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Clause 10—(Charges Of Board And General Fund)

Volume 389: debated on Thursday 6 May 1943

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I beg to move, in page 7, line 34, to leave out "from time to time."

This is practically a drafting Amendment, but I should like to say one word about the reason why we are proposing the alteration. Clause 10, as the Committee knows, refers to the prices that are to be charged by the Board for the supply of various types of electricity, and as the Clause at present reads it provides that the prices are to be determined by the Board from time to time. It was thought that in some quarters that might prevent the Board from entering into a long-term contract, say, with a large power user at a fixed price. I myself did not share that view as to what this meant, and I do not think that the Board would have been tied in that way, but if we remove the phrase "from time to time," then there will be no reasonable doubt about the matter.

Amendment agreed to.

I beg to move, in page 7, line 34, to leave out from the second "time" to "so," in line 36.

This is an occasion where the Government have somewhat met the situation. I put down this Amendment and discovered afterwards that my right hon. Friend the Secretary of State had put down one to follow in almost precisely the same words. I am grateful for small mercies, and I hope that they will be repeated before the Debate is finished. The reason for this is obvious. The Clause as drafted used the extraordinary and unexampled phrase "one year with another." I referred to this in the course of the Second Reading and pointed out that if this was to be the way in which the Board did its business, by this hand-to-mouth existence, it would be impossible for it to succeed. I pleaded then for a long term view. That is why I ask for changes in Clause 5 and I make the same plea here. No Board and no commercial concern could live from year to year in this way; it must be a long-term arrangement. These words are impossible words. I urge that they should be taken out and that we should substitute for these words more or less the words contained in Section 11 of the Act of 1926, to which we must naturally return so frequently in the course of this discussion. The words are:
"The tariff shall be fixed so that, over a term of years to he approved by the Electricity Commissioners, the receipts may in fact balance the outgoings."
That is what the Secretary of State has accepted, and I am grateful for it, but may I ask for his explanation of another matter directly connected with this? In the Clause it states:
"The prices to be charged by the Board for electricity supplied by them shall be determined by them in accordance with regulations to be made by the Secretary of State after consultation."
There is no precedent, as far as I know, for the word "regulations." There is no such provision in the Act of 1926. The Central Electricity Board is not put under this restriction. The Electricity Commissioners are not required under the Act of 1926 to make regulations. All that is required under that Act is that the Electricity Commissioners lay down the principles, the period, and the estimated margin that is to be allowed to the Board in making its charges, and I cannot see why any change is needed here. If the Electricity Commissioners were to do the same thing for this Board, namely, lay down the principles, the period and the margin, they would be doing all that is necessary. Why hamper this Board any more than necessary with very complicated tariffs? The Central Electricity Board has a simpler task than this Board will have to perform. The Board is not only a manufacturer of electricity but a distributor as well, and therefore it is a much more complicated job. Yesterday the Secretary of State asked, and we agreed, that it should have power to co-operate with the local authorities and the Secretary of State in the economic development of the Highlands. All these many functions of the Board make it necessary to give the Board more and more freedom. I want to know what the regulations are that the Secretary of State intends to lay down. Are they to be tight or loose, or what?

I gather that my hon. Friend is going to withdraw his Amendment, in view of the fact that it is covered by the Amendment put down by the Secretary of State which I shall move presently. But may I give an explanation in answer to my hon. Friend with regard to the necessity for regulations? He may remember that the Cooper Committee made certain recommendations as to the charges that should be made for electricity. For example, they recommended that authorised undertakers in the district should have prices regulated in a certain way and different charges for other people and so on. It would not do to put that kind of thing into an Act of Parliament, and accordingly it is to be done by regulations, which, of course, will come up for the approval of the Secretary of State. If my hon. Friend will look at the next Amendment on the Order Paper, in the name of my hon. and learned Friend the Member for North Edinburgh (Mr. Erskine-Hill) and my hon. and gallant Friend the Member for the Pollok Division of Glasgow (Commander Galbraith), he will see the kind of thing which such regulations are to contain. The regulations are the only place where such matters can be dealt with, and accordingly I hope my hon. and gallant Friend will be satisfied with this xplanation.

Would my hon. and learned Friend say why he prefers his form of Amendment to mine? He has asked me to withdraw my Amendment, and if he can explain why his is a better one, I will withdraw it.

I thought that my hon. Friend was going to withdraw his Amendment, because my right hon. Friend the Secretary of State had put down a similar Amendment. It comes to the same thing.

Does the hon. Member wish to withdraw the Amendment?

There seems to be some misunderstanding as to which Amendment the Committee are discussing. The hon. Member for East Fife (Mr. Henderson Stewart) was spea4ing to the second of his Amendments—in page 7, line 38, to leave out "equal one year with another," and to insert:

"be such that over a term of years to be approved by the Electricity Commissioners, they will equal."

The hon. Member was undoubtedly out of Order, because that Amendment had not been called. The question before the Committee is that of the first Amendment.

I understand that the Committee has noticed that one is tied up with the other.

The hon. Member's first Amendment cannot surely now be passed, because already my right hon. Friend's Amendment has been adopted by the Committee, and I do not see how they could both be adopted.

My right hon. and learned Friend is quite right, and I therefore beg to ask leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

I beg to move, in page 7, line 38, to leave out "one year with another," and to insert:

"over a term of years to be approved by the Electricity Commissioners."
My hon. Friend the Member for East Fife (Mr. Henderson Stewart) has already explained the reason for this Amendment, and it conforms with his views and, I hope, with the views of the Committee.

Amendment agreed to.

I beg to move, in page 7, line 40, at the end, to insert:

"( ) Such regulations shall contain a provision that the Board shall not supply electricity directly to a large power user for use within the area of supply of any other authorised undertakers at a price less than the price at which the Board would be prepared to furnish a supply to such authorised undertakers either at the generating station of the Board or at a point on any transmission line belonging to or used by the Board."
This Clause, as the Solicitor-General for Scotland has told us, deals with the charges to be made by the Board as determined in accordance with regulations to be made by the Secretary of State, and the Amendment to which I am speaking would follow directly after the first Sub-section of this Clause. As the hon. Member for Stockport (Sir A. Gridley) reminded the Committee yesterday, this House has always refused to allow competition in respect of the distribution of electricity, but in this Bill we depart from that principle. In Clause 2 (2, c) of the as amended, there is a duty imposed on the Beard to supply large power users in areas of authorised undertakers, provided always that the authorised undertaker consents, or that the Electricity Commissioners are satisfied that the Board can supply appreciably more economically than can the authorised undertaker. At first sight it appears to be very fair and reasonable that where the Board can, supply appreciably more economically, then the Board should make the supply, and where the authorised undertaker can supply appreciably more economically, then he should supply. But in view of the fact that authorised undertakers can only obtain their supplies of electricity from the Board, that would only be fair if the same initial price was quoted to the authorised undertaker as the Board would be prepared to offer to the large power-user. I suggest that that is the only way under this Bill by which competition can be restricted and authorised undertakers given an opportunity to develop their areas along the most economical lines, which, of course, is very greatly for the benefit of the consumer. From the discussion which took place yesterday on Clause 2, I rather understood, from words used by the Secretary of State or the Lord Advocate, that it might be that they accepted the principle of which I have just spoken and that the only difference would be in the method of putting it into operation.

There are two courses open. Either this can be done by regulation, or it can be included in the text of the Bill itself. I would much prefer to see it included in the Bill, for the reason that an Act of Parliament is much more vital than a regulation. My right hon. Friend may make regulations, but they would in no way be binding on his successors in office. The whole object of the Amendment is to restrict competition and to allow authorised undertakers to develop their areas along economic lines. These matters, the Committee will remember, were very strongly stressed in the report of the McGowan Committee. I ask the Lord Advocate whether he will be good enough to accept this Amendment and place the matter beyond doubt instead of proceeding by regulation, which might be annulled at any time without reference to this House.

Yesterday; when Major Milner was in the Chair, I sought to deal with this Amendment in conjunction with three or four Amendments which were bracketed together for discussion on Clause 2. I do not propose to repeat the arguments I then made for the benefit of the Chair, Mr. Williams, as probably most Members who are present now heard what I said then. I want to explain, however, that we accepted the Government's Amendments on Clause 2 with great reluctance and in the hope that when reaching this Amendment to this Clause we might be met. I want to submit two or three arguments which were not touched upon by my hon. and gallant Friend when he moved the Amendment. I want to emphasise again that it can make little difference to the Board whether they themselves supply a large power user direct or that user takes the supply from an authorised undertaker. The reason is because that supply has to be provided at cost by the Board, and, that being so, I ask the Government to consider, this: What does it matter where a high-load factor industry is situated so long as the generating power comes, as it will, from the Board's hydro station? The Board will get the benefit of the business, whether they supply the transmitted current direct to the new industry or whether they give it to the new industry via an existing authorised undertaking.

There is another point. There is nothing we have so far discussed which makes it clear beyond doubt that if that new high-load factor industry wants to come into an area and take a supply at any point on the existing high tension transmission line and the authorised undertaker is in a position to take a supply from that point on the Board's transmission line, the Board will be under an obligation to quote the same price to the existing authorised undertaker as to the new prospective industry. In other words, wherever a supply has to be taken for the purpose of the new industry it ought to be provided at cost wherever it is to be delivered whether by the Board direct to the new industry or whether the authorised undertaker is to give a supply. These are powerful reasons why I would urge the Government to accept this Amendment, and make it clear in the regulations that they intend to carry out the principle they have already conceded in the Amendments which have been accepted to Clause 2. I think I have made out an overwhelming case for this Amendment, and I press the Government strongly to accept it.

In the course of the discussion on Clause 2 yesterday I indicated that the Government were satisfied that the principle underlying this Amendment is right, because it means fair play as between the Board and the authorised undertaker. I do not feel that we can put this matter into the Bill, but I give a categorical assurance that there will be put into the regulations a provision on the lines of this Amendment. I am not tying myself to the precise wording, but it will be on the lines of this Amendment. The reason why we do not wish to put the matter into the Bill is because this is only one of a number of matters which will have to be dealt with under the regulations, and we feel that it is not at all desirable that one matter should be mentioned in the Bill while others, equally important, are not mentioned. Further than that, on other Clauses we have been pressed to put in black and white into the Bill a number of things which in our view can be more properly dealt with either in the Schedule, the regulations or subsidiary documents. The great difficulty in giving way on one point and letting one Amendment of this character go into the Bill is that we shall have a shoal of others with an equally good case, and I ask my hon. friends to rest assured with the assurance I have given that this matter will be dealt with under the regulations. I cannot imagine any Secretary of State, in the face of that assurance, not inserting this matter in the regulations, as promised.

I am rather disappointed that the Lord Advocate has been unable to accept this Amendment, but in view of the assurance he has given —a very definite assurance—I shall ask leave to withdraw the Amendment. But before doing so, I would ask him if he will make it clear that the supply will be given not only at the generating station but also anywhere on the main transmission line where tapping needs to take place?

Of course, where-ever is the convenient place for the transfer from the Board to the authorised undertaker, that is the proper place at which to fix the price.

I am a little disquieted by part of the argument used by the Lord Advocate, and I respectfully suggest that if I have understood him rightly, the Committee deserves rather more explanation. If I followed him correctly, his argument was that this was a matter appropriate to delegated legislation, to Order, that there were other such matters of equal importance which were not in the Bill and that, therefore, this could not be put into the. Bill. It is an extremely dangerous doctrine that you are not to have in your primary legislation anything which is at all parallel with something else which is kept for delegated legislation. The House has more than once shown its disquiet about this kind of Ministerial view of delegated legislation in the past, and when we have a Bill before the Committee such as we have now, I do not think that kind of argument ought to pass without some comment.

With reference to those observations, I put my argument on a much lower and more practical plane than my hon. Friend's observations. The strongest part of my argument, to my mind, is that a great number of other people have asked for a number of Amendments of a somewhat similar character to be put into the Bill which, in the aggregate, would be very confusing, on balance, to a person reading the Bill. We could not allow one unless we were prepared to allow them all, and I do not believe my. hon. Friend wants to have this Bill complicated by a vast number of citations which are better elsewhere.

Before the Amendment is withdrawn I would like to get a little clarification. I am not certain that I followed the arguments of my hon. Friend or the Lord Advocate and that the machinery my hon. Friends asked for is the machinery they want. When we were discussing Clause 2 I had an Amendment on the Order Paper—which I did not move—which sought to do precisely what they want by the method of using the 1926 Act, with which they are familiar. The Government Amendment which was accepted adopted some of the sense of the words of that Amendment of mine. I want to remind the Committee that there is another provision now in law which might meet the case of my hon. Friends and enable the Lord Advocate, not to accept their Amendment, but to give them what they want. The Lord Advocate, I know, will remember the 1909 Act, Section 6, which enables the Electricity Commissioners to authorise the Central Electricity Board to give electricity to large power users through an undertaker at a special price. That is known in the industry as a fringe Order. I should have thought that that would have met the point my hon. Friends were making. [HON. MEMBERS: "No."] Does it not? I sympathise with them in that we do not want any method introduced into the Bill in regard to this matter which complicates the business or which breaks away from the established practice of the industry. What we are seeking in substance to secure is the established practice, namely, that the Central Board cannot supply directly to people outside but only through authorised undertakers.

Amendment negatived.

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