HC Deb 05 August 1918 vol 109 cc1071-88

Order for Second Reading read.

Motion made, and Question proposed, "That the Bill be now read a second time."


I understand that certain legal doubts have arisen as to property rights, and that these questions are all postponed. I think that is a very convenient course. I would like to ask the right hon. Gentleman in charge of the Bill to repeat an assurance given to the House some time ago, and that bears upon the proposal made earlier to introduce a system of royalties. The House turned down the proposal, and an assurance was given that no such royalties should be introduced except with the authority of the House. The Bill contained no reference to royalties but it does give power to the Ministry to issue licences. I wish for an assurance from the Government that these licences will not be capable of being used in such a way as to introduce, without definite discussion in this House, any system of royalties whatsoever. I take it that the Minister in charge of the Bill can give such an assurance without any difficulty.


I think that it is not very creditable to the Government that an important Bill like this should be brought forward to-night. Some time ago we had a discussion on a similar Bill for three nights in this House and that Bill was rejected. Now we have this Bill introduced, and we as asked to pass it. I do not think that that is a creditable thing. In business we should consider it dishonourable. The principle of this Bill was rejected by this House on a Division which was challenged by the Government, who issued a three-line Whip asking Members to support it, and yet now at this late hour of the night we have this Bill put into our hands and the Eleven o'Clock Rule is suspended in order to have it passed. I understand that some arrangement has been come to, but so far as I am concerned I wish to enter the strongest possible protest against the way in which the Government is treating the House.


I desire to reinforce the protest of my hon. Friend the Member for Central Edinburgh. I wish that the Government had seen their way to bring in this Bill at an earlier stage of the Session, instead of the last moment, because it is a Bill which does need very careful consideration. I join also my hon. Friend the Member for Leith in his request that there should be a definite undertaking that certain provisions in this Bill are not to bring in royalties in any way by a side wind. This House has decided against them, and until the matter comes up for the free decision of Parliament it should not be prejudiced one way or the other, and as royalties have been rejected by the House they should not be brought in directly or indirectly by any Departmental Act. At the beginning of Clause 1 of the last Bill there was a declaration in very simple words that His Majesty's Government should have the exclusive right of searching for and boring for and getting petroleum within the United Kingdom, That is a plain statement, not of the right of the Grown to petroleum, but of the exclusive right of the Crown to bore for petroleum. There is a very considerable distinction between the two. I am not saying that that position may not be involved in the first Clause of the new Bill, but I regret that it was not continued, because if it had been continued any doubts on the subject would have been removed. There are various other matters which I might mention, but they are rather Committee points, and I would join in the appeal which my hon. Friend the Member for Leith has made, that; we should not have in this Bill petroleum royalties brought in by a Departmental act, directly or indirectly.


My hon. Friend the Minister of Blockade, in introducing this Bill, expressed the hope that he had avoided all controversial questions. He has certainly, in drafting this Bill, removed many causes of controversy. He has postponed until after the War the question whether there is property in oil, or if there is, whether it belongs to the owners of the land on which the bore happens to have gone down, or whether the adjoining owners have any claim, or whether the discoverer of the oil is the person entitled to it. These matters have been relegated to the happier times when my right hon. Friend the Minister of Reconstruction will be deciding whether questions of meum et tuum are to be governed by the Ten Commandments, or by some more modem code. While all of these questions have been left for consideration after the War, I feel bound to say that those of us in this House who are interested in petroleum feel a great unrest and disquiet at the slow progress that is being made in developing the home supplies of petroleum. Here we are, at the beginning of the fifth year of the War, and practically nothing has been done to de- velop the supplies of oil which are known to exist in this country. This is a Bill for drilling for petroleum. That is one method of getting it, but whether it is the best method of utilising the labour and the material which are available now is a problem which gravely exercises the minds of those who are most interested in petroleum. There are quantities of substances which will yield petroleum by distillation. One of the difficulties which we have in Bills of this sort is to know exactly where they emanate from and on whose advice the Government is acting. There is a mysterious Petroleum Executive which is supposed to look after these things, and when the Petroleum Bill was introduced last October it was promoted by the Petroleum Executive, the Colonial Minister's name was on the back of it, and the Board of Trade was the Government Department which was to grant the licences for boring for petroleum. Now, there is a change in the kaleidoscope, and we find that the Bill is backed by the Ministry of Munitions, and if anything were to happen to this measure and a third incarnation of the Petroleum Bill were to materialise, we should not be surprised to find that the Stationery Office or the Shipping Controller was the competent authority. The Petroleum Executive works in a mysterious way. We do not know what the present position of affairs is; only at intervals we have measures of this kind brought forward, which do not seem to have been fully thought out. We ask ourselves what has happened to the Petroleum Research Department in this country, which, under a geologist of European reputation, was engaged in inquiring into these matters of petroleum research. That Department seems, to judge from a reply given by my hon. Friend the Member for Hereford (Mr. Hewins) the other day, to have disappeared into thin air, but instead of it we have another Department, called the Mineral Oil Production Department, which seems to produce anything but mineral oil. It has taken the supplies of cannel coal which are intended for the production of petroleum; it has sent them to the gasworks, and it is producing there something that certainly is not mineral oil. The petroleum is destroyed by the high temperature distillation, and the petrol, the motor spirit, is absolutely lost, while the product of this gasworks distillation is something that might be very useful with which to make roads, but which will certainly not have much value as fuel for the Navy.

What are we told about it? We have had a report last week from the Committee presided over by the Marquess of Crewe, and we are told that the material produced at the gasworks has been subjected to tests at the naval depot at Haslar, and that it is proved that with a certain admixture of petroleum it is useful as a fuel. That is equally true of mud. If you do not use too much mud, and if you use enough petroleum, you will get a compound which can be used as a fuel. But my submission is that we are neglecting the means of getting the petroleum that are to our hand in the distillation of these substances which exist in large quantities in this country, and we are going in for a policy of drilling for oil. Petroleum mining is a very speculative form of mining, and to look for petroleum with a drill in this country is what is called wild-catting. I have done some wild-catting by drilling myself in various parts of the world, not without success, but it is one thing to drill for oil in a country where petroleum is found already in large quantities and it is another thing to drill for oil'in this country. You may open up a new district in a petroliferous country, and you may find oil in large quantities, or you may not, and the odds are that you may not. It is quite another thing to put down your bore in a country where the existence of petroleum in commercial quantities is a matter of the gravest possible doubt and to hope for the results which seem to be hoped for by the promoters of this Bill. You cannot dogmatise on these matters. I remember a case in which an undertaking with which I was associated decided to put down a well at a place where the greatest geologist in Europe said there was no oil. Indeed, he went so far as to Bay he would drink all the oil to be got there. He was a German, and his capacity for drinking was probably large, but the first well we put down produced a thousand tons a day, which would have been rather too much for his consumption. But that was a case of wild-catting in a country where every few miles you have an oilfield, and when you propose to drill in this country and to expend labour and material which are more valuable now than money, you have got really to ask your- selves this question: Can we use that labour, or can we use that material, to better effect?

While I should be sorry to see this Bill refused a Second Reading to-night, I hope that before it goes through its final stages the Minister in charge will give us his assurance that there is to be no diversion or labour from the work of distilling oil from cannel coal and that there is to be no diversion of material either Do not let us grasp at the shadow and lose the substance. In introducing this Bill, my hon. Friend said that the main object of the measure was to protect oil pools by preventing indiscriminate and wasteful boring. I do not believe that that is the real motive. I think the real motive of this Bill is to give security of tenure to certain people with whom the hon. Gentleman's Department have been negotiating. We want to know what this firm, which is going to spend over £400,000 in "wild-catting" in this country, is going to get for it. They are not philanthropists, and we want to know the conditions of the bargain that is being made with these people, because there is nothing whatever that can be done under this Bill that could not be done under the Defence of the Realm Regulations. The only thing that we get here is security of tenure after the War. [Mr. MACVEAGH: "Where do we get it?"] We want to know, and I think the House is entitled to know, what the position is, and what bargain is being struck with this firm if they are to have a monopoly. I wish them well of their monopoly, and I hope they will succeed in finding petroleum. I myself should not be too hopeful of it, but I put this point most strongly to my hon. Friend who is in charge of the Bill, that he will give an assurance to the House that if this Bill is passed into law there will not be a single ton of material taken away that could be utilised for the purposes of the distillation of oil from cannel coal, and that there will not be any outlay diverted from that necessary purpose to this more speculative purpose. Having said that, I hope the hon. Gentleman will get the Second Reading of the Bill to-night, but that the Government will not ask now for the other stages of the Bill.


We have already lost nine months in dealing with this subject. We are told that the object of the Bill is to prevent waste in the development of the industry in this country. The last Bill was rejected because of one Clause which it contained—a Clause which set up the system of royalties. We are told by the hon. and gallant Member in charge of this Bill that it reserves all these questions of ownership in the oil, and that it is not intended to create any new vested interests pending the settlement of this question. That I take to be a pledge that the Bill will prevent negotiations or agreements of any kind between the owners of the land and the discoverers of the oil, involving any payment of royalties which in their turn would impose a permanent burden on the industry and a permanent addition to the cost of the oil. We are all agreed as to the desirability of getting petroleum wherever it can be found, and even the last hon. Member who spoke—hostile as he seemed to be to this measure—agreed that we should try to make ourselves independent in this country of foreign supplies of this important article. I think this Bill should be allowed to go through on the understanding that no new interests are created, and all these disputed questions are postponed for settlement until after the War. On these lines I support the Second Reading of the Bill.


I regret that the Motion for the Second Reading of this Bill has been brought on at this late hour. The subject is worthy of being discussed at much greater length than is possible now. Before we agree to the Second Heading there are several questions I would like to put to the Minister in charge. As already stated, we rejected the Petroleum Bill in October last because it maintained the principle of royalties, and I am confident that if this Bill had embodied a similar provision it would have shared the fate of its predecessor. Indeed, it is just possible it may meet the same fate unless the right hon. Gentleman in charge is prepared to make perfectly clear the intentions of the Government on this subject. I want first to ask as to Clause 2, which lays it down that the Minister of Munitions, on behalf of His Majesty's Government, may grant licences to search and bore for oil, etc., to such persons and on such terms as he may think fit. I want to be told clearly what are the powers which this Clause confers on the Minister of Munitions. Is the power to grant royalties included? That is a point on which the House desires an assurance. In the next place, I should like to know if it will be possible, in the event of this Bill becoming law, for the landlord to apply for damages under the Defence of the Realm Act in consequence of having lost his right to mining royalties? These are points which. I think, require to be cleared up before we grant the Bill a Second Beading. I am at one with the Government that we ought to do everything in our power to test the oil-bearing possibilities of the country. As a matter of fact, they ought long ago to have been tested, and doubtless would have been if the question of royalties had not been there. The hon. Member who spoke a while ago seemed to think that here was very little chance of petroleum being got in this country. It is just possible that though there may not be much to be obtained in the form that he had in mind, I am certain of this that a considerable quantity of oil could have been secured had the right steps been taken long before now. That would have been a very useful thing for the country. It would not only have kept money in the country, but it would have saved shipping transport. The House, I think, would have been quite willing to give a Second Reading to this Bill if they can be assured that the question of royalties is entirely eliminated, and that the powers of the Bill to be vested in the Minister of Munitions are of such a character that he cannot grant royalties to anyone whose land may be tapped for petroleum purposes. I should like also for him to assure the House that the landlord, under the Defence of the Realm Act, is not able, by a side-wind, to get any until the question comes before the House, and, as he pointed out on his First Reading speech, before the House decides whether or not the royalties are to be paid.

12.0 M.


I should like to join in the protest that is being made at taking a Bill as important as this at this late hour and in so thin a House. I approach the question from a different standpoint to that of the hon. Member who has just spoken, and which other hon. Members have also taken. I approach this question from the point of view of the landowner. Just as the hon. Gentleman who has resumed his seat says that it is not fair to commit the Labour party to royalties to the landowner during the War, I say, from the point of the landowner, it is not fair to commit him during the War to any Act of Parliament which will permanently deprive him of any chance oil showing in the Law Courts that he has a right to a royalty on mineral oil just as he has a right to a royalty on minerals. I do not believe for one moment that hon. Members below the Gangway wish to steal a march upon any interests of the country during the War, and especially on a class, which, one can say without fear of challenge has, during the War, given everything and taken nothing. In the same way landowners are quite willing that this question should be left in abeyance.

Clause 1 of the Bill provides that No person other than a person acting on behalf of His Majesty, or holding a licence under this Act for the purpose, shall search or bore for or get petroleum within the United Kingdom. This permanently takes away from the owner of the land the right to develop his own land, and whatever may be under the surface, without a licence from the Minister of Munitions. If such a provision applied to coal, clay, ironstone, or any other substance which lies beneath the surface, there would be a great outcry against the deprivation, of that which up till now has been considered the right of the owner of the land, according to the laws of the country. It has been said that this Bill, which was urgent in October, 1917, is now still more urgent. In his First Reading speech the hon. Gentleman, in introducing the Bill himself, admitted that the Government have power under the Defence of the Realm Act, both to search and bore for oil, and also to enter upon and secure the land. Thus there is no necessity for this Bill. The only reason for it that I can see is, as the hon. Gentleman (Captain Barnett) said, there has been a claim that a certain firm which has made offers to the Government should be given security of tenure after the War. For that reason Clause 1 has been introduced. Most mining and geological experts think that this scheme of boring for oil in the United Kingdom is one likely to be productive of little. But there are experts on the other side who think that there is a chance of finding oil. If then there is that chance, why did not the Government some three or four years ago, in view of the situation, take upon themselves under the Defence of the Realm Act, to search and bore for oil at the expense of the Imperial Exchequer, and find out how the matter stood? Now, after three or four years, they are bringing in this Bill and so raising this controversial matter. I hope the Government will not press the Bill beyond the Second Reading. I for my part wish to put down Amendments, one of which in Clause 2 is that the matter shall not be left to the Minister of Munitions, but should be left to a greater authority, to the War Cabinet, or the Cabinet. Another Amendment would be in paragraph 2 of Clause 2, which provides: Where a licence is granted under this Section a copy thereof shall be laid before Parliament as soon as may be after the grant thereof. The Amendment I suggest is this, "where it is intended to grant a licence a copy shall be laid before Parliament before such licence is granted," so that this House shall have an opportunity of considering it before it is granted. Under this Bill there may be a chance of giving royalties to the landowner, and there is an equal chance of this Bill conferring an absolute monopoly upon one firm to work whatever oil there may be in Great Britain. I do not like monopolies any more than the hon. Member below the Gangway likes royalties, and from a different point of view I join with him in the distrust with which he regards this Bill. I hope that we shall hear from the hon. Member, when he rises to give an explanation of Clause 2 in connection with the proviso. It is quite clear that it means that the owner must not bore for oil without a licence. It is not clear whether it means that under this Bill the licensee may not enter upon somebody else's land and search and bore for oil. I hope that my hon. Friend will explain that and tell us the exact position. I quite agree that every effort should be made to develop home resources and home supplies. Up till now nothing has been done by the Government, and in raising Amendments on the Committee stage I do not wish to stop the Government developing home supplies and home resources. On the other hand, I think that this should have been done two or three years ago. The Government have had complete powers under the Defence of the Realm Acts.


The hon. Gentleman has raised the whole question of whether petroleum, if it exists under the soil, belongs morally to the nation or to the owner of the surface. I am not going to pursue that question. I take it that the object of this Bill is to hold the question in suspense until we have leisure to discuss it after the War, and, meanwhile, if possible, to make some effort to develope the petroleum in the national interest. We wish to be assured that the Bill in working will do what it purports to do, and for that purpose I want to ask the hon. Gentleman in charge of the Bill if he will not only tell us what the form of the licence is going to be, but if he will actually read the words of the proposed form of licence, so that we may be able to judge whether the Bill in practice will really carry out the intention which I have no doubt it honestly has and which we so strongly desire to see carried out.

The MINISTER of BLOCKADE (Sir Laming Worthington-Evans)

I think that the comments of hon. Gentlemen to-night show that on the whole we have succeeded in avoiding the really controversial points which were raised on the last occasion. There have been five points raised, and I propose to deal with each one in order. First, I am asked to give an assurance that Clause 2, Sub-section (1), does not include royalties to be brought in indirectly. If hon. Members will consider the Clause, they will see that the terms and conditions referred to are the terms and conditions which may be made between the Government and the licensees or those who bore. They are not terms and conditions to be made with the owner. They refer to something quite different, and I can safely say that there is no intention whatever under the Clause, or, indeed, at all, of introducing the royalty question as was suggested indirectly. Then the question was asked as to whether a landlord can apply for compensation under the Defence of the Realm Act, because he does not get royalties. The position is this: There is no power under the Bill for the licensee or the Government Department to enter on or to compulsorily acquire land. The power exists to-day under the Defence of the Realm Regulations, and that is the power that will be used for the purpose of entry in order to enable the licensee to bore. The landlord will have whatever claim he has under the Defence of the Realm Regulations and no other. He will be treated in that respect exactly as he is treated now in other matters which come under the Defence of the Realm Regulations.


It means that he can apply to the Commission and get damages?


He can apply to the Defence of the Realm Losses Commission and receive payment for losses. That is an entirely different thing.


This is a very important point. It is not suggested that the Defence of the Realm Losses Commission should decide the extremely difficult and very controversial point whether or not a landlord should receive payment in respect of oil which has not previously been discovered.


I cannot say that no landlord would put in such a claim before the Commission, but I do say that the powers of the Defence of the Realm Losses Commission to give compensation for loss are limited in a way which my right hon. Friend knows quite well. It must be remembered that it is only for the War. All claims or legal rights, if there be any, in respect of the petroleum obtained will be dealt with after the War and not by the Defence of the Realm Losses Commission.


If a claim for loss is brought by a landowner before the Defence of the Realm Losses Commission will not the Commission, in determining the claim, have to settle the question of title?


I am not in a position to say whether the Losses Commission will go into the question. If a landlord makes a claim he will have to prove a loss, because, so far as I know, that is the limit of the power of the Defence of the Realm Losses Commission. It concerns the period of the War, and the period of the War only. If after the War a landowner sets up a claim to a royalty it will not have been prejudiced under this Bill. Under this Bill the claim is postponed for settlement after the War. We have not attempted to deal with it. I give the undertaking that we do not and will not indirectly pay royalties under this Bill.


Have not the Commission held that compensation should be given unless the Act of Parliament expressly says that compensation should not be given?


That is a legal question which I cannot answer in general, but so far as this Bill is concerned the landlord, in claiming under the Defence of the Realm Act for any loss sustained—there no doubt will be loss, damage to surface rights, for example—will have to prove his loss before he receives compensation. So far as I know, that is the extent of the claim that he can put forward.


He could not lose what he had never had.


I should have thought not. My hon. Friend behind me suggests that the case is prejudiced by after the War. That is precisely what I deny. No legal question of that sort can be raised. We are bound to come back to Parliament for further legislation, and Parliament will then have the opportunity, and will be bound to consider all legal claims that can be put forward.


If a property owner applies for a licence to bore under this Bill, is it likely that he will obtain a licence?


I was just going to deal with that point, because the hon. Member for St. Pancras suggested that a monopoly was going to be created under this Bill; and I rather think the hon. Member for Hereford himself suggested that some sort of monopoly was being created under it. That is not the intention. It is perfectly well known that a very well-known firm, one of the expert firms dealing with oil, has made a very generous offer to the Government. They have offered to put at the disposal of the Government their experience, their knowledge, their plant, and their experts. My hon. Friend the Member for St. Pancras wanted to know what they were going to get out of it. They are going to get nothing out of it; nothing at all during the War.


After the War?


As to after the War nothing has been done. We are not prejudging the position in any way after the War. But they have offered their services, the services of their experts, and their expert knowledge to the Government for the purposes of seeking for oil, if they can get oil, during the War. That they have offered to do with- out remuneration at all, and it seems to me an extremely generous offer which the Government will do well to accept. There is no intention whatever of creating a monopoly. Other firms have asked for licences. One licence has actually been granted; one or two others are under consideration; and any would-be licensee's application shall be considered. But it is only fair to say that the whole object of the Bill is to protect the oil pools, if there can be found oil pools in the country, and therefore you cannot have a multiplicity of licences without one damaging the other. I was asked to say why Clause 1 was inserted at all, because it takes away the right to bore. It is inserted for the very purpose of protecting the industry itself. If everyone has a right to bore you will reproduce the conditions which exist to-day in America, and a large amount of oil, if there is oil in Great Britain at all, will be wasted by unnecessary bore-holes going down.

The hon. Member for Hereford indicated two Amendments that he would wish to propose, and perhaps the House would allow me, as I am going to ask them to give me the Bill to-night, just to say what I would do with regard to these Amendments. My hon. Friend suggests that the Ministry of Munitions should not have charge of the administration of the Bill, but that the War Cabinet should. Neither the War Cabinet nor the Cabinet have the administrative officers or the Department to enable them to carry on the charge of the Bill, so that Amendment cannot possibly be accepted. Then, my hon. Friend suggests that the licence should be laid on the Table of the House before it is granted. Supposing this Bill is passed this Session, before the Adjournment, what that would mean would be that we should have immediately two months' delay before we could go on with any of these licences, because the House would not be sitting. So, unfortunately, we are not able to accept these two Amendments. I have indicated to him, however, one or two other Amendments to the Bill as proposed which I am able to accept. They are Amendments which, if the House will give me the Committee stage, I will undertake will not take more than a very few minutes in getting through. Now, I would ask the House to give me the Second Reading and, if possible, the Committee stage.


I will only detain the House a moment, but I should just like to say that I think the Government, if they are anxious to proceed at once with the search for oil, will proceed much more easily and safely under the Defence of the Realm Act. Under that Act they can put holes down for oil or anything else wherever they decide to do so, and therefore they will have no expense in the meantime in compensating the owners of the surface for any damage they do. That is all they do when searching for oil. But when they begin to work for oil—I do not mean to say that I can explain how that can be done—they will have to take the trouble to find out to whom the oil belongs, if it belongs to anybody at all. The House probably knows the meaning of royalties on minerals, and everything of that kind, simply that the ownership of the mineral goes with the owership of the surface, and if the tenant has not the right of searching for and of mining any minerals, he then pays as he may agree to the owner of the mineral for the working. The whole question divides itself into two matters. First you have to find the oil; that you can do now by making an arrangement with the owner of the surface under the powers of the Defence of the Realm Act, and by compensating him. When you go on to work the oil you must go into the whole question of ownership and the royalty, which is a very large question, and probably one which, having regard to the development of the country, ought to be put in a broader position than it stands at present. At the same time, I should like to point out to the hon. Gentleman in charge of the Bill one thing, namely, that the question whether a fluid is a mineral is a point of law. If the Government act wisely they will proceed at once under the Defence of the Realm Act and search for the oil they need. There will be plenty of opportunity to consider and deal with all these other things as time goes on. If the right hon. Gentleman is anxious to have his Bill at once he ought to proceed under the Defence of the Realm Act.

Bill accordingly read a second time.

Resolved, "That this House will immediately forthwith resolve itself into the Committee on the Bill."—[Mr. J. Hope.]

Bill accordingly considered in Committee.

[Mr. JAMES HOPE in the Chair.]

Clause 1 (Prohibition of Persons other than the Crown Getting, Etc., Petroleum) ordered to stand part of the Bill.

  1. CLAUSE 2.—(Powers of Minister of Munitions). 536 words