Part of the debate – in the House of Commons am ar 25 Gorffennaf 1922.
Mr. THOMSON:
I beg to move to leave out the Clause.
In the course of the earlier discussion the Parliamentary Secretary described this Bill as an amending Bill. I think that, whatever view we may take of Clause 15, we shall all agree it is the substantial Clause in the Bill. Not only does it amend the Act of 1919, but it repeals the arrangements then made under which a power company can refuse to allow an authorised undertaking to come into that particular district. It is some what extraordinary that after all the negotiations which took place, and the consideration which was given to the passing of the 1919 Act, that almost before that Act is well under way the Government should now ask the House to repeal one of the most important parts of that Act. The Parliamentary Secretary well said that this Clause was not in the Bill as originally submitted, but it is surely very extraordinary that a Clause of this substantial character should not have been in the Bill as originally submitted, but that it should have been put in when the Measure was before another place. Why was it put in? The Parliamentary Secretary said it was put in at the request of the power companies in another place, and that the Government must stand by it. This House has a right to consider this Clause on its merits, and its very serious effects, rather than as part of a bargain. I hope the House will consider its effect upon the consumers of electricity and electrical development generally throughout the country.
The 1919 Act as well as this Act is supposed to cheapen electricity. I think Clause 15, as far as it amends Section 12, will not have that effect. I will recall the gradual development of the terms under which one undertaker may come into the district of another undertaker. This is one of the many trials of strength over a large number of years between the various interests concerned in supplying electrical power and electric light to the public. In the closing years of the last century, electrical development was largely in the hands of local authorities and municipalities, but with the growth of the power companies conditions were imposed which prevented those companies going into districts which were already supplied by an authorised undertaker such as a municipal authority: conditions were laid down that where a district was in the hands of an authorised undertaker, they could refuse consent to anyone else coming in unless the people who wished to come in were prepared to supply electricity cheaper than the district could get it from its own particular source of supply.
When the 1919 Bill was introduced the power companies suggested that this arrangement was not fair or sound when an undertaker wished to come into their district, although they considered it was quite sound when they were seeking to go into the province of some municipality; when it was a question of the joint electricity authorities supplying cheaper electricity in districts in which the power company had the right to supply, then the company said what was good enough to protect the local authority was not good enough to protect them. It must not be merely a question of the price at which they were prepared to supply but also of the price at which the authorised undertaker was going to supply. Those were the terms under the 1919 Act. It is because it is sought to vary these that some of us take the strongest objection to this Clause.
What does this Clause substitute? It repeals Section 12 of the 1919 Act, which provided that where a joint electricity authority was anxious to go into a power company's area, that company could not object unless they were prepared to supply electricity at the same price as the joint electricity authority, but consent can now be withheld if the power company can show that they are prepared to supply at a price that would yield them an adequate return on their capital. What does that mean? It means that it is going to protect the vested interests of the power companies for all time, because any company will say that it is prepared to supply electricity providing it can get an adequate return on its capital.
The Minister himself in Committee upstairs admitted that there might possibly be some fear and some danger on this point, and that we might have an Electricity Bill seeking to cheapen electricity
which was going to prevent a cheaper supply in an area because the power company had certain rights, and were prepared to supply at a higher price which this Clause would protect. The Minister said that no one would wish to adopt such a stupid and unreasonable attitude, but if that is possible, why does not the Parliamentary Secretary agree to the words which originally gave the protection? The reason is to be found in the argument of the hon. Member for Oxford (Mr. Marriott), who said:
I want the Committee to observe the real importance and design of this Clause. It is designed to prevent interference with the electric companies power of carrying out their statutory powers and to prevent competition at the hands of the joint electricity authorities. The point is that the power companies have expended a large amount of capital on these undertakings and they are entitled to have this capital safeguarded.
But surely the friends of the power companies do not object to competition. Why should they object to a joint electricity authority which has new plant and the latest advantage of electrical development? Why should a district be robbed of the advantage of these improvements because somebody years ago invested their capital in an obsolete form of plant and obsolete methods of distribution? Surely by doing this you are protecting vested interests against the general welfare of the community as a whole. The hon. Member for Mossley (Mr. Hopkinson) said that we were within sight of a great development, of electrical energy, generating stations and methods of distribution, and if that be true then this is not the time to seek to protect those who have invested capital in obsolete plant or plant situated so far from the area of distribution that they cannot supply electricity as cheaply as a new undertaking could do.
This Clause provides that if the power company is prepared to supply at certain rates they can resist and prevent a joint electricity authority giving cheap electrical power and electric light to those in that district. What are the terms? If the power company is prepared to supply on such terms and conditions as will assure an adequate return to the power company. The Commissioners must have regard amongst other considerations to the capital expenditure in connection with the supply; to the period for which the authority, company or person requiring the supply guarantees to take the supply: and they must also have regard to the amount of electricity and the maximum power required and the hours during which the power company can be called upon to give the supply. They must also have regard to the extent to which capital expended in connection with the supply may become unproductive to the, power company upon the discontinuance of the supply.
There you have the most careful conditions laid down which will protect for all time the expenditure of capital invested by the power company. It is perfectly right that people should have their money protected, but why should investors in one form of industrial enterprise be protected at the expense of the community, while those in other forms of industrial enterprise have to take their own risks in the market. By making this change and altering the Act of 1919, you are retarding the development of electricity and you may be saddling a district with a supply much dearer than they can get elsewhere. In this matter the great hulk of the capital is held, not by power companies, but by municipal enterprises of one sort and another. We are sometimes inclined to think that the great power companies working for profit are the only people who should supply electric power, whereas, as a matter of fact, the undertakings in the hands of municipalities and urban districts hold two-thirds of the total capital invested in these public undertakings. No less than£62,000,000 out of £92,000,000 invested is held by local authorities, leaving some £30,000,000 in the hands of companies. Surely it is a serious matter to repeal an Act, to give to the investors of £30,000,000 a protection which is not given to the holders of the £62,000,000. I do hope that the Government will have regard to the broad public interest, and realise that if they pass this Bill and repeal Section 12 of the 1919 Act, which gave adequate protection to power companies, they are going to hinder very seriously that development and spread of cheap electricity which is so necessary at the present time. Can we wonder now that these terms have been foisted upon the Government that you have in the public Press flotations of power companies; and what do they say in the prospectus? One company is
seeking to raise a capital of £1,000,000, and they say:
The company, having overcome the legislative and other difficulties which resulted from the War "—