Electricity Reviewed: The Herbert Report
| Author | A. H. HANSON |
| DOI | http://doi.org/10.1111/j.1467-9299.1956.tb01490.x |
| Published date | 01 June 1956 |
| Date | 01 June 1956 |
Electricity
Reviewed
:
The
Herbert
Report
By
A.
H.
HANSON
InJuly,
1954,
the Minister
of
Fuel and Power (then
Mr.
Geoffrey Lloyd)
appointed a Departmental Committee
‘‘
to inquire inro the organisation and
efJiciency of the electricity supply industry
in
England and Wales in the
light
of
its working under the Electricity Act,
1947,
and
to make recom-
mendations.” The Chairman
was
Sir
Edwin
Herbert and the
six
other
members included a leading Trade Unionist, a former President of
the
Chartered Accountants and a Professor
of
Economics from
London.
Their report was published in January,
1956
(Cmd.
9672.
6s.
6d.).
PTER
its exhausting efforts of 1945-51, the Labour Party is engaged in
A
stock-taking and self-examination.
As
if to assist the process, the present
Government has this year sponsored the publication of two excellent reports,
each drawing up the balance sheet of a major Labour reform. Both give
retrospective pats on the back to socialist legislators. The Guillebaud Report
exonerates the National Health Service from most of the charges made against
it; the Herbert Report, although harsher in its judgments, eventually dis-
charges the electricity supply industry with
ho
more than a severe caution.
“
This is not in any reasonable sense of the term an inefficient industry,”
it
concludes
;
“
it
is an efficient industry that could be improved but is
in
danger
of losing efficiency partly for reasons beyond its own control.”
Quite rightly, the Report devotes little space to praising the works of the
Central Electricity Authority. Its job is to diagnose remediable diseases, and
to prescribe for them. For this purpose, it attempts to find the answers to
the following questions
:
“
(1)
Is
the industry making the best use of the
capital it raises and the revenues it earns
?
(2)
Is the industry making the best
use of its manpower and physical assets
?
(3)
Are consumers being properly
charged for the services rendered to them? (4) Is the organisation of the
industry well adapted for securing the best possible use of capital, manpower
and physical assets, and for ensuring that proper charges are made to con-
sumers
?
and
(5)
Is the organisation well adapted and the staff sufficiently
capable to secure the same ends in the future
?
”
Application
of
Commercial Criteria
Clearly, the answers depend
on
the interpretation placed
on
“
best,”
‘‘
properly,”
“
well
”
and the other value terms which the questions embody.
Right at the beginning
of
its Report, the Committee emphasises that its inter-
pretation of them is based
on
normal commercial criteria, although
it
admits
that the application of these to a nationalised industry, in a quasi-monopolistic
position and therefore “without the major bench-marks that we have in
competitive industry,” is not easy. Some might contend that this whole
approach is wrong-headed, in that the very purpose of nationalisation was to
lift the industry above the level of ordinary commercial considerations of the
type that guide the calculations of private businessmen, and to transform it
into a special
kind
of social service. Some of the Labour nationalisers, and
many of their supporters, were actually thinking in these terms-and they
were
not entirely wrong.
If
the
NationaI Coal Board,
for
instance, were
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