NORTH SEA OIL

HC Deb 02 August 1972 vol 842 cc607-39

5.47 p.m.

Mr. Dick Douglas (Clackmannan and East Stirlingshire)

I beg to make use of an ancient privilege of the House to raise under Class IV, Votes 1 and 7, the need to review policy in relation to North Sea oil. I am pleased to see the Under-Secretary of State in his place because I know that he has a great deal of knowledge of this topic, going back to his previous incarnation when he was with Phillips Petroleum Company.

It is my duty and responsibility, as on the first occasion when I raised this topic at length in an Adjournment debate in November last, to pay a particular tribute on behalf of us all to the people who are engaged in the exploration for and production of North Sea oil under difficult circumstances. I hope the Minister will tell us—although it may be outwith his sphere of responsibility—what progress has been made on the laying down of codes of practice on rigs and standards of safety for the construction of rigs.

Although much of the technology that has been used in the North Sea is of United States generation, we are moving now into depths that are unknown off Louisiana. We are moving into depths of water of up to 400 ft. and perhaps even deeper. Farther west work may even be going on at depths of 1,000 ft. and perhaps more. The technology that is appropriate for depths of 200 ft. is not necessarily the technology required at much deeper levels and there are more hazards and arduous conditions at those depths in the North Sea.

Although we should take full account of what is happening in the United States on this subject, we must lay down our own standards. I know that if my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) were present he would be pleading for standards of safety to be laid down for those engaged in diving. Again we should not adopt the practice in the United States without seeking greater knowledge on our own part.

I wish to acknowledge the fact that the Government are becoming more aware of the feeling of discontent in this House about the amount of information on oil and gas production in the North Sea. I hope that the Minister, having heard the Minister's reply on the last debate on this topic, will not in a few years' time, if he is still in that office for that length of time, accuse me of not having raised the matter. I have raised this subject today on this legislation, and I also have a Bill, introduced under the Ten-Minute Rule, which clearly lays down some of the points which I wish to see put in legislative form.

The Minister for Industry told the House on 27th July, when replying to a debate on the Scottish economy: I think that the House is entitled to a better presentation of the information available. …"—[OFFICIAL REPORT, 27th July, 1972; Vol. 841, c. 2191.] That at least is a small step forward. Although I welcome that statement, it is no substitute for better and more information on the North Sea situation, which is what we require. We should also like to see a complete new look at the methods adopted for the granting of export and other licences in the North Sea and also information about oil companies engaged in North Sea operations.

The conditions under which licences are issued under the Continental Shelf Act are well known to the House and I shall not detain hon. Members by going into that background. The licences are for a six-year period and relate to payments made on the basis of a square kilometre, the royalties being paid at a rate of 12½ per cent. in terms of wellhead prices.

In April, 1971, a major innovation took place in the fourth round of licences. The idea of using the established discretionary methods of licensing was varied; it was decided to allocate 15 blocks by means of competitive tender or, in common parlance, to auction them. The reasons for this departure have never adequately been explained. As I understand it, the 15 blocks put up for auction were supposed to be representative of all the blocks put out at that time. To take an analogy in another field of operation, let us suppose that there are 100 houses up for sale. If one is not sure of the market value, one may well say, "Let us auction 10 of them." One may then find that the bidding goes to £10,000 for each house. In those circumstances in view of the fact that £10,000 can be achieved for a single house, one would be very reluctant to say, "My normal method is to sell the other 99 houses at £100 at time".

In this instance the situation involves the auctioning of 15 blocks for which £37 million has been received. These blocks were representative of the total allocation at the time. If that is the case, why did we receive only £3 million for the other 267 blocks? Will the Minister say how much information he has received about the blocks which have been allocated up to the present?

Hon. Members opposite have made great play of the fact that the Labour Party has issued a discussion document. Let us have no snide remarks about this document since it must be emphasised that it is a discussion document. It says that we intend to look at the conditions of licences and that we may alter them.

When the Conservative Government came to power they knew that certain criteria were laid down in the third round of allocations for public participation. However, the present Government issued no discussion document when they, for doctrinaire reasons, in the fourth round removed the public participation concept. Why did that happen? What were the changes which occurred between the third and fourth rounds to necessitate the removal of public participation in the fourth round—a round which was to be very lucrative, so far as we can discover, in the allocation of blocks in the North Sea?

We are told that the total investment in the North Sea has reached £300 million. May we be told how much of that has been in gas and how much in oil? What system has the Department of Trade and Industry to monitor this investment? As I understand it, the figures we have been given are not the Department's figures but figures supplied by the oil companies. The Department has no means whatever of accurately monitoring the investment undertaken by the oil companies in North Sea operations. If there are no means to indicate the total expenditure by companies, what means are there for the Government to ensure that companies extend their assets in the United Kingdom? What happens at the moment is that we are given a total figure or a total percentage and we must accept it. We have no monitoring mechanism available for this purpose.

I turn to consider the experience in other countries, particularly that in respect of public participation. We are told that in the latest round of allocations the Norwegians have reserved 75 blocks for the State. Has any thought been given to reserving parts of future allocations in the North Sea for the Unite[...] Kingdom Government based on public participation, either through a State oil company or some other established public corporation in this country, to undertake the production of blocks allocated to them by the State?

We also have available from the Norwegian Government information about the State oil company. I wish to refer to Report No. 76 made by the Petroleum Division of the Ministry of Industry in Norway to the Norwegian Storting. On page 23 of that Report the Ministry of Industry sets out its proposals for setting up a State oil company. It goes even further in Section 4 of that Report and indicates its method of approach. This is the sort of information which we ought to have. The report says: In connection with the first production licences granted, the licencees undertook by a gentleman's agreement with the authorities to employ bases in Norway, Norwegian industry and Norwegian labour, provided that such goods and services are competitive in terms of price and time. The report continues: This condition underlines the fact that the authorities would like Norwegian industry to take part in all phases of the operations on the Continental Shelf. This is a public statement and part of the negotiations, and the companies getting the benefit of production and exploration on the Norwegian section of the continental shelf are now to give more than a gentleman's agreement in relation to the use of Norwegian facilities. Why cannot we have the same? The British Government might have to review any GATT agreements. But is not Norway a signatory to GATT? Why should we in the United Kingdom give the oil companies conditions that are less onerous than those that apply in another country engaged in exploration on the continental shelf?

Mr. William Ross (Kilmarnock)

This is an opportunity to get all these facts on record. Also in regard to that report, will my hon. Friend deal with the question of the carried interest condition that has been placed upon the latest block advertised by the Norwegian Government, whereby it will be a condition that whenever there is a successful strike, an interest for the Norwegian nation has got to be accepted?

Mr. Douglas

I am grateful to my right hon. Friend. I wanted to deal with that point when I deal with a certain innovation that has occurred in the financial arrangements of British Petroleum. It is a very important point.

I turn now to the question of oil refining. The oil companies are to enjoy, in relation to the licence agreements they have to undertake, the advantage of being able to bring the oil ashore in the United Kingdom. But as I understand it, there is nothing in the agreements to require these companies to refine the oil in the United Kingdom. In my Private Member's Bill I ask that the oil companies ought to be asked to give good reasons why they should not refine the oil in the United Kingdom. I can see that there may be technological reasons in the mixes of crude why this should not be done. But when the oil will come ashore in 1974–75 at a production rate of 20 to 25 million tons a year, which will be in excess of Scotland's refining capacity at that time, we should not leave it to the oil companies to decide where they want to refine the oil. This should be at least discussed between the Department of Trade and Industry and the oil companies.

Turning to the point raised by my right hon. Friend, it will not have escaped the notice of hon. Members that the financial arrangements have now been altered, particularly in relation to British Petroleum. British Petroleum has had to raise a massive sum of £360 million from a consortium of banks. If oil is discovered in certain areas of the Norwegian continental shelf there is an indication of public participation. But in this case, unless I have it wrong, what British Petroleum has done in these very peculiar financial arrangements of raising the £360 million is to borrow it from a consortium, and it will then sell the oil to the consortium. I understand that if there are any difficulties, should there be default on the part of the company, the first claim on the oil will be that of the consortium. That strikes me as an alteration in the licensing arrangements. But I am told on very good authority that the Department of Trade and Industry will recognise the claims of the banking consortium and special companies. I may be wrong, but I do not think that the House has been informed of that. Therefore, I should like to hear the Minister's views as to whether the Government, in relation to even a company of the magnitude of British Petroleum and although it is partly publicly owned—a company of that size; not necessarily British Petroleum—accept this type of method of financing this kind of operation.

These operations are difficult to finance. But this innovation is of an American pattern. We have somewhat waived the normal licensing agreements. We are not saying, "When you discover the oil there will be public participation", as the Norwegians say. We are saying that although 50 per cent. of the money is United Kingdom money, we are prepared to allow a large amount of the money and control to be foreign, although the consortium is registered in the United Kingdom. Here we have the major British find of oil, but we know that other banking concerns are moving in and saying that they will have their share at fairly lucrative rates of interest. I recognise the reasons, but nevertheless the House is entitled to an explanation from the Minister.

My final point relates to the assessment of fuel policy. My hon. Friend the Member for Goole (Dr. Marshall) has made a particular investigation of this matter, and I hope that he will catch Mr. Speaker's eye. North Sea oil affects our overall fuel policy. As well as supplying a White Paper on North Sea Oil, the Government ought to show initiative and supply a White Paper on the totality of fuel policy. We may not wish to use North Sea oil merely as a fuel but also as part of a total energy system related to nuclear power and as a very valuable resource for the production of commodities other than fuels. Therefore, the Government ought to make a statement very soon as to their views about the effect of North Sea oil and its potentiality on fuel policy as a whole.

I believe that the total finds have been completely underestimated by the Government. The figures I have seen do not correspond to the production levels given of 100 million tons by the 1980s. I consider that the oil companies, in their own interests, are writing this down at present. A figure of 300 million tons by the 1980s would certainly not be an exaggeration. The oil companies are being very coy as to the finds off Shetland. The hon. Member for Bolton, East (Mr. Laurance Reed) received a very terse reply to a Question on 25th July in relation to those finds.

We must have a better assessment of all that is involved. We require a White Paper on this subject and much more information. I hope that the Minister will say that at least we shall get the type of information available to members of the Norwegian Parliament.

Mr. Speaker

May I, with respect, repeat something that I said during an earlier debate? I hope that those hon. Members who have drawn the early numbers will be reasonable about the time. The first debate took 67 minutes and the next took 55 minutes. I think that an hour, or perhaps a little more, is reasonable. I hope that hon. Members who catch my eye will bear that in mind.

6.10 p.m.

Dr. Edmund Marshall (Goole)

I congratulate my hon. Friend the Member for East Stirlingshire (Mr. Douglas) on choosing this subject within the context of this debate. I will take up his cue and concentrate my remarks on the impact which North Sea oil is likely to have on the whole energy sector of the United Kingdom economy.

I do not believe that any sensible discussion of a particular fuel can take place unless it is within the context of energy as a whole. Although I may be repeating well-worn arguments, I know that the interrelationship between different fuels, because of their interchangeability for both electricity generation and the final consumer, means that any public decision about any one fuel is bound to have serious counter-effects on other fuels. Therefore, I think the Government must adopt an approach which was tried by the Labour Government, whereby all matters of fuel policy are considered together.

To my mind, the only way this can be done satisfactorily is by the use of mathematical model techniques. I understand that within the Department such models have been developed. Only by these techniques can the close relationship between the different primary fuels available to us be properly worked out.

This approach received its first official blessing in the famous White Paper of November, 1967, Cmnd. 3438, entitled "Fuel Policy". That document had a mixed reception. Its critics included many people who are involved in the coal industry whose criticism arose in many respects because of the prediction within the document of a continuing decline in the demand for coal.

I can well understand criticism of that nature, representing a constituency which includes two collieries, one of which, at Kellingley, is among the most modern in the country. However, I do not accept that this is a criticism of an integrated energy policy. People may not have liked the results which came out of the policy, but that is no particular criticism of adopting the integrated approach. Indeed, the only way of planning for a secure future in the coal industry is by calculating precisely the effects and counter-effects between coal and other fuels. I know this in particular having a professional background in the oil and electricity supply industries and now representing a constituency which includes four power stations, has three others nearby, and is within easy distance of the oil and gas installations on the Humber. Unless Governments adopt a fully comprehensive energy policy, the laws of the economic jungle will apply and coal will probably suffer most. It is in the interests of the coal industry that we adopt an overall fuel policy.

The forecasts of the 1967 White Paper have turned out to be remarkably correct for coal and natural gas. Figures given to be by the Under-Secretary of State in a Written Answer on 15th June show that the use of those two primary fuels in 1971 was almost bang on the predictions of the White Paper. The White Paper has gone astray only in respect of nuclear power, which has barely exceeded its 1966 total, and of oil which is already exceeding its forecast level for 1975. It may be that technical problems relating to nuclear reactors are largely responsible for these discrepancies.

Apart from that slight imbalance, the approach of the 1967 White Paper has been shown to be basically correct. I think that it is a good foundation on which the Government should attempt to build now. There is a need at this date, five years after the White Paper, to update it, to extend it—not to replace it, but to build upon it. I noticed the Oral Answers which were given to the hon. Member for Bedford (Mr. Skeet) on 5th June in which the Secretary of State was very shy of committing himself on this subject. At least he could have undertaken to place continued reliance on the kind of techniques adumbrated in the 1967 White Paper.

The major factor which has come on to the scene since 1967 is the very subject of this debate—North Sea oil. Policy for the use of North Sea oil will make sense only within the overall context of a national fuel policy. Almost a new fuel has come on the scene. It may be chemically similar to petroleum from foreign parts, but strategically we have basically a new ingredient in the situation here. Whereas the 1967 White Paper talks of our moving to a four-fuel economy, we have now come to a five-fuel economy.

I think that three basic differences between North Sea oil and oil from foreign sources should be considered. First, we have been told that one restraint on using oil as a primary fuel in this country has been the security, the strategic, factor, especially where the producing countries have been in areas of political unrest. My hon. Friends representing Scottish constituencies will know far better than I what is the likelihood of political unrest in those parts, but I cannot imagine that this is a significant factor, although rigs at sea and underwater pipelines are somewhat vulnerable for any would-be enemies.

Secondly, we have in the past been told that the cost of imported fuels bearing on our balance of payments should be a major consideration in fuel policy. Again, North Sea oil obviously differs from foreign oil in this respect, although, following my hon. Friend, I wonder how far this particular difference has been blurred by the way in which Government negotiators, in the licensing of exploration rights on our continental shelf, have come to terms with the oil companies. It is estimated that, when North Sea oil is in full production, this country will be enabling foreign oil companies to take from our shores £700 million more per year than would have been the case if our negotiators had been as tough as some of the older oil-producing countries in this assignation of exploration rights.

The third way in which North Sea oil differs from foreign oil lies in its employment opportunities for our own people, particularly in Scotland. These benefits can be exaggerated to some extent, partly because oil is not a labour-intensive industry, like coal, and partly because most foreign oil coming to this country is refined here, often for re-export. Employment opportunities, particularly in parts of Scotland where there is severe unemployment, must certainly be kept closely in mind in the development of an integrated fuel policy.

To sum up, I place on record for the first time in this House my view that a national energy policy, based on mathematical techniques, is essential for planning the well-being of the many people in this country who are involved with energy in any form. North Sea oil should be regarded as an entirely new factor to be incorporated in these calculations. Its discovery is potentially one of the best things that has happened for Britain in hundreds of years, but only the proper planning of its use can ensure that the benefits which are derived are maximised.

Mr. Robert Hughes (Aberdeen, North)

I congratulate my hon. Friend the Member for East Stirlingshire (Mr. Douglas) on raising this topic. I shall not follow my son. Friend on the technical and financial aspects or follow my hon. Friend the Member for Goole (Dr. Marshall) in his request for a national fuel policy. Those matters have been adequately covered. I am more concerned with the general economics of the situation.

In the general discussions about the use to which North Sea oil might be put, there have been discussions as to how far the oil should be refined within the boundaries of Scotland or of the United Kingdom, and how far the export of crude oil to be refined elsewhere in Europe might be used as a balance of payments factor.

I am worried because the Government seem to be taking the view that the exploitation of oil and the way in which the benefits are spread throughout the country is a matter for the oil companies alone. I am concerned to see that the good of the nation is given paramount concern. I do not know whether one gets a dose of delirium tremens from a whiff of North Sea oil or gas, but that is the kind of position which the Government are in. Whenever North Sea oil is discussed, we are always told by the Government how many jobs have been created in the North-East of Scotland and how Aberdeen is becoming the Texas of Britain. We are told that tremendous confidence will arise in the North East because of the discovery of North Sea oil.

The Government are perfectly entitled to claim that their present policies are successful because many jobs have been created, although the number has not been defined—some people say 10,000 and some 7,500. The figures vary but the Government are entitled, with 138,000 presently unemployed in Scotland, to clutch at any straw. I concede that in North Sea oil—I accept that I am mixing metaphors—the Government are clutching a substantial straw. Of course, the Government are anxious to prove that, as a result of their policies, and because of the way they have tackled North Sea oil, new jobs are being created. That is something for which they must claim the credit.

However, when it comes to major decisions which might be open to later criticism or even present criticism, the Government tend to opt out of their responsibilities. They say that major decisions on the general economic future of the country are not directly for the Government. For example, if one wishes to tackle the Government about the rôle of British steel in the economy, and the investment decisions and the new ideas which have to be pursued or might be pursued by British steel, the Government say that that is not a matter for them but for the British Steel Corporation. If one approaches the Government about the speed, the manner and the style of planning decisions, the Government retreat from the scene and say, "That is a matter for the local authorities". If one tackles the Government and criticises them for their Scottish harbour development policy, one is told that that is a matter not for them but for the harbour board authorities.

In other words, the Government are approaching the traditional laissez-faire attitude. The oil is there, and oil means money, but how the money is spent, we are told, is a matter for private enterprise to argue and fight about. I am worried that the Government are putting all their eggs into one basket. When they say that there will be spin-off from the discovery of North Sea oil, and from that spin-off all the deep-seated problems of unemployment and poverty in the depressed and under-developed parts of the country will be solved.

The Government have often misunderstood our criticism when we have attacked their decisions on these matters. I have been a persistent critic of the Government's policy regarding the Aberdeen Harbour Board and Aberdeen's development as an oil port for the oil service rigs. Somehow the Government have taken the view, because I criticised the manner in which they took their decision to give a loan to the harbour board rather than giving it grants, that my criticism is carping. That is not so. I am concerned that the board had to postpone well-laid plans which were thought of, discussed and projected for a number of years before North Sea oil was discovered. The fishery developments were to be postponed for five or six years because the harbour board was forced to make up its mind on a commercial development in relation to North Sea oil.

I know that the position has since changed because of the imminent entry of Britain into the EEC. The Government made certain investment decisions regarding fisheries and the projected developments at Aberdeen have been brought forward again. However, that was purely fortuitous and not because of a well-argued and well-thought-out development policy.

The Government are saying that the future of the North East is either with applied oil technology or with allied oil technology, and that that is where all the problems must be solved. One is forced to make the dreadful pun that man does not live by oil alone. However, the Government seem to be suggesting that oil will solve everything. They say that a tremendous number of service jobs have been generated within the economy of the North East of Scotland.

I do not decry service industries or service industry jobs. Any jobs which come because of North Sea oil are important and acceptable. But who gets these jobs? I saw an estimate that 60 per cent. of the jobs so far created have been filled by the recruitment of local people. I do not know whether that is an accurate assessment and I shall be grateful if the Government can give us an accurate assessment. Many people have complained to me that they have written to the oil companies but have received no answer.

The only people who have so far benefited in any conspicuous way from the discovery of North Sea oil are the Aberdeen property developers. There is no doubt that the most rapid growth industry in Aberdeen is the selling of houses. The value of houses and the rents of vacant properties have increased at a pace no one has known in the past. It even exceeds the exploitation of student accommodation.

However, there is only conspicuous evidence of North Sea oil in Aberdeen. I accept that confidence in the North-East of Scotland is important. I know that those of us who criticise the Government's policies can be accused of being Jonahs and putting on a gloomy face and possibly destroying some of the confidence and keeping away some firms from Aberdeen and the surrounding districts. However, that is not my purpose. It would be foolish if we were to take refuge in the kind of hallucinations in which the Government are taking refuge. It is foolish to look at the apparently limitless pool of North Sea oil and to say, "We do not need to worry about the problems in the North East which have existed for generations and which we have begun to solve." Confidence is important but only in the long term.

No one can accurately forecast or speculate how long the oil boom will last. I think that the production and exploitation side will last for a considerable time. However, even within that time scale, which may be eight or ten years, we have to go further than relying on oil. We have to look towards the regeneration of the economy of the region. Without looking too much on the black side of things, it is important to recognise that those hon. Members representing North-East constituencies—I represent one part of Aberdeen—thought we were beginning to see the kind of industries coming into Aberdeen and into the region which could bring back and use the skills which we always had.

Many engineering firms in the North-East of Scotland have closed down during the past 20 years. Almost all the foundries in Aberdeen have closed down. We were looking for new industries. We had the possibility of Mullard's opening a first-class modern electronics plant but unfortunately, due to the position of the electronics industry generally, it did not go ahead. We have also lost some of the clothing industries of the North East.

There is another aspect to be cautious about. We want to see new firms coming to the North East and I want to see the Government using the tremendous revenues from North Sea oil not just for service industries or for applied and allied oil technology but for other industries to keep the whole economy moving. If that is done, we shall see something really worthwhile, but the Government are not yet doing enough about it. This is why I agree that it is important to see a strong move by the Government to keep additional oil refining capacity within Scotland.

I do not take the view that every single drop of oil from the North Sea has to be refined within the boundaries of Scotland or, indeed, of the United Kingdom. If one took that attitude, all Middle East oil would be refined in the Middle East, with the result that some of our traditional refineries would not exist. But there is a strong case for additional oil refineries, because they would bring allied jobs on the petrochemical side which are also important. I hope that the Government will do more about that.

The Government have a responsibility, even if it is not direct, to see that every avenue is explored in getting the benefits from North Sea oil and from the technology. In this month's issue of the British Steel Corporation's magazine, there are excellent figures about how the corporation is becoming involved in production and rigs through subsidiaries and supplying steel. The corporation is anxious to show how much of the steel piping it has supplied, but there is one type of piping that it has not supplied—the undersea piping. This is because there is no capacity for it in Britain. Undersea pipes have to come from Japan. We are speaking now about the general position of oil technology and oil exploration, not simply of what happens off the shores of Britain.

It is generally recognised that between now and the end of the century the major oil finds will be not on land but off shore. Tremendous developments are forecast off Japan, Ireland and other countries, where drilling is taking place in deeper and deeper waters. The oil will have to be brought ashore through undersea pipes. What are the Government doing to encourage the British steel industry to study the possibility of laying down special plant to produce undersea pipes not just for North Sea oil but for export markets as well?

There will always be a difference between the two sides of the House about how far the Government should influence industry. I do not believe that we shall ever resolve that difference. But I would like to think that we all agree that the Government should take an active part. I think that they should. But I am satisfied that, unless we change direction and do not rely entirely on oil but look at the broad spectrum of possibilities, the hope and confidence of all of us that oil can be the greatest boon for this country will not be fulfilled and the Scottish economy will not be developed to its full potential. I hope that the Government will start learning the lessons which they have so far avoided.

6.35 p.m.

Mr. Gavin Strang (Edinburgh, East)

I, too, am grateful to my hon. Friend the Member for East Stirlingshire (Mr. Douglas) for obtaining this debate. Last week the Secretary of State for Scotland described in our debate on Scottish affairs the discovery of North Sea oil as being the most important economic development in Scotland this century. There is no question of that. By far and away it is indeed the most important development. It is only this year that the evidence has become available to show just how big the oil reserve is, and more oil is likely to be discovered.

But it is fair to say that Scottish industry, the Scottish people generally, the Government and the Opposition to some extent have been a little slow in appreciating just how important this development is for the Scottish economy and how important it is to act quickly and to evolve a new approach. The attitude is changing, and I think that my hon. Friend himself has made a substantial contribution to the changing attitude in Scotland and of the media generally.

One could raise a whole host of issues about North Sea oil. There has been a great deal of controversy in Scotland about royalties and to whom they should be paid. Whose are they? Are they the Government's? Are they Scottish or British? There is the controversy about the rôle which oil should play in our energy requirements. Should we use less coal because we have oil? My answer to that is, "No", but I shall not dwell on it now. There has been argument about the pollution aspect. Will it damage the countryside in certain parts of Scotland? That is certainly an aspect about which we should be concerned. How long will the oil last?

All these are important issues, but there is one which I believe is at present far more important in the short term—the question of seeing that the services, materials and equipment required by the oil companies in connection with exploration and the landing of the oil are provided by Scottish and British firms. That is the major short-term challenge facing the Government. The Government have a responsibility to see that a very substantial proportion of the equipment and services comes from Scottish firms, because there is no doubt that the size of the operations could have an immense effect on the Scottish economy. For example, about 50 per cent. of the material is steel.

We are talking not just about the North-East of Scotland in this context but of industry throughout Scotland. I visited Brunton's in my constituency last year and found that the firm had not done much then about oil. But when I returned there recently about another issue, the firm was able to tell me that it had a representative looking into the question of getting contracts with oil firms and that he was making some progress. Only in the last fortnight a group of engineering firms has formed a consortium to see what can be done to supply the North Sea oil industry.

But even allowing for the change of attitude which has taken place and for the fact that oil is becoming more and more important, there is no doubt that we are not making anything like the contribution that we should. There is sufficient evidence for this from other countries and from talking to people on the spot—for example, the manager of the BP Forties field. The Government must accept the responsibility to do everything they can in the short term to improve the situation.

I am not blaming the Government for the situation. It is a new development. It is not something that we can criticise the Government for not doing last year. But we can point out that this is an urgent issue and will not wait. The questions of the rate of extraction, pollution and royalties are not nearly as urgent as this one.

What more can the Government do to see that more jobs are created in Scotland as a result of the discovery of oil in the North Sea? That is what the matter comes to. How can we create these additional jobs? As with every other problem, there are two ways of looking at it. First, one has to bring pressure on the oil companies and to evolve a way of dealing with them in order to show that it is in their financial interest to buy British materials. Obviously, we have to make it profitable for them to do so because they will not do it out of goodness of heart. One must give credit to many companies which have gone out of their way to give orders to British industry, but we have to ensure that it is profitable for the oil industry to buy from British firms.

It is true that this was a factor that was considered when licences were allocated. Firms were required to give some indication that they proposed to make the maximum use of Scottish and British industry. But even now the Government have no way of putting continuing pressure on companies to buy more of their materials from Scottish and British industry. I hope that the Government will look closely at the possibility of evolving some fiscal incentive for the oil companies, perhaps through some form of taxation—I am not pretending that it is easy and my suggestion may turn out to be impracticable—to buy their materials from Scottish or at least British firms.

But that is only one approach and it is the second approach that I wish to consider more carefully. This approach is to make it easier for the supplying companies to provide the materials. It was said at a meeting of the Parliamentary and Scientific Committee by the manager of the BP Forties field that BP had wanted British firms to build a 1,200-ton crane, for instance. My hon. Friend the Member for Aberdeen, North (Mr. Robert Hughes) mentioned the piping to be on the sea bed—of course the bulk of the land piping will be supplied by British firms. But BP found that the reaction of British companies asked to provide equipment or technical know-how in the North Sea field was to say that they were not in that business. For instance, a firm asked to build an oil rig would reply that it was basically a ship-building firm and saw no reason why it should risk spending money in another activity from which it could not be sure of making a profit.

That attitude may be criticised and it may be said that Scottish industry is not sufficiently adventurous. That is often said of British industry and there are undoubtedly failings in that respect. But the matter cannot be left there. The Government have a responsibility to alleviate the problem, to create a situation in which more British firms are prepared to compete for these orders.

There is a strong case for the Government providing direct support to some firms to encourage them to invest in acquiring the necessary skills and expertise. I see no reason why the Government should not carefully consider offering development contracts to firms in order to assist them to acquire the necessary expertise. How it could be done is clear. There would be discussions with the companies about what they might require and firms could approach the Government for selective assistance. I am not sure to what extent the Government might be able to use the Industry Bill for this purpose.

If the Government can provide development contracts, rightly in my view, to enable the computer industry to acquire expertise and to develop new ideas, and if massive financial support can be given to the aircraft industry, I see no reason why the Government should not carefully consider adopting a similar approach to firms learning the North Sea oil business. There is a danger that the benefit to be obtained from North Sea oil in terms of additional jobs and higher wages for the people of Scotland will be lost if there is not a more urgent approach by the Government to this problem.

In five years' time we may look back and say that British industry responded reasonably well, but other firms, not only the Americans but the French and Dutch and Italian firms, which are all in this business in a big way, bigger than most British firms, will still be the major suppliers of the oil companies. Of course British firms are making a bigger contribution, but if it were right for the Governments of those other countries to encourage the development of the offshore industry, it is reasonable to ask the British Government to provide help for Scottish firms and for British industry to enable them to adjust rapidly, so that they may respond to this challenge and so that North Sea oil may make an immense contribution to the Scottish economy.

6.45 p.m.

Mr. Alex Eadie (Midlothian)

I congratulate my hon. Friend the Member for East Stirlingshire (Mr. Douglas) on his enterprise and initiative in raising this subject. It is a pity that we are not able to have more debates on a subject of such great importance not only for Scotland but for the whole nation. All of us wish that the North Sea were floating with oil, because it is the wealth of the nation and the wealth of the nation is beneficial to the people.

But I hope that we shall all make it clear to the general public that oil is a fossil fuel and that as such it is a wasting asset. I hope that we shall not hear nonsense such as we heard from the Chairman of the Highlands and Islands Development Board who said that this great wealth should be burnt in order to generate electricity which would be fed into the national grid. That is not the way to use this great national asset. But we must keep a proper perspective.

On 11th March, we were told by the Department of Trade and Industry that by 1975 we could expect to have about 25 million tons of oil a year and that by 1980 the figure would have risen to 75 million tons. In the United Kingdom we use about 150 million tons a year. People who talk of an unlimited supply of North Sea oil are doing a great disservice to other industries. They are doing a great disservice to the coal industry, for it has already been suggested that we do not have to worry about other fossil fuels, such as coal, now that we have an abundance of oil and even that we could embark on a policy of contracting the coal industry.

We do not have an abundance of oil. Let us hope that we get more than has been predicted, but it must be remembered that the world is now using more oil than it is finding. The United States of America is probably the world's greatest user and it has had to grasp this problem. It has already been calculated that because of the appetite of industry in the United States, with indigenous supplies able to meet only 40 per cent. of demand, vast quantities of oil will have to be imported and that may mean that America will have to devalue the dollar.

We know that the North Sea and the Middle East contain about two-thirds of the world's known oil resources. There will never be any cheap oil. North Sea oil will not be cheap, but it will be valuable to us. There will be no cheap oil anywhere in the world.

I hope the Government are seized of the importance of this matter of energy. I hope that we shall not have the silly policy of trying to deceive the people into believing that there is an abundance of oil and that we can, therefore, contract our other sources of fossil fuel. We cannot close our pits as one closes a factory. When a pit is closed it is closed for all time. It is finished. I hope that when the Minister replies he will indicate that he is seized of this point. All fossil fuels are a wasting asset. Oil is a wasting asset. The Government have a duty to make sure that we use our supplies of North Sea oil wisely and in the interests of the nation as a whole.

6.51 p.m.

Mr. George Lawson (Motherwell)

I, too, have been in a Committee all the afternoon and I have missed much of what has been said in the debate.

I wish to make only one point. I, with other hon. Members, am concerned to see that the greatest benefit is obtained from oil for Britain. But I should like to put in a cautionary word. We have a very beautiful country in Scotland, particularly in the area where the oil will be brought in. In terms of wild life and scenic beauty, it is a rich country, and it would be a shame, which would last for generations, if in the course of bringing in the oil on this lovely coastline we were to pay little attention to what we might destroy.

I agree that there must be some damage, but I ask the Government, and particularly the Scottish Minister concerned, to ensure that this damage is kept to the minimum possible. Despite the wealth which we may get from the oil, we have a duty to preserve our natural amenities.

6.52 p.m.

Mr. Norman Buchan (Renfrew, West)

The last two speakers have reminded me that this is not just a discussion of a major industry. It is a discussion of the whole problem of social control and social responsibility. My hon. Friend the Member for Midlothian (Mr. Eadie) referred to the effect that the oil industry may have on an existing major industry and on the environment. I stress that this is not merely a debate on oil. I congratulate my hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Douglas) on initiating this debate and on drawing attention to the necessity to face the social consequences. At Question time today the Secretary of State said that we were trying to endanger the livelihood of those involved in the industry, and reference was made to a quotation from the Labour Party policy document. It is as well to remind ourselves that when we are dealing with a kind of windfall to the nation, with a new resource which has not existed before in a practical form—a point which was made by my hon. Friend the Member for Goole (Dr. Marshall)—as the Chairman of the Scottish Conservative Party, said, there is an immense responsibility to exert the right kind of public control from the beginning.

The Labour Party document says: We shall reconsider the exploration and exploitation of North Sea gas, and particularly the oil discoveries off Scotland, and bring them more firmly under public control, whilst extending public ownership. Wherever possible we will diversify and expand the operation of the existing public sector. This is part of a discussion document, and all sorts of aspects of it have to be thrashed out in detail, but by and large this sets out the view held by hon. Members on this side of the House that there must be a large element of social and public control of this new resource which should be used effectively for the benefit of the nation.

It is clear that the licensing method that we have adopted in the past has not been the best. Looking at the American system and their treatment of their continental shelf, it would seem that with their system an extra £200 million would be flowing into Britain because of the 16⅔ per cent. royalties. My hon. Friend the Member for East Stirlingshire referred to 15 lots being sold for about £30 million. Many of the other lots have been handed over like Green Shield stamps. This must be changed. We should auction not only on a cash basis but on a royalty basis. The royalties have certain fringe benefits, and they can be immensely important. They can be related to work in Britain, to the employment of British firms and so on. There is the Norwegian experience which does not appear to have been properly considered by the Government, according to Answers that we have received. Clearly, the writing in of public involvement, the option of the Government to share in the development, as occurs in Norway, will have to be introduced in this country. It is no use saying that this will frighten off the oil companies. I do not believe it will. They know the values of the various areas which have been successfully exploited and the kind of profits which are likely to be obtained. I have no objection to private exploration so long as this option is written in with a reversion of sections of the areas to the nation afterwards.

There is a second aspect of this matter which was stressed by my hon. Friend the Member for Edinburgh, East (Mr. Strang), namely, what evidence are we getting that the Government, and particularly the Scottish Office, who have a great responsibility, are taking a lead in job production in this industry? My hon. Friend the Member for Edinburgh, East referred to development grants given to firms in order that their expertise can he developed. But some of the figures suggest a serious possibility that, if we leave things as they are, oil exploration could continue and the landing of oil could continue, with very few additional jobs coming to Scotland. The oil could he exported raw. Refining does not of itself, without the ancillary industries involved, entail a great expansion in manpower.

There is little indication of a lead coming from the Government in this respect. This was precisely the burden of Sir William McEwan Younger's remarks when he said that we could not leave this sort of thing just to the firms, whose primary interest was in the exploitation and expropriation of the oil. We want an assurance from the Government—we have not had it from the Scottish Office, and we hope to hear it from the Department of Trade and Industry—that a lead is being given to promote development spin-off, particularly in jobs.

In Scotland today, we have a persistent unemployment problem, with 138,000 out of work, and we face the decline of one of our other great mineral industries, coal mining. It is not good enough that matters should go ahead without a proper return to the Scottish economy. I hope that we shall hear a reply which will encourage us to believe that the Government are taking practical steps on the two questions facing us and give us a little more comfort than we have had hitherto.

7.1 p.m.

The Under-Secretary of State for Trade and Industry (Mr. Peter Emery)

This fairly thorough debate has underlined that the concern felt by many hon. Members on both sides is strongly reflected in Scotland. I congratulate the hon. Member for East Stirlingshire (Mr. Douglas) not only on the background work which he has done on the matter over the past few years but on his good fortune in securing a place early in today's series of debates. Incidentally, I should congratulate him also because this has been a lucky day for the Douglases, since I understand that "Black Douglas" won the 4.15 at Ayr. I hope that the hon. Gentleman was backing his good fortune. I congratulate him also on the way in which he introduced the debate, setting what I regard as just the tone which the situation demands.

A host of questions has been put to me, and I shall answer as many as I can, but, before doing so, I wish to set the background. It should be emphasised that the policy pursued by the present Government, and by the previous Government, too, has been to do everything possible to ensure that exploration and exploitation of the United Kingdom Continental Shelf is made as quickly as possible. That has been the overriding principle behind the actions of both Governments, and it has been based, broadly speaking, on a reliance on private enterprise, the majority of which has come from international oil companies, though at the same time there has been considerable public sector involvement. As a result, the financial risk has been spread, enabling a much larger total exploration effort to be made.

The financial capital required could not have been found by the Government on their own without considerable strain or without cutting other public sector financing. I am glad to see the hon. Member for Renfrew, West (Mr. Buchan) nodding at that, for it has been a major contention which has not always been accepted by some people considering this matter outside the house.

The policy has been remarkably successful in securing quick exploration, especially for gas, and in finding oil where, 10 years ago, hardly anyone believed an oil field could possibly exist. Already, 90 per cent. of the country's gas supply comes from the United Kingdom shelf. Oil, too, is being explored for with commendable skill and efficiency.

I endorse the tribute which the hon. Member for East Stirlingshire paid to those who work in the North Sea on rigs and on pipeline work. I do not know how many hon. Members have been to a North Sea rig. Usually, one goes only on days when the weather is fairly good and the helicopter service can be regarded as ultra-safe, but anyone who has been there in the midst of a storm knows what an unpleasant experience it can be. For the type of work which they do, in cramped conditions and all sorts of weather, the men concerned deserve considerable praise. I am delighted that that praise was given at the start of the debate, and I add to it the Government's praise as well.

As regards oil, the mood is optimistic, though I must say that I do not go along with some of the figures which have been flashed about in the Press, or even used in some of our debates, mainly because many more wells have to be drilled to establish the potential of the general area of the oil finds. The companies have already spent over £300 million, the vast majority of which has gone on gas, but another £200 million is already scheduled and the greater part of this will go on oil. In addition, there are plans to spend another £1,500 million on oil development.

The licensing terms are always under review, and the Government have an open mind about the future of licensing. I was asked why the discretionary method had been used throughout, and why only 15 licences were put up for auction during the last round. One of the basic reasons for the discretionary method of licensing is that the actual and potential contribution of the applicants to the United Kingdom economy has always been one of the criteria used in awarding licences.

Some hon. Members opposite are caught in a dilemma here, for they have argued that the Government should take a greater degree of control in ensuring that companies look to the development of British industry in their necessary expenditure backing up the work which they do in the North Sea, yet at the same time they have advocated a great measure of revenue for the Exchequer by going to the auction method.

With the auction method, one has precious little control over what can be done on the granting of the type of licence because once it has been let, if such conditions as can be stipulated in the terms—this is the suggestion—are not fulfilled, one can do virtually nothing about it.

Our aim is to ensure on the basis of past performance—we have been able to do it so far—that the actual and potential contribution of applicants to the United Kingdom economy shall be taken as one of the criteria. This is not something done just by this Government, or something which we have brought in as a change from the practice of the previous Government. The only change which we have made has been in relation to public sector participation. We have not altered this aspect of licensing which has run through the whole field of discretionary licensing methods from the word "Go".

Mr. Douglas

Is the hon. Gentleman trying to say that the people who got the 15 blocks got them on conditions less onerous than those applied to other companies, that they did not have to submit work programmes?

Mr. Emery

I am not saying that. The position is that we have carried out this round of auctioning to gain the necessary experience of the problems that are being posed. Can one ensure that the necessary work programmes are carried out by those who have obtained the licences by auction? The hon. Gentleman is correct in one respect, namely, that in the 15 licences which were put up for auction we attempted to have both the kind of block that was very good and certain blocks which, if I may so put it, were highly speculative. We were trying to get experience right across the field.

My hon. Friend the Minister for Industry, my right hon. Friend the Secretary of State, my right hon. Friend the Chancellor of the Exchequer and I are all concerned to ensure that there is a proper return to the Treasury, at the same time as ensuring that there is no lessening of the momentum of exploration and development. These projects have been carried through at a pace which no one initially believed was possible.

This counters the argument of the hon. Member for Edinburgh, East (Mr. Strang) who said that the Government were slow in recognising the economic effects and the manpower aspects of the development of North Sea oil. It is balderdash to say that because, if one considers the level of production, the number of wells that have been drilled and the encouragement that has been given to investment, one realises that there has been more success and greater returns in this small area of the world than in any other fields which anybody has been able to name to me, and I speak with a little experience in this matter.

The Government realise that the discovery of oil and gas on the Continental Shelf will produce immense benefits to the United Kingdom. To this end they are determined to ensure that the whole country—and this includes Scotland—enjoys the maximum of benefit. How does one assess this benefit? Oil accounts for nearly half of our energy requirement, nearly all of which is met from products imported from the Middle East. By 1980, United Kingdom North Sea oil could provide up to half our oil requirements, and this could mean up to one-quarter of our total energy requirement. In addition, the supply of North Sea gas could mean that more than 40 per cent. of our energy requirements were coming from the North Sea. Thus, by 1980 we could well be making foreign exchange savings of several hundreds of millions of pounds. Secondly, there will be substantial revenues to the Exchequer. By 1980, royalties alone should provide £100 million a year, assuming that there is no increase in oil prices. But that assumption is not realistic, so the figure will be appreciably more than that.

Thirdly, the effect on industry and employment, especially in Scotland in the regions, will be considerable. I have been asked for specific figures. It is important to realise that already the number of jobs created or in prospect in Scotland because of North Sea oil is more than 7,500, and I believe that this figure will continue to increase.

I have said before, but I am more than willing to go on repeating, that the Government will watch to see that British firms are given a full and fair opportunity to compete for the supply of materials and equipment. It is for this reason that I wanted to highlight the need for applications to be considered on the basis of the contribution which the successful applicant can make to the economy of the United Kingdom. That factor must be specifically considered in the next round of licensing.

The IMEG report is to be submitted this autumn, and I think most hon. Members know that we shall re-examine the whole question of how British industry, and Scottish industry, can obtain greater benefits from North Sea developments which the analysis has thrown up. In other words, we shall want to ensure that areas of industrial development which have not been recognised by industrialists are brought to their attention and that we do whatever is possible to ensure that British industry is given the opportunity to provide what is needed.

Mr. Buchan

This is crucial. Earlier in his speech the hon. Gentleman said that it was impossible to lay down conditions because there was no means of carrying them out. He said that when he departed from his brief. He has now returned to it and said that one criterion is the benefit to the economy. If that is correct, what conditions do the Government lay down? We have never before been told about this. How is the matter controlled?

Mr. Emery

I am sorry that I gave way and enabled the hon. Gentleman to make that intervention, because he is trying to twist my words. I did not say, nor did I imply—and the hon. Gentleman can check this in HANSARD—that it was impossible to control. I did not use that word, and he knows that I did not. I am sorry that the hon. Gentleman wishes to put that statement into my mouth. I have said all along that there are great difficulties in controlling the matter, and the hon. Gentleman's Government realised that. Why will he not admit it? His right hon. Friends realised that when they were members of the previous Administration, and there is nothing strange about it. We ought not to get into a party political discussion over this matter, because it was accepted by both sides when the previous Government were in office.

Mr. Bruce Millan (Glasgow, Craigton) rose—

Mr. Emery

I am sorry, but Mr. Speaker specifically requested us to try to limit each debate to an hour. I have a number of questions to answer from hon. Members who have been here for the whole of the debate. If I give way to the hon. Gentleman I shall not be able properly to perform my job as the Government spokesman responsible for answering the debate.

The hon. Member for East Stirlingshire asked about the codes of practice and the safety position in the North Sea. Here I pay tribute to the hon. Member for Kingston upon Hull, East (Mr. Prescott) who has been most helpful in putting his experience at the disposal of the Department. The codes of practice and the safety regulations are being dealt with by myself as a matter of urgency, and I have great hopes of being able to get these out within the foreseeable future. In other words, we are not postponing the matter for reasons other than ensuring that we have the right consultations with the people who have the necessary experience, such as the hon. Member for Kingston upon Hull, East.

The hon. Gentleman then raised the issue of the better presentation of information. During the debate on 27th July my hon. Friend the Minister for Industry said: I am not convinced that a White Paper is necessarily appropriate. However, I think that the House is entitled to a better presentation of the information available than has so far been given …—[OFFICIAL REPORT, 27th July, 1972; Vol. 841, c. 2191.] Even before that statement was made, we had been looking into the manner in which this could be done. We believe that it probably needs to be done on an annual basis. We are investigating whether it can be done in the annual report. There is the statutory requirement to produce a report on the continental shelf. I should welcome the application by the hon. Gentleman for more information. The Government agree with him, and we are trying to find the best way in which that can be done.

I was then asked about public participation and whether blocks should be reserved for a State oil company. I can give a categorical assurance that there is no intention of the present Government's creating a United Kingdom State oil company. I do not think that many people will be surprised at that statement.

I return to the remarks of the hon. Member for Renfrew, West. I believe that he is misleading the House, because the Norwegian Government have not taken up any of their options. They are operating at a lower licensing rate than we are. The proof that our policy will have no effect on international participation is in the facts. The amount of exploration, the amount of work done on the Norwegian side of the median line in the continental shelf has been much less than that done on the United Kingdom side.

I believe that the statements in the Labour Party policy document are a great disservice to both Scotland and the country in scaring away the sort of investment we should want. That is the only major political fact that I want to inject into the debate.

I fully understood the request of the hon. Member for Goole (Dr. Marshall) that mathematical models or techniques should be used in an assessment of the total energy policy. He suggests that the assessment should be published. One of the troubles is that it is meaningful only if it is done properly in a rolling five-year forecasting programme. A problem in politics is that the moment any figure is published in a forecast it is held to be gospel. It is believed that the Government are held to the forecast as an absolute fact. Both sides have made great political play, and no doubt will continue to do so, of forecast figures having to be altered. If we could get away from that attitude, I believe that all Governments would find it much easier to run into the sort of five-year rolling forecasting which large companies must do as their normal operating procedure. I predicted at some of my speeches at the time of the Dick Marsh fuel policy exactly what is now being shown to be true, that there was a major underestimation of oil consumption and that we were over-emphasising the national energy policy and the return we would get from the estimates.

The employment opportunities that it is said would become more evident if we were publishing the projected fuel policy do not necessarily have to come into that kind of projection. That is why the Government have decided to have a consultants' report on the employment opportunities. We are keeping the opportunities uppermost in our thinking, to try to ensure that they can be brought home to industry. It was nearly suggested in the debate that the Government can all but make the oil companies place their business in the United Kingdom. We can do that only if the Government create the background for British firms to compete successfully against other industries in the world. Only by getting the oil companies, and those contracting to it, to work with British industry as they have done in the past and as they are doing now, and by getting the right co-operation from industry and the trade unions. [An HON. MEMBER: Come off it."] One of the reasons why we have made only half the 18 moveable rigs being used on our side of the continental shelf is that when the first four orders went to the John Brown yard they were so late in delivery, and such a problem was caused by labour disputes, that much of the industry has not wanted to come back. That is the lesson which must be learned. It is not a party political lesson, but a lesson about the economy. If delivery dates and prices are not met, the orders will not be placed by any company here in Britain. Let us all realise these facts, without trying to defend inefficient management—at times there certainly is that—or trade union practices which in our hearts we all know to be indefensible.

Mr. Harry Ewing (Stirling and Falkirk Burghs)

I am grateful to the Minister for giving way, and I am sorry to interrupt him, but can he explain, against the background of fairness which he has displayed, the British Steel Corporation's position in tendering for only 40 per cent. of the platform steel required to build the oil rigs to which he has referred?

Mr. Emery

I shall be quite frank with the hon. Gentleman. I do not know the exact reasons. They are obviously mainly internal management reasons. So that I can give a full and complete answer, as I always try to do, I shall take up the hon. Gentleman's point and write to him about it.

I come to the speech of the hon. Member for Midlothian (Mr. Eadie), who was able to work into the debate what we all know to be his great love. He was very generous when he said that the North Sea was indeed the wealth of the nation. I am glad that he is willing readily to accept that. I also accept his view that any fossil fuel must be a wasting asset. We realise that, and the Government are very cognisant of what has taken place quite recently in the United States, where particular attention has been paid to the coal industry and the need for the American nation, because of its possible reliance on imported fuel, having to return to the coal industry in a way which many people would not have expected years ago. I am delighted to make clear to the hon. Gentleman that coal has a large and vital part to play in the total energy scene of this country for many years to come.

The Government intend to see that the industry is in fettle to be able to meet those specific demands. In summing up, I hope that hon. Gentlemen will realise that. I am sorry; I have left out one point about the environment which was raised by the hon. Member for Motherwell (Mr. Lawson). Of course we realise the problems. Pipelining has now reached the stage where, on the whole, the techniques used mean that there is very little effect on total landscaping. In the same way, by modern techniques the position with the siting of plant is more and more a matter being dealt with most thoroughly by the Under-Secretary of State for Home Affairs at the Scottish Office who deals also with harbour problems. I know that he is concerned about this, and the whole question of the co-operation between the Scottish Office and the Department of Trade and Industry is illustrated by his attendance today and by the fact that I am to attend the joint standing conference early in October.

At that time I intend to make a tour not only to see the environmental problems but to see some of Scottish industry and to discover whether there are things which the Department can do to ensure that job opportunities are created.

I hope that we have been able to give certain assurances to all British industry to show that the Government realise the massive potential that exists beneath the North Sea. We are determined to bring these benefits to the industry of this country, to the people—so that they may benefit from the products—and to the work-force so that it may benefit from the employment opportunities created.