HC Deb 08 March 1960 vol 619 cc245-321

Order for Second Reading read.

3.32 p.m.

The Minister of Power (Mr. Richard Wood)

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

The House has recently directed its attention to several of the industries with which I am connected. We have had three days of discussion on coal this winter. We have had a day on steel. We have had an occasional peep at the oil industry. This afternoon, for the next few hours, we intend to devote our attention to gas.

The next few years will be most important, as I think the House will agree, to the gas industry. Therefore, I wish to deal fairly briefly with the provisions of this short Bill and then to take a general look at the industry's performance and prospects. The Bill attempts to do three things. It raises the limit of borrowings which was imposed by Section 42 of the Gas Act, 1948, and which itself was raised to £450 million by the Act of 1954. The new limit, therefore, will be raised from £450 million to £525 million.

Secondly, the Bill gives me power to authorise the last £25 million of that £525 million after obtaining an affirmative Resolution of the House. Thirdly, the House will have noticed that in Clause 2 the Bill enables me to recover certain charges which are connected with the testing of gas which at present I am unable to recover. To these, I shall refer briefly in a moment.

I do not think I need add much to the explanation of the Bill which is contained in the White Paper. Although I say it, and perhaps should not, I think that it is admirably clear. The Bill is necessary at present because the £450 million borrowing limit is likely to be approached this year and the industry's capital requirements in the seven financial years between April, 1959, to April, 1966, will be about £370 million, of which £18 million will be needed for working capital and £352 million for fixed investment.

Of the £370 million total borrowings in the seven years from April, 1959, the industry expects to raise from its own internal resources £247 million, about two-thirds. That will leave £123 million to be borrowed. Compared with only one-third of the capital requirements between 1949 and 1959 which were found from the industry's own resources it is, as I suggest, planning to find two-thirds in those seven years. This advance, I think, still remains most encouraging even when one takes into consideration two important matters.

The first is that during the earlier period the effect of inflation was continually increasing the gap between the depreciation at historic cost and the cost of replacement. The second consideration which we should not forget is that in the current seven years capital expenditure will fall slowly and, therefore, the provisions for depreciation will form a larger proportion of the yearly investment. Even taking those two matters into consideration, I think that the House will agree that this represents quite an encouraging advance.

I shall say a word on the revenue prospects of the industry. In 1958–59, the industry made a loss of £1½ million, which was its first loss in the ten years since vesting. Various measures have been taken to restore the position. They have included some tariff adjustments by certain boards and continued efforts everywhere to reduce costs, but, naturally, these could have only a partial effect in the present financial year.

Unfortunately for the industry—I seem to have blamed it in almost every speech I have made in the last few months—we had a memorable summer in 1959. The hot weather created complications for a number of industries and it was followed by a relatively mild winter, although, having felt the temperature of the wind today, I am beginning to think that I am speaking too soon. Demand fell below expectations and a further deficit is likely in the current financial year.

This setback, although a relatively small one, has led to an intensified effort to reduce costs expecially in those boards' areas which are most severely affected. The best estimate I can make of the future is that from 1960 onwards we may reasonably expect a return to the modest level of surplus which the industry had previously been able to earn with the prospect of rather better profits towards the end of this period.

Lastly, on the Bill itself, I should like to say a word about Clause 2 and the matter of gas testing costs. In the Act of 1948, Section 55, the Minister was given the responsibility for appointing gas examiners and their remuneration, including allowances and pensions, was to be recovered from the industry. I am informed on the best legal advice I have obtained that Section 55 does not allow me to recover what I should broadly describe as headquarters costs, that is, the salaries at Ministry headquarters, general Ministry overheads and the salaries of clerical staff, who are working for regional gas examiners.

All those are not covered by Section 55 of the 1948 Act. Therefore, what the Act did was to transfer the costs of gas examiners from the ratepayers to gas consumers and, at the same time, to transfer these headquarters costs from the gas consumers to the taxpayers. I am quite certain that this was not intended. I do not think that anyone thinks that it was intended. This part of the Bill will empower me to recover these headquarters costs as well as other costs which I can at present recover from the industry.

The cost of gas testing, which at present I can recover, is about £110,000 a year, and these headquarters' costs, on the best calculation I have been able to make, are about £70,000 a year. I am, therefore, afraid that I must apologise for a slight mistake in the White Paper; the proportion of the costs which are at present recoverable is about two-thirds and not, as suggested, three-quarters. That is the purpose of that part of the Bill and, having dealt with it, I hope that the House will be satisfied that that is its only object and that we can get on with an examination of the industry.

I want first to draw attention to what has happened since vesting day nearly eleven years ago. Perhaps it would be easiest if I refer hon. Members, not necessarily now but later, to Section II of "Gas Looks Ahead", pages 5 to 8. I do not think that it is necessary to take the time of the House to repeat information which is already available, but several things have impressed me in the visits which I have made in the last few months to boards in various parts of the country.

The first is the very considerable progress which has already been made in concentrating production in the larger units. This is continuing and will continue for several years. The second main impression I have is the great progress made in integrating mains all over the country, perhaps most strikingly in some of the scattered and thinly populated parts of it. Lastly, anyone who has seen some of the boards' arrangements for centralised billing and accounting will recognise that an important step has been taken there.

Since the gas industry published, in 1954, its counterpart to "Gas Looks Ahead", which was called "Fuel for the Nation", the number of domestic consumers, I am glad to say, has increased, but the domestic sales, the number of therms sold to domestic consumers, have not grown as they were then expected to grow. On the other hand, industrial sales have gone ahead much as was forecast in the 1954 plan, probably for mainly two reasons: first, gas is a convenient and a cheap fuel, and in many cases it is the ideal fuel for industry, and, secondly, gas at present is very closely connected with a number of the most modern industries. It is connected with iron and steel, with nuclear power, with electronics, with aviation, and with many forms of engineering.

I sincerely beg any hon. Member who doubts the place of gas in a modern industrial nation and looks upon it as an out-dated fuel to visit a most interesting exhibition, entitled "Gas at Work in Industry", and which is continuing in the Horticultural Hall, in London, until the end of this week. I visited it the other day and I was much educated and, I hope, edified. I was much interested to see the immense part which gas is playing in industry. I hope that hon. Members will avail themselves of the chance to see an exhibition which I think will interest them very much.

Despite this solid industrial achievement and the existence of millions of domestic users, a surprising number of people are still asking whether gas has an economic future in this country. My first reply to that is, "As long as the gas industry economically meets the demand which it serves, I cannot see any advantage in curtailing its activities." Some people argue that it is uneconomic to supply two services to a house. They say that we must have electricity for lighting and power and, therefore, if we have gas it is an extra service. They suggest that this must be uneconomic. The fact remains that a great many consumers, as we all know, find gas the cheapest and most economic form of heating and cooking, and it is evident that the total domestic needs of a enormous number of householders are frequently most economically met by using both electricity and gas, even though the installation charges of two services may be higher.

I therefore suggest that the economic question about gas which concerns us in the House most closely is whether Parliament is justified in giving Government authority to invest still more money in the industry. I want to be perfectly fair and admit that for over a year the industry has been running at a loss, and although I understand that the falling-off in gas sales seems to be coming to an end there is still a great deal of ground to be regained.

In answering this question for ourselves, however, we ought to bear in mind two or three points. The first is that since nationalisation the industry has held a very large volume of business in circumstances which were almost the whole time more unfavourable to the industry than to its competitors, such as electricity and oil. In the same period there has taken place a great deal of modernisation, as I have been trying to point out, many of the benefits of which have not yet been fully reaped. That is an important point.

Secondly, although labour charges still bear heavily on the gas industry, the modernisation which has taken place is having the obvious effect of making it, if I may use the phrase, more capital intensive, and, therefore, reducing the effect of the high labour charges which have been seriously felt in the past.

Thirdly, I think it reasonable to expect that in the future the raw material costs of the industry will no longer move steadily to its disadvantage, as they did in the early years of nationalisation. I believe that there are prospects—I will come to this later—of considerable savings from new methods of production, storage and distribution.

For what it is worth, my judgment is that the gas industry will have to fight in the next few years, and to fight very hard indeed. Having met a number of people working in the industry, I am quite sure that everyone in the industry is clearly aware of the challenge, and that everyone in the industry is not only ready to meet but is enthusiastic to meet this challenge in the future. In my view, therefore, the economic case for gas rests on its own ability to compete in the future and on the willingness of Parliament to allow it the new developments which the Bill would, naturally, contain and which will enable the gas industry to compete in the years ahead.

No speech on gas would be complete without some reference to coke, because this industry has been completely in the past, is very largely in the present, and will remain very largely in the future, a two-fuel producer. The position at the moment is that considerable stocks of coke exist and because of that, in spite of total gasification processes, like the Lurgi process, the continued ability of the industry to carbonise coal for gas will largely depend on its ability to sell the coke which is produced. Provided that markets can be found for the gas which the industry produces, the more coke that is used the better for the coal industry.

I have been pleased, in the last month or two, to find at least one chairman of a gas board who was concerned at the prospect of obtaining his supplies of gas without coke because he had a ready market for the coke—a market which, he told me, was growing and would continue to grow significantly.

Looking ahead—and I think that many hon. Members will agree with me—I think there is likely to be an increasing demand for fuels which call for no storage and very little effort on the part of the user. We can all see piped and wired fuels developing to a larger extent in the next few years. None of us would underestimate—I am sure that most of us would hate to discourage—the national love of the open fire. When I look back a few years, and think of the time when coal was very scarce, I remember that the fuel economists said rude things about the low efficiency of the open fire, and the Beaver Committee found that coal burned in domestic fireplaces made a very large contribution to smog. I am glad to say that it now appears that our friend the open fire is turning out to be not quite such a villain after all.

A large variety of modern appliances are now available which will burn all sorts of solid fuel and will give an efficient form of heat. For clean air zones, in particular, an increasing range of smokeless fuel is now appearing on the market. Most gas boards now produce open fire gas coke to British Standards Institution specification and they are working hard to improve the products. For those who want a specially reactive coke which burns better in any fireplace, there is a gradually greater availability of premium smokeless fuel.

I will now look ahead at the future prospects of the industry and at probable and possible developments which may take place in the next few months or the next few years. The first thing I should like to consider is the future use of raw materials in the industry. The production of gas has always been based on coal, and will continue to be largely based on coal, but for many years a substantial amount of oil has been used, as the House knows, in the production of water gas to meet peak loads. Both my predecessor and I have, naturally, been much concerned about coal's future as the main raw material of gas. The Chairmen of the National Coal Board and the Gas Council have been jointly and carefully considering this matter and have recently reported to me

I am glad to be able to tell the House that the Gas Council has agreed to consult with the National Coal Board at the planning stage of any major gas-making project so that the possibilities of basing the scheme on coal will be fully considered and discussed. It has also agreed, I am glad to say, that if the quantity of coal used in an existing plant is to be substantially reduced the longest possible warning will be given to the coal industry.

On its part, the Coal Board has already undertaken useful negotiations with several gas boards. In all the cases which I have in mind the effect will be to encourage the use of coal for gas making. Better supplies have enabled the Coal Board to offer an improved choice of coals for gas making on more attractive terms, especially for marginal quantities which might otherwise be displaced by oil. I hope that the House will join me in welcoming an agreement which I think does great credit to the good sense of the leaders of both industries and will, I hope, lead to fruitful results in the future.

From coal's point of view an important new means of total gasification in Great Britain—which, as those who know about these things appreciate, will produce no coke—is the Lurgi process, which is designed to operate on a relatively poor quality non-caking small coal. Two plants are being constructed at present—one at Westfield, in Fife, and the other, which is a rather later development, at Coleshill, near Birmingham.

The Lurgi process will produce a lean gas, about 300 B.T.U., which will need enrichment. There are various possibilities for enriching Lurgi gas, but the one which has commanded much attention and to which I should like particularly to refer is enrichment by liquid methane. The House has shown, not only since I became Minister of Power but long before, keen interest in experimental imports of methane and would no doubt like me to say something about them. I wish to make it clear that Her Majesty's Government have given no commitment to allow importation on a commercial scale. They will not do so until the proposals which I expect in the reasonably near future to come forward have been critically examined, both on grounds of commercial merit and on grounds of raw material use in the industry. I would merely say at this stage that the trial shipments have been satisfactory and, whatever their ultimate result, I think that the House will agree that this is a bold and imaginative experiment by an industry which certainly does not look particularly pessimistically at new ideas for the future.

A decision which would prevent the British Gas Council or the British shipping industry from benefiting from a lead which they have clearly established in this field would have to be based on very certain grounds. The critics of these imports argue that larger imports of liquid methane would add to the problems of the coal industry. I well understand such a point of view and the circumstances in which it is very natural to take that view about imports of liquid methane, but I believe that such a point of view considers the whole matter much too narrowly.

What the Coal industry needs is a thriving gas industry. If imported gases enable the industry to compete more effectively, such imports will not harm coal, but will be to its very great benefit. At present, the seventh and probably the last trial cargo is crossing the sea in the "Methane Pioneer". The appraisal of this experiment, which is a highly complicated one, as those who have studied it at all will know, calls for a very high degree of critical care. It may be some time before the Gas Council puts its proposals to me. When it does so, I undertake to examine them urgently and to report to the House as soon as I can.

There are several other developments which may take place in the future. One which has attracted a certain amount of attention is the possibility of a national gas grid. Having taken the best judgment of those who know the problem, I am advised that the transmission of gas by high-pressure pipelines can be a very efficient method of moving energy. Therefore, there is a possibility which is not fully worked out of making substantial economies by basing the gas supply on large manufacturing units in the coalfields and piping gas to where it is wanted.

The present position is that the gas industry is studying the possibilities of a grid. My first impressions are that I would feel that the Lurgi process is possibly very well suited to it: first, because the capital costs of the Lurgi process are high and, therefore, the full benefit of the process is obtainable only from very large plants running on base load; and, secondly, because the process produces gas under pressure and, therefore, further compression to get it down the grid would not be necessary.

I will conclude my remarks on the possibility of a national grid by drawing the attention of the House to the last sentence of paragraph 37, on page 12, of "Gas Looks Ahead": The Council is now undertaking an intensive study of the technical and economic aspects of a national grid in relation to new methods of production and supplies of gas. One other development that might be closely connected with a national grid is the possibility of underground storage. Because of the scale, and the cost, storage in a gas holder can meet only short-term fluctuations in demand, but there is certainly a high possibility, if the underground storage space could be discovered, that underground storage might enable the industry to store gas economically in the summer against winter demand, and thereby enable the industry to keep base-load plants in continual operation throughout the year.

I understand that for this storage it is necessary to find natural rock formations that will hold gas under pressure. This possibility may exist in the United Kingdom, but the only underground storage that we have so far discovered is in a unique exception—a salt cavity. The cavity, which has been specially washed out of rock salt, is at a depth of 1,300 ft. It has a volume of about 340,000 cubic ft., but as the gas stored in it is at a pressure of 440 lb. per sq. in. the volume of gas in the cavity is about 10 million cubic feet—a very substantial amount. If this kind of storage place could be found in other parts of the country a great deal of difference would be made to the industry's prospects. Other possibilities are being investigated in Hampshire and Kent, and one in Scotland, and as time goes on I hope to be able to tell the House of more developments.

Natural gas is a possibility that excited the industry, and all of us, some time ago but, frankly, I am not over-optimistic that we shall find large supplies of natural gas in this country. I understand that the only supply on any substantial scale is to be found in Yorkshire, and will supply part of the North-Eastern Gas Board's area at some time in the future. This, however, is on a relatively small scale, and I understand that there are very few prospects at the moment of finding it in more substantial quantities.

These needs for new developments in the industry underline very clearly the importance of the research that is being carried out. A fairly wide range of research is being carried out at present. There is study in many directions of high-pressure reactions of both coal and oil with steam, oxygen and hydrogen. I have already mentioned the Lurgi process. Another possibility that is being investigated is operating the Lurgi process at high temperatures, at which the ash is removed as a slag so as to improve thermal efficiency.

Then there is the study of the enrichment of lean gas by methane, propane, butane and refinery gases, and by the hydrogenation of oil. Again, there is the possibility of hydrogenating coal to produce a complete town gas. Finally, there is, broadly, all the research on purifying gas, with the connected research aimed at trying to reduce the dangers which still exist and of which we are all aware; and research into the more efficient use of gas. All this effort is being made and, I hope, will be attended with success in the future.

To sum up, I would just say that our fuel policy, as I have announced several times—not to the complete satisfaction of every hon. Member—is based on freedom of choice. This does not mean holding back any of the competitors that may have achieved a temporary lead. I think that it means trying to help each competitor to compete as effectively as it can. Therefore, my conclusion is that if the gas idustry suggests developments that will clearly increase its competitive power, I find it very difficult to think of grounds on which such a request should be refused. As this is the whole object of this present Measure, I hope that the House will agree that the Bill should be read a Second time.

4.4 p.m.

Mr. Frederick Lee (Newton)

I was glad that the Minister explained Clause 2 of the Bill. From what he said, I understand that the liability will be about £180,000 per annum. I wonder whether he could further enlighten us on subsection (3) of Clause 2, which refers to … expenses incurred by any other Government department in connection with the Ministry of Power … Did the Minister's remarks cover that sort of contingency? We should certainly like to know whether we can expect additions to the £180,000 as the result of other Departments' activities.

Mr. Wood

I must make myself quite clear about the £180,000. At present, I can recover from the industry £110,000 out of the £180,000 that is spent on gas testing. The Bill would enable me to recover not £110,000, but the whole £180,000 from the industry, and the purpose of subsection (3) is to include such other Government Departments as may be doing work connected with gas testing—I think that the Post Office has a part to play—for the expenditure on which it would be possible to recover the charges. I hope that that makes it clear.

Mr. Lee

I am very grateful to the right hon. Gentleman. I take it that such charges in relation, say, to the Post Office, and so on, are really included in the £180,000, or whatever it is, to which he made reference.

We were very pleased to hear what we consider to be a most important announcement about the consultation now taking place between the chairmen of the coal and gas industries at the planning stage of new developments. I will refer to that again a little later. For the moment, I will just say that many of us have felt that there was not sufficient cooperation in this direction, and that, in consequence, the coal industry was not, on many occasions, fully aware of the results of the sort of plans that the Gas Council was undertaking.

The right hon. Gentleman has described to us a successful nationalised industry that started under very grave difficulties, but which has done a first-class job. The House, as a whole, should compliment the Gas Council and the area boards, as well as the employees of the Council, on that achievement. It is quite a feature of our discussions here on nationalised industries that when a Minister gives us an objective survey of the work of a nationalised industry that survey is in very marked contrast to the utterances of Conservative Members outside the House.

I looked at The Guardian only yesterday morning, and saw that the Leader of the House had visited Manchester at the weekend to speak to the Young Conservatives—in Manchester, of all places. I read that the Leader of the House thought that the approach to the Budget would be "typical of Conservative philosophy." I did not read that there was any wild enthusiasm on the part of the Young Conservatives at that announcement, possibly because the right hon. Gentleman did not tell them whether it was the Conservative philosophy that applies before or after a General Election. As he remembers from his own experience, that can be very different indeed.

The Leader of the House went on to say, according to The Guardian: There would be no blanket of repression over the whole economy, nor would the Government risk removing the soul from industry as could be done by nationalisation. It would stick to a 'thoroughly competitive economy' and, if industries were in difficulties, ' adjust the balance ' where necessary. That little question of adjusting the balance where necessary is concerning the noble Lord the Member for Dorset, South (Viscount Hinchingbrooke) and myself very much these days. It has cost the country about £300 million in very recent times.

When I read that the Leader of the House himself says that the Government would not … risk removing the soul from industry as could be done by nationalisation. I wondered whether he has looked at paragraph 24 of "Gas Looks Ahead." There, we read that, because of changes —increased efficiency—the number of employees has been reduced by about 20,000, and that the industry, in close co-operation with the trade unions, has done everything in its power to find alternative employment for those rendered redundant, although, in many cases, instead of rendering them redundant it had found them alternative employment.

I wonder whether it is that sort of soullessness that the Leader of the House was referring to, or whether he has looked at the difference, for instance, between the way in which the National Coal Board now cushions redundancy and the "soulful" approach to it of the former private coal owners. It would really be a good thing if people like the Leader of the House stopped this silly political buccaneering and brought their utterances, when speaking in the country, more into line with the very thoughtful and constructive report which the right hon. Gentleman the Minister of Power has given us this afternoon.

The Minister's report showed us an industry which has done a very good job in difficult conditions since nationalisation. The legislation before us proposes an extension of the Gas Council's borrowing power to enable the industrial programme to be carried out. I agree with something he said about the pamphlet, "Gas Looks Ahead". It has served a very good purpose by giving us a picture of the state of the industry not only against the background of its work hitherto, but in the light of the development plan for the next six or seven years.

Read in conjunction with the Annual Report and Accounts of the Gas Council, it presents a picture of an outstandingly successful nationalised industry ably performing the task assigned to it under the Gas Act, 1948. It is well to remember what those tasks were. They were, among other things, to develop and maintain an efficient co-ordinated and economical system of gas supply for the areas. … To develop and maintain the efficient, co-ordinated and economical production of coke. …To develop and maintain efficient methods of recovering by-products obtained in the process of manufacturing gas. By any test which anyone can apply great progress has been made in all three.

The gas industry is a very old industry. I understand that Pall Mall was lit by gas as long ago as 1807, so the industry is well over 150 years old. Very great, changes were necessary upon nationalisation in the scattered, unco-ordinated set-up, with varying degrees of efficiency, to secure a modern and efficient co-ordinated structure. Moreover, nationalisation came at the end of one of the most destructive wars in history which meant inability to accomplish much in the way of capital development, repairs, and so forth. The huge sum of £465 million is the aggregate capital investment since vesting date, a sum which could probably never have been invested in this sort of industry had the Labour Government not had the foresight to nationalise it when they did.

The Gas Act, 1948, limited the borrowing powers of the industry to £250 million, excluding stock issued for the payment of compensation. We must always remember that, irrespective of ability to make profits or anything of that kind, this compensation still has to be met by the industry. In 1954, the limit was raised to £450 million. By that time, most of the deficiencies in plant capacity had been made good and, as "Gas Looks Ahead" points out, the sustained high demands upon the industry were fully met.

We should pause here to consider one of the basic reasons which led the Labour Government to decide to nationalise the gas industry and test by the performance of the industry whether the decision has been justified. We all remember the background of the war damage to our industries and the fact that we had not been able to bring new plant into the country during the war. We realised then the need for a vastly increased industrial production from our manufacturing industries. In those conditions, with a Government determined to obtain the highest level of manufacturing productivity we possibly could, the first matter to be considered was how we could ensure a plentiful supply of coal and the things which flow from coal so that the modernisation of our manufacturing industries could go ahead without fear of shortages in power supplies.

First, we realised that without the nationalisation of the coal industry we could never have adequate supplies of coal to drive the new, modernised industries we wanted, and, secondly, we realised that there would have to be power produced from coal—gas, electricity, and so forth—in the necessary quantities.

By 1954, because of the structure of the nationalised power industries which the Labour Government brought into being, we were able to meet all the increased demands upon our power supplies, and that is ample proof of the correctness of the decisions about nationalisation which were made. We are able to see now that they have been fully justified by the results. By 1954–55, in spite of the increased demands of the manufacturing industries, the gas industry was able to meet all demands made on it.

Since nationalisation, the demand for gas has risen from an annual rate of 2,328 million therms in 1949–50 to 2,605 million therms in 1958–59, an increase of 12 per cent. over that period. Plant capacity has been enlarged from 2,060 million cu. ft., or 9.7 million therms to 2,532 million cu. ft., or 12 million therms, in March, 1959. During the same period, obsolete and inefficient plant with a daily capacity of 700 million cu. ft., or 3.3 million therms, has been replaced, and no less than 22,000 miles of new mains have been laid. As the right hon. Gentleman pointed out, many obsolete and uneconomic works have been closed. The number of works has been reduced from 1,050 to 463 in March, 1959.

Paragraph 440 of the Annual Report and Accounts for 1958–59 shows that the cumulative effect of the increases in efficiency since vesting date is that, in 1958–59, the industry required the equivalent of 2½ million tons of coal less than it would have required had the output of gas and other products been produced at the efficiency of 1948. Although many of us are worried about the effect upon coal, efficiency of the type which that statement indicates surely justifies everything which was put into the Gas Act, 1948, which the party opposite, keeping us up night after night, did all it could to oppose. In paragraph 382 of the 1956–57 Report, we see that, whereas increased costs totalled £135 million in a year, the industry had increased its charges by £120 million, or £15 million less than the increases in costs.

In this respect, it is interesting to refer to what was said by Sir Harold Smith and his team of experts in the supplement to the Financial Times of 17th November last. I notice that Sir Harold himself tells us that One of the major factors in bringing about these improvements has been the opportunity which nationalisation gave of extending gas grid systems. I do not want to go on quoting. I could make a speech on these quotations alone. I only hope that right hon. and hon. Members opposite will realise the error of their ways and will now, in retrospect, see how foolish they were to oppose the far-seeing wisdom of the Labour Government in the days when we decided upon these great changes.

The largest increase in sales during the past ten years has been to industrial consumers. This, of course, ties up with what I was saying about one of the basic reasons for nationalisation being to enable industry to expand. During this period, an expansion of 30 per cent. has taken place in industrial use and, for the period under review, the industry forecasts the same rate of expansion. I wonder whether the industry is taking an over-cautious view here. We are, I think, in a period when industrial production can greatly increase.

During the past year, we saw an increase of 10 per cent. I do not suggest that it will continue at 10 per cent. per annum, but the Gas Council is estimating that there will be an increase in industrial production of 3 per cent. per annum. I should regard it as an abysmal failure if we went on from now at only 3 per cent. per annum. I have suggested before to the right hon. Gentleman that he should have prepared an equation, bringing together what will be required in increased power supplies and what is estimated in respect of increased industrial production, but we have not yet had this.

When discussing this matter some time ago with somebody who should know, I heard it suggested that an estimated 6 per cent. increase in industrial production would require about a 3.6 per cent. increase in power. If that is so it may well be that the 3 per cent. per annum increase upon which the Gas Council is now calculating will turn out to be insufficient for the increase in production which we hope to get. It may be that it would agree to have a look at all that.

The net result of the figures I have given—I apologise for having to weary the House with so many figures—is that the overall thermal efficiency of production, measured by the ratio of thermal output of gas, coke breeze, and tar to thermal input of coal and oil rose from 72 per cent. in 1948 to 77.7 per cent. in 1958–59.

It is interesting to see that the industry now believes that it can successfully compete with electricity in space heating and matters of that kind. We are moving through a very strange period indeed, for, while Tory Governments can win elections on the cry of more competition between private industries based on the profit motive, and then proceed to eliminate competition and use public money to subsidise them, very real competition grows hotter each year between the nationalised industries, such as gas and electricity, with atomic energy coming along apace.

The right hon. Gentleman has a very wide range of industries under his wing. It is strange to see that the only one that apparently needs cosseting and cushioning is the so-called privately owned steel industry as we see in the case of Colvilles, where public money has to be handed over in the way that it is.

In paragraphs 18 to 22 of "Gas Looks Ahead", and in the articles in the Financial Times of 17th November, 1959, to which I have referred, we see the extent of research being undertaken by the Gas Council and we obtain a good view of the future of the industry. Sir Harold Smith gives as first priority in research the development of … methods of gas manufacture which will enable use to be made of the cheaper and poorer grades of coal, which are at present in ample supply. Of course, as the Minister said, the industry aims at complete gasification of these low-grade coals. That may bring about problems so far as coke is concerned and perhaps the Parliamentary Secretary will be able to say something about that when he replies to the debate. The Gas Council has already achieved satisfactory laboratory results in processes designed to substitute hydrogena-tion for gasification which ensure a higher calorific value and a higher quality of purity.

Nationalisation has enabled the industry to plan for a national grid which enables gas produced by new methods to be carried long distances and give a far wider circulation with a reduction in distributive costs. I notice that in the same issue of the Financial Times Sir Henry Jones, who, I am sure, we all wish well in taking over the chairmanship of the Gas Council, contributes a valuable article on the development of the national grid. It is interesting to compare these chapters on research and the wholehearted attitude of the gas industry's approach to its research problems and the money it is prepared to sink in research with the lack of initiative and rather half-hearted and lamentable attempts to look at these problems of research which one sees from other industries.

To quote the shipping industry, we see in the Annual Report of the Chamber of Shipping these words: The Government has not hesitated to spend very substantial sums of money for research in air transport. Let it be bold where the sea is concerned and spend accordingly. The Chamber's president, Mr. Hugh Hogarth, said in his address: We must look to Her Majesty's Government for understanding and action. We shall ask for it not as suppliants, but as a vigorous industry, which, in these so-called enlightened days, must have the Government behind it. When we look at this kind of thing, and the atmosphere which is being created, we realise that it is entirely due to the Government's policy on this matter. In contradistinction to nationalised industry the Government's policy of doles to private industry has produced an atmosphere in which ever increasing numbers are becoming pitifully undignified creatures, the tools of whose trade are incomplete without a begging bowl and a political pamphlet on the sturdy independence of competitive private enterprise.

Despite all the ballyhoo that we read in the Press about Labour policies, I think that the real problem which is becoming more clear day by day is presented by Tories who refuse to be Tories and whose political legitimacy the noble Lord the Member for Dorset, South was calling in question the other day.

Attempts are being made to describe nationalisation as part of a "philosophy of poverty" steming from conditions of other days. We on this side of the House have never accepted that. Indeed, as we see in this industry, in electricity, coal and the atomic energy industry, to quote only the power industries, it has proved to be the only modern method of organisation which can succeed amid false political clamour of Government supporters who seek to denigrate it.

I think that in the first days after the war the main success of these nationalised power industries was that they enabled unemployment to become un-necessary. As they have gone on with ever increasing success it has enabled us to ensure that large increase in production in manufacturing industries can take place without creating power shortages. I believe that the reports have shown that integration within the gas industry has proceeded very well and produced excellent results. Surely, to obtain maximum results from nationalisation of our fuel industries, there must be a far closer working relationship and integration of their programmes and plans in order that the nation can secure full advantage from their activities, which is why we welcome so much the statement that the Minister of Power made to us today.

This integrating of programmes of nationalised industries requires a political decision by the Government. They are not issues upon which the boards can take decisions, and I would ask the right hon. Gentleman to go a little further in considering getting together the chairmen of the two boards and trying to integrate to a far closer degree the programmes of the power industries as we see them now.

I turn to the difficult problem of the increasing use of oil and methane. I know that one of the objectives of the Gas Council is to secure the production of the cheapest form of gas it can get. From every commercial point of view it is, of course, a very proper aim. But I put it to the right hon. Gentleman that because of the nature of the problems that this may throw up in the future the time has come for the Government to set up a committee of experts to examine methods used by international oil companies in marketing their products.

Recently, with hon. Members on both sides of the House, I visited Germany, where competition between oil and coal is positively primitive in its intensity. It is not a question of nationalisation in the German coal industry. It is privately owned. We learned from the private coal owners in Germany that so intense has competition become that oil is sold at a price well below that asked outside Germany. We were told that even if there were a tax of 30 Deutschemarks per ton on oil it will only bring the price of oil to that obtaining now in other parts of the world. In other words, the price is not based on the economics of oil, but on a determination to capture a single market and to force the coal mines in that market to close. Once closed, they cannot be reopened.

It was suggested by those with whom we discussed the matter that a wide range of the oil companies' activities—

Mr. T. H. H. Skeet (Willesden, East)

I was a member of the delegation to which the hon. Gentleman referred. Is it not right to assume that coal owners in Germany own approximately one-third of the oil refining capacity?

Mr. Lee

It is not part of my case to discuss the ramifications of private capitalism. Heaven forbid that I should trespass on that hallowed ground.

Owners in the coal industry in Germany told us, as the hon. Gentleman will agree, that the competition against which they are now asked to sustain themselves is not based on economics, but on the wide international ramifications of the movements of the oil companies, who can pick a market and reduce their prices well below the economic price and, as it were, subsidise themselves by the upward movement of prices in other parts of the world where they are operating. Once they have established a position where coal mines are forced to close, and coal is unable to compete, rises in the price of oil take place.

Mr. James Griffiths (Llanelly)

That is characteristic of the history of the oil industry. It did precisely the same in America and elsewhere. That is why we object to such competition with coal miners in this country.

Mr. Lee

My right hon. Friend has anticipated what I was about to say. This is now happening in Germany. There is more intensive competition than has yet been seen here. I say nothing against it if it is based on economics, but hon. Members will do well to consider the position, because in the end it will probably affect them as much as the people represented by myself and my right hon. and hon. Friends.

Mr. Harold Finch (Bedwellty)

It is a method of dumping oil.

Mr. Lee

It is a method of dumping oil which need not cause losses to the companies concerned because they can recoup themselves in other parts of the world.

If this can happen in Germany and elsewhere, why should we feel that it will not happen here? I see no reason why it should not happen here. Paragraph 31 of "Gas Looks Ahead" indicates that by 31st March, 1966, the total daily capacity of various types of oil gas-making plant is expected to increase to 340 million cubic feet, or 17 million therms per day. By that stage many coal mines may have been closed, thereby causing great social problems in the areas affected. I wonder whether, at that stage, oil prices will again begin to rise. If so, the economics of the gas industry may well go haywire.

I assure the House that we are not looking backward and demanding a return to obsolete methods. Neither this party nor the N.U.M. bases its philosophy on that. We ask that the indigenous products of this country shall be looked at by both parties in this House to ensure that we do not put our- selves in a position where we may not only be unable to use our indigenous products because the coal mines are closed, but be at the mercy of tacticians who are rather unscrupulous in the way that they corner the market. That is why we suggest that an expert committee should be set up which is capable of analysing the ramifications of the international oil companies. If such a committee's report shows that I am wrong, I should be very happy to apologise for what I have said.

Mr. Gerald Nabarro (Kidderminster)

The argument of the hon. Member was first put forward in this House in February last year. It has been related half a dozen times since. We on this side are all well aware of the problems and the anxieties felt in the mining communities, but to state a problem is not to solve it. Would not the hon. Gentleman agree that it is no good my right hon. Friend looking at this problem? We all know the problem. Will the hon. Gentleman tell the House his solution, by legislative or administrative action, so that we may know exactly where the Labour Party stands?

Mr. Lee

The hon. Gentleman was good enough to say that to state the problem is not to solve it. I have read his speeches on the coal industry for a long time, and at last I have found something with which I can agree. He has stated the problem so often, but he has not yet given us a solution. I am offering a solution. I am saying that competition based on economics is not something to which we object. We object to competition which, in the classical Tory phrase, is unfair competition. It is not based on economics, but on the manoeuvring of the market by the great international oil companies.

Mr. Nabarro

If this unfair competition exists, or is likely to exist, will the hon. Gentleman enlighten the House as to what legislative or administrative instrument he would employ to put an end to any unfair competition that may exist? That is what I want to know.

Mr. Lee

The hon. Gentleman's own Government passed legislation which was supposed to take care of unfair practices in industry. We have been told that anti-dumping legislation can be applied. I would discriminate, although the Germans do not, between our own refined oil and imported oil. I said in the speech in February, to which the hon. Member referred, that I had certain priorities with regard to our indigenous products. I said that coal must come first, that fuel oil from our own refineries should come second, and that imported oil should come third. I discriminate between our own oil and imported oil. I would tax very heavily fuel oil which is imported as fuel oil.

Mr. Nabarro

That is exactly what I wanted the hon. Gentleman to say. He has now declared himself. Does he not realise that in the production of gas and the derivatives of gas very large quantities of imported fuel oil are used? Does the hon. Gentleman wish to place an import duty on the raw material of the gas industry, thereby making it increasingly difficult for it to compete with a mammoth competitor, electricity? Surely that would be nonsense.

Mr. Lee

That is a false analogy. There is more fuel oil in this country now than the gas industry can use. It is a question of increasing our capacity to use it, not of increasing the amount of fuel oil required. The hon. Member's analogy is completely false.

Mr. Nabarro

I will reply to the hon. Gentleman later.

Mr. Lee

We are considering today the results of a first-class effort by a successful nationalised industry. I am not saying that we have reached anything like the efficiency which is possible. There is still much to be done. One of the long-term objectives is the elimination of dangerous gases. A solution to this problem must be found as soon as possible. I notice that the industry is investigating the condition of gas fittings in hundreds of thousands of homes. There are nearly 13 million users of gas, and here again much remains to be done. The industry has produced cookers, specially for old people, which cut off the supply of gas if the light fails. This is a splendid development. I am sure that the House would agree that money spent on research for that is money very well spent.

My hon. Friends especially will note that the success which the gas industry and other nationalised industries have achieved has been achieved despite the fact that the legislation which we passed does not as yet permit of all grades of employees being given a genuine opportunity to bring their knowledge and enthusiasm to bear on the problems of management. I believe that in this respect we have much thinking to do.

From experience in industry, I know that there is no person more possessed of industrial genius than the British working man. I am sure that in the future we must consider how we can bring more and more the people within our nationalised industries to realise that they have a stake in their industry, that it is part of themselves and that they can give of their enthusiasm and abilities to the success of their own industry. As yet, we have not answered the challenge, and we must do much thinking before we know the answer.

There is also the paradox in that the success of the gas industry has brought a great social problem in the coalfields. The President of the Board of Trade was in the North-East the other day where he told the local authorities that they should try to sell themselves better. Local authorities there or any other part of the country must, of course, do everything within their power to acquaint the nation with what they have to offer in skilled labour, facilities, and so on, but for the President of the Board of Trade to go to Sunderland or any other part of the North-East Development Area and suggest that, irrespective of what the Government do, the local authorities can do everything in the way of selling themselves and bringing ample work to their people is nonsense, and the right hon. Gentleman knows it. I suggest that as a concomitant of the success of these industries we should have a more positive Government policy to eliminate the social problems which this success brings in its train.

We have discussed the great progress of the industry. We have shown that it is based on the economic possibilities which come with nationalisation. We suggest that it is a way in which we can bring economic liberty as the natural successor to the political liberties that we now enjoy. Nationalisation has nothing to do with the philosophies of poverty, about which we have heard so much. Those who deploy such arguments merely reveal their own poverty of philosophy.

I feel that we are now able to claim that the Conservative Party has badly misled the country in claiming that nationalisation has been a failure, and that in the whole range of industries for which the Minister is responsible we can claim very great and far-reaching successes. It is in that knowledge that we feel that the great legislation of the Labour Government of 1945 to 1951 has been amply justified.

4.43 p.m.

Mr. John H. Osborn (Sheffield, Hallam)

I ask for the indulgence of hon. Members on this the first occasion on which I have addressed the House. I hope that I shall cause no provocation so that the House may extend the courtesy which is usually extended to a maiden speaker.

If I may begin on a personal note, my qualification for speaking in the debate rests on the fact that I am one of the few hon. Members who have been through a national college, the National Foundry College, and my foundry qualifications, which include fuel technology, follow a study of natural sciences and metallurgy.

My experience which justifies my speaking today arises from the fact that for twelve years I have been closely connected with factory management and commercial management in the steel industry, the steel foundry industry and allied industries in Sheffield. It is my hope that, whatever my contribution this afternoon and, for that matter, on future occasions may lack in oratorical prowess, I may make up for it by drawing from my personal experience in industry and commerce, particularly in the City of Sheffield.

My constituency, Hallam, is named after one of the shires within a shire— Hallamshire. It is in the south-west of Yorkshire and embraces most of Sheffield. Its name, like that of Sheffield, occurs in the Domesday Book. The drill hall of the Hallamshire Battalion of the York and Lanes Regiment is in my constituency. The regiment is a well-known one. It celebrated its centenary last year, has served the country well in two world wars, and in the last war saw service in Norway, Iceland and France, among other countries.

The Cutlers Company, in Hallamshire is well known to many in the country as well as to the occupants of the Front Benches in this House. Sheffield is a city which has a tradition. It is a city which has a civic pride, and it is proud of its products. The tradition has been carried on from father to son from generation to generation in all walks of life. Just as I am a member of the Cutlers Company in Sheffield, so was my father a master cutler, so was my grandfather a master cutler, and so were two of my great-grandfathers master cutlers.

Just as I have lived in Hallam, so did my father, so did my grandfather, so did my great-grandfather, and so did my great-great-grandfather. Just as I have worked in Hallam and in Sheffield in the tool and steel industry, so did my father and my grandfather; and I will not go back any further because my antecedents go back to the early seventeenth century when my family was connected with the cutlery industry.

My purpose this afternoon is to support the statements made and the programme outlined by the Minister. It is my conviction, based on experience in Sheffield, that the gas industry has a great future. Why not? The gas industry in, say, the U.S.A. is gaining ground. The sales of natural gas there are going ahead at a faster rate than the sales of liquid fuel. Gas could provide a useful outlet, as the hon. Member for Newton (Mr. Lee) suggested, for the indigenous fuels that lie beneath us, but there are certain facts that we should consider. In 1956, the gas industry used 28 million tons of coal. Last year, the figure dropped to 22 million tons. My comments will be based on this trend.

My reasons for intervening in the debate are, however, fivefold. The first reason is that the gas industry of Sheffield is one of the largest industries supplying industrial users. The capacity taken by industries in Sheffield is 20,000 million cubic feet per year, which is an interesting figure in comparison with the storage capacity mentioned by the Minister.

My second reason is to ask the House to take note of the changes which are taking place in the steel industry, particularly in the industry in Sheffield. Electric arc furnaces of 80 tons and now 150 tons, some using oxygen injection, will be replacing the older open hearth, whether gas-fired or oil-fired, furnaces in the steel industry. This means that ancillary plant, coke ovens and producer gas plants will become surplus to the requirements of the steel industry and may have to be demolished. This also means that gas, a by-product of the steel works, will no longer be available to supplement the local gas grids in Sheffield and other areas.

My third reason is concerned with the impact of the Clean Air Act in a City like Sheffield and also the need to increase fuel efficiency in an area such as Sheffield. Furnace practice is changing. For instance, coal-fired reheating furnaces, whether they be for forge, rolling mill or press, are now being converted into gas or oil. But, as the Minister mentioned, gas is in competition with oil at present, and the gas industry will have to fight.

Sheffield is renowned for its manufacture of high-grade steels required by toolmaking, engineering, aircraft and allied industries. This requires accurate heat treatment to ensure proper physical properties. It also requires accurate atmosphere control and temperature control. It has been my own experience and responsibility to specify, purchase, instal and operate heat treatment furnaces in the steel industry. At that time technical considerations decided that gas would be the most suitable fuel, but, at the same time, economic considerations caused me, in company with other factory managers, to choose oil for factory heating. That decision was taken at the time of Suez.

Fourthly, I intervene in the debate because Sheffield University is an active and expanding university. If I may digress, my constituency embraces part of the university and on behalf of many citizens in Sheffield I should like to express my appreciation to the Minister of the excellent services rendered by his father as Chancellor of Sheffield University. He served Sheffield as he served Oxford. As a member of the Council of Sheffield University, I would also assure the Leader of the House that Sheffield will give him as warm a welcome when he takes up his duty as Chancellor of Sheffield University as that which Oxford University will give to the Prime Minister. It is my association with the Department of Fuel Technology and those advising the industry in Sheffield which leads me to make some of my remarks.

My fifth and last reason for intervening is again a personal one. This week, I have to decide how to heat my home. I am mindful of a letter from my hon. and gallant Friend the Member for The Hartlepools (Commander Kerans), in the Financial Times, which pointed out certain factors of interest to me. I am aware that a decision on domestic heating is not based only on logical considerations, but my short list has on it oil-fired central heating and gas-fired central heating as the last two yet to be decided upon.

My contribution to the debate will be to illustrate the problems which face the domestic and industrial consumer. Gas is in competition with oil. The oil industry is attracting the consumer by service and a sales campaign and it could be taking markets from gas, as I will show. I welcome the Minister's remarks. If gas is made competitive with oil, that is all to the good, but I would emphasise, as my right hon. Friend has emphasised, that the consumer must have freedom of choice.

The problems facing the industrial user are many. Companies in Sheffield who have dispersed factories are paying gas bills which are 15 per cent. higher as a result of a decision connected with non-aggregation of meters. Quarterly assessments have also been a blow. The oil companies, on the other hand, are prepared to aggregate the oil consumed, whether factories are dispersed in one city or throughout the country. This places oil in a stronger competitive position than gas. Local industry has pointed this out to the East Midlands Gas Consultative Council and it has stressed that although industry has improved its efficiency in reheating and heat treatment furnaces, it expects improvements in the gas industry.

At this time in Sheffield, 30 firms, because of the Clean Air Act, are considering converting from coal to either gas-fired or oil-fired furnaces. One firm has converted its forge and rolling mills, on economic grounds only, to oil-firing. This could represent £15,000 of sales in one small factory alone. Another factory has 36 furnaces due for conversion. The first trials on oil have been so encouraging that 19 are now in process of conversion and in all probability the full 36 will be converted to oil.

Similar problems face the domestic consumer. He is offered attractive hire-purchase schemes and is subject to good selling by the oil companies. As my hon. and gallant Friend the Member for The Hartlepools has mentioned, unless the consumer has carried out exhaustive inquiries he is unable to distinguish between the advantages of oil and gas. Attempts have been made to evaluate the differentials between oil, gas and solid fuels. One publication, Which'?, states that oil in an atomising boiler can be rated at 1s. 1d. per useful therm, while oil in a vaporising boiler is 1s. 2d. per useful therm, anthracite 1s. 2d. and gas at 1s. 9d. per useful therm, but this could be a misleading comparison because the gas is rated at the London thermal rate, which does not compare with the domestic tariff of the East Midlands Gas Board, which is 12½d. per therm.

As for domestic oil-fired heating, one manufacturing firm has provided graphs for the use of its would-be customers. It would seem that the capital cost of an oil-fired domestic unit may be double that of a gas-fired unit. The running cost of an oil-fired domestic unit could be between 15 per cent. and 20 per cent. below that of a gas-fired unit. The overall cost of an oil-fired or gas-fired unit, dependent upon the size of the furnace, could be exactly the same over a period of five to nine years, but after that period oil could prove the cheaper medium for domestic heating. These are figures from one survey, but there are definitely other views being expressed in the country. At the end of the day, however, it is not price but convenience and other factors that would persuade the domestic user.

In deciding future policy, the industrial and domestic consumer should be informed of several factors. The known oil reserves in the world could be seriously depleted by the turn of the century, but I am given to understand that the coal reserves of this country could last us for 500 years.

Finally, there is the effect of sulphur dioxide, a hazard which, unlike smoke, cannot be seen. It is corrosive and acidic and, in one instance, during the fog in London eight years ago the high death- rate has been attributed to sulphur dioxide. The sulphur dioxide content in the air in an industrial city like Sheffield is rising and it should be borne in mind that gas, whether produced from coal, oil gasification, whether inported, or produced as a by-product of our refineries, has a sulphur content which is limited by Statute.

I welcome the short-term measures outlined by the Minister, whether they be for the development of natural gas, or firedamp in the collieries, whether for the gasification of oil, or whether related to the pioneer project of bringing in methane from overseas. The public would like to see the consumption of gas increased. This would cause the price to come down because of increased volume. It would be a welcome assurance to the public to be told that the manufacture of gas from oil would reduce prices. The long-term measures—the integration of mines, the high-pressure gas grid, underground storage, the location of gas plants near collieries and, finally, the total gasification of coal—are to be welcomed.

Many people wonder whether £1½ million a year spent on research and development, particularly in connection with the Lurgi and allied processes, is enough at the present time, because it is by developing these processes that we ensure the future of gas, using coal as a raw material. I agree with the Minister that there is no object in curtailing the use of the gas industry, because it is uneconomic. Therefore, I support my right hon. Friend's proposals because they will help in the long-term to make the gas industry competitive. If the industry becomes competitive now, using oil as well as developing means of using our own coal in the future, a useful outlet will have been found for the nation's coal and will help to keep our mines busy. I therefore support the Second Reading of the Bill.

5.1 p.m.

Mr. George Darling (Sheffield, Hillsborough)

I am glad, Mr. Deputy-Speaker, that you have called on me to perform the pleasant duty of congratulating my neighbour in Sheffield, the hon. Member for Hallam (Mr. J. H. Osborn), on having made an excellent maiden speech. I am sure the whole House will agree that he has come through what we all know to be a grim ordeal with great credit.

I am not surprised that the hon. Gentleman made a reasonable speech. He and I clashed in the General Election, but we have discussed things in a more reasonable frame of mind since. I knew that in view of his association with the steel industry he was certain to make a good and reasonable contribution to our debate, because nobody in the steel industry could get away with anything less. It is an industry which imposes a high standard upon all who take part in it and serve it. Clearly, the hon. Gentleman has made a deep study of the gas industry. Because he shares many of my views, which he expressed towards the end of his speech, I can say without question that it was a very intelligent speech indeed. Even hon. Members who do not share our views will agree, I am sure, that we have had a thoughtful speech from the hon. Gentleman and that we look forward to more contributions from him in the future.

The hon. Gentleman mentioned, as did both the Minister and my hon. Friend the Member for Newton (Mr. Lee), the development of the gas grid. I recollect, as I am sure does the hon. Member for Kidderminster (Mr. Nabarro), that this was one proposal in the discussions we had as long as ten years ago which many of us advocated. We said that the best way to develop our indigenous fuel resources would be to carbonise, to gasify, coal and to develop a gas grid, switching over to gas as far as we could both domestic and industrial heating and industrial prime movers. We believed that gas should be used not only in furnaces for steam raising but also for developing gas turbines as prime movers, as far as they could be developed on producer gas.

I regret that progress in this direction has been very slow. As the hon. Member for Hallam said, quite rightly, we must also consider the improvements which need to be made in the production of gas, so that it can become cheaper both to domestic consumers and to industrialists who may wish to take more gas suppplies.

On the question of oil, the Minister said that in future the chairmen of the Gas Council and the National Coal Board will get together and will discuss developments in the gas industry which involve switching over to oil. I am sure the whole House will be glad to learn of this, but I hope that the consideration of the use of oil by the industry will not stop at discussions between the two chairmen. There are other people very much interested in the development of gas from oil, and those are the people who have to live near a gas-from-oil plant. It is about this aspect of the matter that I wish to speak.

There may be differences of opinion on the economics and on the technical aspects of gas-from-oil production, but there can be no difference of opinion about the social effects of a gas-from-oil plant in a residential area. They are intolerable. They make life completely unbearable for the local residents. My hon. Friend the Member for Rother Valley (Mr. D. Griffiths) intended to raise this issue, because he has one of the first of these plants in his constituency. Unfortunately, my hon. Friend is away ill with bronchitis. Therefore, as I am threatened with one of these plants in my constituency, we have discussed the matter between us and I am raising it for him as far as it affects his constituency.

I have seen pictures of the plant established at Laughton Common in the Rother Valley constituency near Rotherham, which show the damage it is doing to the houses near by. They are continuously covered with a pall of oily vapour, and the residents have to put up with nauseating fumes while the plant is working. The local residents also complain of the oily mist that is sprayed not only on the houses close to the gas works but also quite a distance away. It gets on to the paintwork and the windows and is difficult to remove. They also complain of the intolerable noise which comes from this plant which, in the words of one resident in the village of Dinning-ton, near Laughton Commons, blares over the village for twenty-four hours a day. In fact, one old-age pensioner is reported as saying that he thought he was almost stone deaf but he can hear the plant and it stops him from sleeping at night.

The lives of the residents have apparently been made so miserable that they now time the plant's operations. At eight minute intervals jets of steam spray vapour over the houses close by and according to the reports made to me a thick yellow smoke pours out and hangs over the homes of these people, giving off an objectionable smell. The local residents also complain that as the mist condenses greasy water comes down on to the ground and has flooded the backyards of several of their houses.

A reporter on a local paper interviewed the residents who live close to the gasworks. One said that the plant— … is enough to send anyone mad. Taking everything into account, noise, steam and oil, our houses are hardly fit to live in. Another said that all the back windows of her home were covered with this grease which she could not remove. Another who lives on the opposite side of the road away from the plant said that the oil marks on his house were almost impossible to remove. Yet another said that the greasy water sometimes covered his back yard.

If the East Midlands Gas Board, which is the body responsible for putting up that plant, had any real sense of its social obligations, it would have listened to the representations made to the Board before the plant was installed, because the local council made such representations. Those representations were also reported in the local paper, as was the council meeting when the matter was brought up.

It is clear that the representations made to the East Midlands Gas Board by the local council were wiped on one side and that the board did not take the slightest notice of them. The council said that if the plant were sited where it was eventually put and where it was decided to build it at the beginning, the people on the other side of the street would suffer the nuisance which I have described. The council suggested that the board should offer to buy those houses and help to rehouse the residents elsewhere. I am sure that in all the circumstances that was the best solution.

However, the council was given an assurance that local residents had nothing to worry about and that a gas-from-oil plant would not emit any more fumes, smoke, noise or dirt than an ordinary producer gas plant such as we have in an ordinary gas works. That assurance has been proved to be incorrect, and it is clear that the board was leading the council and local residents up the garden.

I urge the Minister to inquire into the social nuisance caused by gas-from-oil plants and not to leave it to local gas boards to give assurances of this kind, which are apparently meaningless. It would be a very grave matter if any more of these plants were built, because many thousands of people who live near gas works will be affected.

I urge the Minister to inquire into the social consequences of the building of these plants. I hope that he will tell the Gas Council quite plainly that public money ought not to be used to cause social nuisances of this kind. Many industries which are producers of obnoxious smells or noise—and we had a discussion about noise on Friday—and which cause social nuisances of some kind, because of the nature of their operations, have to obey rules and regulations designed to abate the nuisance, and sometimes they have to be situated in more or less isolated areas. We do not allow slaughterhouses, for instance, to operate close to residential areas. It is about time that we had similar rules for undertakings of this kind.

Mr. Nabarro

We had protracted debates on this kind of matter on the clean air legislation of 1956. The hon. Member will remember that his side of the House warmly supported the view of the then Minister of Housing and Local Government that, under Section 17 of what is now the Clean Air Act, full responsibility for dealing with nuisance of this kind would rest with the Alkali Inspectorate of the Ministry of Housing and Local Government. As this is evidently an aggravated nuisance, why cannot someone ring up the alkali inspector and ask him to do something about it?

Mr. Darling

I am afraid that the hon. Member has not been told how those provisions are working out. Surely he is not under the impression that we have not made representations. The alkali inspector has said that he has no authority over gas works.

Mr. Nabarro

That is wholly wrong. It is laid down in the Statute that he has full authority over gas works. We wrote it into the Act. If the inspector is not doing his job, why is he not reported to the Ministry of Housing and Local Government for early disciplinary action?

Mr. Darling

The hon. Member has not caught up with the local discussions and debates about the application of these powers. As he knows, Sheffield was one of the first cities to try to put this sort of thing right, and we are still fighting it out with the Minister. We have taken the course suggested by the hon. Member, but we are still finding out who has authority to act. I assure the hon. Member that the Minister is not giving us a great deal of help. The case I have described is not in the Sheffield area, but in the constituency of my hon Friend the Member for Rother Valley, but two similar plants are promised—"threatened" might be a better word—for the Sheffield area—the Wincobank Gas Works and the Neepsend Gas Works in my constituency. I assure the Minister that, if those reports are correct, there will be a great deal of trouble in Sheffield if our constituents have to put up with the kind of social nuisance caused by the gas works at Laugh ton Common.

I have already taken up with the East Midlands Gas Board the question of the nuisance caused not only by smoke but by grit, dirt and dust from the Neepsend Gas Works. The Gas Board has received deputations very courteously and tried to remedy some of the easily remedied defects, but the board has not dealt satisfactorily with our main complaints and it is clear that the East Midlands Gas Board, like other gas boards, will go ahead with its schemes whatever the social consequences.

As my hon. Friend the Member for Newton pointed out, there are defects in the Gas Act. My hon. Frend mentioned worker representation in management. Another defect is that the board appears to have no obligation to seek planning permission for developments of this kind before going ahead. Not only should there be discussions between the chairmen of the Gas Council and the National Coal Board about developments of this kind, but gas boards should be obliged to consult local authorities before such developments are undertaken.

It is quite wrong that living conditions should be made intolerable by developments of this sort, and I hope that we can get the Minister to put some pressure on the Gas Council, because many boards seem to 'behave without a proper sense of social responsibility. I appeal to hon. Members on both sides of the House—because this is not a party matter—for their support and help in urging the Minister to request the Gas Council to instruct gas boards to discuss these matters with local authorities before developments of this kind take place.

In addition to those discussions, we should also be given a better idea of the cost of gas-from-oil plants and their economic results, because if there is no great saving in cost in the production of gas by this method, then the social consequences must outweigh any margin of economy which may be in favour of the use of oil—and we have not had any indication that there is such a margin. I urge the Minister to tell the Gas Council not to proceed with more of these plants, not only because of their social nuisance, but because the costs have not yet been thoroughly examined. I am not convinced that there is any saving, but I am convinced that the social consequences of continuing with these plants will be disastrous for many people who are unfortunate enough to live close to gas works.

5.20 p.m.

Mr. Gerald Nabarro (Kidderminster)

My first and very happy duty this afternoon is most warmly and sincerely to congratulate my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) upon a magnificent maiden speech—especially so because he brought to his subject an expert technological knowledge of so many aspects of our fuel and power industries, the economics associated with them and, in particular, the gas and carbonisation industries with which we are concerned this afternoon. We have regular debates on the nationalised fuel and power industries and their many associated problems, and I hope that my hon. Friend's unique knowledge of this wide and complex field will be available to hon. Members on both sides of the House on many future occasions.

I want to preface the main body of my speech by correcting the hon. Member for Sheffield, Hillsborough (Mr. Darling) with respect to the functions of the Alkali Inspectorate of the Ministry of Housing and Local Government. I would direct him at once to the Beaver Committee's Report—Cmd. 9322— which investigated the question of air pollution and upon which the Clean Air Act, 1956, was based. If he will search out Section 17 of that Act, he will find enshrined in it almost the exact words which were written into the Beaver Committee's Report in connection with the scheduled processes which are the special responsibility of my right hon. Friend the Minister of Housing and Local Government.

Among those special responsibilities are emissions into the atmosphere from gas works, works for the manufacture of coal gas, water gas, carburetted water gas or oil gas for distribution to the general public. The hon. Member for Hillsborough should take the same action in this regard as I regularly take in respect of nuisances with which the Alkali Inspectorate should be concerned. First, I blast the appropriate alkali inspector, and if I get no response from him, or if they are too thin on the ground, I blast my right hon. Friend the Minister of Housing and Local Government as being the responsible Minister. I commend that course of action to the hon. Member.

Mr. Darling

As the hon. Member is obviously a much better blaster than hon. Members on this side of the House, will he help us by blasting his right hon. Friend in this matter, because we have not been able to do anything?

Mr. Nabarro

I cannot set myself up as a universal provider in all these matters. I have not yet qualified for the salary which is normally payable to the Leader of the Opposition. In matters of this kind, hon. Members opposite should put down Questions addressed to the Minister of Housing and Local Government and not blame the Gas Council or the gas boards. The right hon. Member for Derby, South (Mr. P. Noel-Baker) has often talked to me on similar matters affecting power stations.

My right hon. Friend has my full support for the Measure which he has introduced. There are only one or two aspects of the finances of the gas boards upon which I want to dwell for a few moments before passing to the more practical topic of the pursuit of clean air policy and the provision of appropriate fuels by the gas boards for the implementation of that policy.

I want, first, to deal with the organisation of the gas industry. The author of nationalisation in this case—the right hon. Member for Easington (Mr. Shin-well)—is to be complimented upon the structure which he devised for the indus- try. Although he was the author of the Gas Act, 1948, he was not Minister of Fuel and Power when it was taken through the House, but I give him all the praise due to him for the fashion in which he designed the organisation. It is because the organisation was correctly designed that the industry has secured very little attention of a critical kind in this House. There has rarely been a grave criticism of the gas industry in the last ten years. There have been minor criticisms, but nothing of much substance.

The industry has succeeded largely because the managerial units have been organised to an optimum size and because the twelve area gas boards are almost entirely autonomous and are responsible direct to my right hon. Friend the Minister of Power and not to the Gas Council. There is a loose, nonfunctional organisation at the centre, called the Gas Council, which comprises a full-time chairman, a full-time deputy chairman and twelve members, each of whom is the chairman of an area board.

I repeat these facts, not because they are unknown to hon. Members, but because a moral is contained in this story. That is the organisation we require for the railways. I should like to see six operating railway companies, entirely autonomous, paying their way taking year with year, with a loose, non-functional organisation at the centre. When we next debate the reorganisation of the railways, I shall commend the gas industry organisation. I see that you are on the point of rising to remind me that the debate is about the gas industry and not about railways, Mr. Deputy-Speaker, but I could not forbear praising the gas industry organisation and its author— and I rarely praise him—and drawing an analogy, which I believe is important in the affairs of our nationalised industries, in its application to railway matters.

I now turn to the question of finances. This House has a happy habit of embracing certain principles in regard to the creation of committees of inquiry of all kinds. Those inquiries having occupied the full-time attention of fairly large numbers of trusty and experienced public servants, and their reports, often voluminous and nearing the status and stature of the report of the Royal Commission, containing many recommendations, having been published, the House promptly takes scant notice of them.

Mr. Tom Brown (Ince) indicated assent.

Mr. Nabarro

I am glad to se that the hon. Member for Ince (Mr. T. Brown) so warmly supports me.

Mr. Brown

History records that fact.

Mr. Nabarro

I am good at history.

I refer particularly to one of the most valuable reports of a Departmental committee of inquiry published in the last few years, in the context of the principal competitor of the gas industry, namely, the electricity supply industry. This is Command 9672, published two years ago and commonly referred to as the Herbert Committee's Report. Because electricity is one of the principal competitors of gas, this very important Committee, including a member of the Trades Union Congress, made certain important recommendations concerning the provision of new capital for the nationalised gas and electricity boards.

I wonder whether the Parliamentary Secretary has read this Report. If not, I commend to him the contents of paragraphs 347 and 348, in the cantext of this debate. Hon. Members generally might study its words of wisdom. Paragraph 347 says: We have previously drawn attention to certain fundamental differences that exist between the electricity and other nationalised industries on the one hand and private industry on the other. We believe that in the nature of things, the use of capital"— I repeat— the use of capital cannot be as strictly or as closely guided by economic considerations as is the case in a private industry. Paragraph 348 continues: With this in mind, we have given serious consideration to the question whether the Area Boards and the Generation Board should not be required to raise their own capital by going directly to the market, without the support of the Treasury guarantee, and competing there on the basis of the financial position and prospects of each of those bodies respectively. Now come the vital words which I commend to my hon. Friend: We feel that short of this"— that is, resort to the market— it is very difficult to achieve full efficiency. My right hon. Friend this afternoon was claiming that the gas industry had achieved full efficiency, but I do not believe that it has. I do not think that it employs its capital resources to the optimum effect; in fact, I believe that many of the capital resources are wasted because it is largely a monopoly and because the same considerations of profit earning do not apply to it as apply in private industry—through no fault of its own. But then the Herbert Committee continues with very apposite words in connection with the gas industry. It says: The point we are raising therefore, although it arises from our examination of the organisation and efficiency of the electricity supply industry, is in fact a general point applying to all nationalised industries which rely on Treasury guarantee and of which two are competitive with the electricity industry. I pause there. One of the two is, of course, gas. It continues: We feel therefore that we cannot recommend a course which might have the effect of increasing the interest component in the cost of electricity unless the same policy were applied to nationalised industries supplying competitive products. A general recommendation of this sort is we feel outside our terms of reference. We can only draw the attention of the Minister to the matter and say that the recommendations we make for an improved control of expenditure are in our opinion not likely to be wholly effective unless both the product of the industry and its raising of capital are subjected to the competition of the market. My hon. Friend the Parliamentary Secretary, having read this voluminous Report with the same avidity as I have, will recall that in the summary of recommendations and conclusions there are contained these telling words. I commend them to my hon. Friend today. Recommendation No. 68 on page 146 reads: The efficient use of capital would be encouraged if the Boards had to compete for capital funds on the market without the support of the Treasury guarantee, but this course could only be followed if it were also applied to other nationalised industries. We all devoted a lot of care, time and attention to creating this distinguished Committee led by Sir Edwin Herbert. Sir Edwin deliberated for nearly two years before producing his remarkably careful and detailed Report. This was the principal recommendation which he made. Both the Treasury and the Ministry of Power have studiously ignored Sir Edwin's recommendation in this regard and now come to the House today on behalf of the gas industry for an extra £50 million of capital from budgetary funds with a prospect of the Minister, subject to Regulation, raising yet another £25 million, a total of £75 million, in order to increase the borrowing powers of the boards from £450 million to £525 million.

The Minister should tell the House when he proposes to implement the Herbert recommendations and cause these nationalised boards to compete on the open market for their capital instead of providing it by stroke of pen from the Consolidated Fund or otherwise under Ministerial authority. Only by resort to the open market will full efficiency be achieved. These are not my words. They are the words of Sir Edwin Herbert, including the T.U.C. representative sitting on his Committee.

Now I pass to another aspect of committee matters respecting the gas industry? It was Lord Morrison of Lambeth, lately the right hon. Member for Lewisham, South, who stood at the Dispatch Box in 1950 saying that public accountability in nationalised industries should most largely rest upon a seven-yearly examination of their affairs by high level Ministerially-appointed committees. We had Herbert for the electricity supply industry and Fleck for the coal industry. We have not yet had one for the gas industry.

The gas industry has been nationalised for twelve years. I am not sure that it is in such good order as my right hon. Friend suggests. I concede that it is a little more efficient than certain other nationalised industries, but it is still not efficient enough. We were promised by a Socialist Minister that we should have an examination every seven years, but we have not had one. When are we going to have it? What will its terms of reference be?

I strongly recommend to my hon. Friend the Parliamentary Secretary—I hope that he writes shorthand and that he will record these terms of reference —It is nothing to grin about. I rebuke my hon. Friend at once. This is a very serious matter. The terms of reference for this inquiry into the gas and carbonisation industry—[An HON. MEMBER: "Do not be rough with him."] I am not being rough with him; I am being kind with him, as yet. The terms of reference should be: "To inquire into the organisation and efficiency of the gas and carbonisation industry in Great Britain in the light of its working under the Gas Act, 1948, and to make recommendations."

My first proposal is that the gas boards should be given a date on which they resort to the open money market for their future capital requirements. My second proposal is that a committee of inquiry should be established to inquire into the gas industry—it has been nationalised for twelve years—in the same way as the Fleck Committee inquired into the coal industry and the Herbert Committee into the electricity industry. Then I shall be able to examine the findings of independent arbitrators and investigators to see what level of efficiency has been achieved in the gas industry. I should not have to rely upon the paeans of praise showered upon this nationalised board by my right hon. Friend the Minister of Power or by the official Socialist Opposition. I prefer independent inquiries into these matters.

Now let me turn for a moment to an important aspect of the gas industry's affairs. Gas and coke make the best use of the nation's coal. There is no doubt about that at all. We have all been united in our desire to secure very full implementation of the provisions of the Clean Air Act at the earliest moment. It is now nearly four years since that Act reached the Statute Book. Again my hon. Friend the Parliamentary Secretary will be aware of the many recommendations contained in the Beaver Report and of the great difficulty that has been experienced in supplying adequate quantities of smokeless fuel in order to replace raw bituminous coal for industrial and domestic purposes, notably in what Beaver called the "black areas" of the country, that is, those areas which are most heavily polluted.

Beaver postulated in his Report that approximately 19 million tons of solid smokeless fuel, or the equivalent of it, would be required for these black areas if they were to be entirely cleaned up. We are creating smoke control zones quite fast, but there are very real difficulties in regard to the smokeless fuel I hope that my hon. Friend the Parliamentary Secretary will recognise this. It is the Minister of Housing and Local Government who creates the smoke control areas, only after consultation with the Minister of Power who says to him, "Yes. I have sufficient smokeless fuel to support a smokeless control area in this or that local authority area."

What is troubling me about the matter is the character of the solid smokeless fuel provided in these smoke control areas. Certainly gas, electricity and oil are readily available and are all good refined and smokeless fuels. But today my right hon. Friend the Minister of Power—I am sure that I take hon. Members opposite with me—said that we in this country treasure the open fire. I do. I am sorry to interrupt my theme, but perhaps I could, in a moment, join in the conversation going on below the Bar. I am surprised at a Whip behaving like that. Whips should be seen and not heard, on all occasions.

To continue my speech, I treasure the open fire. I do not want smoky raw bituminous coal burned upon it. I want a solid smokeless fuel consumed, a premium fuel and not of the quality of much of the domestic gas coke available today from the gas boards. Poor stuff it is for an open domestic fire, and in any event there is a natural antipathy among housewives to relying upon gas coke as a solid smokeless fuel as a replacement for the happy and warm and cosy coal fire to which they have become accustomed, we all know the names— Coalite, Phurnacite, Rexco, even a product of the Southern Gas Board called Cleanglow. Another is Warmco. They are proprietary premium fuels, but they are all extremely expensive. Up and down the country, as these smoke control areas are created, there is going to be a huge, unfulfilled demand for solid smokeless fuels at a reasonable price, and I want to know what the gas boards are doing about it?

Are they doing anything? I doubt it. The Southern Gas Board has the proprietary fuel, Cleanglow, but there is little in the Midlands so far as I am aware. There are only tiny quantities, anyway. That is what the gas boards ought to be doing. They should not be turning out coke of indifferent quality and texture or coke breeze and trying to force that on domestic consumers as a solid smokeless fuel. They should be concentrating on the production of a good quality, high calorific value, solid, smokeless fuel which will commend itself to housewives in these smoke control areas.

I want to know what progress has been made in this important regard. I hope my hon. Friend the Parliamentary Secretary will not respond with paeans of praise for the boards but will, for a change, say something a little critical about them. Perhaps it would be a very good thing if a Conservative Minister stuck a pin in the backsides of a few of these people on the nationalised boards. The housewife does not want these solid smokeless fuels from the gas boards dumped on her doorstep in a heap, to be heaved in a bucket into a coal shed and then in another bucket into her parlour and put on the fire.

Why is Britain so far behind in the prepackaging of fuels? We are told by Mr. Isaac Wolfson and others that there will be a revolution in shopping in the 1960's. The supermarket is to be the order of the day. My hon. Friend the Member for Willesden, East (Mr. Skeet) vigorously nods his agreement. I hope he will catch your eye, Mr. Deputy-Speaker.

Mr. Skeet

Do not be too long.

Mr. Nabarro

I shall be only another five minutes. The housewife wants solid smokeless fuel, clean and prepackaged. Britain is lagging behind in this matter. The supermarkets should be places where the housewife, or her husband shopping with the motor car, can go not only to buy tinned foods, vegetables, fruit and household necessities over a wide range, but to buy 7 1b. avoirdupois or 14 1b. avoirdupois packages of solid smokeless fuel done up neatly in polythene bags. It would be prepackaged at the gas works mechanically in these bags and transported to the supermarkets where it would be sold, by retail. This is a tendency happening all over the world. Are the gas boards not interested in selling prepackaged solid smokeless fuel? That should be one of their primary purposes?

Mr. F. Blackburn (Stalybridge and Hyde)

I wonder how long a 7 1b. bag would last?

Mr. Nabarro

The hon. Gentleman has missed the point. The purpose of a 7 1b. bag avoirdupois is that the housewife takes it home—or several of them— and that is one good "making up" of the fire. She does not have to put it in a bucket but carries it to the fireplace, unties the neck of the bag, and tips it upside down without any of the dirt normally associated with the handling of coal or coke in her own home. That is the purpose. It has advanced a good way. It should be prepackaged at the gas works and distributed through the supermarkets in the same way as perishables are. Furthermore, it is coming in the next few years. If the gas boards are to be efficient they should be apprised of this important development. If they are, I have not seen any manifestations of it. I have not seen gas board products in nice little clean polythene bags.

Mr. Alan Fitch (Wigan)

What about Cleanglow?

Mr. Nabarro

Cleanglow? But it is no good in a heap on your front doorstep. What I want is nice clean polythene bags of it.

Mr. Wilfred Proudfoot (Cleveland)

Does my hon. Friend realise the cost of a polythene bag? I have something to do with these supermarkets. In this prepackaging the tendency is for smaller bags, even from 7 1b. bags of flour to 3½ 1b. bags. I do not think that one could even sell 7 1b. of potatoes in a bag, let alone 7 1b. of coal.

Mr. Nabarro

I commend to my hon. Friend the Member for Cleveland (Mr. Proudfoot) the most interesting correspondence on this topic, which has been appearing for several weeks in the Financial Times, if he doubts the wisdom of what I am saying concerning the prepackaging of fuel. The research department of Monsanto Chemicals is well advanced in its inquiries into this technique and the fact is that it is widely practised in the United States and Canada already. If my hon. Friend wishes to argue with me about the cost of polythene, let me tell him that I insulate the whole of my greenhouses at home, producing delectable fresh vegetables, flowers and fruit for the insignificant sum of £2 4s. per annum.

Mr. Proudfoot

I worked in supermarkets in the United States and I found that the only fuel sold there was charcoal for chicken barbecues on the lawn. I have just installed gas central heating. I do not have to ring up the gas board, because it comes through a pipe. I do not have to drag the stuff home for myself.

Mr. E. Shinwell (Easington)

I am trying to help the hon. Member for Kidderminster (Mr. Nabarro). This is an interesting topic. I agree with much of what he has said, except for his animadversions on nationalisation, but that is part of party warfare. But I can remember Glasgow and the East End of London, and all the poverty-stricken areas of the country for many long years. People who were too poor to buy 1 cwt. of coal went to the corner of the street—to the coal ree, as we call it in Scotland—where coal was sold in bags, sometimes of 10 1b. That was the only way they could buy it because of their poverty. What the hon. Gentleman is saying is quite right. If it could be prepacked in polythene bags and sold in supermarkets and elsewhere, that would be very desirable indeed.

Mr. Nabarro

I am very grateful to the right hon. Gentleman, with his immense knowledge of the fuel and power industries, for fortifying me and protecting me from my hon. Friend the Member for Cleveland.

I do not want to continue for too long, but this is an intriguing topic. We are voting vast sums of money for an industry which is required to supply a major part of the nation's solid smokeless fuel, as written into its constitution—coke. I want that solid smokeless fuel in a much more palatable and acceptable form for the housewife.

I quote to my hon. Friend the Member for Cleveland these words extracted from a report sent to me by Monsanto Chemicals, which is, after all, one of our leading developers of polythene as a method of packaging. The report states: The prepackaging of solid fuel at source is not yet done commercially … "— that is, at source, at the gas works, where I want it done— but the prepackaging of coal in paper bags commenced in January in Coventry, at the rate of 500 tons per week and another merchant in London is packing ' large quantities'. Others are experimenting, for example, Charrington, Ltd., who use a specially equipped lorry for weighing and filling at the point of sale. Later, the report states: Technically, the problem is to provide dry fuel "— I pause there in my quotation, because there is so much grousing about the weight of water in coke and coal. If it is packaged at source, that is obviated. I continue the quotation: and package it in thin polyethylene bags, using the thinnest gauge of film which will provide both adequate strength and resistance to the sharp points on coal granules which might penetrate and cause external soiling. It is visualised that packages weighing 5 or 6 1b. would be suitable "— here is the answer to the hon. Member for Stalybridge and Hyde (Mr. Blackburn)— for placing on a fire without opening the bag. Prepackaging machines for similar weights are already in wide use for such commodities as potatoes", to which my hon. Friend the Member for Cleveland referred.

Prepackaging is the order of the day in North America. It will be the order of the day in Britain within a year or two. A complete revolution in shopping is coming in this country in the 1960s. I do not want to see a heap of dirty coal or coke piled up in a merchant's yard and dumped on the doorstep, as it has been in past years, by a coal or coke merchant. It should be prepackaged at source in units which are readily available to the housewife through the supermarket organisation, clean, labour-saving and easily transported. The gas boards should be applying themselves to this problem, but they are not.

I repeat to my hon. Friend the Parliamentary Secretary, for the benefit of his reply, that I hope he will not once again launch into a eulogy about nationalised boards. They are not perfect. I am glad to see my right hon. Friend the Minister returning. He opened our proceedings today with the customary paeans of praise for the gas industry. [HON. MEMBERS: "Hear, hear."] I notice that all the cheers come from the Socialists and none from this side. There is no enthusiasm here for nationalisation, but, then, we do not have Clause 4 on our plate.

I hope that when he replies, my hon. Friend the Parliamentary Secretary will give us the benefit of his views upon how the gas boards can meet the largely unfulfilled demand for premium and solid smokeless fuels and with a better and more attractive fuel than gas coke of the indifferent qualities for domestic use which have been offered, notwithstanding the British Standards specifications embraced in the last few years.

Subject only to those few qualifications and minor criticisms, I have pleasure in supporting my right hon. Friend's proposals today and I hope that the Bill will have a rapid passage to the Statute Book.

5.55 p.m.

Mr. Alan Fitch (Wigan)

The hon. Member for Kidderminster (Mr. Nabarro) is always interesting to listen to and to look at. He is an accomplished actor. He seems to be able to dramatise all the emotions through which he is supposed to be passing. I hope that for the remainder of this debate, we shall return from the supermarket and from all the various types of packages back to the gas industry which we are supposed to be discussing.

I am aware of the proposal that fifteen minutes should be the maximum time for a back bencher to speak, and I agree with that. It is also proposed that thirty minutes should be the maximum for a Front Bencher, but who am I to tell the Front Bench, on either side, how long they should speak? I hope, however, to confine my remarks to ten minutes or so.

In this House we have from time to time discussed the coal industry, which is the head of the fuel family. It is an industry which is subject to much controversy. We have not, however, given very much time to the younger member of the fuel family, the gas industry. It is to that industry that I should like to direct my few remarks.

Gas first appeared as a commercial industry in 1810. It is interesting to note that in the early days of the industry there was ruinous competition between the rival enterprises for the sale of gas. So fierce was this competition that different companies ran their mains down the same street to induce the householder to buy gas. It became so ruinous that the gas companies had to amalgamate in their own self-defence. Out of their amalgamation came the zoning system, which an Act of Parliament of 1860 ratified for the area of London. Those of us from the coal industry who are interested in the distribution of coal could well look at the zoning scheme applied by the old gas companies and now by the gas boards.

On reading the revised Report of the National Coal Board, I noticed with very much regret that the gas industry is taking less and less coal. In 1956, it used 27 million tons and in 1957, 26 million tons. In 1958 the figure fell to 24 million tons and it is estimated that in 1965 the gas industry will be using only 21 million tons of coal. This is a serious state of affairs and it suggests that there should be closer co-operation between the gas and coal industries.

There is no doubt that the gas industry is facing a crisis. It faces severe competition from electricity and oil. Between 1950 and 1958, there was a steeper rise in the price of gas than in the corresponding prices of electricity and oil. I do not quite share the views of the Minister, in which he suggested that the gas industry would always be a two-fuel industry. I believe that the process of carbonisation is coming to an end. If the gas industry is to compete successfully in the future it must look, as it is doing, to new methods of development and new techniques. It has been suggested to me by people with considerable knowledge of the gas industry that in another ten years' time there will be little market for coke. Carbonisation of one ton of coal yields about 80 therms of gas, and half a ton of coke. The problem facing the Gas Council is that it has stocks of coke piling up which it cannot sell but which obviously must be charged against the industry. That is bound to send up the price of gas, and, if new methods are not devised, will ultimately price the industry out of the market.

It costs almost as much to transport coke as it does to transport the original raw product, coal. It has also been suggested that the cost of distribution in the gas industry adds almost 100 per cent. to the cost of production.

Another reason why the gas industry is facing a crisis is because of the general economic recession which took place about two years ago when the supply of coke to the steel industry fell considerably. That market has not yet been fully replaced.

What of the future? The future of the gas industry lies in new technical developments such as the experiment at Partington near Manchester where a new gasification station is in the initial stages of construction and where they hope ultimately to be able to gasify coal. I am pleased that the Gas Council has decided in this case to use coal as the raw material. I understand that carbonisation as a process can, at its maximum, be efficient only to the tune of 80 per cent. but the new gasification processes, such as the one at Parting-ton, will be efficient to the tune of 95 per cent.

I can see the gas industry branching out into another sphere. Up to now it has been mainly what is termed a selective fuel industry supplying light and heat to householders and also supplying certain industrial gas, but it has never yet captured the industrial market in the way that electricity has.

I believe that in the future the chemical industry will be greatly helped by raw material in the form of gases which can be supplied by these new gasification processes. All this will help to give the gas industry a new lease of life. The industry is looking for new techniques beyond the process of carbonisation, not from choice but because it is necessary in its own interests to do so if it is to retain its place in the fuel market.

The North Western Gas Board covers the area of which my constituency is a part. From time to time I have had close contact with the gas industry. I do not profess to be an expert technically. I am a layman, but even a layman who has close connections and who interests himself in certain projects can come to some conclusion about whether an industry is efficient or not. I can only speak for the north-western area. The industry there is very efficient. It is therefore regrettable that last year the board had to report a loss. The Report says: The Board regret that for the first time for seven consecutive years they have to report a deficiency on the year's trading amounting to £589,780 which is equivalent to approximately 0.40d. per therm on all gas sold and used. In other words, it had made a profit for the six preceding years.

Here, again, it has the same problem which is general to the country as a whole. The difficulty is the stocking of coke and the inability to sell it, which is adding to the mounting costs of the Gas Board. Nevertheless, in case any hon. Member should feel that in any way the board is inefficient I should like to quote one or two interesting facts about its operations in the north-western area.

In the last nine years there has been a 71½ per cent. increase in efficiency in meter reading and collecting. The sale of gas per employee is 9 per cent. above the national average. Productivity has increased by 25 per cent. per man. All this has taken place since the industry was nationalised. That is a good record.

I appeal to the Minister of Power to do everything he can to bring about closer co-operation between the National Coal Board and the gas industry. We are very pleased with his remarks, but I am sure that he could go even further. I believe that there is a great future for the nationalised gas industry. Until seventy years ago the gas industry was a monopoly. Electricity then entered the competitive market. The pessimists of those days said that the gas industry was finished. It did not finish; it survived, and I believe that if it faces the challenge of today, the challenge of new techniques, it will not go out but will go on to become an even more powerful fuel in this competitive world. If that challenge is met there is a great future for the gas industry.

6.8 p.m.

Mr. T. H. H. Skeet (Willesden, East)

I do not propose to follow the hon. Member for Wigan (Mr. Fitch) in all that he said, but I will follow his example and be brief because I have been advised that the debate will finish by seven o'clock, and I know that there are other hon. Members who wish to speak.

I should like to take up the hon. Member for Newton (Mr. Lee) in the context of his argument, because he said that everything was fair in the nationalised industries, particularly between coal and gas. The hon. Gentleman was good enough to quote from the Financal Times what was said by Sir Harold Smith, the former chairman of the Gas Council. I thought that it was only right that I should quote from The Times of 28th September, 1959, to see why the Gas Council has been in difficulties.

The report in The Times says: His optimism"— on the future of the industry— was clearly based on the view that while the National Coal Board had hitherto been exacting a monopoly price for gas coal, the gas industry had now succeeded in breaking the monopoly by developing other sources of gas. Since the nationalisation of the gas in- dustry, the price of coal had been put up to gas users out of all proportion to the price to domestic consumers and other industries for the same types of coal, Sir Harold said. The result was that during the past few years the gas industry had had a very hard struggle. Not only had the price been put up against them, but there had been many occasions in the past ten years when they could not get as much coal as they wanted. That quotation from Sir Harold Smith, who has had fifty years' experience in the industry, puts in brief phraseology the cause of the trouble in the industry today.

I was surprised that the hon. Member for Newton should say that one possible solution for the troubles of the industry was an impost on fuel oil. Because various oil fractions could be used in gasification there was no indication that the tax would fall where it was intended. I think that the hon. Gentleman should be consistent in his argument. When this matter was debated in the Bundestag, in Western Germany, the Socialist counterparts of hon. Members opposite voted against the imposition of a tax there. I dare say that they would give the same advice here. One compelling argument is to put the whole matter in the correct perspective—

Mr. Lee

I would remind the hon. Member that many Conservative members of the Bundestag advocated taxing oil.

Mr. Skeet

The interest of the people of Germany is to have the cheapest possible competitive fuel. They appreciate that the oil industry gives it to them. That is why they are against a tax. They feel that if there is to be an impost on fuel oil it would not only harass industry, but also the small trader who uses oil on his own premises.

To get this into the correct perspective—

Mr. Albert Roberts (Normanton)

Does the hon. Gentleman realise that the industry has been putting a high price on high-quality coal?

Mr. Skeet

That is a matter which should be referred to the Coal Board.

In answer to the point made by the hon. Member for Newton, I do not think that the relationship between the various nationalised industries is altogether happy.

To put the matter in the correct perspective, of the total gas produced in the United Kingdom up to a fairly recent date, 81 per cent. was derived from coal and coke ovens; 14 per cent. from water gas with a certain amount of oil enrichment; and only 4 per cent. of the total came from oil. Is the suggestion, therefore, that it is essential to have a fuel oil tax simply to deal with that 4 per cent?

It is sterile to look at the past. One should look to the future. I wish to concentrate on the question of methane gas imported into the United Kingdom. We have imported 9,400 tons by the "Methane Pioneer". I hope that we shall build in the United Kingdom or overseas a vessel capable of bringing 20,000 tons of liquified methane gas. This would be equal to a coal equivalent of 2 million tons per annum and provide a way ultimately by which the costs of the industry could be reduced.

I commend to my right hon. Friend a paper delivered by Dr. John McMullen to the Institution of Mechanical Engineers on 27th January of this year, in which this matter is gone into and the economics of it assessed. Everyone appreciates that in the United States, where there is an indigenous supply of natural gas, natural gas accounts for 27 per cent. of the total energy used there; and electricity a little less. That answer may not apply in the United Kingdom, where we have no indigenous supplies, but on the Continent of Europe it may have some application. Of the total energy supplied in France by 1975, 43 per cent. is likely to come from coal and at least 25 per cent. from natural gas. My forecast, for what it is worth, is that it may be possible in time for natural gas to provide 20 per cent. of the total energy used.

Many arguments have been adduced in the House in favour of a gas which is non-toxic. Methane is non-toxic and because it is lighter than air it has the advantage of rising extremely rapidly. The value of that is that it will reduce the incidence of explosion.

In Venezuela, 56 per cent. of the natural gas comes from oil wells and is flared. In Saudi Arabia, the figure is as high as 34 per cent., this gas is not used. Why could it not be brought to the United Kingdom if an economic method could be found to do this? I suggest that my right hon. Friend looks at this matter carefully. Ultimately, he may find that it will provide an answer to his problems.

Dealing with the Lurgi process, I think that we have to bear in mind that there are certain problems which must be appreciated. It is a substantial plant and, of course, as has been mentioned, it is a base-load plant. It is necessary to spend a great deal of money on the disposal of effluent from the processing and to have a certain degree of oil enrichment for the final product. Taking all in all, I think it right that the gas industry should have this money, but what I am primarily concerned about is that the order of priorities in research and development should be right.

I have here a copy of "Towards a New Energy Pattern in Europe". It is the O.E.E.C. Robinson Report. I do not intend to quote from it, but merely mention it. The Report indicates that by 1975 there may be a pipeline circulating throughout Europe which will bring the resources of the Sahara fields by a pipeline probably coming through Spain. In a report in this morning's newspaper, I noticed the possibility of a gas pipeline coming through Italy right up to the Ruhr.

It may tease the imagination to know that if, eventually, we have a Channel tunnel, we might consider bringing power through it to this country from the Continent. Let us not be too parochial in our thinking. Let us consider ourselves as part of Europe and of the European development. If, in the next ten or fifteen years, there are advantages to be derived from methane gas let us cash in on its advantages. If we miss them and tie ourselves too closely to the monopoly of coal, we shall not have hearkened to the words of a former chairman of the Gas Council, that it is not in our ultimate interests to do so. The industry should have flexibility to make use of the raw materials which are available.

I shall not be surprised if, at a later date, my right hon. Friend asks for more money to carry out the developments he has in mind. If that is so, we shall have to support what he is doing. I think that his policy is to make this industry even more competitive and we must give him the opportunity so that the industry may stand on its own feet.

6.19 p.m.

Mr. Tom Brown (Ince)

While supporting the Bill under discussion, I wish briefly to reply to one or two things which were said by the hon. Member for Kidderminster (Mr. Nabarro). The hon. Gentleman said that the coal industry and the electricity industry had been subject to an inquiry, but not the gas industry. He seemed to be disturbed because an inquiry had not been held into the operation and working of the gas industry. He said he was tired of Select Committees and commissions making reports and nothing being done about the recommendations which were made.

The hon. Gentleman then claimed that he was a student of history, butif his studies of history are correct, I think he will agree that no industry in this country has been subject to more inquiries and commissions than the coal industry was when it was under the control of private enterprise. I challenge him to deny that statement. He then went on to say that it was about time that there was an inquiry into the operations of the gas industry. The hon. Gentleman cannot have it both ways—criticising commissions and Select Committees, on the one hand, and then asking for a Select Committee or an inquiry into the gas industry on the other.

The hon. Gentleman went on to say that what the housewives wanted was a good smokeless fuel. That is what we all want. That is why we put on the Statute Book several years ago the Clean Air Act—in order that people living in industrial areas should at least have the opportunity afforded to them to breathe cleaner and purer air. When we embark upon a course of that character it takes a long time. Hitherto, as I have often said and now repeat, we have had too much raw coal of good quality at too cheap a rate. We have wasted it, because there was a superabundance of it and because it was of extraordinarily good quality.

Now, we are faced with this situation in the mining industry, and have to be content to make smokeless fuel out of an inferior raw material. It just cannot be done by return of post. Science has to be called in, experiments have to be undertaken and prices have to be brought within reach of the ordinary people. On this point, I agree with the hon. Gentleman and also with my hon. Friend the Member for Wigan (Mr. Fitch) and my hon. Friend the Member for Hillsborough (Mr. Darling). There is a very wide field for development in the utilisation of the surplus small coal which is now lying on the ground. It will have to be used, because we shall not be able to sell it as a raw material. It is depreciated in quality, and, therefore, the sooner the Gas Council and those responsible for the production of smokeless fuel can get to work to produce a smokeless fuel which will meet the needs of the ordinary householder the better it will be for everybody.

The hon. Member for Kidderminster also made reference to selling smokeless fuel in 7 lb. bags as if that were something original. Bless my life, we have been selling it in 7 lb. bags in industrial areas for donkeys years; I do not mean smokeless fuel, but the raw material. Why did we do it? Why were we compelled to sell it in small quantities? It was because the people in those days had not got the money with which to buy proper coal. That was the reason, and I agree with the hon. Gentleman that the Gas Council or those responsible for the organisation ought to get to work as speedily as possible to give to the consuming public a smokeless fuel which, in terms of quality and price, will help to produce a comfortable kitchen fire. The sooner they do that the better it will be for the coal industry.

Never in the history of this country have we had as much small coal stocked, and the Parliamentary Secretary knows full well that we have today over 30 to 50 million tons of coal stocked, depreciating every hour, every day, every week, and every year. It appears that no drive or thought is being applied to the task of increasing the amount of smokeless fuel. I know that many firms are trying to do this, but I should like to see the Gas Council itself doing something in this direction and not leaving it to private enterprise. Private enterprise is doing its best. I can quite see, in the very near future, that if these smokeless zones are to operate as the Clean Air Act intends that they should we shall have to meet the demands of the people for smokeless fuel. At the moment we cannot do it; it is an impossibility, because there is not sufficient smokeless fuel on the market to meet the need created by the establishment of smokeless zones.

Therefore, I very strongly support this Bill which will lead to an intensification of the production of smokeless fuel. I welcome what is being done, or is proposed to be done, at Partington, near Manchester. It is a great stride forward, and if the development which is proposed is carried out it will give a stimulus to the manufacture of smokeless fuels from raw coal.

There is one other point on which I wish to touch before I leave this question of smokeless fuels. I speak with great humility as one who, for seven and a half years, was chairman of a very large gas undertaking. It manufactured gas for three townships, and during the process of the manufacture of gas, which was the main fuel produced, we produced several other things as well. It was a natural sequence to the carbonisation of coal.

I have always maintained that there are four or five main kinds of byproducts to be extracted from coal, all of them of benefit to the consumer and all of them of benefit to people who do not even consume coal but who use electricity or other forms of power. There is coke, gas, tar and sulphate of ammonia or ammoniacal liquor, as the first process, produced as a natural sequence of carbonising raw coal. It is in that field in which, in my judgment, the Gas Council will have to work so as to produce more by-products from the raw coal for the people who need them.

Why should we in this age have to buy our artificial fertilisers from overseas? Why is there a market here for fertilisers from abroad when we can produce our own fertilisers from the by-products of coal? If I may draw upon my own personal experience, I remember going to Germany to see how the Germans manipulated and organised the manufacture of sulphate of ammonia in order that they could capture the market in this country for fertilisers. I soon discovered that the ammoniacal liquor, which has been running to waste in this country, was collected in one huge area in Germany and taken to one producing plant. As a result of that collection and manufacture by one unit of production, Germany was able to sell to us sulphate of ammonia, which is one of the most valuable fertilisers which can be produced, at a cheaper price than we could produce it at that time.

I plead with the Minister of Power to see that when the Gas Council secures the powers which will be conceded to it when this Bill reaches the Statute Book it does not take a lackadaisical view of the whole thing, but that it will put some ginger into it, get on with the job and apply a greater and more thorough degree of science in experimenting with raw coal, which is so valuable to us, to produce these by-products which are so essential in so many avenues of our everyday life. I hope that will be done because, if it is not, this Bill will fail in its purpose. It will fail in its purpose if the industry depends on gas works utilising small coal. It will succeed only when the industry extracts these by-products from the raw coal which is so vital in maintaining the mining industry. If the industry fails to extract these byproducts from the raw coal it will mean that the Bill will fail in its application.

I plead with the Minister and all concerned that there should be no lackadaisical attitude, no drawing back, but a going forward with scientific inquiries into all these things which are part and parcel of the mining industry and which will help it considerably. I am delighted to know that the chairman of the National Coal Board and the chairman of the Gas Council are to co-operate and consult together.

Mr. Ellis Smith (Stoke-on-Trent, South)

It is time they did so.

Mr. Brown

Yes, co-operation ought to have taken place years ago, but it is no good crying over spilt milk. We are trying to do our best for the industry. When we help a kindred industry which burns, carbonises or uses coal in other ways we are helping the British mining industry and British miners. Having regard to the past, the immediate present and the future, we have to do our best to see that coal is utilised in the most economical way to help the mining industry and the people of the country, who are worthy of the best that we can give them.

6.33 p.m.

Mr. Albert Roberts (Normanton)

As the opening words of my speech I say to the hon. Member for Willesden, East (Mr. Skeet) that I, for one, would not like to see the economy of this country tied to foreign fuel. We must appreciate that the economy of this country cannot survive on sympathy. I realise that industry needs an efficient fuel and a cheap fuel to compete in world markets. When I say "a cheap fuel", I do not, of course, mean cheap mine workers or cheap workers of any kind.

A few years ago the gas industry was considered to be an industry which was on the way out, but I have implicit faith in our technicians, not only in the gas industry but in the other power industries, to keep this country on top. In the last few years the gas industry has made enormous strides. As has been said this afternoon, it must be realised that there must be full co-operation between the mining industry, the electricity industry and the gas industry. Many homes at present could consume far more fuel than they do. Three-quarters of our homes are not heated. The answer to that is cheap fuel.

I am not against the importation of liquid gas if it is to enrich our gas, but the salvation of the gas industry of this country is to provide a cheap gas and to obtain the gas from cheap fuel, not an inferior fuel. At the moment, it is having to pay high prices for some of the coal it uses, but the coal industry has to survive. Hon. Members will realise that our great natural resource is coal. If we can make the best use of our brains and if our technicians lay emphasis on the use of coal, I am convinced that the gas industry can be a good competitor with the electricity industry.

Of course, the coal industry wants to assist the gas industry. It is essential to to do all that we can do to help that co-operation. We are not against some of the things which have been suggested by hon. Members opposite. We want to see the industry of this country in the vanguard of progress. We can assist that by taking advantage of the right kind of research. Many feel that we could get over this obstacle only by bringing in oil and liquid gas. Heaven forbid that we should do that at the expense of our home coal industry. Hon. Members on this side of the House have put up a gigantic fight. If the effort is put into the work we can get the fuel at the right prices.

A matter which has not been mentioned so far in this debate is the sale of gas. The chairman of the North East Gas Board knows very well that in my area some districts are without adequate showrooms. That is lamentable, for if we want to sell gas we must bring its uses before the eye of the public. In one part of my constituency people have to go into a pokey office to pay their bills and very few gas appliances are on show. When representations are made about the inadequacy of showrooms, the only answer is that the industry is making no profit but is "in the red" and cannot afford to provide satisfactory showrooms. That is not the spirit which is required. There must be a spirit and a will to win.

If the gas industry will put its goods into the shop window properly, have a positive outlook and take advantage of some of the things which have been said this afternoon, such as suggestions about transportation of coal and of gas, I am convinced that the effort which this Bill is designed to assist will be successful. I know that the Bill will receive the consent of the House. I trust that the gas industry will take heart from what has been said this afternoon and will realise that the majority in the House is behind the effort to make sure that we have a successful gas industry.

6.40 p.m.

Mr. Harold Finch (Bedwellty)

A few weeks ago the House spent some time debating the mining industry as the chief supplier of our energy needs in this country. Today, we have turned our attention, in this very interesting debate, to the gas industry, another supplier of our heat and our energy requirements.

I will take this opportunity to congratulate the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) on a very interesting and able maiden speech. There can be no doubt that he spoke with a great deal of knowledge of the subject. I can assure him that the House will always listen to an hon. Member who knows a good deal about the subject on which he is speaking. It was quite obvious from his excellent speech that he knew his subject and I know that we shall have the opportunity of hearing his advice and views upon it again in the near future.

It has been said that civilisation is based upon power. There can be no doubt that our standard of living and the extent of our industrial expansion depends upon our power industries. It depends upon their efficiency and, equally, upon the policies of the Government of the day and the encouragement which we are prepared to give to the officials and workmen alike who are employed in the power industries.

Looking at the record of the gas industry during the nearly eleven years since vesting day, there can be no doubt that each of the 12 area boards has shown energy, efficiency and plenty of drive. By integration schemes, they have improved the supply of gas in each of their areas. They have given added supplies to the industries of the country and to domestic consumers in quite a variety of ways.

Representing a Welsh constituency as I do, I have some knowledge of the valuable contribution which the Welsh Gas Board has made to the industries of Wales. Like the boards in other areas, it has constructed hundreds of miles of pipeline to convey gas from the steel works in South Wales—Cardiff and Margam—and from Shotton in the North, from the coke ovens of the National Coal Board in South and North-West Wales, from Bedwas in Monmouthshire; all these industries have been used effectively by the Gas Board in conveying gas throughout the Principality.

Indeed, when we look at the position in South Wales and the great developments which have taken place there, I say at once that in a large measure they have been due to the fact that ample supplies of good quality gas have been available as a result of the drive of the Welsh Gas Board. After all, if we look at British Nylon Spinners, of Pontypool, at Hoover Ltd., of Merthyr, and at Pilkington Bros., in the North, we see that these great industries, which have had a marked effect upon Wales, are fed by gas. We now know that the Pressed Steel Company, which is beginning operations in South-West Wales, is to be fed by gas. The fact that the Welsh Gas Board has done all this since nationalisation is an inducement to industries to move to Wales.

We also know that gas is particularly suitable for certain forms of manufacture. I have mentioned the nylon industry. Under gas heating, temperatures can be regulated and controlled in such a way that gas becomes a valuable asset to many of these industries and undertakings.

I have mentioned what has been achieved in Wales, but it is only typical of what has been done by many area boards. The fact that increasing quantities of gas are available has given an impetus to firms which, in co-operation with the gas industry, now manufacture a wide variety of appliances, including cookers, refrigerators, water and space heaters, laundry equipment and meters, to mention only a few. By doing this they have helped to increase the demand for gas. Because of the appliances which are being manufactured for the use of gas, there has been a new drive in the industry.

The achievements of the area boards are all the more creditable when it is realised that on vesting day 1,037 separate undertakings were taken over. Some were efficient, some were not. Plant in many areas had become obsolete, requiring considerable capital expenditure to put the undertakings on anything like a modern basis to meet the changing pattern of industry and the increasing demand. The war prevented developments which some of these undertakings might have had in mind. To make the position worse, much damage was done by enemy action during the war. Plant was destroyed, and this seriously impaired the activities of the gas industry during the war.

It was in that setting that the gas industry came under public ownership. It required a great deal of public expenditure to put the industry on anything like an efficient basis. We know that the boards set about the task. Throughout the country, during the past nine or ten years the area boards have laid over 20,000 miles of mains. In this process 500 gas works out of the 1,037 undertakings in the country were ultimately closed. Others were modernised and linked by mains stretching thousands of miles.

This reorganisation of the industry in each gas board area has been accomplished with hardly a ripple on the water. I cannot recall any debate in the House in which there were complaints of the reorganisation of this industry. That has been due to the co-operation which has existed between the workmen and the management in the gas industry and to the co-operation of the trade unions in doing this jab. We have reached the stage in the industry at which we can look forward to a national grid system.

It has been pointed out in the debate that this industry has not relied entirely on the traditional methods of producing gas in retorts or coke ovens. That is perfectly true. Methane is now being produced and taken from collieries in this country. I may have misunderstood the right hon. Gentleman, but he did not seem to me over-optimistic about this new method of producing gas in this country, but in Wales—and, here again, I must be pardoned for referring to Wales—the board has constructed 16½ miles of pipeline in the Avon Valley, taking methane from three collieries in the districts to the board's works at Aberavon. I am informed that there are prospects in the near future of draining 30 collieries in South Wales for the purpose of obtaining methane for the supply of gas in the South Wales area. That is being obtained at the colliery at Point of Air in the North, which is supplying gas in North Wales.

What is being done in Wales is also being done to a greater or lesser degree in Scotland. Methane is being obtained from certain collieries in the Midlands. The South Western Board has installed at Gloucester a gasification plant to utilise coal not suitable for normal carbonisation. Refined gas is being increasingly used in the southern counties under the area boards, and, as a result of these experiments and of research, new methods are being employed in each of these areas.

That is evidence of drive, initiative and enterprise. Each of the Boards in its own way—in different ways, perhaps —is improving the gas supply, particularly to industries. The most outstanding achievement of the gas industry has been the progress made in making gas from lower grade coal, to which the right hon. Gentleman referred. A new gas plant using this process has been established at Westfield, Fife, and will soon be in operation. It has now gone beyond the experimental stage. It now goes into production. It is the first of its kind to adopt what is called the Lurgi process developed in Germany.

I mention that in particular, because it is an achievement. It is something done, something accomplished. It is a fact. The plant is going into production. A second plant is being planned by the West Midlands Gas Board at Coleshill, Warwickshire. I understand that by the end of this year this method will result in the production of gas more cheaply than can be achieved by the older methods and, at the same time, will consume large quantities of the poorer quality coals. The process leaves no coke, but results in some valuable by-products.

Two of these plants are being constructed at considerable cost. It is a well-tried and successful process of gas production. The Lurgi method is the best hope for the gas industry and certainly for the coal mining industry. That is why it is so difficult to understand why money should be spent on the importation from abroad of liquid methane. Statements have been made by gas board officials about what is being done by new methods. Methane is being taken from our pits on an ever-increasing scale. In view of that, why have we to spend considerable sums of money on liquid methane from abroad? If money is to be spent, we should construct more of these plants by which we can use our own methane and produce the necessary gas without leaving a residue of coke.

These two methods should be uppermost in the mind of the gas industry and of the Government. This is where we need better co-ordination between the fuel industries, which was mentioned in previous debates. I was very pleased to hear the right hon. Gentleman say— I am tempted to say "at last"—that there is now definite evidence that there will be some co-ordination between the National Coal Board and the gas industry. After all, credit must be given to the gas industry for taking methane from our pits, particularly in South Wales. The coal industry has done its job. It has co-operated with the gas boards. The coal industry has said, "Take this methane from the pits if it will assist the gas industry and help consumption". The industry has done that in a spirit of co-operation. Therefore, I am glad to learn that at last the gas industry is to make some response and see what can be done by methods of co-ordination between these two very important fuel, heat and energy industries.

The grave risk is that if there is to be importation of liquid methane on top of the ever-increasing consumption of oil we shall become more and more dependent upon imports. This can be dangerous, both on economic and on strategic grounds. Our advance depends upon the best use we can make of our own resources. If this was an agricultural debate, and more emphasis was being placed on bringing into this country agricultural products, there would be a hue and cry from the agricultural interests. There would be considerable opposition to the reduction of tariffs as regards other industries.

When such advances have been made as the production of liquid methane and the new Lurgi process, as a result of the activities of the gas boards, why should we continue to spend money on importing liquid methane? If money is to be spent, we should spend it on the Lurgi process. That is the means by which we can improve the position from our own pits.

In its excellent little booklet "Gas Looks Ahead" the Gas Council records its achievements under nationalisation. Reference is made to increased production, a lower labour force and a reduction by over one half in the number of gas works in operation. It is pointed out that the demand for gas has risen by 12 per cent. since vesting date and a further increase of 9 per cent. is expected in the period up to 1966. The industry is doing this in competition with other kinds of fuel and energy and is satisfying the growing demand for fuel in a refined, clean and convenient way.

The record of the gas industry under nationalisation is a great tribute to public ownership. This is another of the publicly-owned industries which is doing so much for private industry and private enterprise. I am amazed when hon. Gentlemen opposite are so very critical of the publicly-owned industries, because they are all doing a great job of work for private enterprise. When the demand for coal was high, a fixed price was imposed and coal was sold by the National Coal Board below economic price to the country's industries. Many industries had the benefit of cheap coal, the gas industry makes a valuable contribution to private ownership. What can be said of gas can be said of elec- tricity, and I hope that it will be said of nuclear energy in the years to come. I look upon the gas industry as the bouncing baby of the country's fuel industries. It is the smallest, but it is doing exceedingly well.

As the gas industry has such an excellent record, we on this side have no hesitation in supporting the borrowing powers contemplated in the Bill. Two-thirds of the proposed future capital expenditure will be financed internally, as against only one-third under the past programme. Each year since 1949, until last year, there was a surplus. As with the Coal Board, the gas industry does not seek a subsidy. It does not ask for grants or for taxation relief. It asks for a loan, which is all that the other nationalised industries have been asking for. Each one of them asks for borrowing powers. Private industry is already receiving millions of pounds from the national Exchequer. The aircraft industry, the cotton industry and the agricultural industry have knocked at the door, and now the shipbuilding industry is knocking.

More industries will knock at the door for public money. The hon. Member for Kidderminster (Mr. Nabarro) need not be alarmed about the position. He will have to sit in the House in the months to come and hear of other proposals to spend more money upon private enterprise. That will be the future policy of the present Government—more and more for private enterprise. All that the nationalised industries are getting out of it are borrowing powers. That is all that the Gas Council asks for, namely, borrowing powers to enable it to carry on with its efficient work to help industry and to work hand in hand with industry to build up the country's economy.

In these circumstances, we should have no hesitation in agreeing to the Measure, critical as we are of some aspects of the administration of gas boards. I hope that the industry will place greater emphasis upon our own internal resources, upon methane from our own pits and upon a further adoption of the Lurgi process rather than importing liquid methane from abroad.

That is the keynote which I must try to sound in closing. I hope that the Bill will go through without any opposition, because it will be another landmark of the progress that industry is making as a result of the activities of public ownership.

7.0 p.m.

The Parliamentary Secretary to the Ministry of Power (Mr. J. C. George)

I begin by joining in the praises to my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn), who made a most attractive, eloquent and well-informed maiden speech. I am sure that the East Midlands Gas Board will read with great interest his remarks on the threat to gas in that area, and I hope that benefits to that Board will accrue therefrom. My hon. Friend has started so well that we would all like him to take part in future power debates.

Every speech has been helpful, and I am sure that the Gas Council and the area boards will be heartened by this debate. Nevertheless, I sensed a tendency to forget what my right hon. Friend said at the beginning. As the debate proceeded, there seemed to be a growing feeling that the industry had only to get the money in order, inevitably, to go on to greater prosperity. Indeed, my hon. Friend the Member for Kidderminster (Mr. Nabarro) said that my right hon. Friend claimed complete efficiency for this industry, but, of course, he did nothing of the sort. What he said was that efficiency had risen, and that the money sought is needed to aid the industry in a fight, a real fight, to face a challenging future—

Mr. Nabarro

What my right hon. Friend was referring to, and I readily concede it, is the improvement in the thermal efficiency of the industry from approximately 72 per cent. to 77 per cent. That was what my right hon. Friend said. What I was referring to was the administrative efficiency or otherwise of the industry, which is an entirely different matter.

Mr. George

I emphasise what I set out to say. The feeling should not prevail that, inevitably, this industry is on the way to greater prosperity. It is facing a tremendous challenge. There may be diversity of views as to the methods being adopted to face the challenge, and those views have been expressed today, but the good will of all for the future has been evident.

The hon. Member for Wigan (Mr. Fitch) said that the methods were not being adopted by choice but of necessity; that the industry was facing a crisis. I do not put it as high as that. I prefer my right hon. Friend's words— the industry is facing a fight, and in facing that fight it must be free to choose whatever weapons are at its disposal. It has been recognised throughout the years that as carbonisation coals were scarce and expensive and the industry, in many cases, distant from the coal fields, it was likely that gas would lose the battle if it tied itself too closely to coal. That being so, the industry set out to get allies, which it found in refinery tail gases and the gasification of oil. I think that in future we shall see an expansion of the gasification of oil and the use of these gases.

The hon. Member for Newton (Mr. Lee) said that the methods adopted were causing problems in the mining industry, and some problems are, indeed, being created. We know that as a result of the use of gasified oil or refinery tail gases in London and the South, some coal from Durham is being cut out, but let us assess this problem and get a true measure of the effect of changes in gas manufacture on the consumption of coal.

In 1949, the gas industry used 25.3 million tons of coal and half a million tons of oil were also used. In 1956, it used 28 million tons of coal—the highest it has ever used—and oil was still at half a million tons. In 1959, 22.5 million tons of coal—a drop of 55 million in the three years—were used, but oil had risen only to .75 million tons.

The hon. Member for Newton gave credit to the industry for saving 2½ million tons of that 5½ million tons by increased efficiency. That is true. Part of the loss to the coal industry— probably a million tons—was occasioned by a fall in sales. Part was occasioned by increasing use of water gas—perhaps another million tons—in order to consume some extra coke. Therefore, the loss of coal sales due to the switch in the gas industry's practices is nothing like the 5½ million tons shown as a fall between 1956 and 1959. The fall is probably nearer a million or 1½ million tons.

Great anxiety has been expressed by hon. Members opposite about coal's future in this industry, but they must have been comforted to read in "Gas Looks Ahead" the Gas Council's view of the prospects for coal. It is there stated that, in 1959, 22.5 tons of coal were used, and it is estimated that in 1965–66 consumption will have fallen by only 1 million tons to 21.5 million tons. The swift fall in the past three years is being checked, and no great incursion into the use of coal in the industry—a further fall of only 1 million tons—is predicted before 1966.

The hon. Member for Newton thought that the Gas Council and the area boards were perhaps being over-pessimistic in their estimates of the future use of gas in industry by putting the increase at only 30 per cent., and paragraph 56 of the publication says: The forecast … of the increase in the sales of gas during the seven years 1959–60 to 1965–66 may prove to be a conservative one. They are obviously well aware of that danger, but as there have been so many recent experiences of over-estimating future prospects, it is, perhaps, wise to be conservative. It could be, therefore, that if there is the extra use of gas by industry for which the hon. Gentleman hopes, this 1 million tons drop might be cut.

As there have not been any voices raised against this Bill to enable extra money to be advanced to the industry, I will confine myself to trying to answer as best I can the various points that have been made. The hon. Member for Newton returned to that old complaint about alleged dumped oil and its effect on coal and, possibly, the acuter dangers when the machinations of the oil barons have driven the coal mines out of production—when the gas industry, being then at the mercy of the barons, might be put out of business.

While these charges have been made many times both in the House and outside it, no proof has ever been submitted that oil is being dumped. Our information is that we are now making more oil products than we are using and that exports and bunkers more than equate with imports. Therefore, unless there is some information about dumping that is unknown to us, that charge must be refuted—

Mr. Lee

The hon. Gentleman will remember that I was trying to state, as fairly as I could, the position as I saw it in Germany. This information was not given to me by anyone in a nationalised industry; it came from private enterprise industry. Will he investigate the basis of the charge I have made in relation to the German pattern?

Mr. George

I am quite certain that the hon. Gentleman gave a completely accurate record of what is taking place in Germany, but that shows how well our own oil companies have behaved. I do not share his fear for the future.

All hon. Members who spoke were extremely pleased at what my right hon. Friend had to say about consultation. Everyone, I think, welcomes the step which has been taken by the chairmen in getting together to ensure that no major change from the use of coal in the gas industry will be made without prior consultation, without the National Coal Board being given a chance to say that it can beat the cost. If the Coal Board can beat it, it will probably get the job. Some benefits have already accrued from this arrangement, and I am glad that hon. Members on both sides have welcomed it so heartily.

The hon. Member for Sheffield, Hills-borough (Mr. Darling) spoke about the problem of the oil gas plant at Dinning-ton. He made certain charges. I have, since he spoke, made inquiries, and I find that what he told us was, as one would expect, accurate in that the main complaints concern noise, fumes and tar spraying. I have a note here which says that the area gas board is well aware of the noise complained of and is extremely worried about it, but it feels that by the steps it is taking it can bring this down to a reasonable level at no too distant a date.

Mr. Darling indicated dissent.

Mr. George

That is the assurance I have. I ask the hon. Gentleman to be good enough to see what transpires. As regards tar spillage outside the works, the board has built a wall 2 feet high to prevent this recurring in the future. As regards tar spraying in the atmosphere, the board hopes to stop this or greatly to reduce it by raising the height of the tower and by other improvements. The board recognises that all the problems to which the hon. Gentleman referred exist, and it is doing its utmost to remove them. The hon. Gentleman said that the Alkali Inspectorate had been approached—

Mr. Darling

No. The hon. Gentleman has misunderstood.

Mr. George

I gathered from the hon. Gentleman's speech that he felt it was no use approaching the Alkali Inspector. In fact, he has been approached. The first complaint was received on 28th January and an inspector visited the place on 9th February. The trouble he found to be caused by tar droplets in the cooling water. He fully investigated the matter and curative methods are in hand.

Mr. Darling

The real point is that these plants ought not to be placed in residential areas. There are gas works away from residential areas where, perhaps, they could be put. When I shook my head a few minutes ago about the assurances which are now being given, I meant to indicate that we have had these assurances before from the East Midlands Gas Board about other complaints, not the Dinnington one—I know no more about that—and the assurances have not been completely fulfilled.

Mr. George

I am sorry that the hon. Gentleman feels it necessary to make that charge. I am quite sure that the board does not give promises and fail to keep them. I know of the area chairman too well to believe that he would deliberately make promises and then break them.

Mr. Darling

No, that is not it.

Mr. George

I am quite certain that these promises were made with the utmost good faith, and the greatest effort will be made to effect a cure or, at least, a great improvement.

Mr. Darling

I am sorry to interrupt again, but I do not want to be misunderstood. The point is, I think, that it is not technically possible to do what I am sure the East Midlands Gas Board would like to do. The technical difficulties in the way will prevent the board's fulfilling the assurances which I am sure it would like to fulfil. They are technical difficulties which arise when this sort of plant is established in a residential area.

Mr. George

I am sure that the hon. Gentleman will take the promises at the moment in good faith and see what takes place in the future.

Mr. Darling

Yes, surely.

Mr. George

Normally, such plants may not be built in residential areas without the approval of the local authority. In this case, with an established plant, it could be done in that way, but I agree it is advisable as far as possible to set up these plants away from residential property where there is no possibility of creating a nuisance to the householders in the neighbourhood.

My hon. Friend the Member for Kidderminster raised several very important points. I will deal with the main matter he raised, that the industry should go to the open market for its money. I emphasised at the beginning of my speech that the industry is not entering an era of inevitable prosperity but, rather, an era when it has to fight for its existence. It must invest in research to the maximum in order to prepare for a new future. An industry in that position could not go to the market, and a nationalised industry could not go to the market like that. In any case, in answer to what he said about recommendations of Royal Commissions being rejected—

Mr. Nabarro

The Herbert Committee.

Mr. George

Yes, the Herbert Commission being one of them—

Mr. Nabarro


Mr. George

—the Herbert Committee—

Mr. Nabarro

That is better.

Mr. George

In reply to what he said, I will quote the Radcliffe comments on this very issue. In paragraph 595 of the Radcliffe Report on the Working of the Monetary System, speaking about this very matter, the Committee said: … we therefore recommend that the nationalised industries should continue to look to the Treasury to cover all their permanent requirements. That is the answer, I think, combined with the fact that this industry is in a period of great transition, and the suggestion made by my hon. Friend is completely impracticable.

Mr. Nabarro

What my hon. Friend is now saying is that the views given in the unanimous Report of a highly distinguished Committee led by Sir Edwin Herbert—and this was its principal recommendation—are impracticable. What is the use of having these Committees if Ministers will not accept their findings?

Mr. George

The Herbert Committee's views were very qualified and not so clear cut as my hon. Friend tries to imply.

My hon. Friend said, quite rightly, that the nationalised industries might be better for being subjected to examination from time to time. I think that a seven-year period was at one time suggested by Lord Morrison of Lambeth, as he now is. But this industry is the industry closest to the Minister himself. We have twelve area boards. My hon. Friend himself admired the system of management. My right hon. Friend is very close to this industry and knows better about the activities of the gas industry than about any other. Moreover, we are again brought back to the point made by my right hon. Friend at the outset, that the industry is in for a fight in the next year or two. Since it is in for a fight, this is no time to say, "I am appointing a committee to sit over your actions and look into everything you are doing". I am not by any means rejecting the proposal that a committee should at some time or another look into the gas industry, but I say that this is not the time. Let us let the industry get through this fight and on to an even keel. Then, if it is wise, we can look into it.

My hon. Friend the Member for Kidderminster spoke also about smokeless fuels and made certain very valuable suggestions. I assure him that the area gas boards treat this matter with the utmost seriousness. They are doing a great deal of experimenting and research—I have seen it in action myself in a number of area boards—in order to produce the type of fuel for which my hon. Friend asks. There is, as my hon. Friend knows, quite a catalogue of premium fuels on the market, none produced in great quantities.

Mr. Nabarro

Hear, hear.

Mr. George

Gloco, the British Standard specification coke, is now being produced in great quantities, and its production is to be extended over all the boards in the future. Many of the smokeless fuels made from coal—Warmco, Rexco, Coalite and so forth—are excellent fuels. They are in great demand, and plans for their increased production are in hand. This is not something that either the gas industry or the coal industry is treating lightly. As my hon. Friend said, there is liaison between the Ministry of Housing and Local Government and the Ministry of Power. When smoke control areas are to be created, there is discussion. We have regional advisory councils which are called in for consultation and asked the question, "If a smoke control area is established here, will there be any difficulty about fuel?" Over 500 orders have been made so far, and not one has had to be turned down because there was not sufficient smokeless fuel available.

It is wrong to say that there has been a great shortage of smokeless fuels. The hon. Member for Ince (Mr. T. Brown) said that there was a great shortage, but there really is not. That is not to say that, as the years advance, we shall always be able to keep pace with demand arising from the establishment of new smoke control areas, but it is our desire to do so and every effort will be made by the, area gas boards to produce smokeless fuels in quantities and of qualities sufficient to make the gas industry the basis of the Clean Air Act in the future.

With regard to the pre-packaging ideas, these are certainly very attractive, and I am sure that the people on the area boards will take note of what he has said today. I have seen the American system over many years, and the idea is that a little package should be thrown on the fire so that there is never any dirty fuel touched by hand. My hon. Friend spoke about 7 1b. of gas coke. I am afraid that my hon. Friend does not use much gas coke himself. Seven pounds are burnt away in a very short time in one of the modern fireplaces. His suggestions are worthy of attention and I hope that the gas board will look at them to see whether they are practical.

Mr. Lee

Concerning the supplies of coke, can the hon. Gentleman say how we secure that sufficient is available as new processes come into operation?

Mr. George

I noted that during the hon. Gentleman's speech and intended to reply. We see the gas industry in future as an industry changing from a two fuel industry, but not suddenly, to a one fuel industry, and very slowly getting away from the production of coke through Lurgi and, we hope, by improved Lurgi, and then by hydrogenation. But, for many years, we will look upon carbonisation as a source of supplying smokeless fuel. I do not think we need fear for many years that it will, in fact, fail the country.

Mention was made by the hon. Member for Wigan and the hon. Gentleman the Member for Ince about experiments being conducted at Partington. These are important experiments. Lurgi and improved Lurgi and hydrogenation are the three processes of producing gas without coke and they are terribly important for the future of the gas industry. Research into the question of coal hydrogenation is vital, but do not let anyone think that it will be a quick job. This is something not assured of success, so let us be frank about it. It has been a task tried many times in the past and we have now reached a point where, according to the Gas Council, there is ground for thinking that a way has been found to the hydrogenation of oil, and experience of that will lead on to a step nearer the hydrogenation of coal. Let no one under-rate the tremendous task that lies ahead in achieving success in the economic hydrogenation of coal. If it is achieved, we shall have done something terribly important for the coal mining industry. As we look ahead, we see demand for coal by the electricity industry slackening with the incoming of nuclear power and there are no other customers on the market of any consequence who will take these supplies after the electricity industry stop taking them. Therefore, it is vital that this matter should be pressed ahead, and I am sure that everyone wishes the Gas Council, or whoever carries out the final experiments, great success in their labours.

Several hon. Members have raised the question of the importing of liquid methane. My hon. Friend the Member for Willesden, East (Mr. Skeet) was very keen that we should go on with the import of liquid methane, and he instanced the effect on the economy of France of importing methane from the Sahara, and other places. We all know that the discovery of natural gas in many countries has had an important effect on the economy of the nations concerned.

It may well be that after my right hon. Friend has examined all the implications —as he said the information is not before him yet—and if this natural gas, liquefied and transported, shows not a marginal difference but an important difference in cost, it will have to be very seriously considered. Whether or not we can handicap the economy of this country, when other countries such as France, the U.S.A. and Canada have great quantities of natural gas, by turning away one source which could give us help along the line we are all searching for will have to be seriously considered. The line to a cheap therm is of the utmost importance to the gas industry. That is its search day by day.

Mr. A. Roberts

The hon. Gentleman will recall that his right hon. Friend said that the demand for gas for domestic use has gone down. I hope the Parliamentary Secretary will say something about the selling side of the gas industry.

Mr. George

The selling side of the gas industry has always been extremely efficient, and great attention has been given in recent years to building it up and to training a sales force to give first-class customer service. There is an excellent sales and advisory service in the gas industry. I am sorry to hear of the conditions prevailing in the hon. Gentleman's constituency where, he says, the sales service was done in pokey offices and where not many appliances were available. I shall look into that matter, because it is by no means symptomatic of the conditions within this great industry.

The industry is searching for a cheap therm and the gas industry will use all the allies it can to bring in, in this holding period of two to ten years, the final discovery of hydrogenation of coal, producing cheap gas and standing four square against the competition of any other fuel industry.

Mr. Norman Pentland (Chester-le-Street)

If the Minister is determined to look into the economics of liquid methane, can we have an assurance that he will look at the implications on all sides of its effect on the economy of this country, taking into account the fears of those in the Durham coalfield where we have 43 pits producing gas coal alone. This would have a serious affect on the Durham coalfields if the right hon. Gentleman were to say that the gas authorities should have to go ahead to sell this liquid methane to any great extent. May we have an assurance upon that?

Mr. George

I think that the hon. Gentleman could not have heard my right hon. Friend's opening speech. He said that before giving authority to the gas industry to import liquid methane he would have regard to all aspects, and that certainly embraces the question of its effect on the production of coal in Durham.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Whitelaw.]

Committee Tomorrow.

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