612 STANDING COMMITTEE B Tuesday, 11th November, 1919

SIR SAMUEL ROBERTS in the Chair.

ELECTRICITY (SUPPLY) BILL.
[OFFICIAL REPORT.]

It being the anniversary of the signing of the Armistice, the Members of the Committee at eleven o'clock, in accordance with His Majesty's Proclamation, rose in their places and for two minutes paid silent tribute to the Glorious Dead.

CLAUSE 24.
—(Supply of Apparatus.)

"A district electricity board and any local authority authorised by special Act or by order to supply electricity may provide, let for hire, and in respect thereof may connect, repair, maintain and remove (but shall not, unless expressly authorised to do so by the special Act, manufacture or sell) electric lines, fittings, apparatus and appliances for lighting, heating and motive power and for all other purposes for which electricity can, or may he used, and with respect thereto may demand and take such remuneration or rents and charges, and make such terms and conditions as may be agreed upon."

Lieut.-Colonel Sir F. HALL: I beg to move to leave out the word "provide" ["to supply electricity may provide"] and to insert instead thereof the word "purchase." I think the general idea with regard to the Clause is clear, but it is not at all clear whether the word "provide" taken in its largest extent might not enable authorities to manufacture under certain circumstances. "We want to make it clear that local authorities should be able to purchase electrical appliances and let them out for hire. The substitution of the word "purchase" would do away with any ambiguity that there is.

The PARLIAMENTARY SECRETARY to the BOARD of TRADE (Mr. Bridgeman): I cannot think that the apprehensions entertained by my hon. and gallant Friend are very well founded. The Clause expressly excludes the manufacture of these articles. I hope my hon. and gallant Friend will not press the Amendment because the word 613 "provide" certainly includes purchase and hire. Therefore it is a wider expression of the kind, but it does not include manufacturers. I hope the Amendment will not he pressed.

Amendment, by leave, withdrawn.

Mr. ROYCE: I beg to move, after the word ''provide" ["electricity may provide"], to insert the words "sell, hire-purchase." It seems absurd that provision should be made that district electricity boards or local authorities should not be permitted to sell any appliances. I submit they ought to have power to dispose of such apparatus, and that it would be a convenience for the public.

Mr. BRIDGEMAN: I am afraid I cannot accept this Amendment. An arrangement was arrived at, after consulting the parties concerned, which follows the General Report of Sir Charles Parson's Departmental Committee. The Amendment would enable the authorities mentioned in this Clause to compete with traders and sell appliances. I am not able to accept the proposal.

Mr. THOMSON: I hope the Government will reconsider this matter. It is not a question of theory but practice in municipal work, where the development of gas and electricity supply has been considerably hampered by the restrictions which already exist in many cases. We have 'heard a great deal to the effect that private companies can do these things so much more efficiently and cheaply than municipalities or local authorities. If that is the fact, why is there any fear or hesitation on the part of vested interests against this competition. If they are able to sell these things so much more cheaply, they should not be afraid of competition. The Parliamentary Secretary in resisting the Amendment said that an arrangement had been arrived at by the parties interested. I submit that the consumer is the one principally interested in anything that makes for cheaper and more efficient supply of electric power and fittings, and that this proposal is in the interests of the public. The Parliamentary Secretary said it would lead to considerable competition. Surely competition is healthy and is calculated to result in a cheaper supply of electricity, which, I understand, is the main purpose of this Bill. If the authorities concerned are not allowed to sell these fittings as well as to hire them, it will be a very considerable handicap. You may have 614 a small district where you have no private undertaking prepared to put in fittings, and there is likely to be considerable delay if the local undertaker is not allowed to do so. In my own municipality the corporation have power to supply gas cookers and heating apparatus generally, and the consumption of gas has more than doubled owing to the facilities afforded by the local undertaking run by the municipality. If the electrical undertaking has not the same facilities it will be handicapped. Surely competition on these lines should be encouraged rather than resisted. Private interests may fear that their profits will be reduced, but this is a proposal in the public interest, and I think the Committee should not take any cognisance of the other matter.

Sir KINGSLEY WOOD: I hope that the Government will adhere to the attitude they have adopted. This is a very vital Amendment. If it were once adopted it opens the door in the widest possible manner to municipal trading. I speak entirely on this occasion from the point of view of the consumer and of the ratepayer, and after the horrible examples in so many cases that we have had before us, I do not apprehend for a moment that we should see those delightful days coming to pass which my hon. Friend anticipates in connection with this matter. I hope the Government will strenuously resist this Amendment. If we once begin to encourage the municipalities in competition with private enterprise, I really do not know where the country will come to.

Sir F. HALL: My hon. Friend in a speech made last week drew particular attention to the fact that the local authorities have the security of the rates behind them.

Mr. THOMSON: I never gave utterance to any such sentiment.

Sir F. HALL: If it was not my hon. Friend then apparently it was the hon. Member for Hillsborough (Mr. Neal). At any rate if the Debates are read carefully it will be seen that reference was made to the fact that the local authorities would have a security of the rates behind them, and in that case they would be able to sell these things for less than they cost to produce.

Commander DAWES: I sincerely hope that this Amendment will be pressed to a 615 Division. There is nothing new in the fact of corporations having this power. Corporations in London which supply electricity have this power already, and so far as I know there has been no charge on the rates. It is a great convenience to customers to be able to get lamps and other things from the people who supply the electricity.

Mr. NEAL: I sympathise entirely with this Amendment. It is an anomalous position that certain municipalities have the power to sell electric apparatus and fittings and others have not. That condition is intended to be stereotyped by Clause 24. What is suggested by those who oppose this Amendment is that some municipalities may continue to do this trade and others may not do it. Why? If the district electricity board or the authority, whatever it may be, desires to develop its electric supply and to show the public the latest and best means of using that supply it nearly always establishes showrooms. In my own city, Sheffield, there is a showroom, and the position is you may show the goods you have got to the consumer, but you have to refer them to somebody else from whom to buy those goods. But if this Clause passes you can say to the consumer, "We will let them on hire." What is the difference in principle? You can let them on hire at a price which may or may not be profitable. But if you sell them then you are transgressing the Decalogue. I do not understand where the wrong comes in. I am not one of those who favour universal municipal trading. I was not able to support the Bill of the Labour Party with that object, but I am not in favour of crippling public authorities by saying, "You must not do what is necessary for carrying on your business." Anyone establishing a business of this kind privately would desire to do the whole trade and not have to send his customers to someone else carrying on business in the same trade. In reference to the powers to put a charge on the rates my hon. and gallant Friend will not find anywhere in this Bill power to charge the rates.

Sir F. HALL: If the price charged is not sufficient to bear the whole cost where is the remainder to be found?

Mr. NEAL: It is not to be found anywhere. I pointed out on the Second Reading of this Bill that there is no provision in this Bill for making good any deficit which arises. So if my hon. and gallant Friend is the custodian of local rates he need not be alarmed about this.

616

Mr. G. BALFOUR: Is it not a fact that a deficit on an electrical undertaking is chargeable on the rates? If there is a loss in the supply of the electricity which has been contributed to by a loss on the sale of electric fittings that loss would be chargeable on the rate.

Mr. NEAL: Without this Bill that is obviously so. But under this Bill the position obviously becomes changed. Take the district electricity board or the joint electricity authorities. Nowhere in this Bill is there power to put a deficit upon the rates. So far as the local authority continues to be the distributors then it may have the right to charge the deficit against the rates. But the scheme under this Bill makes what I think is rather a large assumption—that every district electricity board and every joint electricity authority is going to make both ends meet in every financial year of its career. This is really a small point, but I trust that the Amendment will be carried.

Mr. KILEY: I would suggest that the Government should reconsider the attitude that it has taken up on this matter. The corporation with which I have been connected for many years have been supplying fittings, and also motors to manufacturers in the district for a number of years. They have also been supplying on the hire system by which, after a certain period of payments, the instruments or motors become the property of the person who hires. If this were now stopped we should be placed in a position of some difficulty. Moreover, in order to make this electric supply more successful we had to compete with the gas company. They are private companies, but they have the monopoly in the district, and we should be placed at a serious disadvantage from the electrical point of view if we were not in a position to do what competing companies can do without any restriction.

Mr. BALFOUR: I think that we are rather straying. This Bill deals primarily with the question of supplying electricity and not with the question of supplying electric fittings. Whatever may be the merits for or

Division No. 21.] AYES
Dawes, Commander Mallalieu, Mr. Swan, Mr.
Grundy, Mr. Neal, Mr. Thomson, Mr. Trevelyan
Kiley, Mr. Royce, Mr.
NOES
Balfour, Mr. George Hall, Lieut.-Col. Sir Frederick Pinkham, Colonel
Bowyer, Captain Jones, Sir Evan Roundell, Lieut.-Colonel
Bridgeman, Mr. Marriott, Mr. Steel, Major
Carr, Mr. Moreing, Captain Wood, Sir Kingsley
Elveden, Viscount
617

against empowering municipalities to supply electric light fittings this should not be made the subject of special reference in this Bill. It may be on close investigation that it would prove to be the right thing to give way to powers to municipalities, but I have a strong opinion that as a matter of public policy it is a wrong thing to introduce that into this Bill. I think that the Clause ought to be left as it is, not taking away existing powers and not adding any powers of municipal trading.

Mr. ROYCE: I am afraid that I shall have to press this Amendment. It is an anomalous position that an authority that has power to supply fittings for its gas undertakings is debarred from doing so in reference to its electric undertakings. The Clause at present prevents the selling of electric fittings under the hire purchase system.

Mr. BRIDGEMAN: I do not want to go into the question of municipal trading, which we are in some danger of embarking upon, as it would take us a great distance from this point. I am not quite prepared to accept the view of the hon. Member, for Hillsborough (Mr. Neal), that there is no kind of rate support behind this form of competition. But this Clause was drawn up after a report of Sir Charles Parsons' Electrical Trades Committee on the 17th July, 1918. After having taken evidence both from the Incorporated Municipal Electrical Association and from the Electrical Contractors' Association of England and Scotland and others concerned, they say "we do not favour local authorities being given the power of selling fittings or apparatus or carrying out work on consumers' premises. Such powers would interfere unduly with the legitimate trade of contractors." Therefore, as far as the Government are concerned, we must oppose this Amendment.

Question put, "That those words be there inserted."

The Committee divided: Ayes 8, Noes 13.

618

Sir F. HALL: I beg to move to leave out the word "thereof" ["and in respect thereof may connect"] and to insert instead thereof the words "of such letting for hire". This is merely a drafting Amendment, and I hope the Government will accept it.

Mr. BRIDGEMAN: This would have the effect of preventing boards and local authorities from repairing any fittings other than those they themselves had let for hire. That would unduly limit the Clause, and I hope the Amendment will not be pressed.

Sir F. HALL: I can assure my hon. Friend that that is not the intention. The Amendment is designed to improve the measure. The word "thereof" is very ambiguous, and I wish to make the meaning clear.

Mr. BRIDGEMAN: "Thereof" means either letting for hire or providing, and if these words are inserted "providing" would be cut out from the meaning and intention of the Clause.

The CHAIRMAN: I venture to suggest that that is the true construction.

Amendment, by leave, withdrawn.

Mr. CARR: I beg to move to leave out the word "connect" ["may connect, repair, maintain"] and to insert instead thereof the word "fix." The object is to make perfectly clear what are the powers of the local authority—as to how much wiring or service they may do on a consumer's premises. I want to make it clear that no wiring beyond the consumer's meter shall be undertaken by the local authority, and that the consumer's terminals and system up to the terminals shall be done by private contract.

Mr. BRIDGEMAN: I am not sure that I quite appreciate the difference between the two words, but if there is any it seems to me that "fix" would limit their powers more than would the word "connect." I would rather adhere to the words in the Clause, because I think that having put safeguards in the Clause it would be better to leave the wider words, subject to those safeguards.

Amendment, by leave, withdrawn.

619

Mr. BALFOUR: I beg to move, after the word "not" ["but shall not, unless expressly authorised"], to insert the words "manufacture nor." I would like to call attention to the next Amendment in my name, which is consequential. There is nothing in this Amendment except to express in the Bill the exact conditions which are expressed to-day in various Acts of Parliament. As far as I am aware no special Acts now contain authority to any of the local authorities to manufacture and sell. Some special Acts do give them power to sell and not to manufacture.

Mr. BRIDGEMAN: I am not at all sure what the effect of these words would be. I do not gather quite clearly whether it would mean that those companies which are allowed to do these things under a special Act would be prevented in future from doing so. If that is the intention I cannot accept the Amendment without further consideration. The hon. Member said he thought no companies were allowed—

Mr. BALFOUR: No local authorities— district board and any local authorities.

Mr. BRIDGEMAN: I cannot accept this without further consideration, but I am quite prepared to look into it. I will consider it again later on.

Mr. BALFOUR: Unless the words improve the Clause I do not wish to press them. I leave it entirely to the Parliamentary Secretary whether they should or should not be inserted.

Amendment, by leave, withdrawn.

Sir F. HALL: I beg to move, at the end of the Clause to add the words "Provided that no such local authority shall fix such electric lines, fittings, apparatus, and appliances except through an electrical contractor carrying on business independently of the local authority." This has been discussed at great length many times. In 1909, I think, an Electrical Bill was brought forward. It went back to the House of Lords and the House of Lords asked for an Amendment, practically word for word in the terms of this Amendment. The Bill was sent to the Commons and the House of Commons deleted the Amendment. As a result of consultation between the two Houses a special Clause was devised, called the Model Clause, No. 10. I do not make any bones about it; this Amendment is for 620 the protection of what I will call the contractors, who have been in the habit of doing this class of business—fixing and fitting. I am sure no member of the Committee desires to do anything that will kill an industry.

Mr. BRIDGEMAN: As I have said once before, this Clause is the result of consultation between the electrical contractors and the associations representing the supply authorities, and have resisted a deviation from the arrangement in one direction, and I therefore feel obliged to resist any deviation in the other direction.

Sir F. HALL: I am sorry the Parliamentary Secretary cannot accept the Amendment because it is carrying out the spirit of an Amendment brought forward by my hon. Friend just now. This is practically amplifying what the Government did then. This is absolutely on all fours with what was called the model Clause' of the House of Lords. I suggest to the Parliamentary Secretary that he should not move this Clause, but look into it between now and the Report stage.

Mr. ROYCE: I hope the Parliamentary Secretary will maintain his attitude of resistance. This Amendment would prevent any departmental work of any description being done. Assuming that this House had a staff of electrical engineers, it would be impossible for them to perform any work in this House or any department of this House.

Mr. BALFOUR: On a previous Amendment dealing with the sale of fittings I strongly resisted an extension of powers on the part of the local authority. For the same reason, in order to maintain a logical position, and in order to be able to say we cannot on this occasion give an extension of powers to private traders the only wise thing to do is to retain the Clause pretty much as it is and not extend the powers either of the local authorities or the private traders in this connection. I certainly think we should support the Government in the Clause as it stands.

Mr. BRIDGEMAN: If I gave the comforting assurance that my hon. and gallant Friend seeks, it would be perhaps leading him to false hopes of what might happen on Report. I am always prepared to consider anything he says, but I cannot really hold out any hope that consideration of this point would lead me to change my mind. 621 The observations he made and the points to which he called attention were carefully considered by the Committee on whose advice we drew up this Clause. Their consideration of it as experts is more important than mine, and I am prepared rather to abide by the advice they gave than to embark upon a long consideration of it myself. Therefore I hope my hon. and gallant Friend will not press the matter.

Amendment, by leave, withdrawn.

Sir F. HALL: I beg to move, at the end of the Clause, to add "(2) Any electric lines, fittings, apparatus, and appliances provided by or on behalf of any authorised distributors on consumers' premises either before or after the passing of this Act, and any lands, buildings, or works held by them in connection therewith shall be deemed to form part of the undertaking authorised by the Acts or Provisional Orders relating to such authorised distributors." Taking the Clause all round I should like to have seen some alterations in. it, but in the ordinary course of events it is a fairly reasonable Clause endeavouring to meet all points. The question of the ear-marking of accounts with regard to expenditure under this heading has never been allowed by the Board of Trade. It has been taken out of the accounts because the Board of Trade have said the local authorities have no power to do this sort of thing. When we take into consideration that after the tenure expired the undertaking had to be paid for, either as originally arranged by Section 2 of the Act of 1888, or the modernised manner which Governments have now of altering Parliamentary arrangements which have been come to, it has to be taken into consideration that that has never been allowed. If that had not been taken into consideration heretofore it is necessary that an Amendment on these lines should go in. Determined opposition has been taken by manufacturers to local authorities being the undertakers of this kind of business, and the matter was very carefully gone into by Sections 24 and 25 of the Act of 1882 and Section 16 of the Electric Lighting Act, 1909. I want these to apply to this Bill just as it was proposed that they should apply to the 1909 Act. Supposing part of the undertaking has been hired to a. consumer and the consumer becomes bankrupt and a receiver is put in. Under these Acts the authorised undertakers were protected against confiscation of their property. We should have the same 622 thing under this Bill. If the undertakers are providing the whole of these various appliances they should be placed on exactly the same basis, and if the property belongs to the authorised undertakers no one should be able to come in and say, because it happens to be on the premises, "we shall take it as part of the assets belonging to the consumer."

Mr. BRIDGEMAN: This is a much more reasonable Amendment than some that my hon. and gallant Friend has moved, and I am quite prepared to accept it.

Mr. THOMSON: A great many of us do not follow the purpose of the Amendment or what it means.

Mr. BRIDGEMAN: As far as I understand it, the effect is that where a company has been doing this kind of business the appliances in people's houses become part of the undertaking, and so purchasable by the purchasing authorities, and without this Amendment companies might, as I understand it, be left with the fitting business and nothing else. I think it is only just that the fitting business should become purchasable with the rest of the undertaking.

Mr. THOMSON: I take it that the purpose of the Amendment is to get a bigger price when the undertaking is taken over by a district board. The Government have resisted depreciation being taken into account. If these fittings are taken over without depreciation a district board is going to be landed with a lot of useless fittings and stock because materials of this kind depreciate exceedingly rapidly. The Amendment seeks to upset a ruling that already exists. I am asking for further information so that undertakers and district boards shall not be landed with a white elephant.

Mr. BRIDGEMAN: I am not quite sure whether there is or is not some substance in what the hon. Member has said, but it is quite clear that something on the lines of this Amendment would only be fair and just. If he will allow me to ask my advisers to look into this and possibly alter some of the words, I should like to accept the Amendment with the reservation that at a later stage we may feel it necessary to alter 623 the words, but the principle, as I understand it, we accept.

Sir F. HALL: I assume there is going to be no drastic alteration. I think the Amendment is perfectly reasonable and fair. It is not a question of depreciation. Provided there is not going to be any drastic alteration I am pleased to accept the suggestion.

Amendment agreed to.

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

CLAUSE 25.
—(Limitation of prices and profits.)

"(1) The prices charged by a district electricity board for electricity shall be fixed by the board subject to the approval of the Electricity Commissioners, and shall be such that their receipts on income account will be sufficient to cover their expenditure on income account (including interest and sinking fund charges), with such margin as the Electricity Commissioners may allow.

(2) In addition to any provisions contained in any special Act or order limiting the prices to be charged by authorised undertakers in respect of the supply of electricity, the Electricity Commissioners may regulate such prices with a view to securing that the benefit of any reduction in the cost of electricity or in the' capital employed in the production thereof attributable to the provisions of this Act shall enure to consumers."

Mr. MARRIOTT: I beg to move, at the beginning of the Clause, to insert the words "Subject to the provisions of this Act limiting the prices to be charged by a district electricity board in respect of the supply of electricity." This is not very much more than a drafting Amendment, but it is one of some little importance. The Clause deals, in the first place, with the prices to be charged by district electricity boards, and, in the second place, with the prices to be charged by authorised undertakers to their consumers. The Clause sets out that the prices charged by district electricity boards shall be such that their receipts on income account will be sufficient to cover their expenditure on income account, including interest and sinking fund charges, with such margin as the Electricity Commissioners may allow. It seems necessary to attempt to bring this Clause into conformity with Clause 7. Under Clause 7 the prices to be charged to authorised undertakers whose generating 624 stations have been purchased are not to exceed the cost of generating electricity at these stations. It is only fair, therefore, that Clause 25 should contain a reference to that safeguard, in order to make the two Clauses perfectly consistent.

Mr. BRIDGEMAN: I submit that these words are quite unnecessary. The arguments which have been raised by my hon. Friend may, I think, be taken on the next Amendment. We should not overload the Bill by putting in words which really do not make any difference.

Amendment, by leave, withdrawn.

Mr. BALFOUR: I beg to move to leave out the words "and shall be such that their receipts on income account will be sufficient to cover their expenditure on income account (including interest and sinking fund charges), with such margin as the Electricity Commissioners may allow. (2) In addition to any provisions contained in any special Act or order limiting the prices to be charged by authorised undertakers in respect of the supply of electricity, the Electricity Commissioners may regulate such prices with a view to securing that the benefit of any reduction in the cost of electricity or in the capital employed in the production thereof attributable to the provisions of this Act shall enure to consumers." This is a somewhat drastic Amendment, but I think it is a very necessary one. This subject is dealt with in Clause 7, Subsection (5). In that Sub-section there are specific provisions as to the price charged by the electricity board to the undertaker whose station has been acquired. In Clause 25 we find that the price has to be fixed by the electricity board subject to the approval of the Electricity Commissioners, but immediately you find words which take away from the Commissioners all freedom of action. The Clause proceeds "and shall be such that their receipts on income account will be sufficient to cover their expenditure on income account, including interest and sinking fund charges, with such margin as the Electricity Commissioners may allow." Therefore the Commissioners have no power to fix the price below a certain figure, which must be an amount to pay the whole cost of generating the electricity and other expenses in connection therewith and sufficient to cover the interest and sinking fund they have incurred in connection with the supply. 625 We understand that the supply will be given by the district boards from very large generating stations, which will obviously be of a capacity far in excess of the peak load which will be immediately dealt with. The station may involve a capital outlay of three million pounds, and in it you have plant capable of dealing, say, with a hundred thousand kilowatts and your consumption is only thirty thousand kilowatts. You immediately incur obligation in respect of that plant of one hundred thousand capacity, though using only thirty thousand. It is possible, under certain conditions, that the charge for electricity attributable to interest and sinking fund alone may be higher than the unit charge to-day by existing undertakers with the whole cost included. I am sure that is not the intention of the Government, and I suggest the remainder of the Clause should be left out. I. suggest Sub-section (2) is unnecessary for the reason that it contains no additional authority to the authority which will be given to the Commissioners in Clause 27, assuming that that Clause is passed much in the form in which it now stands. Under that Clause the Commissioners have extraordinarily wide powers, and I think it is right they should have those powers. They can by that Clause practically grant a Provisional Order. They can do anything and everything which under the Electric Lighting Acts may be effected by Provisional Order confirmed by Parliament.

Mr. BRIDGEMAN: As the two points raised are really distinct, I suggest it would make the discussion much plainer and easier if the hon. Member would move his Amendment in this form to leave out from the word "Commissioners" to the end of Sub-section (1). If he thinks fit, subsequently, he can move to delete Sub-section (2), which raises a separate question.

Amendment, by leave, withdrawn.

Mr. BALFOUR: I beg to move, in Subsection (1), to leave out the words "and shall be such that their receipts on income account will be sufficient to cover their expenditure on income account (including interest and sinking fund charges), with such margin as the Electricity Commissioners may allow." I am only too pleased to fall in with the suggestion of the Parliamentary Secretary. I hope I have said sufficient to show that there is real substance in this Amendment.

626

Mr. MARRIOTT: On a point of Order. May I ask how this Amendment will affect the position of the Amendments of which I have given notice and particularly one which stood in the name of my late lamented Friend, Mr. Norman Craig, and which I propose to move.

The CHAIRMAN: The question is to leave out from the word "Commissioners" to the end of the Sub-section.

Mr. BRIDGEMAN: I am obliged to the hon. Member for proposing his Amendment in this form, and I am prepared to accept it. I think he has shown good reason for it. We have suffered in this Committee for want of confidence in the Electricity Commissioners, and it is very refreshing to see that the Committee are now beginning to appreciate the advisability of giving the Commissioners wider scope than they thought fit at an earlier stage. I hope this very intelligent spirit will continue to the end of the Committee stage.

Amendment agreed to

Mr. MARRIOTT: I beg to move, in Subsection (2), after the word "Commissioners" ["Electricity Commissioners"], to insert the words "after hearing the parties interested."

Mr. BRIDGEMAN: I am not quite so ready to accept this Amendment. The hon. Gentleman has given no reasons for it. I do not know what parties he contemplates. It is really a question of accountancy. I think it would be unnecessary delay if it were necessary to hear the large number of parties who might claim to be interested.

Mr. MARRIOTT: It meant a great deal less than that. It meant parties interested in the sale of these undertakings, and the provision of electricity. It did not mean consumers or accountants but undertakers and authorised distributors. If the hon. Gentleman likes I am prepared to substitute those words for other parties interested.

The CHAIRMAN: I think the proper course would be for the hon. Member for Hampstead (Mr. Balfour) to move the deletion of Sub-section (2) down to the words "Commissioners."

Mr. MARRIOTT: I withdraw my Amendment for the present, and will move subsequently.

627

Mr. BALFOUR: I beg to move to leave out Sub-section (2). If the Committee refer to Clause 27 they will find that the powers of the Commissioners are of the widest possible order, and they have almost the powers of Parliament. That being so, it seems to me that Sub-section (2) is quite unnecessary, except for the last line that any saving shall enure to the consumer. The whole Sub-Section could be left out and a very few words inserted to express whatever the Government had in mind as to any surplus profit due to the policy of the district boards enuring to the consumer.

Mr. BRIDGEMAN: I am afraid I cannot accept the Amendment. The point of the Sub-section is largely acclaimed in the last line. The object is that the consumer shall have the benefit of any saving there may be in cost. I do not quite see how that can be effected without leaving in the words, or something like them, which go before the last line.

Mr. BALFOUR: I would point out that the words "may regulate such prices" deal with the point. Under Clause 27 they have the most ample powers to do everything, in-eluding variation of prices. If you have these words in it rather indicates to the Commissioners to regulate the prices with a view to something enuring to the consumer. That raises a great many questions which would occupy too much time to go into now. My desire is to make this a really effective operating Clause, and I am afraid it will be very confusing if you leave it as it is at present.

Mr. HOPKINSON: May I ask what is meant by "enure"?

The CHAIRMAN: It is not for the Chairman to interpret.

Mr. BRIDGEMAN: I do not know whether there is any special legal significance in the word "enure," but what it means is that any benefits that are obtained by our action shall accrue to the consumers, and shall be enjoyed by the consumers rather than by other people.

Mr. HOPKINSON: Is it in the dictionary?

Mr. BRIDGEMAN: It is a very common expression. Most of us have heard it before

628

Mr. BALFOUR: I will not press the Amendment.

Amendment, by leave, withdrawn.

Mr. MARRIOTT: I beg to move, in Subsection (2), after the word "Commissioners," to insert the words "after hearing the parties interested." I did not intend to give to these words the wide interpretation that is suggested. All I meant was the undertakers and the authorised distributors, and I am perfectly willing to substitute these words.

Mr. BRIDGEMAN: Obviously the Electricity Commissioners, in whom such implicit confidence was placed a few moments ago, could not very well do otherwise than consult the undertakers and authorised distributors. I would prefer to leave the Clause as it is, leaving it to their discretion to consult those whom my hon. Friend has in mind, though I do not feel very strongly about it.

Mr. MARRIOTT: While I have absolute confidence in the Commissioners, I would like to make assurance doubly sure on this point, and would ask my hon. Friend to accept the Amendment, with the substitution of the words ''undertakers and authorised distributors" for "parties interested."

Mr. BRIDGEMAN: I am informed that this means holding a formal inquiry, and if that is the case I cannot agree to it.

Mr. MARRIOTT: I will withdraw the Amendment at this stage, reserving the right to raise the matter on Report as a matter of drafting.

Amendment, by leave, withdrawn.

Mr. ROYCE: I beg to move, in Subsection (2), to leave out the word "may" and to insert therefor the word "shall." At present it is permissive to regulate prices, and I want to make it incumbent.

Mr. BRIDGEMAN: I do not think that the word is appropriate here. All we want is that the Electricity Commissioners should have definite power to regulate prices. That seems to me to be sufficient.

Mr. SWAN: If it is made incumbent on them to survey the whole thing and reduce 629 prices accordingly, then the consumers will benefit. Otherwise it depends on the personnel of the board, and it may be that no benefit will accrue to the consumers unless the word is inserted.

Amendment negatived.

Mr. MARRIOTT: I beg to move, in Subsection (2) after the word "that" to insert the words "a fair proportion of." This Amendment, which is followed by others, represents an Amendment of considerable substance. In this Sub-section as drafted, the provision in respect of reduction of cost may at any rate be read to mean, and I suggest that it would be read to mean, that any reduction in the cost of generation and transmission shall be given entirely to the consumers without any regard to the capital expended by the undertakers or any loss to the companies on conversion, transformation, or distribution. The Clause, as drafted, fails entirely to provide for the not at all improbable contingency that the cost of generation and transmission may be increased by the operation of this Bill. It seems to be assumed that it will be reduced, but that is by no means certain. It is not at all improbable that in certain cases it may be increased. But in other cases it is surely equitable that the effect of the Bill upon cost shall be shared between the district boards—that is to say the producers in bulk, the wholesalers, the undertakers, who are in the position of retailers—and the consumers, and that in regulating the price to be charged by undertakers to consumers the necessity of securing to undertakers a reasonable return on the capital ought surely to be recognised. Under the Clause it would be possible for the Commissioners to make the business of the undertakers unremunerative, since they can regulate both the purchasing and the selling price, and are not required to consider the undertakers' position.

Mr. BRIDGEMAN: The object of this Sub-section is merely to deal with the effect of any reduction in the cost attributable to the provisions of the Bill. The price can only be regulated under this Sub-section in the event of this reduction taking place. I do not think that my hon. Friend claims that if the effect of this Bill is to reduce the prices, anybody except the consumers should have the benefit of it. With regard to increase, though this Sub-section does not deal with it, the companies always have the power, and will have, to apply for authority to increase their charges.

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Mr. BALFOUR: As the Parliamentary Secretary studies this Sub-section more and more he will see that there is some necessity for substantial alteration. Supposing the electricity board say to the authorised undertaker whose station they have taken over, "The capital we have spent on our big new station applicable to your supply is £300.000, and the interest and sinking fund on this capital applicable to your supply is a certain amount of money, and our generating station costs applicable to your load factor is so much. Therefore the total cost for you is so much." The undertakers will reply, "If we had put up our own station we should not have spent more than £150,000 though you tell us you have spent on our account £300,000, and our interest and sinking fund, arrived at on the basis of the station costing only £150,000 is only half as much. It is true that our generating cost may be higher than yours, but the aggregate result may be that our net price would be less." The Commissioners may say, "Nowadays you cannot put up your own station," but it is a fact that the undertakers would, in the ordinary development of business, have established their own station. The total cost, including interest and sinking fund, may well have been much lower than would have been chargeable to him for a bulk supply from the district board. All these problems will arise under this Clause. Personally, I think it is best to leave it wide open to the Commissioners, without attempting to fix everything.

Mr. THOMSON: I hope the Amendment will be opposed. The argument has been used that owing to charges made by the district board there will be no reduction in cost. If there is no' reduction in cost, then the case that the Amendment is supposed to meet does not arise. I think the position of the Parliamentary Secretary is unanswerable.

Mr. BALFOUR: I was only indicating the great difficulty that an authorised undertaker, whose station has been taken over, has in showing what his cost would have been.

Mr. THOMSON: It is not a question of what the cost would have been, but what the cost is under the new conditions. If there is any reduction in cost under the new conditions the position under the Amendment does not arise.

Mr. BALFOUR: I would refer the Committee to Clause 7, Sub-section (5), where 631 any undertaker who has in contemplation the construction of a station is entitled to take that station as being in existence for the purpose of fixing his price. There were large numbers of stations in contemplation before May 8th last.

Amendment negatived.

Question proposed, "That the Clause, as amended stand part of the Bill."

Mr. VICKERS: May I suggest before we go any further that the draftsmen should give a little attention to the wording of the Clause. At present the Electricity Commissioners may regulate prices "in addition to any provisions." I fail to understand what that means.

Mr. NEAL: I think this gives me an opportunity to say a few words upon the finance. I respectfully suggest to the Parliamentary Secretary that what I stated earlier is better founded than he seemed to think. I find no provision anywhere for dealing with the deficits of a district board or of a joint district electricity authority. As to the latter it may be covered; as to the district board the position, with the Clause as amended, is that the Government have consented to the striking out of words which provided that the prices shall be such that the receipts on income account will be sufficient to cover the expenditure on income account. It may very well be—and I venture to say it certainly will be—that in many cases, certainly in the earlier stages of the development, the income will not meet the expenditure. One of my hon. Friends suggested to me that there was some power to charge that deficit upon the rates, and I rather understood that the Parliamentary Secretary accepted that position.

Mr. BRIDGEMAN: No, I said I was not prepared to accept the statement that the competition between the local authoriies and the private individual would not be unfair to the private individual because the authority would in some instances be supported by the rates. I think, however, it is out of order to discuss that now on this Clause.

The CHAIRMAN: Yes.

Mr. BRIDGEMAN: I did not do more than reserve to myself the right to differ from my hon. Friend after I had had a chance of looking into it. I was not prepared to accept his statement then, and I am not so prepared now.

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Mr. NEAL: I am not on the small point that we dealt with, about differences between undertakers and private traders, but on Clause 23 simply, which is a very much wider question, namely, that there seems to be nowhere in this Bill any provision for dealing with the deficits which must inevitably arise in the early stages of the development of electricity under electricity boards. I respectfully press upon the Government that they should give this matter consideration. The whole basis assumed is that the prices charged will be sufficient to cover the expenditure incurred. But is it so? They are already limited by Clause 7 as to the price charged for a portion of their supply. They are also limited, as all traders must be, by the trading price that they can get for their commodity in the market, and it may very well be that they will not be able to get the price necessary to bear interest and sinking fund and other charges. I ask the Government to consider whence these deficits are to be met. Up to now I have not been able to get an answer from anybody at any stage, but sooner or later this question will have to be faced. It is a cardinal question, and it goes to the whole root of the matter. The Clause is made weaker by the Amendments which have been accepted.

Mr. BRIDGEMAN: I can appreciate the point which the hon. Gentleman has raised. The Government's advisers have given very careful attention to this point, and they think it is covered, but I am quite prepared to go into the question further in the direction indicated by my hon. Friend, and if he will give us the benefit of his advice I shall be very glad to discuss the matter with him and my advisers.

Question put, and agreed to.

CLAUSE 26.
—(Alteration of Type of Current, etc.)

"The Electricity Commissioners may require any authorised undertakers to amend or alter the type of current, frequency or pressure employed by them in their undertaking, and the execution of the works necessary to comply with such an order shall be a purpose for which a local authority may borrow under the Electric Lighting Acts."

Commander DAWES: I beg to move, at the end of the Clause, to add the words "and all costs, charges, and expenses of and incidental to such amendment or alteration (including reasonable compensation to 633 consumers in respect of alteration of existing or provision of new fitments rendered necessary thereby) shall be repaid to such undertakers by the Electricity Commissioners, and no deduction shall be made from the price of any generating station vested in or acquired by a district electricity board under the powers of this Act in respect of any moneys so repaid." If the Electricity Commissioners require such alterations as are provided for in Clause 26 to be made by authorised undertakers, whether local authorities or companies or anyone else, they should defray the expenditure of such alterations. That is the effect of the Amendment.

Mr. BRIDGEMAN: There is no suggestion to make any deduction from the price of the generating stations.

Sir F. HALL: You may require the whole system changed from high frequency to an alternating system. [A laugh.] My hon. Friend laughs. I have never pretended to understand the practical working of these electricity undertakings. You may ask for expensive alterations. The Commissioners may want to bring all undertakings into unison. The Amendment says that if that is required the Electricity Commissioners shall pay for it.

Mr. BALFOUR: I think the whole point of the Amendment is that the Electricity Commissioners may require various undertakers to amend the type of current, frequency, etc. It then goes on to provide that "the execution of the works necessary to comply with such an order shall be a purpose for which a local authority may borrow under the Electric Lighting Acts." It specifically provides that the local authority may regard that as a capital expenditure and can spread the repayment over a long period of years. I think the Amendment is quite fair. It is only putting all authorised undertakers on the same footing, and it would improve and explain the Clause.

Mr. BRIDGEMAN: It means that the Electricity Commissioners have to pay for this. If so, they have to pay for it from some general fund. That general fund would be a charge on the whole of the country. Therefore some authority might get a great improvement carried out in its area, and the whole of the rest of the country would have to pay for it. The Electricity Commissioners have no fund out of which to pay for this, and I do not think I can accept this Amendment.

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Mr. BALFOUR: It is obvious that something is necessary, because the framers of this Bill have taken the precaution of making a special provision for local authorities, giving them power to borrow money. The undertaker, other than the local authority, receives instructions to change over, say, a large area like that of the Clyde Valley Power Company and the Glasgow Corporation. Both of these are operating at present at 25 cycles per second. Suppose the Commissioners say, "We will standardise this at 50 cycles." The Glasgow Corporation can borrow the money. What is the other undertaker to do? He is perfectly content with the existing system, for he is giving a good and efficient supply. Surely he should be indemnified in some manner against the expense he incurs in changing the plant of all his consumers. It seems reasonable that some such provision should be made.

Sir F. HALL: I think my hon. Friends have overlooked that this has already been acknowledged as the correct way of dealing with it. Take generating stations. Clause 7, Sub-section (5), says: "Whenever a district electricity board acquire a generating station 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 the cost which it could have been so generated, 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." The principle has been admitted and it has passed the Committee. I cannot help thinking this safety valve must have been unintentionally left out. If they acknowledge it in one place they must acknowledge it in the other. It is not desired by the authorised undertakers to put any obstacle in the way of uniformity. If it should be necessary to change from continuous current to the alternating system that covers the whole thing. If it is wanted, carry out the same principle as has been agreed in Clause 7.

Mr. BRIDGEMAN: What I am afraid of is that the undertakers who will benefit by this would, under the proposed Amendment, not have to incur the necessary expenditure for their own benefit. I may be wrong about that, but I do not want to make some general fund chargeable with a benefit 635 which will come to some particular district or undertaker, and if my hon. Friend will allow us to think about this between now and Report, if, as I expect, there is some alteration which might be made we will try to meet his point.

Amendment, by leave, withdrawn.

Amendment made: At the end of the Clause, add the words "Provided that this section shall not apply to electricity generated at a railway generating station." —[Mr. Bridgeman.]

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

CLAUSE 27:
—Substitution of special for provisional orders.

"Anything which under the Electric Lighting Acts may be effected by a provisional order confirmed by Parliament may be effected by a Special Order made by the Electricity Commissioners and confirmed by the Board of Trade under and in accordance with the provisions of this Act, and references in those Acts and the Electric Lighting (Clauses) Act, 1899, to provisional orders shall be construed as including references to Special Orders made under this Act; and any Provisional Order made under the Electric Lighting Acts and confirmed by Parliament may be amended or revoked by a Special Order made under this Act."

Mr. BRIDGEMAN: I beg to move, after the word "Act" ["in accordance with the provisions of this Act"], to insert the words "or by an order establishing a district electricity board or a joint electricity authority under this Act."

Mr. BALFOUR: It seems to me this wants a considerable amount of consideration. It refers us back to the whole constitution of district boards. As it stands the Clause is admirably suited for the purpose, giving the Commissioners full power of doing everything which could be done by application to Parliament at present. I should like to hear some very good reasons why the words should be inserted.

Mr. BRIDGEMAN: These Amendments are intended to bring the Clause into line with the new Clause 5 and taken together they would read as follows: "Anything which under the Electric Lighting Acts may be effected by a Provisional Order confirmed by Parliament may be effected by a special order made by the Electricity Commissioners and confirmed by the Board of Trade under and in accordance with the provisions of this Act or by an 636 order establishing a distinct electricity board or a joint electricity authority under this Act, and references in those Acts and the Electric Lighting (Clauses) Act, 1899, to Provisional Orders shall be construed as including references to such special orders and orders as aforesaid except that paragraphs (1) to (4) of Section 4 of the Electric Lighting Act, 1882, shall not apply to special orders and any Provisional Order made under the Electric Lighting Acts and confirmed by Parliament may be amended or revoked by any such special order or order as aforesaid." The new Clause 5 provides for the constitution of joint electricity authorities and district electricity boards and Clause 27 provides that "Anything which under the Electric Lighting Acts may be effected by a Provisional Order may be effected by a special order which will for the purposes of the Electric Lighting Acts and the Electric Lighting (Clauses) Act take the place of a Provisional Order." These Amendments are intended to carry that into effect.

Amendment agreed to.

Further Amendments made: Leave out the words "special orders made under this 637 Act" and insert instead thereof the words "such special orders and orders as aforesaid."

After the word "Act" ["special orders made under this Act"] insert the words "except that paragraphs (1) to (4) of section 4 of the Electric Lighting Act, 1882, shall not apply to special orders."

Leave out the words "a special order made under this Act" and insert therefor the words "any such special order or order as aforesaid."—[Mr. Bridgeman.]

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

The CHAIRMAN: I suggest that we should now adjourn.

Mr. NEAL: Is it proposed to sit tomorrow afternoon?

The CHAIRMAN: I would be much obliged if the Committee could do so, because we want to finish the Bill. We have been a very long time in Committee.

The Committee adjourned at eleven minutes after One o'clock till tomorraw (Wednesday) at Eleven o'clock.

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:—

Roberts, Sir Samuel (Chairman)

Balfour, Mr. George

Bowyer, Captain

Bridgeman, Mr.

Carr, Mr.

Dawes, Commander

Elveden, Viscount

Grundy, Mr.

Hall, Lieut.-Col. Sir Frederick

Haslam, Mr.

Hopkinson, Mr. Austin

Jones, Sir Evan

Kiley, Mr.

Mallalieu, Mr.

Marriott, Mr.

Moreing, Captain

Neal, Mr.

Pinkham, Colonel

Richardson, Mr. Alexander

Roundell, Lieut.-Col.

Royce, Mr.

Steel, Major

Swan, Mr.

Thomson, Mr. Trevelyan

Vickers, Mr.

Wood, Sir Kingsley