot have the saving both ways. The one destroys the other. In connection with that matter I should like to read one or two sentences from a letter that I received a good many months ago from a practical engineer. He says—Another practical problem on a large scale which I came across recently was in the ironworks of the Midland counties, where I noticed a large number of separate firms each owning blast furnaces where they smelted ore and produced pig iron. Many of these were of old design and uneconomical in their details of operation, and were running a large proportion of their blast furnace gas to waste. A real economic consideration of that question would probably be in the direction of a concentration of these individual works into one plant in which the blast furnace gas would be adequately used fur driving a steel works in connection with the blast furnaces.And then he adds this very pregnant sentence—A mere consideration of the power production in these works would be very likely to lead to incorrect conclusions.I do think that the matter has been looked at a little too narrowly in that respect.
Again, in regard to this question of saving by using electricity, individual trades differ enormously from one another. Take the textile trades, where there is a continuous load from Monday morning to Saturday noon. At present, as things stand, I believe it is greatly more economical to use steam than it would be to use electricity. I am not quite sure that that would apply to new works, newly laid down. It is possible that electricity is becoming suitable for new works newly laid down. At any rate, I know there is not very much in it. But as regards those works with their steam engines and boilers already laid down unless they are extraordinarily out of date and uneconomical there is not only no advantage in a change, but there would be an actual financial disadvantage, and under these circumstances there is no chance of these factories using electricity instead of steam for the present. Again, the prices of new plant and machinery are extraordinarily high at the present time, and it is impossible to obtain plant for new enterprises at all quickly. Many concerns are asking a year, eighteen months, or two years for delivery. Business is good generally in the country and there is no inclination whatever to stop works which are doing well in order to change their motive power, and, as I 701 say, it would not be possible in many cases for a long time to get the plant which is necessary. Here again I say you cannot make this economy that is suggested out of the £100,000,000, and a good deal of that £100,000,000 goes in this item.
Further, there is this point, that we are not up-to-date with our calculations on this matter. These figures that I have been dealing with are all on the old basis. But do we know to-day? What have we been told by the Government of the present cost of producing electricity at super-power stations? The cost of the plant must be enormous, and the cost of the wages is very much higher than it was when this Report was made out. The cost of coal, we know, is very high, and I do not believe that any Government superpower station can possibly supply electricity anything like as cheaply as it is being supplied by the North-East Power Company at the present time, because they bought their plant and laid down their generating station in the old days, when the price of the plant was very much cheaper than it is to-day.
In these circumstances I hope that some time will be given to the consideration of this matter. I do not know what course your Lordships will take if and when we go into Committee. But one thing is perfectly clear. Time would not really be wasted if we could set up the Commissioners and let them get on with the work of surveying the situation. The money is not required to be spent immediately, and if We, could have a scheme from them, with facts and figures and arguments, before this enormous expenditure of £44,000,000 in the Bill and anything else that they can borrow from the public is sanctioned, then I do think that we should in a few months or a year's time be in a very great deal better position to decide whether expenditure of this kind would be really in the end economy or not.
§ LORD PARMOOR
My Lords, I should like to say one or two words in answer to what was said by the noble and learned Viscount (Lord Haldane), who, I think, has given the only considered support which your Lordships have heard with regard to this Bill. Every one will agree with what the noble and learned Viscount said that in the past there has been a considerable waste in our electric installations. But, making that admission, as every one 702 must, we ought to bear in mind from what cause that waste has arisen. The facts are these, and they are very well known to every one who has been interested in the various Acts dealing with the electricity companies, and also they are pointed out very clearly in the Report of Sir Archibald Williamson's Committee, to which the noble Lord on the Woolsack referred. In every case the waste has been brought about by the unfair and undue interference of Government authority, that is to say, the Legislature. And the whole history of the electric lighting industry is this, that if full force and weight had been given to the initiative of private enterprise none of these difficulties with which we are now faced would probably have resulted; yet in reality at every stage of our electric legislation heretofore undue interference has been allowed as regards private enterprise. Let me give your Lordships an illustration of what I mean. When the inquiries were made under the Act of 1888 —which were made, as we know, before the Provisional Orders were granted—it was a condition of private enterprise in those days that the particular Provisional Order should be limited to a small area, and not only that but it was made a further condition that within that area there should be a separate generating station. I entirely agree with what the noble Lord has said that this system has been found wasteful, and I am going to say a word or two in a moment with regard to the remedies because in that respect I do not agree with him.
Then the noble and learned Viscount has said that in his opinion there would be no interference with the initiative of private enterprise if the proposals of this Bill were carried; I think, in fact, he went a little further and said that it would be an encouragement to private enterprise. I cannot think that the noble and learned Viscount has paid much attention to the details of this Bill when he says that. Is he aware that after this Bill is passed that no private individual or company can either erect or extend a generating station? In other words, it is one of the objects of this Bill—I presume it is on this basis that the calculations have been made—that the generating stations set up by the Board of Trade or other public authorities should have the monopoly. Not only is it a question of not encouraging private enterprise, but private enterprise is made impossible. No person, after this Bill is 703 passed, may, as regards private enterprise, either extend or put up a generating station.
§ LORD PARMOOR
At the present time I am dealing with the provisions of the Bill. There is a distinction between what is called a local authority and a local Board, but it does not affect the matter which I am now discussing. Whether it is a local authority constituted by the Commissioners, or whether it is a local Electricity Board constituted by the Commissioners, in either case there is an absolute prohibition as regards any work on a generating station by any private person or company, after the Bill is passed. I will not go into the estimates of the noble and learned Viscount; I will merely say that I agree with Lord Emmott that they require very careful consideration.
But the noble and learned Viscount told us the history of the past. Let us see the way in which he deals with private enterprise in the past. If this Bill had been passed, none of the work of Mr. Merz could have been done in Mr. Merz's private capacity; he would have been absolutely under the disability of putting up a generating station or of extending an existing generating station. The noble and learned Viscount referred to South Africa. He knows perfectly well that the Victoria Falls Company was entirely the result of private enterprise and energy. If you had had a Bill of this kind in South Africa, there would have been no Victoria Falls Company, and none of that ample supply of electrical power for business purposes which has been so fertile a source of productivity in connection with the South African mines. Take the case of Canada and of America, where the noble and learned Viscount says that good provision has been made as regards larger generating stations. I should not like to suggest a universal negative, but I do not know whether there is one illustration in America where these large generating stations have not been the result of private capital and enterprise. I myself have been over the generating stations in Illinois, and in a very large number of cases they are the result of private capital and enterprise. There may be isolated cases where the same work has been done from what has been called 704 the socialistic or nationalistic point of view. I do not want to predicate a universal negative (as I have said), but I am certain that the great mass of that work has been the result of private capital and enterprise. I should like to ask a question in reference to one other illustration given by the noble and learned Viscount—namely, as regards Westphalia. Is Westphalia a nationalised system or is it the effect of private enterprise?
§ LORD PARMOOR
I have read lately one of the last German reports on the socialisation or nationalisation of industries of this kind, and that report is all in favour of private initiative on the ground that in Germany they had had experience of the two systems and, in comparing the two, they were all in favour of private enterprise and activity. I thought that probably the noble and learned Viscount was dealing with the supply of power at Krupps at Essen.
§ VISCOUNT HALDANE
No. There is a Command Paper with that Report; I have not got it here, but it is a Diplomatic Paper published along with the Report of the Reconstruction Committee, which Paper gives an account of it.
§ LORD PARMOOR
I should like to know the conditions under which the particular Westphalian scheme, referred to by the noble and learned Viscount, was actually initiated and carried into operation. But if we are considering matters of this kind, surely, as the noble and learned Lord, Lord Moulton, has said, of all enterprises of recent years none has owed more to private initiative than the electric enterprise, and none has been so much hampered by legislative interference; and if you take those two considerations together I must say that I agree with what the noble Marquess said— namely, that far larger consideration is necessary before a Bill of this kind is sanctioned.
Let me take one or two further points in reference to the remarks of the noble and learned Viscount. He told us that the present was no time to consider the terms or conditions on which the companies' generating stations were to be taken over. Well, you are bound to consider the terms and conditions before you can make up your minds whether the finance of the Bill 705 is likely to be good finance or not. When we come to those terms let me point out what appears to me to be extreme unfairness in three directions. We know that under the Act of 1882— when a term of only twenty-one years was to be allowed for private enterprise and where the terms of purchase at the end of twenty-one years were very much like what is proposed in the present Bill—not one farthing of capital was ever forthcoming. What happened in 1888? The term was extend d for forty-two years, and the conditions under which the companies' undertakings were to be taken over were laid down in a far more generous manner. What is the effect of the present Bill upon this point? At the present time there are about twelve years to run of the companies' concessions as regards generating stations, yet you interfere and take them compulsorily without any suggestion of compensation.
As to the terms of purchase, may I delay your Lordships for one moment to make it clear how essentially different they are from what is contained in the 1888 Act? The terms there are that yon shall have the then value of the plant, machinery, and buildings as belonging to a going concern and capable of immediate use. What is done by this Bill is that you are to have the cost—you are not to have the value of their re-erection now,plus cost of depreciation you are to have the companies compensated merely on the cost when that cost was incurred. Just imagine what that difference means at the present time. It is like giving a man half-a-sovereign for a sovereign. Although I think it is the wrong way altogether to approach the problem, suppose the cost was £1,000, and suppose that you give a man £1,000 at the present time, although it would cost him £3,000 to re-erect the buildings in a similar position—you do not compensate him. The £1,000 is worth only about £500 to him. Just in the same way it is worth only about £500 if you use it in the re-erection of buildings. I notice that the noble and learned Lord, the Lord Chancellor, said that if you were to take the basis of the 1888 Act it would be very hard on the purchaser because, owing to the inflation of currency, money meant a very different thing now from what it meant when the works were erected. That is true, but why should the loss in consequence of an inflated currency be thrown on the persons who have erected the works and have found the capital for the generation and distribution 706 of electricity? That is what it means. It is such an important difference that it will have to be most carefully considered at some future stage.
Then the noble and learned Lord on the Woolsack said there was a number of small—I think he called them "unimportant"—generating stations which would not be taken over at all; they would be left as a useless charge or burden upon the companies themselves. What has been the history of this matter? These smaller stations were not put up by the companies, except under protest. I can remember very well the whole inquiry which took place under the Act of 1888, and I recollect the consensus of opinion among electrical engineers and experts that this system of small generating stations would be a mistake. I recollect that at that time one of our greatest experts, Mr. Ferranti, was in favour of one large generating station much on the lines advocated now, and the same objections and questions were raised then as are raised now. But where the Legislature has imposed a condition of this kind upon the companies against their protest, and where the protest has been found to be accurate and the terms imposed have been found to be wasteful, why should not the companies be put in a proper position as regards compensation?
This really has been the history of this legislation. Nowhere, if I may refer to it for a moment, is it put more clearly than in the Report of the Committee which the Lord Chancellor mentioned. It refers to these conditions as "restrictive and burdensome"; it says that the legislation has hitherto been influenced by an insufficiently large and comprehensive outlook. That is perfectly true. But where, under a Parliamentary bargain and under Parliamentary conditions, capital of this kind has been expended, and properly expended, you cannot interfere with the terms without discouraging, and discouraging in an important industry, and in a way that ought not to be allowed, the use of capital, particularly under the conditions that exist at the present time.
There is only one other point about which I should like to say a word. I am sorry that the noble and learned Viscount is not in his place at the moment. It is this. Everything that he said as regards wastage in my opinion could be found within the terms of the Bill, outside what 707 has been called nationalisation, and I should be strongly in favour of the constitution of Electricity Commissioners, of their having power to make experiments and of their carrying out what the noble Marquess called "co-ordination"—that is, their bringing about the joint operation of present supplying bodies in order that they might, by combination, prevent the overlapping and waste which take place at the present time. In addition to that —and I think it is very important—I should be strongly in favour of amendments of the Electric Lighting Acts—in other words amending provisions which by their imposition on the companies, have caused wastage in the past.
I think that is quite right. The point of difference is this. Are you going to allow the setting up of a new system either of joint electricity authorities or of the new district electricity boards? That is where you really go to the one point in the Bill which I think deserves much more consideration. It is there that you find the element of expense; it is there that you have the necessity of finding £20,000,000 from the Board of Trade and £25,000,000 from the Treasury, although I firmly believe myself that these figures have no relation to what the ultimate figures will be, if a scheme of this kind is attempted to be carried out. It is only the first step on the road to waste, and as regards that I do not want to emphasise what was said by the noble Lord opposite.
Why should not that matter be left to the ordinary way by which these matters are dealt with? If you have the Electricity Commissioners, and if they desire to set up a particular electricity board under particular conditions, let them come to Parliament in the ordinary way and let the matter be discussed in a particular case under the Provisional Order system. The effect of that will be that you will have before you the finance, the calculations in the particular case and all the necessary statistics that are to determine whether the operation is likely to be an economical one or not. But under a Bill of this kind—I do not blame the promoters—it is quite impossible to make any statistical calculation that is of any value at all. It cannot be done. It is too wide and too indefinite. But if the Bill was put on the lines I have suggested, and if the Electricity Commissioners think that expenditure ought to be made in order that these additions could be given, then 708 the particular expenditure and the amount of it could be properly considered in the ordinary way, and personally I should have no objection to the Bill at all. I think that is a matter which might be done. Then I think some part of the Bill would undoubtedly be of enormous advantage, and the objections to which attention has been called more than once would be dealt with.
§ LORD CLIFFORD OF CHUDLEIGH
My Lords, I speak with more experience than most of your Lordships, because I speak as one of those who have seen everything you aim at here carried forward, but in this Bill you are beginning at the chimney tops and trying to finish at the foundations. The time for this Bill has not arrived. Before you can approach it you must do as we did in Tasmania. We spent five years getting surveys of the problem of a general centralisation system, and then encouraging it to be taken up by private enterprise; and, as private enterprise could not complete it, the State Government took it up and turned it into the greatest of all State-owned industries that have been touched.
I am dead against any State-owned industry, but if it were proposed to bring forward a survey of England in connection with the formation of a scheme to put a central generating scheme before the House to begin with, and to ask the House to consider the advisability of that scheme when laid out, then, as a practical engineer, I should be in favour of it. My business is engineering. That is not as it is put forward here, however. When we put up our electric power stations we had the whole line surveyed, and finding we had an ample water power we put up a central station, carried the water thirty miles in pipes to get the necessary fall and put up a turbine system which is capable of being increased five-fold. It is quite ample to supply all the electricity requirements of the Island for another 100 years.
If there was some scheme like that in this country it would be time enough to come forward with this Bill. After such a scheme was complete the State might make arrangements for compensating other companies, but there was no sense in stopping private enterprise until the State had a complete substitute to offer. No such substitute exists at the present moment. There is a good five or six 709 years' work to prepare such a substitute, and it would probably take another ten years to put it into working order.
I am quite in favour of central generating stations, but it is time for the Government to prohibit existing companies when these stations have been planned and erected. In Tasmania we were able to compensate existing companies in a very cheap manner. When we had erected the central generating station, and found we could produce electricity so much cheaper, they received so much compensation. The Government undertook to supply them with electricity at a reduced rate for fifty years, and the public at a higher rate—the difference between the two rates covered the compensation. What is wanted at the present moment is a Bill forming a council who should get practical information on the matter, make a survey of the country, and see what proposition can be practically carried into effect. Personally, I shall not vote in favour of the Bill.
§ THE LORD CHANCELLOR (LORD BIRKENHEAD)
My Lords, the noble Marquess, Lord Salisbury, was good enough to intimate that it was not his intention to ask your Lordships to divide against the Second Reading, but he added the observation that he should take an opportunity of challenging the propriety of allowing the Bill to pursue the normal Parliamentary course with an early Committee stage, indicating, as I understood, that it was his intention to move that the Bill should be referred to a Select Committee.
I had better make the position of the Government as clear on this point as it is in my power to do. Any proposal in this House to refer the Bill to a Select Committee, as far as the Government are concerned, is tantamount to a rejection of the Bill on Second Reading; it is a proposal wholly unacceptable, and will be resisted by every means in our power. It will, if it is forced upon us, for all practical purpose be, as I have said, equivalent to a rejection on Second Reading. I have listened to-night to a great number of speeches upon the Bill and, with the exception of the speech of Viscount Haldane, my ears have not been gratified by one genuine or warm word of friendship for the Bill. I should have been more depressed on account of that if I had detected in any single speech of any one noble Lord that he had ever taken the trouble to read the Bill. I will 710 give your Lordships one voucher for that imputation before I conclude the observation I have to make.
Look at the way the debate has progressed. Lord Moulton delivered a speech last week in which he made a number of observations and charges against the Bill which, I hope I shall be able to show, have extraordinary little foundation. These assumptions, for they are nothing more, have been repeated by Lord Inchcape, and by one speaker after another, until the time comes now when nobody even troubles to argue them. They are assumed. Let me take one illustration? It was said by Lord Moulton—or by Lord Downham, I cannot say which; they seem to have competed—that this Bill will cost hundreds of millions of pounds. I need hardly say that there is not the slightest justification or warrant for saying that this Bill is to cost any sum even remotely resembling it, or is going to cost the community any money at all. I will show your Lordships this, not by any vague talk, but by the provisions of the Bill. Just because Lord Moulton said so it is accepted and repeated with horror to-night by Lord Incheape. He said, "If it is true that this Bill is going to cost £150,000,000—no, £200,000,000—then I for one could never support it in the present condition of our finances." The sum is so often repeated, and becomes so familiar, that, beginning with something for which you can find no stable foundation, all these assumptions are made the basis for decision, and if a vote had been taken and I had not all opportunity of making, as I will, these matters plain, I have not the slightest doubt that upon these vague hypotheses and assumptions we should have had the matter committed to a Select Committee with the certain consequence of destroying a Bill to which the best electrical brains of this country have been given for seven years.
One speaker after another has gone on an assumption which reminds me of nothing so much as those commentators on the old classics. An observation is made by one commentator and you can trace it down for another 300 years. And so we have this "parrot cry" repeated—that this is a Bill which has been insufficiently considered. That charge was made by Lord Salisbury in a question that he put to the Leader of the House. He said, "It is plain that this Bill has not received sufficient 711 attention." This goes out immediately to the world on the authority of the noble Marquess, whose whole speech this evening was a series of hypotheses consisting of what he had borrowed from the previous speakers. Then he says, "If this be true, then there is a case for inquiry." The answer is that none of it is true. The noble Marquess having said that this matter had not been sufficiently inquired into, added that if Lord Moulton said it is so it must be so, and Lord Inchcape having said he founded himself on the authority of Lord Moulton, others speakers who have followed have repeated that, and that has been the favourite argument used to-night.
I take upon myself to say that no Bill during the last five years has been introduced into your Lordships' House which has been made the subject of inquiry, research, and further inquiry by people so competent and so full of authority. What is the case? I believe that the facts can be dealt with with comparative brevity. In the first place there is the Report of the Coal Conservation Sub-Committee which gave immense time and trouble to the subject and consisted of a most able committee on this matter. This Report was sent in in April, 1917. The noble Marquess would say, I suppose, that this was what he was pleased to call the champagne period—in the full ecstacy of the war. I have yet to learn that it is necessary when peace arives that you should instantly discharge the whole result of the research of able men, employed during the war because you knew that a period of reconstruction would inevitably succeed the war. Let us see what the Report says—It is scarcely possible to exaggerate the national importance of the problem of a technically sound system of electrical supply because it is essentially one with the problem of the industrial development of the country, which largely depends upon increasing the net output per head—I pause there to say that not one of these committees to whom I am about to refer has omitted to find, in plain and positive terms, that we are at this moment in danger unless we make a change of the kind which is recommended in this Bill. There is not one which has said we think the change is advantageous, but they have all said that here and now our interests are in peril unless an immense change is made at once. Then noble Lords say, "Let us take six months, let us take six years, or 712 any period you think convenient," while [...]ome is burning in this matter. The Report continues—All these requirements should be provided for by means of an inter-connected power distribution system, tapping all existing sources of power, such as waste gas and heat, and delivering electrical energy wherever it is needed, thus making possible the use of much coal now wasted or left in the pit.The next paragraph which I will read from the Report is as follows—Finally both as regards generation and distribution, it is essential that the whole system should be subject to the general supervision and control of a single body of Electricity Commissioners.And the last line is especially worthy of close attention—But the Coal Conservation Sub-Committee feel that they must draw special attention to the necessity of the policy being national in character, because, as the Report shows, the historical development of electrical supply in this country during the last thirty years has been local in principle and character, and the resulting position will have to be superseded.This was the Report of a Committee which went into this matter with extraordinary care, and which was led to go into this matter by the evident necessity of in some way or other economising in the use of our coal. They explored every single aspect of the question, and is there any noble Lord who has interested himself in this subject who is not aware that one of the greatest national dangers in front of us is the notorious lack of economy in the use of coal. This was the recommendation which the Committee in its most sagacious findings placed first of all. That Report was sent in to Mr. Runciman, who thereupon, it may be assumed, gave it his attention, and he appointed a Committee of whom I say plainly that, having regard to its members, it was one of the ablest Committees which has dealt with this matter for a very long time. He appointed Sir Charles Parsons, who is known to most of those who are interested in the subject, and whose authority is generally recognised; Mr. John Annan Bryce, a member of Parliament and. a Director of many of these companies, who had special experience in dealing with these matters, and four other experts—namely, Mr. Octavius Callender, Mr. James Devonshire, Mr. Bernard Mervyn Drake, and Sir John Snell.
I am informed that those gentlemen are one and all men who have devoted 713 their whole lives to the subject. I cannot understand what Lord Emmott meant when he said, "This is a real expert." Does he mean these are sham experts? If not, the adjective "real" had no meaning at all. What did this Committee do? I told you at the beginning of my speech when the debate was adjourned. They came to the conclusion that it was so vitally necessary that these things which are proposed in this Bill should be done now, that they came back to the Board of Trade and said that the terms of reference to them were not wide enough to enable them to make the recommendations which they were confident should be made at once, and requested the Board of Trade to appoint a larger committee. They said—The evidence leads the Committee to the following conclusions—(II) That the distribution of electrical energy should be regarded no longer as a parochial but as a national question of urgent importance. (III) That the present system of electrical generation and distribution is behind the times and is a serious handicap in international competition. (IV) That the present conditions are mainly due to faulty legislation and to divided and therefore weak executive control—That is the 'System of which I believe Lord Parmoor is so curiously enamoured—(V) That the determination of questions concerning concentration of generating plant with a resulting economy of coal and other savings, requires immediate attention.… (IX) That only by such steps can the Electrical Manufacturing Industry of this country be fully developed, not only for the Home Trade, but as a consequence for the great industry now maturing overseas; that the gain to the State from a well planned scheme of reconstruction will be inestimable; and that the items which are capable of reasonable calculation, such as saving in fuel, reduction in factory costs and increased output will together represent not less than £100,000,000 per annum.That is only one of the heads of economy put forward, not by politicians, not by Ministers in a difficulty dialectically, but by grave men of science who have spent weeks in investigating the subject; and they say, Here, apart from other economies, we affirm that you will save £100,000,000 a year in this specific respect, and we ask that a Committee be immediately appointed larger than we are, more experienced than we are, and with a wider reference, to see whether these things which we recommend should and ought and can be carried out.
So we appointed another Committee, and I should be very interested to hear —when I spoke last I issued a challenge and I have received no reply to that challenge— 714 whether these gentlemen are "real" experts, and whether there is any one of your Lordships who is prepared to say that a stronger Committee could have been formed than the Committee which was formed under the chairmanship of Sir Archibald Williamson. He is known to many of us as an old colleague in the House of Commons, as a man of business, of extraordinary all-round experience, one of deep sagacity and in no way associated with the Government, and who was appointed because of his Parliamentary independence. He had with him Mr. Harry Booth, who has been closely related with all administrative matters arising from the Electric Lighting Acts since 1898, and who was been in charge of, I think, four or five Electric Lighting Acts, and has had control of this branch of the work of the Board of Trade ever since the year 1898, having done practically, it may be said, nothing else but this kind of work since that year; Mr. J. F. Crowley, who is a well-known electrical engineering manufacturer; Mr. James Devonshire, who is managing director of the North Metropolitan Power Company and of a large number of other electric supply companies; Mr. Harold Dickinson, whom I know very well, the City Electrical Engineer of Liverpool and formerly the City Electrical Engineer of Leeds, a gentleman of unrivalled experience; Mr. Falconer, a director of a great number of electric power companies; in fact, I have a whole page of names; but it is sufficient for me to say that there was not one member of that Committee who was not certain to be able to contribute something considerable to its discussions and decisions. How does Lord Salisbury treat this Committee? I say after his speech, with the greatest possible respect, that I can only draw the inference from what he stated that he had never read the Report of the Committee.
§ THE LORD CHANCELLOR
Well, I did not hear him say so, and I can only conclude that he must have read it very incompletely and with little understanding. The noble Marquess, Lord Salisbury, said that this Bill in its main features was not adumbrated in the Report to which I have just directed attention. He said that the details of the Bill were not contained in the Report. Lord Salisbury could not have 715 meant anything so entirely pointless as that all the inconsiderable details of the Bill were not indicated in the Report of the Committee. What obviously he must have meant was that the main features of this Bill were not contained in the Report and recommendations of that Committee. I say that this Bill as a whole, taking its main, important features to-day, is to be found in the Committee's Report. I say that this Bill is founded on the Report of the Committee, and that there is not a single important provision of the Bill which is not to be found in one or other of the recommendations of the Committee. Taking this Bill as a whole, the parents and the the only parents of it are this Committee.
I will ask your Lordships to consider for a moment what the Committee did and recommended. First of all, as to what the Committee did. The suggestion, I understand, has been made that there should be a new Joint Committee of both Houses to go into the matter again. I will say something about that in a moment. This Committee called before them as witnesses an enormous number of people who were obviously highly qualified to give them advice and assistance. They sat for a very long time indeed. I have not before me the exact number of their sittings, but let me as briefly as I did in the other case remind your Lordships of what it was they recommended. What is the basis of the Act in respect of which it is said we made no adequate inquiry? The Committee say—We recognised that it was our duty to consider the terms of reference from a national point of view, so that our recommendations might lead to a practical scheme for providing the vital requirement of cheap power throughout the country.And my noble and learned friend Lord Parmoor, if I understood him, poured contempt upon the mention of obtaining cheap power.
Let me remind him and Lord Moulton that when you talk under the changed conditions of to-day of obtaining cheap power you do not mean cheap power in relation to prices obtaining under pre-war conditions. No one is so foolish as to use language of that kind. When you talk of cheap power you mean cheap power in relation to the prices that you will have to pay for power if this Bill does not become law. That was a point by no means worth while the noble and learned Lord making. The Bill, 716 therefore, does not use the word "cheap" in any sense other than that which I have just indicated. The Committee proceed—The supply of such power is now seen to be virtually as essential as labour and materials in so far as it affects economical production. The value of the application of electricity to all classes of machinery and processes has been increasingly demonstrated in a striking manner during the war, especially in the manufacture of munitions … The extent to which electricity may be further applied to cheaper and better mechanical production, to improved railway service, to electro-chemical and metallurgical processes, to agriculture and to domestic labour saving apparatus is altogether incalculable.That is the Committee's estimate of the effect of the application of electricity, and there are one or two further short passages which I should like to read—To sum up as regards the present position, the evidence given before us was unanimous—I ask your Lordships to observe that the evidence given by the witnesses before this Committee was unanimous—in declaring it to be unsatisfactory, and the opinion of practically every witness was that something must be done and as speedily as possible. Our investigation confirms fully the opinion of the Coal Conservation Sub-Committee and the Electrical Trades Committee regarding prevailing conditions, and leads us unanimously to the conclusion that the present state of affairs is contrary to the national interest, wasteful of fuel resources, deprives industries of the advantage which a well devised system of generation and distribution of electricity would give, and thereby handicaps them in competition with other countries. It should be fully recognised that cheap electrical power is a matter of first-class importance, and will in the future be essential to the industrial progress of this country.I will only read this other passage—After the war the position of delayed extensions of generating plant and mains throughout the country will require immediate attention, especially as the greater number of stations are not working without spare plant. There is also an accumulation of new business requiring a supply, but not yet connected to the distributing mains, while the rapid development of electrical furnaces is overtaxing some existing stations. Unless on the termination of the war there is the necessary organisation ready and prepared for developments on right lines, there will be a perpetuation of present disadvantageous conditions. The evil will grow until it is beyond remedy. Thus the matter is urgent, and it may well be that our industrial future depends greatly upon a wise and far-seeing decision at this time.After a Report like that, by a Committee so appointed, we have heard one noble Lord after another make the charge that we have gone into this matter without sufficient inquiry. In regard to that I repeat the observation with which I com- 717 menced my speech, that I do not believe a Bill, in my experience, has come before Parliament with a greater authority of preliminary inquiry than this Bill, and it was so treated in the House of Commons, where no reference at all was made to this supposed want of inquiry, and there were many in the House of Commons highly qualified to deal with this matter.
Noble Lords have spoken in the course of the debate of the circumstance that they have received numerous communications. Of course they have received numerous communications. Lord Salisbury expressed surprise that he had received communications from three large electrical companies or combinations of electrical companies professing dissatisfaction. Others of your Lordships called attention to this as if it were a singular circumstance. But, my Lords, it is not unusual. Vested interests always make these representations. I assure your Lordships that these Committees received the same representations, and the House of Commons was daily bombarded by the same arguments addressed by the same people. They were fully considered there, and now a last attempt is being made in the hope that your Lordships will adopt the arguments which have been produced by these very artificial remonstrances. This is a last attempt that is being made to storm the portals of this House. The House of Commons at any rate did not neglect this matter. They remitted it to an influential and a numerous Committee, and that Committee sat for nineteen whole days considering exactly the same points which were considered by this last Committee, and having sat for nineteen days, in the course of which they examined and discussed nine hundred Amendments, they put forward this Bill. After the examination which I have described, they send it to your Lordships' House at this period of the session with such weight, and authority and support behind it that I confess I should be amazed if your Lordships were prepared to take any course which would lead to the unfortunate delay of it.
I should not, I think, discharge fully the task which falls upon me to-night if I did not, however shortly, attempt to justify that which I have already said, that the main criticisms which have been directed against this measure are really criticisms that proceed entirely, or almost entirely, from misunderstandings. Let me deal first 718 with the case of finance. I have already reminded your Lordships how the legend of the £200,000,000 grew up, with a rapidity and universal acceptance which I can only compare with the arrival of the Russian soldiers in this country at the beginning of the war. Let me explain what the facts are in regard to finance, because in dealing with finance of all subjects it is as well to have some correspondence with something that is contained in the Bill, The two clauses in the Bill—and the only two— which deal with financial assistance from the State are Clause 19 and Clause 34. And let me make this plain, because no one would have suspected it from the terrifying utterances that we have heard —there is no other clause in the Bill which directly or indirectly authorises, contemplates, or permits the State to spend a farthing of public money.
Now, let us trace out these £200,000,000. Under Clause 19 the sum to be expended is not to exceed £20,000,000, which may be expended for the purpose of erecting generating stations urgently wanted in the districts where there is a famine of power. Your Lordships would really think from the speeches made that when that £20,000,000 had been spent by the State it was lost. Nothing of the kind. It is advanced, as it was recommended that it should be advanced, in places where there is a famine. It is advanced as a loan. There is a provision by Clause 19 (3) which makes the most elaborate provision for the repayment of this loan, and I will undertake to say that there is no business man who will make himself responsible, under all the circumstances of the case, for expressing to your Lordships the view that there is any real commercial risk for any substantial proportion of the £20,000,000 which is to be so advanced. When we come to the Committee stage of the Bill if any noble Lord thinks it right to challenge that anticipation I shall be very pleased, on material which I possess, to enter into it in greater detail than I think it useful to do to-night.
The second clause is Clause 34. In that clause the Electricity Commissioners may lend money, subject to the approval of the Treasury, to a district board or joint electricity authority or any authorised undertakers, not exceeding in the aggregate £25,000,000, if the Commissioners are satisfied that the board or undertakers cannot otherwise raise the money on 719 reasonable terms. And for this purpose the Commissioners may issue electricity stock. It is as certain as anything human can be that not one penny will in fact be required to be found by the State. In the first place, the district board will have every inducement to raise their money locally, as provided in Clauses 32 and 33, and, if they cannot, the Commissioners may issue stock. The only object of this guarantee is to enable the stock to be issued on reasonable terms. I have said that there is no other clause in the whole of the Bill which deals even indirectly with the question of finance or of State advances, and the extreme contingent liability of the State will be £45,000,000, even assuming —what is absolutely certain not to be realised in fact—that every single penny of this advance became ultimately a loss.
In view of the other points in the attack that has been developed which may influence your Lordships, I think I am entitled to claim that at least your Lordships should not be influenced by these wild statements which have been made. One noble Lord said, "Well, either it is spent by the State, or it is spent by these private companies. Hundreds of millions are going to be spent." Of course, they are going to be spent. If they were not to be spent we should cease to possess any capacity to compete with our competitors in other parts of the world. Unless somebody is going to spend hundreds of millions within the next few years in this country the whole of our power of industrial competition with the countries of Europe which are still able to compete and with the United States of America will disappear. All that this Bill does is to provide that instead of using a million bricks we should use 500,000 bricks, and that, instead of the State making this expenditure, every conceivable encouragement should be given to private individuals or private companies to spend money under circumstances which are very favourable to themselves.
So much for finance. Let me now say a very few words on the subject of so-called Parliamentary bargain. I know this is an argument which is presented—and they are perfectly entitled to present it—by those who are giving utterance to the point of view of companies which think they labour under a financial grievance. I do not, of course, mean to suggest that if a bargain is being broken, if circumstances of paramount 720 importance make it necessary by legislation to introduce a change, people must not be fairly treated. I observe that Lord Midleton and Lord Downham and other speakers have talked about a Parliamentary bargain embodied in the Electric Lighting Act, 1888. It is not unimportant to ask what is that so-called bargain. The remark has been made over and over again, based on the assumption that these companies were entitled to be bought out and one would have supposed that there was contained in the Act of 1888 some right on the part of the companies that they should be bought out. The Act of 1888 contained no single provision of this kind. They were placed under a liability of being bought out at the option of the local authorities, and this liability was inserted in that Act in order to give an additional power to the local authorities, and there was no idea at all of giving a benefit to the company. It was provided that they should be under a liability of being bought out after forty-two years, or after any succeeding ten years on the basis of the then value of their lands, buildings, works, materials, and plant, regard being had to their nature and state of repair, but without any addition in respect of compulsory purchase, goodwills, profit or similar consideration. Those terms are shortly described as "Replacement terms less depreciation."
The increased cost of plant following on the war has of course given these terms a new value in the eyes of the companies. But it is important, as I have said, to notice that the option does not lie with them. They cannot go to the local authorities and say "We must be bought out." This Bill—and I present this proposal as being a perfectly fair proposal, which I shall be prepared to defend in detail when we come to the Committee stage— relieves the companies of the necessity for incurring any further capital expenditure on generation, and it gives them the value of their stations, less depreciation, and guarantees to them at least the same amount of electricity as they could have generated and at no greater cost. That is Clauses (7) and (5) and I maintain those terms are generous. I maintain that they are fully as generous as the terms which they would have received, not as a matter of right but as a matter depending on the willingness of the local authorities to assert their right had this new arrangement not been proposed. 721 Now I will attempt to summarise the points which were made by Lord Moulton and afterwards by Lord Inchcape and Lord Salisbury. In the first place, Lord Moulton and many other speakers have said plainly that this Bill means nationalisation. I absolutely challenge and deny that statement. I go further and say that no one who has carefully read the Williamson Report, no one who has satisfied himself that this Bill is framed on the Williamson Report, and no one who has read this Bill can make the. criticism that this is a Bill which will produce or give rise to nationalisation. It does nothing of the kind. Lord Parmoor asked the noble and learned Viscount, Lord Haldane, Does it not prevent any individual from establishing or extending generating stations? At an earlier stage of the debate Lord Ashton of Hyde pointed out most usefully the immense area of distribution that was left open to private enterprise; but a more important observation must be made with reference to Lord Parmoor's point. Has the noble and learned Lord read Clause 9 of the Bill?
§ THE LORD CHANCELLOR
I may, perhaps, remind my noble and learned friend of the terms of that clause in case they have escaped his memory. The clause says—Notwithstanding anything in any special Act or order in force at the passing of this Act, it shall not be lawful for any authority, company, or person to establish a new or extend an existing generating station or main transmission line without the consent of the Electricity Commissioners, which consent shall not be refused or made subject to compliance with conditions to which the authority, company, or person object, unless a local inquiry has been held.…Has the noble and learned Lord that clause in his mind?
§ LORD PARMOOR
It appeared to me that, after hearing a local Inquiry, the Commissioners had absolute power to prevent any private enterprise with regard to generating stations.
§ THE LORD CHANCELLOR
Does the noble and learned Lord mean that the Commissioners are given the power of deciding whether or not companies, authorities, or persons shall be liable to establish new or to extend existing generating 722 stations, when they have the guidance given to them in the terms of the Bill itself that they shall hold a local Inquiry? Does the noble and learned Lord mean that he anticipates that these Commissioners will pursue a course in which they can ignore altogether the considerations of fairness and justice which have been established in the Inquiry?
§ THE LORD CHANCELLOR
The noble and learned Lord, of course, does not mean that. Therefore I do not think (if I may say so) that the question addressed to the noble and learned Viscount was a helpful one, or a very happy one in the face of the terms of the clause. In respect to distribution there is every conceivable provision for enabling those who are dealing with that matter to-day as the result of private enterprise to continue to do so in the case of generation, with the very important clause to which I have directed attention; and when we come (as I hope we shall come) to consider the terms of the Bill in detail, I shall be prepared to meet at every stage the challenge that this is a Bill which can mean, in any conceivable circumstances, nationalisation.
I will now address myself to one argument which I confess astonished me. Everything that was said by the noble and learned Lord, Lord Moulton, on the former occasion was seized upon to-day by every speaker; but there was one argument used by the noble and learned Lord in which he said that he was greatly apprehensive that under this new system sabotage would be a grave danger with these immense lines 200 miles long. To start with, I am afraid the noble and learned Lord has not taken the trouble to acquaint himself with the somewhat obvious fact that, so far from their being 200 miles long, no line would be longer than forty miles, and all lines would be enclosed in pipes. In the second place, it apparently had not occurred to the noble and learned Lord that these pipes will be very small indeed, presenting far less opportunity and danger in connection with such attempts than gas pipes. In the third place, the noble and learned Lord, in my judgment, did not sufficiently consider the value of his argument. What did that argument mean? Assuming that this change is desired by the national interest. assuming that the laying of these pipes and so forth is the one method by which we can 723 equip ourselves for the great commercial struggle which lies in front of us, it is unwise to adopt that method because of sabotage.
The noble and learned Lord will remember that in the days, now far removed, when it was being discussed whether or not a railway line should take the place of stage coaches, it was pointed out that it would be impossible to sanction the change because of the great risks to railway lines on account of sabotage. Indeed, you might say that it was unwise to build the Forth Bridge because exposure to sabotage would be much less if you travelled across the river in boats. If this country is to reach such a condition that we cannot conduct an industrial scheme—otherwise to be reeommended— because we are afraid of revolution and sabotage, let us close your Lordships' House and not attempt to deliberate under a free Constitution.
Having dealt with the main arguments, I now ask leave to call your Lordships' attention, with all the solemnity of which I am capable, to the remarks which were made as to the results which will follow from the scope of the enactments of this Bill until Parliament meets in February, 1920, or, as some noble Lords have suggested, in six months or in six years time. Let me take only the more moderate period. By reason of the electrical manufacturers being engaged during the war on military output, generating stations and public stations most urgently required at this moment in order to meet the demands of the country are not being proceeded with. Lord Emmott said, I think, that there was no demand at this moment for extra current. The truth is that old and new textile mills are clamouring for electrical supply; they are representing almost daily that they cannot carry on or extend their businesses unless they receive that supply. This is true of Manchester, of Stockport, of Stalybridge, and of Bradford; and I have not the slightest doubt that it is true of many other places as well.
§ THE LORD CHANCELLOR
I have not particulars of the size; nor am I aware that any of those centres have limited their demands to small extensions. In the second place, owing to the Report of the Electric Power Supply Committee, and then owing to the promotion of this Bill, the Board of Trade has very naturally, in my opinion, withheld its sanction from Provisional Orders or has reported against the promotion of private Electricity Bills during the last two sessions. It is hardly an exaggeration to say that for this reason no Electricity Order has been made at all during that time. In other words, there has been no progress made, and in my view progress has been arrested because of the comprehensive nature of this scheme. In the third place, the advisers of the Board of Trade have withheld their sanction from extensions of small generating plants in parochial areas in circumstances condemned by the Reports to which I have called attention.
There is thus practically a complete sterilisation of the electrical supply industry at the present time, which will not and cannot be removed until this Bill becomes law. When I say that it cannot be removed I mean only that if your Lordships would take the responsibility of saying that inspite of all these committees you will now appoint still one more committee, that you will refer this matter to a Joint Committee of the House of Commons and the House of Lords, spend six months in that process, and then bring forward another Bill in Parliament—I say that if your Lordships were to take that course you would take it with the knowledge that the other House has (in the circumstances which I have indicated) sent this Bill to you; with the knowledge that in the expectation of this Bill becoming law soon the whole of these small extensions have been sterilised for the period I have indicated; and your Lordships (if I may say so) would also, I think, have to give weight to a more vital and important consideration. We may be attending to the immensely difficult task of reconstruction well or badly; but what is important to bear in mind is that at least we are the men who at this moment have the responsibility of carrying out that task. Nobody else has. We commend this Bill to your Lordships with the assurance that we regard it as vital to our general scheme of reconstruction, as vital as the Transport Bill. While there is much to be said for the carrying out of alternative 725 schemes of reconstruction, I cannot help thinking that your Lordships will pause, and pause again, before deliberately rejecting a Bill which is recommended by those who, whether they use it wisely or not, at least have the responsibility of these terrible days, with the assurance that they regard the Bill as an indispensable part of their general methods of reconstruction.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.
§ THE EARL OF SELBORNE
May I ask the noble and learned Lord when he proposes to put the Bill down for Committee?
§ THE LORD CHANCELLOR
Tomorrow week. I want to give the House as long a time as possible in which to consider it.
§ HOUSE OF COMMONS AND MUNICIPAL CORPORATIONS (QUALIFICATION OF CLERGYMEN) BILL.[H.L.]
§ Read 3a (according to Order) and passed, and sent to the Commons.