GAS (BORROWING POWERS) ORDER

HC Deb 29 July 1963 vol 682 cc171-89

10.29 p.m.

The Parliamentary Secretary to the Ministry of Power (Mr. John Peyton)

I beg to move, That the Gas (Borrowing Powers) Order, 1963, a draft of which was laid before this House on 12th July, be approved. The Order is laid under power conferred by the Gas Act, 1960. I think that the best thing I can do is to make a very short speech in moving the Order and then, in so far as the House requires it, try to reply to any questions which may be raised.

The purposes for which the money is required are already known and have already been authorised by my right hon. Friend. They are such things as the methane scheme. The very success of the gas industry in raising demand for its product has increased the need for the provision of new manufacturing and distribution capacity. There were the gaps revealed by the severe winter of last year.

The 1960 Act raised the borrowing limit from £450 million, at which it had been set by the 1954 Act, to £500 million and at the same time conferred upon my right hon. Friend power to raise that amount by a further £25 million to £525 million by Order. It was at that time expected that the £500 million limit would be reached in 1962–63, but this was postponed, largely owing to the low level of investment. This, however, went up to nearly £60 million last year, in comparison with an average level of about £45 million during the preceding four years. There will be a substantial further increase in investment this year and this will naturally be reflected, and has been reflected, in the borrowing which has been made by the industry. This was last year at a level of £24 million, as opposed to £11 million in the previous year. There will be a considerable further increase this year.

The latest plans of the industry have now been put to my right hon. Friend, who is engaged in a most careful consideration of them. He will, of course, complete his examination of those plans before the limit of the borrowing autho- rised by this Order is reached. When that time comes—and, of course, I am not in a position to say exactly when it will be—he will naturally have to come, on behalf of the industry, to the House for a further increase in borrowing powers, and that at that time he will have to unfold to the House the long-term plans of the industry.

In commending this Order to the House tonight, I would only seek to remind the House that the Order is made in pursuance of powers already granted and in furtherance of purposes already known and approved.

10.32 p.m.

Mr. Thomas Fraser (Hamilton)

I make no complaint about the Parliamentary Secretary making a rather brief speech in introducing this Order to the House. At this time of night it would seem to be appropriate that he should speak briefly in moving the Order and then deal with any questions which may be asked by hon. Members on either side of the House.

It was a delight for me to hear the Parliamentary Secretary say that it was the very success of the gas industry in increasing sales which had made it necessary to come back to the Government for more money. When the hon. Gentleman used to occupy a place on the second bench below the Gangway I always had the impression that he did not believe that any public enterprise industry would make a success at all or would ever require to go to the Minister for money because of success; but, like so many others on his side of the House, he has suffered a considerable conversion since his transfer from one bench to another. Of course, the story of nationalised gas is a success story.

We on this side of the House would not oppose this Order. I would observe that we set out on our only debate this Session on this important industry at this late hour of night, and I would also remark that it is more than a pity that the latest information we have before us on which we can have a debate on the gas industry's activities is the Report of the Gas Council published on 2nd August last year for the year ended 31st March, 1962. So any official information we have available is somewhat out of date.

I therefore content myself by asking a few questions of the Parliamentary Secretary. We have gathered from time to time that the Gas Council is interested in pushing on with the construction of a national gas grid. This would seem to be the right thing for a nationalised industry to do. I hope that the hon. Gentleman will say something about it. I realise that many of the things about which one asks questions are items which the Minister may well be considering in the latest plans which the hon. Gentleman says the Gas Council now has before the right hon. Gentleman and about which he will speak at greater length when in due course he puts before us a Bill to increase the Council's borrowing powers.

Last year I very much regretted the withdrawal of the Gas Council's Private Bill which sought powers to go ahead with the underground storage scheme at Chilcomb, near Winchester. Is underground storage still being considered? Those of us who made inquiries at the time were satisfied beyond doubt that the gas industry could carry through its work on behalf of the nation more efficiently and economically if it could use this method of underground storage that was projected for Chilcomb and was put on one side when the Private Bill was withdrawn.

Is it the Minister's intention to deal with underground storage projects for the Gas Council by means of a Public Bill rather than have the Council produce a Private Bill as it did in that case? Will the Government do for the Gas Council what they did for the oil companies when they introduced the Pipelines Bill? Will they introduce a gas storage Bill. If we had had legislation, with the Minister only having to introduce an Order, as in the pipelines case, a project like the Chilcomb scheme would have gone through and the Gas Council would have been well on the way by now with the construction of a cheap and efficient system of gas storage.

As for the apparent switch from coal to oil and natural gas that we see in the gas industry now, I understand that the Gas Council has a part interest in a private company which is exploring for natural gas on the continental shelf in the North Sea. May we be told some- thing about this? A joint study group was also set up by the Gas Council and the National Coal Board to consider the setting up of a large-scale Lurgi plant, to which reference is made on page 59 of the Council's Report. This study had been going on for a long time when the Minister approved the methane project, for the importation of liquified natural gas from the Sahara, in November, 1961. Some of us thought that the Minister was in too big a hurry to approve that scheme when the talks between the Gas Council and the Coal Board were still going on in that study group. Are the talks continuing? When can we expect a public report of the work done by the joint study group?

As the Parliamentary Secretary knows, considerable concern has been expressed from time to time in Questions from Members about the reduction in supplies of coke and other solid smokeless fuels produced by the gas boards. Is the Minister watching this situation? Can he say whether the Gas Council is moving away from coal to such an extent as to jeopardise the availability of solid smokeless fuels particularly in those areas in which the local authorities are applying the Clean Air Act? Are we moving away from coal to such an extent that modern coal carbonisation plants will have to be scrapped? It seems to me that these are rather important questions, and I should like the Parliamentary Secretary to give us some idea of what is in the Minister's mind.

Mr. Deputy-Speaker (Sir W. Anstruther-Gray)

Order. I do not want to interrupt the debate, but I think that the House should be careful to see that we keep to what is in fact in the Order. It is whether we increase the sum of £500 million to £525 million. Points beyond that, I think, would be out of order in the debate, so I hope that the hon. Member will not expect too much of the Minister in asking him to reply to what he is saying.

Mr. Fraser

I bow to your Ruling, Mr. Deputy-Speaker. I must say, in passing, Sir, that I have listened to and participated in a good many of these debates on the borrowing powers of nationalised industries and my recollection is that the House has accepted that these were the occasions on which we could discuss what the industry is doing. It seems to me, and it has seemed to the House in the past, including the Minister, that it is only by discussing what the industry is doing that we can ourselves be satisfied whether or not the increased borrowing powers are required.

The Parliamentary Secretary would be the first to agree that in the course of his brief speech introducing the Order he had to depart somewhat from the purely financial arrangements which exist between the Minister and the Gas Council and tell us about the operations of the Gas Council that necessitated their request for moneys in excess of the £500 million up to which amount they can borrow without this Order. However, I shall try, Mr. Deputy-Speaker, not to take this point too far.

The Parliamentary Secretary made clear that a part of the money—I think he said a good part of the additional money—was required for what he described as the methane scheme. This contract to import liquefied methane was entered into 18 months or so ago, and one read in The Times on 27th June a very short article from a correspondent of that newspaper in Paris, with the dateline 26th June, saying: Shipments of liquefied gas from the Sahara wells to Britain will start a year later than scheduled and will amount at first to only … about half of the quantity anticipated. This statement was attributed to the French Minister of Industry.

I want to be fair to the Parliamentary Secretary and say that the only other Press comment that I have seen was in the Economist dated 6th July, saying: Reports from Paris last week that the Minister of Industries was suggesting that Britain might postpone its first shipments of liquefied Algerian natural gas for a year were angrily denied in London and eventually disowned in the French ministry. We have these two reports which are mutually contradictory. I am not aware of The Times having withdrawn its correspondent's statement dated 26th June, and I should like the Parliamentary Secretary to say what he understands to be the position. Has he any reason to believe that the date by which we will get this liquefied natural gas has been delayed, and has he any reason to believe that we will not get it in the quantities which were originally contracted for?

To continue with a consideration of what the Gas Council is to do with the additional money which we are asked to vote it, the sense of paragraph 95 of its Report is that a large part of the research into gas production is concerned with the use of coal as a primary fuel. The sense of paragraph 103, on the other hand, is that petroleum products play a valuable part in the enrichment of lean gases from coal gasification. This, clearly, presents a picture of the Gas Council devoting its principal researches to the production of gas from coal and using petroleum products mainly for the enrichment of the lean gases which may be derived from coal. Will the hon. Gentleman say whether this is still the position? Does coal still loom large in the research being undertaken and in the industry's plans for the future?

Some of the things one hears are a little disconcerting. In my view, we can easily find ourselves in a situation with the Gas Council taking decisions on the use of primary fuels on a basis which would be economically attractive to the industry, that is, judged by the criterion of cost of primary fuel to the industry, but which, I suggest, would be a much too narrow basis for decisions of this tremendous importance. It might be that a decision taken on those narrow criteria would not be economically sound when considered in the wider context. It seems to me that the Minister must consider the social cost in, for instance, the Durham coalfield, which is heavily dependent on the production of gas coal, and elsewhere of turning our backs on coal. Natural gas from the Continental Shelf is one thing, but to go in for the production of gas from oil on a large scale or to depend to a considerable extent on imported liquid methane would raise serious balance of payments considerations.

We want our nationalised industries to be efficiently run. We shall certainly not oppose new developments and processes to that end. But the national interest must be considered. We on this side of the House believe that exactly the same case exists for favouring indigenous fuels as exists for favouring indigenous food production. This is not so often said in the House, and I hope that the Parliamentary Secretary will take it vary much into account, always provided that the protection which we offer to our home-produced food or our home fuels is not taken too far.

We realise that this is a matter for political decision and not for the Gas Council. At the end of the day, whatever may be the proposals put forward by the Gas Council on the narrow criteria which the Council must adopt, under the terms of the White Paper on the Financial and Economic Obligations of the Nationalised Industries published just over three years ago, these may not necessarily be the proposals which should be adopted by a wise and far-seeing Government. In the circumstances, I hope that the Parliamentary Secretary will beg his right hon. Friend, when he is considering the latest plans put to him, apparently, by the Gas Council, to take these wider considerations into account and seek to ensure that the industry will continue to serve the best interests of the nation at large.

10.50 p.m.

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

It is my desire to facilitate the proceedings and I shall be relatively brief, but I do not think I could let this pass without raising some significant questions.

This is not the immediate battle, but this seems the last Order which will be available, and my right hon. Friend will have to come back to the House and account for the success or otherwise of the industry in raising very considerable sums. The practice up to 1956 was that the industry had to go to the market, and since 1956 it has largely been financed for capital purposes by advances from my right hon. Friend. It has been a useful course, and we have now reached the limit of the borrowing powers—up to £525 million.

Where do we go from here? It is important to realise that in this industry, which is extending fairly rapidly, there is certainly much room for self-financing. Paragraph 22 of Command Paper 1337 states: … there are powerful grounds in the national interest for requiring these undertakings to make a substantial contribution towards the cost of their capital development out of their own earnings, and so reduce their claims upon the nation's savings and the burden on the Exchequer. If only these nationalised undertakings would do this, it would be encouraging.

We found the other day that the industry had subscribed about 50 per cent. from its own earnings. Up to 1966 this will rise considerably. In paragraph 157 of the Report of the Select Committee on Nationalised Industries it is stated that the chairman of the East Midlands Board, when asked when he would achieve self-financing, replied "I hope never." But when one refers to the evidence, I do not think that is quite the answer; but it conveys part of the point.

There is a very significant quotation from paragraph 159 of the Report: It is, on the surface at least, surprising that a Board whose industrial sales have increased by about 50 per cent. over the last ten years, and who sell gas more cheaply than any other Board … should in 1959–60 have expected to borrow as much as two-thirds of their capital expenditure in the next seven years …". This would come as advances from my right hon. Friend.

One has only to look at the recent accounts to find that in the years 1961–62 £18 million was advanced, and to the East Midlands Board something like £3.3 million. What exactly has this Board been doing with its money if the Chairman is of the view that it will never be self-financing and if the policy is to rely on liberal advances from my right hon. Friend? It seems a rather serious situation.

I am rather perturbed to hear tonight from the Parliamentary Secretary that he thinks the advances will go up still further. This seems to be the trend. In 1959–60 they amounted to £33 million; then there appears to have been a downward slope, in 1960–61 to £15.6 million and in 1961–62 to £11.5 million; and then in 1962–63 they were £24 million, and we hear that in the current year they will be considerably higher. Where will this lead us to?

With all the nationalised industries the net return on capital investment is low. If one takes private enterprise, where there is an element of risk, it is as high as 15 per cent. and more. The return for the Post Office may be a little below 8 per cent., but for the gas industry it is well under 5 per cent. and generally assessed at about 3.3 per cent.

That is borne out by the White Paper which I have mentioned.

For what purpose is money being poured into this industry? It has been said that the industry has many plans ahead of it. I think that I can congratulate it on arranging to import methane from Hassi R'mel, liquefied in North Africa by private enterprise at their expense and brought to the United Kingdom in tankers partly the charge of private enterprise and partly of the Gas Council. It is then processed and reticulated through the mains after delivery to the Midlands. I understand that the methane grid is practically complete. I should like to know how much this undertaking is to cost, not merely for the importation of the methane in refrigerated tankers, but also for the laying of the lines to the East Midlands.

I should also like to know how much of these advances is being utilised for Lurgi plant operations one of which is at Westfield, Fife, and the other at Coleshill, near Birmingham. Some years ago it was thought that the gas industry had at last turned the corner and had pulled away from the stranglehold of coal, but apparently the two great corporations, the National Coal Board and the Gas Council, have been persuaded to continue discussing the complete gasification of small coals. I am rather concerned about the utilisation of public money and surely the Westfield plant must have proved that this process is not economic and that further alternative proposals are available. I understand that the rate of return is even less favourable compared with the new plant at Coleshill which is shortly to come into operation. Surely there must be some criterion in this matter when one is deciding on a project and we are not entitled to inquire what is the rate of return on an investment from moneys advanced by my right hon. Friend, otherwise we shall get into further difficulties as time goes on.

Looking ahead, the gas industry has been taking the line that part of this money can be used for exploring for natural gas in the North Sea, and seismic surveys are being undertaken in conjunction with private enterprise. That will cost money and so will underground gas storage. Perhaps the Parliamentary Secretary will tell me how much the abortive Bill cost? The cost of these surveys and how much money he contemplates will be spent on the Lurgi process in the United Kingdom. It appears that in the course of time we will run into further difficulties.

These advances have been rising very fast and will reach £525 million by 1966. When we come to the new Session, the Parliamentary Secretary will have to come to the House cap in hand in a full-scale debate and say precisely for what he wants the money hereafter. It will be perfectly right for hon. Members to say that if he wants the money, he will have to account to the House and the nation in detail about the way in which it is to be spent. The White Paper indicates that the nationalised industries are to be assisted in some way, but let us be clear that they have a monopoly in their field which must be regarded as of some value.

Mr. John Arbuthnot (Dover)

On a point of order. This is getting rather far from the Order that we are considering.

Mr. Deputy-Speaker

I have been in some anxiety for a good deal of this debate, but I am sure that the hon. Member will bear in mind that we must be restricted to the Order that we are debating.

Mr. Skeet

I was coming to the end of my remarks. I did not realise the impatience of my hon. Friend the Member for Dover (Mr. Arbuthnot) who wishes to speak on ecclesiastical matters. I am certain that patience will not do the Church any harm.

I think it is right that we should judge all these industries by commercial standards. That is why I have been saying tonight that if we are to put them in a separate compartment, permit them to be judged by special criteria, and show them to come cap in hand to the Minister from time to time to get advances from the Crown, we shall have two sorts of commercial enterprises in this nation: those with a privileged form of financing, even though the finance is raised at 6½ per cent., and risk-taking enterprises which have only a small, if any, monopoly in the nation.

I hope that my hon. Friend will illustrate in broad outline the way in which the additional £25 million is to be expended, and over what period, and if he will demonstrate also some of the further designs for the future, which I think, in the interests of all, should be made known.

11.2 p.m.

Mr. Austen Albu (Edmonton)

The hon. Member for Willesden, East (Mr. Skeet) seems particularly ungenerous about an industry which has been recognised in the last few years as having been making substantial progress. I do not think that the gas industry regards itself as having a monopoly. In fact, up to a few years ago it was doubtful whether the industry could continue at all, because its costs were rising while other costs were tending to fall. With the import of petroleum and the supply of oil at a cheap rate, the continuing expansion of electricity, and now the increasing competition from solid fuel, the industry is certainly not without competitors, and I think that the hon. Gentleman is not using words with their real meaning if he talks about the gas industry having a monopoly.

The hon. Gentleman is right when he says that the industry should show a proper return of capital, but he is using wild words when he talks about nobody knowing how the money is spent. The hon. Gentleman has only to read the accounts of the Board to find out what it does with the capital and what the return is.

Mr. Skeet

The hon. Gentleman knows that certain Lurgi plant have been put up in Fife and Birmingham. Is he saying that these are economic propositions, when the rate of return is as low as it is?

Mr. Albu

I am aware of that, and I shall deal with the whole question in a moment or two. The fact that one plant, or one experiment, or one development, is not economic is not an argument aganist the capital expenditure of the industry as a whole.

The hon. Gentleman talked about this industry not earning a return on its capital, but his right hon. Friends have set this and other nationalised industries a target in the White Paper on the Financial and Economic Obligations of the Nationalised Industries, and everything it does, and the investments it makes with the money that we are about to vote it, will be governed by the necessity of making a contribution towards that return of capital.

The hon. Gentleman talked about the difficulty of self-financing by the industry, and complained that the Chairman of the East Midlands Board—who by the way is a very enterprising Chairman—had said that he hoped the industry would never become self-financing. So do I. I know of no private industry which is self-financing, In fact, it is generally thought that these rapidly expanding industries ought to borrow money.

The proper way to control the finances of these industries is to do what I think the Government have done—I am never quite certain because they do not make the position quite clear—namely, to set a rate of return for the industry which is reasonable, and leave it at that. If the industry then, in expanding, needs to raise fresh capital, it will do so. We do not fix the level of self-financing; we fix the rate of return on capital. That is the proper and economic way of ensuring that the capital is used adequately and with proper priorities in the national economy. The degree of self-financing will follow. We do not set the degree of self-financing first and decide afterwards what the rate of return should be. That is economics gone mad. No private industry does it. If we want to get the priorities of national investment correctly we can set the rate of return, and the rate of self-financing will follow.

It is a pleasure to take part in this debate, because to some extent the Parliamentary Secretary is, in this matter, gamekeeper turned poacher. We were colleagues on the Select Committee on Nationalised Industries, which examined this industry, and we did so when it was beginning a completely new line. It was having substantially new ideas, and showing a new enthusiasm and enterprise, and we were all extremely impressed by the way in which it was managed. I admit that the industry has been given a breathing space by the permission to import methane gas for the next few years, but the extraordinary thing was that the Select Committee—which had one or two Members who were not uncritical of the industry—came to an almost unanimous decision that the industry would have to do this for a short period if it was to continue to exist If this permission had not been given costs would have risen to such an extent that the industry would not have been able to buy any coal.

But because the industry has been given this breathing space it must not think that it can give up research into coal gasification. The hon. Member for Willesden, East, who has not looked into the problem of the uses of the natural resources of this country, took the short-term view. The Lurgi plant is not economic, and it probably never will be, but that is not the only system of gasification. The research station at Solihull is continuing to carry out research into the total gasification of coal by other means. My hon. Friend the Member for Hamilton (Mr. T. Fraser) asked, with some justification, whether the industry was taking this job seriously, or was not devoting all its ingenuity in research into developing methods of turning other liquid and gaseous fuels into town gas. I had some suspicion about this myself. There is no harm in Members of Parliament visiting Solihull, or asking Questions in the House, or reminding the gas industry that the time will come when, for one reason or another, imported fuels will not be available—at least at the cheap prices of today—but in the end the Government must decide whether these fuels can be imported with a balance of advantage to our economy.

There are disadvantages in having to pay in foreign currency for imported fuels, and there are strategic reasons and all sorts of other reasons, including political ones. The Gas Council should therefore continue as hard as it can with the excellent research it is now carrying out at Solihull, and should also expand the research it is doing on the total gasification of coal. There is no doubt that the Council, which, on the whole, was somewhat backward in research some years ago, is now doing a really first-class job. I have spoken to several people who have visited Solihull recently, including those who are well qualified to judge, and who say that the research station there is a good enterprise.

I want to ask the Parliamentary Secretary more about the way in which the industry is getting on with earning the financial return on its capital which the Government require of it. This return must be a reasonable one. The South-Eastern Gas Board has had to make a substantial increase in its gas prices recently. This will not help it to earn a return on its capital in the years to come; it will only reduce the number of customers. Private industry holds the balance. If an industry reaches a stage when it is almost going out of business—not that the gas industry has reached that stage—it very often has to earn a lower return on capital in the first 20 years in order to recover, before earning the full return that one would wish.

My hon. Friend the Member for Hamilton asked about the question of pipelines. This is very much tied up with the question of the structure of the boards and is not a question we can discuss in this debate. I should like the Parliamentary Secretary, however, when he replies to the debate, to say what consideration is being given to the matter. The Select Committee pointed out that for the large-scale production and importation of gas—one of the reasons for which we are voting this money—there would have to be a substantial change in the structure of the industry. On this there was general agreement, although between the Minister and ourselves there was a slight difference of emphasis on the extent of the change. The Minister pointed out that the effective use of research is itself related to the structure. Developments in the industry will depend very much on the effect of recent research.

Delay on the question of underground storage has gone on far too long. There is no doubt that this would make a substantial contribution towards reducing the relative price of gas as a fuel. It would enable maximum advantage to be taken of the importation of methane and other fuels and it is the only way in which one could economically develop plant, Lurgi and otherwise, on an advanced scale. This is an advantage which the industry has over electricity. In the last severe winter we saw the advantage in the fact that this fuel can be stored. We ought to give it every opportunity to use that advantage to the maximum. I know the political pressure to which the Minister was subjected and I think the way in which this matter was dealt with by the Ministry was very ham-fisted. Perhaps it was badly advised by the Minister, but the time has come to introduce a Bill to deal with this question.

I shall not mention names, but any of the other nationalised industries would have been pressing the Minister and carrying on a campaign much more wild and violent than I think the gas industry will. Perhaps that is because it has not the powerful pressures which other industries have, but there is no reason why we should not do it in this House. Delay over introduction of legislation is far too great. The technical problems, I am sure, are well understood. It is generally agreed that this is a perfectly safe process. That is accepted and there is no reason why legislation should not be introduced. All we are doing is delaying the advantage of a cheaper and more convenient form of fuel.

11.12 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

I should like to defend my hon. Friend the Member for Willesden, East (Mr. Skeet) on the question of the self-financing ratio of the gas industry. The hon. Member for Edmonton (Mr. Albu) said that it did not matter a bit, but surely it does matter. When one thinks of the Shell industry with a self-financing ratio of over 90 per cent., one sees the great discrepancy there is among nationalised industries. I ask my hon. Friend the Parliamentary Secretary, what is the self-financing ratio of the gas industry at present? It is important for us to know that when considering this Order.

The hon. Member for Hamilton (Mr. T. Fraser) rather bemoaned the fact that we did not have an annual debate on this matter, but we cannot have an annual debate on every industry. We do not have an annual debate on the shale oil industry and there are many others. It would be a wrong practice to get it into our heads that we could have an annual debate on every nationalised industry, much as I should like to take part in them. I also thought that the hon. Member was trying to repel the tide of natural gas and methane, which perhaps, is the only way for the industry to keep ahead—by importing what it thinks right. He seemed to be trying to tie down the industry to old-fashioned methods. Yet he said in the next breath that we want our nationalised industries to be efficiently run. Hon. Members opposite must make up their minds whether they want industries run efficiently or to benefit the coal industry. That is the fundamental question.

Mr. T. Fraser

British farming is efficient. We have some excellently efficient farmers; but we still have protection, as does the hon. Member.

Mr. Ridley

Yes, but there is a big difference between an industry which produces a commodity a great deal of which we must import and one which is nearly self-sufficient; but I should be out of order to pursue that aspect.

The Order with which we are concerned states that the Exchequer may make advances or that the Gas Council may borrow by the issue of stock. Will we see the issue of stock to meet some of the loan? Is this part of the Government's policy to encourage the gas industry to try to find ways of going to the market? We have only a short time to go before we shall have to legislate for more borrowing powers and this question is bound to be raised in greater detail at that time. This quesion is of the utmost importance and it will have to be faced in respect of all the nationalised industries.

I should like to have details about how capital for the nationalised industries will be raised in future. Have the Government a pilot or tentative scheme in mind for raising money on the market, bearing in mind the £25 million for which the Order allows? I acknowledge the many difficulties surrounding this problem, but we must move in this direction.

11.17 p.m.

Mr. Peyton

Like others before me who have stood at this Box, I have been sharply reminded of my past. However, I am grateful to my hon. Friend the Member for Willesden, East (Mr. Skeet), the hon. Member for Hamilton (Mr. T. Fraser) and my erstwhile colleague on the Select Committee, the hon. Member for Edmonton (Mr. Albu), for their not too unkind remarks.

The position regarding the national gas grid is that the methane scheme is a means of distributing a high calorific value gas at high pressure. So far the distribution by a national grid at low pressure of low calorific gas has not proved particularly attractive. Most, if not all, area boards are developing integrated supply systems within their own areas.

I was asked about underground storage and I recall what was said in evidence to the Select Committee on this subject. I would not disagree with what has been said about the importance of the contribution underground storage could make to the economic strength of the industry. I am sorry to have to give a rather negative answer, but I cannot say when legislation will be introduced. It clearly will not be this Session. I am afraid that I cannot, though I should like to, give an undertaking now. Nevertheless, I welcome, for the record, the assurance the hon. Member for Hamilton gave that when such legislation is introduced it will receive an easy passage.

Mr. T. Fraser

I did not say that, although I thing it will have an easy passage. I assure the hon. Gentleman that I had assured his right hon. Friend that I would give my fullest support to the Chilcomb project when it came before us again.

Mr. Peyton

I am very much obliged. Perhaps I made a rather free construction of what the hon. Gentleman said, but I hoped that that was what he meant. The hon. Gentleman went on to ask me when we should get the results of the joint study group on Lurgi. This is eagerly awaited. I do not think I can usefully say very much more about this. It has been very much under discussion recently.

As to carbonisation and coke supplies, the hon. Gentleman went on, having raised this subject, to express the fear that modern plants would be scrapped. I can gave him the assurance that there is no justification for that fear. He referred to the scare in the Press about possible delays in the methane shipments. Again, I can say that these scares are unfounded.

The hon. Gentleman then raised the very important question of the place of coal in the Gas Council's research programme. The position is simply that more money is being spent on coal gasifi- cation than on any other subject. The hon. Gentleman also raised the question of the cost to the country of the oil feed stocks now needed by the gas industry. These feedstock requirements are now running at about 1½ million tons, compared with a total inland consumption of oil products of about 47 million tons.

I pass to the remarks made by my hon. Friend the Member for Willesden, East, who I thought was a little unfair to the industry. He and my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) raised the question of the ratio of self-financing. In the year 1962–63 the industry was self-financing to the extent of 60 per cent. I do not think it would be particularly helpful at this hour of the night and on this Order if I were drawn into the wider question of the financing of nationalised industries, though I am the first to agree with my hon. Friend that this is a matter of very great importance I am willing to accept this demand that these industries should be judged by commercial standards. To give him one or two figures in reply to the questions he asked me, the total cost of the methane pipeline and terminal is £13 million. The cost of the Lurgi plant at Westfield was £7 million. The cost of the Lurgi plant at Coleshill was £11 million.

Mr. Skeet rose——

Mr. Peyton

No. I hope my hon. Friend will forgive me if I do not give way now.

I had the privilege of serving on the Select Committee with the hon. Member for Edmonton. I do not feel particularly embarrassed now about facing him across the Floor of the House in a rather different capacity. It is right that the industry has shown, even more so since it was before the Select Committee, that it has new ideas and possesses a great degree of enterprise. I welcome his acknowledgment, which was indeed the conclusion of the Select Committee, that the methane scheme gave the industry a breathing space. It will always be a question of debate and hazard as to how far one relies upon imported fuels. Nevertheless, I am sure that the hon. Gentleman would agree with me that the industry must be allowed to exercise its own commercial judgment about its future. There is no ground at the moment for supposing that it is exercising that judgment in any wrong or erroneous way.

I particularly welcome what the hon. Gentleman said about the research programme at Solihull, which is a very useful one carried out by men of great skill and high qualifications. The hon. Member then drew attention to the increased price of gas. I conclude by saying that an increase in the price of gas is not wholly out of tune with the thoughts and feelings of the Select Committee on which I had the honour of serving with the hon. Member.

I hope that I have answered most of the points which have been raised from both sides of the House and I ask the House now to approve the Order.

Question put and agreed to.

Resolved, That the Gas (Borrowing Powers) Order, 1963, a draft of which was laid before this House on 12th July, be approved.