Orders of the Day — Electricity Industry (Borrowing Powers)

Part of the debate – in the House of Commons at 12:00 am on 2nd November 1966.

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Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central 12:00 am, 2nd November 1966

I am glad to have the assent of the hon. Gentleman.

A further substantial grievance in the electricity industry which should be considered is that it is expected to return 12·4 per cent. on its investment, whereas the figure for the gas industry is only 9 or 10 per cent. This was done deliberately some years ago, presumably because it was felt that the electricity industry was in a better and stronger position to pay and that the gas industry had to be encouraged. But surely, if there is to be a realistic fuel and power policy, this should now be revised.

Another important issue for electricity supply is that the industry is expected to give a reliable supply, but often, since the war it has been kept short of capital to provide the necessary capacity. Much evidence on this point was given to the Select Committee on the Nationalised Industries, on which I serve and whose Report is available. The Chairman of the Electricity Council, Sir Ronald Edwards, told the Committee that when there is a fuel crisis, a shortage of fuels generally and very severe weather, if coal cannot be delivered, if the gas supply fails and the oil tankers do not get through, people turn out their spare electric radiators in their lofts and lumber rooms and plug them in. So the electricity industry is always uncomfortably placed when other fuel industries fail.

However, apart from having to maintain a domestic supply, which can be very peaky indeed, the electricity industry has a special relationship to the growth of national productivity and the general prosperity of industry. This is a point which I made in a supplementary question to my right hon. Friend with some force a little time ago—that it is absolute folly to propose cutting back capital expenditure of the electricity industry, as in the long run such action will be regretted.

Critics of the industry have talked for years about the possibility of the load curve of growth flattening out. This has happened in no other industrial country and I am certain that it will not happen here. When my right hon. Friend, no doubt under pressure from the Treasury, asks the electricity supply industry to look at its capital expenditure, I hope that he will not take this too far. I hope that he will act instead as a defender of the industry against the Treasury. It is all very easy to say that the cuts are not in generating capacity but in distribution, but in the long run there is an absolute relationship between generation capacity and distribution capacity; we cannot separate the two.

We in the House are representatives of the shareholders in this industry and we should look at industry in that spirit. Our third duty, therefore, is to point out to the industry where it fails; whether it fails in whole or in part. There are a number of points which I could make. Some I have made in the past and some I hope to make in the future. In particular, they concern questions of publicity and of organisation and, particularly, the neglect by the industry in relation to the development of the industrial load. But because of the nature of the Order and the lateness of the hour, I intend to spare the House my reflections on that subject at this stage.

I feel that I have said enough to justify claiming that the industry has a right to ask for this capital and, on its record a right to have it approved by the House. Very soon the nationalised industry will come of age. It will be 21 years since the first nationalisation Act. I wish, in a bipartisan spirit for once, perhaps, to say that the two major parties in the House have contributed a great deal to the improvement of the organisation of this industry. The 1947 Act brought in a new era, although the principles of public ownership were already established in the industry. The 1957 Act in the main brought about a necessary reorganisation; it was introduced by the then Conservative Government. We did not, on this side, oppose that Act in principle.

Together both parties have therefore contributed to the improvement of the organisation and the success of this great industry. It has become very much a school of social management, because industrial management in an industry of this kind, with public accountability very much to the fore, is an art in itself. The engineers, managers and employees in the industry have well justified the trust which has been placed in them. I hope that the House will approve the Order.