§ Order for Second Reading read.
§ 3.56 p.m.
§ The Minister of Fuel and Power (Mr. Aubrey Jones)
I beg to move, That the Bill be now read a Second time.
This Bill had its genesis in the Herbert Report. As the House knows, the Herbert Committee was the first outside inquiry established by a Government into a whole nationalised industry. It is perfectly true that we had the Fleck Committee for the coal industry, but that was set up by the National Coal Board itself. In addition, there was the Chambers Committee, to inquire into London Transport, but that was only part of a nationalised industry. This is the first Government-instituted inquiry into an entire nationalised industry.
In the past, both sides of the House have expressed their belief in the outside inquiry into a public industry. As a matter of fact, I am not sure that the idea did not originate with hon. Members opposite, and certainly the right hon. Member for Lewisham, South (Mr. H. Morrison), when he was identified with these matters, expressed his belief in the outside inquiry. On behalf of this Government I should like to say that we, too, believe in the outside inquiry. After all, a nationalised industry is sheltered from the harsher commercial winds to which an ordinary business concern is exposed, and the outside inquiry can be a means of countering the too great sense of comfort and cosiness which might otherwise result.
Not that any of us would want a nationalised industry to be under a permanent or a continuous state of inquisition. I do not know how many hon. Members have seen a recent American film, "The Solid Gold Cadillac." It is a film about a big business executive in the United States who is invited by the President to take over the Portfolio of Defence. Having spent some time in Washington he is visited one day by his late secretary, a quite irresistible creature, and it inevitably happens that he pours out his troubles to her and bewails the fact that he always has to answer questions before Congress on why he does not get things done. She asks, quite innocently, "Why don't you get things done?" He answers 939 "Because I am always answering questions before Congress."
I hope that we do not want the nationalised industries always to be answering questions, any more, I hope, than we want Ministers always to be answering questions. We want them to get things done, but as a contribution to getting things done an inquiry from time to time, every seven to ten years, can, I think, be a helpful contribution. That is not the same thing as a running fire of daily criticism or inquisition.
There is, in fact, a very good reason why we should pay attention to the findings of the Herbert Committee. I do not mean merely that the Herbert Committee produced a valuable Report. It did, and it did it with expedition and thoroughness, and I should like to pay my tribute to the Committee. I mean more than that. The electricity supply industry is one of the fastest growing things in the entire British economy. The demand for electrical power is increasing by about 9 per cent. a year, and in the last ten years the capacity of the industry has doubled—this in times of financial stringency and when we are still only on the threshold of automation and nuclear power.
It is very natural, in these circumstances, to ask this question: however appropriate the organisation of this industry may have been on the inception of nationalisation ten years ago, is it appropriate now, having regard to the swiftness of this development, and is it likely to be appropriate over the next ten to fifteen years? Hon. Members opposite are the authors of the 1947 Act, but I should like to suggest that it would be very wrong, even in the pride of authorship, not to put that question and try to answer it objectively.
This, in effect, is the question which the Herbert Committee asked itself. Its answer was this: broadly speaking, over the last ten years this industry has done extremely well. It has done extremely well, but the Herbert Committee diagnosed a defect in its organisation, and it thought that this defect might tell even more forcibly in the future than in the past, and might militate against the best possible performance of this industry over the next ten to fifteen years.
940 The defect as diagnosed by the Committee is this. Here is the Central Electricity Authority, saddled by Statute with two functions. It generates electricity and supplies it in bulk, and, at the same time, it exercises a general responsibility over the entire industry. Even at the best of times I think that I should find these two functions—generation, on the one hand, and, on the other, responsibility for the entire industry, production and distribution—somewhat ill-matched. Why, for instance, should the Authority responsible for the entire industry be identified with one side of the industry rather than another, and, if it has to be identified with one side, why should it be identified with the producing side, the side which is, in fact, the furthest from the consumer? On the best interpretation, I should find these questions difficult to answer.
But at this time of all times I suggest that there is a particular reason for looking critically at this odd assortment of functions. In the circumstances in which we now find ourselves, there is added to these two functions one other. There is now added to the task of generation and the responsibility for the entire industry the nuclear power programme. If I were a classicist I should be driven to describe this as piling Pelion on Ossa. Not being a classicist, I can only say that it seems to me that this is a bit much.
Earlier this afternoon I promised to make a statement to the House on the nuclear power programme after the Christmas Recess. I will not now say anything more about it, except to repeat that the Government are anxious to move as fast and as far as we practically can in this matter. The whole national situation absolutely demands it. But I hope that no one in this House will make the mistake of regarding nuclear power as a genie, so to speak, out of an Arabian tale, which can come to our aid without any effort at all on our part. It can come to our aid, but efforts are required by us; and, in particular, if we are to obtain all the benefits of nuclear power, we as a country must be prepared to undergo the sacrifice which the tremendous investment necessary for nuclear power requires. On behalf of the Government, I would only say that we are prepared to pursue policies which will make possible this great amount of investment.
941 Meanwhile—and this is the aspect which is germane to our debate today—it is, I suggest, important not merely to double or treble the figures on paper, it is equally important to speed up the operation of the machine. The machine is the electricity supply industry, and it is the diagnosis of the Herbert Committee that, as a result of this over-concentration of function which I have described, the machine is ticking too slowly.
I would give only one example of this. To build a conventional power station in this country takes about seven years from inception to operation. Calder Hall, built by the Atomic Energy Authority, took three and a half years to build. There were, of course, special circumstances obtaining in the case of Calder Hall. There were privileges facilitating its construction, and the scheme did not have to be fitted into an elaborate national plan of power stations. None the less, this disparity is, I suggest, too great. If we are to speed up the nuclear power programme which our circumstances require, this time must be abridged.
There is, in the light of the Herbert Report, only one way of doing that, and that is to break down this over-concentration of functions, to make each one of them more manageable, and to entrust it to a body which can give undivided attention to it. This is the aim of the Bill. The first thing the Bill does is to constitute the function of generation and bulk transmission as a function on its own and to give responsibility for it to a generating board appointed by the Minister. This is fully in accord with the recommendation of the Herbert Committee.
I grant that it may seem rather a burden on hon. Members to have to legislate to take what is, in essence, a comparatively simple step, but there it is. When functions have been married and united by Statute, if the marriage and the union does not turn out to be too happy, the divorce can come about, I am afraid, only through Statute.
§ Mr. James Callaghan (Cardiff, South-East)
Does the right hon. Gentleman then reject the view that it would be possible to set up a generating board, divorced from the management of the 942 Central Electricity Authority, without legislation?
§ Mr. Jones
Yes, Sir. It would have been possible to establish a generating sub-department of the Central Electricity Authority. That would be a sub-department appointed by the Central Electricity Authority, with the Authority still obliged by Statute to discharge the two functions of generation and the supply of electricity.
§ Mr. Jones
It would have been the Authority itself. The statutory union of function can be separated only by Statute.
The Bill does not lay down how the Generating Board, when constituted, can do its work. Indeed, it would not be proper to lay it down in a Statute. That is something which the Board must ultimately judge for itself. I hope, however, that the Board, if and when it comes into being, will pay particular heed to one suggestion by the Herbert Committee, and a suggestion which the Government for their part endorse. It is the suggestion that conventional stations not incorporating revolutionary features should be delegated to the divisional controllers, so that the Generating Board for its part can be free to concentrate on the more advanced stations; and at this stage of time the more advanced stations are, of course, the nuclear power stations. It is the intention of the Government, when making appointments to the Generating Board, to reflect this intention that the Board shall concentrate on the nuclear power programme.
I was today asked by the hon. Member for Cleveland (Mr. Palmer) a Question on the relationship between the Central Electricity Authority and the Atomic Energy Authority. I should now like to tell the hon. Member that I think it vital for the proper prosecution of the nuclear power programme that a relationship of cordiality should exist between both bodies. The Government take the view that the best way of promoting this end is to provide for some element of common membership between both organisations. For instance, two full-time members of the Atomic Energy Authority might be part-time members of the Generating Board, and vice versa.
943 The Bill does not provide for this, if only because, I hope hon. Members will agree, Ministers can be faithful servants of this House without having their hands tied too closely. For the sake of giving proper discretion to the Minister, this provision does not feature in the Bill, but it is the intention. It equally explains why the maximum membership of the Generating Board is laid down in the Bill at 10. The purpose of this number is to provide ample opportunity to the Minister to appoint to the Board part-time members with general industrial experience, and, in particular, with nuclear power experience.
§ Mr. Arthur Palmer (Cleveland)
When will it be possible for a corresponding appointment to be made to the Atomic Energy Authority?
§ Mr. Jones
I agree that a similar appointment to the Atomic Energy Authority gives rise to a little difficulty, in that it will require an amendment of the Statute governing the Atomic Energy Authority, but that is something that we might consider at another stage.
The first step, therefore, is to establish a Generating Board, appointed by the Minister. There will then be one Generating Board covering the whole of England and Wales and 12 selling boards distributing electricity in the 12 areas. What, then, shall be the status of these several boards? Shall they be as free as possible, subject, of course, to their responsibility to the Minister, or shall their freedom be restricted in some way or other?
The standpoint of the Herbert Committee on this aspect is perfectly clear. The Herbert Committee registered a plea—I do not think it would be an exaggeration to describe it as a heartfelt plea—for greater freedom for individual boards; and I must say that I am not surprised. Looking at the 1947 Act in retrospect, the Statute seems to me to be a little confused. It hums and haws, and it fidgets. On the one hand, it purports to give to the area boards freedom, but, on the other hand, it takes it away again.
For instance, it lays down that the boards shall be appointed by the Minister. If ever there was a symbol of their autonomy or intended autonomy, it is 944 appointment by the Minister. On the other hand, before making these appointments, the Minister is under a statutory obligation to consult the Central Electricity Authority. At the same time, while the Minister appoints these boards, the Central Elecricity Authority has a general responsibility over them.
To whom are these boards ultimately responsible? Is it to the Minister, who appoints them, or is it to the Central Electricity Authority? There is no clear answer to this question. In other words, the line of responsibility is confused; and if ever there is a bar to the maximum efficiency, it is to confuse the line of responsibility.
The Bill endeavours to clarify this confusion and it does it in two ways. First, it relieves the Minister of the statutory obligation of consulting anyone at all before making his appointments to individual boards. Secondly, it imposes on each board a genuine financial responsibility. As the Statute of 1947 now stands, it is the industry as a whole which is required to pay its way. I suggest that this requirement is not conductive to the maximum efficiency.
Hon. Members can imagine the temptation. A board which is individually in deficit has to put its house in order, but how tempting for it to take refuge in the thought that, after all, the need is not as urgent as all that and that the industry as a whole is in balance. As I say, I cannot regard this temptation as conductive to the maximum efficiency. Under the Bill, therefore, each board henceforth will be responsible to the Minister himself for making ends meet. If a board fails, it will no longer be able simply to "pass the buck".
§ Mr. Palmer
The Minister will not, I hope, be unaware that it is the Government's price-freezing policy which has forced into the "red" some of the area boards which were not in the "red" previously.
§ Mr. Jones
I am sorry that the hon. Gentleman should continue to be under a misapprehension on this point. I have on more than one occasion explained to the hon. Gentleman himself that it was the electricity supply industry, entirely on its own initiative and without any prompting whatever by the Government, which took the decision to freeze its charges for a whole year. All boards—the 945 Generating Board and the area distribution boards—will be brought up for the first time against the financial facts of life.
There remains one great question: what, then, shall be the organisation at the centre? We are all agreed that there must be something at the centre—
§ Mr. Gerald Nabarro (Kidderminster)
Before my right hon. Friend comes to the centre, as he is the sole person appointing all the members of the Generating Board and, I gather, the members of the 12 area boards also, will he say something about the reforms and the scale of salaries that he proposes in order to conform with the Herbert Committee's recommendation that such salaries should be on a commercial competitive basis?
§ Mr. Jones
If my hon. Friend exercises patience. I will deal with that matter before I finish.
All the boards will be brought up against the financial facts of life, and we have to turn to the question of what organisation there should be at the centre. For the first time, the Government depart from the recommendation of the Herbert Committee. The House will recall that the Herbert Committee suggested the establishment of an entirely independent body with no executive responsibilities but with the duty of supervision over the industry and with power to issue directions to the industry, subject to confirmation by the Minister. I must say that I found that rather an odd recommendation.
Let me recall the main theme of the Herbert Report. As I said earlier, it registered a plea for greater autonomy, and the counterpart of greater autonomy is, of course, a greater sense of responsibility. The boards must fairly and squarely face their tasks. Is it not likely to weaken their sense of responsibility if there is set up once again a further central body with a power of direction? Would not this further central body recreate the very weakness which the Herbert Committee found in the existing structure, namely, that, on the one hand, there is a pretence of autonomy and, on the other, the autonomy is taken away?
In addition—and it is pertinent to put this to the House, I think—there is an 946 objection of a constitutional nature to this recommendation of the Herbert Committee. Many of the functions which the Herbert Committee suggested should be entrusted to the central body are statutory functions of the Minister—for instance, the approval of capital programmes—and the Minister is, of course, responsible to Parliament for their exercise. What would the House say to me if I were to delegate these functions to an outside body and merely confirm what that outside body did? The House, quite rightly, would be indignant with me. For this constitutional reason, as well as for the reason of principle which I have given, the Government feel unable to accept this recommendation of the Herbert Committee.
If we reject this recommendation what do we put in its place? The Government take the view that there is only one answer to this question. It would, of course, have been quite possible—I grant this freely—to have set up an entirely integrated industry after the model, shall we say, of the Coal Board. However, that would not only be against the recommendations of the Herbert Committee in favour of greater decentralisation it would also flout the Act of 1947.
The 1947 Act rejected the idea of an integrated industry and set up boards appointed by the Minister with, as I say, a semblance of autonomy, even though the autonomy might be compromised. In other words, hon. and right hon. Gentlemen opposite, in their Act of 1947, took this first tentative step to freedom. Who am I now to say that they were wrong and that we ought to retrace this step? I do not think that they were wrong. I think that they were right. In that case there is only one thing to do, and that is to complete what the 1947 Act only half did, and to make the step to freedom longer and bolder. That is what the Bill does.
There is a very interesting contrast in structure between the nationalised electricity industry and the nationalised gas industry. The nationalised electricity industry came first in time and the nationalised gas industry came later. In both industries there is a number of boards, but in the electricity industry the boards enjoy—if I may put it as such—only half-hearted autonomy. In the gas industry they enjoy full autonomy. The 947 gas nationalisation Act came later in time, and I can only assume that the passage of time brought with it some access of wisdom. Indeed, I would remind the House that the Gas Act was piloted through the House by none less than the Leader of the Opposition. I hope, therefore, that hon. Members opposite will not quail where once he ventured to tread.
The Gas Act sets up no central body with executive responsibility. What it does is to collect the boards in council under independent leadership. The functions of the Gas Council are to advise the boards on the one hand, to advise the Minister on the other hand, and, lastly, to act as an agent in certain matters which can be best done collectively—for instance, the collective raising of finance and collective research.
What the Bill proposes for the electricity industry is a similar arrangement. In the Government's view the Electricity Council is the only form of central body which is fully consistent with the autonomy of the individual boards. I will give one example of the way in which the Council may operate. Take the very important matter of capital programmes. As now, a capital programme on the part of an individual board requires the Minister's approval.
Under the Bill, each board, before submitting its programme to the Minister, will first be required to submit it to the Council. The Council, and individual members of the Council, will express opinions on the programme and, no doubt, suggest modifications designed to ensure that the programme matches the programme of some other board. Having got the Councils' view the board will reflect on the form in which it ultimately submits its plan to the Minister. That is for the board itself to decide. The board itself is its own ultimate judge. The Minister, in considering the plan, in deciding whether or not to give his approval, will, of course, have knowledge of the opinions expressed on the plan in the Council.
In other words, the ultimate control will rest with the Minister, but consistently with this an individual board will none the less enjoy full autonomy. Incidentally, the possibility thus opened to the Minister of contrasting and comparing 948 different opinions on the plan of a board will, I hope, give the Minister a more effective supervision over capital expenditure than he has now. I think that that is a much desired improvement in a very important direction.
That is the broad outline of the Bill, as far as its main provisions go. The date given in the Bill for the beginning of the new arrangement is 1st April, 1958. That date was chosen because, after all, it is the beginning of the financial year, but I think it vital that the new organisation, since it has to see the nuclear power programme through, should come into being as quickly as possible. I am, therefore, giving thought to the possibility of making the financial year coincide with the calendar year, and if I were to find this feasible as well as desirable, then it would be possible to start the new organisation on 1st January, 1958. If I decide in this direction, then, of course, I shall introduce an appropriate Amendment in Committee.
There are, of course, other provisions in the Bill, to which I refer only lightly. But I would mention the consultative councils. The Herbert Committee found they were doing good work in safeguarding consumers' interests, and I endorse that judgment. Hitherto, they have not had the power to study bulk supply tariffs as distinct from retail tariffs. Henceforth, under the Bill, that power will be given.
There are, of course, many recommendations in the Herbert Report which do not find expression in the Bill. They do not touch the formal structure of the industry, and, therefore, legislation would have been inappropriate, but they do touch the responsibilities of the individual boards and the efficiency with which they conduct their enterprises. I only hope that the individual boards will give due attention to those recommendations, affecting the recruitment of staff, promotion, tariff research, and so forth, and I hope that they will pay particular attention to the recommendation that the structure of charges should bear a closer relationship to costs.
I have said enough to show that the nuclear power stations will require tremendous capital sums and if, therefore, the sums are to be spent to the best possible advantage it is vital that more should be done to even out the load. I trust that individual boards will give full attention to the contribution which a proper 949 tariff structure can give to this objective of a better evening out of the load.
I should like to step outside the Bill and to see how the powers envisaged in it may operate, having regard to one very important recommendation of the Herbert Committee. The Herbert Committee propounded, in relation to the electricity industry, and, indeed, its remarks are relevant to all the nationalised industries, a most important doctrine. It suggested that the industry should shape its policies by the criterion of cheapness. The Herbert Committee said that even a nationalised industry is a commercial organisation and it ought, therefore, to supply its products as cheaply as possible. If, the Herbert Committee went on, the national interest seemed to conflict with the single-minded pursuit of the objective of cheapness, well then, the industry should have regard to the national interest only if directed to do so by the Minister. This is clearly a most important doctrine.
I should like to say that, even in my short acquaintance with the nationalised industries, I have noticed that the public make demands on them which they do not make on ordinary private commercial businesses. I will give one example only of this. Some time ago, my secretary and I were travelling in a train in a compartment labelled—I grant, a little over-ostentatiously—"Reserved for Minister of Fuel and Power." I observed a dear old lady perambulating up and down the corridor, carefully looking at this notice, and after a while, much to my consternation, she boldly walked into the compartment and confronted me. She said, "Now that the railways are nationalised and belong to the public, do you think it right that you two young men should have a compartment entirely to yourselves?" There was a distinction in her mind between what she would expect of a nationalised industry and what she would expect of private industry. Very often, I am afraid, this expectation takes the form of requiring a nationalised industry to bear in mind certain social considerations quite regardless of cost.
§ Mr. Jones
Take, for instance, transmission lines and overhead cables. I think we would all agree that on the face of it overhead cables and transmission lines can be destructive of amenity, but 950 since nationalisation there has been a much more insistent demand on the part of the public that, henceforth, the cables be laid below ground so that the amenities are preserved. To lay them below ground requires, of course, much greater cost, and it is right that the public should have regard to the fact of this greater cost. So far as the Herbert Committee's doctrine was a reminder of this, I think that it was a very salutary reminder.
Even so, it seems to me that the Committee expressed this doctrine with a little, shall I say, exaggerated severity. I am not at all sure that this division between what is in the commercial interests of industry and what is in the national interest is as neat as all that. I wish it were.
Today, the thing most in people's minds is nuclear power. Clearly, it is in the national interest to develop the indigenous and near-indigenous fuels to the utmost and to develop nuclear power at speed. It should be apparent that, if we have an eye to the commercial interest of the electricity supply industry, the capital cost is very great and the stations are untried. They entail, therefore, a risk. Nevertheless, in the long term, in the interests of the electricity supply industry itself, it is highly-desirable that it should have greater certainty over the sources of its raw materials.
In other words, I suggest that the longer the view that is taken, the more the narrow commercial interest and the national interest coincide. While I do not deny that the industry should bear in mind its own interests, I only hope that it will take the long and broad view.
§ Mr. Austen Albu (Edmonton)
Would the right hon. Gentleman apply the same argument to another industry in which materials are in very short supply, the steel industry?
§ Mr. Jones
Steel is a subject for which I no longer have any responsibility; indeed, I never did have.
May I refer to the question asked me by my hon. Friend the Member for Kidderminster (Mr. Nabarro). This Bill deals entirely with organisation, and organisation, I grant, is not everything. Men are quite as important as organisation if not, in fact, more important.
§ Mr. Jones
Ultimately, I should be the first to say that the efficiency of this industry must depend upon its ability to attract the very best industrial talent. I must add that I think that a great deal has to be done not only in this industry but in all the nationalised fuel and power industries to fortify and strengthen this ability to attract talent.
One of the reasons for the weakness, as the Herbert Committee said, and as the Fleck Committee said at an earlier point of time, is the great disparity in rewards at the top of a nationalised industry compared with those at the top of private industry. I very much regret that the financial and economic situation does not make it possible for the Government to act on this now; but, I would add, the Government are giving very serious thought to this matter and recognise and appreciate the force of the comments made by both Committees. More than that I cannot at the moment say.
May I say, in conclusion, that there is a very great difference between the Act of 1947 and this Bill. The 1947 Act created entirely new units of management and new areas of supply, and it required a great reorientation of attitude and loyalty on the part of all the men in the industry. There is no such transformation as that implicit in this Bill. The Bill effects the very minimum of disturbance. What it seeks to do is to bring the organisation into line with the needs of the times and to give the industry a new opportunity. This has become one of the most important industries of the country.
§ Mr. Jones
It is one of the most important industries in the country and it is to this industry, more than almost to any other, that we look to relieve us of our present too great dependence on overseas sources of industrial power. It would be most wrong of us, in these circumstances, to ignore the weakness of structure which the Herbert Committee diagnosed, and it is absolutely right to try to do all that we can to release to the full the potential initiative and enterprise of this industry. It is with this in mind that the Bill has been conceived and it is on this ground that I commend it to the House.
§ 4.40 p.m.
§ Mr. James Callaghan (Cardiff, South-East)
The Minister said that the genesis of the Bill was the Report of the Committee of Inquiry into the Electricity Supply Industry, better known as the Herbert Committee's Report. I think that I shall be speaking for all my hon. Friends, and maybe for hon. Members opposite, when I say that we all owe our thanks to the Committee for the most detailed, painstaking and, in some ways, exciting account of what has taken place in the industry over the last eight years. I read the Report with fascination. Even though I disagree with some of its conclusions—and in that I am not alone, for the Minister also did so today—nevertheless, the experiment of setting up the Committee was well justified. Our thanks are due to those who worked so extremely hard to gather together such a mass of information and present it in such an authoritative way.
This is the first investigation of the nationalised industries that has taken place. The Minister thought that it was necessary because the nationalised industries are sheltered by monopoly from the fierce winds of competition. I could take him up on that. I wonder how some of the other pampered darlings in the private sector of industry would emerge from such a detailed scrutiny as this. Do not let us pretend that the free winds of competition blow all the bureaucracy out of private enterprise.
Perhaps I know best among the nationalised industries the railways, and the bureaucracy and the barnacles that have accumulated in the railways in the seventy-five years of private enterprise would have taken any shipwright half a century to clear. This is known to exist in private enterprise and we could do with a scrutiny of this kind. If the Government feel like extending an inquiry of this sort into aspects of private industry, which are just as important in many cases to the success of the nation, they will not find any resistance from this side of the House.
The Herbert Committee's Report demonstrates the great success of the nationalisation of the electricity industry. I want, with permission, to place on record some of the facts which emerge from the last Annual Report and the 953 Herbert Committee's Report on this subject. Prices are, I understand, 32 per cent. above those of 1937–38. Is there any private industry that could make a comparable boast? The total profit since nationalisation, or surplus, as I think the industry prefers to call it, is £70 million, but the industry, we are given to understand, runs at a loss.
The output of electricity is nearly double what it was when the industry was taken over, but we were led to understand that the industry was then running down. New plant installed has increased capacity by 50 per cent. The industry has won nearly 3½ million more customers, but with a very small increase in staff. Indeed, there is a 30 per cent. reduction in the staff employed for every 1 million units of electricity sold.
Another point which will touch a sore spot with hon. Members opposite, I hope, is that the industry does not, according to the Herbert Report, use the taxpayers' money. These are not my remarks, but the words of the Herbert Committee. There is a record low figure of plant out of service for overhaul in the winter months. In the year that nationalisation became effective, 1948–49, 4.1 per cent. of the plant was out of service for overhaul during the critical winter months. This last year that had been reduced to 1.6 per cent. There was a record low figure for plant breakdown. At the beginning of nationalisation it ran at 13.5 per cent. Last year, it had been reduced to 8.5 per cent.
There has been a substantial increase in thermal efficiency. The Central Electricity Authority calculates that since nationalisation, because it gets more useful energy out of every lump of coal burned, it has saved over 23 million tons of coal, which would have cost the Authority £74 million. The Authority kept prices stable during the summer of 1956 to help the Chancellor to maintain his plateau. He, of course, has destroyed his plateau, but the Authority was able to keep prices stable.
The Herbert Committee, in paragraph 32 of its Report, said:… we desire to place on record our admiration for the zeal and devotion which has quite evidently been shown at all levels of the industry vesting day. …954 In the Committee's opinion, in paragraph 33,it would be quite wrong to call the industry inefficient.Again, in paragraph 32, the Committee stated:We are also most impressed with the serious efforts that have been made to build on the basis of the Act a new outlook upon labour relations.It also paid tributeto the enthusiasm and zeal with which a new esprit de corps has been built up.What a lot of myths crumble, what a lot of propaganda has gone down the river. Hon. Members opposite never believed it anyway, but it was goon enough to win the Election for them.
I know that hon. Members will not like it, but I have decided to refer to the verdict of the right hon. Member for Woodford (Sir W. Churchill), who speaks very authoritatively on these matters. In his famous Wolverhampton speech of 1949, this was the sort of nonsense he uttered, which helped hon. Members opposite to condemn nationalisation and to win the Election:All nationalised industries, I assert, have ceased to be services and assets to the public and become instead burdens upon it. The losses they make will he paid for either by the taxpayer through the Exchequer or by the consumer, who is also a taxpayer, in higher prices. In all cases a worse service is given to the public.Nationalisation, of course, had hardly started, but such was the doctrinaire, ideological approach of hon. Members opposite that they were prepared to condemn the experiment before they had even seen its conclusion. But never mind, hon. Members opposite won the Election. In winning it they did a great deal of damage to the morale of many people who served in the industry. Those people were extremely distressed by the attack. They resented bitterly the attacks not only upon this but on the other nationalised industries.
§ Sir Ian Horobin (Oldham, East)
I hope that we shall not spoil what is bound to be a technical debate by rehashing past events on one side or the other, but does the hon. Member really claim that the increase in the thermal efficiency of the electricity generating industry in the last few years has anything to do, one way or the other, with the question whether it was a private or a 955 nationalised industry? Surely it would have taken place under anything like decent conditions anyway, and it has been taking place all over the world whether the industries were nationalised or not. That has nothing to do with it one way or another.
§ Mr. Callaghan
I fully understand the hon. Member's cry from the heart. He does not like to have this rehash. Who ever likes to be reminded of his past mistakes?
§ Mr. Callaghan
The hon. Member must have been about the only Conservative candidate in the country who was exempt. We have all had to suffer from this kind of nonsense from the party opposite.
Before other examples from public enterprises are taken, we can ask hon. Members opposite to reserve judgment until they have seen the consequences of nationalisation, because the Herbert Committee's Report justifies what was done. Indeed, I much prefer the verdict of the Minister to that of the right hon. Member for Woodford. The Minister said earlier today that the industry has done extremely well.
§ Mr. Callaghan
I am not pursuing the point about thermal efficiency, because if the hon. Member has read the Herbert Report—
§ Mr. Callaghan
I am bound to accept that the hon. Member has read it. But if he understood it when he read it, he will have realised that the smallness of the units concerned with a great deal of generating and their obsolescence would have prevented this increase in thermal efficiency taking place. Many of those units have now disappeared.
§ Mr. Callaghan
I prefer to make my own speech, if my hon. Friend will allow me. I am sure that he will catch Mr. Speaker's eye later.
956 Before I leave this question of the success of the industry, I want to say one other thing which, I think, might well have come from the Minister. It is that the industry owes a very great deal indeed in the zeal, esprit de corps and enthusiasm which has been built up, to Lord Citrine and his colleagues. Those of us who have watched over a period of years know that he has made an outstanding contribution to the success of the industry. This former electricity apprentice who has risen to become chairman of what I suppose is the biggest authority of its kind anywhere has, by his own efforts, shown what can be done by persons of his calibre, integrity and character. I am delighted that he should have risen from the ranks of labour to achieve the high office that he has undertaken.
I should like to turn to some of the details of the Bill. It is, as the Minister said, broadly an organisational Bill concerned with structure. These are and subjects to argue about. I do not know whether I would go so far with the Minister as to assume, if indeed he did, that the men matter more than the structure. I put it in this way: that the men concerned can overcome many defects in structure and, therefore, both are equally important. We must get the structure right, however and it is.
My own view is that the new Electricity Council is too weak centrally. It is advisory to the Minister, although it can take over tasks that may be delegated to it by the area boards. It can settle a general programme of research, but the area boards may carry out their own research. Capital developments may be submitted to it but they are approved by the Minister; and the machinery for settling wages and conditions is to be maintained at the national level.
Because we know how far the Minister wants to go in this question of decentralisation, I want to get a specific assurance from the Parliamentary Secretary on the question of wages and negotiations before we conclude our debate. The rubric of Clause 9 speaks of "Machinery for settling terms and conditions of employment". I should like an assurance from the Minister that there is no intention in Clause 9 (1, a), to depart from national negotiation and that in fact the conditions of service which have been settled nationally for the last twenty-five years will continue to be settled in that way. It is 957 possible to read the Clause in another way, namely, that the Electricity Council shall be responsible for establishing machinery in order that wages and conditions may be settled regionally. I think that it will help if the Minister will give the assurance which I ask, as I am quite certain that he will.
Of course, it is true that in Clause 9 (1, b) each electricity board is concerned with what has become known as joint consultation. Lord Citrine, I think, has played a very important part in ensuring that the area boards have pushed ahead with joint consultation. I believe that it is because the Authority has had at its head a man who has believed in that so vitally that the area boards have gone as fast and as far as they have. I hope that if this subsection becomes operative there will be no slowing down on the part of the area boards in the matter of joint consultation because the drive and dynamic will have been removed from the centre.
The Minister justified his departure from the Herbert Committee in this matter by referring to a comparison with the Gas Act. Indeed, I must say that when I read the early Clauses of the Bill, I thought that the draftsmen had had a singularly easy time, because many of these Clauses bear a very close, if not a complete, resemblance to the comparable Sections of the Gas Act. Obviously they have been lifted almost wholly. I am not at all sure that this comparison with the structure in the gas industry is valid.
§ Mr. Callaghan
The hon. Gentleman, who is always interrupting, will have his opportunity later to say why he thinks it is. At the moment I am saying why I do not think the comparison is valid. The hon. Gentleman will not put me off my point by muttering that the structure is a very good one.
The area gas boards are responsible both for the distribution of gas and for the production of gas. The area electricity boards under the Bill are responsible for one but not the other, and so we shall get into a position in which there will be a Generating Board which will have separate responsibilities from the area boards for the generating of electricity while the area boards are responsible for selling it. When I come to look at the position of the Electricity 958 Council it seems to me that it is much too overweighted at the centre in favour of the area boards. There are to be 17 members—a chairman and two deputy—chairmen who will be independent, 12 area board men concerned only with distribution, and two from the Central Electricity Generating Board concerned with generation.
Whereas I can understand that it is quite possible to argue that on the Gas Council, if there are a dozen chairmen together who are concerned with both making and distributing gas, they can come to a reasonable compromise. I suggest that the Minister is running a very grave danger by pursuing the analogy of the Gas Council and over-weighting the two members of the Generating Board who will be sitting there in a total number of 17, or whatever it may be, of whom such a large number represent the distribution side of the industry.
I say to the Minister—and I am sure that he must have experienced this himself—that one argument repeated a dozen times sounds much stronger. If there is a situation where one area board member after another pounds the members of the Generating Board—because those members will have their own interest, which will be separate from those of the Generating Board, when they are fighting for allocations of money for capital development, research or whatever it may be—the Minister will find that the Board is put in too weak a position. "That is all right," says the Minister, "The Board can come to me. If it does not like what the Electricity Council says to it, it can come to me with its plans".
I wonder how right the Minister is about this. He is taking on a very heavy responsibility. Is he really to act as referee about a complaint by the Generating Board that it is not getting sufficient allocation of capital and a complaint by the area boards that they are not getting enough? The Minister has not got available the machinery, the men, the technical skill or the knowledge to do it at present, and I do not believe that he ought to have them. I have never wavered from this view. That sort of decision should be taken by the central body of the industry. It is the Minister's responsibility, at Cabinet level, to ensure that what is being allocated to the electricity industry, in these secret discussions 959 that none of us ever knows about, is a fair and adequate proportion of the national resources.
I do not believe that it is the Minister's task to decide, and I believe that he will get into a very great difficulty if he takes upon himself the responsibility for deciding, between the Generating Board and the area boards about these very ticklish matters.
I will give another illustration—the question of the bulk supply tariff. I confess that I do not understand the operation of the bulk supply tariff. I am told that there are persons who live in holes or in obscure corners who do, but I am not one of them. I just know enough to know my own ignorance. The Minister may be brought into this matter. He may have to turn aside from the administrative problems of whether he will be able to get out the petrol coupons to the commercial travellers by next Wednesday, in order to decide whether the charge that is to be made for bulk supply tariff is right or wrong. Will he be able to do that job?
There is a confusion of responsibility here. I should much prefer to see that responsibility allocated to the industry to be determined by a central authority that is strong enough to do it. It can be done. The Minister thought that he would be doing something unconstitutional—I think that was the word—if he gave that power of decision to the industry, but who does he think exercises it in the British Transport Commission? The Commission used to have coming to it requests for capital allocations from the Docks and Inland Waterways Executive, from the Road Haulage Executive, from the railways themselves, and from the hotels. It used to put the individual sums together and then take decisions.
The Minister of Transport did not take the decisions. Heaven help us if he had done so. I am not referring specifically to the present Minister or to any of his predecessors when I say that I do not believe that this is a job for the Minister of Transport. I believe that the Herbert Committee was right and that the Minister is wrong about this. In such cases it would be far better to follow the recommendation of the Herbert Committee, which would have the effect of giving the Central Electricity Authority or the 960 new Electricity Council the power to approve the general plans of both the Central Generating Board and the area boards.
We have all seen this kind of thing before. The last time I saw it was when I was a very junior member of a Government, when I was at the Admiralty. Now and again I was let in on meetings concerned with the allocation of expenditure by various Departments. What happened when the Chiefs of Staff got together was not decision but compromise. They did not take decisions on the real merits of whether the Navy or the Air Force should be developed at such and such a level. They all said. "Let's stick together, boys, and see what we can do to put the politicians down." I hope I am not doing any of them an injustice but, broadly, one always had the feeling that that kind of thing was going on.
I believe that what will happen in the case of a Board made up largely of members concerned with distribution, trying to settle their own capital allocations, will be compromise between them, and not decisions about the right course to be followed, except that they will all "gang up" against the members of the Central Generating Board, and that clash will happen all the time. That is all I want to say on that point, except that a fundamental criticism which I would make of the Bill as it stands is that the Electricity Council should have more power than the Minister proposes to give it.
Now I come to my next point—commercial operation or national interest? I agree with the Minister that the Herbert Committee went too far in what I regard as an artificial separation between commercial operation and the public interest. The right hon. Gentleman took the example of nuclear energy programmes. I will take the more homely case of rural electrification, to which the Herbert Committee devoted some attention. Where does commercial operation merge into the national interest?
I believe it was always the case that many electricity companies before the war thought that rural electrification, whilst it might be construed as a public service, was undertaken because it was intended and hoped and expected to develop into a commercial enterprise 961 operation, and that the promotion system was such that the company expected to sell so much electricity in the countryside eventually that it would recover its investment.
If the company concerned had been asked at the outset, however, it would have said, "This is only a hope. We cannot claim that this is a commercial enterprise". The 1947 Act gave the Central Electricity Authority a specific directive to extend rural electrification, and the authority was told to carry the supply of electricity into all parts of England and Wales. That is right, and one of the consequences of the present Bill was foretold by the Minister when he said that for the first time the area boards would be brought up against the facts of life. That is a description with which I cannot agree; but one of the first consequences may be a slowing down in the rural electrification programme.
Will the Eastern Area Board or the South Western Area Board be able to carry on with rural electrification at the present rates, because they now have to stand on their own feet since there is not to be any national pooling? I do not think it will make much difference in Wales because rural Wales is carried by the heavily industrialised South Wales. I have always told my constituents that I thought it right to do that on the broadest grounds of national interest, but I am certain that other areas, particularly the two areas which I have mentioned, will be faced with some crucial decisions about the extent and the pace of future rural electrification. Indeed, the Bill may well spell the postponement of the carrying of electricity to a number of farms and homes which, under the present arrangement and organisational set-up, have a hope of getting rural electricity in the comparatively near future.
Of course, the public ought to be told where the boards are undertaking these uneconomic activities. They might then be the subject of debate and, if necessary, of Ministerial direction. Yet the distinction which the Herbert Committee makes is an artificial one, and I hope that what the Minister has said this afternoon will carry the day, and that we shall not have the boards adopting the criteria laid down in the Report, criteria which they would find extremely difficult to adopt. However, I warn the Minister 962 that he is endangering the spread of electricity in the countryside by insistence on each area board standing on its own feet.
I end with a reference to the atomic energy programme. The Minister was correct when he said that to an increasing extent the organisation, particularly the generating side, must be built around this programme. With that I agree wholeheartedly. Certainly it will not be as cheap to build nuclear power stations for many years as it will be to build conventional power stations. Indeed, if the Authority were not to consider the national interest, it would be proceeding now not with the building of nuclear power stations but with the building of more oil-fired or even more coal-burning power stations.
I put to the Minister the point that where in the national interest the Authority is being asked to undertake a task of this kind—which will be drastically speeded up, I hope—the Minister himself and the Government should consider what financial obstacles may be put in its way. There is no doubt about it, and I hope the House recognises this, that we are asking the Central Electricity Authority today to undertake a tremendous gamble over atomic energy. We hope and believe, and all the experiments indicate and all the people I have talked to agree, that Calder Hall will turn out all right. Certainly it will be a tragedy if it does not. I believe it will. I go further and say to the Minister that I believe that he is right to standardise on the Calder Hall type of reactor, that is, in building new power stations based on Calder Hall rather than waiting for later developments which would give a much greater thermal efficiency. The problem which Ministers have to face is to decide at what moment they will build on the basis of what they know, instead of waiting for further improvements.
Even so, the Minister is asking the Central Electricity Authority to undertake a tremendous risk. I say that because we have not yet had sufficient experience even of the Calder Hall type station to know that this type will prove to be an unqualified success. So I hope that if finance is a stumbling block, the Government will assist in that matter, because it is only reasonable that the Generating Board and the new Electricity 963 Council should have assistance of that kind from the Government.
On the question of local authority representation on the consultative councils, I feel grateful to the Minister for having taken powers to decrease it. At the moment local authorities are entitled to a greater proportion than they may be entitled to under the Bill. I can only assume that the Minister is taking the powers because he wants to decrease the number of local authority representatives and to increase the number of representatives of trade, commerce and industry. I should have thought that it was the domestic consumer who was not adequately represented on the councils at the present time. Trade and industry have plenty of opportunities and organised outlets to let us know what their complaints are.
If only the Minister could see the telegrams about petrol rationing which I received this morning from chambers of commerce and other organisations he would realise how vocal trade and industry are through their organisations. I do not see why it is necessary to strengthen trade and industry on the consultative councils and weaken the representation of domestic consumers, who are unorganised. I hope the Minister will think about the matter again before the Committee stage.
Finally, why all the rush about the Bill? We had the Herbert Committee Report last January, and the Bill was published on 27th November, and today we have the Second Reading. A very substantial reorganisation is involved here. The Minister is not relying wholly on the Herbert Committee's Report. Indeed, in a very fundamental matter—the powers and authority of the Authority—he is departing radically from the Herbert Committee's recommendations. With whom has he discussed this? He has not discussed it with the trade unions. There has been no public debate on the matter. Has he discussed it with the Authority, and has it expressed its view to him on the matter? All these considerations ought to be matters for public debate.
The Minister ought first to have issued a White Paper giving us his views. I know that there was a three-page document, a rather flimsy thing to justify 964 fundamental departures from a very well considered Report. After issuing the White Paper, the Minister should have allowed a period for discussion and debate, and after there had been time for that he should have brought in his Bill.
We had this experience in relation to something which created far more interest and concern, the denationalisation of road haulage. On that occasion the Government issued a White Paper, then withdrew it and issued a second White Paper. They introduced a Bill, then withdrew it and introduced a second Bill. At the end of the exercise, a far better Measure went on the Statute Book than the one based on the conceptions which appeared in the first White Paper. On that occasion, therefore, the Government went through four processes.
The Minister has done a disservice to the industry and to the cause of public debate by rushing the Bill through so quickly, especially as it is in advance of consultation with persons and bodies whose livelihoods are vitally concerned and whose interests concern the Minister very closely indeed. Incidentally we were also hoping that the atomic energy programme would be known. After all, the Measure does not operate until April, 1958, and there is no reason why we should have been subjected to this rush.
I have expressed a great many doubts about the Bill. However, the Opposition will not vote against it—we have considered this very carefully—because we do not want to put the Minister on his dignity and make him take a stand on a matter of this sort from which there will be no retracting later on. We believe that the Bill needs very careful scrutiny, and that some time will have to be spent on it in Committee. If we do not vote against the Bill tonight, I hope the Minister will not feel that there might be any affront to his dignity if, after having thought about it, he should wish to come forward with substantial modifications. He has two months ahead of him, because I suppose we shall not begin the Committee stage of the Bill until mid-February or thereabouts. At all events, I hope that we shall not. I trust that the Minister will not rush us into that stage when we return after the Recess. He will be making a great mistake if he does.
965 If the Minister takes time to consult the various interests concerned and to consider the views that we shall express today, he may feel that some of the weaknesses which we shall analyse are worthy of reconsideration, followed by an alteration to the Bill. Otherwise, he may find that the Bill gets bogged down in Committee. He will get his way in the end because of the Government's majority, but we are concerned not in just voting but in applying our minds to the problem in order to get the best out of the Bill and the best organisation for the new Authority.
I trust that the Minister will accept what I have said in the spirit in which I have said it, and feel free to reconsider matters which have not yet been the subject of debate. If he feels convinced, I hope that he will make the necessary alterations to the Bill.
§ 5.15 p.m.
§ Mr. Geoffrey Lloyd (Sutton Coldfield)
I hope the House will allow me to associate myself with the tribute which the Minister and the hon. Member for Cardiff, South-East (Mr. Callaghan) paid to the members of the Herbert Committee. I appointed the Committee when I was Minister of Fuel and Power, and I received its Report before I left office. It has done a remarkable piece of work. I understand that its Chairman and many of its members gave up as much as one-third of their time for over a year to the work involved. Whatever views we may have about the Committee's recommendations, we ought all to be extremely grateful that the country can still command such very high quality voluntary endeavour.
I was rather disappointed when at the beginning of his speech the hon. Member for Cardiff, South-East tried to turn the Report into a pamphlet in favour of nationalisation. It would be just as open for hon. Members on this side of the House to go quickly through the Report, find every defect that the Committee had discovered read out a long list of those defects and say that the Committee had reported that the nationalisation of the electricity industry had been a disgraceful failure.
§ Mr. Callaghan
It would be absurd if hon. Members opposite did what the right hon. Gentleman suggests, because the Committee's last conclusion says:As we said in our report, this is not in any reasonable sense of the term an inefficient industry. It is an efficient industry …
§ Mr. Lloyd
It is also true that in the Explanatory Memorandum the Minister says that the Herbert Committee has disclosed the existence of a defect in the organisation of the industry. If the hon. Gentleman begins with that basis of discussion of the Report, what sort of debate are we to have today? This shows the attitude of some hon. Gentlemen opposite. They are the first to complain that hon. Gentlemen on this side of the House indulge in what they call "sniping" at nationalisation, but they regard themselves as free to take every opportunity, however inappropriate, to praise nationalisation. Incidentally, they are all the time lumbering up their political proposals and machine to take another private enterprise industry over to their system of nationalisation.
§ Mr. Lloyd
There would be a much better chance of my hon. Friends stopping sniping at public enterprise if hon. Gentlemen opposite stopped attacking private enterprise. I feel that I have every right to say that in view of the opening part of the hon. Gentleman's speech.
I believe the Bill to be far more important than the public has so fat realised. The electricity supply industry has long been a tremendously important one for the country, and any proposal largely to reorganise it means that the Bill is a very important one. The industry has been fundamentally transformed by the coming of nuclear power, and enormously increased in importance.
Fuel experts have for years talked about the primary and secondary fuel industries. The primary industries were those which produced coal and oil, which actually contain the energy, and the secondary industries were those like gas and electricity, 967 which merely converted the fuel into more convenient forms of energy. From all practical points of view the new atomic power stations will be a new primary source of energy. That immensely promotes the electricity industry in the fuel world, perhaps eventually raising it to a supreme position. The Bill is therefore really concerned with the formation of an organisation which is to be engaged and whose most important job will be to promote and distribute atomic electricity. It might very well be called an atomic energy Bill.
The simple question before the House is whether the Bill sets up an efficient form of organisation for the rapid development of atomic energy. That is why I rather disagree with what the hon. Member for Cardiff, South-East said about rushing the Bill. We should not have any delay, because the nuclear power programme is going on very fast and we want to prepare the organisation which is to do the job, that is, the organisation which the Bill sets up. I therefore commend my right hon. Friend for the speed and the dispatch he has shown in bringing the proposals before the House.
§ Mr. Arthur Palmer (Cleveland)
Would it not be helpful if we could have the statement we were promised earlier on the full development of the nuclear programme? Would not that make for a more intelligent debate?
§ Mr. Lloyd
I do not think so. It would have been fortunate had the Government been able to make an announcement, but I think that I understand the reasons why they have not done so. That they have not made a statement quickly is a rather good omen. I think it means that they are considering the matter very carefully, as they will have to do to make a really big advance.
When referring to nuclear power, we should not rely too much on the Herbert Committee. I appointed the Herbert Committee in July, 1954. I had the privilege of announcing the Government's atomic energy programme in February, 1955, and I received the Report of the Herbert Committee in December of that year. When the Herbert Committee started its work, it was not really aware of the atomic energy programme. It is true that it had six months of knowledge, so to speak, of the programme after it 968 had been announced, but I am bound to say that when I read the passage in Part V of the Report in preparation for the debate, the part which deals with nuclear energy, I thought it was already rather outdated. That is not the fault of the Committee, but is due to the extremely encouraging rapid progress with nuclear energy.
That means that there is a particular responsibility on the House today to see whether the Bill really does what needs to be done about atomic electricity in the light of the programme and the prospects as we see them today. Although the Government have not yet been able to make a statement, we can all make reasonable surmises and have reasonable expectations in the light of the announcements already made, the immensely important announcements of last week, for example, of the tenders for contracts for atomic power stations. The problem is whether the Bill is the right vehicle and whether the organisation it proposes is correct.
I see the progress of atomic electricity in three different stages. The first stage would be an all-out effort to increase the country's total supplies of energy. The second stage would be the time when atomic electricity might be expected to be displacing other forms of fuel and power in use in the country. The third stage, with which we are not so much concerned today, would be the time when the atom would be the world's primary source of fuel.
The first stage throws a special responsibility on the Minister and upon the new generating authority to be set up under Clause 2. The original programme for nuclear energy, as the House will remember, provided for 12 power stations which by 1965 would produce about 1,500 to 2,000 megawatts of electricity, equivalent to 5 million to 6 million tons of coal. Last week, when the contracts for the South of Scotland Electricity Board and the C.E.A. were announced, we found that instead of those original figures by which each power station would produce 100 to 150 megawatts, the output of each atomic station will be doubled. Thus the prospects for the future expansion of the programme are very good. Clearly, output may be doubled and one hopes that it may be trebled or possibly more. Trebling would mean 6,000 megawatts of 969 atomic electricity by 1965 with a coal equivalent of about 18 million tons a year.
Under the Bill the Minister has an important responsibility in this connection. Clause 7 refers to his interpretation of the national interest. It should be remembered that when he is interpreting the national interest, he is giving not his own opinion, or that of his Department, but is speaking for the Government as a whole, which, of course, includes the Treasury. He has the duty, as do the electricity boards, of considering the capital expenditure aspect to which the Minister and the hon. Member for Cardiff, South-East referred.
As the Minister said, that is bound to be heavy. I calculate that the trebled programme will probably need an expenditure of about £700 million to £720 million in the next nine years. If we were building ordinary power stations, we would have to spend about £350 million. Although the sums seem large, it is nevertheless a fact that when they are spread over the nine years of the programme which still remains to be carried out, they are not so large. I have taken particular care to calculate the rather interesting figure that the annual expenditure would amount to only about 1.5 per cent. of the gross capital formation last year, a figure which brings a sense of proportion to this capital expenditure.
Of course, I agree with the Minister that this kind of rate of atomic electricity expansion will create very serious problems for the new generating board which is to be set up. If we are to go at this speed, it will have to be decided whether to go over entirely to atomic power stations and not to build any more coal-burning power stations at a time when the first nuclear power stations, those for which contracts have just been issued, will have been operating for comparatively only a short time.
It is because of those very considerable difficulties and problems of generation that I favour the proposal in the Bill to set up a generating board whose one job shall be the technical, engineering and production job of generation and which will not be distracted by any of the other extremely important matters which affect the electricity supply industry.
970 In stage two of the atomic electricity expansion, in which I foresee a time when atomic electricity may be displacing other fuels, there will be a challenge to the area boards and the Electricity Council which is to be set up under Clause 3. The House will remember that one of the characteristics of atomic energy power stations is that because of their high capital costs and low fuel costs, a premium is put upon the continuous operation of the stations. That is why they have at present been planned as base load stations to operate night and day.
However, if we expand as fast as we want and as I hope we shall, we shall soon begin to reach a point when there is not enough base load for the number of atomic energy stations. That seems to me to raise a particular challenge for the area boards and the Electricity Council, because even when we have reached that point it will still be true that atomic power stations will not give of their best, economically, unless they are operated continuously by day and night. That will dramatically underline the problem of the load factor, to which my hon. Friend the Member for Kidderminster (Mr. Nabarro) has often referred very effectively, and which is dealt with in Chapter 16 of the Herbert Committee Report as an already quite serious problem. It will no doubt have to be dealt with by new low night tariffs, or tariffs which are extremely encouraging to the use of electricity at off-peak times.
One can at once see some of the possible applications. Obviously cheap electricity at night could give enormous encouragement to the use of electric storage heaters, which are already technically possible, to a point when they might compete with ordinary coal and coke heating. Similarly, low night tariffs for industry could do much to encourage the use of expensive plant at night, and the development of the shift system—which for many other reasons is very important—and it would fit in with the ever-increasing need for the continuous operation of highly automatic plant, which needs to be operated continuously for exactly the same reason as do the atomic power stations themselves, namely the very high capital cost. This makes it desirable to make very intensive use of them.
971 That is another reason why I favour another new organ which is mentioned in the Bill, namely, the Electricity Council. It is not beyond the bounds of possibility that very low night tariffs with, perhaps, some improvements in methods of storage of electricity, might lead to quite a recrudescence of the electrical vehicle. I know that my right hon. Friend would be extremely glad if we had some atomic petrol pumps at present. The only disadvantage would be that vehicles would have to be filled up at night—but I do not think that the owners would mind that very much.
These problems are very difficult and complex ones for the industry. That is why I like the rôle of the Electricity Council, as a watchdog body with supervisory powers and without executive jobs of its own, which will have the duty of looking ahead and, if necessary, conducting research and experiment upon the many difficult problems affecting the industry, including what I regard as the main problem of the load factor and the differential tariff. It is no exaggeration to say that the Herbert Committee has been rather critical of electricity authorities in regard to that matter. I do not want to press it now because I hope that that phase of the debate has passed.
§ Mr. Lloyd
I refuse to be drawn away by the hon. Member for Cardiff, South-East at this stage. I will merely say that under Clauses 2 and 3 the Minister appoints all the Board members. Both the Herbert Committee and the Minister's Explanatory Memorandum have said that this is his most important function. The hon. Member for Cardiff, South-East really agreed with that. I entirely agree that the organisation is important; but the human factor is decisive.
I should like to give an example from the history of another nationalised industry, in which the hon. Member for Cardiff, South-East is particularly interested. We have all known for years that the most inefficient way in the world of burning coal is in a steam locomotive. Everybody has known it and representations have been made to the Transport 972 Commission for years about it. What has been the result? There has been a stream of technical arguments of the highest authority, showing that in this country, whatever may be the case elsewhere, diesel locomotives were bound to be uneconomic. Then, quite suddenly—with no preparations—an enormous diesel programme was announced.
What was the explanation? There was no change in coal; the diesel engine had not improved particularly, and the Transport Commission organisation had not been changed. But the men at the top had changed. A new chairman had come into the Transport Commission and, perhaps more important, some of the high executives—the old brigade of the steam generation—had retired and younger men had come in to take their places.
§ Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)
I have only just come into the Chamber, but I am particularly interested in this question. The right hon. Gentleman must know that the Commission has lacked capital and permission to expend capital for many years. It has been fully aware of the need for dieselisation and electrification all through that period, but it was not until it received the all-clear that it was able to go ahead.
§ Mr. Lloyd
I am sorry; my purpose is not to attack the Transport Commission but to emphasise the importance of the human factor. If the hon. Member's explanation of this sudden change is the correct one I cannot understand why the Commission did not explain it at the time, instead of giving forth this cloud of technical obscurantism.
§ Mr. Lloyd
In the matter of atomic electricity we cannot afford to wait for the gradual progression of the human generation. We want to get on with this job quickly. Even if we decided to wait, the outlook in the electricity supply industry at the present time is bad.
I do not want to put this forward from any partisan point of view, but I should like the House and the hon. Member for Cardiff, South-East to know that one of the most severe strictures in the Herbert Committee Report is with regard to the question of the ability of people coming into the industry. This is dealt with in Chapter 14.
§ Mr. Lloyd
I was not going to introduce it in that aspect at all. I am simply considering the question from the point of view of human problems in the industry, and pointing out that the Herbert Committee says that under present circumstances able men are being repelled from the industry and are turning aside. It is very important to put that right, and the House would be wrong not to express great anxiety at this position and a determination to ask the Minister and the new authorities to do everything possible to put it right.
I now want to approach the human problem from a slightly different angle, which may be a little more in tune with hon. Members opposite. Which nationalised authority is most esteemed by the public at the present time? I am not inviting anybody to say that there is not such a one, because I am going to give the answer. In my opinion, it is the Atomic Energy Authority, because of its brilliant successes. That is not partisan, is it?
The point to note is that these brilliant successes have not been merely in the field of purely applied physics; they have also occurred in technology, engineering and large industrial construction carried out to a rigid time schedule. I have had the benefit of having had some experience of this. The spirit and the type of man which we have in the Atomic Energy Authority are just the kind of spirit and the type of man which we should like to see infused into the new electricity authorities which are being set up under the Bill.
I was glad to hear the Minister state that it was his intention to bring some of the leading men in the atomic energy side of the industry on to the boards of these electricity authorities. I am bound to say that I should go further. I should consider it well worth while to think carefully whether, at any rate, the chairman of the new Generating Board should be chosen from among those who have led the way in the development of atomic electricity.
However that may be, I entirely agree with the hon. Member for Cardiff, South-East and with the Minister, for whom I felt a genuine sympathy when he was dealing with the passage on the question 974 of salaries of board members. We must pay the rate for the job or else the efficiency of the management of this industry will gradually run down. I speak with some feeling on this subject because of my own experiences as a Minister. It is not very easy to get good people to come into the management of the nationalised industries. There are various reasons for that. But when we are asking people to do so, and also, in effect, asking them to accept a financial sacrifice as well, the job becomes virtually impossible. That applies not only to the full-time board members, but also to part-time members.
We desired to get top grade men. Time and again I found myself talking to people and asking them to become members of these boards, stressing the importance of the job and the fact that the Government were very anxious that it should be done as efficiently as possible and that we were keen to get the best men, and so on. And then I felt an acute sense of embarrassment when I had to reveal what was the salary; not because it was necessarily a question of the salary being the deciding factor—a number of these people were probably earning good incomes elsewhere—but because the salary we were permitted to offer made it almost impossible to maintain the idea of the importance of the job. But they are important jobs.
I also felt sympathy for the Minister when he made his statement this afternoon, because on looking back, I should be able to find similar statements about how the Government had reached the point where they were giving serious consideration to this matter. I am not blaming the Minister. I have a good idea of what he is trying to do behind the scenes. But we know that his statement today had to be vetted officially by the Treasury—and by the Chancellor—before it was read to the House. We understand that the position may be difficult at the moment. But, as we all realise—and the House has expressed its view to the Government—if we want these nationalised industries to be efficient, and we do, this problem has to be faced.
In general, the Bill will provide us with a good organisation for speeding up the provision of atomic electricity. If one goes round Calder Hall, one realises that 975 it is one of the modern wonders of technical progress. But one also realises that in order to achieve that progress, there have been scores of minor but wonderful engineering and technical achievements. I think it true to say that the Atomic Energy Authority would be the first to place on record its obligation to a score or so of efficient firms, particularly in the sphere of engineering, who have done everything possible to provide solutions for the technical difficulties with which the Authority has been faced.
Rather than finish on the note on which the hon. Member for Cardiff, South-East began, I prefer to say that we have, in a sense, rediscovered in this country the zest for the achievement of industrial progress and industrial triumphs, both in the public and the private sphere. We had it in the great days of the industrial revolution one hundred or more years ago, but we lost it to a considerable extent in the days of our supreme wealth and prosperity. We are now finding it again at the moment when we need it most. Rather than squabble in this House about these issues, we should concentrate more on encouraging that spirit or, at any rate, on doing everything possible to see that it has full scope in the organisation which we are creating by the Bill.
§ 5.45 p.m.
§ Mr. C. R. Hobson (Keighley)
I entirely agree with what was said by the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) in praise of our scientists and engineers regarding the development of electrical power from atomic energy. But I thought he spoilt what was an otherwise excellent peroration—indeed, the main theme of his speech dealt largely with atomic energy—by his denigration of hon. Members on this side of the House. The right hon. Gentleman made some slight reference which I thought rather carping to my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan). No one has been more enthusiastic or more anxious to see the development of atomic energy than my hon. Friend. We in this House are in complete agreement about the necessity for its rapid development, if only to become independent of oil and probably, at a later stage, to reduce the quantity of coal required.
It is regrettable that the Government have not found time for a debate on the 976 Herbert Committee's Report. Every Thursday afternoon during Questions on business, over a period of months, I have asked for a debate on that Report. After all, it is a Government Report and we are entitled to expect them to allot a day on which to discuss it. Instead, we now have to debate it, subject to the Ruling of Mr. Speaker, which, as usual allows us a wide scope, on the Second Reading of this Bill. All the previous speakers have referred to the Herbert Report, and I intend to do so. It is a tendency of the Government to flout their own reports. We have yet to have a debate on the East African Report, which has been before the House for months, and I suppose we shall have to await a Bill in order to discuss that.
We are now discussing legislation to amend the 1947 Act. I agree that that Act has worked well. There is not the slightest doubt about it. It was a huge task to bring together in one organisation the electrical industry which was two-thirds publicly owned and one-third privately owned. There was bound to be considerable centralisation at the outset. The Herbert Committee has commented somewhat unfavourably on the centralisation, but I do not see how it could have been avoided. We can only weave one pattern in the cloth at a time, and it was absolutely vital that right through the industry there should be the same aims and objects, and indeed, the same directives. That, of necessity, was bound to lead to centralisation.
I wish to pay a tribute to Lord Citrine. He has done an admirable job. The main criticism against him personally as Chairman of the Authority is over this matter of centralisation, but I know of no other way of bringing into being a nationalised organisation such as the electricity industry without such centralisation.
As was said by my hon. Friend the Member for Cardiff. South-East, since nationalisation the industry has kept down costs. It has absorbed a large percentage of increased costs, both in wages and fuel, by increased efficiency. That is proved by the reports from the power stations of improved thermal efficiency. It has gone in for higher steam pressures, and also for higher super-heat temperatures. It has borne in mind something which is very important. All engineers 977 have had to resist the temptation of building too big sets in too few stations, and, in so doing, putting too many eggs in one basket.
The overall technical direction of the industry has been a tribute to those responsible for it. We ought to pay tribute to the research that has gone into boiler plants to consume low-grade fuel. This fuel has a fairly high calorific value, but in order to make it combustible radical re-design of our water-tube boilers has been necessary. The electricity industry today is burning fuel that nobody else can or would burn, and is saving a tremendous amount of money which otherwise might be spent on the importation of coal, which unfortunately we have to do.
I would pay tribute, as has already been done, to the development of nuclear power stations. I was proposing to speak at some length on this subject, but in view of what has been said I shall not do so. Since the transition from 1947 to the present day, labour conditions in the industry have been good. I know of no major strike in the industry since nationalisation, and that is a proof that labour relations are good. Public accountability, of which I propose to speak later, has been, within the limitations of the Act, quite good. As the result of the Act there is greater public accountability, for reasons which I shall explain.
The Bill separates generation from distribution and gives over-riding control to the central authority. In point of fact, the Bill leaves out the question of ownership of the industry. The organisation now proposed is very similar to what was brought into being in 1926. Then we had the Central Electricity Board to control generation technically, while ownership remained with the municipalities and the private authorities. Distribution was controlled by the Electricity Commissioners. Whatever we may say about the Act, under the Bill the Central Electricity Authority will no longer be the sole boss. There are to be two bodies, one of which will have sole control of generation. The new Council will have control of both generation and distribution. By so doing it will unquestionably achieve complete co-ordination. 978 That is the main argument in favour of the Bill.
There used to be a rota of area-board chairmen for sitting with the Central Electricity Authority. I never thought that was satisfactory. The proposed setup will be an improvement. It was always felt that chairmen who were taking their turn on the Central Electricity Authority were bound to feel under tutelage. I put it no higher than that. The idea of having all the area-board chairmen on the Central Electricity Authority is a step in the right direction. Further than that—this is very important—it will strengthen the area boards' bargaining power with the generating authority for bulk tariffs. When only two area-board chairmen were on the Authority, it was difficult to negotiate a bargain with the Central Electricity Authority about the price per unit and bulk tariffs.
Quite a number of hon. Gentlemen have been chairmen of electricity boards. I was chairman of the authority in Willesden, which had one of the lowest tariffs in the country. The whole of our electricity was bulk-purchased from the North Metropolitan Company and there had to be very hard bargaining indeed. The proposed set-up will be an improvement.
There is one weird provision in the Bill, the reason for which I have not been able to find out. I have had conversations with my hon. Friend the Member for Cleveland (Mr. Palmer) and others whose experience in the industry is of long standing to find out why area boards are to be allowed to generate electricity. What is involved in this? Why has the Central Electricity Authority to hand over generation to area boards? What is behind it? There will have to be an explanation from the Parliamentary Secretary why this provision has been included.
Are area boards to build stations? If so, are these to be base-load stations or part-load stations? I am prepared to give way to the Parliamentary Secretary now, if he can give us a reply. Are there to be two authorities for generation? The area boards are presumably to generate their own electricity, yet the Bill says in Clause 2 that there is only to be one Authority.
§ The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. David Renton)
The hon. Member has invited me to reply. The Herbert Committee had a good deal to say about this matter, and I shall have a little bit more to say about it in winding up.
§ Mr. Hobson
I must say that is a very helpful interjection. I have been in this House for 12 years and I have never heard anything so piffling in my life. The hon. and learned Gentleman appears to be studying his brief in order to give an answer. His Parliamentary Private Secretary is not behind him, so I am afraid the hon. and learned Gentleman will have to go to the Official Box himself to get the answer. The Minister might have told us in his opening remarks how the distributing authorities are to generate electricity and why.
Probably the area boards are to buy surplus energy from industrial concerns. Is it assumed that there are to be small sets of 5,000 kilowatt capacity installed by area boards, consisting of back-pressure turbines, in order to have regional heating? Is that what is involved? If so, it would have been far better to say so in the Explanatory Memorandum. We must bear in mind that there is to be a complete change of policy in the placing of the base-load power stations. In other words, they are to be nearer the source of fuel supply and are to be removed from the large conurbations—to use the current word.
Clause 2 (5, c) provides for supplies to railways. That is, of course, the present practice, but what is to be the future of railways about owning their own generating stations, as they do at present? That has to be faced up to. The London Passenger Transport Board has three power stations, at Lots Road, Neasden and Greenwich. I do not know whether there is one still functioning at Wimbledon. There used to be done at Southport run by British Railways. I wonder whether the railways are to be allowed to retain their power stations. It would be tidier to put all generating stations under one authority.
I have had experience of these power stations. Some of them are getting old and generate at a different frequency, 33 cycles instead of 50 cycles. It is not simple or technically efficient to change the frequency. What is to be done about 980 these stations? We are entitled to have some word from the Minister about their future. I would have put them all under one authority. I think that probably in future there will have to be a rationalisation there. No doubt the Minister will consult the Minister of Transport in regard to this, which to me is a somewhat technical anachronism.
I now come to Clause 2 (7, a), which gives permission for the manufacture of turbine sets and boilers. This is in the old 1947 Act. The Central Electricity Authority has not taken advantage of that Section, for reasons I can well understand. It takes a number of years to get the whole machine ticking over, but it seems to me that the time has come for the Minister to say quite frankly to the Authority that it is time something was done about this. Construction of turbines and boilers is very overloaded. There is a very good export trade, and unquestionably we can export all the sets we can produce. As the right hon. Member for Sutton Coldfield knows, there are very few companies in England and they are interlinked financially. Although I shall not say there is a monopoly of price, the fact is that price fixing is not unknown.
§ Mr. Nabarro
Lord Citrine himself defended this system of price fixing only a few months ago, in fact, at the time when the Bill dealing with monopolies was on the point of reaching the Statute Book.[An HON. MEMBER: "No."] Lord Citrine came out quite unequivocably in favour of price fixing.
§ Mr. Hobson
I take the statement of the hon. Member at its face value. That may be Lord Citrine's view, but it is not my view. I think there is something akin to monopoly in the companies in the manufacture of these sets. The time has come, particularly with the change-over to nuclear power stations, when a heaven-sent opportunity may be provided for the Authority to get down to the manufacture of necessary equipment. After all, it is not without its technical skill and ability.
§ Mr. Geoffrey Lloyd
May I interrupt the hon. Member, as he has mentioned me—particularly when he refers to nuclear plant. I think it is relevant to say that the general understanding in the industry, both by the Central Electricity Authority and the Atomic Energy Authority, has been that the competition between the four industrial groups for 981 these atomic power station contracts has been intense, and there was a wide difference in the prices quoted. Therefore, I think it would be rather unfortunate to say that there was monopoly.
§ Mr. Hobson
I have not had experience of nuclear power stations. I have been out of the industry far too long for that. I accept the statement made by the right hon. Member, because he is in a position to know, but for the standard 60,000 kilowatt set, which was standard practice for the base-load power stations, there was an affinity of price between B.T.H., Metropolitan Vickers and English Electric. Everyone knows that. I am giving reasons to show that this is a good opportunity for the Central Electricity Authority to take advantage of that Section of the 1947 Act, which I am pleased to see incorporated in this Bill.
§ Mr. Geoffrey Lloyd
I do not want to trespass on the time of the hon. Member, but he rather directed his remarks to me. We hope to have a big export trade in these atomic power stations. Let the hon. Member consider public interest from that point of view. I think we have to allow these groups to have a good home trade to provide a platform from which to go out and capture the export trade.
§ Mr. Hobson
I am not dissenting from that at all. I am merely putting it over as an idea. If I were in the position of authority in which the right hon. Member has been, or if I were a member of the Central Electricity Authority, I should consider this the time to look very seriously at the development I have suggested.
Clause 7 deals with the overriding powers of the Minister, and I welcome the improvement that makes on the 1947 Act. The decisions of the Minister can become operative only after there has been the closest association between himself and the Council. Here we come up against the very important point—of which my hon. Friend the Member for Edmonton (Mr. Albu) has spoken many times in this House—of the power of Parliament. I have rather strong views on this question. I think the whole pattern of Parliamentary control of the nationalised industries is not yet determined. Let us be perfectly frank; probably not sufficient thought has been 982 given to the matter. I pay tribute to my hon. Friend the Member for Edmonton, who has spent a lot of time and brought forward a number of original ideas on how control over these vast industries can be maintained. Obviously it is right that we should not interfere with the day-to-day arrangements. Nobody suggests doing that.
Not wanting to develop the argument, because I do not want to take up too much time on this, I will only say that there is a case for a Committee similar to the Estimates Committee—but not necessarily that Committee—to look at the expenditure of the nationalised industries. We should then find out a lot about the industries. If we did nothing else, that could be helpful. There is a vast assortment of talent and experience of business and trade unionism in this House. I believe it would be very useful if we could deal with these nationalised boards through a Committee similar to the Estimates Committee.
Clause 8 deals with the reports of area boards, which have to be laid before Parliament. That is the normal procedure, but I have a complaint to make to the Minister. The former Minister is here and the Parliamentary Secretary is present. Questions are asked about electricity and gas, and Ministers always fall back on the cliché of referring the hon. Member asking the question to the industry's report. That is not good enough. Often when we look up that report, the information is not contained in it, and so we do not get the answer. This matter is relevant to the Bill, and I ask that the Minister should look into it. When hon. Members put down Questions it is not good enough that they should be referred to a section in the report, particularly with reference to costings, in which some of us are very interested—the cost per kilowatt per hour and so on.
Reference has been made to consultative committees. Like my hon. Friend the Member for Cardiff, South East, I deplore the reduction in the number of local authorities' representatives. They are known in their own areas. People know their own councillors, and when they have trouble about their bills they can go to the local councillor and get redress. If we bring to the consultative committee people from outside industry, those people—however eminent—will not 983 be so well known. They will be able to look after their own interests, and I quite agree that the large consumer should be represented, but I think the Minister should look again at the suggestion—which I think is retrograde—of reducing the number of local authority representatives.
I propose to put forward an Amendment in Committee on the question of consultative committees and area boards. Many of the boards, such as that for Yorkshire, are very large. It is possible to have district consultative committees. Yorkshire Electricity Board has seven operating, but there are boards which have no district committee. The result is that we have committees dealing with large areas geographically and large populations. They ought to be broken down, and ways and means ought to be provided in the Bill to enable us to have district consultative committees. I am also pleased to see that under the Bill members of the consultative committees will have access to the generating board and, in the last analysis, even to the Minister. That is a very important step forward.
I should like to refer in general terms to some of the references in the Herbert Committee's Report. For instance, I am not at all satisfied that sufficient attention is being paid to the siting of power stations. Perhaps I may give an example from the borough in which I live. We have four of these stations, two belonging to the railways—Stonebridge Park and Neasden—and two to the Central Electricity Authority, Acton Lane and Willesden. It is not good enough to extend the Acton Lane station in a very densely populated area such as this. The smoke pollution is aggravated. Frankly, insufficient attention is paid to the placing of these stations.
Another point which has been dealt with in the Report is the transport of coal. If my information is correct, about 160,000 tons of coal are carried by road to the power stations. Why cannot it be carried by rail or barge? Why clutter up the roads?
§ Mr. Nabarro
In the case of Stour-port-on-Severn "A" and "B" power stations in my constituency, last year 115,000 tons was carried by road. That is only a tiny fraction of the coal carried by road.
§ Mr. Hobson
This is fantastic, and I hope directions will be given for it to be stopped.
May I say a few words about staff training? I think staff training is excellent, and great improvements in it have taken place since nationalisation, but there are still grievances and I want to deal with one of them. Consider the position of a fitter on the power station floor. A young chap is brought to him with a degree in engineering and he has to teach that lad how to line up the turbines, which is a highly skilled job. It involves 10 to 12 tons, and sometimes more, revolving at 3,000 revolutions per minute. The lad is taught how to set the governors of the turbines, how to set the governors of the pumps and how to float the safety valve. This is part of the fitter's job.
The young graduate will probably rise to the top in the industry, but what about the two-way traffic? What about the fitter? What facilities are given, other than his going to night school, for him to rise to a high position within the industry? When I first started in the industry my chief was a former fitter who had become the resident engineer. This question of training must be considered and facilities must be given for those who have served their time to rise right to the top, because in such an industry as this skill and technical knowledge are largely interwoven.
I agree entirely with the Herbert Committee's Report about the delegation of power. There have been far too many committees within the industry. If we go through the Herbert Committee's Report we can find the whole lot. I was once told that there were more committees than under the London County Council. I am one of those who believes that one of the curses of modern society is committee-it is and that it is far better that there should be delegation of power and personal responsibility.
The Herbert Committee mentioned this and painted out that, apart from Lord Citrine, we do not know the big names in the industry. For ten years I was a member of the Incorporated Municipal Electrical Association and I can remember the names of those days. There was Lord Gridley, formerly Sir Arnold Gridley, a Member of the House; Captain Donaldson of Northmet; P. J. Robinson of Liverpool; Mills of Hackney. Those 985 were names known to everybody in the industry from the top to the bottom. The Herbert Committee is quite right in stressing that. This is tied up with the question raised by my hon. Friend the Member for Cardiff, South-East—the need for salaries to attract the right people. The two points cannot be divorced.
I welcome the Bill, which I regard as a step in the right direction. We claim that the nationalisation of the industry has been an unqualified success and this Bill seeks a reorganisation based on experience; but it is in no way to be interpreted as a criticism of nationalisation as a principle. There are one or two major points on which Amendments Will have to be tabled, but, having studied the Bill. I can say as one who took an active part in the 1946 Act that I am happy to support it.
§ 6.17 p.m.
§ Colonel C. G. Lancaster (South Fylde)
The hon. Member for Keighley (Mr. Hobson) speaks with great experience and considerable technical knowledge of the industry and I cannot hope to follow him in many of the points which he made. I am in considerable agreement with him on a great many of those points, in particular that about coal being carried by road to power stations when it could be carried by rail or by water.
I also agree with the hon. Member's views about the necessity for devolution in the industry. He gave the names of men who played a prominent part in the industry at a time when he himself was similarly engaged. I remember, too, the very constructive part which the hon. Member played when the 1946 Act was being discussed in the House and in Committee. Many of the points which he has made this afternoon will, I think, be echoed on this side of the House.
I want to intervene for only a few moments and I want to express my admiration and gratitude to Sir Edwin Herbert and his Committee for what I think is a wholly admirable Report. On whatever side of the House we sit and whether or not we feel that nationalisation as applied to this industry has so far been a success, we all recognise that a change must come; we cannot be wholly satisfied that the present set-up 986 and organisation is the perfect one. Indeed, I think most of us recognise that there has to be change, and the Herbert Committee has, I think, blazed the trail in that direction. It has given us a great deal about which we can think and has pointed the way in which many of us would like to see the industry develop.
I, personally, am glad to see the sort of things which I have been trying to express for so many years expressed so lucidly in the Report. Sir Edwin Herbert's Committee points out that devolution must conic, but that if it is to come intelligently and satisfactorily it must be carried out in an orderly and sensible manner and that there must be autonomy at the periphery, in this case with the area boards. The Report makes it clear that until that autonomy is created we shall not make the big advances in both efficiency and economy which undoubtedly lie ahead of this industry, both in normal electrical generation and in the new fields about which my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) has spoken.
I should like to quote from one paragraph in the Report because I think it expresses clearly what many of us may have in mind. Paragraph 502 reads:Partly, no doubt, as the result of anxiety over public accountability there is a tendency to do work in whole or part several times over at different levels and an unreadiness to trust the field commanders with the power and responsibility that they ought to have. In our opinion more should be left to the discretion of subordinate officials and if they make mistakes, as they will from time to time, the public must be taught that this is part of the price of delegation that large-scale organisations must pay if they are to remain virile.I believe that to be a profoundly true statement. This matter of devolution is a principle which everyone who is engaged in industry sooner or later has to learn. We must all be pleased that this Committee which has considered this matter so sensibly and comprehensively has pointed the way so clearly in this direction. I hope that as the Bill goes through its various stages it will be recognised that if the new structure is to be what we hope it will be, wholly efficient, it must tend tremendously in the direction of intelligent devolution and decentralisation.
There is one aspect of this matter which has been mentioned by the hon. Members 987 for Cardiff, South-East (Mr. Callaghan) and for Keighley, and to which I should like to refer, namely, the composition of this Electricity Council. I believe that the Committee was wiser in its approach than has been my right hon. Friend. The Committee recommends that the Council should consist of three permanent members and four part-time members.
So many of the decisions taken by the Council will relate to matters which must involve taking a dispassionate view—matters about which it is excessively difficult to be dispassionate if one is involved in them in one's day-to-day work. Many of the questions will affect consumers in a manner which is in some measure different from the approach that would be made from a member of the Authority. I hope that my right hon. Friend will give further thought to the composition of this Electricity Council, on which a great deal of the success or otherwise of the industry must in future depend.
As I say, I feel that independence of approach by the Council is almost essential, and to leave it as is suggested to be composed of the representatives of the area boards and only three part-time members—admittedly with the chairman and vice-chairman—is not a wholly satisfactory solution of the problem. I hope that my right hon. Friend will reconsider this decision.
As I have said, my real reason for intervening in this debate is to say that I personally feel that this is an admirable Report. It points the way to great improvements in this industry. I believe that if, during the Committee stage, hon. Members have this Report very much in mind, and if the Bill is approached in the spirit in which this debate has been approached, we can expect to see a first-class Act of Parliament emerge.
§ 6.25 p.m.
§ Mr. Austen Albu (Edmonton)
The hon. and gallant Member for South Fylde (Colonel Lancaster) has made some of his characteristic remarks about devolution. I largely agree with him, but I think that he will agree, from his experience of criticising the National Coal Board, that there are strong differences of opinion on these matters and that they can become an and topic of conversation, as my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) suggested.
988 I hope that I shall not be considered partisan if I add my support to those who have already said that they think that the industry since the war has done a first-class job, although, if I may add my voice to that of my hon. Friend the Member for Cardiff, South-East, while supporting the Bill in general, I think it is a shame that the Minister did not spend more time in consultation with the industry itself and with other interests concerned, including the trade unions, before introducing the Bill. This is a fairly common procedure these days, and I would have thought it was part of the normal human relations aspect of administration.
It has been said that this Bill is only a matter of change of organisation, or an administrative matter, and some hon. Members have said that this is in conflict with the ideals of human relations. But, of course, organisation is only the formalisation of human relations, and, therefore, the form which an organisation takes is very important from the human relations point of view.
It is common knowledge, and has been for some years, that in this industry those who take part in it—the managers, the technical staff, and others—have felt that there was an over-centralised control. I do not think that this was the intention of the drafters of the original Act, but to some extent I think that their functions have been thwarted by some of the provisions, particularly those which give control over the industry to the Central Electricity Authority, first, by the power to appoint members of the boards and the method of appointment, but chiefly by the duty imposed on the Central Electricity Authority to balance the accounts of the industry as a whole. That is to say, the final authority in the industry rests firmly on those who control its finances and accounts, and if that is at the centre the control will rest at the centre. The Central Electricity Authority can always criticise or remove personnel on the ground that the area boards are not carrying out the instructions given them by the Authority, in accordance with the Authority's duty, to balance accounts.
There is not a great deal of change in this Bill in the distribution between the central and regional functions. The centre still maintains the overall majority 989 power of generating, which is obviously right, and I believe it is the centre which will still have the duty of determining wages and conditions. I believe I am right in saying that, but I hope that we shall get a clear answer on that point from the hon. and learned Gentleman the Parliamentary Secretary.
The regions have the responsibility of marketing and distribution, and, I think rightly, the responsibility for welfare and joint consultation. The decisions on joint consultation should never have to be referred higher than is absolutely necessary. If joint consultation is to be successful, it is important that the power of giving a decision on a matter on which there is to be consultation should be as near to the point of joint consultation as possible. One of the difficulties in the industry has been that the hierarchy of joint consultative committees, which we have seen in other industries, including the Royal Ordnance Factories, creates a sense of frustration among those who take part in them.
Having said that I want joint consultation to be at as low a level as possible, I hope that nothing will be done to interfere with the present advisory machinery established at the centre by Lord Citrine and his staff. They had a difficult struggle not only against the managers, but sometimes against the trade unions as well. They have built up a tradition, and I think that everybody will agree that they have done an absolutely first-class job. Although I am glad to see that this is to be the function of the areas, nevertheless I hope that the present central advisory staff will be kept in being to help in getting the areas jogging along with this particularly important task.
The main function, of course, is that of the Minister to appoint members, but perhaps the main central function—I might not have understood my hon. Friend the Member for Cardiff, South-East correctly and I am not sure whether he would agree with me—is that of determining investment policy. I agree with my hon. Friend that one does not want the distribution of investment policy to be carried out in too great detail by the Minister. Nevertheless, the present setup is probably the right one, because I want to see a much stronger fuel and power policy. That means a policy both 990 of tariffs and of prices and a policy of relative investment. Therefore, I am glad that the Bill strengthens the power of the Minister over investment policy.
One of the criticisms that I have seen of the Bill—it is a criticism which, on the whole, would not be made by my hon. Friends on this side, but it is a criticism I have seen in a technical journal—is that it will give the Minister greater powers and that the new Council will have less power over the control of investment than the existing Central Electricity Authority has. Whether the existing powers are exercised by virtue of Statute or by virtue of personality, I am not certain. Nevertheless, I think that the Bill will increase the power of the Minister over investment policy. That, I am certain, is right. The extent of the investment in these important industries must, obviously, be part of general economic policy and the relationship between them is a very important function of the Minister of Fuel and Power if we are to have any intelligent fuel and power policy.
My hon. Friend the Member for Keighley (Mr. Hobson), with most of whose speech I entirely agreed, seemed critical of the power given in Clause 5 of the Bill for local generation. It is important that this matter should be cleared up in Committee. I presume that what is intended is to give the area boards the sort of powers to which my hon. Friend referred for buying surplus current from industrial firms, but also to some extent the opposite way round—that is to say, of generating current in relatively small stations which can be economically situated next to developing new towns or developing urban areas or new industries, and selling to them, not the electricity, but the surplus heat.
I have raised this matter several times in the House. It is not one which a non-technical person can well understand, but it is the fact that even the massive new 500,000 kilowatt power stations which are to be built will still be throwing nearly 70 per cent. of their heat down the drain. This is something to which we must pay attention.
It has always been argued that the district heating schemes are not economic, and considered by themselves, of course, they are not. It may equally be the case that a district heating scheme in a built-up area, in which the whole place has to 991 be ripped up to put in the capital equipment, the mains and so on, may not be economical; but where such a scheme is considered in a new area, or a scheme for heating or supplying steam to a new factory, and it is considered in relation to a relatively small power station which by itself would be uneconomic, the two combined may become economic. Although this may not make a gigantic contribution to our energy requirements, it may make some contribution and we cannot afford to lose any increase in efficiency or in economy in the use of energy.
§ Mr. Nabarro
Does the hon. Member realise that the very principle he is now enunciating was enshrined in Section 50 of the 1947 Act, but that in the ensuing ten years almost not a single heat-cum-power station based on back-pressure turbines has been put into use by the Electricity Authority?
§ Mr. Albu
That may well be the case for what I call quite understandable human technical reasons. That is partly why I support the Bill.
Because there is a central authority and central engineers dealing with very large-scale power stations, they do not really have the time or, perhaps, the interest to deal with something which is very different indeed and which is much better dealt with on a local basis, where there can be local agreement, local contracts and local negotiation. It gives an interest to the boards, which at present many of them feel that they lack, because they have no generating functions. I am sure it is not the Minister's intention that there shall be any interference with the building of the most efficient power stations possible, for this would make nonsense of any nuclear energy programme. Nevertheless, there is this very important function of district heating.
There is one other function but I am not sure how far it is suitable for the area boards. It is one in which I know the Minister is interested but in which we are slow to get going, and in which I hope we can make much faster progress. I refer to underground gasification. I am not sure to what extent local area boards could make agreements with the Coal Board divisions for this purpose on their own or whether it is a matter which has to be dealt with at the top. Again, it is 992 rather a nuisance to the big bodies—the Central Electricity Authority and the National Coal Board—but it might be a field of great interest locally for area boards to discuss among themselves.
Here, I happen to think, we have perhaps a rather greater possibility of additions to our energy supplies than in some of the other ways which we have been discussing. The latest reports published by the Ministry have shown that the whole technical problems of underground gasification have made considerable progress and I believe that, with initiative by the two authorities concerned, we might see a real contribution towards our energy requirements?
On the question of the powers of area boards. I agree with the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) in what he had to say about the possibilities of improving the tariff structure, so as to get a better load factor for the industry, and particularly a combination of the tariff structure and, perhaps, local research and development storage equipment, electricity-using vehicles, and so on. This might be another direction in which one does not want to see the area boards indulging in large-scale research. It might be the kind of research relating to the consumer which an area board might well undertake, but such technical research must be related to economic research—that is to say, market research concerning the possibilities of the tariff structure and the possibilities of utilisation. This sort of thing would make a considerable contribution to the economy of the industry.
Finally, I should like to say a word or two about the immediate energy crisis. We are likely to be in serious difficulty for the next, say, five or ten years. I am not making a political speech and arguing as to how soon we will have the oil flowing through the Canal and how soon we shall have enough oil, but I think we all must feel very unhappy about the very sharp energy knife-edge on which our industry is at present balanced.
In a debate of this kind, it is quite natural that we should cast our eyes forward to the happy days when all our energy comes from nuclear power stations. I certainly agree with the right hon. Member for Sutton Coldfield in everything he said about the achievements of our scientists, and especially our technologists and 993 engineers, because in recent years particularly it is our engineers who have made their contribution to what has been achieved.
There are, of course, great difficulties. We are all agreed that we should go on with the Calder Hall type of station, but that is not the end of the story, because the Calder Hall type of station can be improved. As I understand, some of the experiments and research, particularly into the fuel elements, which must be undertaken have not yet been completed, and, before they have been completed, the stations cannot be designed. Therefore, within the decision to build the Calder Hall station, the Minister must decide again whether to build the model T Calder Hall station or to wait until the scientists or technologists have produced better fuel elements even for the existing station. These are very difficult problems. In general, the type of fuel element determines the life of the fuel and the energy which can be got from it, as I understand, and, therefore, very much affects the price at which electricity can be generated from these stations.
Although one wants the power, one must, I think, be a little careful that one does not jump into a design so fast that the cost of it is too high. We have to ask ourselves whether a few months will make a great deal of difference. Not much contribution is likely to come from these stations for some years. Assuming that the output of the stations were doubled, either because output is being doubled in practice, or because we can build faster, assuming we do not change our output of coal, and that the original estimates were correct about demand, in the next few years, by 1965, that would save us only about 7½ per cent. of our present oil consumption.
While 7½ per cent. is useful, we have seen recently that demands for energy go up a good deal faster than the estimates, and it is quite likely that the estimates by 1960 will be higher than those we made a few years ago. Therefore, we shall still be terribly dependent on oil supplies.
§ Mr. Geoffrey Lloyd
Trebling of the programme would equal 18 million tons of coal, which is getting on for 10 per cent. of our present coal consumption, and, while there may still be some doubt 994 about fuel elements, it is quite clear that the capital costs have been reduced in the contracts just made, and, therefore, all this is a good deal more worth while than the hon. Gentleman thinks.
§ Mr. Albu
It is too technical a matter to discuss across the Floor of the House. I simply wanted to utter a warning that we cannot expect the crisis to be solved in a short time.
Meanwhile, there are other things we have to do. For instance, we must build super-tankers. It was not to make a nasty political point that I asked the Minister whether he thought that the control of investment in steel was important as it was in other things, in this case in electricity; because, of course, to build these power stations, to build supertankers, and to build the storage tanks which we shall require for the increased stocks of oil we ought to hold will require a very large amount of heavy steel, which does not now exist in the quantities which are needed.
The Bill is an improvement, but unless the Minister takes advantage of the powers he is being given, unless he and the Government as a whole co-ordinate fuel policy, particularly investment policy, and co-ordinate investment in the basic industries as a whole, particularly in the steel industry, the Bill will be wasted. We have to have an intermediate policy and a long-term policy, and that policy can be based only on the heavy engineering industry, and the industries on which that is itself based, and there must be a capital investment programme which is related to our energy requirements.
§ 6.43 p.m.
§ Sir Ian Horobin (Oldham, East)
I do not propose to discuss the Bill in detail, because I want to direct my observations to what I conceive to be the vital matter, namely, how far the Bill is adapted to transferring as quickly as possible our fuel policy on to a nuclear basis. Before I get on to that, I would say that in any case this Bill must be an interim Measure if only for a reason which, rather surprisingly. I think, nobody so far in the debate has referred to at all, namely, that one of the major recommendations, one of the fundamental recommendations, of the Herbert Committee was about the method of financing of this, and, indeed, 995 of the other nationalised industries. The relevant paragraphs are those finishing with No. 351, I think. They make it very clear that the Committee looks forward, in a really economically managed nationalised industry, and in this one in particular, to control of the market as an essential element.
As we all know, for reasons which, we hope, will not last very long, so far from going forward in that direction the Government have recently gone back. It would not be appropriate to discuss that now. However, I think that on both sides of the House we all shall agree that one fundamental prerequisite in the opinion of the Herbert Committee is not at present being operated. Therefore, this Bill, whatever its other advantages, cannot be considered, on either side of the House, as anything but an interim Measure. On the other hand, I think there is every substance in the argument made by my right hon. Friend the Member for Sutton Cold-field (Mr. Geoffrey Lloyd), that so far from that being a matter of criticism of the Minister, it is a quite sufficient reason for hurrying the Bill forward as an interim Measure because, without it, it is quite impossible to envisage the rapid development of our fuel economy on to a nuclear basis.
I want now to come to this matter of atomic energy. I am glad to say that in the confusions and miseries of the last few weeks I personally have found it a great relief to go back to my earlier interests in the certainties and the comparative simpilicities of nuclear physics, and I want to give just a very few figures. They are not new figures, but I want to cite them to put them into some relation with this matter. Following the observations made by my right hon. Friend, and those which have just been put to the House, with both of which I find myself in complete agreement, I think it may be useful just to do this.
As has already been pointed out, the original programme was one of from 1,500 to 2,000 megawatts in twelve stations of 150 megawatt capacity. That rate of capacity has already been doubled, and we are already actually building for 300 megawatt stations, and it is not unreasonable to anticipate that in the next few years we shall be thinking in terms of 400 megawatt stations.
996 We were thinking, in each of the last eighteen months, of the original programme of four more stations. If we were not thinking of any unrealistic increase in Government policy, we should be thinking in terms of, say, 18 stations of possibly 400 megawatt capacity in 1965. That means a 6,000 or 7,000 megawatt programme, and I think that such an achievement is definitely possible, and that we ought to be thinking in such terms, and that they should constitute our programme.
Before I draw a lesson from that, I want to take the matter one step further. We are thinking in such terms as those as being a practicable possibility by 1965, and on the basis of the graphite moderated gas-cooled station without further fundamental development—to which I shall refer again a little later—and which has already been definitely proved, a station of the Calder Hall type. We have to keep firmly in our minds that in that we have picked a winner. I hope we shall not be over-cautious. I hope we shall not proceed with this business as we did with aircraft production, for instance, in which we everlastingly got new things on paper but never in the air. So now we must not everlastingly have new designs on paper and nothing new on the ground. We are really beyond the stage when we have to be too cautious. Indeed, we can calculate now already what we can do. We may have to be thinking that towards the end of the 1965 period we shall have every year four or five 400 megawatt stations, we shall be calculating for about 2,000 megawatts every year or an equivalent of 7 million tons a year of coal.
Everyone who has followed this matter will appreciate at once the significance of that. The major people who had calculated power requirements, measured in terms of coal equivalent, over the next twenty or thirty years have worked out that it is about 7 million tons of new coal equivalent required every year.
Therefore, the consideration I am putting to the House is that we now have these reasonably calculable figures if we have an all-out programme and give it absolute Al priority. While we cannot do much more than perhaps treble what we hoped to get in 1965, we can thereafter, with graphite moderated gas-cooled stations, which have proved a success, think in terms of all the new fuel—not 997 electricity only—but all the new fuel requirements of British industry coming from something under our own control.
If that is possible, and on all the evidence which I can get from people who really know—and there is a mass of material published in the United States and here—that is something reasonable to go for, surely we must consider this Bill, the whole fuel policy of the country and the whole investment policy of the country on that basis. That is what we should aim at—trebling at least what we hoped to get in 1965, and thereafter trying to get something of the order of 7 million tons coal equivalent of new energy every year.
Here, I entirely agree with the very relevant warning of the hon. Member for Edmonton (Mr. Albu). We are hoping to stabilise our fuel demands other than atomic energy to what they will be in 1965. But in 1965, even if we treble the original programme and get 6,000 or 7.000 megawatts, we shall still need something like twice the oil which came into this country last year. These are the two sets of figures which I put to the House, if we are to get the picture, as we must have it, in our minds.
Nothing which we can do now will make very much difference in the next ten years. Indeed, in the next ten years our dependence on oil will increase and not decrease, even if our coal industry does very much better than we can hope. Nothing will stop us being at the mercy of Nasser and the orders of Dulles in the next ten years. But if we take steps to go for what is absolutely reasonable to work for in 1965, we can thereafter stabilise that position and the percentage which we shall have from imported oil will get less each year and more and more manageable and the damage which its interruption can do to our economy will be less and less and there will be all the other results too obvious to need elaboration.
I will go one step further. How has all that come about? It is a most interesting thing that that is almost entirely the result of just one simple, purely constructional advance. It has nothing to do with nuclear physics at all. It is simply the discovery of the mechanics that they can weld on site 3-in. plates instead of 2-in. plates. It is as simple as that. That process is going to increase.
998 We are already able to make much bigger nuclear cores, and it is already possible to increase the pressure of gas cooling. There are, therefore, all sorts of perfectly straightforward advances which, we may say, are in the bag and not just a gleam in the eye of some long-haired scientist None of these figures I have put forward—and I hope that whoever is to reply will tell me if I am wrong; but I do not think that I am—take account of the huge number of improvements which we have actively interesting to the atomic team. There is the whole question of Berylium metallurgy, the whole question of redesigning of the canning of the element, and I could go on. There is the question of ceramic cans instead of metal. So, even on the basis of the Calder Hall type, we can already calculate in the not too distant future not only an output on a scale completely unthought of when the original programme was started, but we have a whole number of extremely promising lines of development without any major change at all.
Behind all this, we have the question of fast breeder reactors. Here it is well to bear in mind that any likely contribution from them on a very large scale to electricity production even in the 'seventies must not be exaggerated. They must be proceeded with as rapidly as possible if for no other reason than that they are the only way of utilising the plutonium products of the Calder Hall type. Dounreay is designed to operate on only a 60 megawatt scale.
Therefore, while we can hardly be too optimistic about what can be done by our present Calder Hall type, and while we must develop from it, we do not want to get the impression that there is some sort of magical change likely to come over the scene in the very near future, although undoubtedly there will be developments. I have no doubt at all that some hon. Members of this House will still be alive when the thermo-nuclear process will be harnessed, although no one knows how to do that now.
I should like to put one other point to the House. I hope that we shall not get too terrified by this base-load problem, though it is true that from the economic point of view it is the big type of atomic station which benefits by that. There are, so I am advised, now already, so rapidly has advance been made in these matters, practically no technical difficulties in 999 adjusting atomic stations to the variable load, as well as the standard coal-burning stations. That is not a matter of any difficulty. We cannot say that that will set a limit to atomic development, although it is a very relevant consideration in £ s. d. So much for what I think can be done and the scale of operations and the possibilities if we tackle this matter as an absolutely overriding A.1 priority.
Here I come to agree with the remark of the hon. Member for Cardiff, South-East (Mr. Callaghan)—I am sorry he is not here, because he sometimes makes surprisingly sensible remarks when he is not stroking the tail of his sacred cow—and I think that he made some relevant criticisms of the composition of the Central Electricity Council. I am very much frightened by an overweighting of those on the side of the area boards distributive chairmen. The main function of the Generating Board itself is to be a nuclear energy producer, to put it as simply as that, but it will want an enormous sum of money, and I think that it would be a disaster if any recommendations which come up to the Minister, even if he does not accept them—and it is always easier to accept something than it is to turn it down, unless you are in the Treasury (when you are in the Treasury) —recommendations for the use of capital, which will be very limited, are to be over-weighted on the side of distribution as against pressing ahead on the generating side.
I want to conclude by saying a word on the question of capital. So far as I am able to follow this matter, while there are, of course, a number of possible bottlenecks, the question of draughtsmen, design teams and of expanding our technical education and the difficulties about steel—although I am advised that those are not as serious as is sometimes made out—the real bottleneck is simply to find the savings necessary for this huge undertaking. I think that the figure which has been given is roughly right and that it is the difference between about £70 a kilowatt and £120 a kilowatt, which will probably come down to £100. This will mean that about £30 million a year extra will be required.
This is a big sum, but it is not an impossible one. I hope very much that, if necessary, the Government will take the decision that this being the only hope 1000 for the industrial future of the country the money must be found. It is simply a question from where it is to be cut. In so far as we can increase saving by any method, that is all to the good, but if the total that the Chancellor can find does not allow for that, in addition to the other things, then the other things must be sacrificed.
Two things stick out in my mind. One of them may get me into trouble with hon. Members opposite but I assure them that there is no politics in this. If £30 million will produce fuel out of the atomic programme rather than out of coal then if one has to be sacrificed for the other I think we would do well to reduce the allocation for the development of the coal industry and put that money into the atomic fuel industry. If not, the money must come out of the defence programme which now bears no relation whatever to reality.
A sum of £30 million or £35 million a year, if need be, can certainly be found and must be found by a reduction there. It makes no sense to begger ourselves with a so-called defence programme if we are to be brought to a standstill by a failure in the basis of our economy. These proposals can be justified because they give the best hope of freeing our generating authority from all considerations other than going ahead as fast as possible with the transition to nuclear energy. There is a real and calculable hope within this generation of freeing ourselves from what otherwise would be an increasing stranglehold in our dependence on coal and oil.
We must accept the fact that in the immediate future it can do very little, but in five or ten years there will be a rapidly increasing rate of contribution. But the work can be done only if the fundamental decision is taken by the Government and passed on to the Generating Board and all concerned that this is number one priority, to which everything else must be subservient.
I support the Bill because I believe that it shows that the Government are clearing the decks, none too soon, for transition to this field in which happily, by the skill and ingenuity not of a nationalised industry or a private industry—for that has nothing to do with it—we are two years ahead of our competitors, including the "Yanks". Let us, for heaven's sake stay there.
§ 7.3 p.m.
§ Mr. W. A. Wilkins (Bristol, South)
My few observations will seem rather dull and uninteresting after the highly technical and fluent discourse to which we have just listened from the hon. Member for Oldham, East (Sir I. Horobin). I cannot possibly attempt to answer the matters which he discussed, because I am not technically qualified to do so. I am sure, however, that we were all interested to hear what the hon. Member had to say about future developments in nuclear energy. I have another engagement at 7.30 p.m., and I hope that hon. Members will forgive me for having to go away to a meeting immediately after I have finished speaking, but I wanted to raise one or two points with the Minister.
A favourite hobby-horse of mine when debates on electricity supplies take place in the House is the subject of rural electrification. I am not one of those who believes that we should say, "Never, never, never, should we interfere with a nationalised industry". If we have reason to believe that there are defects in a nationalised industry and that there is inefficiency at any point, it is our duty to examine the structure of the industry. If we can improve that structure, it is our duty as a House of Commons to do precisely that.
At the same time, we should not lose sight of the good intentions which we—particularly my hon. Friends—had when we decided upon the nationalisation of certain of the basic industries, especially the electricity industry, the one in which I confess I have always been the most interested. One of the reasons why I always favoured nationalisation of the electricity undertakings of the country was that I believed that both the large municipal undertakings—and I was chairman of the undertaking in Bristol—and the private undertakings were incapable of doing one of the things which we believed ought to be done. That was to make an adequate supply of electricity available in the countryside. I always held the view that that could be done only if we were able to co-ordinate the efforts of the nation through our nationalised industries. That is why I want to say a few words about rural electrification.
It may be that I am unnecessarily worried and that the Minister will be able to give me some assurance, either now 1002 or in Committee, which will allay my doubts. Clause 10, entitled "General duty of Boards to balance revenue accounts", makes me wonder what will happen to the two area boards which I regard as being the Cinderellas of the nationalised undertaking. I think particularly of my own area, the South-Western Region, but the Eastern Region is even worse off than we are in the South-West.
The board in my area has had a very difficult time since nationalisation in trying to bring about some sort of balance in its accounts. The reasons are not far to seek. It is because it has a comparatively small industrial load and an immense geographical, agricultural, area to cover. I am sure that even the businessmen in the House will admit that it is not easy to reconcile those two things. Many of them would not like to try to do so in the ordinary way of private business.
I pay a tribute, which I trust the Minister will be able to endorse, to the former Chairman of the South-Western Electricity Board, Mr. Steward, who came in at the very beginning and whom I know fairly well. He has done a fine job of work in the South-West, and he has handed over what I might call a going concern to his successor, in whom I have the utmost confidence, a former part-time member of the Board, who has been appointed Chairman. I believe that he, too, will do a really good job.
I am very anxious that rural electrification and the development of rural supplies shall not be retarded in any way as a result of the Bill. The Minister will probably find in his files a record of an occasion when some of us Members in the south-west of England went with the shadow Minister of Fuel and Power at that time to see Lord Citrine to seek assistance for the South-West and Eastern areas in their rural development.
Lord Citrine was extremely fair. He said, "I am not prepared to consider favourable tariffs or anything like that or anything that will appear to give some favourable situation to area boards. If I can discover a formula which will be available not only to the two boards whom you represent but to any board in the country which at any time might need to seek such assistance, I will see what I can do." The result was that he arrived at a formula which left it for any board 1003 that needed to do so to make approaches to the Authority for assistance for rural development.
It has worked extremely well. One has only to look at Appendix M of the Herbert Report to realise how effective it was in assisting the South-Western and Eastern Boards. I will not weary the House with the figures, for I have not the time, but it shows that, following that help, they were able to find themselves in balance rather than with a deficit. I am not sure of the balances which are shown. I think they must be gross rather than net. I have not studied them fully.
I hope the Minister will reassure us on that point and ensure, if he can, that his proposals, which I confess I have not examined in detail, do not result in the retarding of development. I can give an illustration of the value of this development from my personal experience. I usually spend my holidays on a farm in Cornwall. About twelve months ago electricity was brought to the area and about eighteen farms were connected to the supply. I remember the appreciation of the farmers. The wife of one farmer told me that for the first time they would be able to pluck their birds at Christmas in comfort instead of having to walk around the farm with hurricane lamps, perhaps in half a gale. Electricity is an enormous boon and benefit to the farming community, and when labour on the farm is not easy to obtain, it makes up to some considerable extent for the shortage of manpower.
I plead that the development of rural electrification should in no way be impeded. I hope the Minister will be able to say that assistance will be made available to area boards which may find themselves in financial difficulty unless they retard their rural development.
I would also add my plea to the Minister to reconsider his proposals about local authority representation. I was for a short time the chairman of the highly successful municipal undertaking in Bristol. I suggest that the experience gained by dozens of people during the course of years in the administration of municipal undertakings fits them for service on such committees. I trust that the Minister's mind is not closed to reconsideration of the representation.
1004 I believe that one of the main arguments that one can put forward in support of the plea for more local authority representation is that such people are invariably known in the areas which they serve. I urge the Minister to give further consideration to the matter and to amend the Bill in Committee.
§ 7.14 p.m.
Vice-Admiral John Hughes Hallett (Croydon, North-East)
I am sure the hon. Member for Bristol, South (Mr. Wilkins) will forgive me if I do not follow him in the points which he has developed. For one thing, I represent a constituency which has no rural areas. Also, although I wish to say something about the selection of persons to serve on the boards, I should prefer to do so at a later stage in my remarks.
While it is true that this Bill arises directly from the Herbert Committee's Report, I certainly hold that the wisdom of making changes must also be judged to some extent by the results which have been achieved by the industry since nationalisation. Indeed the Committee recognised that. There is a very interesting section of its Report in which it discusses the various factors which ought to be considered when assessing the efficiency of a publicly-owned concern. I certainly would not dispute the soundness of its conclusions, although I think that they are perhaps a little theoretical, because the Committee went on to recognise that, in practice, the owners of such industries—the public—will judge them primarily by the cost of their product. In the case of the electricity industry, its efficiency will probably be judged by the public almost solely by the price of electricity.
Speaking for myself, I think the public are right to take this line. In that respect, I do not entirely agree with my right hon. Friend, who, I think, felt that we should take a rather wider view of the question. However that may be, I would concede at once that the electrical industry, judged by the price standard, shows up very well indeed. It is a remarkable fact that, whereas, in the years since the war, in terms of real costs—that is, costs corrected for changes in the cost of living—average salaries and wages in the industry have risen by 6 per cent. and the cost of coal, the chief raw material used by the industry, has risen by 6 per cent., 1005 the price of electricity has fallen by 14 per cent. I repeat, that is in real terms. I suggest that, judged by any standard, that is a very creditable result.
It is easy to discount these results by saying that the electricity industry has had the lion's share of capital investment and that the technical development in the sphere of generation has been greater than that in other spheres, but the fact remains that credit is due, and ought to be paid, to the people who have worked in the industry at every level since the war. I know something about electricians, because I worked with them for many years in my naval service. There is probably no calling in which one finds a greater professional pride and a greater keenness, and that is reflected in the results to which I have referred.
Reverting to the Herbert Committee's Report, there runs like a refrain, from the beginning to the end of the Report, a plea that the industry should be run on normal commercial lines. It is a plea which makes good sense when applied to some aspects, anyhow, of the internal organisation of the industry, and that is the case with the reorganisation, which is the main purpose of the Bill.
In passing, I would say that, in so far as the Bill departs in certain respects from the Committee's recommendations, I prefer what the Bill contains. I do not think that the points of difference are quite as important as has been suggested by one or two hon. Members. What I do challenge, however, is the suggestion that the principle of running on normal commercial lines can possibly have any universal application in a publicly-owned concern. There are, in particular, two or three matters arising from the Bill to which I should like to draw attention and about which I should like further information.
The first concerns the selection, appointment and promotion of the managerial staff. In "managerial staff" I include those exalted persons who serve on the boards, because, after all, they are the top of the managerial organisation. The Report lays very great stress on the right and the duty of the Minister to select the best men for the key posts. Incidentally, it also argues the need to pay them bigger salaries. The Bill leaves the Minister's appointing powers some- 1006 what enhanced while it leaves the salaries unchanged.
At the risk of incurring the wrath of my hon. Friends, I should like to say that I entirely support and endorse the Minister's decision not to raise these salaries at present. I know that people have different standards, but to my way of thinking a salary of £8,000 a year is enormous. I cannot believe that there are many people who would not be prepared to give of their best for a remuneration on that scale. Surely if there are such people, they should not be encouraged.
§ Mr. Nabarro
Will my hon. and gallant Friend bear in mind that the assets of the Central Electricity Authority today are about £2,000 million, which is many times bigger than the biggest private enterprise industry in this country, but that private enterprise industry will pay to its top executives salaries four, five or more times greater than those paid in nationalised industry for similar work?
§ Vice-Admiral Hughes Hallett
Perhaps if private enterprise were paid somewhat less, the cost of living might fall. If the Prime Minister can work for £8,000 a year, I do not see why a chairman of a nationalised board should not work for a similar sum.
§ Mr. Palmer
Is there not also the difficulty that if this arbitrary ceiling for members of the boards is fixed, it becomes almost impossible to pay adequate salaries to the great bulk of the managerial people?
§ Vice-Admiral Hughes Hallett
There may be something in that. The top members of the board are remunerated on a scale higher than that of Permanent Under-Secretaries of State and on a substantially higher scale than the senior officers of the Armed Forces.
To return to appointments, I suggest that there is some danger in carrying this principle of arbitrary Ministerial power to appoint the alleged best man for the job too far. In practice, how does the Minister find the best man for the job? Is it decided in conversation with leading figures in the electrical industry? Is it decided on the advice of senior officials in the Ministry? I do not know, but I should have said that it was a very difficult thing to do.
1007 Arbitrary appointing of this nature is apt to cause considerable heartburning on the part of those in the industry who have worked their way up. I should like to say at once that this is where publicly-owned industry differs from privately-owned industry. The time must come, and I am not sure that it has not come already, when the top jobs ought to go to those who have worked their way up in the industry itself. Otherwise, there will not be the right kind of entrant.
After all, what would happen to the entry into Sandhurst if the Secretary of State for War were allowed to go where he liked for the members of the Army Council? What would happen to the entry into the Administrative Class of the Civil Service if it were the practice of the Minister to go to industry to find a man to be the permanent head of his Ministry? I am not saying that the efficiency of the public service might not benefit in the short term. Very likely it would, but, in the long term, we should lose, because the standard of young men who would be prepared to join would fall, unless we could offer them these prizes at the end of their careers.
That, in turn, raises the further question of how one ought to appoint, select and promote for the lower managerial posts throughout the industry. Here, I thought that the Herbert Committee was on very sound lines indeed in the observations it made in Chapter 14. Paragraphs 326 and 327 struck me as being of particular merit. I should like to ask the Minister, on this matter, whether he would be favourably disposed towards the creation of a central office to handle the appointment and promotion of the managerial members throughout the whole of the electrical industry and working under the authority of the Council.
Something on those lines is essential, in the long run, if one is to find an effective substitute for the profit motive as a spur to efficiency in public industry. There must be a carefully thought-out system of appointment and promotion. It is true that the Bill would empower the Council to do this, provided the boards agree, but I should like to ask whether there should not be mandatory powers in due course to take over this most important duty and to get the whole of the managerial structure of the industry on a properly competitive level.
1008 I want now to turn to the topic of capital for expansion. I am very glad that the Bill confirms the arrangement announced in the last Budget for raising capital for the industry, because the one part of the Herbert Committee's Report with which I disagreed was the chapter dealing with the raising of capital. The Committee said that a nationalised industry… ought to have to fight for its capital by going to the market.That is in paragraph 345.
I cannot understand what that means in the case of a concern owned by the public. It is not really practical to contemplate the issue of ordinary stock and, if fixed interest stock is issued, why should the public not have the benefit of the cheaper rate which comes with a Treasury guarantee? I am inclined to disagree with the paragraphs of the Report which argue against financing expansion of the industry to any extent out of profits. That part of the Report rather savoured of special pleading.
Why should not consumers help to pay for expansion, as they do to a very large extent throughout the entire private sector of industry? Indeed, if hon. Members opposite had their way, and carried nationalisation several stages further, we would run into great political difficulties if we accepted this principle as universal. There would be the strongest opposition to providing a Treasury guarantee for the expansion of the whisky distilling industry, so why tie ourselves down in that way in the electricity industry? Can we take it that Clause 19 of the Bill would permit expansion to be financed out of profits, or would it be held that Clause 19 was overridden by Clause 10? If there is any doubt, perhaps an Amendment should be considered in Committee to permit, at any rate, financing of area boards' expansion programmes out of profits, if necessary.
The last point to which I should like very briefly to refer is that to which several hon. Members have already alluded, the enormous importance of pressing on at the greatest possible speed with nuclear power stations. As has been pointed out, from the point of view of the Electricity Council the prospect would appear rather less attractive. The uncertainties from the financial point of view are well defined in paragraph 5 of the Herbert Report, even if it is not up to date, as, of course, it is not.
1009 Under Clause 7 the Minister has the necessary powers to insist upon an enhanced nuclear programme, although the more he exercises his directions under the Clause the more it will conflict with what I, at any rate, believe to be the overriding requirement—a cheap electricity supply.
Since the case for nuclear stations is one which stands in the national interest, and is not simply one which affects the interest of consumers, does it not follow that there might be some justification for reimbursing the industry to the extent of the difference between the cost of nuclear electricity and electricity produced by the coal-fired power station? I recognise that that would amount, in practice, to a subsidy, but I submit that it would have very respectable precedents.
For many years, in the early part of the century, the mail-carrying contracts which went to shipowners were a subsidy to encourage owners to build ships faster than would otherwise have been economical. Indeed, now I think of it, a direct subsidy was paid to shipowners who were prepared to build their ships with certain additional strengthening, so that they could be armed in the event of war. This case appears to me to be very similar in principle to that type of subsidy; it is something offered in the national interest. I am not suggesting that the Government should give an undertaking at present, but I ask them to bear it in mind.
I have tried to make my criticisms of this Measure as constructive as possible, because I yield to no one in my admiration of what the electrical industry has already achieved in recent years. I believe that the Bill will pave the way to its going forward to even greater achievements, and for that reason I most strongly support it.
§ 7.32 p.m.
§ Mr. Michael Stewart (Fulham)
We have all listened with great interest to the hon. and gallant Member for Croydon, North-East (Vice-Admiral Hughes Hallett). I was particularly interested in and gratified by his study of the problems of a publicly-owned industry—though it occurred to me that if he follows diligently the implications of some of his views he may end up with a political thought very different from the one in which he is now stationed. 1010 Hon. Members on this side of the House would not regret that journey.
I noticed particularly that the hon. and gallant Gentleman drew attention to the fact that if one judges the electrical industry by the price it charges the public for its services it has an extremely creditable record. One must accept that as a fact; it is something which has passed beyond the realm of controversy.
Earlier in the debate there was some argument between my hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) and the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) as to the judgment which the Herbert Committee has passed upon the electrical industry. The Herbert Committee's Report is not a piece of whitewashing, nor is it a piece of mudslinging; it is a sober appraisal of what has been achieved, combined with recommendations for the future. Out of that sober appraisal we can draw some things which are creditable to the industry and others which are not so creditable. The general, balanced judgment at the end, however, is overwhelmingly favourable to the conduct of this publicly-owned industry.
The significance of that to the Bill which we are discussing is that in the light of the Herbert Report and of other less spectacular but perhaps equal significant pieces of evidence, which we can find in the reports of other publicly-owned industries, it is not now possible for a sincere, sensible and reasonably well-informed person to maintain that there is any necessary correlation between nationalisation and inefficiency. A large chunk of political doctrine which used to play a part in the political life of the country—the setting forward as an axiom the statement that public ownership meant inefficiency—cannot now be maintained by a reasonably well-informed person.
There may still be room for difference as to how far the notion of public ownerships might be pushed, and there will certainly be need for a great deal of discussion as to the forms which it should take, but the idea that it must mean inefficiency is something which no reputable person will advance again in the field of politics. I trust that hon. Members opposite will mention this fact to some of their friends who are less well-informed on the subject of publicly-owned industries.
1011 Because this is so, and we are moving into an age when public ownership will be more and more recognised and will probably become increasingly common, it will be of the very greatest importance to us to obtain the proper form of public ownership. If we look back at the way in which industries have been organised under private capitalism we will see that the position has not been static. Right at the outset of the Industrial Revolution Adam Smith triumphantly proved to his own satisfaction that it was quite impossible to run a really go-ahead enterprise in the form of a joint stock company. In a generation's time the joint stock company had become the typical form of capitalist organisation. By alterations in the law and by experience people had found how to make joint stock enterprise compatible with go-ahead enterprise.
We are in a somewhat similar position today. We recognise the necessity for increasing public ownership and, to an ever increasing extent, the big political question will be, "How can we make public ownership efficient?" We need not be bigoted to the extent of supposing that the exact form of public ownership which is enshrined in the Nationalisation Acts passed in the 1940s is the permanent model of how public industries should be run, but we must banish from our politics in future the outmoded idea that we should attack nationalisation as such and, instead, we must concentrate upon exactly how we can make it work. If we approach the later stages of the Bill in that spirit we shall be able to make it a useful Measure.
Having made that general comment—to which I was moved by the remarks made by the hon. and gallant Member—I will now refer very briefly to two points of detail. In my constituency there is a large and famous power station, once the property of the municipality. Perhaps for that reason the citizens of my constituency have always had a special interest, both as workers and as consumers, in the electrical industry. One of my points affects consumers and the other workers.
Reference has already been made to the arrangements made in the Bill—as in the preceding Act—for the representation of consumer interests. In the Bill those arrangements are situated mainly in the First Schedule. I share the regret which 1012 has already been expressed that the voice of local authorities is apparently to be heard less in the representation of consumer interests. I feel that one of the shortcomings of the industry in its present form is that it has not yet found how to make consumer representation a reality.
People do not yet feel that there is somebody to whom they can say, "I have a complaint about the way this public service is run." Representation exists in fact and in law, but it does not capture people's imaginations. I am quite sure that that is one of the things to which the Minister and everyone responsible for running a publicly-owned industry has to address his attention in future.
As an example, may I quote a matter on which Questions were addressed to the Minister some months ago, the disappearance of what used to be known as an assisted wiring scheme. We had one in our borough when the undertaking was municipally owned. It meant that if the ordinary domestic consumer of electricity needed to get his house rewired he received some financial assistance for the purpose. It was a desirable thing in the interests of safety.
Then consumers found that they could not get the benefit of this scheme. The trouble was that when they used the mechanism by which consumers are able to make complaints they were not able to get a satisfactory answer to why they could not get from the industry, in its present form, something which they could get in the earlier form of public ownership, which was municipal. The point I am making is that they were left unsatisfied and unconvinced. It is not a good thing, even if the publicly-owned industry were right—I am not sure that it was—that a consumer should be left unsatisfied and unconvinced.
§ Mr. Charles A. Howell (Birmingham, Perry Barr)
While the Minister was giving my hon. Friend that reply in the House, he was writing to me, as secretary of a trades council, telling me that it was possible to get an assisted wiring scheme for farm labourers and other people. The Minister may have misunderstood, or he may have had a different scheme in mind.
§ Mr. Stewart
I am obliged to my hon. Friend. Perhaps the fault is mine. I have no farm labourers in my constituency, and I was taking a slightly municipal view. At any rate, my constituents, 1013 and others like them, were left unsatisfied and unconvinced.
§ Mr. Stewart
The other point affecting the workers in the industry I will refer to briefly. It was well described by my hon. Friend the Member for Keighley (Mr. Hobson). The Minister will remember that my hon. Friend described how young men recently down from the university with graduate qualifications had good prospects of promotion according to ability in this industry; and that it was the rather older men, with whom and by whom the right hon. Gentleman must work in the first instance, who had not similar prospects of advancement. That was the point made by my hon. Friend, and it struck me, because something similar had been said to me by a constituent who works in the industry.
My constituent praised the increasing opportunities for promotion according to ability that had come about in the industry since nationalisation. But, he said—and perhaps it was a natural result that it was the young men who had come into the industry recently who would be the main beneficiaries—that there did not appear to be sufficient attention, as yet, being paid to the men who, shall we say, are in their late thirties, or a bit older, but are still at an age when they could look for promotion and opportunities of further training and advancement. They felt that the industry was not doing quite as much for them as for people ten or fifteen years younger.
I put forward those two points, one affecting the consumers and one affecting the workers in the industry, and it may well be that I put them forward from the point of view of one constituency. There may be much else to be said on both those matters in order to get a proper picture, but I ask that in the task with which this Bill is concerned—that of getting a form of organisation for a public industry which is satisfactory to the public, to the consumer, and to the worker in the industry—those kind of points be borne in mind.
§ 7.44 p.m.
§ Mr. Gerald Nabarro (Kidderminster)
Two incontrovertible facts have emerged from our debate so far. First, there is likely to be in this country an increasing 1014 shortage of energy in all its forms during the passage of the next two or three decades. Secondly, that the Herbert Committee's Report is an admirable dissertation upon the electricity supply industry, though many of us may disagree with certain of the recommendations which the Committee made.
I wish to apply myself to a number of matters which, I believe, are of broad principle to the industry and to leave what is undoubtedly a very complicated Bill indeed to be the subject of minute scrutiny during Committee stage. I hope the Measure will be substantially amended, for there are many aspects of this Bill which will become the subject of acute dissention once we have it in Standing Committee. First, I wish to say something about the proposals of the Minister for the reorganisation of the industry, the dissolution of the Central Electricity Authority; the creation of the Central Electricity Generating Board; the creation of the Electricity Council and the investing of the twelve area boards with a larger degree of autonomy than they have enjoyed since the passing of the 1947 Act.
All of these measures of reorganisation are, in my opinion, fundamentally sound and ought to be supported by hon. Members on both sides of the House. I do not think that the Herbert Committee's particular recommendation for the interpolation—in effect—of the additional strata in the form of a generating board beneath the Central Electricity Authority and between the Authority and the executives of the various area boards would have resulted in simplification of management within the industry. I believe that simplification and administration of management is supremely important in an industry of this kind. I confess that before the Herbert Committee was established I was for many years very tempted to believe that the best form of organisation was a central electricity authority and twelve area boards, each one of which would be responsible both for generation and for distribution. I advanced that view for many years. However, as a result of what Herbert has written, I have largely changed my views, and I congratulate my right hon. Friend upon a form of organisation which I think is most likely to be successful.
1015 In my opinion, there is a clear analogy between the area boards which he now envisages and the area boards in the gas industry. One hon. Member referred to the fact that the Atomic Energy Authority was the nationalised industry about which we heard least and about which there was the least controversy. But the Atomic Energy Authority is relatively new. Of the older nationalised industries, created by the Statutes of the 1945–50 Parliament, the one we undoubtedly hear least about is the gas industry. In my view, there is a sound reason for that.
It is the fact that the right hon. Member for Easington (Mr. Shinwell), the then Minister of Fuel and Power, as a result of all the experience he gained during the prolonged debates and consultations upon the nationalisation of coal and electricity, decided that an autonomous area board in each of twelve cases, bound but loosely together at the centre by the Gas Council, was most likely to be successful. In the event, it has been very successful, and I believe that the form of organisation for the area boards which we now envisage in the electricity industry is likely equally to succeed; provided that a necessary degree of autonomy and self-government is accorded to each of those area boards and the guiding hand at the centre is provided by the Electricity Council.
I have said that with regard to the broad pattern of reorganisation. I wish now adversely to criticise some of the provisions of Clause 2 (7) of the Bill which states:The Generating Board shall have power (a) to manufacture electrical plant.Later, in the Clause it states:Provided that this subsection shall not empower the Generating Board to manufacture electrical plant for export, or to manufacture, sell, hire or otherwise supply electrical fittings.I am opposed to the nationalised authority being empowered to manufacture any electrical plant, equipment or fittings. The hon. Member for Houghton-le-Spring (Mr. Blyton), who is laughing at me, will know from his knowledge of the coal industry that there are certain proponents in his party of a policy allowing the National Coal Board to engage in the manufacture of coalmining machinery. That is likely to 1016 be damaging to the structure of the industry.
I will tell the House why, in relation to electricity. Since electricity was nationalised there has been only one buyer in this country of heavy plant, that is, of turbo-alternators first, boilers second, and heavy cable third. I have no doubt that there has been collusion between the small number of manufacturers of these types of heavy plant. Many hon. Members thought I was wrong when I said so, but Lord Citrine did, by implication a few months ago—whether he meant it or not I do not know—when he was reported most definitely as supporting this system of fixed-price tendering for heavy plant to the nationalised authority.
The reason I am against the nationalised electricity authority manufacturing heavy equipment of the types I have mentioned is a purely practical one. I entreat hon. Gentleman opposite not to consider that I am being doctrinaire about the matter. I am opposed to it because each of the heavy electrical manufacturers concerned must have primary regard to the export of that plant, and it is only by having at their command on the home market an established and continuous demand for the products of their industry that they can remain highly competitive in price in the export field.
If hon. Gentlemen opposite disbelieve me, will they please consider the case of steam locomotives, because it is largely analogous. Since the nationalisation of railways the steam locomotive manufacturers have had many difficulties. They have been faced with the fact that the railways are cutting down their purchases of steam locomotives which has caused the cost of locomotives for export to rise. In many cases this has resulted in the loss of contracts to German competitors. That was also manifest in the case of contracts for open tender put out by the Indian Government and by other foreign governments. Exactly the same thing might apply if we had here in Britain, interpolated in this Bill, an additional means of manufacturing heavy electrical equipment by the nationalised authority.
§ Mr. C. Howell
Is the hon. Member suggesting that the British Transport Commission has been manufacturing and 1017 exporting so many locomotives that the manufacturers cannot now export locomotives?
§ Mr. Nabarro
I see the hon. Member for Fulham (Mr. M. Stewart) nodding his head vigorously. I did not suggest that for one moment. I was using the case of locomotives analogously. I know it will appeal to my right hon. Friend because he is in possession of the facts.
I shall move in Committee to delete the words permitting the manufacture of plant. I shall do so for two additional reasons. The first reason is that the Central Electricity Authority raises its capital on preferential terms under Treasury guarantee, terms that private enterprise manufacturers cannot match. It is therefore manifestly unfair that a nationalised authority should use public money, which is heavily subsidised by the Treasury, for manufacturing in competition with private enterprise firms who are paying the full market rate.
§ Mr. Nabarro
Because it has always been our intention in this House that nationalised coal, electricity and gas, and other industries that went into public ownership between 1945 and 1950, should apply their funds primarily to the essential purposes for which those corporate bodies were formed, in this instance the generation and distribution of electricity.
Let me give my final objection to this manufacturing Clause. What is the distinction between electrical plant and electrical fittings? The Clause says that the authority may manufacture plant but may not manufacture fittings. Is an electric motor plant or fittings? [Interruption.] Is some hon. Member giving me the answer?
§ Mr. Nabarro
The hon. Gentleman says "plant". He should be very careful. I am not trailing my coat before him. A fifteen or twenty horse-power motor in a factory might be considered plant, but a fractional motor attached to a carpet sweeper is generally regarded as a fitting. Is a solenoid plant or a fitting? Is a condenser plant or a fitting? One might go through the whole gamut. There is this unfortunate distinction in the Clause. If by "fittings" one means conduit or adaptors for electric lamps, that is one thing, 1018 but there is this invidious distinction. It was in the 1947 Act in similar terms, and I have always objected to it in principle. In Committee I shall move to extinguish it from the Bill.
§ Mr. Palmer
The hon. Member is making rather heavy weather about this matter. The Central Electricity Board has had this power of manufacture for eight years or so and has never used it. It keeps it in reserve in the event of its being held to ransom by manufacturers.
§ Mr. Nabarro
The hon. Member considers me a little more naive than I consider myself. He can tell that story to the marines and get away with it, but he will not impress it on me. It was wholly bad that this provision for the manufacturing of plant was put into the 1947 Act. Whether it has been used in the last ten years or not, I shall move to get it extinguished when the bill is in Committee. I believe this provision to be wrong and to be fundamentally opposed to the ideology of the party I represent.
§ Mr. Nabarro
It might appeal to my hon. and gallant Friend, who was invited to join the benches opposite, but it does not appeal to my Conservative philosophy.
§ Mr. Hobson
In view of the fact that firms who are making this plant are loaded to capacity, what is wrong, in order to preserve the market which the hon. Gentleman desires, if the Central Electricity Authority and the Electricity Council make turbines, generators and auxiliary plant under licence? Is there anything wrong in that?
§ Mr. Nabarro
We might usefully explore that point in Committee. I could speak for a long time on the merits and demerits of nationalised undertakings engaging directly in the manufacture of plant.
I have a word to say now about salaries of members of the board. The Herbert Committee was quite explicit about this matter. In my opinion, we are wrong to burke, delay and procrastinate on these outworn salary scales for senior executive members of the boards. My hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) has had a long and illustrious service in the Royal Navy. He 1019 knows nothing about private enterprise concerns. He was therefore a little ill-advised to be so dogmatic as he was about the standards of remuneration paid in private industry. Take Imperial Chemical Industries or any large industrial firm. Their senior executives, although the organisations are manifestly much smaller in size than the nationalised industry that we are now discussing, are paid many times the salaries of the senior executives of these nationalised boards. I have no intention of trying to de-nationalise the electricity industry, but if it is to remain highly efficient it is fundamental that the men in the senior positions have the best brains and experience that the resources of the nation can command.
On this point the Herbert Report was absolutely implicit. We ought to have some regard to the recommendation it made on page 144, which was as follows:The electricity supply industry must compete with private industry for its top management and will be hobbled"—I pause there to say that I very much like the word "hobbled"—… in the face of severe external competition for leaders and technical staffs if it cannot offer salaries comparable to those in private industry.The following recommendations, 42 and 43, rather expand those views. In my opinion, the nationalised electricity industry and other branches of nationalised industries are gravely suffering today in their recruitment of top executives of adequate calibre because they are not in a position to offer salaries, remuneration and conditions of employment comparable with those paid in the best private enterprise firms. It used to be the plea of hon. Members opposite that private enterprise would have to follow the standards created by nationalised industries in matters of this kind. Exactly the opposite is the case today. The nationalised industries are failing to comply with the standards generally recognised as being enlightened, proper and adequate by those private enterprise concerns.
§ Vice-Admiral Hughes Hallett
Does my hon. Friend think the nationalised industries, particularly the electrical industry, will always have to go outside the 1020 industry for the top appointments? Does he think the time will never come when they can be filled by ordinary promotion?
§ Mr. Nabarro
No, Sir, it should be a proper admixture of promotion from the lower grades within the industry and recruitment from without the industry. If I might give my hon. and gallant Friend an example. The present deputy-chairman of the Central Electricity Authority, Mr. Eccles, who came from the North-Western Board, was an example of promotion from within the industry. That was an admirable appointment in every way, as we would all agree. On the other hand, Sir Brian Robertson, in charge of the British Transport Commission, came from right outside the transport industry. His also was, I believe, an admirable appointment, and I am sure that in view of the identity of background my hon. and gallant Friend would agree. Every case has to be considered on its merits, but remuneration is a fundamental factor, and I entreat my right hon. Friend to reconsider the matter.
I want to say a word or two about finance. This industry consumes fabulous sums of money. Investment in the nationalised electricity industry annually is at present of the order of £200 million a year. It is double that of the coal industry, nearly four times that of the gas industry, yet still it has inadequate sums as its disposal for expanding the power generation facilities of the country on the scale we wish to see. I make two comments within the compass of this Bill. In my opinion, my right hon. Friend and his predecessor have always stressed the merit of these area boards being autonomous and complying with best commercial standards. We hear these terms bandied about on all sides of the House, particularly that these area boards should be commercial undertakings. I submit that they never can be commercial undertakings until they comply with the important recommendation made by the Herbert Committee, which said, in effect, that greater autonomy should be enjoyed by the area boards, but pari passu with the area boards raising their own capital by direct resort to the money market.
What my right hon. Friend omitted to observe in his dissertation on this aspect of matters was the fact that these area boards compete with private enterprise in quite a wide field of contracting 1021 and supplying appliances and thus the Herbert Committee is quite emphatic. The Report says:The advantages we envisage in according to the individual Boards a greater sense of personal responsibility for capital expenditure, and providing the discipline which direct access to the market would exert, should not, in our opinion, be lightly cast away, and we would hope that the course we recommend will be adopted.The Report goes on to say:We would propose that the Act be amended so that each Board would go to the market for its own capital requirements.That was a fundamental recommendation of the Herbert Committee Report pari passu with the greater autonomy to be enjoyed by the boards. I was, therefore, somewhat sad that my right hon. Friend failed even to make a reference to that important provision and recommendation. He did it somewhat less than justice.
The second point which my right hon. Friend again neglected to observe in the course of his speech today and which I believe to be of cardinal importance is that although there have been many plaudits for the electricity industry and the wisdom of the Herbert Committee's Report, why was there not some attention to a highly derogatory sentence about the industry contained in page 91? There the Report states:As we shall show, there is ample scope for an attack upon costs, in the scale of capital expenditure, in the utilisation of capital, in the use of manpower and in other directions. In our opinion the industry is languid in its approach to these problems and we should expect to see a far more vigorous approach before the expedient of raising prices is contemplated.I re-emphasise to my right hon. Friend the use of the word "languid." I am sure that Sir Edwin Herbert did not write that into the Report without a very careful consideration of the choice of words. I should like my right hon. Friend to say, in view of the tremendous sums he envisages as being necessary for future capital for the industry, what steps he proposes to take, to assume that the electricity authority is a great deal less languid than it has been in the past, in this important matter of costs.
Thirdly, I want to say a few words about generation. We are creating the Central Electricity Generating Board. I am sure we will all wish that new body a generous measure of success in its important duties, but I wish to urge on 1022 the Minister, and through him upon this body, two very important factors which have been little touched upon today by earlier speakers. The first is in connection with independent generation. I think I may claim with due modesty to be the only hon. Member of this House who gave oral evidence before the Herbert Committee. I spent several hours with the members discussing this very important question of independent generation.
The fact is that 25 per cent. of the power generation facilities of this country are today in private hands; they are not nationalised. They represent the power plants of individual firms, of other nationalised undertakings, and are not part of the fixed assets owned by the nationalised electricity undertaking. The highly desirable state of affairs is that those private plants should be worked closely in parallel with the grid. This point was made in another form by the hon. Member for Keighley (Mr. Hobson). It means that when the private plants have a surplus of electricity it shall be fed into the grid and when the grid is short of supplies, so far as possible, it shall draw on the resources and facilities of those private plants. The Herbert Committee used these words—I comment once again to my right hon. Friend that I am sorry he omitted reference to them this afternoon:The full economic and technical possibilities of parallel operation of private generating plants are not therefore fully realised.
§ Mr. Nabarro
I do not agree that it would be expensive; it would be much cheaper, for the reason the hon. Member gave. I do not want to go into the technicalities, but it is a fact that the most efficient public generating plant burns coal at a thermal efficiency of 30 per cent. approximately whereas back pressure turbines privately and independently owned, when properly balanced between feeding power to factory requirements and using steam for the secondary need of processing and heating the factory itself often have a thermal efficiency of 70 per cent., or more than twice as much as the public plants. That was one of the reasons for the Herbert Committee recommendation. I hope the Central Electricity Generating Board will have regard to that important fact.
1023 Secondly in connection with generation, I wish to say a word or two about the load factor. We invest huge sums of money in electric power stations. The load factor last year was of the order of 44.9 per cent. The year before it was 44.8 per cent. That means that these enormously expensive establishments are used to less than half of their optimum capacity. Nobody would suggest that they could be used as to 100 per cent., but base load stations are often used as to 80 per cent. or more. The plain fact is that only 44.9 per cent. of the huge sum of public money invested in these power stations was actively employed last year, and the remainder of the capacity was dormant or idle.
Herbert recognised this point at once. He used these words, which again I commend to my right hon. Friend; and again I was grieved that he did not embody them in his speech today. [Laughter.] I do not know why my right hon. Friend should be amused at what I say. I am rebuking him for failing to have proper regard to such an important matter.
§ Mr. Aubrey Jones
I must remind my hon. Friend that out of courtesy to the House I had to keep my speech to a certain brevity.
§ Mr. Nabarro
The fact is that my right hon. Friend included many matters of minor importance and omitted others of major importance.
§ Mr. Nabarro
As my right hon. Friend says, I am quite incorrigible on this matter.
The quotation which I intended to give was from paragraph 403:We therefore recommend that the Authority should undertake as a matter of urgency a thorough investigation into the problem of load factor improvement.Instead of glibly granting vast sums of additional money for this Authority year by year for new investment, it would be a very good thing if we looked more closely at the utilisation of the existing money vested in the industry.
Finally, I want to say a few words about commercial policy. This subject has not yet been mentioned in the debate, although the Herbert Committee had a 1024 great deal to say about it in its Report. I have always taken the view that it is not the duty of an electricity authority to enter into the kind of commercial operations which are manifest in the area board showrooms all over the country today. I do not believe that it is part of the duty of an electricity authority to sell refrigerators or television sets or radio sets or Kenwood "Chef" mixers. These are not, in the proper sense of the word, electrical appliances.
Some people have said that the electricity boards sold appliances before nationalisation. It is true that they sold electric fires, electric water heaters and one or two other things which improved the load factor, but when it becomes so distant from the original electrical appliances as is evidenced by such items as television sets, one wonders where the area board's commercial activities will end. I am prompted to inquire of the Minister, although he cannot reply today—I shall press him on the matter in Committee at the appropriate time—[HON. MEMBERS: "He will have a rough time."]—and no doubt my right hon. Friend will have a rough time in Committee.
§ Mr. Nabarro
I am sorry that has amused you, Mr. Deputy-Speaker; it ought to have been a source of commiseration.
I was saying that it is beginning to be very difficult to understand what an electrical appliance is. If a television set is an electrical appliance because it needs a trickle current to power it, equally a lathe is an electrical appliance, a grinding tool is an electrical appliance, and a motor vehicle of the type operated by Harrods or other London stores on electric batteries is also an electrical appliance? Are we to see the area boards and their showroom organisations spreading their wings into sales of that kind? I believe that this is wholly wrong.
Last year, the area boards used for this purpose millions and millions of pounds of capital which had been granted to them for the purposes of generating and distributing electricity. I believe that the boards should leave to the proper agents for this purpose—namely, the private enterprise firms—the sale of these electrical appliances. I am glad to see that my 1025 hon. and gallant Friend the Member for Croydon, North-East agrees with me on that point.
The final reason that it is so unfair is that many of these showrooms pay no rates and that these area boards are financing the sale of such appliances with money borrowed under Treasury guarantee on preferential terms. During the discussion of the Rating and Valuation (Miscellaneous Provisions) Act last June, the hon. Member for East Ham, North (Mr. Dames) took the point, I thought, very neatly, and I am sorry that he is not here to support me today. On that occasion he said in effect that, "He did not mind the area boards selling appliances so long as they sold them on exactly the same terms as the co-operatives and private enterprise firms." He thoroughly objected, as I do, to the fact that as an example I have an electricity showroom in Stourport-on-Severn, Worcestershire, taken over by the board three years ago, which has not paid a penny in rates since the day the area board took it over, whereas before, of course, as an ordinary private enterprise shop, it paid its full measure of rates to the local authority.
Therefore, I want to ask my right hon. Friend what his intentions are about this important sector of the activities of the area boards? Will he take steps in the Bill or in this Parliamentary Session to make sure that the terms of sale for appliances are exactly comparable, as far as he is able, between the nationalised area boards and fair and equitable as between the area boards and the cooperatives and private shopkeepers? Surely they should all pay their due measure of local rates and should all operate on fair and equitable terms, without the nationalised authority being unfairly favoured.
Those are my principal comments at this stage, upon the Bill which is undoubtedly complex but in principle good. It will need a great deal of amendment in Committee. It contains many points which I believe are offensive to hon. Members on this side of the House, but I assure my right hon. Friend, although I have been critical on certain aspects of it, that I share his belief that this reorganisation of the electricity supply industry is indeed fundamental to the expansion of our power and energy resources which is, in turn essential to the future well-being of our country.
§ 8.18 p.m.
§ Mr. William Blyton (Houghton-le-Spring)
About this time ten years ago some of us sat for many weeks in a Standing Committee to deal with the Electricity Act, 1947. While the hon. Member for Kidderminster (Mr. Nabarro) was not on that Committee, there is no doubt that members of his party at that time put forward very forceful arguments to show why shops owned by electricity undertakings should not be allowed to sell appliances but should leave them all to be sold by private enterprise. We overthrew that argument at that time, and I hope that the Minister will not place electricity undertakings in a less advantageous position than that which they enjoyed in earlier days, when they were municipalised.
Another point which we faced in that Committee, and which ought to be remembered, is that at that time the electricity industry was in a rather bad state. The McGowan Report had condemned it in 1936; there had to be reorganisation of the industry, and this was delayed because of the war. Something had to be done, no matter who was in power at the end of the war, and we nationalised the industry. It is remarkable that although the nationalisation Act was opposed tooth and nail by the Conservative Party, hon. Members opposite are now singing the praises of the electricity undertaking as one being of the best in the country.
I want to be quite frank on this point; while I want to develop nuclear energy in this country, we must not lead the public to believe that nuclear energy will meet a great part of our fuel requirements in the foreseeable future. I believe that in the foreseeable future the country will have to depend on coal and oil, and that we must also do all we can to develop our atomic energy policy to ease the situation. But I do not want it to go out from this House that there is no future in the mining industry. I do not want the impression to be created that nuclear power will take the place of coal in the foreseeable future; otherwise, we shall have even greater difficulty in attracting men into the industry.
The apparent basis in this Bill for the reorganisation of the electricity industry will not be accepted in the mining industry. We in that industry will not accept 1027 any idea of areas being based upon their own economic resources. We have had some of that, and we know what it means. Therefore, I hope that the Bill does not in any way represent a basis of the organisation to be applied to the coal mining industry, for if it does there will be more opposition in the future than there is tonight.
I am greatly disturbed about the reduction of local authority representation on the Electricity Council. During the Committee stage of the 1947 Act we took over hundreds of municipal undertakings and brought them within the nationalized ambit. The people in these undertakings have had years of experience of electricity generation and distribution. It must also be remembered that the local authority representatives are in direct contact with the people in their areas whom they represent.
It would be very bad for the Minister to reduce the amount of local authority representation on the Council, because many of the complaints which are considered emanate from people in the areas who consult their local boards. It appears to me that by this Measure they are to have their representation reduced to enable the big industrialists who make bulk purchases of electricity to secure representation. This is a very bad move, and I hope that we shall amend this provision in Committee.
I now wish to refer to Clause 10, under which the area boards, taking one year with another, have to balance their revenues. If the local area boards are to deal with rural electrification, I should like to know what will happen in some areas which are not heavily industrialised, where there are small townships and where there are no large bulk purchasers of electricity. Let us be frank. There are areas which are not carrying the load. If rural electrification in South-West England, for example, is dependent on the revenue in that area, rural electrification will be put back many more years than it would be in an area whose electricity board is prosperous, for instance, on the banks of the Tyne, which is heavily industrialised.
The electrification of the rural areas ought to be carried out on a national scale and the area boards ought similarly to be assisted. If this electrification is 1028 to be based on the economic resources of the respective areas, upon the generation, sale and distribution of electricity in those areas, I feel very sorry for parts of South-West England, such as Devon and Cornwall.
I listened to the hon. Member for Kidderminster (Mr. Nabarro) referring to our dependence on our own fuel resources. I agree with him. I have come back from oil-producing areas in the Colonies where the production of oil is in the hands of the Americans. We made an inexcusable surrender in the Trinidad oil sell-out, and now we have to buy that oil with precious dollars. The Americans are in Jamaica and Barbados, too. If we are to be dependent upon our own oil resources, why do we not get the oil from our own Commonwealth and ease the situation?
I hope that the Minister will not change that part of the Bill which some of us regard as a safety Clause against the rings that operate in the electricity industry. We are aware of the monopoly in electric lamps and cables. If there is not a safeguard by which the industry can take a stand against these rings, the industry will be at the mercy of these people. Therefore, this safety provision ought to be retained, and in so doing the Minister will have the backing of this side of the House.
§ 8.28 p.m.
§ Sir Keith Joseph (Leeds, North-East)
I cannot follow the hon. Member for Houghton-le-Spring (Mr. Blyton) in all the points he so quickly raised, but I should like to stand up for the liberalisation of trade which the Government have so properly carried out. In his last two points, the hon. Member was against that liberalisation. First, he blamed the Government for allowing the Americans to buy the Trinidad Oil Company when it would ill become our Government, who are pressing America to allow British competition within the United States, to forbid them entry under precisely competitive conditions into our own Commonwealth.
On the second matter which he raised at the end of his speech, I should like to remind the hon. Member that under the Bill the Central Electricity Authority will have power to seek quotations for heavy equipment from abroad, thus giving yet another protection against any conceivable 1029 exploitation by our own heavy plant manufacturers.
In considering the Bill, which is based on such an excellent Report as the Herbert Report, one naturally tends to look for those recommendations of the Report which have not been included in the Bill. I must say, although I only repeat what other hon. Members, on both sides, have said, that the more one supports the Bill, as I do enthusiastically, the more absurd it seems that the almost basic recommendation of the Herbert Report that salaries for managerial and technical staff should be raised should have been ignored.
I make no apology for repeating what other hon. Members have said. As the hon. Member for Cardiff, South-East (Mr. Callaghan) said earlier in the afternoon, when talking of area board chairmen, the more that a single point is repeated, the more chance there is that it will be heeded. Salaries were fixed in 1947. They were fixed, as far as I can make out, on some special basis as falling above Civil Service salaries and yet below private enterprise salaries, as if a compromise in this sphere could be successful.
Any comparison with Civil Service salaries is completely misleading. Unlike service in the Civil Service, there is for board members in nationalised industries no comparable security of tenure. There are no comparable pension provisions. What is equally important is that board members have no anonymity and no Minister to defend them the whole while, as civil servants have.
One must face the fact that it is private enterprise salaries and conditions of service that set the pace. We all recognise—this is by no means a party point—that, in the world in which we now live, managerial genius is at a premium. We all want it for every activity and it seems absurd that in a world in which managerial genius is desired, we should jeopardise the nationalised industries which we all want to be resoundingly successful for fear of possible political consequences of modernising the salary scale.
§ Mr. F. H. Hayman (Falmouth and Camborne)
On the same argument, would the hon. Member be prepared to move that Members' salaries be increased?
§ Sir K. Joseph
I, for one, am very much in sympathy with the principle of an increase in Members' salaries, but there is an element in them which is completely absent in nationalised board members' salaries. In the case of the salaries of Members of Parliament, there is the question of appearing to the public as the paymaster increasing his own pay. This element does not appear in the case of nationalised industry management.
§ Mr. Hayman
Would the hon. Member agree that the same insecurity of tenure and the absence of pension provisions applies both to the Member of Parliament and to the chairman of, say, an electricity board?
§ Sir K. Joseph
To become a Member of Parliament or a member of a nationalised board is in each case a voluntary undertaking, but we know that members of nationalised boards are bid for by other purchasers. Can one say that Members of Parliament are bid for by other purchasers?
§ Notice taken that 40 Members were not present:
§ House counted, and, 40 Members being present—
§ Sir K. Joseph
The plea for higher salaries for top management is not the only recommendation of the Herbert Committee to which I wish to draw attention. The Herbert Committee, quite rightly, pointed out that middle management and technical staffs have their salaries compressed between the very properly increased wages and salaries at the lower end of the scale and the fixed salaries of the board members. Consequently, the result of the Government's failure to increase salaries for board members since 1947 has been to jeopardise the retention by at least this nationalised industry of the absolutely vital middle management and technical staff who are essential to our electrical and nuclear programmes.
These men are vital for private enterprise as well as for public enterprise. One has only to look at the advertisement columns of the daily papers to see the temptation under which these men must exist, however much they may want to serve the stirring and exciting projects of nuclear energy, if their conditions of pay are not proper.
1031 However much the hon. Member for Fulham (Mr. M. Stewart) may feel that only right hon. and hon. Members on his side of the House study the documents about nationalised industries—he expressed surprise that my hon. and gallant Friend the Member for Croydon, North-East (Vice-Admiral Hughes Hallett) had studied the nationalised industries—I would draw his attention to the publication by the Acton Society Trust on the problems of middle management in nationalised industries, which points out that, excellent though the achievements of the electricity boards have been, there are still problems of management in this large-scale endeavour which have not been solved.
If we fail to solve that middle management problem and if we pay the personnel less than they can get in private enterprise, the whole of this multimillion pound enterprise to rescue our fortunes will be jeopardised for the skimping of salaries. I am quite sure that the Minister fully realises this. The person who has to be persuaded is not the Minister, but the Chancellor of the Exchequer. He is naturally anxious to avoid increases in cost.
I cannot pretend that the increase which I am suggesting would be a trivial one, because not only is it the top management but also the middle management and technical staff whose salaries I am discussing; and it is not only their salaries but also their pension rights and possible compensation for dismissal, and all the other conditions, obtainable in both the Civil Service and private enterprise.
It seems to me that if the Government, on the plea that these things can be left for another year, continue to ignore this problem there will be demoralisation in the staffs, there will be distraction of their attention from much more important things, and there may easily be disintegration of the excellent teams that have been brought together. I would urge the Government most seriously to face the fact that, though there may be some criticism of raising salaries, there will be far more criticism if, for want of raising the salaries, this great basic industry finds its future jeopardised.
§ Mr. Douglas Houghton (Sowerby)
I would point out, in defence of the Chancellor of the Exchequer, that when he was confronted with the recommendations of the Priestley Commission to lift Civil Service salaries, and some of them quite substantially, he accepted those recommendations without hesitation.
§ Sir K. Joseph
I am obliged to the hon. Gentleman. I am not in a position to question that. I do not even know when that occurred.
§ Sir K. Joseph
I thank the hon. Gentleman.
There are two other omissions from the Bill, though recommendations of the Herbert Report, to which I should like to draw attention. The first is in connection with the relative failure of the electricity boards to encourage and to maximise the use of work study and other modern techniques for cutting unit costs. Obviously, we cannot legislate to insist upon work study. That is beyond legislation, but I suggest that there is provision in the Bill, in Clause 8 (3), which has to do with accounts, which gives my right hon. Friend power to call for annual reports from the Council and the boards in any form he pleases.
I very much hope that to encourage the use of work study and cost analysis my right hon. Friend will insist upon the area boards producing as full as possible cost analyses and unit costs so that the public may judge by results the relative efficiency in their function of each board comparable one with the others.
The third omission to which I want to draw attention concerns the effectiveness of the part-time members of the area boards. The Herbert Report, without being dogmatic, suggests that it would be helpful if area chairmen were sometimes part-time. It suggests no dramatic changes now, but that as vacancies occur consideration should be given to part-time chairmen being appointed. I should be grateful if hon. Members would consider what it would be like to be a part-time member of one of the area boards, to arrive at its meeting and to be faced with a phalanx of full-time members, the chairman and vice-chairman, or now the chief executive, and to feel that one's own common-sense interpolations and 1033 suggestions were put to people who would obviously consider everything, however constructive, as amateur suggestions. I feel that the Herbert Committee has a good case here in suggesting that the work of the part-time members might be more fruitful if a part time chairman were appointed who could judge between their suggestions and the policy enunciated by the full-time deputy-chairman or chief executive.
I very strongly support the Bill. I admire enormously the work of the Herbert Committee, though there are some parts of its Report with which I disagree, and I would particularly draw the attention of my right hon. Friend to the urgency of dealing with the top and middle management salaries, of cutting unit costs as a measure of efficiency, and of the appointment of part-time chairmen as vacancies occur.
§ 8.40 p.m.
§ Mr. Charles A. Howell (Birmingham, Perry Barr)
I do not intend to follow the hon. Member for Leeds, North-East (Sir K. Joseph), except in his reference to the salaries of the area boards and the Central Authority. It is rather strange that this should be the first sentence in Chapter 13 of the Report. Probably that is the reason why this looks like being unlucky. It says:An industry is no more efficient than the men who run it.By writing that in Chapter 13, the Committee seems to imply that it knew that it was unlucky and that it was not going to get anywhere with it. I would suggest that these people probably could be found inside the industry, because the men inside the industry would not require such fantastic salaries as are offered in private enterprise.
§ Sir K. Joseph
I quite agree with the hon. Gentleman, but I am sure he would recognise that men good enough to be offered these top jobs might well be seduced away by private enterprise for higher salaries.
§ Mr. Howell
I agree. I do not, however, like the word "seduced", but I know what the hon. Gentleman means and I accept it in the context. I happen to be still a member of a nationalised industry and, while I was very interested on the trade union side, I was not prepared to be seduced away from the trade 1034 unions by an offer of promotion inside the industry. There is no question that people who take these promotions within the industry remain in it because of their inherent love of the industry and because their roots are so deep inside the industry.
This question of fantastic salaries offered by private enterprise was referred to by the hon. Member for Kidderminster (Mr. Nabarro) but we have to remember that it is we, the consumers, who are paying these fantastic salaries for the top executives of private enterprise firms. It is because we pay these salaries that the price of commodities is kept so high and is tipping over the plateau of the Chancellor of the Exchequer.
If more promotion were made within the industry, we should not get this question of amateurs and professionals at the top which was referred to by the hon. Gentleman. Most of them would be professionals within the industry and would know exactly what they were talking about. Members of a board could, in the same way as a lord mayor, mayor or chairman of a committee of a local council, seek the advice of professionals. They could seek the advice of the town clerk, engineer, architect or surveyor; but it is for the committee to decide whether to accept that advice or to reject it.
I would prefer to see these boards working in that way. The people in the industry should run the industry on the advice of the professional. It would, of course, bring them back to the question we had in an industry recently when men were told that the head executives were looking over their shoulders. There is a reference to that in the conclusions of the Herbert Report, and there is no question that it is very salient. Paragraph 502 of the Report states:We believe, secondly, that the industry has not yet solved the problem of the right degree of delegation within the formal framework. Partly, no doubt, as the result of anxiety over public accountability there is a tendency to do work in whole or part several times over at different levels and an unreadiness to trust the field commanders with the power and responsibility that they ought to have. In our opinion more should be left to the discretion of subordinate officials.…I differ even from some of my hon. Friends on this side about an industry having someone looking over its shoulder. I know that if I were an executive of a nationalised industry and I 1035 knew that before I made a decision the public or the Minister responsible for my Department or hon. Members of this House would have every opportunity of having a prod at me, I should think twice. I should think, "Is this risk worth it?" or, in other words, "Is my neck worth it?"
It may well be that private enterprise must take a risk and that more often than not the risk is justified and a project is successful. Even in nationalised industry my experience is that when an executive has taken a decision he moves heaven and earth to see that it turns out succesfully, no matter what the sacrifice. It is much better not to have officials worried as to whether a decision, even before it is found to be successful or otherwise, is to be placed under the microscope not only of public but of Parliamentary opinion.
I have to confess, like the hon. Member for Kidderminster, that the Herbert Committee never sought my opinion. I say that without undue modesty. I believe that I would have made quite as good a contribution as the hon. Member if I had been called. Nevertheless, despite the fact that the Committee did not seek my advice, I think that it did a marvellous job in scrutinising the industry and producing its Report. It must be some gratification to its chairman, Sir Edwin Herbert, to know that he is considered to have done a good job, despite the fact that he was investigating the plaything of politics. Because no matter what we say about keeping politics out of the industry, certain hon. Members do not lose an opportunity of bringing politics into it. Despite all that, the Committee has produced a Report which some people have criticised in part but which on the whole they think the Committee deserves to be complimented upon. If anybody can produce a Report like this on a political plaything, it is obvious that he has done jolly good work.
Whether the Minister has taken the advice given in the Report or the advice given by the hon. Member for Kidderminster, does not matter. What matters is that the Bill will be properly amended in Committee when the hon. Member for Kidderminster has his way. I am sure that some of my hon. Friends would be only too pleased to know whether they 1036 will be members of the Standing Committee. The hon. Member for Kidderminster apparently knows that he will be, because he intends to move an Amendment to delete part of the Bill.
I have no desire to be a member of the Committee, and I do not expect that I shall be, because I am serving on a Standing Committee which starts work tomorrow. If I were on the Committee, I assure the House that I should have pleasure in seconding the Amendment which the hon. Member for Kidderminster proposes to move, but not for the reason which he gave.
The hon. Member wants to delete Clause 1 (7), which states that,The Generating Board shall have power—(a) to manufacture electrical plant …with this condition,Provided that this subsection shall not empower the Generating Board to manufacture electrical plant for export, or to manufacture, sell, hire or otherwise supply electrical fittings.It may well be that my views on this matter are political. If they are, I make no apologies, because I feel I represent the consumers.
The hon. Member for Kidderminster obviously was representing the manufacturers in his argument. He was representing the people who want to sell the various goods which he enumerated. I could not care less about the sale of television sets, wireless sets and so on. If the electricity supply failed tonight there probably would be a Motion put to Mr. Speaker tomorrow by an hon. Member as a matter of urgency, on the ground that his constituents could not see Gilbert Harding on television because of the failure of a nationalised industry to supply the necessary electricity. I do not want electricity supplied for that purpose, but there are such things as electric cookers which are an essential part of a house if the house is provided only with an electricity supply.
When the local authority of Derby, of which I was a member, were building new houses, the tenants were given the opportunity of choosing either electricity or gas. If they chose gas, then a gas cooker was put in, and if they chose electricity, then, of course, an electric cooker was put in. The electric cooker in my home had been there for twenty-five years, and I was not the first tenant. When we wanted it 1037 renewed, we were told that, because of the credit squeeze, we could not hire a cooker and would have to purchase one. Had no instruction been issued to the industry that cookers could no longer be hired but had to be sold, we could have exchanged our cooker under the hire system. I want to see that system brought back again.
I should like this Clause deleted from the Bill so that electricity undertakings can manufacture electricity, transport it and then provide the equipment to be used by the consumer. I am not thinking of television sets and wireless sets, but of electric cookers and things of that kind. I see no reason at all why such equipment should not still be hired from the electricity undertaking as was possible until fairly recently.
On the other hand, there is no reason why people should not buy such equipment from the electricity undertaking provided that the trade itself is protected by ensuring that the price charged by the undertaking for the articles is the same as that charged by the trade. If that were done, then the private enterprise shopkeeper would have no grievance at all.
In Clause 7 there is an item which, to my way of thinking, is rather ambiguous. Clause 7 (2), which refers to directions given by the Minister, says:Before giving any directions to the Electricity Council under the preceding subsection, the Minister shall consult the Council.Clause 9, which refers to the Electricity Council, says:it shall be the duty of the Electricity Council and the Scottish Electricity Boards to seek joint consultations with any organisation appearing to them to be appropriate, with a view to the conclusion between the Council, those Boards and that organisation of such joint agreements as appear to the parties to be desirable.…and so on.
It seems to me that the Minister can make directions for economic reasons, for political reasons and for reasons of State contrary to the decisions desired by the board or the Council. No indication is given as to whom the Minister should consult, a fact which can leave the door very wide open. Take, for instance, an industry where it is intended to make a certain direction and where the Minister has been advised to that effect. The Bill, as drafted, does not lay it down that the Minister shall make any inquiries or 1038 have any consultations whatsoever. If the Minister made a direction which completely cut across previous agreements with the trade unions then, obviously, the industry would be in chaos. That would be throwing down the gauntlet to the trade unions and saying that the Minister was making his decision in the interest of the security of the State, or because of the needs of the State.
I want to see put into the Bill the words "after due consultation." That would avoid any feeling in the trade union movement that, despite what had happened with the electricity board, area board, or local or national agreements, the Minister could make a direction. I think that would be extremely dangerous. For that reason, I ask the Minister to have another look at the Clause.
There is another Clause on which, in the few minutes left to me, I want to make the following very important point. One reason why the public are not alarmed about such Bills as this is that they cannot understand them and never get to know them. I want to refer to a most important point in relation to meters. I have never had any dealings with electricity meters, but I was a member of a local authority committee which regularly had reports about the quality of the gas supplied and was concerned with the examination of gas meters.
Clause 24 deals with the electricity meters. It seems remarkable—I do not know the reason for it; perhaps the Parliamentary Secretary can tell us why it is—that boards can examine their own meters. Clause 24 (4) says:A meter examiner may certify a meter under the provisions of the Schedule of 1899, notwithstanding …That is an old-established word in legal matters; I have had some terrible experiences of "notwithstanding".
… that he has not himself examined or tested it …Imagine that ! We are now telling a meter examiner that he can sign for a meter without having examined it, provided that:the meter is submitted to him for certification by an Electricity Board, together with a report stating that the Board have examined and tested the meter in accordance with directions …Imagine the responsibility that that man has to have because an electricity board 1039 has told him "Certify this meter as O.K. We have examined it, and we think it is." That is a terrible situation.
Under Clause 24 (7) we find that if an electricity board is guilty of an offence under the Clause it shall be liable, for a first offence, to a fine not exceeding £10 and, for a subsequent offence, to a fine not exceeding £20. Magistrates, recorders and so on have said that it is futile for them to impose a fine on a public undertaking, a nationalised industry, simply because the public pay the fine. The Minister should look again at this provision. What is the use of a Clause which says that a public undertaking shall be fined £10 or £20? Action of another sort ought to be taken against the board by the Minister himself. If the Minister will give us some guidance about his intentions in that respect, I shall be grateful.
§ 8.57 p.m.
§ Mr. Arthur Palmer (Cleveland)
It seems to me that, apart from some brisk early exchanges, we have had a sedate, if interesting, debate. Even the hon. Member for Kidderminster (Mr. Nabarro) has not on this occasion tried to spoil the party.
As one who is much interested in the question of electricity supply legislation, I prefer to look upon the Bill rather in the sense of continuity with a great deal of earlier electricity supply legislation, not necessarily starting in 1947 but going back beyond that to the 1926 Act and, if necessary, to the 1919 Act. If one looks at it in that way, one sees that electricity supply legislation is a continuous process. It has been going on for a long time, and it is likely to go on after this generation of parliamentarians has passed away.
I was glad that my hon. Friend the Member for Keighley (Mr. Hobson) referred to the 1926 Act. In the process of doing some homework in anticipation of the debate, I took the trouble to read the 1926 debate. It was the last occasion—there was a great deal of controversy over the 1947 Act—when there was substantial unity between the two sides of the House about a piece of electricity supply legislation.
It is quite true that there were some Tory rebels on that occasion. They were of much sterner stuff than the modern, synthetic, plastic kind, because they ac- 1040 tually went into the Lobby against the Measure—I think about three score of those sturdy braves. In fact, the Second Reading of the 1926 Measure was carried by a combined progressive Conservative and naturally progressive Labour vote.
On that occasion, one of the leaders of the Tory electrical rebels was Mr. George Balfour, the then Member for Hampstead, who said that the great electrical grid system to which the country is so much indebted was likely to be a grid iron on which Conservative principles would be roasted. Conservative principles have gone through a great deal since that time.
From the point of view of my right hon. Friends, it is interesting to note that in the debates on the 1926 Measure there was a Labour Amendment in favour of the full principle of public ownership for this vital national service. That was, of course, defeated, but twenty-one years later, in 1947, the House of Commons accepted the principle of national ownership and the present Bill does not quarrel with that principle. Had it done so, our reactions to the Bill would have been very different.
We take the view, as my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said, that forms of organisation within a nationalised industry are always capable of improvement and are susceptible to evolutionary development. After all, it is the well rooted plant which grows and develops. If nationalisation in the electricity supply industry has come to stay, as we believe it has, we can afford to allow it to grow and develop.
I draw the qualification, as did my hon. Friend the Member for Cardiff, South-East earlier, that on this side of the House we have taken the view that if change has to be carried out, it should be carried out, if possible, within the organisation itself under the industry's own leaders who have learned from their experience and from their own mistakes—unless it can be shown that the law of the land has itself placed a corset around the industry, cramping it and preventing its adaptation to changing times. That has been the main issue of the debate today.
1041 Is the Herbert Committee right or wrong in its contention that the combination of generation and bulk transmission of electrical energy with the general supervision of the industry is a fundamental flaw in the present organisation of the industry? Not only is it at present a flaw, is it likely to be a more serious flaw with coming developments, particularly in nuclear energy? I think that the debate has substantially shown that both sides of the House have reached the conclusion of the Herbert Committee, that the combination of these two functions is a flaw and should, therefore, be put right.
Upon the evidence of the Herbert Report and from a number of other sources—the Trades Union Congress said very guardedly, in its statement on the Herbert Committee, that it thought that there might be a technical case for separating the generation of electricity from the overall supervision of the industry—it seems that the present organisation is defective. As one who has a fairly close, I think every-day, connection with the working of this nationalised industry, that is certainly my own experience.
I remember the debates on the 1947 Measure. I was a member of the Standing Committee and one of our slogans on that occasion was that there should be a considerable degree of freedom for the area hoards. If we are to be frank about the matter we must agree that there is an occasional tendency for area boards to be turned into departments of the Authority. That was never the intention of the 1947 Act.
In retrospect, I think that it was a mistake to place a few representatives of area boards in a minority position on the Authority and also to make appointments dependent upon the good will of the Authority. I speak from memory; I have not had an opportunity to check up, and I may be wrong, but I believe that the proposal to make the appointment of area board chairmen dependent upon the good will of the Authority was a Conservative Amendment, put down in the other place. It was resisted by my right hon. Friend the Member for Easington (Mr. Shinwell) who was then Minister of Fuel and Power, or his spokesman in another place, but, perhaps for the sake of peace and quietness, or of getting the Measure through quickly, it was agreed to in the end.
1042 I remember the debates that took place upon the 1947 Bill quite well, and it is apparent to me that the attitude of my right hon. and hon. Friends today, who have been anxious to avoid too many partisan exchanges, contrasted very favourably with the very partisan attitude of hon. and right hon. Gentlemen opposite in 1947, when we had to fight very hard indeed to get that Measure on to the Statute Book.
From my own modest experience of the electricity supply industry I believe that it is not always to the advantage of the wholesale side to have this combination of responsibility for the everyday work of generation and bulk transmission and the task of overall supervision. This has been to the disadvantage not only of the area boards, but also to the wholesale side. The engineering vice-chairman of the Authority, who, in many ways, takes a great and direct interest in the work of generation and bulk transmission—which is, perhaps, his biggest job—has far too many general jobs to do on behalf of the industry, and that has not made for all-round efficiency.
That brings me to a most important point, which is still imperfectly understood by the Minister. If we accept the fact that the area boards are free to be masters in their own houses—as we, presumably, are prepared to accept—and if they are free to decide their own policies, balance their own accounts and make their own surpluses, if the Government will let them, it is surely true that the Generating Board has a right to be master in its own house, and not live in fear of border raids by swashbuckling area board chairmen. I know that some of these gentlemen are excellent servants of the industry, but they have ambitions which sometimes go a little beyond distribution, and in the interests both of the industry and themselves they need to be restrained.
England and Wales is quite a small territory, electrically. Heavy loadings and an interconnected high voltage system makes the centralisation of national direction on the wholesale side as essential as is decentralisation on the retail side. For that reason hon. Members on this side of the House view Clause 5 with a great deal of concern. The Clause gives area boards the right, if they wish to use it—with the permission of the Electricity Council—to 1043 bring forward generation schemes on their own account.
The explanation for it is that this is to permit district heating schemes. As a limited purpose that is excellent, but I should like the Parliamentary Secretary to say something about this. As the Clause is drafted, it is possible to drive the proverbial coach and horses through it, or even a motorbus—if one had the petrol. I suggest that that Clause must be carefully examined during the Committee stage. If it is intended only for district heating schemes it should state that, and leave it at that.
I wish to comment on the Electricity Council which it is intended shall be the general supervisory body for the industry under the Minister. It is a kind of federal organisation. I hope that we shall look with a critical eye at the way in which the Council is set up and how it will work. I agree with what was said by my hon. Friend the Member for Cardiff, South-East; and he was supported by the hon. Member for Oldham, East (Sir I. Horobin), who said that he felt that the Electricity Council idea was capable of a great deal of improvement. The parallel of the gas industry has been quoted. I consider that somewhat superficial for the reason given earlier by my hon. Friend.
In the gas industry we have 16 area boards which, in themselves, combine the functions of production and distribution. Naturally, there is harmony of interest between them but that is not so in the electricity industry, because we are proposing to add 12 area boards to the one Council. I appreciate that there will be harmony of interest between the three boards. If I may phrase it rather rudely, the attitude will he, "If you don't put your finger into my pie, I will not put my finger into yours."
But there is the Generating Board which is to be represented on the Council. That is an enormous and nation-wide organisation; there is a generation division alongside each area board. If there is to be a tug-of-war on the Council, it is likely to be between the combined area boards on the one hand and the Generating Board on the other. The question will arise as to who is to resolve that 1044 difficulty in the national interest, and, as I see it, only the Minister can do so.
If it is to be the Minister, I hope that he will face the truth bravely, and that when they talk on this question, members of the Conservative Party will not try to befuddle their minds, or ours, with technical and commercial tests for decisions which will largely be of a political character. We cannot have it both ways. The Herbert Committee reported in favour of making the in-industry more and not less commercial; taking it further away from the Minister, if possible.
In this Bill the industry has been brought closer to the Minister and to Parliamentary supervision. Whether that is a good or a bad thing is a question on which we can differ, but we cannot have it both ways. We cannot, in one breath, say that the Minister should and must have control, and, at the same time, that the industry must have independent commercial operation. I hope that when we examine the Bill during the Committee stage we shall try to probe more closely the intentions of the Government in that matter.
I come to something which has been touched on by various hon. Members, and that is finance. Like other hon. Members, I admire the work that has been done by the Herbert Committee. I had the advantage, like the hon. Member for Kidderminster, who is not in the Chamber at the moment, of appearing before the Herbert Committee. I went in a rather more modest and collected way than he. I did not go with the slightly bombastic attitude which I know is quite natural to the hon. Member for Kidderminster and which he cannot help. I was impressed with the thoroughness with which those who appeared before the Committee were examined. The Committee did an excellent and conscientious job.
I was very glad that the proposal was not adopted that in future capital for the industry might be raised without Treasury guarantee. It would have been intolerable if a public service which is under a statutory obligation to maintain an efficient, co-ordinated and economic electricity supply system all over England and Wales, should be forced on to the market, and if there should not be public financial backing for what are 1045 really public policies. I congratulate the hon. Member for Croydon, North-East (Vice-Admiral Hughes Hallett) on his speech. I hope that it will not do any harm to his future political career if I say that it was a very good, Socialistic speech.
§ Vice-Admiral Hughes Hallett
I hope that the hon. Member will not think that because I gave a measure of praise where I thought it was due, to the electrical industry, I am necessarily a supporter of the general principle of nationalisation. That is a very different matter.
§ Mr. Palmer
It is quite natural that the hon. and gallant Gentleman wants to reassure his supporters in his constituency. I quite appreciate that. What I said was intended to be a most sincere compliment upon an excellent speech. I agreed with much of it.
I particularly agreed with what the hon. and gallant Gentleman said about the right of a nationalised or public industry to finance its own development. That was excellent. I could never see why there should be an objection to that. If the principle is good for large-scale private industry, it is equally good for large-scale public industry. On that point, the Herbert Committee said one of the shallowest things in its Report.
Many Committee points are in the Bill and we need not take them any further tonight, but I would refer to labour relations. There should be no tampering with the principle of national negotiations on wage and salary matters. We must remember that the principle of national negotiation on wages and salaries in this industry goes back much before the 1947 Act. It has existed for a long period of time and there should be no tampering with the principle.
I come to very nearly the last of the important points which should be mentioned in a reply to the debate. It was touched on by the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) and by the hon. Member for Oldham, East. It concerns the changes proposed in the Bill and the necessary acceleration of the nuclear energy programme I was very disappointed that the Minister was unable to give the House the information which we have had promised to us for quite a time The right hon Gentleman has been questioned from Monday to 1046 Monday on this point and he has always said, "Wait for 17th December." It is coming along, but it has not arrived.
It is no good the right hon. Member for Sutton Coldfield saying, "We should automatically support the Bill because of the great effect it will have on the nuclear energy programme". We have not had the arguments. There may be many other arguments for the Bill, but we have not had the arguments about the development of the nuclear energy programme to which we were looking forward. We certainly attach the highest importance to the proper development of indigenous sources of power.
We must try, if we can, to offset the excessive dependence on imported oil. It is no good supposing that for an industrial or agricultural country like ours we can do without oil, but if we can we should limit our dependence upon it. That must be done by a development of the coal industry and through the development of this great new source of power, the nuclear energy industry, which is the natural and convenient medium for carrying electricity to the home and to industry. I wish we did not do such stupid things as changing over from trolley to diesel buses in London, but that is another story.
I have been very glad, and I am sure that all hon. Members have been glad, of the announcement in the Press, two or three days ago, that the first of the nuclear energy power station contracts has now been placed. Calder Hall, the work mainly of the Atomic Energy Authority, is a very fine piece of work, but we have to remember that it is experimental and at Calder Hall electricity is a by-product plutonium is the main product. At Brad-well and Berkeley electricity will be the primary product. There has been some talk of delay in placing electricity contracts. Perhaps that is unfair and not true, but it has certainly been argued by the right hon. Gentleman and his supporters, and by some of my hon. Friends, that one of the reasons for this Measure is that the new Generating Board will be able to concentrate on the nuclear programme. Ought we not also to sort things out at ministerial level?
We have the present Central Electricity Authority and the new Generating Board which, apparently, will be advised by the Atomic Energy Authority. They are 1047 dependent on private contractors who, also, will be advised by the Atomic Energy Authority. While the present Central Electricity Authority and the future Generating Board are to be responsible to the Minister of Fuel and Power, this key go-between—the Atomic Energy Authority—is responsible to the Lord President of the Council. Although these may be bigger questions and beyond the scope of this Bill they are certainly things we should be thinking about if we are thinking seriously of an energy policy for this country. Eventually, we shall have to take from the Atomic Energy Authority its civil power responsibility and put nuclear energy, electricity, oil coal and gas under the Minister of Fuel and Power, not the present Minister, but I hope that by then a more progressive Minister from among hon. Members on this side of the House.
Finally, I wish to say a word on a point on which many hon. Members have touched. That is the question of the human element in this industry. We have been discussing forms of organisation, but it is no platitude to say that without the right kind of people to work them organisations will not get us very far. Sometimes the most perfect schemes of organisation have been ruined by the wrong people and occasionally the right people have risen above imperfect organisation. I should have thought for that reason we have to do everything we can to encourage the men at all levels who are running the industry.
A number of hon. Members, including the hon. Member for Kidderminster, have raised this point. I put a Question to the right hon. Gentleman on the matter of carrying through one of the additional recommendations of the Herbert Committee, to the effect that salaries in the industry should be improved, particularly the salaries of area board chairmen and others, which for a number of years have been fixed by political considerations.
I am concerned about the level of the salaries of such people as the chairmen, because I am concerned also about the depressing effect which keeping their salaries fixed has on the general level of staff salaries and, on occasion, on wages as well in the nationalised industries. It is not fair to a nationalised industry to say, "You must be competitive in the 1048 public interest with the best which is done in private industry but, at the same time, we shall not allow you to pay the kind of salaries which will attract and keep the right people."
I do not want to go too far on this point, but we should remember that in recent times three very able area board chairmen in the electricity supply industry have resigned. Two of them have gone to private industries. These were men who did a fine and useful job. What has happened to these chairmen has also happened to several of the Central Authority's important technical executives. It is not fair to a publicly-owned industry that it should be handicapped in this way, and it is not good enough for right hon. and hon. Members opposite to take refuge behind the Chancellor of the Exchequer. After all, he is a Conservative Chancellor of the Exchequer and is ultimately to blame for the restrictive policies. He is not something separate and distinct from the Minister of Fuel and Power.
In these matters, like all of us, I am a politician, but I am also an engineer and there are occasions on which I prefer to describe myself as an engineer rather than as a politician. Occasionally, it is safer. I hope that I shall be pardoned for saying with some professional feeling that I believe that the electrical industry is a very great industry. I have been connected with it for a number of years—since I was first a student engineer, in 1932. We can say this about the industry: it has successfully survived many Acts of Parliament and it has gone from strength to strength on both the supply and the manufacturing sides. British engineering knowledge and, I think we can modestly say, British engineering genius has spread from the pioneer electricity industry of ours to every corner of the world.
In the view of my right hon. and hon. Friends the Bill needs a vast amount of improvement. We on this side of the House are determined to play our part in improving the Bill, not in the interests of the Government or in the interests of the Minister, but in the interests of the country. It is in that spirit that we approach the Bill. As my hon. Friend the Member for Cardiff, South-East has already said, although we criticise the Bill and think that it has imperfections, we do not intend to oppose its Second Reading.
§ 9.28 p.m.
§ The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. David Renton)
I should like, first, to refer to the most interesting speech which we have heard from the hon. Member for Cleveland (Mr. Palmer), speaking with his great knowledge of the industry, because he has put his finger on one or two points which are fundamental to the decisions underlying the Bill. He said that the combination in the Central Authority of overall responsibility and of generation was a flaw. That was the first point he made. He said, secondly, that the area boards had become too much departments of the Central Authority. On both those points I unhesitatingly agree, and, as I hope to show, they are fundamental to the main purposes of the Bill.
The hon. Member said that, if the area boards were to be free, so should the generating board be free. I hope he was not suggesting that it would not be free, because it is clearly the intention of the Bill that the Generating Board should be free.
The hon. Member mentioned the composition of the Electricity Council, and I shall have a little more to say about that later. Meanwhile, may I point this out? My right hon. Friend has decided to make the composition of the Electricity Council fully representative of all the area boards and of the Generating Board, and to have the Chairman and two Deputy-Chairmen as well, in order partly to remove the very difficulties which have been found in the working of the Central Electricity Authority in recent years, and in order that the Electricity Council may become the true grand council of the industry, the true forum for discussion and the ironing out of differences.
It is an obvious conclusion to be drawn from this debate that the general principles of the Bill are acceptable to the House, in spite of the praising with faint damns of the hon. Member for Cardiff, South-East (Mr. Callaghan). The fact that the Bill is acceptable is not only gratifying to the Government, but I think it is important to the industry and to the country at this time especially when the industry has reached the stage when it must be prepared by Parliament, and must prepare itself, for the advent of nuclear power.
1050 It is perhaps an unhappy reflection, however, that the House has been so thinly attended during this important debate, but sometimes the smaller the numbers present the higher the average level of the speeches, if I may presume to say so, and I particularly welcomed the speech of my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), a most interesting and encouraging one.
Tributes have been paid to the Herbert Committee. My right hon. Friend took a very early opportunity of praising in this House the work of the Committee soon after its Report was published, and I should like to add my tribute to those which have been paid today. The hon. Member for Cardiff, South-East paid a tribute to Lord Citrine, which my right hon. Friend has asked me to say he warmly endorses and which I am sure the whole House does.
Many points have been raised today about matters which would not require legislation. It would be, I think, impossible in the time for me to reply to them all, but I should just mention one, and that is the matter of salaries and to say that it is receiving the earnest consideration of my right hon. Friend and his colleagues. Many other points which have been raised were candidly Committee points, and we are looking forward to dealing with them at the right time and in the right place. [Interruption.] I shall deal with the point raised by the hon. Member for Keighley (Mr. Hobson) in a moment if he does not interrupt me too much.
The hon. Member for Cardiff, South-East and others raised a point about which they are certainly entitled to an assurance, and that is whether the tradition of the industry for the national negotiation of wages and conditions of work will continue. I give that assurance. That will be the effect of Clause 9 (1, a) of the Bill. Joint consultation on safety, health and welfare will, as I understand it, continue to be dealt with to a great extent locally, but the Electricity Council will have its own arrangements, too.
The hon. Member for Cardiff, South-East said that this Bill had been rushed. I must say I was astonished when he said that. He also said that there was not enough consultation. May I point 1051 out to him that the Herbert Committee, which sat for well over a year, gave ample opportunity to everybody, including my hon. Friend the Member for Kidderminster (Mr. Nabarro), to make representations to it; that many national associations, bodies and trade unions which are listed in one of the appendices to the Report gave evidence, and that since the Report was published very nearly a year ago there has been ample opportunity for discussion of it in the Press, in trade journals and among all those who are interested.
The Central Electricity Authority and all the area boards have made to my right hon. Friend representations which have been most carefully considered, and he has received a deputation from the Trades Union Congress and from several other bodies. The Bill was published three weeks ago tomorrow, and the White Paper was published with it. We have the whole of the Recess before the Committee stage begins, and, therefore, plenty of opportunity for further thought. I hope that, with those second thoughts in mind, the hon. Member for Cardiff, South-East will think rather better of us about the timing of the matter.
§ Mr. Callaghan
I shall not think any better at all. We all know that we had a long time to think about the Herbert Report, and none of us complains about that. What we complain about is that the Minister's proposals depart drastically from the Herbert Committee's recommendations and we have had only two or three weeks in which to consider this.
§ Mr. Renton
I know how implacable the hon. Member is, because he and I have crossed swords often in the past and in other spheres, but I would contrast his attitude tonight with that of his hon. Friends.
On the general principles of the Bill, there are one or two points which I should like to clarify. First, the provision for a separate and independent Generating Board is the provision which is most directly aimed at preparation for atomic energy. As my right hon. Friend said today, it is the Government's intention to consider making a link with the Atomic Energy Authority through 1052 common membership of the two Authorities. The Herbert Committee made various suggestions, which did not require legislation, as to the way in which a separate Generating Board could best concentrate on the development of atomic energy, and I have no doubt that the Herbert Committee's recommendations would be borne in mind by a new board.
As to autonomy for area distribution boards, as I think has been accepted, at least by the hon. Member for Cleveland, more autonomy was intended under the 1947 Act than was or could be achieved. For example, the right hon. Member for Easington (Mr. Shinwell), then Minister of Fuel and Power, during the Report stage on the previous Bill, said:I am all in favour of decentralisation, and that is why I have suggested over and over again in the course of the proceedings in the Committee stage that these boards, so far as practicable, should be fully autonomous."— [OFFICIAL REPORT, 23rd June, 1947; Vol. 489. c. 145.]Alas, the right hon. Gentleman's hopes have not been fulfilled in the last nine years because it was not found practicable.
Under the present Bill, however, each board will be master of its own house instead of a department of the Central Authority. Each board will be financially self-supporting. It will be responsible to the Minister of Fuel and Power and, above all, it will have the responsibility, a very important one indeed, of submitting to the Minister annually its own capital development programme, but with the difference that each board will submit its own programme after consultation with the other members of the Electricity Council. There is no question of the Electricity Council submitting a programme. It will be for each board to do so but for the Electricity Council to consider, advise and express its opinion, but not to have any executive responsibility in the matter.
§ Mr. Renton
Most certainly, it will apply with equal force to the Generation Board.
It might help if I briefly summarise the functions of the Electricity Council, about which various hon. Members have expressed doubt. First, it will be a forum 1053 for the discussion of the industry's problems and for ironing out differences between boards. Secondly, it will advise the Minister on problems affecting the industry, and especially on those problems in which the Minister will have a responsibility, such as approving capital development programmes. Although the words used are "promote and assist", it will help the boards in maintaining and developing an efficient, co-ordinated and economical system of electricity supply. It will have no executive functions.
There is just one exception which, for the sake of the record, perhaps I should mention, that when a board has defaulted on its borrowing liabilities then, and only then, will the Electricity Council have any power to issue directions to it. That is the only exception, and I think it is a very minor one, or is likely to be only a very minor one in practice.
The next part of the Electricity Council's work is this. It will be expected to perform common services for all the boards, such as, first, the raising of capital; secondly, as I mentioned, the scrutiny of capital development programmes, and there an accountancy service of a modest kind will, no doubt, be provided; thirdly, the general negotiation of wages and conditions of employment, which I have mentioned; and fourth, the co-ordination of research, about which some anxiety was expressed by the hon. Member for Cardiff, South-East. There the Gas Council provides a useful precedent. We shall get the best of both worlds. We shall have the boards able to carry on their own research, but pooling the advantages of it with the Electricity Council, which either by research on its own behalf or by getting a board to carry on its own research, will further co-ordinate in that way.
The management of the central guarantee fund will, of course, be a responsibility of the Electricity Council.
I would say a further word about the composition of the Council, because the hon. Member for Cardiff, South-East said it would he weighted in favour of the area boards, who are sure to be against the Generating Board, whereas the hon. Member for Keighley said he welcomed the constitution of the Electricity Council. Having all the area board chairmen there, he thought, would strengthen their hands against the generating Board. Thus there 1054 are two completely conflicting views. We share the views of the hon. Member for Keighley on this.
I say with respect to the hon. Member for Cardiff, South-East, that I do not think he makes a very good point when he says that it imposes too heavy a responsibility on the Minister that he should ultimately have to judge between the Generating Board and the area boards. I do not suppose he will very often have to exercise that form of his admirable judgment, but I say that if he does have to do so it is just the sort of responsibility which a Minister ought to take. Ministers are here for exercising responsibility.
I come to the question about generation, which was mentioned particularly by the hon. Member for Keighley, but by other hon. Members, too. Why, they asked, should the area boards be allowed to generate? This has to do with Clause 5. The Herbert Committee made a very good suggestion and said that the area boards sometimes, through their particular knowledge of local circumstances, would be in a good position to combine generation with district heating schemes. There is one good reason why those powers should be given. Another good reason, I am told, is that sometimes the peak load difficulty in a given locality could be solved by a small local generation scheme. It should not be thought that the powers under Clause 5 are to be exercised in a widespread manner, in a careless manner, in such a way as to give an impression of competition with the Generating Board. That is not the intention. In other words, the main purpose of the Clause is to carry out a recommendation of the Herbert Committee.
§ Mr. Palmer
The hon. Gentleman will appreciate that the Clause as worded allows almost anything and, that being so, would his right hon. Friend look favourably at an Amendment limiting the effect of the Clause?
§ Mr. Renton
It would be quite wrong for me on Second Reading, in winding up the debate, to express an opinion on the desirability or otherwise of a particular Amendment, but I will say that my right hon. Friend is quite prepared to consider whether this Clause is necessarily drawn as widely as it is or not.
The hon. Member for Keighley also asked me whether the British Transport Commission should continue to have its 1055 own power stations. That is a point which we can consider further in Committee. In relation to the general structure of the industry, it is a comparatively minor detail.
Several hon. Members have mentioned the proposal in the Bill to reduce local authority representation on the consultative councils. It is not a very great point because, out of a total composition of 30 on the consultative councils, this Amendment would affect only three members. Experience has shown that it would be better sometimes for the Minister of Fuel and Power, in making these appointments, to have rather greater latitude than the present Act gives him, and in any event we are again following a recommendation of the Herbert Committee in order that latitude may be given for greater representation of industry where necessary. It must be borne in mind that, although the domestic load has been the traditional source of revenue of the industry in some corners of the country, the indusrial load is very heavy in other places, and where the industrial load is heavy it may be thought well to have slightly greater industrial representation.
The hon. Member for Bristol, South (Mr. Wilkins) mentioned rural electrification and expressed the fear that the autonomy of local boards might interfere with it. I should like very briefly to give him an assurance that I do not think that it will do so. We can explore that further in Committee.
I now come to the speeches of some of my hon. Friends. In the first place, my hon. Friend the Member for Oldham, East (Sir I. Horobin) pressed very hard indeed for the stepping-up of the atomic energy programme, and I hope that he will forgive me if I do not discuss that now. I would, meanwhile, remind him that even if the atomic energy programme were stepped up, as no doubt it will be, we shall still need all the coal we are likely to be able to produce, and very large quantities of oil as well, if we are to have an expanding industry and an expanding population.
My hon. Friend the Member for Kidderminster and my hon. Friend the Member for Oldham, East both pressed for doing away with the Treasury guarantee and forcing the area boards on to the open market. The Chancellor of the Exchequer, in picturesque language, in 1056 his Budget explained why that could not be done in present circumstances, and I have nothing to add to what he said then. I would, however, point out that in the Bill the Treasury guarantee is made permissive. It does not say that there shall be a Treasury guarantee; it says that there may be, and so the door is left open for further consideration of this matter in the future.
My hon. Friend the Member for Kidderminster rode several of his pet hobby horses with his usual dashing skill. I am sure he will agree that some of the points which he raised are Committee points, but there was one respect in which I felt that perhaps he had not correlated two of his points. He rightly stressed the importance of maintaining the load factor, but when discussing the retail sale of appliances he overlooked the fact that the main reason, as the Herbert Committee found, why the area boards need freedom to sell appliances by retail is in order to improve the load factor. Therefore, perhaps between now and the Committee stage my hon. Friend will consider those two important points in his interesting speech.
The many points which have been raised in the debate which I have not answered have not fallen upon deaf ears. They will make a very useful foundation for further studies of the Bill, especially between now and the Committee stage. This great industry has at least doubled its output in every decade of this century, even, I am told, during the war years, which surprised me very much. It has made a vital contribution to the standard of living of our people and the efficiency of our industry. It may also double its output in the next ten years, and now it finds itself approaching the threshold of the atomic age. It is the duty both of Her Majesty's Government and of Parliament to see that this electricity supply industry is constructed in the best possible way to take the earliest advantage of the coming of nuclear power. It is because we believe that the Bill will achieve that purpose that we commend it to the House.
§ Mr. Hayman
Will the hon. Gentleman say a word or two on Clause 10, which is entitled "General duty of Boards to balance revenue account"? It seems to some of us that the Clause will mean that rural development will be very greatly hampered, particularly in the south-west and in my own constituency.
§ Mr. Renton
I hope that I shall be forgiven for having dealt with that only briefly, but I gave an assurance that Clause 10 should not adversely affect rural developments. The only board which the Central Electricity Authority felt it necessary to subsidise, so to speak, out of the general revenues of the Authority was the South Western Electricity Board, in whose area the hon. Member's constituency it situated. But even the South Western Electricity Board, after being in the red for four or five years, has now begun to make a profit, not in spite of its rural electricity development but possibly because of it, and having got to the right side of the account I have every confidence that it will remain there.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 38 (Committal of Bills.)