HYDRO-ELECTRIC DEVELOPMENT (SCOTLAND) BILL (Hansard, 8 April 1952)

THE EARL OF HOME
My Lords, the Government feel it is generally recognised in Scotland that this Bill can be a very valuable contribution to the social and economic welfare of the Highlands The proposal is that the upward limits to which the Hydro-Electric Board may borrow shall be raised to £200,000,000. That does not mean that the Board can at this stage borrow up to that amount. The consent of the Secretary of State is necessary before any individual scheme is brought forward and before the Hydro-Electric Board can issue stock or borrow with a Treasury guarantee, and the consent of the Treasury has to be given. Therefore, we come forward with this proposal for this reason: that as far as we can see ahead—that is, let us say, about three or four years—there are a certain number of schemes which the Hydro-Electric Board would like to promote. We think it is reasonable and, indeed, essential that they should be able to look ahead for a reasonable time so as to make a carefully planned development scheme and to be able to carry it out.
Of course, when they make their contracts it is essential that they should be able to borrow the money in order to pay the bills to the contractors as they go along. Up to date, £57,000,000 has been borrowed by the Board; £39,000,000 remains to be borrowed for schemes which have already been approved, and another £30,000,000 is before the Secretary of State for confirmation. Therefore, I think your Lordships will agree that we should set a new limit up to which the Board, in certain circumstances and if certain permission has been given, may borrow. I do not think I need say any more at this stage. If any noble Lords have any points to raise in the debate, I will do my best to answer them at a later stage. I beg to move.

§ LORD MORRISON
My Lords, may I just say that, so far as we on this side of the House are concerned, we support this Bill, without any qualification?

LORD CLYDESMUIR
My Lords, may I say a few words on this Bill? In another place there were criticisms offered on the increased capital expenditure likely to be involved, and I would submit that this is a time when every penny of capital expenditure has to be most carefully scrutinised. I admit, however, that this Board has done and is doing most valuable work in the Highlands of Scotland. In particular, I should like to mention the saving of coal. If the electricity had been produced by steam instead of by the use of water power well over 500,000 tons of coal would have been required per annum. As the scheme increases, so will the saving increase. The transport of coal in Highland parts of Scotland is, of course, a costly and difficult undertaking. Therefore I submit that if electric power is to be produced there, there is really no alternative to producing it by water power. The Capital Investments Committee may be relied upon to scrutinise very closely any proposal which comes before them, and, so far as I understand, the Hydro-Electric Board have escaped their strictures. I therefore feel that although every penny must be watched (and a good deal of time was taken up in the examination of this aspect of the Bill in another place) your Lordships would be wise to accept it, bearing in mind the important work of the Hydro-Electric Corporation and the large saving of coal which results from their operations.

§ LORD WOLVERTON
My Lords, in rising to support this Bill, I should like to make one or two criticisms. I do so as a Lowlander, and therefore perhaps I ought not to attempt to interfere with a Scottish debate. But, having been connected with the electricity supply industry for some twelve years, I am rather perturbed—especially after the speech of my noble friend Lord Lovat at the end of January—at the very large amount of land we are having to flood, from the point of view of food production. In studying the Annual Report of the Board for 1950, your Lordships will see on page 1 that nearly half the power which was produced by this Board was taken to the South of Scotland. When we supported the Bill and the setting up of the Board in 1943 we were told that it was 107 largely for the development of the Highlands, and to try and keep people in the Highlands. I am not sure that it has altogether achieved that purpose, because of the 397,000 kilowatts which the Board are producing, they are retaining for their own use in the North of Scotland district some 241,000 kilowatts and exporting to the British Electricity Authority in Southern and Central Scotland some 156,000 kilowatts. I am not going to argue that it is not cheaper to produce power in this way, even with the very enhanced costs—because costs have gone up tremendously. As the Minister of Fuel and Power said in answer to a Question in another place the other day, they are in the neighbourhood of £136 per kilowatt, capital cost, against between £50 and £60 capital cost of a steam station. At the same time, taking all that into consideration, the running of the hydro-station is so much cheaper that the hydro-station wins by a small amount.
At the same time, I think we must consider very closely the question of flooding these areas in relation to the food problem of this country. I hope the Minister can give us some assurance that every consideration will be given in future schemes—and there are a large number now projected. They are working farther and farther north, and the farther north they work, the more expensive it will be for the Board to bring the power down. Payments for transmission are very substantial. I hope that the Minister will be able to give us some assurance that future schemes will be carefully looked into, so that they will not lead to the taking away of some very valuable grazing land. Having said this, I support the Bill. It is a very large sum which is wanted, but it will have to be found. These big schemes seem to cost about £10,000,000 each, but with these new schemes in project the Board appear to be getting near the end of their borrowing power.

LORD SEMPILL
My Lords, I wish to support this Bill and to refer specifically to the remarks of the noble Lord who has just spoken with regard to the export of current from the Highlands. I hope the noble Earl will ask that particular consideration be given to that aspect of research, which has already been debated in this House, so that more power in 108 small units may be used in the Highlands for small townships and crofts. That will entail greater expense than is now in prospect on research into those possibilities.

THE EARL OF HOME
My Lords, I am grateful for the reception you have given to this Bill. As the noble Lord, Lord Clydesmuir, has said, we think that these Hydro-Electric Board activities are a social amenity and an economic asset to the Highlands, and provided that the Board conduct their operations with a reasonable sense of economy, which I think they do, we feel that this proposal to give them increased borrowing powers is justified.
The noble Lord, Lord Wolverton, drew attention to the question of flooding of land. Well, of course, one cannot have such a scheme without some land being flooded. But the procedure is quite elaborate before any one of these schemes is approved by the Secretary of State. They have to go before the agricultural executive committees and be passed by the Department of Agriculture for Scotland before, finally, they go to the Secretary of State. But I can give the noble Lord an assurance that the Secretary of State will bear in mind the vital necessity of conserving such land as we possibly can for food production. The noble Lord also called attention to the exporting by the Board of current to England. If they are to supply some of the outlying areas at anything like an economic price, then it is necessary that they should export their surplus and get a good price for it from the grid. The noble Lord, Lord Sempill, has drawn attention once more, as he always properly does, to the question of adequate research. Again, I can say to him that the Government are fully aware of the vital necessity in these days of research on an adequate scale in all these matters and, indeed, throughout the whole field of industry.
It is true, of course, that the original estimate of the cost of these schemes was very much less than the actual cost has turned out to be, after a gap of three or four years during which the price of almost all the materials has risen very steeply. But this is not something which is peculiar to the operations of the Hydro-Electric Board. In the case, for instance, 109 of steam generating stations, the cost has gone up three, or even four, times. It is common knowledge that the capital cost of hydro-electric schemes, wherever undertaken in any part of the world, is extremely high. The running costs will be lower than those of steam stations, and the all-in cost lower—I think by about 15 per cent. This has been a very short debate on the Second Reading of this Bill. I hope that your Lordships feel that we are doing something which is necessary and worth while in raising this limit of the borrowing power of the Board.