This Resolution will not, I hope, occupy the Committee for a very long time. It is necessary in connection with the Electricity Bill. The Committee is aware that under the financial scheme of that Bill there is a system of Treasury guarantees, and if hon. Members turn to Clause 26 of the Bill, they will find that the second sub-section of that Clause shows the purpose for which this Resolution is required. I notice that three or four of my hon. Friends have put down an Amendment to the Resolution. I do not know whether they will think it wrong of me if I suggest to them that a much more suitable occasion for making the points which they wish to raise would be given at a later stage of the Bill. The Ministers concerned with the Bill are, I may say, very much occupied at the present moment, and I doubt very much whether the Committee will be competent to deal with the figures of this scheme now as fully as they would be dealt with on the Committee stage of the Bill, or on Report. I simply make that suggestion to my hon. friends, because obviously the Bill will be entirely upset, in its financial arrangements, unless this Resolution is carried.

May I ask in relation to the Committee on the Electricity (Supply) Bill which is sitting, if any part of this Resolution carries any financial responsibility for that Bill, which is in Committee?

I am afraid I did not follow the question. Perhaps the hon. Member would make it more clear.

I want to know if this Resolution is distinct from the Bill under consideration at present by a Standing Committee.

It is to enable the financial Clauses of the Bill to be discussed in Committee. They must be founded upon a Financial Resolution in Committee of the whole House.

I entirely agree with my right hon. Friend the Financial Secretary to the Treasury that we could not have a much worse time for discussing this Resolution than to-day, when everybody's minds are occupied with other things, and we protest very strongly against this Resolution having been put down for to-day. It is no small matter. The Committee is being asked to pass a Resolution guaranteeing no less than £33,500,000, and it only shows the lighthearted way in which finance is treated in this House that we are asked, at a time like this and without discussion, to pass a guarantee for £33,500,000. With regard to the rest of the right hon. Gentleman's remarks, our contention is most distinctly that this Resolution is not in the least necessary to the Bill, and that is what we hope to prove. I do not think it well to allow this Resolution to go through without discussion, and I must move my Amendment if the Government decide to continue with the Resolution. They are at present in Committee only on Clause I of the Bill, and this refers to Clause 26. If they like to postpone this Resolution until another day, therefore, it will not affect the proceedings in Committee at all.

Does the hon. and gallant Gentleman move his Amendment?

I beg to move, in line 2, after the word sums," to insert the words, "not exceeding ten thousand pounds."

I am very sorry that the Financial Secretary to the Treasury should say that this Resolution was necessary.

I never said that.

I took down what the right hon. Gentleman said, and I under- stood him to say that it was necessary at the present time, but he also said that Ministers were occupied elsewhere, and I think I would agree with my hon. and gallant Friend the Member for Hitchin (Major Kindersley) that it is a great pity that this Resolution is not put off. When you are guaranteeing £33,500,000 of the taxpayers' money at the present time and when there is great criticism in regard to this finance, I cannot help thinking that it is most important that this Resolution should be discussed in full detail. I am not against the Electricity Bill, but I am against the idea that this £33,500,000 should be guaranteed by the taxpayers' money. I feel that it is not justifiable. The Bill and the Weir Report are full of complexities. You have the Weir Report, and in Part V., alluding to the technical scheme, which will involve during the next 15 years new money to the extent of £250,000,000, or about a third of our pre-War National Debt—a gigantic amount. This is divided into two parts over the 15 years, and, although I need not go into the details of those two parts, one of them is for the capitalisation of the interest on the £33,500,000 over five years. That is not sound finance. It is all very well for a new company perhaps, in Canada or elsewhere, where they have to develop their electricity, and it may take five years before there is any return, but this is something which is a monopoly for the holders of the stock to the extent of £33,500,000, presumably debentures.

There was a Memorandum issued with this Bill, which stated that the Board are required to fix tariffs—that means the full interest which is required—which shall cover their expenses, with such margin as may be allowed that shall give the necessary powers to raise capital up to £33,500,000. I contend that, with that Clause and these tariffs, the security is good enough without a Government guarantee. What does it mean to the taxpayer? It means a responsibility of £1,675,000 a year in interest at 5 per cent on the £33,500,000, and also the money has to be found. Therefore, the taxpayer is responsible not only for this interest but also for the capital which has to be raised. I ask myself two questions: Is it necessary to guarantee it? And can the taxpayer afford it? Let me take the first question. The Attorney-General, who made a most excellent speech on the Second Reading of the Bill, which we all appreciated, told us that there would be savings of millions and millions of pounds, and if anybody refers to the Weir Report, he will see that there also it is suggested that there will be savings of millions and millions of pounds if this scheme is carried through. It is very attractive, but I contend that it is not necessary that the taxpayers should give their guarantee. I contend that the main thing is that the Central Electricity Board should have men on it who will command capital. What has happened in the past? Let me refer to the London Power Co. I would specially like to draw the attention of the Financial Secretary to the Treasury to that issue, which was made on the 25th February, of £3,000,000 5 per cent redeemable debentures, and the price of issue was 96. It is redeemable in 1972. I believe that issue was over-subscribed almost immediately, and my hon. and gallant Friend the Member for Hitchin will state whether or not I am correct in that respect.

Yes, it was over-subscribed five times.

Why was that? It was because it had a Board which commanded the confidence of the people. I need not mention all the names on that Board, but they included such names as Mr. Walter Leaf, which carry weight. Why could not this Electricity Bill have a Board composed of names like that? Here we have the brokers, Messrs. R. Nivison & Co., and anybody who knows them knows that they can underwrite millions almost immediately, and I contend very strongly that, as far as this is concerned, it is not necessary to guarantee this issue. What would it mean if this were not guaranteed? It might mean an extra 1 per cent. I am sure the Attorney-General will say we cannot afford an extra 1 per cent, but what does that mean? It means an extra £335,000 per annum, and you are giving up the taxpayers' guarantee. I should have thought that if there was one person who would have welcomed my suggestion, or that of the hon. and gallant Member for Hitchin, it would be the Chancellor of the Exchequer. Why? It would be 6 per cent., for argument's sake, instead of 5 per cent., and the country would not have had that guarantee, and also would he not get a little more In- come Tax on 6 per cent. than he would on 5 per cent. I am sure we want every penny we can get at the present time to make our ends meet. That is my first point.

My second point is, can the taxpayer afford it? We have been spending millions and millions on all sorts of guarantees and subsidies of every sort and description. Even this week, a Resolution went through this House relating to the Merchandise Marks Bill which was taxpayers' money. There must be an end to this use of taxpayers' money. We cannot possibly burden the taxpayer more at the present time. Anybody who studies our National Debt must realise, that although this is only a guarantee, it is literally adding to the National Debt, because we are responsible not only for the interest, as I said before, but also the capital.

There is another point, also, why I should have thought the Chancellor of the Exchequer would have agreed with what I have said, and that is in regard to the maturities. These vast maturities are becoming due in the next two and a half years, £900,000,000 in one case and also an option on £2,000,000,000 of National War Stock. An issue of this sort affects those maturities. It affects the taxpayer. I also rather contend that it might be more successful without a Government guarantee. It may sound rather absurd to say such a thing, but we had instances only last month of issues where the Government guaranteed such things as the Blue Star Line for £2,750,000 and also an issue of Pearson and Dorman Long of £2,000,000, and the underwriters were left with 70 per cent. Yet since then we have had the Glasgow loan, which was not guaranteed by the taxpayer and which was over-subscribed, and issued at a bigger price than the guarantee of these two loans which I have just mentioned.

The Port of London has not got any guarantee. Why is this guarantee necessary? Surely the security of this great monopoly, because it is a monopoly, should not have the advantage of a taxpayers' guarantee. It is a new departure. Gas companies have not got it. When gas matured about 100 years ago, I am sure the Government in those days did not give guarantees. Where does this £33,500,000 come from?

[HON. MEMBERS: "From the workers."] Yes, it comes from the workers and the others by the savings they make. It is the savings of the people that subscribe to a loan of this sort, and I contend the only way this can be successful is by the saving being great enough to subscribe to a loan of this sort. If it is a trustee loan, as it will be, if the principal and interest are guaranteed by the Government, a different class of person takes the trustee loan from that which would take a loan such as the London Power Company's stock.

In conclusion, I do impress upon the Financial Secretary and upon the Committee, the vital necessity to stop this sort of finance. It is doing us harm; it is doing our trade harm, and I contend that the sooner it stops the better it will be, not only for this country, but for the taxpayers of this country.

I should like to support what was said by the hon. and gallant Member for Hitchin (Major Kindersley) in regard to this. It seems to me that this Board which is to be set up for the supply of electricity in this country, must be set up on some basis by which we have some criterion of its efficiency, and I cannot conceive of any real criterion of the efficiency of any Board of Directors of any commercial concern except what one might term the criterion of the market, that is to say, the position that can only be justified by the agreement of the market in that form of policy. In other words, if we relieve them from the necessity of justifying their position in the market by giving guarantees, we at once do away with the only useful criterion we have, and the only safeguard the people of this country have, that they shall be efficient, or take the consequence of inefficiency.

The other point I wish to put forward, very briefly, is this. The Motion starts with the words, "It is expedient", and so on. I think Members on all sides of the Committee, and certainly the general public, would very strongly disagree with that phrase, because, consider the position of the taxpayers and the industries of this country. For many years now we have made immense sacrifices, through our taxation, to put our finances upon a satisfactory basis, all this being done with a view of being able to convert the large loans in the next few years on to a lower rate of interest. Three years ago, before the Conservative party committed suicide in 1923, there was every prospect that the bulk of that money could be replaced somewhere in the neighbourhood of 4 per cent. I venture to say now, there is not the faintest prospect, as far as we are fixed at present, of being able to convert on any favourable terms whatsoever. Recent issues guaranteed under the Trade Facilities Acts have shown conclusively that the Government have to borrow now at about 5 per cent. In other words, all the sacrifices we have made in industry during the last few years have been completely wiped out and rendered nul by the policy of the Government in this reckless expansion of Government credit. I know very well the right hon. Gentleman who is in charge of the business to-day realises as much as anyone how serious the position is, but I do ask this House to consider seriously whether it is wise at this juncture, and with this immense amount of loan money, to be replaced in the next few years, that, in the words of the Motion, "It is expedient" that we should do this thing.

I wanted to say a few words upon this question, but I am afraid that owing to a mistake I omitted to do so when I spoke before. Therefore, I would ask the Committee to bear with me a little while. The reason we have put down this Amendment is, first of all, because we think it can be shown by reference to the Bill that this guarantee is entirely unnecessary; in other words, that the statutory powers which are conferred upon the Board give ample security for any money they will require. That is our first point. Our second point is, that it is not expedient, for financial reasons, that this guarantee should be given, and, with the permission of the Committee, I propose to deal first with the point that the guarantee is not necessary, and, in order that I may prove that, I must ask the Committee to bear with me while I refer to certain Clauses of the Bill, which I will do as shortly as I can.

In order to visualise the position one must assume that a scheme has been prepared under the Act. That would be under Clause 4, and it would be for a large area such as the London and Home Counties Electricity District which has already been commenced, and which comprises the Counties of London and Middlesex and parts of six adjoining Counties. The Central Board themselves prepare the scheme. They decide which stations in the area shall be "selected." That is under Clause 4 Sub-section (la) and then the Electricity Commissioners confirm the scheme with or without modifications. Up to this point the Board will not naturally have spent anything at all on their scheme. The scheme, then, having been formulated and approved the expenditure would begin. It is under five heads. First of all, they must—and I want hon. Members to remember that word—they "must" lay down main transmission lines connecting the selected stations and systems of authorised undertakers, but only in accordance with their own scheme. That is under Clause 8, Sub-section (1).

Secondly, they "may" take over, so far as the scheme provides existing main transmission lines of undertakers in the area. That is under Clause 8, Subsection (2). Thirdly, they "may"—and again may I call attention to the word "may"—take over generating stations whose owners, subject to certain appeals, refuse to alter or extend them, but according to the power given to them the Board can please themselves. That is Clause 6 Sub-section (1). Fourthly, they may build new generating stations if they satisfy the Commissioners that such stations are needed, and that the Board cannot get other people to build them. Here, again, it is optional. They can please themselves.

On a point of Order. Is it in Order on this Resolution to go into the main question of the Bill?

The hon. and gallant Gentleman is not in Order, on this Resolution, in raising the whole scheme. He must, I think, confine himself to the question in the Resolution.

On the point of Order. Is my hon. and gallant Friend not in Order, seeing that it is proposed to spend this money, in dealing with the purposes for which the money is spent?

I think we must keep to the Resolution as strictly as possible.

With respect to you, Sir, I was desiring to point out that this guarantee was unnecessary because of the statutory powers given. I do not see how I can deal with the matter properly unless I am allowed to point out what statutory powers there are under the Bill. It seems to me impossible to discuss this Resolution unless I can show that the guarantee is unnecessary. However, I shall keep so far as I can, on a straight line. This is practically a summary of the position—I do not want to weary the House by quoting Clauses and Sub-sections—but the Board can first of all select the cheapest market in which to buy their electricity, they can control the output of the stations to suit their needs, and can commandeer the whole of the output of the most cheaply provided electricity. They can prevent any competition, and any electricity they have to sell the Board can force on buyers at a price which must show a profit. Under these circumstances it is difficult to see why a guarantee of £33,500,000 is necessary seeing the Board have these enormous statutory powers. As my hon. Friend the Member for Ilford (Sir F. Wise) said, they can go into the money market and raise as much money as they want, I do not say possibly at quite the same rate as they could raise it if they had a Government guarantee, but at a very, very favourable rate and one which considering the size of the undertakings, I do not think would really affect the price of electricity in the least. Therefore that is our first point, that this guarantee was not necessary.

The second point is that it is not expedient. I am perfectly free to admit that as industry develops in this country along its present lines you will probably have a good many public utility industries of this class which may be socialised, but not nationalised. [HON. MEMBERS: "Hear, hear."] Yes, I quite understand those cheers, but I do not mean by that expression "socialized" either municipalised or nationalised. I mean, you will have great Boards clothed with statutory powers — like the Port of London Authority, the Metropolitan Water Board, the Mersey Docks and Harbour Board—so clothed with great statutory powers as to enable them to raise money and to run their enterprises on an absolutely economic basis. In that case I have no objection, and that is what I mean when I say it is socialised industry as opposed to municipalisation or nationalisation. Municipalisation and nationalisation are altogether different. It is quite impossible for this House to run an industry. It is not capable of doing so. That is one pitfall of nationalisation, and that pitfall has been avoided by this Bill. The other pitfall is this; that when you nationalise an industry you also nationalise the savings of the people and invest them in industry, which you have no right to do, whether it be the House of Commons or a borough council.

This is the first time that the Government has done this. We had, of course, the Trade Facilities Act, but that was passed for a particular purpose in order to create work, temporarily, for the unemployed. You have a temporary guarantee in the case of the sugar-beet industry, and so on. In this case you are embarking on an absolutely new principle, and it is because I think that in future you will have similar cases like this where you will have what I have called the socialisation of other public services that it is of the utmost importance That the Government should not fall into that great pitfall, which is really one side of nationalisation, and possibly the worst side, the nationalisation of the savings of the people. For that reason we are deeply opposed to this new departure.

The question of the inflation of Government credit, which is very important at the present moment, and far more important than it was two weeks ago, has been dealt with by my hon. friend the Member for Ilford (Sir F. Wise), and I agree with every word he said. We have, I am glad to say, decided to drop the Trade Facilities Act, but now the Government come down, on a Friday, in the middle of a tremendous crisis, when people interested in this subject cannot get here, and calmly ask us to pass a resolution guaranteeing £33,500,000. That is not the way to manage the finances of this country. I maintain that there is no need to move this Resolution at the moment, because Clause I of the Bill is not through Committee. It almost amounts to a scandal that the Government should put down this Resolution to-day, and I protest against it in the very strongest terms. As I said before, any friends and I intend to divide against the Resolution, not because we are opposed to this electricity scheme—we believe that the scheme is excellent—but because we believe we have shown that this Resolution is not necessary to the scheme, which could be carried on perfectly well without it. We are also dividing against the Resolution because, as I said, we regard this guarantee as a most dangerous and unnecessary departure from the fundamental principles for which the party to which we have the honour to belong stand.

I do not intend to follow the two hon. Members on this side who moved and seconded the Amendment to this Financial Resolution in any of the financial arguments they have put to the Committee, but I wish to submit two or three other considerations. This Financial Resolution is brought forward to enable the Committee upstairs who are considering the Electricity Bill to proceed with their business. The object of that Bill is to promote and to develop the industry of this country. If there is any justification for the Electricity Bill at all, I cannot imagine circumstances under which it could be more urgent for us to do everything to assist the Government in developing industry, and I cannot think hon. Members on this side of the House are well advised in setting up their views, in opposition to the views put forward by the Government, as to what steps, financial and other, are necessary to carry through this project. My hon. Friend the Member for Ilford (Sir F. Wise), who is so learned in finance, has told us that this Financial Resolution is wholly unnecessary, and quoted cases in which electricity undertakings have been able to raise money very successfully without any Government guarantee, their issues having been subscribed five times over. Surely that defeats the hon. Member's own argument against this Financial Resolution, because if there be no necessity for a Government guarantee then the guarantee will not become operative.

:The Government lose their credit.

That is quite another aspect of the case, with which I shall deal presently when I am answering the hon. Member for Mossley (Mr. A. Hopkinson). He said that before the Conservative Government committed suicide, as he expressed it, in 1923, most of these great commercial operations could have been carried through at 4 per cent., but that there was no chance of that now. What a policy of despair that is: Because, according to the hon. Member for Mossley, Government credit is not what it was, we are to do nothing, we are not to employ the guarantee of the State to assist the development of industry. I quite agree that Government credit is not what it was, and that the more we pile up Government guarantees, or Government loans, which are much more important in this respect, the worse that credit is likely to be; but if we are to say that from this moment we must hold our hands, and must vote against this Resolution, which the Government say is a part of their scheme, it is a policy of despair, and I will not subscribe to any such thing for a moment. I am very sorry the hon. and gallant Member for Hitchin (Major Kindersley) and the hon. Member for Ilford (Sir F. Wise) think it necessary to say they will divide the Committee on this question. For my part I feel more confident than ever that at this juncture I ought to give support to the Government in what they propose. Not for a moment do I pose as a financial expert, but I do say that the arguments put before the Committee defeat themselves. If there be no need for the guarantee, it will not operate, and if there be need for it, now is the time to use Government credit, and anything else we have got, to develop industry and to find employment for a great many people who will be wanting it in the near future.

I am considerably mystified by some of the things said during this Debate by those who are undoubtedly financial experts. I always listen with interest to what the hon. Member for Ilford (Sir F. Wise) has to say upon matters of this sort, but as far as I can gather from his speech on this occasion he suggests that had the scheme been carried through as he would have carried it through, from a financial point of view, it might have led to underwriting by financial houses, and that would have meant an imposition of an extra 1 per cent., to be paid somehow, but to come ultimately, as he says, from the savings of the people. He said that financial gentlemen like R. Nicholson & Co. would have been able to underwrite the amount, but that the interest charged would probably have been higher by 1 per cent. than the Government will pay under their scheme. It is all very well to talk about the savings of the people being the fundamental fund from which we draw the means to carry on these undertakings, but I object to these intermediate processes, if we can avoid them, by which certain private financial interests are able to extract from the community money the payment of which can be avoided if we go about the work in a different way. At this moment, when I am most desirous of opposing the Government—I have never felt so desirous of opposing them, though I am keeping my temper—I am sure, in spite of the financial advice we have had from the other side, that it is the duty of those who want schemes of reconstruction undertaken to see to it that as far as possible financial interests are kept out of them and that the community are made responsible for raising the funds. I have no doubt that those who talk about credits will agree with me that credits are finally dependent upon the willingness of the community—and of the workers—to believe in the possibilities of the future. If you can get an electricity scheme which will give some hope to the workers and make production easier it will be very satisfactory. In that way the amount of credit at our disposal will be increased and you will establish a greater willingness and capacity to take part in the reconstructive work to which I have referred. Seeing that the present Government believes it possible by this method to raise money cheaper, I think it is in the interest of all parties that we should support this Resolution.

With regard to what has been said by the hon. Member who has just sat down I would like to point out that even if the loan is issued with a Government guarantee the process of underwriting will have to be resorted to, and that process is not peculiar to loans which are issued without Government guarantee. I think, therefore, we can dismiss that point from the hon. Member's speech, for obviously he did not catch the remarks upon which it was founded. I want to confine my observations to the general matters raised in this Resolution. These financial resolutions are an important part of our financial procedure, and the House of Commons itself has to decide upon the general principles involved. The constitutional forms of dealing with money resolutions are very carefully devised so that at every stage the House of Commons may have full control, and we should not pass lightly over any stages of important money resolutions. I do not think these powers of raising money ought to be handed over to Committees upstairs although it may be right that a Committee should have power to agree to a Government guarantee.

12 NOON

With regard to this guarantee I think a mistake is being made. I am quite aware that there will have to be some power to raise money if the Electricity Bill is to proceed further, but I do hesitate very greatly in this matter of the guarantee. One of the effects will be that a Government guarantee releases the promoters of the Bill very largely from those carefully drawn provisions which would attract to their scheme the subscriptions of large sums of money in the money market at a low rate of interest. If the scheme had to depend upon its industrial efficiency for its financial success and soundness in the future, at every stage the Government and the Treasury would have to keep in mind the necessity of raising the money required. These schemes should be thoroughly sound and able to raise money on their own merits rather than with a Government guarantee. I agree with everything that has been said, notwithstanding the criticisms from some quarters, as to the necessity of being most careful with our national credit, and the events of the past two weeks have done much to injure our position. I think we should be most careful about taking any step which may, in any way, hamper or decrease our national credit. For these reasons, unless the Government is able to show that this guarantee is absolutely necessary for their scheme I shall have to vote with my hon. Friend.

I am one of those who spoke against the Second Reading of the Electricity Bill but, now that the House has approved the principle of the Measure, the Committee ought not to refuse the Financial Resolution which the Government thinks necessary for its success. Whether or not some limit to the amount might be accepted by those in charge of the Bill is another question. I agree with what has been said about the great expansion of Government obligations and the cheapening of our credit by giving guarantees in all directions. If the supply of trustee stocks exceeds the demand, the inevitable effect must be that our credit will deteriorate, and in the end we shall have to pay a higher rate of interest. It has been suggested that it might be better to issue a six per cent. stock without guarantee rather than a guaranteed 5 per cent. because the Chancellor of the Exchequer would then be able to get more income tax, but I think that argument comes from topsy turveydom. On those lines it might be urged that it would be advisable to issue a 10 per cent. stock because the Chancellor of the Exchequer would then get even more from the income tax.

At the same time I think it is very desirable to limit the amount of the guarantee. One reason why I think my right hon. Friend in charge of this Bill might very well agree to some limit is that a great deal of this money is going to be spent upon power stations, and if low temperature carbonisation comes in, all the present power stations will have to be scrapped.

We may have spent tens of millions on constructing power stations, and we may have to sweep them away altogether and put our power stations in the coalfields. Low temperature carbonisation of coal may be discovered this afternoon. That is an argument why we should limit the amount of our guarantee. Personally, I should like to see my right hon. Friend prepared to accept same limit, though not £10,000, which would be a limitation pour rire. If this Amendment goes to a division, I shall, as a loyal supporter of the Government, although an original opponent of the Bill, feel it my duty to go into the Lobby in support of the Resolution, but, when I have said that, I wish to endorse many of the arguments which have been used in support of the Amendment.

I rise to second the Amendment.

I am afraid that is both unnecessary and too late.

On a point of Order, may I ask, if a seconder be unnecessary, how it is that some other hon. Member seconded?

It is unnecessary in Committee.

I wish to make it clear that I am not supporting this Amendment in any spirit of hostility to the Electricity (Supply) Bill, but for the same reason that I opposed the extension of the State guarantee under the Trade Facilities Act recently. Each of these guarantee which we give puts back the hand of the clock, and postpones the time when we may convert our larger War Loans into a cheaper security. I do not suggest for a moment that the addition of some £33,500,000 of contingent liability on the part of the British Government on top of the £7,000,000,000 odd which we already owe is itself seriously going to affect our credit, but I would like to point out a direction in which our credit is seriously affected and our chances of conversion prejudiced. All money available for investment, as has been truly said, comes out of savings, savings either of wealthy or of poor people.

I would like the Committee to visualise those savings, which can be drawn upon, as coming out of three separate and distinct springs. Spring No. I we may regard as capital belonging to people who are prepared to risk the loss of the whole of it in an endeavour to secure either considerable capital appreciation or a high return on their money. Such people invest their money in ordinary industrial or mining securities. Spring No. 2 may be regarded as capital, the owners of which are prepared to run a certain amount of risk, possibly 20 per cent. or 30 per cent of their capital, in an endeavour to secure 6 per cent. or a little more. Spring No. 3 is what I would call the gilt-edged spring, representing capital which is held by trustees or by people who for one cause or another must have absolute security, and are therefore content with a return of 5 per cent. It is Spring No. 3 to which the Government must look three years' hence, when £3,000,000,000 of our debt will be come available for conversion, if the the Government are in a position to do it on terms that will show a national saving. A saving of only half per cent. would mean £15,000,000 per annum saved to the Exchequer.

I said at the outset that I was not opposed to the Electricity (Supply) Bill, and that I was not supporting this Amendment in any way as an attack upon it. I contend most strongly that the guarantee is quite unnecessary for the purpose of efficiently carrying through the Bill and for its working subsequently. The Central Electricity Board will have at their control a potential monopoly of electricity supply in the country. Clause 24 of the Bill provides the purposes to which the £33,500,000 which they are allowed to raise shall be applied. It is clear that under the terms of that Clause the Central Electricity Board will have sound assets to represent the money which they raise—the construction or acquisition of such main transmission lines, generating stations, and so on. At any rate, in addition to those sound assets which will be created by the money which the Board raises, there will be that boundless goodwill represented by a monopoly of electricity supply in this country, and I do say that a well-drawn prospectus setting forth those facts free from any Government guarantee would raise the money at 5½ or 6 per cent.

I do contend that this light-hearted way—I do not know whether that is too strong a term—in which we are continually giving Government guarantees to ensure money being raised on terms approximately equal to Government terms is a wrong policy to follow. The people who will benefit by the cheap borrowing of this money by the Electricity Board are not the stockholders of the Electricity Board, but the electricity consumers in the country, because Clauses 7 and 11 provide that after the Electricity Board have purchased or generated it they shall supply electricity at cost price plus all expenses, including interest on money borrowed. Therefore, the only effect of enabling them to borrow at the cost of the Government credit is that electricity will be to that extent cheaper. In conclusion, I submit to the Committee that, in order possibly to save 1 per cent. on £33,500,000, that is, £335,000 a year, to the electricity consumers of this country, the general tax-payers may be mulcted to the extent of £15,000,000 or £30,000,000 in additional cost of the interest on the debt.

I am not an expert either in electrical engineering or in high finance, and I think that some of the speeches to which we have listened rather give one a warning not to plunge into the intricacies of finance. But I crave that I may be considered to hold the views of the typical mugwump in these matters. It is noticeable that on this occasion, as on some previous occasions, we see an alliance between the Government front bench and the nominal Socialists in the House. I recall an instance, not so long ago, when just the same thing happened. That was when the London Traffic Bill was going through the House. We then saw the Conservative Leaders allying themselves with the Socialist Party, who were then the Government Party, and those of us, including myself, who opposed that Bill, foretold a state of affairs very similar to that which we have seen in the last few days. We did our utmost to persuade the Government and our own leaders that it was wrong to abolish, or to do anything which helped to abolish, the independent private omnibus owners, who have, in all too small numbers, come to the rescue during the last week. I only give that as an instance of the sort of thing that makes one suspect an alliance between the Conservative Front Bench and the official Socialists.

One of the most applauded and generally approved portions of the Budget statement recently made by the Chancellor of the Exchequer was that the Trade Facilities scheme would come to an end, but here we have, as it seems to me, the worst features of the Trade Facilities scheme resuscitated once more. The country has been, and, indeed, still is, passing through a great crisis. We do not know, nor does anybody at present know, what that crisis is costing the country, but it is quite obvious to everybody that it is costing the country enormous sums, both in cash and in credit. Nevertheless, we find, in the midst of this crisis, that the House of Commons is being asked to pledge the national credit to the extent of some £33,000,000. That appears to me, not being a financial expert, to be a most reckless thing to do, particularly in the present circumstances. The country's credit is, obviously, bound to be severely shaken by the crisis, and, surely, this is the most inopportune moment possible for pledging the credit of the country to this very large extent.

We should do everything, both now and henceforth, to reduce the commitments of the nation both in cash and in credit—which are for this purpose the same thing—and thereby help the nation to pull through these difficult times. By doing what we are doing, it appears to me that not only are we not helping to overcome the results of the crisis, but we are making its results worse than they otherwise might be. I do not profess to have any very definite views on many of the details of the Electricity Bill. It has been argued, as it seemed to me quite convincingly, that it is unnecessary, in order to make the Electricity Bill a success, that it should have behind it the backing of Government credit. Be that as it may, and I am inclined to think that it is totally unnecessary, I feel that, even at the risk of upsetting some of the provisions of the Electricity Bill, we should be most unwise now, before we are able to take stock of the financial position created by the present crisis, to pledge the nation's credit still further to this enormous extent.

Like my hon. and gallant Friend the Member for Western Dorset (Major Colfox), I do not pretend to be a financial expert, and I do not wish to exercise myself in great matters which are too high for me. At the same time, there are one or two points which I think my hon. and gallant Friend has not very clearly brought out. I think that this guarantee may be necessary, and for this reason, that the reason why this money is required is that the proposals of the Electricity Bill are not commercially sound—that is to say, the money is required, not for productive enterprise, but for such things as standardisation of frequency throughout the country. There is no money to be made out of standardising anybody's frequency—

I do not know whether the hon. and learned Member is referring to the average number of times that different Members address the House, but, if so, it is not in order.

I am sorry I am not in order, but the point I wanted to make was that, if you ask the public to subscribe money for a productive undertaking, and show them that there is a profit to be made, they will subscribe the money, but I doubt whether this money could be raised without the Government's guarantee, and, thertfore, I should, to that extent, support the Amendment. We do expect, however, that in Committee the Bill will be so-amended and altered for the better that probably this money would be able to be raised without the guarantee, and, therefore, I would plead with the Government to postpone this Resolution until we have some idea at any rate as to how the Bill is going to emerge from the Committee. If it emerges in such a form that the guarantee will be unnecessary, well and good, but in the meantime I shall feel bound to support the Amendment.

As a Member whose frequency is, perhaps, rather high, I apologise for intervening, but I want to say one or two things. I think it is unfortunate, at a time when the Government have announced that they do not propose to continue the system of Trade Facilities guarantees, they should propose a guarantee on such a large scale, involving a sum nearly equal to half the total guarantees under the Trade Facilities Act. It is a transaction on a very big scale indeed, and, while I have always held that the Trade Facilities Act was justified, because its object was to divert such capital as was available for the purpose of stimulating industries which for the moment were very badly hit, I think, now that the general trade situation is better, that that justification has passed, and that the Government are right to drop it. I think it is a pity to re-introduce it in this connection, because it will relieve the Board of that stimulus which they ought to have if they are going to do their job efficiently. After all, whether capitalism be good or ill, there is an element of risk about it which is very stimulating. I always believe that to give anyone absolute security is a mistake. This will give the Board absolute security. Whether they are successful in their technical operations or not, those who subscribe will get their money, and the Board will not feel any anxiety because of their inability by their operations to raise sufficient profit for the purpose of paying the interest.

I wish there were some possibility of having not a fixed rate of interest at all but some degree of variation—that they might in some years distribute less and in some years more, but keeping it within moderate limits. Do not let us mix up credit and credits, as I think the hon. Member for Huddersfield (Mr. Hudson) was doing. Credit is a psychological thing. Credits, after all, depend not on psychology but on the amount of cash there is available for new investment. They depend essentially on past savings which have not yet been devoted to any new purpose, and the amount of those savings available at any particular moment is not unlimited. However great your credit may be, there is only a limited amount that you can obtain at any given time. If a large proportion of what is available is raised under Government guarantees at comparatively low rates of interest and is diverted to particular purposes, the amount of new capital available for ordinary enterprises is proportionately restricted, and very much higher rates of interest will have to be paid for capital raised for other enterprises. Therefore, in benefiting one enterprise, whether it has the Government behind it or not, you may be prejudicing every other new enterprise and forcing it to borrow money at very much higher rates of interest, and therefore holding back a great many enterprises which are very desirable. That is one of the unfortunate ways in which a system of guarantees operates, and though I should not be justified in voting against the Resolution I think it right that those who feel as I feel should voice our protest against this continued extension of a system of financial facilities which is no longer justified.

I trust all Conservative Members will vote against this Amendment. If the Bill is to be postponed, or even opposed, I do not think this is the logical way of doing it. No Bill of this description can even be discussed in Committee without observing the form of previously passing a Financial Resolution. I also regret that among the arguments in support of the Amendment we have heard far-reach- ing objections against Government guarantees. My honourable Friend opposite (Sir F. Wise) has spoken almost in the same breath, coupling the guarantees proposed in favour of this vast scheme and the guarantee for a very minor concern called the "Blue Funnel Line." When guarantees are given side by side with collateral securities of comparatively immense and increasing value, such as this electrical undertaking will be, there is no injury whatsoever to the general credit of the British Government, and this security could be made liquid to cover guarantees. Take parallel cases in Australia. How many schemes in Australia have not with advantage received Government guarantees? Have any of such Government guarantees when given for first-class schemes done any harm whatever to Australia's credit?

Not a British Government guarantee.

I say Australian Government guarantees for Australian schemes have not injured Australian credit, and so British Government guarantees for schemes of which the goodwill and realisable assets will be of enormous and of increasing value can do no harm to the national credit. On the other hand, such guarantees may do immense good, because they accelerate electrical progress. When a great scheme is encouraged by Government guarantee, that is so much additional help to industry, and it will diminish unemployment and not do harm to anyone. The ordinary investor does not always want to take the trouble to judge what is safe. He has not the time or the skill to learn and differentiate between a good investment and a bad one. If this Government guarantees an investment he is quite confident that it is safe to keep his money in the country, and it saves him an immense amount of anxiety. The Amendment is really a blow at the Bill itself.

There are good direct reasons for opposing the Bill; nevertheless, it should be carefully and seriously considered and recast. The Amendment is very clumsy, and should not come from anyone who is prepared to vote with the Government on the Bill itself. When it is drastically amended, I shall be prepared to vote for the Bill in all its subsequent stages. I feel it is full at present of dangers and difficulties which ought to be thoroughly thrashed out. I have been very closely connected with Government attempts to run commercial enterprises by salaried official Boards and Committees. They often begin well. My experience is that schemes are sometimes started by men who are full of ability and earnestness, men who are personally interested in the success of the undertakings, but when these creators of a scheme pass away, the management lapses into the hands of Committees which sooner or later become careless, expensive and wasteful. Officials have their pensions and pay secured, not only when they are very good, but also when they are just passable. Moreover, the success of British business enterprise depends upon the punishment of nonsuccess. The official escapes those penalties, others have to suffer the penalties of non-success, bankruptcy, no pay, no pension, and so forth.

I think the hon. Member is going rather far from the question of the guarantee.

Although I am by no means favourably disposed to the Bill as it stands, or to its adoption at an early date, I hope the method of shelving the Bill now before the House will receive no countenance whatsoever.

I appeal to the Committee not to oppose the Resolution but to let the Government go on with the Bill. I am not convinced that it is exactly an admirable Bill but, I think the Committee should be allowed to consider all its points and that this Committee should not to-day take the responsibility of preventing the scheme the Government are bringing forward from having proper consideration. As I understand the scheme in its entirety, it is to enable us to get out of a tangle, so that the nation as a whole shall be able to have certain savings in administration on electricity. But the difficulty is to see who is to finance that proposition. If the Government does not bear the financial responsibility it is very difficult to see how we can go on with the Bill as drafted. Therefore, it seems to me that we ought to pass the Financial Resolution in order that the Standing Committee may consider the various proposals and place before the House a fully considered scheme.

I think it is exceedingly unfortunate at the present stage of electricity in this country that the Government should have deemed it advisable or desirable to introduce such a Resolution, and a Clause in the Bill which necessitates such a Resolution. My very profound conviction is that if the Bill emerges from Committee somewhat in the form in which it has been presented, and if it is necessary to use the machinery provided by the Financial Clauses resulting from such a Resolution, then there can only be one result. A higher price will have to be paid for all the money that is to be employed henceforward in electrical development in this country. Of that I am profoundly convinced. I am sorry that I was not able to be present earlier, but I was detained dealing with these very problems of the raising of large sums for electrical enterprise and placing very large orders for electrical machinery. It is exceedingly unfortunate that the Government should take this line at the present time, in view of the reaction which a policy such as this will have. It will undoubtedly hit the large undertakers in the country, particularly the privately owned ones, because the municipally owned undertakings will have to a certain extent the protection and the guarantee of the large cities behind them. It is particularly unfortunate that we should be faced with a Motion of this kind at the present time.

Reference has been made to Australia. Not only Australia but Canada to-day have great territories which are under-populated compared with the population in the cities and that under-population is due largely to the very policy which is being adumbrated in the Motion now before the House. Restrictions have been placed upon the utilisation of private capital both in Australia and Canada. I remember being in the King Edward territory of Toronto over 20 years ago when concessions were offered to be financed in this country but the conditions imposed were of a very similar character to the conditions that will follow from such a Motion as this, with the result that those with whom I am associated would never again go to Canada. It is no use going to Canada with private enterprise in this respect. One very large territory was handed over to the Ontario Hydro-Electric Commission. If hon. Members would read the speeches made in the Ontario Legislature by men of the highest distinction, renowned jurists, they would see that this policy was referred to as a policy of theft. I will not enter into a discussion of that matter, but if hon. Members would analyse the results of the Ontario Hydro-electric development and study the policy and its reaction on employment, they would find that there is a vastly less population in that country to-day resulting from that policy than would have been the case had they left the enterprise to be developed freely and unfettered by local authorities or private enterprise.

Is not this argument rather far from the question of guarantee?

With respect, I suggest not. I am trying to show the immediate effect of passing a Resolution such as this, which will undoubtedly compel people to pay a higher price for the development of electrical undertakings in this country. I was showing that where you have one large territory taken over in that manner, blocking the free flow of capital and of population, the results are very unsatisfactory. In this country, of course, the question of the flow of population has not the same relation to the question as is the case in the great territories of Canada; but I maintain that the energies of the people engaged in these undertakings will undoubtedly be diminished, and the diminishing of that energy will re-act in a great degree in diminishing the proper supply of electricity under state-aided and state-guaranteed schemes resulting from such a Motion as this.

I had hoped that the Attorney-General would have seen his way to have delayed this Motion. He does not intend to do so. I would, however, make a plea to him. We are speaking under very trying circumstances whatever subject we debate at the present time in this House. Very few members understood that this particular Motion would come forward to-day, owing to the non-circulation of Parliamentary papers. If we decide not to divide against the Motion, I hope that it will not be said later that the Motion passed the House without a division. If the Attorney-General wished to sense the feeling of the majority of the members of his own party I think he would find that the vast majority would, had there been a proper opportunity, have attended here to-day and have expressed pretty much the same views that I am now expressing.

My hon. and gallant Friend the Member for Hitchin (Major Kindersley) and the hon. Member for Hampstead (Mr. Balfour) have both expressed regret that this business is being taken in the circumstances in which we find ourselves. Although I was not personally responsible for this particular business being taken on this particular day, I think that those responsible for arranging the business of the House have acted with great prudence and with wisdom in continuing to bring forward the ordinary business of the House in spite of the crisis which exists. Nothing could be more ill-advised than to postpone particular Measures or Resolutions which would normally have been discussed, on the ground that the crisis prevents our being able to proceed. I think that perhaps nothing has more tended to steady public opinion in this country than the fact that the House of Commons has continued to function normally and to discuss its ordinary business affairs.

Would it not have been convenient for other business to have been taken rather than this?

This business has not keen accelerated, expedited or postponed. It is being taken in the ordinary way. My hon. friend was not here when the Amendment was moved, in which a bitter protest was made against bringing this business forward at this time. The hon. and gallant Member for Hitchin is very strongly opposed to it. It is important that the Committee should agree with the view I take that the ordinary business of the House of Commons ought to be carried on unaltered by reason of the crisis in which we find ourselves. I think that has had a very valuable effect outside. I am not speaking from a party point of view, because I think hon. Members opposite would say the same thing.

Dealing with the merits of the Resolution and the Amendment, I would like to remind the Committee of what it is that this financial resolution is designed to do. The hon. Member for Ilford (Sir F. Wise) spoke of the Weir Report containing a sum of £250,000,000, and said that this was an enormous tax on the savings of the community. It is true that in that report it is anticipated that during the next 15 years some £250,000,000 will be spent on electrical enterprise. Of that sum it is anticipated that £125,000,000 will be spent on capital expenditure connected with distribution, with which this Bill has nothing to do. A further £100,000,000 is expected to be expended in that period on new stations. This guarantee is not intended to affect the building of new stations.

These sums are not in addition to the £250,000,000.

No, I am explaining how it is made up. There is the sum of £125,000,000 for distribution, £100,000,000 for new stations, £25,000,000 estimated to be the cost of main transmission lines to be built under the Weir scheme, and £8,500,000 anticipated to be the net cost of standardisation of frequency, which is an essential part of the Weir scheme. The Weir Report suggested that the £100,000,000 which would be required for new stations should be guaranteed by the State, that the £25,000,000 for main transmission lines should be guaranteed by the State, and that the £8,500,000 required for standardisation of frequency should either be paid out and out or advanced in cash by the State and repaid later on. The Government did not see their way to accept these suggestions.

They thought, and quite wisely, that it was very undesirable to burden the public credit with such large sums of money and accordingly they decided, first, that there should be no cash advanced by the state and, secondly, that there should be no guarantee of the £100,000,000 required for new stations. The figure of £33,500,000, which is the only figure referred to, is made up of the £25,000,000 required for transmission lines and £8,500,000 required for the standardisation of frequency.

It is suggested by those who oppose this Resolution that the guarantee is unnecessary because there is no risk. They say, "You can easily raise the money on the Stock Exchange at a slightly higher rate of interest." It is curious that the only people who hold that view ale those who desire to wreck the Bill. No friends of the Bill, and no experts, hold any such view. It is only those who consistently oppose the Bill who press its merits so much as to say that no State guarantee is required. In fact, it is an essential part of the Bill. It is not true to say that when the Board requires this large sum of money, this £33,500,000, that it would be in a position to raise it on commercial terms on the Stock Exchange. The Board is precluded from making any profit and at the time when it raises money for the building of transmission lines it will have no assets at all in its possession. The only assets are those which will be created by the use of this money—the erection of the main transmission lines—and if you asked the public to lend you £33,500,000 in order to build your main transmission lines, at a cost of 25 million pounds, and then when they are built they are to be incapable of returning any profit you would have considerable difficulty in obtaining anything like that sum of money at a reasonable rate.

May I interrupt the right hon. Gentleman? What about the monopoly which is more valuable than anything else?

The hon. Member is misusing language when he speaks of a monopoly. A monopoly right, which a monopolist can exploit for his own advantage, is very valuable, but it is on the essence of this Bill that the Board shall make no profits at all. The monopoly that is given, such as it is, is a monopoly only of the right to buy from suitable stations and resell to authorised undertakers at cost price such electricity as the authorised undertaker may wish to take from the Board. There is no obligation on any undertaker to take any current from the Board, but there is a provision that they shall not be allowed to charge their consumers any more than they would charge if they were taking their own supplies from the Board. There is no question of a monopoly as a money making concern. There is a board formed to discharge a great public function, and for that purpose it has the right to raise a sufficient sum of money from the public, on the guarantee of the State in order to perform that public duty.

It has been said, and said truly that the only people who will benefit by the granting of this guarantee will be the consumers of electricity I admit that at once, but I go a little further, and I say that we claim it as a reason for using this credit The consumers of electricity in this country are already the great bulk of the population, and if we are able to encourage the use of the electricity, as we hope to do by cheapening its cost, we are conferring on the community at large a very great advantage for which a wise use of State credit may properly be devoted. It is in our view an essential part of this scheme that this guarantee should be given. The Committee is only authorising a Clause of the Bill to be discussed in Committee upstairs when it is reached, and I appeal to the Committee to prevent the Committee upstairs proceeding with the Bill by voting against what the Government regard as an essential feature of their scheme. I agree that it would be ridiculous for me, if this Resolution were passed without a division, as I hope it may be, to say that on that account any sanction has been given to any particular feature of the Bill by the House at large. The House has already sanctioned the general principle of the Bill on Second Reading, but this Resolution, if it is allowed to pass without division, does not do more than enable the Committee upstairs to discuss the proposal on its merits. I hope it may be possible for the Committee to come to a conclusion on this matter and proceed to the other business on the Order Paper.

The Attorney-General used the expression "not trading for profit" just now. I am quite sure he meant to say, earn their full interest and depreciation. Full interest would be something like 5½ per cent. The average of company undertakings throughout Great Britain for the last 10 or 15 years is about 5 per cent.

Of course the Board is not to make a lose. They are to so regulate their charges that they make no profits. They merely pay back interest to these people who take up these bonds and provide the sinking fund necessary to redeem them, but they are incapable of returning any bonus or dividends of any kind beyond the actual sum necessary which they have to hear as interest on capital.

What happens in the event of the Board making a loss in relation to the guarantee?

As a protection against a risk of that kind we have the guarantee. The Bill provides that the Board shall so regulate its charges that there shall not be a loss, but if there is a miscalculation in one year, then the charges would have to be a little higher the next year.

I beg to move, "That the Bill be now read a Second time."

This Bill, which has come to us from another place, is a short Bill of six clauses, but it is one of great importance to all those who are concerned with the administration of local government. It deals with a question which in the past has given rise to a great deal of difficulty, and that is the question of the adjustments of the boundaries between one local authority and another. The functions of local government are daily becoming more complicated, more involved, and more specialised in particular directions, and as that process continues, any change in it becomes more disturbing and gives rise to greater difficulties. But on the other hand, of course, while the functions are increasing, there are other changes taking place. There are movements of population, there are commercial and residential developments, and so there is a constant pressure upon certain authorities to amend their boundaries and to adjust their administration to the other conditions which have grown up. Since these adjustments and alteration of boundaries cannot take place except at the expense of the adjoining authorities, there is not unnaturally a considerable amount of discussion and sometimes of ill-feeling aroused by proposals of the kind.

1 P.M.

The friction engendered by these constant disputes between different local authorities and different classes of local authorities, was proving so injurious to the cause of local government as a whole that in 1922 it was decided that it was necessary to set up a Royal Commission to inquire into the whole matter. Accordingly such a Royal Commission was established. It was constituted rather differently from the way in which most Royal Commissions are brought together. It contained representatives of the county councils, of the county boroughs, of other boroughs, of urban district councils and rural district councils, together with a certain number of other gentlemen who were not directly conflicted with local government. The chairmanship was undertaken by my noble Friend, Lord Onslow, who was marked out for a position of that kind by the fact that he had great experience of local government, and was at the time the Parliamentary Secretary to the Ministry of Health, and he was the possessor of other qualities which it was felt fitted him in a peculiar degree for the chairmanship of the Commission. The task was to obtain if possible a unanimous report, and a solution satisfactory to all concerned on a subject which was highly controversial, and which had aroused very strong feeling in the past.

I would like to pay my personal tribute of gratitude to Lord Onslow and his colleagues for the remarkable work which they have accomplished. They certainly cannot be accused of idleness. They began their task in February, 1923, and concluded it on the first part of their terms of reference only in August of 1925. They have produced a volume of nearly 500 pages which, I dare say, will provide some week-end reading for hon. Members. Perusal of the Report will reward them, because it does contain a most valuable epitome of information about the history, the functions and the duties of local authorities, which, I think, will make it just as valuable as a work of reference in future as it is by way of a contribution to the solution of this difficult question. There were two Members of the Commis- sion whose names I will mention in this connection, because neither of them is now with us. One was formerly a Member of this House, Sir Ryland Adkins. He was appointed originally to represent the county councils, and a very genuine tribute is paid to his memory in the Report which bears witness to his learning, his wit and powers of persuasion. Those who were colleagues of his in this House will not need to be reminded of his possession to a very eminent degree of those qualities. He died before the completion of the Report, and his place was taken by Mr. Taylor. Another Member of the Commission was Sir Walter Nicholas, who represented the urban district councils. His name will be found appended to the Report. But he has not lived to see the Report translated into legislation, and one can only announce one's appreciation of the contribution which he has made.

The Report is unanimous—a very remarkable achievement in the circumstances. It is, of course, in the nature of a compromise, but I believe that it will lie found to be entirely non-controversial in this House, as it has been in another place. I will very briefly run through the principal provisions of the Bill. Clause 1 deals with the creation of new county boroughs. In the past, a town council desiring that its borough should be made into a county borough could proceed either by provisional order or by private Bill. A provisional order was rather the cheaper course of the two and was, therefore, the one most generally pursued. But it had a disadvantage. In nearly every case the creation of a county borough was the subject of opposition, not only from the county council from whose jurisdiction the borough was to be removed but from other quarters, and it was necessary that the opposition should be given every fair chance of presenting its case before the matter was finally decided by Parliament.

Under the provisional order procedure, a local inquiry was first held by an inspector of the Ministry of Health who made a report to the Minister, upon which the Minister made his final decision whether or not he should make the order. Of course the order when made was only provisional and could only be made final by Parliament. But the argument which was put forward against that procedure by the representatives of the county councils was, first, that the inspectors of the Ministry, while their bone fides was in no way impugned, nevertheless by their training and previous record had a tendency to look at this question—I am giving the views of the county councils, not my own—too much from the point of view of the sanitary services only, and that there were wider aspects of the questions from the local Government point of view, which were not so present to the mind of the inspectors. Therefore, in the view of the county councils, their case was to a certain extent prejudiced from the beginning by the fact that the inspectors were liable to take these views. Secondly, they said that when the inspector reported in favour of the borough, the tendency of the Minister was to take his advice and if the Minister took that advice and made the provisional order then the case was weighted against the county council when it came before Parliament. It was their view that just as the Minister had a tendency to be influenced by the report of the inspector, so Parliament in its turn would have a tendency to be influenced by the fact that the Minister had already made a provisional order. I will not attempt to say how far these arguments were justified by any facts, and hon. Members can judge as well as I can how far these considerations are correct, but undoubtedly in the minds of the county councils these considerations had force. They did not feel they were getting a fair opportunity of putting their case, under the provisional order procedure, and since, in a matter of this kind, one of the first essentials is that all parties should have complete confidence in the fairness of the procedure, the Royal Commission has recommended—and we have followed strictly their recommendation in the Bill—that in the ease of the creation of new county boroughs, in the future the provisional order procedure shall be swept away and boroughs shall proceed entirely by private Bill.

That is the effect of the first sub-section of Clause 1. The second sub-section provides that it shall not be lawful for the council of any borough to promote a Bill for the purpose of constituting the borough into a county borough, unless the population of the borough for the time being is 75,000 or upwards. The Commission said that that was one of the most difficult points which they had to decide and I would ask the House to observe, that the fact that the population of a borough reached a certain figure, whether it be 75,000 or any other, is not by this Clause or under this Bill to be an unchallengeable right to be made into a county borough. It is merely a condition which must be satisfied before any application can be lawfully made for that purpose. The question as to whether or not it is desirable that the borough should he turned into a county borough will remain to be decided by Parliament, irrespective of the question of population. But it is an essential condition that no borough with less than 75,000 can apply to be made into a county borough. The limit at present is much lower, being 50,000, and the figure in the Bill represents a compromise. I believe the figure suggested by the county councils was 150,000 hot the conclusion unanimously arrived at by the representatives of the various interests concerned on the Royal Commission was that 75,000 is the correct figure, and I venture to say the House would do well to accept that which has found acceptance among those who are most concerned. Clause 2 deals not with the creation but the extension of county boroughs, and there, too, it is provided that in future county boroughs shall only be extended by provisional order if there is no opposition to the extension. Where there is opposition they have to adopt the same procedure, namely private Bill procedure, as that prescribed in the case of the creation of new county boroughs.

Does that include the opposition of adjacent authorities?

It applies not merely to the county councils but to all local authorities who are adjacent, and who often oppose in these cases. Clause 3 deals with the procedure by private Bill—where the purpose of the Bill is either to constitute a new county borough or extend an old one—and it removes the necessity for referring the matter to a public meeting of electors which may be followed, if it is demanded, by a poll. Anyone who has had experience of these public meetings of electors to consider private Bills knows how unsatisfactory they are. [HON. MEMBERS: "Hear hear"] I am glad to see that I meet with general acceptance in making that statement. Obviously it is impossible to have a public meeting of 75,000 persons in any hall which exists in this country and we all know that the only people who come to meetings of this kind are those who have some private interest to serve by opposing the provisions of a Bill, who may turn up in sufficient numbers to defeat it and who frequently put the community to unnecessary expense. For my part, I think the Councillors are elected by the people to represent the people's interests, and if the electors think those interests are not properly represented, they have their remedy at the next election. We have heard it said that it is foolish to keep a dog and bark yourself and that the electors, having elected people to conduct their local affairs, should then come in to upset the work of elected representatives seems to be a grotesque and unfortunate proceeding. While not going into the question of removing that procedure altogether from the Statute Book, Clause 3 removes it so far as this particular matter is concerned.

The only other provision I need mention is that in Clause 5 which deals with compensation to county councils for loss of area. I am aware that in using that phrase I am technically inaccurate. It is not a question of compensation for loss of rateable value, which, I believe, is not recognised to exist at all, but really this comes to very much the same thing. The county council objection in the past to the extension of county boroughs has been largely based on the fact that it has necessitated the taking away from them of a valuable rateable area. In effect, if they get an increased compensation for the additional burden placed upon them in the maintenance of main roads, they need not bother about the loss of rateable value which is involved. Under the present arrangement they are now allowed a maximum of 15 years' purchase, if one may use that term, of the increased annual burden. Under the Bill, on the unanimous Report of the Royal Commission, that 15 is increased to 21. It is really a concession to the county councils, and it is a concession recognised as reasonable by the municipal corporations, and agreed to by them, and, therefore, probably no- one in this House will feel it necessary to raise any objection to it. Those are really the main provisions in this Bill It is the putting into legislative form of such of the recommendations of the Royal Commission in their first Report as require legislation, and I hope it will have unanimous acceptance on the part of this House.

I am sure the House is indebted to the Minister of Health for his very lucid explanation of the provisions of the Bill. We have been indebted to him for such explanations on other occasions, and while we often seriously disagree with the policy which he defends, we do appreciate the kind of explanation which he gives to a Bill when he brings it before this House. So far as we on this side are concerned, we do not propose to oppose this Bill. It is quite clear, from the recommendations of the Royal Commission, to which the Minister has referred, that some legislation is required to clear the position and make things more workable in future, and anyone who has had experience of county councils, say, in the last 30 years, during a time when they have had many and increased duties placed upon them by Parliament, will know that so much of their valuable areas has been taken from them as to make it more and more difficult for them to exercise their powers. It follows that they must feel very sore on many occasions at it being apparently so easy, through procedure by Provisional Order, after inquiry and report, and then upon the presumptive favourable decision of the Ministry to lose some of their area, and still to have to carry on the services which they are asked to do by Parliament from time to time.

From that point of view, I think the Bill is good. It is, however, quite possible that the Minister will get some opposition to Sub-section (2) of Clause 1 in Committee. I do not think it advisable to debate that at length to-day, but it is likely that representatives in this House who are interested in particular municipal authorities may have something to say on that point in Committee. Members on this side who have followed the proceedings of the Royal Commission support the Minister in all that he said concerning the work of the Chairman and certain Members of it. The matter is a very technical and detailed one, and I hope it is not because of the arduous nature of the task of the Commission that one or two of its Members, to whom a tribute has been paid by the Minister, have passed away from us during the period of the sitting of the Commission. We support what the Minister said in regard to their labours, and we are grateful to them for the work that they did. We hope that the Bill will get favourable consideration, and, subject to one or two small points to be raised in Committee, we hope it will lead to a better understanding between the county councils and the boroughs and county boroughs, and to that end we do not propose to divide against it.

I think it is as well to voice the view of the county authorities in supporting this Bill. I do so without any authority, but because I have been in close touch with county council government, both in London and the provinces, and, inasmuch as I represent a county area, I should like to express my own feeling that this, as a compromise, is one which most of those who think with me on this subject may well support. It is, however, appropriate to emphasise one's general feeling that this is only a provisional Measure, and no final solution of the problem of the inter-relation between town and country. In fact, things are pointing in the other direction. It is quite true that some 50 years ago it seemed natural, when life was more concentrated on certain centres, that those centres should be independent when they got to a sufficient size, but we have, during the last 25 years, seen a radical change in life, a change of which we are still only at the beginning, owing to the introduction of the internal-combustion engine and the development of motor-cars and road transport. The result is that towns are seeking life in the country and country facilities in the towns, and it is entirely arbitrary and unnatural, and in many ways uneconomic and impracticable, to separate the government of town and country.

In my own county of Hertfordshire, we have fortunately up to the present preserved intact the county unity, although one town, Watford, has approached the 50,000 mark, but as I look to the future, however large the towns grow, I believe it will be to the advantage of the towns as well as of the country to combine for very many purposes. At present it is not simply that certain services are removed from the ambit of the local Government. You have to have a standing joint committee to run the police, and the road services obviously are common in many ways in their use between town and country, but people are moving out and living in the country, and to a certain extent escaping the rates that they would have to pay if they still lived in the towns. In regard to education, although you have separate elementary education authorities, at the same time, for secondary and higher education, obviously town and county must be as one. You have your separate health services, but when it comes to the larger and more specialised services, they must be combined. So, for every one of the services you are getting greater combination in life between town and country. I do not want to enlarge on this but you cannot get any solution of these problems by creating county boroughs, and in many ways you are adding obstacles to them with every county borough that is created. As regards extension, there is no logic in the extension of a county borough that does not apply equally against the intension if you are looking to the future and to the larger movements which we of this generation are witnessing.

I hope that this small obstacle that is placed in the way of the separation of the larger towns by raising the population from 50,000 to 75,000 will, by moral and logical consent, become generally adopted The large urban districts and municipal boroughs will, I hope, think 50 times before separating themselves from the county areas, which may be developed with so much advantage to themselves if they remain under an integral, common authority. I hope in the future there will be very few county boroughs created, but that while creating and extending the powers of large urban districts in these matters that appertain purely and solely to the locality, they still will retain their combination in the county authority for the great advantage not only of the county, but also of the people themselves in the towns, who, obviously, have everything to gain by making the utmost use of the county surrounding them. In that spirit, I support the Second Reading of this Measure, as a compromise under the present conditions.

May I ask the Minister whether the Bill will in any way affect the Poor Law administration? Will it confer any extra powers upon the county borough councils while extending the areas for poor law administration, which are now included in the Parliamentary boundary? To make the question clear, in my own division three out of the four wards for the Poor Law are under the administration of Newcastle. The fourth is under the Tyne-mouth Union. Will the Bill confer any power upon the Newcastle City Council to acquire full control of the Poor Law administration within its Parliamentary boundaries?

Not at all. It clues not touch that.

I wish to say one word with regard to the position which is felt by many non-county boroughs, and to support the Second Reading of this Bill, reserving any rights we may have to discuss in Committee questions which I think affect the position of those boroughs. After all, it has to be remembered it is now some three years since an embargo has been put on non-county boroughs by the Ministry of Health, and we must remember the very difficult position in which those boroughs are which would have qualified under the old population basis, but who have been barred during that period from exercising these rights, and are now to be disqualified from getting those powers on the new basis. I think this matter is of serious consideration, particularly in view of the fact that many non-county boroughs in services such as health and education which they do control, are very much more go-ahead than the County Councils. In almost every Bill that comes before this House dealing with social questions, this question always comes up as to what authority is to administer it. We had a case a little while ago of a Bill, on which a compromise was found, to safeguard the rights of the non-county boroughs, and I think if this is to be definitely established in Legislation which does come before this House, some consideration should be given to those boroughs who cannot qualify for County Borough powers, or whose Bills may not be carried in future, who are efficiently carrying out services, and who very much resent the curtailment of their powers in respect of those services or the withdrawing of those services from such authorities.

I beg to move, "That the Bill be now read a Second time."

This Bill is a very small one. The House knows, probably, that under the Police Pensions Act, of 1921, there was a deduction made of 2½ per cent from police pay towards the cost of those pensions.

I understood that this Bill was not coming on to-day.

I have had no notice that this Bill was to be postponed. I desire to meet the convenience of the House, but I know nothing about a postponement.

I hope the right hon. Gentleman will not withdraw it

I understand arrangements were made through the usual channels for this Bill and the succeeding Bill to be postponed, on the ground that certain persons w ho are interested are not here.

The arrangement which I came to yesterday was that if the Debate which we had yesterday was continued to-day, we should only lake the first Order, which we have just disposed of, and the Criminal Appeal (Scotland) Bill, but that if the Debate was not continued, we should consider the Bills in the order they stand in the Papers. I have already arranged with the Party opposite not to proceed with the Lead Paint (Protection against Poison) Bill because I understand some correspondence is passing. But we really cannot hold up the whole business of this House and the question of police pensions, because one hon. Member does not choose to be present. He has had ample warning. I have already put the Bill off once, and I can conceive no reason why hon. Members should not be in their places to continue the ordinary business of the country.

There is no reason for the hon. and gallant Member to talk in that manner. I have been informed by our Whips that that was the arrangement, but if the hon. and gallant Gentleman says otherwise, I accept it. There is, however, no need to get up and make accusations about people not being here or not doing their duty.

I did not say that.

There is no Amendment to this Bill on the Order Paper, and one was under the impression that the hon. Member who takes an interest in this Measure was not going to submit an Amendment for the rejection.

I think I had better go on with my remarks. I understood it was quite an agreed Bill. Under the Act of 1921 there was a deduction of 2½ per cent. from the police pay towards the cost of their pensions. When the Geddes Committee got to work they decided that there should be a further deduction from police pay of 2½ per cent., and that certain deductions should be made from the rent allowance paid to the police. When I was appointed to the post I now hold, I had many conferences with the police, and I was very anxious to remove what was, undoubtedly, a grievance in the minds of the police. I subsequently appointed a Committee, with Lord Lee of Fareham as Chairman, and, as a result, a compromise was arrived at entirely to the satisfaction of the police, and equally to the satisfaction of the local authorities and Home Office, who are jointly responsible for the cost of this force. I should like to say how splendidly the police behaved in this matter, and still behave. The proposal was a compromise of 2½ per cent., making 5 per cent. of reduction of pay for the purpose of providing what was desired. I gave an undertaking, which I repeat now, that while I was Home Secretary I should make no further suggestion to alter the pay of the police force.

This Bill is divided into two parts. One of them carries out that undertaking. I have reason to think, indeed I am perfectly certain, that there is no member of the police force who desires to oppose the carrying out by Parliament of this. The second part of the Bill is absolutely in favour of some members of the police force. I hardly like now to refer at this terrible time to the police strike of 1919, but what happened was that there were a considerable number of members of the police force who struck, and were refused to be taken back. Many of those had served a considerable time in various forces, and, as it were, had earned a certain right or expectation of pension or gratuity at the conclusion of their service. There was no power to give them that when dismissed, for they lost all their rights. When the Bill of 1921 was passed it gave to local authorities and to local police authorities the power, when a man left the police force without any gratuity, to consider whether they would give him anything. It was optional, and that power was not retrospective. My right hon. predecessor appointed a Committee in 1924 to consider the whole position of these men of the police forces who struck, to consider whether they should or should not be reinstated. That Committee, known as Sir William Mackenzie Committee—Sir William was Chairman of it—took a very large amount of evidence and reported to the Home Office. While they came to the conclusion that the action of the Home Office must not be interfered with, they also came to the conclusion that where a member of a police force—but I need not read the whole—I will read this—

"That police authorities be authorised in their discretion to apply the whole or any part of the deductions which have been made in the pay of the police before 1919, in such manner as they think fit for the benefit of the wife, widow, or children, and for this purpose we recommend that legislation be brought in."

The second part of this Bill carries out that recommendation. I have taken pains to inquire from the local authorities throughout the kingdom who are responsible for the provisional police forces, as to whether or not they desired this legislation to be brought in, because it places a responsibility on them to decide, in the particular list of cases of the men who struck, which they will have to go through, to decide whether or not a gratuity shall be given to these men out of the Police Fund. All but two of the local authorities replied in favour of the proposal, and asked for the passage of this Bill.

It is intended that this Bill shall extend the provisions of the Act of 1921 to those men who ceased to be members of the police forces on strike in 1919. That is to say, that the local authority shall have the right to go into each case and consider whether, in their view, it is desirable that some gratuity should be given to the men whom they were no longer able to retain in the force. This provision is entirely in favour of the men themselves. I cannot think that any hon. Member will desire to prevent this part of the Bill going through. I certainly hope the House would not think of refusing the Bill, which is entirely in favour of the men who were removed from the police forces.

My right hon. Friend the Chief Whip has just made a communication to me, from which it appears that there has been a misunderstanding, and that because of that misunderstanding hon. Members of the Labour Party who are very much interested in these matters are unable to be here. I should not like to do anything against the views of the House. I have always endeavoured, as Minister, to carry on my work to meet the convenience of the House. Under these circumstances I do not propose to ask for the Second Reading of the Bill now. I should like it to be postponed. I hope, however, the House will not expect me to make a second speech, pleased as I am always to meet opponents in debate, but that hon. Members will do me the favour, if they get the opportunity, of reading my remarks in the Official Report.

Not in the "British Gazette."?

Not in the "British Gaeztte." The "British Gazette," having admirably fulfilled its functions,

"has folded its tents like the Arabs, And silently faded away."

Motion made, and Question proposed, "That the Debate be now adjourned." [Commander Eyres Monsell.]

On this Motion I should like to put it to the Home Secretary that there is an hon. Member opposite, the Member for one of the divisions of Liverpool, who wanted to draw attention to various matters connected with the Bill. I do not know that he wants to move any Motion against the Bill, but I should like to point out that this Bill has been put off before. I do not know that any hon. Members have any intention of opposing it. They simply want to call attention to one or two matters. I desire also to go into one or two points in connection with it, which I am quite sure the Home Secretary will be able to meet, and do his best to help us. What, however, I want to know at the moment is this. Could not the right hon. Gentleman take this Bill at a time convenient for those interested, and could it not be taken as the first Order after Questions on one day early next week? I should be glad if something of the kind is possible. It will not take long, and it is desirable to have it put down early in the sitting instead of having it put as the very last Order which may run it into the early hours of ale morning when everybody wants to get away.

I cannot quite understand the protest by the hon. Member opposite, because a day or two ago I personally consulted him on this matter, and found him perfectly agreeable to the postponement of the discussion of this Bill. I think he may take it that so far as we on this side are concerned this is not a fractious opposition to the Bill, but we desire this postponement in order that special interests which are concerned may have adequate expression in this House, and I cannot see why we should extract from the Home Secretary any pledge that would bind us to take the Bill on a special day. I expect the Bill will be taken at the earliest possible moment, and that will be facilitated, as far as we are concerned.

I hope the hon. Member opposite does not think that I am protesting against anything that was arranged a day or two ago, but we want to have the discussion of the Bill fixed for as early a date as possible which will be convenient to both sides. That is all I am asking for.

I am sure my hon. Friend will realise that the allocation of the business of the House must be in the hands of the Chief Whip, but I will do my best to get him to put this Bill down at a somewhat early stage one day. I have found that Home Office Bills are very often put down for the end of the day because the Home Secretary is known to be a short speaker. I will come down one day and make a speech of about three hours, and then we may get our Bills a little earlier in the day.

There not being 40 Members present, I propose now to leave the Chair. The Division bells will be rung when 40 Members are present.