ELECTRICITY BILL

HL Deb 30 May 1957 vol 204 cc131-45

3.12 p.m.

Amendments reported (according to Order).

Clause 2 [Establishment, constitution and functions of Central Electricity Generating Board]:

LORD GRIDLEY moved, after subsection (6) to insert: (7) The Generating Board shall have power to enter into agreements with any Area Board whereby the Area Board operates and maintains generating stations in its area and generates electricity as agent for the Generating Board, and the Area Board shall have power to act accordingly. The noble Lord said: My Lords, this Amendment is such a simple one that I do not think I need take up much of your Lordships time in dealing with it. It will be remembered that on the Committee stage I moved an Amendment which was not accepted by my noble friend the Minister. The purpose of that Amendment was to transfer the operation of generating stations from the new Generating Board which is to be set up under the Bill, and which will, as the Bill stands, have the duty of operating stations, to the Area Boards, where for many years it was.

There is strong feeling in many quarters to-day, although I must admit that it is not a unanimous opinion, that the operation of these stations should revert to the Area Boards. I gave a number of reasons on Committee stage, with which I do not propose to burden your Lordships again to-day, why this should be done; but having been refused, I have now become almost too reasonable, because this Amendment is so simple that all it does is to enable the new Generating Board and the Area Boards, if they so wish, to agree together about the operation of these stations. If the Generating Board wish one or more of the Area Boards to relieve them of their responsibility, the way will be paved for that to be done. On the other hand, there is nothing compulsory about this Amendment. It leaves this matter an entirely voluntary one for arrangement between the two authorities. I should think that there could not possibly be any objection of any weight against a reasonable Amendment of this kind. I do not know what reply is to be made, and whether it is likely to be satisfactory, but I would say to your Lordships that unless the reply convinces me that this is an unnecessary or harmful Amendment, I shall feel inclined to ask the support of your Lordships in the Division Lobby. I beg to move.

Amendment moved— Page 2, line 33, at end insert the said subsection.—(Lord Gridley.)

THE PARLIAMENTARY SECRETARY, MINISTRY OF DEFENCE (LORD MANCROFT)

My Lords, I hope that the gentle and reasonable way in which my noble friend Lord Gridley has moved his new Amendment has not disguised from your Lordships the fundamental and far-reaching nature of his proposals. As my noble friend reminded the House, on Committee stage, he introduced a series of Amendments which would have required the Generating Board to hand over every power station to the Area Board concerned, for operation and maintenance. After an interesting debate, we persuaded my noble friend to withdraw his Amendment, though clearly the withdrawal afforded him no happiness whatever. I developed the case in some detail then, and I will not weary your Lordships by doing that again, because much of what I had to say then is common to this new Amendment. My noble friend has returned to the charge with a fresh Amendment, but this time his proposal is that the transfer of power stations by the Generating Board to Area Boards should be made possible but not obligatory. I am sorry to tell him that the kind of transfer he now proposes is no more acceptable to the Government for being merely permissive. It is open to a number of objections, many of them the same as those which I explained to your Lordships on my noble friend's previous Amendments.

Let me remind my noble friend and your Lordships briefly what the reasons were and why they apply equally to this Amendment. The Herbert Committee thought that the separation of generation and distribution was sound and that it would be a retrograde step to hand over main generating stations to the Area Boards. Electricity would be cheaper, they considered, if the generating system were under one body. The best results would be obtained if the Area Boards were left free to concentrate on the mainly commercial problems of distribution, and the generating authority on the mainly engineering problems of generation and supply in bulk.

My noble friend quoted several extracts from the Herbert Committee's Report to indicate that many officers of the former undertakings disliked the separation of generation and distribution when the industry was nationalised and that the Committee saw force in the argument that if the Area Boards were responsible for constructing and operating the power stations which served them, there would be a considerable incentive to economy. But the fact is that, having weighed these arguments, which my noble friend quoted in detail, the Herbert Committee came to the opposite conclusion, for reasons which the Government consider to be sound. Although my noble friend maintained that economies in staff would be possible by combining generation and distribution, the Herbert Committee took the view that greater economies would be possible by combining generating divisions.

For all these reasons, we feel that it would be most inexpedient to give Area Boards any encouragement to seek agreement with the Generating Board for taking over the Generating Board's power stations in their areas. Some Area Boards would no doubt welcome such an opportunity, but that does not alter the Government's belief that at this stage in the industry's expansion, the devolution, whether optional, as my noble friend now wants, or compulsory, as he originally suggested, of the Generating Board's functions to the Area Boards would not give the industry the structure which is likely to produce the best results. After thinking the matter over carefully, we feel that this proposal would be unsound. As my noble friend said at the beginning, the proposal is fundamental and goes to a major root of the Bill. I only wish that I could transfer to this new Amendment the affection and respect that I feel for its mover, but I am afraid that I cannot. I very much hope that my noble friend, having thought over the matter, will not see fit to take the action which he proposed at the end of his speech.

LORD HURCOMB

My Lords, I feel that my noble friend Lord Gridley has made a very much modified proposal compared to that which he made at the previous stage of the Bill. If I correctly understand the present Amendment, it gives the Generating Board absolute discretion to decide whether or not they delegate the operation of a station to an Area Board. I can, of course, appreciate that there are objections even to that course on the grounds that the noble Lord who has just spoken has given; but if that is so I find it very difficult to understand why the Bill itself, in Clause 5, proposes to give the Area Boards, in certain circumstances, the right to generate, subject to ministerial approval. I can understand the logic of the distinction drawn by the Herbert Committee, when they say that distribution is one thing and generation another, and that the two should be in entirely distinct hands, but I find it a little difficult to argue very strongly against Lord Gridley's Amendment and at the same time support Clause 5.

LORD GRIDLEY

I must confess that my noble friend Lord Mancroft's answer leaves me entirely unconvinced. I would ask your Lordships to consider this point. It may be true that the Herbert Committee, when they framed their Report, came down in favour of leaving the operation of power stations where it now is. But I venture to point out—and I ask your Lordships to give great importance to it—that since that Report was issued we have had from the noble Lord the Minister himself a statement in this House which will put upon this new Generating Board the very enlarged task of constructing the increased number of atomic stations—a task which, so far as any of us knows, was not under contemplation at the time of the Herbert Report; or, if it was, little or no public announcement of it had been made. The new Generating Board, therefore, will have an immense programme, and one of the fears expressed in our last proceedings was that the construction of these new power stations might not proceed at the tempo required to meet the rapidly increasing demand for power for all purposes, industrial, commercial and domestic.

As we all know, or I think we all know, the industry doubles itself—at least it has done in recent times—every ten years. Therefore we have by no means reached saturation point, and if we are to make ourselves less dependent on oil it is admittedly of vital importance that these atomic power stations and some very large projected coal-fired conventional stations should be proceeded with as rapidly as possible. That being so, I think we ought not to put upon the new Generating Board any heavier task than the one which the capital construction of stations would put upon it. I am not suggesting now, in my reasonableness, if I may so claim it, what I suggested originally, that the Generating Board should transfer its responsibilities for operating the existing and new stations to come; I am leaving them where it was suggested they should be left, with the new Generating Board.

When all is said and done, the argument put forward by the Government is really a very thin one. I think it is well known to noble Lords, and in particular to those who occupied important positions in borough councils and the like, in the days when our municipalities had their own undertakings, that the operation of power stations should be coupled with the business as a whole and not separated, with the disadvantages involved, as is proposed under this Bill, which continues what many consider to be a bad practice. In order that views should be heard both for and against, I thought it, in the circumstances, only proper to put down an enabling Amendment. Even if it is carried it may never be acted upon, but if the powers-that-be come to the conclusion at any time during the next few years that they must be relieved of some of their responsibilities, and can reach amicable agreement with the Area Boards to take over this duty, there can be no possible reason which has any substance to it to put it out of their power to enter into such agreements.

There is nothing fundamental, as my noble friend Lord Mancroft claimed, about this Amendment. It does not weaken the Bill one iota; it raises no

questions of nationalisation or private enterprise. In fact, this step, if it were to be eventually carried out, would only support one of the main objectives expressed in the Herbert Report, that it was essential to put Area Boards in a position of having some autonomous powers. This would be a step in the direction of transferring such powers. I am not arguing to-day whether they should be transferred or not: I am only suggesting that the way may be there, the road open, if the parties should desire to make use of it. I cannot conceive why the Government can have the slightest hesitation at all in agreeing to this simple and unobjectionable Amendment. I am grateful to my noble friend, Lord Hurcomb, for his support, and I feel that I must ask the House to divide on a matter on which I think the Government might quite well have given way.

THE MINISTER OF POWER (LORD MILLS)

My Lords, I should like, with your Lordships' permission, to say just a word about this Amendment. It does cut across the fundamental purpose and the fundamental theme of this Bill. The Herbert Committee recommended that the function of generating electricity should be separated from the function of distributing it. That is what this Bill does. While this is a permissive Amendment, it still returns to the old method which the Herbert Committee rejected—a decision which the Government accepted. With regard to Lord Hurcomb's point, I am aware of the provision in Clause 5; that was put in in order to further the cause of rural electricity in cases where an Area Board might find it convenient to put up small stations.

On Question, Whether the said Amendment shall be agreed to?

Their Lordships divided: Contents, 6; Not-Contents, 51.

CONTENTS
Ridley, V. [Teller.]	Gridley, L. [Teller.]	Saltoun, L
	Rea, L.	Sinha, L
Grantchester, L.
NOT-CONTENTS
Kilmuir, V. (L. Chancellor.)	Lansdowne, M.	Gosford, E.
	Reading, M.	Howe, E.
Home, E. (L. President.)		Listowel, E.
	Attlee, E.	Lucan, E.
Buccleuch and Queensberry, D.	Beauchamp, E	Morley, E.
	Dundee, E.	Onslow, E. [Teller.]
Cholmondeley, M.	Fortescue, E. [Teller.]	St. Aldwyn, E.
Suffolk and Berkshire, E.	Burden, L.	Leconfield, L.
Woolton, E.	Chesham, L.	Lucas of Chilworth, L.
	Colyton, L.	Mancroft, L.
Alexander of Hillsborough, V.	Croft, L.	Mathers, L.
Bridgeman, V.	Fairfax of Cameron, L.	Merrivale, L.
Cilcennin, V.	Fraser of North Cape, L.	Mills, L.
Gage, V.	Gifford, L.	Milner of Leeds, L.
Goschen, V.	Haden-Guest, L.	Newall, L.
Massereene and Ferrard, V.	Hawke, L.	Shepherd, L.
Soulbury, V.	Henderson, L.	Strang, L.
	Joicey, L.	Thurlow, L.
Belstead, L.	Latham, L.	Wolverton, L.

On Question, Amendment agreed to.

Clause 3:

Establishment, constitution and functions of Electricity Council

(2) The Electricity Council shall be constituted as follows:— (a) the Minister shall appoint a person to be the chairman of the Council, and shall appoint two other persons to be deputy chairmen of the Council, and may (in addition to the members so appointed) appoint as members of the Council such number of other persons, not exceeding three, as he may from time to time determine;

LORD MILLS had given notice of two Amendments to subsection (2) (a), the first being to omit "of other persons". The noble Lord said: My Lords, I have put down this Amendment to facilitate an addition to subsection (3) to meet the Amendment proposed in Committee by the noble Lord, Lord Lucas of Chilworth. The purpose is to specify in the case of the Electricity Council the kind of people from whom the Minister should make his appointments, in the same way as applies to the Generating Boards. I hope that the Amendment will be satisfactory. I beg to move.

Amendment moved— Page 3, line 24, leave out ("of other persons").—(Lord Mills.)

LORD LUCAS OF CHILWORTH

My Lords, I assume that the noble Lord is referring to Amendments Nos. 2 and 3. If I may be allowed to say so, even at this stage, I think the noble Lord has, with commendable accommodation, tried to meet us in quite a number of these Amendments. I am glad he has done so in this case, because as the Electricity Council will have the onerous task of conducting the national wage and conditions of employment negotiations, we thought it only right that upon that body there should be somebody, at least, with a knowledge of the organisation of the workers. The noble Lord has said that we are right, and I am deeply grateful to him for meeting us.

LORD MILLS: My Lords, this Amendment is consequential. I beg to move.

Amendment moved— Page 3, line 25, after ("three") insert ("of other persons (being persons appearing to the Minister to be qualified as mentioned in subsection (3) of the last preceding section)").—(Lord Mills.)

3.42 p.m.

LORD MILLS moved, after Clause 3 to insert the following new clause:

Whole-time members of Generating Board, Electricity Council and Area Boards.

". In the exercise of his powers of appointing members of the Generating Board or of the Electricity Council in accordance with sections two and three of this Act, or of appointing members of an Area Board in accordance with section three of the principal Act, the Minister shall secure that as many of the members so appointed as he may consider requisite for the efficient performance of the functions of the Council or Board shall be appointed as whole-time members of the Council or Board."

The noble Lord said: My Lords, the object of this Amendment is to admit the principle which the noble Lord, Lord Lucas of Chilworth, asked me to admit when we considered this matter in Committee—that there should be full-time members of these Boards. I have put it down in this way in order that the Minister can ensure that there should be a proper balance between whole-time and part-time members, with the object of securing the best possible management in these Boards. I beg to move.

Amendment moved— After Clause 3, insert the said new clause.—(Lord Mills.)

LORD LUCAS OF CHILWORTH moved, as an Amendment to the above Amendment, at end to insert: and among the number of whole-time members so appointed there shall be included the chairmen and deputy chairmen of the Council or Board.

The noble Lord said: My Lords, I am again grateful to the noble Lord for moving his Amendment. It writes into the Bill the principle that I asked him to be kind enough to insert. I hope he will not think I am being churlish in putting down the Amendment I have for the purpose of carrying it a stage further. I was tempted to do so because I believe that we must have full-time members of these Boards and we must have the right men, and we shall not get the right men, at least in my opinion, by having a substantial number of part-time appointments. I expressed my own opinion upon the value, as experience has taught us, of part-time men, and I do not intend to weary your Lordships with a repetition of that.

But I thought it would be as well if I reminded your Lordships of what the Herbert Committee say in paragraph 253 of their Report. That paragraph reads: The Central Authority we have in mind would need to be of high quality and should consist of members of outstanding capacity whose judgment and knowledge would command respect. They go on to say: We suggest three full-time members, of whom one would be the Chairman … That is the Council—the overriding authority. They go on to say in paragraph 256, referring to the Generating Board: We suggest it should have a full-time Chairman … and four to six other members who should in the main be full-time. I thought the Minister made a very good case on the Committee stage, when we discussed the Amendment I submitted that there should be a minimum number of full-time appointments to not only the Council, but also the Generating Board and the Area Boards. I do not want to tie the hands of the Minister, but I know he will agree with me that there is a difference between tying his hands and giving him a blank cheque. My experience of the Minister up to date is that I would entrust him with any cheque of mine that was quite blank. But Ministers come and Ministers go, and I think we should at least write something into this Bill beyond the principle of having full-time members.

I have had second thoughts upon the matter since I put this Amendment down, because I recall that the Minister wanted some elbow room in making new appointments; he did not want to be fettered by having to appoint a full-time Vice-Chairman or Deputy Chairman to one of the Boards. The Minister—and I was grateful to him for so doing—was frank enough to take us into his confidence. If I withdraw this Amendment, I wonder whether the noble Lord would agree to accept an Amendment on the Third Reading to write into the Bill that the Chairman of the Boards shall be full-time, rather on the lines of my Amendment, which says: and among the number of whole-time members so appointed there shall be included the chairman and deputy chairmen of the Council or Board. If I leave out the words "deputy chairmen", would the Minister give me an assurance on that point? If he will, I shall be only too happy to withdraw my Amendment. It gives him the elbow room he wants. The noble Lord told us on the Committee stage that it was his intention to appoint all the chairmen full-time. I think that that is very necessary, and I am willing to help him in that degree if he will accept my help. I beg to move.

Amendment to Amendment moved— Line 8, at end insert the said words.—(Lord Lucas of Chilworth.)

LORD MILLS

My Lords, I am grateful to the noble Lord for his understanding in this matter. As he has said, we discussed this matter at some length in Committee, and I am impressed with his arguments. But I think we should retain a certain amount of flexibility. The sole objective is to get the best possible men for these jobs, and it is not always easy. For example, I see that the Herbert Committee, in paragraph 281, came to the conclusion that for the Area Boards we might have to consider appointing part-time Chairmen. I can envisage circumstances in which that may be necessary if we want a strong Executive and a wise Chairman to rule it. In the case of the Council and the Generating Board, I have no doubt whatever that the Chairmen should be full-time Chairmen. If the noble Lord would agree with that being specified on Third Reading, I would gladly do so.

LORD LUCAS OF CHILWORTH

My Lords, I gladly accept the noble Lord's offer. I think he has met us on principle and has given us just that little bit extra which is so welcome. On that understanding, I will ask your Lordships' permission to allow me to withdraw the Amendment.

Amendment to the Amendment, by leave, withdrawn.

LORD LUCAS OF CHILWORTH moved after Clause 3 to insert the following new clause: . The terms and conditions of the appointment of all members of the Generating Board. Electricity Council and Area Boards shall conform to good industrial and commercial standards.

The noble Lord said: My Lords, we have had a most interesting discussion upon this vexed problem, the terms and conditions of the appointment of members of nationalised boards. After that interesting discussion, the noble Lord said that he would think about the matter again. With a frankness which I appreciated, he did not attempt to controvert my arguments that the present terms and conditions of appointment of not only the Boards that are being formed under this Bill but the Boards of all nationalised bodies did not reflect any great credit upon our desire that they should be composed of the best possible men. Since the last stage. I have looked at what the Herbert Committee had to say upon this most important subject. It is strange that it had slipped my memory, but the Herbert Committee underlined in better language than I used the whole of the arguments that I raised in your Lordships' House. In paragraph 308 they said: An industry is no more efficient than the men who run it All our previous recommendations for organisational changes depend for their fulfilment on the abilities and enthusiasm of the men who work in the industry and on the men who lead them. Efficient management will to some extent overcome or mask any deficiency in organisation, but no organisation, no matter how perfect, will lead to efficiency unless the top management is of the right calibre and, in our opinion, unless it is adequately remunerated. Then in paragraph 311 they said: The electricity supply industry is one of the most important industries in the country. The Electricity Boards are large industrial organisations and the top management of these concerns must have the same qualities of management and flair for commercial enterprise as the leaders of any other major industrial undertaking. We have been concerned to look closely into the question of the salaries of Board members, as this has a profound effect not only on the calibre and future supply of top managers to the industry but also on the grading and salaries of management and technical staff throughout the industry. There are quite a number of paragraphs in that strain. One pertinent remark is made in paragraph 315, where the Herbert Committee state quite emphatically: We also regard the current rate of remuneration of £500 for part-time members of the Central Authority and Area Boards as entirely inadequate and out of scale with present conditions. We consider this remuneration to be almost derisory … Now your Lordships will remember that the noble Lord said that he might—he did not say it with any great conviction, I might add—have a difficulty in interpreting the words that I had put into my Amendment, that The terms and conditions of the appointment of all members of the Generating Board, Electricity Council and Area Boards shall conform to good industrial and commercial standards. The noble Lord said he might have a job to determine what a "good industrial standard" was. I chided him to the effect that he has had to do this, as I have, thousands of times in his life and he would have no real difficulty in coming to a conclusion like that in future. In point of fact, the Herbert Committee themselves tried to do it. What they say and the figures they give are worth quoting, for I think it might make the public wake up to the fact that we are trying to run our national industries on charity and not on a sound, commercial basis. This is what they say, in paragraph 316: We have been more concerned in our deliberations on this question with the criteria adopted by the Government for the determination of salaries of Board members than with an assessment of the actual salaries which should be paid. If it is helpful for us to express a view on this question, we consider, after taking into account the depreciation of money since 1947 and the salaries for comparable posts in private industry, that the salaries of the Chairman and full-time members of the Central Authority should be at least £10,000 and £8,500 respectively, whilst the salaries of the Chairman and full-time members of the Generation Board should be at least £8,500 and £7,000 respectively. The post of Area Board Chairman should command £6,000 for a full-time and £3,000 for a part-time appointment, and the remuneration of other part-time appointments to the Central Authority and Boards should be at least £2,500 and £1,000 respectively. The salary of the Area Board's Chief Executives would of course be for those Boards to determine themselves, but we would suggest they should not normally be paid substantially less than the salary we propose for a full-time Area Board Chairman. So they have tried to give the noble Lord a suggestion.

The noble Lord, in asking me to withdraw my Amendment last time, suggested that perhaps it was not appropriate to put a clause like this into a Bill. I accept that argument. I wanted to insert the thin end of this wedge somewhere, as this is a battle that I have fought ever since I had anything to do with, or had a personal interest in, this matter, when I was the Parliamentary Secretary of the Ministry of Transport. I make no bones about it. I think that one of the reasons for the non-success of that particular nationalised industry, if your Lordships will allow me to use again a vulgarism which I have used before, is the "chicken feed" remunerations that we have tried to pay to those who are running an industry with a turnover of £800 million a year. The noble Lord was good enough to say that he had no quarrel with my arguments—he supported them, as I knew he would have to unless he belied the whole of his industrial life, which he cannot do. He said he would give this matter second thoughts. I have put down this Amendment so that we may have the benefit of those second thoughts. I beg to move.

Amendment moved— After Clause 3 insert the said new clause.—(Lord Lucas of Chilworth.)

4.1 p.m.

THE EARL OF WOOLTON

My Lords, if the noble Lord opposite can get over the fact that I rise to support him on this issue, I should just like to say to the Minister that I hope he will give favourable consideration to this Amendment. We have the nationalised industries; all Parties are pledged to keep them, and we want them to be successful. It is the merest nonsense to assume that we can get men of the quality that is necessary to conduct these great industries unless we reward them, at any rate approximately, with salaries such as they are able to get in the ordinary commercial market. I think it is a great misfortune that the Minister is. I believe, somewhat restricted by legislation that has already been passed. I think it would be a good thing if the Government would consider whether they ought not to revise that legislation and to consider the possibility of putting these nationalised industries on a really commercial basis. I hope the Minister will forgive the quite extraordinary fact that I rise to support a member of the Opposition in this House.

LORD MILLS

My Lords, I thank the noble Lord and the noble Earl for the sentiments they have expressed—sentiments with which, as I said in Committee, I am in agreement. As the noble Lord has reminded your Lordships, I said that I thought difficulties might arise from a precise interpretation of the suggested words. The noble Lord has said that he is quite sure that I would have no difficulty in interpreting them. But I would remind him, as he reminded me, that Ministers do not last for ever, and other Ministers might come along who might not have the same facility as I have. I thought it was not appropriate to insert this new clause in the Bill, but I promised to think it over. This I have done. I have, however, reluctantly come to the conclusion that it would not help, and it would not be appropriate, therefore, to accept this Amendment. I can, however, assure your Lordships that this matter is receiving the active attention of the Government, and it should be possible within a few weeks to make a statement covering all the nationalised boards. I trust, therefore, that the noble Lord will agree to withdraw his Amendment.

LORD LUCAS OF CHILWORTH

My Lords, I am most grateful to the noble Lord, Lord Mills. I feel that a fight has been fought and won. If I interpret aright what the noble Lord has said, Her Majesty's Government have accepted the principle, and in a short space of time will make an announcement as to their interpretation of the principle, of this Amendment, so as to cover all nationalised boards. If my interpretation of what the Minister says is correct, I should like not only to thank him but to say that he has done something that will redound to the benefit of our nationalised industries to an extent that I think will surprise quite a number of folk. I am happy to withdraw my Amendment. I have never withdrawn an Amendment so gladly. Once again, I express my grateful thanks to the noble Lord for what he has done.

Amendment, by leave, withdrawn.