ELECTRICITY BILL.

HL Deb 08 July 1947 vol 150 cc127-252

2.37 p.m.

Order of the Day for the Second Reading read.

THE LORD CHANCELLOR (VISCOUNT JOWITT)

My Lords, I rise to move the Second Reading of this Bill. I can state quite sincerely that I believe the case for this Bill is literally overwhelming. In the year 1943, in the month of March, the then Prime Minister of what he rightly described as "the Great Coalition" referred to "the broadening field for State ownership and enterprise, especially in relation to monopolies of all kinds." How the field can broaden unless it is going to take in such monopolies as this, I cannot conceive. Sir John Anderson, in the course of the last Election, publicly stated that he was in favour of the nationalization of the distribution of electricity. And I hope to receive support for the broad principles of the Second Reading quite outside Government circles. We received the support of the Liberal Party for both the Second and Third Readings of this Bill in another place, and I hope my noble friend, Lord Rennell, is going to-day to lend me his powerful support in favour of the Second Reading of this Bill.

It is not stating it too highly to say that the system of electricity distribution in this country to-day is chaotic, and to say that is not to belittle the work which the local authorities and electricity companies have accomplished—but I wonder how much more they would have accomplished if they had not been handicapped and prejudiced by a legislative structure which is hopelessly out of date. In 1926, following the Weir Report, there was established a national system for the generation of electricity, and I think everybody must admit that the Central Electricity Board, handicapped as they have been by the divorce between ownership and control, have yet rendered most useful service. But nothing comparable has been done with regard to distribution. In the year 1936 a Commission was appointed, presided over by Lord McGowan, who had associated with him the late Sir John Snell and Sir John Morrison. That powerful Committee published a Report on this problem. I take that Report as the text of everything I am going to say. I accept all the facts stated in that Report and though, to some extent, as I shall show presently, I differ from the Committee's conclusions, I think it is right to say that in the eleven years since 1936, the date of their Report, we have passed through a span of experience far greater than that of a normal period of eleven years.

The Report rightly states that the object to be aimed at is efficiency. Efficiency always tends towards a reduction in costs. It is quite certain that the future will bring a greatly increased demand for electricity and that in its turn gives scope for future reduction of costs, but I am not going to hold out great hopes of that cheap and abundant electricity in the near future of which we have heard so much for so many years and experienced so little. With the rising cost of coal to-day and with the greatly increased capital costs, it would be idle to imagine for a moment that you are in a field in which by a stroke of a wand you can bring about cheap electricity. Those very facts make it all the more essential that the system of distribution should be as efficient as it can be, so as to reduce the cost as far as may be possible, and there can be no doubt that given equal efficiency in management, large-scale operation has inherent advantages over small-scale operation. Paragraphs 99, 100 and 101 of the McGowan Report bear that out quite plainly.

Among other advantages they mention, in the first place, improved technical layout and economy of capital expenditure. I would point out that the more we can eliminate boundaries, the better chance we have of bringing about cheap distribution. Secondly, diversity of load. One may say in general the larger the area, the better the chance of securing diversity of load, but a factor which often prevents this at the present time is the absurd situation which arises when a power company supplies a particular section of the consumers within an area already supplied by some other undertaking. Admittedly this situation is due to the restrictive and anomolous legislative structure, but that is only one more reason why that structure should be superseded.

The McGowan Committee go on to point out that financial resources are easier to secure in cases of large-scale operations, and that centralized purchasing can be achieved. You have a better chance of dealing with personnel. And last, but by no means least, the better supply of electricity to rural areas. I need not elaborate on the importance of this from a national point of view. The McGowan Committee felt very strongly about it, and they devoted a section of their Report to the unsatisfactory position. I commend to your Lordships paragraph 125, and paragraphs 372 onwards of that Report, where you find these facts set out.

I would add to these desiderata that research can and should be undertaken on a large scale that the standardization of voltages should be completed; and that something should be done to simplify and standardize the present methods of charge. At present each undertaking has its own system of charging, and the variety is extremely great. Inside one undertaking there may be as many as twenty or thirty methods of charging, many of which are unnecessary refinements, and are very confusing to the consumer. We have found it impossible in the past to get agreement amongst undertakings on this subject. A Committee of the Electricity Supply Associations did consider the two-part tariff, and made recommendations in 1931, but the undertakings were under no obligation to follow up the recommendations, and they almost entirely ignored them. Consequently, as we all know, in an area such as London the charges differ very considerably from district to district for no apparent reason. In general it may be said that the methods of charging adopted by the electrical undertakings have not been worked out scientifically on any basis of cost whatever.

There has been a considerable amount of experiment in this field, and perhaps this partly accounts for the great variety of methods adopted. But rationalization is over due, both to eliminate this excessive variety of tariffs, and to make them more "easily understanded of the people." The McGowan Report states, rightly I think, that the success of the Central Electricity Board in regard to generation and main transmission is not conclusive evidence that the distribution of electricity should be organized on a similar basis. But it is apparently conceded that the analogy and experience of the national system for generation affords some evidence, albeit not conclusive, in favour of the introduction of a comparable system for distribution. But the facts prevailing in the industry to-day are such that any large-scale system of distribution is impossible. Let me tell your Lordships the facts. There are to-day in this country 563 different electricity undertakings: 370 are local authority undertakings, and 193 are company undertakings. They vary in size from an undertaking having a supply area of a few hundred acres, and selling only a few thousand units per annum, to an undertaking such as the North-Eastern Electric Supply Company, having an area of 5,640 square miles, and selling—including sales to the Central Electricity Board—upwards of 1,800 million units per annum. That company—and I believe it to be an efficient company—covers a larger area than the average area of our fourteen regions, which is just over 5,000 square miles. Incidentally, Edmundson's Electricity Corporation operates, I think with efficiency, over a scattered area of not less than 15,000 square miles. Amongst these undertakings there is a complicated and overlapping system of jurisdiction, companies and local authorities being hopelessly intermingled. In some cases the area of an undertaking is an island inside another undertaking. The result of that is that there is a large number of widely varying systems of tariffs and voltages—distribution voltages vary between 100 and 480 to domestic and power consumers.

It is quite true that, since the date when the McGowan Committee reported, there has been a definite improvement towards the reduction of the number of electricity undertakings—including some voluntary amalgamations—and towards a standardization of voltages and services generally, but, as franchises are now falling in, I see little chance of any further reduction in the number of undertakings. I see, on the contrary, a very real risk of a sharp increase in their number. Your Lordships will remember that franchises were granted to the electricity supply companies by special Acts dating roughly from 1900 onwards and generally for forty-two years, after which the right devolved upon the local authority to buy out the supply company. These franchises are just beginning to fall in, and if the rights of purchase extending over the next ten years were to be exercised, the number of local authority undertakings would increase by no less than 500, and the companies would decline to 148, most of those being the smaller and less efficient companies. I emphasize this because this is the situation which confronts us unless we do something about it. I will tell your Lordships on that assumption what the number of undertakings will be in ten years' time. There will be no fewer than 878 local authority undertakings, and 148 company undertakings, making a grand total of 1,026 undertakings in all in ten years' time. There- fore, I say, that the disintegration which confronts us unless we take steps to prevent it would tend to even greater chaos than the chaos which exists to-day.

In this situation two facts, I think, are obvious. The first is this. There is no need for any further inquiry. The facts are known; they are stated in the McGowan Report. It is for us to find some remedy. The second fact is this. It is hopeless to rely on any voluntary scheme of reorganization. May I read to your Lordships paragraph 132 of the McGowan Report? It says: Past experience has demonstrated beyond question that any attempt to carry through on a voluntary basis a scheme of reorganization on the general lines we have recommended, would be bound to fail. In paragraph 45 they recall a similar observation of the Weir Committee: Five years of patient and capable effort have been unavailing. Co-ordination has not been achieved. The advisory bodies created under the Act have agreed on technical schemes, but local interests have prevented the carrying out of those schemes. Delay and procrastination are widespread, and the policy of suasion can only be written down as a failure. In those circumstances, the McGowan Committee suggested two alternative methods of dealing with the present chaotic system of distribution, and, so far as I know, they are the only two methods possible. The first is this: Immediate and complete reorganization on a regional basis under public control, by the setting up of regional boards which would buy out all the existing undertakings. That is paragraph 88. The second suggestion made in the McGowan Report is the retention and utilization, where possible, of the larger and more efficient of the existing undertakings (both public authorities and companies) and the absorption by such undertakings of the smaller and less efficient undertakings. That Committee, reporting as they did in the year 1936, were in favour of the second scheme and since eleven years later we are rejecting their conclusions although accepting their facts, it is well to consider why they prefer the second to the first alternative.

I have read the Report very carefully and there seem to be three reasons. The first is that a scheme of complete reorganization would result in a serious and unnecessary dislocation to the supply industry. I will consider all these reasons in a moment. The second reason is that the payment of compensation might involve an undue burden upon the new authorities. The third is that such a scheme should not be proceeded with unless the industry were generally inefficient and unprogressive. Let us consider those three reasons. As to the first, I tell your Lordships quite frankly that in any scheme of reorganization there is a risk of dislocation. Indeed, I would say that a good scheme differs from a bad scheme in rendering that risk as small as possible. But the McGowan Committee themselves did not doubt that a substantial measure of reorganization was bound to take place. They emphasize that regrouping of undertakings must be carried out on a comprehensive scale and they are satisfied—I quote their words: that a substantial measure of simplification and co-ordination of the present structure is necessary if the fullest measure of development is to be achieved … That is paragraph 97. Whatever course we adopt, therefore, we are confronted with a risk of some dislocation, but I believe that our present scheme has reduced that risk to a minimum.

I pass to the second reason—namely, the risk of excess payment of compensation. I think it would be sufficient for present purposes if I were to say that I gather that your Lordships on the Opposition side are of the opinion that we have satisfactorily avoided that risk in this Bill. As to the last reason— namely, that we should not proceed with such a scheme unless the industry were generally inefficient and unprogressive, frankly I do not follow the argument. Let it be assumed that the electricity supply industry has pursued a progressive and enterprising policy. It is stated in paragraph 93 that the electricity supply industry has made remarkable progress, particularly during the last ten years, notwithstanding its complicated and, in many cases, uneconomic structure. The problem surely is whether it would not have made even more remarkable progress if it had not been handicapped by an uneconomic and complicated structure.

I cannot accept the validity of those three reasons for the adoption of the second as opposed to the first alternative. Moreover, whatever force they had in 1936 I am confident that they no longer have any force in 1947. See if you will what happened following the pronouncement of the McGowan Report. The then Minister of Transport, Mr. Hore-Belisha, promulgated proposals on the basis of the second suggestion in the McGowan Report—namely, the taking over by the larger undertakings of a number of the smaller undertakings. Mr. Hore-Belisha proposed to group the undertakings in this country into some thirty districts, sub-divided into seventy-six groups. I think I am not going too far when I say that those proposals achieved the unique distinction of being heartily disliked by everybody. I remember in the case of my own constituency, Ashton-under-Lyne, the proposal was that they should lose their supply system, of which were intensely proud, and with good reason, and that they should be taken over by, or at any rate be amalgamated with, Oldham. I have not a word to say against Oldham, but the healthy rivalry between the Lancashire towns is such that when I heard my constituents talking about these proposals, I sometimes thought they would rather be taken over by, or amalgamated with, the devil himself.

In the result nothing has been done, and it is now for us to provide a solution. Your Lordships sometimes accuse the Government of having a bee in their bonnet about nationalization. Well, there is another disease which is just as bad, and that is having a bee in your bonnet which leads you to say that in no circumstances whatever can nationalization be the right solution, and that disease in a case of this sort is a very serious one. I take the view that each case must be considered on its own merits. I would add this, that if ever there were a case which to an unprejudiced person is plain and demonstrable it is this case, and if it is not this case I would very much like to know which case it is. That is why we have decided to adopt the more radical solution indicated by the McGowan Report, and I am confident that the times are such that we must not hesitate to adopt bold measures of reconstruction. There comes a time in the history of a nation when he who tinkers is lost.

VISCOUNT SWINTON

Is that the "tinker's cuss"?

THE LORD CHANCELLOR

In fact, the acceptance of the alternative proposal indicated by the McGowan Report no longer fills the bill.

VISCOUNT SWINTON

I said: Was that the "tinker's cuss"?

THE LORD CHANCELLOR

There is one further consideration to be borne in mind in considering the McGowan Report. Remember that they did not offer their Report as affording any permanent solution of these problems. They contemplated that in due course the entire industry should come under public ownership, and their solution was at best only a temporary solution. The solution we put forward in this Bill is intended to be a permanent solution, and so long as we can secure that the efficiency which has been shown in the past is continually increased in the future we can, by getting rid of this chaotic and obsolete structure, bring about a far better prospect of being able to supply electricity at a cheaper price than would otherwise be possible.

Before I come to the details of the Bill I would add this. The Bill was discussed at length in another place. There was no guillotine. A very large number of Amendments were suggested and a very large number of Amendments were accepted. Although it may be that there are still some points in which the Bill can be improved, yet on the broad structure of the Bill I beg to say that this is the solution which should commend itself to your Lordships. I would point out that having read the whole of the debates—not always very edifying—I have yet to see any alternative solution propounded. There has been none—none whatever—and I do not suppose we shall get one to-day.

That brings me to the consideration of the structure of this Bill. Part I of the Bill deals with the establishment and functions of the British Electricity Authority responsible for generation, main transmission and general policy control, and of the fourteen area boards responsible for distribution. It also covers the necessary modifications to the functions of the North of Scotland Hydro-Electric Board, whose scope is extended so that over their district they become responsible for all generation and distribution. The noble Lord, Lord Morrison, in the course of the debate to-day is going to deal with the position in Scotland, and I can safely leave that to him.

The first aim of the Bill is to put an end to the present multiplicity of un- co-ordinated units in the industry, the sizes of which bear no relation to the technical requirements of the electricity supply. In the second place, the Bill completes the provision of centralized generation and main transmission which was begun in 1926. Clause I accordingly lays down that it is the duty of the Central Authority as from the vesting date to develop and maintain an efficient, co-ordinated and economical system of electricity supply for all parts of Great Britain except the North of Scotland district. … And it is the duty of each area board as from the vesting date to acquire from the British Electricity Authority bulk supplies of electricity and to plan and carry out an efficient and economical distribution of those supplies to persons in their area who require them. Then follows, in Clause I (6), a recital of the principles which the boards are to follow in carrying out their functions. I invite your Lordships' particular attention to paragraph (b), which provides that they are to secure, so far as practicable, the development, extension to rural areas and cheapening of supplies of electricity"; and also to the provisions at the end of the subsection that they shall also promote the welfare, health and safety of persons in the employment of the boards. In Clause 2 the boards are given additional functions: First, the duty to promote research, and next the duty to care for the training and education of their employees, both directly and by assisting others. Then, in subsection (3), the Central Authority is given power to manufacture electrical plant and electrical fittings and to deal in electrical plant and fittings, subject to the important proviso that they may not manufacture for export. The power to manufacture is possessed by a number of the companies whose assets are to be transferred to the Central Authority, and although it may well be that this power will not be used, there can be no reason to prevent the Authority from inheriting it and retaining it in reserve as a weapon of defence. In this and the next few subsections there is a number of subsidiary and enabling powers, which are largely in common form in such Bills as this and do not call for special note.

Clause 3 deals with the constitution of the boards, in regard to which I should point out certain special features. The members of both the Central Authority and of the area boards are appointed by the Minister; therefore the status of the area boards is not simply that of agents for the Central Authority. Within the necessary limitations of co-ordination by the Central Authority they have their own separate existence. Then in order to make certain that there shall be close understanding and co-operation between the Central Authority and the area boards, between the generating authority and the distributing authorities, it is provided that four of the area board chairmen are to serve in rotation on the Central Authority. Finally, in order to ensure a similar understanding and co-operation between the Central Authority and the North of Scotland Board, the chairman of that Board is to be a permanent member of the Authority so long as he holds office. I believe that these arrangements will make for close and harmonious working in an organization where there must be room for progress and initiative at all levels.

As regards the area boards, it is to be noted that provision is made for the chairman of the consultative council for the area to be a member of the board. The consultative council are dealt with in Clause 7, but I must mention them now. One of the most important aims of the Bill must be to win the confidence of the consumer, and these councils are designed for that purpose. It is clear that their value and status will be enhanced by having their chairmen serving on the area boards—a provision that will also ensure that the deliberations of the council will be able to proceed with a proper background of knowledge of the facts and problems confronting the area board.

These councils are much more than channels for complaint; they are intended to provide democratic machinery in close touch with the requirements of each area, which will enable the consumer to know what is going on and to make his requirements known. We regard this experiment as one of great importance and we hope that it will put an end to the feeling of helplessness which besets most consumers when confronted with a large public utility organization.

I would draw your Lordships' attention to the provisions in subsection (2) (a) of Clause 7, that not less than half the members are to be drawn from amongst members of local authorities in the area. They will of course have been elected to those authorities, and their representative character will not be impaired by the fact that they will be chosen by the Minister from a panel. This device of the panel is a mere piece of machinery, and a necessary piece of machinery, because in each area there will be upwards of 100 local authorities of different kinds, and we have not yet evolved any means of bringing so many authorities together and getting them to agree upon a relatively small number of representatives—in this case probably between fifteen and twenty persons.

Whereas the local authority representatives may be fairly regarded as representing mainly the domestic consumer, the remainder of the council is to be representative of other important interests within the area. Finally I would point out to your Lordships that under subsection (9) of Clause 7 we make provision for the appointment of local committees and representatives, so that the consumer will be able to feel that he is no less closely in touch with the affairs of the undertaking than he is at the present time. Indeed, I venture to say that he will feel a good deal more closely in touch than most of us feel at present.

Going back now to Clause 5, we come to the powers of the Minister, and in order to dispose of some of the criticism is frequently made against such powers, I would stress that it is not contrary to the interests of the consumer that the Bill provides that the Minister should give general directions to the Central Authority on matters which appear to him to be requisite in the national interest, since by these means the conflicting claims of various types of consumer may be given such priorities as will ensure the speediest recovery of the country and its entry once more into settled economic conditions. Without, however, going to such lengths as the issuing of directions, the Minister can indicate to the Central Authority the general trends and economic conditions which must be taken in account during the consultations, for which provision is made in the Bill, between himself and the Central Authority. It is to be hoped—and here I think I shall carry with me those noble Lords who are normally in opposition—that the occasions when the Minister finds it necessary to give directions will be few and far between and that they will tend to become even fewer and still further between. But for the moment I confess that these powers to the Minister seem to me to be essential.

Clause 6 gives to the Central Authority a general power of supervision over area boards for purposes of co-ordinating distribution of electricity and of exercising a general control over policy. This is a necessary corollary of the main duty of the Central Authority to develop and maintain an efficient, co-ordinated and economical system of electricity supply. Clause 8 makes provision for reports by the Central Authority.

Part II of the Bill is concerned with the method of taking over existing undertakings and the payment of compensation. We are bound to consider that at some length at later stages of the Bill but I do not think that at this stage I need go into details. Then there is provision in Clauses 31 and 33 for the setting up of a special arbitration tribunal to deal with those matters for which arbitration is provided under the Bill. Part III of the Bill sets out the permanent financial structure of the industry, and gives the Central Authority certain co-ordinating powers, and contains in Clause 37 provisions relating to the fixing and variation of tariffs, which should be of great interest to the consumer. We embody in this part of the Bill provisions against undue preference which your Lordships have pressed on me in regard to various comparable Bills.

Part IV contains some important matter. Clause 49, for instance, deals with the supply of electricity to railways. Clause 50 deals with that important matter which to-day is nobody's business—namely, the possibilities of district heating, and that may be a means by which we can save fuel. Clauses 53 to 55 deal with conditions of employment, pension rights and compensation. They are most important clauses, but I think by now they are almost in common form. No doubt we shall have to look at them critically and carefully. Clause 57 dissolves the Electricity Commissioners, originally constituted by the Electricity (Supply) Act, 1919. They have, for nearly thirty years, supervised the electricity supply industry, and I think by and large they have done exceptionally good work. I think we owe them a great debt of gratitude and, in many respects, one is sorry to see them go.

That is, in very broad and very brief outline, the case for the Bill, as I see it, and a very short exposition of the principles. As I see it, if ever there was an instance in which there is a case for nationalization of an industry it is this. There has been no alternative put forward. There is not an alternative, and I confidently commend to your Lordships this Bill as being the right and only solution of his difficult problem. I beg to move that this Bill be read a Second time.

Moved, That the Bill be now read 2ª.— (The Lord Chancellor.)

3.12 p.m.

VISCOUNT SWINTON

My Lords, the Lord Chancellor has expounded the provisions of this Bill with characteristic lucidity. He has also painted an impressionist and somewhat imaginative picture of the present position. I think the position can be more shortly, and perhaps more accurately, stated in the following terms. Flushed and inspired with his success in anticipating the coal crisis, and providing the country with coal during the winter, the Minister of Fuel and Power now seeks to take the whole production and distribution of electricity in this country into his protective custody! Now, in public administration as in business, justification is by works and not by faith, and in a rash moment Mr. Shinwell accepted that test. He said—and I have been careful to verify all my quotations: We cannot afford to take risks. If we should fail with coal, we cannot hope to promote further schemes of nationalization. What is the Minister's standard of failure and success? If his handling of the coal situation to date is to be counted success, then heaven help the electricity of this country. If it is to be counted failure then, with his own words, he is not justified in this Bill.

What has become in all this of the Lord President's rule—the test which Mr. Morrison has asserted frequently—that it is up to the nationalizer to prove the case for nationalization? We know that the Lord Chancellor prefers to shift the onus of proof, a rather unusual doctrine proceeding from such a quarter; but let us accept the challenge. Though I have no interest myself in the electrical enterprises of this country, I have, as all your Lordships have, a deep interest in the consumers of electricity. Let us accept the test and shift the onus of proof, and let us accept the challenge, because I think it is very easy for the defendant industry in this case to show cause why it should not be nationalized. This is no case of an inefficient or unprogressive industry. This is no case where an industry has failed the consumer. Consumption has increased tenfold in twenty-five years. Up to the outbreak of war, consumers were being added at the rate of 800,000 a year. The costs have gone up; that is to say material and wages have been greatly increased; but the price to the consumer has gone down. The price went down steadily before the war, was held certainly and never raised by the companies during the war or after, as I understand.

Could you have a better case of efficiency, proof of efficiency, than that? I say, without fear of contradiction, that here is a record, in spite of great difficulties, impossible to beat, and hard to match in any other industry serving consumers in this country. I observe that the Minister himself thought at Election time, and after, that we were all going to be fold that electricity was going to be so much cheaper. I have not heard that in the careful speech of the Lord Chancellor. I doubt whether I shall hear it from any responsible quarter on the other side. There is no suggestion now that if this Bill goes through electricity is to be cheaper. Efficiency no one has challenged. The Lord Chancellor himself has said that these people were efficient, and of course that is so. Municipalities and companies have been efficient. With regard to thermal efficiency, the ton of coal to-day does what two tons did a few years ago, and if the Minister of Fuel and Power would devote himself to his proper job of getting coal, and produce coal of better quality, a ton of coal would do more even than it does to-day. Frequencies have been standardized. The voltage would have been standardized but for the war, and there has been considerable progress in the rural areas, which the Lord Chancellor just lightly sketched in as part of the background to the impressionist picture.

If he would like me to do so, I will come a little closer to this. I say without fear of contradiction—and I will in detail justify it if challenged—that what has been done in rural areas has been done by the companies. I could show by chapter and verse, comparing a company like the Wessex Company with the carefully selected projects of State enterprise, that free enterprise compared on the basis of such matters as areas served, number of people connected, the cost at which it has been done, the price charged and the failure to come upon the State for a subsidy, that what these companies have done compares in the rural districts very favourably with what State enterprise has done in carefully selected areas. Much more would have been done, but everything was held up in the war.

Let me take another test, that of profits. The Lord Chancellor was very silent upon this—apart from a little jest. I do not know whether to admire most in the Lord Chancellor's speeches the way in which he develops a relatively strong point or the way in which he carefully avoids a multitude of weak points. But let me take this one that he slid over very carefully. Profits have been steadily ploughed back into the business—I did not hear anything about that in the noble and learned Viscount's speech. For all the things that are said about it, British industry holds a pretty fine record of ploughing back profits into business. That is the strength of our industries to-day, and you will not find a better instance of that than is provided by the way in which these particular companies have steadily ploughed back a large proportion of their profits into the business, with the result that the capital actually employed in the business today is far greater than appears in the balance sheets. The consequence is that when you speak of a 6 per cent. or 7 per cent. dividend upon the declared issued capital of a company, if you look at the real capital invested in the business, taking account of what has been ploughed back, you find that the result is something Very different.

To regard money ploughed back has always been a Treasury test. I have lived in these circles for many years, and I know that the Treasury people very wisely and carefully have always said: "If you have got to fix a profit, what you have got to look at is not the nominal issued capital, but the capital actually employed in the business." I invite you, my Lord Chancellor, to look at that to-day in considering whether your proposed compensation is fair or not. I ask you to consider what is the real capital employed. How many millions have been ploughed back? If you do that you will find that the real rate of dividend on capital employed is not 6 per cent., 7 per cent., or 8 per cent. but is much nearer 3 per cent. or 4 per cent. Then, my Lord Chancellor, as the head of the equity law of this land, consider whether your terms are just and fair.

The Lord Chancellor made great play, as I thought he would, with the fact that there are too many companies and too many authorities. There is no dispute about that at all. Of course, the distribution requires consolidation and co-ordination. I am bound to say that I thought the Lord Chancellor was a little bit unfair in the picture which he painted of frightful chaos. At any rate, it was a chaos that got us through the war. The electricity supply of all the great munition factories did not fail during the war. I dare say there were too many companies, but is not the fact that they did not fail something of a tribute to the people conducting those enterprises? I shall have a word or two more to say about that in a moment. As the Lord Chancellor told us on another occasion—he can always make the right speech on the right occasion—what matters is not ownership but co-ordination. I agree with him at once. The right way is by means of right-sized units. But the fact that there are too many undertakers and distributors in this country to-day, either company or municipal, is not the fault of the wretched companies. I agree, and we can all take our share of the blame, it is the fault of Parliament. It is Parliament who have prevented a proper amalgamation. Of course, if there had been no war Parliament would have legislated, but the fact that we in Parliament failed to legislate is no reason for condemning the undertaker or for legislating in the wrong way now.

The Lord Chancellor said that something has got to be done. I agree. But that is no reason for doing the wrong thing. If we lay politics aside, practical men could easily reach the best solution. The Lord Chancellor says that there is only one solution. I see that the noble Lord, Lord Walkden, is not in his place. He had a few things to say the other day about mistrusting converts. He is very wise to absent himself now. But the Lord Chancellor, with the zeal of the convert, is prepared to die for dogma. We should be very sorry to see his martyrdom or his suicide, but what we complain about is that he wants to pile everyone else on his funeral pyre when he does die for his dogma.

The Electricity Commissioners working on the lines of the McGowan Report could give us a very good scheme. If I may say so respectfully, the Lord Chancellor when it suited him brought the McGowan Report into his speech, but when it did not suit him he was very ready to reject it. It does seem to me, if he will forgive my saying so, that there was a certain Jesuitical casuistry about his line of argument. He accepted all premises but rejected all conclusions. It is easy to make the best of both worlds in argument if you are prepared to do that. May I say in passing that one of the advantages in adopting the lines of the McGowan Report instead of this Bill would be that you would keep gas and electricity in competition, which is a most desirable thing to do.

Then it is said—and I was really most surprised at the Lord Chancellor repeating this argument—that you must nationalize now (the McGowan Committee were against this) because some of the local authorities would this year or next year have power to take over local undertakings, and in the next two years a number more would be able to take them over. Therefore, it is said: "We must have this Bill; we must do something." I think it was Lord Melbourne who said: "When someone tells me that I have to do something, I know that he wants me to do some damned silly thing." I ask your Lordships to excuse me for quoting such a strong expression. Now I do not adopt that extreme Whig or Liberal laissez-faire principle, but the fact that we have to do something does not mean that we have to do something very stupid.

The perfectly simple answer to this is to suspend this power of the local authorities to take over for a year or two while we settle the right scheme of amalgamation. That would be perfectly in accordance with precedent. After all, my Lords, this Government by legislation or regulation have suspended for the time being most of our rights and liberties. It would not be a great extension to pass a one-clause Bill—perhaps it could be done by Order in Council—suspending for the time being the power of the local authorities to take over. I will not use this argument because the Lord Chancellor did not use it, but there was the profit motive. This argument was not produced to us by the Lord Chancellor; but it was presented a great deal in another place. It is running a little thin to-day. You cannot apply it to the municipalities who own whatever it is—60 per cent. or more; but anybody who knows anything about electricity knows that this is, above all, the one industry where, if you are to make a profit, you must increase the volume of your consumption. No electricity company can make money unless it expands and increases its volume, and, all along, the industry has teen strictly controlled.

There will be many speakers who will speak with a more detailed knowledge of the industry here than I have, but I think I have said enough to show that, on all counts on which the case for nationalization can be claimed, it has failed on the broad issue; and even if it did not fail as completely as it does on the broad issue, it fails entirely in that the time for such a Bill could not be worse. The fact that we are in difficulties, that demand in electricity exceeds supply, surely makes it, above all, the wrong time to make a major change and upset of this kind. As the Lord Chancellor has admitted, any change involves a great deal of temporary dislocation. That is the common experience of all amalgamations: the greater the change the greater the dislocation. That was one of the great arguments in the McGowan Report; but there has been time to change since the McGowan Report.

Let me refer the Lord Chancellor to a more recent Report made by a committee appointed by a Socialist Secretary of State, a great Secretary of State, perhaps the best Secretary of State for Scotland I have ever known—Mr. Tom Johnston. He appointed a Committee in 1942 called, I think, the Cooper Committee and they reported this: We have examined the different aspects of the problem …. Theoretically, there would be a superficial attractiveness in a complete reorganization of the entire Northern Area under a scheme by which all the existing undertakings, whether belonging to companies or to local authorities, would be acquired and merged in a public corporation with new and wide powers. But for the same reasons which influenced the McGowan Committee to reject the same solution of a similar problem we do not recommend so drastic a proposal—the obstacles to which in our view substantially outweigh the theoretical advantages which would be secured. Mark these words: Such a scheme— this is 1942— could not be carried into effect without very serious and needless dislocation of electricity supply, and we are not satisfied that the consumers would derive any compensating benefits. That is wise, unprejudiced advice. At this moment, when we want everyone working on emergency plans to see us through, when we want the knowledge and experience of the undertakers and, not least, their local knowledge of these emergency arrangements between an electricity company and the local manufacturer, I wish to heaven these people would get away from their dogmas. Anybody who his anything to do with these practical matters knows that if you want to get, as we did get in the war, arrangements which will work in the particular locality to tide over a difficult time of two or three winter months, you must get the manufacturer on his job to see that he works in together with the local electricity supply people. That is the way in which you get your temporary solution. In the words which have been referred to in a White Paper which I think has now become rather obsolete, this at any rate still remains true: "Let us put first things first." This is the industry which is to be put into the hands of a Minister who has certainly not solved the coal problem, and vast powers are to be put into the hands of that Minister. May I repeat the refrain of his own test? If we fail in coal, we cannot hope to promote further schemes of nationalization.' I am thinking here not only of electricity companies or of the municipalities who produce; I am thinking also of the domestic consumers, the industrial consumers, and the production campaign which is vital. These consumers hitherto have had an appeal to the Electricity Commissioners. That right of appeal to an independent authoritative tribunal is equally important, or more important, when you set up a single State monopoly. I am not decrying advisory councils; they are all very well; I think they will help, but they are not a substitute for a real court of appeal any more than a nice conciliation meeting between the solicitors of two parties to a case to see if they can reach an agreement is an alternative to a court of law and ultimately to an appeal to the Lord Chancellor on the Woolsack. It is their right of appeal which really counts and yet here everything is left in the Minister's hands. The appeal from Cæsar is to Cæsar. How inconsistent! Take the Transport Bill that we are still discussing in this House. There—just as there is now an appeal to the Electricity Commissioners—the charges are to go to an independent transport tribunal, and the Minister and the Transport Commission are to be bound and the consumers are to be bound by that independent tribunal. There is nothing of the kind in this Bill. There is no end to the Minister's powers. The appetite grows with eating. Most of us to-day have some difficulty in satisfying our appetites; not so the Minister. The rest of us are rationed; he alone is free.

Take the appointment of the boards. The Lord Chancellor again has skated rather lightly over that. Under the Bill, all the appointments vest in the Minister. I agree that he must appoint the Central Authority. Nobody else can; that is right. But in this House we have debated at great length on the Transport Bill and have expressed the strongest opinion on that Bill that the appointment of the executives, who are the equivalent of these boards because of general directions of policy, the co-ordination of policy, should be made by the Transport Commission. This House decided in its great weight not only of vote but of opinion—there hardly was an argument raised against it—that the appointment of these boards and executives should be in the central authority and not in the Minister. I shall not repeat—it is unnecessary—the arguments which I and others deployed to the House of the administrative analogy to show why that should be so. Your Lordships considered the question and decided it. The Minister himself in the Coal Industry Nationalisation Act accepted a similar arrangement. He appoints the Coal Board; the Coal Board appoints these local boards throughout the country. The Minister has himself recently supplied the strongest possible reinforcement of the argument why the Central Authority, and not the Minister, should appoint the boards. If these boards are to succeed they must have the very best and most experienced men, and politics should never be allowed to enter at all into consideration—never.

THE FIRST LORD OF THE ADMIRALTY (VISCOUNT HALL)

On neither side?

VISCOUNT SWINTON

Yes, on neither side. I accept that completely. But the noble Lord is very interesting. Does he mean that nobody is to be appointed to the boards who holds any political opinion. He has to be, if your Lordships will forgive my saying, a political eunuch.

VISCOUNT HALL

Nonsense.

VISCOUNT SWINTON

Then indeed we shall be in a strange position.

VISCOUNT HALL

Sheer nonsense.

VISCOUNT SWINTON

Politics should not enter in either way. Then under this rule a man should not be debarred from a board when a Tory Government are in, if he is a keen nationalizer, and not debarred from a board when a Socialist Government are in, if he is against nationalization. If he has technical, commercial, or market efficiency, he is the man for the job. Now let me read to the First Lord the Minister of Fuel's speeches on this point. I have gone into them with great care, and he can check me now. The Minister has said he will not appoint a man, however able and experienced he is, if he is opposed to nationalization.

VISCOUNT HALL

I would ask the noble Viscount whether he will say that the appointments to the Coal Board were political and I believe all of the appointments were appointments of men who were in favour of nationalization. That is the real test.

VISCOUNT SWINTON

I have not the least idea of the political views of the gentlemen on the Coal Board. I am not complaining about the Coal Board—

VISCOUNT HALL

But who appointed the Coal Board?

VISCOUNT SWINTON

The Minister. But he is going to appoint on quite a different principle here.

VISCOUNT HALL

Nonsense.

VISCOUNT SWINTON

It is no good the noble Viscount becoming fractious. I do not wonder. If I were accusing him of doing this kind of thing he would have every right to be indignant and to reprove me and repress me. But I am going to quote to him now what the Minister, who under this Bill is going to appoint these boards, has said very clearly in Parliament are the principles on which he will proceed, and if the noble Viscount is to repudiate this I shall be very much interested. The Minister of Fuel has said quite definitely that he is not going to appoint men to an Electricity Board if they are opposed to nationalization. Here is the quotation, which you will find in the Third Reading debate: If I have to appoint electricity boards it would be quite improper to appoint to a board a person who is definitely opposed to the nationalization of the industry. I hope he will not have to make these appointments. But I want to be quite fair, and the noble Lord will admit that I am, on the whole, a fair controversialist. The Minister elaborated the point. He said: We must be certain, even if there is a difference of opinion among the members of the electricity boards, that at any rate they are concerned about promoting nationalization with due regard to public interest. How is it possible to appoint a person who has declared over and over again he is against nationalization, and that it is going to prove a failure, to a board of management. A technician will be employed by the boards "— not on the boards— as a technician, but to allow a person who is against the proposition to run the industry—well, we are heading for trouble if we do. I do not intend to head for trouble. That indeed would be a pleasant change, but trouble is just what the Minister is heading for if he pursues this course.

What a contrast to what the Lord President said, that we must keep politics out of this and must have the best commercial men. This is indeed the closed Shop—a new kind of closed shop—a policy of full employment if you vote Socialist. The Minister made by this the discreditable insinuation that an honest opponent of nationalization would sabotage a scheme if he accepted the post. My Lords, I pick my words. That may be the technique of a Communist or a crypto-Communist: it is wholly alien to the way of life, to the conception of duty, and to the sense of decency of the ordinary Englishman, of the common man. No decent man would dream of accepting a post on one of these boards unless he were prepared to give his whole heart and energy to making it a success. I have spent a little time over this challenge of the Minister but I think not too much time on so grave an issue. The Minister has supplied an unanswerable argument for vesting the appointment of the boards in the Central Authority.

I must say one word about compensation, which the Lord Chancellor slid over with a witticism. The old accepted principle of ascertaining a fair value is departed from again. Stock Exchange values are to be taken where available. Whatever argument could be raised on the Transport Bill about the railways has no application here. Why should not an electricity company receive what is the true and fair value for the business as a going concern, having due regard to all the circumstances, the length of its franchise and everything else? There is no question of buying—I have forgotten the elegant phrase about the railways used by the Chancellor of the Exchequer—"the whole bag of tricks" or something—I have not the exact delicate phrase; perhaps Lord Woolton has it in mind. But here the State is buying not only valuable fixed assets which have greatly appreciated in value but expanding businesses as well. No fewer than 140 companies will have to settle by agreement or go to arbitration, because they have what is called non-quoted assets. Observe what you are doing, you are going here to penalize those who have been most conservative in their policy. I do not mean politically Conservative, which no doubt Mr. Shinwell would think right, but companies of whom many have for years anticipated and followed the advice of the Chancellor of the Exchequer to plough back a large part of their profits into the business.

I have confined myself to broad issues and questions of principle. There are many matters which we shall have to consider in Committee. We will certainly not shirk our duties in this matter, and we shall have the advantage of our discussions on the Transport Bill. Most of your Lordships—and I suspect the majority of people in the country to-day—will feel that there is little or no case for this Bill; certainly, I am sure, the great majority of people feel that it is disastrously the wrong time to introduce it. The Government have great and grave responsibilities to-day; they do not grow less, but accumulate. Surely, they are singularly unwise to add this to their commitments. However, if they insist, we will try to improve the Bill. It is the wrong kind of ship, but if, in this stormy weather and these uncharted seas, they insist on setting sail in this strange craft, we will try to make it as seaworthy as possible.

3.52 p.m.

LORD RENNELL

My Lords, I apologize to the noble and learned Viscount on the Woolsack for not having been here in time to hear his opening remarks. It is not for me to anticipate what your Lordships will feel about what I have in a very few words to say. I understand from the noble Viscount who has just sat down that he is opposed to the Bill, but he is not opposing the Bill. I do not propose to follow him down that road because, for my part, I accept the Bill. I think there are certain arguments which even the noble and learned Viscount, the Lord Chancellor, did not bring out in the course of his speech, which are pertinent, and to which I would like to refer. The electricity industry in this country, as I see it and as I think a number of foreigners see it (and sometimes we may judge what we are doing here more effectively through the eyes of foreigners than through our own eyes, and I must say that I agree with them, looking back over the last twenty or thirty years of the electricity industry here) is rather like Topsy—it has "growed." It has not been very systematically developed. The reasons why, I will come to in a minute. Perhaps it is not the fault of the industry.

There is another aspect which I think is pertinent to this particular Bill. It is that electricity legislation seems to have been passed—if one can judge of it in general terms—always rather after the event, instead of in anticipation of developments; in other words, the legislation which has governed the generation and distribution of electricity has run after developments rather than guided them. For instance, it is indeed a remark- able fact—I think I am right in saying this—that the last principal piece of electricity legislation in this country was passed as far back as 1926, twenty-one years ago. Even if the five years period of the war is eliminated, it still leaves a gap of about fifteen years during which there was no major electricity legislation. In the course of that time there were, of course, a number of inquiries, which I am sorry to say, by and large, led to nothing except recommendations. As the noble Viscount who has just sat down said, that is the fault of Parliament and not the fault of the industry. But, nevertheless, it is a fact. It seems to me, as a consequence, that where there is a gap of such duration as twenty years since the last major piece of legislation, the next piece of legislation, whatever it is, will have to catch up on those years. If the industry is going to serve the community in the future, it will have to anticipate developments and guide them. I believe we are probably on common ground there, and I do not think the noble Viscount who has just sat down will disagree with me on that.

So we come to a point at which a piece of major legislation is necessary. Here again, I think, the so-called private enterprises, the public utility companies themselves, accept as a whole that a piece of major legislation is overdue, if for no other reason than that to which the noble and learned Viscount on the Woolsack referred—namely, the possibility in the immediate future of an increase in the number of electricity undertakings, rather than a diminution. In trying to see why this has happened, I wonder whether a piece of major legislation could not have been promoted earlier by the public utility undertakings—the private ones, if you wish, or the whole of them—before now. They did not promote any because, of course, they did not agree, and they could not agree. I dare say it is arguable that the larger electricity companies could have got together to promote such a piece of legislation, but there would have been antagonisms among the smaller companies, just as there always have been antagonisms against amalgamations in the terms referred to in the McGowan Report. In other words, even on what might be called the private side of the electricity industry in this country, there has not been unanimity by any manner of means; and as between those undertakings and the local authority undertakings, taking each side as a whole, there has, of course, been even less unanimity, if that be possible.

It seems to me a pity, if one looks back to 1926, that when the generation and distribution of electricity was integrated, so far as companies were concerned, the local authority undertakings were not brought under control at the same time. Your Lordships know better than I do why they stood out. You also know who were the protagonists against bringing the local authority undertakings into the national electricity scheme. Those whom that hat fits, I suggest, should put it on, instead of criticizing the fact that this did not take place in 1926. I think I am right in saying that in no sense was it ever the fault of the public utility electrical companies. But the result is that there has been this antagonism between two sides, this bilateralism in the electricity supply of this country, which has created a situation which to-day is virtually untenable and which is not only entirely unfair to the community as a whole but monstrously unfair to the public utility companies.

Why is it monstrously unfair? For the very simple reason that as the franchises fell in, local authorities took over their own supplies, and they have always had the easiest and most profitable end of the business. They have always had the dense populations to deal with; they have always been able to sell electricity without any difficulty, to somebody living 5 feet, 10 feet or 10 yards away from his neighbour. Who has had the difficulty? It is those who have supplied rural areas—and how many of those are local authority undertakings? Your Lordships know the answer as well as I do; but may I remind you once again of what I have said? The people who are mainly responsible for this state of affairs are those who opposed bringing the local authority undertakings into a general national scheme. The result has been not only costly to the country as a whole, but also not very creditable.

We are a very tight, small island with over-all a very dense population. Even if the more barren and deserted areas of the United Kingdom are taken into account, the density of the population per square mile is still very great. Yet we have never been able to supply rural areas with electricity at a reasonable price, and we have not been able to do that for the reasons I have stated. It seems peculiar that in so tight and small a place we should, for over forty years, have avoided this issue of a unified scheme. Politically every Party is in part to blame for this, and I do not think it is any good going back and attributing blame to the failures of the 1926 Act and earlier Acts. I think we must accept that that is so, and, having accepted it, also accept that a major, and therefore, possibly drastic, piece of legislation is now necessary. Prior to the war it might still have been possible to devise another scheme, but times change, and the past—which is perhaps the only thing which is always with us—remains ineffaceable. We cannot go back to-day to a scheme which might have been workable seven years ago. Therefore, I do not propose to pursue that rabbit any further, because I frankly think it is a waste of time.

Before going on to the second part of what I have to say, however, I must add one thing. When all the best advocacy has been made for continuing the present system of private enterprise, when instances have been advanced to show how efficient the Central Electricity Board, the big central generating stations and distribution by the grid have been, there remains the unanswerable fact—or the fact which I have never seen rebutted—that large bulk buyers, the industrial buyers, have, by and large, not been satisfied with the service which they have obtained from the Central Electricity Board. I will not quote names, but I could quote two large industrial concerns in this country, both of them in the first flight of efficiency. One of these concerns set up its plant depending wholly on bulk electricity bought off the grid, and regretted that decision from the day it started working, both on account of the service and, above all, on account of cost. That concern has, in the course of its extensions, decided to put up its own generating plant to supplement what it receives, because it is too late now to replace it. The second is a group of undertakings, again among the most efficient certainly in this country and perhaps in the world. Every one of those factories has built its own generating station, and not one depends upon the grid for its electricity supplies. There must be some reason for that. It must be that the service they were getting or the price they were being asked was not good enough, and we must accept that fact. And what has been the result? The result has been that each one of those separate factories, in order to maintain its own efficiency and safeguard against breakdown, in setting up its generating plant has had to instal stand-by plant of 50 per cent., 70 per cent. and sometimes even 100 per cent. in excess of its requirements. Those stand-by plants are, by and large, idle for perhaps ten months a year, and that capacity for generation is being lost to us.

LORD BARNBY

If I might interrupt the noble Lord, could he give the names of the undertakings?

LORD RENNELL

I will give them afterwards.

LORD BARNBY

I ask that because it seems that there is a large generating capacity available in the country which is not being used.

LORD RENNELL

I will deal with the noble Lord's question later on.

VISCOUNT RIDLEY

Would the noble Lord say whether they did not wish to purchase current from the Central Electricity Board, or is he only saying that they did not wish to purchase from the supply undertaking of that area because the price was too high?

LORD RENNELL

That is so; they were not willing to purchase from the grid which ran through their area.

VISCOUNT RIDLEY

That would mean purchasing from the supply undertakings?

LORD RENNELL

Yes. The conclusion I draw from that is that what was possible in the way of a central organization is no longer possible. To pass from that to this particular scheme is, of course, quite another story. My own inclination, and probably that of a great number of my friends, would have been to see not so much a nationalized industry as a national industry—and I think there is some distinction. The alternative of a public corporation for the whole country, divided into two parts, the generating end and the distributing end, was perhaps a feasible alternative. Frankly, I do not think it is a feasible alternative now, not because it would not be workable but for a simple and inescapable political fact—namely, that the other alternative, adopted and contained in this Bill, was clearly and fairly set forth before the electorate at the last Election. We may or may not agree with it—noble Lords opposite obviously do agree with it—but it was set forth, and of all the parts of the programme of the present Government I think it is fair to say that nationalization of electricity in some such form as this did commend itself to the electorate as a whole.

That being the case, the possibility of choosing the first of the alternatives in the McGowan Report, as opposed to the second one which the McGowan Report discarded, is not in fact a practical argument to-day. I therefore conclude on this point by saying that a case undoubtedly can be made out for drastic legislation at this stage. A case can be made out and will be largely agreed to by people in the industry itself that a reorganization of the industry as a whole is necessary; and I must add that the country appears to desire a scheme partaking of nationalization. I accept that the country does wish that, and I feel, therefore, it is necessary to support this Bill in broad terms—but not in all its details.

However it is probably not germane on a Second Reading debate to deal with points which will fall to be brought up in the Committee stage, except for two which I think are serious blots on the Bill in its present form. One is the last point to which the noble Viscount, Lord Swinton, referred, and that is the method of appointing and organizing the area boards. I wish I could understand what was at the back of the Government's mind in having the top authority appointed by the Minister—and rightly—and the next set of authorities, at a lower level, also appointed by the Minister. In the case of the Transport Bill, I have not heard anything from the Benches opposite, or in the debates, both here and in another place, which I have read, which explained this curious theory of the Minister appointing both the subordinate and the principal authority. Had it occurred only in the Transport Bill, I think it might have been argued that the different aspects of transport—road, rail, canal and so forth—were not of the same sort, but competed with one another to such an extent that the Minister felt he had to have a finger in each of those pies, to maintain some sort of coherence in the Transport Commission. But in this set-up of the electricity industry no such argument holds good. The area boards are carrying out in their areas electricity work and nothing else. It is true that they are engaged in distribution rather than in generation, but it is all electricity. There is no difference in kind; they are dealing with precisely the same trade. If ever there were a case for separating the area boards from the Central Authority, it is here. There must be some reason why this curious device has been chosen, and I hope that the noble and learned Viscount, the Lord Chancellor, when he concludes the debate, will be able to enlighten us, because I cannot see any rhyme or reason in it. It may be that there is a reason why the Minister wants to have all the appointments in his hands, but even if there be reasons I hope that the Government spokesman will state them. I have not yet heard of them.

The second point in which this Bill contains a very serious fault, is in the matter of compensation. It is arguable that a valuation of the physical assets and maintainable revenue of the four or five railway groups in this country might be very difficult to achieve, but the practice of valuing a public utility organization, both in this country and in other countries, is common form. It is known how it is done, and it is a perfectly easy thing to do. You can not only value the maintainable revenue, but you can obtain a very close forecast of an increasing revenue. The basis for valuation is there. The basis proposed in the Bill seems to be a shot in the dark and not a basis at all; to take the Stock Exchange valuations seems to me to have no ground whatsoever, in logic, in justice in equity, or in finance. I defy the Government to find a financial ground to justify their valuation.

I have referred to these points only because I think they are major issues. There is a number of other points, which I shall hope to see raised or raise myself on the Committee stage: notably, that what everybody agrees should be one of the purposes of the electricity authority is not stated as one of its purposes—the increasing of the supply of electricity to rural areas. This was recommended by the Scott Committee, and every noble Lord who has had anything to do with agriculture and land will have noticed that not a single reference has been made to increasing the use of and cheapening electricity in rural areas. That omission seems to be quite incomprehensible. I would conclude by saying that I, with my friends here, accept this Bill and do not oppose it.

4.18 p.m.

THE EARL OF LYTTON

My Lords, we have listened to two speeches in defence of this Bill. The noble and learned Viscount the Lord Chancellor made out what he called a good case; indeed he congratulated himself chat it was an over-whelming case in favour of a substantial measure of reorganization of the electricity industry. I agree that there is a case for substantial reorganization of the industry; but I could find in the noble Viscount's speech nothing whatever in defence of this particular Bill. The noble Lord who has just spoken said that there was need for a more systematic development. I agree with him; but he said nothing about this Bill at all, except to point out the blots in it. The only reason, I gathered, why he was supporting it, was that the Government had a mandate at the last Election to Carry out wide schemes of nationalization. That, of course, we also accept—and that is the explanation of the action of my noble friend on the Front Bench; that is why he "is opposed to but not opposing the Bill."

The objects of the Bill, or, at any rate, the objects which are set before those who will have to administer its machinery, are very modestly stated at page 3 of the Bill, in subsection (6) of Clause 1, and, as the Lord Chancellor reminded us, those objects are the development and cheapening of supplies as far as practicable. For that purpose this Bill is not needed. There are exiting undertakers who are developing the electricity supply, and at a progressive cheapening of the price. The only thing that they require in order to accelerate the development and, still further, to reduce the price, is additional plant to make good their war losses, and, above all, the fuel to work their undertakings. If yon want more and cheaper electricity at once you can get it by giving us more coal, a better quality of coal and coal at a lower price. But nothing was said in the Lord Chancellor's speech to show how that could be brought about, and there is nothing in this Bill which will produce a better quality or a cheaper fuel.

The real and only object of this Bill is to change the ownership of the present sources of supply. It is a purely political object. In other words, it is "a manifesto of doctrine or policy masquerading in the guise of a Bill," the very thing to which the Lord Chancellor took strong exception in the case of Lord Reading's Bill. If I were to make a proposition to the noble and learned Viscount, and if I were to offer to improve the time-keeping of his watch, and, at the same time, save him the necessity of winding it up every night, he might perhaps think there was something attractive in the proposition. But he would be very much less enthusiastic, I am sure, if I went on to explain that I intended to bring about that result by transferring the watch to myself, and giving him in return something of much less value. He would probably call that unfair and I do not think he would love me any better if I then said: "But, see how mercenary you are trying to make money out of my benevolence." But that is precisely the way in which the Government are treating the present undertakers of electricity in this Bill.

I want to deal first of all with the justification for this Bill, a justification which is not stated but which is implied in the Bill. The noble Lord, Lord Morrison, speaking on the first day of this Session, when he was moving the Address, used these words: In my view, the vital and real test of whether private enterprise or nationalization of industry is the better policy for the nation to pursue is to be found in the efficiency in which either method serves the public. I accept that test. It is the test I would myself apply when examining the merits of this Bill, and I venture to submit to your Lordships that the electricity industry will stand up to that test better than any other.

When you come to think of it, there is hardly a single industry or a single public service in the country to-day which can be called efficient by pre-war standards; but with regard to their failure, such as it is, the question of ownership has nothing whatever to do with the matter. Let me take two examples. The postal and telephone service of the country at the moment is inefficient. It is more expensive, it is less reliable, and it does not come up to the pre-war standards. That is a service under Government control, but nobody suggests that the Postmaster-General is to blame for the non-delivery or late delivery of one's letters. Everybody knows that it is due to war conditions over which the owners have no control whatever. Let us take the railways. They are, by comparison with pre-war standards, inefficient to-day. There are fewer trains, more overcrowded trains, and unpunctual trains; but no one suggests—or no one would have the right to suggest—that that is the fault of the railway directors. The Post Office would be no more efficient if it were under private ownership, and the railways would be no more efficient if they were under Government control. Ownership has nothing whatever to do with the efficiency or inefficiency of these various industries.

The electrical industry has had precisely the same war conditions to contend with. It has lost a large proportion of its employees. Its plant has been damaged or destroyed, and its normal development has been arrested by the curtailment of its capital expenditure. Yet, in spite of those conditions, in spite of conditions which would have justified a failure to fulfil its obligations, it has not failed. I admit that the Lord Chancellor in his speech did not say that it had failed. I do not think any Minister speaking in Parliament, where he could be corrected, has claimed that any of the existing undertakings have been inefficient; but other members of the Government, Ministers speaking outside, have not always been so careful. I remember the Chancellor of the Exchequer, for instance, in his Budget speech sneeringly remarking that private enterprise had not shown itself very enterprising. But, even if these things had not been said, the charge is implicit, if we accept Lord Morrison's test, in the Bill. I wish to challenge that contention.

I can, of course, speak only for a certain area of which I have personal knowledge, an area in Central London, small in extent, but an area which was vitally important during the war, since it included both Houses of Parliament, Buckingham Palace, and all the Government Depart- ments. Other noble Lords, no doubt, will be able to speak of other areas, larger in extent, and giving a supply to the rural districts. I am only what the Minister of Fuel and Power called "a namby-pamby director, here to-day and gone tomorrow." I do not know what he meant by that. Anyhow, I am here to-day, and, if this Bill passes, I shall be gone tomorrow. But before I go, I owe it to my colleagues who have shown their confidence in me by choosing me as their chairman, I owe it to the staff and the workers generally, who have served us faithfully and well, to repudiate the suggestion that there has been any lack of foresight in developing the business, any slackness in that development, or any inefficiency in the management or administration.

To do that I am obliged to submit to your Lordships a very few facts which completely dispose of any such allegation. The area of the two companies, of which I am chairman, in Central London, one a generating and the other a distributing company, suffered more than any other in the country during the war. Our generating stations were, throughout the war, enemy targets, and they were hit no fewer, than 175 times. In our distribution area 2,500 bombs were dropped, doing considerable damage. Out of the claims for war damage for the whole country, amounting to £10,000,000, claims amounting to £1,000,000, or 10 per cent., came from this area alone. We have never received that compensation, and the damage, of course, has been only partially replaced. But in spite of what happened the supply never failed. There was one occasion, on a Saturday night, when our main station which supplied the Whitehall area, received a direct hit and was completely destroyed. Yet the Government Departments received their supply by Sunday morning, and all consumers over the whole of that area were connected up by Monday morning.

Not only was London never deprived of its electricity, but we exported electricity, over the grid, to war factories as far away as South Wales. If we had failed, those factories could not have fulfilled their obligations, and we should have lost the war. Only their own employers know at what a price in heroism, skill and energy on the part of the people concerned, those results were achieved. The continuity of the supply was accepted by the general public as a matter of course, and the fact that it was so accepted is a measure of the confidence which consumers and the public generally had in the industry. I do not say that under national ownership those men would have done any less well. They would, of course, have done just as well. But I submit that they could not have done better under any system, and that the industry completely stood up to the test of the war.

So much for the workers. But you may say to me: What about development and what about price?—those are the things with which this Bill deals. I will give your Lordships only one figure under each head. First as regards growth: the London Power Company was established in 1926, and in the years that have passed since then the maximum demand has increased 270 per cent. and the units sold have increased by 540 per cent., or from 420,000,000 to 2,700,000,000. That indicates something of the growth or development of the company. Now with regard to price. As a result of the measures taken by the London Power Company there has been a progressive cheapening of the supply, and in the twelve years up to 1938, the generating costs had been reduced by 60 per cent. Of course the downward tendency was halted in the war, just as it was in every other business, but, even to-day, costs are lower by 40 per cent. than they were in 1926, and that in spite of a rise in the price of coal of 150 per cent. since 1938. I challenge Lord Morrison, or any other noble Lord to say that those figures show that private enterprise was unenterprising or unsuccessful.

I come to my second point—the time chosen for the introduction of the Bill. When the Government took office there was a shortage of almost everything, and, in consequence, we were faced by a succession of crises. We had a food crisis, a fuel crisis, a financial crisis, and the remedy for all these crises, as the Government are always pointing out, is increased production and a united national effort in dealing with the peace crisis, just as the nation dealt with the war. What we need are more houses, more coal, more exports, more gas, and more electricity. There are agencies already in existence which could supply all those things, if only the Government would give them the necessary help, and with the Government help they could have produced more immediately. Instead of devoting all their energies to increasing production, to helping producers, and to uniting all classes in a national effort, the Government have wasted time on political propaganda, have hampered producers with vexatious interferences, restrictions, regulations and forms, and have sown controversy instead of encouraging unity. Finally, they have removed all incentive to further production by describing any attempt to carry on industry at a profit as almost criminal.

This Bill is another example of political propaganda. It will not produce a single additional unit of electricity. It cannot help either producers, consumers or workers immediately, and if I am told that the object of the Bill is not the immediate cheapening of or an immediate increase in, the supply, but that that is a long-term policy, then I say that the existing undertakers could also produce more as a long-term policy—but they could have produced it very much more quickly.

I come to the third point that I wish to make, and that concerns the administrative machinery set up in this Bill, which it is claimed is going to give us so much greater efficiency. There is to be one central authority and fourteen area boards for the whole country. I would ask your Lordships to note that these area boards are to have no funds for capital expenditure, and no autonomy in the spending of capital. How can that possibly produce greater efficiency? Let me explain to your Lordships what takes place in a company to-day. At the beginning of the year, the chief engineer submits a programme of capital expenditure and the works which he proposes to carry out. The programme is discussed by the board and, when approved, he then knows exactly what work he has to do. He can place his orders and he can get on with the work. But what is going to happen under this Bill? If an engineer wants, perhaps, to put down a new main, or set up a new transformer station, he cannot work out any budget of capital expenditure. He has to go to the engineer of the area board for every single item of capital expenditure, and the engineer of the area board then submits this scheme, together with others which he may have received from other districts, to his area board. The area board then can do nothing. It has to pass on the proposal to the engineer of the Central Authority. The Central Authority then has to consider this particular item of expenditure with items from all over the country—England, Scotland and Wales— which are made as proposals to the Central Authority. If fresh capital is needed to carry it out, then the Central Authority itself has to go to the Treasury. It is a fantastic arrangement.

It is impossible to say that that is going to make for efficiency. The noble and learned Viscount the Lord Chancellor, I am sure, would never suggest for a moment that that was in the minds of the McGowan Committee when they suggested the setting up of regional authorities. This House is full of noble Lords who have great experience in the working of industry, and I would ask you, my Lords: Can any one of you undertake to carry on a business without any money for capital expenditure and without any responsibility for the capital expenditure which you incur? Not one of you, for a moment, could conduct any business at all on those lines. It is quite fantastic, and, of course, it cannot be the intention of the Government that that should be the system. They must have in mind some degree of financial autonomy for the area boards, but there is nothing in the Bill to tell us what it is, and we are entitled to know. Let me tell your Lordships that our own engineers are very anxious about this matter. They come to me and say: "How are we going to do our work under this new system?" I cannot tell them, but they are entitled to know. I do hope that before all the stages of this Bill are through somebody on behalf of the Government will give us some idea of the sort of way in which these area boards are to conduct their business.

My fourth and last point is this. I have said that there is anxiety amongst our engineers. There is also very considerable anxiety amongst our workers. Under the existing system of ownership and management, our workers have very many and substantial benefits. They enjoy the benefits of a pension fund, of a sick pay scheme, of a staff assurance scheme, of long-service grants, of an efficiency bonus, of co-partnership benefits, of a health service with clinics attended by a doctor and a nurse, of canteens where they may get their food, of educational facilities and of a sports ground for recreation. All these things, of course, cost a great deal of money, and expenditure upon them by one company alone amounts to £100,000 a year. Our workers want to know: Are these benefits going to be continued? There is nothing in this Bill to assure them that they will be, except that: reference in subsection (6) of Clause 1 to which the Lord Chancellor referred in his opening remarks—namely, that it shall be the duty of the boards to promote the welfare, health, and safety of persons in their employment. As a result of the benefits which they at present enjoy, there has always existed the happiest possible relations between management and employees in our company, and we want to know whether this will continue. I would ask the First Lord of the Admiralty, when he comes to reply, if he would give us an assurance that all existing benefits to workers in the industry will be continued.

As is the case with Lord Rennell, there are some points of detail which I should be disposed to criticize when we get into Committee; but. I can leave them till then. On the broad general principle which is applicable to the Second Reading, I repeat that no justification has been put before us for changing the ownership of electricity undertakings. No proof has been submitted to us that any benefit will result therefrom to either consumers or workers and, by the controversy raised in this Bill, a great impediment has been imposed upon national unity. My interest, my Lords, is in the industry, and in the welfare of those who have served me well and faithfully. I have no doubt that they will serve the State equally efficiently and equally loyally, but I have grave doubt whether, under this machinery, they will be able to render service as successful as they have done in the past. I say I have no confidence that that is possible, but I may be mistaken and, if I am mistaken, and if it is going to be possible to cover the bare bones of this Bill with human material—human material which has both authority and efficiency—if the right men are going to be put in and politics are going to be kept out, and if, as a result of that, we are going to get a greater development of electricity and quicker reduction in the price with diminished measures for the welfare of the workers—if all those goals are going to be achieved, then I shall be ready to forgive everything. I will forgive the slur on existing undertakers which is implicit in this Bill; I will forgive the Minister's rude references to directors whom I know to be a body of upright men, honest trustees and stewards of the responsibility which they have undertaken; I will even forgive the loss of my own employment and my own income, and I will sing my Nunc Dimittis with a good grace.

4.49 p.m.

LORD BRABAZON OF TARA

My Lords, I should like to speak from this Box because one is less conspicuous and it is very convenient; I should like to say that anything I say from it is not on behalf of the official Opposition, in the same way as many things that they say are not my views either. I would like to start by congratulating the Lord Chancellor on his introductory speech. It is quite extra ordinary and always remarkable to me to hear the way a skilled lawyer can make a good speech on a bad case. The question of nationalization goes to two extremes. Some people go so far as to say the best way to wage war is by private armies, and the other extreme say it is best to nationalize all children. And of course the right policy lies somewhere in the middle. And the line shifts. The line of nationalization is very difficult sometimes to determine.

To-day the telephone service has been mentioned. Are we all quite happy that that is best run as a nationalized institution, when we have a very remarkable system in America which is run by private enterprise? That is something on the border line, and I am not pretending for one moment that electricity is not also on the border line. It is of course now, admittedly, a necessity of life but noble Lords will remember that it was not always thought so. If you look at the construction of some of the companies you will see they had to pay 6 per cent. for preference and 5 per cent. for debentures. That did not show much confidence in electricity, if that was what the ordinary investor thought of its chance of success. One thing people sometimes forget is that electricity generation in this country was born of private to enterprise and if it had not been for private enterprise there would be no electricity to nationalize. It is a pity not to pay tribute where tribute is due.

The Conservative Government in 1926 set up the grid, a most imaginative measure. It found a somewhat heterogeneous industry with everything in separate compartments, stations generating at different voltages and frequencies and all entirely independent. It was an imaginative Act that inter-connected the production of electricity, set up selected stations and the Central Electricity Board and standardized frequencies. But there again, if it had not been for that Act, the nationalization of electricity would not have been a possibility. It would be the same as nationalizing furnishing shops. There would have been no co-ordinating machinery whereby you could take over the whole of the industry. I do not think that even on this side we have paid sufficient tribute to the Baldwin administration who passed that imaginative and instructive Act. I well remember it because it was criticized so violently from the point of view of defence and the noble Earl, Lord Lytton, only to-day referred to the fact that though his power station was destroyed during the war, within a few hours he had been able to get current going owing to the interconnection.

I do not think anybody would dispute the Lord Chancellor's point that larger areas are wanted. That was a recommendation of the McGowan Report and it has been a pity that joint electricity authorities have not been set up over England. But do not let us pretend that the objection to that was just that the municipalities would not lie down with the companies. The jealousy between the municipalities was just as violent as was the dislike between private enterprise and the municipalities. Only one joint electricity authority was set up, the West Midland, and it has been a success. I think we ought to pay tribute to this area where the companies and municipalities have shown the world that such a thing could be a success.

In a question like this timing is of the essence of the problem and we have had no technical reasons put forward why there is an advantage in nationalizing the whole of the country to-day in one step. We have come to the conclusion, naturally, that this is not a measure which is based on the genuine desire to get a good supply of electricity, but on purely political doctrines. We are going in for a great venture and it might have been done much more smoothly, with a certain amount of good will and co-operation. If another Minister had been responsible for the Bill, the situation would have been very diffierent from what it is to-day. The Minister says that if you differ from him —God knows, we are still allowed to differ from the Ministers—on a subject of which you know something and he knows very little, you are automatically a knave. I hope legislation in the future will not be based on penalizing those people who differ from the opinions of Ministers. Tribute has been paid from both sides to the efficiency of this industry, because it has done well. Nobody can pretend it has not done well and we wish it to do well in the future. If you are going to make a success of such a scheme you must get the co-operation of everyone and all should feel in their bones that they have had a fair deal.

Let us glance through the industry and see what the general feeling is. First of all the Electricity Commissoners. Of course everybody has quarrelled with the Electricity Commissioners but they have done great work, with no politics. They have come down on this undertaking or on that, but have always stood respected and above all criticism. They have had great names, that of the late Sir John Snell, the present Sir John Kennedy and Sir Cyril Hurcombe. We may quarrel with them but the industry as a whole looks on them with the greatest respect and I regret, as the Lord Chancellor regrets, their disappearance. Secondly we come to the Central Electricity Board. That was a Board set up, if you remember, with so many safety valves that it was thought it never would work. But it has worked. They have been great wholesalers of electricity. They have played the tune on the selected stations and I think an immense amount of praise is due to them for the imaginative way in which they have dealt with generation from the selected stations. Are they going to be pleased because they are wiped off the map together with all their staff?

I turn to the great municipalities. The municipalities who generated electricity were immensely proud of their own stations. How they loved to boast of their efficiency and it is very remarkable that just because their political views in many cases happened to correspond with those of the Government of the day they did not protest at having their generating stations torn away from them when they were so devoted to them, and loved them so much. As a matter of finance, I hope this example will not be copied by private people—that the more you owe the more money you get from the Government, because the municipality that has charged its citizens to pay for its station gets no money at all, whereas, if you have supplied electricity cheaply to your citizens and not paid for your station, then the taxpayer is going to foot the Bill.

Then we come to the question of the companies. I am a director of the County of London Company. When I was a junior Minister in the Ministry of Transport, I used to quarrel with old Sir Harry Renwick with violence; and it is very curious that sixteen or seventeen years afterwards I was asked to become a member of that company. I hope nobody will think that my policy during my tenure of office had anything to do with the prospect of becoming a director sixteen years afterwards. There is a family. Sir Harry Renwick, after all, was one of the great pioneers of this industry, who put down the station at Barking, which is not only the biggest in England, but the biggest in Europe. That was the result of the imaginative hard work of a managing director and a chairman. He is now succeeded by his son, Sir Robert, who is carrying on that great company in the traditions of his father.

I ask your Lordships: What basis, in equity, has the Minister, in view of the hard work of those people, to take away the Chairman's job without any compensation whatsoever? Have they not done more than any technician has done in the whole of the industry? What right have the Government to penalize Sir Robert, and put him out of that job, which he has performed so well? It can be based on nothing but the vindictive malice of the Minister. Sir Robert, first of all, honestly opposed nationalization. That is no reason for penalizing anybody, or putting them in gaol. But the trouble with Sir Robert is that when he forecasts something he is invariably right, and the Minister is invariably wrong. That is very galling, but it is no reason for incorporating hate into a Bill.

We now come to the manufacturers. How delighted the manufacturers are going to be that now they can have the stimulating influence of the Government competing with them. That will cause them great joy. Last, and of course least, there comes the consumer. In the old days the consumer could appeal to the Electricity Commissioners against high charges. Now the Government are going to set up some sort of organization whereby nobody will get anywhere. That is quite certain, because it has been proved throughout the world that by nationalization you are not going to get cheaper current. That is one of the most farcical ideas that was ever put forward. Perhaps the consumers are going to be pleased if they get any electricity at all. What with the present costs, and the rationing (now so fashionably called shedding"), they will be happy if they get a couple of watts a week. I think I can say, without fear of contradiction, that never did any measure start with more universal than does this one. I have too much of love for this great industry not to regret that, if the political world makes it necessary to nationalize the industry, it should be done in the way that this Bill proposes to do it. It is the Minister's triumph that he has made every section of the industry disappointed, downhearted and sour.

5.7 p.m.

LORD MORRISON

My Lords, after the most enjoyable and forthright speech of the noble Lord, Lord Brabazon, perhaps it might suit your Lordships' convenience if I were to carry out the promise made by the noble and learned Viscount the Lord Chancellor, that I would intervene to explain the position of Scotland in regard to this Bill. Before I do so, may I thank the noble Earl, Lord Lytton, for having referred to a few sentences of mine in the first debate of this session in your Lordships' House, when I said that "whether public or private ownership is better depends, in my opinion, on which is the more efficient." I only wish to say that I see no reason, either in respect of this Bill or anything else, to detract from what I said, or to change my opinion. The noble Earl gave examples, particularly of his own business. I have little knowledge of that, but such little knowledge as I have leads me to think that it is highly efficient, and the work that it did during the period of the war was unforgettable and unsurpassed. But efficiency, it seems to me, is like the curate's egg—it may be good in parts. From the point of view of Great Britain, I feel that no system can be regarded as entirely efficient which leaves large parts of the country entirely without electricity.

Dealing with the Scottish position, I may say that many Bills come before your Lordships' House during the Session of which it is said: "Another injustice to poor old Scotland!" Whether that remark is always justified is a tempting subject for debate. I am afraid if I embarked upon that now, it might generate an electric storm in your Lordships' House. So I will content myself with a much milder assertion, which I hope may be accepted. It is this. There may be occasions when Bills applying to Great Britain do less than full justice to Scotland, but this Bill is not one of them. As your Lordships are aware, this measure provides for the nationalization of the electricity supply industry in Great Britain. Outside the North of Scotland district, generation will be the responsibility of the Central Authority, and distribution will be entrusted to fourteen area boards, which will receive bulk supplies of electricity from the Central Authority. In the case of the North of Scotland district, generation and distribution will be the responsibility of the existing North of Scotland Hydro-Electric Board. The rest of Scotland will be covered by two area boards—

VISCOUNT ELIBANK

Under Whitehall.

LORD MORRISON

I am coming to that in a moment. The North of Scotland Board came into existence, as your Lordships will remember, as a result of the Hydro-Electric Development (Scotland) Act, 1943, which received general approval of both Houses of Parliament. Very fortunately for the Board, their first chairman was a member of your Lordships' House, who I regret is not with us this afternoon, the noble Earl, Lord Airlie. To the devoted work which he did while he held that office the general regard in which the board are held to-day is in no small measure due. In the last fortnight I have had an opportunity of seeing some of the work of the Hydro-Electric Board in Scotland, and wherever I went I was impressed by the voluntary statements I heard of the excellent job of work done by the noble Earl, Lord Airlie, while he was chairman of the board.

The Board are a non-profit making public board, and accordingly fit into the Government's proposals for the nationalization of the industry. In addition to their duty of generating and distributing electricity, the Act of 1943 placed an obligation upon them to co-operate in the carrying out of measures for the economic development and social improvement of their district. They were, therefore, more than authorized undertakers in the ordinary sense. It was the desire of Parliament that they should contribute to raising the standard of life, and to developing the resources of a part of the country in which, for many years, depopulation, unemployment and a considerable measure of poverty, have been crying out for remedy. The present Government have decided that the special responsibilities of the Board shall continue under the new plan. The development of the water power resources of the Highlands of Scotland in the wider interests of the social and economic welfare of the Highland area is a task, I submit, different in character and calling for a different outlook from the task of organizing the electricity industry in other parts of Great Britain.

The Board at present consists of five members, of whom one is a full-time deputy chairman and chief executive officer. Four members are appointed by the Secretary of State and the Minister of Fuel and Power acting jointly, and one member is appointed by the Central Electricity Board from among its own members. Under the Bill it is proposed to increase the membership so that the new Board shall consist of not less than five nor more than nine members, all of whom will be appointed jointly by the Minister of Fuel and Power and the Secretary of State for Scotland, and they may be either full-time or part-time members. The increase in membership is necessary because of the heavier responsibilities which will devolve upon the Board under the Bill.

It is proposed to extend the area of the North of Scotland district under this Bill to include the city of Dundee, the county of Kinross and those parts of the counties of Angus and Perth that are now outside it. The district will then consist of the cities of Dundee and Aberdeen, the counties of Orkney, Zetland, Caithness, Sutherland, Ross and Cromarty, Inverness, Moray, Nairn, Banff, Aberdeen, Kincardine, Angus, Perth, Kinross, Argyll, Bute and parts of Stirling and Dumbarton. It will have an area of about 21,600 square miles—73 per cent. of the total area of Scotland—and a population of about 1,165,000–23 per cent. of the total population. At present the Board are responsible for developing the water power resources of their district and for the distribution of electricity outside the areas of other authorized undertakers. They cannot, however, distribute in the areas of other undertakers or acquire existing undertakings otherwise than by agreement. Under the new arrangements the whole generating resources of the district will be integrated under the Board's control, and the distribution of electricity can be planned as a single enterprise. The Board will acquire the large undertakings now administered by the Grampian Electricity Supply Company, and the Corporations of Dundee and Aberdeen.

The potential production of electricity from water power in the Highlands is greatly in excess of the amount required to meet the needs of the district, and accordingly the Act of 1943 provided for the sale of surplus energy to the Central Electricity Board at a guaranteed price which would insure a profit to the North of Scotland Board. This arrangement was designed and accepted as fair and reasonable to the Highlands to enable the Board to develop the distribution of electricity in the sparsely populated areas of the North of Scotland district, in which distribution is economically impossible without financial assistance from outside. The need for this arrangement continues, and is indeed increased, by the addition to the areas within which the Board are responsible for distribution of further sparsely populated districts now within the area of supply of other undertakers, but still without an electricity supply.

Under the Act of 1943, the Central Electricity Board must pay for electricity bought from the North of Scotland Board roughly what it would have cost them to produce it at a new steam station, and at that time this was considered a reasonable assumption. Since 1943, however, there has been a substantial rise in capital costs, with the result that the guaranteed price then arranged will no longer show a sufficient margin of profit to enable the North of Scotland Board to promote the necessarily uneconomic schemes for the distribution of electricity in the remote areas of the Highlands. To meet this situation a new clause was inserted in this Bill in Standing Committee enabling the Secretary of State and the Minister of Fuel and Power to add a percentage to the price now guaranteed in the Act of 1943. This provision deals with the immediate future. The new clause also provides for a statutory review of the guaranteed price arrangements of the Act of 1943 to be carried out before 1953, by which date the North of Scotland Board will have been in existence for ten years.

Although the Bill proposes that the Hydro-Electric Board shall continue as an independent Board it will be essential that there should be the closest co-operation between the North of Scotland Board and the Central Authority, and that the work and policy of the two Boards should be properly integrated. Accordingly, the North of Scotland Board will be subject to the direction of the Secretary of State for Scotland in the same way as the Central Authority will be subject to the directions of the Minister of Fuel and Power, and it will be the duty of the two Ministers to keep in touch in regard to the policy to be followed in matters of common concern. Further, the chairman of the North of Scotland Board will be ex officio a member of the Central Authority, and the authority and the Board will be placed under a statutory obligation to appoint a joint technical committee.

There is one other important respect in which the work of the two bodies will be formally integrated. It is proposed that new constructional works in the North of Scotland district should continue to be authorized by constructional schemes under the Act of 1943. These schemes are at present approved by the Electricity Commissioners and confirmed by the Secretary of State. It is proposed that approval by the Commissioners should be replaced by approval by the Central Authority as the national body, which will have at its disposal not only the technical resources to enable it to judge of the technical soundness of the schemes, but also a comprehensive knowledge of the electrical resources and requirements of the whole country. As a safeguard against the remote possibility that the Central Authority might withhold approval of a constructional scheme on other than valid technical grounds, the Bill proposes that the Minister and the Secretary of State should, in such a case, be able, after hearing both parties, to direct that the scheme may nevertheless be submitted for confirmation and considered on its merits by the Secretary of State in the light of objections and of the report of any public inquiry.

VISCOUNT ELIBANK

Is the noble Lord speaking about the North of Scotland, or the South-West and South-East?

LORD MORRISON

I am now confining my remarks to the North of Scotland Hydro-Electric Board. The Amenity and Fisheries Committees, appointed by the Secretary of State under Section 9 of the Act of 1943, will continue to advise the North of Scotland Board and the Secretary of State on amenity questions and the preservation of fisheries. Under Clause 7 of the Bill, consultative councils are to be set up for the area of each area board to watch the interests of consumers of electricity, and each council is required to appoint local committees or representatives to cover adequately all parts of its area. Similarly, a consultative council will be appointed by the Secretary of State for the North of Scotland district.

Generally, the North of Scotland Board will continue to function under the powers of the Act of 1943, the Central Authority taking the place of the Central Electricity Board as the purchaser of its surplus output, and the Secretary of State acting, in most cases, in place of the Electricity Commissioners. But it is also proposed to give the North of Scotland Board most of the new powers which are being conferred by the Bill upon the Central Authority and the area boards, with the Secretary of State taking the place of the Minister of Fuel and Power. The provisions of the 1943 Act requiring the preparation, approval, and confirmation of distribution schemes as a preliminary to the supply of electricity in any area have, however, been dropped. The procedure is not appropriate in the case of a Board with the wider responsibilities for distribution now proposed; and the Bill therefore places the Board under a general obligation to supply electricity in their district, subject to the directions of the Secretary of State.

As regards finance, the North of Scotland Board will continue to be responsible for raising their own capital. Under the Act of 1943, they may borrow, without statutory restriction of amount, with the approval of the Electricity Commissioners; but the Treasury may guarantee their borrowing only within a maximum of £30,000,000. Under the Bill, the Board may borrow with the consent of the Secretary of State up to a total of £100,000,000 apart from compensation payable for the transferred undertakings), and the Treasury may guarantee loans up to this amount. As at present the Board are bound to balance their budget over a period of years, and the charges made by them for electricity are subject to regulations made by the Secretary of State. The effect of the Bill, so far as concerns the North of Scotland Hydro-Electric Board, can be summed up as follows. The North of Scotland Board will, under the general supervision of the Secretary of State, exercise in the North of Scotland district the functions which are elsewhere to be given to the Central Authority and the area boards. In addition, they will continue to have those wider responsibilities for Highland regeneration which were placed upon them by the Act of 1943 under which they were set up.

May I add here a very short summary of what the Board have already done? Since their establishment in 1943 work has begun on four major hydro-electric schemes, estimated to cost upwards of £16,000,000. The installed capacity of the generating plant proposed is 374,000 kilowatts with an estimated average annual output of 706,000,000 units of electricity. Other major schemes are in preparation. In addition, four smaller constructional schemes, the output of which will be used locally, have already been approved. Thirteen local distribution schemes have been approved, and work has begun on a number of them. Other schemes are with the Electricity Commissioners, awaiting approval, and many more are contemplated. The Board have also anticipated the nationalization plan by acquiring already, by agreement, the existing electricity undertakings at Rothesay, Lerwick, Fort William, Wick, Kirkwall, Tobermory, and Arran.

Your Lordships will have noticed that up to now I have dealt almost exclusively with the position under the Bill of the North of Scotland Board. For the rest of Scotland, the provisions of the Bill, as explained by the noble and learned Viscount, the Lord Chancellor, apply exactly as they do to England and Wales. I am, of course, aware that in another place Amendments were moved at various stages, having as their object the setting up of a Scottish region under a Scottish board, responsible in Scotland for all generation and distribution and possessing the powers proposed to be given to the North of Scotland Board under this Bill and under their own Act of 1943. After very full debates, both in Committee upstairs and on the floor of the House, these Amendments were lost. A Second Reading debate in Your Lordships' House may not be the time to reply to the arguments used in another place. Indeed, they were in my opinion effectively replied to in another place, so much so that your Lordships may not find it necessary to repeat them here—but, of course, that is not for me to decide. Many of the arguments to which I refer—and I do not say this in any offensive sense—were based on Scottish nationalism, which is not what we are discussing to-day.

Confining myself strictly to this Bill, therefore, I will say only that the general policy of successive Governments—Conservative, National and Labour—and endorsed by successive Parliaments, has been that the control and co-ordination of electrical development is a matter to be dealt with on a Great Britain basis. Technical considerations and the need for ensuring an orderly development of generating capacity and of the grid system, support the view that the national boundary between England and Scotland has, in this connexion, no special significance. I admit readily that the setting up in 1943 of the North of Scotland Hydro-Electric Board was an innovation on this general policy. But, as I have already explained, this was a special task of an entirely different kind in the interests of the regeneration of the Highlands of Scotland.

The chairman of the North of Scotland Board is to be a permanent member of the Central Authority. The chairmen of the two area boards for the South-East and South-West of Scotland, will take their turn on the Central Authority. These Scottish boards will have a wide measure of autonomy; they will be advised by Scottish consultative councils and, so far as they are answerable to anyone, they will be answerable to a Central Authority upon which the Scottish point of view will be adequately represented. I apologize to your Lordships for having spoken at greater length than I intended. May I conclude, as I began, by saying that while it may or may not be true that Scotland does not always get a square deal in our legislation in the British Parliament, I hope I have convinced your Lordships that there can be no complaint on that score in the provisions of this Bill?

5.28 p.m.

VISCOUNT RIDLEY

My Lords, I am afraid that I cannot make any comment on what the noble Lord, Lord Morrison, has said with regard to Scotland. I know very well that many of your Lordships from over the Border will have a lot to say from time to time. The only comment I want to make is that in Scotland they have at least an independent body, whereas we in England have not; so that on this occasion it is not Scotland that is in a worse position than England, but the other way round. In introducing the Bill, the noble and learned Viscount, the Lord Chancellor, referred, when he was describing the range and size of companies operating in this country, to the company of which I am now chairman; he quoted it as one of the larger undertakings. I do not want to say too much about this particular enterprise, except to take the opportunity of saving that things are done much better in the North of England than they are in the South—or even in Scotland.

A short comment may be of interest, simply for the reason that this undertaking is approximately of the size and character which is suggested as typical of the area boards that are to be set up over the whole country. In fact, to all intents and purposes, the area is the same now under the company's activities as it will be under those of the area boards. Important differences are the inclusion in the area of the company of a number of separate supply undertakings conducted by municipalities, some of them with generating stations. I listened with great interest to the introduction of the Bill by the noble and learned Viscount on the Woolsack, and I felt very much in agreement with nearly all he said, certainly in the first part of his speech.

Going back to the McGowan Report, I think that there is no doubt that that Report correctly shows the situation of the industry as it was then, and pointed to one or two alternatives by which it could be improved. I notice that in these proposals the Government have adopted neither of those alternatives. And I would, respectfully, rather disagree with the Lord Chancellor, because I think later when he was speaking he said that the Government, having rejected the proposal of the McGowan Committee, were adopting the alternative which the McGowan Commission did not choose: that is to say, the alternative of a regional boards system. I cannot suggest—and neither do I think that many of your Lordships can—that there is not an absolutely clear case for very much larger areas of supply in this country. The simple question is the number of staff, the number of items of equipment, the size of the undertaking, and so on.

The arguments are inconclusive, but the difficulty comes in, and always must come in, on such a rearrangement: how are we to set up the new authorities to be responsible for these larger units? Here I differ very strongly indeed from the Government proposal. I do not differ on the question of ownership, but I differ very violently on the particular extent of the Central Electricity Authority. It is very much the same discussion as that which we have recently had on the Transport Bill; and no doubt we shall have it again. The question is: To what extent is it wise to direct and control this great national enterprise from a Central Authority? The very assumption of national ownership implies control or direction, to some extent at any rate, from the Government through one or other Ministry—whichever Ministry are mainly responsible for that undertaking. What is the reason in this case for interposing an Electricity Authority? Why have the Government jumped away from the rejected alternative of the McGowan Report and gone straight to a Central Authority, treating the regional or area boards as minor or less important units in the new method of running the thing? About that I feel very unhappy.

As I have said, the company to which I have referred is of the same size, character and magnitude as will be the undertaking of an area board. The latter will not have control of generation. That is another point that I hope I may be able to refer to later, but I cannot conceive any number of people running an undertaking of that size without something approaching the financial and other autonomy which such an undertaking has at present. I see no reason why in this Bill they should not be given that, but I see no signs whatever of a situation that can possibly work. I have made a few notes showing the matters over which the Central Authority can give directions to the area boards. There are eleven of them. I will not worry your Lordships by reading them all through. They are all important matters, such as direction on tariffs, on what to do with their surplus revenues, and how much of their reserve they are to put to the Central Area Reserve, and so on. Many of them have been raised by various of your Lordships who have spoken, and they are matters which will no doubt have to be discussed in Committee.

I do not believe, however, that any number of Amendments in Committee will do any good unless we really accept the principle that the only way to make this plan work is to have these area boards as completely autonomous independent units. Such a system should be adopted, keeping as the central co-ordinating body the Central Electricity Board. And the Board should carry out their functions much as they do now—supply the other grid, act as the wholesalers and the overall controllers of the companies in so far as their generation is concerned—that is to say, the people who decide approximately how much is to be generated at each station. That seems to me a perfectly adequate balancing system of achieving adequacy of supply throughout the country. On the other hand, the Electricity Commissioners can still survive as the judicial authority responsible for all matters which concern the public, their requirements as to the cost of supply, and so on, as they are now.

I would be interested to know what has caused the Government to go so far as to annihilate the practical usefulness of these proposed regional boards. The Lord Chancellor, when speaking in reference to this Bill, said that no alternative had been proposed. I do not want to misunderstand him, because I do not think he was speaking at that moment on the question of nationalization or national ownership, but rather on the structure of the Bill. If I am right, however, and his remark was intended to refer to the method of running an industry under national ownership, I can state quite clearly that other methods have, in fact, been proposed. Under a system of national ownership by the public, by means of regional boards of this kind—or area corporations, or call them what you like—owned by the public, and giving a good deal of obedience to general directions from the centre, it would be perfectly possible to build up a system, either of fourteen, as proposed, or, as some say a few more. My only experience is that the undertaking I know of is probably the right size for one board. For the rest of the country I believe it is generally thought that somewhere about thirty boards would be the right number. Whatever the number, however, if the area of each were arranged so far as possible to include urban, industrial and rural, and a certain amount of mixed consumers, it would be perfectly possible to contrive these independent authorities. They could be independent of each other, and independent of the centre, except through commercial activities with the Central Electricity Board, and except for the general directions as to policy which would come from the Ministry of Fuel and Power.

That is probably too far from what is in this Bill, but that is the kind of thing which can be made to work. It might be of interest to mention that such a scheme was proposed to the Minister of Fuel and Power by the company to which I have referred, founded on their experience as a large area supply undertaking. They proposed publicly owned area boards to get over the difficulty of mixed company-municipal ownership, and so on. So that has been suggested. I have never heard from the Government a specific defence of the organization which they propose in this Bill. Further, there is, I think, one other real mistake, and that is in the way in which this Bill is to work. It relates mainly to the operation of the generating stations. I gathered the impression from what was said by one or two noble Lords who have spoken that they saw the present system as generation being done by the Central Electricity Board. Of course, that is not so. The Central Electricity Board are in a position to influence or, in fact, to order, the power companies to make more or less as is required, to take, more or less from the grid from time to time, or to put more or less into the grid. One of the things which an experience of a large area of supply, particularly in an important industrial area, shows, is the absolute necessity of working in the generation and distribution together. This is not a political question, nor a question of public or other ownership. At present when there is a question of electrical supply to any large industry— such as, for example, steel making, which is a very complicated and involved process—all sorts of difficult questions arise. There may be a question of heat available for various processes, a question whether waste heat should be used for generation or not, a question whether there should be a stand-by plant or not, and it automatically leads to a complicated bargain or arrangement between the supply undertaking and the steel makers. This inevitably means that the supply undertaking must have knowledge of, and a good deal to do with, the generation of electricity as such.

Another point. There are many personnel who have to work together. Variations in load go straight from the consumer to the man in the generating station; they go all through the same system. A lot of the transmission lines are very frequently used as distribution lines. It would not be possible if distribution and generation are separated in ownership—or perhaps I should not say in ownership but in management. A lot of the equipment is common to both parts of the undertaking. Spares and maintenance activities are common to both. I regret to see that a Bill which it is said is a Bill to promote efficiency starts by pulling to pieces the only example we have of a completely integrated system of generation and distribution over one of these large areas. I believe that to be wrong. I would have liked to see an attempt to evolve gradually a system whereby generating systems were operated by the companies distributing over these large areas, so that we could get the maximum of speed and efficiency in running, and also the maximum of flexibility in meeting the demands put upon the industry. I would make this comment in reference to that point. The McGowan Report never envisaged a division of those two functions. I do not know—I would very much like to know—for what reason this arrangement is proposed in the Bill. Why is it thought that greater efficiency will be achieved? What are the savings which it is expected will result—and so on?

One word on the position of the consumer. At present there are maximum price arrangements, basic price arrangements and limited profit arrangements relating to the selling price of electricity. Most efficient undertakings have those. The consumer has the right of appeal ultimately to the Minister. I would suggest that whether or not there are these consumers councils as proposed in the Bill—without any power, one must remember—it is really public opinion which at present keeps prices reasonable. It is not the actual fact that a number of consumers—I think it is twenty—can appeal for a hearing to the Minister that has a great influence on prices. Is it not the truth that people are apt to say: "I would not go and live at such and such a place, the price of current is so high," and that that is what really counts? Supply undertakings know when that sort of thing is being said and they know that their responsibility is to meet the demands of the people, so that they can increase their business as much as possible. That is another reason why, in the interests of the consumer, one wants to see areas kept separate and autonomous. It is true that no area directly competes against another to supply the same individual, but areas do compete against each other in the matter of their reputation and good name, which is something that they get from the customers.

I would now like to say one word on the question of supplies in rural areas. Whatever may be said, we have got a long way yet to go in meeting all the requirements of farms and houses and cottages and buildings on farms in the country. I would suggest that a reason why we have not already got any further is simply this. It must cost more to take a supply to one or two houses at a farm some way from a village than it does to connect the urban consumer direct over a very short distance. At present this can be done; up to the war it was being done; and even during the war a certain amount of connecting of rural consumers was being carried out. But it is a very expensive matter, and the price is usually more than the rural consumer can pay. The capital cost of connecting is high and it brings the total price of electricity to more than the urban consumer pays. I always believe that a reason why companies in the main have not extended their supplies more than they have done to that class of consumer, and spread the extra burden over their urban consumers, is that so many of them have the knowledge that the municipal authorities have power to buy up that part of their undertaking in the municipal area.

The rural consumer, I suggest, cannot be supplied with his current at a reasonable cost, unless it is generally and publicly admitted that the urban consumer has to pay a little more. There are no two ways about that. I should be very sorry to see it suggested that this difficulty should be met by way of a subsidy from public funds. But I have no regret in suggesting that it ought to be explained to the urban consumer, that just because he lives in a congested town among a lot of other people, who also use electricity, he has no right to get his electricity cheaper than anyone else. I suggest that that would be a test of this new system. I suggest that it could well be applied, knowing that this new system is secure in the future, knowing that its supply area is certain for many years. The only way to get current for the man in the country who needs it, at a reasonable charge, is to charge a little more—and it would not be much, I think—to the man in the towns.

I have felt bound to be very critical of what is proposed in this Bill but I think I have explained to your Lordships the reasons for my criticisms. Whether you agree or not with the suggestions that the McGowan Committee made in their Report, the important thing clearly seems to be that we should have larger autonomous areas. Who owns the undertakings I do not really very much care, whether it is the public or private people, but what does seem important to me is that they should be run independently, efficiently, and with enterprise. And that is a state of affairs which I am quite convinced under this Bill can only be obtained by all strings pulling into the centre, a state of affairs which will be extremely difficult to achieve.

5.51 p.m.

LORD TWEEDSMUIR

My Lords, I listened with very great interest and respect, as I always do, to the noble and learned Viscount the Lord Chancellor in his introductory speech. I hope he will excuse me for saying that I could not divorce myself from the conclusion that this was another example of His Majesty's Government's inability to distinguish between a reasoned measure of State control and outright State ownership. I could not escape the conclusion that they considered that nationalization was an end in itself, which is a view to which we can never subscribe; and that monopoly, if public, was desirable, whereas monopoly has two faults which you cannot eradicate, because they are inherent: one is an arbitrary attitude towards the consumer, and the other is the inevitable marketing of a second-class or, in this case, more expensive product.

In listening to the Lord Chancellor, I could not help feeling, too, that this is legislation not dealing with the present, or with the future, but directed rather against the past. It reminded me, if I might quote a rather recondite simile, of the American War of 1812, which was declared three days after the causes of war were removed, and the fighting was continued six months after the Peace Treaty had been signed. I hope I shall not disappoint the noble Lord, Lord Morrison, if I use a few arguments that other people have used before. He appears to be in high good humour, so perhaps he will not mind. I am quite well aware of that Amendment which was moved in another place, which would have had the effect, if accepted, of making Scotland a separate electrical entity. It was defeated, albeit, by only one Scottish vote; but that it was defeated, I entirely accept. I listened to his description of the state of affairs in Scotland with very great interest indeed; but there is one thing he left out and that is the present position of electricity in Scotland at this very date.

Scotland is in a very unusual position in that we have great, and unusual, advantages of climate and geography for the generation of hydro-electric power, and going back to the figures of 1942 and 1943, the cost of electricity in Scotland was, per unit, 26 per cent. cheaper than in England, and in fact to this day Scotland is an exporting country of electricity. It possesses that powerful advantage. It has been said, and I think with some truth, that much of Scotland's economic trouble in the past has been due to a too great dependence being placed upon heavy industry. Now a supply of cheap electricity is a most powerful inducement for light industry to move to that country. I agree with the noble Lord, Lord Morrison, when he said that we must not be immoderate in our demands, or we must not be too selfish about the advantages which we enjoy. I do not agree with very much else that he said. I do not agree that full justice has been done to Scotland, though I agree that injustice has been done on previous occasions. I associate myself with the tribute to the noble Earl, Lord Airlie, and all that has been said about the North of Scotland Board. No one wishes it well for the future more than I do. I am very glad to see it retain that measure of autonomy that we would wish to see it have, but I do not agree with the noble Lord that the border has no significance.

He ran very briefly over the position of the two southern areas of Scotland because they did not support his argument quite as well as the position of the North of Scotland Board. They have passed, as so many things are passing now, to the ultimate control of Whitehall. Railways, it may well be argued, have been controlled from London for many years past. That is not the case with electricity in Scotland, which is situated in Scotland, and of which Scotland is now to be deprived. And so we see a Bill of nationalization, bringing with it its inevitable denationalization of that country. The southern border of the North of Scotland Board, and the northern border of the two southern areas have been drawn, I think, in a most uniquely inapposite fashion. It may be argued that borders will always cause hardship; someone has to draw that border. But this one is drawn through the most heavily industrialized parts of the country. It is a unique piece of blundering.

What Scotland needs—and it is a very moderate request—is resident, responsible management not expressed in assurances, which are poor provender, but in concrete statutory provision. Regarding the area boards' resident and responsible management, "resident" can be easily defined, but "responsible" I think can be reasonably defined as the power of a board of management to select, and engage, and dismiss, its own staff; and the power to buy its own equipment and machinery, and considerable discretion in its power of borrowing. Having wandered my way through the verbal jungle of this Bill, it appears to me that the area boards have that control over the engagement of their personnel. As for their buying of their own equipment, I understand that when the Central Authority has gone into the business of manufacturing electrical plant, they will receive it from them. As for control of borrowing, they are denied even the right of the ordinary citizen, as such, to run up an overdraft without asking anyone's permission; they may borrow temporarily on overdraft, I understand having first got the permission of the right honourable gentleman, the Minister, and the Treasury. Those powers are not sufficient autonomy to stimulate and safeguard the initiative that you need to make an organization of this kind work, and I entirely agree with my noble friend Lord Ridley in what he said.

Perhaps Lord Morrison is rather hard to convince and I do not normally read long quotations. I will not read a long quotation now, but I think it would be not a bad thing if he gave some thought to it. This is a short quotation from a Supplementary Report by the Committee on Church and Nation, of the General Assembly of the Church of Scotland, dated May of this year. The noble Lord, Lord Morrison, I think, stressed the need for taking things on a Great Britain basis: Large-scale organizations easily mistake their own interests for the interests of the community, which they exist to serve. The issue arises not from the intentions of those who support such schemes: it develops rather from the logic of events. Schemes of nationalization must, therefore, be accompanied by large measures of devolution and decentralization of control, if they are not seriously to imperil the attainment of a genuine democracy. That has put that point much better than I can put it.

Before I sit down I should like to say one word on the subject of centraliza- tion, not just as it affects Scotland, but because centralization is an evil whose effects are most apparent, and are first apparent, at the perimeter. That evil influence creeps from the rim of the wheel, by the spokes towards the hub. Many years past, this has been apparent in Scotland. It started nearly a hundred years ago, but it is recognized in the last few years for the strangling and stultifying thing that it is. Every one of these nationalization Bills increases it with a tragic, and horrible, momentum. The time is not far distant when no expenditure of public money can be undertaken without reference to some remote being in Whitehall, whose only qualification is that he has never been there. As more and more jobs are centralized in London the time is coming—in fact it has come—when a man of genius and ability, and energy, cannot rise to the heights to which his qualities entitle him, by staying in that part of the country in which he was born, but he must inevitably be drawn to London. It starts at the perimeter and its evil effects have been apparent for some years, but noble Lords on this side who do not agree with centralization and monopoly will agree with me, that what is happening there is the touchstone of what will happen in this country, not only in northern England but gradually creeping into its centre. It is our duty to see that the Bill goes out a better Act than it comes in a Bill. I fundamentally disagree with the premises on which this Bill is based. I believe it is built on foundations that will not bear its weight and will eventually break down and be replaced by one, at a later stage, better suited to the needs of the country, being better and more truly planned.

6.2 p.m.

LORD BARNBY

My Lords, the noble Lord who has just sat down dealt with the North of Scotland part of this Bill and spoke with knowledge and sympathy for Scotland in replying to Lord Morrison, who surely showed his courtesy to the House in speaking with such care on the non-inclusion of the North of Scotland in the Bill. Lord Morrison failed all the same, in spite of his usual persuasiveness, to satisfy those who are doubters about the propriety of that part of the Bill. I am not interested in any electricity undertaking but I am a member of the Central Electricity Board, nominated as such by the Minister. It will be understood that for that reason I want to intervene in this debate.

I approach the Bill with the experience which no one else has had in this House of how the centralized direction of generation can work. There are other members of your Lordships' House who as Ministers have been familiar with the administration of the Act of 1926. There is certainly no absence of talent and knowledge as to the workings of electricity undertakings and all will admit that the contributions of the noble Earl, Lord Lytton, and the noble Viscount, Lord Ridley, will have sufficiently dealt with the details beyond what, as Lord Morrison has pointed out, has been so fully covered by discussion in another place. Anyone who heard the Lord Chancellor introducing this Bill would say that an impartial listener might well be convinced by the habitual lucidity of his exposition and by the ease with which he avoided any of the difficulties of the Bill, that it was a very natural thing for the Government to introduce this Bill and to introduce it in this manner. I approach the Bill with fundamental misgivings that an extension of the bureaucratic administration may well imperil the hopes of greater relief to the electricity consumer in the future.

With the general underlying principles of centralized direction and control I have no quarrel; in fact, I would associate myself with much of what Lord Rennell has said in what I felt was a most constructive contribution to this debate. After giving support to the principle of the Bill, he was certainly pretty vehement in the way in which he tore some parts of it to pieces. I regret that I interrupted his speech, but he made a statement I understood to be at variance with the facts. But he was good enough to say he would have me informed of the matter later. If I was in error I tender my apologies in advance. The first thing I turn to is the Central Authority. Having seen how the Central Electricity Board works and the strict impartiality and freedom from politics of its work, there are grounds for misgivings, which were mentioned in another place but cavalierly brushed aside. In this particular matter we have the instance of a start that has been made.

I would emphasize what Lord Tweedsmuir has just said, that the responsibility of this House is to improve the Bill. I would seek at some stage of the Bill a definition of the status of the British Electricity Authority. There seems to be confusion about nationalization and public ownership. Lord Rennell drew a distinction between nationalization and national ownership. The Minister of Fuel and Power, in Hansard, says of the Central Electricity Board, "It was a nationalized concern to deal with generation." There is a distinction between ownership of telephones and ownership of mines, I believe. One, I believe, is owned outright by the Treasury and the other is owned by a public authority. I have heard in this House several noble Lords refer to the Central Electricity Board as a national undertaking. The £70,000,000 which has been raised by the Central Electricity Board for the erection of the grid and generation have been all furnished by the pubic without any Government guarantee. The man in the street has put up the money. Is it therefore correct, as the Leader of the House himself has said, to describe it as a nationalized undertaking? I have quoted the Minister of Fuel and Power, and I do hope some clarification of the statement may be made.

Before I leave that part of the Central Electricity Board, I would like to express my gratitude for the tribute paid by the a noble and learned Viscount on the Woolsack to the past achievements of the Central Electricity Board, which I am convinced are well merited. Had anybody taken the trouble to read the Annual Reports of the last nineteen years of the Central Electricity Board, they would be convinced of how well that authority worked. I would like to ask what is to be the tenure of office of the Central Authority under this Bill? This point was disregarded in the case of the Transport Bill. No explanation was sought at any stage of the Bill of a clear definition, in advance, of what were the intentions of the Minister. What are the powers of removal? If that be entirely at the pleasure of the Minister, I would ask your Lordships to consider what is the degree of independence which is going to motivate the members of that board. I agree with the noble Lord, Lord Rennell, and other speakers, that it is certainly preferable to keep the generation and distribution separate. The experience of the Central Electricity Board over the past twenty years has brought out that point most clearly.

Again I revert to the Central Electricity Board. They are subject, indeed, to departmental consents. But the property is vested in a board composed of persons nominated by the Minister under authority of Parliament, without the power of removal. They have, therefore, an independence of action, and I venture to think, from the past achievements of the Central Electricity Board, it is clear that all actions inspired by technical desirability have only been modified to the extent of public relations considerations by the other independent non-technical members of the Board. I should think that no body so constituted as the Central Electricity Board would ever disregard a direction by a Minister which would definitely assist its efficiency. I refer to the words of the Leader of the Opposition. He challenged the constitution of the members of the Central Authority. I must refer to the position of my chairman of the Central Electricity Board with whom I have not discussed my intentions to-day. I think it would be natural to expect that from one who has loyalty to his chairman and a belief in his ability which, in this case, is shared by the whole industry.

I would ask your Lordships' indulgence to quote a leading electrical publication, which recently referred to the resignation of Mr. Harold Hobson from the Central Electricity Board, and to an interview which they had sought with him. I quote: He informed us that his withdrawal from the electricity supply stage at the present critical time was dictated by one reason, and one reason only. It was a protest, inspired by his conviction that the appointment of Lord Citrine as Chairman of the British Electricity Authority, was made primarily for political reasons. He protests in the only effective way open to him against what he regards as the introduction of political patronage into the administrative control of one of the nation's basic industries. Mr. Hobson added, that his action had been in no way influenced by the issue of nationalization—he was prepared to serve the B.E.A. in other circumstances—nor by any personal considerations relating to Lord Citrine, whom he has never met, and no criticism of the latter was implied. The issue was purely one of principle. It then goes on: Are we in fact witnessing the incipient infiltration of political patronage into the nation's industrial affairs? It is natural that this electricity authority should pay attention to the feelings of current thought running through the industry, as reflected by its leading journals.

I feel in regard to this Bill, that the responsible position of the Minister does not qualify him and his officials to be in a position to deal with electricity from the technical point of view. The essential difference between the Central Electricity Board and the proposed British Electricity Authority is that it would seem the new body will be subject to political pressure. That is the more distressing as electricity supply is a technical matter and has hitherto been kept entirely free from politics. I regret that as a result of this the chairman of the Central Electricity Board was obligated to tender his resignation. I mean no disparagement to the member of your Lordships' House to whom I refer, Lord Citrine. I attack the appointment, not Lord Citrine. I have known him intimately for a long time and have genuinely admired his qualities. The Turner-Mond Conference, of which I was one of the seven employer members, which, with the seven representatives of the trade union movement, produced such an outstanding report, gave me my early assessment of Lord Citrine's talents. But he has not the technical knowledge to carry out the difficult and technical task which the head of this great undertaking requires. It pains me that the Minister of Fuel and Power, in another place, should suggest by a reply of his that the present chairman of the Central Electricity Board was expected to accept a subordinate position, with his great technical knowledge and experience which lay at the use of the nation. How could he accept such a position? It seems that it is clearly an instance of a political appointment. I naturally feel doubt as to whether that offers as good a promise as the practice followed in the past by His Majesty's Government in regard to the Central Electricity Board.

I beg the indulgence of the House to refer to the admirable statistical work of the Central Electricity Board over the last nineteen years. I feel they have done an outstanding job with exceptional accuracy. So it is that I feel great resentment against the insinuations that the Central Electricity Board's faulty calculations led up to what history will come to know as the "Shinwell Crisis," producing all the industrial loss that came to this country in the spring. There were repeated warnings against an insufficiency of coal stocks; there was a forecast that industry would be reduced to a thirty-five hour week by the spring if other action was not taken. Providence intervened to assist the Minister to allege acts of God in the weather as the cause. He had repeated warnings; he was given caution after caution that he should forbid the production of electrical heaters which would overload the productive capacity of the grid, but he took no action.

I want to refer to the area boards. I support what was so clearly set out by Lord Ridley. I am convinced that the area boards should have greater authority and should have imposed upon them some measure of financial responsibility. I dislike a nationalized undertaking if it is to be anything like the telephone system. The telephone system in this country, apart from its gross inefficiency, is contributing tremendously to the waste of time, the loss of effort, the sense of frustration, and the loss of man hours. It does not plough its big profits back into improving its services, but they are taken by the Chancellor of the Exchequer. I hope the members of the Government will remember what the noble Lord, Lord Rennell, and the noble Earl, Lord Lytton, emphasized, that the profits of this great industry have been generously ploughed back. Will the Government profit from that example and so remove one of the great anxieties of those who, like myself, fear that what happens in the case of the telephone system will happen here to the disadvantage of the electricity consumer?

6.23 p.m.

LORD LLOYD

My Lords, I should like to begin by supporting what has already been said by the noble Viscount, Lord Swinton, and others about the timing of this Bill, because I feel that that is one of the most important things about the whole business. No good General—if I may use a military analogy—chooses the moment when the battle is hottest to reorganize his whole Army, least of all his fighting troops. Any General who did that would lose not only his job but the battle as well. Nobody who heard the recent grim statement by the Chancellor of the Exchequer in another place can doubt that this country at the present time is fighting in the economic field for its very existence. What is more, the battle has not yet reached its height. That is coming in a few months' time, when the rigours of winter descend upon us again and the American Loan runs out. Yet this is the moment which has been selected by His Majesty's Government to pass legislation which will dislocate first of all the whole of our transport industry, and, secondly, our electricity. The noble and learned Viscount, the Lord Chancellor, himself admitted that there was a grave risk of dislocation in the electricity industry, and I suggest that these industries are the front line troops in this battle. I said that any General who did such a thing would lose both his job and the battle. I think it would be hypocritical of me to suggest that we on these Benches would grieve if His Majesty's Government lost their job, but we are rather concerned lest the nation should lose the battle.

I will turn now to what I feel are the demerits of this Bill. They have been dealt with very fully by other noble Lords, and I do not propose to detain the House a moment longer than I can help. First of all, I must state that here we have the Government setting up another State monopoly. Noble Lords opposite, or rather their Party, have in the past been very critical of private monopoly, and I myself do not understand the argument that once a monopoly becomes a State monopoly everything in the garden is lovely. It seems to me that if a private monopoly is bad, a State monopoly, which is both larger and more powerful, is worse. I would direct my argument to the evidence in this Bill that it is a monopoly. Mention has been mace before of the way this Bill affects the consumer. That has been gone into fully by other noble Lords, and I will not elaborate that point. But I do not think there is any doubt that the protections the consumer has had in the past have gone. His first great protection in the past was competition, and I submit that in this industry there has been healthy competition between the companies and municipalities and, what is more, healthy competition between electricity and gas. Great tribute was paid to that by Lord Simon of Wythenshawe who considered that that competition ought to continue. Under this Bill competition within the industry will be removed, and I do not believe it will do the consumer any good. What is more, competition with gas is going to be removed, if I understand the Government spokesmen aright.

Then there is the question of tariffs which has already been dealt with by other noble Lords. I think that the consumer will be a great deal worse off if tariffs are going to be settled by the area boards without reference to anybody. In that case the boards can charge what they like. There is going to be no impartial tribunal except this consultative council, which, like all the bodies under this Bill, is not an elected body and not even an expert body—it is a body nominated by the Minister. Again I draw the attention of your Lordships to what was said by the noble Viscount, Lord Swinton, about the Minister's statements in another place. I do not want to say any more about those statements, because I think the more they are relegated to decent obscurity the better. All I can say is that I do not believe that those remarks are going to inspire a great deal of public confidence in any body nominated under this Bill.

There is one other point to which I wish to refer, and that is the question of undue preference. In the past there has been very strong statutory protection for the consumer as regards undue preference. The provisions in the Bill are undoubtedly a whittling down of those former statutory provisions, and what is more, so far as I can see, there is no guarantee that the Central Authority should not give undue preference to one body as against another in the supply of bulk electricity. What is more, there is absolutely no guarantee that they should not give undue preference to the vast railway undertakings, at the expense of domestic consumers and others.

Another point to which I would refer briefly is what I believe to be the inefficiency of these State monopolies. Noble Lords have referred to the coal monopoly in this country, but I do not want to be unfair, because perhaps it is a little early yet to judge the Minister. But we have a perfectly good example in France. In France there is a State monopoly which, I am creditably informed, in its first year has not done too badly. It has lost only about 18,000,000 to 20,000,000 milliards of francs—but I expect we shall have better results later on. I should like to direct the attention of your Lordships' House to the debate in the Chamber of Deputies which took place quite recently. I have a whole string of quotations, but I will not bother noble Lords with them. However, I think this one is fair comment on the whole debate, and it is the speech of M. Rene Mayer, who is a radical deputy. This is what he said: The whole framework of electricity is enormous, and it is very difficult, as we have recently seen, for a man to direct from Paris the transport and distribution of electricity to the smallest villages. I add that, for some time in the country districts, it has been extremely difficult to obtain from the services of the local nationalized electricity concern, the least bit of work or even a reply, even when the request is only whether it is possible to obtain a plug, because considerable centralization has developed for financial or other reasons, and it is impossible at present for local electricity concerns to take decisions which have practically all to be sent to Paris, from whence they descend with extreme slowness. That is what the French thought about it. The French have a word for it!

I submit to the noble Lord opposite that that weakness is plainly apparent in this Bill. Noble Lords have already spoken about this, and I believe that one noble Lord mentioned that there were five stages in the development scheme which had to be gone through before anything could be done about it—from the area Board to the consultative council, from the area board to the Central Authority, then to the Minister, from the Minister to the Treasury if it contained any financial element, and then back to the area board. No major item of capital expenditure could be spent by the area boards without going to the Central Authority

I feel that there are other defects which have been dealt with, but that will do me for this evening. I feel that these are very considerable defects in any Bill. I wonder what compensating merits this Bill has to make up for these defects. This is a young and efficient industry, and I feel it is rather more immoral and one of the worst of the seven deadly sins to violate a young and innocent girl like this industry than an old and hardened courtesan like the coal industry. This is a young and efficient industry, though I agree that it has its defects. We all agree for example that D.C. should have been abolished, and forms of tariffs and voltages standardized; that there should have been a reduction of undertakers and an enlargement of areas. But we concentrate so much on the defects of this industry in this country, and we do not look at other countries outside. Everybody says that the electricity industry in this country is so bad. Yet in the United States, which I imagine nobody could think of as a very backward country technically, you find that the percentage of the population who are actually connected to the electricity mains is 22, whereas the percentage of the population in this country actually connected is 24. These figures are slightly fallacious, because that is the percentage of the population; but when you get to the houses actually connected in the United States there ate 80 per cent., compared with 69 per cent. in this country. That is not a very great disparity. After all the United States is one of the foremost countries in the world.

Let me take these various defects. There is the standardization of voltages and the abolition of D.C. I do not think anybody can say that great progress has not already been made in abolishing D.C. and in standardizing voltages. There is more to be done—but we do not need this Bill to do that. As regards the standardizing of the forms of tariff, when the industry's plan was launched in 1944, it was said that they could go a long way towards standardizing forms of tariffs within five years; but this also hangs on the enlargement of areas, and on getting rid of some of the enormous number of undertakers. With great respect, I think that the noble and learned Viscount, the Lord Chancellor, rather exaggerated the picture when he spoke of this enormous number of undertakers, because although I agree with his figures, in point of fact 90 per cent. of the electricity is supplied by about thirty companies and seventy-six municipalities. The others are so small that they supply only the remaining 10 per cent. I think that is a fair picture. I suggest that we do not need this Bill to effect a high measure of rationalization of this industry. Of course, as the noble and learned Viscount said, it is quite hopeless to rely on voluntary effort. That has been tried in the past and failed. But we on these Benches believe that it is unnecessary to change the ownership. We believe that if the Electricity Commissioners were given the necessary powers of compulsion, of defining special areas, of removing redundant undertakers and of allowing them to be acquired by the larger ones, this could be done without any of the dislocation which is inevitable under this Bill.

There is another point. When the Government went to the electorate two years ago they gave a promise, to which I have already referred, to put these things right; and they gave another promise, They said specifically in their manifesto Let us Face the Future: "The public ownership of electricity undertakings will lower charges." That was a remarkable statement which, so far as I can understand, has been repudiated, first by the Minister, and now to-day by the noble and learned Viscount, the Lord Chancellor. He said there was no prospect of charges being lowered. Yet I must point out to the Government that it was on this promise that they obtained their mandate. We do not question their mandate now; we are not going to obstruct this Bill. But we are entitled to say: "Here is one of the chief things upon which you won the victory; and now you come and tell us there is no question of cheaper electricity."

I would like to ask the noble and learned Viscount to give us more details about the impossibility of giving the rural areas cheaper electricity. It is quite impossible to give cheaper electricity unless you make up the capital charges either by charging the industrial consumer or the domestic consumer more. I think that is generally admitted. Certainly it is quite true that the Post Office, which is another nationalized undertaking, charge more in the country than in the town. Let me quote the Assistant Postmaster-General. He said in another place on July 26, 1946: Where the cost of a delivery to a few outlying houses would be prohibitive in relation to the number of letters received no delivery will be made. He said again: In rural areas where technical conditions permit, a kiosk will be provided if the local authority will contribute £4 per annum for five years towards the cost of providing the kiosk. Does the noble and learned Viscount intend, or does he not intend, to give cheaper electricity to the rural consumer? If he does, how does he intend to do it? If he says he does intend to do it, I should like to know why. I should also like to ask whether he thinks that this Bill will speed up rural electrification. I understand from experts that the main obstacle to rural electrification is shortage of materials, and I believe that the companies or industry as at present organized or as reorganized in the way that we have suggested can do the job a great deal quicker than the Government will be able to do. They have already got plans to do this as soon as the materials arrive, and all those plans are going to be torn up and the whole thing has got to be unscrambled and started again.

I feel that the Government have made out no case in this Bill. I feel, in fact, that this Bill contains some admirable principles in the first clause, but it does not condescend to detail anywhere throughout the Bill. The noble Lords who were here on the Second Reading of the Preservation of Rights Bill introduced by the noble Marquess, Lord Reading, will remember that it was precisely this that the noble and learned Viscount the Lord Chancellor described as an electoral manifesto. I do hope that the noble Viscount, Lord Hall, in his reply will put in the details which are so lacking in the Bill in order to save the noble and learned Viscount on the Woolsack from what must plainly be an extremely embarrassing predicament. We all know the feelings of the noble and learned Viscount about electoral manifestos.

In conclusion I should like to refer to Mr. Hilaire Belloc's Cautionary Tales for Children which I happened to be turning through the other day. I found this very interesting little poem which is rather appropriate to this occasion. It concerned a noble Lord and it also deals with electricity. Mr. Belloc wrote the following: Lord Finchley tried to mend the electric light himself: It struck him dead, and serve him right. It is the business of the wealthy man To give employment to the artisan. That is a very simple little quatrain but it does seem to me that it might have a moral for us here to-day. It seems to me that the noble Lords opposite are trying to mend the electric light themselves. I hope it will not strike them dead, but I believe they would do much better to leave it to the artisan—the industry which really understands it. By all means rationalize the industry. Give the Electricity Commissioners more powers, but do not mess the whole thing up in the way that it is being messed up in this Bill. That is the moral of this little poem of Mr. Belloc's. All I can say is that if they do it and we do not get any electricity it will serve them right, and we shall suffer.

6.45 p.m.

LORD LUCAS OF CHILWORTH

My Lords, I feel almost as if I should apologize to noble Lords opposite for interrupting the monopoly which they have enjoyed, not only during the Second Reading debate upon this Bill, but the debate upon the two previous Bills which have gone through this House. I intervene upon this occasion, because I want to approach the problem which is confronting us from the point of view of an industrialist, as I am quite free to admit, unlike the majority of noble Lords who have already spoken, that I have no financial interest in this industry. But, before I do so, I would like to make some comments upon the remarks of the noble Viscount, Lord Swinton. When the noble and learned Lord Chancellor introduced this Bill, he said there had been no practical alternative put forward to it, and he did not expect one to be put forward in your Lordships' House. In so far as the noble Viscount, Lord Swinton, is the spokesman for the official Opposition, he certainly did not put one forward, because his only alternative, if alternative it could be called, was to cancel the franchises at present held and set up another committee of inquiry, I presume, to find out—

VISCOUNT SWINTON

I am not going to interrupt the noble Lord, because he can read my remarks in Hansard tomorrow. But what he is saying now bears no relation to what I said.

LORD LUCAS OF CHILWORTH

That was my impression.

VISCOUNT SWINTON

Only to you, but to nobody else.

LORD LUCAS OF CHILWORTH

Perhaps the noble Viscount will bear with me if I quote him again. I think he said also that the time is not right. Of course, the time never is. It was never right for the nationalization of the coal industry, it was never right for the nationalization of transport. No time is ever right for change. But again I am going to quote the noble Viscount, because I think he was less than fair to the Minister when, in a quotation he gave of what the Minister said—and I am quoting the Minister: If we fail in coal, there is no case for any other nationalization "— the noble Viscount, I am sure quite unwittingly, inferred that the Minister was referring to the coal crisis, whereas the Minister, when he made that remark, was referring to the setting up of the National Coal Board, and the Minister meant that if the National Coal Board failed, there was no further case.

VISCOUNT SWINTON

Has the National Coal Board been a success?

LORD LUCAS OF CHILWORTH

I think, with the characteristic fairness which the noble Viscount always shows, he should at least allow the National Coal Board a little longer than the few months they have been in existence in order to judge whether they have been a success or a failure. There is one other thing that I wish to take up with the noble Viscount, because he has said—and he has repeated what Opposition speakers have said right through the discussions on all these Bills—that noble Lords on this side of the House are smitten with some dogmatic mania, that for us it is nationalization for nationalization's sake. The noble Viscount made the claim that he is a fair controversialist, a claim which is quite justified. Therefore, in fairness I think he will admit this, that while he has, perhaps, not a very great opinion of the politics of noble Lords who sit on this side of the House, at least he will admit that in the hard school of industry and commerce some of us have gained useful experience and have not been altogether failures. It is because of our experience in the field of industry and commerce, and the hard school of practical experience as working industrialists, that we have been driven to the conclusion that these main basic production industries must come under public control if the future economy of this country is to be saved.

I speak upon this subject as a working industrialist. The noble Lord who has just sat down mentioned our economic position. Worried though I may be about the dollar position of this country to-day, in relation to the American Loan, I am still more afraid of our competitive position as an exporting country. The cry goes up upon every hand for more productivity. Our basic problem is how to increase the productivity per head per hour of our people. It is a popular exhortation to-day to say "work harder"; suggesting that the working man is not pulling his weight. Increased productivity per head of the population in this country rests on many things other than human sweat and elbow grease. It depends upon the increase in the horsepower available at the hands of our workers, and after the nationalization of the coal industry, or bringing it under public control, call it what you will, the very basis of the availability of horsepower to the worker of this country rests upon bringing the generation and supply of electrical energy out of private hands or the multiplicity of municipalities ant bringing it under one central control.

It is true, with regard to all the schemes of public ownership, that you cannot have proper co-ordination of these basic industries with anything other than single ownership. It is an impossibility to get co-ordination when, as the noble and learned Viscount the Lord Chancellor pointed out, you have 563 supply authorities, which is the case to-day. The secret of our success in the future as an industrial country will rest upon these basic industries being organized, not for private profit—and before any noble Lord opposite gets up to correct me on this point; let me say that I do not quarrel with the private profit motive; I condemn its blindness and its short-sightedness, which result in its not being able to see that the good of every citizen of his country rests upon the prosperity of the country as a whole—but for the good of the community as a whole.

Comparisons are made between productivity per head in this country and in America. The British workman is a better workman than the American workman. He works harder than the American, he works longer hours than the American, and he gets half the money of the American. Why is it that the standard of American productivity is twice as high as that of British productivity? It is because the horse-power available to the hand of the American worker is two to three times greater than the horse-power available to the hand of the British worker. If you think we are going to re-equip our country, if you think that we are going to get the requisite horse-power available to the hand of the worker under any system other than that which is being propounded by His Majesty's Government, then I, from my own experience, say that I believe you are mistaken.

The noble and learned Viscount who sits on the Woolsack in my view made, in his opening speech, an unanswerable case for nationalization, and it was reinforced by the speech of the noble Lord, Lord Rennell. It was an unanswerable case for bringing the electrical energy supply and distribution industry of this country under one central authority and one central ownership. Nothing I have heard to-day of the murmurings of the Jeremiahs, of the pre-judgments of failure—

VISCOUNT SWINTON

Lamentations.

LORD LUCAS OF CHILWORTH

Yes, of the lamentations at the Wailing Wall—the Wailing Wall that is erected every time we talk about bringing public utility to the service of the people, and not for the continuation of private profit. The effect of those murmurings and those wailings is, I suspect, that the bulk of the discussions that are to follow upon this Bill will be devoted to the compensation clauses and not to the improvement of the industry as a whole.

But let me go back for a few moments to the McGowan Report, and examine the state of affairs as that Committee saw it in 1936. There were, we are told, 635 separate undertakings, 43 different voltages, ranging from 100 to 480 volts. Voltages and systems and charges varied from street to street. On one side of the street, there would be alternating current and on the other side of that street direct current. On one side of the street the Charge would be 4½d. per unit and on the other side it would be 9½d. per unit. The current, in both cases, might well be generated at the same station, but in one case the supply was bought by a private supply company from a municipality, and through that transaction the price of current was doubled. That, in the words of the noble and learned Viscount, the Lord Chancellor, was a chaotic position.

If we attempt to allow this industry to develop under the existing legislation the confusion will be worse confounded. Take the question of the standardization of voltages. There are many great areas in this country to-day that have to labour under the disadvantage of having the obsolete direct current system. For those areas plant is absolutely unobtainable and many of the factories and workshops, while anxious to increase their production, are unable to obtain motors to use D.C. Although, as noble Lords have said, a great deal of standardization has been done, I know, from personal experience, that for twenty years local supply authorities have been going to change D.C. to A.C. I personally, in one of my works in one end of a certain town, have to operate on D.C., while at the other end of the same town I operate on A.C. From one works for twenty years I have filled in forms on the assumption that the local authority will at some time replace all those D.C. motors, but nothing has been done, and to-day I cannot buy one scrap of equipment under about two years, because, unfortunately, I have to labour under an obsolete system.

The noble Lord who has just spoken made a great debating point upon the matter of charges. The noble and learned Viscount, the Lord Chancellor, has been—if I may use such an expression in your Lordships' House—"chivvied" with regard to what he said to the effect that there could not be any diminution in charges. When noble Lords talk about charges at times like this they ought to try to bring a sense of proportion to bear. The equipment per kilowatt now costs double what it used to cost in pre-war days. It was £20; now it is £40. Charges of generation have gone up. Coal has gone up. I say that under the scheme set out in this Bill, prices will be far less than they would be in the future if we allowed the present system to go on.

VISCOUNT SWINTON

This is very different from what we heard at the time of the General Election.

LORD LUCAS OF CHILWORTH

There is one other point upon which I wish to touch in connexion with charges. Far too many municipalities in the past have utilized their electricity undertakings for the relief of rates. I am very glad to see that in the future the charges for electrical energy under this Bill are going to be based upon costs. We have to see that all consumers have electrical energy at the least possible cost. It is useless to try to work out our future economy by putting up industrial costs for the purpose of subsidizing rates and other fiscal matters. Other points are hire-purchase charges, service charges, and the cost of fittings. All can be substantially reduced.

I thought that the noble and learned Viscount, the Lord Chancellor, was rather apologetic when he mentioned the manufacturing powers under this Bill. I think he said something to the effect that such powers might only be used as a defensive weapon. I hope that they will be used as an offensive weapon, because I know of no field of consumer goods which has been more prone to exploitation than the field of electrical goods. I will cite one case. One of the ordinary electric lamps used here was produced by a firm in this country allied to an American firm, using exactly the same material and machines as were used in America. The production cost pre-war of that lamp was 1.92 pence; the packaging and the distribution to the retail shop cost another 2 pence. By any reasonable standard of profit, that lamp could have been sold to the British public for 6d., which was exactly the price at which it was sold by the American manufacturing concern to the American public. The tightest ring with which we have to contend in British industry made the retail price of that lamp 1s. 6d., and that is what has gone on throughout British industry.

In some areas, through the interlocking directorates of supply companies and equipment manufacturers, where you find the unit rate the lowest, the charge for equipment is the highest. We have to see that our generation plant and all those things which go to make up industry's plant are manufactured at the lowest possible price. I hope that His Majesty's Government may find the wireless valve industry a profitable field to enter. One of the biggest questions demanding inquiry to-day, is the question of standardization. If you have anything to do to-day with the production field you know that the, standardization of equipment is one of industry's greatest problems. The noble Lord, Lord Lloyd, talked about plugs in Paris; I do not know much about plugs in Paris, but I know a lot about plugs in British industry, and it is about time we had a little standardization. I think it was the noble Viscount, Lord Ridley, and again the noble Lord, Lord Lloyd, who mentioned rural areas. I congratulate him upon the excellent debating points which he made; they were excellent. But what is the reason why the rural areas have been so neglected—because only 10 per cent. of the total current consumption is consumed outside urban areas. Why? The reason is that the existing schemes of electrification have left untouched the unprofitable areas. Is it not an indictment against the private profit economy, because, where it is not profitable to run electricity, electricity is not run.

LORD LLOYD

May I interrupt? I would not entirely dissociate myself from what the noble Lord said, but I would like to draw his attention to this fact, which I know is a fact, and I think it ought to be put in its right perspective. It might be so up to a point, but you will find also amongst farmers the most extreme conservative attitude towards electricity altogether. I know of one company that have 700 farms on to which they could have laid electricity with the greatest of ease. That is good for industry.

LORD LUCAS OF CHILWORTH

One of the ways to get over that kind of conservatism is price: price gets over a lot of things, even conservatism. I agree with the noble Lord that we shall never cure the dispersal of population problem in this country, we shall never stop the herding in the towns, and we shall never disperse industry to get people to live in the country until the amenities of the town can be bought to the countryside at the same price. That must be the long-term policy of this Electricity Authority. I do not think it can be done for many years ahead, but it has got to be done. We have got to bring electrical equipment into the homes of the countryside as well as into the homes of the towns. Have you ever realized what it costs to-day for the housewife to equip herself with what have almost become essentials—refrigerators, washing machines, etc.? I made some inquiries during the week, a fortnight ago, when we had our English summer, as to the amount of food that had to be thrown into the dustbins of this country through lack of refrigeration. If we can get our production up to such a height that every citizen in this country can possess himself of the same amount of these goods as his American counterpart can to-day for the same working effort, our cost factor of mass production is practically solved.

VISCOUNT ELIBANK

You will have to effect that by restricting exports.

LORD LUCAS OF CHILWORTH

That is another subject altogether which, I understand, will be debated in your Lordships' House in a few weeks' time; but I do not hold for one moment to the theory that has been expounded in your Lordships' House that the relative price of these appliances in this country and America is so favourable to America because of her large home consumption. There is a potential in this country for all these things that will give us an optimum figure of mass production where all the production cost savings have been realized. I know—and every noble Lord who is interested in the engineering industry knows—the difference between the prime cost of producing a refrigerator to-day and the cost which the British public has to pay is nothing short of a scandal. And that is true of a number of these things.

I will not detain your Lordships any longer except to say one word upon this subject of research. I hope that some of the benefits of research carried on by this authority will be reflected in the cost of the products to the consumer, because it is about time they were. My final point is this. I am delighted that in this Bill there are so many good things being done to safeguard the interests of employees. I was very surprised when the noble Earl, Lord Lytton, said that there was nothing about the interest of employees except the reference in Clause 1. If the noble Lord will direct his attention to Clauses 53 and 54, he will see that all the fears he expressed about the treatment of ex-employees of the Central Electricity Board are really of no substance. I hope that His Majesty's Government will not be deterred from their course of action in regard to this Bill, and that one day they will be able to bring the prime factor of British industrial efficiency to a much higher level than that at which it stands to-day.

[The sitting was suspended at ten minutes past seven o'clock and resumed at twenty minutes before nine.]

8.40 p.m.

LORD ROCHDALE

My Lords, the noble Lord who spoke last said he was approaching this subject from the point of view of a practical commercial user of electricity. I want to approach the problem from the same point of view, only I must admit that the time your Lordships take up these days makes it extremely difficult to be very practical! Listening to the noble Lord, Lord Lucas, it seemed to me that the major point he made was the importance of having enough horsepower available in the hands of industry. No one could agree with him more than I on the importance of that fact. To-day, with our shortage of manpower, it means that if we are to produce more we must use more machinery; and if we use more machinery we must use more horsepower. I would remind your Lordships that in the early days of the war, there were a number of major power stations authorized and put in hand. But in the first critical days, after a very considered opinion had been taken by the highest authority, it was decided, in the interests of the production of tanks and other armaments, to discontinue for the time being the work on these power stations. Had that decision not been necessary much of that additional horsepower would be available for use by industry to-day.

Be that as it may, I would like to approach the problem from rather a different point of view. It is one that has been stressed by noble Lords, but to my mind it is of such importance that it cannot be raised too often. Before the war, in planning new factories, or when the time came when old factories were to be re-equipped and they had to extend their own power plant, many industrialists came to the decision that rather than make their own electrical current, they would use purchased supplies of electricity. They thought that by so doing they would have an economical and reliable source of current without the need of tying up considerable capital in stand-by plant. The experience of the noble Lord, Lord Lucas, must have been unfortunate, and the noble Lord, Lord Rennell, quoted certain cases where the experience of certain industrialists using purchased current was not too happy. I can also quote a number of cases—and I believe there are a number more—where the users of electricity purchased from local suppliers have had fully justified the hopes they entertained when they decided to use that form of current. I believe that in a number of cases one would find that the partnership of industry and the local authorities or companies supplying current has proved to be a happy one.

Of course the proof of such a statement depends on experience, and particularly experience gained during periods of greatest difficulty. But I have no reason to suppose that the period of the war, for instance, did anything to disprove that; and it seems to be true of experience gained during the very difficult period last winter when we had the fuel crisis. The difficulty that might have occurred then was overcome, I think, owing to the flexibility of the link between commercial users of electricity on the one hand, and the providers on the other. That flexibility having been built up locally between these two parties, owing to the very close personal contact that had been developed between them, adjustment as between their two sets of problems was made easier. What I am concerned about now is whether that personal contact—the flexibility of the link between the suppliers and the users—can be maintained under the present proposed Government scheme.

I am not saying anything here with regard to the unification of the production system. From the technical point of view, the development that one sees going on would appear to be nothing more than the logical conclusion of present trends. Certainly so far as the production of electricity goes, from the point of view of the centralization of the distributive side, some amalgamation and re-organization is obviously necessary. But this present system seems to me to be a system of over-centralization, which will, to use the simile I have just used, weaken the flexible link, and make it stiffer and, therefore, less adaptable to changing circumstances. I would like to give your Lordships an example of the sort of thing I have in mind. During last winter we had the fuel crisis. I particularly want to emphasize that I am not referring to the periods of load shedding; that was another matter altogether, due to lack of productive capacity. What I am referring to is the long stoppages of industry due to the fuel shortage.

I would like to take that period as an example of What I have in mind. I know of a number of industries—and there must be many in similar circumstances—where you cannot just turn off the switches and stop the industry. The problem is much more difficult than that, and much more complicated. On the other hand, it is not a problem that cannot be easily solved, provided that the two sides concerned get together. Take an industry—like so many—which consists of a number of successive processes, where the success of one process is intimately connected with the satisfactory completion of the next. Take, for instance, an industry where a material is going through some process in which the material is made wet. If it is allowed to stand there for any length of time before it is dried it may be changed by mildew, or some similar action. If it is allowed to stand there, the industry will suffer very considerably. It may be necessary for certain departments to run on, may be even for some days, after the rest of the industry has been allowed to stop. These problems to which I have referred can easily be overcome, provided that the two sides—the providers of electricity, on the one hand, and the consumers, on the other—are allowed to get together, and have freedom to use their own discretion as to how they are to settle the matter.

That is where I have some doubt as to whether the present system will work. I have no doubt that it will be argued that the technical officials, the local electrical engineers acting on behalf of the area boards, will be very keen to watch for these problems. It may even be argued that the very same men who had to cope with these problems in the past will have to deal with them in the future. But the question I would like to put is this: Will they be given the same degree of discretion that they have had with the local companies in the past? Is it not very likely that, with the absorption of a, large number of small companies into the jurisdiction of the great big area boards, matters will too often be referred back to higher authority, just at a time when decisions are urgently needed to be taken on the spot? Is it not even more likely that during the early years individuals will be uncertain how far they can act on their own with safety, and that the tendency will be, "When in doubt, for safety's sake refer it back"; and therefore reference will be made back and back and decisions will not be taken?

I suggest that that is not an unfair criticism to make of these technicians. It is only the human thing for anyone to do who wants to keep his job and to carry on with it. But from the standpoint of the interests of the commercial users, that attitude is going to be a dangerous one, and not an easy one to combat. The problems I have in mind are obviously not the sort of problems that can be settled by the consultative councils, or even by their local representatives who are referred to, I think, in Clause 7 of the Bill. Their machinery is quite different. Their machinery, as I understand it, has to be methodical and thorough, and is for dealing with quite different problems. They may, or may not, be available for that purpose.

I realize that I may be accused of being unfair in taking as my illustration the recent fuel crisis. I admit that I have taken an extreme case, but, on the other hand, I have not seen or heard anything to make me feel sure that we shall not have recurrences of that sort of thing in the future. Therefore, whatever may be said for or against the extension of the monopoly of power production, and accepting also the need for very considerable reorganization on the distribution side, I am quite convinced that as the Bill now stands the degree of centralization and simplification has been overdone. I would like to see local distribution given a far bigger degree of independence and autonomy. However, the Bill says otherwise, and I suppose that is how the Bill will go through.

Therefore, all I would like to urge now is that when the system is put into operation the Minister will go out of his way—and I emphasize that, because it will not be an easy thing to do—to see that the technical officials who are in constant touch with the local problems of industry will be given considerable latitude as to the discretion they can exercise on their own. I will go further than that. I hope that the discretion will be made not merely permissive but obligatory. I know it may sound somewhat of a contradiction to have an obligatory discretion, but what I have in mind is that the man who is continually referring things back in order to save his own skin should be looked upon with disfavour, rather than the man who, as a general rule, takes decisions on his own, even though he occasionally may make mistakes. If that is not going to be the prospect in the electrical industry, then I see a very grim outlook for the industry—and a grim outlook at a time when we all require the maximum production from industry.

8.56 p.m.

LORD HAWKE

My Lords, I am sorry there have been so few speakers from the Benches opposite, because we delight to listen to them, and we particularly delighted to listen to the noble Lord, Lord Lucas. I doubt whether for the last forty years there has been such anti-trust oratory as he produced—not since Mr. Sherman produced his famous Act. I have no doubt that the noble Lord will write his name in history at some future date by bringing forward a private Bill on the subject. He dealt at considerable length with shortage of electrical equipment, and that shortage is one from which we all suffer. Both in my business capacity and my private capacity, I have long been waiting for a supply of electric motors. I do not blame the unfortunate electrical supply industry, who have an unprecedented demand from the four corners of the earth as well as this country for electric motors—the tools of trade.

There is one point on which the noble Lord rather slipped up, perhaps inadvertently. He spoke about single ownership and State ownership. In practice State ownership is not single ownership, because, as I have had occasion to point out to your Lordships several times, the ramifications of Government are such that State ownership is in fact ownership by anything up to a dozen different Government Departments; and the only singleness about it is when you get to the top, to the Prime Minister, and he is a man who has not got time for very much co-ordination. Therefore in practice State ownership is not single ownership. To recommend State ownership as a panacea is not the same as to recommend single ownership.

I do not know whether a note of envy crept into the noble Lord's remarks at one stage. I think that even a Socialist industrialist might be tempted sometimes to break the Tenth Commandment and covet his neighbour's lamp ring; but to a man of such great enterprise as the noble Lord, who perhaps has in his background something of the profit motive, I should have thought he would have "muscled in" by now, if there was much in it. When we get these nationalization measures before us, I become presumptuous. I presume to adopt a role, and my presumption is the greater for the rarity of the character I assume: a good sensible Socialist. There are not many of those people, and they are all in this House. Having said that, I ask myself, "Is this how I should have done it?" And the answer varies from a qualified affirmative to an uncompromising negative. I regret to say that in this case the answer is an uncompromising negative. I believe that in the practice of surgery the great danger to the patient is that of shock; that surgeons go to great lengths to avoid giving shock; that every operation produces it; and that where two or more major operations are concerned, the good doctor will generally fatten up the patient between the two, so as to minimize this risk of shock. In this Bill there are two factors of violent shock, and no attempt has been made to administer them separately. The patient will not have time to fatten and recuperate.

The first great shock is in the transfer from private employment to public employment of many thousands of employees. At the bottom of the pyramid the shock will obviously be the lightest, but nobody who has had the experience can deny that for an executive with any degree of responsibility the transfer will come as a very violent and profound shock. The prohibitions and restrictions will be most irksome at first, and months of frustration will result. I do not believe that any noble Lord who has had such an experience will deny this fact. A wise Government, composed of good sensible Socialists, I think would have been sufficiently careful and solicitous of the patient to see that the inevitable shock was the only one for the time being. So far from this, however, they have deliberately produced a further great shock, which, I submit, was not at all inevitable, in the complete re-alignment of the industry. However desirable the good sensible Socialist might think this is he would never have taken this step without consolidating his first step—the transition from private to public employment, the consolidation, the running in; then—and only then—would he have thought about re-aligning the industry. In any new big organization the most important things to get right are the men and the financial provisions, because if you do not get the financial provisions right you will not get the men.

Now let us see whether the financial arrangements are satisfactory and conducive towards getting the right men into the organization. I would first of all refer your Lordships to Clause 36, subsection (1), where there is a most astounding provision, that this great organization of area boards and the Central Authority is to make both ends meet "taking one year with another." What on earth does that mean? Taking one year with which year? It is quite meaningless to me, and I had hoped that the noble Lord, Lord Piercy, perhaps, coming from the salons of the Old Lady of Threadneedle Street, might have been able to explain some of these things to us. The phrase as it stands reminds me of the theme song of South American Chancellors, "To-morrow it will balance," but it does not remind me of the habits of the Old Lady in my youth; I do not think she was very ford of opening accounts with people who dealt with their finances in that way.

Let us consider the area board. The Central Authority has to exercise a general control over the area boards and can demand to approve of their capital expenditure. It has control over their tariffs and over their surplus revenue; it supplies current to them at any price it likes; and it can order them to work either at a profit or a loss. In other words, the area boards are complete puppets of the Central. Authority, a situation which the noble and learned Viscount, the Lord Chancellor, summed up in what I think is a delightful Whitehall euphemism, that "they have certain co-ordinating powers.'' Under these conditions, what man of experience and spirit is going to serve on these area boards? The only hope is to give the area boards more incentive to do their job properly, and more financial powers than seem indicated in the Bill.

When we come to the Central Authority we find that it, in turn, is subservient to the Minister in important respects. The Minister is empowered to direct how the Central Reserve Fund, and also its surplus revenue, shall be treated. Moreover, the Central Authority cannot interfere in the area reserve funds without the approval of the Minister. The Central Authority cannot borrow without the approval of the Minister, and in framing large programmes of capital works the Authority must consult the Minister. In fact, the authorization of capital works, and the funds from which those capital works can be done are, in the case of the Central Authority and the area boards, equally tied up. Now will the Minister, who is in the hands of the Treasury, be able to loose these powers by correct devolution? There are stories, perhaps quite untrue, that men in the Coal Board who have been in the habit of authorizing thousands of pounds on their own authority are now circumscribed to quite paltry limits. If this sort of thing is to happen in regard to electricity, then, of course, we shall not get the right men.

The borrowing powers of the Central Authority are immense—they go to £700,000,000. But enormous borrowing powers are the fashion nowadays. It is easy to produce a Bill with many millions in it, and to persuade the public that those millions mean benefits and progress. In fact, of course, until they are translated into action, they mean nothing of the kind. The capital programmes under other Bills are equally large—Transport, Coal, Colonial Development and so on, besides the acquisition of stocks. These figures are beginning to fill me with considerable alarm. There is a dirge in my heart, in fact! I think it is a mistake to take it for granted that it is going to be easy to raise these enormous sums by any legitimate means. One wonders whether the savings of the people will be sufficient to provide the money. It is worth remembering that by calling in Government finance we may save a fraction in interest, but we do narrow the field. We tap only those savings which are destined for safety first investment. We exclude savings which seek to take a risk in search of a gain.

Many holders of compensation stock, too, will seek to exchange their holding for more remunerative risk-bearing securities. Unless they are to depress the price—and the price is one at which the Central Authority will be constantly issuing new bonds—there will have to be a volume of savings to take up all this stock, both old and new. I wonder whether there will be sufficient savings. The Electricity Authority will not be the only people in the market. One cannot get away from the basic principle that if one wants to provide capital for future benefits one has to forgo present consumption by taxation, by inflation or by savings; and it seems to me that, if these vast capital programmes are to be implemented we shall for a generation remain under a crushing burden of taxation, or under a progressive inflation, unless we adopt the third course, which is to make saving more attractive. A wise Frenchman in March, 1939, said to me: "It is not Goering's Air Force I fear; it is the Maginot Line." Finance is the Maginot Line of all Governments of the Left.

9.11 p.m.

LORD WOLVERTON

My Lords, on rising to address your Lordships to-night on Second Reading of this Bill, I should first of all like to declare that I am a director of an electricity supply company. Having done so, I would like to support the remarks on this side of the House in condemnation of this Bill. I think it has been said many times to-day that it over-centralizes industry, and it completely divorces generation from distribution. It does not give adequate powers of protection to the consumers; the compensation terms are definitely unfair to the shareholders; and it leaves the possibly displaced staff through its reorganization in a very dubious position, because we do not know what compensation we are to have—it is all to be done by a regulation which we have not yet seen.

Having said that, I should like to say next that the industry as a whole has been most efficient. That can only be judged by the results, which are well known to your Lordships. Its war record was excellent, and I think that all sides of the House will agree with that. I am not one who is going to say that it cannot be made more efficient, because I think it can, especially on the distribution side; personally, I have always supported the famous McGowan Report. I agreed with that Report, and I think a great number of the industry agreed with it too. Had it not been for Munich and the war, I think that that Report, with its main recommendations, would have been implemented by now, because the Government of the day had already issued a White Paper on that Report. I personally should have liked to see that done, but it could not be done, as is well known, because of the outbreak of war.

Now, if I may, I should like to turn for one moment to the Bill. I particularly want to talk to-night on Clause 1, subsection (6), paragraph (b): That the Electricity Boards shall secure, so far as practicable, the development, extension to rural areas and cheapening of supplies of electricity. As the Bill was first introduced into another place, under the policy clauses, in that paragraph (b), there was nothing at all about rural supplies. They were brought in only after an Amendment by the Opposition had been accepted. A little pamphlet called Electricity Transformed, which I confess cost me the modest sum of threepence, which is well known to noble Lords opposite and which was published, I think, in January, at the time of the introduction of this Bill, says in its opening paragraph: The growing use of electrical equipment of all kinds has been one of the outstanding developments of the past fifty years. In the towns, at least (for, as this pamphlet will show the rural areas have been sadly neglected in the matter of electrification). In the paragraphs dealing with rural electrification, the final paragraph on page 17 says: Rural electrification, to be a success, must be conceived imaginatively and executed over extensive areas of country. The present structure of the industry is entirely unsuited to the task and, hence, rural electrification has been only a dream for the past forty years. The noble and learned Viscount the Lord Chancellor, at the end of his speech this afternoon said of rural supplies "last but not least." I would agree with him, and what I want to do is to try to convince your Lordships that this was really not a dream and that a great deal has been done during the last forty years. I will quote some official figures published either by the Electricity Commissioners or by the Institute of Electrical Engineers. By 1939, according to figures issued by the Institute of Electrical Engineers, which I consider to be a body very competent to give them, 1,100,000 rural houses had been connected to the mains. The Institute went on to say that 67 per cent. of rural houses had a supply available, 73 per cent. of those which had a supply available were connected to the mains, and 49 per cent. of all rural houses were supplied. I think that in itself is a fairly good record. I would like to say a word about farms, because I know your Lordships are interested in this subject. The Minister of Agriculture in another place in April, 1946, said that 69,000 farms in England and Wales had been connected to the mains up to that time, and I understand from the industry that the figure now stands at about 85,000 farms. That is about one-third of the number; 150,000 more farms have to be connected. But it is certainly not a dream to have connected nearly 85,000 farms and 1,100,000 rural houses.

I would like to deal for a moment with the relative prices charged, because that is an extremely important point. The average price per unit for municipal undertakings (I am taking the Electricity Commissioners' figures up to 1939; I could not get later ones as they were not published during the war) for lighting, heating and cooking for domestic supplies, in 1924 was 3.77d. It dropped in 1939 to 1.42d. The price charged by the companies, which have a majority of rural areas inland because they were the enterprisers in these areas (the municipalities could have had them in the early days but they did not want them but took the plums in the towns) fell from 5.23d. in 1924 to 1.90d. in 1939. There was thus a difference of only 0.48d. between the two prices in 1939. The cost to the rural areas was less than a half-penny more per unit. Perhaps with those few words I have been able to convince your Lordships that the industry certainly was net dreaming. I have been in it for fifteen years, and I very much object to those words.

May I say a word on the future plans of the industry on the rural side? In 1944, before the end of the war and certainly before the famous Coalition broke up, the electricity supply companies and the National Farmers' Union got together a co-ordinated committee to see how best they could frame a five-year plan to tackle the 150,000 farms which were still without a supply. They published in 1946 a report, which I have here, which I think is well known to your Lordships. Very briefly, that report, which received the complete approval of the National Farmers' Union and the electrical supply companies, recommended that £72,000,000 should be spent in the next five years, if supplies of materials were available. The amount was split up in this way. The industry was to pay £45,000,000 for new mains, averaging about £300 a farm; and the farmers themselves were to pay £27,000,000 for electrification of the farms and for motors and general equipment. That scheme has been started, and quite a lot has been done.

I would like to take up just a moment more of your Lordships' time and tell you something of the colossal amount of material that this scheme involves, even if the industry is nationalized—and it is material which is not there. Over the next five years' period it would take something in the neighbourhood of 900,000 wooden poles, 100,000 miles of copper conductor, and approximately 750,000 horsepower of electrical motors. It is not the fault of the supply authorities that the electrical motors are not there. As the noble Lord, Lord Hawke, said, there is a tremendous demand in this country and throughout the world for electrical motors, and there is a great shortage in the manufacturing line, and in labour, as we all know. Those are some of the figures involved in this gigantic task. In my own company—the Edmundson group—we are getting only something like 60 per cent. of the poles we require. As I think is well known now, pre-war, in 1939, something like 800,000 new consumers were connected per year, but now the number is only about 200,000. It is not because they are not there to connect, but because the material is not there. I thought it right to point out those few things to your Lordships now, and to give you some facts on rural electrification, to try and justify—and I think I have justified it—my view that the industry has certainly not been dreaming.

9.23 p.m.

LORD ADDINGTON

My Lords, this Bill concerns so very closely the interests of local authorities that it seems to me essential that their views should be expressed in this debate. At this late hour, I will put them forward as briefly as I can. First, I would say that they support, generally, the opinions which have been very widely expressed on this side of the house, that the proposals in this Bill will not benefit the consumers and are by no means the best that could have been devised. Accepting the announcement made by the Government in November, 1945, that it was their intention to bring under national ownership the electric supply industry, the General Purposes Committee of the Association of Municipal Corporations set up a special sub-committee. That sub-committee made the following proposals—which I will summarize—which were submitted to the general Council of the Association in October, 1946.

They first recognized that the obligation of regulating and supervising the generation and supply of electricity throughout the country would be placed on a central body set up by Parliament. That is what is being done under this Bill in connexion with the Central Authority. The Committee went on to recognize that the country would be de-limited into districts most suitable for securing the proper co-ordination of distribution, each of which would be under the control of a district board—which has become the area board of the Bill. They then go on to recommend that within the districts so delimited the actual distribution and supply of the electricity should be under the control either of single local authorities or combinations of local authorities, as the circumstances may require. These recommendations were sent to the Minister of Fuel and Power, and they are, it seems to me, alternative suggestions such as the noble and learned Viscount, the Lord Chancellor, was seeking for at any rate some of the proposals made in this Bill. They indicated a system of distribution worked for the people by their elected representatives, who know the needs of the district, and by whom those needs could readily be made known. I would submit further that they are far more democratic proposals than any of those laid down in this Bill.

With regard to the general basis of compensation, I would only add one thing to what has been said from this side of the House—with which I am in complete agreement. This Bill gives least to those local authorities who follow the most sound and conservative principles (in a financial and not in a political sense), and penalizes those who have ploughed back their profits into their undertaking and so kept their loan charges as low as possible. I would like, for a moment, to try to clarify the position of the local authorities regarding this additional sum allocated for severance and for other financial burdens, about which there has been some misunderstanding on the consultations which have taken place.

I am advised that both the Associations of Municipal Corporations, when they had a meeting with the Prime Minister and certain of his colleagues, and the Association of Urban District Councils, in a letter which they wrote to the Prime Minister in March, 1947, did raise the general question of the losses that would be incurred in this respect. But between those dates and the announcement, I think by the Minister in Standing Committee in another place, that the sum of £5,000,000 would be given, there were no consultations whatever as to the amount of additional compensation or how it should be calculated. I understand that neither of the Associations concerned consider that sum anything like adequate. Consultations, it is true, are now taking place between the financial advisers of the Associations and those of the Ministry as to the manner in which this sum of £5,000,000 should be distributed among the local authorities who are electricity undertakers. But I submit that the Government, before putting this figure of £5,000,000 into the Bill, should have taken steps to see both that the amount was fair and adequate, and also that it could be distributed equitably among those concerned.

9.29 p.m.

VISCOUNT ELIBANK

My Lords, I am sorry that the noble and learned Viscount, the Lord Chancellor, is leaving the Chamber at this moment, because I shall have to refer to certain things he said in his speech. However, he will be able to read it in Hansard to-morrow morning. As is usual, I should like to make a personal statement in regard to my connexion with the electrical industry. For about fifteen years I have been Chairman of a holding company which controls and directs a number of electrical supply undertakings. In this capacity it has been my duty and privilege to make myself acquainted with many details and principles connected with electrical supply and I have naturally come into contact also with many problems affecting the electrical industry as a whole.

The Bill before your Lordships' House deals with the nationalization of the electric supply industry, which includes the plant, equipment, and machinery that provides the bulk of the current for retail distribution throughout the country. What is proposed is that existing supply undertakings and the municipal undertakings shall be expropriated by the State from their present owners, on a basis of compensation which is not only inadequate and unfair to shareholders and ratepayers alike, but which has never before been applied by any British Government. The Minister of Fuel and Power callously said recently in another place that even if the shareholders lost something, the consumers would gain by it. He does not seem to care a "tinker's cuss" (or should I say more than one hoot?) about the shareholders. And what reason has the Minister of Fuel and Power given for this revolutionary change of ownership? Is it because the industry has been badly administered and failed to progress or do its duty by the community that it is roughly seized by the throat? Or is it that His Majesty's Government are so obsessed by the word "nationalization" that, looking round, they said "Here is some ripe fruit; let's pluck it"?

What actually happened? The noble and learned Viscount, the Lord Chancellor, referred at the end of his speech to what he stated was the fact that no other project had been propounded in lieu of nationalization. I challenge that statement. It is quite inaccurate. I will repeat what I was saying, now that the noble and learned Viscount is back on the Woolsack. I was saying: Is it that His Majesty's Government are so obsessed by the word "nationalization" that looking round they said "Here is some ripe fruit; let's pluck it"? The noble and learned Viscount said at the end of his speech that no other project had been propounded in lieu of nationalization. I am sorry that the noble and learned Viscount was so badly briefed, because that is not accurate.

What actually happened was that the power companies, the provincial supply companies and the municipalities all put forward projects to the Minister of Fuel and Power suggesting that the industry could be organized. The Minister of Fuel and Power responded by approaching the industry and saying to them: "I am going to nationalize you. Will you help me to nationalize yourselves?" Naturally, the industry said: "We do not believe in nationalization, and why should we help you to nationalize us?" The next thing that happened was that the Minister of Fuel and Power met leading representatives of the supply industry. He arrived at this meeting, which was a private meeting—it has been disclosed throughout the industry, and there is no reason why I should not make this statement to-night—and he opened the proceedings by saying: "I have come here to nationalize you. I am going to nationalize you. I do not care whether you like it or not. I am going to nationalize you, and I have not come here to talk to you about how I am going to nationalize you; I have come here to talk to you about how you are to conduct your business in the interim before you are nationalized."

Representatives at that meeting vainly attempted to secure from the Minister some information as to how they were to be nationalized, and he would give them none. In his usual arrogant manner he said that he was not going to do so; and the meeting broke up. That is the actual fact. I have had to make this statement because of the statement of the noble and learned Viscount at the end of his speech that no other project had been propounded. I will deal again with that a little later. I have searched the speech made by the Minister on the Second Reading debate in another place for any valid reason for the nationalization of the industry, and I have found none. The nearest he went to any good reason was when he said: Whatever Government had assumed office in July, 1945, it would have had to introduce legislation to reorganize the distribution of electricity. I think the noble and learned Viscount on the Woolsack referred to that same fact. There is no one who will disagree with the Minister's contention that in due course some form of reorganization was necessary. I entirely agree with it, and we all agree with it. It has been going on since 1935. In 1936 we started to telescope a great many electrical supply companies, and that went on until 1939. War intervened and we were stopped. The Government of the day believed that with war coming, we should face up to the war in that position rather than continue any reorganization; and so we left things as they were. As one noble Lord said to-night, our record as an industry during the war, and the way we faced up to the problems and difficulties of the war, is absolutely impeccable. I do not believe anyone will gainsay that.

We agreed that reorganization was necessary, but the Minister went on to dismiss, also in the same speech, with contumely, the McGowan recommendation that any reorganization should avoid "unnecessary dislocation." There again I disagree with the noble and learned Viscount on the Woolsack, because he said that whereas dislocation was necessary, this would give the least amount of dislocation. There are other ways in which reorganization could have been effected. They were put up to the Minister, and they would not have given anything like the dislocation that will be involved under nationalization. I submit that the scheme in this Bill will involve the maximum amount of dislocation at a time when industry as a whole—and this has been very fully urged to-night—can least afford to have added to its many difficulties and problems the delays and troubles that are bound to occur in the process of changing from private and municipal ownership to wholesale nationalization the electricity upon which most of our industries depend.

Take, for instance, the arrangements under the Bill to delimitate the country into fourteen areas. Two of our largest electrical groups, the Edmundson and the County of London, which have already been mentioned in the debate, will be affected to the extent that one will be split up among seven of those areas, and the other will be split up among four of them. Anyone who has knowledge of administration of the distribution of electricity will have no illusions as to what this will mean in dislocation. It Will mean not merely dislocation, but dislocation for a very considerable period, until the disjointed sections are re-orientated into their new spheres. No one with any experience of business and amalgamations will expect that that will go no further, but will anticipate that, in a lesser degree, this disintegration followed again by reintegration will, under nationalization, occur in most parts of the country, with its attendant degrees of dislocation.

The McGowan Report, to which the noble and learned Viscount referred as his Bible—though he did not follow it as his Bible in all respects—recommended thirty districts and seventy-six groups, as against the fourteen areas under the Bill. That was in 1935. We are now in 1947. We all agree that things change in twelve years. We all agree that the numbers of areas and districts recommended by the McGowan Report are too high to-day, and that they would have to be reduced in number. I submit that fourteen is too small a number of areas. I have read the relevant clause in the Bill and I should like to see that particular clause amended so as to make it more flexible and elastic in the light of experience, in regard to the number of areas that can be established. I do not want to dwell upon this point, but I do want to support those noble Lords who have urged that the area boards should, within legislative limits, be as nearly autonomous and given as wide powers as possible to develop their areas.

The fact that the electrical industry has advanced and developed under this "pernicious system" of private enterprise and municipal enterprise—as noble Lords on the other side would regard it—is due to its having had machinery of a sufficiently flexible nature to permit of advancement all the time. If money was required, it was poured in. The noble and learned Viscount, the Lord Chancellor, does not believe that that was the case, hut it was. Engineers had very wide authority to act and to go back to their boards for further powers, and everything was done in order to promote the good of the industry and the advantage of the consumers. The fact that in 1927 there were 2,500,000 consumers in this country, and that in 1945 the number of those consumers had increased to 11,000,000, is surely proof that the policy of the electrical companies and the municipalities was a progressive one, and one under which the industry thrived.

I should like to ask the Lord Chancellor, or the noble Lord who is going to reply, whether he is really of opinion that private companies, municipalities and power stations have failed in the responsibilities laid upon them under the various Electricity Acts. I put that question quite deliberately because, in my view, that should be the only good and fair reason for forcibly wresting from companies and municipalities their electricity supply undertakings, nationalizing them and compensating the owners on an unfair basis. If his answer is that the companies and municipalities have failed the nation and the consumer, then how does he reconcile that answer with the facts and figures which I will not now lay before your Lordships' House, because a good many of them have already been given— I think Lord Wolverton, who has just spoken, gave a number of them. However, I would like shortly to give two or three of these figures to emphasize my case.

For instance, in eighteen years the consumption of electricity has risen from 7,000 million units to 35,000 million units, or five-fold. In 1927 there were 2,500,000 consumers, and in 1945 there were over 11,000,000 consumers. What is also remarkable is that the price has fallen, in spite of the declining quality of coal—and it is very bad indeed. Some of the coal that is brought to the power stations to-day is hardly usable. When this industry is nationalized if, by the mere fact of putting a Bill on paper, the Government think that they are going to increase or improve their supplies, they certainly will not make them cheaper; they will become dearer and, unless they can improve the quality and quantity of the coal that is brought to the power stations, they will make a dismal failure of it.

Great play has been made by the Government that they are going to electrify the rural areas, and that the electricity supply companies have failed in this. Again Lord Wolverton has given some figures here, and I should like to state shortly these facts. The only rural areas which have been developed electrically by municipalities in England and Wales are the rural areas lying immediately around the towns of Norwich, Bedford and Luton. Otherwise the whole of the rural development in this country—and it is considerable—has been effected by the private companies. Private companies have in their areas 278 consumers to the square mile as compared with 1,813 consumers in the square mile in the municipalities. In 1939, out of 2,225,000 rural houses, 1,100,000 were taking supplies, mostly through the supply companies; there were another 450,000 for which supply was available, leaving under 1,000,000 to be supplied. As Lord Wolverton has said, the companies, in collaboration with the National Farmers' Union, about a year ago arranged to expend £72,000,000 on the electrification of rural areas. What happened? Everything was held up. The money was there; we were ready to go ahead and it was all arranged, but it was held up because of this wonderful Bill which is before your Lordships' House to-night. I venture to predict that it will be laid up for another two or three years because the supplies such as materials, which were at any rate available to some extent then, are not available now; and the whole thing will fall to the ground in probably two or three years.

I want now to take the case of the consumer, and I submit that his interests are quite inadequately safeguarded under this Bill. At the present time, if a consumer, whether industrial or domestic, has a grievance about charges or services he can appeal to the Electricity Commissioners, a body of electrical experts who have access to and keep duplicates of all the accounts of undertakings; and they can make an investigation or hold an inquiry if necessary. From their decision he has a right of appeal to the Minister of Transport, although in practice this is seldom sought. The consumer, moreover, is further protected by the maximum charges laid down under the Acts by the Electricity Commissioners. This protection he will lose, as, under this Bill, the Electricity Commissioners may be abolished. The Minister of Fuel and Power, who for some reason unknown apparently has his knife into the Electricity Commissioners, has definitely stated that it is his intention to abolish them; and to-night we have heard from the noble and learned Viscount, the Lord Chancellor, that this is the case.

If the Minister does abolish this ultimate safeguard to the consumer, he proposes to put in their place something which, in my opinion, will be quite illusory and unsatisfactory. He proposes to set up in each area consultative consumers' councils and these amorphous bodies—I call them so deliberately—consist of laymen with no technical experience. Apparently the consumer who feels aggrieved by his treatment by an area board will have the right to place his case before the consumers' council. And if they are satisfied they will pass on the complaint to the Central Electricity Authority, who then become judge and arbiter in one. These seven wise men who comprise the Central Electricity Authority, who are responsible for the whole electrical developments of the country, are to have added to their gargantuan task the consideration of appeals from aggrieved consumers. I have no doubt that they will have a sub-department to deal with them, but nevertheless the ultimate responsibility, as I read the Bill, will lie with the Central Electricity Authority.

I see that by Clause 64 the Minister may hold inquiries, so possibly the appeal may be to him. I have tried to read this Bill and to understand it, but I am not quite certain where the appeal lies, and I hope the noble Viscount, in replying, will tell us what actually is the procedure. I submit that this duty should continue to belong to the Electricity Commissioners who should be kept in being. If the Minister dislikes the Electricity Commissioners so much that they must be abolished—and he acts as an autocratic dictator very often—then another body, a rates tribunal or some such body, should be set up to take their place. I hope that this will be discussed on the Committee stage.

Another question on which your Lordships should reassure yourselves before the Bill leaves this House is that of securing pensions for staffs on retirement, including payment for loss or suffering where that arises. I am not very clear on these matters and perhaps the Minister would say something in replying. Clause 54, subsection 1 (b) allows regulations to provide, among other things, for the continuance, amendment, repeal or revocation of existing pension schemes. As the clause stands it is permissive, and not mandatory; consequently the option to make regulations may never be exercised, in which case the whole clause will simply fall to the ground. Employees are very anxious about this—not only my own employees, but throughout the industry. They have brought this point to my notice, and have asked that the clause be made mandatory and not merely permissive.

There is another point to which I must refer briefly. It is that certain directors, whom the Minister of Fuel and Power euphoniously describes as "Namby-pamby" directors (I do not know what he means by that, but that is his delightful term) are to be thrown out of office on vesting day without a stiver of compensation. This is a point which received much consideration in another place. It may not be an issue with which we can concern ourselves here, owing to privilege, but nevertheless I am going to take this opportunity to register my strong condemnation of the Government's attitude in this matter of compensation to those directors; it is unworthy of any British Government who profess to see justice done, and to be influenced in their actions by fair play.

There is another matter which I wish shortly to discuss, and that is the question of Scotland under this Bill—a matter which was dealt with by the noble Lord, Lord Morrison, this afternoon. Personally, I cannot understand why, under this Bill, Scotland is to be truncated and partitioned. The noble Lord, Lord Morrison's speech this afternoon left me with the impression that he was merely reading out a brief; that he had no personal interest as a Scotsman in the matter, and that he was laying before your Lordships' House the views of the Minister, without really having studied them or accepted them. I read the speech of the Minister of Fuel and Power on the Third Reading in another place, and I found not a single argument in it to justify the act of truncating Scotland. I listened to the noble Lord, Lord Morrison's speech, and I found no justification there. He told us about the North of Scotland. We all agree that the North of Scotland is being treated very well. But the whole of his speech was devoted to the North of Scotland. I was not interested—nor were my noble friends interested—in the North of Scotland perse, because we knew that the North of Scotland was getting a fair deal. What we are interested in is the South of Scotland, from where I come. The noble Lord proceeded to tell us—and this is an interesting fact—that 73 per cent. of Scotland, containing only 20 per cent.—

LORD MORRISON

23 per cent.

VISCOUNT ELIBANK

23 per cent. of the population of Scotland—were to look after their own affairs. But in the other portion—that is 27 per cent. of the area of Scotland containing 77 per cent. of the population—

A NOBLE LORD

73 per cent.

VISCOUNT ELIBANK

My figures are accurate to within 2 or 3 per cent.—was to go to England. The Government were to have the plum, and the advantage of all that. That was to go to Whitehall, and they were to gain the benefit of it. I am not going to detain the House for very long on this point, but there are a few practical facts which I wish to place before the Minister. He never attempted to argue the South of Scotland case at all. He tried to cast a glamour over his South of Scotland statement by telling us a great deal about the North of Scotland. It did not work a bit. We were not taken in by it, and I wish to tell him that, from a practical standpoint, the connexion between Scotland and England is confined to the main transmission line which runs South from Dumfries through Carlisle to the North West England industrial area. The grid consistently exports current from Scotland to England via this line. On the Eastern side there is no effective interchange of current between Scotland and England at all. Berwick and North thereof are supplied from Edinburgh and the Lothians. South of the Tweed there are broad stretches of moorlands North of Alnwick, and South Northumberland is naturally supplied from Tyneside.

Therefore, there is only one useful trunk line connexion between Scotland and England and it is a necessary connexion. It is used daily to export hydroelectric power from Galloway to England. It is in fact an essential physical connexion between the Scottish transmission system and the English, and overwhelmingly—and I want to emphasize this—the chief beneficiary is England and not Scotland. If we wish to look after our own electricity and to export it to England under conditions which would be arranged between the Ministers, why should we not? Why should we be tied once more to Whitehall under this centralizing disease which obsesses the Government when it comes to any nationalization scheme so far as it effects Scotland? Just before leaving the subject I would like to refer to a personal matter. Electricity in my house in the Tweed Valley in the South of Scotland, seven miles from any town, tucked away amongst the hills and moors, costs me less than it does in my house in London with its vast population. That is the position to-day. What is going to happen under this nationalization? We are to be tied to Whitehall, and I have no doubt that unfortunately I, with others, will have to pay more for my electricity in the Tweed Valley than I did before this Bill came on the Statute Book.

I do not want to delay the House any longer, but there are a good many other points which one might discuss, such as financial clauses, the vesting day, and so on, but there will be an opportunity of doing that on the Committee stage. I wish to conclude with these few words. I desire again to emphasize that industrial consumers to-day are largely dependent upon the efficiency of their electricity supply for the progress and development of their many industries which are so important in their effect upon the whole economic life of this country. Whilst I am critical of this Bill and dislike it and its set-up intensely, and whilst I am not at all optimistic, as are the Government, of the luscious fruits which are to fall from its branches, but on the other hand venture to predict that the price of electricity under it will be dearer and not cheaper, I realize that we must accept it. But I say that there will be any amount of dislocation in the near future as soon as operations under the Bill commence. I realize, nevertheless, that nationalization of the electricity supply industry has come, and that we have to accept it in the light of the mandate given. I accept the mandate, and its adoption by the machine majority in another place. I realize, however, that the details of the Bill have been improved in the other place, and it is now, I believe, our duty in this Chamber of revision to see what we can do to improve it still further. It is in that spirit that I propose to take my part in its passage through your Lordships' House.

10.6 p.m.

LORD BALFOUR OF INCHRYE

My Lords, we have had approximately six hours of debate on this Bill. Two days were spent on Second Reading in another place; there were twenty-four days in Standing Committee and three days on Report stage in another place; and I personally, and I think many other noble Lords on this side of your Lordships' House, are waiting for an answer to two vital questions. They remain unanswered as regards any speeches of Ministers in the other place, or, with respect, any remarks from the noble and learned Viscount on the Woolsack—or from the sole supporter from the Back Benches on the Government side who spoke to-day. The first of the two questions is this: Who, except for the Government, is clamouring for this Bill? The second question is: Who will benefit, except the Government, from this Bill? Those seem to me to be perfectly reasonable questions, to which we are entitled to an answer, and in the spirit of which we can examine the proposals of His Majesty's Government.

The Government have adduced no reason for bringing forward this Bill nationalization being the success or other-ward put forward by the noble Lord, Lord Lucas, who took to task my noble friend Lord Swinton for his statement regarding what the Minister of Fuel and Power had said in relation to the test of nationalization being the success or otherwise of the experiment in coal. There was some little difference between the noble Lord and my noble friend, but I think there was general agreement on this: that the Minister of Fuel and Power said that the case for or against nationalization rested on the success of the Coal Board. The noble Lord, Lord Lucas, made a plea for time in which the Coal Board could prove whether or not it could be a success. The sole supporter of the Government on the other side of the House was pleading for time in order to test out the theory upon which the success or failure of this Bill is to depend. According to the noble Lord's own argument, the best thing his own Government could do—and we hope he will advise his Front Bench to do it—would be to suspend the Bill until the Coal Board can prove that the nationalization of coal was or was not successful. That was the only justification we have had to-day for the introduction of this Bill.

Everyone, of any Party, admits that reorganization of the electricity industry is due. The noble and learned Viscount the Lord Chancellor said that there was need for nationalization as there was "need for a major operation because of the purchase rights of local authorities falling in over the next few years." That was one of the main points made by the noble and learned Viscount in his speech, but I would like to remind the House that under the existing legislation no local authority can exercise a purchase right without the consent of the Electricity Commissioners. This consent is withheld in cases where the exercise of purchase rights would be deleterious to the general interests of the industry and the community; so that that point which the Lord Chancellor made seemed to me to be a rather weak one upon which to base the need for this Bill.

The next point upon which the noble and learned. Viscount based his case was largely the McGowan Report. The noble and learned Viscount seemed to me to ignore the rejection by the McGowan Report of nationalization as a solution In the speeches in another place and in the country there has been a sort of aura of nationalization put round whenever the McGowan Report is mentioned, but in fact that Report came down against nationalization.

I think it is worth a moment to give your Lordships the exact quotation on that point of the McGowan Report. It says: We are of opinion that a reorganization of such a revolutionary character would only be justified if it were beyond a doubt that the constituent bodies in the electricity supply industry, as distinct from the organization of the industry as a whole, were generally inefficient and unprogressive, and incapable of being improved on a more evolutional basis. And then the Report went on: On the contrary, there has been abundant evidence to show that, taken as a whole, the electricity supply industry has made remarkable progress, particularly during the last ten years, notwithstanding its complicated and, in many cases, uneconomic structure, and the trade depression from which the country is now emerging, The noble and learned Viscount the Lord Chancellor also ignored a very pertinent comment—

THE LORD CHANCELLOR

I hope the noble Lord is not suggesting that I ignored that. I pointed out those words, and pointed out that I accepted the facts of the Report, but differed from the conclusions it gave, and I gave my reasons.

LORD BALFOUR OF INCHRYE

would not wish to misrepresent the noble and learned Viscount. He certainly drew attention to the findings of the Report, but it seems to me did not give sufficient weight to the conclusions, which were thoroughly against nationalization. Also he did not mention the 1942 Cooper Committee which was set up to investigate the findings of the McGowan Committee on hydro-electro development in Scotland. Lord Cooper's Report said this: We should not have hesitated to advise even this drastic solution if we could have supported it by the prospect of resulting increased efficiency and cheaper supplies, but we have no grounds for holding out any such prospect. So, with respect to the noble and learned Viscount, the Lord Chancellor, it does not seem that the second point upon which he based his case for nationalization is a very sound one or provides a good foundation for the Government's contention that this Bill is in the interests of the industry. Other than the Government, let us examine for a moment who clamoured for this Bill. There are 362 local authorities who have municipal employees and, so far as I know, the operatives in those municipal undertakings are not clamouring for nationalization. There has been no evidence. In the remainder of the industry, except for the Trades Union Congress, which votes for nationalization as a sort of duty, there has been no great public clamour for nationalization from the men engaged in industry. I think it might be fair to say that relations have been good, and it has been what is termed in the Navy, a "happy ship" The relationship between capital and labour in this industry has been happy. The noble Earl, Lord Lytton, in a very moving plea for the interests of the employees in the particular concern with which he is connected, seemed to me to strike a note that has been characteristic of all the important employers in this industry, throughout their many years of handling its problems. Let us look next at the undertakers. The local authorities are not clamouring for this Bill. A good many of them consider that they are getting somewhat of a raw deal, that they are getting poor terms—the noble Lord, Lord Addington, has dealt with that particular aspect in a very effective way—and the proposals for taking over have not received the approbation of the Association of Municipal Corporations.

The private enterprise undertakings certainly do not want it. That, I trust, has been made convincingly obvious in this debate. And the Government cannot say that this is an inefficient industry. Those engaged in the industry have every right to be proud of their achievements in the past. We have had in speeches which have been made in this debate to-day examples of the public spirit of those whose concerns are going to be nationalized, and who oppose nationalization on the grounds that they feel, not that their own interests are going to be affected but that the public welfare is not going to be served by the steps which the Government are taking in the way that they have been in the past. Certainly, the consumers are not clamouring for this Bill. The charges to them have gone down over a period of years, in spite of the costs of production going up. Noble Lords have given some very striking figures to-day showing how, in spite of the increased costs of coal and of other increased costs, prices to the consumers have steadily fallen and services have been extended.

This brings me to my second question: Who is going to benefit? The first person whose case I would take is the poor consumer. There was a regrettable absence of reference to consumers' interests in another place—the Lord Chancellor did not devote much time to this but, of course he had a large field to cover—and not much mention of them anywhere. What is the position of the consumer? The statutory safeguards which he has enjoyed hitherto are going to be removed. The competition which has existed hitherto between electricity and gas is going to be wiped away. Now the consumer is going to have no protection at all from State monopoly, except an appeal to the devoted appointees of the Minister. I say "devoted" in no personal sense; I mean devoted to the cause, which the Minister sponsors, of nationalization. The Minister is going to appoint every person to whom the consumer will have any appeal in the future. It seems to me to be a very poor lookout for the industrial and private consumers.

As has been made clear in the debate, there is no promise of cheap and abundant supplies of electricity. One would have thought that if the Government were really going to introduce a Bill aimed at benefiting the community, their primary purpose would have been to give cheap and abundant electricity. But in another place there was tremendous resistance to the insertion of anything in the Bill with the purpose of providing cheap and abundant electricity, and in fact there is now, as we have heard to-day from the Government side, every prospect of higher costs. Lord Morrison said that large areas of England were without any electricity. Another noble Lord, I think, spoke of the cost of equipment per kilowatt having increased from £20 to £40. Undoubtedly costs are going up.

LORD LUCAS OF CHILWORTH

I think, if the noble Lord will forgive me, I made the comment "cost of equipment per kilowatt".

LORD BALFOUR OF INCHRYE

Cost of equipment per kilowatt has increased from £20 to £40. Then there seems to us, on all sides, little chance of electricity being any cheaper for the consumer.

LORD LUCAS OF CHILWORTH

It will not be so expensive.

LORD BALFOUR OF INCHRYE

The noble Lord says "it will not be so expensive." I am not so sure what the difference is between not being so expensive and being cheaper. It is not much good saying to somebody, as at the last Election, "Let us face the future and vote for the Labour Party, in order to get cheaper electricity", and then to tell him, "Your electricity may not be any cheaper but it will not cost you any more." That does not seem to be a very comforting idea. These proposals certainly give no benefit to the industry; and they give no benefit to the technicians who will now be working in an over-centralized industry. Quite apart from whether we like Government ownership or whether we do not, it seems to me that one of the dangers inherent in our new development of planned industry is this centralization, with which my noble friend Lord Rochdale dealt so effectively—the centralization of control. It is in- herent in any kind of monopoly, whether it be State or private enterprise, and here you have this inherent tendency towards centralization without any of the safeguards of competition that the ordinary industry has to accept. The only parties who benefit are the Government. When I say "benefit," I mean benefit politically; I would not dream of questioning the integrity of any Minister or anyone concerned with the proposals.

LORD LINDSAY OF BIRKER

If the Bill is as bad as it is, would the noble Lord explain how the Government will benefit politically by bringing it in?

LORD BALFOUR OF INCHRYE

I will tell the noble Lord; because there are going to be 148 paid jobs and 300 to 400 other jobs, some of them paid, some of them not paid, all in the giving of the Minister, and, human nature being as it is. I would like to remind the noble Lord of another Hilaire Belloc rhyme—we have had a most delightful Hilaire Belloc rhyme from Lord Lloyd. Here is another, and no doubt the noble Lord, with his educational knowledge, will remember "Little Lord Lundy." With respect to Hilaire Belloc, one could read "Little Lord Lundy" like this: We had intended you to be The next Vice-Chairman but three; The stocks were set, the boys were squared, The T.U.C. was all prepared; But as it is my language fails— Be off and govern Southern Wales. The noble Lord asked me where the danger of patronage was, I think.

LORD LINDSAY OF BIRKER

Which noble Lord asked you that?

LORD BALFOUR OF INCHRYE

In effect. You asked what was the political danger.

LORD LINDSAY OF BIRKER

No, I did not. All I asked you was how the Government were going to benefit politically. You have said so far nothing about that.

LORD BALFOUR OF INCHRYE

The rewards which are in the giving of the Government—

LORD LINDSAY OF BIRKER

That will not benefit them politically.

LORD BALFOUR OF INCHRYE

Certainly it is political patronage if, as the Minister of Fuel and Power said in another place—and this has been quoted to-night— The outlook is that you will take those who agree with you politically, and only those who agree with you politically, and put them into the jobs. If those in charge of the administration at the noble Lord's University only put in those who liked their particular sort of learning, how very biased would the learning become at a University which acts in this way. If the Minister of Fuel and Power chooses only those who broadly think politically as he does, how very much will the industry become affected.

LORD LINDSAY OF BIRKER

Does the noble Lord really think that "corruptly" and "politically" mean the same thing? He seems to.

LORD BALFOUR OF INCHRYE

Not at all. I have said nothing about corruption at all. I have been very careful about it. I have said that political patronage, to quote another place, "jobs for the boys," is, I consider, a bad and wrong thing and not in the interests of the industry, which should be run only for the technical benefit and advantage of the industry.

I want to turn for a moment to the question of compensation terms. These are a travesty of justice. We have asked for a proper basis of valuation. If the Labour Party stand for fair compensation it seems to me that there can be no answer to the point that fair compensation should be based on what a thing is actually worth, and not upon a price on the Stock Exchange, which may vary up and down according to various factors: it may be too high or too low. Nevertheless, that has been refused in principle. About 143 companies out of 188, whose shares are not quoted on the Stock Exchange, are to have a basis of valuation for being taken over as between a willing buyer and a willing seller which the Government have denied to the others. It is interesting to note the reason the Government have advanced. They say that arbitration would take too long; it would be too complicated. It is the first time, I believe, that the Government have said, "We like justice, but we have no time for justice in Britain." That is in effect what they are saying.

It was equally so with the £5,000,000 which is to be given to the local authori- ties. They have not the time to work out a scheme. It is like throwing a £5,000,000 bone to a dog. They hope that it will be all right; it may be enough, and it may be too much; but nobody knows. And the reason they have advanced for being unable to obtain any accurate estimate is that there will be no time. I want to say one word of regret about the abuse that has been bandied about concerning directors of these companies. I am not a director of a company—

LORD LUCAS OF CHILWORTH

Would the noble Lord tell us by whom? In this House?

LORD BALFOUR OF INCHRYE

In another place, not here; and, generally, in speeches up and down the country. The Ministers spent four days appealing here for our co-operation and help in their industrial drive, and then in their week-end speeches undo every bit of good their speeches in Parliament have done. The abuse that has been heaped on this body of directors is unfortunate. They have made a new crypto-criminal class of directors by undermining the integrity and the probity of these directors, many of whom have given forty years of service to industry. I hope it will go on record in this House that we pay full tribute to these men who have rendered such good service.

Finally, I would say that I agree with the noble Lords who have said that this is the wrong time for this Bill. I think that it is a bad Bill, but if it had to be introduced this is the wrong time. It is a political Bill, introduced for a political purpose, not for the benefit that it was to bring to anybody working in the industry or receiving current from it. We have a fuel crisis looming ahead, and there could be no more dangerous time for this Bill to become law. The noble Lords opposite, and their colleagues in the Government, had the pamphlet Let us Face the Future, on which they obtained their mandate for this Bill. We on this side accept that mandate and we shall do our best, when the Second Reading is given to the Bill, to try to improve it so that when it does come out it is a better Bill than it is at the present time. Let us face the future, but let it go on record that we face the future with less confidence than before that our darkness will be lightened by better and cheaper supplies of electricity as a result of this ill-timed and ill-prepared measure which we are debating to-night.

10.31 p.m.

VISCOUNT HALL

My Lords, we have had a very long and very interesting debate. From the speeches which have been made there can be no doubt that there is a distinct division in your Lordships' House on the principle of nationalization. I am a nationalizer. It is rather interesting to note that of the seventeen speeches which have been delivered (and, if I may say so, from the point of view of their delivery; and their point of view, they have been very good speeches) only four have been made in favour of the Bill. I am convinced in my own mind that the case for the Bill was so very ably stated by the noble Viscount, the Lord Chancellor, and, indeed, by the noble Lords, Lord Rennell, Lord Lucas and Lord Morrison, that, however eloquent I may be, or whatever arguments I may adduce, there is no danger of any conversions from the Opposition side of the House. Therefore, I think it would be much better if, instead of what might be regarded as repeating arguments which have already been made, I deal in the time at my disposal with the points which have been raised in the course of the debate.

I want to pay tribute to the noble and learned Viscount, the Lord Chancellor, because I think his speech was very full, and very lucid, and made out a complete case for the Bill. I listened with a good deal of interest to the speech of the noble Viscount, Lord Swinton. I question what was the purpose of the speech—as to whether it was to criticize the Bill, or really to denounce the Minister, because some 50 per cent. of the noble Viscount's time was used in denunciation of the Minister. I feel painfully surprised, I must say, that so much time has been taken up in your Lordships' House in dealing with this question of patronage. I think it may be said of both Houses, and, indeed, of the Civil Service generally, that one of the greatest insults which can be hurled, particularly at a Minister or a member of either House, is that he is using his power for the purpose of providing jobs for his friends. I must say—not that I am going to take up much time—that I would like to cross swords with the noble Viscount as to which of the political Parties have done most in the appointment of members from their own sides in connexion with any positions which it has been necessary to fill. I am convinced that the Party to which I belong will have nothing to regret. A certain amount of the noble Viscount's time was taken up in regard to the question of coal.

VISCOUNT SWINTON

Will the noble Viscount permit me to interrupt? I do not wish there to be any misunderstanding as to exactly what I said about the Minister. I quoted the Minister's own statements. I challenged the First Lord of the Admiralty to deny those statements, and my challenge was this. I said that there should be one test and one test only for appointments to these Boards—efficiency in the job. The Minister has said—and the noble Viscount will not deny the quotations I have given; they are here in Hansard—that he would not appoint to a Board a man who had opposed nationalization. I am saying nothing about corruption at all. But that was a disgraceful thing to say, because it is denying to this nationalized industry the chance of making use of the ablest men, and confining it to men who have been "Yes-men" all through. Let the noble Viscount not try and get away with any separate allegation; that is the sole allegation I made against the Minister. I make it; I stand by it.

VISCOUNT HALL

I take the noble Viscount's challenge. Shall we take the set-up of the Coal Board?

VISCOUNT SWINTON

No, we will take the set-up—

VISCOUNT HALL

Please—I have certain rights in this House.

VISCOUNT SWINTON

You have if you want to mislead. I want to know what is to be done with this Bill.

VISCOUNT HALL

I am going to take what the Minister himself has done in relation to the appointments of the Coal Board, and whether you take the Central Board, or whether you take the regional boards, it cannot be said that there has been a single appointment which has been made on the basis of the statement made by the noble Viscount. Let me come to the question of coal—and this was stated by the noble Lord, Lord Balfour of Inchrye. The test of nationalization is to be based upon the success of our nationalized coal industry, a coal industry which has been nationalized for a period of six months; which has been faced with very great difficulties, and indeed has suffered considerably as a result. I am not going to charge the colliery companies with inefficiency, but I would like to put certain points with regard to the noble Viscount himself in connexion with the situation in which the coal industry finds itself to-day; and no one should know more about it than the noble Viscount.

The coal industry is in the condition in which it is to-day for the reason that for almost a generation it has been one of the most unattractive industries in this country. Unattractive for what reason? Because of the conditions in which the miners have been employed over a very long period. One of the things which burned into the very soul of the miners of this country—and here the noble Viscount has some responsibility—was 1926. That will never be forgotten by the generation which had to suffer it and the generation which will succeed it. It was during the period of the administration of the noble Viscount that that calamity happened, for he was the President of the Board of Trade and the Minister in the Cabinet responsible for that situation. I wish I could follow this further, but it is as well when the noble Viscount is hurling his charges about a Minister to look to his own record.

VISCOUNT SWINTON

If the noble Viscount—

SEVERAL NOBLE LORDS

Order, order.

VISCOUNT SWINTON

If the Minister does not wish to give way on a personal challenge, I will not ask hint to. I am in no way ashamed of my record in the General Strike and the part I had in breaking that revolutionary attempt. But this is wholly irrelevant. The sole point I have made is that in this Bill the Minister has said that he will not appoint to any electricity authority any man who has been opposed to nationalization.

LORD LUCAS OF CHILWORTH

He has not said it in this Bill.

VISCOUNT HALL

Perhaps the noble Viscount is not ashamed of his work in crushing the General Strike, but he should be ashamed of the fact that for six months the miners of this country were locked out and starved into submission—and that is what they will never forget.

I regret, too, that the noble Lord, Lord Barnby thought fit to raise this question and centred it round the name of Lord Citrine. I am a stranger to the practice of your Lordships' House, but it is the custom in another place that if a Member intends to mention the name of another Member by way of criticism, he would wish to give the person to whom he is referring notice of his intention to do so. I am not sure whether the noble Lord did intimate to Lord Citrine that he was going to quote the passage he did quote concerning Lord Citrine 's appointment, and was going to attack that appointment and bring up the question of political patronage. If not, then I think an injustice was done to the noble Lord, Lord Citrine.

LORD BARNBY

The noble Viscount obviously invites a reply. He is noted as a fair-minded man, and with the permission of the House I feel bound to reply that I developed a theme which had already been dealt with by the noble Viscount, Lord Swinton. I specifically prefaced my remarks by saying that I made no criticism of the noble Lord, Lord Citrine, himself. On the contrary, I went out of my way to pay him compliments, in his regrettable absence from your Lordships' House to-day. I specifically said that I criticized the appointment and not the noble Lord.

VISCOUNT HALL

The noble Lord has not replied to the question I put as to whether he had notified the noble Lord, Lord Citrine, to the effect that it was around his name that the question of political patronage was to be raised.

LORD BARNBY

I, too, have spent some time in the other place, and I believe it is not excluded that quotations may be read out in the course of a debate. I would remind the noble Viscount, Lord Hall, that I read a report from a very highly-regarded trade paper and in the course of that report it was unavoidable that I should refer to the noble Lord, Lord Citrine, I did not give him any notice because I did not know the circumstances beforehand.

VISCOUNT HALL

I am afraid that I should not take it quite as lightly as the noble Lord. The criticism centred round the name of Lord Citrine.

LORD BARNBY

It was a question of technical efficiency. If the noble Viscount, or any member of this House, suggests that Lord Citrine has technical electrical qualifications comparable to those of Mr. Harold Hobson, President of the Central Electricity Board, I offer the challenge.

VISCOUNT HALL

Perhaps the noble Lord will just listen to what I have to say. The noble Lord, Lord Citrine, is said not to have the technical knowledge for the post of Chairman. I do not know whether the noble Lord, Lord Barnby, is aware that Lord Citrine himself served in the electrical industry and for years he was employed at a power station. I should have thought that the knowledge of a person who had served such a long period as he served in the industry, and who is now a man of vision, of character, of integrity, and great ability, would have been an asset to any body of which he was called—not asked, but called—to undertake the administration. It is surprising that Lord Citrine has been singled out. It is by no means the case that a very high degree of technical knowledge is needed to be a Chairman.

I do not want to be misunderstood, because I want to pay him great credit for the way in which he has conducted his duties, but did Sir Andrew Duncan have that knowledge when he was appointed Chairman of the Central Electricity Board? He was, by all accounts, a very successful Chairman of that very highly technical industry. What is the difference between the two men? Of course, the noble Lord cannot reply. There is no difference, except that one has come from the employers' side and one has been brought from the workers' side. I dislike taking so much time on what, after all, is a personal matter to the two persons to which I have referred, but I do so in fairness—and if there is one thing that your Lordships always stand for it is fairness—to persons who have not the opportunity of defending themselves. So I make no apology for raising the matter as I have.

A certain number of questions were raised, and I will endeavour to deal with them. A number were raised in regard to the appointment of area boards by the Minister and not by the Central Authority. May I point out that electricity has two main aspects? First, the generation and the main transmission, and, secondly, the retail distribution to consumer. The first of these responsibilities is that of the Central Authority, the second is the responsibility of the area boards. The Central Authority and the area boards are partners in a joint enterprise. It has not been brought out in the course of the debate that the Central Authority will be strengthened by four chairmen of the area boards who are always to be found as members of the Central Authority sitting in rotation on that Authority. That is provided for in subsection (2) (b) of Clause 3. It is intended that the Central Authority, which I repeat includes four area board chairmen, will lay down the general long-term policy of distribution. The area boards will have the responsibility, within the framework of that policy, for distributing electricity in their areas, and they will have full autonomy in so doing. So to carry out these important functions they must have a proper status. They must not be the creatures of the Central Authority, and for that reason it is necessary that they should be appointed by the Minister himself. They are really independent of the Central Authority in that way.

It must also be remembered that the presence of area board chairmen on the Central Authority is intended to provide for a two-way traffic of advice and experience between—as I have called them—the two partners in this enterprise. In any such arrangement it is clearly desirable that these partners should be as nearly as possible on an equal footing, and that is an additional reason for providing that the appointments in the case of the chairmen of the area boards should be made by the Minister. It is for no other reason but that they should be treated as partners in this great adventure. The noble Viscount, Lord Swinton, raised the question as to whether we ought not to suspend local authorities' purchase rights. He was dealing with the franchise. This has, in fact, been done and the rights have repeatedly been extended under special enactments. But local authorities are at present insisting on exercising their rights and receiving further extensions. Whatever Government came into office after the war would have been faced with one of two alternatives: to let local authorities exercise the rights which Parliament gave them in 1882, or to bring in legislation to override those rights. Such legislation was only possible as part of the scheme of reorganization.

Quite a number of questions were directed to the matter of rural development; and indeed very few noble Lords, in the course of their speeches, did not refer to it. The noble Lord, Lord Rennell, raised the matter in the course of his speech, and he is, I know, aware that—

LORD RENNELL

My Lords, my only excuse for asking the noble Viscount to give way for a moment is to thank him for correcting me on that point. I am aware of the subsection in Clause 1 of the Bill. I was perhaps a little exuberant in saying that no reference had been made to rural development. But I was disappointed at the very restricted terms in which that reference is made and by the use of the words "so far as practicable." I withdraw the statement that there is no reference to it.

VISCOUNT HALL

The Bill provides for a very large extension of the supply of electricity in the rural areas and that is the intention. I fully appreciate the difficulties with which the companies have been faced, and indeed with which local authorities have been faced, in extending their activities to the rural areas. I myself am interested, though only as a. ratepayer, in a very successful electrical undertaking. Indeed, I was one of those who, by virtue of being a member of a local authority, was responsible for initiating the scheme, and I think that at the present time it is one of the most remunerative and most successful distributing schemes in the country. And I may add that I do not expect any reduction in electrical charges. I could not get them, for if I did I would not be paying anything for my electricity. So successful is this undertaking that I only wish we could extend it and extend its advantages to other areas.

I am referring to the Mountain Ash district in South Wales where I get electric current for lighting. Owing to the profits made in the first two quarters of the year, for the second two quarters of the year they reduce the tariff to something like a farthing or three-halfpence a unit—and give back the consumers a very good Christmas box. They have their statutory reserve fund and the interest on that, together with the profit, enables them to do what they are doing. But a different state of affairs exists in a neighbouring urban district which was not so successful in introducing a system of assisted wiring—and indeed of free wiring—to bring in the consumers. In that neighbouring district the price is about three times what it is in the one I have mentioned. Going across to Merthyr, a district which is not unknown to the noble Viscount, Lord Kemsley, where you have a private company—and of course he believes in private enterprise in his district—private enterprise means that they are charged about three times as much for their electricity as I am charged.

Then, when you go down to the rural areas of West Wales, what do you find? Very few houses have the advantage of an electrical supply, and where they have it they pay something like sevenpence or eightpence, and in some cases ninepence a unit for it. Here is a service which should be placed at the disposal of almost every person in this country. I say that under this Bill there is a very much better chance of that being done than if you leave it to the companies. Please do not think that I am suggesting for a moment that the electrical supply in this country has been inefficient; it has not. But that does not signify that something more could not be done for the people of this country if we had the kind of organisation and unification which this Bill is to provide. Your Lordships will be aware that the Bill provides for borrowing powers amounting to £700,000,000 and it is expected that some £400,000,000 of the £700,000,000 will be spent by the area boards in the development of the distributive side. If that can be done then I think that the Bill ought to receive its reward. After all, it cannot be done except by subsidizing private companies or local authorities, or by the State coming in.

Reference has been made to the Post Office. Of course, the Post Office could never pay what it costs to collect and deliver letters in some of the rural districts of this country if it were not for this great national scheme. In this matter I should have thought that there was that friendliness and, indeed, that desire to assist one another. Why should I have electricity because I live in an urban district, and a friend of mine, because he lives in a rural district, doing as useful work as the fellow in the urban district, not have it? He just cannot get a supply of electricity in these days. There is something wrong.

LORD LLOYD

Would the noble Viscount forgive me, but I would just like to get this quite clear? Are these rural prices to be reduced—I am only asking for information—by putting up the prices either to the urban or to the industrial consumer? I ask that only because, in connexion with some of the larger industrial consumers, the noble Viscount will appreciate that a very small rise in the price may make an enormous difference to an industrial consumer who uses millions of units a year. And when we have to consider our export programme and the prices of our goods I want to have that clear.

VISCOUNT HALL

It will mean that the area boards will put up their schemes; they will have to cover the whole of their area, and in those schemes they will have to state the cost of supplying electricity to those areas. It may be that they will have, in some way, to spread the additional cost over the urban and town populations. I should think that is the only way in which it can be done.

LORD LLOYD

It will certainly happen.

VISCOUNT HALL

It might; but it has not been done until now. These people have been deprived of their supply, and that is why it is so necessary for this to be done.

Another question I wish to raise is on the financial control of the area boards. I understand that the area boards will be financed from the Central Authority; it is the central authority who will have the power of raising money. I have been informed, however, that the area boards will put in their estimates in exactly the same way as Government Departments, towards the end of the financial year for the next financial year. And the area boards, after the estimate is carried through and they satisfy the Central Authority, will obtain the money they require for carrying out their schemes without the rigid control of the Treasury. That is the method of financing the area boards. I am sorry that I have taken up so much time. I was very impressed by the speech of the noble Earl, Lord Lytton; and what he had to say about his company on the welfare side of the workpeople; indeed, I think that could be said to a large extent of a large number of industrial concerns, and I want to assure him that provision is contained in the Bill for the purpose of protecting pension rights and all the welfare and health work to which he referred. I am not so sure about the question of co-partnership. The benefit to industrial workers through a system of co-partnership is made up out of the profits of the concern. I understand that will be looked at and that those engaged in such schemes will possibly have some kind of compensation paid for any loss they might sustain.

I should think almost every speech from noble Lords opposite dealt with the question of compensation. It is not for me at this late hour to deal with the question of compensation to private companies, or the lack of compensation to local authorities which was so well put by the noble Lord, Lord Addington. The Committee stage is the time when we can have the real "dust-down" on this question, and I have no doubt that noble Lords opposite will put the case very strongly. I conclude by saying that I have no illusions at all about nationalization. I am convinced in my own way that there are certain industries in which we should have State ownership. The noble Lord, Lord Balfour of Inchrye, asked, "Who is clamouring for this Bill." The electors sent into Parliament with an overwhelming majority their representatives of a certain Party for the purpose of nationalizing certain industries. And we propose to do it. I would like to ask the noble Lord, whilst there is a clamour, is there any opposition to it? I know of no objection apart from the opposition expressed by certain representative bodies. I know of no meeting of industrial workers, even in the areas where the electricity plants exist, and I know of no hostility to this Bill.

LORD BALFOUR OF INCHRYE

The electors voted chiefly on a wide programme, including not so much the nationalization of electricity as the cheaper electricity which was promised because of nationalization. Secondly, as to whether there has been any protests: The people have not yet felt the effect of the Bill. When the consumers do then the protests will start.

VISCOUNT HALL

The noble Viscount took pains to explain how many days were required for the discussion of the Bill in another place, and the newspapers have been full of it for the last six months.

THE MARQUESS OF SALISBURY

I doubt whether protests would have made any difference to the Government. They had many protests against nationalization from the road hauliers, but the Government took no notice.

VISCOUNT HALL

I am not so sure that there have been protests from the majority of the road hauliers.

SEVERAL NOBLE LORDS

Oh!

VISCOUNT HALL

I have seen large hoardings with posters, paid for by certain vested interests. But, after all, noble Lords do not fully realize the power that the industrial workers have in their own trade unions in making their opinions felt. If there was any hostility at all, either against the Transport Bill or this Bill, believe me, the industrial workers of this country are not nearly so quiet and modest as noble Lords think in letting other people know their views. They would quickly express themselves in that way.

May I come to this point? This industry is to be nationalized; rightly, I think, noble Lords think wrongly. I am convinced in my own mind that it will be for the great benefit of the people of this country. There has been a great deal of State control of this industry from the very early days, when the old pioneers never realized that the industry would grow to the position to which it has grown in the economic and industrial life of this nation. There is no industry which is contributing more to the comfort and the ease of work in the homes of the majority of the people of this country. I say whatever may be said about some little defect here, or some little defect there, that here is a great national service which should be placed at the disposal of every person in this country who can use it. It ought not to be based upon how much he can pay: it should be there. I can hear what the noble Viscount opposite is saying. I wish he would just behave himself a little bit. I do not want to subsidize it.

VISCOUNT SWINTON

I am extremely sorry. I thought I had correctly apprehended the noble Viscount. He said it should not depend upon whether the man could pay for it. I thought that meant that it was to be subsidized. I am glad if I misheard him.

VISCOUNT HALL

I think the noble Viscount really knows more about finance than he pretends he does. That is one of the reasons why the area boards will be appointed. It is not a question of a State subsidy at all. It is a question really of giving facilities to the people to have their houses connected. 150,000 farms doing important work in this country, are at present unconnected. Why are they not connected? It is because of the question of finance. One noble Viscount shakes his head, and another noble Lord nods in agreement.

VISCOUNT ELIBANK

The noble Viscount has made a mis-statement.

SEVERAL NOBLE LORDS

Order, order.

VISCOUNT HALL

I have taken up too much of your Lordships' time. I would ask noble Lords to march with the great progressive minds in this country. You have done a grand job, but the time has come when these changes must take place. I think the change which will be brought about as a result of this Bill will be in the interests of the great mass of the people of this country.

On Question, Bill read 2ª, and committed to a Committee of the Whole House.

House adjourned at ten minutes past eleven o'clock.