§ Motion made, and Question proposed, "That this House do now adjourn."—[Mr. T. G. D. Galbraith.]
§ 12.14 a.m.
§ Mr. J. Grimond (Orkney and Shetland)
I want to discuss the capital charges scheme of the North of Scotland Hydro-Electric Board. Since the policy of the Board in regard to these charges must reflect and also influence their policy on future expansion, I want to say a word about that, too.
I had, perhaps, better make clear my attitude towards the Board. I am a wholehearted supporter of it. It has done, and I know will continue to do, wonderful work throughout the Islands and Highlands, and I should like to thank the Board, and particularly its manager and secretary, and perhaps more particularly the local manager and staff in the Orkneys and Shetlands, for the service they give and for their unfailing courtesy and the great attention they always give to the innumerable questions which a rather tiresome Member of Parliament puts to them.
I feel that we have every right to ask for information, particularly about the future of this Board and the policy it is to pursue. From time to time, there are bound to be genuine differences of opinion over its policy, and it is the duty of this House which, after all, corresponds to the shareholders of a company, to ventilate those different views. I think that it is doubly important to do this where, as is the case here, the Government have a direct influence on the matter.
Let me now turn to the history and purpose of the Board. It was set up in 1943, and the Act under which it was set up lays on it a specific duty toprovide supplies of electricity to isolated areas so far as is practicable.1152 From this Act, and from the speech of the right hon. Thomas Johnston, who introduced the Bill, as it then was, on behalf of a Government of all parties, it is made clear that the duty of the Board is to supply electricity to the remoter areas of the Highlands and Islands, and that the Board was looked upon as instrument of development for those places, and not merely as a commercial undertaking.
Mr. Johnston devoted the opening part of his speech to an analysis of the distressing depopulation of many Highland areas, and spoke of industries which might have been located in those areas being developed in other lands; and he made use of the phrase, "the population rapidly bleeding to death."
Admittedly, the great hope of those who sponsored the Board was that cheap power would lead to industrial development; but these hopes have not been fully realised. There is no doubt that the drift of population to which I have referred can also to some extent be stopped by the provision of such advantages as electricity and water in the houses of the crofting districts. There is no doubt that electricity is a great boon to farmers, and crofters, and indeed, in some cases it is an essential form of help in providing the food we so badly need.
The Board, I think one can say, undertook its task of development with joy; it took a very wide view of its responsibilities, and all over the Highlands and Islands, cables went up and electric light and power came to ease the work of even the smallest crofts.
In those earlier days, no charge was made for connecting up the houses, and no guarantee was required. The Board radiated out from its main centres of generation and, as a result, in my own constituency, the houses round Kirkwall and on the main transmission lines to the west mainland of Orkney got electricity without any installation charge. These, of course, are some of the most populous and prosperous districts where life is easiest. The same thing happened through the Highlands and Shetland.
Then, as time passed, the Board found all its costs rising. Wages rose, cost of materials rose, and as an example of this I would mention that I understand that 1153 copper went from about £50 a ton in prewar days to more than £200. The cost of joining up individual crofts, always heavy, became crushing. I believe that each mile of local distribution line—including my own—costs something like £1,200, and at the end of it the consumption of electricity in some cases was very small. At the same time the Board, took over the obligations of the Grampian Scheme, and had its area of operations considerably extended.
The Board was faced with having to make a decision. It had to make ends meet. It could not go on supplying electricity at a loss, and had to stop expansion or else put up its charges in some way. Its dilemma was well set out in its pamphlet entitled, "Contributions, Guarantees, and Costs of Distribution in Agricultural Areas." The Board could raise tariffs, or else ask consumers in outlying areas to make a contribution to the rising costs of installation. At first, this took the form of only asking for a guarantee that the householder would pay for a certain amount of electricity, but then the Board took the second of the two courses I have just mentioned. Very soon a contribution was required.
I am anxious to do full justice to the Board. It had very full reasons for its decision. It was, I believe, connected with the decision of other electrical companies; they went to great trouble to minimise any hardship it might cause; they kept on extending electrical supplies in the face of great difficulties, which were increased by the high cost of borrowing Nevertheless, I must confess that I think. on balance, they made a wrong decision. It would have been more in the spirit of their constitution, more in the interests of the Highlands, and fairer and made administration much easier, if they had chosen the first alternative; if they had obtained some Government assistance, which I think would have been justified on the ground of higher costs and higher interest charges, and if they had then raised the tariff slightly over the whole of their area.
Both the Secretary of State and Mr. Thomas Johnston have been kind enough to explain to me at some length why they did not choose this alternative. I can only say that, while I appreciate the points they make their arguments do not 1154 convince me. What are the arguments in this matter? On the ground of retaining the population of the Highlands and Islands it was most unfortunate that the increase fell on the more remote areas, on the very districts which had been losing their population fastest.
In my own constituency Kirkwall and Lerwick have grown; these towns and the surrounding districts have many comforts and amenities and the people flock into them; they get the light put in free. But the outlying parishes, which, to use Mr. Johnston's own words when introducing the Bill, are the people who are bleeding to death, have to pay. Secondly, while the Board took on new responsibilities under the 1947 Act when its area was extended, they also acquired a much greater population over which the extra burden could be spread; and I believe that if it were evenly spread over this whole area, including Dundee and Aberdeen, the extra would be very small.
§ Mr. Gerald Nabarro (Kidderminster)
Does the whole of the hon. Gentleman's argument come down to the fact that he is advocating standardisation of electricity tariffs from John-o-Groats to Land's End? What we call postalisation?
§ Mr. Grimond
Perhaps I might continue. I have very little time. Surely, if the Government are to spend any money on Highland development, here is a direction in which assistance would be well merited, and I think put to very good use.
Thirdly, from the Board's own point of view I am sure they have complicated their task enormously, and to some extent, I am afraid, impaired their goodwill. The local managers in Orkney and Shetland have worked very hard to make the guarantee or charge acceptable, but I must say I think they have a hard job, and there is no doubt that there is a wide feeling of dissatisfaction which the unfairness of the scheme is bound to create. It is unfair that a man in one parish, who happened to be put on the line earlier, should get his electricity put in free, while his neighbour in another district, who merely happened to come later in the scheme of things, has to pay a charge. 1155 There are two arguments of the Board's with which I should like to deal shortly. First, it is said by them that the capital contribution is very small. I agree it is nothing like the full cost of installation; it seems to vary from place to place, no doubt as costs vary. But though it may be small, and seems small to the comparatively rich areas of the south, it is not a small matter for the ordinary crofters and fishermen.
I sometimes think it is not realised down here how poor some of the people in the Highlands area are. In Bressay it works out at £10 a room; there are many districts in which it comes to £1 a quarter spread over 10 years. These are fairly large charges for some crofters, and I am very sorry to say that the charge is quite enough to be another little extra inducement to people to leave the Islands in the more remote areas and migrate to the towns.
It is argued that even with the additional charges electricity is cheaper than oil lamps. That seems to me a false argument. If I complain to a manufácturer of motor cars about the prices which he charges I do not expect to be told that a coach and four would be more expensive still. I ask the Government, therefore, if they will look at this matter again and see whether they can help the Board and the people whom it serves, in so far as they need it, with these capital costs and, with the Board, work out some fairer system of charges. I am aware, of course, that there is assistance available to farmers and crofters under the agricultural Acts. It would be interesting to know how many people have been helped with the installation of light and whether the assistance has been effective and can be extended.
Then there is the wider aspect of the matter. Can the Government give us an assurance about the future of electricity supplies to the remoter areas? Is the Board to be encouraged to continue with an imaginative policy, or is it to be cut back? There is some apprehension that high costs and what I may be allowed to call the commercial outlook may slow up or stop development. I am aware that it was never to be 100 per cent. and every croft to be connected up. But in my constituency there are big islands, such as Hoy, Shapinsay, Rousay and the North 1156 Isles of Orkney and Whalsay, Yell and Unst, in Shetland, which certainly look forward to getting light and power. Can the Parliamentary Secretary say when that will be and on what terms? There are still big landward areas in Orkney, Shetland, and other islands and on the mainland which are clamouring for the light. But none of these areas can pay high capital charges. If the charges are increased it will defeat the scheme completely as far as they are concerned.
I congratulate the Board on its decision to go down into Burray and South Ronaldshay free of capital charge. I welcome their progress in the West Mainland of Shetland, but I should like some assurance from the Government about the remaining areas. I should also like to know whether the Government have any new suggestions for the attraction of light industry, which was one of the original purposes of the Board. This is particularly important in the small Highland burghs. Earlier hopes have not been fully realised.
I have no time to go into other aspects of the case. I want to finish by saying again what I have said several times before. It is that it is no good treating the Highlands like Glasgow or London, Lancashire or Middlesex. They are totally different and they need different treatment. I hope and believe that Ministers know this, but I sometimes fear that they are in the grip of a machine and that it is a Whitehall machine. Over roads, transport, land development, water and light I have the feeling that the machine is determined to treat Shetland like Sussex, and Kirkwall like Manchester. I hope that it will not be said tonight that, after all, the Board has done just what the Southern Electricity Board has done in its area.
I do not believe that we have begun to develop the Highlands as we ought to do, or to come to grips in practical terms with this problem in rural areas. If we are to do it the Government must make up their minds to be a little revolutionary. If it is a question of money, money can be found for building an annexe to Westminster Abbey for the convenience of a few people for a few hours; it can be found for re-furbishing the Old Bailey at a cost of £500,000, and for building astronomical schemes on the Volta River.
1157 Let us face it. If we want food from the Highlands we must spend money. Money is being found for other purposes, some of which, in my view, are certainly no more worthy. If we cannot find some money soon we may never be able to do so. A Chancellor with money to give away is a mirage. I do not believe that the time will ever come when a Chancellor will be able to say, "The times are much better now, tell us what you want." Let us make up our minds to bring imagination and specialised knowledge to bear upon this great Highland area and get the best out of it by a policy designed for its needs and potentialities; and to look at it now not with eyes used to looking at London, or the different conditions of the city, but with eyes which are paying attention to the particular needs and potentialities of this district, and the will to draw out of it the contribution which it can make to the economy of the country.
§ 12.30 a.m.
§ Major D. McCallum (Argyll)
I want to intervene for only a few moments. I should like to congratulate my hon. Friend the Member for Orkney and Shetland (Mr. Grimond) on having had the, opportunity to raise the question of the Hydro-Electric Board's charges.
There is one point I should like to mention, and that is, that on recent occasions when one of the Board's schemes has been opened, or there has been some function in connection with the Board, someone, or a Press report, has taken the opportunity—I believe unwisely—to suggest that the Board will lose some of its authority. I believe that that is wrong. Ever since the Board was started the idea was that it should remain the responsible authority under the Secretary of State, an autonomous organisation carrying out what it set out to do—not only to supply electricity, but to help to develop the Highlands. I hope that the Minister will refute the suggestion that the Board is to lose its authority.
§ 12.32 a.m.
§ The Joint Under-Secretary of State for Scotland (Mr. Henderson Stewart)
It is a good thing for Orkney and Shetland, and for the country as a whole, that the hon. Member for Orkney and Shetland (Mr. Grimond) has raised this matter, because although it applies directly to 1158 the constituency which he represents it affects the whole of the Highlands and I am glad to have the opportunity to deal with it.
May I say at once, in answer to my hon. and gallant Friend the Member for Argyll (Major McCallum) that I, too, regret that any suggestion should be made publicly that the Government have in mind any plan designed in the slightest degree to weaken the authority, or to alter the duties, of the Scottish Hydro-Electric Board. Nothing of the kind has entered our minds. My right hon. Friend, has stated that at least once in the House, and I have repeated his assurance. I hope that that complete denial will satisfy my hon. and gallant Friend.
I am left with only a little more than ten minutes, and, therefore, I am not able, as I would have liked, to follow the hon. Member for Orkney and Shetland into the latter part of his speech, when he dealt with the fascinating problem, by and large, of the development of the Highlands. I agree that there is much needs to be done; I would almost agree that we need to be somewhat revolutionary in our approach. But I have only time tonight to deal with the precise matter which he invited me to take up, namely, the provision of electricity, especially the charges made for electricity in his part of the world.
The need to do everything possible to support industry, and to retain population, in Orkney and Shetland is admitted. It is the whole basis of the Government's policy for the Highlands and Islands. The population in Orkney and Shetland has been falling, though on the mainland of Orkney it has risen in the last 10 years. The supply of electricity is a major contribution to the steadying of population and the advancement of the general welfare of the people. It is for that reason that the Hydro-Electric Board was given the duty originally, and every Government since has confirmed it, of co-operating in measures for the economic development and social improvement of those areas. That is its duty now, and I hope it will continue to be.
As the hon. Gentleman knows, it is expensive to do that, and it becomes—
§ Mr. Stewart
I would gladly take up the interruption of my hon. Friend, but perhaps that would lead me away from this subject.
It is becoming increasingly difficult for the Board to carry out what was its original intention. In Orkney and Shetland it is particularly so because it is not hydro-electric power that is involved. Electricity can only be provided there out of diesel oil engineering plants and that has to be carried long distances, the oil is exceedingly expensive and the costs of distribution, including material like copper, have risen almost beyond counting.
In face of these difficulties the Board has made remarkable progress. I was delighted to hear the tributes paid by the hon. Member to the Board, the local managers and all those associated with the work, and, of course, in those tributes I heartily join. When the Board took over its duties only 16.8 per cent. of the potential consumers in Orkney and 25 per cent. of the potential consumers in Shetland had supplies. The percentage is now 54 per cent. in each county, and when the supplies which have been authorised have been given the percentages will be 62.8 Orkney and 64.6 in Shetland. If one takes the mainland of these areas, it is 87.6 in Orkney and 72.7 per cent. in Shetland. These are fairly good figures. In nearly all these cases, no connection charges were made or will be made.
In the case of supplies that have still to be authorised, charges are now going to be made, and that it what the hon. Member for Orkney and Shetland is complaining about. The cost of giving supplies in outlying areas is so high that the Board cannot afford any longer to meet the whole of the loss entailed. It is at present meeting at least three-eighths of the loss, which is not a bad proportion—not far short of half the loss involved in providing outlying supplies throughout the area. In Orkney and Shetland the Board's contribution to the cost of such supplies last year amounted to £50 and £30 respectively to each consumer, which is not negligible.
In those circumstances, the Board has decided to make a capital charge to each new consumer, which does not vary from house to house. There is a standard 1160 charge of £1 per room per annum for 10 years, with a maximum of £10 per annum. For the average four-roomed house the occupant will have to pay £40 over a period of 40 years. I cannot think that that is an excessive charge to pay. The practice of making a capital charge is not levied exclusively on Orkney and Shetland. Capital charges are made in the South-east and South-west of Scotland and in parts of England. It would be difficult to justify giving Orkney and Shetland a privilege which no other citizen in any other part of the country is able to enjoy.
The Hydro-Electric Board could not continue to provide outlying connections in Orkney or Shetland or in any other parts of its area without a substantial increase in charges to its consumers generally. That is what the hon. Member suggested should be done. He said that other people should be invited to pay for supplying these outlying parts. That is not a very easy thing to put over. It is not a very easy proposition for other consumers to accept. Other consumers in the Highlands have twice had their charges raised by 10 per cent. in recent years. The suggestion about Government grants, which was the other alternative the hon. Gentleman put to us, would not do either, because it would involve legislation, and it would not be in order to discuss that tonight. It would be difficult legislation to get through in any case.
But there are two other ways in which help could be given. Under the Hill Farming and Livestock Rearing Acts a farmer may apply for grants for installing an electricity supply on his farm if it forms part of a comprehensive improvement scheme, and the Government can advance up to 50 per cent. of the initial cost of the installation. I am told that of all the applicants in respect of whose farms improvements schemes have been approved, only two in Shetland have asked for the installation of electricity, and those require private generating plant. Of the cases still under consideration there are seven proposed schemes in Orkney providing for the installation of electricity. The hon. Gentleman's constituents might take note of these Acts, and make more use of them.
There are two other Acts, the Small Landholders Act and the Agriculture 1161 (Scotland) Act, 1947, which provide useful assistance. Under the former, landholders and cottars may receive from the Government loans on favourable terms for installing electricity; and, in certain circumstances, may qualify for a grant of 50 per cent. of the cost under Section 77 of the second Act. So far, under neither Act have any grants been made in Orkney. In Shetland, out of 70 schemes for improvements which have been submitted only three involve electricity supply, and grant has been given 1162 in these cases covering the wiring of the houses concerned.
Summing up, in the present strained circumstances I think that the Board is justified in its action, but I commend to the hon. Gentleman the possibilities of the various Acts I have mentioned, in which perhaps his constituents could find considerable aid and relief.
§ Question put, and agreed to.
§ Adjourned accordingly at Seventeen Minutes to One o'Clock a.m.