North-Western Gas Board (Tariffs)

Civil Estimates and Estimates for Revenue Departments, Supplementary Estimates, 1952–53; Ministry of Defence Supplementary Estimate, 1952–53; Navy, Army and Air Estimates, 1953–54; and Navy Supplementary Estimate, 1952–53. – in the House of Commons at 12:00 am on 18th March 1953.

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Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Kaberry.]

9.35 p.m.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

Almost every month now in the North-West we get a new gas tariff. I am not sure whether the one I have in my hand is the latest although it is dated January, 1953. It is a grave matter, and since this is the only chance we have of discussing the tariffs and charges of the nationalised industries I am delighted that we have a little more time than usual in which to do so tonight.

There are two points I wish to raise, about one of which I am bound to say that I do not expect to get very much satisfaction, although it is a very serious matter. I refer to the actual increases in the charges for gas. But the second point, upon which I hope to get some answer, is the inequitable way in which these increases have been levied, particularly on small industrial consumers.

The tariff I have referred to covers the districts of Accrington, Blackburn, Clitheroe, Darwen, Oswaldtwistle and Withnell, all of them hard working and thrifty places, particularly Darwen and Withnell. I have been written to by a series of small business men, particularly bakers and fried fish merchants and people of that sort, all of whom say they are no longer going to use gas, and that they will, if their resources permit, change to the consumption of oil. I am sure it would be a bad thing if these districts as a whole became more and more dependent upon an imported product and less dependent upon a product which we produce indigenously.

To give some idea of the great increase that has taken place, I would mention that in 1950, when the Gas Board took over, the charge per therm was 9d. That was for the first 500 therms per quarter, and if more than 500 therms were taken the charge went down to 8½d., so that there was a little rebate for quantity. There was no meter rent and there was a small discount for cash.

In January, 1953, what do we find? For the first 65 therms the charge is double what it was in 1950. It is 18d. per therm. There are large gradations of price according to the amount taken. The next amount is 1,200 therms, for which the price is 16d. per therm, then 2,000 therms at 14¾d., and so on until, for a consumption per quarter of over 90,000 therms, the price is 9d. or thereabouts. In other words, for the very large consumer there has been practically no alteration at all since 1950, whereas for the small consumers the charge per therm has in many cases doubled

Rebates for quantity are, in small measure, familiar features of industrial life, and can be justified. To deliver a load of coal in a wagon may be cheaper because of the quantity and because overheads are less, although not very much less. I challenge the Parliamentary Secretary to the Ministry of Fuel and Power, and through him the Gas Board, to say that a reduction from 1s. 6d. to 9d.—a bracket as wide as that—can be accounted for by saving on delivery in quantity. If it cannot be so accounted for, it is a very sinister feature of the charges to the consumer.

The United States believe very strongly in equality of competition, and feel strongly, as we do on both sides of the House, against the cartelisation of the private sector of industry. It is a crime there, indeed it is a gross infringement of the anti-trust laws, for a supplier in a monopolistic position to grant heavy rebates for quantity that cannot be very strictly justified on the ground of economy in overheads by reason of supplying in quantity, because that would be giving undue preference to a large concern and is not fair competition. In this case—if this were the United States—the gas board would be in serious danger of prosecution.

I defy the board to justify these rebates on economic grounds. It looks as though the board realise that they have the small, moderate consumer in a very close grip. These small people—bakers, fish fryers, etc.—have not the capital resources to enable them to turn to alternative fuel. They have invested their capital in gas-burning equipment and they cannot convert as easily as can the large central bakery in the big city. I am told that these are known as "federal" bakeries. These latter get a big relative advantage in the new tariff and that is a very bad development.

If baking is to be done in the cities and not in the small towns, that is bad socially. A heavy fall of snow in a mountainous area such as North-East Lancashire can cut off the small towns from the cities for as long as a week; even the outbreak of hostilities would break off communications. Then, if the small bakers in small towns have been driven out of business because they can no longer compete, we shall be in a very bad way.

It ought to be the duty of the House and of the Government, and also of the gas board, to see that small bakers and fish fryers have their position preserved. After all, flour costs the same for all concerns. If gas is to cost the small man twice as much it stands to reason that he will be driven out. His raw material and labour costs are the same as those of the big, federal bakeries. If he has to pay double for his gas, or even half as much again, he is bound to go under.

I ask the Parliamentary Secretary to take this matter very seriously. The cost of this new schedule is heavy. Taking baking as an example, because it is probably the direct industrial activity that comes closest to the hearts and stomachs of the people, I am informed that oil-fired baking can produce a sack of bread for 1s. 8d. in a travelling oven. If these tariffs are put into effect, for the moderate-size oil-fired bakeries, assuming a consumption of 9,000 therms per quarter, gas will cost 7s. 2d., using draw-plate ovens. In other words, in a travelling oven bread can be produced for a fuel cost of 1s. 8d. by oil, whereas it will be 7s. 2d. by gas, using a draw-plate oven. I suggest that that is becoming a lamentable state of affairs.

That brings me to my second point, the savage gradation between the large consumer, who is getting his gas not much more expensively, if at all, than three years ago, and the moderate and small man, who is paying half or three-quarters as much again, or even double. That is bad enough, but it is much worse when one looks at the gas charges as a whole. The price for the poor domestic consumer who has to put 1s. in the slot is 19¼d. per therm whereas in 1950 it was just over 9d. a therm, which is much more than double. Nowadays, of course, there are also charges for meters, and whereas formerly there were small discounts for cash payment of accounts, these have disappeared.

It is difficult for hon. Members of this House to probe into the costs of these boards. These are the only chances we have of doing so, and I hope that the Parliamentary Secretary will take the unique chance we have tonight, when we have quite a long time at our disposal, to tell us why these charges should have gone up so much in the last three years. It is not good enough to say that it is because coal charges have gone up so much. The increase is much more than can be accounted for on that score.

It is a remarkable state of affairs, but I believe the gas boards buy coal at 70s. a ton and sell coke, after they have extracted the gas, at 80s. a ton. Although the two tonnages are not comparable, coke being so much lighter than coal, it shows to what extent the costs of the gas board must be inflated if they can sell their by-products at more than their main raw material costs, and then in addition, they are selling their main product, gas, at these tremendous charges.

I hope I have made my two points. On the main point we cannot, of course, do anything but plunge about in the dark. On the subsidiary point, I suggest it strikes at an important principle, not merely in regard to gas but all services, fuel and transport and all other matters connected not merely with nationalised industries but with industry as a whole. The principle is that, if we are to preserve free and fair competition, we must do all we can to stop undue preferences being given to big concerns that have great bargaining and market power.

I end as I began. I believe that the gas board knows it has to get its money from somewhere. According to the statute it has to balance its accounts over the years, taking one year with another— whatever that may mean. It cannot, it feels it dare not, extract its money from the people who have buying power because it knows they have the capital resources to switch to alternative fuel. What it does, therefore, is to come down heavily on people who have few or insufficient capital resources because it knows that they cannot do anything but complain through the voice of their Member, and not very often because he cannot put down Questions about it.

I ask the Parliamentary Secretary to ask his right hon. Friend the Minister to give a direction, not only to this Gas Board, but to all gas boards, under Section 7 of the Gas Act. This is not a matter of day-to-day management or anything of that sort, but is a matter of general principle, on which Section 7 of the Act permits the Minister to give directions.

It is a matter of general principle that gas boards should not discriminate between moderate industrial users and large industrial users, or between moderate domestic users and large domestic users, if any such still remain, except where that justification is rigidly and strictly justifiable on the ground of economy in the overheads of the gas board, in the reading of meters or in connection with accounts. I cannot believe that a discrepancy of as much as that between 9d. and 18d. per therm can possibly be so justified.

After all, the pipes already exist. If some great new installation was being fixed up, one could well understand that the large capital investment involved would have to be made to pay its way by the charging of a cheaper rate or something similar; but even so, I rather think it would be the other way round. The fixed installations in the area we are considering, however, are already there, and all that the board has to do is to send the gas along the pipes. I cannot believe that as far as the overhead expenses of the board are concerned it makes all that difference whether the gas is consumed by one great concern or by, say 20 concerns each one-twentieth the size of the large concern. If these differences of treatment are not justified they should be stopped.

9.52 p.m.

Photo of Mr Julian Snow Mr Julian Snow , Lichfield and Tamworth

I only want to speak on two relatively small points, one of which follows a point made by the hon. Member for Darwen (Mr. Fletcher-Cooke) about the disclosure of costs and the relatively few opportunities that we get in the House to consider and debate the accounts and costings of nationalised industries.

I feel rather in sympathy with what the hon. Member has said, although I remember that a few weeks ago when certain questions were raised about the price of petrol and other liquid fuels, there was a great deal of agitation in the Conservative Press to the effect that there should not be interference with the accounts and costings of the business of private enterprise. If the hon. Member is with me in agreeing that there is a case for more frequent opportunities to discuss the accounts and costings of nationalised industries, I hope he would agree with me that there was a similar case concerning such public amenities and services as those provided by the big oil cracking organisations.

I agree with the hon. Member that there is some cause for concern at the tendency, for instance, of the gas board to raise tariffs without due consideration to local factors, which brings me to my second point. Recently, we have had in Lichfield a lot. in my view, of justifiable public agitation about the new, greatly increased, tariffs which, contrary to public expectation, have not been based on the efficiency or take-up value of the local undertaking, but on some far lower price scale, taking into consideration very inefficient and other adjacent undertakings. This is slightly a digression from the point made by the hon. Member, but it is rather disappointing when a local authority, such as Lichfield, who have an extremely efficient undertaking are subjected to a greatly increased tariff which appears to be unjustified when their previous state of efficiency is taken into consideration.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

Exactly the same applies to my constituency, in the borough of Darwen. Exactly the same happened; it was a very efficient undertaking, but all that efficiency has gone for nothing because of the inefficiency in other places.

Photo of Mr Julian Snow Mr Julian Snow , Lichfield and Tamworth

It is somewhat of an embarrassment to have all this agreement and no doubt there is a catch in it. From a constituency point of view I should like to draw the attention of the Parliamentary Secretary to the fact that there is local disquiet on this point.

On the other question raised by the hon. Member about the disclosure of accounts and costings I am completely in agreement, provided he accepts the principle that it should apply also to those virtually monopoly services provided by the liquid fuel organisations which are at present—at present—under private enterprise.

9.56 p.m.

Photo of Sir Ian Horobin Sir Ian Horobin , Oldham East

I hope that the Minister will be under no illusions on the depth of feeling there is all over Lancashire on this point, which has been so usefully raised by my hon. Friend the Member for Darwen (Mr. Fletcher Cooke). I do not want to say anything about the discriminatory tariffs to which my hon. Friend referred, although I am in agreement with him. The fundamental public feeling is on the ceaseless rise in costs over which apparently no one now has any control as a result of the practically irresponsible Socialist monopolies set up in what, after all, is one industry—the fuel industry.

I am going to embarrass my hon. Friend the Member for Lichfield and Tamworth (Mr. Snow) by agreeing with the point he made. A great many of us feel that this section of the industry, the gas industry, was in much better hands when it was either under statutory authorities limited as regards dividends by price so that they had every incentive to keep prices down or in the many extremely efficient local authority gas undertakings under strict control of the local ratepayers.

Photo of Mr Julian Snow Mr Julian Snow , Lichfield and Tamworth

The hon. Member refers to me as his hon. Friend. I assume that that is a slip of the tongue. There were, of course, extremely efficient local undertakings such as that of the City of Lichfield, but he should not overstate the case. There were extremely inefficient undertakings from which we are now suffering.

Photo of Sir Ian Horobin Sir Ian Horobin , Oldham East

That might be true but, as so often happens, everyone has been levelled to the lowest instead of being raised to the highest. Wherever we touch this matter in this industry we find services have got worse.

Reference has been made to the facilities which have been withdrawn with regard to meters, and so on, and prices have gone up, but no one seems to have any control. It is appreciated that so long as the price of coal goes up— although this is not the time to go into that—the price of gas, electricity, transport and the cost of living will also go up. There is grave disquiet over the conduct of these subsidiary branches of the fuel industry—coal and electricity— for the very reason that neither local control nor shareholders' control is operative any more and the Minister seems either unable or, for good or bad reasons, does not exercise direction or control.

I hope that this opportunity will not have been taken in vain, but that it will lead the Minister to furbish such powers as he has to see that every rise in the price of raw materials, in wages, and so on, is not passed on to the consumer but that a ceaseless effort is made to be as efficient as possible. It is quite certain that the prices of everything we buy is being put up by a spiral which rises never endingly, starting with coal and going up through gas, electricity, transport, and so forth.

I hope that the Minister will be able to give us some satisfaction and hope for the future in this matter, which has caused grave disquiet, and certainly in my constituency and in that of my hon. Friend.

9.59 p.m.

Photo of Hon. Lancelot Joynson-Hicks Hon. Lancelot Joynson-Hicks , Chichester

If I may make a reference to what my hon. Friend the Member for Oldham, East (Mr. Horobin) has been saying, I think it would be a pity if quite such sweeping statements as he has been making about the ineffectiveness of the boards were allowed to go from the House unchallenged; because it is easy to say that prices have gone up, that some discounts have been withdrawn and matters of that sort and that in every direction hardship has been created to the consumer, but that the consumer has had no advantages. I would remind him that with regard to the most recent increase in the price of coal—

It being Ten o'Clock, the Motion for the Adjournment of the House lapsed, with-out Question put.

Motion made, and Question proposed, "That this House do now adjourn."— [Mr. Kaberry.]

Photo of Hon. Lancelot Joynson-Hicks Hon. Lancelot Joynson-Hicks , Chichester

I would remind my hon. Friend that with regard to the most recent increase of 10 per cent. in the price of coal quite a number of gas boards have themselves carried it, and are not putting up their prices. That is one indication at least of increasing efficiency and of an increasing sense of responsibility that this spiral has to be stopped. When we throw out these broad generalisations in detriment of the boards we should also bear in mind the things which can be said to their credit.

I wish to congratulate my hon. Friend the Member for Darwen (Mr. Fletcher-Cooke) not only on having the felicity of opening this debate, but on his good fortune in having rather a longer period in which to do so than is normally the case. I am glad that he seized his opportunity. It is an excellent thing that we should have a chance to review these matters and discuss the questions he has raised. But when he, and my hon. Friend the Member for Oldham, East (Mr. Horobin) and the hon. Member for Lichfield and Tamworth (Mr. Snow) pursued the question further and discussed the affairs of the boards, the rates of tariffs, and so on, I felt we were getting out of our depth, because that is a matter at present within the consideration of the Select Committee appointed by this House.

What we do tonight must be of a rather more limited nature. I would make it clear that under the powers which Parliament has granted to the gas boards, and imposed upon him, my right hon. Friend has no power to interfere with the tariffs which the boards adopt. We have to start on that basis. I think it would be of assistance to my hon. Friend were I to take him through the procedure.

I would refer to the Gas Act, 1948, where he will find that in Section 9 it is laid down that the gas consultative council for the area have to consider the variation of tariffs and the provision of new or improved services or facilities within the area. That is a matter for them to discuss with the board. Parliament, through the Minister, has appointed the gas consultative councils to be, for that purpose, the representatives of the consumers.

If the councils do not agree to the proposals to vary tariffs it is for them to take the matter up with the boards. If they succeed in pursuading the boards that the tariffs are bad and wrong the tariffs will be varied. If they do not succeed it is open to the councils, under the Act, to make their representations to the Minister. It is thus, on the representations of the consultative councils, that the Minister has the power to intervene by consultation with the boards and with the Gas Council itself and ultimately, if necessary, by making a direction. But there is no power to make a special direction such as would be necessary to effect a change in a tariff unless, and until, it is upon the representation of one of the consultative councils.

Photo of Mr Charles Fletcher-Cooke Mr Charles Fletcher-Cooke , Darwen

My hon. Friend mentioned Section 9 of the Act. Is it the received view in his Ministry and in the Government as a whole that the powers provided for the consultative council procedure inevitably mean that the overriding and general words of Section 7 do not apply on the question of tariffs, and that under Section 7 the Minister has no power to give general directions relating to tariffs even so far as non-discrimination between small and large consumers is concerned?

Photo of Hon. Lancelot Joynson-Hicks Hon. Lancelot Joynson-Hicks , Chichester

I was coming to Section 7 later, but I will deal with it now.

It would be exceedingly difficult to argue that the words of Section 7 would cover the point which my hon. Friend wants to make. The provision there is that: The Minister may give to Area Boards generally or to a particular Area Board or to the Gas Council such directions of a general character as to the exercise and performance by those Boards or that Board or the Gas Council of their functions as appear to the Minister to be requisite in the national interest, and they shall give effect to any such directions. This has to be interpreted with the onus which is laid upon the boards not to make a profit and not to make a loss taking one year with another, as the phrase goes, which rather puzzled my hon. Friend. It is reasonably clear what is meant. By and large, they have to break even. Also, they have to run their business on commercial lines as an economic proposition. They are left as autonomous commercial people to run the business themselves.

It would be exceedingly difficult to argue that, under that general power of direction to guide boards in the way they should go in the national interest, it would be possible to intervene so as to direct the form which a tariff should take even to the extent that my hon. Friend desires. The fact remains that the tariffs in the North-Western area were considered by the consultative council on behalf of the consumers. The consumers —representatives of bakers, and small commercial and industrial men—made representations to the consultative council.

Several deputations were received by the district committees of the consultative council. As a result of going into the matter with great care and at considerable length the consultative council came to the conclusion that there was no justification for them to interfere, and they approved the tariff which had been submitted by the board. It would be abundantly more difficult, if not impossible, even if there was no question as to the power being in the hands of my right hon. Friend, for him to intervene in a case of that sort and to override the decision already reached by the consultative council.

I pass to the question of preference. My hon. Friend made it clear that the Gas Act refers to the fact that a board shall not grant undue preference in the supply of its commodity. He sought to show that it was, in effect, granting undue preference for a board to charge a lower rate of tariff to the big consumer than to the small consumer. Again, perhaps it would be as well if I referred to the exact words of the Act to make the position clear and to avoid any misunderstanding.

The provision is contained in Section 53 (7), which states: An Area Board, in fixing tariffs and making agreements under this section, shall not show undue preference to any person or class of persons and shall not exercise any undue discrimination against any person or class of persons. All that the boards can do in that respect is to grant special terms in individual agreements where special circumstances exist. It is not a power which is frequently exercised, because it seldom happens that the circumstances do exist.

We had one. example in an electricity case recently which was debated in the House on another Adjournment, but in this particular instance regarding gas, it would only exist in the event of the size and continuity of the load being of such a character that it was of real advantage to the board to be able to have a base load of that sort which was so steady, continuous and certain that it was a substantial contribution to the board's overhead expenses. Such cases do exist, but they are special circumstances and they are very few in number indeed.

What I want to make clear to the House is the problem which faced the boards when they took over on vesting day and had to absorb into their areas the number of undertakings which were there contained. In the case of the northwestern area, there were no fewer than 97 different undertakings, and those undertakings had no fewer than 130 different tariffs. It is not only the responsibility of the board under the Act to set about the standardisation of these tariffs, but, from the ordinary commercial standpoint, it would obviously be exceedingly difficult to run efficiently one undertaking which was seeking to operate such an immense number of tariffs in its own area.

Now that the hon. Member for Lich-field and Tamworth has resumed his seat, I would like to congratulate him on his perspicacity in pointing out that not all the undertakings were good undertakings, because one of the complications facing the North-Western Board when they took over was that, out of the 97 undertakings which had been absorbed, there were no fewer than 35 which had for a number of years been operating at a loss. Obviously, that threw an immediate and exceedingly difficult burden upon the board. They had had no opportunity of seeking to counteract the effect of the loss by making economies or by taking any of the other steps that have since been taken, and there was no alternative but to increase the price of gas to cover that loss, because it is contrary to the right procedure for a board to trade deliberately at a loss.

Then, they found an exceedingly serious state of affairs in certain parts of the undertakings in their area, and I think it is only fair to the board to quote from the conclusion of the 1951–52 Report, in which they say: There can, unfortunately, be no doubt that in many undertakings in the past, plant and equipment had been allowed to deteriorate seriously in order to keep down the price of gas. In others the shortage of materials and labour during the war and immediate post-war years had prevented the undertakers from maintaining their plant in the condition which they would have wished. In some cases, the result was that not only was there a likelihood of failure to supply but plant was actually in a dangerous condition. The Report goes on to illustrate the practical effect of that situation and the steps necessary to overcome it.

What it amounts to is that the Board had to expend very substantial sums of money in patching up and repairing plant which was inefficient, which should have been scrapped on economic grounds had it been possible to carry on the supply in any other way, and which should have been supplanted by new modernised economic plant. The result was that, on the one hand, the board had to expend money on which there would be no immediate economic return and from which they would not increase the production of gas from which to obtain increased revenue. On the other hand, it made it necessary for the board to incur forthwith substantial capital commitments of an investment character which cannot, in the natural course of events, show any short-term advantage to the board's consumers, but which are calculated to show a long-term advantage and a better supply under improved conditions to the consumers.

That is the general picture, which I have perhaps put forward at greater length than I otherwise might have done—

Photo of Mr William Williams Mr William Williams , Droylsden

And very effectively.

Photo of Hon. Lancelot Joynson-Hicks Hon. Lancelot Joynson-Hicks , Chichester

I thank the hon. Gentleman. I want my hon. Friend to appreciate that the board have their own difficulties.

I wish to come shortly to the question of increases in price. It has so happened that almost invariably as soon as the board have just got to a point in their standardisation of tariffs they have been met with some increased cost. As my hon. Friend the Member for Oldham, East (Mr. Horobin) said, it is not always due to the increase in the price of coal. The wages of the people employed in the industry have risen substantially during the period, as have the costs of the materials which they use.

As they sought to standardise, so they were met with the increased prices which necessitated at the same time increases in the tariffs they were trying to standardise, but the upshot is that they have reduced the total number of tariffs from 130 to seven. Regarding the seven, I would remind my hon. Friend of what the Consultative Council said about them. In their Annual Report they said: The Council welcomed the decision of the Board to move towards standardisation of practices and noted that the policy of a"— and this is what I would ask my hon. Friend particularly to bear in mind— maximum price of 19d. per therm to credit consumers necessitated a reduction in tariff charges in several districts. We hear a great deal about the rises in tariff charges, but in the natural course of events and the way in which human nature works, we very seldom have people coming along to thank the boards for any reduction in tariff charges. It is on record in the Report of the Consultative Council that so far as the North-Western Board are concerned there has been a reduction of tariff charges in several districts.

I want now to say a word or two about the general effect of this differential in the tariffs themselves. I am not altogether at one with the figures quoted by my hon. Friend, though substantially I agree with him that there are differentials. I think that the figures which he quoted for 1950 were really the pre-1950 figures. The figures which I have for the tariff blocks for 1950 started with the 47½ therms at 14½d. per therm. I think that his figure was about 9d., so there is a substantial difference there. But I agree that in 1950, as against his figure of 14.5d., the last figure at over 2,280 therms per quarter was charged at only 9d.

Now I move to the current figures. The last figures which my hon. Friend gave I recognise as January, 1953, and not March, 1953, figures; but we do like to be up to date. Actually, it makes very little difference, because the March figures went up 1d. a therm on a flat rate on every tariff. But the first 65 therms under the revised tariff block are charged at 19.25d. When one gets to the biggest block of all—that of over 90,000 therms per quarter, which is a very substantial consumer indeed—at the top bracket, and it does not affect each therm for it rises in steps, there is a charge at 10½d. per therm for over 90,000 therms.

We can now try to see what happens to the bakers. I have made inquiries to try to find out the approximate—and it can only be the average—gas consumption of the small baker and the large baker. Generally speaking, I think the small baker fits into the second step of the tariff where, after his first 65 therms, he goes into the bracket for the next 1,235 therms; that is he is taking between 1,300 and 1,500 therms per quarter. He is being charged at present 17d. on the bulk of his supply.

The large baker probably fits into the sixth step of the tariff, where he is getting up to about the 100,000 therms per quarter limit. At his top bracket he is having his supply, roughly speaking, at 1s. per therm, showing a differential of 5d. per therm between the two top brackets. That compares with the differential at the beginning of 1952 of 3d. between the top bracket of the small baker and the top bracket of the large baker. So my hon. Friend is quite justified in saying that the differentials have increased against the small baker and the small manufacturer of any other commodity who uses approximately the same amount of gas.

The question is: what can be done about it? I say, quite frankly, that my right hon. Friend can do nothing about it. As I have already said, the matter is one which has been taken into consideration by the consultative council. They have considered that it is a fair and right tariff and a proper tariff in the interests of consumers, both from the short-term and the long-term point of view; and we have to realise that there is a long-term point of view in this matter.

If for one reason or another the price goes up to the big consumer to the extent that he takes to oil or electricity or some other form of fuel and power and the gas board in consequence loses the base load and the contribution which that makes towards the overhead expenses, then the gas to the small consumer goes up in price very much more; because it would have to be the small consumer who would have to meet the overhead expenses previously met by the large consumer.

I wonder, also, whether it is only the question of gas which is affecting these small industrialists at the present time. There are many other elements in it. My hon. Friend said that the cost of labour was the same, but I am not sure whether or not he is right. In the big, mechanised bakeries there is a different class of labour, and it may be that on the average turnover the labour charges in a big bakery represent a substantially smaller proportion of the turnover than the labour charges in a small bakery.

I am not a specialist in these matters and I do not claim to be able to speak with any certainty. I throw that out as an argument which occurs to me during the debate, as a possibility that it may not only be gas which is the cause of the difficulties in which the smaller bakers are finding themselves at present.

If the bigger consumer pays less, the smaller consumer might be prejudiced, but if the bigger consumer is asked to pay more and has to go out of business then the smaller consumer might find that his costs would go up even more. It is a question of it being the duty of the board to balance the economic cost of the article against the commercial practice of the business. As the Ridley Report has laid down, and as the Government have accepted, it should be the endeavour of the boards to ensure that the price to the consumer of the commodity which is produced should be related to the cost of production.

In addition, we have also to take into account the commercial practice of the industry. There are other suppliers of power, such as oil, which are not nationalised, are open to free competition, and are not bound by any statutory rules and provisions as to the way in which they have to operate their tariffs. If we were to seek to tie up the nationalised boards, they might be unable to meet the free competition of such interests, so that it would be impossible for them to carry on their major business and they would lose the major consumers to their competitors.

Therefore, an element of commercial practice has to be taken into account, and that may have had some influence in the decision which was taken by the consultative council when they came to the conclusion that it was not in the interests of the consumer for them to press the board further on this matter and that they were satisfied with the decision of the board.

While my right hon. Friend has not power, under the Act, to intervene in this matter, there is nothing to prevent both of my hon. Friends, if they think fit, putting this matter again to the consultative council. I say without any hesitation that I think that have put forward a fair and powerful case to the House this evening. If they put their case again to the consultative council upon the lines they have argued tonight, they might be able to persuade the council, who are the people who have the power to make representations.

If so, my right hon. Friend would have something on which he could go, but until that is the situation there is nothing further I can do except to express my regret that I have been unable to meet my hon. Friend and to thank him, as I do sincerely, for having given us the opportunity this evening of discussing this matter fully in the House tonight.

The Question having been proposed at Ten o'clock, and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Half-past Ten o'Clock.