§ 2.47 p.m.
§ Order of the Day for the Second Reading read.
§ THE LORD CHANCELLOR (VISCOUNT JOWITT)
My Lords, I rise to move that this Bill be now read a second time. It has for long been my habit in moving these measures to indicate to your Lordships whether the Bill is or is not likely to prove controversial. I apprehend that this Bill is likely to prove controversial. But one never knows! Last night, we had a Bill in this House which I should have thought was as uncontroversial as any Bill ever introduced, and it proved 1091 highly controversial. To make up for that, I hope that this Bill will, equally, prove uncontroversial. But, my Lords, I am not asserting that that will prove to be the fact.
Now, I am afraid, I have to deliver to your Lordships a lecture on gas. I am bound to add that I hope that my class will prove, I will not say more responsive but, at any rate, more receptive than they were last night. I possess none of the adventitious aids which schoolmasters possess; I must rely on the mere force of reason to convince your Lordships what is undoubtedly the fact—that this is a very excellent Bill. If I may borrow a phrase from Macaulay: "as every schoolboy knows," gas lighting was invented in this country. As all your Lordships know, and would expect, it was invented by a Scotsman and—doubtless your Lordships will correct me if I am wrong: you know the dates and I do not—I believe that the first public occasion for the use of gas lighting in this country was the celebration of the Peace of Amiens, which was signed, if I remember aright, on October 1, 1902.
§ SEVERAL NOBLE LORDS: 1802.
§ THE LORD CHANCELLOR
I now look at my notes, and I see that the date was March 27, 1802. None of your Lordships corrected my mistake as to the month.
All your Lordships know that Pall Mall was the first street in the world to be lit by gas, that in 1812 the Gas Light and Coke Company were incorporated, and that by the year 1814 the Parish of St. Margaret's Westminster, had all its streets lighted by gas. Therefore, the gas industry is an old industry, and I think we may say that it is an industry which has shown remarkable vigour, because it has survived and prospered notwithstanding the fact that all its domestic lighting load—or substantially all its domestic lighting load—has been captured by electricity. In recent years it has found ever-increasing markets for its gas and its coke, in the home and in the factory.
But this industry had one serious defect which really derives from its ancient history. When it was started, and thereafter, the gas supply was developed under close Parliamentary control, with numerous small statutory monopolies, each 1092 occupying a small area. At the present time, I am told, there are in this island about 675 of these statutory gas undertakings—of which, broadly speaking, two-thirds are companies and one-third municipalities. When I add to that some 350 non-statutory gas companies, we arrive at a total of over 1,000—a total of which even the Australian cricket team might be proud! If we look at a map of the gas undertakings resulting from this haphazard structure, we see that it is a perfect patchwork of small units, with municipalities and companies intermixed in a kind of complicated jigsaw puzzle. The object of this Bill is to provide the gas industry with a modern structure.
It is an odd fact that there was no comprehensive official investigation into the gas industry until the war arrived. In 1944, Major Lloyd George, who was then Minister of Fuel and Power, appointed a Committee under Mr. (now Sir) Geoffrey Heyworth which reported in December, 1945. Your Lordships will have seen and digested that Report, which I think has been generally regarded as a wise and constructive document. The Committee's terms of reference were to consider how to promote a system to provide a cheap and widespread supply of gas. I have not the privilege of knowing the members of that Committee but, so far as I know, none of them was a hard-boiled Socialist. Yet the conclusion to which they came is surely remarkable. May I read from paragraph 227 of their Report?The existing structure is restrictive of further progress. In other words, the existing forms of organisation no longer suit present-day conditions and are even less likely to meet the problems of the future.They consider—here I quote from the succeeding paragraph—that:a basic change in the structure of the industry is the only approach that can produce really effective results quickly. The direction of the required change is clearly marked, namely, towards groupings into larger units. This is preponderantly the view of the industry itself. It is in no sense a revolutionary idea; it is entirely consistent with past history, which shows a steady accelerating trend towards integration.Accordingly, the Committee recommended what I readily concede is a drastic step, the transfer of all the undertakings of the country, company and municipal, lock, stock and barrel into ten Regional Boards. The scheme of this Bill is very similar to 1093 that of the Heyworth Report, except that instead of ten Boards, we have constituted twelve.
§ VISCOUNT BUCKMASTER
With great respect to the noble and learned Viscount, I do not quite agree with his statement that no other Committee have inquired into the gas industry. According to my information, a number inquired into it in the years before the last war and recommended in the entirely opposite sense. The National Fuel and Power Committee in 1928 recommended that the gas industry should be given a substantially greater measure of freedom. The noble and learned Viscount will forgive me for interrupting him.
§ THE LORD CHANCELLOR
I am delighted, but there was a recommendation in 1943 from the gas industry in which a higher degree of integration was recommended. The essential reason underlying the Report of the Heyworth Committee was that undertakings are too numerous and, on the average, far too small for modern conditions, however suitable they might have been a hundred years ago. I would suggest to your Lordships that an example of the right size of undertaking is our own local undertaking, the Gas Light and Coke Company. I believe it to be the largest undertaking in the world, and I believe that it is generally recognised as one of the most efficient industrial concerns in this country. It supplies something like 12 per cent. of the total gas supply in the country. It has the advantage of large units of production, and its success is due to a considerable extent to the foresight of its then manager, Beck, who in the year 1868 planned and built the huge gas works at Beckton, which were able to produce gas on such a large scale and at such a low cost that the company were able to expand and absorb most of the undertakings in the North London area. Even so, there are certain enclaves—for instance, there are the Romford under-taking and the Commercial Gas Company in the East End—which have prevented the completely integrated planning of this area. We recognise that this is the right sort of area and we preserve it practically in toto, with the enclaves, which we take over, in the North Thames Gas Board, which is proposed in our White Paper. The other Area Boards will be large 1094 enough to develop organisations on a scale comparable with that of the old Gas Light and Coke Company.
Let me compare the area of the Gas Light and Coke Company with some other areas. Take South Lancashire, an area which I know well. In population, and in the amount of gas supply, it is comparable with the North Thames area. In South Lancashire, there are 34 local authority undertakings, mostly with their own separate works, intermixed with 14 company undertakings—a total of 48 separate undertakings. Or compare the North Thames area with South Wales, which has a smaller population and a smaller gas supply. It has 15 municipal undertakings and 23 company undertakings, and the need to get rid of the antiquated structure in South Wales is a crying one, because of the possibility of coke oven development, which I will discuss presently. In that area there should be something like a local gas grid, but the difficulties of organising that and superimposing it on the old structure are insuperable. Or take West Yorkshire. In West Yorkshire we have a most enterprising holding company, which deserves full credit for their enterprise in developing a gas grid, linking up a number of coke ovens and gradually improving the local gas supply. But if you look at the map you will see that that gas grid has to worm its way almost entirely through the territory of company undertakings subsidiary to the holding company. The local authorities stand almost completely out of the grid scheme. Take as another illustration south-west Scotland. The great municipal gas undertaking of Glasgow is surrounded by a large assortment of undertakings, mostly small. Within a radius of thirty miles of Glasgow there are twenty-seven municipal and thirty-one company undertakings, many of whom are non-statutory. It is obvious that a big integration scheme is needed here.
Indeed, I submit to your Lordships that the need for integration of the gas industry into larger units is so obvious as hardly to need argument. When I am listening to the speeches that will be delivered on this Bill I shall be very interested to hear whether that fact is accepted—namely, that there is a 1095 tremendous need in the gas industry for integration into larger units.
I can quite understand that it may be said—it almost certainly will be said—that integration should be carried out in an evolutionary way, by a method of amalgamation, and that we should set up Gas Commissioners, or a Gas Integration Tribunal, or some other device of that sort. At the present state of the country's fortunes, that kind of solution simply will not meet the case. We tried that scheme out in the 1920s and 1930s. We remember the Coal Mines Reorganisation Commission, set up to stimulate amalgamation between the collieries, and we know that, notwithstanding all the work they did and the excellent personnel on that Commission, their achievements were almost nil. That is a sign post to what not to do. Moreover, that method is too slow. Bear in mind, if you will, that integration, rightly or wrongly, almost inevitably leaves the municipal undertakings on one side; you cannot get municipalities to merge their undertakings with companies. The development of joint boards for local authority undertakings has been very modest, and I am by no means a devoted adherent to the idea of a joint board.
It is true that there have been amalgamations between adjacent company undertakings, but the process has been very slow. I think one of the main difficulties has been the cost and the time of Parliamentary proceedings. These amalgamations, if they are to be effected, have to be effected by Special Orders or Private Bills. The procedure itself is good enough but, as I have said, it costs much time and money. Moreover, the gas industry, unlike the electricity industry, has no modern general legislation other than legislation dealing with points of detail.
I must recognise—and we shall perhaps hear—that the gas holding company movement is a way out of this difficulty. I think there are some dozen holding companies or gas corporation groups which have acquired a financial interest in quite a proportion of gas undertakings in this country. But that scheme cannot solve the gas industry's problem. The holding company which developed the West Yorkshire Gas Grid, which I have already mentioned, have done good work 1096 on the technical side and have achieved some measure of integration. But in a large number of cases control is little more than financial, and the undertakings owned by the different groups are scattered more or less haphazardly over the map, reflecting the casual manner in which the subsidiary undertakings came into the market and were acquired by the various holding groups. There is one holding group, for example, which stretches from South Wales to Thurso in Caithness and from Aylesbury to Scarborough. It is, to our minds, quite inconceivable that these holding companies could form the basis for an efficient modern structure for the gas industry.
If I may refer to the Heyworth Committee again, I would point out that they were firmly of opinion that a root and branch operation was necessary. This is what they say in paragraph 233 of their Report:The next consideration is how larger units are to be brought into being. No voluntary process is likely to be sufficiently speedy to satisfy present and future requirements. The reason for this is that the difference in structure between the statutory companies and the municipal undertakings is a basic one, and it is unrealistic to expect such a change of climate as will make possible fusion between them in any form which is likely to be effective.In paragraph 236 they say:But, in fact, it is not necessary to decide whether or not the provision of additional machinery would, or would not, bring about acceleration of integration within the different forms of structure. A glance at the map of the structure of the industry as it is today will make it clear that no degree of success along this line of approach could produce a pattern of grouping even approximating to the ideal.Paragraph 237 of the Report says:Pre-determination of boundaries is the only approach that will produce a workable pattern.Of course, it may be said: "Should we not wait and see? Should we not see what results we get from our other experiments in nationalisation?" Well, it is nearly three years since the Heyworth Committee reported. I believe it to be true that the technical men in the gas in industry are overwhelmingly of the opinion that the present structure does not fit the present age or its requirements. Indeed—if I may call the attention of the noble Viscount, Lord Buckmaster, to this fact—in 1943, before the Heyworth Committee was thought of, the Report of the 1097 industry's Post-war Planning Committee, presided over by Sir David Milne-Watson, called attention to the need for the development of integration. I believe these technical people to be almost universally agreed that something on the lines of the Heyworth Report and on the lines of the Government scheme—a grouping, whether into ten regions or twelve regions—is essential. The industry has already had to wait several years, and this delay has inevitably had a most frustrating and inhibiting effect upon the people in it. Let us relieve their anxiety as soon as we can.
Another reason why we must not delay is this. The new and larger gas supply areas are essential because in these days the physical development of gas supply must be planned on a large scale, and physical development is taking place all the time. Gasworks and gas retorts have only a limited life; they have periodically to be reconstructed. Distribution systems have to be extended, and decisions on these matters have to be taken up and down the country, month by month, whether the industry is nationalised or whether it is not. Surely, with our limited resources of to-day, it is essential that this planning should be done on the right lines, not bounded by the parochial viewpoint of small undertakings, but related to the needs of the area as a whole, and particularly to the possibilities of interlinking undertakings by means of gas grids.
I understand, and accept the position, that we are never likely to have a national gas grid covering the whole country. But surely there should be, in many cases, local gas grids, joining up the bigger works and enabling the smaller works to be closed down—except, perhaps, for the purpose of gas storage. It is to enable this kind of planning to be carried out—to promote the technical efficiency of what is one of our basic and one of our most important industries—that I ask your Lordships to give a speedy passage to this Bill. I do not promise—and I have never done so in these nationalisation Bills—that this Bill will lead to reductions in the cost of gas. I make no such promise. That depends largely upon other factors—miners' wages, the price of steel and all sorts of factors which are outside the industry's control. All I predict is that, when these Area Boards are 1098 set up, the large-scale planning of capital development which I have described will enable them to produce gas more cheaply than would otherwise have been possible.
Now I will come to the Bill. Your Lordships will be aware that this Bill received a detailed scrutiny in another place. I have, to my misfortune, read all the debates and, I am bound to say, without much edification. This Bill was discussed in Standing Committee for 127 hours, compared with 60 hours for the Electricity Bill and 45 hours for the Coal Industry Nationalisation Bill. In spite of that length of time, the number of Amendments made was only about three-fifths of the Amendments moved to the Electricity Bill of last year and, to be quite candid, few of the Amendments made were on points of real substance. One can understand that because, of course, large sections of the Bill are based closely upon the Electricity Act, and embody the wisdom of both Houses as applied to that measure last year. Many of the questions of principle which this Bill involves have, in fact, been closely examined by your Lordships on the Electricity Act. I feel that, having regard to the detailed scrutiny and the previous work we have done on nationalisation Bills, this Bill can be presented to your Lordships as a measure towards which a great deal of thought and care has already been directed.
The first clause of the Bill establishes the twelve Area Gas Boards, which compare with the ten in the Heyworth Report. Your Lordships will remember that there were twelve in the Electricity Act, outside Scotland; thirteen were suggested by the British Gas Council in a scheme which they put up to the Ministry some time ago. The main feature of the Bill is that these Area Boards will be largely autonomous. They own the physical assess; they are responsible for gas manufacture and distribution; they have almost complete financial freedom and they fix their own tariffs. In all these respects, the Area Boards are very much on the lines which were advocated in the past by the noble Viscount, Lord Swinton, and the noble Viscount, Lord Ridley, in the case of electricity. The fact—if it be a fact; as I believe it is—that we cannot have a gas grid all over the country, as we have the electricity grid, is one reason why it has been thought possible here to 1099 have this very wide decentralisation. It is the first of our nationalised industries in which decentralisation, in the formal and legal sense, has been carried to this extent. May I make it quite plain that I do not preclude further decentralisation below each of the twelve Area Boards—and indeed I hope that that will take place. That, of course, is an operational matter, which will be settled by each of the Area Boards, who will probably have different solutions to suit the varying geographical and other characteristics of their areas.
The Boards which the Heyworth Committee recommended were even more autonomous than our Boards. That Committee recommended no central body at all, but we have deviated from the Heyworth Report in this respect because we felt that it would be unwise to leave the Area Boards completely in the air, without any central body. Therefore, we have established the Gas Council, a kind of federal body consisting of the twelve chairmen of the various Area Boards, with an independent chairman and deputy chairman. But the Council cannot issue directions to an Area Board save in the rare case of a financial default. Their job is advisory, and to provide common services. For instance, they are responsible for research—and there is no industry in which research is more called for—for training, education and negotiating national wage machinery.
Quite obviously, the protection of the consumer must be a vital matter in regard to all these nationalised industries. In Clause 9 of this Bill, we set up consultative councils similar to those set up for electricity. There are several important features in this set-up. The chairman of every consultative council is a member of the corresponding Area Board. Moreover, the councils are not intended to be mere bodies to receive complaints, but are to be informed about the Area Board's development plans and they are expected to be constructive critics of them. On the Committee stage, no doubt, we shall have considerable discussion on the question of compensation and finance. The basis of compensation proposed is broadly similar to that in the Electricity Act—namely, share-market value for companies and net outstanding debt for local authorities. I readily concede that 1100 it is more difficult to apply it in the gas industry than in electricity, because a smaller number of these companies were quoted on the Stock Exchange. I would call attention to Clause 26, which makes special provision for compensation to companies for war losses. Part IV and the Schedules of the Bill are again a matter which we shall no doubt discuss carefully on the Committee stage. I will, however, commend—and I think this will be completely uncontroversial—the Third Schedule, in which we bring up to date and codify a mass of antiquated gas legislation. This will free the lawyers of the future from hunting up and trying to relate the ancient Statutes of a hundred years ago.
I should like to say a word on Clause 58, because it deals with co-partnership, to which much importance is rightly attached. It has been developed perhaps on a larger scale in the gas industry than in any other industry, and no doubt its future needs careful consideration. Clause 58 as it comes to your Lordships' House leaves the future of co-partnership quite open. We provide that existing schemes are to be carried on for a period after vesting, pending discussions between the two sides of the industry on the possibility of new or modified schemes in each area. Co-partnership cannot, of course, continue precisely in its present form, because the variable profit on ordinary shares, on which most of the schemes are based, will disappear. But there is no reason why a new type of scheme embodying the incentive wage principle should not be adopted. My understanding is—though I am not sure—that the recent co-partnership scheme of the Gas Light and Coke Company was based on a bonus on output; but no doubt we shall hear about that. The preparation of these schemes is to be left to the two sides of the industry in each area, and if and in so far as co-partnership schemes provide an incentive to work and—what is much more important, I think—bring about a feeling that the workers are a vital and necessary part of the industry concerned, then they are all to the good.
The scheme will, I hope, lead to coordination of the fuel and power industries. I put the case for nationalising the gas industry on its own merits, but it is reinforced by considerations and 1101 arguments of fuel and power policy and technical development. The coke oven plants of the National Coal Board and the iron and steel industry are carrying out the same carbonizing process as is carried out at a gas works, albeit in larger retorts. The same products—gas, coke, coal tar, and so on—are produced although there is a special emphasis at the coke ovens on production of so-called "hard coke" for blast furnaces. Where you have coke ovens there should be gas grids, because this, prevents coke oven gas being wasted and saves the construction of carbonizing plant at gas works. Those of us who have seen the Ruhr realise that this type of development has been carried through there on an enormous, scale. In this country, as in so many spheres, we have the idea, perhaps we even started the idea, but we have developed it only in patches. South Wales is a typical illustration. That is a place where there should be a coke oven gas grid but, as I have said, it is most difficult to develop one, with 38 different gas undertakings in South Wales, company and municipal. What we want to secure surely is combined planning between the gas industry and the Coal Board coke ovens. Clause 50 of the Bill, which provides for this, is one of the most important and constructive provisions. It provides an opportunity for these two great nationalised fuel industries to co-operate.
Combined physical planning as between the gas works and coke ovens is essential, but, with regard to electricity, I should be sorry to think that nationalisation was to put an end to all competition. In the debates in your Lordships' House last year, the noble Viscount, Lord Ridley, urged that nationalisation ought not to mean the end of healthy competition between electricity and gas. I agree. It is not proposed that competition should end. So long as we ensure that the tariff structures of the two industries conform with sound economic principles (and that was recommended in an important Report on Domestic Fuel Policy of a body under the Chairmanship of the noble Lord, Lord Simon of Wythenshawe) and so long as we ensure that there is a fair field and no favour to either side, we look forward to competition between these two industries as a healthy stimulus 1102 to enterprise in the best sense of the word.
There is one other factor that I should like to mention. In considering the gas industry we must never forget that one of their most important products is coke, the total output of which from gas works contains, I understand, considerably more heat units than their output of gas. The interesting Report to which I have just referred, made by a body under the Chairmanship of Lord Simon of Wyahenshawe, has emphasised the strong case which exists for developing the use in the homes of the country of greatly increased quantities of solid smokeless fuels, such as coke. This, the Report says, will have the double advantage of reducing that beastly and unnecessary evil, the smoke nuisance, and also of promoting the more efficient and economic use of fuel. We look forward to the nationalised industry developing to the full this important field of activity, which provides another concrete example of what we are aiming at when we use the somewhat elusive phrase "fuel and power policy."
That leads me to my final point. As many of your Lordships know, the carbonization process carried out at gas works and coke ovens is a source not only of gas and coke but of chemicals and byproducts, bewildering in their variety and importance. From coal and tar and benzole we can get products ranging from dyestuffs to plastics, and from aviation petrol to the sulphanilamide drugs, which have made such a difference to medicine. The gas industry is thus a vital source of raw materials for our chemical industry and, as such, has a tremendous part to play in our national economy. Some of the processes and some of the products are already well-established, but, as I have said, what matter in this industry are research and development. We attach the greatest importance to the research activities of the Gas Council and the Area Boards, dealt with in Clause 3 of the Bill. One interesting possibility which has often been discussed is that of producing oil from coal. Your Lordships may be surprised to hear that the gas and coke oven industries between them, in the creosote-pitch oil-fuel, and the petrol which they produced, contributed to a marked extent to our war-time oil resources.
1103 I myself, as Chairman of a committee under the then Mines Department, had the interesting experience early in the Second World War of examining the so-called Fischer-Tropsch process, one of the oil-from-coal processes which had been developed by the Germans in their drive for economic autarchy. This process is of considerable interest to the gas industry because its starting point is water gas, one of the gases which at the present time the gas industry manufacture on a large scale. At present, the process as a peacetime proposition is, I believe, considered uneconomic, but I am also told that variants of it are now being investigated on a large scale by some of the oil interests in America. For all we know, the scientists' dream may one day come true, and we may be able to obtain petrol on an economic basis from our gas works. That is one of the fascinating possibilities opened up before us if we get the structure of this industry right.
Therefore, I ask your Lordships to give this Bill its Second Reading and to examine it in Committee with all the care which the importance of this industry demands. Our object is that the technical men should be given a free run in this industry, an industry which is unrivalled in its traditions and its spirit of service, but which for many years has suffered from a Victorian scheme of organisation. I beg to move.
§ Moved, that the Bill be now read 2a.—(The Lord Chancellor.)
§ 3.33 p.m.
§ VISCOUNT SWINTON
My Lords, the noble and learned Viscount the Lord Chancellor always expounds any Bill to us with clarity and charm; and to-day has been no exception. He has fully lived up to his own high standard of exposition. He always interests me, as I am sure he does all your Lordships, in his presentation of these Bills. He possesses three styles of presenting a Bill. He appears to divide Government measures into three classes. There are the Bills which he presents with conviction; there are the Bills which he commends to us with distaste; and there are the Bills which he submits to us with resignation—although perhaps I do not use a very apt phrase. Should I rather say that there are Bills which he submits to us "upon instructions." Frankly, after hearing the very interesting 1104 speech that we have had this afternoon, I am still left in some doubt into which of those three categories, in his estimation, this particular Bill falls.
Certainly it seems an odd time to produce this Bill. I do not for a moment deny that this measure was in the Government's programme of "Let us look at the past," or "Let us face the future," or whatever it is, in the prospectus. It was there; it was in the memorandum of association; and that is a complete justification that what is proposed to us is, if I may use a legal term, intra vires. But that does not in the least mean that it is necessarily wise or sensible to do it at all, or to do it now. If I may take an exact parallel, which I think will appeal to everybody, it is quite usual for a limited company to have in its memorandum of association wide powers to engage in this or that kind of business. Nobody can challenge it for doing something which is outside its powers if it engages in any of the enterprises for which its memorandum authorises it. But if a company within its powers engages in a particular line of business and loses an enormous amount of money over it, and does not render very good service, and if it tries that line of business once, twice, thrice, each time with increasing failure and losses, then, though it might be well within its legal powers to continue on that downward path, it would not be very good business so to do. If it did so, the shareholders would have something to say. I think that that is an exact parallel.
The nationalisation experiments have been tried. The noble and learned Viscount the Lord Chancellor said, "We should wait and see. Some of them have been going only six months. One of them has been going only two years." All I can say is that, so far, each one has proved itself more unsuccessful than the last. Take coal. In spite of an enormously increased price, enormous losses have been made. We are waiting for the report to come out. We shall see with great interest what it says. Forecasts are that the losses will be in the neighbourhood of £20,000,00. I do not know. But certainly heavy losses have been made in an industry where, in the past, when there were losses, the shareholders carried them, and when there were profits, the Chancellor of the Exchequer took a very good "whack" by 1105 way of Income Tax. Not only that: there is evidence of gross mismanagement. I am not going into this now, but take as an instance something which became notorious in the Press the other day—the belting which was ordered in colossal quantities when it was not wanted. It was not ordered from British industry, which would have been bad enough; it was ordered for dollars. That is one example.
Next, take transport. No doubt there is a big deficit there. Then aviation—a smaller business. Under the recent management, there was a loss of £10,000,000. Under the new management, we hope that the loss will not be quite so big. Then there is electricity. We do not know whether there will be a profit or a loss here. It has not had long to run. But one thing at any rate we have seen. Everybody in the country has already had to pay a good deal more for his electricity—that is, if he gets it; when there is not a national breakdown. We are not at the end of these rising prices. The noble and learned Viscount the Lord Chancellor wisely said to-day that he was not going to promise anything about cheap and abundant supplies of gas or make any forecast about what it was going to cost. That is interesting. During the General Election your Lordships will recollect that the slogan was "Cheap and abundant." I suppose that next time the slogan will have to be "Dear and scarce"—or should I say "Dear and in short supply"? That is all recognised, and the Lord President, the managing director of the undertaking, with his eye upon the General Meeting (which cannot come too soon), is giving the advice "Go slow." Even Mr. Tanner, from the Left Wing, is giving the same advice. The Government would be well advised to take the advice of those two very shrewd politicians.
Look at the Ministry to which this scheme is to be given—the Ministry of Fuel and Power. That Ministry already have on their hands the whole muddle of coal and electricity, and, after eight or nine months, have not yet produced the regulations about electricity compensation. They cannot even do that for their employees. And this is the Ministry which is to be overloaded with this further load of gas. I can well imagine that the State electricity undertakings do not want the 1106 competition of efficient gas companies. I understand that industrial relations are not very happy in the nationalised industries, in spite of all that was hoped of nationalisation by those who believed in it, and, I may say, even by those who hoped but did not believe in it. It certainly does not seem to be doing anything to make the industries happier. It is remote and impersonal.
The relations in many gas companies have been happy, and in some companies particularly successful. A variety of co-partnership schemes have been developed and extended over many years, taking the form which the management and workers in each company have found to be best suited to make an effective working partnership in which the worker takes his place as an active and interested partner. I can well understand that that is a remarkable and most unwelcome contrast to what obtains in the nationalised industries. That is going to be swept away. I understand that some of these co-partnership schemes may for a time be kept in being by regulation, but the Lord Chancellor himself explained that, by the very fact of nationalising the whole of the industry, you make it impossible to carry out co-partnership on the basis on which the great bulk of these co-partnership schemes are carried out. So that must be swept away, and the worker partner must lose, both socially and financially.
There is another kind of partnership and incentive. In this industry there has been a very effective link between dividends and prices. I will not trouble the House with details of it. There are various systems, but the broad principle is the fixing of a basic rate which may be earned but, to increase that rate, the company has to reduce its price. That was a very effective link between the consumer and the producer and a good way of stimulating efficiency. Of course, that goes. All this surely makes it rather odd that we should have this Bill now. To the economic and social arguments against the Bill I must add one of national finance The Chancellor of the Exchequer certainly wishes to improve Government credit, to keep the rate of Government borrowing down; another aspect of the same problem being to improve the prices of Government Stocks. It seems a very odd way of doing that, to go out of your 1107 way to add a new, unnecessary and unwanted Government stock. There is an enormous amount of Government stock of one kind or another, and to add to that by the creation of unnecessary and unwanted Gas Stock seems a very odd arrangement.
The Lord Chancellor made great play with Sir Geoffrey Hey worth's Report. I say frankly that, able man as Sir Geoffrey Heyworth is, I do not necessarily regard his Report as inspired word which we must take without criticism. Certainly the Government have not so taken it. The Lord Chancellor spoke as if the only point on which they had departed from the Heyworth Report was that they had created twelve regions instead of the ten that the Report recommends. As a matter of fact, they have departed from the Report in a great many vital particulars—particulars which the members of that Committee said they regarded as vital. Let me take just two or three. The Committee said that the Gas Boards must be absolutely independent. In their own words they say that you must:Place responsibility for efficient operation squarely on the shoulders of the Board".To prevent diffusion of responsibility they say there should be no central board and no co-ordinating committee. Of course, the Bill does the exact opposite.
The Committee state that the Boards should be financially independent. They are not; they are dependent upon the Gas Council. After all, what is the test of financial independence? It is whether you can raise your own capital. They cannot do that; they can borrow it from the bank with the leave of the Minister, but they cannot raise their own capital. The capital has to be raised by the Gas Council. Then it is said that the Boards should have complete freedom of operation. They have not; they are liable to control by the Gas Council and to direction by the Minister. I would like to quote these next few words, because the Committee laid great stress on the importance of the complete separation and complete independence of the different fuel industries. Paragraph 277 of the Report says:One further cost consideration seems relevant. Competition between the fuel industries is the main stimulus towards efficiency on which these proposals depend. This is important for the gas consumer, but it is 1108 equally important in the national interest that the other fuel industries—electricity and solid fuel in particular—should be stimulated to the maximum extent by competition from gas.It is a very odd way in which to stimulate competition, to bring all the industries under the same monopoly control. I do not know, but I venture to think that if that were done in private enterprise, we should be told of the wickedness of combines and cartels. Certainly they must be investigated and controlled if they are doing mischief. But this is by far and away the biggest combination and cartel of the whole lot—although, of course, when the Minister does it, it is not a cartel; it passes under the blessed name of "co-ordination," and the result is far worse for the tax-payer and the consumer.
Then the Heyworth Report said that the chairmen and at least three members of each Board should be full-time appointments—and quite right too. But that goes by the board. Finally, although I do not take all the differences, but I have taken some pretty important ones, they said that compensation should be fair to the owners and should be assessed by an impartial authority. Of course that would not do. I think I have said enough to show that the Bill cannot be justified on the Heyworth Report.
As the Lord Chancellor has invited us to do, we must give the Bill careful consideration in Committee. I do not want to deal with any Committee points to-day, but the question of compensation is so important that I think I ought to say a word about it. As I have pointed out, the Heyworth Committee said that there ought to be fair terms settled by an impartial authority. If that means anything it means fair value—true value. Now the Government argue that you should take the Stock Exchange quotation, but they admit that in the great majority of cases there is no Stock Exchange quotation so you have to do a very odd thing. You have to take the nearest equivalent, assuming that there was a Stock Exchange quotation—whatever that may be. We have seen already that injustice—in some cases great injustice—was done in the case of electricity, because Stock Exchange values did not necessarily correspond with the real value of undertakings. Certainly that applied particularly in the cases of the most efficient companies and the most 1109 conservatively-managed companies which had ploughed back great reserves into their businesses. To put it another way: the better you managed your business the worse you were treated. That does not seem to me to be a good principle. It may be, of course, that, here and there, someone receives too much. That is equally wrong, and it results from departing from the simple principle which has always been applied hitherto—namely, finding what is the real value of the undertaking?
In the case of electricity, there was a specious excuse to the effect that, broad and large, what: the Government bought up were securities quoted on the Stock Exchange, and therefore, if compensation equivalent to Stock Exchange quotation was given, a fair thing was being done. Here there is not even that specious excuse. What are being bought are, for the most part, not securities quoted on the Stock Exchange. The great majority are not quoted at all. Even out of the minority that are nominally quoted, I am told that there are some in which there have been no dealings for years. Yet we have to follow this very curious formula. The values must vary greatly. Assets vary; reserves vary; so do competence of management, the prospects of the undertaking and all those things which go to make up what is likely to be the net maintainable revenue, which is the real basis of any valuation of a public utility. It is true that, in the case of gas, all the undertakings are freeholds, and in that they differ from electricity. That difference was one of the arguments used by the Minister in the debate on the Electricity Bill. His argument was that he could not give the valuation ascertained by arbitration but must take the Stock Exchange quotation. He said there were differences in leaseholds and different franchises. But that is not the case here. The very argument used in the case of electricity against taking the real valuation, the arbitrated valuation, is an argument for doing it here, in the case of gas. I say without hesitation that the only fair way of ascertaining this value—not only fair to the owner but fair to the taxpayer who has to foot the bill—is to take what is the real value in each case.
What does the Bill provide? By Clause 25 (9) the Bill provides that, in the absence of agreement, where securities are 1110 not quoted, the value or price must be settled by arbitration. Then, when you have found the value, you have to translate it into the theoretical equivalent of a Stock Exchange quotation, assuming that such a quotation had existed. How is a theoretical Stock Exchange quotation to be arrived at? In the first place, the arbitrator has to find the real value. Why not leave it at that? Why not leave it at what the arbitrator finds the thing is worth? Why make him do this extra theoretical sum for the purpose of turning the value which he found the business to be worth into this theoretical Stock Exchange quotation?
The Financial Secretary of the Treasury admitted the justice of this point in the debate of June 9. If I am challenged on that, I have the report of his speech here. I do not wish at all to misrepresent him, and I will quote what he said. After admitting that the Trades Union Congress had said that the net maintainable revenue was the proper basis for compensation he went on to say:I would again like to say that, if it had been possible, as it was in the case of other industries, to have taken the net maintainable revenue as basis, we should have had no objection to doing that. We want to be fair to all those concerned.There was then an interjection by another M.P. and Mr. Glenvil Hall replied:It would obviously take far too long.Someone remarked:Too long to explain?And Mr Glenvil Hall replied:No, too long to do. It would take some months.But is the fact that it would take some months a reason, or even an excuse, for not doing what is fair and just? We really must not sacrifice justice and equity to the convenience of a young man in a hurry. He was even wrong about his time factor. I do not know how long this would take. If it is right, it is what ought to be done, irrespective of time. Actually what the Bill proposes will take longer, because the arbitrator has to go through two processes. As I have indicated, I want him to go through only one. First, he has to find the value of an undertaking and, having found that, he has to translate it into a theoretical Stock Exchange quotation. Therefore, for the Financial Secretary to speak as he did about taking too long is just nonsense, because in any 1111 case the true value has to be found. It would be shorter and fairer to stop at that, and to pay out in Gas Stock what is the real value.
Your Lordships may well ask why we should engage in all this work of supererogation at the present time. What is the real position? Nationalisation has failed in every industry. The Minister and the Ministry are overworked. As Mr. Morrison has said, what we ought to try to do is to get coal and electricity right; to make nationalisation work. What is the position of gas? I am not saying for a moment that some action is not required; but it must not be the wrong action. There are some very efficient companies and local authorities. Why not leave them alone, financially and in management? They are undertakings which are much the most important, both to industrial consumers and to domestic consumers. I have no doubt that outside those important and efficient undertakings there are a number of smaller ones which ought to be grouped or linked with existing larger units, and the Report says that integration had, in fact, begun. Speed it up, if that is the right way; but do not go and pull down the companies which are giving excellent service to the public, and which have admirable relations with their workmen. This industry affords a real test to the Government as practical planners. They have the chance of doing a real job by leaving it alone where it is efficient and tackling the remainder. They have the other alternative of imposing a theoretical bureaucracy, which has cost the public, as taxpayers, millions of pounds and is to-day costing the public millions as consumers as well. In the light of all that, and of the warning by the wisest and astutest members of their own Government, that in this matter they had better go slow, one would think that economically and politically it was a pretty simple choice, but quem deus vult perdere dementat. Perhaps noble Lords opposite would prefer to have it rendered:Where ignorance is bliss, 'tis folly to be wise.
§ 4.2 p.m.
My Lords, I cannot say that my noble friends on these Benches are very enthusiastic about this 1112 Bill, and I, for my part, am even less enthusiastic. But I suppose that the Bill in some such form as it has been presented will in due course become law. I think we shall all live to regret it. I was particularly interested in the noble and learned Viscount's presentation of the Bill, but for a different reason from that which animated the noble Viscount, Lord Swinton. To me, the noble and learned Viscount made a charming and extremely learned presentation of a Bill to reorganise the gas industry—not of this Bill. He said that this Bill will reorganise the gas industry. Perhaps; but its main object, as I see it, is not to reorganise the gas industry, but to nationalise it. In my view what the noble and learned Viscount said was, in the main, a plea for area organisation, a plea which I think most of us feel is necessary and valid. There has been a need for many years past for a reorganisation Bill. In this country we have examples of modern processes, such as coal distillation, which are in the forefront of the industry in the world. We also have a number of small producing units which are a survival of what might be called the Victorian coal gas period. The fact that these two should co-exist is a considerable criticism of industrial organisation in this country, and in itself is every justification for a reorganisation Bill, but not for this Bill.
On these Benches we feel that this Bill is particularly unacceptable because, whatever the Government may say, two elements which in our view are valuable must disappear. They are two elements which the gas industry were amongst the first to introduce into industrial production: I refer, in the first case, to the principles of co-partnership and profit sharing, and secondly, to the principle of relating dividends, or profits distributed, to the price of the commodity sold. In spite of the clause which the noble and learned Viscount quoted—Clause 58—the co-partnership principle must inevitably go. As I see it, the co-partnership principle involves, as its essential element, a sharing of profits, the bringing-in of the staff of a concern into the sharing of profits made by that concern. It is inconceivable that a profit-sharing scheme can continue in an industry the object of which is not to make profits. Therefore, by definition, that principle must go. And that is a 1113 principle which we on these Benches consider valuable and which should have been retained as a model of what should be done in other industries, instead of being destroyed.
The other and main objection we have was touched upon by the noble Viscount, Lord Swinton—the question of freedom of choice of the consumer, In recent years we have had examples of the pressure put on the occupants of council houses to use electricity rather than gas. There have been biases for certain types of heating. I agree that the old days of coal consumption in open grates should pass, but I cannot agree that the people of this country should be submitted to the direction of any Minister or any body about how their dinner should be cooked. The principle that a tenant should have freedom of choice in cooking and in the heating of his house was enshrined in a Private Act, which I understand is to be one of the Acts to be repealed in the Schedule to this Bill. Even if that were left in, how obvious must it be that when the coal industry, the electricity industry and the gas industry are eventually all put under one hat, however big the head may be that the hat sits on, it inevitably puts in one hand the possibility of directing the fuel, power and heating which all of us are to consume—if, indeed we are to have anything to consume; if, indeed, we are not to be directed to have our dinner in a soup kitchen, because there is not enough heating to go round.
The gas industry organised and legislated for profit sharing and for the consumer's freedom, of choice earlier than any other industry; yet it is that industry which is to be singled out to-day for the removal from it of those principles. This Bill could have been framed in an entirely different manner. It could have been a gas reorganisation Bill. It could have been a Bill giving powers to a Gas Commission—a temporary Gas Commission, I would suggest, and not a permanent body—to reorganise the industry, to continue the principles of amalgamation and integrations of the gas industry which, during the inter-war years, had already begun, and which we would be the first to admit had not gone anything like far enough. Because this process was slow—and it was very largely slow on account of the objections taken by municipal 1114 enterprises to amalgamation—that is no reason why amalgamation should not have been increased by a Bill which would have brought gas legislation up-to-date. Instead, we have a standard model Bill upon the lines of the Electricity Act, and also following the lines of the Coal Act. We have become used to it and, in spite of what the Lord Chancellor has said, I think we remain of the opinion that that model, is, by and large, a bad model, and a particularly bad model in the case of the gas industry.
We on these Benches will not oppose the Bill on Second Reading. It is part of a plan, and we knew at the beginning of this Parliament that that plan, in some form or another, would have to come into effect. But we hope that on the Committee stage, at least, some improvements will be effected, notably in dealing with the injustice in the matter of compensation to which the noble Viscount, Lord Swinton referred. I do not propose to touch on that matter at all to-day, except to express the hope that the clause which deals with the compensation to holders of securities on the analogy of the Electricity Act will this time lie properly applied. We have had two examples up to date of what the so-called opinion of the Treasury is. The opinion of the Treasury on the compensation of holders of electricity stock and transport stock was, quite frankly, a very bad opinion. It is inconceivable to me that the Treasury and their advisers—for reasons which are not known to me, but which may be guessed—stated as their opinion something which was manifestly unlikely to happen, and which anybody could have told them would not happen—namely, that the issue of the stock would give the holders the price they were entitled to have according to the Act itself. In the cases of both transport compensation and electricity compensation the losses suffered by holders as a result of what was stated to be Treasury opinion, as compared with the amount holders were entitled to receive under the Acts, are nothing short of lamentable. It is a discreditable performance which I hope will not be repeated in the case of the gas industry. We shall come to that matter in greater detail no doubt, on the Committee stage of the Bill.
This Bill is the third—and I hope the last, though I fear not the last—of a series of presentations from His Majesty's Gov- 1115 ernment, foreshadowed in the programme of the General Election. The presentations which we have had up to date remind me of nothing so much as the Wagnerian Ring des Nibelungen. We have had the first of these, the Coal Act—or, as it might be called instead of Rheingold, Black gold—and we have; seen the result. In the second of these presentations we have seen Siegfried Shinwell striking sparks on his anvil, and making interminable speeches to the Gods of Valhalla. This is the third presentation—a picture of a well-moulded and well-armoured Brunehilde going up to a Socialist Valhalla in a flame of gas. But, remember, there was a fourth episode. The fourth episode was the culmination of the theme which runs through the whole of the Ring. It was the fight of the underworld, a fight of evil against the rather dissolute and weak Gods in Valhalla. Your Lordships know what the fourth episode was. The fourth episode showed how the forces of the underworld had sapped the pillars of Valhalla. In the same way it will eventually bring down in ruin, in the twilight of the Gods, the Socialist Valhalla that was held out to us three years ago.
§ 4.15 p.m.
§ VISCOUNT CECIL OF CHELWOOD
My Lords, I recognise that any Bill at the present time dealing with industry must be largely concerned with, and must be discussed mainly with relation to, its effect on our financial position. As to that, I am not going to trouble your Lordships. I am going to deal with only one particular aspect of the question. How will the Bill react on the relation of the employees with their employers? That, I believe, is the important issue raised in this matter. The other day, Sir John Stephenson, who I understand is the President of the National Federation of Building Operatives, made a speech which he concluded with these words:The motive force most required in industry to-day is enthusiasm.I believe that to be true. I have always felt, as I have no doubt many of your Lordships have felt, that if must be a very difficult thing for the manual worker in a factory, or in such works as are dealt with by this Bill, to take an interest in the actual operation which he is carrying out.
1116 For the most part, it consists in the constant repetition of certain muscular movements, which are only an element in a process from which ultimately a product of a valuable character is obtained. Unless he can be given some human interest in what he is doing, with full knowledge of all its aims and objects, how can he be expected to work, as Sir John Stephenson says, with enthusiasm? Is not that what is meant by the allegation that he is a wage slave, a mere machine? If so, is that not a grave result, and one which we should consider very carefully? In addition, is it not a fearful waste of power? After all, man has marvellous qualities, both moral and intellectual, which at the present moment are practically unused in most branches of modern industry.
My noble friends who sit near me will no doubt say—at least, I hope they will—that that is precisely what this Bill will cure. I wonder whether it will. "Nationalisation" is an attractive word, but as a mere matter of fact what it means is the substitution of the taxpayer for the shareholder as the provider of the funds necessary to carry on the business. If it I does nothing more than that, I do not see how it will improve matters from the point of view that I am now discussing. It may be some satisfaction to the worker to know that any profits his work may produce will be distributed among some millions of his fellows, instead of among a small fraction of them, but I doubt whether in this country that by itself will make much difference. Unless other changes are made, he will still be a wage slave, though the slave master will be the State. Therefore, I hope very much that by this Bill, or in some other way, we shall do much more than that.
I notice that in the debate in another place some of the supporters of the Bill proclaimed that by Clause 56—oddly enough that was not the clause mentioned by the Lord Chancellor; but it was the only clause, as I read the debates elsewhere, which was relied upon to provide any palliation of the evil that was to be done by this Bill—great changes would I be made. I was encouraged to notice that though the Minister of Fuel, speaking on the Second Reading, could not go further than to say he was not hostile to co-partnership, yet on the Third Reading his Under-Secretary asserted that Clause 1117 56 provided for joint consultation "at every level," and said:I want to see in this industry consultative machinery so designed that it will effectively give a voice to the humblest worker in the industry, and make him feel part and parcel of this great undertaking.That is, of course, the main object of co-partnership. It is, in point of fact, an object which has been very fully achieved by some of the gas companies with which I happen to be acquainted.
The case that your Lordships will have to consider, as it seems to me, is how far that result can probably be achieved by this Bill. In the first place, it is quite clear that all the co-partnership schemes in the undertakings affected by the Bill will be destroyed. Mr. Gaitskell was quite frank about that, and he knew what he was saying, for a deputation consisting of actual co-partners explained to him clearly what such schemes were and what they did. I accompanied the deputation, and we were very courteously received. However, as often happens to deputations, we wholly failed to make any impression upon the mind of the Minister who, as I have already said, thought that whether co-partnership survived or did not survive was a matter of little importance.
May I venture very shortly to remind your Lordships of what co-partnership really means? I will take the case of the South Metropolitan Gas Company, because I happen to know about that. There, co-partnership began about half a century ago, and it started with a purely profit-sharing scheme. That was extended shortly to a scheme for sharing the capital and, later, still further, to give the employees representation on the board of directors. They had three directors out of nine. I observe that in the debates elsewhere that number was rather sneered at as being of no importance. But I venture respectfully to suggest that to be able to elect one-third of the board of directors—especially when you remember that it gives these directors the right to know the full details of the management of the Company—is a useful privilege.
As I think your Lordships have been reminded to-day, the public also have specific protection, first by control of the quality of the gas supplied—originally it was a test of light; it is now a test of heat, 1118 but it is a very rigid test—and, secondly, by the particular provision to which my noble friend opposite referred, that no dividend can be increased unless the price of gas is reduced. That is the point that I most earnestly press upon your Lordships. The effect of this scheme was that the shareholders, the employees and the public were all engaged in a common undertaking in which they were all interested. That is the vital point of the scheme. It is not only theory; the actual results have been remarkable. Before profit-sharing came in, the history of the South Metropolitan Gas Company had been very disturbed. They had had repeated strikes, and very bitter strikes. Indeed, if I recollect rightly, there was a prolonged strike against the introduction of profit-sharing itself, and it was after that was settled that the scheme was established. Since that time, there have been no strikes at all, no serious disputes of any kind, and the Company's history from that point of view has been a blank.
I cannot help feeling—I hope I am not unjust in this opinion—that this has been partly the reason for the hostility shown to it by that type of trade unionist who regards his union chiefly as a righting machine. He may not—and I do not suppose he ever does—desire industrial combat, but he does not like to see any considerable body of workmen too friendly with their employers. It is not merely the absence of strikes and trade disputes. There has also been a growth of various forms of corporate action, such as those which you may see in schools or colleges. There are sports arrangements, provisions for illness and against accidents, social meetings; and, above all, what is called a co-partnership committee—namely, a committee consisting of representatives of the directors and of the general body of workers before which all sorts of questions (what the Bill calls "questions of mutual Interest," including terms of conditions and employment, and any views or disputes on the subject which may have arisen) come for discussion and decision. The members of this committee—and I call your Lordships' attention to this—are, I think, chosen by ballot. In any case, they are chosen perfectly freely by the persons they represent. In that way there is a real human feeling in the carrying on of this organisation—a complete acceptance of the view that they are all 1119 working together for a common purpose of national importance.
I have often heard it said that the success of co-partnership depends on the existence of profits, and that if they disappeared the whole scheme would come to an end. That is not so. For several years during the war, no profits were made or distributed, but the co-partners remained just as much in favour of co-partnership as before. The truth is that the profit motive, whether applied to wages or dividends, is not wicked. I do not think there is anything wicked about that—although some people may seem to think so—and it is not nearly so important a motive as is generally supposed. True, there are strikes over wages, but if you look into them you will generally find that the grievance is not so much a matter of money as a belief that the workers are not being fairly treated. And so it is with dividends. Men like to amassriches as they like to make other collections, and so struggle for profits; but it often happens, especially in America, that a man spends the first half of his life in amassing a fortune, and the second half in spending it.
We hear a great deal about incentives to work, which generally mean an increase of pay. So far as I am concerned, I believe that that is a mistake. A rise in pay may have some effect, but what is far more important is that the worker should feel an interest in his work and have a knowledge of what it means, and, consequently, accept responsibility for its success. The Bill contains provisions to secure co-partners against loss of money by the nationalisation of the industry. It is, of course, quite right that that should be done, but it is a mistake to suppose that that is the main question involved. The main question is what is to be the treatment of the workers. Are they to be treated as human beings? Are they to receive recognition of their wish to participate intelligently in the whole concern? This is a far more important matter than any question of money. That is why I deeply regret what seems to me to have been an irresponsible attack on what I regard as an admirable contribution to the solution of the industrial problem.
And what have we in its place? A Gas Council, who have to deal with the supply of gas all over the country—not 1120 elected by anyone, but appointed by the Minister, who is, of course, himself a delegate of the Cabinet. The councilors are to be persons who have "shown capacity" in various technical matters and—to me a most ominous phrase—"in the organisation of workers" That is the kind of phrase that might have come from some Continental precedent—perhaps even from Moscow. In any case, it is the antithesis of any human contacts between employer and employed. It is obvious that the Gas Council, operating over the whole country and chosen by officials in London, will have no kind of personal contact with the men they employ. If I may be allowed to say so, this seems to me undiluted bureaucracy.
Then there are the Area Boards, each of which deals with a very large area. Each Board is to have not more than seven members—none being elected, but all appointed by the Minister. One, however, is added: the chairman of yet another committee called the gas consultative council. The consultative body is to be much larger in numbers than the Area Board; and I must say, after reading the Bill through, that its duties are a little mysterious to me. There is to be one such council for each area. The members are to be appointed, like every other official, as I understand it, by the Minister; they are to look after the interests of the consumer and are to be a kind of buffer between the chief bureaucratic bodies and the general public. I should doubt whether they will contribute much to the efficiency of the gas supply or the appeasement of the public. Nor can I find that they have anything to do with the workers—the present co-partners in the industry. I do not inquire whether the machinery will be financially successful; that has been dealt with by other speakers; but certainly these organisations, with all their committees and their inter-play, do not appear to me to be likely to be financially successful. I do not think that autocratic control by a Minister in Whitehall is likely to be an improvement in that respect.
I observe that the Lord Chancellor referred to Clause 58 as the great clause which was to be for the protection of co-partnership; but I confess that I am a little doubtful about that. To begin with, the clause deals only with profit-sharing and not with any other aspect of co-part- 1121 nership. Moreover, there is no indication that anybody is to be consulted who knows anything about co-partnership. It is to be entirely the usual form of bureaucratic organization—imposition of government from above, never acceptance of government from below. Nor do I derive much comfort from Clause 56 (the clause more relied upon in another place) which empowers the Gas Council or the Area Boards to make agreements with unnamed outside bodies "appearing to them to be appropriate" There is no indication that such a body as the co-partnership committee are to be consulted, and I gather that only the over-laden Gas Council is to have any power to deal with terms and conditions of employment. Those powers are to be left entirely to the Gas Council, and the only duty of the Area Boards, as I understand it, is to carry out the orders they receive from the Gas Council. I cannot believe that this is the right way of preserving the principle of co-partnership. To my mind this scheme is fundamentally bureaucratic; it is of a piece with much else that is going on. When bureaucracy comes in at the door, liberty flies out at the window.
Speaking on Saturday to a body of Labour and Co-operative workers in Woolwich, the Prime Minister drew a sharp distinction between democracy and Socialism, which he said was the Government policy, and the bureaucratic collectivism practised in other countries. I am not clear what distinction he drew between Socialism and collectivism, but the: distinction between democracy and bureaucracy is very clear and very wide. I can only say that I wish I could see any clear indication that the Government really support that distinction. If this Bill is not an example of bureaucratic collectivism I do not know what is. The Prime Minister went on to say:Whatever we do in government or anywhere else"—I would draw your Lordships' special attention to these words—we can only set free the people to work out their own salvation.That is my belief; and that is why I like co-partnership, and why I very much dislike this Bill.
§ 4.39 p.m.
§ VISCOUNT BUCKMASTER
My Lords, this is not a very auspicious occasion for me, for if this Bill becomes law, as no doubt it will, it will mark the end of a very happy association on my part with all ranks of the gas company of which I am privileged to be a director. Having thus disclosed my interest, I might add that it is but a modest one, so that, if any bitterness tinges my speech, I trust that noble Lords will not attribute it solely to my pocket. I am perhaps a little concerned that the noble and learned Viscount the Lord Chancellor should be dealing with this Bill because, if he will allow me to say so, his methods of persuasion are such that I never find it easy to respond to him, although it has often been my fate to engage him in battle in your Lordships' House.
I have followed closely the arguments in favour of this Bill which the noble and learned Viscount adduced. They follow closely the arguments put forward by the Minister in another place. In substance, he put forward three propositions. The first proposition was this: that the structure of this great industry is inefficient, and that the only remedy is nationalisation. The second proposition was that the only structure is handicapped by excessive; legislation which prevents the maximum of efficiency. The third proposition—and here he seemed to me to be harping rather strangely on one note—was that the suitable structure was nationalisation. Let me take these points one by one, if I may. Out of consideration to your Lordships, I can only do so with brevity, even at the risk of weakening my case. If we take the first proposition, that the structure of this great industry is inefficient, I would ask how many human structures are completely efficient? There are supporters of His Majesty's Government who believe that the Cabinet itself has a defective structure, that it lacks the maximum efficiency. They have not suggested, that a National Government should take its place.
§ VISCOUNT BUCKMASTER
The noble and learned Viscount has paid a tribute to the history of this industry. As your Lordships know, in its inception it 1123 depended upon lighting for its revenue. The introduction of the incandescent mantle at one stroke swept away seven-eighths of the income which it received. Hardly had it recovered from that blow before the introduction of electricity took away from it the field of lighting for all but certain purposes. But did the industry accept defeat? No, my Lords, it did not. It fought back. How did it fight back? It fought back by introducing gas as a method both of cooking and of heating. In so doing, even if we ignore comfort and convenience and the reduction of cost, it rendered a saving of many millions of tons of coal, which was the greatest possible service to the community. But it does not rest there. Year by year this industry spends £500,000 upon research and, by greatly improving the thermal efficiency of its apparatus, it has saved the country many more millions of tons of the fuel of which it so sadly stands in need. That is common knowledge. I need hardly add that the output of gas has, if not doubled, risen by 75 per cent, during the last ten years. There is not very much evidence of inefficiency here.
Let us turn to the other picture which my noble friend, Lord Swinton, has painted in such skilful colours—the picture of the industries already nationalised. Do they form a very happy picture? I submit for your Lordships' consideration the question of coal. The unhappy state of the industry is common knowledge; I will not repeat what my noble friend has said. I am not surprised that Sir Charles Reid was forced to resign and, above all, I am not surprised that the Government have never dared disclose the reasons given in his letter of resignation. They dare not publish it. Then let us turn to electricity. That is something which has been nationalised so recently that your Lordships may say that it is unfair to call attention to it. But I am not in the practice of making points which are unfair. The charges for current were increased almost the moment the Government assumed ownership.
May I tell your Lordships this, if I may digress to the extent of showing, through electricity, what may happen as the result of nationalisation? The electrical industry was faced with greatly increased costs of fuel and of labour but, on the other hand, it had an enormously in- 1124 creased sale of current. As a consequence, the overall cost fell and the cost of electricity to the consumer was tending to fall. There was one company, the name of which I shall be happy to supply to the noble and learned Viscount, which was proposing to reduce its charge—actually to reduce it. Then nationalisation was introduced and now in many areas throughout the country there is a staggering increase. We get nothing but prayers, appeals and exhortations. "Cut down your current. Do not do this. Do not do that. Do not keep warm. Do not light your offices. Do not heat your house. Do not go to the pictures" That is the picture you get under nationalisation. If that does not satisfy, may I, with your Lordships' permission, turn to France, of which I have some knowledge? Gas has just been nationalised in France. What is the result there? A big increase—but not in output. There is a 20 per cent, increase of workers, but not a single extra therm produced. That is nationalisation. I suggest to your Lordships that there is not one particle of evidence to suggest or to show that by nationalisation this great industry can make itself more efficient in any way whatever.
The second point was that this industry is over-burdened with legislation. I would like to have the advantage of the presence of the noble and learned Viscount, but unfortunately he is not here. I must call his attention, as I did before, to this question of the Heyworth Report. He said that it recommended still tighter control. I must just remind your Lordships that other Committees had reported in quite other terms. I think your Lordships will accept Mr. Evershed, K.C., who is now Lord Justice Evershed, as a man of some accuracy. Speaking before the Second World War, he said:There have been a number of inquiries by a number of different bodies, including Joint Select Committees of this House and the House of Commons, and you find consistently throughout that period of time the view taken that the gas industry should be relieved of fetters which were imposed upon it.As I say, there were a number of Committees, not one.
It is true that the gas industry is tightly fettered by control. You have a position where the areas of supply are defined. Most of the companies operate under Statute. There is control of the calorific value of the gas. There is control of the bye- 1125 products. There is control over the issue of capital. There is limitation of dividends. The control is so complete that I cannot visualise it extending any further. It is more complete than that obtaining in any other industry, excepting in the case of water. When there is so strict a measure of control, why is it necessary to nationalise gas? We do not know what the real answer is, but I think that it can be guessed without much difficulty. The Moloch "Nationalisation" demands yet another victim. Steel is not yet ready for the sacrifice so gas, an equally innocent and unwilling victim, is offered up instead.
The final point made by the Minister was that nationalisation provided the only structure which in fact was suitable. I find it difficult to believe that under nationalisation there will be the intense and active competition which has existed hitherto. In my own company we are subjected to the most intense competition. The electricity in our area is run by the local authority, and I venture to suggest that under those conditions we have benefited. It has kept us alive, and it has kept us alert; it has made us sensitive to the demands of the consumer. I feel certain that the consumer has gained, as each side has been vying with the other to try and produce the best and the cheapest product for his use. Your Lordships will not have forgotten that before the war we had the engaging and entertaining figure of "Mr. Therm" who was always "at your service," prepared to supply hot water or heating. He was a product of advertising resulting from intensive competition. I can only feel that under nationalisation we shall be reduced to a common level of frigidity, and that "Mr. Therm" will be rechristened "Mr. Isotherm."
We come to this question of compensation, to which I feel it a little difficult to address myself, partly because in a sense it affects me and partly because my noble friend, Lord Swinton, has dealt with it in a manner at once cogent and convincing. I would say this: that, having been privileged to be a member of the Council of the Stock Exchange, with which I have no connection now, I hold the opinion that Stock Exchange prices can never be a fair basis for compensation for an unwilling seller. The point I wish to stress is the unwilling seller. Stock 1126 Exchange prices do not reflect the full potentialities of a company, they do not reflect the full value of its assets and, above all, they cannot reflect them in the case of an industry which is going to be nationalised. The prices are then depressed because it is to be taken over. May I take an instance? The Gas Light and Coke Company, with which I have no connection, has on an average paid 5 per cent, for over one hundred years. Is it really suggested that the price of its shares would have fallen to 21s. 3d. or anything like it—I agree that on one basis they can be taken at 23s. 3d.—had it not been for the threat of the act of nationalisation which the Government proposed to perpetrate?
Then we come to this question of directors, upon which I feel I must say something. May I first say, in case it may be thought that I am inflamed by personal loss, that since I have had the privilege to be a member of your Lordships' House I have trained myself to accept the financial assaults made upon me, and that any robbery, provided it is of a modest nature and within the limits of my pocket to withstand, I accept with a reasonable degree of equanimity. I would commend that philosophy to those of your Lordships who have not yet found it prudent to adopt it. I would point out, however, that a director has a definite contract of service. Legal opinion has teen taken on this point, and it seems to me, at least—and I have no wish to use harsh words—an unfortunate thing that a contract of this nature should be cancelled, when no director would attempt to behave in such a way towards an employee and when we know perfectly well that the Government would never dare to take such a line with a member of a trade union.
But, not satisfied with breaking these contracts, the Government see fit to call these unhappy people "guinea pigs" as well. While we can accept robbery with a reasonable degree of equanimity, it seems a little hard that opprobrium should be added to it. May I say, in all sincerity, that the only directors with whom I have had contact have had a long, wide and technical experience of the gas industry? There is not one of them who is not a man highly qualified. I am myself perhaps an exception, but I hive tried to render service in other ways. It 1127 may have been thought that the Government was desirous of replacing the directors with a race of supermen. But what is the position? When it was proposed in another place that either—not both—the Chairman or the Deputy-Chairman of an Area Board should have technical knowledge of gas, the Amendment was resisted. They need know nothing at all about it. I leave it to the judgment of the community and to the future as to what will happen when you have replaced the guinea pig in theory by the rabbit in fact.
I feel some brief reference must be made also to co-partnership, with which the noble Viscount, Lord Cecil has dealt with such skill. I was privileged to be on the co-partnership committee of the company of which I am a director, and there I had considerable contact with the workers, which was a great source of encouragement to me. I think it only right to say that they were good enough to express their regret that this friendly relationship between the directors and themselves should be so rudely severed. But it is time we faced the blunt truth, and the blunt truth is that the unions do not like co-partnership and have no intention whatever of allowing the Government to perpetuate it. My, company did not belong to the Association of Gas Employers—that, I hope, is its correct title—which would be the employers' union. It did not recognise the workers' union, although of course the workers were entirely free to belong to it, and many of them did. What happened? We were brought up before the Arbitration Tribunal on a number of charges which, to all appearances, were faked. At a cost of a considerable sum of money, we won on every single charge. We could not lose because we guaranteed the basic wage, with the benefits of co-partnership in addition. We were brought up only because of the trade union's dislike of co-partnership. I have been present at the meetings and have heard the workers say that trade unionism and co-partnership can never march hand in hand. Under co-partnership the man's interests dictate that he should do his best for the company, and trade union membership implies that trade union interests must come first. I am sorry indeed that this great and constructive measure for the benefit of the worker and, 1128 as I believe, for the community may (whatever this present clause may do), through pressure of the trade unions, cease to exist.
There are also in this Bill certain features about compensation to which I feel I should briefly refer. I am by no means happy that those who should receive compensation may be denied it by being offered alternative employment which they feel unable to accept. I can visualise, for example, the man who is secretary of a company, let us say in London, being offered the secretaryship of a company in Blackpool. He may rightly and properly refuse to accept it, in which case, as I understand it—and I shall be corrected if I am wrong—he may forfeit the pension to which he is otherwise entitled. Nor am I satisfied that the provision for compensating employee-directors is adequate or just. Some slight concession in this regard has been made, but, whatever may be done and will be done in the way of injustice to other directors, may I at least put forward a plea that those who have worked their way up through the company and have become directors shall receive the measure of fairness and justice which, after all, is but their due.
In a rather hasty and imperfect way I have attempted to deal with this matter as I see it. But I believe the greatest danger of all has not yet been fully appreciated, and that is this. When industries are nationalised, under the present Government, an "iron curtain" falls. When questions are asked in another place about those industries, the Minister resents giving the information which is sought, and resists if he can. Thus, the citizen is denied access to information which it is an elementary principle of democracy that he should receive. So, as the great basic industries of the nation pass under State control, each Minister becomes a dictator in his own sphere, imposing on the community a despotic and even unjust conception of Socialism, and slowly the ordinary citizen will realise that the last vestiges of freedom are disappearing. In the words of one of our greater poets, he will feel theshades of the prison house begin to closeThe gas industry is not ashamed of its past. If left unmolested, it is not afraid 1129 of anything that may lie in front of it. There are not many things which it does ask, but this it docs ask in all sincerity—that it should itself be allowed to effect any reorganisation and that in the future it should in freedom be allowed to supply the public that in the past it has served so well.
§ 5.0 p.m.
§ LORD CALVERLEY
My Lords, like the noble Viscount, Lord Buckmaster, I would begin by declaring my interest in this industry. He has declared his interest because he is a director. I declare my interest because I am a member of the National Union of General and Municipal Workers—the Gas Workers' Union as it used to be called. The noble Viscount has put before the House a very overdrawn picture as to what has happened. True, he has paid a just tribute to the Gas Light and Coke Company, and has spoken of the fact that it has been enabled to pay a 5 per cent, dividend for so many years. He might have gone on to say that the Company has been able to pay that dividend because, under Act of Parliament, it was recognised as a monopolistic undertaking and its profits were curtailed—and quite rightly so. Moreover, any over-plus of profit, it was directed, should be diverted in other ways.
I would remind the noble Viscount that to speak of "private gas companies" is really a contradiction in terms, because they were, in fact, public utility companies. He is quite right in saying they have been able—under what perhaps I might call a "most favoured nation" clause—to operate and to flourish and to do good work in this country. And I am not going to underrate that work. At the same time, I would point out that there has been very little mention of another section of the community associated with the gas industry, a section which has rendered equally as good service as that rendered by the noble Viscount;—if he will forgive my saying so—in his capacity as a director. He has spoken about councillors and has called them "guinea pigs" He may do so if he like. He has said that they are devoid of technical knowledge. Well, he may say that also, if he likes. I want to say that if he remembers anything about the days when his noble father was connected with Keighley 1130 and similar places in Yorkshire, these undertakings——
§ VISCOUNT BUCKMASTER
Would the noble Lord help me by telling me what it is he is trying to say? If he wants, to attack me in some way will he please do it? I am not connected with the Gas Light and Coke Company, as I have pointed out. If the noble Lord is asking: "Has the worker in the industry done more than I have?" the answer is "Yes."
§ LORD CALVERLEY
The noble Viscount has mistaken what I have said. I never said that he was a director of the Gas Light and Coke Company. He stated quite clearly that he was not, and I am not hard of hearing. We have listened to the noble Viscount for twenty minutes, and he has not had a word to say for these municipal undertakings. I feel that I am justified in saying a word on their behalf. At the outset, I would say, frankly, that there is a feeling of suspicion in municipal circles that His Majesty's Government are treating these undertakings rather shabbily. The noble Viscount, Lord Buckmaster, has belittled I and has drawn a lurid picture of the workers and I wish—
§ VISCOUNT BUCKMASTER
I have never belittled the workers in my life. I said that they were my friends. I wish the noble Lord would keep to what I said.
§ LORD CALVERLEY
The noble Viscount will read the report of his speech tomorrow. I am not going to apologise now for him. He can do it himself afterwards if he wishes. I have a greater regard and a greater respect for the noble Viscount, Lord Cecil of Chelwood, and when he speaks of co-partnership in this industry I listen to him with great respect. He told us that there was a strike at the works of one great company because an effort was made to introduce co-partnership. The noble Viscount, Lord Buck-master, might have been able to tell him why the men went on strike. The noble Viscount's company in the "good old days" paid a minimum wage of anything from 21s. to 24s. a Week to men who worked for the company. And, be it remembered, they had to work with prehistoric equipment. They used the old horizontal retorts, for instance; now, of course, the vertical method is employed 1131 in all up-to-date gas undertakings. That is one reason why it will be well for members of this House, and people outside, to realise that there is a grounded suspicion in the minds of these people—they may have too long memories of the bad old days. These people are somewhat suspicious, as I say, and when they hear of co-partnership with plenty of "co" and very little "partnership" it seems to them that there is a smell about it which they do not like. That is one reason why this Gas Bill is one of the most appropriate measures which could be introduced, since the private or public utility companies were largely controlled by the State with regard to profits, capital, sinking funds and so forth.
The great municipal authorities, also, were able to control and ran their gas undertakings through what have been called "guinea pig" councillors. They were so-called, I gather, because they may not have been technically minded. Nevertheless, they rendered great service to the community in discharging their duty, whether as councillors or aldermen. And these people helped to provide cheap gas. There are honourable exceptions, such as the Sheffield Gas Company, among the private utility concerns. That undertaking, because it was up to date in its methods, collected gas from the coke ovens surrounding Sheffield and was able to provide gas at a cheaper rate even than some of the municipal undertakings. I make the noble Viscount, Lord Buckmaster, a present of that fact. But it was certainly high time that there should be co-ordination, or call it what you like, of these public utility companies and the municipal authorities. Consider the absurd things which happened in the West Riding of Yorkshire. There we have a group organised by capable business men, who will still operate when this Bill becomes an Act of Parliament—the West Yorkshire grid and the great authorities, like Leeds and Bradford, with their municipally owned undertakings. There was difficulty about using the public authorities' pipes, because the grid was not municipally owned. But to-day they are co-operating. One public authority took 2,000,000 cubic feet of gas from the grid when it needed it.
I listened with great interest to the speech of the noble Lord, Lord Rennell, 1132 and I admired him because I thought that in his illustrations he was not the real thing, but a pocket edition of Brendan Bracken. But let us get back to gas, and stick to it. There have been a fair number of leakages of "gas" this afternoon, on electricity and co-partnership and other things. To-day we find that the men occupied in one of the most distasteful trades, stoking and making gas, are more contented. The noble Viscount, Lord Cecil of Chelwood, was right in saying that the most recent strike in the gas industry was not so much about wages as about conditions. That is as it should be. There should be no strikes at all, but, if we are to have them, let us have them about the improvement of the conditions of labour.
The noble Viscount, Lord Buckmaster, tried to create a bogey about bureaucracy, but in this Bill the Government are trying to see that, through the appropriate councils, the people control the production of gas. The people of this country, and the workers in the industry, are of one mind—that in this Bill we are doing a good job of work. I am not concerned with the companies mentioned by the last speaker. They are powerful enough to look after themselves, and will do it. I ask the Government to dispel the fear which occupies the minds of those in touch with the municipal production of gas, that we are not having a fair deal, and to say that the interests of the municipal undertakings will be safeguarded. I hope the municipal authorities will be suitably compensated.
§ 5.15 p.m.
My Lords, I confess I found it difficult to follow all the arguments of the noble Lord who has just sat down. We on this side are much in favour of everything done by the municipalities in the production of gas. They are most efficient. The first and lasting impression gained from an examination of the history of the gas industry—and I have examined it pretty closely during the last few months—is the complete futility of the idea that nationalisation will either improve conditions in the industry, lead to the supply of cheaper gas, or in any way improve the efficiency of the industry. As has been pointed out by a number of noble Lords, this industry is already largely controlled by statutory regulations, and in addition rigid control 1133 of dividends and the price of gas has been in operation for years. It is true that certain reorganisation could take place in the industry, but certainly not in the manner outlined in this Bill. This was made very clear by the noble Lord, Lord Rennell.
But why disturb an industry which is functioning extremely well, which has had few, if any, industrial troubles, and which is already co-ordinated by an excellent trade organisation known as the British Gas Council? This Gas Council is a national organisation, the members of which include both local authorities and companies responsible for 95 per cent, of the total production of gas in the industry. The activities of the Council extend to the development of the use of gas, the formulation of policy, the promotion of research, and the maintenance of supplies and materials. Here we have an excellent co-ordinating authority who thoroughly understand the industry. I see no reason to suppose that the new Gas Council proposed under the Bill will be any more efficient or produce a better policy for the industry.
I would suggest that the main reason for the nationalisation of this industry is not so much the completion of the trilogy of fuel and power, but rather the pressure which has been put upon the Minister of Fuel and Power by the National Union of Mineworkers. The National Union of Mineworkers have been anxious for years to obtain for the coal industry some degree of control of the coal carbonization activities of the gas industry. What is more, they are also anxious to lay their hands on the profitable market which has been established in by-products by the gas industry. In the past, competition in the coal industry has ensured the supply of good quality coal at reasonable prices to the gas industry, but this, of course, has now disappeared under the operation of the Coal Nationalisation Act. The Coal Board is now in a position to charge what it likes to the gas industry. With this new scheme of nationalisation, which will bind the industry more closely to the powerful coal industry, there is little doubt that gas will become the Cinderella of the great monopoly of fuel and power, the price of gas will be increased, and consumers, both in industry and in the home, will suffer.
1134 It is true, of course, that the Heyworth Report in 1945 recommended a scheme of integration which had a certain similarity to the nationalisation scheme as set out in this Bill. But it put forward many safeguards. The noble Viscount, Lord Swinton, has pointed out the difference in one or two very important particulars between that Report and the Bill. The Heyworth Report recommended that the area should have complete independence. But where is that independence? They cannot even raise money without the consent of the new Gas Council. It must not be forgotten that a year after the Heyworth Report, in 1946, the British Gas Council held meetings in every district in the country, and a resolution against the nationalisation of the gas industry was passed by large majorities. As I have already mentioned, the British Gas Council, who organised these meetings, represent bodies responsible for 95 percent, of the production of gas in the country. It is, therefore, quite untrue to say that the industry is wholeheartedly in favour of nationalisation. On the contrary, the industry has in the last year or two witnessed the very bad effects of nationalisation on other industries, and I think they are now convinced that nationalisation would prove a disaster.
Then, again, what effect will nationalisation have on the employees of the industry? We have had a powerful speech from the noble Viscount, Lord Cecil, who has pointed out how the workers will suffer from the extinguishing of the co-partnership scheme. I think that there is small prospect of anything being done for the workers on a comparable basis; I doubt very much if anything will be done at all. As the noble Viscount, Lord Buckmaster, pointed out, the trade unions do not walk hand in hand with co-partnership schemes. I need hardly remind your Lordships of the extensive Parliamentary control of the industry which exists already. In fact, Parliament has been controlling and debating the affairs of the gas industry for many years, and I believe there are over 2,000 Acts of Parliament relating to the gas industry. The Heyworth Report, which, as we know, is so much favoured by His Majesty's Government, indicates that Parliamentary control is far too great and has in fact retarded the development 1135 of the industry. Why add to this retardation by superimposing upon it a vast bureaucratic system, which is bound to have a disturbing effect on the industry for a number of years and can in no way improve or cheapen the supply of gas in the near future?
His Majesty's Government may ask what proposals we on this side of the House put forward for the industry. It is, of course, true that the industry favours amalgamation in certain directions, and would welcome a further integration. Our answer on this side is to leave well alone. The noble and learned Viscount, the Lord Chancellor, has mentioned that we might have evolution in a reasonable way. And why not? Amalgamations have already taken place in the industry, and under the guidance of the present British Gas Council no doubt further far-reaching steps would be taken which would meet the wishes of the industry. But now it is to be hampered by the dead hand of nationalisation, with all the stifling of initiative and general levelling down which occurs under such a bureaucratic régime. If in the future any real difficulties occurred to prevent obvious and necessary amalgamations, it would be quite easy to appoint gas commissioners with wide powers to enforce the amalgamations in conjunction with an arbitration tribunal. I still think that would be possible, in spite of what has been said by the noble and learned Viscount on the Woolsack. I suggest it would be a far better scheme than burdening the industry with a horde of busybodies and officials, who inevitably appear with all their forms and red tape so soon as an industry becomes nationalised. What is the use of talking about gas grids, which many of your Lordships must know are extremely expensive, and which I think are very unlikely to be seen for a good many years? We have neither the raw materials nor the labour to carry out this expensive work. They are very different from electricity grids.
Day by day we are witnessing the failure of the Government's nationalisation schemes, but, in spite of this experience, we have this Bill to add yet another responsibility to the Ministry of Fuel and Power—already over-burdened by difficulties with coal and electricity—which can only mean confusion, delay and lack of decision. I would suggest that perhaps 1136 the main charge that can be levelled against this Bill is that it creates a monopoly in fuel and power. What steps do His Majesty's Government propose to take to curb their own monopolies? How much better it would be if the gas industry, were left free to compete with electricity! Another serious charge that can be made against the Bill is that there is no limitation on the price of gas which the Boards may charge to the consumers. That is a very important point. As your Lordships are aware, there are at present three parallel forms of control covering the price of gas and dividends, and perhaps the best known is the sliding scale system. The noble Viscount, Lord Cecil, has pointed out to your Lordships what an excellent effect such a system, combined with co-partnership, has had on the industry. That is very true indeed.
Under the sliding scale system a standard price and a standard dividend on the ordinary capital are fixed. If, by economy and skill in management, a company is able to reduce below the standard rate the price of gas charged to consumers, a proportionate increase in the authorised dividend is permitted. If, on the other hand, the price charged for gas is above the standard, the company is penalised by a proportionate reduction in the authorised dividend. Under the Bill this safeguard to the consumer is entirely swept away, and the only thing put in its place is a consultative council, composed of members appointed by the Minister. The noble Viscount, Lord Cecil, said that this is a little mysterious. Well, I think it is, too. The noble and learned Viscount on the Woolsack has told your Lordships that the chairman of the area consultative council would be the chairman of the Area Board. This might be so, but I think the Bill lays down that the chairman will be appointed by the Minister.
§ LORD CHORLEY
I am sorry to interrupt. The noble Lord said the chairman of the area consultative council would be the chairman of the Area Board. I think he meant one of the members.
I may have misquoted the noble and learned Viscount, but I think he said the chairman. I hope the Minister will exercise his authority to appoint an independent chairman.
The noble Viscount, Lord Swinton, has made clear to your Lordships that 1137 the method of compensation on the basis of Stock Exchange values is most unfair, especially as applied to the gas industry. The principle of compensation based on net maintainable revenue should undoubtedly be adopted for this industry, as in the case of coal and Cable and Wireless. The excuse given by the Minister in another place that this method would be far too long, simply cannot be substantiated when set against the time necessary to value undertakings which have no Stock Exchange values. The policy of the Government in the nationalisation of this industry seems to be the establishment of a method of compensation which will prove the cheapest for the Government, but regardless of all justice and equity. Justice has been thrown over for expediency, and a large number of small shareholders will undoubtedly suffer.
The Bill will undoubtedly have a detrimental effect on the export drive. Our export industry is largely dependent upon a plentiful and cheap supply of fuel and power. I maintain that this rigid fuel and power monopoly is bound to have the effect of raising our export costs in many lines of goods, and it would have a braking effect on our export programme. The Bill is a thoroughly bad and unnecessary one. It will create delay, difficulty and confusion at a time when co-operation and development in industry is of paramount importance to the country. It is bound to impose upon the gas industry a considerable addition to overhead charges and expenditure which, of course, the consumer will in the end have to bear. We shall see a vast horde of new officials growing up like mushrooms as they did under the Coal Board. No doubt they will be provided with their country mansions at the taxpayers' expense—a truly delightful scene of garden recreation, combined with big business. The Bill proposes to substitute the bureaucratic control of Whitehall for the well-tried, long-established and remarkably successful co-operation between the companies and local authorities in the production of gas. Up to now the freedom of choice among other fuels has been maintained, but with this new monopoly, how much longer can it be said that this freedom will be continued? The centralisation in the Ministry of Fuel and Power of all three industries, coal, electricity and gas, will, I think, enable the Minister to place 1138 such emphasis as he might choose on any one of them, and it would not be difficult, by giving directions, to manipulate at his discretion the cost of any one of the fuels; and freedom of choice might disappear.
I maintain that His Majesty's Government have produced no evidence at all to show that nationalisation will result in cheaper gas, improved consumer service, or in improved conditions for the workers in the industry. Mutual co-operation between the companies and local authority undertakings—as has been mentioned by the noble Lord, Lord Calverley—has been very successful, and the guiding influence of the British Gas Council has already placed on a national basis many matters which otherwise might have been left to the varying decisions of individual undertakings. It is true that His Majesty's Government have perhaps a so-called mandate for the nationalisation of the gas industry. But I suggest that it would have been far better to have postponed the Bill until coal and electricity were on their feet again, and the Government were in a position to profit by experience in the nationalisation of these industries, rather than to adopt a trilogy of fuel and power which may well have the Greek meaning of three tragedies in quick succession. I suggest that His Majesty's Government would be well advised to postpone the Bill.
§ 5.33 p.m.
§ LORD CHORLEY
My Lords, we have had an interesting and on the whole—with the exception of the speech of the noble Viscount, Lord Buckmaster, who warned us that he was going to approach the subject with an element of bitterness—a good-tempered debate. I do not propose to go over the whole of the ground again. My noble and learned friend made such an admirable survey of the whole situation that it would be to attempt to paint the lily to deal with the points which he placed before Your Lordships' House. I should have thought that of all the schemes for the nationalisation of the basic industries of the country, this was the one which was the least open to objection, and the one which had been most powerfully supported by, so to speak, outside authority.
The Hey worth Committee, despite what has been said about them this afternoon, did recommend—although they did not use the word "nationalization"—that 1139 there should be, in effect, a nationalisation of this industry. They were a perfectly independent Committee. I think they contained only one trade union member who might, perhaps, have been regarded as a protagonist of nationalisation. Certainly all the other members were in no sense committed to any sort of scheme of that kind. The main point which struck them, coming to the investigation of this industry, was the crying need for integration and the impossibility of obtaining that essential integration without some method of compulsion. I was rather surprised this afternoon, in listening to this debate, to find that noble Lords opposite did not seem to be convinced that there was any need for integration. The cry, very largely, was, "Let well alone" In another place—and to some extent this was echoed by the noble Lord, Lord Rennell—the Opposition took the view that integration was very necessary indeed, but that it could be secured by leaving the industry to secure its own integration. If that is so, the industry has not been making a very successful job of it over these last years.
In so far as Government assistance was needed, the Opposition were in full control for practically the whole of the period between the wars, and lent very little, if any, assistance to the industry to secure this necessary integration and co-ordination. The result was the establishment of some five joint boards, from the point of view of the municipalities, with, here and there, a few amalgamations. But surely it is quite obvious that this problem of integration might have gone on to the Greek calends if it had been left to the industry to integrate itself. There are no fewer than 566 gas-making concerns in this country, with an annual production of under 500,000 therms per annum. The Heyworth Committee were perfectly clear that you need at least 1,250,000 therms production per annum in order to secure even the basic efficiency. Therefore, well over 600 concerns in this country could not, by any stretch of imagination, be regarded as sufficiently large for the purpose of efficient gas production. In those circumstances to say, "Let well alone," is surely a counsel of despair.
The fact of the matter is, of course, that the whole structure which was built up 1140 during Victorian times, and occasionally modified, is completely out of date. The noble Viscount, Lord Swinton, the noble Lord, Lord Rennell, and other noble Lords, rather put forward the view that this scheme of maximum prices, sliding scales and basic charges—which all tended to become confused and rolled up together in the course of the debate—was a perfectly satisfactory method. Obviously, the method of maximum charges is the most unsatisfactory method of all, and it is still one which is used by a substantial number—I think no fewer than 150—of the gas undertakings in the country. It provides no inducement to efficiency. Even in the middle years of the last century that began to be regarded as an unsatisfactory method. And the method of the sliding scale—which, of course, is an entirely different method—was introduced so long ago as 1875, and is rather more satisfactory than the maximum price method. But it does not enable the gas undertaker to make any sort of concession to the really large consumer. It has to treat large industrial and commercial users in exactly the same way as the small domestic user. Obviously, that is quite unsatisfactory.
Then, about 1920, came this other method of the basic price, based on a standard under which 5 per cent, is fixed as a sort of basic dividend, after which any additional earnings were to be shared with the consumer and, also, with the workers by way of the co-partnership schemes. This was obviously a more satisfactory method than either of the other two. It is true that the larger concerns have over the last twenty-five years or so been using that method, but even this is not altogether satisfactory. The truth is that you cannot have a really satisfactory method of controlling the prices charged by monopolies. The only way in which you can achieve a satisfactory and reasonable price is by nationalising the monopoly, by making it the community's monopoly and no longer the monopoly of a few private individuals——
§ LORD CHORLEY
Does the noble Viscount suggest that the prices of motor cars 1141 and other objects manufactured by free independent manufacturers in this country have not gone up?
§ LORD CHORLEY
Everybody knows that the price of coal before the war was a thoroughly unfair price, and was only secured at the cost of grinding down and keeping unemployed hundreds of thousands of men. The community now are thoroughly ashamed of what went on during that period.
Now I will endeavour to deal with some of the points which have been made during the course of the debate. The noble Viscount, Lord Swinton, who led the attack with his usual verve and, if I may say so, his usual failure to face the case which had been made by the noble and learned Viscount the Lord Chancellor, based his main argument on the fact that this was an odd time to introduce the Bill. It is never an odd time to do that which is obviously right and necessary. Gas is a very important item in the production drive in this country, and it is essential that the great amount of inefficiency which undoubtedly exists in the gas industry, and which has been brought out perfectly clearly in the Heyworth Report, should be cured as quickly as possible and not left to meander on in the way suggested by noble Lords. The noble Viscount referred with a gibe to what he called "Let us face the past" I sometimes wish that noble Lords on the opposite Benches could be induced, to face the past. If they did, I think they would realise the necessity for a great deal more of the sort of legislation which the Government have introduced over the last year or two.
§ LORD CHORLEY
I do not disagree in the slightest degree with Mr. Morrison. He has been largely responsible for introducing this, legislation—and history will say that he was perfectly right in doing so. The noble Viscount and other noble Lords have spent many years in 1142 industry and commerce, and they know perfectly well that the "Beecham's Pills" method of selling your ware; is a good one. You have only to tell people often enough that "Beecham's Pills are worth a guinea a box," and eventually the public will pay the "guinea" Noble Lords opposite hope to persuade the country that nationalisation has failed; and they take even' conceivable opportunity, quite irrespective of whether the facts fit in or not, to persuade the country to change its mind about nationalisation. The noble Viscount did not produce any real evidence to show that nationalisation has failed in any degree. The only industry so far which has been nationalised of which there has been any chance of observing the working is the coal industry.
§ LORD CHORLEY
The noble Viscount knows perfectly well that that is an exceptional type of industry, and that if he had been in it now, he would have had to nationalise it.
§ VISCOUNT SWINTON
The noble Lord has now definitely challenged me. I had my plan for civil aviation, and it was, not nationalisation. The whole of the money was to be put up by the undertakings. And, of course, they never lost money. K.L.M. are making money, while we lost £10,000,000.
§ LORD CHORLEY
The noble Viscount had to subsidise civil aviation before the war, and money was lost in that way.
§ LORD CHORLEY
The real question with regard to coal is whether the quantities are being produced—and they are in fact, being produced. It is no good the noble Viscount trying to persuade the country that nationalisation of the coal industry has failed. We on this side of the House have said that it would obviously take a number of years to get the coal industry—which had been allowed by the noble Viscount and his friends to get into a completely hopeless and chaotic state in the years before the war—back into a proper and efficient condition. But it is a remarkable thing that the men have been practically achieving the targets which were set for 1143 them—and very realistic targets they were. We are not, therefore, going to accept this continued "Beecham's Pill" type of attack on nationalisation.
The noble Viscount said that there had been departures from the Heyworth Report in all sorts of fundamental ways. We cannot for a moment accept that. He suggested that Area Gas Boards were not independent, but that the Gas Council would direct and control them. That is not so. The Gas Council—which, after all, consists largely of the twelve chairmen of the Area Boards—will be independent. That is a point on which I think the noble Lord, Lord Teynham, was not quite clear——
§ LORD CHORLEY
I beg the noble Lord's pardon. I will deal with them in a moment. The Gas Council, after all, consists largely of the twelve chairmen of the Area Boards. But, in any case, it is a consultative council. Its main job is to advise the Minister. Its job is not in any way to control the Boards. It can advise them, and it can assist them by research work, and by training their workers; but apart from the one event—the possibility of their getting into financial difficulties—the Gas Council has no control over the Area Boards at all. I think the noble Viscount has completely misunderstood the situation when he suggests that the Gas Council is to be a sort of super-controlling authority in Whitehall.
Then again, the noble Viscount dealt with the question of compensation. He said, in the first place, that we had been running away from the recommendations of the Heyworth Report, because they said that compensation should be adjudicated upon by an independent authority. When he developed his argument, however, he pointed out that in the event of a dispute an independent authority would come in and discover what was the value of these properties. His objection was not in any sense to the valuation by an independent committee, but because it had to do what he objected to—some sort of sum in turning the value over to a Stock Exchange basis. It was implicit in his argument that there would in fact 1144 be an independent valuation by this body if such were required.
§ VISCOUNT SWINTON
We shall certainly return to this point in Committee. I should like to know where the Government stand. The Financial Secretary to the Treasury said that to base the value on net maintainable revenue would be a right thing to do, but that it would take too long. I venture to say to-day that it would not take so long. Does the noble Lord accept that?
§ LORD CHORLEY
In my submission, it is really a Committee stage point which we shall discuss at that stage. What I am saying here is that there is an independent tribunal which, in the event of undertakings not being able to reach agreement on this question of compensation, will adjudicate upon the matter. I would point out to the noble Viscount that in respect of electricity, where the compensation provision is practically identical, agreement has been reached in almost every case. Therefore, this is not a problem which is of great moment one way or the other.
The noble Lord, Lord Rennell, the noble Viscount, Lord Cecil of Chelwood, and other noble Lords paid a great deal of attention—and very properly—to this question of co-partnership. It is well known that the noble Viscount, Lord Cecil of Chelwood, takes a keen interest in this important matter. I think that he is President of the Co-partnership Association. For my part, my sympathies are entirely with him, especially when the co-partnership is a real and genuine co-partnership, under which the workers in the industry are enabled to take a real share in the management of the business. Unfortunately, that is rarely so in these co-partnership schemes. I am sure that the noble Viscount would agree with me that in the gas industry it is so in only a very few cases. The noble Viscount discussed at some length the position in the South Metropolitan Gas Company which, of course, is the best of all the cases.
§ LORD CHORLEY
I am sure that the noble Viscount did not mean to suggest that it was in any sense typical of the co-partnership schemes throughout the gas industry. Out of these hundreds of concerns, there are only three cases where there are nominees of the workers on the board of directors. In 99 per cent, of the cases, I think they are purely profit-sharing schemes. The very important side of it which the noble Viscount emphasised, and with which I entirely agree—namely, securing the interest of the men in the work and the management—does not come into it. It is only the profit-sharing side of it which will be abolished eventually, under this Bill. Obviously, where there are no longer any profits, as the noble Lord, Lord Rennell, has pointed out, they cannot be shared, because they are no longer there.
§ VISCOUNT CECIL OF CHELWOOD
May I interrupt the noble Lord for a moment? The question of what will happen is very important. Take the case of a co-partnership committee, with which the noble Lord is quite familiar. Will that go on? Unless some provision is made in the Bill, it cannot go on.
§ LORD CHORLEY
During the interim period, there will be negotiations between the Area Board and the organisations which are interested. If they can come to some sort of agreement as to a new type of scheme—it cannot be based upon profit-sharing, but it may be based upon some sort of financial incentive—there is no reason why that should not happen, as happened in the great scheme of the Gas Light and Coke Company which was introduced only a few years ago. They have gone away from profit-sharing altogether, and they now work upon a system of bonus for increased production. There is no reason at all why, if the Area Board and the representatives of the work people come to an agreement to establish schemes of that kind, they should not do so.
I am not quite clear about what the noble Lord has said; what I understood him to say seemed to 1146 me slightly misleading. We have seen talking of co-partnerships and the sharing of profits. As the noble Lord says, if there are no profits, you cannot share them. That is quite clear. Then he goes on to say he does not see why negotiations should, not be entered into between workers and Area Boards to continue a form of co-partnership as a financial incentive to do more work. If that is so, it means, that that has nothing to do with profit-sharing at all. That is paying a higher wage out of the taxpayers' pockets. It is nothing to do with profit-sharing.
§ LORD CHORLEY
These schemes may make provision for welfare work, for education, for pensions, for management and that sort of thing. The noble Viscount himself pointed out that under Clause 56 (1), the Bill envisages as an important part of this set-up that there should be a great deal of consultation between the management and the workers in the industry. That is why the clause was so much emphasised in the discussions in another place. There is no earthly reason why these two things should not be integrated and a sound scheme worked out between the parties responsible. Under such a scheme, much greater consultation with the workpeople will take place, and there will be an incentives scheme resulting in additional production, which in turn will lead to increased earnings and, possibly, other provisions for welfare, education, and things of that kind. I think that when he looks into this a little further the noble Viscount will find that the position is safeguarded, and that his idea that somehow or another co-partnership is going to be swamped by a bureaucratic scheme is not really correct.
§ LORD CHORLEY
As I pointed out to the noble Viscount, the Bill provides for such schemes. If the provisions in the Bill are effectively worked, and particularly by the representatives of the workpeople whom he has so much at heart, I am quite sure that they will be able to find some way of preserving this enterprise which, in my view, is most valuable.
I should like to put this question, which I believe to be a 1147 helpful question. I cannot see that under this Bill profits are eliminated. As I read Clause 40, the Area Board has to produce at least sufficient money to pay its outgoings. There is nothing to say that it shall not make a surplus. Am I right in assuming that the noble Lord assumes that it is bound not to make a surplus?
§ LORD CHORLEY
Obviously not. But it may make a surplus one year and, if it finds that it is charging too much, it will not charge so much in the future.
May I turn for a moment to the remarks of the noble Viscount, Lord Buck-master? I will not go over all the ground which the noble Viscount travelled with what seemed to me a rather unnecessary amount of heat. He took "Mr. Therm" as his hero, and developed a good deal of heat in that regard. But I would remind him that the word "isotherm" means equal heat and not diminution in heat. What I thought was so unfortunate about his speech was his attack on trade unionism. It is a little unfortunate that at this time a noble Lord who speaks with such authority should make a violent attack on the great trade unions of this country, which have been working so hard over the last years to increase the productive effort and the well-being of the country. I hope that, on reflection, he will agree that his attack was thoroughly unmerited, and will withdraw it.
§ VISCOUNT BUCKMASTER
The noble Lord has challenged me. I was repeating what I heard a worker say at a co-partnership meeting. Many workers said the same thing—namely, that trade unionism and co-partnership do not march hand in hand; and I repeat that. It is not an attack on the trade unions themselves.
§ LORD CHORLEY
The noble Viscount did not limit himself to a criticism which in itself would have been perfectly fair, but what he said was that the trade unions were concerned only with their own interests and not with the interests of the nation as a whole, which is a completely wrong statement.
§ VISCOUNT BUCKMASTER
I am sorry to interrupt again. I said that with co-partnership the interests of the company come first, but that in trade unions the interests of the unions are paramount. I never referred to the nation. I never suggested that trade unions are 1148 disloyal or unpatriotic in any way. The sole purpose of my remarks was to show that if you destroy co-partnership you limit the benefit that the worker receives. My company has paid the basic union wage and has given the workers co-partnership on top of it. The unions did not like it, and I think I am entitled to say so.
§ LORD CHORLEY
The noble Viscount has repeated that with the trade unions the interests of the trade unions are paramount. I deny that.
§ LORD CHORLEY
The noble Lord, Lord Teynham, laid great stress on the municipal gas undertakings. I entirely agree with him, and warmly support what he said about them. Some of the great municipal gas undertakings are very efficient indeed, and are models in the way in which gas production should take place. On the other hand, of course, it would not be true to say that that was true of all municipalities. Some of them are very small undertakings, and are so situated that they cannot, within the limits of their working capacity, reach the highest degree of efficiency. The noble Lord went on to put forward a view which I should like to challenge, very strongly—to the effect that this Bill was put forward because a great mining trade union had insisted that it should, so to speak, bring the gas industry within its clutches. There is not a word of truth in that suggestion, and I am surprised to find that the noble Lord should put it forward as he did.
Nor does this Bill, in any sense that the noble Lord can imagine, bring the gas industry within the control either of the coal workers' trade union or of the National Coal Board, or in any sense of the term make the industry subservient. The Area Gas Boards are completely independent, and the noble Lord and the noble Viscount are quite wrong when they say that they will work under the directions of the Minister of Fuel and Power. The Minister's power is purely to issue directions of a general character; he will not control the detailed working of the Area Gas Boards in any sort of degree whatever. The noble Lord has repeated what he and other noble Lords opposite 1149 have said before in this House—namely, that this will bring the gas industry, which they suggest has been completely efficient in all respects up to the present time, into what is called "the dead hand of nationalisation." That is making the same argument over and over again.
The noble Lord, Lord Teynham, must know perfectly well that the fact that industry is organised and controlled by the community as a whole does not necessarily mean that it becomes inefficient. The noble Lord has had a distinguished career in His Majesty's Navy, and he knows perfectly well that the Navy is a very efficient organisation—a national organisation and not an organisation which is in any sense run for private profit. There is no reason whatever why these great nationalised undertakings should not be conducted in just the same spirit of efficiency as is His Majesty's Navy or, indeed, any other of the Armed Forces of the Crown. We are undoubtedly embarking upon a very interesting and, as I hope, a very fruitful experiment with this and with the other measures. If only noble Lords opposite could bring them- 1150 selves to try to assist us to make this great experiment a success, I am sure that in the long run it would redound to their own credit and to the advantage of the country as a whole. I hope that your Lordships will give this Bill a Second Reading.
§ On Question, Bill read 2a, and committed to a Committee of the Whole House.