§ 11.6 a.m.
§ The Minister of Power (Mr. Richard Wood)Mr. Speaker, with your permission and that of the House, I should like to make a statement.
The Chairman of the Gas Council, as the House knows, has put before me proposals for the importation of natural gas from North Africa. I am writing today to the Chairman authorising him to go ahead with these plans.
In reaching this decision, I have taken into account the urgent need of the gas industry to reduce its costs of production ; the technical advantages of methane ; the comparatively small capital cost of this scheme; and the benefit it may bring our shipbuilding interests. I have also had regard to the effect of the proposals on the balance of payments, to security of supplies and to the objections which have been expressed by the National Coal Board.
The town gas derived from this new raw material will be about one tenth of the total supplies. This scheme is one of several developments which the gas industry is contemplating within the next few years. In particular, the Gas Council is now discussing with the Coal Board the economics of gasifying coal on a large scale by the Lurgi process. I am satisfied that my decision on the methane proposals will in no way prejudge the building of a large Lurgi plant if such a plant promises to be competitive. Nor will it prevent the industry from expanding its use of petroleum feedstocks.
This scheme will develop a new technology and provide the country with an additional source of energy. It is not without risks, but I am convinced that they are outweighed by its merits. I agree with the view expressed in the Report of the Select Committee on the 488 Nationalised Industries, that the gas industry should be enabled to take advantage of cheap supplies in order to strengthen its competitive position. I am confident that my decision will help it to do so.
§ Mr. GunterIs the Minister aware that his statement will bring a further degree of despondency to the coalmining industry? Is it not surprising that a matter of this importance was not a matter of some reflection by the Minister in the debate on the coal industry only just over a week ago? I would have thought that the Minister would have allowed us an opportunity to debate it then instead of making a statement on a Friday morning.
Although mention is made in the statement of the continuance of the study group between the Gas Council and the N.C.B. on the Lurgi plan, do we understand that that study group is not yet in sight of making its report to the Minister on the plan? Are the Government satisfied that there can be or will be maintained continuity of supplies of methane in view of the political instability of the Sahara area?
Will the Minister tell us what will be the estimated capital cost of the provision of the new plant required to deal with methane when it comes into the country, and the provision of tankers? Will he make some comment on what he proposes to do, in view of this further statement, to combat the decline in the manpower of the coal industry and to restore some sense of confidence to the men who are in it?
§ Mr. WoodThe effect on the coal industry was naturally one important matter which I took into consideration. I do not believe that this will affect the likely demand for coal more than to the marginal extent which was quoted in the Report of the Select Committee on the Nationalised Industries. The hon. Member asked why I did not mention it in debate. In fact, my hon. Friend the Parliamentary Secretary dealt very fully with the study group and said that the gas industry would make up its mind on the implementation of Lurgi plans in the light of the study group's report. I am told that the study group, which has been working for some time, still has a great deal of work to do. Frankly, I did not feel justified in waiting for the 489 report of the study group before deciding to proceed with the Gas Council's proposals. I am satisfied that the supplies of town gas in this country could be safely and securely maintained whatever might happen in North Africa, because the gas industry has put before me alternative plans to deal with that eventuality. The hon. Member asked me about the cost of the plant. The plant and the mains in this country and the terminal necessary for the reception of this gas will cost about £18 million. The ships will not be a charge on the Gas Council, nor will the cost of the refrigeration plant in North Africa.
§ Mr. SkeetMay I congratulate the Minister on his proposals, which I think will receive wide recognition in the gas industry and also among consumers generally? May I ask him about the price of the gas? I hope that he will drive a hard bargain on the question of price and that he will ensure that the contract does not preclude the importation of pipeline gas from Europe at a future date.
§ Mr. WoodIt is not for me to drive bargains on the price of the gas. I understand that the Gas Council is satisfied with the contract which it is preparing to sign with the authorities. I assume that by his reference to pipeline gas my hon. Friend means gas imported by pipeline from the Continent. That is another matter. We are dealing at the moment with the importation of liquid methane by ship from North Africa, not from the Continent.
§ Mr. SnowIs the right hon. Gentleman aware that, far from congratulating him, we on this side of the House are very perturbed about this statement, which appears to denote some indecent haste? Is it not a fact that his Ministry knows that the joint committee between the National Coal Board and the Gas Council will probably submit a report to him within two months? Is it not a fact that it is known in his Ministry that in all certainty that report will demonstrate that the effective cost to this country would show no difference at all between gas produced from methane and gas produced on the Lurgi principle? In those circumstances, and bearing in 490 mind the strategic considerations, why is the Minister acting in this way, which can only be described as a blow at the domestic coal industry?
§ Mr. WoodI do not think that a charge of indecent haste can possibly be sustained, particularly in view of some of the strictures of hon. Members opposite that I was not making up my mind quickly enough. I cannot see that the prospects of a potential Lurgi plant in the future will be jeopardised by this method. In fact, I believe exactly the opposite. I believe that the formation of the pipeline across the country, Which will be necessary because of these proposals, will facilitate the economics of a possible Lurgi plant in the future. What is absolutely true is that if these proposals had been refused the individual gas boards would have looked very favourably on a number of offers of liquid petroleum gases other than methane. I therefore do not believe that the effect on the coal industry—as I said in answer to the hon. Member for Southwark (Mr. Gunter)—will be more than marginal.
§ Sir. R. NugentMay I add my congratulations to others from this side of the House to my right hon. Friend on the decision which he has taken? Is he aware that far from being criticised for indecent haste, he is much more likely to be criticised for his long delay in taking this decision? The gas industry has made plain its urgent need to get a cheaper supply of gas as quickly as possible and the months which have passed have been prejudicial to them. Is my right hon. Friend also aware that the opinion of the gas industry is that if gas remains at its present price, gas consumption is likely to fall and coal consumption with it, so that the importation of methane by this scheme, which will have the overall effect in the relatively near future of reducing the price of gas, is likely to give the gas industry the best prospect of not only holding its present level of consumption but of increasing it? On the long view, far from being likely to prejudice the coal industry, this is likely to benefit it. Is my right hon. Friend also aware that this does not prejudice the Lurgi scheme on a large scale and that the gas industry has said quite plainly that if—
§ Mr. SpeakerOrder. It would be quite insufferable if we were to have speeches and counter-speeches on these occasions in lieu of the few questions which I am permitted to allow to be asked.
§ Mr. WoodI agree with my hon. Friend that anything which betters and improves the competitive position of the gas industry will certainly not be to the detriment of the coal industry. That is quite true. I am quite convinced of the truth of my hon. Friend's assertion— and I know the study which he gave to this matter on the Select Committee— that the building of a Lurgi plant will not be prejudiced by this decision.
§ Mr. Ellis SmithIs it not the case that the gas industry is more efficient than ever it has been and that it is one of the most efficient of its kind in the world? Is it not a fact that the cost of production is lower than ever? Was the National Coal Board consulted about this decision and was the National Union of Mineworkers either consulted or informed?
§ Mr. WoodAs the hon. Member knows, this has been a matter of considerable public debate for quite a long time. That is why I rebutted the charge of indecent haste made against me. As for the efficiency of the industry, I regard it as my duty to try to allow the gas industry to be as efficient as it thinks it can be. The gas industry chose this method of proceeding in order to strengthen its competitive position and I think, therefore, that I was right to agree to the proposal.
§ Mr. Emrys HughesIn view of the fact that there is great concern in Scotland about the whole future of the 492 mining industry and that there is a dread of unemployment and pit closures, may I ask whether the Minister can give us some assurance that in this event some of these plants will be concentrated in Scotland, where there is the possibility of unemployment?
§ Mr. WoodNo. The methane gas is to be imported, as I think the hon. Member knows, to Canvey Island at the end of the Thames which, I am sorry to say, is rather a long way from Scotland. I said last week how grave a view I took of the Scottish problems. That is another matter, with which we dealt last week, and I think that perhaps the House will want to deal with it again on some other occasion.
§ Mr. W. YatesAs a representative of a mining constituency, may I ask my right hon. Friend whether he is aware that the majority of people in my constituency think that there is no possible danger to the coal industry in any way from this decision and that many of the workers are most anxious that gas should be used, as are the Midlands industrialists? Is he aware that this is a horse-and-buggy attitude of the Opposition?
§ Mr. GunterMay I ask one last question? It has been estimated that the gas manufactured from imported methane would be available at about 8½d. a therm. Will the Minister confirm that figure?