HC Deb 02 July 1958 vol 590 cc1439-64

(1) On and after the sixth day of August, nineteen hundred and fifty-eight, hydrocarbon oil produced from shale mined in Scotland shall be exempted from excise duty, and accordingly, on and after that date section two of the Finance Act, 1950 (which imposes a duty on hydrocarbon oils), shall have effect with the addition at the end of subsection (2) of that section of the following words, that is to say, "or (c) to oils produced from shale mined in Scotland".

(2) The powers of the Commissioners of Customs and Excise to make regulations under section one hundred and ninety-eight of the Customs and Excise Act, 1952 (which empowers those Commissioners to make regulations relating to hydrocarbon oils), shall include power to make such regulations as appear to the Commissioners to be required to give effect to the last foregoing subsection.

(3) Where excise duty has been charged before or after the passing of this Act, and by virtue of this section no such duty should have been charged, or the duty should have been charged at the lower rate than that at which it was in fact charged, the person by whom the duty was paid shall be entitled to repayment of the amount of the overcharge.—[Mr. John Taylor.]

Brought up, and read the First time.

Mr. John Taylor (West Lothian)

I beg to move, That the Clause be read a Second time.

We are still dealing with oil, though now not with the use of oil, but with its production. This Clause deals only with oil produced from shale mined in Scotland. It does not affect oil produced by any other means, or from any other source. Therefore, its scope is strictly limited and the amount involved on this occasion is very small. Nevertheless, the Clause is of vital importance to the shale oil industry. It is not an exaggeration to say that this really is a matter of life and death to the industry.

The shale oil industry of the Lothians was the very first oil-producing industry in the world. It started to produce oil from shale mined in Midlothian and West Lothian in 1858, just 100 years ago. The production of oil is now a mammoth industry involving countless millions of capital, bedevilling international politics and constantly threatening the uneasy balance of world peace. But the pioneer oil industry of Midlothian and West Lothian has no responsibility for those troublous consequences. For 100 years it has steadily continued to produce oil from shale. First it produced burning oil, later motor spirit and then Derv, diesel oil, which is peacefully pumped into the home market without involving the use of tankers, pipelines, payments to desert sheiks or Texan oil barons, without treaties, pacts or guarantees, without any protecting fleets, armies or aircraft

It is more costly to produce oil from shale than from wells, but because it involves none of these gigantic incidental expanses, shale oil for the Government is the cheapest oil in the world. The shale oil industry never had any substantial financial difficulties or problems until the introduction of the Excise Duty on oils, but from that day onwards it has had an unceasing struggle for existence. That is not because it was inefficient or badly managed, or badly served by its employees. It is a highly efficient industry, extremely well managed and loyally served by a devoted, but, alas, diminishing body of operatives. The industry's present financial difficulties are created entirely, wholly and exclusively by taxation.

As the right hon. Gentleman knows, from time to time reductions in the rate of duty per gallon have been made in recognition of the fact that it is unjust to place the same burden on a struggling home industry as is borne by the product of the relatively prosperous import industry, which is produced at a much lower cost per gallon. At the moment, the level of duty on all home-produced hydrocarbon oils is 1s. 3d. per gallon. In practically every other section of the indigenous oil industry, oil is a by-product, but in the shale oil industry it is the main product.

I have said that it is more costly to produce oil from shale than to get it out of the desert, pipe it, tank it, refine it and transport it—yet the retail price of motor spirit or Derv is the same in all pumps, whether the pump delivers spirit from Kuwait or from West Lothian, so that our pioneer native oil industry has to sell its main product at a price fixed by its competitors—who have a much lower cost of production per gallon—and then it has to pay 1s. 3d. tax on every gallon sold. The shale oil industry cannot do both these things. The fact is that on the acceptance or rejection of the Clause depends the life or death of the industry.

The right hon. Gentleman can be sure that I would not seek exemption for the industry without very compelling reasons. I will mention a few. First, this is a unique industry. It is the only industry in Britain which produces oil from shale; in fact, it may be the only industry in Europe producing oil from shale, with the exception of Sweden. Secondly, the industry has made every conceivable endeavour to cut its costs to the irreducible minimum. Last year it cut out its least productive sections and closed down some of its mines and establishments, at the cost of the jobs of 700 workers in the industry—and that is a heavy cost. This year more establishments are being closed down, and another 300 oil workers have lost their jobs.

One-third of the labour force of the industry has been sacrificed in two years in this endeavour to continue the industry, and the 1,000 people involved have become redundant in an area which already has a difficult unemployment problem, and in which there is no sign of any replacement industry. In any case, as we all know, a replacement industry for any industry affected by changes in industrial techniques cannot be established in a week, a month, or even a year; it takes a long time to replace one industry by another.

Any insistence upon continuing to extract this duty will sooner or later—and I feel that it will be sooner rather than later—mean the closing down of the industry. If, unhappily, that should happen, the Treasury would lose not only its present revenue, but also all the normal taxation yield which comes from an operating industry.

9.0 p.m.

I take it that the whole Committee will agree that it is unwise strategically for this nation to sacrifice any source of oil, however small. The existing shale measures in the Lothians are sufficient to keep the industry in production for at least twenty years, and possibly twenty-five years. In that period it would produce, at the most conservative estimate, 300 million gallons of oil, which is not an inconsiderable amount.

That is what is at stake in this Clause. It is not the £750,000 or rather less which the Treasury would lose in duty if the Clause were accepted. It would lose that in any case if the industry closed. Also at stake—and to me this is a very important consideration—is the livelihood of the 2,000 workers and their families and the tradespeople and other incidental people who depend indirectly on the industry. Their livelihoods are at stake.

An oil worker said to me the other day, "Why do the Government continue to persecute this little industry? What have they against it?" No amount of argument or reasoning will ever convince these people that the industry is not being deliberately strangled by the stubborn insistence of the Treasury on its pound of flesh. I am no Portia, but the insistence on this pound of flesh will have the same result on the victim as that intended by Shylock.

Last year, when we debated an almost identical Clause, the then Financial Secretary seemed to hold out a gleam of hope. He said that the Government could not agree to help the industry by fiscal means. He said that the Government did not think that that was the right way to do it, but he also said that there were other ways of assisting the industry. We wondered what they were, but because he made the statement so definitely and, it seemed, with some degree of hopefulness, we waited expectantly. The oil industry wondered what was meant. Perhaps there were ramifications involved. The company concerned, Scottish Oil Limited, is a subsidiary of B.P., and it was thought that as the Government held the majority of shares in B.P. they might have in mind some other means in that direction.

We waited, but nothing happened, and at last, in the spring, the industry, thinking that nothing was to happen, had to take these very drastic steps and to make these further closures of mines and establishments which were efficient and which had a good production potential. They had to be closed, and the country has lost the source of oil from those mines.

If the Government accepted the Clause the industry would continue to produce its quota of this precious commodity for twenty years. I said earlier that the industry started 100 years ago in 1858. It has served the country well for 100 years. At one time it was one of Scotland's major industries. People in Scotland are regarding the fate of the shale oil industry with more than usual concern. It is not merely another Scottish industry going under; it is something symbolic. It is so easy to assist this industry, at a cost of less than £250,000, and to allow it to continue its useful work for another two decades without any substantial loss to the Treasury.

Feelings in this matter are deep, strong and sincere, even outside the bounds of my constituency or that of my hon. Friend the Member for Midlothian (Mr. Pryde), who would have been glad to be here had he been well enough and who has fought for so many years for the same end as that which I am trying to achieve tonight. I wish that we could celebrate the centenary of the industry in a more fitting manner by giving it not only a reprieve but a new lease of life.

The industry has said, "If we could have this relief and not have to continue struggling and cutting down and pruning until we die the death of a thousand cuts, we should be able to develop and bring new methods of production into the extraction of the oil, which would enable us to get more oil per ton of shale produced from the mines."

I ask the Government not just to say "No" on this occasion, but to give the matter some consideration. I hope they will say "Yes", because I believe the case is unanswerable. There can be no reasonable ground for turning down this request. The argument that other sections of the indigenous hydrocarbon oil industry would expect the same treatment is not sound, because other sections of the industry appreciate the special and unique circumstances of the Scottish shale oil industry.

If the Chancellor has hardened his heart and is asking for his pound of flesh, I hope that he will hesitate for a moment and will not bluntly turn down this request as has been done on previous occasions. I hope that, instead, he will consult with us and with the industry, and if the fiscal means of achieving what is desired are distasteful to him, will see what other means can be used.

The case for the abolition of the duty on this valuable, efficient, pioneering and important section of our Scottish home industries is very strong. This industry has in its day supplied many pioneers to the oil industry all over the world. Technicians have gone from the Lothians to oil refineries all over the world. The Chancellor has had some experience of industry dying in his own part of the country. There is no need for this industry to die. It ought to live, and I hope the right hon. Gentleman will encourage it to do so.

Sir James Henderson-Stewart (Fife, East)

I was impressed by the case made by the hon. Member for West Lothian (Mr. J. Taylor). He always puts his case so modestly and moderately that a moderate and modest man like the Chancellor of the Exchequer must be bound to be impressed.

I know the arguments against taking action along the lines suggested in this proposed Clause. I have used them myself from the Front Bench. They are substantial arguments from the Treasury point of view. Yet I have always wondered whether this or any Government would be right to accept only the Treasury view.

When I was a very young man I remember being on the staff of Lloyd George and hearing him say "Remember, the State has many ledgers." That is a very wise remark. What he meant was, "You may well be losing money in one Department, but you may be making money in another." The Government may well be saving or gaining money for the Treasury by maintaining this present duty, but if, at the same time, by that very means they are losing in the general revenue of the nation, is it not the duty of the Chancellor to take the broader national view?

I put this with great deference to my right hon. Friend, because he is a man of very liberal views, and I know that he will understand me in the somewhat difficult position in which I find myself tonight. The Chancellor must know that today is a very difficult moment in Scotland at which to look complacently upon an industry, however minor, gradually falling away. This morning, we have the Report of the Scottish Council for Development, and it is in all the Scottish papers. I am bound to say that it is a disturbing report. I do not accept everything that the Council says, any more than I did when I was a member of the Council, but this much it brings out—that the recession or the contraction, whatever we like to call it, north of the Border appears to be more intense than it is south of the Border. We have undoubtedly pockets of unemployment that cause all of us, and must cause my right hon. Friend, acute anxiety, and we do not, for the moment, see any easy or ready means of relieving their distress.

The Lothians, where this industry is carried on, like other parts, is suffering distress. I know that the Government are doing what they can—and I was in at this at the early stage—to introduce new industries. I know that they have made strenuous efforts, but we also know that not much success has attended those efforts. It is not their fault. It is very difficult to bring new industry anywhere. We have to get the people available, provide the sites and a number of other things in order to induce people to go. We cannot compel them to go, and, while I think it is nobody's fault, the fact is that we have not had in the last year or two the introduction of these compensating industries which might have relieved the situation to some extent.

I think, with great respect, that my right hon. Friend ought to pause before he rejects this proposed new Clause outright. I know very well that the total output of this industry in this form of oil is minute compared to our national needs. I think the total production amounts only to a quarter per cent. of the total United Kingdom need. That is true, and it is no use pretending that it is anything else. We may say, therefore, that it does not matter very much to the total United Kingdom needs if that small amount of oil were to disappear; but is that argument quite as sound as it appears? Is it wise in a world like this, where there is so much uncertainty, to destroy even this small part of the indigenous oil production? I ask myself this question, and I do not find it easy to answer. It does not seem to me to be sound nationally to allow even some indigenous oil production to fall away.

For these and a great many other reasons which I could adduce, I feel disposed to support the hon. Member for West Lothian in this Amendment, at any rate to the extent of pleading with my right hon. Friend not to turn down the case he made. I have no authority to speak for my Scottish colleagues on this side of the Committee, but I have a strong impression that most of them share my views on this matter, and I think that the majority of Scottish people share my views.

Therefore, while I do not ask or expect the Chancellor to come tonight with a cast-iron answer to our problem and our plea, I do ask him not to reject this Amendment out of hand. If he cannot accept this Amendment in its present form, I beg him to offer us the opportunity, as the hon. Gentleman opposite has said, to confer with him and with the industry in order that we may achieve a form of alternative so that this small indigenous but important part of Scottish industry can be maintained.

9.15 p.m.

Mr. Thomas Oswald (Edinburgh, Central)

I have some personal knowledge of the industry itself. I am more than grateful to the hon. Gentleman the Member for Fife, East (Sir J. Henderson-Stewart) for what he has said. Although he suggested that he has not a mandate to speak for all his colleagues, I am certain that he was echoing their sentiments about this Scottish industry and the sentiments of the Scottish people also.

The historical background to the industry has been stated in the House of Commons on many occasions by hon. Members of both sides. My main concern in making an appeal to the Chancellor is this. If he is not prepared to assist, he will be condemning this very important industry to death. Not long ago there were over 12,000 operatives working in and dependent upon the industry in the Lothians. Today, there are only 3,000 people working, and there is the likelihood of a very large number becoming redundant in the very near future, the more so if the Chancellor is not prepared to accept the new Clause before the Committee at the moment. Only one-quarter of the original staff is being retained.

Just a few weeks ago, 300 men were declared redundant at the Addiewell Crude Oil Works and also at the Bum-grange pit itself. We have information also that the Roman Camp Crude Oil Works and the three supporting units are being dismantled. It is hardly credible that, at this moment, the plant is actually being dismantled. This, of course, has thrown more than 1,000 men out of work.

The unemployment figure for Scotland is just under 80,000. If we cannot save this industry, we shall automatically put many more highly skilled people on the industrial scrapheap. I ask the Chancellor particularly to take note of developments at the Westwood Oil Works. It is the most up to date in the world. All expansion in that establishment has been halted because its work is being strangled.

Whole communities in West Lothian and Midlothian have been asked to stand still because, and only because, the existing tax on oil produced in the Scottish shale oil field is crippling the industry. The future of the industry rests squarely with the Chancellor and with no other person. His decision will spell either encouragement for the future or it will spell despair and the end of a very important industry.

The industry is on record as saying that, if the present tax is removed, it is ready, willing and prepared to undertake to re-employ all the dismissed personnel and, indeed, to employ others in addition to those already declared redundant. On top of that, they are ready, willing and prepared to spend at this moment £1 million on new plant to enable them to continue their development. I know that the Chancellor's argument is that the Government cannot afford to lose the £700,000 which is collected annually in tax from shale oil products. But, of course, if the Chancellor persists in this crippling burden on the industry he will stop all production and will lose £700,000 every year. It is like the present-day theme that the workers have to produce more, but we cannot expect them to produce more if we deny them the right to produce.

The Scottish situation has always required nursing, because we live mainly on the basic industries. In Scotland, we do not have a diversification of industry. In the areas where we have had diversification in the past we find that much of the new factory space is standing empty because those whom we persuaded to come north of the Border are now telescoping their industries, with the result that many people in the Lothians are unemployed, even outside the shale industry. It is estimated that about 450 million tons of crude shale are still untapped in the area. What a tremendous potential. Must this source of valuable oil be allowed to remain untouched if the industry goes bankrupt?

It is on record that the Scottish motor trade, in making representations to the Government, has pointed out that the shale industry supplies four-fifths of the needs in running public transport in Scotland alone. Over 18 million gallons of diesel oil are produced annually from the existing plant. If an opportunity were granted to the industry to develop, the total gallonage could be vastly improved and would enable a tremendous amount of dollars to be saved through our not having to import the oil.

A very important factor is that it has been shown that the quality of the oil is very much superior to other oils. That is unchallenged. That is supported by the Report of the Falmouth Sub-Committee on Oil from Coal by the Ministry of Power and by the Institute of Petroleum Technology. It is reported that the latter body has said that Scottish shale oil is an ideal base for diesel oil. The industry supplies as one of its byproducts 5,000 tons of paraffin wax annually, which is purchased by manufacturers of electrical installations and is used in the making of matches and cosmetics. A very important factor arises from this. There is no comparable source of this wax anywhere else in Britain. If the industry is forced to close down, then the total tonnage required will have to be imported at an annual cost of well over 1 million dollars.

Unemployment is mounting in the Lothians. There is little or no other industry. Even the light industries recently introduced into the area are closing down. It seems tragic that the pioneer industry of the world's oil production should be deliberately throttled by the Government, as it is being throttled if the Chancellor is not ready and willing to repeal this tax.

The industry is not asking the Government for a subsidy. It is ready and prepared to go ahead itself. All it is asking is to be relieved of this dreadful burden. It is asking to be kept alive. If a remission of this tax can be granted tonight, salvation will come to the industry and it will be enabled to continue production.

For 107 years, oil has been continuously produced. It has proved a useful source of revenue to succeeding Governments. To my mind, it is sheer folly to kill the goose that lays the golden eggs or deliberately to crush the industry to extinction, as is now happening. As far back as 1851, the original intention of Robert Young, the man who started production of oil, was to produce paraffin oil for household use and the lamps that we had at that time. Then, just a century ago, we really went into production in producing in quantity.

Since the inception of the industry a century ago, great strides have been made not only in the production of the oil but with numerous by-products. Even the spent shale is being recovered and made into bricks for house and factory building. At the £6½ million B.P. chemicals plant at Grangemouth, the whole of the ground was recovered from the sea with spent shale and the whole of the new plant was built with bricks made from spent shale in the Lothians.

The producing company has had many setbacks in the past century, but it has continued, even in adversity, to keep the retorts and the refineries in production. Today the industry is dying, but the Government can resuscitate it by the simple expedient of conceding the new Clause, which has been introduced by my hon. Friend the Member for West Lothian (Mr. Taylor) in his usual able manner. I, too, regret that my hon. Friend the Member for Midlothian (Mr. Pryde) is not present, as his constituency is very much affected as a consequence of the present position.

I appeal to the Chancellor, with all the sincerity I can command, that if he gives remission of this tax he will be enabled to save an important industry in Scotland and bring relief to the hundreds of families who are still dependent upon the production of oil from the shale industry.

Sir David Robertson (Caithness and Sutherland)

Like all other Scottish Members, I am very anxious about the situation of the shale industry in West Lothian and I intensely dislike the thought of any industry being closed down, particularly one where it all began. This is the pioneer oilfield, I believe, of the world. The original research was done by the chemist Robert Young in extracting oil from shale. In this day and age, when it is the only oil we have produced in Britain, it seems extraordinary that any Government should want to put it out of business.

Men have gone out from this field to all over the world, to the fields in America, in the Middle East and elsewhere. Lord Strathalmond, who recently retired from the chairmanship of the British Petroleum Company, was, I think, the grandson of the original Robert Young. At least, his grandfather, his father and he himself were all trained in the oil industry at Pumpherston, and he became the head of the great British Petroleum Company which brought great wealth to this country.

Alexander Fraser, an old friend of mine who went to school with me in Glasgow, went from the same company in West Lothian to become the President of Shell Oil and of Shell Union in America. Not only, therefore, was this a pioneer project which has been carried on for over a century, but its men have gone out and made a great contribution to the oil industry of the world.

9.30 p.m.

For those reasons alone I think the Government should look very carefully before they decide, because of the tax, to close this industry. Hon. Members who have already spoken have made it abundantly clear that it is only the imposition of the tax, levied by this Committee, which is causing this industry to be threatened with extinction. That is wrong, and it is within the power of this Committee, provided, of course, the Chancellor and his colleagues in the Treasury agree to the arguments which have been put so well before us tonight, to say this industry should be allowed to continue.

But there is surely another reason why it should. We are spending vast sums of the £5,000 million which we are raising from the taxpayers of this country every year in trying to defend overseas oil on which we are so largely dependent. Both sides of the Committee seem to approve this expenditure to protect oilfields abroad on which we are so dependent, but is it right to do that and, at the same time, deliberately to close down an oil industry which, as the hon. Member for Edinburgh, Central (Mr. Oswald) stated a moment or two ago, is producing four-fifths of the diesel oil to run Scottish transport? Can Britain afford to do that? It may be, as my hon. Friend the Member for Fife, East (Sir J. Henderson-Stewart) stated, a very small quantity, taking into account the United Kingdom's need for oil, but it is home-produced. It requires no defence money spent upon it. And it provides valuable employment for our men.

I am fully convinced from what I have heard from people much better qualified to speak on this matter that this industry can produce shale oil more cheaply and more economically than has been done in the past. Now it is threatened with extinction by a tax levied by this Committee—by us, every one of us in this Chamber. That seems to me to be wholly wrong. This principle of "Do not break the front" is one which I can never understand. There are always exceptions to every good rule. Cannot there be an exception to this one? I am perfectly satisfied that Scotland does not like this tax. I do not like it. I do not think any Scottish Member likes it, and I strongly urge the Chancellor to look again at this and make an attempt to save this industry simply by taking off the tax.

Dr. J. Dickson Mabon (Greenock)

The Chancellor will have gathered by now that what cotton is to Lancashire and jute is to Dundee shale oil is to The Lothians, and I do not apologise for intervening in this debate at this juncture. I should like to put the point in two ways, first, as a Scotsman, a Scottish Member, who knows intimately Scotland's economy.

It seems to me absolutely outrageous and insane that in one and the same country and at one and the same time we should be trying to create opportunities for employment in some localities while in another locality by fiscal action affecting capital arrangements we are closing down a source of employment. It seems to me a ridiculous position. This paradox has to be explained, if it is a paradox, in some way.

Last year we were told by a Treasury Minister that there were other measures by which this industry could be helped. We have not seen any apparent demonstration of those other methods, and if they have failed, or if they do not exist, then surely the Chancellor should tell us tonight that it is the Government's policy that this industry is doomed and that we shall have to find alternative means of giving employment to its people. Any other answer would be equivocal, unless the Chancellor accepts the new Clause and the industry thus has a new lease of life.

If he does not say so quite bluntly and in so many words does it not follow—and now I speak as a United Kingdom Member—that we are to spend a great deal of money in building factories to provide alternative work for the men rendered unemployed by the closing down of the shale oil industry?

I understand that it will cost the Government half a million pounds if they carry out their promise, as I certainly hope that they will, to build a factory in Greenock which will employ 500 men in 1960. If this industry is to be bankrupted in a few years' time, it follows that we shall have to spend a great deal more money to establish factories of that kind. This seems to me absolutely crazy finance. I cannot see the logic of imposing a tax which brings in this amount of money and pulls down an industry, while, at the same time, we face the fact that we should have to spend a great deal more money in resurrecting the area if the industry closes down.

Mr. James H. Hoy (Edinburgh, Leith)

In addition, there is the tremendous cost of unemployment benefit.

Dr. Dickson Mabon

I accept that very valid point.

While the Chancellor may have been engrossed in the historical background of this industry and have regarded us Scotsmen as sentimental about it, he should face the stark physical financial facts of the position and tell us how in all sanity this tax can be defended at present. If he were to say that temporarily it would be suspended, that would be welcomed by both sides of the Committee. That would be satisfactory in itself, even if in the process of time we could not save the industry completely.

Miss Margaret Herbison (Lanarkshire, North)

I support the new Clause. My hon. Friend the Member for West Lothian (Mr. J. Taylor) is my next-door neighbour. My constituency borders on The Lothians, and I add my plea to those made on behalf of this industry from both sides of the Committee. Every Scottish Member who has spoken is in full support of the Clause. It seems to me senseless that the Government, for the sake of £¾ million in such a huge Budget, intend to accept the responsibility for closing down completely this oil industry in Scotland. I know the villages in the Lothians. I know the people well, and I can vouch that the men and women in these villages just cannot understand the Government's attitude on this matter of taxation.

Mr. E. G. Willis (Edinburgh, East)

Neither can anybody else.

Miss Herbison

Today the Minister of Labour, in the course of answering Questions from Scottish Members, showed quite clearly that he was worried about the high and growing level of unemployment in Scotland. I am sure that if the Chancellor had a word with the Minister of Labour he would find that his right hon. Friend, if he is seriously worried, would be adding his voice to the voices which have been heard tonight in support of taking away this taxation from the industry.

The hon. Member for Caithness and Sutherland (Sir D. Robertson) has spoken very clearly and forcibly about the amount of money that we are spending on defence, some of it to safeguard oil interests in other parts of the world. Are the Chancellor and the Government quite certain that at no time in the future they will greatly regret that we do not have this indigenous supply of oil? That point ought to be taken into consideration when a decision on this new Clause is taken.

Tonight we are not asking for a subsidy for this industry. We find that in this country heavy subsidies are given for agriculture, running into over £300 million a year at present. That money is spent on agriculture because, as a nation, we feel that it is of the greatest importance for us to supply at least half of the food we need, and how grateful we have been from time to time when the international situation has been serious that we have had this supply of food in our country.

Mr. William Hamilton (Fife, West)

Will my hon. Friend bear in mind the subsidy to other industries in the form of derating?

Miss Herbison

My hon. Friend is correct about the derating of other industries. I want to stress again to the Chancellor of the Exchequer that we are not asking for even the smallest subsidy to put against that huge subsidy to agriculture. We are asking only that the Chancellor should not take from this industry £¾ million a year.

Again, some of my hon. Friend's constituents sign on at an Employment Exchange in my area. We are seriously worried, not only in Lanarkshire but also in the Lothians, about the increase in unemployment. My hon. Friend the Member for Edinburgh, Central (Mr. Oswald) spoke of the difficulties of finding alternative work. The big stretch of The Lothians next to my constituency has not had any new factories provided for it.

Mr. Willis

Neither has Midlothian.

Miss Herbison

I am speaking of the part I know so well and of the distress and the misery there caused by present unemployment. I ask the Chancellor to give the gravest consideration to the plea that is being put forward to save this industry for the nation and to give some hope to those 2,000 shale oil miners and their families.

Mr. Amory

My hon. Friend the Member for Fife, East (Sir J. Henderson-Stewart) recalled the time when he used to sit on this Bench. I devoutly wish he was sitting here this evening to answer this point because, if I were to be guided only by my heart and not by my head, I would find it tempting to support the Clause.

I feel much sympathy on human grounds for the case which was put so persuasively by the hon. Gentleman the Member for West Lothian (Mr. J. Taylor), but we must try to consider the facts as objectively as we can. The blunt fact is that the production of oil from shale in Scotland cannot compete on anything approaching equal terms with imported oil. The industry has been kept going on a diminishing scale by reason of a substantial preference in the duty. That preference since 1928, if added up, amounts to protection to the shale oil industry of close on £20 million.

Mr. Hamilton indicated dissent.

Mr. Amory

I think it does, if we relate it to the production of oil over that period. The hon. Gentleman will find that it comes out at a substantial figure.

The object of the proposed Clause is that this oil production should receive total exemption from the Excise Duty. That, in effect, would be doubling the present preference, whilst leaving the existing preferential rates still applicable to other indigenous oil produced in other sections of the oil industry. It has been said, and it is I think a fact, that the shale oil industry produces one-sixth of our requirements for paraffin wax, about one-half per cent. of the total usage in the country of Derv and light oil, and about 8 per cent. of the total indigenous production of oil.

9.45 p.m.

I recognise, straightaway, that this industry has been the mainstay of employment in West Lothian, but when we take into consideration these facts, we must bear in mind that the existing preference is the equivalent of a protective duty of 100 per cent. on the oil. The hon. Lady the Member for Lanarkshire, North (Miss Herbison) referred to agricultural support, but I do not think that there is any agricultural product which receives a protective duty in the form of subsidy or duty of 100 per cent. of its value. That protective duty, if worked out per head of those engaged in the industry, amounts to nearly £5 per week per worker.

If the exemption were extended to other indigenous oil production, it would amount to not £750,000 but approaching £10 million, and on administrative grounds, although it might not be impossible to devise a way of differentiating, it would be quite difficult to do so because, as hon. Members representing Scottish constituencies know, shale oil and other crude oils are refined in the same refinery. I cannot find any sufficient justification—I wish I could—for further assistance to this industry on the ground of oil supplies.

One has to look at some of these harsh facts. I think that an hon. Gentleman said that if further relief was not given to this industry we might lose the whole of the £750,000 which is at present receivable. If one looks at that purely objectively, and that oil were replaced by imported oil, the Revenue would obtain twice the rate of duty that it obtains at present.

The total number of employed in the industry now is 2,300 and already that is costing in protection £750,000 a year. I feel that the relief which is being given, amounting to 100 per cent. of the value of the oil produced, is as much as can be possibly justified. As I have said, per head per worker it amounts—and this is relevant when one is considering the proper use of our manpower resources—to the equivalent of about £5 per head per worker. From the evidence that I have I cannot feel, unfortunately, that further relief in this case will provide a permanent solution to this problem.

Mr. Oswald

I am sorry to interrupt the right hon. Gentleman. I am grateful to him for giving way. It seems passing strange to me that the right hon. Gentleman has quoted precisely the same figures tonight as those quoted by the Financial Secretary in reply to a similar debate last year. His argument was that we were giving an equivalent sum of between £4 and £5 per head of the population in the industry. Today, we have only 2,300 people working in the industry, as against 12,000 last year. In the past two years that has been reduced annually. The figure quoted last year was between £4 and £5 and the same figure has been given tonight. It seems a very phoney argument.

Mr. Amory

I do not think so, because production has dropped in the meantime. [HON. MEMBERS: "Oh."] That is the answer, and, if the hon. Member works it out, he will see that the figures I have quoted can be reconciled. The best solution in the long term was to do, first, what I understand is being done at present, cut out the less productive sections of the industry—[An HON. MEMBER: "There will be none left."]—and, in the longer term, to help in every way we can to encourage new industries to come to the area to absorb those for whom this industry cannot any longer provide employment.

Very reluctantly, I have come to the conclusion that on present evidence I should not be justified in accepting the proposal made in this new Clause.

Mr. Willis

That is a shocking answer.

Mr. Thomas Fraser (Hamilton)

If the Chancellor had any supporters in Scotland before he made his speech tonight and his speech is reported in Scotland, he will have precious few tomorrow. The Chancellor said that if he were to decide this matter by his heart and not by his head of course he would make the concession. By what he has said he has convinced us that the Government have no heart at all.

Mr. Willis

No head either.

Mr. Fraser

The Chancellor made it clear to the people of the Lothians area in particular and of the whole of Scotland generally that the Government have no heart and are not willing to consider the plight of a great many people. He has been looking at this matter on cold fiscal grounds, making what will be regarded in Scotland as quite irrelevant calculations, and then rejecting the plea which has been made. The Chancellor said the protection this industry enjoyed had cost £20 million over the last thirty years. What did the Suez episode cost eighteen months ago? That was for the purpose of protecting oil being brought from another part of the world. What does it cost us every year to keep the shipping lines open to ensure that we get oil from other parts of the world?

The Chancellor replied to my hon. Friend the Member for Lanarkshire, North (Miss Herbison), who made reference to farm subsidies, that this relief was in no way comparable to farm subsidies. Of course it is not. He said that would work out at about £4 to £5 per week per worker. My hon. Friend the Member for Edinburgh, Central (Mr. Oswald) was right in saying that this was the calculation made by the Financial Secretary twelve months ago today, on the 2nd July, 1957, at which time there were more than 3,000 workers in the industry, and today we are told there are 2,300 and the amount of money is £750,000. I want to remind the Chancellor that he added nothing to what was said a year ago.

We are not here asking that the Chancellor should dip into taxpayers' pockets and subsidise this industry at the rate of £4 or £5 per week per worker employed. Whilst I remind him of that, I would also tell him that, according to the estimates, he is obliged to dip his hands in the taxpayers' pockets to find £47 million for farm subsidies in Scotland. That £47 million for farm subsidies is a sum greatly in excess of the total amount received in wages by all farm workers in Scotland, and it is being found out of the pockets of the taxpayers. Will he bear some of these things in mind and reconsider the speech he made tonight?

Incidentally, it is worth bearing in mind that that £47 million represents more than £9 per head of the total population of Scotland, men, women and children. There are 5 million people in Scotland. I have not been asking for cuts in farm subsidies; I have just been asking that other industries—and other people who are employed in industries which are of some importance to the nation as a whole—should be given some consideration by the Government.

The Chancellor said that if this oil were replaced by imported oil he would get from the duty double the income that he gets at present. One of my hon. Friends interjected to ask what it would cost to protect our shipping lines to bring it in. Why did the Chancellor make that point? Was it to show that he was being generous in what he is doing, and that if he is taking this £750,000 he is sacrificing another £750,000? That is the only point that can be made from his statement.

Mr. Willis

He is trying to justify murdering the industry.

Mr. Fraser

Yes. He said that the real way to help the area was to get new industry there. He is the Chancellor of the Exchequer. What is he doing about that? Are there any new industries growing up in the area. The answer is "No."

We have listened to many speeches from that Box, and from Government supporters in Scotland, protesting that the Government were most anxious to deal with unemployment wherever it existed at a high and persistent level, and that new powers being taken under a Bill now before Parliament. The Government did not have to take powers under a new Bill; they have had the powers since 1945, but they have not been exercised in order to get new industries into this part of Scotland. Hon. Members on both sides of the Committee who know this part of Scotland or have travelled through it will readily agree that it is the one part of central Scotland which causes distress to anyone passing through it.

I represent a constituency in central Lanarkshire. It was right in the centre of the old distressed area. We still suffer a lot of distress in Lanarkshire, but we have some new industrial estates. We have a lot of new factories—not enough, but there is evidence of new life in Lanarkshire. But one goes through West Lothian—through this shale mining area—and sees only evidence of industries dying and communities decaying.

Last year, in rejecting a similar Clause, the then Financial Secretary—the hon. Member for Wolverhampton, South-West (Mr. Powell)—offered some hope. He said: I repeat that that does not mean that because the fiscal method is impracticable—and certainly highly unselective—there may be no case for other means being used for the assistance of the industry, as the hon. Member himself mentioned. That is not a question for the Treasury. I am concerned here only with the fiscal question. I would ask the Committee, however, not to deduce that, because I feel obliged to advise it against making a concession upon the Excise Duty, the Government are unaware of the difficulties under which the shale oil industry is placed, and that for this reason the application of other means is necessarily ruled out. That hope was offered to this industry by the official spokesman for the Government a year ago today. There was a hope that other measures would be taken.

Before finally rejecting the Clause, will the Chancellor tell us what are these other measures? What are the measures that were suggested twelve months ago? Are other measures being taken, or are they going to be taken? Hon. Members who will support the Government later were satisfied in the course of the debate a year ago. The hon. Member for Glasgow, Pollok (Mr. George) said: I confess that I am not able to answer the argument put forward by the Financial Secretary regarding the impossibility of separating the products of the shale oil industry from other oil products. I can quite appreciate that that is a tremendous difficulty, but, though I may be putting it too high, I felt that in not ruling out some other method of assisting the industry, my hon. Friend had gone a very long way to giving us hope"— then my hon. Friend the Member for Glasgow, Central (Mr. McInnes) said: Could the hon. Member say what the other methods are? and the hon. Member for Pollok said: I would not press that issue at this stage. I am quite happy to feel that the Government are thinking along other lines to assist—".—[OFFICIAL REPORT, 2nd July, 1957; Vol. 572, c. 997–1000.] I hope that the hon. Member is in the Committee tonight, because we have not been told what the other measures are.

A year ago the Government got away with their opposition to this Clause on the promise that they would take other methods to assist this industry. If there is no other assistance for this industry and no other assistance for this part of the country, this industry, which has shed many hundreds of workers since the debate a year ago, is likely to shed a great many more before the year is out.

10.0 p.m.

Mr. Amory

I thought I had implied towards the end of my remarks that the other measures which the Government had in mind were to encourage in every way they could new industries to go there and to assist those who wished to do so.

Mr. Fraser

The right hon. Gentleman is somewhat inexact in what he has said, because a year ago the Financial Secretary did not say that the Government would take other measures to assist the area and the hon. Member for Pollok did not repeat a promise to assist the area. The Financial Secretary promised other measures to assist the industry, not the area. The Chancellor has waited a long time to say that we shall get other measures to assist the area. I ask him to remember that he was inexact in saying that the promise was to assist the area, because the promise was to assist the industry.

In any case, it is not enough to reject the new Clause, which will protect the existing industry in the area, by saying that the Chancellor, at some unspecified date in the future, will undertake to assist in the attraction of other industries into the area. He must be a great deal more specific than that. We have waited a long time for some evidence of some new industrial activity in this area, and there is none as yet. In the absence of a more specific assurance about the area than we have had up to now, I should like to think that every hon. Member representing a Scottish constituency will find it very easy to go into the Lobby tonight in support of the Clause.

Mr. H. Wilson

Anxious as we are to make progress, the Chancellor cannot leave the position where it is. I submit that he must reply to the last point made by my hon. Friend the Member for Hamilton (Mr. T. Fraser). Does he now repudiate the pledge given a year ago on the Finance Bill that other means would be found to help the industry? It is not an answer to say that the Government will sit in Whitehall trying, by all the pussy-footing methods at their

disposal, or that they are willing to use, to persuade other industries to come to the area.

We know that Development Area policy under this Government is a dead letter, because they will not use the controls available, but last year a pledge was given which clearly affected the decision of at any rate one hon. Member and perhaps many more on how they would vote in the Division. Will the Chancellor tell us whether he now repudiates that pledge or whether he has some plan, secret so far from the Committee and perhaps secret from himself, which he intends to carry out?

Question put, That the Clause be read a Second time:—

Time Committee divided: Ayes 157, Noes 188.

Division No. 190.] AYES [10.4 p.m.
Ainsley, J. W. Herbison, Miss M. Noel-Baker, Rt. Hon. P. (Derby, S.)
Albu, A. H. Hewitson, Capt. M. Oram, A. E.
Allaun, Frank (Salford, E.) Hobson, C. R. (Kelghley) Orbach, M.
Awbery, S. S. Holman, P. Oswald, T.
Bacon, Miss Alice Holt, A. F. Owen, W. J.
Benson, Sir George Houghton, Douglas Padley, W. E.
Bevan, Rt. Hon. A. (Ebbw Vale) Howell, Charles (Perry Barr) Palmer, A. M. F.
Blackburn, F. Hoy, J. H. Pargiter, G. A.
Blenkinsop, A. Hughes, Emrys (S. Ayrshire) Parkin, B. T.
Blyton, W. R. Hughes, Hector (Aberdeen, N.) Paton, John
Boardman, H. Hunter, A. E. Peart, T. F.
Bonham Carter, Mark Hynd, H. (Accrington) Pentland, N.
Bottomley, Rt. Hon. A. G. Hynd, J. B. (Attercliffe) Popplewell, E.
Bowden, H. W. (Leicester, S. W.) Irving, Sydney (Dartford) Price, J. T. (Westhoughton)
Braddock, Mrs. Elizabeth Isaacs, Rt. Hon. G. A. Price, Philips (Gloucestershire, W.)
Broughton, Dr. A. D. D. Janner, B. Probert, A. R.
Brown, Rt. Hon. George (Belper) Jay, Rt. Hon. D. P. T. Pursey, cmdr. H.
Brown, Thomas (Ince) Jeger, George (Goole) Rankin, John
Burke, W. A. Jeger, Mrs. Lena (Holbn & St. Pncs. S.) Redhead, E. C.
Callaghan, L. J. Jenkins, Roy (Stechford) Reynolds, G. W.
Champion, A. J. Johnson, James (Rugby) Rhodes, H.
Chetwynd, G. R. Johnston, Douglas (Paisley) Roberts, Albert (Normanton)
Collins, V. J. (Shoreditch & Finsbury) Jones, David (The Hartlepools) Roberts, Goronwy (Caernarvon)
Jones, Jack (Rotherham) Robinson, Kenneth (St. Pancras, N.)
Corbet, Mrs. Freda Jones, J. Idwal (Wrexham) Short, E. W.
Craddock, George (Bradford, S.) Kenyon, C. Silverman, Julius (Aston)
Cronin, J. D. Key, Rt. Hon. C. W. Skeffington, A. M.
Crossman, R. H. S. Lawson, G. M. Smith, Ellis (Stoke, S.)
Darling, George (Hillsborough) Ledger, R. J. Snow, J. W.
Davies, Ernest (Enfield, E.) Lee, Frederick (Newton) Sorensen, R. W.
Deer, G. Lee, Miss Jennie (Cannock) Soskice, Rt. Hon. Sir Frank
de Freitas, Geoffrey Sparks, J. A.
Delargy, H. J. Lever, Leslie (Ardwick) Stones, W. (Consett)
Diamond, John Lewis, Arthur Summerskill, Rt. Hon. E.
Dodds, N. N. Lindgren, G. S. Swingler, S. T.
Ede, Rt. Hon. J. C. Logan, D. G. Taylor, Bernard (Mansfield)
Edwards, W. J. (Stepney) Mabon, Dr. J. Dickson Taylor, John (West Lothian)
Evans, Edward (Lowestoft) McAlister, Mrs. Mary Thomas, George (Cardiff)
Fernyhough, E. McCann, J. Thomson, George (Dundee, E.)
Fletcher, Eric MacDermot, Niall Tomney, F.
Fraser, Thomas (Hamilton) Molnnes, J. Ungoed-Thomas, Sir Lynn
George, Lady Megan Lloyd (Car'then) MacPherson, Malcolm (Stirling) Viant, S. P.
Gibson, C. W. Mahon, Simon Wade, D. W.
Gordon Walker, Rt. Hon. P. C. Mallalieu, E. L. (Brigg) Watkins, T. E.
Grenfell, Rt. Hon. D. R. Mallalieu, J. P. W. (Huddersfd, E.) Weitzman, D.
Grimond, J. Mann, Mrs. Jean Wheeldon, W. E.
Hall, Rt. Hn. Glenvil (Colne Valley) Mitchison, G. R. White, Mrs. Eirene (E. Flint)
Hamilton, W. W. Moss, R. Wilcock, Group Capt. C. A. B.
Harrison, J. (Nottingham, N.) Moyle, A. Willey, Frederick
Hayman, F. H. Neal, Harold (Bolsover) Williams, David (Neath)
Healey, Denis Noel-Baker, Francis (Swindon) Williams, Rev. Llywelyn (Ab'tillery)
Williams, Rt. Hon. T. (Don Valley) Winterbottom, Richard TELLERS FOR THE AYES:
Willis, Eustace (Edinburgh, E.) Woodburn, Rt. Hon. A. Mr. Pearson and Mr. Simmons.
Wilson, Rt. Hon. Harold (Huyton) Yates, V. (Ladywood)
Agnew, Sir Peter Grant, Rt. Hon. W. (Woodside) Nicolson, N. (B'n'm'th, E. & Chr'ch)
Aitken, W. T. Grant-Ferris, Wg Cdr. R. (Nantwich) Noble, Michael (Argyll)
Allan, R. A. (Paddington, S.) Green, A. Nugent, G. R. H.
Alport, C. J. M. Gresham Cooke, R. Oakshott, H. D.
Amory, Rt. Hn. Heathcoat (Tiverton) Grimston, Hon. John (St. Albans) O'Neill, Hn. Phelim (Co. Antrim, N.)
Arbuthnot, John Gurden, Harold Orr, Capt. L. P. S.
Ashton, H. Harris, Reader (Heston) Orr-Ewing, Charles Ian (Hendon, N.)
Atkins, H. E. Harrison, A. B. C. (Maldon) Osborne, C.
Baldock, Lt.-Cmdr. J. M. Harrison, Col. J. H. (Eye) Page, R. G.
Barber, Anthony Harvey, John (Walthamstow, E.) Pannell, N. A. (Kirkdale)
Barter, John Heald, Rt. Hon. Sir Lionel Partridge, E.
Batsford, Brian Heath, Rt. Hon. E. R. G. Peel, W. J.
Baxter, Sir Beverley Hesketh, R. F. Pickthorn, K. W. M.
Beamish, Col. Tufton Hicks-Beach, Maj. W. W. Pike, Miss Mervyn
Bell, Philip (Bolton, E.) Hill, Mrs. E. (Wythenshawe) Pilkington, Capt. R. A.
Bell, Ronald (Bucks, S.) Hirst, Geoffrey Powell, J. Enoch
Bennett, F. M. (Torquay) Hobson, John (Warwick & Leam'gt'n) Profumo, J. D.
Bevins, J. R. (Toxteth) Holland-Martin, C. J. Ramsden, J. E.
Bidgood, J. C. Hope, Lord John Rawlinson, Peter
Bishop, F. P. Hornby, R. P. Redmayne, M.
Black, C. W. Horobin, Sir Ian Rees-Davies, W. R.
Bossom, Sir Alfred Howard, Gerald (Cambridgeshire) Ridsdale, J. E.
Boyd-Carpenter, Rt. Hon. J. A. Hughes-Young, M. H. C. Roberts, Sir Peter (Heeley)
Boyle, Sir Edward Hutchison, Michael Clark (E'b'gh, S.) Robinson, Sir Roland (Blackpool, S.)
Braine, B. R. Hyde, Montgomery Rodgers, John (Sevenoaks)
Bromley-Davenport, Lt.-Col. W. H. Hylton-Foster, Rt. Hon. Sir Harry Roper, Sir Harold
Browne, J. Nixon (Craigton) Iremonger, T. L. Ropner, Col. Sir Leonard
Bullus, Wing Commander E. E. Irvine, Bryant Godman (Rye) Shepherd, William
Burden, F. F. A. Jenkins, Robert (Dulwich) Simon, J. E. S. (Middlesbrough, W.)
Butcher, Sir Herbert Jennings, Sir Roland (Hallam) Spearman, Sir Alexander
Carr, Robert Johnson, Dr. Donald (Carlisle) Stanley, Capt. Hon. Richard
Chichester-Clark, R. Johnson, Eric (Blackley) Stevens, Geoffrey
Clarke, Brig. Terence (Portsmth, W.) Joseph, Sir Keith Steward, Harold (Stockport, S.)
Cole, Norman Kaberry, D. Stoddart-Scott, col. Sir Malcolm
Conant, Maj. Sir Roger Kerr, Sir Hamilton Stuart, Rt. Hon. James (Moray)
Cooke, Robert Kershaw, J. A. Studholme, Sir Henry
Cooper-Key, E. M. Kimball, M. Summers, Sir Spenser
Craddock, Beresford (Spelthorne) Leather, E. H. C. Sumner, W. D. M. (Orpington)
Crowder, Petre (Ruislip—Northwood) Leavey, J. A. Taylor, Sir Charles (Eastbourne)
Davidson, Viscountess Legge-Bourke, Maj. E. A. H. Teeling, W.
D'Avigdor-Goldsmid, Sir Henry Legh, Hon. Peter (Petersfield) Temple, John M.
Deedes, W. F. Linstead, Sir H. N. Thomas, Leslie (Canterbury)
Digby, Simon Wingfield Lloyd, Maj. Sir Guy (Renfrew, E.) Thompson, Kenneth (Walton)
Donaldson, Cmdr. C. E. McA. Lloyd, Rt. Hon. Selwyn (Wirral) Thompson, R. (Croydon, S.)
Doughty, C. J. A. Lucas, Sir Jocelyn (Portsmouth, S.) Thornton-Kemsley, Sir Colin
du Cann, E. D. L. Lucas, P. B. (Brentford & Chiswick) Tilney, John (Wavertree)
Dugdale, Rt. Hn. Sir T. (Richmond) Lucas-Tooth, Sir Hugh Turton, Rt. Hon. R. H.
Macdonald, Sir Peter Tweedsmuir, Lady
Elliott, R. W. (Ne'castle upon Tyne, N.) Mackeson, Brig. Sir Harry Vane, W. M. F.
Emmet, Hon. Mrs. Evelyn McKibbin, Alan Vickers, Miss Joan
Errington, Sir Eric Mackie, J. H. (Galloway) Vosper, Rt. Hon. D. F.
Finlay, Graeme McLaughlin, Mrs. P. Wakefield, Edward (Derbyshire, W.)
Fletcher-Cooke, C. Macmillan, Maurice (Halifax) Wakefield, Sir Wavell (St. M'lebone)
Gammans, Lady Macpherson, Niall (Dumfries) Wall, Patrick
Garner-Evans, E. H. Maddan, Martin Ward, Rt. Hon. G. R. (Worcester)
George, J. C. (Pollok) Markham, Major Sir Frank Ward, Dame Irene (Tynemouth)
Gibson-Watt, D. Marlowe, A. A. H. Webster, David
Glover, D. Marshall, Douglas Whitelaw, W. S. I.
Glyn, Col. Richard H. Mathew, R. Wilson, Geoffrey (Truro)
Godber, J. B. Maudling, Rt. Hon. R. Wood, Hon. R.
Goodhart, Philip Medlicott, Sir Frank Woollam, John Victor
Gough, C. F. H. Nabarro, G. D. N.
Gower, H. R. Nairn, D. L. S. TELLERS FOR THE NOES:
Graham, Sir Fergus Nicholson, Sir Godfrey (Farnham) Sir Gerald Wills and Mr. Bryan.