HC Deb 14 November 1950 vol 480 cc1611-35

6.6 p.m.

Mr. Selwyn Lloyd (Wirral)

I beg to move, That an humble Address be presented to His Majesty, praying that the Regulations, dated 28th July, 1950, entitled the Electricity (Severance Compensation) Regulations, 1950 (S.I., 1950, No. 1278), a copy of which was laid before this House on 28th July, be annulled.

Mr. Deputy-Speaker (Major Milner)

I understand it has been agreed that this Motion and the following Motion in the name of the same hon. and learned Gentleman to the effect That an humble Address be presented to His Majesty, praying that the Regulations, dated 28th July, 1950, entitled the Gas (Severance Compensation) Regulations, 1950 (S.I., 1950, No. 1277), a copy of which was laid before this House on 28th July, be annulled, may be discussed together.

Mr. Lloyd

I was going to suggest that course for the convenience of the House if it was agreed, and I think the Minister who is going to reply might find it convenient.

These two Motions affect, the first, 350 local authorities which formerly had electricity undertakings, and the second, 276 local authorities which formerly had gas undertakings, so that the Motions are of fairly wide importance to people in the country. So far as my own constituency is concerned, the District Council of Hoylake had an electricity and gas undertaking, and the District Council of Ellesmere Port had a gas undertaking, so that I am personally concerned to that extent.

I must say straight away to the House that it is a matter of some complication to go into the regulations made under these two Acts, and I ask for the indulgence of the House if I do not explain my point of view very clearly. But the regulations are made, in the case of the electricity undertakings, under Section 23 of the Electricity Act, 1947, and the Gas Order under Section 29 of the Gas Act, 1948. I think it would be for the convenience of the House if I read the Section of the Electricity Act. It says: There shall be paid by the Central authority to local authorities, by way of compensation in respect of the severance of their electricity undertakings from their other activities, the sum of five million pounds, and the said sum shall be divided among such of the said local authorities as satisfy the prescribed conditions, and the amounts to be paid to the individual authorities shall be determined in such manner and in accordance with such principles as may be prescribed. Therefore, both my Motions deal with the problem of the severance of electricity or gas undertakings from other activities of the councils concerned.

It is a matter on which one would hope there might be points of view which transcend points of party difference, and I hope that before we finish the discussion, views will be expressed by hon. Members opposite which will assist in bringing pressure to bear on the Minister with regard to these matters. So far as these municipalities are concerned, I think that to most hon. Members the way in which they carried on their business is common knowledge.

When I started my apprenticeship in local government, I joined a local autho- rity which had its own gas, water and electricity undertakings. In other words, it was a small all-purpose authority. In passing, I think it is a matter of great regret to many of us that that sort of authority has been disestablished in this way by these nationalisation schemes. The legal and the committee work of the undertakings owned by such authorities was done in the town hall; the treasurer's department handled and sent out all the accounts, the audit of the accounts and the payment of wages were done centrally, and the cashiers in the town hall received all the cash that came in for the electricity and gas undertakings as well as for the general rate fund.

As a result of severance, so far as the larger municipalities are concerned, it may well have been possible for them to hand over to the new Board complete the branch of the staff which dealt with many of the matters to which I have referred, but, so far as the smaller authorities are concerned, it has not been possible to do so. This is principally for the reason, of which we have had some experience in the last week, of the difficulty of splitting of the human atom—and I look to one bench in the House. As far as the single individual is concerned, it has not yet been proved possible to split him. In fact, the same cashier who took the cash for these various undertakings was also the man who took the rates and he has to be in the continual employment of the council in order to carry on that activity.

Again, in the matter of accommodation, the larger authorities were able to hand over to the new Board accommodation which housed special staff. In the case of the smaller authority, the treasurer's department, the wages staff, etc., were all housed under the town hall roof. That has still to be maintained and it costs as much to light, heat and run it as before. Therefore, it should be considered, by those who can direct their minds reasonably to this matter, that the smaller authorities suffer more than the larger authorities. I think I can claim general agreement on that.

When the Electricity (Severance Compensation) Regulations were debated on 18th October this year, the Parliamentary Secretary to the Ministry of Fuel and Power said, when defending the formula which I am attacking: We felt at the Ministry that this formula, did, in fact, favour the smaller undertakings rather than the larger ones."—[OFFICIAL REPORT, 18th October, 1950; Vol. 476, c. 2187.] So we start, I hope, with common ground, as far as the Minister and I are concerned, that we desire to assist the smaller undertakings rather than the larger ones. Therefore, if we agree as far as that purpose is concerned, the only matter to be resolved is whether the Minister's formula does help the small authorities rather than the larger authorities.

Now we have to consider the methods which the Minister is adopting. I understand no attempt was made to find out how much the undertaking in each case actually contributed to the central establishment charges of the council. Probably that was right because it would have meant very complicated investigations into the affairs of each individual corporation. But a rather rougher and readier method was adopted. The first part of that method was to use the consumer basis. That was a recommendation of the Institute of Municipal Treasurers and Accountants, and, in order that there shall be no feeling in this debate between the large authority and the smaller authority, I must say that that Institute does represent both the small and the large authorities; and I would be very willing to take the judgment of the Institute upon this matter as between those classes of authorities.

The Institute did recommend that the consumer basis was the proper basis, even though a rough and ready one, to calculate the method whereby some of the £5 million was to be split up. Having decided that the consumer basis was a good one—and in fact the Minister, as to 75 per cent. of the sum, has split it up on the consumer basis—the next point is to decide whether the flat rate per consumer was the proper way to do it. I should have thought that it would be a commonplace of administration that as the numbers of consumers increase so the overheads proportionately to consumers decrease. I should have thought that that was a first principle of mass production, or of any form of administration.

For example, the first thousand consumers would cost much more per consumer to administer than the next 9,000. Therefore, I should have thought that there would be a very strong case, difficult to argue against, that the consumer calculation should be on the basis of a sliding scale. I think that argument does receive general agreement. It is always the argument put forward on behalf of the larger authority when they seek to extend their boundaries. It is always suggested in those cases that it will result in more economical administration. If that is the case, I do not think that argument could be controverted now.

Taking the electricity regulations first, the method selected is to use the consumer basis as to 75 per cent., but at a flat rate which, I suggest, is contrary to sound principles. The remaining 25 per cent. is allotted on a rather different basis. It is allotted according to three calculations—first of all, in accordance with units generated 6¼ per cent., then in accordance with units sold in bulk, 6¼ per cent., and finally in accordance with revenue, 12½ per cent. To a certain extent those matters do overlap and, as it is the larger authorities which are the authorities which generate electricity, they benefit owing to the fact that the calculations relate to units generated, units sold and revenue.

The Institute of Municipal Treasurers and Accountants did not consider that those other three items should be brought into the calculation at all. As I said, that is an Institute on which the larger authorities are represented. Even conceding that one should bring in those other three items, because it is a method of permitting the larger authority to get a benefit from the larger consumer, it is all the stronger case for the consumer side of it being done on the basis of a sliding scale. The proof of my contention is indicated by the actual figures. If we consider the effect on 350 authorities concerned of the rules which the Minister makes, we see that the national average, taking the total sum to be distributed and the total number of consumers, is 13s. 4d. per consumer.

The largest ten undertakings, according to the Minister's formula, are being compensated at the rate of 14s. 8d. per consumer and the remaining 340 at the rate of 12s. 10d. The largest 20 undertakings are being compensated at the rate of 14s. 5d. per consumer, and the remaining 330 at the rate of 12s. 8d. If one takes the largest 31 undertakings, they are compensated at the rate of 14s. 5d. per consumer, and the remaining 319 at 12s. 7d. If one takes the largest 43 undertakings, they are compensated at the rate of 14s. 4d. per consumer and the remaining 307 at 12s. 1d. per consumer. It is clear that the way in which the Minister's formula works out is so that the smaller authority comes off worse than the larger authority.

I do not know whether, by his nod, the Parliamentary Secretary is indicating, as a matter of courtesy, that he is following my argument, or whether he is indicating that he approves of my proposition that the impact of severance is more serious on the smaller authority than on the larger authority, and of my submission that the smaller number of consumers costs more per head to administer than the larger number of consumers.

The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. Robens)

I was merely indicating that I was following the argument with great interest. I shall say something about it later.

Mr. Lloyd

Perhaps I was anticipating, but I am certain that even the Minister is not deaf to sound argument, and that, if he does not accept it many of his colleagues will accept the argument I am putting forward. The effect of the scale laid down in these regulations is as I have just described in the case of electricity.

So far as gas is concerned, the average for all 276 authorities is 12s. 1½d. per consumer. The 19 bigger authorities get 12s. 3d. per consumer, and the 257 smaller ones 11s. 7d., so, although the difference is not so marked as in the case of the electricity formula, nevertheless there is some discrimination against the smaller authority. May I give the result of this in the case of Hoylake electricity undertaking, an undertaking, incidentally, on which the ratepayers have spent £300,000, of which £205,000 have been paid out of revenue or by loans since paid off? Reserves were £18,500, and so the Board paid £76,500 for an undertaking worth at least £250,000. That is another story, appreciated at the appropriate time by the electors in that particular area.

The ratepayers there certainly got a very bad bargain. Now severance compensation is to be given to them. The burden of severance which could not be passed on—the burden which is going to remain with the local authority— amounted to £2,773 for 1947–48, and the compensation which they get under the Minister's regulations is £5,595. I think the Minister will agree that in the case of the smaller authority it must take longer than two years to get over the effect of losing such undertakings. In fact, I think the then Financial Secretary indicated a period of five years when the matter was under discussion in 1947. Therefore, on that basis we ought to get very much more.

The Minister said that his formula favoured the smaller authorities. I think I have shown quite clearly that it has not done so. I think my argument must commend itself to hon. Members in all parts of the House. Dealing finally with the only real argument which I believe the Minister can bring against us, with regard to delay, I would say this to him. If he will submit his formula to the Institute of Municipal Treasurers and Accountants and ask them to say whether they consider that it favours the smaller authority, and if that Institute says that it favours the smaller authority, I, for one, will say no more about the matter and will accept their view; but if, as I am certain he will find, they say this formula favours the larger authority rather than the smaller, again I ask him on a rough and ready basis quickly to make fresh Regulations to meet this matter in a more just and equitable manner.

6.22 p.m.

Mr. J. H. Hare (Sudbury and Woodbridge)

I beg to second the Motion.

In moving this Motion my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) has advanced very plain and clear arguments. As he said at the beginning of his speech, this is a somewhat complicated matter for those who are not connected with this type of undertaking, but I think the House will agree that my hon. and learned Friend made his arguments amply clear for all, even perhaps the less intelligent of us, to understand.

I should like to concentrate on the electricity undertakings and leave others to deal with the further arguments in support of our condemnation of the gas severance compensation. I do not believe that any hon. Member would deny the justice of what my hon. and learned Friend said, when he stated that these Electricity Regulations are definitely unfair to the smaller authorities. We are not asking the Minister to change his mind about these regulations for any political reasons; I believe that this truth is fully in the minds of many hon. Members opposite who may have some of the smaller electricity undertakings in their constituencies. Therefore, all we are asking from the Minister tonight is justice, and it is in the hope that he will accept the truth of our arguments that we wish to apply ourselves to this question.

It is clear to anybody who knows of a small local authority with an electricity undertaking that that small authority has, in fact, suffered far more than has the larger authority, because so much of the work of the electricity undertaking was carried out within the normal local government departments of the council concerned. In Felixstowe, which is in my constituency, we have an undertaking typical of these smaller undertakings which we on this side of the House think have been penalised by the Minister. This undertaking has, I think, slightly over 5,000 consumers. It was a flourishing, small concern, but much of the work of the administration of this undertaking was carried out by the staff of the clerk or treasurer of the council. They were responsible for the final accounts, the legal side, creditor ledgers, loan matters and a number of other items of that nature. When this undertaking was removed from them, many of what we regard as the permanent staff were deprived of a considerable amount of the work which they had been accustomed to carry out.

My constituents and I feel that in addition to the overall criticism that we have lost a very profitable undertaking which had built up reserves of £12,000 and which had got a working revenue of £7,500, a further injustice to the town of Felixstowe is caused by the Minister's regulations which we are discussing. I would point out that, under the basis which the Minister has adopted, Felixstowe will receive 12s. 4d. per consumer; and yet, as my hon. and learned Friend has said, the average throughout the country is 13s. 4d. Therefore, here is this small authority which suffers more from severance than the many other larger authorities and is receiving 1s. less than the national average under these regulations. That cannot be justice. I hope that the Minister will not feel that he has committed himself too far. I hope that he will feel that there is no disgrace in thinking again when good arguments are put up to him which should cause him to change his mind.

One of the most telling points in this matter is the fact that the Institute of Municipal Treasurers and Accountants put forward proposals very similar to those put forward by the Urban District Councils Association. I am not particularly pressing the detailed claims of the Urban District Councils Association. They were naturally responsible for putting forward as good an argument as possible for those councils which they represent. But to me it seems clear that those proposals which they put forward were reasonable proposals on which it would be expected the Minister would be prepared to negotiate. He did not do that, although the Institute of Municipal Treasurers and Accountants based the foremost part of their proposals on the principle of a sliding scale. This fact was also vital to the interests represented by the Urban District Councils Association. Therefore it is strange that the Minister in these Regulations has flatly refused to adopt the sliding scale principle.

I am certain that the real root of this trouble is the failure of the Minister to adopt this sliding scale. We are not going to get the justice which I believe the whole House, irrespective of political beliefs, wants to give to these smaller authorities, until the sliding scale principle is accepted. I hope that the Minister, having listened to what we consider are very reasonable arguments, will be prepared to think again and that he will give justice where justice is very much due.

6.31 p.m.

Mr. W. T. Aitken (Suffolk, Bury St. Edmunds)

I do not think there is one hon. Member who would not do a great deal to remedy any form of injustice and that, I think, is the keynote of this debate. We are not seeking to make political capital out of this Motion. I would point out to the Minister that there are many thousands of people in the country who voted, some of them Socialist, some of them Conservative and some of them Liberal, and to whom the arguments on nationalisation are probably dead and gone, but who feel that they have a real grievance in this matter of compensation for severance.

I refer, in particular, to those very tiny microcosms of the gas industry such as those run by small local authorities. I am familiar with about three of these, and one of the very impressive things about them is that people have always had a good deal of interest and pride in the fact that their industry has been run locally. The nationalisation of their industry was, naturally, a matter of some grief to them and harsh words were probably said. These local authorities are suffering a very great injustice by virtue of these regulations.

It is clearly understood that Section 29 of the Gas Act, 1948, provided for some £2,500,000, which was to be divided among the local authorities as compensation for the severance of their activities, according to the loss they suffered. I do not believe that compensation has worked out that way. The arguments of my hon. Friends show that the loss to the small local authorities is far greater than it is in the case of the larger authorities. I do not think there is any question of that. Their argument is, too, that the regulations as they stand favour the larger authorities.

I would refer to the case of Haverhill, a small town in my constituency, where, for many years, we have had a very active and well-run gas committee. The gas undertaking was in excellent shape when it was taken over, and if anyone had tried to buy that industry it would have cost at least £50,000. To reinforce the arguments of those of my hon. Friends who have already spoken on this subject. I would point out that the administration of that undertaking was principally carried out by the local clerk, who was responsible for the administrative work and the accountancy. The meetings were held in the council offices. The collection of revenue for the undertaking was carried out by the local collector, among his other duties. In the course of a normal year's work the local authority charged £622 on account of the salaries of these staffs.

None of these officers has been transferred to the Eastern Gas Board. The whole of that proportion of the salaries is still carried by the local authority That represents, to a tiny community like Haver- hill, about 7d. on the rates. The position is different in the case of larger local authorities who had their business taken over as an entity, with clerical staff, and so on. I know of no case where the whole of the undertaking has been taken over as an entity and where there has been an increased charge on the rates as a result of the nationalisation of the industry.

We can see how seriously this matter is regarded in a village like Haverhill. I could give two or three other examples of the same kind. As far as we can calculate, the total compensation for Haverhill under these regulations will be about £800. That is to compensate them for a continuing charge of over £600 a year. I submit that it is quite justifiable for them to claim that the sum payable as compensation ought to compensate them for the extra £600 a year which they have to pay, but I do not imagine for one moment that the Minister would consider such an amount as compensation. I agree with my hon. Friend the Member for Sudbury and Woodbridge (Mr. Hare) and my hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd), who said that there ought to be some kind of sliding scale, for it is obvious to anybody who has had dealings with these people that they are suffering from a real grievance and that £600 extra on the rates each year is a very serious matter.

I was interested to read, in HANSARD, in the report of a debate of 1948, that the Lord President argued about the principles upon which compensation should be paid. The argument was, at the same time, that it was quite logical for us to assume that the taking over of a local authority undertaking of this kind was really a transfer from one public body to another. He denied charges that the Government were expropriating millions of pounds from the ratepayers. I can assure the Minister that a lot of ratepayers do not feel that way. Human beings do not always respond to logic when their own interests are affected.

There is no doubt that people like the gas consumers of Haverhill have seen their undertakings, of which they were very proud, taken over upon what they consider to be confiscatory terms. They have seen the rates go up by 7d., they have seen the price of gas go up and they have seen a reduction in the quality of the service. I am sure that there is a sound reason for an increase in the price of gas. I would not criticise the Eastern Gas Board on that account, although I feel that perhaps the National Coal Board might be criticised. But there is no excuse for this unfair and unjust treatment which means that, as a result of the terms of the compensation, there is a permanent increase in the rates of a tiny community. The Minister must consider this as a matter of elementary justice and nothing else.

6.39 p.m.

Mr. Spearman (Scarborough and Whitby)

This is not a matter of party controversy, but rather one of putting right an anomaly, upon which, I think, hon. Members on all sides could agree. My hon. Friends have made it so very clear that there is an anomaly that I hope we can look forward with confidence to the Parliamentary Secretary promising, in his speech, to reconsider the matter. I have the more confidence that he will do so because, in his speech of 19th October, he said that he felt that this formula adopted by the Ministry favoured the small authority.

I assumed from that that the right hon. Gentleman was not trying to give favour to one section of the community over the other without reason, but rather that he felt that the smaller authorities had a case for a preference to be given to them. The reason has already been given by my hon. Friends, namely, that the larger authorities have been able to make economies which are not possible to the smaller.

Let me give an instance, from my own constituency, of a town where, I believe, the electrical business was undertaken in one room which was used for other activities of the council and the officials who managed it also managed other activities of the council. In that case there was no saving. So these small undertakings deserve some greater compensation than the larger. The fact is that the figures show the very reverse.

I will, if I may, give two examples from my constituency—examples which apply to many places. Let us take the case of Scarborough which is not, after all a very small town. The number of the consumers is not small. It may not be quite in proportion to the fame of the town, which is so popular with hon. Gentlemen opposite, but it is just under 18,000; yet, under the regulations, the amount per consumer works out at 12s. 11d. In the case of the smaller town of Whitby the amount works out at only 11s. 11d. I think that the national average is 13s. 4d., and that many of the towns—the larger ones—get up to 14s. 10d.

Earlier today the Minister of Agriculture, talking on a rather different subject, said he would do his best to hold the balance between crooks and honest men. He did not explain how he would achieve that very difficult object. However, I am asking the Parliamentary Secretary to do something very much easier—to hold a fair balance between honest men.

6.42 p.m.

Mr. Douglas Houghton (Sowerby)

If I enter a plea to my hon. Friend for reconsideration of this matter it may emphasise the non-party character of this debate. We are all clear about two important facts. The total amount of compensation was fixed, I think, under the Electricity Act, 1947. There is no question of increasing the total amount of compensation. What we are discussing is how it should be divided.

Another feature of importance is that Section 23 of that Act did not specify or define the principles upon which the compensation should be based. It said that compensation should be granted in accordance with "such principles as might be prescribed." I assumed from that that the Minister, in consultation with those whose interests he would wish to consult, was free to prescribe the principles upon which the compensation should be based. We are clear from what the Parliamentary Secretary said in the previous debate, on 18th October, that the compensation was for severance of the undertakings and was not compensation for the loss of them to the local authorities concerned.

I have received representations from two urban districts in my own constituency, the urban districts of Hebden Royd and Elland, both of them reasonable authorities, who feel strongly that the compensation prescribed in the regulations is unfair to them. I was hoping that in the previous debate—all through which I sat listening carefully to all the arguments—we should get from the Parlia mentary Secretary a full explanation of the basis of compensation adopted. Unhappily—and, here, I hope not to strike a discordant note—the right hon. Gentleman the Member for Bournemouth, East and Christchurch (Mr. Bracken) intervened with one of his typically boisterous contributions, so that the wishes of the more tranquil Members of the House, who were hoping to get this explanation from the Parliamentary Secretary, were disappointed. I therefore suggest that on this occasion the right hon. Gentleman may perhaps, facilitate matters if he does not seek to catch your eye, Sir.

Mr. Selwyn Lloyd

I think it is only fair that the hon. Gentleman should also point out that my right hon. Friend's speech was made after the Parliamentary Secretary had made his unsatisfactory reply.

Mr. Houghton

Yes. It is, however, a fact that certain interjections made by the right hon. Gentleman before my hon. Friend spoke showed quite well which way the wind was blowing. However, I leave that, otherwise I shall be doing exactly what I am rebuking the right hon. Gentleman for.

One of the authorities, the Urban District Council of Hebden Royd, drew attention to the difficulty which they had with a small number of consumers—no more than 2,800—in the administration of their electricity undertakings, who were separate from the general administration of the local authority. They were mixed up. There were not enough to justify separate staffs and separate premises, so that, in fact, the electricity undertaking paid to the general administration account the sum of £650 a year to cover part of the time of the clerk of the authority and part of the time of shorthand typists and clerical staff.

They represented strongly to me—and I have made a special effort to understand their view, to see whether it is reasonable—that an authority such as that, which could not fold up the administration of the electricity section of their activities and hand over to the new authority, were especially penalised by the adoption of a formula which does not give full and, indeed, from their point of view, exclusive emphasis to the number of consumers. They attached little importance in their view to the formula of the 25 per cent. which is divided as to a proportion of revenue and a proportion of units generated, leaving aside those generated and supplied in bulk.

I hope that my hon. Friend will be at some pains to explain and defend the formula which is contained in the regulations. We all appreciate, I am sure, the need for getting the maximum agreement between all parties concerned. None of us would envy him the task which confronts him in reconciling different claims and interests, and getting a formula which commands general assent, but there is no doubt that the urban district councils with which I am concerned feel that less than justice has been done. The amount per consumer which they get out of the proposed compensation of only £1,597 is 11s. 5d. per consumer, which is nearly a shilling less than the average for these smaller authorities, in contrast with the 15s. 5d. per consumer in the case, for example, of the Birmingham Corporation. That is all I have to say. I rose in the role of one seeking a fuller explanation and a more convincing defence of the proposed formula than it has been our lot to hear up to now.

6.49 p.m.

Mr. R. V. Grimston (Westbury)

I rise for only a moment or two, following the speech of the hon. Member for Sowerby (Mr. Houghton), particularly to stress the fact, which he has pointed out, that this is not a party issue. As a matter of fact, I merely intervene because I have the honour to be President of the Urban District Councils' Association, and I am supported by a galaxy of vice-presidents in all quarters of the House. I do not wish to go over all the arguments again, but I ask the Minister to believe that we are raising this matters because we feel that the smaller local authorities are not getting the deal which I think he himself intended that they should get under these regulations.

I wish to reinforce the plea made from all sides of the House that the Minister should look again at these regulations. I do not think he need fear that in doing so he would lose any authority or prestige. All we ask him to do is to look at them and to present new regulations which will produce the effect he himself has said is desirable—that the smaller authorities should be compensated rather better than the larger authorities. The present position, as we see it, is exactly the opposite.

6.51 p.m.

Mr. Molson (The High Peak)

I rise to deal with only two points. When, on 18th October, I put forward certain arguments, the Parliamentary Secretary, in reply, made it quite plain that he and his right hon. Friend were anxious that justice should be done to the smaller local authorities. There is one point which has not been mentioned this afternoon to which I would invite the hon. Gentleman's attention, and that is that it is unjust to smaller authorities that the generation and sale of current should be taken into account when under earlier Statutes those smaller authorities are precluded from generating.

My own local authority, which has pressed me upon this subject, is the Urban District Council of New Mills, and under the formula which the Government are putting forward they stand to lose £600 as compared with the compensation they would have received if fair consideration had been given and if, instead of a flat rate, there had been a b sliding scale, as recommended by both the Urban District Councils Association and the Association of Borough Treasurers and Accountants.

6.52 p.m.

Mr. Murray (Durham, North-West)

I feel that I must intervene because on the last occasion when this question was discussed I raised with the Parliamentary Secretary the very important matter of the position of smaller authorities, and I hope I am not misrepresenting him when I say that I got the impression that the smaller authorities would be looked after. If that was the impression he gave me, I must ask him very sincerely to have another look at this important question. Most of my division is a development area, and the Crook and Willington Urban District Council has written and asked me to raise this matter tonight.

I am doing so because the Government have had to plant three factories in Crook to use the unemployed people in that area. I suggest that the Parliamentary Secretary, who is responsible for this—he is a very reasonable chap, and I hope he will show his reasonableness tonight—will give us what we are asking. It is not a bit of use giving us something with one hand by planting factories in a development area and then taking it away with the other hand when something has to be taken from that area which will mean 6d. or 7d. on the local rate.

That is what this means, because on the figures given to me, under the formula suggested by the Minister, the Crook and Willington Urban District Council would receive £1,251, whereas under the recommendation of the Urban District Councils Association they would receive £2,011. In other words, they will be down £760. That is a very serious matter for a small authority. For an authority with just over 20,000 inhabitants to find an extra 7d. rate is no mean matter, and I ask my hon. Friend to see whether this formula can be adjusted, and at least to give me the satisfaction of feeling in my heart that he did not misrepresent the situation when we last debated it.

I did not get up to make a long speech, but I felt that I could not let a chance like this go by, lest it was felt that because hon. Members opposite had raised the matter there was no substance in it. I thought that an echo from this side of the House might add some weight—and I think I am a fairly substantial fellow for doing that. I hope that I have said enough to impress on the Parliamentary Secretary that this is a serious matter for local authorities such as Crook and Willington, and if he can adjust the formula so that those who are strong financially can bear the extra burden and give any benefit there night be to the smaller authorities, he will be doing a good job of work tonight.

6.56 p.m.

The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. Robens)

I am sure my hon. Friend the Member for Durham, North-West (Mr. Murray) would never accuse me of willingly at this Box misleading the House, or indeed misleading individual Members when we are talking informally outside this Chamber. What I said in the speech which has been referred to so many times tonight was that we had weighted this formula in the interests of the small authorities.

I am sure the whole House is grateful to the hon. and learned Member for Wirral (Mr. Selwyn Lloyd) for the very excellent case that he presented. He put all the facts before the House, and I do not want to add to or detract from them, or to argue with any of the facts which he gave the House. He set out the position very clearly, and the fact that he is the vice-president of the Urban District Councils Association lends some weight to his argument, because he knows all about it. At the same time it does reveal some slight interest in this matter on behalf of the urban district councils.

Mr. Brendan Bracken (Bournemouth. East, and Christchurch)

He is "a" vice-president.

Mr. Robens

I was referring to the fact that he is the vice-chairman of this association.

Mr. Bracken

Vice-president, not vice-chairman.

Mr. Robens

Despite what the right hon. Gentleman says, he is the vice-chairman. He does not deny that.

Mr. Bracken

He is "a" vice-president.

Mr. Robens

I am saying that because of that the facts which he gives in his speech would be accurate. I am sure we shall get along very pleasantly and follow the arguments out quite nicely if the right hon. Member will restrain himself and let us get on to the facts of the situation.

Mr. Selwyn Lloyd

I did at the beginning of my speech make it quite clear that I represented four urban district councils, and that I had a particular interest in this. I did not think that my being one of the vice-presidents of the Urban District Councils Association was of sufficient importance to warrant my informing the House of it.

Mr. Robens

It is a very important position and I did not want hon. Members to leave tonight without knowing the important position held by the hon. and learned Member. It is very important that the House should know. I agree that this is not a political issue at all. There are representatives of urban district councils on all sides of the House; all of them will have received letters complaining about the formula which has been laid down, and will have been given the figures in relation to their own area to show what they would have received under the sliding scale formula, which was their proposition, as against the formula which has been laid down by my right hon. Friend. I agree that there is no politics in this.

We were faced with dividing £5 million in respect of electricity and £2½ million in respect of gas amongst all those authorities who had undertakings. Our job at the Ministry was to divide that out fairly in accordance with the Act. My right hon. Friend described in very clear detail precisely what that compensation should meet. It was to meet the case where officers had lost certain duties and where it would be some time before other duties could be found for them.

It was clear that there was a great difference of opinion among the local authorities, varying with their size. Indeed, if tonight I were to say, "All right, let us withdraw this, let us have the sliding scale recommended by the Urban District Councils Association" and if subsequently I were to produce that in this House, we should have another Prayer. But on that occasion the Members taking part would be representing the large local authorities, and they would be saying precisely what hon. Members have been saying tonight on behalf of the urban district councils, but in a different context. [HON. MEMBERS: "No."] It is no use hon. Members saying "No" at this stage. If, in fact, that formula was adopted, they would receive the same letters as the Urban District Councils Association. [HON. MEMBERS: "No."] Yes they would, and I will prove it in a few minutes.

The fact is that if one represents a constituency which has a small undertaking, then, of course, the sliding scale is the formula for favouring the smaller undertakings to the disadvantage of the larger undertakings. I repeat that if we were to change this round, we should have another Prayer, and this time the big guns would be brought to bear. There may be some exceptions, but by and large I am certain that would be the trend of events. [HON. MEMBERS: "No."] I will prove it. Indeed, I said something like this on the last occasion we debated this matter.

We have not produced these regulations in five minutes; we have been two and a half years on this job, and many hon. Members have complained about that. But why have two and a half years been taken up in this way? They have been spent in getting all the various local authorities together to see if they could agree on a common formula. This formula has been accepted by all except the Urban District Councils Association. Where did this start? The first basis for the formula was consumers 40 per cent., revenue 25 per cent., and sales and generation 35 per cent. That was where the basis of argument started between all the local authorities concerned. Hon. Members will see from that how far we have moved in the direction of assisting the smaller authorities by the 75 per cent., 12½ per cent. and l2½ per cent. we are now proposing.

Mr. William Elwyn Jones (Conway)

Whose formula was that?

Mr. Robens

This was the formula which was initially the basis of discussion with all the local authorities.

Mr. Jones

By whom was it suggested?

Mr. Robens

This was produced at the beginning as a basis of discussion by the Ministry after consultations with some of the local authority organisations. It has moved a long way from there.

Hon. Members have produced very good evidence and figures as to the effect upon their particular local authority undertakings; but, of course, they will obviously produce the figures that suit the case, and I am always chary of accepting figures because I do not think they ever prove cases. [HON. MEMBERS: "Oh."] Really, they do not. The case put forward by hon. Members can easily be shown to be quite different in other examples. For instance, there is an area very well known to every hon. Member of this House—Ebbw Vale. That authority would get 20s. per consumer on this basis, and they are an urban district council. Thornton Cleveleys, also an urban district council, would get 20s. per consumer, but a city like Manchester would only get 14s. 9d. These are the electricity undertakings.

Mr. Selwyn Lloyd

Does not the hon. Gentleman admit that he has picked out the two urban district councils which are quite exceptional because of the relationship of the units sold to the number of consumers?

Mr. Robens

Of course, I have picked out the exceptional councils. Before I produced the figures I said I was going to produce the exceptional ones, because those which have been produced in this House tonight have been exceptional ones. [HON. MEMBERS: "No."] Oh, yes.

Mr. Pickthorn (Carlton)

Tell us the average.

Mr. Robens

I am not bothered about the average; the average does not make the case at all. The fact is that some urban district councils will do well out of the formula and some larger boroughs will not do so well. However, the fact remains that if we were to take the sliding scale, as proposed by the Urban District Councils Association, it would be to the disadvantage of the larger authorities who not only had to serve large industrial users, which were only reckoned as one consumer, but also had to serve generating stations, the staffs of which have not all been taken over. None of those considerations would have been taken into account at all. I am certain no hon. Member would say we should not take into account that kind of severance problem.

If we want to consider the figures in another way, let us have a look at the effect on rates. Hon. Members have been discussing this matter in terms of "per consumer." They are really anxious to stand up for their ratepayers. If we look at Manchester, we find that that authority will get by way of compensation 6d. for electricity and 5½d. for gas. When we come to urban district councils, we see that Hindley will get 7d. for electricity, which is more than Manchester, and 1s. 0½d. for gas, and there is a number of such cases. I agree that I have selected these examples in order to show the other side of the picture, where, in point of fact, on rateable value, the urban district councils have done very much better than have the larger local authorities.

Mr. Joynson-Hicks (Chichester)

What has rateable value to do with it?

Mr. Robens

The amounts of compensation, if expressed in terms of the rate, would come to the figures I have indicated. In other words, the contribution would be 6d. for Manchester, and 1s. 2d. in the case of Ebbw Vale, and 7d. in the case of Hindley. Therefore, one can use these figures to prove almost anything. Indeed, that is what good statisticians usually do.

To come back to what we have to do, I would point out that we have to divide this £5 million and the £2,500,000 in equity. This formula, which I agree has taken two and a half years to produce, has only been produced after endless negotiations with all the authorities concerned. It is very interesting to note that the Scottish associations, representing both the large and the small, have accepted this formula entirely, and that in England only the Urban District Councils Association have not accepted it. No matter what kind of formula is produced, there are bound to be some snags about it. No formula can produce a fair and just way of distributing this money. It must be rough and ready justice, and that is what this formula provides. But, at least, it is a formula to which all associations except the Urban District Councils' Association have subscribed, and so far as that association is concerned, they are doing very much better under this formula than they would have done under any of the previous formulas discussed.

Mr. Selwyn Lloyd

What about the formula of the Institute of Municipal Accountants?

Mr. Robens

That is a professional body. The Institute is a professional body, but the people the Government must consult are not professional bodies of that character, but the local authority and urban district council associations. While the Institute can probably give advice to their constituents, the fact remains that they are not a negotiating body, but that the local government associations are.

It really boils down to this, that this formula represents, as near as can be obtained, a fair division of the amount of money for severance which the Bill provides for compensation. That it represents rough justice, I agree; but, at the same time, any other formula would lead to the same kind of debate in the House. In view of the fact that we have all the associations accepting this formula, except for this one body, it seems to me that the House can readily accept the formula laid down.

Question put.

The House divided: Ayes, 179; Noes, 212.

Division No. 5.] AYES [7.13 p.m.
Aitken, W. T Harden, J R E Orr, Capt. L. P. S
Alport, C. J. M Harris, F. W (Croydon, N.) Osborne, C
Amory, D Heathcoat (Tiverton) Harvey, Air Codre A V. (Macclesfield) Perkins, W. R. D.
Arbuthnot, John Harvey, Ian (Harrow, E.) Pickthorn, K
Ashton, H (Chelmsford) Hay, John Price, H. A. (Lewisham, W.)
Baker, P Heald, L. F. Raikes, H. V.
Baldock, J. M. Hicks-Beach, Maj. W. W. Rayner, Brig. R.
Baldwin, A. E Higgs, J. M C Redmayne, M.
Banks, Col C. Hill, Mrs. E (Wythenshawe) Renton, D. L. M.
Bell, R. M Hinchingbrooke, Viscount Roberts, Emrys (Merioneth)
Bennett, Sir P. (Edgbaston) Hirst, Geoffrey Robertson, Sir D (Caithness)
Bennett, R. F. B. (Gosport) Hollis, M C Robinson, J. Roland (Blackpool, S.)
Bennett, W G (Woodside) Hopkinson, H [...] D'A Rodgers, John (Sevenoaks)
Bevins J R (Liverpool Toxteth) Hornsby-Smith, Miss P Roper, Sir H.
Birch, Nigel Horsbrugh, Rt. Hon. Florence Ropner, Col. L
Bishop, F P Howard, G R (St Ives) Ross, Sir R D. (Londonderry)
Black C W Howard, Gerald (Cambridgeshire) Russell, R. S
Boles, Lt.-Col D C (Wells) Hudson, Sir Austin (Lewisham, N.) Ryder Capt R E D
Bossom, A C Hudson, Rt Hon R S (Southport) Scott, Donald
Bowen, R Hudson, W R A (Hull, N.) Shepherd, W S (Cheadle)
Boyd-Carpenter, J A Hutchison, Lt -Com Clark (E'b'rgh W.) Smiles, Lt.-Col Sir W
Bracken, Rt. Hon Brendan Hutchison, Col. J. R. H (Scotstoun) Smith, E Martin (Grantham)
Braine, B Jennings, R. Smithers, Peter H. B (Winchester)
Braithwaite, Lt.-Comdr [...] G Jones, A. (Hall Green) Spearman, A C M
Brooke, H. (Hampstead) Joynson-Hicks, Hon L W Spens, Sir P (Kensington, S.)
Browne, J N (Govan) Lambert, Hon G Stevens, G P
Buchan-Hepburn, P G [...]1 Lancaster, Col C G Stoddart-Scott, Col M
Burden, Squadron-Leader F A. Legge-Bourke, Maj. E A H Strauss, Henry (Norwich S)
Butler, Rt Hon R A (S'ffr'n W'ld'n) Lennox-Boyd, A. T Stuart, Rt Hon J (Moray)
Channon, H Linstead, H N Summers, G S
Clarke, Col. R. S. (East Grinstead) Llewellyn, D Sutcliffe H
Clarke, Brig. T. H. (Portsmouth, W.) Lloyd, Maj Guy (Renfrew, E.) Teeling William
Conant, Maj. R J. E Lockwood, Lt.-Col. J C Thomas, J P L (Hereford)
Cooper, A E (Ilford, S.) Low, A R. W Thompson, K P (Walton)
Cooper-Key, E. M. McAdden, S. J Thompson, R H M (Croydon, W.)
Craddock, G B (Spelthorne) McCallum, Maj D Thornton-Kemsley, C N
Cranborne, Viscount Macdonald, Sir P (I. of Wight) Thorp, Brigadier R A
Cross, Rt. Hon. Sir R Mackeson, Brig. H R Touche, G C
Crosthwaite-Eyre, Col O E McKibbin, A. Turton, R H
Crouch, R. F McKie J H. (Galloway) Turner, H F L
Crowder, F P. (Ruislip—Northwood) Maclean, F H. R. Vane, W M F
Davies, Nigel (Epping) MacLeod, Iain (Enfield, W.) Vaughan-Morgan, J K
Deedes, W. F. MacLeod, John (Ross and Cromarty) Vosper, D F
Digby, S. Wingfield Macmillan, Rt. Hon Harold (Bromley) Wakefield, E B (Derbyshire, W.)
Dodds-Parker, A D Maitland, Comdr J. W Walker-Smith, D C
Donner, P W. Manningham-Buller, R E Ward, Hon G R (Worcester)
Drewe, C Marples, A E Ward, Miss (Tynem[...])
Dugdale, Maj Sir T (Richmond) Marshall, D. (Bodmin) Waterhouse, Capt C
Duncan, Capt J A L Maude, A E U (Ealing, S.) Watkinson, H
Duthie W S Mellor, Sir J. Wheatley, Major M J (Poole)
Fletcher, W. (Bury) Molson, A H E White, J. Baker (Canterbury)
Fort, R. Morris, R Hopkin (Carmarthen) Williams, C (Torquay)
Foster, J G. Morrison, Maj. J. G (Salisbury) Williams, Gerald (Tonbr[...])
Fraser, Hon. H C. P. (Stone) Nabarro, G Williams, Sir H. G (Croydon, E.)
Fraser, Sir I. (Lonsdale) Nicholls, H. Wills, G
Fyfe, Rt. Hon Sir. D. P M Nicholson, G. Wilson, Geoffrey (Truro)
Galbraith, Cmdr T. D (Pollok) Nugent, G R. H Wood, Hon. R
Galbraith, T. G. D. (Hillhead) Nutting, Anthony York, C.
Garner-Evans, E. H. (Denbigh) Oakshott, H D
Gridley, Sir A Ormsby-Gore, Hon. W D TELLERS FOR THE AYES:
Grimston, R. V. (Westbury) Mr. Selwyn Lloyd and
Mr. J. H. Hare.
Acland, Sir Richard Brook, D (Halifax) Crawley, A.
Allen, A C. (Bosworth) Brooks, T. J (Normanton) Darnes, P.
Allen, Scholefield (Crewe) Brown, George (Belper) Darling G. (Hillsboro')
Anderson, A. (Motherwell) Brown, T J. (Ince) Davies, A Edward (Stoke, N.)
Awbery, S S. Butler, H W (Hackney. S.) Davies, Harold (Leek)
Ayles, W. H. Callaghan, James Davies, R J (Westhoughton)
Bacon, Miss A Carmichael, James Davies, S O (Merthyr)
Baird, J Castle, Mrs. B A. de Freitas, Geoffrey
Balfour, A Champion, A J Deer, G
Barnes, Rt Hon A J Chetwynd, G R Delargy, H J
Bartley, P Clunie, J Diamond, J.
Bevan, Rt Hon A (Ebbw Vale) Cocks, F S Dodds, N N
Bing, G H C Coldrick, W Donnelly, D
Blenkinsop, A Collindridge, F Driberg, T E N
Blyton, W R Cooper, J (Deptford) Dugdale, Rt Hon J (W Bromwish)
Boardman, H Corbet, Mrs F K (Peckham) Dye, S
Braddock, Mrs E M Cove, W G Ede, Rt Hon J C
Brockway, A Fenner Craddock, George (Bradford, S.) Edwards, John (Brighouse)
Edwards, W J (Stepney) Lee, F (Newton) Roberts, Goronwy (Caernarvonshire)
Evans, Albert (Islington, S.W.) Lever, L. M (Ardwick) Robertson, J. J. (Berwick)
Fernyhough, E. Lewis, A. W. J. (West Ham N.) Rogers, G H. R. (Kensington, N.)
Field, Capt. W. J Lindgren, G. S Ross, William (Kilmarnock)
Finch, H. J. Logan, D. G. Royle, C
Follick, M MacColl, J. E. Shackleton, E. A. A
Foot, M. M. McGhee, H. G. Shurmer, P L E
Forman, J. C. McGovern, J. Silverman, J (Erdington)
Fraser, T (Hamilton) McInnes, J. Silverman, S. S (Nelson)
Gaitskell, Rt. Hon. H I N McKay, J (Wallsend) Simmons, C J
Ganley, Mrs. C. S McLeavy, F. Slater, J.
Gibson, C. W. MacMillan, M. K. (Western Isles) Smith, H. N. (Nottingham, S.)
Gilzean, A. MacPherson, Malcolm (Stirling) Sorensen, R. W.
Gooch, E G. Mainwaring, W. H. Sparks, J. A.
Gordon-Walker, Rt. Hon. P C Mallalieu, J. P. W. (Huddersfield, E) Strachey, Rt. Hon. J
Greenwood, Anthony W. J. (Rossendale) Mann, Mrs J. Sylvester, G. O.
Grenfell, D. R. Manuel, A. C. Taylor, H B (Mansfield)
Grey, C F Mathers, Rt. Hon. George Taylor, R. J. (Morpeth)
Griffiths, D. (Rother Valley) Mellish, R. J. Thomas, D. E. (Aberdare)
Griffiths, Rt. Hon. J (Llanelly) Messer, F Thomas, George (Cardiff)
Griffiths, W. D. (Exchange) Middleton, Mrs. L. Thomas, I. O. (Wrekin)
Gunter, R. J. Mikardo, Ian Thomas, I. R (Rhondda, W.)
Hale, J. (Rochdale) Mitchison, G. R. Thorneycroft, Harry (Clayton)
Hale, Leslie (Oldham, W.) Moeran, E W. Thurtle, Ernest
Hall, J. (Gateshead, W.) Monslow, W. Tilney, John
Hall, Rt. Hn. W. Glenvil (Colne V'll'y) Moody, A. S. Tomlinson, Rt. Hon. G
Hamilton, W. W. Morgan, Dr. H. B Tomney, F
Hannan, W. Morley, R. Turner-Samuels, M
Hardman, D. R Mort, D. L Ungoed-Thomas, A. L
Hardy, E. A. Moyle, A. Vernon, Maj W. F
Hargreaves, A. Neal, H. Viant, S. P.
Hastings, Dr. Somerville Noel-Baker, Rt. Hon. P J Wallace, H. W
Hayman, F. H O'Brien, T Watkins, T. E
Herbison, Miss M. Oldfield, W. H. Weitzman, D
Hewitson, Capt. M. Oliver, G. H. Wells, W. T (Walsall)
West, D. G.
Holmes, H E (Hornsworth) Orbach, M. Wheatley, Rt Hn John (Edinb'gh, E)
Houghton, Douglas Padley, W. E. White, H. (Derbyshire, N E)
Hoy, J. Paling, Rt. Hon. Wilfred (Dearne V'lly) Whiteley, Rt. Hon. W
Hudson, J. H. (Ealing, N.) Paling, Will T. (Dewsbury) Wigg, George
Hughes, Emrys (S. Ayr) Pargiter, G. A. Wilkins, W. A
Hughes, Hector (Aberdeen, N.) Parker, J. Willey, F. T. (Sunderland)
Irving, W J. (Wood Green) Pearson, A. Willey, O. G. (Cleveland)
Isaacs, Rt. Hon. G A. Peart, T. F. Williams, D. J (Neath)
Jeger, G. (Goole) Popplewell, E. Williams, Ronald (Wigan)
Johnston, Douglas (Paisley) Porter, G. Wilson, Rt. Hon J H. (Huyton)
Jones, Jack (Rotherham) Price, M. Philips (Gloucestershire, W.) Winterbottom, I (Nottingham, C.)
Jones, William Elwyn (Conway) Proctor, W. T. Yates, V. F.
Keenan, W. Pursey, Comdr. H. Woodburn, Rt. Hon. A.
Kenyon, C. Rankin, J. Woods, Rev. G. S
Key, Rt. Hon. C. W Reeves, J.
King, H M. Reid, W. (Camlachie) TELLERS FOR THE NOES:
Kinghorn, Sqn.-Ldr. E Rhodes, H. Mr. Bowden and
Kinley, J. Richards, R Mr. Kenneth Robinson.
Lang, Rev. G. Robens, A.

Motion made, and Question proposed, "That this House do now adjuourn."—[Mr. R. J. Taylor.]