354 STANDING COMMITTEE B Wednesday, 6th August, 1919

Sir SAMUEL ROBERTS in the Chair.

ELECTRICITY (SUPPLY) BILL.
[OFFICIAL REPORT.] CLAUSE 7.
—Acquisition of generating stations.

(5) Whenever a district electricity board acquire a generating station otherwise than by agreement under this Section they shall be under an obligation thenceforth to supply to the authority, company, or person from whom it is transferred electricity not less in amount than could have been generated at the generating station by that authority, company, or person at a price not greater than that at which it could have been so generated, and if any question arises as to such amount or price, the question shall be determined by the Electricity Commissioners, and in determining such price regard shall be had to capital charges (including interest on capital), cost of fuel and labour and other costs of generation, and to any reduction of costs which might reasonably have been expected to accrue from any improvement of the generating station and plant therein which is proved to the satisfaction of the Electricity Commissioners to have been on the day of nineteen hundred and nineteen under consideration by such authority, company, or person, with a probability of early execution.

(6)Where a generating station or main transmission line has been vested in or acquired by a district electricity board under this Section the board may, subject to the approval of the Electricity Commissioners, agree with the former owner thereof that such owner shall work and maintain the same on behalf of the board for such period and on such terms as may be agreed between them.

Debate resumed on Amendment [5th. August], which Amendment was in Subsection (5), after the word "be" ["shall be under an obligation thenceforth to supply"], to insert the words "bound to supply all electricity to meet the requirements of the authority, company, or person whose generating station has been taken over by the district electricity boards at prices to be agreed or, failing agreement, to be determined by the Electricity Commissioners, but in any event."—[Mr. G. Balfour.]

Question again proposed, "That those words be there inserted."

Major BARNES: To be able to discuss this Amendment with any effect, we ought to be quite clear as to the exact effect of the obligation of the Sub-section. I have read it in one way, and I do not know whether I am right or not. As far as I understand it, 355 it is that wherever a generating station has been taken over otherwise than by agreement a district electricity board is bound to supply such amount of electricity as could have been generated at that station at the cost at which it could have been generated there, but I do not understand that would mean the supply and the cost as on any particular date—not on the date on which the generating station is taken over. It is an obligation always to supply that amount at cost price, but the cost may differ from time to time. It may be one thing on the date on which the generating station is taken over, but it may be another thing as time goes along, and I understand the obligation here is not to continue for ever to supply a certain amount at a cost arrived at on a certain date, but to supply for ever a certain amount at the cost price, and that really the companies have got here a sort of right of appeal. They could go at any time and say to the district board, "The price which you are charging us for this electricity is a greater price than that at which we could at this present moment generate it." I take it it is the position?

The SECRETARY OF STATE FOR THE HOME DEPARTMENT (Mr. Shortt): That is so.

Major BARNES: In other words the position is that for this particular amount the district electricity board is always obliged to supply that at cost price. They have taken over the works at cost price and are obliged to supply the current at cost price.

Mr. SHORTT: Or what the cost ought to be. Not necessarily what it is.

Major BARNES: One is assuming that the cost will always be what it ought to be under the control of a district board. That being so, the Amendment, would seem to suggest that under certain circumstances they are to supply it below cost, because there is a limitation in the Amendment which lays it down that the prices are never to exceed what the cost ought to be. That, apart from any other reason, seems to make it impossible to accept the Amendment. If it had been put in another way, that the district electricity board were to supply always the whole amount of the current that is supplied at cost, that would raise another question, and perhaps some of us might be prepared to agree that the district electricity board should never make profits, but should always supply the current they are able to generate at the cost at which they generate it. That would be another proposition, but this Amendment suggests that we should put into the Bill powers to supply a certain amount of electricity under cost, and that appears to me quite impossible to accept.

Mr. NEAL: The Amendment is one of extreme importance and should receive most 356 careful consideration. I find myself in complete sympathy with the Mover, that it is to say, if I quite fully understand his object. What he desires to safeguard, I take it, is that the generating station of an authority, company, or person should not be taken over without them having guaranteed an adequate supply of electricity for their business as distributors. I take it that is really the object. I suggest that the Amendment is too wide for that purpose. In Clause 6 the duty is imposed upon district electricity boards of securing the provision of a cheap and abundant supply of electricity within their district, and for that purpose certain powers and duties are given to them and imposed upon them. This Clause deals with the acquisition of particular generating stations and is intended to secure to the authority, be it municipal or any other, that it shall have supplied to it electricity, not at cost, as mentioned by the hon. and gallant Gentleman (Major Barnes), but at a sum not greater than the cost at which the undertaker could have produced the electricity in that station.

Sir FORTESCUE FLANNERY: Formerly.

Mr. NEAL: No. At the date. It is important to remember that, because in determining the price at which the electricity could have been produced by the undertaker you have to give effect to the existing state of circumstances as to the cost of production, that is to say, the labour charge which would have been upon him, and the cost of materials and standing charges and the like, so that it is not guaranteed to him at the cost produced by the district board, but the intention is to guarantee it to him at a cost not greater than he could have produced it at a given time himself. The Amendment is very much wider than that. It says that "the district board shall be bound to supply all electricity to meet the requirements of the authority, company, or person whose generating station has been taken over by the district electricity boards." There is a limitation in those words to the productive capacity of the generating station which is taken over. The authorities which may call upon the district boards to supply electricity may, in their aggregate demands, seek very much more than the existing station is capable of producing, and after all you cannot sell more milk than the cow produces. These words not only have the effect, so far as the amount is concerned, of being too wide, but they also seek to limit the price, not only of the electricity which the authority could have produced itself, but the price of the supplementary supply. I hope the Amendment will not be pressed. If there is to be any greater obligation put upon the district electricity board, I respectfully suggest it should be under Clause 6 when you are dealing with the duties of the boards, 357 but the real safeguard to all the undertakers, whether municipal or company, is in the fact that all these matters may be dealt with in the scheme constituting the board. It is inconceivable when that scheme was being propounded that whoever was responsible for it would neglect to put in it the proportion in which the several distributors should have the right to call for the supply from the generating station, either present or future. It is hoped that the district boards will establish more generating stations in order to give a greater supply. I respectfully suggest to the Committee that in the schemes you will have an ample opportunity of dealing with this matter. I can quite understand that when the schemes were under consideration there might be a conflict, and the company might ask for a larger proportion of the total supply than the municipal authority thought it was entitled to, or there might be rivalry between two companies or two municipal authorities. If I am correct in my view, it seems to me that these are matters of detail to be discussed and settled in the scheme, and should not take a place in the Bill itself. If this Amendment were to be passed it might, of necessity, produce a state of insolvency in the district boards. Supposing all the persons or authorities whose generating stations had been taken over could establish claims against the district board to have their supply at a certain price, and the price so fixed was not sufficient to enable the district boards to pay the standing charges and expenses, then you might have this result, that you might have a district board with a limited income unable to meet all those charges. When we remember what I think is one of the cardinal defects of the Bill, that there is no provision anywhere in it for dealing with deficiencies which may arise from year to year in the accounts of district boards, it will be seen at once that that is a very serious position. Under these circumstances I should be glad if my hon. Friend could see his way to withdraw this Amendment.

Mr. G. BALFOUR: I am sorry that this Amendment has caused so much delay. Its object is to put the undertaker definitely in a position of fulfilling his obligation under the Statute of being able to supply all the electricity he is called upon to supply, and as he is bound to do either under a Provisional Order or by special Act of Parliament. These words allow the undertaker to make his arrangement with the district board as to the terms on which the supply is to be given. If they fail it allows the Commissioners to come in and fix the price. I agree that there may be some cause of complaint if we bind them to give the whole of the supply at a price "not greater than," as is stated in the Bill. Instead of leaving out the whole of the words in Sub-section (5), as provided by my Amendment, I suggest that we should leave out the words "under 358 an obligation thenceforth," and then the Sub-section would read as follows: "Whenever a district electricity board acquire a generation station otherwise than by agreement under this Section they shall be bound to supply all electricity to meet the requirements of the authority, company, or person whose generating station has been taken over by the district electricity boards at prices to be agreed or, failing agreement, to be determined by the Electricity Commissioners, but in any event to supply to the authority, company, or person from whom it is transferred electricity not less in amount than could have been generated at a generating station by that authority, company, or person at a price not greater than that at which it could have been so generated." By this proposal you will get the whole of the supply which I think is necessary. I do not press my point beyond that.

Mr. SHORTT: I cannot see how you secure the obligation to supply by striking out the words "under an obligation thenceforth." May I say what this Clause does and what is the intention? It is that the undertakers shall be in no worse position in regard to the distribution of the profits by the taking over of the generating station. It provides that whatever a station could supply, or, on the carrying out of any reasonably contemplated extensions and improvements, would be able to supply, the board is to be under an obligation to supply at the cost which the undertakers themselves could have supplied at had they been still working the generation station themselves. That is the object, and I think it carries it out. I think that is all my hon. Friend wants.

Mr. BALFOUR: Will the right hon. Gentleman show me in this Bill where there is any binding obligation to supply the whole requirements of these distributors?

Mr. SHORTT: It depends upon what you mean by "whole requirements." We mean anything you could have supplied yourselves from that station or any reasonable extension of it, but if you suddenly find yourselves in the position that you would have had to build another generating station to cover new customers, it does not cover that.

Mr. BALFOUR: That is a very important point, and I must confess I never imagined that there was any intention of disturbing the area of any authorised distributor exercising his powers under the Statute. Take the case of a municipality with very widely extended boundaries, and they find it necessary to supply large factories and foundries and miscellaneous manufactories to put down a second generating station. In that event, would the district board, if they had taken over the generating station, not be bound to 359 give a supply which would have been given from the second generating station which they would have built?

Mr. SHORTT: Not to the distributors. They would have to supply it direct.

Mr. BALFOUR: The municipality is under an obligation under the Acts or Provisional Orders to give the supply on demand on the usual terms.

Mr. SHORTT: But they would be the customer.

Mr. BALFOUR: But where is the supply coming from? In the ordinary course that municipality may have been compelled to meet that demand to put down a second station. The right hon. Gentleman now says that he would not meet that demand.

Mr. SHORTT: I did not say that. What I say is that you could not expect that demand to be met on the very exceptional terms provided for in this Clause. They would be treated like any other customer, and they would get a supply at the cheapest price the board could provide it at. Under this Clause, and so far as the generating station which is taken is concerned, the undertakers are entitled to exceptional treatment and you cannot carry it beyond that.

Lieut.-Commander CRAIG: I wish to clear up a point as to the effect of this Clause. When the Home Secretary is giving his interpretation, will he say if the price at which this limited supply will be given is the cost at which the expropriated undertakers could have produced it at that generating station themselves?

Mr. SHORTT: Yes.

Lieut.-Commander CRAIG: Does that mean at the time of the transfer of the undertaking or the production of the electricity?

Mr. SHORTT: At the time of the production.

Lieut.-Commander CRAIG: Now I understand it is the time of the production, and observe the absurdity of the limitation. The only case that the municipality or the company could make is that the supply is being made upon extravagant and uneconomic grounds, and that is the only case you could make. You have to have regard to the existing conditions as regards wages and material and everything else before you can go to the board and say, "You are extravagant in your administration; we, as private people or as a municipality, could have produced electricity so much cheaper than yon propose to charge, and therefore to what extent are you going to abate the bill?" The board may reply, "We persist in being extravagant, although you have demonstrated our extrava- 360 gance before the designated tribunal; we persist in being extravagant and uneconomic in our production and we are going to make you pay the excess, except to the extent that you could have produced electricity from that station as it existed in your time." If the district electricity boards are going to produce cheap electricity—and I see pious words in the Bill to that effect—then why in the world can they not make the whole supply at the same price that it could have been produced by the undertakers if private enterprise had continued? Could there be anything more ludicrous than to say, "We will cut in half the bill we render to you, and to the extent of the supply being equal to the capacity of the generating station as you had it we will reduce the bill, though it costs us more to produce it; but as to the greater extent, we will charge you the full amount of our extravagant cost"? A more ludicrous state of things I cannot conceive. We are all indebted to the Home Secretary for explaining that that is the intention. I think the municipalities, as well as private enterprise, will be interested to know that this great sop which is given to them, to comfort them for their expropriation, will only ensure them a supply at the time of production at the cost at which they, as economic undertakers, could have produced it, according to the extent of their then generating station; but for the rest they must pay any extravagant price that the district board thinks fit to charge.

Mr. SHORTT: Does the hon. and gallant Member ask me to withdraw Sub-section (5)?

Lieut.-Commander CRAIG: No, I do not.

Mr. SHORTT: I should think not.

Lieut.-Commander CRAIG: You asked me a question, and you laugh without the politeness of allowing me to reply. I do not ask that you should withdraw it, but I ask you to make the whole supply dependent upon the same conditions which you make appropriate to the part which could have been produced at the time you took over the generating station.

Mr. NEAL: At whose cost?

Lieut.-Commander CRAIG: I am pointing out the absurdity of the thing. It will come out of somebody's pocket.

Mr. NEAL: Whose?

Lieut.-Commander CRAIG: It will be the taxpayer.

Mr. NEAL: No. That is not in the Bill.

Lieut.-Commander CRAIG: The Electricity Commissioners will have to make good, by loan, I suppose, any deficit in the accounts.

Mr. NEAL: No.

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Lieut.-Commander CRAIG: Indeed they will. They cannot owe money. The taxpayer will pay in that case instead of the ratepayer. It is only one of the absurdities in the Bill. Do not think I am praising the Bill.

Mr. CHAMBERLAIN: I rise for the purpose of supporting my hon. Friend (Mr. Neal), because it seems to me that this discussion has shown that this Sub-section is going to be in practice entirely illusory. I ask the Home Secretary to withdraw it and adopt the suggestion of my hon. Friend, that such safeguard as the Government desire to give, and as I think they should properly give, should be included in the scheme for the constitution of the district electricity board when it is formulated. This Subsection seeks to give safeguards both as to quantity and as to cost. The quantity of electricity which is to be guaranteed is to be not less than that which could have been generated in the generating station which is being taken over. The Home Secretary put a gloss upon that and said that that meant the amount which could have been generated, not merely in the station as it is when it is taken over, but after making any necessary improvements and alterations.

Mr. SHORTT: Contemplated.

Mr. CHAMBERLAIN: I think you did not say that at the time.

Mr. SHORTT: "Reasonably contemplated" was what I said.

Mr. CHAMBERLAIN: You are only referring to what is in the Bill.

Mr. SHORTT: "Reasonably contemplated" is my interpretation of "could."

Mr. CHAMBERLAIN: I think we may leave out "reasonably contemplated" for the purpose of this argument.

Commander DAWES: "Reasonable extension" were the words used by the Home Secretary.

Mr. SHORTT: "Extensions reasonably contemplated."

Mr. CHAMBERLAIN: That makes a difference. I understood the right hon. Gentlemen to say that he intended to include any alterations and improvements which were reasonably necessary and which were contemplated when the station was taken over, but not those which were not contemplated when the station was taken over. Practically all you are guaranteeing is the amount of electricity that can be given when the station is taken over. That is not very much of a guarantee, and I do not think there is anything to be lost even if that were left out altogether. Unless the whole scheme is to break down altogether we can hardly contemplate that the new arrangement is 362 going to fail to give as much electricity as could have been given when the concern was under its old owners. Let us come to the question of price. The price is to be no greater than the cost at which the electricity could have been generated in the station, at any time after it has been taken over, if it had remained in the ownership of the old owners instead of the ownership of the new owners. That appears to be a perfectly illusory safeguard. Who is to say whether the old owners could have generated the electricity cheaper or not in the new station? How are the old owners to know whether they could have generated it cheaper or not? They can put their fingers upon certain things. They could say, "Your management is extravagant, your coal bill is excessive, your labour cost is too high." In all these things they could make these statements without exact knowledge of the fact as a sort of "try on," to see how it would work. The district electricity board would say, "It is true that the cost is much higher than when we took over the station, but it cannot be helped, and you would have to pay the same if you were in our position." Therefore they have a dispute with the old owners, and they go to the Electricity Commissioners to decide. In that case you have the judge and the defendant as the same persons. It seems to me that this Sub-section is practically unworkable. You can only deal with this question in each case by taking into consideration the facts of each case. There is the point raised by the hon. Member for Hampstead as to a supply which could have been produced from a second generating station. This shows that you must take the local facts and conditions into consideration in making your scheme. I seriously suggest to the Home Secretary that the Bill would be more workable and more practicable if he withdraws this Sub-section and deals with the whole question when we come to deal with the constitution of the various schemes.

Mr. STEVENS: Speaking entirely from the point of view of the customer, I would like to ask the Home Secretary how he would deal with a case now before Parliament. The Trafford Power and Light Co., a private company, have undertaken to supply the whole of their district with all the requirements of that district, and those requirements are largely growing. That company has been purchased by the local authority during this Session of Parliament, and the Bill is now going through. The local authority has undertaken the obligation to supply electricity at no greater cost that that which is charged under like circumstances by the Manchester Corporation, and also to supply the district with all that is required. Judging from what has passed between the Home Secretary and the hon. Member for Hampstead, there does not seem to be any suggestion in the mind of the Home Secretary that 363 a contract of that sort can be continued. It is a contract of the utmost importance that the local authority should go on supplying, not only the requirements that can be met by the existing power station, but any reasonable requirement of the immediate future. There is an obligation to go on for all time supplying the requirements of that district, and at a price which should be no greater than that which is charged by the Manchester Corporation. I should like to have a reply from the Home Secretary as to the manner in which he proposes to meet a case of that sort.

Captain R. GUINNESS: If I understand this Bill aright, the advantage which the companies are going to get out of this concession is very small.

Mr. SHORTT: I am quite willing to drop it. If the companies do not want it they can leave it—I am not pressing it.

Captain GUINNESS: They are going to be allowed to get a certain portion of their supply at a cheaper price than the rest, but there is nothing in the Bill to say where the money for the rest is to come from. I should imagine that the district board will have to make up the difference on the remainder. Therefore, if the demand for electricity is going to be greater in future than it is now, and the cost of producing it is to be greater, then the undertaking will have to get that extra cost out of the consumers by the authority of the Commissioners in respect of the second part of the supply. The first part can be got at a cheaper price by the consumer, but for the second part they will have to pay whatever is the difference in the cost. The difference in the cost will have to be got one way or the other by the undertaking. There is no provision in the Bill as to the loss falling on the taxpayer, or the ratepayer, or anyone else. So far as I can see the consumer has to pay for the electricity supplied, and if one part is supplied under cost the other part will have to be supplied at over cost. If that is so there is very little in this Clause. I should like to ask a question with regard to the taking over of the power station. An undertaking that exists to-day has its power station taken over under the conditions which we have passed. I admit that I do not understand the precise way as to how you are to value the power station. Will the company be able to say, "You paid £100,000 for the power station which you took over from us, and the interest on the £100,000 is part of the cost price of the electricity that would have come from the station you took over"? If so, what bearing would that have upon the Home Secretary's intention to prevent profiteering with respect to extreme values? They would be able to say, "You took over from us a cheap power station, and you have put up an expensive one. Therefore you must give us up to the amount that we could have produced in our cheap station. You must give 364 us a supply of electricity equivalent to the amount that could have been produced in that cheap station." In that case they would get the advantage of having been robbed in the first instance, and they would get a "pull" for having been robbed in perpetuity. But if on the remainder of the supply which they have to give to the public they have to pay the difference out of their own income to make up for what they have got, the swings and the roundabouts will apparently both be failures. This Clause is difficult to understand. I hope it will work, but it seems to me very doubtful.

Mr. SHORTT: We are discussing an Amendment, and not the whole Sub-section. If the Amendment is accepted, it makes it all the worse for the other companies. I would suggest that we have had sufficient discussion on the Amendment and may pass from it. The Clause was put in definitely as a protection to the companies whose generating stations are being taken over. If the companies say they would rather be without that protection, we do not want to force it on them.

Mr. STEVENS: May I ask for a reply to my question?

Mr. SHORTT: I could not understand the hon. Member's question at all.

Mr. BALFOUR: I thought I had made it perfectly clear to the Home Secretary that I was willing to withdraw the Amendment if he would assure me in this or some other Clause that provision would be made for the supply of electricity. I am not speaking of the price.

Mr. SHORTT: It is in the Bill.

Mr. BALFOUR: As long as they are bound definitely to supply the whole of the requirements without having anything to do with price? If the right hon. Gentleman will show me that we shall get the full supply, I will withdraw.

Lieut.-Commander CRAIG: Where is it in the Bill?

Mr. SHORTT: Surely my hon. and learned Friend has read the Bill. It puts the duty upon the district boards or the joint authority to supply all the electricity that is required in that area.

Lieut.-Commander CRAIG: Where does it put the duty on the electricity board to supply a particular customer?

Mr. SHORTT: Perhaps my hon. Friend will look up Clause 11 among others.

Lieut.-Commander CRAIG: I do not find in Clause 11 any obligation to fulfil to anybody whose generating station is taken away the obligation resting upon that person towards third parties.

Amendment, by leave, withdrawn.

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Mr. WADDINGTON: I beg to move, in Sub-section (5), to leave out the word "thenceforth" ["under an obligation thenceforth"] and to insert instead thereof the words "for such period as may be determined by the Electricity Commissioners." The discussion on the previous Amendment covers very largely this Amendment. The object of the Amendment is to give a period instead of leaving it in perpetuity. The idea is that schemes will vary in different districts, and consequently, if it is left to the discretion of the Electricity Commissioners so to arrange the schemes, the times and periods according to the class of machinery, which is the generating plant, in existence, we shall get some measure of injustice. Take a plant which has only from five to ten years of life. At the end of that period the district electricity board will have to renew it. Consequently the powers which have been retained for the benefit of the companies or municipal authorities ought to cease to be operative. If it is left under this Amendment to the discretion of the Electricity Commissioners we shall get a better measure of justice throughout the country.

Mr. SHORTT: I hope that my hon. Friend will not press this Amendment. It might work injustice to companies whose generating stations are taken. There is provision in the Bill that at any time where there is power to the municipal authorities to take over a company that power is transferred to the board. They can always take them over. The provision is that they shall get it as cheaply as they could have got it if the generating station had remained in their hands. If you have got to replace all the plant, etc., and that has to be scrapped, they would have had to do the same thing themselves. You will then be in the position of saying, "You would have had to do this yourselves." I do not think that the danger which my hon. Friend sees is a real one. After all, it is the recognition of a claim by those whose generating station is taken.

Mr. WADDINGTON: I do not press my Amendment with the explanation which has been given now and previously that the sum which is to be charged is the price at the time of production. This Sub-section has been read in different ways by different people who consider themselves equally competent to interpret it. They have interpreted it to mean the price in 1919 or 1920, whenever it is taken over; but so long as we have it that it means the time of production, I am willing to withdraw.

Amendment, by leave, withdrawn.

Amendment made: Leave out the word "that" ["price not greater than that"] and insert instead thereof the words "the cost."—[Mr. Shortt.]

Commander DAWES: I beg to move, in Sub-section (5), after the word "generated" ["so generated"], to insert the words "and 366 to adequately compensate such authority, company, or person for any loss which they may suffer by reason of interruption of supply or alteration of periodicity or any other change resulting from the acquisition of such station by the board." It is only fair, if the local authority, company, or person have their business interrupted through the requirements of the district electricity boards, that they should be compensated.

Mr. SHORTT: With regard, at any rate, to the question of the alteration of periodicity, we should be prepared to accept something of this kind: "and in the event of any change in the type of current, frequency, or pressure to pay such expenses as the authority, company, or person may necessarily incur in consequence of such change."

Commander DAWES: I am willing to accept that suggestion, and will withdraw my Amendment. All I want is to prevent injustice.

Amendment, by leave, withdrawn.

Mr. SHORTT: I beg to move, in Subsection (5), after the word "generated" ["so generated"], to insert "and in the event of any change in the type of current, frequency, or pressure to pay such expenses as the authority, company, or person may necessarily incur in consequence of such change."

Mr. CHAMBERLAIN: If this Amendment is carried, it throws upon the Electricity Commissioners the duty of compensating the local authority for damage caused by a difference of frequency. The expenses of the Electricity Commissioners are presently to be allocated among the various district boards. That, probably, may apply to the authority.

Mr. SHORTT: It is the board who pay.

Mr. CHAMBERLAIN: Where does this money come from?

Mr. SHORTT: It is like all their money.

Amendment agreed to.

Further Amendments made: In Sub-section (5) leave out the word "price" ["price, the question"] and insert instead thereof the word "cost"; after the word "price" insert the words "or expenses."—[Mr. Shortt.]

Commander DAWES: I beg to move, in Sub-section (5) to leave out the words "Electricity Commissioners" ["determined by the Electricity Commissioners"] and to insert instead thereof the words "an arbitrator to be agreed upon by the parties, 367 or, failing such agreement, to be appointed by the Board of Trade." Personally I think that the Electricity Commissioners would act fairly, and I do not feel strongly one way or the other; but possibly it would be more satisfactory to have an arbitrator appointed by the Board of Trade.

Mr. SHORTT: The Electricity Commissioners are not really in the position of a party in the ordinary sense of the word. The district board are the parties really, and it would be very awkward if in every case where a question arose you were bound to go to arbitration. If the Electricity Commissioners have any doubt about the matter or any difficulty they would, of course, appoint someone to go into the whole matter and report to them. Probably one of themselves would do that, but somebody would do it. But to appoint an arbitrator every time a question arose would be burdensome and cumbersome.

Amendment, by leave, withdrawn.

Further Amendments made: In Sub-section (5) leave out the word "price" ["such price regard"] and insert instead thereof the word "cost"; after the word "the" ["been on the"] insert the word "eighth"; after the word "of" ["day of"] insert the word "May."—[Mr. Shortt.]

Mr. THOMSON: I beg to move, in Subsection (6), after the word "period" to insert the words "not exceeding two years from the passing of this Act." I take it that the object of the Sub-section is merely to provide for a temporary arrangement. I would like to see in the Bill that it is merely a temporary arrangement. As the Bill stands I take it that it might go on for all time.

Mr. STEVENS: This would cover the point which I raised just now in the question which I put to the Home Secretary, to which, evidently, he was not attending, or else he would have understood it. The question is whether this Bill provides for the local authority or the companies carrying out all their obligations in regard to electricity as to time and as to price, and if there is any limit as to time put into the Clause it would preclude the Bill providing for it.

Mr. SHORTT: The intention is that it should be for a purely limited period in order-to enable things to be put in order and carried out. That is the intention of it.

Mr. STEVENS: Sir J. Snell understands the point thoroughly.

The CHAIRMAN: I am afraid the hon. Member cannot appeal to a gentleman who is not a member of the Committee.

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Mr. STEVENS: I would ask the Home Secretary for a reply to my inquiry whether the Bill provides that a local authority shall carry out all its obligations in regard to electricity as to price and as to time.

Mr. SHORTT: I shall be glad to give the hon. Member a copy of the Bill, and he should be able to see for himself.

Lieut.-Commander CRAIG: I hope the Home Secretary will not accept the Amendment. I quite understand the intention of it, but the effect of it might be quite different. Supposing the Electricity Commissioners came to the conclusion that a municipality, for example, in an isolated district was working economically and well and wished it to continue. If the Amendment is accepted it would not be able to continue, by arrangement with the Electricity Commissioners, for more than two years from the passing of the Bill. I sympathise with the intention of the Amendment, but it would produce the most surprising results.

Amendment, by leave, withdrawn.

Further Amendment made: At the end of the Clause add "(7) Where a generating station, which is vested in a district electricity board under this Section, is in course of construction, extension, or repair the rights and liabilities of the former owners thereof under any contract for such construction, extension, or repair shall be transferred to the district electricity board."—[Mr. Shortt.]

Lieut.-Commander CRAIG: I beg to move, after the words last inserted, add the words "(7) Interest at the rate of six per cent. per annum upon the standard price shall be paid by the district electricity board to the former owners of any such generating station or main transmission line as from the date of vesting thereof in such board until payment." Under the terms of the Bill the property vests at a time long anterior to payment. This is simply to make provision that, as the property vests before payment, during the period which elapses between the vesting and the payment, interest at six per cent. should be paid to the people whose property is taken. I proposed an Amendment that transfer should take place upon payment, but the Committee did not accept that, and you may now get vesting long before you get the obligation to pay. Under general law interest would not accrue, and I think this provision is necessary.

Mr. SHORTT: I quite accept the principle, but I want to guard myself against accepting six per cent.

Lieut.-Commander CRAIG: One per cent. above bank rate?

Mr. SHORTT: I will not argue it at present, as I am afraid I should be so denounced, but I wish to make it quite clear in 369 accepting this that I do not accept the six in such a way as to prevent me raising it on Report.

Amendment agreed to.

Further Amendment made: After the words last inserted, to add the words "(7) Where in any generating station vested in a district electricity board under this Section there is contained any plant which, in the opinion of the Electricity Commissioners, forms an essential part of the distribution system of the former owners of the generating station, that plant shall, notwithstanding such vesting, remain the property of its former owners, who shall, so long as electricity is supplied for distribution from that station, at all times have the right of access thereto."—[Mr. Shortt.]

Mr. WADDINGTON: I beg to move, after the words last added, to add the words "(7) If any portion of the undertaking of any authorised undertaker is acquired by a district electricity board or by a joint electricity authority, such board or authority shall purchase the whole of the undertaking of such authorised undertaker upon the terms specified in this Section for the purchase of a generating station or main transmission line if the owner of the undertaking so desires and serves a notice of such desire upon the board or authority within twelve months of the date upon which the said portion of the undertaking is acquired." This is to give the right to the undertakers, where they have had a part of the undertaking bought out, to ask for the. whole of the undertaking to be taken over if they make application within twelve months from the date the part is acquired. This is a similar Amendment to what was the second part of the original large Amendment of the hon. Member for Oxford (Mr. Marriott). I think it is pretty generally felt that something of this sort should be adopted.

Mr. SHORTT: I hope this Amendment will not be pressed. I hope the Committee will accept an Amendment of mine to Clause 13 which will enable power companies which are not distributors to insist upon the whole of their concern being purchased if the generating station is taken, but in the case of distributing companies the board would find themselves under the obligation to buy out all the inefficient companies. The really efficient companies would appreciate that, getting their electricity as they did, they would be able to make better profits, and therefore the whole effect of this would be to put upon the various boards an obligation to buy out all the inefficient people and all the people who saw a good chance of getting well out of some bad bargain of their own.

Amendment, by leave, withdrawn.

Mr. MacVEAGH: I beg to move, after the words last inserted, to add the words "Provided that if it is proved to the satisfaction of the Electricity Commissioners that 370 for any exceptional reason the calculation of the standard price would work injustice, the matter shall be referred to an arbitrator to be appointed by the Board of Trade." The Home Secretary stated yesterday that he was willing, if general words could be found, to give effect to the Amendment I handed in. I have endeavoured to find such general words, and I hope I have succeeded. I have relied upon words used by the Home Secretary himself in a preceding Clause in the hope that it would make it more difficult for him to refuse.

Mr. SHORTT: These words do not quite correspond with the words in the other part of the Clause. Dealing with annuities payable to municipal authorities, it says "any such annuity may be increased by such amount as the Electricity Commissioners think just" and if the standard proves to work injustice, the question should be referred, not to an arbitrator, but to the Electricity Commissioners. That is the difference between the two. I shall be quite prepared to ask the Committee to accept some words of this description, but I cannot accept these words as widely as they stand at present. If the Committee thinks fit, I should not make any protest against this going in, but it must be clearly understood that I am entitled to endeavour to put that right on Report.

Mr. MacVEAGH: Quite so.

Mr. CHAMBERLAIN: I had an Amendment to substitute for the Electricity Commissioners "an arbitrator appointed by the Board of Trade." The right hon. Gentleman twice promised me that, and he has twice forgotten about it.

Mr. SHORTT: The hon. Member and my hon. Friend (Mr. Bridgeman) must remember to come together in order to carry out my promise.

The PARLIAMENTARY SECRETARY TO THE BOARD OF TRADE (Mr. Bridgeman): I could not have foreseen that this Amendment was going to be moved.

Mr. CHAMBERLAIN: I wanted to suggest that the Amendment of the hon. Member (Mr. MacVeagh) would much more appropriately come in the proviso to Subsection (2), paragraph (6).

The CHAIRMAN: If it is moved in this form the alteration is a matter of drafting when it conies up.

Mr. CHAMBERLAIN: In the proviso it says, in case of injustice, "an arbitrator appointed by the Board of Trade," which is what the hon. Member (Mr. MacVeagh) 371 desires. If it were inserted here, there would be no necessity to put in the Electricity Commissioners.

Amendment agreed to.

Clause, as amended, ordered to stand part of the Bill.

The CHAIRMAN: That finishes the part of the Bill that we decided to finish before the Recess. Perhaps the Committee will leave it to the Home Secretary and to myself to fix the date of the first meeting.

Mr. BRIDGEMAN: The President of the Board of Trade has asked me to make an appeal to the Committee to reconsider whether they might not continue to sit in view of the fact that it does not seem likely that the House will rise for some little time at present.

Lieut.-Commander CRAIG: I hope the Committee will not accept the suggestion. We are going to have an Autumn Session and shall have plenty of time to finish the Bill then. A good many Members have made arrangements in contemplation that what was indicated by the Chairman would be given effect to. I hope we shall adhere to that.

The CHAIRMAN: I thought the Committee had come to a final decision on the point that we should finish Clause 7 and then adjourn till the Autumn. The only effect of going on would be, I am afraid, that we should not get a quorum. So many Members have arranged to go away, myself included, and there would have to be another Chairman. I really think one or two days in the Autumn would be all we should have to take. That is my feeling, but, of course, I am in the hands of the Committee.

Mr. JOHNSTONE: I think it is quite impossible to go further now, because we agreed on this course, and it was understood that when we had disposed of Clause 7 we should adjourn.

Mr. BRIDGEMAN: In view of this having been a final decision, and in view of the expression of opinion, of course I cannot press my request any further. I have discharged my duty.

The CHAIRMAN: Perhaps the Parliamentary Secretary will convey what has been said to the President of the Board of Trade, for I should not like him to think that we are shirking our duty.

Lieut.-Commander CRAIG: Would it be possible to have the Bill reprinted with the Amendments inserted as far as we have gone?

The CHAIRMAN: I will see that that is done.

Adjourned at fifteen minutes after Twelve of the clock.

372

THE FOLLOWING MEMBEBS ATTENDED THE COMMITTEE.

Roberts, Sir Samuel (Chairman)

Balfour, Mr. George

Barnes, Major

Bridgeman, Mr.

Brown, Mr. James

Chamberlain, Mr. Neville

Craig, Lieut.-Commander Norman

Dawes, Commander

Entwistle, Major

Flannery, Sir James Fortescue

Guinness, Captain Rupert

Johnstone, Mr.

MacVeagh, Mr.

Mallalieu, Mr.

Neal, Mr.

Roundell, Lieut.-Colonel

Royce, Mr.

Shortt, Mr. Secretary

Steel, Major

Stevens, Mr. Marshall

Thorne, Colonel William

Thomson, Mr. Trevelyan

Vickers, Mr.

Waddington,Mr.

Williams, Lieut Colonel Sir Rhys

373