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Clause 18—(Acquisition Of Undertakings By Agreement)

Volume 389: debated on Thursday 6 May 1943

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I beg to move, in page 13, line 27, at the end, to add:

"Provided that the powers of this Section shall not be exerciscable in respect of the whole or any part of an undertaking which may be purchasable by any other authorised undertakers under existing statutory powers."
We have now arrived at a very important stage of these Amendments, which will require careful consideration, and I hope we shall receive the fullest possible consideration from the Government if we are not forced to divide the Committee. Parliament has granted to the Grampian Company and others statutory powers to acquire by agreement undertakings inside their statutory area of supply, which number about 15 in all, and 10 of these have already been purchased and merged in the Grampian undertaking. Of the remaining five not yet acquired, three are already very closely allied with the Grampian Company by virtue of the fact of their taking supplies in bulk from the Company for the purpose of their local distribution. These are long-term agreements properly approved by the Electricity Commissioners. If, in due course, these remaining five undertakings desire to dispose of their undertakings, as the other 10 have done, they can only do so through the existing Company on conditions which have to be approved by the Electricity Commissioners, and, therefore, there is that safeguard that the terms of sale and purchase are fair, in the opinion of the Commissioners, to both parties. The nearest of these undertakings not yet purchased to any possible supply that might be given by the new Board is something like 80 miles away at present. Apart from that argument, the Clause cuts right across past legislation in two respects. It limits the statutory powers granted to the Company to acquire undertakings inside their area, and it permits competition for the acquisition of such undertakings by another body. Parliament has always said that there should be no competition of that kind. It is quite unnecessary. The terms of acquisition, no matter by whom these smaller undertakings may be acquired, have to be approved by the Electricity Commissioners.

The Government have put down an Amendment which, in the view of my friends and myself, does not meet the objections that I am raising at all. It would allow the new Board to negotiate with the undertaker proposing to, dispose of his undertaking and to enter quite secretly into a provisional agreement, and then they have to submit it to the Electricity Commissioners. The Commissioners then have to send on a copy of the agreement to the Company possessing the statutory right of purchase which Parliament had granted them and give them an opportunity of making any representations thereon. I ask the Government to consider the altogether undesirable situation that might follow this entirely novel method of dealing with a matter of this kind. The power company having the statutory rights might say that the price was too low and that they would offer something more, or that the price was too high and that they did not think anybody ought to pay such a price. Who, then, has the right to decide? That right will be in the power of the Electricity Commissioners.

I ask the Committee to consider this. All the schemes which are to be formulated under this Bill are to be prepared by the Board and then submitted to the Electricity Commissioners for their approval. The Commissioners may, in their wisdom, say, "We do not like this or that part of your scheme; we want you to alter it in this direction or that." Ultimately, when the scheme is approved, it is one which is fathered substantially by the Electricity Commissioners. When it comes to a question of who is to buy these isolated undertakings with which this Amendment deals, it is the Electricity Commissioners, Who are the fathers of the Board's scheme, who will have the right to say, "We think the Board ought to buy this property and not the body to whom Parliament has given the power of purchase." I venture to say with great respect to the Electricity Commissioners, for whom I have a high regard, that this is bureaucracy in excelsis. If the Committee do not accept my Amendment, they are saying, "Parliament so far has had some control over electrical legislation, but we are now going to waive powers which hitherto we have always kept in our own hands and to hand them over to a body which will have complete responsibility for what they do." I hope that the Secretary of State will give full weight to the case I have submitted and that the Government will agree to accept the Amendment. On this point I feel so strongly, and I am so sure the Committee will be making a great mistake if it does not accept my Amendment, that I shall ask the Committee to divide upon it.

The Amendment has undoubtedly some substance behind it, but the hon. Gentleman will forgive me if I say that he has proved himself a splendid advocate on one side and has not exactly seen the whole problem. What is involved here, if my information is correct, is that there are two local authority enterprises and one company enterprise still within the ambit of the Grampian Power Company. The Grampian Company have in effect power by agreement, but only by agreement, to acquire these undertakings. Parliament never said that they should have a monopoly and that no one else should ever be able to acquire these undertakings. Parliament did say in the Grampian Company's charter, however, "You shall have the right by agreement to acquire the enterprises of the Buckie and Lossiemouth Councils and the Peterhead Company." That is how the matter stands now. If I understood the hon. Gentleman correctly, he said that there were no precedents for alternative offers of this kind being made available. My information is that there are at least six examples of cases where authorised undertakers possess competitive powers to purchase other undertakings by agreement. In three of these cases the competitive powers are entirely unqualified. They are the Yorkshire Electric Power Company and the Lancashire Electric Power Company; the Derbyshire and Nottinghamshire Electric Power Company—

I hope that the right hon. Gentleman will not carry these illustrations in such a way that other hon. Members may feel that they must reply to them.

It is essential for the purpose of the Bill to show that we are not importing any innovation.

I agree, but I do not want the illustrations introduced in any controversial sense. An illustration may be simple without being controversial.

You will surely give me the right to make a brief comment on these illustrations, because there is a complete answer to them?

I will endeavour to be as brief as possible. I am pointing out that there are examples of cases where authorised undertakers now possess competitive powers to purchase other undertakings by agreement, so that it is hardly correct of the hon. Member to say that there are no precedents. It may be perfectly true that some of these local authorities are a considerable distance away from where the power may be created. Unless it can be shown to be advisable that Buckie, for example, or Lossiemouth should in the national interest and the interests of cheap power be taken over by the new Board, there is no case for interfering in the slightest degree with the Grampian Company's rights. They have the rights anyway. I see the force of the hon. Gentleman's comment that the Government's proposed Amendment might mean that the new Board could enter into negotiations secretly with, say, the Buckie Council to the prejudice of the Grampian Company. I can see that some possible guarantees might have to be given under that heading, and I am willing to examine it.

The point I would like to put is this: Here are two local authorities. There is no question at the moment but that they have only one potential buyer, that buyer being the Grampian Company. We are not interfering with the Grampian Company's charter or seeking to say that the Grampian Company shall not be allowed to purchase the local authority undertakings. What we say is that it is improper that Parliament should say that these local authorities shall be bound to only one purchaser and shall have no option of going anywhere else. If the hon. Member envisages circumstances where a connection which had to run from 80 miles away would be highly uneconomic and undesirable, we will be willing to put in any safeguards he likes against any stupid or foolish purchase of that kind. That is the province of the Electricity Commissioners anyway, and they would say that it could not be justified. That would be the end of it. I submit that the Government are right in saying that we ought not to bind two local authorities to only one buyer and that here is a question of competition, it may be between the Grampian Company and the public Board, but that this competition is one for which there are precedents. The hon. Member says that he will have something to say about the terms of those precedents I shall be willing to hear what he has to say about them, but I assure him that this is hypothetical all the way through and that Buckie may not want to sell their undertaking to anyone. We have no knowledge of any potential negotiations. If it were felt in the Highlands that we had passed a Measure which had bound two local authorities to only one purchaser of their undertaking, the Grampian Company, there would be a considerable storm of opposition That would not make for harmonious co-operation in the provision of cheap electricity and the amenities of civilisation in the Highlands between the Grampian Company and the Board, which we are all anxious to promote.

I really think the Secretary of State has not done himself justice in the arguments with which he has tried to convince the Committee. He has admitted that the question of whether the new Board is likely at any time ever to be in a position to purchase these undertakings is extremely remote. He also said that these local authorities might blame Parliament for binding them to one purchaser. Parliament has already bound these undertakings to one purchaser, and hundreds of others like it, all over Great Britain. We are not departing from any sinister behaviour of Parliament in the past. Parliament has carefully considered what powers should be granted for the development of electricity supply throughout the country, and now we are being asked to do something which is entirely novel and to no advantage to those concerns so distant away. It is obvious that the reason for this Clause has nothing to do with the Bill or the circumstances of the undertakers inside the Bill. The only conclusion I can come to is that for other reasons it is desirable to establish a precedent by getting a Clause of this kind into the Bill. I ask the Committee in a case like this to reserve its rights until we come to consider, as we may well have to do, improving the existing legislation which governs the electricity supply of Great Britain. Those of us who arc associated with it are prepared to assist in the reorganisation which we admit to a considerable extent will be necessary. Let us, therefore, keep our hands unfettered as to what we want to do when that time arrives and not find ourselves tied to any precedent which may have anything but a good influence on one side of the House or another when that time comes. The Government have no case whatsoever for this Clause, and unless the Secretary of State is prepared to accept my Amendment or consider the matter further between now and the Report stage, I shall have no alternative but to ask my hon. Friends to go with me to a Division.

May I remind the hon. Member that he promised he would say a word on the question of precedents?

I am sorry I had forgotten that point. The cases to which the Secretary of State has referred in Yorkshire and Lancashire are simply explained in this way. One undertaking, it may be in Yorkshire, desired to buy an undertaking in Lancashire which was on the Lancashire border, but contingent to the Yorkshire supply, where mains were available. They were boundary cases, and it was only common sense that where an undertaking was near the existing mains of another concern powers of purchase should be taken. There is no analogy between those cases and the present one. The other case is that of the Home Counties Joint Electricity Authority. Anybody who goes into the history of that concern will see that it has been a most unfortunate one of legislation on those lines and will, I am bound to say, never be repeated by this House.

I sympathise with the case made by my hon. Friend, although I have had no consultation with him beforehand.

I have the same right to speak as my hon. Friend opposite, and I intend to exercise it. The hon. Member for Stockport (Sir A. Gridley) has established the fact that the change proposed by the Government is an abnormal change. There is not an established precedent, and it is an important change. I am not arguing the merits of the change to-day, but it is an important change which, if it is accepted, will create a precedent which may well be used in all other parts of the country. Again I say that I do not argue the merits, but a change so important, striking at the very root of the ownership, control and constitution of the great electricity companies, should not be introduced in a Measure applying to only one part of the country. Earlier, either during the Committee stage or on Second Reading, or it may be in a speech outside, my right hon. Friend said this Bill was not the occasion for proposing changes in the constitution of the Electricity Commissioners. I said on Second Reading that I thought it was time the Electricity Commissioners were abolished, and I hold that view strongly, and the reply was that this was not the occasion for a change of that kind, and I say that it is not the occasion, either, for a change of the kind now contemplated. I think the issue here is one to which the Committee should not be asked to address itself on this Bill, and I would ask my right hon. Friend not to put us in the position of having to cause a Division and vote against him on a matter the merits of which I am not prepared to argue but the principle of which, I am quite satisfied, is not one which should be discussed on this Bill.

There is no question of whether the hon. Member for East Fife (Mr. Henderson Stewart) should speak, because he has as much right as other hon. Members here to speak, but it is as clear as anything that from the beginning of the discussions on this Bill he has not been speaking for his constituents or the people of Scotland but for vested interests. It is as clear as anything in the bluff he is trying to play on this particular Clause. All that the Clause says is that it shall be lawful for the Board to enter into an agreement for the transfer to the Board of the whole or any part of an undertaking. That is a terrible, an awful change. That is going to determine the whole constitution of this country, according to the hon. Member for East Fife. It is very clear that this is a good and desirable Clause. The hon. Member dare not argue against it, and only says, "While I am not expressing an opinion whether it is good or bad, it is such a fundamental change, the whole character of the Constitution of the country would be so altered if this Clause were passed, that you ought not to pass it." I say that from the very start of this Bill he has been speaking here for vested interests outside and has not been a wee bit concerned about his constituents or Scotland.

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

The Committee divided: Ayes, 11; Noes, 141.

Division No. 19.


Beit, Sir A. L,Mellor, Sir J. S. P.Williams, Sir H. G. (Croydon, S.)
Colegate, W. A.Perkins, W. R. D.
Gates, Major E. E.Salt, E. W.TELLERS FOR THW AYES.—
Gridley, Sir A. B.Thorneycroft, Major G. E. P. (Staffd)Commander Galbraith and
Hurd, Sir P. A.Wells, Sir S. RichardMr. Henderson Stewart.

Adamson, W. M. (Cannock)Helmore, Group Capt. W.Reed, Sir H. S. (Aylesbury)
Ammon, C. G.Henderson, T. (Tradeston)Reid, Rt. Hon. J. S. C. (Hillhead)
Anderson, F. (Whitehaven)Higgs, W. F.Reid, W. Allan (Derby)
Barr, J.Hill, Prof. A. V.Richards, R.
Beamish, Rear-Admiral T. P.Hogg, Hon. Q. McG.Ridley. G.
Beattie, F. (Catheart)Horabin, T. L.Ritson, J.
Beaumont, Hubert (Batley)Horsbrugh, FlorenceRobertson, Rt. Hon. Sir M. A. (M'ham)
Beechman, N. A.Howitt, Dr. A. B.Ross Taylor, W.
Benson, G.Hunter, T.Royds, Admiral Sir P. M. R.
Bevin, Rt. Hon. E.Hutchison, Lt.-Com. G. I. C. (E'burgh)Sanderson, Sir F. B.
Blair, Sir R.Jenkins, A. (Pontypool)Sandys, E. D.
Bossom, A. C.Jennings, R.Savory, Professor D. L.
Bower, Norman (Harrow)Johnston, Rt. Hon. T. (Stlg & C'km'n)Shepperson, Sir E. W.
Bower, Comdr. R. T. (Cleveland)Jones, A. C. (Shipley)Sloan, A.
Brooks, T. J. (Rothwell)Kerr, H. W. (Oldham)Smith, E. P. (Ashford)
Buchanan, G.Kirkwood, D.Smith, T. (Normanton)
Cadogan, Major Sir E.Lamb, Sir J. Q.Snadden, W. McN.
Chapman, A. (Rutherglen)Lawson, J. J.Southby, Comd. Sir A. R. J.
Chapman, Sir S. (Edinburgh, S.)Leslie, J. R.Spearman, A. C. M.
Charleton, H. C.Lewis, O.Stephen, C.
Cluse, W. S.Little, Dr. J. (Down)Stokes, R. R.
Clynes, Rt. Hon. J. R.Lucas, Major Sir J. M.Storey, S.
Cobb, Captain E. C.MacAndrew, Colonel Sir C. G.Studholme, Captain H. G.
Doland, G. F.McCallum, Major D.Sutcliffe, H.
Dugdale, John (W. Bromwich)McCorquodale, Malcolm S.Taylor, R. J. (Morpeth)
Dunn, E.McEntee, V. la T.Thomas, J. P. L. (Hereford)
Edmondson, Major Sir J.McEwen, Capt. J. H. F.Thomas, Dr. W. S. Russell (S'th'm'tn)
Edwards, Walter J. (Whitechapel)McGhee, H. G.Thorne, W.
Etherton, RalphMcNeil, H.Tomlinson, G.
Findlay, Sir E.Makins, Brig.-Can. Sir E.Tufnell, Lieut.-Comdr. R. L.
Foot, D. MManningham-Buller, R. E.Ward, Col. Sir A. L. (Hull)
Fox, Flight- Lieut. Sir G. W. G.Mathers, G.Watkins, F. C.
Frankel, D.Maxton, J.Watson, W. MoL.
Fraser, T. (Hamilton)Medlicott, Colonel FrankWestwood, J.
Fyfe, Major Sir D. P. M.Mills, Sir F. (Leylon, E.)White, H. (Derby, N.E.)
Gallacher, W.Molson, A. H. E.Whiteley, Rt. Hon. W. (Blaydon)
George, Maj. Rt. Hon. G. Lloyd (P'b'ke)Montague, F.Wilson, C. H.
Gluckstein, Major L. H.Morgan, R. H. (Stourbridge)Windsor, W.
Greenwood, Rt. Hon. A.Morrison, Rt. Hon. W. S. (Cirencester)Winterton, Rt. Hon. Earl
Grimston, R. V.Mott-Radclyffe, Capt. C. E.Womersley, Rt. Hon. Sir W.
Guy, W. H.Murray, Sir D. K. (Midlothian, N.)Woodburn, A.
Hacking, Rt. Hon. Sir D. H.Nunn, W.Woods. G. S. (Finsbury)
Hall, W. G. (Colne Valley)Palmer, G. E. H.York, Major C.
Hammersley, S. S.Parker, J.Young, A. S. L. (Partick)
Hannah, I. C.Peters, Dr. S. J.Young, Sir R. (Newton)
Hannon, Sir P. J. H.Pethick-Lawrence, Rt. Hon. F. W.TELLERS FOR THE NOES. —
Hardie, AgnesPeto, Major B. A. J.Mr. Boulton and Mr. Pym.
Harris, Rt. Hon. Sir P. A.Price, M. P
Mr. Boulton and Mr. Pym.

I beg to move, in page 13, line 27, at the end, to add:

"(2) The Electricity Commissioners before approving under the last foregoing sub-section an agreement for the transfer to the Board of any undertaking which any other undertakers ale empowered by or under any Act to acquire shall notify those undertakers that the agreement has been submitted for their approval and shall consider any representations which those undertakers may make."
This Amendment is intended to ensure that before any negotiations are completed between the Hydro Board and any existing undertaker within the ambit of the Grampian Company's purchase rights, the Grampian Company will be informed. I hope that the Committee will accept these words.

Amendment agreed to.

I beg to move, in page 13, line 27, at the end, to add:

"( ) Section fifteen (which relates to compensation for deprivation of employment) of the Electricity (Supply) Act, 1926, shall apply and have effect in the case of the transfer to the Board in pursuance of this section of the whole or any part of any such undertaking as is referred to in this section as if such transfer were the acquisition under or in consequence of the said Act of 1926 of a generating station and as if the Board referred to in the said section fifteen wore the Board constituted by this Act."
This Amendment deals with the position of officers and servants of undertakers who may be deprived of their employment by reason of amalgamations or transfers of undertakings which may take place as a result of the Bill. The purpose of the Amendment is to extend to these officers the provisions relating to compensation for loss of office contained in the Electricity Supply Act of 111)26 and in the Acts of 1919 and 1922. These provisions are complicated and I conceive that there is no need for me to enter into the details. It is sufficient to say that these provisions have been the subject of enactment for a number of years and have been found to be satisfactory. The intention of this Amendment is that these provisions should be extended to officers and servants of undertakings who may be deprived of their employment in the same way as they extend to officers and servants deprived of their employment under the earlier Acts.

We are in agreement with the Amendment, but after considering the matter, we are of opinion that it is already covered by the Bill as it stands. My hon. and learned Friend wishes to put into the Bill an adaptation of Section 15 of the Act of 1926. It happens that Section 15 does nothing more than adopt and expand Section 16 of the Act of 1919, and that is the operative provision. We have therefore thought it better to make our amendment by means of a direct addition to the terms of the 1919 Act. If hon. Members care to look at the new Schedule which may be moved later, they will find words which apply those provisions of the 1919 Act to amalgamations under the Bill. I can therefore assure my hon. and learned Friend that the point is met by the present draft.

Before I ask leave to withdraw the Amendment, may I ask the Lord Advocate whether he is satisfied that the whole of the provisions of the 1926 Act, including the Fourth Schedule, will extend to amalgamations under this Bill?

I think that has been checked, but as my hon. and learned Friend has raised the matter, I will certainly look into it again and make sure of it.

We ought to be clear about this most extraordinary Schedule. It says in the main what it does not do. Hon. Members will see that it says:

"The Electricity (Supply) Act, 1919. The Section shall not apply to the Board."
That sort of thing is repeated. Nothing does apply to the Board. We want to know what does apply to the Board. The Law Officer has not indicated what particular thing does apply to the Board. It ought to be made clear beyond a doubt.

If hon. Members will look at Clause 18 of the Bill, they will see the words that are imported. It is the only Section applying to matters of this kind. Therefore I think we have covered the point.

This is the most extraordinary form of drafting I have ever seen, and I ask the Committee to look at it. The Schedule proposes to insert into Section 16 of the Electricity (Supply) Act, 1919, the words:

"or Section eighteen of the Hydro-Electric Development (Scotland) Act, 1943."
Accordingly, when anybody in future reads the Act of 1919, as amended, they will see it contains a reference to an Act of Parliament passed 24 years later. That is legislation by reference of the maddest kind I have ever heard of. When the Government are trying to amend a Statute they should not do it by inserting into it something passed 24 years later.

Amendment, by leave, withdrawn.

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