§ 4.9 p.m.
§ Motion made, and Question proposed, That is House do now adjourn. [Mr. Legh.]
§ Mr. Norman Dodds (Dartford)
In raising the important question of the price of petrol and oil, may I say that I know it is dealt with by several Departments. I am thinking of the Board of Trade, the Ministry of Fuel and Power, the Treasury and the Foreign Office. However, I have already given notice which should enable the questions which I am about to put to be dealt with by the Minister who is to reply to the debate.
As I have said, this is a very important matter, because the price of petrol and oil very much affects the cost of living. It has been urged for a long while that if the heavy tax on petrol and oil were appreciably reduced that would reduce the cost of living. That course has many advocates. At the same time, it does not seem to be sensible that we should advocate a reduction of tax and then leave it to the oil combines to run absolutely rampant in their efforts to make as much money as possible.
1705 Over a period of years there has been evidence to indicate that the activities of the oil companies are such that, if not already, they will rapidly become chief contenders for the title of "Public Enemy No. 1."In that respect the President of the Board of Trade, time after time, week after week and year after year, has been asked whether he would refer the activities of the oil companies to the Monopolies and Restrictive Practices Commission. The right hon. Gentleman has set up an all-time record by the number of times he has said that he is "bearing it in mind." He has said that so often that, a week or two ago, almost everybody in the House beat him to it every time by quoting the magic words, "I am bearing it in mind."I have raised the matter several times. An answer which I received this morning indicates that we are no further forward than we were in 1952.
The record of the right hon. Gentleman is, indeed, a shocking one when we consider the number of times he has been asked to look into this matter and to refer it to the Monopolies Commission. In February, 1952, he was asked by my hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd) whether he would refer the activities of the petroleum companies to the Monopolies Commission. The OFFICIAL REPORT states, at column 64:MR. P. THORNEYCROFT: I will consider the supply of petrol as a possible subject for reference to the Commission when I come to select further references."—[OFFICIAL REPORT, 21st February, 1952; Vol. 496, c. 64.]There is a second quotation which I should like to give. In February, 1953, my hon. Friend the Member for Uxbridge (Mr. Beswick)…asked the President of the Board of Trade whether he has any further statement to make regarding a reference of the oil industry to the Monopolies Commission."qThe reply and further exchanges ran as follows:MR. P. THORNEYCROFT: No, Sir.Mr. BESWICK: Does that mean that the right hon. Gentleman has not yet completed his consideration, or that he has decided not to refer the matter?Mr. THORNEYCROFT: No, Sir. The answer which was given before on this was that the question of this referencewould be borne in mind in considering future matters for reference."—[OFFICIAL REPORT, 12th February, 1953; Vol. 511, c. 584.]That was in 1952 and 1953. A decision is long overdue in this important matter; unless, of course, we are to deduce that 1706 there is no real desire whatever to protect the people from the racketeers in the oil combines.To come to a more recent date, on the 10th of this month my hon. Friend the Member for Broxtowe (Mr. Warbey) referred to the United Nations Report on oil and asked the President of the Board of Tradewhether he will introduce legislation in order to end these arrangements, so far as this country is concerned and to establish price control.In a supplementary question, my hon. Friend asked:Is the right hon. Gentleman aware that the Report referred to says that some Middle East oil companies are making 400 percent. profit on every gallon of oil? Will he do nothing to put an end to this costly racket?Again, I quote the Minister's reply:I did say in answer to the previous Question that I was continuing to bear these things in mind.Then, we had a visit to the Dispatch Box by my right hon. Friend the Member for Ipswich (Mr. Stokes), who said:Has the President really examined the matter yet? Is he aware that it costs only £1 a ton to put oil into a tanker in the Persian Gulf, whereas it costs nearly £3 10s. in the Gulf of Mexico and the result is that the price is kept up to £4 10s. a ton to keep the American oil companies in business?The right hon. Gentleman replied:I said that I shall continue to bear this industry in mind as a possible reference to the Monopolies Commission."—[OFFICIAL REPORT, 10th March, 1955: Vol. 538, c. 601–2.]It seems that, whatever Department we deal with, we make no progress at all, but I think that the prize for the most nonsensical answer must be awarded to the Ministry of Fuel and Power. It is probably just as well that this question is not put to that Ministry very often. On 7th February last, my right hon. Friend the Member for Huyton (Mr. Wilson) raised the question of petrol and oil prices. He referred to the index of Gulf prices and asked the Minister of Fuel and Powerwhether … he will institute price control on petrol and oil so as to protect the motorist and public transport services against excessive prices.The Parliamentary Secretary to the Ministry of Fuel and Power said, in reply, that… competition provides the protection against excessive prices."—[OFFICIAL REPORT. 7th February, 1955; Vol. 536, c. 169.]1707 After the experiences we have had in the last two years, how can the Minister claim that competition in the oil industry is really helpful to the public interest?
Only a few weeks ago, we had an example of what can happen, when five of the largest companies put up their prices overnight with the precision of the Brigade of Guards. There is substantial evidence to indicate that the oil companies are ganging up and that all that is necessary is for one of them to declare that it is putting up its prices, and then, by a gentleman's agreement, which other people call a "racket," the other companies fall into line.
The amazing aspect of the matter is that the world production of oil is expanding rapidly.Last year, the Western Hemisphere was glutted with oil to such an extent that it was being exported to other parts of the world. In 1954, production reached the record figure of 681 million tons, or 26 million tons more than in 1953. One would have thought, when reading about this business of private enterprise, that to try to increase consumption the price would have been reduced and not increased. It cannot be said that prices have been put up because the returns to the oil companies were falling, for in 1954 the record profits made by the oil companies represented an increase of £8½ million over 1953.
We should bear in mind that four-fifths of the petrol and nine-tenths of the diesel oil is being used in carrying passengers and goods, and that, therefore, it must have a very big effect on the question of the cost of living. It has been reported that the Birmingham transport authority received a shock, because, overnight, its fuel bill was increased by £25,000. That should be a warning to the London Passenger Transport Board which contemplates—or which, probably, has already agreed—changing over from electric trolley-buses to diesels, because there is at least some control over the price of the power that drives the trolley-buses. It looks, once again, as if we are to be at the mercy of the oil interests unless something is done to deal with them.
As Co-operative Members, we are also concerned. Before the last war, several co-operative societies had their own garages and, when they could get it from 1708 the non-ring concerns, used to sell petrol to the public, and gave a dividend. But during the war, as a result of the bringing into existence of the Petroleum Board, that arrangement was ended, and today no dividend can be given by co-operative societies on the sale of petrol and oil. If that were possible, there is no doubt that there would be an extension on the part of the co-operative societies of garage work and of the sale of petrol and oil to the public. That is another reason why this restrictive practice should be broken down.
I, together with my right hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton), have the honour of having on the Order Paper a Motion asking that there should be a reduction in the fuel duty in this year's Budget. I am sure that my hon. and gallant Friend is as concerned as I am that we should not ask for this reduction simply for the purpose of providing more millions for the combines.
§ Mr. John Taylor (West Lothian)
I am sure that my hon. Friend will bear in mind that there is at least one part of this industry which is an exception to his general case. A remission in the petrol duty for the shale oil industry, which produces petroleum and diesel oil and which is a community interest, is essential for the survival of that industry, and not for the purpose of making great profits.
§ Mr. Dodds
I am very greatful for my hon. Friend's intervention. I should like to see the Chancellor of the Exchequer give increased aid to an industrywhich is vital to the interests of the country so that it shall not only survive, but be able to prosper and increase its business.
The other day, I asked the Secretary of State for Foreign Affairs what consideration had been given to the Report by the United Nations on the activities of the international oil cartels and, in reply, the Joint Under-Secretary of State for Foreign Affairs said:It is now being considered by Her Majesty's Government with a view to preparing suitable instructions for the United Kingdom Representative at the meeting of the Coal Committee of the Economic Commission for Europe on 9th and 10th March, when this Report will be discussed by the participating Governments."—[OFFICIAL REPORT, 2nd March, 1955; Vol. 537, c. 2038.]1709 All I can say is that, if that is the behaviour of the representative of Her Majesty's Government sitting on that Committee, it really means we should be much more alarmed than ever at the Government's attitude towards the racketeering that is going on in the oil industry.
I wish to draw the attention of the Minister to a report in today's "News Chronicle" which is headed "Britain Soft Pedals It." The report says that some angry remarks were made in the Committee about the revelations in connection with oil from Saudi Arabia which was produced at £2 and sold at £12 10s. It goes on to say:Before the Commission spokesman could reply, the acting leader of the British delegation, Mr. Reginald Maudling, M.P., was on his feet.Those who have read the report in this and other newspapers will know that the representative of Her Majesty's Government appears to have soft-pedalled the United Nations Report.
I ask the Minister two questions. First, after years of request to have the activities of the oil companies referred to the Monopolies Commission, is he now able to give us a decision one way or the other? Secondly, what do the Government intend to do about the matter? What action will be taken to see whether the allegations reported in the newspapers are correct? The Minister must realise that the whole nation will now want to know what is to be done about the United Nations Report.
§ 4.26 p.m.
§ The Minister of State, Board of Trade (Mr. A. R. W. Low)
I begin by thanking the hon. Member for seeing that Ihad notice of the questions that he was going to raise. As he has said, they concern a number of Departments besides my own. I shall do my best to deal with the points which he has made. First, he made strong accusations against the oil companies, which formed the basis of his arguments that their activities should already have been referred to the Monopolies Commission.
I shall deal with that point at the outset. It would be quite wrong for me to discuss in this House or anywhere else the merits of those arguments, or to debate in any way the suitability of referring the activities of the oil industry, or 1710 any aspect of the supply of oil or petroleum products, to the Monopolies Commission. I feel perfectly safe, however, in categorically denying the accusation that the oil companies are "Public Enemy No. 1."
§ Mr. Low
I am glad that the hon. Member has withdrawn that accusation. It has never been the practice of this Government or, indeed, the previous Government, to discuss questions which might be referred to the Commission before they have been so referred and reported upon, or, indeed, to announce in advance any of the subjects which are to be referred to the Commission. There are some quite good reasons for this, which I shall explain.
First, for me or for any Member of the Government to say that a certain subject seems to be a specially strong candidate for examination might appear to condemn the industry in advance and thus to prejudge the questions which it is the Commission's function to decide. In fact, if I discussed any of the merits of the case with the hon. Gentleman I should be doing the job which Parliament has deliberately given to the Commission.
Secondly, to indicate in advance of actual reference that a particular industry was to be referred to the Monopolies Commission would add unnecessarily to the already substantial period which elapses after reference, during which the industry referred and its relations with its customers are bound to be unsettled. I think that the hon. Member will concede that point. Thirdly, it is the duty of my right hon. Friend the President of the Board of Trade to keep under review all the matters which are within the scope of the Monopolies Acts. A great many suggestions and requests for reference to the Commission have been made since 1949 and duly reported in the Annual Report by the Board of Trade on the Monopolies and Restrictive Practices Act. Petroleum,in fact, was first included in such a report in 1950, and not in 1952.
Those lists are not exhaustive; other suggestions have been made or have occurred to the Government, and other suggestions will be made. The hon. Gentleman objects to the words which 1711 my right hon. Friend has used in answer to a Question by him and his right hon. Friend, which were that he was bearing in mind the points made. That phrase is not very different from what former Presidents of the Board of Trade used to say before October, 1951. They had a different formula, which meant very much the same thing. They used to say:This matter, together with many others, will be considered when the time comes for the Board of Trade to make further references to the Monopolies Commission."—[OFFICIAL REPORT, 26th June, 1950; Vol. 476, c. 190.]Those words were used by the right hon. Member for Huyton (Mr. H. Wilson).
I am sure that the Labour Government were right to announce their decisions about subjects for future references at the time the reference was made and not before. That is what we do and what we think we are right in doing.
The hon. Gentleman mentioned the time—a long period, I grant him that—during which this matter has been under public discussion. I have already said that it would not be proper for me to go into the merits of the matter.
§ Mr. Low
If the hon. Gentleman will bear with me I can explain some of the difficulties which surround this question. In the course of a quotation which he adduced to support his argument, the hon. Gentleman referred to the relationship of the Gulf prices and costs in the Middle East, with the prices charged here and in Europe. That at once brings to mind the fact that the problem is not just British but is an international problem affecting companies outside the jurisdiction of the United Kingdom; indeed, some parts of the problem seem to be quite outside the terms of reference of the Monopolies Commission.
It occurred to me that that fact might be one of the reasons which prompted the right hon. Member for Huyton to say during the Monopolies debate, and referring to the President of the Board of Trade:I did not ask him to refer the oil industry to the Commission; that might be very difficult, anyway, because of the Act."—[OFFICIAL REPORT, 24th February, 1955; Vol. 537, c. 1497.]1712 That is some indication that there are difficulties, and is a view about reference to the Monopolies Commission quite contrary to the hon. Gentleman's own view.
I think he will see that practically any problem relating to the oil industry is likely to become an international problem or a problem with international aspects. I am not saying that one cannot try to find aspects of the problem which are mainly or almost wholly concerned with the domestic market, but even then—I do not say that it must be, but I ask the hon. Gentleman to agree that it may be—international questions may come in, even if they do not dominate the matter.
§ Lieut.-Colonel Marcus Lipton (Brixton)
At this point would the hon. Gentleman agree that one of the difficulties is that the Anglo-Iranian Oil Company, which is responsible for the distribution of about one-third of the consumption in this country, is controlled by Her Majesty's Government, and could therefore be told to engage in some more honest competition with the American oil companies?
§ Mr. Low
If it is a difficulty, the hon. and gallant Member is adding to my argument. I do not want to comment upon it but to consider the case put up by his hon. Friend.
The hon. Gentleman referred to the E.C.E. Report which was published yesterday and about which newspapers today have comments. It was considered in the Coal Committee of the Commission. Our representatives inthat Committee reserved their position. The Secretariat were invited promptly to publish the Report on their own responsibility. The Report was, in fact, produced by the Secretariat, but it is an analysis of the problem as seen from the European point of view. But there are omissions in it—he will find that to be so if he studies it clearly—and the Report does not suggest any particular steps that ought to be taken. Other Governments are, no doubt, carefully considering the matter, and that indeed is our position.
The hon. Gentleman asked me what the views of the Government are. There are reports in certain newspapers, although, as he will find if he studies the newspapers, all the reports are not the same.
§ Mr. Low
This problem affecting several countries outside Europe cannot best be discussed in the Economic Commission for Europe because, as the Economic Secretary said yesterday, a study to be effective would have to embrace an examination on a wider basis and, as the Economic Secretary has also said, the Report, though a useful analysis of some parts of the problem, omits or gives too little emphasis to several important factors—for example, investments and, amongst other things, the arrangements for 50–50 profit-sharing with Middle East Governments. Those are important points. I think that answers the hon. Gentleman's question. He also alluded to price control.
§ Mr. Low
Ihave explained the matter relating to the Monopolies Commission. I have tried to explain that the Government think it wise to consider the Report, and that is what they are doing.
I should like to deal shortly with theprice control suggestion. I do not know whether the hon. Gentleman is aware that during the life-time of the Labour Government when prices were controlled, they were controlled by reference to the Gulf price. I do not know whether he is also aware that since price control was removed by this Government at the beginning of 1953, the price of the pool grade petrol has dropped by 1¾d.. which is quite a substantial fall even after allowing for the recent increase of ½d. I do not know whether the hon. Gentle- 1714 man believes in price control to deal with this problem, but I would ask him to appreciate that price control is not the solution of all our problems, and certainly before a system of price control is instituted one must find a yardstick,which is one of the problems.
I am not complaining that the right hon. Gentleman thought it right to debate this important matter here today. I think he has hit upon a very good day to discuss it, a day on which all the newspapers are referring to the Report. Of course, it is an important matter, but I hope I have explained to his satisfaction and to the satisfaction of the House the position of the Government on the points which he has raised, and I hope that he will now understand more clearly why he has received consistent answers from members of the Government on this important question.
§ Lieut.-Colonel Lipton
The Minister may have satisfied himself, but I do not think he has satisfied anybody else. He does not believe in price control. He does not believe in fair and honest competition between oil companies. There is an oil company in which the Government hold the majority of the shares. Why does not the Anglo-Iranian Oil Company engage in honest competition with other companies, and provide cheaper—
§ The Question having been proposed after Four o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
§ Adjourned at twenty-one minutes to Five o'clock.