§ Order of the Day for the Second Reading read.
§ VISCOUNT PEEL
My Lords, I beg to move the Second Reading of the Electricity (Supply) Bill. The object of this Bill is to secure the production of electrical power on the largest possible scale at the lowest possible price in this country. The method by which this end is to be attained is as follows: All high tension electricity generated by authorised undertakers in this country is in due course to be generated under control in accordance with a technical scheme for the whole country and sold through the Central Electricity Board to authorised undertakers. This Bill—and I would ask your Lordships to note this point particularly—does not deal with the distribution of electrical power. Such matters, with one small exception that I shall mention later, are left in the hands of the authorised undertakers themselves, whether they be municipalities or companies.
The first point that I wish to raise, the first question that I wish to answer is this: What is the case for a change in our system? The justification for bringing in a Bill to deal with electricity is that while electricity is becoming more and more the motive 733 power for industry, Great Britain is falling behind her industrial competitors. The Committee presided over by my noble friend Lord Weir set out a table—it will be found on page 5 of their Report—showing the consumption of electricity per head of population in various towns and countries. This consumption varied from 1,200 units in California to 110 units in Great Britain. These figures, let me add, apply to authorised undertakings and do not include private generation. If the figures of private generation were added, the consumption would probably reach 200 units in this country, but again, in order to make the figures comparable, additions would have to be made to the figures of consumption in other countries which have been quoted. The effect of the Report is that while the tables may need certain readjustments, there can be no doubt that we are not consuming electricity to anything like the same amount as other important industrial countries.
The figures upon which this Bill is based have, of course, been very carefully examined, tested and re-tested by the Electricity Commissioners. In addition to being examined by the Electricity Commissioners themselves, they have also been submitted to very searching examinations by a number of very eminent outside experts, who generally agree with the conclusions arrived at by the Electricity Commissioners themselves. In spite of this agreement there are still a certain number of froward persons who dispute these figures. They attack them as official, they profess their distrust of them, and they suggest; that they are not very strongly supported by what might be called outside independent evidence. I therefore wish to call in aid the admirable analysis rcently made by Dr. Eccles, the President of the Institution of Electrical Engineers, who fully confirms the conclusions of the Weir Committee and who, I think, has thrown what I might describe as rather an uncomfortable bombshell in the camp of our opponents.
Dr. Eccles first of all remarks that the outstanding feature of the electrical supply of the world is its tendency to concentrate into big units of management and production. In Europe this tendency was forced on by the War and 734 by the economic consequences of the War, and Dr. Eccles adds:—In addition to these immediate and visible forces there was impulsion due to the instinctive feeling that modernisation of the basic industries was impossible without previous electrification on a national scale.Intense activities have been displayed in the electrical field of production in France, in Italy, in Germany and in Scandinavia, and also, of course, in America—in short, in the countries of our great industrial competitors. From the analysis which Dr. Eccles gives, which I think brings up to date the figures that were given by Lord Weir and his Committee, it seems that the annual consumption per head of population varies from 1,800 units in Norway to 155 in Great Britain and 129 in Italy. In this country the consumption is less than one half of that of the United States, and if you take only one of the best examples in this country of development, if you take the most fully electrified area, the Newcastle area, you find a consumption of 600 units per head, which is only one third of that for similar zones in America.
I want to take different aspects of these figures because the bearing of one set of figures is sometimes challenged. Dr. Eccles takes another standard; that is to say, the number of units delivered per kilowatt installed. The figures for four big States are: In the United States, 2,700; in Italy, 2,640; in Switzerland, 2,430; and in Great Britain, 1,220—showing, I am sorry to say, a big lag in the case of Great Britain. If, taking another aspect of the same figures, you make a comparison between the largest undertakings in these countries sufficient to give an annual output of 2,000 million units instead of taking the average of all undertakings, good and bad alike, you get these figures: In Italy, with five companies, you get, units per kilowatt installed, 4,250; in Germany, for two companies, 3,460; in the United States, for one company, 3,430; in France, for three companies, 2,040; whereas Great Britain, for seventeen companies, has an average of 1,730, coming again, as your Lordships will observe, at the end of the list. Comparing the size of undertakings, you require seventeen companies in this country, as compared with three in France, two in Germany and one in 735 the United States, in order to get a product of 2,000 million units. Taking this table and drawing from it the necessary deductions, it will be clear that we are getting only 4¾ hours work per day out of the machinery in a number of our best stations, while according to the figures given in the Economist of November 6, which I have tested, Canada is getting something like 12 hours work per day. Another comparison may be made. In 1925 America obtained 35 units per annum as against 28 in this country for each pound sterling invested.
When Dr. Eccles is discussing the cause of this backwardness he makes one very important statement. He says that it is not due to any lack of water power in this country, since Belgium, which is more highly electrified than Great Britain, has no hydraulic stations; and he shows that there is good reason to suppose that thermal generation will continue to be more economical than hydraulic generation in most of the existing industrial areas of the world, partly owing to the cost of transmission from the source of supply and partly to the ever-increasing efficiency of the thermal plant. He concludes that our backwardness is due to a number of causes—to acomplex of primary causes, economic and political, but the chief electrical cause is our neglect to use the principle of inter-connection for cheapening supply. This neglect has been due, in turn, partly to the stiffness of our national organisation, partly to the cheapness of coal and transport.Another cause is that many of our installations are by no means efficient, the bulk of them as judged by modern standards.
In all these respects and looking at these figures in their different aspects, and indeed whatever set of comparable figures you take, one regrets to see that the same result appears—namely, that Great Britain appears to be low in the scale of the great industrial countries in regard to electricity. In one point only has Great Britain pre-eminence and that is in price. The average price charged in Great Britain is 1.76d. per unit, in the United States 1.53d., and then we get down to Switzerland 40d., Italy 40d., and France, one of our great competitors, 33d. In connection with these figures I wish to draw your Lordships' attention to the fact that 736 they are the average prices to the consumer. A great deal of confusion has arisen between the average price to the consumer, after a great deal of transportation and carriage has taken place, and the price of generation to the power company or the municipality as the case may be.
I submit to your Lordships that the introduction of this Bill is justified on three grounds:—Firstly, because we are behind our competitors at the present moment; secondly, because, as I can show later, we are not progressing at the same rate as other countries and are therefore falling still more behind; thirdly, that, although there is development in our electrical generation and although the number of units produced now is much larger than it was four or five years ago, yet that production is on the wrong lines—on the old lines—on uneconomical and wasteful lines.
The next question that I desire to ask and to try to answer is: What has been done to remedy this state of things? It was recognised, and perhaps your Lordships will forgive me for going into a little history because it illustrates the situation very forcibly—it was recognised early in the War that the electrical industry was in need of reorganisation, and a series of Committees was appointed to consider what steps could or should be taken. The Electrical Trades Committee, the Coal Conservation Sub-Committee of the Reconstruction Committee and, most important of all, the Electrical Power Supply Committee, under the Chairmanship of my noble friend Lord Forres. As a result of the last-named Committee a Bill was introduced in 1919 to secure co-ordination in comparatively large areas. The Bill as introduced and passed in the House of Commons set up the Electricity Commission and started with a certain amount of compulsory powers, but at a later stage in the history of the Bill it was thought better to proceed rather by way of persuasion and agreement than by way of compulsion.
The results, unfortunately, have not been very successful. In the seven years during which the Electricity Commissioners have been functioning only three joint electricity authorities have been set up and four advisory boards, the latter without any effective powers. It is thus, I am afraid, abundantly clear that the policy of persuasion has failed. 737 It has been given a good trial, but it has been unsuccessful, and in January, 1925, the present Government appointed a Committee under my noble friend Lord Weir, to reconsider the whole question. The present Bill is very largely based upon the recommendations of that Committee. Perhaps I may add, to show how thoroughly the matter was tested and examined, that Lord Weir's scheme was itself the subject of a very careful, painstaking and thorough examination by a. Cabinet Committee at the beginning of last year reaching over into this year.
Having shown then what has been done, and what has not been done, I desire to ask, and it is pertinent to our Bill and inquiry: How has the present position arisen? It has very largely arisen owing to the fact that Great Britain was one of the pioneers of electricity, and is paying now, to some extent, the price of being one of the pioneers. At the outset electricity was regarded simply as a means of lighting, and Parliament dealt with it on much the same lines as gas; it was confined to local authority areas and stringent safety Regulations were imposed. Though private enterprise was not ruled out, lighting was regarded as pertaining more to the duties of the local authorities, and the earlier Acts clearly contemplated that, even when undertakings were started by individuals or companies, they should in the long run pass into the hands of the municipal authorities. There was, in fact, in the earlier stages, a distinct municipal mark upon electricity supplies. Electricity grew up with a parochial stamp upon it, which it certainly has not lost up to the present day. Indeed, at the present time two-thirds of the undertakings are in the hands of local authorities, whose activities are necessarily confined to those areas over which they immediately rule.
When it was found, towards the beginning of this century, that electricity could be used for power purposes, it was realised that some change of method was necessary, and a Committee was appointed under Lord Cross to suggest new methods. The result of all this was simply to allow the creation of power companies, who were given larger areas but at the same time restricted to the supply of electricity in bulk and for power purposes—that is to say, there was 738 a duplicate system in addition to, and not in substitution for, the existing distribution companies. By that time the greater number of large towns already had their own undertakings, and consequently the activities of these power companies were very much circumscribed. They had to struggle for their existence, and, roughly speaking, when the War came they had not achieved their desired success. In fact, I repeat, the present position is permeated with the old parochial feeling and system in which electricity started, complicated by a large amount of (shall I say?) healthy competition, or, to use a darker word, distrust and jealousy between the local authorities and the power companies.
The results of this are startling, and must be marked by this House. Instead of these large areas and large production, to which Dr. Eccles refers, Great Britain has some 600 stations, the large majority of which are very small, besides innumerable private installations of tramways, factories and so on, to which I have already referred. The effort, the waste and the loss of money and time are gigantic, and the possibilities of development are in these ways very largely hampered. Take the authorised undertakers alone. They generate electricity at no less than fourteen different frequencies, and many different voltages, while the spare plant installed amounts to about 62 per cent. in excess of the maximum demand on it. The load factor for the different stations varies from 7.3 per cent to 62.3 per cent., the average for the whole country being 29. It is worth noting, I think, that the policy of Parliament coincides with a very deeply rooted British instinct; namely, the desire to run your own show, and never to produce any article which resembles in any way that which is produced by your competitors and colleagues. No doubt there is some value in this rich variety of output but originality has run rather wild and we have now a plentiful store of varied experience on which we may base some degree of standardisation.
Having referred to the actual position in this country, may I ask what is the scientific or the electrical ideal at which we ought to aim? If we could sweep away the whole of our existing installations, and start afresh with the 739 new knowledge that we now have, undoubtedly Great Britain would be treated as a single unit. Stations of large capacity would be erected on sites favourably situated for coal and water, and would be inter-connected with one another by means of high tension transmission lines. From this primary system of generation and transmission, supplies in bulk would be made available for distribution in the various local areas. But some may say: "Well, that may be the ideal, but why should the state interfere?"
§ VISCOUNT PEEL
One noble Lord does say so. I should like, then, to address myself to that particular point. Why should we not let the ideal be attained by the ordinary methods of private enterprise? I have already said that Great Britain is behind other countries in electrical development, and there are persons who suggest that if it were left alone we should be able to catch up with other nations. Even if it were granted that, if things remain as they are, the industry will struggle slowly towards something approaching the ideal which I have defined, that progress must inevitably be very slow. It might even happen that it would not be attained until the coal resources of this country had been nearly exhausted, and the Government view is that that is too long a period of delay. As showing the difficulty under which present conditions work I might note that in 1916, when the Board of Trade issued a circular urging undertakers to interconnect for national purposes during the War, the undertakers were willing, but they found themselves quite unable to do it partly for technical, partly for financial reasons.
But the point is not so much whether the ideal can ultimately be reached, but how does Great Britain stand in relation to other countries from the point of view of progress? The capacity of authorised undertakers in this country has increased from 2,500,000 kilowatts to 4,750,000 during the past six years, and the annual 'average rate of increase of consumption 'has been 14 per cent., which compares with Germany's 25 per cent. per annum, and Italy's 38 per cent. per annum 740 between the years 1921 and 1925. In the last two years some £33,000,000 of new capital have been invested in the electrical industry. It is significant to note that in the one month of January, 1926, in America, no less than 168 million dollars were invested in new electric light and power companies, or about the same sum as was invested in Great Britain in twenty-four months. There is no reason to suppose that we are progressing more rapidly than other nations. On the contrary, we are falling further behind. Moreover, while our progress is largely upon the old lines, other nations are reorganising their systems.
In this connection Dr. Siegel, one of the leading financial experts connected with electricity supply in Germany, wrote in May, 1926:The German experts can view the Bill with satisfaction because in its objects it recognises the correctness of the opinions which have hitherto been voiced by the majority of German technicians, and the greater part of which have already been carried out in practice.He continued:The carrying through of this great electrification scheme by England will decisively influence the future progress of German industry, and above all, German exports of industrial products upon the world market.…We shall have a much more difficult fight on the world market owing to increased difficulties for export of industrial products created by cheaper cost of production in English industry.It follows from what has been said, first, that this country is not progressing as fast as other countries and consequently will fall further behind; secondly, that it will reach the ideal, if at all, only after long delays; and, thirdly, that the progress now being made is largely along the old lines, and therefore in itself tends to retard the time when the ideal will be reached. If anything, therefore, the more the progress at present, the greater the need for a Bill to reorganise the industry upon sound lines before it is too late.
Such, then, being the ideal, how far does this Bill itself approach that ideal? In general outlines the Bill adheres fairly closely to the ideal that I have sketched out. At the same time, the Government realise that existing conditions must be taken into account and existing rights safeguarded as far as possible; to this extent there is a 741 limitation imposed. On the other hand, the Bill aims at reducing the number of generating stations (at present about 600) to some sixty, either new or existing, and at interconnecting these selected stations. The result will be that the most efficient stations in the country will be used to far better effect, and the necessity for each station to have its spare plant will be substantially reduced. At present the amount is about 62 per cent. in excess of the maximum demand. Under this Bill much of that excess plant will itself become revenue-producing.
Let me give your Lordships a very brief sketch of the principles which are implied in the very texture of this Bill. There are three principles upon which the Bill is founded. The first—I do not want to shock my noble friend behind me—is a minimum of State control. The powers and duties of this Bill will be exercised by a Central Electricity Board which, while it is appointed by the Minister, will not be in any sense a Government Department and will not be responsible to Parliament It will, no doubt, be armed with considerable, statutory powers under this Bill.
§ VISCOUNT PEEL
I will come to that in a moment. Otherwise it will be subject to the general law in precisely the same position as any other undertaker, and it will be free to adopt schemes and to carry out schemes so adopted as it sees fit. My next principle is that there is in the Bill a minimum of State interference. Apart from such control as is necessary to safeguard the public interest, State interference, either through the Commissioners, or the Minister or arbitrators, is practically limited to the settlement of disputes between the Board and the existing undertakers. Even this element of interference would not be necessary but that it is the avowed intention of the Government to safeguard existing rights, and this has led to a rather elaborate system of appeals. The extent to which this interference must take place will depend, of course, upon the good will of the authorised undertakers. If, as I hope they will, they co-operate heartily with the Board that interference will be reduced to a minimum.
742 My third principle is a maximum of freedom allowed to existing undertakers. Two-thirds of the generation is, as I have said already, done by the municipalities Generation will be placed under the control of the Board; distribution will remain in the hands of existing undertakers, and there is nothing at all to prevent private enterprise or, as your Lordships will see, municipal enterprise from developing distribution to its fullest extent. In fact, there will be greater opportunity for the development of distribution, partly through the saving of capital on generation and the setting free of capital for developing that larger distribution which will be possible through the cheaper generation of electricity. I have no doubt your Lordships are well aware that in the electricity business the profits come not from the mere generation but from the sale of the electricity.
Under the Bill, what is the executive authority; that it to say, the authority that actually carries out the work? That is carried out by a. Board, and that Board consists of a Chairman and seven members, and it will be appointed by the Minister after consultation with the various interests, as provided in Clause 1. It is not suggested that the Board should represent various classes of undertakers; that, of course, would only enhance those difficulties of parochialism against which we are fighting; but it will be a body of men of wide commercial and financial experience who can command the confidence of the country and the respect of the industry. They will function rather as a board of directors and will obtain such technical information as they require either from their own or from independent experts. Their tenure of office will be from five to ten years and the intention is to make them retire in rotation, so as to obtain a continuous policy.
Now I come to what is, perhaps, the most technical and difficult part of the Bill. How does this scheme actually operate? I wish to deal now with the functions of the Board and to avoid as far as possible any unnecessary detail, though I think I must answer some questions which have been raised as to the sale price of electricity and other matters. I will try to give a general sketch of how the Board will operate. The Bill provides, first of all, that the 743 Electricity Commissioners shall prepare and transmit schemes to the Board. They may prepare one scheme for the whole country or a series of schemes for different areas, covering, ultimately, of course, the whole country. A scheme will show what stations should be selected, provide for their interconnection by means of main transmission lines and for such standardisation of frequencies as may be necessary. It will also include temporary arrangements to be in force during the completion of the scheme and it will thus give in general outline the best method of generation for the area to be dealt with.
The scheme then comes down to the Board and the Board must publish it and give at least a month in which any one interested may make representations. The Board must consider these representations and, if necessary, hold an inquiry and then adopt the scheme with or without modifications, governed, of course, by the general scheme set out by the Electricity Commissioners. The scheme as adopted must again be published, and any authorised undertaker on whom obligations are laid may lodge an appeal within one month. We will assume, then, that a scheme has been adopted. It now becomes the duty of the Board to carry it out. I need not say much about the construction of the transmission lines and the standardisation of frequencies because those are matters merely of physical construction. The main function of the Board at this time is in connection with the owners of the selected stations. The procedure laid down in the Bill is that the Board should make arrangements with the owners for the stations to be operated in accordance with the provisions of the measure and for such alterations and extensions to be made as may be required from time to time.
The owners of the selected stations are the pivot on which the whole scheme of the Bill revolves. These stations are now worked either by great municipalities or power and other companies, who work them for the benefit of their respective areas. The Government scheme is based upon the widest and most economical user of such stations, not only for the advantage of the limited areas where they now work but for the interest of larger areas and, indeed, for the good of the 744 whole country. The Government are satisfied that this can be done without prejudice to the owners of these stations and, indeed, have backed their opinion in Clause 13 of the Bill by giving them safeguards which guarantee the pecuniary interests of these owners. Such extension of the use of these efficient stations can only be brought about by interconnection and co-operative working. That is beyond the power and capacity of the largest of these stations and that is the reason for the setting up of this Central Board. The benefits flowing from such co-operative action are undisputed by the greatest technical experts in this and other countries, although opinions, of course, may differ somewhat as to their extent. But it is the hope of the Government that there will be the fullest and closest co-operation in the interest of the whole scheme and of the whole community between the owners of the selected stations and the Board.
There are, also in reserve, of course, and I want to make this plain to your Lordships, certain compulsory powers; because it is remarkable how far more efficacious is the use of reason and argument when it rests upon, or is backed to some extent by, compulsion. If it should happen, unfortunately, that an owner should refuse to enter into these arrangements, the Bill enables the Minister of Transport to make an order transferring the station to someone else upon payment of a price laid down in the First Schedule, which is roughly the capital cost less depreciation. It will be understood that this is not an essential part of the Bill and one hopes it may never be required. I would point out also that it is only the station with which we are concerned here. The whale of the distribution system of that particular selected station will be left entirely in the hands of the owners. The underlying idea is that the existing undertakers should continue their businesses, subject only to the adjustments necessitated by the reorganisation scheme, and when compulsion has to be invoked, if it has to be invoked, the Board have then to give a preference in working to any authorised undertaker or person who is prepared to do the work and are only empowered to carry out the work themselves in default of any reasonable alternative. I need not go in detail 745 into the matter of the new stations, because the same principles exactly apply.
I will only refer briefly to the question as to whether there may be any difficulty in raising capital for these new stations. I cannot think there will be. After all, in raising capital for new enterprises, you generally have to ask, first, whether they are going to pay, and whether they will give a still further output. Here you have absolute certainty, because the Board buys the whole of their output. Therefore, whatever money is invested in the new stations, shareholders will know that the whole of the electricity produced will be bought from them by the Board. I should like to say that these powers are confined to, and affect only, these selected stations and not the other 640 stations which will be called the non-selected stations. After they have entered into an arrangement with the selected owners, the Board have to fix a date from which the owner of the selected station comes under an obligation to operate the station so as to generate such quantity of electricity, at such rates of output, and at such times as the Board may direct. The object of this is perfectly simple. The Board will study the requirements of the area as a whole and will divide this into a base load and a peak load. They will arrange that the most up-to-date and efficient stations shall bear the base load, running at a high load factor for the whole three shifts, while other stations of lesser efficiency will run for one or two shifts only. By this means the whole load will be carried in the most economical fashion and the stations worked on a much improved load factor. At the same time, by means of interconnection the necessity for carrying a large amount of spare plant will be obviated.
After the generation, what happens to the electricity? What is the commercial system under which the Board works? All the electricity thus generated will be sold to the Board at the cost of production, as laid down in the Second Schedule. Put broadly, this price includes all running expenses and all capital charges. It follows, therefore, that whatever amount is generated, whether it is less or more than hitherto, the Board must bear the full cost of the station. Meanwhile, the owners of the selected 746 stations are entitled to demand back from the Board so much of the current generated at their station as they require for their own purposes. If, owing to the directions of the Board, they require more than the whole output of the station they are entitled also to demand this extra amount. I want to deal with the difficult question of price a little later. We will assume that the Board have begun to couple up the stations, and that they are prepared to supply. When they give that notification they come under an obligation to meet the demands of all authorised undertakers in the area, whether they are owners of selected stations or not, but, owing to the fact that some of the authorised undertakers have statutory rights to supply in bulk, the Board must in such areas supply indirectly—that is, through the undertaker who has the rights over bulk supplies. This, again, is not an essential part of the Bill, but is rendered necessary by the Government's desire to preserve existing rights.
The point I want to emphasise at this stage is that all authorised undertakers have a right to demand whatever supplies they need and the Board are under an obligation to supply them, either directly or indirectly. If the power of the undertaker to demand a supply stood by itself, it might very well be that the undertakers would continue to run their own stations and would merely ask the Board for any surplus they might want, using the Board, therefore, merely as a stand-by. Such a course would mean that a, number of uneconomical stations would be kept in use and the advantages of the scheme would be frustrated. Therefore, side by side with the duty of supplying the demands of these authorised undertakers, the Board are given other rights. First of all, where an undertaker demands a supply, the Board may make it a condition of giving that supply that the undertaker shall take all his requirements from the Board, provided, and provided only, of course, that the Board's price is less than the local cost of generation—that is to say, the price at which the man himself can generate it. In the second place, where no demand is made by the non-selected station, the Board can offer a supply and, if this offer is refused, can apply to the Electricity Commis- 747 sioners for an order requiring the undertaker to take the supply and shut down his station. This, again, is subject to the proviso that the Board's price is lower than the cost at which the man can generate it.
Without these provisions it is obvious that the benefits of the Bill and of the cheaper production of electricity could not necessarily go to the consumers who are supplied by these companies. Compulsion, no doubt, will be unnecessary in most cases, because, if they find that they can get their supplies cheaper from the Board than they can generate themselves, the consumers and the shareholders will probably insist upon their doing it. I have said that over distribution they practically have no power except this, that they have the right to supply individuals in unoccupied areas subject to certain safeguards. In this way, and with these powers, the Board will be able to meet all the requirements of the area and deal with them in the best and most economical manner.
That is the general sketch of the method by which the Bill operates, but there are two points that I must discuss further and they are the question of the prices of the Board and the question of standardisation. So far as the operations of the Board are concerned, the underlying principle is that the Board is to conduct its operations on a nonprofit-earning basis, and for this reason it is laid down that the tariff shall be fixed from time to time for a term of years in such a way that the receipts shall cover expenditure with such margin as the Commissioners may allow. The basis of the tariff to be charged by the Board will, therefore, be automatically fixed by the cost of generation at the selected stations; the more the operations of the Board extend and the better the load factor on the stations, the lower the tariff must fall. This is, of course, the central idea of the whole Bill, which is to reduce the cost of generation to all undertakers by the concentration of generation in the most practical manner. The Government are advised that the tariff will be lower than the cost of local generation at non-selected stations and, of course, it must be if the Board are to supply at all.
So far as selected stations are concerned the position is slightly different. The tariff in this case will be based on 748 the average of the costs of production at the different selected stations, and thus may be slightly higher than the actual cost of production at a particular selected station. It does not follow that the tariff will necessarily also be higher than the cost of production at that station if the owner continues to operate it solely for his own purposes, since the Board may be using that station in order to get a better load factor. But it is possible that it may be dependent upon a combination of the owner's requirements and the effect of the Board's directions. Accordingly, special provisions have been inserted in the Bill as to the price to be charged to owners of selected stations. They have several alternatives. They are first given the alternative of the tariff or the cost of production at their own station adjusted to their own power and load factor, coupled with a proportion of the Board's expenses, or they can take the tariff, the Board's tariff, whichever is lower. Or, if they can show that the price at which they themselves would have produced the electricity without the interference of the Board is less than either the tariff price or their own new price plus the Board's proportion of expenses, then they can get the electricity at that price.
It may perhaps, at first sight, seem a little unreasonable to require the owner to sell to the Board at the cost of production and to re-purchase at the cost of production plus a proportion of the Board's expenses. The justification, of course, is that the better use made of the plant owing to the Board's operations and the saving of spare plant through interconnection will reduce the cost of production, and it is not reasonable that the owner should obtain the whole advantage of that when the result is due to the action of the Board itself. In fact, they share it. On the other hand, if, as of course is very unlikely, the Board's action does not result in lowering the cost of production, then the guarantee comes into play and the owner is in that way protected. Now it will be observed, on the one hand, that every undertaker, whether he demands a supply or is forced to take a supply, is guaranteed against being charged more than the cost of local generation or the cost at which he can generate it himself while, on the other hand, the Board is bound to pass on any 749 benefits which may be progressively obtained because it acts itself on a non-profit-earning basis.
So far, I have dealt only with direct supplies by the Board, but there are certain provisions about indirect supplies, that is to say, supplies given through another undertaker. When the supply is passed on through, we will say, a selected station to another undertaker, then he has to pass it on at the same terms plus a specified allowance for the costs of transmission. That is to secure that the benefit of cheaper production is spread through the country. There also are provisions, of course, to secure that the actual consumer gets the benefit. That is secured in the case of companies by means of sliding scales of prices and dividends and revisions of maximum prices, and in the case of local authorities by an alteration of the existing law so that surpluses may be applied to the reduction of price rather than be put to the credit of the local rates.
Another point on which I must say a word is standardisation. Standardisation, of course, is not an end in itself. Its object is simply to enable interconnection to be completely carried out. On the one hand, benefits accrue both to those who are to be standardised and to those who already have the standard. It also benefits the manufacturers and consequently the public. Owing to the benefits, the Board will naturally carry out standardisation as far as possible, and as the station which is altered does not gain any particular advantage which is not common to all it is reasonable that the cost should be spread over the whole of the electrical industry. So the Bill provides that the cost to the Board shall be repaid by the Electricity Commissioners, who, in their turn, will make a levy over the whole industry.
I would now refer to finance. As the Board is to be a business undertaking it must raise its own capital, but, of course, it will be in a difficulty at first because it will have, at the start at least, no tangible assets. The extent of the Board's sales will, of course, depend upon the efficiency with which the scheme is carried out. It may be, therefore, that anyhow at first they will be unable to raise their funds at a reasonable rate, and in order to overcome this difficulty 750 the Bill provides that the Treasury may guarantee the principal and interest on loans up to£33,500,000. That, of course, is the amount necessary to make the interconnections and do the other work. This sum covers the cost of erecting the "grid" and also standardisation. Any further capital must be raised by the Board on their own security. They would then, of course, have ample assets of their own. Thus, the Government make no direct contribution to the Board and give no subsidy to the industry. If any payment is made under the guarantee the Board are required to repay it. They are, in fact, given the well-known trade facility terms.
Now, may I say a few general words on the question of the safeguarding of existing rights and interests? While the object of the Bill is, as I have shown, to reorganise the whole of the electrical industry, it is the fixed desire of the Government to interfere as little as possible with existing rights. These fall under three heads—generation, supplies in bulk and distribution to customers whether for light or power. So far as generation is concerned, the Board, as I have shown, have very considerable powers of control. The object of the Bill is to restrict the right of individual undertakers to continue uneconomic generation, and in return for this restriction they are given the right to demand all the current they require from the Board at a lower cost than they can produce it themselves. When it is remembered that the profits come not from mere generation but from the sale of current, it is clear that the restriction, instead of doing harm, will really result in advantage all round, and though the Board can interfere with generation, even so the actual operation of these selected stations so far as possible is left in the hands of existing owners. As regards supplies in bulk, I have pointed out that where an undertaker already has those powers the Board cannot ignore them but must meet any demands in the area through the agency of such undertaking; but as far as distribution to customers is concerned, the Board has no power whatever except in the isolated cases to which I have already referred. This right clearly does not affect any existing undertaker.
751 There has been much criticism of this Bill, and I think the main charge which has been brought against it is that it is a Socialist Bill of nationalisation. One noble Lord has confided his views to a paper called the Referee, in which he describes this Bill as being (I think) a shameless attempt to nationalise the electrical industry. It is rather a remarkable thing, if that be so, that the Labour Party on the Third Reading in the House of Commons tried to throw out the Bill on the ground that it was not nationalisation, but possibly they may be no judges of what nationalisation really is. It is remarkable that this Bill, if it is this shameless attempt to nationalise, should be supported, first of all, by the Minister of Transport, who happens to be President of the Anti-Socialist Union; it is odd also that it should be supported by men of such well-known subversive tendencies as my noble friend Lord Weir, and that it should have been largely conducted in another place by that well-known Communist intriguer, the Attorney-General.
I think, however, that it is pretty clear from what I have said that this sort of criticism is unfounded. I do not say that your Lordships will necessarily be greatly concerned as to whether this Bill is or is not in accord with some political theory. You will probably consider whether it is or is not in itself a useful and admirable Bill. But it is rather remarkable that this should be called a Socialist Bill or a nationalising Bill when the Board itself is as unfettered in its actions as I have described it to be, and when it has so much power of interfering with municipalities in the kind of action which is generally, I understand, considered to be a form of State or municipal trading. I ask: What are the tests of this being a nationalising Bill? First of all, it does not take one single wage earner more under the control of the Government. It does not create one single civil servant in excess of those at present at work—for the employees of the Board are not in any sense civil servants. All that is effected in this Bill is generation, and there is no suggestion that even this, much less the industry as a whole, should be run as a State concern.
It is quite true that Great Britain may be treated as a single unit and, to that 752 extent, the scheme may be called national, but such treatment is essential from a technical and economic point of view, and in no way has to do with the ordinary significance of the word "nationalisation." On the contrary, so far from imposing fresh restrictions of a bureaucratic type, it seeks to remove those already imposed and to set free the industry from all those ties and bonds which the policy of the State and legislation have placed upon it in its infancy, and which now so largely hamper its development. I think that the danger is rather on the other side. The danger may be that consumers and others, finding that they cannot get cheap supplies of power, may be so disgusted with the existing system that they will turn to other and less useful remedies.
I will sum up, in conclusion, what I conceive to be the advantages obtained from this Bill. First of all, the pooling of the generating resources of the country will result in the utilisation of the most efficient stations in the best manner. The country will gain the advantages of large units of plant, a considerable reduction in coal consumption, a reduction of spare plant to a minimum and an improvement of the national load factor. Less capital will be needed for producing a given amount of electricity and the return per kilowatt installed and per pound invested will be increased. The cumulative effect will be a marked reduction in the cost of production, estimated by Lord Weir's Committee to amount to about£44,500,000 on the national bill when the consumption per head has risen to 500 units. Again, the existence of the "grid" transmission lines, crossing the country from one selected station to another, will make it possible to carry supplies through parts of the country where at present no distribution system exists and thus afford a welcome opportunity for the development of rural industrial areas. At the present time I understand that in this country only 400 farms, or .8 per cent., have a supply of electricity, whereas in Germany no fewer than 90 per cent. of the farms are supplied. The Bill will also open up a market for the sale of energy produced at waste heat and water power stations and any other forms of energy that in the future may be discovered.
753 It will be noted also that standardisation, by eliminating the multiplicity of parts, will lower the cost of manufacture and benefit not only undertakers but the manufacturing and export industry. In addition, the areas standardised will receive the benefits of the national scheme and will also add to its efficacy. The reduction of cost which will follow will give an impetus to development which will itself tend to reduce the cost still further. The possibility will be opened up of electricity being made available for types of industry which at present prefer to continue with steam. The use of electricity for domestic purposes will be encouraged, and industries which depend upon electrical power will be stimulated. As regards finance, existing undertakers will be able to utilise all their capital for the development of their distribution systems and should, therefore, be able to progress more rapidly, while at the same time the capital required for generation, being smaller in amount, will also be employed less wastefully.
There is just one more observation that I should like to make—I am afraid I have detained the House for a long while—and it regards the time factor. I have spoken of the power factor and of the load factor; but in all these matters time is of the utmost importance. Our great competitors, Germany, America, France and other countries, are developing their reorganisation schemes at a great rate, while we, at the same time, are still resting for the most part in our old slow, confined, parochial system. We have a chance here of assisting industrialists. I often think that it is difficult to understand how a man can go on manufacturing in this country; he finds so many obstacles in his way, he is exposed to so tremendous a competition, he has to meet strikes and industrial troubles and he has to bear all the burdens of the War. Here is a chance, by passing this Bill and giving an opportunity for the development of electricity on the largest scale at the cheapest price, to do something to assist our manufacturers and to support and help them in the great world struggle in which they are engaged. I invite your Lordships to use all your influence to co-operate with the Government in assisting and furthering this most desirable end. I beg to move.
§ Moved, That the Bill be now read 2ª—(Viscount Peel.)
§ VISCOUNT HALDANE
My Lords, if I ask your Lordships to permit me to intervene at this early stage in the debate, it is for no formal reason. For upwards of thirty years this question has been one which has engaged my interest and my affections. I was privileged to be Chairman of the Coal Conservation Committee of 1918, in which we formulated the broad principles which to-day, in an improved form in many respects and yet in a form substantially the same, have come to light in this But since then a good deal has happened. The Government of the day, a Conservative, or perhaps I should rather say a Unionist Government, impressed by the Report, resolved to have it revised, and a Committee was appointed by the Board of Trade, over which Lord Forres presided, which worked the whole thing out. It was a very valuable Committee. On that there was introduced the Bill of 1919, which had such an unfortunate fate in this House.
The Bill set up Electricity Commissioners, and in its original form it gave them powers which would have left us a good deal further on to-day than we now find ourselves. In this House there was violent storm, and people were apprehensive of State interference and of individuals being prejudiced. There was language of a very pronounced kind, and the result was that your Lordships struck out nearly all the compulsory powers of the Electricity Commissioners, a body set up for the first time by the Bill. The Electricity Commissioners worked on as well as they could, but much hampered, for six years, and then a Committee was appointed by the present Government, over which there presided a man of very great industrial knowledge and ability, who I am glad to say is present to-day—Lord Weir. Lord Weir had as his colleagues Lord Forres, with all his experience of the previous Committee, and Sir Hardman Lever. They produced a scheme which is in the main the scheme of this Bill. It was a scheme elaborately worked out, and I am glad to say it has been published and can be obtained in the Vote Office.
It has been more than suggested that the present Bill, which is based on the 755 research of these Committees, and on the actual experience of the Electricity Commission, is a Socialist Bill, a Bill for nationalising industry, and a Bill that interferes unduly with private enterprise and particularly with its profits. All these things have been said, and said with much emphasis. I too have had the privilege of reading the Referee, a newspaper which I have not hitherto associated much with science, but in the name of Lord Sydenham I found a good deal which I do not recognise as science or arithmetic. Since then there has been a good deal of the same kind. I believe the view so put forward to be utterly fallacious, and founded upon misunderstanding of the clauses of the Bill. The noble Viscount has given an admirable description of the situation and of the Bill, and I do not propose to travel over the ground he has occupied. It is a Bill which is very difficult to understand, and the noble Viscount, very wisely I think, did not inflict upon your Lordships any detailed exposition of its clauses. There are forty-seven clauses and seven schedules, fulfilling accurately the definition which Lord Chancellor Westbury gave of a deed—something difficult to read, impossible to understand and disgusting to touch.
I propose to take rather a different line. I am not standing here to praise the Bill. It is a Bill which deals with a subject matter which has already undergone close consideration. The Cabinet of the late Labour Government appointed a Committee to go into the whole subject. We had not then the advantage of Lord Weir's Report. I was an active member of that Cabinet, and we went into the matter and produced proposals which were not very different from the foundation of a great deal of this Bill, but there were some things which I think we should have done, had we lived long enough, which are not done in this Bill. This Bill deals with three subjects—generation transmission and distribution of electricity by private people and power companies and local authorities who sell it to the consumers in their localities. Distribution is left alone, and yet if you have to talk to working men who live in the few localities—for, unfortunately, they are few—where there is a really decent system of distribution, and contrast what they tell you of their experience with the 756 experience of the great bulk of the population, you will be surprised at their keenness of feeling about a subject apparently so remote. They get their hot water, baths at any time of the day or night, their power for cooking, their power for cleaning and lighting, they get it all at an inclusive rate of about 2d. in the favoured districts, and live in houses which are very appreciably more comfortable than the old class of cottage in which they lived before.
At any other place it is very different. Your Lordships know that if you take your lamps into a new district, with a different system of voltage, you will find your lamps burst and break; that is to say, the wires are consumed and your electrical apparatus very often will not work at all. The reason of that, as the noble Viscount said, is that there are about fourteen different standards which the different distributing authorities employ. That is all very bad. It interferes with distribution in this country very much. We want standardisation there. Of that there is very little in this Bill. In other aspects the Bill is a very good one.
The three things with which it deals are generation, transmission and local distribution. As regards transmission, I think the scheme of the Bill is an admirable scheme. Indeed, it is the only scheme that was possible for scientific reasons. Electricity will be conveyed by overhead cables at a high voltage, which is turned by conversion to low voltages suitable for distribution in the localities; but when, having said so much, I come to generation, then the tale is not so good. Generation is left in the hands of private undertakers everywhere. Selected station will be operated by private persons. Now, that is all very well, but it is not as good as if they had been run by public authorities who would not have made a profit. These private operators will make profits up to 6½per cent. Not only that, but they will carry on private businesses with their own distribution system and they will be supplied with electricity from the Board at cost price. Well might the noble Viscount say in his eloquent speech that the lot of the generator at the selected station will not be a very hard one. It will be a very comfortable one: he will have State assistance in carrying on private business. 757 I do not really mind so much about that as I would have done otherwise, because the conditions under which he will operate are conditions which will be controlled by the State, and the position will be much better than the position as it was before the new Act had come into operation.
Still, at the same time, how anybody can say that that is Socialism, or how he can call a Bill socialistic which does not deal with local distribution puzzles me. But I am only a plain person, and I never could quite understand what is meant by Socialism. There are a great many measures of the present Administration which are not free of a certain reproach of conforming to that principle of legislating in the national interest, but I do not think this is one of the most striking. Rather I should say that this is a Bill which resembles the Bill brought in seventy years ago when the railway system was introduced into this country. It resembles the Bills that have been brought in to regulate motor traffic. It is brought in because it is in the public interest that it should be brought in. And how it, can be said that this Bill is a Bill which can be expected to be satisfactory to the Labour Party puzzles me. It is not satisfactory to the Labour Party. Still, it is a very good Bill for all that as far as it goes, and I want now, not to follow the noble Viscount in going over the ground which he has covered, but to present to your Lordships a picture of what life will be like under the new system. I am not going to refer to the forty-seven clauses and seven schedules: I shall not have occasion to speak of any of them, but all I say will be founded on what you will find in these clauses and schedules, with which I am pretty familiar.
To-day, as the noble Viscount said, we have got a very large number of generating stations, some of them very small and inefficient, others of them large and good. There are 600 of them, and they generate at different frequencies and different voltages, and they vary in every possible way. Your Lordships know, or some of you know, what a frequency is, and Lord Rayleigh, who is here, will, I hope, explain it in the course of this debate much better than I can do. As a dynamo whirls round, at two points at least it touches the brushes, which take off the electricity, 758 and, as it is going in one direction when it reaches the first brush and in a second direction when it reaches the second brush, the current is generated in different directions, and it called alternating current. That is the simple and natural way of getting, current from a dynamo. And it does very well, indeed it does the best for most industrial purposes. It is economical, be cause if you convert—if you transform, as it is called—into electricity that direct current involves a certain expenditure and a certain wastage. There fore the generating stations generate in the main in indirect current.
§ VISCOUNT HALDANE
Alternating current and indirect current are synonymous, but I quite agree that alternating current is the more natural expression. The thing, however, is the important thing, and not what one may choose to call it. What is of vital importance—and here I come to the very essence of the Bill—is that the electricity should be generated in large quantities, with a large load, because unless the load is large the proportion of cost is great. The load can only be generated largely if there is somewhere to take it when generated, and for that reason I go a little further than the noble Viscount went. I think the transmission part of the Bill is the most important part of the Bill, for in transmission by overhead cables has been found a way of disposing of the large load of electricity which henceforth we are to have.
The 600 generating stations—there are a few more than that—will be reduced to sixty. These will be selected stations, selected because of the convenience of the public and the possibility of supplying the electricity in large loads; and they will be left in the hands of the private persons who own them now, and who will come under certain obligations as to supply in large loads, and at the same time will have certain privileges. These power companies and generators will generate, and he bound to generate, to the full extent of their machines, and the Electricity Board, under the guidance of the Electricity Commissioners, will 759 take the whole of what is generated; they will be able to take the whole because of the large transmission cables which are ready to receive what they take. If an individual station finds that it can use for its own purposes more than the Board is taking from it—which might happen—then it is entitled to get back from the Board at cost price just as much as it needs. It has got an unlimited right, so that it can supply its own customers and thereby make a profit for itself in addition to the profit which comes to it by what is paid by the Board.
The transmission system is really a reservoir. It is very important for the understanding of this Bill to be clear about the position of the transmission lines in taking the place of a reservoir. Your Lordships know that if there is a reservoir for water and there is a large flow into it there must be a large flow out of it, or else it will overflow; and you know, too, that it is much more economical to send a large current of water in and take a large flow of water out than to do it with small pipes. That is the foundation of this Bill. I do not agree with the noble Viscount that transmission should have an unimportant or secondary place.
§ VISCOUNT HALDANE
Not in terms, but the noble Viscount did not give it the great place in his scheme which I expected.
§ VISCOUNT PEEL
I thought it was so easily intelligible, and I wanted to explain the more difficult parts of the Bill.
§ VISCOUNT HALDANE
I know, but that is the most difficult part, and the key to the most difficult part. You must explain how you have a reservoir, how you have high loads, and how you can distribute them. The electricity is taken by the great cables, and taken in unlimited quantity, and it is generated with high loads, and consequently generated very much more cheaply than small loads can be generated. And when it is taken it is conveyed long distances. The cables may convey it 150 miles and more, and it is taken to places from which it is distributed. It can be dis- 760 tributed even, in an emergency, to other points of distribution, if that is needed. Accordingly, unless the transmission system occupies the foremost place in the scheme it is impossible to have a selected generating station operating with large loads.
When the transmission cables have taken the electricity at high voltage to the local distributing centres the electricity has there to be converted down to electricity at low voltage. That would be done, as at present I am afraid, according to all sorts of systems; but some day hereafter we may get a uniform system of distribution to be controlled by the State, and the conversion of electricity of high voltage to electricity of low voltage should be on such a system. It is certainly very desirable that local authorities and local power distributing companies should distribute the same strength of electricity to their customers so that the lamps, the machines and the wires can be used anywhere. That is not so at present and, perhaps, it will not be so for some time. In this Bill we make a very fine start towards such a, system. That is the general plan—the generation of high loads into the reservoir, on which is the transmission cable, and then the distribution of the electricity at a diminished voltage to the local centres where it is required.
But that is not all. There is another aspect of this Bill which interests me very much. It is a Bill which operates for the whole country; that is to say, you will have transmission lines and generating stations everywhere, and generating stations so powerful that they will be able to generate all you want if you put in spare plant. The spare plant will always be there to a certain extent, although not to such an extent, as it is at present, that it causes loss of interest and capital which is lying waste by not being employed. But there will be a certain amount always available, and the selected stations which are not running at full power will be able to come to the rescue of stations on which a great demand is made. Supposing war breaks out and supposing London is bombed by aeroplanes. I am not one of those people who think that very likely, but still one must consider it. Supposing the generating stations in and about London are smashed, what then? 761 Under this system the military improvement is immense, because London could then be supplied from the generating stations in the Midlands and South Midlands, Birmingham and other places, and they in their turn would be supplied from generating stations further north until you got to the great generating station in Scotland. It is not that you can carry current over 300 or 400 miles of cable; that is not possible or practicable; but you can take it from point to point and there redistribute it for the purpose of military operations; so that you are never in danger of having your electricity completely cut off to the extent that you were before.
There are many other things which may happen now that we are in sight of generation upon a very large scale. It is so cheap that the railway companies will be able, if and when they like, to get cheap current which will enable them to convert their railways from steam to electricity at a much lower cost than they can at the present time; and not only with them but with the motor industry will you also have considerable changes. Hitherto one of the objections to electrical motors, which for some purposes are very good, is that you cannot change your batteries and you cannot get them charged easily. But, now there will be electrical current available at every point so that you can easily get your batteries restored as you go along. Then, again, smoke ought to disappear almost entirely if this measure succeeds, and we shall be able to draw upon water power for public and private purposes. Water power does not exist in this country sufficiently to enable us to do without coal; but water power exists to a very considerable extent and can be utilised for feeding the reservoir even if it is not sufficient to make up the whole quantity required.
The great reproach against this Bill has been that it is unnecessary. Is it unnecessary? At this moment we are falling behind. It is true, as has been said, that there has been a considerable improvement in the generation of electricity. We went up 18 per cent. in one year, but that was because of new attention to the industry; but at that time other countries were going up higher. The figures have been given by the noble Viscount and I will not repeat them further than to say that the American workman is now 762 getting 68 per cent. of his power from electricity, whereas the British workman is getting only 33 per cent. In Belgium, which has no water power, the workman gets 61 per cent. and in Germany the workman gets 60 per cent. Anybody who knows what a difference the generation of the power which the workman needs by electricity instead of by coal means knows what a difference it makes both to the conditions under which he lives and to his efficiency.
Really, when you look into this Bill and the more you look into it the more the opposition to it seems to assume just the form of that opposition, from the spirit rather than from any reason that can be defined, which was manifested at the time the railways were introduced. My noble friend Lord Banbury of Southam will doubtless oppose this Bill: but he will oppose it not, I think, on detailed scientific grounds so much as with a theological animus against any intervention by the State and, above all, any intervention by the Treasury. The intervention by the Treasury amounts to nothing at all. I have had this worked out by experts independently of the Government experts and they have arrived at the same conclusion. The Government is to guarantee£33,000.000 of loan to be raised by the Electricity Board. The Electricity Board will raise the money. But presently as the system comes into existence it will, on the figures, begin to repay its costs handsomely. In about a year I think there will be no need to call upon the Treasury for assistance. In five years there ought to be things in operation which will pay back every penny to the Board which borrowed the money and expended it on setting up improved frequencies and improved transmission cables. It is estimated that the additional cost per kilowatt to the producer of electricity by having this system with all its expense will not be more than one-twentieth of a penny or one-fifth of a farthing, and I need not say that the producer of electricity will get that cost back over and over again by the economy arising from his always being able to produce a large load at a steady rate—a load which is taken up by the transmission reservoir.
It seems to me that we have come now to the parting of the ways. It has often happened to us that when we have been 763 striving to do something for the development of industry in this country we have taken just the wrong way. We have not asked ourselves what are the hindrances. The hindrances here are apparent. The hindrances are that the workman cannot get cheap power and cannot get employment at present in a profitable industry. When the scheme is put into operation it may take until 1940 to become thoroughly established and everywhere effective; but it will be a scheme with much life in it by 1935 if all goes well, and the employment given by it will be very large. It will be employment which becomes progressively skilled and can afford high wages. And not only that, but it will be employment which will give the workman the satisfaction of thinking that he is contributing to the well-being of his fellow-workmen and the efforts of the people who are doing what they can to increase production in this country. Therefore, it is with more than usual feeling that I look to the prospects of this Bill. If it succeeds the Government will have done a great stroke of business, because it is a bold Bill and it covers the ground in a very large fashion. Whether it is satisfactory or not in all its details, it is a Bill which constitutes a really great attempt to advance the condition of industry in this country and make the conditions of the working classes better. It is a Bill, it seems to me, not only economical, not only safe financially, but one which is calculated to give great profit to those who generate electricity.
The thought that this Bill, which passed the other House by large majorities, should be rejected here fills me with dismay. I do not think that is likely, but the Amendment which has been put down to send it to a Select Committee is just as much a wrecking Amendment as if it was a Motion to read the Bill a second time this day six months. If this Bill is sent to a Select Committee it is lost for this Session and the months of work done before Grand Committee and the tremendous struggle which was conducted in defence of the Bill with such consummate skill by the Attorney-General will all be thrown away. Therefore I devoutly pray that your Lordships will not only give this Bill a Second Reading but see it through Committee.
§ LORD WEIR
My Lords, I feel your Lordships will consider it fitting that I should make some contribution to this debate as I had the privilege of presiding over the Committee whose Report forms the basis of the Bill. I propose to take the course of elaborating some of the considerations which prompted the proposals made in the Report and in the Bill and of dealing with certain criticism to which those proposals have been subjected. I feel that it is very reasonable on this occasion that you should ask why, in 1926, the electrical supply system of this country should require further legislation. In an industrial country which aims at maintaining a high standard of living an adequate and readily available supply of electrical energy is of absolutely fundamental importance. It is no exaggeration to say that the progress of our national productivity can be fairly measured by the rate of increase of energy consumption in the form of heat, light and power and of these, certainly the two last-mentioned, electrical energy is the most easily applied.
The review and the investigation made by our Committee disclosed that this country possesses assets which, if properly utilised and co-ordinated, can yield a supply of electrical energy at a cost so favourable as to confer on the industries of the country a competitive advantage over other countries in all cases other than those where the particular type of industry can be located alongside the waterfall, a situation which exists in a very limited number of cases. When it is suggested, as it has been, that our costs of generation compare favourably in some cases with those of other countries, my Committee felt that the real question was not so much how well we were doing, but how much better we ought to do. All evidence and all investigations have disclosed that in this country—and here I quote from the Report—we are not generating, transmitting, nor distributing electric energy as cheaply as we might, nor are we consuming electric energy to anything like the same extent as other highly civilised countries.
In coming to this conclusion we merely found ourselves confirming the whole of the findings of the earlier investigators on the same subject and, broadly speaking, no one has ever contested that con- 765 clusion. Exception has been taken to some of the figures we quoted to show the comparative consumption per head in different countries. For example, we included in the figures a reference to Tasmania. I make a present of that quotation to our critics. I go further. I say, disregard all these official figures, and if you care to visit the other countries use your ordinary powers of observation and inquiry and you are bound to come to the very same conclusion that we reached. Let me give you an example not from abroad but from our own country. In the last eighteen months I have been associated in the construction of about 1,500 houses built in large centres in Scotland. Out of these 1,500 houses I found only 286 equipped for electric light. I will give you an English example. Within eleven miles of this House there is a new town of 8,000 workmen's houses built during the last eight years and situated within three miles of one of the largest power stations in this country; yet not one of those houses is fitted with electric energy and the workman's wife has none of the advantages that electric energy might give her. That is a situation which does not exist in any other country of the world to-day.
With considerations like that in view it is possible that your Lordships may still ask why, in the first instance, we must look for an improvement through legislation. The best answer I can give is that the electrical legislation of the past has contributed substantially to bring us to the position we are in to day. It is, therefore, only through new legislation that we can repair our situation. In reaching that conclusion our Committee were merely confirming what had been laid down by the two earlier investigating Committees. This country was a pioneer in electrical development. It has a very creditable record. But we also pioneered electrical legislation and it has not been quite so creditable in its effects. We granted independent supply rights both to private enterprise and to municipalities and we made no effective provision for co-ordination. Because of this our system has come directly into conflict with the technical and commercial considerations which experience has shown to be essential for cheap and effective generation.
766 As the noble Viscount who moved the Second Reading of the Bill said, the 1919 Bill made an effort to secure co-ordination by suasion and voluntary co-operation, but we found in our investigations ample and very saddening evidence of the failure of that form of effort. At this stage let me say that in the proceedings of our Committee I was never conscious that we were influenced by any possible political implication arising out of our proposals, but I now find these proposals given a certain political label and progress obstructed not so much through criticism of the intrinsic merits of the proposal but through the label. I will develop that point further as I come to the end of my remarks. But may I point out here that if the subdivided supply rights had been given in the beginning in every case to private enterprise instead of to private enterprise and municipalities, then the essential co-ordination and combination would almost certainly have taken place as a matter of commercial evolution. Development would have gone on exactly as it has done in the United States with such striking success. The supply rights would have become merged, interconnection arrangements would have been made, and to-day our problem would not have existed in the form in which it does exist. I do not wish to debate the general question of municipal and private enterprise in regard to the operation of public utilities, but I do submit that it is inherently difficult, if not impossible, to secure effective co-operation between municipalities, while it is practically impossible to secure it between municipal authorities and private enterprise, and that it is through backing both horses in the past that, we have created to-day's situation.
I will not repeat the detailed technical considerations associated with achieving maximum economy in the generation of energy. They have already been dealt with and they are fully described in the Report, and (may I say?) they have never been seriously disputed. You have to have interconnection and the mechanism to secure that is the transmission line which we have called the "grid." I wish to point out that the whole trend of development in every country, not excluding development in this country within the narrow limits of its possibilities, is directly towards interconnection. 767 Accordingly the Committee felt that interconnection must be the foundation of the scheme and that the essential compulsory co-ordination in generation could be most practically achieved through the organisation which owned and operated the transmission "grid." It is reasonable that your Lordships should not be content to accept mere generalities on such a vital matter. The Committee certainly did not. It felt that it ought to know the cost of the "grid," and the cost of its administration, and that it ought to have an estimate of its reactions on generating costs. To secure this we asked the chief Electricity Commissioner to work out in detail a definite scheme taking into account the existing stations, their expansion programme and the probable new stations. We asked that the estimate should be based on the very moderate and conservative estimate of a consumption of 500 units per head of population, and we asked that this be reached in the year 1940. The result of that investigation and of the scheme prepared shows an economy in 1940 over existing conditions at the rate of£44,000,000 per annum. That appeared an objective well worth striving for.
Perhaps at this stage I should deal with the complaint that our hearings were in private, and that the evidence was not published. The two earlier investigations, that of the Coal Conservation Committee and of the Williamson Committee, were conducted in public over a very long period, and evidence was given by every conceivable interest. We were in possession of all that, and we conceived that it was our duty to work out and prepare a Report on practical and definite lines, and to present it as quickly as possible because of its absolute necessity, and I am quite convinced that public hearings would merely have involved delay without any compensating advantage whatever. Then it is said that we did not consult a wide enough range of expert opinion. On that I have to say that we chose a body of experts, British and foreign, recognised in every country and by the electrical industries of those countries as of unimpeachable authority. They were men who had been responsible for the technical and commercial success of a wide selection of the most outstanding examples of electrical development all over the world.
768 Now I come to the recommendation of the Central Board. An alternative might have been the Commissioners themselves, but if we had adopted that course the country would have lost its national judicial electrical body, and that is an authority which has been found necessary in every other country. You would have lost that and you would also, I think, have had a first class example of State Department operation of a public utility. We decided instead to recommend a Board which would consist of men of affairs, chosen for their ability to accept and to discharge responsibility in a business way. They would sit under a Chairman or, alternatively, with a managing director, a man who would devote the whole of his time to the work and a man with a wide experience of dealing with the kind of interests involved. From the initiation of the Board its members would be conscious that their performance would be judged by the country on a definite balance sheet basis and no other. They would have to discharge certain definite responsibilities, but they would be given power to frame their policy and their organisation so that they might delegate to existing organisations a very large part of the executive work. The Bill gives them the necessary flexibility to do this.
Criticism has also been directed against the Board's power to control the operation of selected generating stations. This control is, of course, essential to the working of any large transmission system and is inherent in the operation of such a system, but in its application it is neither interfering nor exigent, and it is being done every day in other countries. The condition of operation of these stations will be such as any knowledgeable electrical engineer would subscribe to at once as representing sound practice. It is also said that the Board will be an appanage of the Ministry of Transport. The Board is completely independent of the Ministry of Transport. It is responsible for the supply of high tension energy to Great Britain, and for its cost, and it cannot relieve itself of that responsibility by shouldering the load on to any Government Department.
In view of that which has been so clearly represented by the noble Viscount who introduced the Bill, I do not think that I need deal with the standardisation 769 of frequency other than to point to a difference between the recommendations of the Report and the proposals of the Bill in that respect. The Committee came to the definite conclusion that in the interests of economy the frequency should be standardised throughout the country, that it should be done at the cost of the State and that repayment should take place without interest over a considerable period. Standardisation in certain large areas will, of course, involve new equipment and it is altogether a costly and troublesome affair. The Committee believed that the present system was defective, and we said, in effect: "Carry out the drastic operation now, because every day lost entails greater cost and greater trouble and, if you delay long enough, the whole thing will become economically unsound." What has happened is that the Bill gives the Board power to standardise and gives it the finance to carry out the standardisation. I do not propose to move an Amendment instructing the Board to standardise, but I do wish to record my very definite opinion that the Board should make its decision regarding standardisation at the earliest possible moment and should cure the evil before it becomes chronic. I do not think that I need deal with the financial position, because Lord Peel has already done so.
I have dealt with the generation and transmission of high tension unconverted energy, and it is a perfectly fair thing for your Lordships to say that this covers only half the cost of energy to the consumers. There are nearly 600 distributing authorities and no investigating authority, so far as I know, has ever suggested that their rights should be disturbed or that, broadly speaking, distribution is other than a local function. The Committee accepted this situation, but it is not the case that we did not deal with many economies in distribution. The distribution authorities are hampered by petty restrictions, many of them legislative, and we found that a Committee had already been appointed to deal with these. We said that, if their Report was good, it should be adopted and the remedies enforced. That Report is now available. It makes useful proposals, and I hope that the Government will take action upon it. One petty restriction with which the present Bill does deal is that which is laid upon 770 municipalities with regard to the sale of appliances. A considerable number of authorities already possess these powers, and we did not see any reason why the powers should not be granted to all of them.
Distribution, however, cannot altogether be improved by legislation. We felt that the main element in the existing high cost of distribution arose from the comparatively small consumption of energy, and this, we ventured to believe, was largely due to a lack of imaginative selling enterprise on the part of the distribution authorities. Potential consumers of electricity have not yet been taught to demand electricity and to see that they get it. This country has still to learn how to consume electricity, but I am glad to say that the realisation of the need of a far more active policy of selling their product is now awakened among British distributors and a very rapid improvement can be looked for. I may be allowed to say that they are learning the lesson which gas has taught them. I must point out, however, that under the Bill itself the activity of by far the largest number of undertakers will automatically be concentrated on distribution development and on distribution policy because of the closing down of their unselected stations. The best help which can be given to distribution authorities is the help given by the Board when it enables them to buy their product at a lower price than ever. I now come to two matters hardly referred to in the Report but of considerable national importance. The first is the reaction of an effective supply system on the manufacturing industry. That has already, I think, been dealt with.
§ LORD WEIR
If the electrical energy supply is available at a cheap rate the home demand for equipment will be much increased, and that increase will result in a much more stable manufacturing industry and a substantial improvement in our export possibilities. Your Lordships are aware of the gallant fight which the manufacturing industry has made in the last few years against foreign competition at home, in the Empire, and in foreign markets, but I feel that the electric manufacturing industry has not yet achieved the prominent position 771 which it ought to occupy in the world electrical trade. In the ten years period 1913–1923 the British output of electrical machinery increased 113 per cent., while France and America increased 200 per cent.
The next factor with which I wish to deal very shortly is the reaction of the new proposals on the possible electrification of our British railway system. Before the Central Board adopt any of these schemes prepared by the Commissioners, in fact in the preparation of these schemes, I venture to hope that the possible electrification of main lines will be kept constantly and continuously in the front. What can be said with confidence is this, that if capital outlay be the main obstacle to railway electrification, then that obstacle can be greatly modified by a transmission layout which from the beginning envisages a railway demand for energy, and few railways in the world will be able to secure their energy supply so cheaply as a British railway under this scheme. As to the Bill itself, apart from its main conception and objectives, I have only this to say, that I feel it carries out the Committee's recommendations as well as is possible, in view of the complication of existing legislation, and I feel that it will be a perfectly workable Bill. If the number of appeals which have crept in another place could be reduced the Bill would be improved, because appeals mean delay and delay is a very costly thing indeed in electrical development.
Before I conclude I feel bound to refer to an aspect of the subject dealt with by the noble and learned Viscount (Lord Haldane) when he spoke in terms of national fuel and energy considerations. Nothing would have been easier than for the Committee to have presented a Report showing a picture of an ideal system of national energy transformation from the raw fuel, comprising pithead power stations equipped with coal pretreatment plant, the production of by-products, and the interlocking of energy supply with other industrial activities. Such a picture was sketched in the noble and learned Viscount's own reconstruction Report, and I think it was portrayed recently, and in more vivid colours, in the evidence of the Miners' Federation before the Samuel Commission. All these possibilities were present in our minds, 772 but if you wish to get something useful done you really must deal with actualities. I am personally completely convinced that the future prosperity of this country is bound up quite definitely with the problem of the effective conversion of our great fuel resources into electric energy, into gas and into liquid hydrocarbons.
The gravest economic danger signal in this country, and one which passes very largely unnoticed, is the fall in our exports of thermal units in the form of coal, and the continually increasing imports of thermal units in the form of oil and motor spirit. That is a situation which this country cannot stand for many years more, and from our fuel technologists we must demand a solution of the problem. When that solution comes its application is rendered much simpler through the existence of the "gridiron" of transmission mains proposed in this Bill. To-day, if any one produced cheap electrical energy from waste heat, or as part of a carbonisation plant output, there is no free market for that product. The "grid" will provide the market for electrical energy which can be produced by more economic processes than those which obtain in the best power stations of to-day. Therefore, while fully alive to the possibilities in the domain of fuel technology, but recognising also the great amount of work still requiring to be done before any one of the various processes has reached a form capable of practical adoption on a commercial basis, it appeared to my Committee that their best contribution towards the development of fuel treatment was to provide the physical means or mechanism by which the successful results of research could be most effectively and simply applied.
Now I come to my conclusion, and I trust your Lordships will allow me to make a somewhat personal reflection. I have never taken any part in purely political activities. Consequently I have been rather concerned at the charges made against the Report and the Bill, that they display a strong socialistic tendency. With all respect, I regard that as utter nonsense, unless it be part of the creed that there must be one way, and one way only, of achieving a desired end. To those who believe that this country has passed the zenith of its supremacy, and that we can only look forward to 773 gradual degeneracy in those spheres where formerly we led the world, this Bill can make small appeal, and I can understand their attitude of leaving things as they are. But because I am not one of those, because I have the most earnest faith in the future of our country's industries and of our people, the necessity for this measure seems to me overwhelming.
What are the facts? We have had the most detailed and documented evidence from every interested source in the Coal Conservation Committee's Report and in Lord Forres' Report. We have had it confirmed and brought down to date by the Committee over which I had the honour to preside, and the sum of these Reports presents to us a problem, difficult enough to-day, but much more difficult to-morrow, and becoming more expensive with every delay imposed on its solution. With no political bias, but actuated solely by the necessity of placing the country's electrical supply development on sound lines, of avoiding the errors of the past and making provision for expansion in the future, my Committee made the recommendations which largely form the substance of this Bill. The time is more than ripe for such a measure, and to delay it now or emasculate it is a heavy responsibility for this House, particularly at this time; to hesitate longer in the hope of finding a better or an easier way of dealing with this problem is, to my mind, the surest and readiest road towards assisting the Socialist cause. For by such action you present, ready to the hand of the Socialist Party, the finest opportunity for constructive proposals of their peculiar brand which they could wish for, and you deprive the. Conservative Party of a measure which cannot fail to play a considerable part in increasing our national productivity, raising the standard of living to a higher plane, and restoring our competitive power in the world's markets to an encouraging level.
§ LORD BANBURY OF SOUTHAM
Lords, the noble Lord has stated that it is very necessary that there should be increased provision of electricity. He has also said that he hopes the main lines of railways will be electrified. I do not venture to disagree with him in the first part of that statement, but profoundly disagree with him on the 774 question of the electrification of the main lines of the railways. The railways at the present moment are not in any too good a financial position, and if you spend huge sums of money on electrifying the main lines you will find they will probably be nearer bankruptcy than anything else. My noble friend Lord Peel asked why Great Britain was falling behind other countries in the development of electricity. I will tell him why—Government interference. In 1832, when electricity was in its infancy, Mr. Chamberlain, who was then a member of the Government, put such restrictions upon the provision of electricity that it was impossible for any person to invest his money in any company under those restrictions, and consequently nothing was done until 1888, when further Bills were passed and restrictions were removed.
I have never myself personally had anything whatever to do, financially or otherwise, with any electricity company, but I believe it is the fact that at the present moment electricity is improving very considerably. The noble Lord below me has laid great stress upon the increased provision of electric power and electricity generally. The question is: is this Bill going to do it? And not only that, but is it going also to provide for a scheme of confiscation? The noble Lord apparently does not think that this Bill is nationalisation. Now, there are three kinds of nationalisation. There is the nationalisation when the State thinks that it is in the interest of the State to acquire certain undertakings, and pays a fair price for those undertakings when it acquires them. I do not think that the State, at any rate in this country, has ever conducted any enterprise with success, and it would be well if the Government were to devote their energy to seeing how little they can lose on the telegraphs and telephones, without endeavouring to lose more money on other schemes. That is the first kind of nationalisation and there is nothing wrong in it except that in this country it leads to losing money.
There is another kind of nationalisation, and that is the nationalisation to which some of the noble. Lords opposite, or at any rate their followers, are not opposed: "Private property is robbery; let us take it over. We will take it over, and pay 775 nothing for it." That is the second kind of nationalisation. And there is a third kind of nationalisation, whose supporters say: "We are not going to commit any robbery, oh dear no, but we are going to bring in an Act, and lay down principles in that Act which will compel the owners of the property which we wish to acquire to refuse to comply with the provisions which we tell them to comply with, and then we are going to take their property over." At what price? At the price of old iron. And that is this Bill, and it is brought in by a Conservative Government! I believe the Prime Minister is reported to have said some time ago, before this Bill saw the light, that it was not nationalisation because the Board which would be set up would be like the Port of London Authority. The Port of London Authority consists of twenty-eight members. Of those eighteen are elected by the wharfingers, the users of the dock, and various other people; seven are nominated by the London County Council and by the Corporation of the City of London, and only three out of the twenty-eight are appointed by the Government.
And it was again rather an unfortunate illustration, because I understand from my noble friend Lord Peel, and also from the noble Lord who has just spoken, that this Bill, if it does come into effect, is going to cheapen the price of electricity. Well, what happened with the Port of London? They put all their charges up. The Bill authorised them to do so, and, instead of anything being cheaper, everything connected with the Port of London has been dearer. And how about the financial success of the Port of London? When the Bill setting up the Port of London Authority was introduced, what happened? All the prices on the Stock Exchange of London dock shares went up. Has the price of any electricity company's shares gone up? Is my noble friend prepared to invest any money at the present moment in an electricity company, or is any noble Lord?
§ LORD BANBURY OF SOUTHAM
I am not talking about speculation, I am talking about investment—which is a very different thing. I am talking about an investor who puts his money into a 776 thing in the hope that he will receive interest, and that his principal will not be injured, and that a Parliamentary title will be maintained. Now I propose to show that this Bill abrogates a Parliamentary title, abrogates every Act of Parliament which has ever been passed dealing with these companies, and is neither more nor less than disguised confiscation. There is to be a State guarantee. I always read with great pleasure any remarks made by any member of the Government, and I see that the Attorney-General said this on Thursday last:—It is true we shall not have to call on the taxpayer.That is his opinion—It is equally true that unless we had the taxpayer behind us we should never be able to raise the money in the first instance.That is a good sort of thing for the taxpayer. Here is something in which nobody can be induced to invest any money in any circumstances whatever, so the taxpayer is to do it. That is not a business proposition according to the ideas in which I was brought up.
We are told that amalgamations are to take place, and the noble Lord below me talked about £44,000,000 being saved upon the amalgamations. I have heard that before. I heard in another place during the discussion of the railway amalgamations in 1921 that there would be a saving of from£20,000,000 to £40,000,000. What has been the result? There has been no saving, and in order to pay their dividends the railway companies have been obliged to help themselves largely from their reserve. Undoubtedly, enterprises were too small thirty or forty years ago and it was a good thing in reason to amalgamate various concerns interested in the same sort of undertaking. But now you are going to the other extreme and want to have everything in the country under one great concern. How on earth can a Board of seven or eight people manage electricity all over the country? It is impossible for anybody, even a superman.
I would like to read to your Lordships a few of the clauses of the Bill to show that I have not exaggerated in any kind of way in any statement I have made. The noble Lord below me is a man of business, 777 and I might for the moment ask him whether he would like to sell the products of his factory at cost price to, I will not call them Government officials but men appointed by a Government Department—that is as near to being Government officials as I know, but we will not call them Government officials—and buy them back again at an enhanced price? No one out of Bedlam, I should have thought, ever conceived such a ridiculous idea. I cannot say whether it was my noble friend or the noble Lord below me who said that this did not mean more officials. Let me, refer him to Clause 3 of the Bill which says:—The Board may appoint one or more consultative technical committees consisting of engineers employed in connection with undertakings comprising generating stations which are by virtue of this Act for the time being selected stations.More people are to be appointed and being engineers I presume that their salaries will be fairly high.
Then subsection (8) of Clause 1 provides that—The Board shall appoint a secretary and such other officers and servants as the Board may determine…There is no limit whatever to the number of officials which are to be appointed. And Clause 5 provides:—The Board shall make arrangements with the owners of existing generating stations"—I am leaving out unnecessary words—…for such extensions and alterations thereof as may be required by the scheme and for such additional extensions and alterations as the Board, with the approval of the Electricity Commissioners, may from time to time direct:Provided that if the owners of any such station consider that any directions of the Board requiring additional extensions or alterations impose upon them an unreasonable financial burden, the matter shall, if they so require, be referred to the arbitration of a barrister…Why, particularly, to the arbitration of a barrister? What can he know about commercial undertakings? Why not "of the High Court"? That barrister is to be appointed by the Minister of Transport from a panel set up under Section 4 of the Act.
Then Clause 5 goes on to say, in subsection (2):—If the owners of any such station"—778 I ask your Lordships to listen to this because it bears out the statement I made a few moments ago that this Bill was confiscatory—are unwilling to enter into or fail to carry out any such arrangements to the satisfaction of the Board, the Minister of Transport may by order empower any authorised undertakers or other company or person approved by the Board, or, failing such authorised undertakers, company or person, the Board, to acquire the generating station at a price to be determined in accordance with the provisions of the First Schedule to this Act…Turning to the First Schedule of the Bill we find that it says this:—The price of a generating station or main transmission line shall be such sum as may be certified by an auditor appointed by the Electricity Commissioners to have been the amount of the expenses properly incurred on and incidental to the provision of the generating station or main transmission line, less depreciation on a scale fixed by special order.That is, old iron. The good will and the business they have built up are all to go for nothing.
It is as though you were to say: "We are going to buy the Great Northern Railway at the old iron price of the rails and the cost of the stations, less depreciation." It is the clause which was originally put into the Bill of 1882 with this difference, that the Bill of 1882 gave a certain life to the companies which were to be dealt with in this way during which they might possibly recoup themselves. But there is a proviso—Provided that if the owners of the generating station…are dissatisfied—the matter in dispute shall, in default of agreement, be determined by the arbitration of a barrister…appointed by the Minister of Transport from the appropriate paneland so on. As I read it, all that this barrister can do is to see whether the proper amount, based upon the fact that all the compensation that can be given the cost of the station and the main transmission line less depreciation, has been given. If that is not confiscation I do not know what is.
There are plenty of such things in the Bill. I have mentioned the fact that the unfortunate companies are to sell their product at cost price to the Board and to buy it back again at an enhanced price. Clause 14 gives the Board power to close generating stations and the purchase price is to be the same as in the 779 other case. Clause 16 provides that where the Board is authorised or required to enter into arrangements with certain people then, notwithstanding anything in any special Act or order or any other instrument, the undertakers can go to the Board with a scheme, and if the scheme is approved by the Board then… notwithstanding anything in any special Act affecting the company or the holders of any class of loan or share capital in the company, the additional capital of each class shall form part and rank pari passu with the existing capital of that class…That is to say, people who have been induced to invest their money on the faith of an Act of Parliament stating that they shall have preferential rights are to have that money taken away from them. It is quite true that the High Court has to approve the scheme. I, unfortunately, am not a lawyer, but I have read some Bills, and I do not think the High Court could interfere with this, because all the High Court would have to do would be to consider whether the scheme was good or not. If the High Court thought the scheme was good then, notwithstanding anything in any Act of Parliament, people who invest their money with a Parliamentary title—which in my young days was always considered to be the finest form of investment, but which now seems to be the worst—are to have their security taken away from them in the manner I have pointed out.
Further, Clause 29 says:On a power company commencing to receive a supply of electricity from the Board, the Minister of Transport may revise the maximum prices authorised under the special Act of the company to be charged by the company for supplies.Here, again, people invested their money under a special Act of Parliament stating that they were to charge certain prices and now the Minister of Transport—who he may be in the future I do not know—is to come round and say: "Well, I choose to revise those lists of prices. No matter that large sums of money have been invested on the understanding that certain prices might be charged, I, the Minister of Transport, decree that those prices shall not be charged and that other prices may be charged in future." If that is the way my noble friend is going to supply cheap electricity I cannot congratulate him on 780 it. Clause 30 does something of the same sort. It says:… make provision as to the relation between the charges to be made for electricity and the dividends to be paid by the company, and the Order shall have effect as if the provisions contained therein were in substitution for the provisions (if any) contained in the Act or Order relating to the undertaking of the company as to the relation of charges to dividend.I presume that means that dividends are allowed to be paid according to the charges on a sliding scale in the same way as in the case of the gas companies. Under this Bill all that is to be altered and a Board of seven or eight people are to be appointed by the Government for no less than five years, so that they are irremovable, as I understand, for five years and may do anything they like in that five years. The special Act is to be disregarded and the people's property is to be taken away from them.
§ LORD BANBURY OF SOITTHAM
Oh, well, one is as bad as the other. I could point out the inequalities of this Bill at much greater length if it were not so late, but I do earnestly hope that at any rate we shall send this Bill upstairs where witnesses can be heard whose evidence can be published. I am sorry the noble Lord, Lord Weir, has gone, because, unless I am misinformed, the evidence which was taken before his Committee was taken in private. It was not published, and when a request was made that it should be published that request was refused. I really think that is the least we can do if we desire to encourage people to put their money into English industries and not to send it abroad where, possibly, Bills of this sort are not introduced. It is very necessary no doubt for manufacturers to have cheap electrical power. They will make a little more profit if someone else supplies the electricity cheaply. But there are other things to be considered besides that, and one of them is to keep up the old reputation of England that where a contract is entered into between two sane men it shall not be broken to the disadvantage of one and the advantage of the other. I spent some years of my life in the City and I can assure my noble friend that if the Government are going 781 to introduce Bills of this kind which, to use a colloquial phrase, "play Old Harry" with all investments, they will find that instead of encouraging enterprise here in the future they will discourage it.
My Lords, it was my intention to address you on the subject of this Bill in a few words only, and at this late hour I shall make them very few, confining them to one or two points alone. It seems to tie generally agreed that we cannot go on as we are. Even the opponents of this Bill, so far as they have given expression to their views, hardly contend that this country can satisfactorily maintain its commercial position if we go on as we are at the present with our electrical supply system on a parochial basis. If it be admitted for the sake of argument that that situation cannot be tolerated, what possible way is there out of it? This question of standardisation arises in every technical art and every branch of engineering as progress continues. In the early days when the art emerges from its primitive form everyone has to work out his own salvation and the necessary result is that there is a great deal of multiplicity, each individual adopting his own standards according to the best of his judgment and leaving the future to take care of itself.
Let me give an illustration. Take the subject of screw threads. The screw can, of course, only be screwed into a hole which is of the right size and with the right number of threads to receive it. In the early days of engineering there was no kind of standard in such matters. Every engineer made threads with his own home-made tools and he left it to luck whether the threads used by other engineers would be the same or whether they would be slightly different. It makes no great difference whether, for example,¾ inch screws should have ten threads to the inch or eleven except in this respect, if one man makes them with eleven threads and another makes them with ten threads they will not fit the same threaded hole and the time-conies when such a situation becomes intolerable. Only the particular maker of the machine can easily repair it unless the standard is established. In my youth I used to read with great attention and delight the monu- 782 mental work on engineering by the late Mr. Holtzapfell written at an early date. There the matter was dealt with in a way that illustrates very well the difficulty we are now in. The author said that the proposal for a standardised thread was attractive but chimerical and that the chance of its practical adoption might be rejected. He instanced the large number of tools he had made himself which did not agree with those made by other mechanicians and he said the idea of abandoning those and scrapping them, as the phrase is, was one which could not possibly be tolerated.
Now I have only mentioned that—perhaps it is somewhat of digression—because it illustrates exactly the situation which has arisen here. A great number of frequencies of electrical supply have grown up and each of them has its merits. Probably the difference between them on merits is not very great, but the objection to the present system lies not in any one of these frequencies being unsuitable, but because they do not agree one with another. They make inter communication impossible and electrical engineers are, I think, unanimous that intercommunication is the only system by which the present chaos can be improved and, a tolerable situation built up.
I submit, then, that Government interference is the only way by which this existing situation can possibly be ameliorated. It might seem that when reasonable men have a great interest in some common practice they ought to be able to get together without the interference of third parties and arrive at some working basis of standardisation. The case which I have mentioned of screw threads illustrates very well how personal idiosyncrasies, personal preferences and the prejudice developed by long practice in one particular thing intervene to prevent a common standard being arrived at. It is only when a little persuasion backed by power can be applied from outside that these personal difficulties can be overcome. The substance, then, of what I have to represent to your Lordships is that a change is essential, that experience shows that in this, as in similar cases, such a change cannot be produced from inside but has to be imposed by outside authority, that the present Bill is a means for doing that, and that the 783 opponents of it so far as they have shown their hands have no practical alternative.
§ Moved, That the debate be now adjourned.—(Lord Forres.)
§ On Question, Motion agreed to, and debate adjourned accordingly.