OIL SUPPLIES

HC Deb 11 May 1948 vol 450 cc1969-2084

3.35 p.m.

Mr. R. S. Hudson (Southport)

As I said in the Second Reading Debate on the Petrol Bill last week, we thought that as discussion on the Bill was bound to be very narrow it would be for the convenience of hon. Members on all sides if we put down the Vote of the Ministry of Fuel and Power on as early a Supply Day as convenient; to enable us to discuss both the questions of policy connected with petrôleum and petrôleum products and also the administration of the Department. I will cover certain aspects and other points will be illustrated by my hon. Friends.

I will deal first with the record of the Ministry regarding fuel oil and, in particular, the conversion from coal to oil. Their record in this respect is typical. It is a history of panic, followed by order, counter order and disorder. The Committee will remember that in August, 1946, industrialists were asked to convert from coal firing to oil firing. As an inducement a rebate of 1d. per gallon on fuel oil was offered. This rebate was confirmed in the Finance Bill, 1947. The pressure by the Government on industrialists increased during 1946 and 1947 and was accentuated during the panic which arose out of what we always regarded as the unnecessary fuel crisis of 1947. The conversion involved the firms concerned in heavy capital outlay which was bound to increase costs of production. It also involved considerable quantities of steel and considerable engineering manpower, both of which we have been told on numerous occasions are short and constitute bottlenecks. The Government were warned by practical persons of experience of the difficulties ahead. They were told that there was a shortage of tankage and oil storage in the country and that other similar shortages were bound to cause difficulties and result in delay.

It is quite clear—and it should have been clear at the time—that a policy of this kind was justified only if it was certain that adequate supplies of oil would be available for running those oil firing installations after conversion had taken pace. The pressure to convert continued until the middle of 1947, but difficulties in the supply of oil began to multiply and industries failed entirely to get any adequate guidance from the Government. They could get no assurance that, if they converted, supplies of fuel would be made available. No definite guidance was given to industries, even in the speech of the Minister shortly before Christmas 1947; yet, as the Committee will remember, by that time the basic ration had already been abolished for several weeks on the plea of the shortage of dollars. Apparently what was done by the Government was to order a survey, but we have had no indication, of course, of the instructions given to the Government officials who conducted that survey. What is quite clear is that in more than one case the impression was given to the industrial concern that the difficulties in the supply of oil were likely to prove only temporary.

No clear lead has even yet been given by the Government, and the situation today is that some firms have installed conversion machinery and have no fuel, others have installed conversion machinery and can get fuel, some are still going ahead with conversions and others are now reconverting back to coal with the approval of the Ministry. No one has any idea what the Government's policy is on this matter, and it is quite clear that uncertainty of this nature is bound to do industrial harm and hamper our efforts to increase the export trade. I hope, therefore, that the Government will give us a clear statement in the reply to be given to this Debate. What we should like to know, and what the country is entitled to know, is what is the estimate of the availability of fuel oil today, next year and the following year.

As illustrating the lack of certainty which prevails, I would only remind the Committee that the original estimate was 2 million tons of fuel oil to 3 million tons of coal, that the figure rose to 2½ million tons when the Government panicked in the winter of 1947, and that since then estimates as high as 5 million tons or even 6 million tons have gained currency. Which of these figures is correct, and is there any prospect of any firm commitment to supply oil? What policy do the Government recommend should be followed in the case of the three classes of firms concerned—that is the firm which has already completed conversion, the firm which is still engaged in conversion and the firm which is planning to convert? We should be glad of some information from the Government on that.

What is the excuse put forward by the Government for the shortage of oil in this country? It is that there has been a great increase in world consumption, and more particularly in consumption in the United States. It is quite true that the increase in consumption in the United States in the two recent years was equivalent to the total consumption in this country. It is equally true today that the total consumption in the United States is at least as great today as the total world consumption before the war. We admit that, but the question we are entitled to ask, and it is the question which the Government have never really attempted to answer, is why was this increase not foreseen. The Parliamentary Secretary, in answer to a Question on 6th April, said that despite the big increase per head in the United States the percentage increase in this country was even greater. That did not happen from one day to another. The Government must have seen that an increased percentage of consumption was taking place in this country, and it was only reasonable to presume therefore that a similar condition would prevail in the United States. What is the use of planning in these circumstances?

We are told that the increased consumption in the United States could not have been foreseen, but if rumour is to be believed many Ministers today have attached to them personal economists, and if rumour is again to be believed the unfortunate civil servants of many Departments spend a great deal of their time trying to pursuade the economic "boyfriends" of Ministers that their information and views are not as well-founded as they think. Assuming that there is some reason for the existence of these "boy friends," surely it is to foresee the type of increase which has, in fact, taken place in the United States? Two deductions can inevitably be drawn from the history of the last two months. Firstly, that in oil, as in so many other cases, the Government are far more concerned in trying to explain what are their difficulties than in devising solutions to these difficulties. Secondly, that in pre-war days people in private enterprise who made such a gross error in calculating and forecasting, as has obviously been made by this present Government, would have lost their jobs in a very short time.

At the risk of introducing some old controversies, I should now like to say a word or two about the basic petrol ration. We on this side have never believed that the abolition of the basic ration was necessary. We believe that the decision was taken in a panic, and we believe that as a result of what has happened since the Government now realise they made a serious mistake. We regret, that while trying somewhat to relieve that mistake by the institution of a standard ration, they have accompanied it with a scheme which inflicts gross injustices on holders of E and S coupons. The abolition of the basic ration was justified by the Government at the time on the grounds that we were short of dollars.

We all agree that dollar expenditure, in the circumstances in which we find ourselves, has to be reduced as far as possible, but, having said that, it still remains true that within the global figure of dollar expenditure we have to decide how many dollars should be allocated to this that and the other import, and in deciding what is the amount of dollars to be allocated to any particular import we have to balance the advantages and the disadvantages, both to the individual and to the national economy as a whole. We believe that if such factors are taken into account as loss of tourist trade, damage to the hotel industry, the inflationary effect of the loss of revenue, the expense involved in setting up the machinery for supplementary rationing, the inconvenience to the public and the unfair discrimination which has resulted as between the one user and the other, the balance lies rather towards disadvantage than to advantage.

The Government have made a great deal of play about the black market and the influence of the black market on the consumption of petrol in this country. I believe, in view of such figures as have been published, that that argument is nothing more nor less than a smokescreen. Because taking the figures of the Russell Vick Report, if I interpret them aright, the result is as follows: it was estimated that when the basic ration was in existence about 160,000 tons of petrol a year went into the black market, and it is now estimated that in spite of the abolition of basic petrol there is still a leakage in the order of 100,000 tons.

That would appear to mean that people who had basic petrol were using something of the order of 60,000 tons of petrol from the black market. The total basic ration was 800,000 tons. I suggest that 60,000 in relation to 800,000 tons was not such a figure as to justify the abolition of the basic ration and the inconvenience to which the community has consequently been put. What the Government ought to have done, if they believed that the black market was really serious, was to introduce measures such as we have been discussing during the past week; not now and not last January, but 18 months ago. Then they would have secured, if the figures are correct, a considerable reduction of dollar expenditure.

Our complaint is that the administration of the issue of supplementary coupons is rigid and unimaginative. I do not wish to delay the Committee by quoting a number of incidents, particularly as I have no doubt that hon. Members on every side of the House will be able to give instances which have come to their notice in their constituencies. I should like, however, to cite two cases. The first is that of a war widow with a semi-invalid mother, a father who is ill and not likely to recover, and a small child. In order to try, in the reduced family circumstances, to eke out her widow's pension this lady decided to start again in the profession of architect in which she had been employed before the war. She began to practice from her own home. She could not afford to buy a car herself. Her mother has a car and a microscopic allowance of petrol. The lady asked for a small allowance in order that she might save time in the journeys she had to take in her professional capacity. She was told that there were adequate public services and that there was no ground for granting her application. Hon. Members will readily realise that she is able to devote only three hours a day on the average to her profession. The rest of her time is naturally fully taken up looking after her mother, father, and child. If she had to rely upon the public services her journeys would take two hours per day out of the three that she can devote to her profession, leaving her one hour a day. In fairness to the Minister I am bound to say that in a large proportion of the cases which I have brought to his personal attention he has been able, after having the cases investigated, to see his way to some extent to meet the request, and that this is a case in point.

I wanted to cite this case and I wanted to be sure of my facts, but the actual letters had been sent to the Ministry. I sent my secretary round to the Ministry yesterday to ask whether I might have the letters back because I wanted to use the case in my speech today. My secretary was told that if she waited a short while she could have them back. She waited, and eventually she received the letters together with a further letter signed by the right hon. Gentleman, granting the lady a small allowance, for which I am most grateful to the right hon. Gentleman. Not having a "police state" mind I am quite sure that this was purely a coincidence, and a happy conjuncture which caused the letter from the right hon. Gentleman to be just ready to be signed by him so that it might be delivered with such promptitude to my secretary. The only reflection which has occurred to me has been that when the Bill which we were discussing yesterday becomes law, and if ever the right hon. Gentleman is accused of having red petrol in his car, that defence may not be the sort that would be accepted by a hardhearted magistrate.

The other case is that of the assistant to a county architect. He has to travel about the country, as will be readily understood. He has to travel to see about maternity homes, hospitals and similar institutions. One of his disabled colleagues has a small car. The county authorities authorised the architect to apply for a small allowance of petrol to enable him to run his friend's car upon official business. The application was turned down. So important were the duties of this architect regarded by the county authorities that they gave the architect permission to hire a taxi for the use of him and his assistant on their necessary journeys.

I will give the House particulars of what has happened. A typical journey I am told is about 64 miles a day. If the architect had been given petrol the total cost to the county would have been 13s. 5d. per day. The total charges for the taxi for the same day amounted to £2 0s. 11d. The car that the architect would have used is an 8-horsepower and would have used very little petrol. The taxi is 12-horsepower, using much more petrol. We have been told of the need for conserving manpower. If the architect had been given a modest allowance of petrol he would have left the car wherever he was and there would have been no waste of manpower. In fact, the taxi man has had to wait, and has in fact waited for 4¾ hours a day. The net result of this admirable administration by the right hon. Gentleman's Department, is that the county has had to pay at least twice as much, much more petrol has been used, and the taxi man's time has been wasted hanging about all day. That is the sort of administration which the right hon. Gentleman has produced and to which we object.

I will turn now to the new scheme announced by the right hon. Gentleman in April. As we understand the matter, owners of E and S coupons will have no ration in future for their unfettered use, or rather the amount will be deducted from the total of their E and S coupons. The right hon. Gentleman is in a dilemma. He either assumes that the holders of E and S coupons have been breaking the law up to now and have been using their petrol for their own purposes, in which case his action encourages them, ex post facto; or else he assumes that they have not been breaking the law and have used their petrol for proper purposes, in which case he is inflicting grave injustice upon them by reducing their E and S coupons. No wonder they are angry.

The same thing applies to members of public bodies like rural district and county councils, hospital committees and so on. They all find that because they have been patriotic in the past by licensing their cars and using them on public business with their E and S coupons, they are to be deprived of the amount of petrol for their own unfettered use which their neighbours are to get. The right hon. Gentleman made a plaintive complaint the other day that nobody loved him. Surely the right hon. Gentleman can realise that practically every motorist—a large number of the public are motorists—believes that these regulations, restrictions and rationings are neither necessary nor reasonable and that the administration of them is unduly harsh. It is only reasonable that the right hon. Gentleman is not as popular as he apparently thinks he ought to be.

What about the future? What is to be the position in three or four years time, because that is equally as important as is the position today, and what are the Government doing about the future? Are we to have panic measures such as we have seen in each of the last three years during each of the years of the remainder of the Government's life. In a speech on 8th April the right hon. Gentleman prophesied that there was to be a world shortage of petroleum, which he attributed to three factors. He said firstly, that the United States demand is growing; secondly, that there is and is going to be a shortage of tankers; and thirdly, that there is a shortage of refining capacity. What are the Government doing about each of these three factors? I am bound to say that their record so far on each of them is pretty lamentable.

It is often asked, in this connection, why, when we produce so much oil from sterling sources, we have to go to dollar sources; why do we have to buy American or dollar oil when production from companies under British control is far greater than our annual consumption in this country? The Lord Chancellor gave some figures the other day. He said that petrol production from British controlled companies amounted to 8 million tons a year. He gave the consumption for the United Kingdom as being 3,800,000 tons, that of the sterling area 5,600,000 tons, and foreign trade consumption as 2,900,000 tons, making a consumption of 12,300,000 tons, as against a production of 8 million tons, and he said that we had to provide the balance from dollar sources.

Those figures are very impressive. We should like to know this afternoon, as I am sure the British public would like to know, whether they are justified. Is the present scale of supplies which we make available to sterling countries and others outside the sterling area justified today? Is it right that so much petrol should go to other countries at our expense, when in England the basic ration has been abolished to the ordinary everyday motorist. Take the the item of 2,900,000 tons for foreign trade. I understand that it is made up as follows: for hard currency countries, 1,600,000, to soft currency countries, such as France, 450,000 tons; and to semi-hard countries—perhaps the Minister or Under-Secretary, in replying, will be able to explain what this rather nice phrase "semi-hard currency countries" means—850,000 tons.

The fact remains that there are very few countries, so far as I can discover, to which petrol is going at our expense, where restrictions are anything like severe as they are here. In Australia the basic ration is from six to 14 gallons a month, in Eire from eight to 12 gallons. In Denmark, one of the countries concerned, I believe that no rationing system exists, nor is there a rationing system in Belgium and Luxembourg. One certainly does not exist in Egypt and Ceylon. It is quite true that it is desirable in our present circumstances to export as much as we possibly can, and to reduce the dollar expenditure to the maximum possible extent. But we in this Committee are entitled to question the desirability of continuing, at a time when British motorists are so drastically restricted, to provide suplies of petrol to countries who pay for them very largely merely by running down their sterling balances. I query very much indeed whether the Government have adequately investigated this problem, and have done all that they can to see that if we are to provide petrol at our expense, the consumers in the country to which the petrol is provided should be subjected to something like the same restrictions as those to which we are subject in this country.

I turn to the Middle East. Can we have any estimate from the Government—I presume that they have made one—of the effect of the recent troubles in Palestine on Haifa, for example? I understand that the Haifa refinery was turning out something of the order of 4 million tons a year—a quantity equal to five times the basic ration in England—and that it is being closed down. What is to happen to that refinery, and to the new pipe line? We shall also be glad to know, and I think we are entitled to the information, what is the forecast by the Government of the effect of E.R.P. and the Marshall Plan? Are the American Government to continue to provide us in this country with petrol and oil products in order to enable us to continue to export those products to other countries?

Finally, I come to the question of refineries. The right hon. Gentleman referred to the shortage of refinery capacity as one of the limiting factors in the next few years. What are the Government doing about refineries? There are two main developments. There is the big refinery at Abadan, the biggest in the world, which requires continual enlargement. There are plans on foot for the erection of some four new refineries in this country. Oil, and especially refined oil, is one of the best methods of obtaining dollars in hard currency that this country can possibly have. Therefore, we on this side of the House believe that the increase of refinery capacity in this country and in Abadan should be given top priority. We should like to know whether there is truth in the rumours we hear that both the planning and the construction of these new refineries and the extension at Abadan are being held up by shortages of steel. If that be the case, as I believe, we should like to know what quantities of steel are involved, and by how much does the present allocation of steel to these items fall short of what the oil companies regard as reasonable in order to make good our position over the next three or four years?

The Government have hitherto refused to issue any figures of our steel allocation. The Ministry of Fuel and Power gave us a coal budget with estimates of the allocation of coal to different industries, the domestic demand, etc. This was extremely valuable and not only helped us in this House to get a better idea of the matter but also helped the country at large. Will the Government do the same thing in regard to steel, and if not why not? We are told that steel is the main bottleneck and yet we are refused any information. We believe that refinery priority should be right at the top of the steel allocation list. When we look around we see not far from here Government buildings being erected which must take appreciable quantities of steel. The country cannot in those circumstances believe the Government's views about steel shortages.

I have said enough to show that the Government record to date so far as oil and oil products are concerned is one of failure. I do not blame the present Minister for the whole of that. After all, he inherited a pretty mess from his predecessor. There is no doubt that coal under nationalisation has a heavy load of responsibility to bear for our present difficulties in regard to oil. By its failure to produce plentiful supplies of coal for domestic industry in the winter of 1946 and the spring of 1947 it intensified at the most inopportune moment possible the home and industrial demand for oil supplies, and by its failure to expand our export trade on anything like an adequate scale, it seriously aggravated a difficult foreign exchange situation. Too late now the man mainly responsible has publicly confessed the failure of his plans. The present Minister, however, must bear a large share of the responsibility for the fumblings and failures of his own term of office. In the light of that miserable record he need not be surprised that he is not loved by all.

4.10 p.m.

The Parliamentary Secretary to the Ministry of Fuel and Power (Mr. Robens)

In opening this Debate, the right hon. Gentleman the Member for Southport (Mr. R. S. Hudson) has covered a wide field—fuel oil conversion, standard petrol, the administrative arrangements in the offices of our regional petroleum officers, the refinery programme, tankers, dollar oil supplies to soft currency countries, the Middle East situation, pipe lines, etc. I hope to cover most if not all of these points during my remarks. If I do not cover them in the same order as that in which the right hon. Gentleman raised them, it is because I want to present to the House a picture of the oil situation throughout the world, to relate it to our own position here, and to deal with all these matters as I go along.

The right hon. Gentleman very properly said that there had been an enormous increase in the consumption of oil throughout the world. It has indeed been a phenomenal increase, because by 1938 the world consumption of oil had increased to 12 times the quantity consumed in 1900, and up to that time production had kept pace with that rapidly increasing demand year by year. That is, of course, until the Second World War. Then we had enormous damage done to the oil fields in Burma and in the East Indies and damage to the refineries; and it must be remembered that in that area alone, before it was overrun by the enemy, some 10 million tons of oil was produced. The refineries in Europe and elsewhere also suffered some heavy damage but, despite all that, the production in 1946 was 390 million tons as against a figure of 278 million tons in 1938, and from 1946 to 1947, a good part of which was covered by the administration of my right hon. Friend, to whom the right hon. Gentleman attributed great failure, despite his "bungling" of the situation, oil production had risen from 390 million tons to over 420 million tons —that is world supplies. But, despite that enormous increase in production, the demand is still greater than our supplies admit of fulfilment.

Major Lloyd George (Pembroke)

Did the right hon. Gentleman say 497 million tons?

Mr. Robens

In 1947 production exceeded 420 million tons.

Why has there been that outstanding increase in the world demand for oil during and since the war? Mainly because, prior to the war, large areas of the world suffered from under-development due very largely to the poverty from which these areas suffered. The right hon. Gentleman referred to the enormous consumption of the United States of America. I would take up his point on that subject to emphasise it, and to show how greatly the increased consumption in the U.S.A. affects the rest of the world in relation to oil supplies. If world consumption in 1938 had been at the same, rate as in the United States, something like a ten-fold increase in supplies would have been required. The increased mechanisation throughout the world and development in the less developed areas has created a huge increase, apart from the rapidly rising United States consumption. The increase in consumption in the United States between 1938 and 1946 was nearly 100 million tons, and that accounts for the greater part of the increase in world consumption. United States production has not kept pace with the domestic demand, so that, instead of being an exporter of oil—in 1938 she exported 18 million tons, this year for the first time she has become a net importer.

It will be seen, therefore, that oil availability is influenced by factors outside our control. This is most important, because the rate of consumption in the United States today is greater than the world consumption in 1938—a point to which the right hon. Gentleman referred. It shows, therefore, that a very small percentage difference in American consumption has a very marked reaction on the availability of supplies for the rest of the world. Indeed, United States consumption completely outstripped the expectation of her own experts. During 1947 the official estimate of demand had to be revised upwards on three occasions; and already this year there has been another upward revision of the demand for 1948. It is apparent that there are other people, well skilled in oil production and distribution and close to the source of supply, who are unable to make accurate estimates in the circumstances in which they find themselves.

In the British Commonwealth oil production is infinitesimal. Out of the world production of 420 million tons in 1947 only 6 million tons came from the British Commonwealth. We have, therefore, had to build up, through British interests, large oil production in foreign countries. By 1938 this production was 39 million tons. Again, I want to bring the right hon. Gentleman back to the opinion that he has so consistently put forward, on the lackadaisical way in which he says the Government have dealt with the oil situation, and to tell him that, in spite of all the difficulties and the damage that had to be repaired in the oilfields covered by British interests, production had increased from 39 million tons in 1938 to 52 million tons in 1947—

an increase that, considering all the difficulties, can be regarded as remarkable.

The world demand for oil can only be satisfied provided that the British companies, refineries and tankers can be expanded rapidly. Now that the United States import oil, the Eastern hemisphere in the future will have to rely largely, if not wholly, on the vast oil resources of the Middle East where British companies have played a prominent part in development. It would be quite wrong to suggest that there has been no real planning of requirements. The British companies are fully aware of the need to expand production and have embarked on major schemes. In the United Kingdom refinery programmes ultimately costing £95 million have been mapped out. This includes something like £60 million on plant, and, when it is completed, they will be capable of handling 20 million tons of oil a year. Overseas, large investments have been prepared.

At the same time, it is necessary to have a very large increase in the tonnage of tankers to deal with the greater production that will come along. I will deal in greater detail later with tankers. The building of tankers and refineries is dependent entirely on the availability of steel, and for the foreign concessions large sums of foreign exchange are required. The House is fully aware of all the difficulties in relation to capital development, and, while steel production has been running at a very high rate, nevertheless, steel for tankers, refineries and the expansion of the oil programme must be considered along with all the other uses to which steel must be put. Although the right hon. Gentleman gave the impression that we should use all the steel required for oil production, I am certain that, if that were done, he would be complaining that we had not provided steel for agriculture, for generating plant, mining machinery and the like.

It is sensible and right that we should consider what steel is available and the major projects that have basic priorities, and allocate the steel available so as to produce the best return for the nation at large. We are doing that. It is not an easy task. It is not something that can be done by sitting at a desk and dividing the amount of steel available by some figure. The amount of steel and its uses arc being carefully worked out, and, in so far as expansion schemes for refineries and tankers are concerned, there is a high priority, ranking with the highest; but it must take its place with all the other steel requirements that are essential.

Mr. R. S. Hudson

I did ask two specific questions about steel. I said, "Will the Government give us the allocation of steel?" and, "What is the relation between the allocation of steel to refineries and the amount that the oil companies think they need?" Is it 5 per cent. or 7 per cent., or what is the figure? It is no good the hon. Gentleman saying, "We are doing this." The House and the country are entitled to have the figures, and to see whether what the Government are doing is right.

Mr. Robens

I am not sure that it is a good thing that the House and the country should know about this allocation of steel. [HON. MEMBERS: "Why not?"] I ant not proposing during this Debate on the Ministry of Fuel and Power Vote to talk about steel allocation.

Mr. Hudson

Excuse me.

Mr. Robens

Let me finish. It is certainly not my job to give the House a budget for steel, which is used in many other Departments. The right hon. Gentleman must talk to the Chancellor of the Exchequer and those responsible for the broad economic survey of the country.

Mr. Hudson

The Parliamentary Secretary obviously made that last submission through inexperience, and, therefore, I do not challenge it. But if he will take the trouble to look at the Order Paper, he will see that we included the Ministry of Supply, for the specific reason that we wanted to extract from the Minister, or whoever was speaking on behalf of the Government, the allocation of steel, and, therefore, my questions are relevant to the Debate. I do not know whether it would be in Order—I suggest it may be —if I were so minded, to move the Adjournment of the Debate, to call attention to the fact that there is no one here representing the Ministry of Supply, whose Vote is on the Paper. I do not propose to do it, but I hope the hon. Member will not pursue that line of argument.

Mr. Robens

I do pursue this line, that it is not my task to give the right hon. Gentleman a steel budget. My right hon. Friend will be replying later in the Debate, and he will probably have something more to say about the steel allocation, but I do not promise a steel budget. It certainly is not my task now.

May I turn now to the question of tankers? I will not worry the House with details of the purchases of American tankers, except to say that, of the tankers that have been brought back into commission, this country and the Dominions have had a generous share. We have not held up the oil companies through lack of dollars to buy all the tankers that the United States were prepared to sell us. At the same time, it is clear that we must go on with an extensive building programme if we are to keep up consistently with the production of oil and the increased demand. It would perhaps be as well if the House were to know the size of the task before the shipbuilders and the progress they have made.

The British tanker fleet in September, 1937, was 4,727,000 deadweight tons. Losses during the war amounted to 2,940,000 deadweight tons, and the gains were 2,444,000 deadweight tons, so that we finished the end of the war with a tanker fleet of 4,231,000 deadweight tons as compared with 4,727,000 deadweight tons at the beginning. The tonnage under construction at the beginning of 1948 for completion by 1951 was 1,130,000 deadweight tons and, therefore, the projected British flag tanker fleet at the end of 1951 will be 6,360,000 deadweight tons.

It will be seen from those figures that there has been no restriction at all upon the capacity of the shipyards to turn out tankers; indeed, every encouragement has been given to the production of tankers, not only for our own use but also as a valuable export for purchase by countries abroad. Because of the acquisition of tankers from the United States, and because of this rapid building programme, the tanker shortage has disappeared for the time being. During the current quarter, the British tanker companies have been able to cover their margin of 10 per cent. by chartering tankers in the market, but this includes the equivalent of 25 dollar tankers on continuous service. I shall return to that point later when I deal with the dollar element in sterling oil.

There will, therefore, be enough tankers available in the third quarter to cover requirements in full. While it is early yet to say with assurance that there will be enough tankers during the winter, plans are being made to charter sufficient to cover the peak winter requirements. By 1951, if trade expands according to plan, the increase in the demand for tankers will be out of proportion to the increase in tanker fleets as at present projected. The British oil companies have a large building programme in hand, and they are engaged in an energetic policy of chartering Norwegian and other flag tankers on a long term basis, but, unless more tankers are built, they will not be able to cover the estimated deficit. A recent review puts the estimated world deficit in 1951 at 100 tankers at least, even if the Saudi-Arabian pipeline and the Middle East pipeline could be constructed before 1951; and without these pipelines the deficit may easily be of the order of 250 T.2. tankers.

It is probable that part of this shortfall in world tanker tonnage availability will be made good by building in the United States, but, if we are to keep our dollar expenditure and the chartering of American tankers within bounds, let alone reduce it, we must continue to build more tankers in this country. The oil industry are fully alive to the probability of a tanker shortage. They are combining a policy of gradually increasing their own building with a policy of stimulating the independent operators to place orders for new ships by offering them the security of long-term charters. They do not wish to invest too heavily in tankers whilst the future of their refinery expansion programmes and the prospects of the pipelines are by no means certain. There is undoubtedly scope for more building in the United Kingdom if the steel and the other materials can be provided, and the right policy is clearly to stimulate to the utmost the private building of tankers in our yards, both by the oil companies and the independent owners.

Mr. Solley (Thurrock)

In the case of the tankers which it is proposed shall be built between now and 1951, can my hon. Friend say whether all, or some, and what percentage if some, will be built in British shipyards?

Mr. Robens

The figures I gave are all for building in British shipyards.

Mr. R. S. Hudson

Can the hon. Gentleman tell us what is the steel allocation?

Mr. Robens

The Chairman will pull the right hon. Gentleman up for repetition if he says that again.

May I turn now to some of the points made by the right hon. Gentleman in relation to the dollar position in what is usually termed sterling oils. It is misleading to treat the United Kingdom requirements of petrol or, indeed, of any petroleum product, in isolation from the requirements of the rest of the sterling area and of our export trade in general. Although at first sight the aggregate production of motor spirit available to British companies from their various producing fields in foreign lands is apparently nearly twice the United Kingdom consumption, there are a number of reasons why this leads to a wrong conclusion. In the first place the cost of oil production of the British companies cannot be assessed purely in terms of sterling. British companies have to disburse convertible foreign exchange for royalties and expenses. For example, in Venezuela, a company's royalty and local expenses are settled in local currency, and those are convertible to United States dollars. Specialist equipment for the development of their own oil fields and the construction of their refineries, also entails some outlay in dollars, with the result that there is a substantial element of dollars or other hard currencies in the cost of producing their oil.

On the other hand, the supplies brought into the sterling area by American companies do not always ultimately entail dollar expenditure, because American companies are substantial buyers from British companies and this, of course, again saves dollars. For example, it is much more economical to all concerned that so-called British oil should be sold in, say, the Persian Gulf to American companies for disposal in the Indian Ocean area, and that British companies should buy oil from American companies in the Western Hemisphere to supply the United Kingdom. I need not enlarge on that; one is aware of the long hauls that are entailed, and the geographical situation makes it convenient. Indeed, a great deal of economy is possible by reason of ensuring that oil is delivered to its closest ports of demand, and therefore we get the interchange of British and American oil.

Additionally to that, the shortage of tankers has added substantially to the cost of oil and, for that reason alone, it is not possible to plan in terms of allocating British oil solely according to British consumption needs. We must get the most remunerative use from tankers, and, therefore, the loads have to be carried, with special consideration to the distances they must be hauled. As I have said before, that involves American oil going to British possessions and British oil going to the United States. Also a high proportion of world oil is provided by the United States and ourselves and, in the development of world oil supplies, British companies have developed extensive capital facilities for the distribution of oil in many foreign countries, and their trade in these areas is a valuable asset in our export programme.

The hon. Gentleman gave a list of some countries. It is perfectly true that some of these oil supplies go to soft currency areas but, after all, oil is essential to a modern economy and there is a point at which the diversion of supplies from such countries is no more in the interests of His Majesty's Government than of the country concerned. The relative strength of foreign currencies will not always remain as it is now, and the trade of British companies abroad is an asset of the greatest importance on the long-term view. In order to provide for their market requirements in the sterling areas and other foreign countries, British companies have had to purchase marginal supplies of petrol and other products from dollar sources, so that, apart from the dollar element in sterling oil, for the reasons I have mentioned, there is also this additional dollar element in the petrol trade of British companies. We cannot, therefore, in any case dispense with the supplies which, in practice, are brought into the United Kingdom and the sterling area by American companies from dollar sources.

Time is getting on and I want, if I can, to deal with coal-oil conversion and with the comments made by the right hon. Gentleman in relation to standard petrol and the administration of our regional petroleum officers. First, with regard to coal-oil conversion, it was only recently that we had an Adjournment Debate on this matter raised by the hon. Member for Altrincham and Sale (Mr. Erroll). If hon. Members will turn up that Debate, they will find a good deal of information which, with permission, I do not propose to repeat this afternoon. At the time that the coal-oil conversion programme was launched, the situation in this country was grave. We had a surplus of fuel oil, there was a grave shortage of coal, therefore it was the commonsense thing to encourage it. [Laughter.] Hon. Gentlemen may laugh, but I say it was commonsense to encourage conversion from coal to oil. That was done, and if the Government had not stepped in and tried to arrange that conversion in an orderly way, it would not have stopped conversion. Industrialists, unable to get coal, would inevitably themselves have been driven to conversion and it would have been done in a chaotic way. Industries without any real priority demands might easily have got their conversions completed before other industries with high priority demand. There would have been no question of relating the priority to coal-oil conversion, which I think the right hon. Gentleman would regard as being important, to the savings made. Therefore, coal-oil conversion, at the time my right hon. Friend stepped in, was encouraged in order that we could make the best use of what we had available at that time, that there should be some real order, and that we should help industries in relation to their programme and their importance to the nation.

The United States of America also went in for fuel-oil conversion. They also have come up against the same problem, that their demand has outstripped their supply. They, too, have had to call a halt in their fuel-oil conversion programme. The right hon. Gentleman cannot have it both ways. In the United States of America where there has been no control, where the oil supplies are near home, they allowed industry to please itself. In this country, where our position is much more difficult, we stepped in and made an orderly conversion. I will give the right hon. Gentleman some figures for which he asked, and I hope they will show that my right hon. Friend, far from leaving this position in the air, far from causing embarrassment, has done a great deal to provide an orderly change from coal to oil, but has been faced subsequently with an unprecedented demand for fuel oil, not only from our own people but from the United States at the same time, which has affected materially the available supplies in this country. The conversions which have been completed and are using oil number 1,548. They involve oil to the extent of 2.54 million tons per annum. We have authorised 291 conversions to be completed which will involve 250,000 tons of oil a year. We propose shortly to authorise a further group of 120 which will require about .34 million tons a year, so that the balance which will remain will be about 435 cases with an estimated consumption of oil of .94 million tons. Including pre-campaign consumption the estimated consumption is 3.4 million tons in 1948 rising to 4 million tons in a full year. Those figures do not indicate that any inefficiency was displayed by my right hon. Friend.

The small margin of authorisations that have not been completed, compared with the large number of cases which have been completed, particularly in view of the steel-works, glass-works and others of importance which have been completed under the ordinary programme, show that, having been faced with something which could not be anticipated even in the United States of America and certainly not by us—it is not British demand for fuel oil which controls the demand but it is the demand from outside—the figures prove that there has been a proper orderly conversion. I agree that it has caused inconvenience to firms who have gone so far with conversion schemes, but it is inevitable that that will happen, and as the oil comes through, we shall authorise conversion as we are able to in acordance with some scheme of priority based on the extent to which conversion has been made, and the benefit to the country at large.

Mr. W. S. Morrison (Cirencester and Tewkesbury)

Will the hon. Gentleman tell us the total consumption of oil per annum of the groups he has given individually? What is the total consumption involved in the conversion programme of those authorised and those projected or proposed to be authorised, and the balance?

Mr. Robens

Four million tons, plus the requirement to complete those 435 cases where, it is true, they have been authorised but are now stopped, which is another .94 million tons.

Mr. R. S. Hudson

The figures do not tally.

Colonel Lancaster (Fylde)

The figures the Parliamentary Secretary has given, 2.9 million tons in 249 cases and .34 million tons in 120 cases make 3 million tons, and with the .94 million tons it adds up to 4 million tons.

Mr. Robens

It is the pre-campaign consumption, that is, those already burning oil which brings it up.

Mr. W. S. Morrison

That is why I asked the question.

Mr. Robens

Yes, we have it clear now.

Mr. Morrison

What is the total consumption?

Mr. Robens

, It will be 4 million tons.

Mr. Orr-Ewing (Weston-super-Mare)

Could we be given the figure of pre-conversion?

Mr. Robens

I will give the figures once more. Conversions complete and using oil are 2.54; authorised to complete conversion .25; further authorisations .34, and the balance that will remain deferred will be .94.

Mr. R. S. Hudson

What is the actual consumption today?

Mr. Robens

The actual consumption today will be those figures, almost 4 million tons.

Mr. Hudson

It is 4 million tons now, and will rise to 5 million tons?

Mr. Robens

Almost.

May I turn to the position of the standard petrol, to which the right hon. Member for Southport gave some time. I am sure he did not mean it unkindly, but I wish to refute the suggestion that there has been maladministration in the offices of regional petroleum officers. I have personally visited most of the offices and found that they have hard working staffs conscientiously doing a good job of work. I have found in every case that regional petroleum officers take a personal and very deep interest in the work and are most anxious to be sympathetic in regard to petrol cases and to administer the allocation of "E" and "S" coupons with full regard to the problems that confront applicants making applications within the maxima we lay down at the Ministry of Fuel and Power. I am sure the right hon. Gentleman did not mean his remark unkindly, because those people are not able to reply for themselves. I give him the absolute assurance that the staffs have done an excellent job of work, under the most difficult circumstances.

The right hon. Gentleman mentioned one of two specific cases. He referred to the case which ray right hon. Friend dealt with and about which he sent his secretary across to the Ministry. My right hon. Friend was good enough, in the welter of all the work he has to do on the Gas Bill upstairs, the Petrol Bill down here, this Debate, and the Prayer tomorrow night, to take up the right hon. Gentleman's case and to give it personal attention. I think the right hon. Gentleman owes thanks and appreciation for that, and not the suggestion that it is owing to the coincidence that, as he is raising it today, he got special consideration. If the interpretation which the right hon. Gentleman suggests had been put on the matter, the case would have been put at the bottom of the pile and would have awaited its turn. If the constituent of the right hon. Gentleman had given all the information which the right hon. Gentleman gave to us, it would never have come to him.

Mr. R. S. Hudson indicated dissent.

Mr. Robens

It is no use the right hon. Gentleman shaking his head. I have known hundreds of these cases and invariably I find that I am able to recommend allowances because the regional petroleum officer has not been given as much information by the applicant as the applicant has given to us through a Member of Parliament. I do not know whether we have reached the stage where the man who can fill in the form the best gets the best results, but certainly no regional petroleum officer can give a proper decision unless all the circumstances and all the facts are put into the application. I suggest to the right hon. Gentleman and to constituents of all hon. Members that applications should be made full and complete when they are made to the regional petroleum officers. Then I am certain they will not have cases such as that raised by the right hon. Gentleman and referred to my right hon. Friend.

The right hon. Gentleman was very concerned about what had been represented to me as the most contentious part of the new arrangements for the issue of standard petrol, that is, in relation to persons in receipt of supplementary allowances who are to have the amount of standard petrol deducted. It is suggested that this is a hardship — [HON. MEMBERS: "Hear, hear."]—I am glad to hear hon. Members say "Hear, hear," because it shows that it is generally accepted by hon. Members opposite that it is a hardship for the standard petrol to be deducted from "E" and "S" holders. I repeat what the Minister has said about the petrol allocation. We had 120,000 tons for distribution. I think the right hon. Gentleman missed this point when he was discussing the 120,000 tons in relation to the petrol allowances saved by the abolition of the basic ration. The abolition of the basic ration saved a considerable amount of petrol. Having got down to that figure, this standard allowance is being given without increasing the amount of petrol, or, in other words, without digging back into the saving which has been achieved by the abolition of the basic ration. That is why there is only a small amount of petrol to distribute.

The 120,000 tons is made up of 100,000 tons we shall get from the black market and the 20,000 tons by the special review of "E" and "S" holders, some of whom are getting more than they are entitled to get. If that had been distributed to every motor user in the country, it would represent eight miles of motoring a week. Hon. Members are not going to suggest that eight miles a week to every commercial traveller, doctor or whoever holds supplementary coupons could be said to be any real advantage. It would have been greeted with derision if we had said to people whose cars are off the road, and to the men whose motor cycles are off the road, "Here are eight miles of motoring a week for you." To make it a reasonable amount, which is about one-third of the basic ration, those persons whose cars are off the road get the standard ration for roughly 90 miles a month, which we draw from the "E" and "S" holders. They get something which they have been wanting for a long time—freedom. If we had not taken the step of colouring petrol and making the leak from commercial to private tanks impossible, we probably would not have heard so much about the withdrawal of standard allowance from "E" and "S" holders.

Let us look at the hardship, and see what there is in it. I say plainly but quite emphatically that in my view there can hardly be a single holder of "E" or "S" coupons who does not get some convenience petrol. Take two men living in the same road. Both work for the same firm; one is the sales manager and the other the cashier. Both have cars, but, as the cashier has no business outside his office, he gets no business allowance, while the sales manager has business outside the office and gets an allowance. When they leave home in the morning the cashier waits at the bus stop, goes to the station and catches his train, and then gets another bus to his office. His next-door neighbour, because he is a sales manager, goes to the office by car. He is not doing anything wrong. He cannot garage his car at the office but, nevertheless, he gets an added convenience, from home to his office. The doctor, commercial traveller, or anyone else with "E" or "S" coupons, can pick up his wife and drop her in town to do her shopping, and pick her up again on the way home with the parcels. It is a great convenience which cannot be enjoyed by those whose cars are laid up. Inevitably there is a measure of convenience petrol in all the allocations which have been made to "E" and "S" holders.

Let us have a look at the hardship, if that is accepted. What is the extent of three gallons of petrol a month? Roughly, about 20 miles of travelling a week—I am taking the 90 miles now—for a month. Three-quarters of a gallon a week is to be used or drawn back from the "E" and "S" holder's supplementary balance. The inconveniences that he has is, roughly, about 20 miles. I suggest, on that, that it can never be proved to have been a hardship, bearing in mind the people who have invested their money in cars—and I have heard a lot of argument from hon. Members opposite on this aspect—and who want their cars for use and for convenience. We say to those people, "You are getting some convenience by the use of your petrol which represents about 20 miles a week, and you are no worse off, and immeasurably better off, because you have freedom in the use of your petrol."

Mr. R. S. Hudson

What an amazing argument.

Mr. Robens

It may be an amazing argument, but, all the same, I would like to see that argument refuted.

Mr. Hudson

It will be, and it will not be accepted by the "E" and "S" holders, either.

Mr. Robens

I agree that it will not be accepted by the "E" and "S" holders. Very obviously no one is getting as much as he wants, and, therefore, if they can get another three gallons a month they will press for it. -What I say to the "E" and "S" holders is this. The availability is not there. They cannot have what is not there. They can only have eight miles a week extra if we keep everybody's car and cycle off the road who has not got "E" and "S" allowances. It seems to me that there can be no question here of inconvenience, and no real question of hardship.

I have promised that I would say something about the Territorial Army. I will say this. My right hon. Friend the Secretary of State for War indicated, in answer to a Question in the House today, that I should be making a statement about the issue of petrol to the Territorial Army. Therefore, I should like to inform the House that, as from 1st June, a bulk allowance of petrol will be made to the War Office for use in connection with the Territorial Army. The War Office will be responsible for the issue of this petrol, to members of the Territorial Army who need it in connection with their duties. The issue of supplementary allowances by the regional petroleum officers for attending drills, etc., will thereupon cease. It has also been agreed with the other two Service Departments that they will be responsible for the issue of petrol coupons to their respective auxiliary services.

Mr. R. S. Hudson

Will the hon. Gentleman say what is the amount?

Mr. Robens

There is no amount allocated. The War Office will determine the amounts to be allocated to their officers, either Territorial officers or Regular serving officers, in accordance with what the War Office decides are their individual needs. The War Office will be the sole arbitrator.

Mr. Hudson

Is this additional petrol coming out of the existing "E" and "S" total?

Mr. Robens

There will not be any additional amount. We have been providing certain petrol, through the regional petroleum officers, in connection with the Territorial Army. In connection with certain duties the War Office already provide petrol. All we shall do is to transfer that amount of petrol to the War Office for them to allocate to their people according to their needs.

Brigadier Head (Carshalton)

Am I correct in assuming from what the Parliamentary Secretary has said—he said there will be no increase in the bulk allotment to the War Office—that any amount they allocate to the Territorial Army will come out of the existing allotment?

Mr. Robens

I did not say that, and if hon. Members understood me to say that, I am sorry. We shall transfer to the War Office from our regional petroleum officers an equivalent amount to that which was given direct from our regional petroleum officers to Territorial officers in respect of their duties. We shall leave the War Office to determine how it shall be allocated.

Major Legge-Bourke (Isle of Ely)

Will the cars owners for which this petrol is issued be entitled to the standard ration?

Mr. Robens

The car owners for which petrol is issued by Service Departments will not be affected by this drawback scheme in the standard ration. They will receive the standard ration.

Mr. Orr-Ewing

The Parliamentary Secretary has said that his Department will transfer from the regional petroleum officers an amount of petrol to make up the War Office requirements. Where is that petrol coming from?

Mr. Robens

It is coming from what we gave before. We issued x hundred gallons direct from the regional petroleum officers throughout the country to the Territorial officers. We transfer that x hundred gallons to the War Office. Our regional petroleum officers no longer give any at all. The War Office will distribute it. I am sorry that I have been so lengthy, but the right hon. Gentleman did me the courtesy of advising me of the points he was raising, and I thought it only right that I should spend some time in dealing with them.

During my speech I have endeavoured to show the oil trends in the world and in the British Commonwealth. There is no use disguising the fact that, for the next few years, even if the international situation goes well and smoothly, oil will remain a problem. But it is not a permanent problem. There are vast reserves of oil in the world. Oil can bring to the people of this country, and the world, greater opportunities, because of the way in which it can be the means of opening up new territories, helping industry to be more efficient and helping us with transport. Its increased consumption throughout the world can only mark a fresh era of prosperity. In this task of developing the oil reserves, and of ensuring that the countries of the world have access to oil supplies, the British nation has a large and important part to play. The sinking of new wells, building of tankers and refineries and all the work that goes into increasing oil supplies, and thus utilising the long years of experience that we have in this field, is the way that this nation can play its full part.

I do not believe that we could have a Debate of this character without paying our tribute to those in the oil industry who have faced great physical difficulties in the winning of oil, and whose contribution to the development of overseas oil resources has placed British interests, with American, in the fore in the world's oil production. Their task has been much more difficult to accomplish, because they have developed oil in foreign lands and this has demanded great engineering skill. The demand for oil proceeds apace, and, in the task of ensuring plentiful supplies of oil for all who need it, His Majesty's Government will give every help, every aid, to those upon whose shoulders fall the physical burden of having to produce, refine and distribute this worldwide, valuable and essential commodity.

5.8 p.m.

Mr. Cuthbert (Rye)

I have listened with interest to the Parliamentary Secretary, with his great mass of figures and so on relating to the oil industry, but I think his last remark interested me more than anything, that is, his tribute to the oil industry. About a year and a half ago I had the honour to go out to Southern Persia—which is the main source of oil supply from the British point of view—on the instigation of the Foreign Secretary, when we had a great deal of industrial dispute there. I was able to see then and can confirm now what the hon. Gentleman has said about the great integrity, skill and courage of those people at the oil wells.

My right hon. Friend the Member for Southport (Mr. R. S. Hudson) has put the case for hon. Members on this side of the House extremely well. I intend to deal more with what I consider to be dangers of the future and, shall I say, mistakes of the past, and where they may be rectified by the Government. I do not think it is generally known that there is an oil shortage in the world, and more particularly in America. Half of our troubles are due to that. At one time, just before the war, America was herself a great producer of oil, and she had no need to go anywhere else to get oil. But circumstances have changed considerably, and America now is one of our biggest buyers. That, incidentally is to the benefit of this nation, because America buys British oil and pays dollars for it.

I do not exonerate the Government from the mistakes which have been committed in the last two years, knowing, as most people in the industry did know, that the consumption of oil throughout the world had increased considerably. Even two years ago that was known. I think that the first mistake was that no encouragement was given to the oil industry to get more oil. What do I mean by that? I know that the industry was crying out for steel. I think that if the Government at that time had allocated more steel to the oil industry, first and foremost for the shipping part of the oil industry—to build more tankers—that would have been a great help. Secondly, they should have been given more steel for the enlargement of their refineries. That was another mistake in my opinion, and I think that most people in the industry would say the same.

Then we come to the old story of switching from coal to oil. It was obvious, at that time, that if we went on consuming oil in this country, as we did, we were bound to find ourselves eventually in the position in which we find ourselves today. I blame the coal industry for that. We will not go too far back as to what we say went wrong in the coal industry, but I think the general opinion in the oil world is that if we had gone in for getting coal, instead of nationalising the coal industry, we should not have drawn on our oil resources in this way. Those are the three mistakes made in the last two years. The main thing of course is that no great thought was given to the oil industry at that time—I am now talking of two years ago.

Most of our oil is produced outside this island. The Government, when they came into power, were occupied entirely in encouraging the people who put them in office, as far as home affairs were concerned. Oil, and things that were outside and so vital to the British nation as a whole, were not thought about in the proper way. I am sure that that is one of the reasons why we are literally screaming for oil at the present time. The Government should have thought of these things two years ago and made the allocation of steel to the oil industry a number one priority. I think there is a tremendous future for oil, about which the Government must think very seriously. Oil is going to be one of our best dollar producers. Coal is not going to be our best export; that will be oil and its products. Therefore we should be thinking about it now, and planning ahead for three or four years, to see that the industry gets everything it requires to double, and even treble, its output. I am pessimistic about coal. In the past the export of coal did a great deal to balance our economy, but in the future, if we can produce enough coal to keep our industries going, we shall do quite well. We shall have to look elsewhere for exports, and that means oil.

I want to say now that I am not a shareholder in any oil company, nor have I any financial interest in it. I am speaking purely from the economist's point of view. I have said that at the moment the oil industry is short of steel to build tankers, refineries, pipe-lines and the million-and-one things required by an oil company to produce oil to be turned into cash. Why are we short of oil? Again, I think, two years ago the Government should have thought of this from the steel point of view and should have allocated steel away from some other industry to the oil industry. If I may give examples. I have heard how, in the past year or so, we have been producing steel props for the mining industries. Why could they not have continued with wooden props, leaving steel alone? Why did we export so much steel to Russia when we required it in our own industry? I know we shall be told that we received coarse grain in return, but that could have been obtained elsewhere. I do not want to touch too much on the political angle, but it seems to me that we were exporting steel products to Russia, a nation about which we were not sure whether they were friend or foe, when we in this country require it for ourselves, not only for peace but in the possibility of an emergency as well.

Turning to the future, recently we have heard of the closing down of the Haifa Refinery in Palestine. I wonder if the Committee realises what that will mean so far as our oil is concerned? Something like four million tons is locked up there; 2½ million of that was supplied to our sterling area. That has gone for the time being. What is the position for the future? I ask the Government what is going to happen, after Saturday, about the Haifa Refinery? Are we ever going to get the Haifa Refinery going again? If we have real trouble in Palestine between Jew and Arab, the first thing the Jews will do will be to take the refinery because they may want the oil for war potential. The moment they do that the Arabs, through whose country the pipe-line passes, will cut the pipe-line, and we shall be finished again. I would like the Government to give a great deal of thought to what action they intend to take to secure our Haifa Refinery and to see that it will be safe for our future.

The real world source of oil is Persia. At the moment everything there is perfectly sweet and safe, but we must look ahead. I was out in Southern Persia about 18 months ago, and hon. Members who read the report will see that I and my two colleagues on that side of the Committee were in complete agreement that all those industrial troubles again, were caused by Communist influence. There is a party in Persia called Tudeh; they were definitely Communist and until they were shot or locked up there was no peace. A position like that might return. I want to know what the Government are thinking about in the way of protection for those enormous oilfields in Persia. They are the main source of our oil and one of the biggest sources of oil in the world.

Persia has been a very great country and can again be a very great country, but she needs assistance. It is time the British Government awoke to the fact that we must help Persia to keep democracy sound, and to see that her neighbours around her do not have the opportunity of spreading their own gospel of their way of life, which Persia may be forced to accept through our lack of interest in that country. How can we do that? Most hon. Members must have read the report of the select committee on the British Council, on which I served. The British Council should be encouraged tremendously to do good work in Persia, but I would go further than that. The Government should encourage the Persian Government by sending out experts to teach them how to build factories and to build up the industries they are anxious to build, but in which they lack capital and machinery and, indeed, the experts to show them how. If that, were done, we could carry our British way of life into Persia. They want it, and they are screaming for British influence in Persia. I admit that our name is not too good at the moment, because of the past six or seven years of neglect, but it can be restored, and we should make Persia a buffer State against any nation or any group of people who may think they have a chance of taking over that great oil producing country.

Mr. Gallacher (Fife, West)

The hon. Member talks about taking the British way of life into Persia. When he speaks of the British way of life, does he mean profits for the private owners or nationalisation of the industry?

Mr. Cuthbert

In reply to the hon. Member for West Fife (Mr. Gallacher) I would say that on our visit last year we learned that the British way of life is very much accepted in Southern Persia by all employees in that country and by people outside. The trouble was caused by only a small group of three or four people. That is why I said Persia is aching to have the British way of life. I do not mean profits; that is another argument. I think it will be found that the profits made in Persia are mostly made by the Persian Government, through its royalties, and they, therefore, go to the Persian people. It must not be forgotten that half of the great oil concerns in Persia are owned by the British taxpayer. All hon. Members in this Committee benefit.

I would end on this note. I feel that the oil industry, especially the British oil industry, should be left to itself to manage its own affairs. I will give the House one or two examples of what I mean. For instance, with their products, they are told practically where they have to sell them in order to get a certain amount of exchange. We can understand that in the case of dollars, but there are further ways in which they are restricted. They are told by the Treasury what sort of coinage is required and what sort of barter they must do with goods. These men are experts who know their job, and they do not need any Government interference at all. I want to see the oil industry left alone to run its own affairs, but give it steel and more steel, and let it become the greatest export of Great Britain which must, and finally will, take the place of coal.

5.23 p.m.

Mr. Edelman (Coventry, West)

While I cannot agree with the hon. Member for Rye (Mr. Cuthbert) in the whole of his diagnosis of the reasons for the oil shortage, I must agree on the essential fact that there is a world oil shortage. It sets off the improvidence of the right hon. Member for Southport (Mr. R. S. Hudson) —I regret he is not here—when he asked for an increase in the petrol and oil ration.

I would recall to the Committee that during the war President Roosevelt, becoming apprehensive of the shortage of oil which was already appearing, sent a geological party under Dr. De Golyer to the Middle East to prospect and examine the opportunities for developing those as yet undeveloped areas. It was a matter of vital concern to the United States, because although between 1938 and 1946 her actual production of oil was to rise from 16o million tons to 234 million tons, her ultimate net export was only 2¼ million tons owing to the rise in internal consumption. Dr. De Golyer reported, after investigating conditions in the Middle East, that the centre of gravity of world oil production was shifting from the Caribbean area to the Middle East-Persian Gulf area. That is of the greatest importance to our security and our economy because we must increasingly rely on receiving our oil supplies from the Middle East instead of from the traditional sources. At one time Venezuela used to export oil—the bulk of its production—something like 54 million tons to Europe. Today it exports approximately half that amount to the United States.

While in the United States that shortage is intensifying itself, in the Soviet Union, where industry and agriculture has become increasingly mechanised during the past few years, there is something approaching an oil famine. Whereas in 1939 production reached something like 30 million tons, as a result of the German incursion into the Caucasus it had fallen by 1946 to a figure approaching only 20 million tons. That is one of the reasons for the Soviet Union continuing to exercise pressure on those Middle East areas which look like being the world's principal suppliers of the future. Because of the shortage in the United States we ourselves have become more dependent than ever on supplies of oil from the Middle East. When the hon. Member for Rye mentioned that the oil companies should be allowed to exercise their activities without Governmental interference, he was echoing a speech made in New York in 1947 by Sir William Fraser, chairman of the Anglo-Iranian Oil Company, who said: It is difficult to escape the idea that the international oil industry may be regarded in certain quarters as one susceptible to some measures of ultra-commercial integration. If this idea substitutes State regimentation in some form or another for the element of healthy commercial competition, I must candidly say I think it underrates the capacity of the industry to conduct its own affairs on a proper level of competence. But it is quite clear that today oil is a matter of public concern and its acquisition and distribution should be made in accordance with public policy. Consequently, I prefer to the views of the hon. Member for Rye or of Sir William Fraser, the words which were said in this House on 17th July, 1913, by the then First Lord of the Admiralty, who said: Our ultimate policy is that the Admiralty should become the independent owner and producer of its own supplies of liquid fuel, first by building up an oil reserve in this country sufficient to make us safe in war … The second aspect of our ultimate policy involves the Admiralty being able to refine oil of various kinds. This again leads us into having to dispose of the surplus production but I do not myself see why we should shrink, if necessary, from entering this field of State enterprise … The third aspect of the ultimate policy is that we must become the owners or at any rate the controllers at the source of at least a proportion of the supply of natural oil which we require.—[OFFICIAL REPORT, 17th July, 1913; Vol. 55, c. 1466.] Those words were spoken by the present Leader of the Opposition. It is quite clear, in view of that immense strategic and economic importance of oil that the decision as to its production and supply should not be left in the hands of arbitrary individuals and firms, but must be made to conform to public policy under Governmental control.

We can no longer allow the oil companies to have a foreign policy of their own. We have indeed reached a position in which the struggle for oil has become a potential casus belli, and for that reason it is of the greatest importance that there should be the most exact coordination of the intentions of the Government and the function of the oil companies. President Roosevelt, looking ahead and considering the difficulties, which were bound to emerge from the race to obtain oil supplies, proposed an Anglo-American Oil Agreement which had as its intention the making available of the oil resources of the world to all those who had a legitimate interest in them. At the time he also proposed a controlling agency, an International Petroleum Council in order to have an orderly and economic exploitation of oil resources. Unfortunately owing to the resistance by the great oil interests, that oil agreement was never ratified; and when at a later stage the agreement was refashioned in an emasculated form, it was even then impossible to obtain formal ratification. Consequently, like many of the notable proposals which were put forward in those days, proposals which were not only distinguished by their motives but also which would have been of the greatest practical value today, the Anglo-American Oil Agreement was allowed to lapse.

I would ask my right hon. Friend whether it is now his intention to try to initiate new conversations with the United States of America in order that we should have a common national oil policy. Conversations have been going on between the oil companies which have led to certain practical results. For example, there has been the agreement between the Anglo-Iranian Oil Company and two American oil companies that the bulk of the refining of crude oil from newly-developed sources should be carried out by the Americans. This has had the effect of putting a considerable advantage in their hands, because not only is it easier and more profitable to refine oil than to undertake the possibly unproductive task of prospecting, but in addition, those who control the refineries occupy a key strategic position. It therefore seems to me to be of the greatest importance that some attempt should be made to initate a joint oil policy with the United States which will have the sanction, approval and the direction of the Government.

I want to turn to another question which was raised by the hon. Member for Rye. He very properly pointed out that the oil of Iran, like the oil of the Middle East generally, is of the greatest strategic importance to Great Britain. It is absolutely right that we should use every means to defend our interests in those areas. At the same time, I cannot believe that in the long run those interests will best be served merely by encouraging the issue of private concessions to independent oil companies, and the exclusion of other countries, including the Soviet Union, from the opportunity of extracting or obtaining a share in the extraction of oil from those areas. It is quite clear that, particularly in the case of a country like Russia, with an economy which for many years has been backward and only now is being mechanised, and where the internal combustion engine was until recently a rarity, it is only natural that such a country must require access to sources of oil.

I do not think that anybody in this Committee would say that it is improper for the Soviet Union to want to feed her engines of peace. I recognise that in time of tension it is important that we should try to pre-empt an important strategic material like oil; but, on the other hand, looking forward, if there is to be any hope and prospect of peace, we must go back to 1944 when both the Americans and we were of the opinion that it would be possible to develop the resources of the Middle East not exclusively for those who had concessions but for all those countries who had a legitimate interest in obtaining oil.

I suggest that my right hon. Friend the Minister of Fuel and Power or the Foreign Secretary should use the occasion of the present détente which seems to have been announced this morning between the United States and the Soviet Union, to try to revive the old idea for the orderly distribution and production of the Middle East oil resources. We had a most valuable experience of the rational distribution of coal for Europe under the European Coal Organisation. That Organisation was a kind of consortium of the coal producing and consuming European countries who got together to allocate according to need the coal which was available. The fact that this organisation was responsible for the allocation of coal did not in any way interfere with the particular form in which the coal was extracted in any given country. It made no difference if in one country coal was nationalised or if in another country coal was in private ownership. Today, it should be possible to create a Middle East oil organisation based on the precedent of the European Coal Organisation.

Mr. Cuthbert

The hon. Gentleman seems to forget that the oil in Persia belongs to Persia, and, therefore, there can be no question of other nations having a say in the matter; it depends entirely on what Persia wants to do. If Persia wants to give concessions to America or to Britain or to any other country she is free to do so. We cannot say that this is the world's oil; it is her oil, and it is in her country.

Mr. Edelman

The hon. Gentleman has missed my point. The oil in Persia is incidentally developed and mostly owned by the Anglo-Iranian Oil Company in which this country has a major share. The point that I want to make is that this organisation which I propose should be concerned, not necessarily with the ownership, but with the allocation of oil according to the needs of the consumers. The idea suggested by President Roosevelt is embodied in the Anglo-American Oil Agreement.

Mr. Cuthbert

I did not miss the hon. Gentleman's point. The point I was trying to make was that it is not for any other nation to distribute the oil of Persia: it is for Persia herself. If she likes to give concessions to foreign countries that is another matter, but it is for her, and for her alone, to decide.

Mr. Edelman

I am surprised that the hon. Gentleman should be such an absolutist in matters of national sovereignty. At the present time when we are trying to create a Western Union which would involve a diminution of national sovereignty, both politically and economically, I am surprised that hon. Members opposite should be opposed to the idea of the proper distribution and allocation of the oil resources of the Middle East under some kind of international authority. It would certainly meet with the opposition of the great oil companies who prefer to be able to conduct their business on the basis of non-interference from the Government.

If I may revert to the oil agreement which was proposed so hopefully during the war, I would say that it gives not only the greatest hope that the substantial oil resources of the Middle East would be fully developed but, more than that, it will ensure that the Middle East oil, instead of becoming a threat to peace, may be used to unite the nations. At the present time the Middle East is dangerously inflamed not merely by political differences but also by the economic struggle. If some kind of international authority supersedes the present jungle tactics of the oil companies, then, indeed, the inflammation of the Middle East may well subside and instead of the dangerous war situation that exists today we may have a healthful activity and the prospect of peace.

5.42 p.m.

Major Lloyd George (Pembroke)

If I do not follow the hon. Member for West Coventry (Mr. Edelman) in his very interesting speech, it is not because I do not think that what he has said is of great importance. He mentioned the European Coal Organisation, without which many countries would now have been in great difficulty. I may be prejudiced because I played a certain part in bringing that organisation into being. I do not wish to detain the Committee for any length of time, but I want to deal with one or two rather narrower points.

First, I wish to refer to the position of the people in this country, whether engaged in industry or as individuals under the restrictions of petroleum in various forms which they have had to suffer for a considerable period. For very nearly 10 years our population has been very severely restricted in its use of petroleum and petroleum products. During the war period they were perfectly prepared to accept not only inconvenience, but possibly hardship, because they realised that on their greatly restricted consumption victory or defeat might depend. They could readily appreciate the need for severe restriction at that time. They knew perfectly well that when, for example, we had a tank offensive going full blast the consumption of petrol was tremendous. They also realised that the Army which was fighting in this last war, as opposed to the Army in the first war, was almost entirely mechanised. In fact, I believe it used to be said that most of our Army had forgotten how to walk. That also meant a tremendous consumption of petroleum and its products.

When the air offensive developed, particularly towards the end of the war, it was so obvious to anybody living in this country, hearing the roar of those aircraft going out at night, and then day and night, what it involved in the consumption of petroleum. I think I am right in saying that when the big Fortress raids took place, involving 1,000 Fortresses, they consumed the equivalent of one tanker's cargo, which gives a rough idea of what the consumption was. They also realised that bringing petroleum into this country could only be done at the risk of gallant men's lives. Only too often did they know of the consequences of attack upon those petroleum-carrying craft. The people of this country have shown time and time again that they are prepared to suffer inconvenience and hardship provided it is made clear to them what the reasons for the hardship are.

In 1945 the basic ration was restored, and it was accepted, small as it was, as an instalment of better things to follow. Then, two years after the end of the war, the basic ration was cancelled, and now, three years after the end of the war, a Measure has been introduced into the House of Commons which imposes penalties for the use of petroleum in certain circumstances— penalties greater than anything I can think of in regard to petroleum during the war itself. All this, three years after the war has come to an end. The reasons give have been many—the dollar shortage, the tanker shortage, and, in a lesser degree, the black market. Unless reasons are given that people clearly understand, whether we like it or not, every ingenuity will be used to circumvent the measures and to infringe them. If good reasons for the inconvenience are made clear to the people they will endure it. For instance, in 1942, when we appealed for fuel economy, the reasons for that appeal were obvious to the whole population and the response was quite remarkable. That result was achieved entirely by a voluntary appeal. People understood the reason then. Can anyone really say in this Committee that the people are clear in their minds why there are all these present restrictions on petroleum?

Mr. Solley

Yes:

Major Lloyd George

They clearly know?

Mr. Solley

Clearly, yes.

Major Lloyd George

Then the hon. Member is a bigger optimist than I thought, because he is the only one I have met up to date who thinks so. The Government themselves are largely responsible for the confusion that exists in the minds of the ordinary people in the country, amongst whom I would not include the hon. Member for Thurrock (Mr. Solley). This is the fault of the Government. Let me give some reasons. We have been told that one of the reasons for the restriction is the dollar shortage. That was last Autumn. The basic ration was abolished because of the difficulty of acquiring dollars. Is our economic position better today than it was when the ration was taken off altogether? Logically, that must seem to be so. I am trying to explain how the ordinary man in the street gets into difficulty about this. Another reason given was the shortage of tankers. We had some very full figures from the Parliamentary Secretary today. I am a little worried about one side of them. Am I right in saying that the tanker position today is better than it was when the war came to an end? I suggest that it is considerably improved. When the war finished, our losses were practically 3,000,000 tons. We gained about 2,500,000 tons. I am using round figures. At the end of the war we had 4,231,000 tons of tanker tonnage. The hon. Gentleman missed out a figure I should like to have. He said that between 1948 and 1951, 130,000 tons were to be constructed. What has been constructed between 1945 and 1948? Is the position of our tanker fleet today better or worse than it was when the basic ration was restored in 1945? That is another point that it is important the people should understand if we are to get them to realise—as a vast number today do not realise—the necessity of what is being done.

I should like to turn for a moment to the question of coal to oil conversion. Here is another aspect of the matter which confuses the ordinary man in the street. The Government's attitude to this is confusing. The Parliamentary Secretary said today that the coal to oil conversion was due to the grave coal position in 1947. Surely, he does not expect us to acquit the right hon. Gentleman's predecessor of a small contribution to that situation? It was not the right hon. Gentleman's fault that there was a shortage of coal.

Mr. Champion (Derby, Southern)

What about the right hon. Gentleman's predecessor's predecessor—the right hon. and gallant Gentleman himself?

Major Lloyd George

I did not have a single industry stopped during the war, nor did any part of the war effort stop because of the coal shortage.

Mr. Champion

The industry had declined.

Major Lloyd George

I had sufficient coal supplies. I am only giving the facts. The industry had been declining ever since the war first started. As the Minister knows, many of the best coal-producing men are taken out of the industry in war, yet there was coal enough during the war. Now those men are coming back, and a great deal of the improvement in output per man shift is due to the fact that these very fine men have come back and, as everybody tells me, are working very well indeed.

The fact is that the shortage of coal was not the responsibility of the right hon. Gentleman, but that he did not take any action to deal with that situation is entirely his responsibility, because he had plenty of warnings, not only in the House of Commons but from all over the country. Whereas one may struggle through a crisis with economies if they are spread over a long period it is too late to start such economies when the crisis comes. That was the position we had in the Spring of 1947. The Minister certainly cannot escape blame for that. The Parliamentary Secretary today said we had oil in stock and it was only common sense to use it. What was there in stock?

The Minister of Fuel and Power (Mr. Gaitskell)

I am sure my hon. Friend did not say we had oil in stock. He said there was a surplus of fuel oil. That is not the same thing.

Major Lloyd George

Where we keep a surplus if not in stock I do not know.

Mr. Gaitskell

It was excess of production over requirements.

Major Lloyd George

At any rate, it was there. The Parliamentary Secretary said it would be foolish not to use it. I agree, if we do not have to convert appliances from coal to oil burning. If the Government ask industrialists to change over from coal to oil burning they ought to have some security as to the amount of oil they have in the country. What happened, in fact? These industrialists, I say frankly, were misled. Questions were asked in the House only just a year ago. There was one question to the right hon. Gentleman's predecessor, asking him if he could possibly give an answer to industrialists prepared to convert from coal to oil fuel. The right hon. Gentleman replied: We programmed for a saving of 8,000,000 tons of coal by next year, providing the equipment was forthcoming, and we think there is a reasonable prospect of acquiring it. Then the hon. Member for Stockport (Sir A. Gridley) asked a question and the reply was: As regards the question of oil fuel supplies, the oil fuel will be available. There is a difficulty about equipment, particularly tankers, but we hope to be able to save two million tons of coal in the summer, and, as tankers and material come along in the autumn, I think we can save at the rate of eight million tons by this time next year."—[OFFICIAL REPORT, 2nd April, 1947; Vol. 435, c. 2071–2074.] Can anybody wonder that people are a little confused about the oil position when the Minister spoke in that way a year ago, telling people to do everything they can to convert from coal to oil? We had a Debate on Welsh affairs not so long ago on the basis of the White Paper. In that White Paper the Government were boasting that in one refinery and other places in South Wales, by conversion from coal to oil, they had saved 480,000 tons of coal. But it meant using 300,000 tons of fuel oil.

Mr. Gaitskell

The right hon. and gallant Gentleman said a refinery. Did he mean a steel works?

Major Lloyd George

At a refinery and other places. About 51 or so. Including a refinery, I think there were 51 conversions, although I am not sure about the figure. They hoped to save 480,000 tons of coal—for export, I suppose—but at a cost of 300,000 tons of imported fuel oil. What is the good of saying people understand clearly the position in circumstances like that?

We are told the black market consumed roughly 100,000 tons. That is about one-third of the quantity wanted for this particular conversion in South Wales and about a sixtieth of what the right hon. Gentleman's predecessor told us we should be using. Just a few weeks before the basic ration was abolished we were told it was dollars, and now we are told it was due to the startling increase in the consumption in the United States of America. What is the good of the Parliamentary Secretary's telling us, as he did today, that they did not know that this was going on in America. Of course, they must have known. Their own White Paper said that in 1946 there had been an enormous increase over consumption in 1938. It says that the total consumption in the world was 397 million tons. The hon. Gentleman told us today that production was 420 million torts.

Mr. Gaitskell

Is the right hon. and gallant Gentleman referring to 1947?

Major Lloyd George

I am referring to 1947, and he was referring to 1948, but 1948 is not finished yet, so it is difficult to judge its production.

Mr. Gaitskell

I think that there is another possible explanation, and that is that there are certain losses in the process of refining.

Major Lloyd George

I was asking for information. I was struck by the figure when the Parliamentary Secretary gave it, but I did not want to interrupt him. The point I am making is that the increased consumption in the United States has been going on for some time, and it is rather disturbing to find that that is now given as the reason for our restrictions, whereas we had been told that it was a tanker shortage. A tanker shortage is not important, I suppose, if there is a world shortage of oil. Then we were told it was a dollar shortage. Now we are told it is a shortage of oil itself.

In re-introducing the basic or standard ration the right hon. Gentleman referred to the grave injustice to the holders of the "E" and "S" coupons. The only sources of black market in petrol must be the "E" and "S" coupon holders. There is no other. The right hon. Gentleman tried to remedy that in two ways—by his Bill, and by not giving the "E" and "S" coupon holders any of the standard ration. His hon. Friend's explanation did not convince me very much—the added convenience. Since when has a man been given "E" coupons for convenience? I thought he had to make a case that it was essential for him in his business.

What the right hon. Gentleman has told us is that the black market comes from the "E" and "S" coupon holders, and that people who had applied for these coupons have been cheating, and that when it comes to raising the standard ration they are going to be left out. If a man has been honest—and I like to believe that most people are—and has said, "That is the minimum necessary for me to do my work," he is being penalised by not having the standard ration which other people are to enjoy. If the right hon. Gentleman really thinks, as his hon. Friend said today that it was reckoned that a hundred thousand tons had been over-allocated, would it not have been better for him and his staff to have devoted more attention to trying to get a proper allocation to the "E" and "S" coupon holders. It is restrictions that make people ask for more than they need. May I gave an example of that in connection with agriculture? Last Autumn, in some parts of the country, it was very wet and Autumn ploughing was considerably delayed. Many of the coupons which would have been used normally were not returned, because those who had them felt that if they returned them the allocation would be cut down next time, when they would have to plough more intensively because of the delay.

I am told—and perhaps the right hon. Gentleman will correct me if I am wrong—that there is a certain amount of truth in the fact that steel and other raw materials have also been asked for in larger quantities than necessary in order to get somewhere near what is really required. It is these restrictions that make people take more than they are legitimately entitled to get. The right hon. Gentleman has a large staff in his petroleum office. When I was there, the figure was about 5,000, but no doubt now it is considerably less.

Mr. Gaitskell

It is 1,800.

Major Lloyd George

I have some sympathy with the right hon. Gentleman here because the staff were not reserved during the war and in one office alone we had a turnover of 100 per cent. of the staff in 12 months. That does not tend towards the greatest possible efficiency, but one cannot help wondering whether it would not have been better, instead of putting up this elaborate machinery, which the right hon. Gentleman is now doing, with all sorts of inspectors, and adding burdens to the police, already understaffed, for the right hon. Gentleman to have investigated more thoroughly the allocation of "E" and "S" coupons. He has admitted, through his Parliamentary Secretary, that 100,000 tons were over-allocated. That is about 12 per cent. I would like him to look into that matter, rather than have a fantastic Bill. After the end of three years, to have a Bill like the one which we had in front of us the other day is the most extraordinary thing I have seen in my life. It is an incredible thing that we should have to have a Bill of that sort, which, in my humble opinion, will be entirely unworkable.

I would like the right hon. Gentleman to apply his mind to using some of his staff—and the agricultural committees could help him quite a lot—in the allocation of petrol in agricultural areas. I believe that the road haulage people could also help him. I would like him to go to the source, which he has himself admitted, to try to get rid of the 100,000 tons of over-allocation, and get rid of all this nonsense of people going about prying and snooping. There is clearly, hardship and inconvenience in the rural areas, and I speak for a rural area. Rural areas differ and the facilities differ. Some rural areas have a far better transport system than others and some people are far better at form-filling than others. Their imagination is probably more strongly developed than that of some of their fellows, and it is quite astonishing sometimes what they can get away with.

I admit that the right hon. Gentleman has been extremely sympathetic in most of the cases which I have put before him, and I am not criticising him on that point. It is because of the system that we get this inequality. If we are to have restrictions it is important that they should be accompanied by a sense of justice. If people are all restricted, much as we disagree with it, it gives a better feeling if there is not a sense of injustice going with it. I say, finally, that it is not only important that in these cases of restriction justice should be done, but that it should manifestly seem to be done.

6.6 p.m.

Mr. Lipson (Cheltenham)

I wish to raise one point only. The Minister has granted supplementary petrol allowances to disabled men of the two world wars who require motor transport because of their disabilities and who are engaged in business. I appeal to him to allow this class to have the standard ration in addition. I know that the Minister has said that he cannot admit exceptions to his general rule, but this afternoon we were told—and I welcome it—of an exception for those engaged in Territorial duties. The class for which I plead stands by itself, and it would be an honourable exception, if the Minister could see his way to grant it. These are men who have paid a very high price to enable victory to be possible. They will continue to pay that price for the whole of their lives. Their opportunities for relaxation are far fewer than those of other people. I therefore ask the Minister to give consideration to this class of people who cannot be very numerous—those who are so disabled that to enable them to carry on their businesses they have been given a supplementary allowance. The amount of petrol involved would be very small.

I do not think that the concession would lead to what the right hon. Gentleman fears if he makes an exception—the opening of the door to an avalanche of appeals. The public would recognise that this is a very special case, and I hope, therefore, that he will not harden his heart against it. May I conclude by saying that the type of case which I have in mind is typified by a constituent of mine who was an R.A.F. pilot from 1939 to 1945, and who, as a result of his war service, has had his left thigh amputated. I ask the Minister to allow this man and the comparatively few like him to have the standard ration. If he will do so, it will be an act of grace and a credit to the Minister.

6.12 p.m.

Mr. Ellis Smith (Stoke)

We are considering a very important subject, and one which will grow in importance, for this is to be an age of oil. Oil is now required in all forms of life's activities. After the first world war, there was a growing demand for oil, and the second world war has made that demand much greater. It has completely changed the centre of gravity, and oil now determines to some extent the power in the world and to a large extent foreign policy. One hundred million pounds are to be spent in the construction of oil refineries in Britain. As a result of a careful study of the situation, I have no hesitation in saying that Britain's economic demands require that twice as much should be spent on the oil refineries that have been erected up to the present time. One of the finest oil refineries in the world is in production in this country.

Although I do not want to dwell on it, I want to place on record that those who between the two wars constantly raised the issue in this House of the adoption of a policy of this kind were side-tracked time after time, and little did we realise who was responsible for preventing this development. As a result of reading the American Press and the account of the Nuremberg trials we now know who was responsible for preventing that development in this country. Two other refineries are now being built near Manchester. Coal, oil and chemicals, with scientific treatment, and with enterprise, capital and drive can provide Britain with greater wealth than ever before, and if a policy of this character was adopted there would be no need for the pessimism that prevails in many quarters with regard to the future of our country. The value of by-products of oil, with scientific treatment, is enormous.

With scientific treatment, coal, which is still found in abundance in this country and which is far too valuable to be burnt in its raw state, together with oil and chemicals can provide us with enormous wealth. Labour Ministers were elected to show the same kind of courage, initiative and drive that made this country great 50 years ago. With a world oil agreement—and I shall plead for this later on because it is so urgently necessary—and with science, chemicals, coal and engineering we should put Britain on the road towards becoming a land of plenty. The importance of oil was stressed many times during the last war by the Germans. They agreed that our bombing of the Roumanian oilfields meant many victories for the Allies against Germany. There is further evidence of the importance of oil in modern economy, and its growing importance can be measured in the world increase in output since 1938, when it was 270 million metric tons. In 1947 it was 410 million metric tons. We can measure the rich oil supplies of the Middle East by the output in 1938 of 16 million metric tons, which increased in 1947 to 42 million metric tons. It is plain that the output in the Middle East could be increased in a relatively short time to 8o million metric tons.

Research shows that 50 per cent. of the world's total reserves are now to be found in the Middle East—in Iraq, Iran and Saudi Arabia. There will be world trouble over the Middle East oil unless agreement can provide for world co-operation. The Middle East is now the most important strategical centre. It is a political oil volcano which could start world war three in five, 10 or 15 years if the world continues its present drift. Palestine, Egypt, Syria, Turkey, Greece, Libya, Iraq, Saudi Arabia and the control of the Dardanelles and the Mediterannean are all wrapped up in the Middle East issue, which is now an oil supply problem.

At present the Middle East provides Europe with 15 per cent. of her oil needs. It is planned to increase that figure to 80 per cent. within five years and to 100 per cent, within 10 years. Thousands of years of slow development in the Middle East have resulted in minority problems amongst the many communities. Racial and religious differences of all kinds have added to a situation which the world needs to consider. The many minority problems of this conglomeration of peoples have been exploited by vested interests in most countries. A continuation of this will lead to more and more political strife and to war unless we plan to avoid it.

Many of us played our part in the first world war and planned a policy to avoid another, but we drifted into one. The time has arrived when all men and women must adopt a policy to avoid world war three. For these reasons I plead for an international oil agreement. Britain should take the initiative in calling together the chief Powers of the world to co-operate and negotiate a Middle East trading agreement rather than continue to set people against people, clan against clan, or minority against minority. We can allow them all to work out their own destiny in accordance with their own religious beliefs and co-operate together to provide the world with the oil which is now to be found in the Middle East.

I wish to ask the Minister some questions and I hope that the Parliamentary Secretary will be good enough to take notes for him. Is it a fact that the American oil companies are to spend £1,000 million in the Middle East? Have the oil interests determined United States Palestine policy? I do not know the inside story of all this. What I do know—and I have no hesitation in stating it—is that the British people say that none of our men shall remain in Palestine one second longer than the last day fixed for our withdrawal. Others can have their oil: we want world cooperation. Their lives are too valuable for our boys to be kept in the Middle East any longer than is necessary. It is agreement that is required rather than the policy now being pursued.

What is going on in Ethiopia? [Laughter.] Are oil supplies responsible for the failure to withdraw our Army of occupation? Why should there be laughter? Do those hon. Members value our boys' lives? Have they played their part in any war? Did a representative of the previous Government state that Britain recognised that all mineral rights belonged to Ethiopia? If so, why has that policy been reversed? The International Co-operative Alliance recently issued a report in which they stated that conflicts over oil resources are an ever-present threat to world peace. Is it a fact that at the Zurich Conference the International Co-operative Alliance, supported by the World Federation of Trade Unions, was opposed by the representative of the British Government? If so, I ask why our representative took that attitude.

The Deputy-Chairman (Mr. Hubert Beaumont)

I am sorry to have to interrupt the hon. Member but he seems to be speaking more in the realm of foreign politics than on the Vote under discussion. The Vote deals with services connected with petrol and petroleum products.

Mr. Ellis Smith

I have been carefully watching the Vote, Mr. Beaumont. If you will be good enough to refer to the Order Paper you will find that the Vote covers all that I am saying. I am giving this explanation of the conference to ask why a representative of the Government should oppose the policy of world agreement instead of advocating a policy which leads to world peace. Were British and American oil interests negotiating oil concessions in the Middle East during the war? Did they work through, or with, the Arabian Prime Minister? Did the talks on oil take place, and what did the British Ambassador in Teheran report in September, 1944?

The Deputy-Chairman

The hon. Member is now getting back to foreign affairs. I really must ask him to keep to the Vote.

Mr. Ellis Smith

I said earlier, Mr. Beaumont, that foreign policy is now largely determined by our policy on oil. I realise your difficulty and will not dwell too long on this because that would not be fair. All I am doing is linking up this Vote, which really covers four Votes, with the serious issue of world differences on the question of oil.

The Deputy-Chairman

It is very kind of the hon. Member to recognise my difficulties. I recognised his difficulty by allowing him to go so far, but we cannot turn this discussion into a debate on foreign affairs.

Mr. Ellis Smith

I will take note of that guidance, but I am not turning the Vote into the subject of foreign affairs. The right hon. Gentleman who opened the Debate referred to the Middle East and to many points similar to those with which I am dealing. I was pleased that he did so, because he set the basis upon which this Debate should take place. Having prepared my notes with perhaps a leaning towards the foreign affairs side of the problem, I was pleased that the right hon. Gentleman should have set the pace for others to follow.

The centre of world gravity—the centre of the world's struggle for power—has completely changed as a result of the increasing demand for oil supplies. The Government should take the initiative—we should not leave it to other people as we have done on too many occasions—because this country has more to gain by world agreement than any other country. Our needs will continue to increase. If we are to avoid a repetition of what has happened in the past; if we are to avoid serious political strife and the race for increased armaments that gives rise to war, now is the time for the Government to take the initiative to prevent a recurrence of what has happened too often in the past.

6.25 p.m.

Mr. Erroll (Altrincham and Sale)

It was interesting to observe an arch-planner such as the hon. Member for Stoke (Mr. Ellis Smith) who apparently did not plan his own speech to keep within the subject of today's Debate. He got away into the realm of foreign affairs. I agree with him that it is hard to discuss the whole of the oil problem, since it is an international problem, without reference to foreign affairs and overall strategy.

Mr. Ellis Smith

That proves that in order to plan a speech correctly, one must take an international approach to the problem.

Mr. Erroll

The difficulty is ours rather than the Chairman's. I was interested also to observe a junior Minister referring so much to the shortages of oil resulting from the exceptional demands of the United States. We have always been told by this Government of planners that shortages and similar troubles could be avoided by wise planning and that the fault of the Tory Government between the wars was that we did not plan and we did not know what was happening. Before the war, however, there was no shortage of oil—we always had the necessary supplies—nor was there any shortage during the war. Only since the war—since the advent of the Government of planners—have these distressing shortages arisen. I would like to see the planners taking responsibility for their own errors of planning and admitting their mistake instead of blaming the United States as they usually do. The signs were there to be seen if only they had been looking for them.

Not only in the domestic field was the difficulty apparent. If, for example, they had looked at the problem of oil bunkering for ships, they could have seen an unmistakeable barometer pointing to an increasing shortage of oil. The bunkering position became extremely acute a year ago and we are still without any policy or plan from the Government as to the future position of oil supplies for ships. Although the barometer was set at the danger sign a year ago, the Government continued with its schemes for coal to oil conversion. That has been a sorry story and shows up the myth of planning, even in the domestic field, for what it is worth.

Earlier speakers have referred to some of the disappointments and frustrations experienced by manufacturers. The great folly of the Government in the coal to oil conversion programme was to advocate so much oil being used purely for its heating value and not for improving the efficiency of the plant in which the oil was burned. We saw the panic conversion of steam locomotives, which were known to be inefficient consumers of oil fuel. Incidentally, the railway companies which were about to be nationalised displayed a remarkable resistance to the edicts from the Ministry. Perhaps the Minister could say how many of the 1,300 locomotives which were planned for conversion have been in fact converted to the burning of oil fuel?

Not content with burning up large quantities of fuel oil in a way which would release only its heating or thermal value, the Ministry decided to encourage power stations in the consumption of oil fuel. The power station at Neasden is now burning this fuel, which could be much better employed on other purposes such as steel furnaces and the like. We are still awaiting a decision about the Bankside power station on the Thames. One reason why that scheme went through in the face of fierce opposition was that the Minister gave an assurance that it would consume oil fuel and thus there would be no danger of sulphur or smoke to the fabric of St. Paul's Cathedral across the river. Does that policy still hold good? Can the Minister, with so much bitter experience of late, still guarantee oil fuel for the Bankside power station?

There is unfortunately a tendency for us to imagine that supplies of petroleum will soon catch up with world demands. We should be taking a very complacent view if we thought that, because not only have we a great demand in connection with the uses for which petroleum is already widely known, such as motor transport and air transport, but we have a whole range of new uses which will press their claims for a share of the oil products of the oilfields of the world. To begin with, we now have jet-propelled aircraft making a new demand, although it is not necessarily for fuel of the highest range. Nevertheless, it is a demand in such large quantities that it may well upset the balanced programme of refineries in different parts of the world. There is also a great programme afoot for the mechanisation of agriculture, with which I am in entire agreement. The Ferguson tractor is being pushed strongly in connection with this programme at the present time, because it is light and handy, and uses petrol the farmer can easily get; it does not require paraffin to start it or heavy oil which is not used in connection with other agricultural equipment. This is a demand which is not only taking place in this country but throughout the world.

There is also the change-over to oil-firing in steel works, both in this country and in America, and shortly to be followed, I understand, in certain of the Dominions. All will make a tremendous demand on what is only a residue of the oil refineries, namely, viscous fuel oil. Reference has been made to the new developments we are witnessing, of new industries, such as the chemicals—from oil—industry, which will produce much-needed and valuable chemicals. These will obviously require oil or its by-products as part of their raw material. It is very questionable whether oil supplies can hope to catch up in the next decade with the ever-growing demands for the whole range of petroleum products.

It is against this background that we must envisage the steps the Government propose to take to enlarge our oil supplies. It is disappointing to learn that oilfield requirements of steel must be set off against the demands of other users of steel. At the present time, there is an overwhelming case for an absolute priority in steel for oil. It is far more important to put steel into an oilfield than to supply motor cars to, say, Portugal where they can only increase the demand for oil; whereas steel sent to the oilfields will increase the supply of oil from which all else flows. Referring to the overwhelming importance of steel in connection with oil supplies, the Parliamentary Secretary on 6th April said: The allocation of steel for the expansion of British oil company projects is probably one of the most productive uses to which steel can be put for the long-term export assets."—[OFFICIAL REPORT, 6th April, 1948; Vol. 449, c. 136.] In view of what the Minister said, an overwhelming case exists for giving the oilfields and the refineries all the steel they require, even if other users have to go short.

If only we can get ahead with our exploitation of the Middle East fields and the home refineries in the next two or three years, we shall be in a stronger position vis-à-vis America when it comes to exporting our own oil products. It is interesting to learn that the Government have sanctioned a U.K. refinery programme, and that some £95 million is to be set aside for this purpose according to the Economic Survey of 1948. I hope that this programme will go forward with rapidity. I know there are formidable arguments against U.K. refining, and they certainly had considerable weight before the war; but times have changed and the strategic balance has altered. The hon. Member for West Coventry (Mr. Edelman) spoke of the Middle East as now being the strategic centre for supplies, but he will probably agree that the centre is still nearer the Caribbean and is likely to remain there rather than in the Middle East. We do not want to pay too much attention to the old Falmouth Report. We must have U.K. refining, and much more than is envisaged in the White Paper. American estimates show that the capital cost of refinery plant works out at about 1,000 dollars per daily barrel. It will be seen, therefore, that to spend only £95 million on capital equipment for British oil refineries is far from adequate, if we project ourselves five or 10 years ahead.

It is important to go ahead with U.K. refining and to make sure that our plans are properly dovetailed into the American plans. The Middle East oil, which it is largely intended to use in British refineries, does not by any means yield the whole of the products we require. There must be an inter-supply of products between this country and America. We must send to America those products which our domestic refineries can most readily produce, and America must be able to send us hers. The Middle East oil, which the Marshall Plan envisages shall be made over to us, is deficient in certain most important respects, and is lacking in some of the middle elements which are most valuable today. The fuel oil itself is rather too viscous for satisfactory use. I hope that the Minister of Fuel and Power will not forget the importance of interlocking our developments with those in America, and will not pursue an isolated policy for the United Kingdom.

That does not mean to say that we should leave out of consideration the importance of refining in the Middle East. In this connection, it is deplorable to find that the Minister of Fuel and Power has made so little provision for the great losses which will be entailed as a result of the Haifa refinery being out of action so long this year. It is no mean loss at the present time. We must ensure, in developing our new Middle East refineries, that they are not too vulnerable strategically. If we are to secure the maximum and most rapid development, we must at all cost secure the full co-operation of America. I fear that the Minister may be too engrossed in petrol rationing schemes and in organising scarcity. I ask him to take his nose out of the private motorist's petrol tank and to look at the bigger field of international oil supplies for the next ten years. He should realise how essential it is that our companies, with his guidance, encouragement and approval, should plan their developments in company with the American oil companies and, where necessary, he should ensure that the Treasury do not adopt a mean view about dollars for those oils, which it is not really economic to refine in this country. We do not want the Treasury to have one policy and the Minister to have another.

There is, of course, the problem of protecting our sources of oil supply, and the Minister of Fuel and Power must have a word with the Minister of Defence on this most important matter. I hope that the Minister will allow full scope for the development of our oil industry in an international way, so that if Haifa is out of action supplies can be properly planned and allocated as between one country and another, and so that refineries can plan with a reasonable assumption of freedom of trade between the different classes of user countries. Finally, I hope that there will always be room for the small company to enter this industry, and that it will not be so organised and so technical that only the largest companies can have an effective say in the future of this industry.

6.42 p.m.

Mr. Solley (Thurrock)

This Debate has travelled far and wide; indeed, at one stage my hon. Friend the Member for Stoke (Mr. Ellis Smith) anticipated the next Debate on Foreign Affairs. It is natural that this Debate should be fairly wide, because we are dealing with an industry which has a complex world structure and international political implications. I feel it unfortunate, therefore, that no reference has yet been made to the distribution side of the petroleum industry in this country and to the decision of the Government to dissolve the Petroleum Board. This is a matter of some substance for my constituency includes Thameshaven and Shellhaven, where we have probably one of the largest oil centres in this country.

About a year ago I was invited to attend an important meeting of petroleum workers in my constituency, at which they put to me, in no uncertain language, the proposition that the dissolution of the Petroleum Board would be a retrogressive step. They said that it was desirable, in spite of the obvious difficulties facing the Government, that this Board, formed as it was for the purposes of the war, should fulfil in peace-time the function of being a stepping stone towards the socialisation of the petroleum distribution industry in this country. I do not think I am giving away any confidence when I say that trade union representations were made to the former Minister, and that in spite of what has happened the case of the trade unions concerned is by no means a negligible one; indeed, the Minister has recommended that when the Petroleum Board goes on 30th June, there shall be no re-introduction of branded products for at least six months.

The position in six months' time may be no better than it is at the moment. Indeed, from what the Parliamentary Secretary said, the world oil position will probably be more difficult than it is now. The Government are feeling some diffidence about this dissolution and they express that diffidence in the phrase to which I have referred, in which they state that there shall be no introduction of branded products for at least six months. I could understand the dissolution of the Petroleum Board at a time when there were ample supplies of petrol and petroleum products and when there was room within the capitalist framework of society for the competitive system which existed before the war, when high-powered salesmanship was invoked to assist the motorist in choosing one brand of petrol rather than another. The position today precludes the possibility of any such effective commercial competition.

I would like to give the Committee figures which add to what the Parliamentary Secretary said about the present world position and which will, I hope better illustrate the point which I am trying to make. The world's crude oil production in 1947 was more than 50 per cent. up over the tonnage of 1938. As against that, the increase in the estimated United Kingdom total consumption for this year will be an increase of about 55 per cent. over that of 1938. In other words, although the production is going up, user in this country and throughout the world is increasing at a greater speed. Over and above that, there have been striking changes in the pattern of oil consumption. Some of those changes are in sharp contrast. For example, the most spectacular increase has been in respect of fuel, diesel and gas oils. The 1948 demand in this country has more than trebled the demand in 1938.

It cannot therefore be argued that in six months' time there will be sufficient petroleum available in this country to enable the various petroleum companies to embark once again on their pre-war competitive system of high-powered salesmanship. I ask my right hon. Friend whether he can hold out any hope of reconsideration of this decision, or of the introduction in the not too distant future of legislation to enable the Government themselves to take over the functions which were voluntarily carried out during the war by the Petroleum Board, and which could be used as a stepping stone towards the complete socialisation of the petroleum industry in this country.

Reference has been made to the world shortage of refining capacity. Of all the impediments to production in the petroleum industry, lack of refining capacity is the most serious. I therefore welcomed the Government's announcement in December last of the allocation of £95 million for the construction of new refineries in the United Kingdom, especially as the Shell group are to build two complete refineries, one at Thornton and one in my constituency, with a total capacity when in full operation of something like six million tons annually. Like my hon. Friend the Member for Stoke, however, I cannot believe that the allocation in respect to the construction of new refineries is sufficient. I hope that the Government will look again at their allocation of steel and of capital expenditure in connection with this matter, to see whether they can permit a further construction of refineries.

The importance of constructing refineries in this country cannot be overestimated. Very shortly Western Europe, including the United Kingdom, will have to rely to a very substantial extent upon supplies from the Middle East. Unlike hon. Members opposite, I have never given up hope of concord between this country, Eastern Europe and the Soviet Union whereby there would be brought into the pool of oil supplies for this country and Western Europe some of the very substantial reserves available in the Soviet Union and in Eastern Europe. In October last when I visited the Ploesti oil wells in Roumania, I was much impressed by the desire of the Roumanian personnel to rehabilitate their industry. I hope that it will not be found impossible by His Majesty's Government to bear in mind the importance of the oil industry, not merely of the Middle East but of Eastern Europe, when they are considering the future oil supplies of this country.

The heavy increase in the overall demand for petroleum products has created larger and better local markets, as a result of which the construction of refineries has become an economic proposition in this country. Speaking with particular knowledge of the conditions in East Tilbury in my constituency, I hope that the Government will tell me whether recent developments in the economic field will have a deleterious effect upon the rapidity of construction of the refineries there, when they expect that the refineries will be completed and whether they are satisfied that there is ample co-operation between the housing authorities and the Ministry of Fuel and Power in building the necessary houses for workers side by side with the construction of factories and refineries.

I would like to refer to the very important question of the tanker fleets of this country and of the United States. This is a matter of intimate interest and importance to my constituency. I am not suggesting that the Port of London is a suitable place for the wholesale construction of tanker fleets. But if we are to have large scale construction of tanker fleets in this country the consequence for Tilbury will be that there will be available more shipping repairs for the port. I was by no means certain that the Parliamentary Secretary was sufficiently aware of the tanker position. I should like to give the Committee figures which will establish the fact that we have lost our grip on the world market, a fact which affects in turn our present and future sources of dollar earnings. In August, 1939, we and the United States had an almost equal amount of tanker tonnage. The United States had 4,434 thousand deadweight tons, as against our own 4,704 thousand deadweight tons. On 31st December, 1947, the corresponding figures were: United States, 10,858 thousand deadweight tons; we had under the half of that, 5,139 thousand deadweight tons. In 1939, we and the United States had an equal interest in the tanker fleets of the world. Today the United States has twice the interest that we have. In 1951, when, as has already been stated, we expect an increase of some 1,030 thousand deadweight tons, assuming that the United States of America has a corresponding increase—an assumption which is warranted—the United States will then still have twice the amount possessed by us.

I would like to ask my right hon. Friend whether the Marshall Plan is imposing any condition in relation to the construction of tanker fleets in this country. Are any conditions being laid down to limit the construction of tanker fleets in this country? I believe that the figure 1,030 given by the Parliamentary Secretary is not sufficient. I would have liked to see a more substantial increase in our tonnage for 1951, when we ought to have recovered our prewar position, that is to say, achieved a fleet equal to that of the United States. I am quite aware of the serious difficulties of the Government in relation to steel, manpower and the necessity of channelling the larger part of our industry into the export field. But the tanker and the refining industries are substantial earners of dollars. If the Government can see their way to increasing our tanker fleet above the numbers already mentioned and to giving a greater allocation of steel for the contruction of refineries, they will be doing a great service to this country in terms both of immediate and of future dollar earnings.

6.59 p.m.

Mr. Bowen (Cardigan)

I once heard a man of great experience in the oil industry and oilfields give this advice: "If you don't strike oil in the first 10 minutes, stop boring." I want to bear that advice in mind now when I address a few remarks to the Committee. The right hon. Gentleman said at the beginning of last month that there was a very acute oil shortage throughout the world and that the situation would certainly continue for the next three or four years. Almost everybody who has spoken today has emphasised the same point. One thing which is clear is that that situation is not due to the world being short of natural resources of oil or to under-production compared with prewar years. It is due to the almost phenomenal increase in the demand for oil in many and varied forms. This factor creates serious and acute problems for the world as a whole and for this country in particular.

The increased demand throughout the world is really a welcome sign. It is associated with industrial and economic development. It is directly associated with an increase in the standard of living throughout the world, and as one who represent an agricultural constituency I would say that one factor contributing towards this increased demand is the new and ever increasing requirements in the field of agriculture for oil for various purposes. So, while one may feel a little apprehensive about the shortage and the fact that it is likely to continue for some time, the grounds which give rise to the shortage hould be a source of satisfaction to all of us. That is why I failed to apreciate the observations of the hon. Member for AltrinCham and Sale (Mr. Erroll) when he appeared to express delight at the fact that before the war there was no shortage of oil. The sole reason for that was the lack of demand, and the lack of demand was in some measure an indication of the social and economic development which was going on at that time.

All that I would say in regard to present tendencies is that so far as the world production of oil is concerned, it would appear, from the interesting figures which the Parliamentary Secretary has given us, that the world production of crude oil has almost doubled since 1938. The unfortunate factor is that the increase in production of crude oil has not kept pace with the increase in world demand. So far as this country is concerned—I hope I have analysed the statistics correctly—there has been an increase in demand of almost 50 per cent, since 1938, and clearly the extent of the demand in this country is determined by national policy. The real demand, represented by the needs of the people, if there was freedom to purchase and supplies were readily available, would be far greater than the 50 per cent. increase over 1938 which we have reached today.

The Parliamentary Secretary gave us a large amount of most interesting data, and all the information he gave us tended to illustrate the gravity of the problem. Very little of the information he gave us related to the steps taken by His Majesty's Government towards seeing that we make an adequate contribution towards the solution of that world problem. Our situation is particularly serious because the shortage of oil fuel is more particularly marked in the sphere of motor spirit than in any other, and also because of the fact that we have additional difficulties that arise out of the balance of payments problem.

The difficulty in connection with the world situation arises out of storage, refining and transportation difficulties and I should have appreciated the speech of the Parliamentary Secretary far more if he had given us much more detail about our contribution as a nation towards overcoming those difficulties. We have heard very little as to what is happening in regard to Haifa, and as to extensions of pipe lines. Reference has been made to the question of the steel allocation for refineries. I would have liked to have had far more specific information upon that matter. In regard to shipping we were told, and I certainly welcomed this fact as a matter in which we can take particular pride, that we have a greater tonnage of tankers than we had before the war, despite the fact that we lost almost three million tons of our tanker fleet during the war. I gather that in 1947 something like 60 per cent. of the shipping tonnage constructed in this country was devoted to tankers. What is the future policy in that respect? Is the steel allocation for the building of tankers to be increased, or what is the position? The Parliamentary Secretary left us rather in the air about that matter.

I feel that our problem in this country in relation to oil, particularly in regard to motor spirit, should be looked upon not as a national problem, but more particularly as a sterling area problem. People in this country strongly suspect that we as a nation are suffering and are called upon to make far greater contributions in hardships and irritations than the other members of the sterling area. As one who has just returned from abroad after having been in other parts of the sterling area my experience indicates that the restrictions and limitations on the ordinary private user of motor fuel are certainly more severe in this country than in many other parts of the sterling area. That has given rise to a genuine sense of grievance on the part of the British motoring public.

That brings me to the only other topic upon which I wish to touch, namely, the position relating to the changes which are contemplated in the near future. I wish to associate myself with what the right hon. and gallant Gentleman the Member for Pembroke (Major Lloyd George) had to say about public reactions in this matter, and particularly public reactions in the rural areas. Whatever may be the position in the industrial areas, members of the public in the rural areas cannot understand why the problem is being treated in the way in which it is being treated. Rightly or wrongly, they do not think that what they are being asked to do is reasonable and proper.

Mr. R. S. Hudson

It is not reasonable and proper.

Mr. Bowen

The right hon. Gentleman says that it is not reasonable and proper, and I respectfully agree. Reference has been made to the black market. A large part of the black market is due to the fact that the public do not appreciate that this is really a matter of honour and common decency. Rightly or wrongly, I think in some measure rightly, they think that Government policy in this respect is a stupid and foolish policy. That has, in some measure, given rise to the black market.

I appreciate that in considering the question of motor fuel for the ordinary private user one has to face the problem or the desire to save all possible dollars. I feel that in comparing the amount of dollars which have been saved, particularly now by the policy in regard to "E" and "S" coupon users, with the amount of hardship, irritation and friction which have been created, the amount of dollars is far more than counter-balanced by this policy. I often think that the Government do not really appreciate how acute the problem is in rural areas. In my constituency public transport services are limited. Most of the districts have no rail services and there are extremely limited bus services. The amount of time wasted and the physical hardship to which these petrol restrictions have given rise are not, I feel, appreciated by the Government. To my mind the amount of saving in dollars by this stringent application cannot be justified.

I do feel that the abolition of the basic ration itself was a very big step. There is the added factor of a purely sociological character. In common with all other Members of this House I am inundated with comments and complaints relating to the way in which applications for petrol have been entertained and received. As far as the personal attention of the regional petroleum officers is concerned, I have no cause for complaint. Wherever matters have been dealt with personally by the petroleum officer I find that they have been dealt with sympathetically but that is certainly not true of the ordinary day to day application which simply goes through the routine machine. There one begins to get all sorts of anomalies. One has people in identical circumstances where one is refused petrol and another is given it.

Again one finds people being given petrol for reasons which are extremely difficult for other people to understand and other people are refused on what appear to be quite inadequate grounds. That has given rise in villages and towns to considerable friction, friction in so far as the Government and individual is concerned, and friction and unhappiness as between one section of the community and another. I get hosts of letters saying "so and so has petrol, why cannot I get it?" All that sort of thing is creating an unhealthy and unwholesome state of affairs and if anything can be done to reduce that feeling it ought to be done.

I do hope that the Minister when he comes to wind up tonight will give us further and better information relating to the efforts of the Government to see that this country makes its full contribution towards an increase in the facilities for refining, storage, and transportation of oil. I would also like him to deal further with the criticisms with regard to the "E" and "S" coupons users. I do feel that what the Parliamentary Secretary had to say about them was highly unsatisfactory. Surely what he said was only an incitement to the "E" and "S" holders to abuse the rights which they have at the moment? Surely he is inviting them to use their petrol for purposes other than those for which it was acquired, and that is precisely what will happen. It is bad for the rest of the community and bad for these people.

7.15 p.m.

Viscount Hinchingbrooke (Dorset, Southern)

I thought I detected in some of the speeches of the hon. Members opposite besides other petroleum products, traces of midnight oil. It was evident that some of them had carried through their prepared but undelivered speeches from last week's Debate on foreign affairs. I have listened to the hon. Member for Stoke (Mr. Ellis Smith) for six to seven years now, and much as I appreciate his cosmic planning speeches directed against World War Five, I never feel that they impinge on the more mundane topics with which the House is concerned from time to time. Perhaps the best thing that can be said of his speech is that it successfully poured oil on troubled water in Teheran, Ethiopia and the Middle East.

The hon. Member for Thurrock (Mr. Solley) deplored the fact that the Petroleum Board was being split up into its constituent parts. I should be correct in saying that we on this side are unanimous in our view that that is the only wise thing the Government have done on oil since they came into power. They could do nothing else, for they have no further power to retain the Petroleum Board. I quite appreciate that the trade unions are objecting. The trade union movement is particularly concerned with passengers in industry, and quite obviously when the Petroleum Board breaks up the units will again begin to compete in order to serve the public faithfully and well and will have no room for passengers in their midst.

I would like to ask the Government a number of questions with regard to the overseas oil position. I think we should get this Marshall programme aspect square. It is quite clear that we are earning dollars through the sale of sterling oil to the United States and other dollar countries. I should like a definite statement from the Government as to whether any provision has been made under the Marshall Aid programme to divert a proportion, not necessarily of American oil, within the programme to satisfy the immediate needs of this country. My right hon. Friend the Member for Southport (Mr. R. S. Hudson) stated that we were sending oil to the Empire and to the Far East. He also clearly told us that Denmark, Egypt, Ceylon and some other countries are not suffering any rationing of oil, and I would like to get the Govern- ment to tell us exactly what is the position of Britain relative to all those other countries. Is it generally the same as in food and other subjects that we, being one of the great victorious powers in the war, are unable to get things that all other countries can get, with the exception of our defeated enemies, Germany, Italy and Japan? I fully agree that world demand is increasing. Why is our share of that demand not more effective? Why is our share not positively increased?

I am glad to see the Parliamentary Secretary has returned to the Committee. I have no wish to be discourteous and I know it is not the first occasion upon which he has spoken to the House, but I suffered at the end of his speech from a quite extraordinary feeling of frustration. It was a speech in very simple language rather like that of a father advising his children what to do over the tea table, but his simplicity of language did not lead to lucidity or understanding. We had explanations of certain difficulties; we had excuses; we had one alibi, to use a modern term; and we had one complete blank. Nowhere was there any sign of intention, drive, enterprise or policy, and I hope that we shall get that later in the evening from the Minister of Fuel and Power. We had an alibi about the first world war having dislocated petroleum resources. Was it not true that British oil production was built up successfully in the intervening years between the wars, and is it not also true that when the tanks were roaring into France and the aeroplanes crowding above we had plenty of oil?

Why after three years of Socialism are we so lowly rationed? We had excuses. We had the excuse that the low prewar consumption in the rest of the world was due to its poverty, and the gloss which the Parliamentary Secretary put upon that, that somehow it was due to the British Governments of the time. Let me examine that argument. What is the corollary to it? It is that the present Government, by raising overseas prosperity, is depressing the home market for petrol consumption. Where does that lead us? Nowhere at all. Then we had the blank about the difficulties of refining due to steel shortage, and the refusal of the Minister to give any figures to the Committee. We then had two confusing explanations. On the tanker situation the Minister went so far as to say that there was no prospective shortage and yet, at the end of his dissertation on that point, he said that in 1951 there would be a world deficit of 100 tankers. I hope we shall get a further explanation of that discrepancy. His second confusing explanation was on the coal-oil conversion programme. First we had no coal, so the Government went in for oil. Then oil became scarce and the prospects for coal were better, so we went in for coal. Now some people tell us that in a few years time there will be plenty of coal, and the Minister says that the oil imports are more assured, and that therefore the coal-oil conversion programme is to go forward. If this is not order and counter order leading to disorder, to which my right hon. Friend referred, I do not know what it is.

We have not had an adequate explanation about the situation in Haifa. Of course we could hardly expect anything else from the Government. The Foreign Secretary's total absence of regard for economic strategy has landed us in a situation where one of the most valuable refineries in the world is now sterile. What does the loss of Haifa mean to the Middle East? I think my right hon. Friend said that it was £4 million a year. Will the Minister confirm that? Is the estimate true that it is equivalent to one half of the annual United Kingdom consumption of both fuel oil and motor spirit? How do the Government propose to make good the loss of Haifa to the Middle East and to other British countries? Is there not a moral case for asking the United States to do something? The share of the responsibility of the United States for the situation which has developed in Palestine is almost as grave as that of the Government of this country, and the United States is morally bound to make some contribution, not only for strategic reasons in the Middle East, but also to satisfy the needs of vast masses of people throughout that area out of her oil resources.

What have we been told today? That the United States petrol consumption is running at 500 gallons per head, which is six and a half times that of the people of this country, and my right hon. Friend told us that it is more than the entire world consumption in 1938. What sort of language is the Minister of Fuel and Power using to the United States? He made a speech the other day at the dinner of the Association of Engineers at which he said: If the United States demand goes up like that, it knocks the rest of the world sideways.… We must face up to a difficult time in oil in the next few years. That is not facing up, that is taking it lying down. And the speech we had today was on exactly the same lines.

I would like to pass to the home situation and I have a small question to ask on home production. There is a large creosote hydrogenisation plant at Gillingham belonging to I.C.I. Is it the fault of private enterprise or lack of opportunities given by this Government that they are producing now only at half the wartime peak? Surely that is another example of lack of foresight and proper planning by this Government.

In conclusion, I offer some observations to the Committee on the subject of home consumption and rationing. Briefly, I favour a progressive abandonment of rationing and a progressive application of the price mechanism to petrol. There are two advantages to the price mechanism. Higher prices sift demand in a much fairer way than do arbitrary schemes of licensing by the Government. Furthermore, higher prices stimulate production far beyond the possibility of mere Government bulk-buying at fixed prices. On the production side, I would like to return to the price system, but of course it would require the freeing of the foreign exchange position. It would be a complicated matter, but an attempt should be made now, even by this Government, to get away from overseas bulk purchase and let the price that the consumer pays reflect itself right back in the wages of the technician at Abadan. Unless we get that situation we shall never get healthy enterprise and drive in production.

On the consumption side I would like to see the price of petrol rise by 2s. or 3s. a gallon and become known to every person as the financial luxury which we in this House know it to be from the point of view of the would economic situation. Hon. Member opposite will say at once that if that were to happen, only the rich would get the petrol. That is not true to the extent that the less wealthy members of the community would save to expend petrol on summer holidays, on necessary travelling, and so on. However, I am prepared for the general accusation which I know hon. Members will make, and I am ready to answer it by saying that, by and large, with exceptions—I have a favourite exception of my own, a Brazilian diamond magnate who lives in two rooms at the Savoy Hotel—wealth is a better test of social and economic value than anything else.

Mr. Gallacher

You are a test.

Viscount Hinchingbrooke

At present far too many people who ought to have petrol in this country are not getting it, and far too many people who ought not to have petrol are getting it. Who are the people who are getting it? They are the friends of bureaucracy—

Mr. Nally (Bilston)

Does that include the bookmakers?

Viscount Hinchingbrooke

—clerkly people of dim social and economic importance—

Mr. Gallacher

What about you?

Viscount Hinchingbrooke

—with responsibilities well beyond their worth, people, as Mr. Edmund Burke described them: Of low education and a mean contracted view of things. They are getting the petrol. But who else is getting petrol? The friends of Socialism. It is going to the fleets of private cars in central Government pools and depots and is at the disposal of P.R.Os. and other personages on boards of nationalised industries. Petrol rationing was started in the war as a measure of fair play and equalisation, but it is now being used, as all rationing schemes are used after a time, to facilitate the way of life of the rulers and their friends.

Mr. Gallacher

That is the old game you played for long enough.

Viscount Hinchingbrooke

I am glad the hon. Member for West Fife (Mr. Gallacher) admits that he would readily transfer privilege from the old order to a new order dominated by himself.

Mr. Gallacher

The noble Lord will have a job in a foundry.

Viscount Hinchingbrooke

I make three charges against the Government. I charge them with lack of foresight in conserving and fostering overseas petrol supplies; secondly, with maintaining scarcity at home and in the sterling area by adhering to methods of bulk purchase and distribution—

Mr. Gallacher

I do not think the noble Lord likes the Government.

Viscount Hinchingbrooke

Nor does the hon. Member for West Fife. Thirdly, I charge the Government with maintaining rationing, not for the purpose of fair shares which I believe should be weighted by considerations of civic responsibility, duty and importance, but for the purpose of advancing the interest, opportunities and scope of the practitioners and disciples of the Socialist Party.

7.14 p.m.

Mr. Pryde (Midlothian and Peebles, Southern)

The position of fuel oil must cause everyone a great deal of anxiety. If we look to the West we find this country is at the mercy of the dollar, and if we look to the East we find we are at the mercy of Arabian sheiks. In wartime we are a splendid target for an enemy. It would be quite easy to criticise and say that hon. Members opposite are responsible for that position, but I doubt if it is possible at the moment for any individual in this country, no matter how well equipped, to come forward and give us a quick way out of our difficulties.

However, we can always look to the future. Forty years ago there was a very prosperous industry in the Northland. Then came the cartels, and it disappeared. The district I have in mind is the Lothian district of Scotland. I want this Government to do something for themselves. It is only by doing something for themselves that they can justify themselves in the eyes of the people. Previous Governments have always failed. During the war the Germans showed what could be done in regard to low temperature carbonisation of coal. In the county of Midlothian where, 700 years ago, the first charter was granted for the mining of coal, there are 40 high grade seams of coal crying out to be exploited. On the West bank of the River Esk there are 20 seams, on the East bank of the South Esk there are 14 seams, while between there are six seams, all of the highest quality coal. On the East bank of the Esk, 40 years ago, coal was produced on which the City of London depended. It came from the Parret seam which commanded a price of £2 10s. a ton. It was taken to Leith and shipped to London by cargo boats.

In West Lothian, and in the Western portion of Midlothian, there are high grade seams of the very finest oil shale. It might be said that that part of the country is very vulnerable in case of war if refineries were set up, but I suggest that invulnerable refineries might be built into the Pentlands. The Germans showed what could be done in that way during the war and one of the great difficulties was to demolish some of the German reinforced concrete establishments. Oil from such refineries would not be so vulnerable as that brought across the sea. In Midlothian there are the Drumgray and Torbane Hill seams from which the highest octane spirit can be made.

I suggest to the Ministry that they should take the risk and spend money on such a project. They would get the men if inducements are held out to them. Labour can always be got for industries in which the highest price is paid. I suggest that we do that now. If we do it now in a few years' time we will be almost independent of foreign supplies. I do not say that we shall be entirely independent of foreign supplies, but to a great extent we shall be independent if we concentrate on low temperature carbonisation of coal. We have the quality in the Lothians, and we have the men to get it. We certainly require the houses for the labour which we have at our disposal in Scotland.

I ask the Minister to take his courage into both hands and foster this industry in Scotland which held out so much promise 40 years ago, and which in the County of Midlothian is typified by a few broken-down houses where miners live. We have the potentialities in our country and I hope the Minister will take his courage into both hands and concentrate on this, because God helps those who help themselves.

7.40 p.m.

Mr. Dodds-Parker (Banbury)

I am sure it is quite coincidental that the hon. Member for Midlothian and Peebles, Southern (Mr. Pryde) and I should be speaking on the same point, the question of getting oil supplies from coal. Obviously it is increasingly dangerous as time goes on for an hon. Member to try to bring up the question of cartels. I believe the hon. Member said that works were shut down as the result of cartels. If he looks further he will see that the National Coal Board are at this very moment doing the same thing: and that is a monopoly which he supports. Unless he and his hon. Friends are more careful, they will find they are fouling their own nest. One other point that I wish to bring to the notice of the Parliamentary Secretary is the double injury that is being done to holders of "E" and "S" coupons. It is not just the physical damage of stopping them from getting on with their own business, it is the fact that they appear to be regarded by this Government as crooks and cheats, and are treated as such. If the Parliamentary Secretary has not had the time to find this out I wish he would make inquiries, on his own side of the House, and discover for himself. The way the Government have treated "E" and "S" coupon holders has done more to annoy people, particularly in the rural areas, I believe, than any of their other activities.

If planning means anything there should have been overall planning in the last three years particularly regarding the improvement of food. No doubt many hon. Members saw the statement made by Sir John Boyd-Orr recently on his return from America. That is the sort of planning that His Majesty's Government should undertake, if overall planning means anything. I believe that same sort of planning should be undertaken as regards fuel. In the 19th century we were liberal, to the point of prodigality with our own and Nature's resources. In this phase of transient Socialism through which the world is passing, we are being liberal to the point of prodigality with the resources of other people. That will not go on. We are reaching a state where fuel supplies throughout the world are getting short. We might do something about hydro-electric power but the point I am interested in is the production of oil from coal.

In the United Kingdom most of our oil comes from overseas. We require in Britain an increasing amount of oil, not just for pleasure motoring, but for commerce and particularly for agriculture. That applies not only to the United Kingdom but overseas where there are great plans for mechanised agriculture, in Australia and Africa and elsewhere. We are becoming more and more dependent on supplies of fuel oil.

A point which may be raised under Class VI, Vote 18, is the question of research. I do not know if the Minister will be able to say anything about the new fuels upon which research is being carried out. Jet engines require a particular sort of fuel, and are extravagant in the use of it. I do not know whether under that Vote he will be able to say anything about the geological survey not only in this country, but overseas. This is, in my submission, fundamental planning of the sort which any Government should be undertaking, more than day to day details of the administration of actual production when it has reached that stage. The hon. Member for Midlothian and Peebles, Southern, raised the issue of oil from shale. It is not only oil from shale in this country in which I am interested, but oil from coal.

I realise that it is an expensive process but the Germans made considerable use of it during the war. The Fischer-Tropsch process is alleged to be the most up-to-date in the world. But I am also credibly informed that there are other firms in this country, great chemical and engineering firms, which have processes with a higher degree of perfection for extracting oil from coal. I was reading recently of plans in the United States of America involving an expenditure of 9,000 million dollars in producing oil from coal. There is in the United States of America, in sight at the moment, oil sufficient for 12 years at the present rate of consumption, and coal, at the present rate of consumption, for 3,000 years. This is the projected development in America, a country which is blissfully free from the present British type of so-called planning, and which has a Government which is doing what we consider to be the proper function of a Government—encouraging those most suited to do the job to get on with it, and to produce such important requirements as oil. I would ask the Parliamentary Secretary to tell the House what is being done about the production of oil from coal in the United Kingdom and overseas.

In regard to overseas production, I am thinking in particular of Northern Queensland where, with the help of private enterprise, coal firms which were ejected from this country, great development is now going on: where coal, I am told, can be put on board ship at the Queensland ports at 10s. 6d. a ton. Would it not be pos- sible for factories and distillation plant to be erected there to produce oil from coal? I believe, again, that projects for development in parts of Southern Africa are at the moment under consideration by the Paymaster-General. I hope that among his recommendations there will be a definite project that there shall be oil-from-coal distillation plants set up there, not only in the Union, which is outside the purview of this honourable House, but in Tanganyika, where there is coal of suitable quality for distillation, and at Wankie, which is in a self-governing colony and therefore may not come entirely in the purview of this honourable House. I would put it to the Government that that is an essential area which is now destitute of oil supplies, and where a plan for the production of oil from coal would be of the greatest economic advantage. A pipe-line from Wankie, which could take oil either to Northern Rhodesia or down South to the Union, would be a far more immediate practical proposition, in many respects, than attempting to build 600 or 700 miles of railway line to bring coal to the sea.

The Parliamentary Secretary to the Ministry of Supply could, I think, under Class X, Vote 4, tell us something of the strategic storage of oil fuel which I understand comes under his charge. Most of the points which I have put so far are economic, but I think anyone who looks at the map, and at these projects for producing oil from coal, will realise that they would be a great strategic reserve in the event of another war, to keep these areas where oil is produced from coal far away from the likely centres of immediate destruction. It would be of inestimable value to the world as a whole.

I do not know if the Parliamentary Secretary is in a position to say whether the Colonial Development Corporation could be brought in to assist in such a project as the one at Wankie which I have suggested. I believe that the Corporation could be of the greatest assistance, because the fuel could be used not only in Southern Rhodesia, but in Northern Rhodesia and Nyasaland which are now under the Colonial Office. That is the sort of project, I believe, to help which the Colonial Development Corporation was formed.

I urge the Minister to consider these points and I ask him to give us some information when he comes to wind up this Debate on the plans of the Government, so that those who are dependent upon an adequate and regular supply of oil in these various territories may be able to make their own plans and get on with the job of production.

Colonel Ponsonby (Sevenoaks)

Before he sits down, would the hon. Member say how many tons of ordinary bituminous coal it takes to make a ton of oil?

Mr. Dodds-Parker

So far as I know, anything between eight and 10 tons, but I am not very certain about this.

7.50 p.m.

Mr. Crossman (Coventry, East)

We, on this side of the Committee, have been struck by two remarkable agreements among hon. Members of the Opposition. They seem to agree that there has been a grave lack of planning in our oil policy, and they seem, somewhat surprisingly, to believe that one of the healthiest signs in the world has been the outstanding increase in the American demand for oil. I cannot accept that belief.

I regard the view that the increase in the American demand is a healthy one—it really amounts to the world demand—as unfair to the Government. The real reason why planning has been extremely difficult since the war has been the totally uncalculated and incalculable increase in American demand. That is not due to the fruits of private enterprise; it is due to the most wasteful productive system that anybody has ever had—they waste more oil than any other country in the world—and also to the extremely wasteful use of their coal. They have not scientifically planned the use of their power capacity and in some installations they use oil burning when they could satisfactorily use coal burning. They have artificially produced a colossal domestic need far beyond their domestic capacity. As a result, the rest of the world is finding a first-rate political crisis in the Middle East arising out of the American shortage of domestic oil, and America has become, in the last three years, a nett importer of oil.

This is really an incredible fact; a country which owns 50 per cent, of the world's resources has, owing to its wasteful methods of production and its wasteful methods of looking after its power, become a nett importer of oil and has had to go into the Middle East.

Some hon. Members on the other side remarked that there was no oil shortage during the war. It was precisely during the war, when the Americans started doing a little planning, that they discovered that in terms of war they had not enough oil in America and, consequently, the Middle East had to become a vital American interest. This eruption of America into the Middle East, this sudden American demand and interest in oil from the Middle East for domestic use in America, has made it extremely difficult for other countries—which, after all, have a better right and interest in the Middle East—to plan their development and their resources. I suggest that issue must be understood before anybody can talk about criticism of the planning by the Government. Nobody could have foreseen and planned that, because of the chaotic American economy, she would be a domestic importer of oil in 1948; no rational planning could have foreseen that degree of chaos and irrationality.

Turning to Haifa, I was very surprised to hear hon. Members opposite complaining about Haifa and saying that the Foreign Secretary had shown a total disregard in his Palestine policy to the needs of the country. I think that is wholly true, but I am surprised that hon. Gentlemen opposite who, on the whole subject of Palestine have sedulously followed the Foreign Secretary and have refused to criticise the policy of "bag and baggage," should come at this stage and say that they find anything wrong with the Government's policy. It is a queer place in which to find criticism of the Government's policy. We need to hear from the Minister a good deal more information about the situation in Haifa because, after all, Haifa has become, purely in terms of this world oil shortage, of great importance to us and the whole of Europe.

I remember, during the Debate on the Palestine Bill, we were looking gloomily towards a period of chaos and disaster in Palestine. Now it appears that this chaos will not occur. One side has shown itself highly competent in military efficiency so as to conquer the area allotted to it, and we can, therefore, look forward with a great deal more confidence from the military point of view to the situation in Haifa in the months to come. There is no chance of it being burned as a city in the course of a civil war; it is securely held and is in the middle of a de facto Jewish State, and the really vital issue which we must have explained is what attitude the Government will take after next Saturday when the State, which will by then have been created by force of arms, is in existence.

Will the Government be willing to change their minds at long last? For years they have said they could not look after our oil supplies except by a certain policy with regard to the Arabs, and that the military requisite of the oilfields was that we should be on the side of the Arabs, because they had some gigantic armies and if we ever came against them on the ground those gigantic armies would sweep us to the seas. But those gigantic armies have not materialised; a smaller, highly efficient Jewish army has materialised, and that army holds Haifa today and is in no danger of losing it in the future.

A few weeks ago we summarily threw Palestine out of the sterling area, despite its potash, its citrus, its oil and the other valuable resources of that country which can no longer be purchased in the sterling area. What are we going to do about the assets of Palestine now that we see a de facto strong and solvent State emerging there? I gather from the Press that we have taken hold of £50 million worth of the assets of the Palestine Government in order to have a hold on the Haifa refineries, whoever holds them after 15th May. That is not a sufficient policy and I hope the Government will recognise the fact, and recognise that the one hope of maintaining oil flowing through Haifa is to negotiate firm and solid treaties of alliance with, on the one side, Abdullah, and, on the other side, the Jewish State—the two forces in the Middle East which have emerged as the dominant partners or strugglers over Palestine. The future of our oil, in fact, depends on the skill of British diplomacy in the next four months.

When we feel depressed about Palestine I would remind the Committee that, in the last stages of the Boer War, this country felt ashamed, depressed and indignant, but within a few months, by a supreme act of statesmanship in the creation of the Union of South Africa, steps were taken which guaranteed the assets out there. I believe that statesmanship and conciliation today can guarantee the Haifa refinery and the other assets which are so vital to us in Palestine an3 in the Middle East. I know we cannot expect the Minister of Fuel and Power personally to answer all this, as he is not himself responsible, nor is he able to achieve responsibility over the policy which will in fact determine whether or not we get that oil—whether in fact we recognise the people who have established and proved themselves masters of the situation.

My last observation deals with the home subject of E. and S. coupons, because it probably affects my own constituency more vitally than any other. One person in seven drives a car in Coventry and we probably have a higher percentage of car-owners than any other city. I can assure the noble Lord the Member for Dorset, Southern (Viscount Hinchingbrooke), to whose speech I listened with very great interest, that if he thinks motor driving a luxury only for the rich, he should come to Coventry, where he will find a number of working men who own cars and have owned cars for years; where it has nothing to do with the rich, and where at last we have a civilisation in which the working man feels he has a right to a car as part of the lot of an ordinary civilised human being.

I believe the wealthy, prosperous businessman and hon. Members do not suffer at all under the new standard ration, because we do not work on that. We have no doubt occasionally done some pleasure motoring. Let us be candid about this. The new standard ration is given on the basis of the assumption that everybody has done a little bit of pleasure motoring. It is based on the assumption of a limited percentage of dishonesty. I have been told by the Ministry that only two people out of 10 will not receive any benefit from this ration. I suggest that this question cannot be regarded statistically. Only two out of 10 are small men—not businessmen or Members of Parliament who have a certain margin of petrol—who have been driving strictly on the exact routes given to them and who are now told, "You are to have no pleasure petrol whatsoever," whereas the boss, because he has had a certain margin, will be able to enjoy himself.

The Minister has told us that one of his major objects is to break the black market, and that unless we can break the black market this new scheme will not be successful. The way in which to get the public to break the black market is to give them a sense of justice, not only the well off but the small men. We all know that one's business friends have not had a shortage of petrol; they have had considerable latitude. In every case it is the small man who is limited and the big man who is not. We shall now have a sense of disgruntlement among the most honest, the most conscientious and most worthy section of the population. Such people will say that they are hit for being honest, and that if they had been dishonest and had asked for a little more petrol than they needed they would have been better off. Such a man will say, "Just because I asked for exactly what I required for my daily journey to and from work, and not an ounce more, I am going to be penalised for my honesty." That is not the way to create a public opinion to defeat the black market.

It is precisely the small man who will be driven to "fiddling." Will this small man, who is to get no standard ration but who may be getting less petrol and paying more in motor taxation, be encouraged to break the black market when two out of 10 are going to feel a sense of injury and injustice? I put this point to the Minister as strongly as I can, because we do want the black market broken. We want the standard petrol scheme to work, but it will not work unless standard petrol is given to every motorist equally, whether they have had petrol before or not. If the standard ration is given equally to everyone a sense of justice can be created. If the Government discriminate against the little man they will create an inclination to "fiddle" petrol. If two out of 10 are more inclined to "fiddle" petrol by this scheme, that is not the most efficient way to defeat the black market. I ask the Minister to give very serious consideration to that fact.

I have had a great deal to do with this problem of supplementary allowances, because many people in Coventry have written to me. I have been amazed at the good temper of the people who have written letters to me on this subject, and who have expressed their desire to help the Minister to break the black market. I must add, however, that there is a deep sense of frustration on the part of those people who are being penalised for having been strictly honest in their applications. They are told, "What you get for being strictly honest is that you will be worse hit than the man who was not honest." I do not know how to answer these letters. It is no good for me to say, "Statistically you are just two out of 10." The reply to that is, "That makes no difference to me." Since the Minister's aim is to break the black market, and since it is into the black market that the leak goes, it might well be an investment to create a sense of justice at the cost of giving more petrol officially rather than having a lot more petrol leaking unofficially because public opinion is outraged by a minor part of this excellent scheme.

I believe the scheme will work. I believe "pink petrol" will work, because we are a law-abiding people. On the other hand, I cannot believe that the small men who have written to me will accept this, as they feel, penalisation of their honesty which the Minister has imposed on them. I beg him to reconsider it at the cost of cutting a lot more from commercial users and farmers. We all know where the petrol is. It flows in the country. We all know the bogus farmer—the chap who is not really a farmer at all but who gets his farming petrol. We all know how the lorries work on the main road. That is where the leak is. The Minister can cut much more off commercial users. I believe he could cut enough off to give everybody an equal standard ration of petrol.

8.6 p.m.

Colonel Lancaster (Fylde)

At this late hour of the Debate I do not wish to cover the ground which hon. Members on both sides of the Committee have covered, and I know the hon. Member for East Coventry (Mr. Crossman) will forgive me if I do not follow him in the able speech and the very useful suggestions that he made on the question of dealing with the black market in petrol.

What I want to deal with is a matter which was referred to by the Parliamentary Secretary in such terms that I do not think hon. Members on either side of the Committee were able to obtain the information which they were seeking. That is the question of coal-oil conversion. Hon. Members opposite are at some pains these days to defend the former Minister of Fuel and Power, though I cannot see why they should be so concerned to do so. The former Minister is quite capable and content to dig his own grave at his own pace, and we have on record so much about this matter that any defence of the right hon. Gentleman at this moment seems to be quite pointless. On 6th March, 1947, in answer to a Question about the availability of supplies, the right hon. Gentleman, speaking about the oil requirements of coal-oil conversion said: There is no doubt as to an ample supply of fuel oil being available. There is no difficulty in this connection."—[OFFICIAL REPORT, 6th March, 1947; Vol. 434, c. 632–3.] I do not wish, however, to deal with that aspect of the matter. I would like the Minister when he replies to give some indication of the underlying principle in this matter of coal-oil conversion. We had a most helpful speech from my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) on this question, and he raised a number of pertinent points.

There are one or two other points with which I would like to deal, and I know they are exercising the minds of industrialists up and down the country. Originally, the intention was to carry out a programme involving something in the region of 3 million tons of coal being replaced by 2 million tons of oil. In February, 1947, that was stepped up to about 5 or 6 million tons of oil to take the place of about 10 million tons of coal. So far as I am aware, and certainly during the discussion on the earlier of those two programmes, no clear indication was given of the purpose behind this scheme. Was it purely a short-term scheme to cope with the difficulties occasioned by the shortage of coal, or was it that the Government had come to the conclusion that oil firing as such for steam raising purposes was a sound proposition?

For about 20 years I was a member of the Coal Utilisation Council, and we used to consider this matter in considerable detail. Certainly at that time it had never been shown that the efficiency of oil for steam raising purposes compared favourably with that of coal. For specialised purposes, as my hon. Friend the Member for Altrincham and Sale mentioned, it claimed preference; for use in steel production, metallurgical work, for glass making, and one or two things of that sort, it had a superiority over coal. However, for general purposes the case had not been proved. What I should like the Minister to say tonight is whether it is the considered opinion of the Government now that this scheme of conversion on a fairly big scale from coal to oil is conditioned by the shortage—temporary shortage, we hope—of coal, or whether it is because the Government have come to the conclusion that it is a very effective means of steam raising over a wide field of uses. I can hardly believe that.

The position at the moment is chaotic. All sorts of individual concerns have, as a result of the exhortation of the Government, undertaken conversion. I believe it is a fact that in certain cases their coal requirements are being denied them. We have had a list today of conversions which have occurred; 1,500 have occurred, and some 300 which are about to take place in the near future, and then a further 120. What is the principle behind all this conversion? What has been decided as regards priorities in the matter? Industrialists must know the answers to these questions. It is no good their becoming interested in the matter of oil conversion until they have a clear picture of what is the intention of the Government in regard to it, and what are the factors conditioning the Government's policy, and, indeed, what allocation of the necessary steel is likely in the near future.

The question we have asked is what is the amount of steel to be allocated for this specific purpose? We are not asking tonight for any more information than that, but since at the moment it still appears to be in the forefront of the Government's intention that this general policy of conversion should continue, I think it is only right that the Committee and the country should be told the facts about the amount of steel which would be made available for the purpose, and the amount of plant which can be reasonably be looked to in the near future, and the possibility and probability of oil supplies once the plant has been erected.

In conclusion, I come back to my original question. I think it is essential that at this moment the country should have a clear picture of the Government's view of the purposes of this coal oil conversion scheme. Is it merely of a short-term nature to get over our coal difficulties, or is there behind it some long-term intention for general purposes which hitherto has not been generally acceptable by those who are interested in the matter?

8.15 p.m.

Mr. Frederick Lee (Manchester, Hulme)

I, too, had the honour of being a member of the Parliamentary Delegation which in 1946 went to Southern Persia, and in the few remarks I wish to make tonight I want to confine myself to the conditions which I found in that country. Many hon. Members during the Debate have stressed the necessity of trying in some way to ensure that the mechanisation of industry, which is now seen on a large scale throughout the world, is not stultified, and world production cut down, through inability to obtain the necessary oil supplies. The hon. Member for Stoke (Mr. Ellis Smith) went in some detail into the horrors which can come to the world unless we can solve this problem of getting an equalised supply of oil to all the countries where it is so much required.

I do not propose to go into these technicalities now, except to say that there is one thing which we must attain to secure that goal, and that is the good will of the oil workers in the Middle East, not thinking of them as in some way inferior to ourselves, or as people we can merely use or exploit because of the precious liquid gold which their country contains, and without having regard to the social conditions with which they live. One of the problems which confronted us during our visit there was the fact that during the war, because of the necessity for aviation spirit, the great refinery at Abadan had been almost doubled. Thousands of workers went to Abadan from various parts of Persia. That, in itself, meant a tremendous shortage of housing. What facilities and raw materials were available had to be used to enlarge the refinery at the very time when it was necessary to increase the number of houses in which the workers could live because of the numbers going into Abadan. They had, in fact, to put a stop to the construction altogether.

In Southern Persia, I could not find a single brick house, a single road, or sewer, or anything at all that had ever been constructed by the Government; the whole of the houses—the towns—had been constructed by the Anglo-Iranian Oil Company. It is vitally necessary for our own Government to use their powerful influence in Southern Persia to ensure that the workers who produce this oil, no matter by whom it is finally used, shall have a far better consideration, both from us and from their own Government, than they have ever had in the past. There was a lack of consideration from many sources. The idea of negotiation in industry is something new in the Middle East, but I suggest to the Government that the time is now overdue when, in addition to technicians, we must send to the Middle East people versed in the knowledge of negotiations between employers and employed, people who can bring a new spirit into the oil industry of Southern Persia, so that we may ensure, not merely keeping our industry going, but an improvement of the conditions of those workers on whose labour so much depends.

Another of the troubles in that country was that the rial, the currency of Persia, was horribly inflated. I would recommend hon. Gentlemen opposite, when they talk about the necessity of getting rid of controls and restrictions, to take a few weeks in Persia to find out precisely to what dire depths a nation can degenerate when there is no type of control exercised at a time when raw materials and food are in short supply. I believe that in aiding the Persian workers in the way I have asked, much could be done to ensure that increased supplies of oil are obtained, and, what is even more important, increased understanding and good will would ensue because of more enlightened methods.

During the time I was there, the temperature was 120 degrees in the shade. The hon. Member for Bolton (Mr. J. Lewis) and I had good reason to know what the term "Abadan tummy" meant within a few hours of our reaching Southern Persia. In this great enterprise in Persia, it is a pleasure to see the manner in which many people from this country are doing a great job of work. I visited the hospital in Abadan, and I have never felt more proud of British women than when I was privileged to see the way in which those great British women were doing their wonderful job in trying to bring health again to broken bodies in the hospitals in Southern Persia. One of the best things which the Government can do in this connection is to ensure that more raw materials, timber and so on, are sent out from Britain for use in the building of more hospitals, schools, etc., in Southern Persia. Those are really the things that matter. The general outlook of the oil worker in Southern Persia is that it is not the job of his own Government to provide him with a house, hospital facilities, and things of that description because they had never known them from their own Government. If we are to increase the supply of oil, and to ensure more permanency in the supply of oil that is the way to tackle it. The amount of time which is lost because of injury which could yield to treatment if first aid facilities were available must be tremendous.

I hope that we shall see, in addition to all its political implications, that it is vitally important to give the workers of Southern Persia a knowledge that we in this country understand their difficulties and will do our utmost to provide them with the things for which they have yearned for so long. The standard of life in Southern Persia is higher under the Anglo-Iranian Company than under any other company there, but even so it is pretty low. I believe that we can ensure greater supplies of oil and a market for our own goods by giving the workers of Southern Persia the ability to enjoy a higher standard of life than they have had before.

Hon. Members on both sides of the House during the Debate have mentioned the possibility of greater refinery capacity both abroad and in this country. I feel that much could be done in the way of providing refinery capacity here especially as we are now facing the position that we are turning crude oil back into the wells of Southern Persia by a very clever engineering performance, about which our American friends were quite inquisitive during the time that I was there. We are turning crude oil back into the wells because we cannot create the artificial reservoirs necessary to hold it. I feel that it would be a good investment if we increased allocations of steel for creating more refining capacity in this country rather than turn crude oil back into the wells.

I believe that we can do a great job of work by getting trade union delegations sent out to Southern Persia and by using our experience to show the people there that negotiation between employer and employee is in fact the best basis of settling many things which would otherwise result in friction of many kinds. I also believe that we have to see that executive positions in great enterprises in the Middle East are now placed at the disposal of the Persians themselves. We have to think more and more in terms of handing over control of these great enterprises to the natives of the country in which they are placed. By that method we can ensure good will. At the present time, the Middle East is virtually the cockpit in which war and everything which war brings may come at any moment. It is quite fatal for European nations to talk in terms of world peace if we turn a blind eye to what is happening in Persia and the Middle East.

We have to show the people of that country that the days of mere exploitation for the sake of taking over their greatest assets, in order to increase our own wealth, are gone; that we genuinely desire to co-operate with them, and that we will use all our efforts and ability to help them to run their industries and obtain a far higher standard of life than they have known before. By that method we can get a far better basis of co-operation in that troubled sphere with the Soviet Union, and get down to the problem of solving what is at the root of our economic problems—millions of people in dire poverty who are producing the wealth on which we in this country and in America are dependent for our existence. Let us give them more power and control of those great industries, because I am certain that in return we shall get the greatest measure of friendship we can ever hope for and eliminate the fear of recurring war, bringing in its train horrors, which would mean that all our great social experiments at home would go for nothing.

8.27 p.m.

Mr. Hugh Fraser (Stone)

I am unable to follow the hon. Member for Hulme (Mr. F. Lee), except to say that as far as the handing over of valuable assets to local populations go, we have seen the results in Mexico where the local population having taken over, have asked us to come back. I think the hon. Gentleman is over-optimistic about the ability of certain local populations to run these things for themselves. I want to return to the speech of the hon. Member for East Coventry (Mr. Crossman) who divided his speech neatly into two parts. In the first part, he excused the Government for their inability to control events outside this country, and in the second part he referred to the legislative inference of the new petrol ration scheme especially on "E" and "S" coupon users. In the first part of his speech, the attempt to excuse the Government, his argument was that the Americans were irrational people. I do not know whether he is right or wrong when he describes the production of coal or the production of petrol in America as rational. If he believes that, the Socialists, who believe private enterprise to be irrational, should have calculated on the growth of petrol consumption. They should have made the sort of calculation which was made by a large number of oil people throughout the world.

It is all very well for the Government to keep blaming a world over which they have no control. It has always been a feature of this country, as a nation which relied on exports and imports, to be dependent on world events for its survival. If the Government are unable to arrange their policy to fit in with world trade, then they are clearly incapable of government. I would go further and say that there is blame—that there are people responsible—for our present fuel difficulties. I would accuse the Ministry of Fuel and Power, although perhaps not so much the Ministry as the Ministers. The right hon. Gentleman who is now Secretary of State for War has been accused of being a wildcatter and an exhausted gusher. A variety of accusations have been made against him. Hon. Members on the other side of the Committee may talk of baleful boredom, but I believe the Minister of Fuel and Power is something of a Marie Antoinette. Marie Antoinette said to the people, "If you have no bread, eat cake." The predecessor of the Minister of Fuel and Power said to the industrialists, "If you have no coal, burn oil."

The whole matter wants serious investigation. The present Minister of Health once described this island as being almost entirely surrounded by fish and almost entirely constructed of coal. That we should be importing oil to burn in our factories is a serious matter and a course of action which needs defence by the Minister when he replies. It is extremely dangerous to push forward with a programme of increasing eventually the amount of fuel oil burned in our factories from something like 2 million to 5 million tons. We know that America has its fuel problem. We know also that a new policy of pushing even further forward with the burning of fuel oil in our factories entails a considerable expenditure of steel for further storage capacity, unless the Minister can tell us that we shall never have a restoration of the old petrol standard. If he cannot, a great deal of steel will be needed for the construction of the necessary machinery, blowers, and tanks inside the factories for the burning of oil. Local and regional oil storage will be required.

The hon. Member for East Coventry (Mr. Crossman) said it was odd that the Americans were undertaking large-scale oil conversion in their factories. There is nothing odd about it at all. To adopt the extravagant phraseology of the Minister of Health that country consists almost entirely of fuel in the shape of oil. It is no more odd for the Americans to make use of fuel for oil burning in their factories than it is for us to use coal. In that vast continent there are areas where the use of heavy fuel oil is more economical than coal.

To revert to our own country, it is vastly extravagant to embark on a further expansion of the burning of fuel oil, a programme which needs steel which could be more usefully employed in other ways—for example, in increasing the facilities in British controlled oilfields. The Under-Secretary dealt very shortly with the increase of production within British controlled oilfields. The figures, compared with those of the world, are not satisfactory. The overall increase in world production since the end of the war is something like 55 per cent. The increase in the British controlled oilfields is all very vague; there are the complications and difficulties of oil finance and whether it is controlled by a small group of foreign shareholders or by us. If we accept the figures which have been given, the British increase is a mere 33 per cent.

It may be said that areas have been bombed, that there has been damage in Burma, difficulty in Sumatra and trouble in South America, but, generally speaking all these things balance up. We can boast only of a 33 per cent. increase whilst the rest of the world can claim something like 66 per cent. That means that more use could have been made of steel; that more steel could have been used for the important and valuable oil production in Venezuela, in Abadan and in various parts of the Far East. I have visited Venezuela, where there are many complaints about shortage of steel from companies with a large British shareholding. They have to obtain most of their steel from the United States, yet at home the policy is put forward of using more steel for building up storage capacity which one day will be redundant.

I am amazed that more hon. Members opposite who represent mining constituencies have not spoken of the need of steel for producing better coal. What the Government have done is merely to increase the general tendency which is naturally away from the badly produced coal of the National Coal Board. There is a national tendency amongst industrialists to turn away, if possible, from the badly produced coal which contains 5 or 6 per cent. more ash than before the war. That is natural and is rather like the Government's attempt to increase the use of electricity by reducing the purchase tax on heaters. All these things have been ill thought out. Steel should be used to produce more pumping capacity and in increasing refining and cranking capacity in the oil fields; and in seeing that the coal we produce is of a better quality and is washed. The hon. Member for Stoke (Mr. Ellis Smith) knows, as I do, that there is at present a resistance in the sales of coal and slack in the Midlands. I know factories where there are 10 to 15 weeks' supply and power stations in the Mid-West with nine weeks' supply, even at this time of year.

Unless the Government take great care with certain brands of low type fuel or industrial coal slack, there may well be over-production; yet they go ahead with increasing the size and scope of their oil burning programme. This is not good planning. If we have fuel oil abroad it might well have been sold for dollars which in turn could have been expended on petrol and so help towards restoring to our people something approaching the basic ration or, at least, a fairer type of rationing than that envisaged by our present rulers. There are many questions which need to be answered by the Minister tonight, but, as things are, with the tendencies towards over-production in certain grades of fuel, to embark upon this enormous programme of increasing consumption from 2 million to 5 million tons of fuel a year is a type of folly which only such a Government as this could produce.

8.40 p.m.

Mr. Scollan (Renfrew, Western)

The hon. Member for Stone (Mr. H. Fraser) has touched upon a point I intended to raise. There is a modern steel-smelting works in my constituency, and I went there to see its conversion from coal to oil. After studying the whole setup, I have come to the conclusion that the Minister will be well-advised to select certain industries for oil consumption and to leave other industries purely on coal. From the industrial experience I have had for many years, I have not found that the amount of wastage in coal has varied one bit in the past to years. That is to say that the 10 per cent. dirt and stone we are getting today is not due to the National Coal Board, because we had that 10 per cent. before the Board was set up. The weekly output of coal averages 4 million tons, which means that every week there are 400,000 tons of useless dirt and stone being carried over our railways and roads.

This coal has not the necessary steam-heating qualities, and it has to be cleaned out of the boilers and carted away to be dumped. Anyone who understands economy knows it is good economics to clean the coal before it is sent out, because it saves our transport and our industries this enormous wastage and expense. It also saves our municipalities an enormous expense, because instead of dustbins containing ashes they are filled by the housewives with this useless coal which has to be carted away by the dustmen to the incinerator where it has to be dumped. All this is sheer waste.

The Deputy-Chairman

The hon. Member may not realise it, but we are dealing with services connected with petrol and petroleum.

Mr. Scollan

I was trying to point out how we can do without a lot of the petroleum which is being used in this country.

The Deputy-Chairman

The hon. Member may have been trying to point that out, but he has not succeeded in doing so.

Mr. Scollan

Then I must have put my point very badly. The petroleum which is being used in industry today could easily be supplanted by coal. I am not surprised at all at the increased amount of oil being used in America because oil is on her doorstep. On the other hand, the industrial prosperity of this country has been built on coal, because coal is on our doorstep. Most people forget that coal is the only natural asset we have. On coal and coal alone was our industrial prosperity built up, and therefore it should be used instead of oil wherever possible. We had a small shale-oil plant in Scotland. It was shut down by the Standard Oil Company as a result of internal penetration by American capital. It was not shut down as a result of nationalisation by the Labour Government. It was closed down by the Standard Oil Company because it produced oil so much cheaper. That shale-oil plant could be brought into operation today.

We cannot measure a national asset in terms of competitive prices with other countries. It is the biggest mistake any Government can make to say that we can buy cheaper abroad and should not therefore use what we have at home. What we have to do is to put all we can produce at home into the market, and to equate the prices to make our national assets a paying proposition. We know what happened about Lend Lease and how it was cut off before we had time to get our breath. We then had to beg and borrow a loan. We do not want to be put in that position today. Our potential asset lies in the low carbonisation of coal, and we should clean the coal to make it as attractive a fuel as we can. We should use it to increase our production at home, and if the Minister does that he will go a long way towards meeting this competition from abroad.

8.48 p.m.

Mr. W. S. Morrison (Cirencester and Tewkesbury)

The subject under discussion has been so well covered by my right hon. and hon. Friends, and so much has been said on the various topics of this problem, that I find myself in a slight difficulty, because I have heard the points I wished to make being brought forward one by one and explained with an eloquence which I could not hope to equal. The best service I can do is, I think, to sum up briefly the arguments forming the case which the Government have to answer over the handling of this important problem of fuel oil and petrol. There is a good deal of uneasiness in the country that this matter has not been well managed, and that uneasiness has spread beyond the narrow circle of those whose vocations make them primarily acquainted with the technicalities and otherwise of oil. The man in the street is beginning to doubt whether this problem has ever been understood and grasped by the Government. I make no denial of the fact that it is a difficult problem.

I think that the reason for this uneasiness spreading among the general public, who are not acquainted with the tonnages concerned and to whom the mysteries of dollar exchanges are still mercifully a closed book, is the violent vacillation and changes of policy of the Government in regard to the two commodities of petrol and fuel oil. It is felt that if a policy existed there would have been more continuity in the sequence of events and fewer of the abrupt changes which have from time to time characterised the course of events in the last two years. The spasmodic and fitful character of the intimations of the Government in regard to this commodity give the appearance more of panic than of policy and seem to betray a lack of that fore-thought which is the very essence and foundation of planning. Indeed, the graph of petrol rationing and fuel oil policy looks like the temperature chart of a patient suffering from very high fever.

Let us take petrol rationing. The various changes are quite remarkable. It was in June, 1945, that the basic ration was re-introduced, upon a basis of 120 miles per month. In September, 1945, it was increased to some 150 miles per month. In March, 1946, it was increased to 180 miles per month. In August, 1946, it was increased to 270 miles per month. On 6th August, 1947, the Prime Minister, speaking in this House, announced that the ration would again be reduced to 180 miles per month from 1st October following; but on 1st October following, it was completely abolished. Those are very violent fluctuations in policy, so violent that they seem to preclude the existence of any continuous stream of thought in connection with the day-to-day administration in this matter.

Let me turn from petrol to fuel oil. I rely upon my figures because this matter seems to be more one of administration policy than of governmental statement. I am bound to say my figures depend upon a leading article in "The Times" today. If the right hon. Gentleman tells me that the figures given in "The Times" are wrong, I accept his view at once; but the figures are interesting. According to this article, the programme of conversion from coal to oil was announced in the Spring of 1946. The target then was to save three million tons of coal by using two million tons extra of fuel oil. After the coal crisis of February last year, which seems to have fallen upon Ministers like a bolt from the blue unheralded by any act of their intelligences although they had been warned before about it, we Were told that the target was raised to five million tons of fuel oil and later to six million tons of fuel oil, in order to save some 10 million tons of coal.

As the article points out, six million tons of fuel oil is a very large quantity and is equal to one and a quarter times the amount of motor spirit imported in 1928. The figure represented a year ago the Government's view of the future oil supplies in this country. It is only a year ago. Just before last Christmas, the right hon. Gentleman announced that the programme was to be cut. I believe that some conversions had been completed at the rate of about 2,200,000 tons of oil a year. Last month, coming down to date, the right hon. Gentleman told us that most of the firms who were in the process of converting from coal to oil would have to go on burning coal for a considerable time. "The Times" with its customary moderation of language, comments: This is a sharp reversal. All these chops and changes have done great damage. They have wasted much effort, capital expenditure—the point has been made and I merely repeat it without elaborating it—steel and planning energy, while commitments of one sort and another have been undertaken to fulfil this programme at the request of the Government. All the chops and changes have fallen inevitably upon the people of the country without warning. The navigation of the right hon. Gentleman and his predecessor has been so erratic and they have changed their course in the river so abruptly as to be a source of embarrassment, if not even a danger, to other craft using the river. They have not accompanied their changes, of course, by giving the signal which is customary with well-managed ships, and which curiously enough is three, not two, loud hoots on the siren, signifying: "Look out. I am going astern."

Not only the policy but the reasons for the policy have changed from time to time, if not always in effect, in emphasis. Last October we were deprived of the basic ration. The case was fought by the Government almost entirely on the issue of dollars. Now we hear less about dollars. We still hear about them. Like the poor, lack of dollars is always with us, but we hear less about dollars today. Perhaps Marshall Aid, so-called, has something to do with that; but the emphasis now has shifted to the world shortage of oil in relation to the demand for that commodity. Now we are told that oil is so short in the world that even if we had the dollars we could not buy oil.

It is clear that these alternations are very bewildering and upsetting. I hope this Debate will give the right hon. Gentleman an opportunity of explaining the connecting thread, if he can find one. What is the clue which is to lead us out of this labyrinth and restore the confidence which is so badly needed in industries affected by the oil problem? It appears now that the end of the story, taking the latest utterances of Ministers, is that we have to face a natural shortage of oil for some years. That is a very different picture from two years ago, when we were told that there was plenty of fuel oil, and one year ago, when the oil conversion scheme was being boosted up to five or six million tons.

Let us examine that shortage. I am told that there is no shortage of oil in the ground. Indeed the proved reserves of oil in the world today are, I am told, greater than they have ever been. The shortage occurs in the apparatus for converting the raw material and making it available in consumable form to those who use it, and that apparatus consists of oil- well plant, refineries and tankers. Generally speaking the plant at the oil wells does not seem to be the main cause of this stringency, so far as I can make out. Speaking on 6th April, the Parliamentary Secretary, referring to the strange phenomenon of oil being pumped back in the Midle East said that that was not due to any deficiency at the wells themselves but to a shortage of tankers.

We are told that refining capacity is short, and an added but significant shortage will occur through the withdrawal from refining production of the refinery at Haifa, amounting to some four million tons a year. Then we are told that consumption has greatly increased. That is the melancholy picture with which we are confronted. I ask which of these factors which together account for our present stringency in oil supplies could not have been foreseen two years ago, when the conversion plan was started, involving two million extra tons of oil, or at least a year ago when, if "The Times" was right, it was boosted up to five million and then to six million tons.

Let us take the question of refineries. The "Economic Survey," with which we have just been favoured, says, in paragraph 109, in reference to the programme to improve the refining capacity, that these plans will, however, take some years to mature, and may be delayed in view of the current shortage of steel. Nor is it possible to speed their completion to any large extent by the import of additional petroleum equipment from the United States. For not only dollars, but oil equipment itself is short. I should have thought that most of that forecast could have been as easily made two years ago as today. There is nothing that has altered in the period of time in the position of either oil refining plant or the provision of refining capacity to make this glimpse of the obvious a discovery which could only have been made yesterday. It must long ago have been in the minds of those who studied the problem.

The same can be said broadly of the tanker position. There is nothing about our tanker position today which could not easily have been forecast 12 months or two years ago at least. Tankers take a long time to construct, and the position should have been as clear then as it is today. I am still not satisfied, although I listened with the greatest interest to the informative and instructive speech of the Parliamentary Secretary, that the other factor upon which reliance is now placed, namely, the greatly increased consumption in America, could not have been foreseen more accurately than it has been. The Parliamentary Secretary claimed that we could not control the consumption in America. That is perfectly true, but it might have been intelligently anticipated.

As my right hon. Friend the Member for Southport (Mr. R. S. Hudson) pointed out, the Parliamentary Secretary told us that the gross consumption in America, which is a very big place, was a large factor, yet the percentage increase in the United Kingdom was greater than the percentage increase in America at the same time. The Government should have drawn the obvious and easy deduction. Knowing that our production in our homeland is going up, knowing the greater extent to which America relies on the motor car, and bearing in mind the amount of petroleum which America uses for the manufacture of synthetic rubber, they should have drawn the obvious inference. If the percentage of consumption nearer home was rising, as obviously it was, it was a very safe bet to jump from that, and say that in the United States a greater possible increase in consumption must be intelligently anticipated. Yet nothing of that sort appears to have occurred at all. I hope I am not being unfair or unreasonable, and it is easy to be wiser after the event so that one must guard against expressing unfair judgment, but I do claim that it ought to have been foreseen if attention had been exercised.

It appears to be increasingly clear that the five to six million tons of fuel oil, which, a year ago, the Government urged industry to consume, was never in prospect at that time. My conclusion is that it was not reasonable to suppose it would be. I cannot accept the description of the Parliamentary Secretary that this proposal is commonsense. With the best will in the world it appears to be the very negation of common sense to indulge in a process of asking people to convert into the consumption of fuel which did not exist in any intelligent prospect. Nor do I take the other argument that if the Government had not taken charge of the programme we should have had unco- ordinated and chaotic conversion by industrialists themselves, and it was claimed by the hon. Gentleman that the intervention of the Government in this matter had produced a programme of conversion to a degree of order which otherwise would not have existed.

I hope the Minister can amplify this argument, because I find it very difficult to believe. I think myself it was not an ordered programme so much as a mere propaganda drive to convert at all costs. I am borne out by that in some interesting speeches, including the one by my hon. and gallant Friend the Member for Fylde (Colonel Lancaster) and the hon. Gentleman the Member for Western Renfrew (Mr. Scollan), who has just spoken. It is quite obvious that a great deal of the conversion from coal to fuel oil had been diverted for purely thermal purposes—that of steam raising. On the information before me there are cases where fuel oil has advantages over coal—in certain cases of ceramics, glass making and certain forms of steel where temperature control is the essence, but I know that a great number of people have put fuel oil not to the specific and justified processes at all, but to mere steam raising where it has little advantage over coal.

So much for oil. If the matter had been left to the public to make up their minds whether they would convert, individual industries could have taken a risk in the absence of the fuel oil supply which would have been an ordinary commercial risk, and which would have been undertaken by them on their own responsibility. Now it is the responsibility of the Government for having encouraged them to incur this expenditure and they are now without oil. Have the Government a coal-oil policy even now? If so, it would be for the enlightenment of the nation.

It is vitally important, in view of this shortage, that we must make the most of what we can get, and in this respect I would ask the right hon. Gentleman whether the Fuel Research Board is still conducting its valuable work. I would also like to ask him to examine the point made by the hon. Member for Western Renfrew about shale oil and natural gas in this country. We cannot afford to neglect our natural resources. There is also producer gas. In timber yards attached to woodlands there is a tremen- dous amount of waste wood which could be turned into producer gas, and so save petrol and oil considerably. I hope attention will be given to this. I would also like to know more about the German synthetic oil production. There they were able, in spite of the blockade, to power vast fleets of aeroplanes and vast armies of tanks, none of which they can now do. Is there no hope here of getting from Germany an export which will be useful to them in enabling them to rehabilitate their economy and also be useful to the rest of the world? I hope so, and I hope also that we may have an answer to my right hon. Friend's question about the proportion of steel that is being given to the refineries. It is obvious that that is a crucial point. My right hon. Friend did not ask for a steel budget, he asked what proportion the steel allocated to the refineries bore to their application, and I think the Committee is entitled to know that. The hon. Member for the Hulme Division of Manchester (Mr. Lee) pressed the same point.

Now I turn to the last part of my remarks which are concerned with the rationing of petrol. Here, again, I find that so many speeches have been made in the course of the Debate, and so many points have been put up to the right hon. Gentleman, that I can do no more than summarise them briefly. I have already described the extraordinary fluctuations of policy which have attended rationing since its inception, ending with its withdrawal completely last year. I still do not believe that the withdrawal of the basic ration was in the public interest. I believe that, though it shows a paper saving, its indirect damage to the life of the country, and in particular the countryside, to the dollar earning capacities of our entertainment and hotel industry, amongst other things, really outweighed the economy that was effected. It was very unequal in its incidence. It bore much more heavily upon the countryside than upon the town and, representing as I do a country division, I know the complete dislocation of all social and athletic life which it brought about in my remote hamlets.

Perhaps there was no greater sufferer from the basic petrol withdrawal than the right hon. Gentleman, whose office must have been inundated with correspondence from all parts of the House, bringing this case and the other. For my part, I would thank him for the way in which he has dealt with a big problem with which I have troubled him. When on many occasions he has seen fit to allow a claim I put forward, I have always felt what a pity it was that the man had to write to me and that I had to bother the right hon. Gentleman before the right course of action was taken. Then think of the people who do not write to their Members of Parliament—there may be some of them alive yet, for all I know. It is not a good thing to think that these people may be suffering some unjust deprivation simply because they do not like to write to a Member of Parliament.

Regional officers have been mentioned. I do not criticise them for the way in which they have done their work. The truth is that they have been overwhelmed. The right hon. Gentleman the predecessor of the Minister of Fuel and Power, has told us of the immense difficulties which are encountered when one starts to put into operation plans of nationalisation without having made adequate preparation. I think exactly the same is true of the burden which was suddenly cast upon regional petroleum officers by the withdrawal of the basic ration without proper clerical provision having been made for scrutiny of claims. The whole controversy has been somewhat clouded by the use of the term "pleasure motorist." I remember the days when there were very few motor cars about, but a man with a horse and trap was not called a "trappist." There was a much less elegant sound about that than about "motorist." The term "motorist" is apt to conjure up a very grotesque and antique figure, driving an antique car, preceded by a man with a flag and accompanied by a lady wearing a big veil.

Today the motorist is the doctor, farmer, or workingman going to work—[Interruption.] Yes, I include motor cycles and small cars, of course. I say to hon. Members opposite that no people have suffered more deprivation from withdrawal of basic petrol than some of the workingmen with motor cycles and sidecars who wish to take their wives out on Saturday afternoons. Today motoring is a method of progression, and nothing more, and we should not mix ourselves up with ideas of something antiquated and special about it.

Of the new scheme I will only say that it is not good enough. The Parlia- mentary Secretary said that those with "E" and "S" coupons would get something, and that was freedom. Freedom we are learning to prize and no doubt we shall get that crumb of it. Unfortunately, it falls very unequally. The hon. Gentleman also said that no user of "E" and "S" coupons did not get some convenience out of motoring. That falls from him very whimsically, and not justly. There is no doubt that if a man's sources of pleasure and amusement lie on the road which he is given petrol to follow he gets a great deal of freedom out of his motor car in that way, but there is nothing of that kind in some of the country villages. There a man has just enough petrol to do his day's work. He gets nothing more out of it, yet he keeps his car on the road the whole year round. The rural district councillor who gets just enough petrol to go 10 miles from his village to a little town where the council meets does not go for pleasure. He has freedom, but has no petrol with which to enjoy it.

The conclusion of the matter is that the Government have not met the case made against them. We shall listen to what the right hon. Gentleman has to say. I express the hope that soon he will be relieved from those barren labours on nationalisation, so that his Department can turn their attention to providing fuel and power for the people. We shall listen to what he has to say with all due deference, but I give notice that unless we on this side of the Committee feel satisfied with his defence we shall move a small reduction in his Vote.

9.20 p.m.

The Minister of Fuel and Power (Mr. Gaitskell)

We have had a serious and interesting Debate, and many informative speeches have been made on both sides of the Committee. On the whole, I think that the criticisms made of my Department and myself have been moderate. Even the right hon. Member for Southport (Mr. R. S. Hudson) was rather less aggressive than usual. Whether that is the result of his South African tour, which has mellowed him in the sun, and the avoidance of even a mild English winter, I do not know.

I will endeavour to reply to the various points which have been made. Many hon. Members have spoken of the coal-oil conversion scheme, and I want to deal with that at some length. My hon. Friend the Parliamentary Secretary dealt with this towards the end of his very capable speech, and I shall, therefore, not have to say quite as much as would have otherwise been necessary. The right hon. Member for Southport said that this plan should not have been embarked upon without some certainty regarding oil supplies, and the hon. Member for Altrincham and Sale (Mr. Erroll) asked how it was that the Government failed to foresee that there was going to be difficulty about the supplies of oil. He said that the signs were there for all to see.

The attitude of the Opposition to this matter is in striking contrast to the line which they took 18 months to two years ago. I was a little surprised that the hon. Member for Altrincham and Sale—who unfortunately I do not see in his place but no doubt he will return—who is something of an expert in this subject, seemed to overlook the extraordinary change in his own mind. On 8th April, 1946, speaking in the Adjournment Debate, that is to say, on a subject which he himself had selected, he said: Therefore, from that point of view as well it is most desirable that encouragement should be given to industry to convert to fuel oil wherever practicable. He went on to say: I hope he"— my predecessor— will be able to say tonight that he will do all he can to encourage the use of fuel oil so that industry can go ahead with the long term planning which it is constantly being urged to do."—[OFFICIAL REPORT, 8th April, 1946; Vol. 421, C. 1765.] That was the attitude of the hon. Gentleman in April, 1946. Yet he comes forward today and says that the signs were there for all to see. Evidently there was one blind man, anyway.

Although the right hon. and gallant Member for Gainsborough (Captain Crookshank) is not here this evening, he also made a statement on this matter in the Debate on the Finance Bill on 25th June, 1946, on the question of the removal of the duty on fuel oils. This is what the hon. and gallant Member said: Let us risk the £3,500,000 not coming into the Exchequer in favour of encouraging firms to go ahead as fast as possible during this critical winter. I am sure the right hon. Gentleman will agree that the prospects are very bad on the coal front, and that anything we can do to reduce the demand for coal while the position is so bad would be to the national advantage."—[OFFICIAL REPORT, 25th Tune, 1946; Vol. 424, c. 1079.] Hon. Members opposite cannot maintain that they were not the keenest supporters of the coal-oil conversion programme. Again and again we were pressed by them to get on faster with this and to allow it to proceed more fully, and it is not for them now to turn round and say we should not have started it at all. The right hon. Gentleman says it was hoped supplies were available—

Mr. R. S. Hudson

I said the Government thought there was a surplus available.

Mr. Gaitskell

The Government went into the matter with the fullest possible consultation with the oil companies. Clearly, before a programme of that kind could be adopted it would be necessary to secure from the oil companies some idea of what they thought could be done, and it is a fact that at that time there was a surplus of fuel oil in this sense—that the total expected available supplies of fuel oil produced by British companies exceeded what they thought they could otherwise market. They told us—and they confirmed this to me personally when I saw them a few months ago—that at that time they supposed it would be possible to provide five to six million tons extra—and that, in fact, was the eventual programme. My hon. Friend the Parliamentary Secretary this afternoon quoted the continual change of estimates in the United States on this matter of oil consumption which, of course, is the root of the trouble. I do not think it is fair to say it was plain for all to see. Certainly the oil companies did not see it; certainly the expert statisticians in the United States did not see it; certainly the Opposition did not see it—it is something which has really surprised all of them.

Air-Commodore Harvey (Macclesfield)

When the right hon. Gentleman says there might have been five to six million tons extra available, would he have had the tankers to cope with that amount?

Mr. Gaitskell

At that time the oil companies thought it would be possible to supply that five to six million tons without difficulty. I can assure the Committee that that is what they freely admit, and I think in the oil world generally it is known that this increased consumption of the United States has taken everybody by surprise. For instance, on the point of tankers to which the hon. and gallant Member for Macclesfield (Air-Commodore Harvey) referred, after the war the United States Government expected there would be a surplus of tankers and it was for that reason that they proceeded to lay up no fewer than 300 tankers. These subsequently have had to be refloated and, I am glad to say, have served within the last few months considerably to relieve the tanker situation.

Mr. Dodds-Parker

Did not the Government, in fact, direct companies to sell oil to the United States for dollars? Is not that the reason?

Mr. Gaitskell

There is no direction to the oil companies to sell oil for dollars at all. Of course, the oil companies—say the Shell Oil Company, which is the second largest or, at any rate, the third largest distributing company in the United States—are really international companies, but it is not correct to say that oil companies have been directed to sell here, there and everywhere.

Mr. Dodds-Parker

But is it not so, within the limitation that everybody is encouraged to sell for dollars wherever they can?

Mr. Gaitskell

Obviously it is very desirable that we should obtain dollars, but one has to have regard to every consideration. I will, however, deal with that point later.

We have been given a number of reasons in the Committee why the coal-oil conversion scheme had to be held up. I want to tell the Committee exactly what happened. During the first six to nine months when the scheme was introduced, early in 1946, there was in fact very little response from industry, and it was not until, first of all, we introduced the subsidy of 1d. a gallon and the subsequent removal of the duty—and later, of course, the great shortage of coal in the winter of 1946–47—that the conversion programme really got going. What did it mean that the "conversion programme got going?" It simply meant that a large number of enterprises went to the Petroleum Board and said, "We wish to convert; we want to get on the list." In April, 1947, my right hon. Friend, my predecessor, had in fact to close those lists—a year ago—because at that time the full programme had already been achieved. It is true under some pressure—not from hon. Members—from certain firms and industries where the conversion progress was particularly valuable, a further million tons was permitted shortly afterwards. Broadly speaking, however, it is true to say that a year ago because of the lists getting full up so quickly he had to step in and say, "That is all."

The next stage in the whole business was a certain difficulty—a purely temporary one—which we ran into, of tank cars. I do not think there is any reason for us to apologise for that. It was not easy to phase precisely all the different stages and elements in this programme, and during the summer of 1947 it appeared that there would be some difficulty because of a shortage of tank cars. At that time we asked certain firms to postpone the completion of their conversion.

Then in December last year I had to announce that those who were still in process of converting should not complete conversions until further notice. I did that at that time primarily because of tanker difficulties. There were, in fact, tanker difficulties. It was not that the Government wanted to find a new excuse. It was because the United States consumption had increased so much that they had to use tankers, which would otherwise have been available for world trade, to convey the oil largely coastwise to their cities. That created quite suddenly, and in a matter literally of three or four months, a serious tanker shortage and we, therefore, had to hold up conversions. Since then we have been examining the stages which the various conversions have reached. We have done that, and last week I announced that certain schemes would go forward and that others would have to stay put for the time being.

Surely, when the Parliamentary Secretary says that this is merely creating order, there is some sense in it. Suppose the Government had done nothing about this matter. Suppose that they had simply let any firm convert when it wished to do so, and there had been no attempt to correlate the conversions with the supplies of oil. What would have happened? I suggest that while no doubt, to begin with, in 1946 there would have been very few conversions, or many fewer, as soon as we ran into the coal difficulty in the winter of 1946–47 there would have been a tremendous rush of firms all anxious to convert and get oil conversion equipment, and eventually anxious to get oil. There is no doubt in my mind that they would have run into enormous difficulties. Some of them would have found that they could not complete the conversion process owing to difficulties of getting equipment, steel and so on. Others would have completed their process of conversion and then would have been unable to get the oil. We at least have seen to it—I have yet to hear of a single case to the contrary—that when a firm is converted it gets the oil. The line of argument put by my hon. Friend is perfectly fair.

It is the fact that in the United States exactly the same sort of difficulties have occurred. There have been conversions from coal to oil in the United States on a very large scale, in transport, in domestic houses, and in industry. Equally there are these difficulties occurring, despite the fact that the United States is in a very much stronger position, as far as dollars are concerned, to acquire additional supplies. I have been asked if I will give some indication to industry, through the Committee, as to the future position.

Mr. Scollan

Is my right hon. Friend not aware that a large number of industrialists are converting, or want to convert, to oil owing to the amount of dirt in the coal?

Mr. Gaitskell

There may be all sorts of reasons why industrialists wish to convert to oil, but I am perfectly well aware of the problem of the coal quality, and have spoken of it several times recently. It is mainly due to the fact that there has been an increase in mechanised mining without a corresponding increase in cleaning capacity. Cleaning capacity will have to be increased, but is bound to take a little time before it is completed.

I was saying that I had been asked to give some guidance to firms as to what the position is likely to be. I cannot possibly say here what, for instance, I think the relative price of coal and oil is likely to be in five or ten years' time. It is not, in my view, possible to give any very accurate estimate. If I were to give an opinion on that, it would be my personal opinion. It is a matter on which, to quote what the right hon. Gentleman said, the firms concerned must take a commercial risk. It is up to them to decide. All I can say is that for the moment, with the uncertainty of the oil situation, gravely accentuated by the closing of the Haifa refinery, which was producing nearly two million tons of fuel oil a year, we think it wisest for them to remain on coal.

As soon as there is any easing of the oil situation, as soon as it becomes apparent that supplies can be made available, subject, of course, to the foreign currency position, which I shall come to in a moment, we shall, naturally, inform the House of Commons and the country of the position; and it may be possible to make a further relaxation on the lines of the one we have already made. But we think it very much better that firms should be told to stay on coal for the moment. We think it better to say "Do not complete your conversion and go over to oil, because the Petroleum Board and the oil companies cannot guarantee supplies."

Colonel J. R. H. Hutchison (Glasgow, Central)

If there is a concern for which it is of outstanding benefit to convert from coal to oil for the purpose of its trade, apart altogether from the point of view of saving coal, will it be able to get the necessary licence to enable it to convert, to carry on its firing with oil?

Mr. Gaitskell

We have closed the list so far as starting conversions is concerned.

Colonel Hutchison

To everybody?

Mr. Gaitskell

Yes; we are not permitting new conversions for the moment at all. There are, of course, firms who are in the process of converting, and may be very near to completing the process, and some of those will be informed, as I announced a few days ago, that we can now supply the oil to them. If the oil position becomes easier we shall take a similar step later on.

Colonel Hutchison

Would the right hon. Gentleman agree to allow a particular firm or industry, that can make out a very high level argument for being allowed to convert, to carry out conversion? Would he examine a case like that and allow it a permit?

Mr. Gaitskell

I can give no encouragement to that, but naturally, if the hon. and gallant Gentleman has a particular case I shall have to look at it. However, I do not want to give any encouragement to the idea that we are going to provide oil to people who have not started conversion when there are lots of people who have already started and cannot get oil. No doubt, one would take into account some quite exceptional case where there was some substantial advantage to be gained. That, then, is what I would say tonight to industry. Now I should like to turn to a closely related subject.

Colonel Lancaster

I did direct to the right hon. Gentleman a very specific question—what was the principle underlying the Government's policy in regard to fuel-oil conversion? The right hon. Gentleman does not seem to have addressed himself to that.

Mr. Gaitskell

I am much obliged. I think the hon. and gallant Gentleman's question was, whether the coal-oil conversion programme was a short-term programme or not. The answer is, Yes, it was a short-term programme as such. But I still consider that, although the Government gave encouragement and guidance in this matter, they did not carry it through. It was for the firms themselves to make up their minds. As to the future, I am not proposing that we should encourage it because of the oil situation.

The right hon. Gentleman the Member for Cirencester and Tewkesbury (Mr. W. S. Morrison) spoke of the different causes of difficulties—tankers, dollars, refinery capacity, and so on. I would like to say a word on that. It is a bit complicated but I will do my best. One cannot separate any of these questions from the dollar shortage, because if we had more dollars than we have now, undoubtedly we could afford all sorts of things which we cannot afford now. We could, for instance, afford to pay for more tankers and bid more heavily for tankers, and forgo exports of oil to dollar countries, which we cannot do at the moment. Therefore, that element is present all the time. It was only not present in the case of fuel oil two years ago because there was then, in the view of the oil companies, an actual surplus which they could not market, fuel oil being largely a residue product. At the moment, that is not so, and all the fuel oil which the oil companies are producing is in fact marketable and is being marketed, and, therefore, if we were to import additional fuel oil we should be foregoing some foreign currency.

If one asks what is the relation of this to the increased oil consumption in the U.S.A. it is this: When U.S.A. oil consumption rises they require more tankers and that accentuates the shortage of tankers. That was the major reason for the tanker shortage that occurred last Summer and Autumn, happily now much reduced, and at the moment the recycling of oil at Abadan is not in fact taking place. We are now up against a refinery bottleneck. We have been up against a tanker bottleneck up to now. We are now up against a refinery bottleneck.

Mr. R. S. Hudson

More alibis.

Mr. Gaitskell

The right hon. Gentleman says "more alibis." I think myself that is a perfectly sensible explanation, particularly when I say to the right hon. Gentleman that he was in the Government during the war and knows how this sort of difficulty occurs. The right hon. Gentleman asked me one question which is related to this. He was talking of motor spirit, and he asked about the sale of motor spirit by British companies to soft currency countries. It is true, as the Lord Chancellor said in another place, that the British oil companies do deliver motor spirit in some quantities to what are called soft currency countries. Undoubtedly, the Shell Oil Company distribute petrol in France, and similarly in other countries. He asked, "What is the reason for this, and why must it go on?" I would ask the Committee to consider for a moment what the consequences would be if we were to tell the oil companies or order the oil companies to stop their trade with these countries. In the first place, we do not tell the oil companies to whom they can sell their oil. I think that it was the hon. Member for Rye (Mr. Cuthbert) who rather took the line that, in any case, we should not do that. I can assure him it is not in the main our practice, although it is right that the Government should on currency matters give some degree of guidance.

Many hon. Members have spoken of the great future that there is for British oil markets. I agree. In that connection we cannot overlook the fact that the companies concerned have got not only valuable markets in these countries but also installations, and for them to cut off all supplies of petrol to France or these other countries would have the most damaging effect on the future possibility of trade with those countries.

Mr. R. S. Hudson

I never suggested that.

Mr. Gaitskell

I am glad to hear the right hon. Gentleman say so. Secondly, we have now concluded bilateral agreements with a number of these countries with, I think, the general approval of Parliament. In many of those agreements we have agreed that there should be supplies of petrol and petroleum products from the British oil companies to those countries. There is the case, for instance, of Denmark, to which the right hon. Gentleman referred.

Thirdly, it will be known no doubt to the Committee that it was an integral part of the Marshall Plan that British oil companies should continue to supply European markets or, to put it correctly, "the participating countries." It is impossible for us to order the oil companies to leave those markets and to do nothing more. Closely connected with this question was the issue of rationing systems in the sterling area and in these other countries. Most hon. Members will agree that conditions in such countries as Australia, New Zealand, and in other parts of the Empire, are very different from conditions here as far as transport is concerned. Those countries depend far more than we do upon the use of petrol for transport and we cannot expect them to adopt the some rationing system as we have here. In some of them the administrative difficulties of rationing are very much greater.

In Eire the proportion of the agricultural population is much higher than it is here. I think that something like 80 per cent. of the petrol consumed or issued through supplementary allowances in Eire goes to agricultural districts. I discussed this matter with the Minister of Commerce when he was here. He made what I thought was a very good point. He said that if they cut out the basic ration altogether there would be practically no saving because almost everybody in the rural districts needs also a supplementary ration. I would ask the Committee to bear in mind also that we cannot ignore our peculiar relationship with Empire countries. Some of them—South Africa, for instance, with their gold production—can buy whatever they want in the way of petrol. It would be out of the question for us to insist on petrol rationing there.

Mr. R. S. Hudson

And Egypt or Ceylon?

Mr. Gaitskell

Egypt is not in the sterling area, and in Ceylon the total consumption is only about two or three thousand tons. It is so small that the cost of administering a rationing system would be quite out of proportion. That is a good instance of the administrative difficulties which we come up against.

I have been asked by a number of speakers to deal with steel allocations. Even if I had the figures available, which I have not, I would have no intention of telling the Committee the exact amount of steel to be allocated to different industries. The right hon. Gentleman said that we had presented a coal budget and asked why we could not do the same with steel. We did not do it with coal; what we did was to say how much coal could go to domestic consumers and to industry. We did not give figures for separate industries. It would be wrong for the Government to publish the steel allocations to different industries. There are all sorts of reasons, one of which is security. There is bound to be a great deal of misunderstanding about such figures. As hon. Members opposite will know, these figures are argued about for hours and we try to get the best possible balance. All the arguments which have been put forward could not be made public. They would be followed by a great deal of misunderstanding.

The hon. Member for Altrincham and Sale (Mr. Erroll) says that it is all wrong for oil companies to have to state their claims for steel and that they should be given all the steel they want. That would be a most ridiculous state of affairs. What would hon. Members opposite, who show some interest in agricultural affairs, be likely to say if the oil companies had all their requirements made up at the expense of agricultural machinery? I think there was considerable anxiety shown by hon. Members opposite about the position of agricultural machinery when the Paymaster-General made a statement on the ending of the priority list. We cannot deal with the matter in that way. We have to balance the needs of the various claimants for steel and decide what is best in the national interest. We do attach an immense amount of importance to the refinery programme, and I fully agree with what many hon. Members said, that in the development of British company oil production we have a certain dollar winner. We recognise that, and we are anxious, within the limits set by the inevitable high demands for steel for other purposes, to give them as much as we possibly can.

Some Members have asked why the refinery programme did not go further. It is a very large programme, involving an increase in capacity in the U.K. from 4½ million tons to 20 million tons. I should have thought that that was good enough to go on with, but when the programme is completed we shall have to see how we go on. It is on a gigantic scale, and when hon. Members opposite ask why we do not do more, I would point out their absolute failure to do anything in this field before the war, which was one of the most discreditable features in their administration at that time.

Lastly, I want to turn to the various points raised on rationing. Here again we have been accused of giving a lot of different reasons for the restrictions on petrol consumption. The answer is that it is essentially for dollar reasons, as we have always said. It is true that there is a world shortage of oil, but that does not alter the fact that our problem is primarily a dollar problem, and that there is a much bigger deficit of motor spirit as far as British companies are concerned than there is of fuel oil. Essentially, it is a dollar problem. So far as tankers are concerned, I have already explained that the tanker position is rather easier now; but certainly the dollar position is just as bad.

I am really surprised at the attitude of some hon. Members on the subject of the black market. I should have supposed that everyone would agree on the necessity for suppressing the black market. There seem to be the most extraordinary misunderstandings on this subject. It is not only that we think that by suppressing it we can save 100,000 tons of petrol which is going to people who should not get it, and give this to people whose cars are laid up, but for the more important reason that we think it is essential to deal with the problem in this way, because so long as petrol rationing exists there will be a tremendous leak through that channel. Surely it is obvious that the smaller the standard ration we can afford, the greater will be the pressure on the black market. Therefore, it is not just a matter of suppressing it for the introduction of the standard ration, but it is essential for other purposes.

My hon. Friend the Member for East Coventry (Mr. Crossman) suggested that we could find extra petrol to give more to the supplementary allowance holders by cutting down the supply to the farmers and the commercial people. The whole purpose of the black market scheme is to prevent anything going from the farmers and the commercial people to the ordinary motorist. If that is so, we cannot cut the farmers and the commercial people any further. We would stop them from carrying on their essential business of food production and transport.

Lastly, may I turn to the vexed question of the supplementary allowance? The argument of hon. Members opposite is roughly that after all, the standard allowance will be for those who want pleasure motoring only, whereas the supplementary allowance holders get petrol only for essential purposes. Therefore, they have no pleasure motoring. Hon. Members opposite draw that sharp division between essential motoring on the one side and pleasure motoring on the other. I must say that I find that a rather curious attitude for some hon. Members opposite to adopt. When we withdrew the basic ration precisely the opposite argument was put forward, not by one but by several speakers, the argument was that there was no such thing as pleasure motoring and that all motoring was really a matter of convenience. I would quote from the speech of the hon. Member who moved the Prayer to reject the order. This is what the hon. Member for Kingston-upon-Thames (Mr. Boyd-Carpenter) said: It is sheer nonsense to suggest that in the majority of cases the basic ration is or has been used for pleasure in any sense of the term. It has been used, as hon. Members have no doubt heard from many of their constituents in the last few weeks, for a multiplicity of essential domestic purposes.… It has been used, of course, above all to facilitate people getting to their work."— [OFFICIAL REPORT, 29th October, 1947; Vol. 443, c. 1001.] How anybody who has argued that way can now get up and say that we should give the ration back to everybody I cannot understand.

The facts are these: We only have so much petrol available, 120,000 tons. If we give it to everybody, it means eight miles motoring per week, and that is farcical. People would not bring out their cars which have been laid up, on that basis. It would be of no advantage to them. We have to choose in this matter. I have not the slightest doubt—and the motoring organisations agree—that, granted that that is all the petrol available, we adopted the right course. The only other argument is that we should spend more dollars. That is an easy one. Anybody can say that. They can say that the advantage of spending more dollars on petrol outweighs the disadvantages and

the inconvenience of not doing so. That argument could be used on almost every dollar commodity. It is a striking change that the Opposition should adopt that attitude from the one which they adopted during the Budget Debate. Then speaker after speaker said that in no circumstances could we afford any more dollars.

I suggest that in this Debate the Opposition have absolutely failed to make effective their charges against my Department. There is, in fact, no truth in those charges. We are admittedly dealing with a very difficult situation and we are dealing with it in the fairest and most satisfactory manner for everybody.

Mr. W. S. Morrison

I beg to move, "That Item Class VI, Vote 6, Ministry of Fuel and Power, be reduced by £5."

Question put.

The Committee divided: Ayes, 122; Noes, 239.

Division No. 149.]	AYES.	[10.0 p.m.
Amory, D. Heathcoat	Hollis, M. C.	Pickthorn, K
Astor, Hon. M.	Holmes, Sir J. Stanley (Harwich)	Pitman, I. J.
Baldwin, A. E.	Howard, Hon. A.	Ponsonby, Col. C. E.
Beamish, Maj. T. V. H.	Hudson, Rt. Hon. R. S. (Southport)	Poole, O. B. S. (Oswestry)
Bennett, Sir P.	Hulbert, Wing-Cdr. N. J.	Price-White, Lt-.Col. D
Bowen, R.	Hutchison, Lt.-Cm. Clark (E'b'rgh, W.)	Prior-Palmer, Brig. O.
Boyd-Carpenter, J. A.	Hutchison, Col. J. R. (Glasgow, C.)	Raikes, H. V.
Bracken, Rt. Hon. Brendan	Jeffreys, General Sir G	Ramsay, Maj. S.
Braithwaite, Lt.-Comdr. J. G.	Jennings, R.	Rayner, Brig. R.
Bromley-Davonport, Lt.-Col. W	Kerr, Sir J. Graham	Roed, Sir S. (Aylesbury)
Buchan-Hepburn, P. G. T.	Lambert, Hon. G.	Reid, Rt. Hon. J. S. C. (Hillhead)
Byers, Frank	Lancaster, Col. C. G.	Roberts, Emrys (Merioneth)
Carson, E.	Legge-Bourke, Maj. E. A. H	Roberts, P. G. (Ecclesall)
Challen, C.	Lennox-Boyd, A. T.	Robinson, Roland
Channon, H.	Lindsay, M. (Solihull)	Ropner, Col. L.
Clarke, Col. R. S.	Lipson, D. L.	Scott, Lord W.
Clifton-Brown, Lt.-Col. G.	Lloyd, Selwyn (Wirral)	Shepherd, W. S. (Bucklow)
Cole, T. L.	Low, A. R. W.	Snadden, W. M.
Crosthwaite-Eyre, Col. O. E	Lucas, Major Sir J.	Spearman, A. C. M.
Crowder, Capt. John E.	Lucas-Tooth, Sir H.	Stanley,-Rt. Hon. O.
Davidson, Viscountess	MacAndrew, Col. Sir C.	Stoddart-Scott, Col. M.
Davies, Rt. Hn. Clement (Montgomery)	McCorquodale, Rt. Hon. M. S.	Strauss, H. G. (English Universities)
Dodds-Parker, A. D.	MacDonald, Sir M. (Inverness)	Studholme, H. G.
Dower, E. L. G. (Caithness)	Macdonald, Sir P. (I. of Wight)	Sutcliffe, H.
Dugdate, Maj. Sir T. (Richmond)	McFarlane, C. S.	Taylor, C. S. (Eastbourne)
Elliot, Rt. Hon. Walter	McKie, J. H. (Galloway)	Thorp, Brigadier R. A. F.
Foster, J. G. (Northwich)	Maclean, F. H. R. (Lancaster)	Touche, G. C.
Fox, Sir G.	Maitland, Comdr. J. W.	Turton, R. H.
Fraser, H. C. P. (Stone)	Manningham-Buller, R. E	Vane, W. M. F
Fraser, Sir I. (Lonsdale)	Marlowe, A. A. H.	Wadsworth, G.
Galbraith, Cmdr. T. D.	Marsden, Capt. A.	Wakefield, Sir W. W
Gates, Maj. E. E.	Marshall, D. (Bodmin)	Walker-Smith, D.
George, Maj. Rt. Hn. G. Lloyd (P'ke)	Medlicott, Brigadier F.	Watt, Sir G. S. Harvie
Glyn, Sir R.	Middleton, Mrs. L.	Wheatley, Colonel M. J. (Dorset, E.)
Gomme-Duncan, Col. A	Morris, Hopkin (Carmarthen)	White, Sir D. (Fareham)
Granville, E. (Eye)	Morrison, Maj. J. G. (Salisbury)	White, J. B. (Canterbury)
Grimston, R. V.	Morrison, Rt. Hon. W. S (Cirencester)	Willoughby de Eresby, Lord
Harvey, Air-Cmdre. A. V.	Noble, Comdr. A. H. P.	York, C
Henderson, John (Cathcart)	Odey, G. W.	Young, Sir A. S. L. (Partick)
Herbert, Sir A. P.	O'Neill, Rt. Hon. Sir H
Hinchingbrooke, Viscount	Orr-Ewing, I. L.	TELLERS FOR THE AYES:
Hogg, Hon. Q.	Peto, Brig. C. H. M	Major Conant and
		Brigadier Mackeson.
NOES.
Adams, Richard (Balham)	Alpass, J. H.	Balfour, A.
Adams, W. T. (Hammersmith, South)	Anderson, F. (Whitehaven)	Barton, C.
Alexander, Rt. Hon. A. V.	Attewell, H. C.	Battley, J. R.
Allen, A. C. (Bosworth)	Awbery, S. S.	Bechervaise, A. E.
Allen, Scholefield (Crewe)	Bacon, Miss A.	Bellenger, Rt. Hon. F. J.
Benson, G.	Guy, W. H.	Porter, E. (Warrington)
Berry, H.	Hamilton, Lieut.-Col. R.	Porter, G. (Leeds)
Beswick, F.	Hannan, W. (Maryhill)	Price, M. Philips
Bing, G. H. C.	Hardy, E. A.	Pryde, D. J.
Blackburn, A. R.	Harrison, J.	Pursey, Cmdr. H
Blenkinsop, A.	Hastings, Dr. Somerville	Ranger, J.
Blyton, W. R.	Henderson, Joseph (Ardwick)	Rankin, J.
Boardman, H.	Herbison, Miss M.	Rees-Williams, D. R.
Bottomley, A. G.	Holman, P.	Reeves, J.
Bowden, Flg. Offr. H. W.	Holmes, H. E. (Hemsworth)	Reid, T. (Swindon)
Bowles, F. G. (Nuneaton)	House, G.	Rhodes, H.
Braddock, Mrs. E. M. (L'pl, Exch'ge)	Hubbard, T.	Ridealgh, Mrs. M.
Braddock, T. (Mitcham)	Hudson, J. H. (Ealing, W.)	Robens, A.
Bramall, E. A.	Hughes, Emrys (S. Ayr)	Robertson, J. J. (Berwick)
Brook, D. (Halifax)	Hughes, Hector (Aberdeen, N.)	Ross, William (Kilmarnock)
Brooks, T. J. (Rothwell)	Hughes, H. D. (W'lverh'pton, W.)	Scollan, T.
Brown, George (Belper)	Hynd, J. B. (Attercliffe)	Segal, Dr. S.
Brown, T. J. (Ince)	Irvine, A. J. (Liverpool)	Shackleton, E. A. A.
Buchanan, Rt. Hon. G.	Irving, W. J. (Tottenham, N.)	Sharp, Granville
Burden, T. W.	Janner, B.	Shawcross, C. N. (Widnes)
Burke, W. A.	Jay, D. P. T.	Shawcross, Rt. Hn. Sir H. (St. Helens)
Champion, A. J.	Jeger, G. (Winchester)	Shurmer, P.
Chetwynd, G. R.	Jeger, Dr. S. W. (St. Pancras, S. E.)	Silverman, J. (Erdington)
Cobb, F. A.	Jenkins, R. H.	Silverman, S. S. (Nelson)
Cocks, F. S.	Johnston, Douglas	Simmons, C. J.
Collick, P.	Jones, D. T. (Hartlepool)	Skeffington-Lodge, T. C
Collindridge, F.	Jones, Elwyn (Plaistow)	Smith, C. (Colchester)
Collins, V. J.	Jones, J. H. (Bolton)	Smith, Ellis (Stoke)
Colman, Miss G. M.	Keenan, W.	Smith, H. N. (Nottingham, S.)
Comyns, Dr. L.	Kenyon, C.	Solley, L. J.
Cooper, Wing-Comdr. G.	King, E. M.	Sorensen, R. W.
Corbet, Mrs. F. K. (Camb'well, N.W.)	Kinghorn, Sqn.-Ldr. E.	Soskice, Sir Frank
Corlett, Dr. J.	Kinley, J.	Stamford, W.
Daggar, G.	Lee, F. (Hulme)	Steele, T.
Daines, P.	Lee, Miss J. (Cannock)	Stewart, Michael (Fulham, E.)
Davies, Edward (Burslem)	Lewis, A. W. J. (Upton)	Stokes, R. R.
Davies, Ernest (Enfield)	Lewis, J. (Bolton)	Swingler, S.
Davies, R. J. (Westhoughton)	Lewis, T. (Southampton)	Sylvester, G. O.
Deer, G.	Lindgren, G. S.	Taylor, R. J. (Morpeth)
Diamond, J.	Logan, D. G.	Thomas, D. E. (Aberdare)
Dobbie, W.	McAdam, W.	Thomas, I. O. (Wrekin)
Dodds, N. N.	McEntee, V. La T	Thomas, George (Cardiff)
Driberg, T. E. N.	McGhee, H. G.	Thorneycroft, Harry (Clayton)
Dumpleton, C. W.	McGovern, J.	Thurtle, Ernest
Durbin, E. F. M.	McKay, J. (Wallsend)	Tiffany, S.
Ede, Rt. Hon. J. C.	McKinlay, A. S.	Timmons, J.
Edwards, John (Blackburn)	Mallalieu, E. L. (Brigg)	Titterington, M. F.
Edwards, N. (Caerphilly)	Mallalieu, J. P. W. (Huddersfield)	Tolley, L.
Edwards, W. J. (Whitechapel)	Manning, Mrs. L. (Epping)	Turner-Samuels, M.
Evans, John (Ogmore)	Marquand, H. A.	Ungoed-Thomas, L.
Evans, S. N. (Wednesbury)	Mathers, Rt. Hon. George	Vernon, Maj. W. F.
Ewart, R.	Mellish, R. J.	Viant, S. P.
Fairhurst, F.	Middleton, Mrs. L.	Walkden, E.
Farthing, W. J.	Mitchison, G. R.	Watson, W. M.
Fernyhough, E.	Monslow, W.	Weitzman, D.
Field, Capt, W. J.	Moody, A. S.	Wells, W. T. (Walsall)
Fletcher, E. G. M. (Islington, E.)	Morley, R.	White, C. F. (Derbyshire, W.)
Follick, M.	Morris, Lt.-Col. H. (Sheffield, C.)	Whiteley, Rt. Hon. W.
Fool, M. M.	Morris, P. (Swansea, W.)	Wilkins, W. A.
Forman, J. C.	Morrison, Rt. Hon- H. (Lewisham, E.)	Willey, F. T. (Sunderland)
Fraser, T. (Hamilton)	Mort, D. L.	Willey, O. G. (Cleveland)
Freeman, J. (Watford)	Moyle, A.	Williams, D. J. (Neath)
Freeman, Peter (Newport)	Murray, J. D.	Williams, R. W. (Wigan)
Gaitskell, Rt. Hon. H. T. N.	Nally, W.	Williams, Rt. Hon. T. (Don Valley)
Ganley, Mrs. C. S.	Nicholls, H. R. (Stratford)	Willis, E.
Gibbins, J.	Noel-Baker, Capt. F. E. (Brentford)	Wills, Mrs. E. A.
Gibson, C. W.	Oldfield, W. H.	Wise, Major F. J.
Gilzean, A.	Orbach, M.	Woods, G. S.
Glanville, J. E. (Consett)	Paling, Rt. Hon. Wilfred (Wentworth)	Yates, V. F.
Gooch, E. G.	Paling, Will T. (Dewsbury)	Young, Sir R. (Newton)
Grenfell, D. R.	Pargiter, G. A.	Younger, Hon. Kenneth
Grey, C. F.	Parker, J.
Griffiths, D. (Rother Valley)	Parkin, B. T.	TELLERS FOR THE NOES:
Griffiths, Rt. Hon. J. (Llanelly)	Paton, J. (Norwich)	Mr. Snow and
Griffiths, W. D. (Moss Side)	Pearson, A.	Mr. George Wallace.
Guest, Dr. L. Haden	Popplewell, E

Question put, and agreed to.

Original Question again proposed.

It being after Ten o'Clock, and objection being taken to further Proceeding,

The CHAIRMAN left the Chair to make his report to the House.

Committee report Progress; to sit again Tomorrow.