ELECTRICITY BILL

HL Deb 30 April 1957 vol 203 cc187-240

2.39 p.m.

Order of the Day for the Second Reading read.

THE MINISTER OF POWER (LORD MILLS)

My Lords, I beg to move that the Electricity Bill be now read a second time. As your Lordships are aware, the electricity supply industry is at present organised under the Electricity Act, 1947, so that the generation of electricity and its delivery in bulk by mains transmission is the function of the Central Electricity Authority, and the distribution to the public of the electricity delivered by the Authority is the function of twelve Area Boards. The Central Electricity Authority have the additional functions of coordinating the distribution by the Area Boards of the electricity delivered to them, of exercising a general control over their policy and of seeing that the industry as a whole pays its way. What this Bill does is to dissolve the Central Electricity Authority and to create a new Generating Board responsible for generating and delivering electricity in bulk but without the Central Electricity Authority's supervisory functions. The Generating Board and the Area Boards are each made financially autonomous. As a central body for the industry there is to be an Electricity Council, mainly advisory in character but with certain other duties and responsibilities which I shall describe later.

The Bill had its origin in the Report of the Committee of Inquiry into the Electricity Supply Industry, known as the Herbert Committee, which was appointed in 1954: To inquire into organisation and efficiency of the electricity supply industry in England and Wales in the light of its working under the Electricity Act, 1947, and to make recommendations. The appointment of the Herbert Committee represented the first full-scale inquiry appointed by the Government into the working of a nationalised industry. There was the Fleck Committee, appointed by the National Coal Board, but that was not a Government-appointed Committee and it was required to inquire only into the organisation of the Coal Board. At this stage, I should like to pay a tribute to this painstaking and thorough Report by the Herbert Committee, which, as I say, is the foundation for this Bill. At the same time, I should like to pay tribute once more to the work of the noble Lord, Lord Citrine, and of his colleagues who had a great task in starting this industry on its way as a nationalised supply industry.

The most important of the Herbert Committee's findings arose from the statutory obligations placed upon the Central Electricity Authority under the 1947 Act, not only for generating and transmitting electricity but also for coordinating distribution, generally controlling Area Board policy and ensuring that the industry as a whole paid its way. The Herbert Committee found that the combination of generating and supervision led to excessive over-centralisation. Top officials were naturally concerned with the day-to-day business and too little time was available for wider policy problems. The Committee also found that there was a certain amount of frustration not only among the staff of the Central Electricity Authority but also among the staffs of the Area Boards themselves.

It seems to me that the terms of the 1947 Act made over-centralisation difficult to avoid. The Herbert Committee found that the organisation set up by the Act, while well suited to bringing together all the component parts of the industry—the companies, the municipal undertakings and so on—was not quite so suited for the future development and expansion of the nationalised industry. This Bill is designed to remedy this defect in the organisation. I think that the matter is an urgent one, because of the great nuclear power developments which I have already announced in your Lordships' House. These developments must be tackled with energy and drive, and they must not be handicapped by any organisational defects. The Government think that the best remedy for over-centralisation is to accept the Herbert Committee's recommendation for establishing a new statutory corporation, responsible for generation and main transmission. This organisation will have the singleness of purpose to push forward the great power programmes which are in front of us over the next two decades.

The Bill, therefore, provides that the Central Electricity Authority shall be dissolved on January 1, 1958, and that a new Central Electricity Generating Board shall be set up, responsible for the power stations and the grid. The Generating Board will consist of a Chairman and from seven to nine members, all to be appointed by the Minister. I hope to announce these appointments immediately the Bill becomes law, so that the new body can be ready for the takeover. Obviously they will have to consider many things: their staff requirements and organisation, and also the Herbert Committee's recommendations for devolving responsibility for power station planning and construction—that is to say, the nuclear power stations could be dealt with at headquarters, whereas the conventional type could largely be delegated to the generating divisions.

I should like to mention one point which has been the subject of discussion in another place. Under the 1947 Act, the Central Electricity Authority have the power to manufacture electrical plant and fittings. That power was given as a safeguard against restrictive price arrangements by plant manufacturers, but we are now under new conditions. The Restrictive Trade Practices Act, 1956, provided for the review of restrictive trade agreements by the Restrictive Trade Practices Court and the annulment of such practices where they were found to be against the public interest. Therefore, the Government came to the conclusion that there was now no need for the Generating Board to have the same safeguard as was given to the Central Electricity Authority. In passing, I may say that the Central Electricity Authority have never used that power, except to provide themselves with the things which the Generating Board will also be able to do in connection with research and development purposes.

Another matter of interest is that, unlike the Central Electricity Authority, the Generating Board is given power to supply electricity outside Great Britain, so that exchanges of electricity can be made where this is found to be mutually advantageous. As your Lordships will be aware, a project has been worked out over the past few years between the Central Electricity Authority and Electricité de France for energy exchange by means of a submarine cable. Experimental tests have been successful and the technical problems have been overcome. The difference between the peak loads in France and Great Britain suggest that there is an economic case for exchanging power at certain times. The departmental scrutiny of this project has been almost completed, and the Government hope soon to make an announcement on the matter.

I now turn to the Area Boards. Section 36 of the 1947 Act required the Central Electricity Authority merely to see that the industry as a whole pays its way. In practice, however, the Authority required each Board to pay its way, and they were commended by the Herbert Committee for this practice. However, the Government believe that decentralisation would be assisted to a still greater extent if each Board were required to pay its way as a statutory obligation, and provision has been made for this in the Bill. In this way, Her Majesty's Government hope to foster a keen sense of financial responsibility and a critical attitude on the part of the Area Boards to costs; they believe that it will place the Generating Board and the Area Boards on their mettle. Under this arrangement for financial autonomy, each Board will be required to establish and to maintain its own reserves.

Then there is the question of borrowing. For the time being, the Boards will continue to raise capital either by way of Exchequer advances, under Section 42 of the Finance Act, 1956, or by British Electricity Stock centrally issued and guaranteed by the Treasury. But in the pursuance of the financial responsibility of each Board, the Bill permits the Generating Board and each Area Board, with the consent of the Minister and the Treasury, to issue their own stock without Treasury guarantee. That power has deliberately been made permissive. It will obviously be some time before the Boards can go to the market and raise capital successfully without guarantee. Large sums of money are required, and they would all have to come from money which usually goes into gilt-edged. As we are short of savings to meet the capital expenditure required by the country, it is clear that the Treasury must continue to control the money market, and particularly issues of this kind. Nevertheless, it is felt right, in principle, to arrange for the Boards to be able to go to the market, when the time is ripe, without Treasury guarantee. This, I am sure your Lordships will agree, is consistent with full Board autonomy.

I feel that your Lordships will expect me to say a word or two about rural electrification, in which I know many noble Lords are interested, and in which a great deal of interest was shown in another place. The 1947 Act requires the Boards to secure, so far as practicable, the extension of the supply of electricity to rural areas, and this provision remains in force. In 1953, a programme was announced of connecting up 57,000 farms in five years—that is, up to April, 1958. By then, 70 per cent. of all farms were to be connected up, and 85 per cent. by 1963, except in the case of the South Western, South Wales, Merseyside and North Wales areas. The programme is, in fact, ahead of schedule. Eight out of twelve Boards reached 70 per cent. connection by the end of last year: four reached 80 per cent.; and in all 70 per cent. will be achieved by the autumn of this year.

It was also decided that claims from Boards for special financial assistance should be considered every five years. The only instance was in the case of the South Western Board, who received £250,000 from the industry's central funds. In the year they received that amount, and in the following year, they made a surplus of about £500,000 in each year they pushed on with the good work, and that payment, which was the only one that has been made, was justified. But obviously they should be given any necessary help in carrying out this essential work. Therefore, before the central reserve fund is wound up, as a result of the organisational change embodied in this Bill, each Board will be able to make out a case for special consideration on account of special problems, including rural electrification. I think this is as much as we need do to help Boards whose rural electrification schemes have not proceeded as far as the majority. Costs are already pooled, in that the cost of the main distribution lines is charged to the consumers in the area as a whole. Further, Boards apply the same tariff to all domestic consumers, whether urban or rural. In view of this pooling of costs, I do not think any central subsidy for rural electrification is justified. Central subsidies would disguise the real cost of the service and might cause a less critical attitude to cost by the Boards receiving help and perhaps some resentment by the Boards having to provide the money.

The Herbert Committee did not find that there was any serious lack of balance in the different areas between the rural and the urban load. I think, therefore, we can be fairly confident that the aim of connecting 85 per cent. of all farms will be achieved. The remoter farms, representing some 15 per cent., of course present special difficulties, and perhaps it is even now a little early to say how they can be dealt with. But there is a special power in Clause 5 of the Bill for the Boards, in special circumstances, to generate electricity themselves, and it may be that small stations, apart from the main network, may be the solution to the problem of providing power to remote farms and hamlets.

Now I should like to deal with the Electricity Council. It is felt that, in view of the autonomy of the Boards, it is appropriate that the central body in the industry should be mainly advisory in character. Clause 3 of the Bill establishes the Electricity Council, which is analogous to the Gas Council, but of a different composition. The members consist of a chairman and two deputy chairmen; the chairmen of the twelve Area Boards; the chairman and two other representatives of the Generating Board, and up to three members who are not members of any Electricity Board but who can bring outside experience to bear in the Council.

Now as to the main duties of the Central Council. First of all, there is the broad duty of advising the Minister on all questions affecting the industry. Then they are to promote and assist the maintenance and development by the Boards of an efficient, co-ordinated and economical system of electricity supply. Next, they are to scrutinise and advise on the Board's capital programmes, so that the programme for industry as a whole can be critically examined and properly integrated. We look upon that as a very important function indeed. Then there is their function to raise capital on behalf of the industry, with the approval of the Minister and the Treasury, either by Exchequer advances or by the issue of British Electricity Stock; and again it is the Council's function, subject to the Minister's approval, to allocate to the Boards the ultimate responsibility for servicing any such debt. It is their function to maintain a central guarantee fund from Board contributions against any failure to service the debt. They are the body on which the industry's liability for income tax and profits tax will be assessed.

The Council also have the responsibility for co-ordinating and implementing the industry's research programme. In that connection, the Boards themselves will have power to conduct research outside the general programme, after consulting the Council. They also have the great responsibility on behalf of the industry, and with the agreement of the trade unions concerned, of settling the machinery for negotiating terms and conditions of employment, and for joint consultation on safety, health, welfare, education and training.

Those, then, are the duties of the Council. They are advisory in character so as to remain consistent with each Board's autonomy. There is also a provision in the Bill for dealing with any difference of opinion between the Boards. It should be noted that Clause 8 lays down the procedure whereby any Board can refer differences to the Electricity Council, provided that it consults the other Board concerned before doing so. The Council can then inquire into the case, with reference to the Minister if necessary.

I should like now to say a word or two about the other powers of the Minister. The first duty is to appoint the chairmen and members of the Council and Boards. I need not remind your Lordships that the successful running of an industry depends greatly on the men chosen. Secondly, the Minister will have to approve the general line of the Boards' capital development. This is in accordance with the present procedure, but in future the Minister will have the benefit of the views of the Electricity Council before he is required to give his approval. As I have said, the consent of the Minister and the Treasury is required for the Board's borrowings. Then the Minister has certain responsibilities in regard to the disposal of reserves. Fifthly, on a reference by the Consultative Council, the Minister may, if he finds a defect in any of the Board's plans, issue a direction to the Board to put it right. The difference is that previously the Minister notified the Central Electricity Authority, who then issued a direction to the Board. Now any direction will come direct from the Minister to the Board. Another new arrangement, which I shall explain later, allows the Minister, on a reference by the Electricity Council, to give a direction to a Board to right a defect disclosed by an individual consumer's complaint to the Electricity Council.

The Herbert Committee made several recommendations for strengthening Consultative Councils. The Committee felt that they did very useful and necessary work but that they could be made still more useful. The changes included that the chairmen of the Consultative Councils would, as in the case of gas Consultative Councils, be appointed separately by the Minister in addition to the statutory membership. This should give the Minister a wider field of choice to get men of the right experience and ability. The Consultative Councils in future will be able to discuss the bulk tariff—that is, the charge which the Generating Board makes to the Area Boards for supplies. Hither-to, this has been outside the terms of reference of the Consultative Councils.

There is a reduction from one half to two-fifths in the minimum representation of local authorities on these Councils. The maximum of three-fifths remains un-changed. It is not intended that there should be a general reduction in local authority representation, but the Minister is given the discretion to increase the representation of industry and commerce in areas where that is needed.

In future, too, Councils will have the right to deal with representations from consumers about special agreements for supplies, in circumstances where the ordinary tariffs are inappropriate. I have already made a reference to the individual consumer's right to make representations to the Electricity Council. This is permitted by the Bill where the consumer has already put his case to the Consultative Council without receiving satisfaction. The object is to ensure that there shall be a full consideration of consumers' problems and special difficulties. If, after consulting the Board and the Consultative Council concerned, the Electricity Council considers that there is a defect in the Board's plans, it can advise the Board how to put the defect right. If the Council is not satisfied with the action of the Board, it can invoke the Minister's assistance. On the other hand, if the Council decides that no action is required on the consumer's complaint, that is the end of the matter. He cannot take it any further.

Before leaving the subject of Consultative Councils, I should like to say how much the industry appreciate what they are doing to look after the consumers' interests in their areas. The Herbert Committee paid strong tribute to the work of the Consultative Councils, which I fully endorse. I am sure that this Bill will strengthen their hands.

As regards siting procedure, I mentioned last month in your Lordships' House that my right honourable friend the Paymaster General was tabling Amendments to the Bill in another place to facilitate power station development. Clause 31 empowers Electricity Boards to enter on land to survey and explore, subject to the giving of twenty-eight days' notice to the occupier and, wherever practicable, to the owner. Occupiers and owners, wherever it is practicable, will be informed of the general purpose of the survey and the results of any trial borings. Clause 32 of this Bill provides for a reduction from three months to one month in the period for the publication of notice before an order can be made by the Minister of Transport under Section 49 of the Town and Country Planning Act for stopping up or diverting a highway in connection with electricity development.

When this Bill becomes law, as I hope it will, it will mark seventy-five years of electricity legislation. It may serve to put the Bill in perspective if I briefly recall how the supply industry has developed over that period. I think the introduction of electricity legislation saw a new phase of the Industrial Revolution—not only the age of electric lighting but of electric motors, the internal combustion engine and, I believe, the pneumatic tyre. The first electricity supply was generated in 1881 from the waters of the River Wey to light the streets of Godalming. The undertakers had no power to open up the streets so that they had to lay the supply lines in the gutters. The year 1882 saw the first Electric Lighting Act enabling the Board of Trade to authorise authorities, companies and persons to supply electricity. It is worth remembering that all the early Acts were designed to meet the needs of small local undertakings.

By the end of the nineteenth century, technical progress had enlarged the area a generating station could serve. The First World War showed up the inadequacies of the system and led to the passing of the 1919 Acts designed to reorganise the industry on a wider regional basis. Nevertheless, in 1925 there were 527 separate supply undertakings and 438 generating stations. On the recommendation of the Weir Committee, the national grid first came into being as a result of the passing of the Electricity Supply Act, 1926. That Act established the Central Electricity Board. The Board took current from a limited number of the many stations in existence, selected for their efficiency and low operating costs. The basic soundness of the grid system was, I think, confirmed by the Second World War, and in 1948 95 per cent. of the national electricity supply was being generated in 143 selected stations.

Then the 1947 Act brought the whole generating transmission and distribution system under public ownership, and I think admirable progress has been made under the organisation established by that Act. The Herbert Committee, however, found signs of strain developing, and the Government have decided in this Bill to remodel the organisation so that it can undertake the very exacting programme of planning and development facing the electricity industry in the next twenty years. This is the main object of the Bill which I now commend to your Lordships. I beg to move that the Bill be now read a second time.

Moved, That the Bill be now read 2^a.—(Lord Mills.)

3.21 p.m.

EARL ATTLEE

My Lords, we are indebted to the Minister for his interesting and lucid exposition of this Bill. There is nothing very controversial in the Bill, the main principle of nationalisation having been accepted by all Parties. I was interested in the history that the Minister gave us at the end of his speech. I am afraid my knowledge of electricity goes back rather far—in fact, I think this is the first speech I have made on the subject since the passing of the 1926 Act, in regard to which I was the leader of our Party, and I have nostalgic memories.

I was looking at the proceedings on this Bill in another place, and I recall many hours spent when, in characteristic fashion, a Bill for advancing the public ownership and operation of electricity was introduced by Mr. Wilfred Ashley, the Chairman of the Anti-Socialist Union. In Committee we had an interesting division. I was the Leader of the Labour Party and the Conservatives were divided into two classes. One class were all good, quiet boys who supported the Government, and the others seemed to be mainly advocates of private interests. They were known as the "mutes" and the "undertakers". It was largely due to the alliance of the Labour Members and the "mutes" that that Act got on to the Statute Book. I have had rather to go back to my recollection. What I notice of interest, in reading the proceedings in the other place, is that there is still that division between those who consider electricity generation and supply as mainly a fundamental service both to industry and the citizens, and those who wish at all points to insert some form of private interest.

As the Minister has said, we are all greatly indebted to the Herbert Committee for a most able Report, and also to Lord Citrine and his colleagues for the work they have done in these years. I could not help noticing that the Minister skated rather carefully over the fact that the Government had evaded one of the principal proposals of the Herbert Committee. The Herbert Committee, it is true, did believe in setting up a special Board concerned with generation, but they did not propose to leave a vacuum in general direction. On the contrary, they proposed a body which would have coordinating functions. That principle has disappeared, and we have instead this Advisory Council. I am far from suggesting that a Government are always obliged to accept everything that is recommended by a Committee set up by themselves, but I believe that this Council in the centre is weak. I do not think it gives the necessary co-ordination—because that is what is required, if one looks at the provision of electricity as fundamentally a service to the community and to all of us.

It is, in fact, an instrument of planning. At one time it was empirical to talk of planning. I have been told that we are all planners now. It depends really on what sort of plan we want. Here, I think there is a departure from what I consider most essential in the interests of economy, a proper co-ordination of all our various sources of power. We cannot afford waste in this Island. We are going to spend many millions of pounds on new developments in atomic power arid the rest, and one wants to see that that effort is directed in the best possible way in the interests of the community.

The other points that arise on the Bill are largely Committee points, but some are important. I was sorry that the Minister, after putting up a valiant fight in Committee in the other place, surrendered on the Report stage to those who wanted to limit the powers of the Board in manufacture. It has been pointed out that the Central Authority did not want to go into manufacture, and that the power was put in for a good purpose: it was an instrument which restrained the exploitation of the Authority by banded, vested interests.

There was a time when I was actively concerned in this industry and I know what happened. It was well organised. For instance, there were the people who made cables. There were eleven firms, and whenever you asked for a quotation for cables, by some miraculous arrangement they all quoted exactly the same amount. They are clever, too: they roped in their workers and said on the Whitley Council that they were all agreed on this matter. The only real protection is the power to manufacture. The Government say. "Oh well, you do not need that power now. You have the Restrictive Practices Act, and the Monopolies Commission can deal with these things when they arise." You may just as well say that you can do away with the fire brigade because, after all, there is the insurance. The point of having this power is that it prevents exploitation. The Monopolies Commission come in only after exploitation has taken place.

I regret that the present Ministers should have proved themselves less strong, on the defence of public rights against private interests, than were their predecessors, even though one of their predecessors was a chairman of the Anti-Socialist Union. On the other hand, I am glad that the Government resisted a strong attack in another place which was designed, in effect, to increase the interest which the Board would have to pay for their money. I can never understand why such a proposal should be put forward by anybody, unless it is somebody who does not use electricity at all. It is quite obvious that if you are going to make the Board pay more for their money it must be reflected in price. Whether you are a domestic consumer or an industrialist, your interest is to have an abundant supply of cheap electricity. Why on earth it should be thought an advantage that a certain person should be getting 8 per cent., instead of 4½ per cent., for his money beats me. However, the Government did stand up to that proposal, and I congratulate them.

Broadly speaking, I do not think there was much need for this Bill. The question of the exact organisation of a nationalised industry is not one for which our Party have ever laid down a blue print. We have always considered that each matter should be judged on its merits. There is a case for some centralisation and a case for some decentralisation. Undoubtedly, in the case of electricity you have a kind of flux and reflux from the extreme decentralisation, even anarchy, that I can remember, moving up to a point of extreme centralisation. It may be, as the Herbert Committee reported, that there is a case for some relaxation; but it is not a matter on which one would die in the last ditch. Broadly speaking, I do not think this Bill will effect very much. I do not think it was particularly necessary; nor is it advisable to pray in aid the precedent of what was done with the gas industry, for, technically, that industry is in a totally different position from the electricity industry. I believe that it is better to look at all these cases from the viewpoint of what is best for the particular industry. There are points which we shall raise in Committee, but we shall not divide against a Second Reading of this Bill which, as I have said, though not particularly necessary is not particularly obnoxious.

3.31 p.m.

LORD GRIDLEY

My Lords, I am sure that it needs no words of mine to Stress the great importance of the Bill which we are discussing to-day, or how vitally necessary it is to make this nationalised supply industry as successful as possible, not only in the interests of the country and of its consumers but also for the well-being of the workers of this country. In my view there is no industry, whether nationalised or still worked under private enterprise, which is more important than the one we are discussing, and in saying this my experience, like that of the noble Earl, Lord Attlee, goes back over a very long period. Although I am old, I am still able to remember the time when I saw the first street lighting by are lamps established in my native city of Bristol. I also saw there the installation of what was, I believe, the second electric tramway undertaking, and I remember that we started the first alternating current machine, the invention of that famous man Dr. Ferranti.

I cannot refrain from telling your Lordships of another incident in which, as a young man in the industry, I was concerned. One of our colleagues received a severe electric shock and appeared to be dead. Two doctors were called while some of us carried out artificial respiration under the Swedish system, about which little was then known. While we were doing so, the doctors pronounced the victim's life extinct. We asked whether we might continue our efforts for a short time longer, but were assured that it was useless to do so as there was no doubt that the victim was dead. We did, however, continue our efforts for a further twenty minutes, when the patient opened his eyes. The doctors saw that happen with great surprise. That man survived—another illustration of the progress in practice which has taught us that there are far better methods of dealing with electric shock.

My recollection also goes back to the period during which I was Controller of Electric Power Supply at the Ministry of Munitions in the First World War. Then one saw an amazing advance in the development of this industry. During the four war years, the demand for power to assist in war production was so stimulating that those four years saw a development equivalent to that of the previous thirty-two years; and from that time until now progress in the industry has been rapid. Yet—and this is a point which we ought all to bear in mind—in spite of the growth in industrial and domestic use of electricity saturation point has by no means been reached. We have therefore to foresee the need, as I think has been foreseen, greatly to accelerate the increase in the number of generating stations and the further distribution of power, not only in industrial areas but in rural areas as well.

When, in another place, I spoke against the nationalisation Bill I regretted very much the necessity for the step that was taken, but I said on Third Reading that I hoped that under national control the supply industry, which had been of such service to the country, would be put into a position to render even greater service as time went on. When one considers the enormous task which faced those entrusted with carrying out the provisions of the Electricity Act, the task of gathering together and welding into one body the enormous number of separate municipal and company undertakings which then existed, one must, I feel, admit that, in all the circumstances and considering all the difficulties, an excellent job has been done by those responsible. It would, however, have been strange if after ten years' experience of developing a new undertaking under national ownership and control, there had not been found in that undertaking flaws which might be removed, and possibilities of improvement in administration and readjustment of responsibilities as recommended by the Herbert Report.

Having said that, I agree with the noble Earl, Lord Attlee, that it would be unthinkable not to give this Bill a Second Reading to-day. I feel that it will be possible to make what is, on the whole, a good Bill a still better Bill, and I propose, when the opportunity arises, to put forward one or two Amendments of which I have already given notice to the Minister. If your Lordships will bear with me for a moment longer I should like to put certain thoughts into your Lordships' minds for consideration between now and the Committee stage.

Since the publication of the Herbert Report (and what an admirable Report it was! made by a very capable Committee presided over by a Chairman well known to most of us) a totally new situation has arisen. Since then the Minister has announced a gigantic increased programme of nuclear power construction, involving an outlay, we are told, in the region of £1,000 million. I suggest that the new Generating Board to be set up, with the responsibility for dealing with power stations, have a Herculean task in front of them. They have to deal with the planning and construction of these additional stations and with the very important, highly technical and most urgent volume of research work which must be carried out at the same time if, during the planning of these stations, the latest practice (and the practice will be developing all the time) in the use of atomic power is to be adopted, in order that we may have stations able to produce current at the cheapest possible rate.

If I am right in that, my proposal is that while the Generating Board should he responsible for coping with this large additional programme of nuclear power station construction, they should also be responsible for the planning and construction of the very large conventional coal-fired power station units which I understand are being planned and will shortly be under construction in some of our large manufacturing works—I am thinking of machines which will be units (some of your Lordships may think these figures staggering) of between 600,000 and 700,000 horse-power. There are not many engineers in the country to-day who have experience in developing units of that size, and I therefore feel that these units should be within the responsibility of the new Generating Board which is being set up.

From that there follows the second point which I want the Minister to consider, namely, that the Area Boards, under their delegated powers, should be entrusted with the management, operation and maintenance of the existing coal-fired, or conventional power stations situated in their areas. At one time I thought it might be better if the ownership of those stations were transferred to the Area Boards, but I think that less disturbance would be caused (it could be done with a stroke of the pen) by transferring the operation of these stations to the Area Boards, so relieving the new Generating Board of responsibility for running stations which are already in service and which have proved themselves. When all is said and done, it should be—it always was in my day—the responsibility of the men at the top to see that from the moment the coal comes into the power station the production of power and its transmission, through main transmission cables and through local distribution cables to the works or the householders, remains the responsibility of one organisation. As matters stand at present, the responsibility is a divided one.

There is one other comment which I should like to make. The Herbert Report points out that it is essential that the best men and those with the right experience should be encouraged to come into the industry, and that the salary and conditions should be considered. I ask that they should indeed be considered. I am sure that those who were connected with the electricity supply undertakings, whether they were municipal or company, in the old days will remember that the men at the top had the responsibility of running big power stations which belonged to the company or the municipality in addition to all the other duties attached to the main supply to consumers. If the Area Boards are going to be left merely with purchasing powers and power of distribution to consumers, that would surely take away their effectiveness from the point of view of men who ought to become our future engineers. It is most essential that everything should be done to encourage such men to come into the industry. We hope to see nuclear power stations developed in various parts of the Dominions and colonies, and when men are wanted to take charge of those undertakings what use will it be for a man whose sole experience has been with an Area Board here, and who is without any generating experience behind him, to put in an application? Everyone connected with those overseas undertakings will want men who have had all-round experience. The experience is going to be widened if my suggestion of transferring the operation of power stations to the Area Boards is approved.

At the proper time, I shall want to say something, more about these matters, but I do not propose to develop them now. There are other ideas which may develop from this suggestion. I think the change would bring about a nationalised industry which would be of even greater service to the nation and more attractive to the men at present in the industry whom we want to retain, and to those who may desire to come into it in the days to come.

3.47 p.m.

THE EARL OF AIRLIE

My Lords, before I say anything else I should like to take this opportunity of warmly thanking Lord Mills who moved the Second Reading of this Bill for allowing me, a Scot, to enter into the discussion on the Bill, which is, after all, an English measure. Yet I make no apology for so doing, because, though I naturally speak from a somewhat Scottish angle, and though this Bill is designed to reorganise electricity affairs in England and Wales (as was done for Scotland under the Electricity Reorganisation (Scotland) Act, 1954), you will perhaps find that what has occurred in Scotland may occur here. I do not find that that reorganisation has got us very far in furthering the distribution of electricity supply in rural areas, and it is along these lines that I should like to raise the strongest plea possible, because it is a difficulty that could be common to both countries. The intentions, of course, are excellent, though the execution of them can become—as it is in Scotland at the moment—rather nonexistent owing to the so-called "credit squeeze".

There is a saying that: You must cut your coat according to your cloth. That is a very wise saying indeed, but you can run into great danger. You may never get your coat if the cloth has to wait so long that it becomes rotten. That is really what is inclined to happen at the moment. This is no destructive criticism, for I am fully aware of the dilemma which faces Her Majesty's Government: it is a financial one, of course, and it is something which is common to many of us in all walks of life. But this is really a matter of priority and wisdom in economics. In Scotland, our electricity supply has been reorganised since 1954. But, my Lords, the point is—and it will affect you in England, too—vital distribution schemes are being held up because of this so-called "credit squeeze".

This applies especially to my country. I speak as one who was at one time the first Chairman of the North of Scotland Hydro-Electric Board—a very interesting and somewhat controversial duty. I should not like to weary your Lordships, but I remember in the fight for that Bill being practically on all fours in your Lordships' House and going through a difficult time. There was in some quarters a certain amount of antagonism to the supply of electricity, as the noble Earl, Lord Attlee, mentioned. I remember residing at a certain club in Edinburgh for a time, for some particular purpose. Somebody came to see me and asked the old hall porter, who had been a member of the distinguished regiment in which I served, if I was in. The porter replied. "I don't know, sir; I'll see. But he hardly ever comes out of his bedroom since the Hydro-Electric Bill was passed." And I think that that was true. This antagonism existed; but having been round Scotland I am glad to say that I can go to sleep without feeling that I have ruined the amenities of Scotland. Perhaps the housewife can spend a little more time in bed now and watch her "better part" grilling his own breakfast, instead of having to get up an hour earlier and light the fire to make his breakfast for him. So I can go to sleep feeling not entirely unhappy.

I know how agricultural and timber productivity is being held up through the non-progress of electricity schemes. That is something we simply cannot—I repeat, cannot—afford to permit. It is a purely false economy. So far as my country is concerned, I do not think it is appreciated what a part Scotland is playing in the general economy of these islands as a whole, in regard to exports and other matters. Scottish development is undoubtedly being hopelessly frustrated by the hold-up of supply of electricity, transport and water. I am grateful that my noble friend the Minister of State for Scotland has found time to come and perhaps correct me on these matters. I feel that these two latter services—transport and water supply—are almost as important as electricity, because we cannot expect people to remain and work in far-flung, out-of-the-way places unless they can get the same sort of amenities as their brothers and sisters have in urban areas. What happens is that we have a continued drift away from the land and from areas which, if a long-term view is taken, are vital to the future economy of the country.

No other country neglects its resources as we do. I expect that Her Majesty's Government have taken the trouble to go into what other countries are doing. If necessary, I can supply facts and figures. I would recommend to them and to your Lordships a paper read by the chief commercial engineer of the North of Scotland Hydro-Electric Board before the Royal Philosophical Society of Glasgow and the Royal Geographical Society, Glasgow Branch, in February, 1957. Your Lordships will find that extremely interesting reading. It will be found that Norway, Sweden, Eire, Germany, France, Canada and the United States have already appreciated the vital need to aid in large measure this long-distance connection, and they have acted accordingly. I shall probably be told that the economy of these countries is in better shape than ours, and that is probably true; but economy in the wrong direction is never wise. I submit most strongly, in discussing electricity affairs in your Lordships' House, that this is no arena upon which to let the axe fall. I would quote from the Prime Minister's speech of January 19, 1957, when he said: Power from all sources is the key to the future. That is perfectly true.

I understand that Her Majesty's Government are giving, or proposing to give, under the new Agriculture Bill a grant of 33⅓ per cent. to farmers to install electricity, but this grant is withheld from farmworkers, blacksmiths and suchlike workers. These restrictions do not appear to me to make sense, and somehow we should widen the class of personnel who can qualify for the Government contribution. Could not Her Majesty's Government think again and make some percentage contribution towards the cost of distribution and connection? I realise that the difficulty is lack of capital or money and that there is also a difficulty in deciding what needs must come first; but to my mind, and to many others, this need will and must stimulate production I am not suggesting cheaper tariffs or subsidising (in our case) the Hydro-Electric Board—and that applies also to the Boards in England and Wales. What I am suggesting is that primary connection costs relating to long distances should be faced in the way I am given to understand the Post Office are now doing. The rural consumer is quite willing to bear his share, but he must be helped. I would plead with Her Majesty's Government to treat this question as a priority one before it is too late, and, when the industry is reorganised, not to allow the schemes for distribution to be held up. We in Scotland are reorganised. Well, for heaven's sake, allow us to expand! For you in England, also, it is your only salvation and hope.

3.56 p.m.

THE MINISTER OF STATE, SCOTTISH OFFICE (LORD STRATHCLYDE)

My Lords, it may be convenient to your Lordships if I intervene at this stage to say a few words about the application of this Bill to Scotland and about the interesting points raised by my noble friend. As was mentioned by my noble friend Lord Mills, who opened the debate, the remit of the Herbert Committee did not extend to Scotland, where, as the noble Earl has just told us, the electricity supply industry was reorganised as recently as 1955. To-day the industry in Scotland is in the hands of two independent boards—the North of Scotland Hydro-Electric Board and the South of Scotland Electricity Board. These Boards are responsible for both generation and distribution within their respective areas, and the Secretary of State is the Minister responsible for all electricity matters in Scotland.

The changes in organisation proposed in England and Wales do not, therefore, extend to Scotland, but the reorganisation does involve some necessary consequential provisions in Scotland. For example, where the Scottish Electricity Boards have at present a relationship with the Central Electricity Authority, in future they will have a corresponding relationship with the proposed Generating Board or the Electricity Council, as the case may be. Most of the other matters with which the Bill deals do not apply to Scotland, the exceptions being those that affect the common code which already exists between the two countries. Of these, the most important are certain minor changes made in the constitution of the Consultative Council. Your Lordships will have observed that, for convenience, the amended provisions as they will apply to Scotland have been written out in full in Part II of the First Schedule. Certain other changes also affect Scotland, including the provisions about entering on land for purposes of survey and for expediting the procedure for stopping up highways. These matters are referred to in Clauses 31 and 32 of the Bill.

May I now turn to the points raised by my noble friend, Lord Airlie, about the supply of electricity to consumers in Scotland, particularly in rural areas. It may be that this subject is not strictly relevant to the Second Reading of this Bill, but I would ask your Lordships to bear with me for a few minutes while I say a word or two about it. I have to remind your Lordships that the Electricity Boards in Scotland are bound by Statute to balance their budgets, and rural distribution, involving the laying of extensive lines of supply to a few consumers, is usually an uneconomic process. I can assure your Lordships, however, that the Boards realise that they have a social responsibility, and in so far as their finances permit, they do what they can. But the amount of work that they are able to undertake is ultimately dependent upon their financial position.

Quite apart from the economic position of the Boards themselves, my noble friend Lord Airlie suggested that rural electrification had been held up through capital cuts imposed by the Government. It is true that both Boards have been asked by the Government to slow down their total capital expenditure on distribution, but the decrease has not been as large as one might expect from what my noble friend said. Let me give your Lordships some figures in relation to the area of the North of Scotland Hydro-Electric Board. In 1956, 2,245 farms and crofts were connected, compared with a figure of 2,870 in the year 1955; and I can tell your Lordships that the hope is that the 1956 rate will be maintained during the present year. The general progress made by the Board over recent years is. I think, satisfactory, and these figures will show your Lordships what I mean when I say that.

If we go back to April 1, 1948, we find that 7.3 per cent. of farms, and 2.5 per cent. of crofts, in the area had a supply of electricity; whereas 56.6 per cent. of farms and 56.3 per cent. of crofts have now been connected. In figures that means that since 1948, 9,531 farms and 11,713 crofts have been supplied. Your Lordships may feel, as I admit I do, that the Board deserve to be congratulated on what I am sure you will agree is a considerable achievement, which, let me say, without doubt derives from the initial work performed by my noble friend as the first Chairman of the North of Scotland Board. So much for the situation in the North of Scotland district.

THE EARL OF AIRLIE

I hesitate to interrupt the noble Lord, but I shall not have another opportunity. I do not want him to think that I am in any way criticising the work of the North of Scotland Board, which I think has been remarkable. At the same time, I still maintain my point that the distribution is lacking.

LORD STRATHCLYDE

When the noble Earl travels over the northern counties of Scotland I am sure he will he struck by the miles and miles of distribution line running to single crofts and farms in the hills and glens. I think it is a remarkable performance; in fact, it is nothing short of a revolution in conditions in the northern counties of Scotland.

I should now like to say a word or two in connection with the situation in the South of Scotland. Here, 32,198 consumers of all kinds were connected in 1956, as compared with 38,748 in 1955. Over 75 per cent. of the farms in the area now have a supply of electricity, and some of your Lordships may recollect that last November the Board published a five-year plan for the electrification of those parts of the area which have not yet been given a supply. I can assure my noble friend that we will bear in mind the points that he has raised, but I hope that the figures I have quoted will convince your Lordships that both Boards are fully alive to their responsibilities and that, in fact, considerable progress has been and is being made in the supply of electricity throughout Scotland.

4.5 p.m.

LORD HURCOMB

My Lords, I have had so much to do with the electricity industry from various angles, that I feel impelled to say a few words to your Lordships, rather by way of comment than of criticism of the contents of this Bill. Before doing that, as I have also had a good deal to do with the North of Scotland Hydro-Electric Board, I should like to say that I agree that it has accomplished a wonderful piece of work for Scotland, which is admired throughout the world. I had the privilege last summer of visiting some of the works with Mr. Tom Johnston, the recent Chairman, and of taking with me some distinguished foreign naturalists, who were not interested in the technical side of electricity but were extremely interested in seeing the way in which hydro-electric schemes could be developed without detriment to the natural life and scenery of the country. They were immensely impressed by the enlightened way in which that Board had carried out its work.

Coming to the subject matter of this Bill, the first point on which I think there is general agreement is that some change was desirable in the direction of divorcing the direct control of generation from a too intimate connection with the general supervisory functions of the Central Electricity Authority. There are, I know, differences of view as to how that might have been done, and whether as the noble Earl, Lord Attlee, said, it was essential to make such drastic statutory changes. There was undoubtedly a necessity in the early stages for the people who were dealing with the affairs of the new nationalised undertaking to give a great deal of their thought and energy to centralising and consolidating the generating system. That may have led to some lack of balance, or the appearance, or a feeling in the minds of some of the Area Boards, that there was a lack of balance.

One must, I think, accept from the Herbert Report—a Report made by an experienced and acute mind—that that feeling did exist, and that it was advisable to do something to remove it. Whether or not a slightly different set-up in the Central Authority could have been devised, so that the generation branch of their activities would have been regarded by them as on a footing which it was their duty to keep fair and level with that of the Area Boards, I do not know; but as the Committee itself considered that the creation of a new statutory Generating Board was the right step, and as the Government have come to the same conclusion, one is not disposed to quarrel with that decision.

On the other question to which reference has been made, how far the Area Boards should themselves have powers of generation, I would urge upon the Minister the need for the utmost caution. We are at the moment in many directions swaying, or being swayed, back in the direction of all sorts of local and separate autonomies. My experience, going back to 1919, has been such as to impress me with the immense waste and the economic loss which the country has suffered through not having standardised and centralised fast enough in directions where that was essential. The legislation of Sir Eric Geddes in 1919 was emasculated by your Lordships' House, and nothing at that date was done about generation. That meant a loss of ten years before the old Central Electricity Board were able to deal with the generation problem at all.

The reluctance to interfere with the autonomy of the 500 separate supply undertakings, to which the noble Lord referred in his interesting opening speech, again led to immense developments of the supply system on all sorts of non-standardised voltages, which it has cost many millions of pounds to correct very late in the day. My own feeling is that it is much too easy to yield to the popular view—and the view one always shares in one's own affairs—that people should be left locally to do much as they please. It is easy to overlook the overriding national interest or the overriding economic gain that can be obtained from a wise application of the contrary view. I believe that it would be a great mistake to allow the Area Boards to get back into the old pre-nationalisation position in which, automatically, they each generated for themselves.

On the other hand, there is an attraction in the line of thought suggested by my noble friend Lord Gridley, that the actual day-to-day operation and management of many of the conventional coal-fired stations might be entrusted, under a delegated authority, or some other agency arrangement, to the engineers of the Area Boards. I would only submit that the decision whether to do it or not should be in the discretion of the Central Electricity Generating Board. They should not be compelled to do it, but should merely be empowered to do it; they should retain strict control of the way in which their delegated power was carried out, or the way in which the agency arrangement was performed. They are bound to control the actual use of the current generated, which must, under this scheme, be directed as part of the national grid, and I feel that they ought to have the control of the station in the last resort.

That, of course, will in itself raise some organisational problems. There will be the question whether the engineers of the Central Electricity Generating Board can go direct to the engineer in charge of the station, or whether they must go to the chairman of the Area Board before they can give an instruction. But those problems could be solved, and I agree with my noble friend Lord Gridley that that is a possible solution of a somewhat difficult question which is well worth exploring, and one, perhaps, which your Lordships will wish to look at in more detail when we come to the Committee stage of the Bill. Generally, I submit that strong justification indeed would be needed before the Area Boards were allowed to own generating stations for themselves. I was interested to note what the Minister said: that the express reference in the Bill to that matter had in mind the possibility that in some of the more remote or scattered areas small local stations might well be operated and owned by the Area Boards as a means of providing a cheap supply for the surrounding rural areas. If the proposal were limited to that, there could be no possible objection. If it goes beyond that, I think it will need looking at with considerable caution.

Now may I pass to a much broader consideration—that is, the departure in the Bill from the recommendations of the Herbert Committee in regard to the powers of the central body. The Herbert Report talks about a reconstituted Central Electricity Authority who would have had authority and would have had responsibilities, not merely in the sense that they must give advice as responsible men, but final responsibilities of their own. That has all gone by the board, and in its place there is to be an Electricity Council which, so far as I can see, is to be merely advisory. Every Area Board which does not like the advice it gets from the Electricity Council will, apparently, have a right of appeal to the Minister, and no Area Board can be told to do anything, apart from being advised, implored or encouraged, except by the Minister. Now how is that going to work? It may be that the Electricity Council will be composed of individuals of such standing and authority that their advice will be cheerfully, automatically and universally accepted. But that is not certain; and with all the encouragement that is being given to the Area Boards to exert their autonomy and show some spirit, and, if possible, some variation, I should have thought there was a real risk that the Electricity Council's advice will not be accepted without constant reference and appeal over their heads to the Minister.

I am not sure that I understood the Minister correctly. He seemed to imply that, in the last resort, the Electricity Council could enforce their view on some matter brought to them by a Consultative Council by going to the Minister for a direction to the Area Board. That does not appear to be expressly set out in the clause. What Clause 13 (5) (d) says is: if it appears to the Electricity Council, after consultation with the Area Board and with the Consultative Council, that the consumer has established…the grounds on which the matter was referred to them, the Electricity Council may give to the Area Board such advice as they may consider appropriate…. What then? If the Area Board says, "Well, we note your advice, but we do not propose to take it", it seems to me to leave the Council in an extraordinarily weak position. I have no doubt that it will be said that from the start everybody will be anxious to work this system, that no difficulties will arise, and that the prestige and influence of the Council will be such that they will not need authority or direct powers of giving orders. If that is so, is there not still the risk that inside the Department a parallel, an additional, organisation will be built up to advise the Minister whether the Electricity Council is right?

It seems to me that there is a real risk with this structure, which certainly departs very materially indeed from the lines of the Herbert Report, that administration may be complicated, that we may have a Council which in fact is a third wheel of the coach. I myself would rather have seen the Bill take the line of reconstituting the Central. Electricity Authority and re-defining its powers but leaving with them the final word and the final decision in a whole range of matters which, in my view, are better given to a body of that sort than moved into the Department. I may be out of date or sympathy with the present trend of thought, but I have always favoured the view, civil servant though I was, that the public authority or public corporation was a better solution of many of these problems than departmental management; and, although I have no claim at all to represent the views of the Socialist Party, I believe that the Socialists themselves were always against that particular kind of State Socialism.

Is there not a risk that the provisions of this Bill may lead us away from the conception of a public corporation on those lines? I am sure that that matter must have been carefully considered by the Minister and he must have come to the conclusion that, on balance, the risks of the scheme not working as he would wish can be taken. I do not wish to be dogmatic in any way on those matters, but if the noble Earl, Lord Swinton, were still in his place I should have been inclined to remind him that there seems to have been a great departure from the principles which he used to inculcate upon me when I was a civil servant responsible for giving advice on some of these matters.

The only other point to which I should like to refer is finance. I agree entirely with the view taken by the Government and, I think, by most people that the public bodies, whatever they may be called, should be autonomous in their finance to the maximum degree. In my own case, if I may draw on my experience as Chairman of the British Transport Commission, I think it was a very salutary thing that, when the Commission wanted money, they had to go to the market, satisfy the bank and issue a prospectus over their signatures explaining what they wanted, why they wanted it and what their financial position was. With the Treasury guarantee, I admit that none of that had any effect upon the rate at which one borrowed, but it had a psychological effect upon oneself and upon one's colleagues, and, I am sure, was salutary. It may be an advantage to carry that principle to the twelve Area Boards or the Central Electricity Authority. I am less certain about that. In one great nationalised undertaking the principle is sound enough, but whether it will work with subordinate boards or agencies is, I think, less certain.

What I do not quite understand, however, is how it will be possible for these Area Boards ever to borrow money without the Treasury guarantee. There is already a vast amount of capital, raised with the Treasury guarantee, in front of it. If they want to borrow more money, I suppose the Treasury would never agree to that obligation being placed in front of the stock already guaranteed by the Treasury. I cannot see that even the most optimistic Minister can expect the credit of one of these Area Boards to be better than that of Her Majesty's Government. Certainly, if it is not better than, or as good as, that, it will cost the consumer more, as the noble Earl, Lord Attlee, said. I wonder whether the possible advantage of a feeling of greater financial responsibility in these Area Boards will be worth the difference in the rate of interest which their money will cost their consumers. I doubt it. It is true that that was the position with the old Central Electricity Board created under the Act of 1926, and that they did raise their money without Treasury guarantee. But why? I well remember the Chairman of that Board coming to me and saying that he did not want the Treasury guarantee because it would mean ministerial and Treasury interference. In this case, that argument does not apply. The right of ministerial intervention is there and the Minister may give all sorts of directions in the national interest which might not be, commercially, what a commercial body would undertake; so I think the circumstances are different. Although I do not object to this provision in the Bill, I speculate in my own mind as to whether it can have any possible application.

May I make one concluding remark which links it up? The Herbert Report rightly emphasises how important it is that the Boards shall be able to manage their finances on a strictly commercial principle. It says that they should not be asked to make reductions in their tariffs or to incur expenditure on some alleged ground of national interest which in normal commercial circumstances they would not do. That seems to me quite right. But there is an important distinction to be drawn in that matter. If one is thinking of concessions to particular classes of consumers at the expense of other classes, on some social or political ground, then it is surely right that the cost should fall on national funds and the Exchequer and not on the funds of the industry. But if one is asking the industry to behave in an enlightened way by, for instance, avoiding the pollution of rivers or by putting cables underground in order to preserve the landscape, then it seems to me that those costs properly fall upon the industry and do not come into this category. They fall, rightly, upon the industry because they are part of the consideration of the privileges which the industry enjoys in getting possession of people's land, and of various statutory exemptions which they enjoy. I should like to put that thought into the Minister's mind because I do not want to see the Ministry at some future date falling back upon this principle enunciated in the Herbert Report and applying it to a set of circumstances where it does not have any legitimate application.

Those are all the comments I wish to make to your Lordships. In conclusion I should like to say that, even under the present set-up, the Central Electricity Authority have managed to run the industry in times of rapid development and great technical advance with conspicuous ability and, on the whole, great satisfaction to the public. It is perhaps for that reason that I am not too enamoured of applying to their organisation a scheme which may work quite well with the gas industry. I should much rather electrify the gas industry than apply the organisation which suits the gas industry to electricity. Nothing is going to check the progress of electricity. The stars in their courses fight for it. It can yet bring immense boons to the population as a whole, and I suspect that all those beneficial results will flow, whatever the changes in organisation that Parliament feels compelled to make every ten years.

4.31 p.m.

LORD SIMON OF WYTHENSHAWE

My Lords, the noble Lord, Lord Hurcomb, who probably has wider experience in the administration of nationalised industries than anybody else alive, has pointed out some of the difficulties which are liable to arise under this original organisation which the Herbert Committee have invented and which, in a modified form, the Government have adopted. So far as I know, there is nothing in the world like this triple organisation—two central bodies and a dozen Area Boards, with the heads all nominated by the Minister, and all expected to co-ordinate their work and to work together with the utmost efficiency and friendliness. I have made many inquiries of private enterprise, which of course, in this country, always has a single top board, however large the concern may be. Even in America the much larger concerns always have a single top board. We have the example here of the gas industry which has one single board—a very weak Central Board, and a dozen Area Boards. Now there is the Herbert invention of two Central Boards of different kinds and a dozen Area Boards.

On the face of it, this is putting on the Minister a great burden. I have worked out the arithmetic of it, to the best of my ability, and I calculate that he has ninety-nine nominations to make. I do not know whether he has worked this out and is prepared to let me know whether I have the figure right—I understand that my arithmetic is right. So he has ninety-nine nominations to make—which is a terrific burden—quite apart from the nominations that he has in other industries. One can only watch developments in this connection and sympathise with the Minister.

Apart from that matter, I want to deal with one point only which I regard as a most vital point—namely, how to secure the best top Board in a nationalised industry. This applies to all nationalised industries, including electricity. I am sure that noble Lords will agree with the statement that a prime necessity in the success of any large undertaking is the constant exercise of leadership at the highest level. There is a most remarkable contrast between the way in which the Boards of the nationalised industries are selected and the method of selection of the best private enterprise concerns. I investigated a dozen or so of the largest private enterprise concerns (the two largest, in capital assets, are Unilever and I.C.I.), and perhaps I may, in a few words, say how they select their top boards—and this applies to almost all other concerns. In the first instance, they select a considerable number of the best people that they can get, both from the grammar schools and from graduates from the universities. They train them for twenty years, not only as specialists but, in regard to a great many of the more suitable ones, for top management. They move them round and they train them in top management, so that by the time they get to the age of about fifty, which is the age when directors are generally appointed in these concerns, they have had twenty to twenty-five years' excellent experience.

In the best companies there are always a considerable number of first-rate men ready and able to take the top jobs. When there is a vacancy on either of those boards the chairman, deputy chairman and the whole-time directors make it an absolute top priority to hunt out the best people; and they make quite sure that they choose the best people, because that is the very key to the future of their concern. Lord Heyworth has said publicly that he gives an immense amount of time to this matter; that he personally knows 200 of the top people in Unilever well enough to have a good idea which of them is ready for promotion and which is not. When they have made their choice (and I am assured that in both companies their choice is made unanimously; they all agree that a person is the best candidate for the job), normally he remains on until his date of the retirement or whatever may be the cause of his ceasing to be employed. So these directors are all people who have had a long career, starting after the university, or before, and going on, except in abnormal cases where things go wrong, to retiring age.

The other point is that their salaries and pensions are adequate to enable them to do their work happily and without frustration. That is the way in which these boards work. The Boards of the nationalised industries are appointed in a totally different way. I think that none of the nationalised industries has a training scheme starting at the beginning, comparable with those in the best private enterprise firms. That is not their fault; they have not had time to do it; but it is a great difficulty. The second and really important matter is the appointment. The appointment has to be made by the Minister. The Minister is not like the chairman of I.C.I. or Unilever, who has spent his life in the job. The average life of a Minister of Fuel and Power, since that office was first created, has been something under three years, though I hope that it will be longer in future. He has not one concern to look after, but ninety-nine appointments to make, in gas and so on, as well as a great many other vital responsibilities. Neither he himself nor his civil servants can possibly have the kind of knowledge that the best private concerns have of candidates for directorships or membership of the board.

There is another and, as I think, much more serious objection. A most extraordinary tradition has grown up in regard to public Boards, in that the appointments of the Chairman and the members are for five years, renewable but generally not renewed. I myself was appointed Chairman of the B.B.C. I served for five years; I was then sacked, without, so far as I know, any regard to my faults or wickedness, but just because I had done five years and it was somebody else's turn. Of course it is difficult to find people to serve only for a term of that sort of duration. Certainly they have no security, which is essential if one is to devote oneself energetically and wholeheartedly to one's work.

If I may give one example, the Coal Board is one case where things have gone wrong, from the point of view of the Board. In just over ten years there have been twenty-five full-time members of the Board—never more than eight at a time. The average life of those Board members is three and a half years. Only four of them have served the whole five years; one had his term of office renewed and served ten years. But the average life of the whole lot has been three and a half years. This is a little longer than the average life of those Ministers who appointed them. At the present moment not a single member on the Coal Board has been serving for more than two years. There is no continuity. How can there be any team spirit? The whole thing seems to be almost an Alice in Wonderland way of appointing Boards. Added to that, the salaries and, I think, pensions are notoriously inadequate. That may not be so in regard to the Chairman and the Deputy Chairman, but the ordinary Board members may get £5,000; and it seems to be the tradition that anybody not on the Board is never paid more than a Board member. For that reason, nationalised industry is constantly losing good men. There is a complete contrast between the methods of appointing the boards of good private enterprise companies and the Boards of nationalised industries.

What ought to be done is, I hope, perfectly obvious to the Minister and to anybody else. I have discussed this question with a great many people. I have asked why there should be this five-year rule or habit which seems to have become a fixed practice, but I have not been able to discover the reason for it. If there is no reason for it, possibly we can get it changed. If things are to be put right, in the light of experience of private enterprise, not only in this country but in Germany, America and everywhere else, so far as I know—and I think I do know—the first thing we need is for vigorous efforts to be made to train people within these industries. But that, unfortunately, will take time.

Secondly, it seems clear that leading private enterprise companies do not leave new appointments to the chairman or to a selected number of members of the board. The board as a whole are brought in, and are required to approve new appointments. Why could we not have that practice (though possibly we could not get it immediately) in the coal, electricity and other industries? If the Minister were to ask the Board to make a recommendation, then, clearly, as the Minister represents the "shareholders" he would have power, by his veto, to preserve the rights of those concerned, just as shareholders' rights are preserved. Thus gradually, in time—and we are drifting towards that position—the Minister would get such confidence in the nationalised Boards as shareholders of private companies have in their boards. I believe it is true to say that, although Ministers have consulted chairmen of the Boards of the nationalised industries, neither they nor their colleagues have ever consulted any Board as a whole.

Most important of all is the need for the abolition of this unfortunate five-year rule and for the introduction instead of appointments, during good behaviour, up to retirement age. I cannot conceive why that could not be done in the nationalised industries. Then, finally, the question of salaries is vital. I am not sure that legislation is required for any of these things. I believe that they are all within the power of Her Majesty's Government and the Minister. As an industrialist, I welcome the present Minister as the first industrialist to be appointed to the position which he holds. He has very wide experience and, I believe, has been chairman of a famous engineering works for a good many years. Though I do not suppose he will tell us, it would be interesting to imagine what would have happened to that company if he had been "sacked" after the first five years, and his successor had been "sacked" after another five years, and to know where that company would be now. As my noble Leader has said, both sides of the House are equally anxious to make these nationalised industries efficient, and I am quite certain that there is no step more important in making them efficient than to get really effective Boards in whom everyone will have confidence. I beg the Minister to do everything in his power in that direction.

4.44 p.m.

LORD LUCAS OF CHILWORTH

My Lords, in winding up this debate on behalf of the Opposition, may I begin by respectfully offering to the noble Lord, the Minister, a word of congratulation upon his most successful maiden effort in introducing a Bill into your Lordships' House. It was not only an agreeable effort but it was practical, and the noble Lord gave me the impression—one which I am sure was shared by all noble Lords—that he was trying to tell us as much as he possibly could and to explain all that he could about what was proposed. Having said that, and offered the noble Lord that implied compliment, I hope he will not mind if I now proceed to offer a few rather stern criticisms of the Bill to which he is asking your Lordships to give a Second Reading.

I have a feeling that the Bill is below the level of events, and that very likely it will be out of date before it ever reaches the Statute Book or comes into force, which, as the noble Lord says, will be in January, 1958. It is based upon the Report of a Committee which started its deliberations in 1954—three years ago; and as the noble Lord, Lord Gridley, has said, there has been a revolution even since the Bill was produced in another place. The fear which worries me, and which I again voice, is that not sufficient thinking is being given to the overall policy of the power industries of this country, into which in the next few years there is to be put some £6,000 million, mostly of the taxpayers' money—because, as the noble Lord, Lord Hurcomb, has said, one cannot see any money coming into these industries the principal and interest of which is not guaranteed by the State.

I am therefore impressed by a letter which appeared in The Times of to-day and which took first place in the correspondence columns. The editor headed it with the caption: "A Policy for Power. Urgent Need to Study Facts." May I quote this one passage: Can we afford to maintain an energy supply structure in which the production of gas, coal and electricity is maintained in separate industries? Is it or is it not true that many economics might be effected by integrating the production of gas and electricity, a process which might also include the production of fuel oils, gas oils, and coke for use in either operation on an integrated basis? I could have understood a policy whereby the noble Lord, Lord Mills, would come before your Lordships' House and propose an Advisory Council for electricity, gas, coal and oil, because I cannot believe that we can tolerate the wasteful competition which is the basis of these industries today. The noble Lord himself has told your Lordships' House that for electrical energy development up to 1965 the cost will he a grand total of £3,350 million.

This Bill purports to give us the organisation structure and the management structure which is to handle that very great amount of money. I do not dissent from what was said by my noble Leader, Lord Attlee, the noble Lords, Lords Gridley and Hurcomb, and my noble friend Lord Simon of Wythenshawe, upon the organisation of what is necessary to see that the development of our national resources, many of them not only undeveloped but unknown, is properly handled. The noble Lord puts right at the top of this organisation a Council with power but no authority. There is plenty of power to give advice, but it has no authority whatsoever. I have always understood that authority without responsibility—and as the noble Lord, Lord Hurcomb has pointed out, this Council has no responsibility—was about the worse thing that one could have in any industrial organisation. I am sure the noble Lord would agree with me that that has been his experience. Whoever "cooked up" this idea of an Electricity Council, I do not know.

I want to ask the noble and learned Viscount who sits on the Woolsack whether he will be kind enough really to answer, even if only in a general way, the question that has fallen from the lips of every noble Lord who has spoken in this debate so far. What is the bracket that is going to be given to this Board—the salary bracket? What are the terms? What calibre of individual are you going to have on this Generating Board? Look at the gigantic task with which they are faced. What is to be the calibre of the persons you are going to have as chairman and deputy chairmen, and of the three independent members other than the area chairmen who will go on to the Electricity Council automatically? Are you going to allow the Treasury to dictate the same salary scale as they have dictated in the cases of other nationalised industries up to date? This folly of the salary scale has been the cause of one of the troubles of our nationalised industries. Let us at least learn from experience of the past.

I suppose that one of the greatest examples of tragedy provided by our nationalised industries is that of the British Transport Commission. It is one of our largest industrial concerns with a turnover of £800 million a year and 800,000 employees. In the higher-bracket management groups salaries are paid that would be disgraceful in the case of door-to-door salesmen. And into that great transport industry, into which we are putting £1,200 million of the taxpayers' money, not one single entrant is going from the public schools or the universities. Indeed, this industry cannot keep the brains it has. Are the Government going to allow the same thing to happen in the industry with which this Bill deals? Is the noble Lord, Lord Mills, going to win the battle in this connection? If he does not, the industry will never get the brains that are wanted, the young brains to which Lord Gridley referred, having regard to the opportunities offered by the vast expanse of our industries to-day—my noble friend has mentioned one or two by name. Unless you pay the money you will not get the brains. If the noble Lord has found the secret of doing it in the course of his experience in industry, then he is unique in industry.

Perhaps the noble and learned Viscount who sits on the Woolsack will give us some idea of what is intended. I do not think it is worth our while to fill a structure like this—I say this without offence or being personal to anyone—with people who have passed retiring age either in the Army or the Civil Service. It is just no good. In the future this industry cannot be the one to provide "jobs for the boys." We must have the best brains obtainable in this country and we have to compete with other industries to get them. The Bill does not say, and the noble Lord has not told us, whether these appointments are going to be full-time or part-time. We have tried the experiment of having part-time members of boards in nationalised industries. Has it been a success? I doubt it. I think we all started off with good intentions. Our idea was that we should allow these people to live a fuller life and not be held in the cloistered seclusion of one particular industry. I think we were wrong. That is, of course, my own personal opinion.

To-day British industry is full of executive directors—and quite right too. "Guinea pigs" have largely disappeared. Do not forget that the majority of the part-time members in nationalised industries, even in Area Boards, if they do their job properly and spend the requisite time at it are being carried on the backs of the firms who pay their salaries. Should we end that or are we again, at Treasury dictation, going to pay men with brilliant brains £500 a year as part-time members of boards? Once the industrial concerns which employ them feel that they can no longer pay them for time when they are absent on their duties with the nationalised industries, they will have to resign. I think the other points which my noble friend raised were good. These are some of the things about which I feel we ought to be given information. I do not suppose it is within the province of your Lordships' House to attempt to alter this particular aspect of the Minister's problem in this Bill. I hope he will manage to grapple with it successfully.

I come back to what I and other noble Lords consider the noble Lord's chief problem. I do not see any use in having this Council. I can see that in a short space of time the whole of these industries will have to be amalgamated, because, with our narrow resources, we cannot afford to have any further exercise of the pleasant theory that competition between gas and electricity will make both more efficient. Lord Hurcomb has said that what you want to do is to electrify the gas industry. I feel that we need a Ministry of Power in its proper sense. I would rather go in the direction of setting up an organisation or a council for the power industries all together, than to impose a sort of academic debating society right between the Generating Board and the Area Boards.

I am disturbed about the policy of Her Majesty's Government—the price policy, the policy of saying that the Area Boards must in future pay their way individually. For me, one of the great attractions of the nationalised industries is that—if I may use the Scottish expression—" the fat must fry the lean ". If you are going to have competition between Boards and allow them autonomy to vary their rates and price structure, you are never going to have the electrification of the rural areas which is so desirable. And what are you tending to do by putting into this Bill the pokey that there must be competition amongst the Area Boards to make money? If the Boards go to the market and attract capital without Treasury guarantee, it will only be because they can pay high dividends. As they would have monopolies in their respective areas, that would be possible. Is that what you want? Do you want prices to consumers to go up? Do you want to see the South Eastern Board or the North-Western Board offer stock and produce balance sheets showing very high profits in order to attract capital, those profits having been squeezed out of the consumer? That is not my idea of a nationalised industry.

I am very apprehensive on this score. If the Government are going on with this policy, are they going to extend it to the railway system? Are they going to have the Western Region advertising cheaper fares to the West of England than the Midland Region, say, offers to Scotland? Or wilt it he a case of the Southern Region appealing to the public to spend their holidays at Bournemouth and saying that they will take them there at half the price another Region would charge for taking them to Scarborough? This seems to me to be the beginning of that sort of thing. Then take the case of the Post Office. If the Post Office follow the noble Lord's policy, how long will it be before they charge a farmer for delivering letters to his farm because of the expense caused through the postman having to ride his bicycle up the drive to the farmhouse? It makes just as much sense. I offer this criticism. The policy of the Central Electricity Authority over recent years of "milking" the consumer (if I may use a vulgarism) for installation charges has been wholly wrong, and there have been many complaints about it.

I can speak personally. I wanted to install 100 yards of lighting cable to a cottage. They started off by charging me £100, but I have spent much of my life in bargaining, and eventually I paid £30, because I happen to know how to argue. I wanted a telephone put into this cottage, and it cost me 30s., for the same length of cable and the installation. If the noble Lord is going on with this policy, I think that he is going to find himself in trouble. On February 19, I asked him a question. I asked whether installation costs all over the country should not be borne by the overriding price structure, and the noble Lord replied [OFFICIAL REPORT, Vol. 201 (No. 35), col. 986]: I would not dissent from the noble Lord's contention that in general the cost of rural electrification should fall on the whole body of consumers. I think that that is the only correct policy. I admit that subsidy has to come from somewhere. The Herbert Report was dead against the policy I am now expounding, but I still think that it is correct. At the present time the farmer has a subsidy of 33⅓ per cent. for the electrification of his farm. I suppose that the cynic may say that the farmer now has an electrically heated blanket on his feather bed! But not all who live in rural areas are farmers. How are the others to get electricity? I hope that the noble Lord will reconsider this matter of policy, which I consider fundamental for a public utility, and a public utility which is also a monopoly. I think that it is a bad policy, and I hope that the Government will give it up as soon as they possibly can.

I come again to the siting of power stations. I understand that the Generating Board will have responsibility for the generation of both atomic and conventional power and will also have authority to put up transmission lines, which means the super-grid. I must confess to acute disappointment that the noble Lord, Lord Mills, who on two occasions expressed his great appreciation of the feelings of your Lordships' House on the sacrifice of amenity, has done nothing in this Bill to implement his appreciation of these feelings. As a matter of fact, when the Bill first went to another place, the noble Lord did precisely the reverse, and gave the Generating Board authority to enter private land at twenty-four hours' notice. I had hoped that in this Bill the noble Lord would have invented some better machinery for looking after the amenities of the country, which will be sadly despoiled if the present policy is followed.

The noble Lord and I have crossed swords about this matter on many occasions. I have told him that he has become a law unto himself, though he has denied this. As my noble friend Lord Attlee has pointed out, in all the enactments affecting his powers, going right back to 1820, he has accumulated so much power that he stands above planning permission. The noble Lord came to your Lordships' House and said that that was not the case, because his inspectors were always accompanied by an inspector from the Ministry of Housing and Local Government, who are responsible for preserving the amenities of the country. When I said that that was only to give a cloak of respectability to the proceedings, the noble Lord went on to say that it was because his Department would always listen to the inspectors on amenity.

But there are two cases which your Lordships know well, one within six miles of where the noble Lord lives, if the Daily Telegraph is telling the truth, in the heart of Worcestershire, where a fine historic village, scheduled by a preservation order under the Town and Country Planning Act, has been like jam to a fly, and the Central Electricity Authority have acquired eighteen acres right in the middle of it, or within destructive distance of it, to put up a transmission station for the super-grid. I had hoped that the noble Lord would have listened to the feelings expressed by the House and by the country and would have put into the Bill some machinery whereby at least the Chairmen of these inquiries would be independent and whereby their reports could be published. May I say respectfully to the noble Lord that in this matter the scales of justice have to weigh as evenly and as accurately as the scales of Avery always do?

Perhaps we may think of putting down Amendments on Committee stage to some of these provisions, because we are all anxious that this great power project, which is the life-blood of the country, shall be a success—on that, I do not think that there will be a dissentient voice. But I warn the noble Lord that he is heading for failure if he thinks that he can spend £3,000 million in material and nothing in brains. He is heading for failure unless he can carry the bulk of the ordinary people with him and preserve the amenities which are dear to the hearts of those who live in the rural areas.

5.10 p.m.

THE LORD CHANCELLOR (VISCOUNT KILMUIR)

My Lords, although this debate has lasted for only two and a half hours. I think everyone who has listened to it must have been struck with admiration at the variety of points that have been raised and the interesting way in which they have been put to your Lordships' House. I shall do my best to deal with those that seem most important, but if I omit to deal with some of them I hope that noble Lords in any part of the House will not hesitate to apply either to my noble friend the Minister or to myself for further information.

The noble Earl, Lord Attlee, put forward as his first criticism the fact that we, as a Government, have not adopted one recommendation of the Herbert Committee, and I should like to deal with that point. The noble Earl had in mind the recommendations concerning the reform of the Central Authority. As I understand these recommendations, the idea of the Committee was that, after generation and main line transition had been taken over by a new Board, the Central Authority should retain certain limited powers of supervision, as set out in recommendation 12 of the Herbert Committee Report. These were: to approve the Board's development programme, capital and revenue budgets, depreciation policy and reserve funds, bulk supply and retail tariffs, research and development; to consider complaints by Consultative Councils of individual consumers, and to supervise the labour relations machinery. But the Authority was to issue directions to the Board only with the Minister's approval.

Strangely enough, the noble Lord, Lord Lucas of Chilworth, quoted the phrase—and I think it was the idea which he repudiated with, if he will allow me to say so, such power—that motivated us against this proposal. The view taken was that such a body would exercise power over the industry without responsibility. In so far as the Minister confirmed its directions passively, he would, though still responsible to Parliament, be reduced to a cipher; if he played a more active part he would, to some extent, duplicate the Authority's organisation. An Authority of this kind set over the industry would destroy the sense of corporate harmony essential to its efficiency. All I want to say (and I think my noble friend, Lord Hurcomb, was interested in this matter) is that we considered the suggestion carefully; and we also considered carefully the possible alternative of a holding company structure. But there, again, we considered that, in view of the general interest taken in the activities of a nationalised industry, and in the absence of any yardstick of profit, it was less easy for a public corporation than for a holding company in private industry to run its subsidiaries with a light hand. A holding company structure, we thought, might lead to just the same over-centralisation of which it is desired to cure the present organisation of the industry.

The noble Lord, Lord Lucas of Chilworth, asked what was the idea behind the Council—I use slightly different words—and he asked me to try to deal with the point. Again, if I may deal with it now quite shortly, he can elaborate it later if he so desires. We felt that there must obviously be some machinery for considering the industry's problems as a whole and, in particular, for reviewing its capital investment programme, a matter on which the Herbert Committee laid particular emphasis. That is why the Government decided upon the new Electricity Council, mainly consultative and advisory in character, but with certain functions which the Statute might require it to exercise centrally on behalf of the industry, such as raising capital, or others which the Boards might wish it to exercise on their behalf. The noble Lord will have noticed that, as regards the investment programme, the Boards will be required to submit their proposals to the Minister after they have been examined by the Electricity Council. I would ask the noble Lord, Lord Lucas of Chilworth, to remember that the Generating Board and the Area Boards will all be represented on the Council, and though the representatives of the Generating Board will be a minority, their bargaining position will be strong, and neither they nor the Minister will be bound to accept the opinion of the majority. I believe that, from the aspect of functions and from the aspect of membership, this is a novel but, at the same time, imaginative method of dealing with the problem.

The noble Earl, Lord Attlee, then came hack to a very old friend—namely, the question of the manufacturing provisions—and regretted the exclusion of the power to manufacture electrical plant. That matter was carefully considered, and I am sure your Lordships will have in mind the provisions of Clause 2 (7) (a) of the Bill. There were really two questions. The first was the question of whether or not power to manufacture electrical fittings should be accorded to the Generating Board or to the Area Boards. That question was considered earlier by Ministers, and it was decided that the Boards should not be permitted to compete with private enterprise in this field. My right honourable friend the Paymaster General said in Standing Committee in another place: We believe that if those nationalised Boards are to carry out their purpose, in this case the generation and supply of electricity, they ought not to wander into far wider fields of activity. That is why we have taken away from them the power to manufacture electrical fittings, because we do not want the power to manufacture to be used at any time in such a way as would enable the nationalised industries to extend their activities beyond the activities for which they were established. I want to say that, so far as the operation of nationalised industries is concerned, I believe that we are still in the stage when a great deal can be learned. I do not think there is any Party issue here. A great deal of nationalisation has come to stay, as the Party to which I belong accepted after the period of the first Socialist Government. Therefore, it is up to all of us to apply the most critical minds in order to try to find the best method of running the nationalised industry. But, broadly, I should ask noble Lords who belong to a different Party from myself to consider whether that is not a reasonable attitude from the point of view of the success of a nationalised industry itself. If you give these wide ancillary powers, in my view you are going to distract attention from the main activity and in that way lessen its efficiency.

As regards the second point, the manufacture of electrical plant, we have felt that we ought to withdraw that power, first of all for the reason that I have already mentioned. But that was not the only reason. The manufacturing industry in the United Kingdom is capable of meeting all the plant requirements of the nationalised industry. Competition, should it arise between the nationalised industry and the plant manufacturers, might well be unfair competition, because the nationalised industry can obtain its capital on easier terms. Fourthly, the manufacturing industry, if it is to succeed in export markets often with small profit margins, must have a secure basis of home demand.

I wish to answer the criticisms that have been made with regard to the question of monopoly or restrictive practices. The fact is that the manufacturers were operating a common price system long before the Central Authority was set up with these powers. In spite of that, the powers that were given to the old Central Authority under Section 23 (a) of the 1947 Act to manufacture plant and fittings have hardly been used at all. After the suggestion was made to the Herbert Committee that the Authority should have exercised these powers and so helped to depress the price of heavy electrical plant, the Herbert Committee expressed the view that it was: certainly not a very practical or economical proposition at the present time for the Central Authority to undertake the manufacture of this very complicated engineering equipment, which would require investment in plant and buildings on a large scale and the recruitment of skilled labour… The other point, as my noble friend made clear in introducing this Bill, was that agreements restricting prices have now to be registered under Sections 6 and 9 of the Restrictive Practices Act of last year, and the Registrar of Restrictive Trading Agreements may bring them before the new Restrictive Practices Court for review under Section 20. If I may say so with happy memory, after the detailed examination and criticism which the noble Lord, Lord Lucas of Chilworth, gave to these sections, I think I am right in saying that these are the portions of the Bill which emerged relatively scatheless and with which all Parties in this House were relatively pleased. Therefore, I think we have now a new weapon, apart from the point that was noted by the Monopolies Commission when they examined the general problem before we introduced the Bill. Although they said that the price agreements were against the public interest, they also pointed out that the purchasing strength of the Authority on the one side had to be balanced against it, and they did not think that either side would get any advantage over the other. I should also like to mention—and this is the last point, and perhaps we shall not need to refer to it again—that my right honourable friend Mr. Aubrey Jones, the previous Minister, stated in the House of Commons that whether the Authority or its successors should purchase abroad was to be a matter for their commercial judgment; therefore, if they felt that they had, for commercial reasons, to do so, that course was open to them.

LORD LUCAS OF CHILWORTH

Of course, the expression which my noble friend Lord Attlee used still holds good. The Restrictive Trade Practices Act is but an insurance, and we have not yet had any experience at all as to how it will work. If the noble and learned Viscount can give us an assurance that the delay in dealing with matters of exploitation will be dealt with quickly, it may ease our feelings a little.

THE LORD CHANCELLOR

That raises nostalgic memories, going back to the undertakings with regard to the Restrictive Practices Act, because the noble Lord, Lord Lucas of Chilworth, asked me for so many. But I think the noble Lord knows two things: first, that the Restrictive Practices Act is a piece of legislation in which I have the keenest personal interest and the greatest desire to make a success, and, secondly, that I believe we have a workable and a sound system. I am not, I assure him, putting this forward as a method of repelling criticism but as a new answer that has come into the matter since it was first considered.

There is only one other point as to the general necessity of the Bill. Really there are two aspects. One is the separation of the generating powers and the supervisory powers. At this stage, when your Lordships are all acquainted with the arguments in the Herbert Report and have heard to-day's debate, I want to say only that, so far as I am concerned, I am satisfied that there should be that separation. The other aspect is the question of de-centralisation which arises with regard to the Area Boards. Here, again, is something which I hope we shall be able to take out of Party politics with regard to nationalisation. I am fortified in that hope by having read a number of extracts from the debate on the 1947 Act. If I might give one—it happens to be the shortest, but it is one of five that I have—it is from the right honourable gentleman, Mr. Shinwell. He said [OFFICIAL REPORT, Commons, Vol. 439, col. 145]: I am all in favour of de-centralisation, and that is why I have suggested over and over again in the course of our proceedings in the Committee stage that these boards, so far as practicable, should be fully autonomous. I have a long, quotation from Mr. Gaitskell with which I shall not trouble your Lordships, but it is in column 995 of the OFFICIAL REPORT for June 30, 1947. I have an equally strong quotation from the noble Viscount, Lord Hall, made in your Lordships' House on July 22, 1947.

Then I refer again, because it is short, to another quotation from Mr. Gaitskell. He said [OFFICIAL REPORT, Commons, Vol. 439, col. 382]: We do not want to put into a Statute any provision saying that Area Board accounts must balance year by year. I would not, personally, dissent from the view that it is desirable that accounts over a period of years should be balanced. I do not want to push the argument too far, but I thought that, in view of what the noble Lord, Lord Lucas of Chilworth, said on this question, in that most interesting portion of his speech, he would like me to remind him of that so that he could consider it. But, taking that as a whole, with the background of the Herbert Report, with the greatest good will in the world I cannot see that anyone to-clay could say that we could have avoided legislation or that this Bill is not necessary.

I come to a different aspect of the matter which was raised by my noble friend Lord Gridley, in a speech of great interest on a subject on which, if he will allow an old friend to say so, he speaks with very great authority. As I understood his suggestion, it was that the stations should be operated, but not owned, by the local Boards. I could again, as he will understand, go into this matter in considerable detail, and build up from the Herbert Report, but I will only remind him that the question of operation has been considered at great length. Of course, the Herbert Committee—and it is the basis of this Bill—expressed themselves firmly of the opinion that the two functions of generation and distribution should be kept separate. In the same friendly spirit as my noble friend showed, I ask him to consider these difficulties which have occurred to me. That will not prevent me from considering carefully what he has said to-day, and I hope that he will give some consideration to these points of mine.

The first is that, if the Area Boards were to act as the operators of power stations in their respective areas, they would be subject to a considerable measure of control by the Generating Board which would have to retain responsibility for siting the power stations and for national grid control. In my view, that would run counter to the main purpose of the Bill, which is to advance the autonomy of the individual Boards. Moreover, as I see it, it would also impair the autonomy of the Generating Board itself, by virtue of the fact that an important part of its functions would be carried out on an agency basis by the employees of the other Boards; and, with such a division of functions, it is difficult to see how the Generating Board could be held responsible for making its business pay.

Again, as the Herbert Committee pointed out, it is unlikely that the boundaries of the generating divisions will, or indeed should, remain co-terminous with those of the distributing Boards. They foresaw that the advent of larger coal and oil-fired stations, and the siting of those stations in relation to fuel and water resources, the advent of nuclear stations and the development of the super-grid, would eventually result in a national generating and main transmission system which would no longer coincide with the distribution of the areas. If my noble friend would like to consider this question at more length, he will find it dealt with in paragraph 229 of the Report.

In these conditions it may well be that the geographical distribution of power stations will become increasingly uneven as between different Area Boards throughout England and Wales. I have the fear that if my noble friend's proposals were accepted the results would be that some Boards would bear a disproportionate share of the operating costs which would have to be passed on mainly to the importing Boards. Of course, as my noble friend will remember—and he will appreciate it more—the Herbert Committee also pointed out that the distribution of electricity is primarily a commercial matter; and they said that in their view it would be unsound for the Area Boards to widen the field of their existing responsibilities, since the operation of power stations is essentially an engineering matter closely bound up with the national grid control which is to become the responsibility of the Generating Board.

It shows how different problems appear differently to different minds. I speak with great diffidence in answer to my noble friend Lord Gridley, because of his immense experience in the matter. My experience is merely ministerial, not concerned with the particular Department, but I should stress two things. One is that, if the country's electricity needs are to be met with the utmost economy, and without the installation of more capacity than is necessary (that is the point the noble Lord, Lord Lucas of Chilworth, has always been insisting we should look at most carefully) and, in addition to that, if the nuclear programme is to proceed at the tempo we require, there must be one body responsible for providing an efficient co-ordinated and economic system of bulk supply for England and Wales, as laid down in Clause 25. If that body is to delegate to Area Boards the operation of the power stations, the sole responsibility for the bulk supply system as a whole cannot be given to one body. I believe that dividing responsibility would make for inefficiency.

The other point—and this is one which I make with even greater diffidence, because my noble friend saw it the other way—is that it seemed to me that the transfer of the operation of generating stations to Area Boards would affect adversely the Central Board's engineering staff. Their prospects of promotion would deteriorate in different degrees, according to whether the Area Board to which they were transferred had many or few power stations in its area; and that would certainly cause great resentment. Moreover, human nature being what it is, if my noble friend's suggestion were accepted, the Generating Board would tend to keep their best engineers and let the Area Boards have the others. That is the way human nature works, very often—I do not think I am being too cynical in saying that. That would not be conducive either to the efficiency of the industry as a whole or to the spread of nuclear experience in the engineering staff. I put that point because I wanted out of respect to my noble friend to show him that we do consider these points. I should like to give him the opportunity of seeing this argument in Hansard. I shall be delighted to hear his further comments upon it at a later time.

I am sorry to take so much of your Lordships' time, but most interesting speeches have been made in the debate, and I do not want to appear to fail to deal with them. I have tried to deal with what I may call the general worry which my noble friend Lord Hurcomb had. I should like the chance (I am sure my noble friend Lord Mills will agree) of considering the noble Lord's speech at leisure when we are able to read it in the OFFICIAL REPORT. No one could exceed my own admiration for Lord Hurcomb's experience. I am probably the only Member of your Lordships' House who has actually appeared before Lord Hurcomb when he constituted a quasi-judicial tribunal and dealt with that most difficult and controversial subject, the Bankside Power Station. Therefore, having tried to charm him from the advocates' benches, I hope that he will allow me to consider at leisure and at length the other important points that he has made to-day. My noble friend Lord Strathclyde has freed me from dealing with the somewhat pessimistic but eloquently described picture of our native land which my noble friend Lord Airlie gave, and so I shall not cross the Border, even in spirit, for the next few minutes.

That brings me to the interesting point that was raised by the noble Lord, Lord Simon of Wythenshawe. I should like to say at once that the Government heartily endorse the noble Lord's desire to get the best possible men for the job; but with all that I have said, I feel that there are difficulties about adopting either of his two suggestions—either that about appointing the members for more than five years, or the second, for making the Board, so to speak, self-filling. I think one must face it, as a matter of practical, political experience, that the extent to which any Government should commit their successors as to the personnel of these national Boards is limited. I know that in a perfect universe one ought to be able to insulate it; but we are not dealing with a perfect universe, and one has to take into account the fact that five years is really the life of a Government.

But, if I may turn from the theoretical to the practical, I do not think that the noble Lord had in mind the happiest aspect of what has actually occurred. According to my information (if I may state the noble Lord will then have a chance of questioning it if he so desires), it is not entirely accurate to say that Board members seldom serve more than one term. Lord Citrine has been Chairman, and Sir Henry Self Deputy Chairman, of the Central Electricity Authority since its inception. Sir Harold Smith has been at the head of the Gas Council, first as Deputy Chairman, and then as Chairman, since the Gas Act, 1948, was passed; and among the Electricity Area Boards, there has been only one case of a Chairman or Deputy Chairman, who would have been able to serve again, not being reappointed. The noble Lord will know the case that I have in mind. Apart from that, there have been other cases where there have been unfortunate occurrences into which I am not going but again the noble Lord probably remembers them. That is the information that is given to me, and it is some cheer on the important point which the noble Lord raised. He will remember that in paragraph 318 the Herbert Committee agreed that an initial term of five years was about right, although the Committee thought that if the Minister had greater discretion as to individual terms of appointment, it might help him to get the best men available.

My Lords, one must face this position. The function of appointing members of Boards is the most important single means by which the Minister and Parliament can ensure that nationalised industries are being run in the national interest, It is a basic concept of nationalisation that the Minister should appoint men in whom he has full confidence, and should leave to them the day-to-day operation of the industries. I hope that the noble Lord will think this a point worthy of his consideration. If the Minister loses the right to appoint such men as I have described, the result might well be an increase in day-to-day interference with the work of the Boards. It is only when the Minister can depend, and knows that he can depend, on these people that he is able to leave them to it.

It is a long time since the noble Lord, Lord Simon of Wythenshawe, was in another place, but he will know—and here I think everyone who has been in another place will agree with me—that there is a general battle going on all the time to try to prevent questions and discussion on day-to-day management. It is only natural that a Member whose constituents have some difficulty—it may be because the 9.38 has been arriving at 10.22—should want to bring it up if he can. That is only natural, because in a nationalised industry there is no shareholders' meeting. It would be a bad thing, as we all agreed when these Bills were being passed, if this kind of thing were brought into operation.

I now come to the other question which the noble Lord, Lord Simon of Wythenshawe, raised and which the noble Lord, Lord Lucas of Chilworth, strongly supported indeed, he has often raised it in your Lordships' House. I refer to the question of salaries. I do not seek to controvert either of their arguments. The first argument is the importance of getting men of first-class quality and capacity, and the second argument, as I understand it, has always been that if you depress the salaries of the chairmen, then you will have a depressing effect on the executives and the other people. I do not think I can do better than quote to your Lordships what my right honourable friend Mr. Aubrey Jones, the former Minister, said on the Second Reading of the Bill in another place. He said on December 17, 1956 [OFFICIAL REPORT, Commons, Vol. 562, col. 951]: One of the reasons for the weakness, as the Herbert Committee said, and as the Fleck Committee said at an earlier point of time, is the great disparity in rewards at the top of a nationalised industry compared with those at the top of private industry. Mr. Aubrey Jones went on to say: I very much regret that the financial and economic situation does not make it possible for the Government to act on this now; but, I would add, the Government are giving very serious thought to this matter and recognise and appreciate the force of the comments made by both Committees. More than that I cannot at the moment say. I should only like to add that I and, I am sure, my noble friend Lord Mills appreciate the force of these comments just as much as my right honourable friend, Mr. Aubrey Jones.

LORD LUCAS OF CHILWORTH

My Lords, while it ill becomes a Member of your Lordships' House to criticise what was said in another place, although it came from a Minister, may I say that I should have reversed what was said by the Minister. I would have said that we can ill afford not to do it; for I have never heard a more ridiculous excuse for not paying talent than that the economics of the country will not allow us to pay for it. It is because we have not paid for talent that the economics of the country are in their present state.

THE LORD CHANCELLOR

My Lords, the noble Lord has adduced strong arguments, and I think from what I have quoted from my right honourable friend your Lordships will see that he was extremely sympathetic towards those arguments. I do not think that the noble Lord, Lord Lucas of Chilworth, would like me, at this stage of my own speech, to begin an answer to his excursus on the thesis that this should be a Bill dealing with electricity, coal, gas and oil, instead of being merely an Electricity Bill; because that would take us outside the scope of the debate, although I was very interested in what he had to say.

The noble Lord has previously voiced concern in your Lordships' House as to, the extent of investments, not only in power but in public utilities generally, and has expressed his desire for an overall review. I should like the noble Lord to consider the other side of it, which I think one can put in a sentence. My noble friend Lord Mills said that we had to pay regard to the needs and changes of the next two decades. The noble Lord, Lord Lucas of Chilworth, knows that these are not only needs and changes as to forms of power but are needs and changes in regard to population. In that period we have to look forward to a time when a relatively small central section of the population, not a minority but a section small compared with the whole population, is supporting the education which we want—and improved technological education at that—for those who are to play and make a growing part for our country in the new scientific age, and also supporting a doubled section of people on retirement which the figures show is likely to come in the same period. That is what we have to face, and there is no getting away from it.

I believe it is most important that we should put behind that relatively small central section the greatest amount of investment in power, energy, machinery and transport that we can. I believe it is essential for our survival. But I do not for a moment forget that capital investment of that kind is asking a great sacrifice of the present generation. They are making it at a time when the problem is less acute in order to deal with the problem which nobody denies is bound to come. While I entirely agree that it is the duty of the Government to make the most critical overall review of capital investment—I do not dissent from the noble Lord in regard to that—the other problem must be faced. I apologise for taking so much of your Lordships' time, but, as I hope I have demonstrated, for it is certainly true, I found the speeches in the debate very interesting, and they have led me perhaps to speak at too great length myself. I hope, after that, that your Lordships will now give the Bill a Second Reading.

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