ELECTRICITY (SCOTLAND) BILL (Hansard, 21 January 1969)

§ LORD HUGHES
My Lords, I beg to move that this Bill be now read a second time. This is a short and simple Bill but an important one. Its main purpose is to raise the limit on the amount which the Scottish Electricity Boards may borrow from £580 million to £800 million, but the opportunity has been taken to include a provision amending the statutory requirements governing the authentication of the Board's seals. The estimates on which the proposed new limit is based are explained in the White Paper on the Bill and in the Boards' brochure, Plans for the Future, 1968–1975, copies of which are in the Printed Paper Office. But it may be helpful if I explain the position briefly.
The last occasion on which your Lordships' House considered the borrowing powers of the Scottish Electricity Boards was when the Electricity and Gas Bill of 1963 was before you. That Act raised the borrowing limits of the Scottish Boards to £500 million with provision for a further increase to £580 million on approval of an Order to that effect by the House of Commons. Such an Order was approved in 1966. At that time the extension was expected to last for about two years. This estimate has proved to be very near the mark: at March 31, 1969, the total borrowings expected to count against the limit will be about £583 million. The new limit of £800 million is expected to last until 1975, but the Bill provides an interim limit of £700 million beyond which the Boards will not have power to borrow unless the Secretary of State, as in 1966, makes an Order which must receive the approval of the House of Commons. That point is expected to be reached in 1972.
The White Paper on the present Bill shows in paragraph 8 that in the seven years to March 31, 1975, the capital re- 902 quirements of the Scottish Electricity Boards are forecast at £506 million. The allocation of this figure between the two Boards and its detailed make-up between generation, transmission and distribution expenditure and working capital is set out in Table 3 of the Boards' brochure. Of the total requirements of £506 million the Boards expect to meet £300 million from internal resources, leaving the balance of £206 million to come from borrowing. This is the extent of the new borrowing envisaged, but in addition provision has been included for some £37 million of re-borrowing to repay loans which at present are not required to be within the borrowing limit.
Electricity demand in Scotland has for many years been increasing at a higher rate than in England and Wales, and this trend is expected to continue. Sales are expected to increase by about 80 per cent. during the seven years up to 1975. Over the past ten years the Scottish demand has shown an average annual growth of about 8½ per cent. There are no indications that this will fall away in the next seven years.
The greater part of the expenditure provided for over this period will be devoted to the creation of new generating capacity. With power stations taking some five to seven years to design and build, correct load forecasting is essential if over-investment is to be avoided and if economic development is not going to be restricted by shortage of power. The Scottish Boards have had a very good record in this respect. The investment programmes of the Boards have to be approved each year by the Secretary of State and this approval is given only after the programmes submitted by the Boards each spring have been studied in detail by the Department concerned. Investment appraisal is carried out in accordance with the principles set out in the White Paper Cmnd. 3437 using the test discount rate recommended by the Government.
Planning of new generating capacity for Scotland as a whole is undertaken by a Joint Planning Committee of the two Boards, which makes a series of computer studies of the effect on system costs over a period of years of each alternative means available of meeting forecast demands. In deciding what proposals to put to the Secretary of State the Boards 903 are accordingly able to base their judgment on a precise estimate of the effect on Scottish system costs of each alternative, with all other stations fitting into their proper place in the system and adopting the most appropriate load factor. This is the method which was used to establish the case for the Hunterston "B" nuclear power station at present being built in North Ayrshire; and since then the Boards have recommended that the next projects should be a pumped storage hydro-electric scheme at Foyers, in Inverness-shire, and an oil-fired station on the Clyde.
The Foyers scheme was published early in 1968. Certain objections were lodged to it, but following negotiations between the objectors and the Board these have now been withdrawn and the Secretary of State will be announcing his decision very soon. Your Lordships will understand that I cannot anticipate that decision, but if the scheme is approved it will be laid before Parliament and may be annulled by a Resolution of either House. The proposal for the oil-fired station is being considered by my right honourable friend the Secretary of State in consultation with his colleagues. It is for the Boards to put forward whatever proposals they regard as most appropriate from their commercial point of view, but Ministers are entitled, and indeed obliged, to look at the full range of economic and social implications. This is being done.
Finally, I should perhaps mention the change proposed in the statutory requirements governing the authentication of the Boards' seals. At present two signatures are required: that of the chairman or another authorised member of the Board and that of the secretary or another authorised person. It is proposed in future to require only the signature of the secretary or other authorised person. With an organisation of the size of these Boards and bearing in mind the many transactions which require sealing, it will be appreciated that the requirement of a signature by a Board member as well as that of an official of the Board can be unnecessarily burdensome.
The number of documents requiring sealing—leases, feu contracts, miscellaneous formal agreements of many kinds— 904 is running at something over 100 a year for the Hydro Board and at 200 to 250 a year in recent years for the South Board. This represents something like 1,500 signatures, since many of these documents have more than one sheet, each of which, as the noble Lord, Lord Strathclyde, will recollect, has to be signed. Provided that the agreements incorporated in the documents have been properly approved at the appropriate level, it is sensible that the Boards should be able, if they wish, to delegate to officials authority to sign on their behalf. This simplification has already been adopted for certain other nationalised Boards under the Transport and Civil Aviation Acts of last Session. I commend the Bill to your Lordships as a measure necessary for the social and economic wellbeing of Scotland. I beg to move.

§ THE MARQUESS OF LOTHIAN
My Lords, I should like to thank the noble Lord, Lord Hughes, for once again giving your Lordships such a clear and concise account of the content of a Scottish Bill. As he said, it is really one of a series—an almost inevitable series—of measures which come before your Lordships' House from time to time. I think that there is little doubt that noble Lords on both sides of the House will wish to see this Bill given a Second Reading as soon as possible.
At first sight, the increased borrowing powers sought in the Bill seem to be large. On the other hand, when one reads this excellent document, to which the noble Lord referred, one sees that the money is required for specific and genuine purposes. Indeed, if one calculates the figures in the document one sees that the Boards are allowing themselves very little to spare at the end of the period up to 1975. Therefore one hopes that their forecasting will prove to be accurate and that we shall not need to have another interim measure of this sort before that date. One thing interests me, partly because of its omission from the Report. I wonder whether the noble Lord can tell the House if any of these calculations have taken into account the possible effect on the Scottish economy of the provision of gas from the North Sea. 905 I should like to take this opportunity to pay a tribute to the work of the Scottish Electricity Boards and their employees. I have always found them extremely efficient and very helpful. Looking back to about a year ago, when we had a hurricane in Scotland, one recalls that it was remarkable how quickly in most cases electricity supplies were restored.
One thing that affects us all, and not only in respect of electricity, although particularly so there, is the cost. As noble Lords know well, this is increasing month by month for obvious reasons, such as labour and fuel costs. Because of this I am a little puzzled about the seeming reluctance of the Electricity Boards in Scotland to put forward more positive plans for nuclear generating stations, for I believe I am right in saying that already the cost per unit of producing electricity from nuclear energy is lower than that for electricity from any other form of generation. I quite understand that there are social reasons for using other methods, and indeed capital reasons why other forms of generating equipment are cheaper in the first place, but I feel that the future lies with the nuclear generating stations, and I hope that, at any rate after 1975, we shall see more of them being built.
I should like also to say a brief word about amenity, not because I think that the Boards have fallen down in this respect but to encourage them to do even more. We all realise that because of cost you cannot bury power transmission lines but it is often the case that a small adjustment in the siting of pylons and grids can make all the difference to the countryside. I know that the Boards are well aware of this problem, but I hope that the noble Lord, Lord Hughes, and his colleagues will take the opportunity to remind them of it from time to time. With those few remarks, my Lords, I welcome the Bill.

§ LORD STRATHCLYDE
My Lords, I am certain that the whole House would like to join with the noble Marquess, Lord Lothian, in congratulating both the Scottish Electricity Boards on the foresight they have shown, which alone has enabled them to deal with the constantly increasing demand for electricity throughout the whole of Scotland. If I may add just one word, it is in connection 906 with the station at Foyers, which was mentioned by the Minister. Some little time ago, when I had something to do with the provision of electricity in the North of Scotland, it was considered that this station, working in conjunction with the new fast reactor at Dounreay, would produce a most efficient supply of electricity, both economically and otherwise. I hope that when the matter comes before the Secretary of State he will find it possible to approve the scheme set before him.

§ LORD HUGHES
My Lords, I should like to thank the noble Marquess, Lord Lothian, and the noble Lord, Lord Strathclyde, for the general and generous welcome which they have given to the Bill. The noble Marquess asked whether the Boards had taken into account in their estimates the effect of North Sea gas. I can say that so far as is possible at this stage the Boards have made allowance for the likely effect of this new fuel on the growth of demand. North Sea gas is, in fact, expected to become available in Scotland in the early 1970s.
The noble Marquess also referred to cost. I think the words he used were, "We all know that costs are increasing month by month". If he was referring to the cost to the Boards he is probably right, but it is perhaps an example of the efficiency of the Boards that at least they ensure that the increased cost is not passed on month by month to their consumers. Increases in electricity costs are not as rare as we should like, but certainly they are not so frequent as in other sectors of the economy; and this despite the fact that both Boards have an excellent record, as the noble Marquess said, with regard to amenity, particularly in the area of the North Board. Any tribute I make in this respect will not, perhaps, be invalidated by the fact that, like the noble Lord, Lord Strathclyde, I was formerly a member of that Board. Without either his or my accepting any responsibility for it, I think it true to say that no public, body in this country—or private body, for that matter—devote more of their resources to protecting the natural beauty of the landscape in which they have to work. By the nature of their task the South Board are perhaps not so heavily involved, but I think it equally true to say 907 of that Board that the protection of amenity is never far from their thoughts in relation to any new scheme. In any event, if it were, there are thousands, or tens of thousands, or hundreds of thousands, of people very ready to remind them of their responsibilities in that direction.
On the question of costs, the noble Marquess, Lord Lothian, referred to the part which the generation of nuclear electricity could play in keeping down costs in the future. The noble Lord, Lord Strathclyde, referred to the Foyers scheme. I could almost wish that this Second Reading debate had been a little further ahead in time, because then it would have been easier for me to make references to the costs to which the Boards have referred in putting forward their schemes. I think that all I can properly say is that the noble Lord, Lord Strathclyde, has left your Lordships in no doubt about the value which he would attach to the approval of the Foyers scheme, and I am certain that he is not doing so because he regarded it as an expensive way of providing electricity. Beyond that, I would not go. I thank your Lordships for the reception given and for the speedy Second Reading which your Lordships propose to accord to this Bill.