GAS INDUSTRY (BORROWING POWERS)

HC Deb 08 December 1964 vol 703 cc1463-507

10.12 p.m.

The Minister of Power (Mr. Frederick Lee)

I beg to move, That the Gas (Borrowing Powers) Order, 1964, a draft of which was laid before this House on 23rd November, be approved. The Electricity and Gas Act, 1963, raised the limits of the gas industry's borrowing to £600 million and provided that the limit could be further raised to £650 million by order. In presenting this Order to the House, I think I should say how the industry has developed since we considered its borrowings during the passage of the Act.

I believe that it is a success story. At that time, the Gas Council supported its application to the House by a publication called "Gas Goes Ahead". The confidence expressed in that title has certainly been justified. In 1963, the industry had plans providing for an increase in gas sold of some 5 per cent. per year. This of itself was a very encouraging figure when one remembers that throughout the 1950s gas was hard-pressed to avoid a net loss in sales.

One can, therefore, congratulate the industry, firstly, on its optimistic outlook for the future at the time of the 1963 Act and, secondly, on what has happened since. To give an estimate at this stage of future growth is by no means easy. A great deal of the new business which the gas boards are now securing is for seasonal heating, which is very much affected by weather conditions. Although corrections for temperature can be applied there is within this position considerable margin for error and there are signs that heating standards are changing rapidly and, in the main, for the better. Also, the extent to which gas has already caught on varies from one part of the country to another. These and a number of other factors make forecasting a pretty risky business, but I think that we can with some confidence estimate that the rate of increase from now on will be about 7 or 8 per cent. per annum, which of itself is about half as much again as we expected as recently as 1963.

One may ask how this spectacular resurgence of gas has come about. To those who remember the struggle which the industry was having, almost for survival, a few years ago, this is a most remarkable change. I suppose that basically the reason for the expansion is that the public, and I think particularly the householder as distinct from industry, have taken a new view of the prospects of the industry itself. I think that all of us have been impressed by the scheme to import liquid gas from Algeria, a scheme which has just begun to operate. This is an outstanding example of enterprise by a nationalised industry brought to fruition in co-operation with private concerns and, indeed, with international partnerships.

In addition, the last few years have seen the coming into operation of two important Lurgi plants for the total gasification of coal, and also the introduction of some very economical and flexible processes for making gas from light oil. On top of all that, there is the possibility of gas being found beneath the North Sea. Under these conditions, it is perhaps no wonder that the man in the street expects gas to be an increasingly competitive fuel.

It is a short step from that to expecting reductions in the price of gas. Indeed, I was asked a Question about this at Question Time today. This is an issue which is relevant indeed to the Order which I am now asking the House to accept. Like other businesses the area gas boards are meeting increased costs in labour, goods and services. In addition, capital charges are payable before the investment to which such capital charges relate can begin to bear fruit.

It is important to remember that as yet only a comparatively small proportion of our gas comes from what I might describe as the new low cost sources. At the same time, the industry has to make a suitable contribution to its own development, and perhaps I should mention here that it is now providing upwards of £50 million a year from its own resources, principally depreciation provisions and revenue surplus, which is about half of its annual investment needs.

Relating all that to the price of gas, I think it is pretty clear that there is, and may remain for some time, a transitional period during which the aim must be to stabilise the price of this fuel. In fact over the last two years the overall price has increased by only a halfpenny per therm, which is a record comparable to that of any industry over the same period.

During the transitional period there may well be variations, according to the circumstances of individual boards. As the House knows, the industry is based far more on regions than on any central national control. We can have no doubt about the ultimate benefits of the investment which I am asking the House for tonight, in its effects on the financial stability of the industry. It will certainly lead to reductions in the average costs of making gas and to increases in the amounts of gas available to the British public.

The British winter is not to be underrated, and gas is a most suitable fuel for supplying the seasonal heating load. Per unit of output, the capital cost of the new gas-making plants is quite low, and the distribution is less affected by weather conditions than is the case with most other fuels.

The Order which we are now discussing is needed rather earlier than was expected when we debated the parent legislation, and I have no apologies to offer for that. The reasons for this are implicit in the increased rate of growth to which I have referred and the increased fixed and working capital which arise from it. It follows that the industry will fairly soon have to apply to Parliament for new legislation to extend its borrowing powers beyond the limits of the 1963 Act.

That will be an occasion for a more comprehensive look at the picture of the gas industry than I have given tonight, and at this stage I think that the House would not expect me to go beyond the rather short progress report that I have given.

Summing it up, this money is needed for investment in a growth industry which has an essential part to play in our fuel economy, both in industry and in the home, and I therefore commend the Order to the House.

10.23 p.m.

Mr. John Peyton (Yeovil)

First, on behalf of my right hon. and hon. Friends, I want to express our very warm regret that a Measure of this importance should have been produced for the consideration of the House at this late hour. [Laughter.] The Under-Secretary of State for Scotland may laugh, but we have had some experience of his dealing with these matters in the past. I am quite serious. The practice has been to divide into two parts the large sums of money which we lend to nationalised industries. It is one of those second tranches that we are dealing with tonight. The House of Commons is being asked, by way of affirmative Resolution, to give the Minister power to lend this further £50 million to a highly successful industry. I regard as quite monstrous the fact that at this hour we should have to be content with the extraordinarily meagre survey that we have had from the Minister.

It is wholly wrong that we should be asked to initiate and undertake a discussion of so large an industry as this at this hour. I do not believe for a moment that it is in the public interest that the House should deal so lightly with large sums of money, nor do I believe that this method of proceeding is anything but an affront to the House. We are asked in the most cursory way to apply a rubber stamp to what the Minister appears to suggest is simply a routine operation—

Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)

Do not talk such utter rot.

Mr. Peyton

The hon. Member will have plenty of opportunity to speak later. We have listened to him speak at great length in the past, and I do not doubt that we shall have an opportunity of listening to him tonight. But nothing he says is going to deter me from expressing my point of view and those of my hon. and right hon. Friends.

Lastly, I would say that the conduct of the Government on this occasion shows a very scant regard for this nationalised industry. The right hon. Gentleman will forgive me if I say that his exceedingly brief survey has not left us any wiser than we were before. He told us that forecasting was a pretty risky business—I will come back to that point before I finish my remarks. The right hon. Gentleman played vaguely with the idea that there might be a reduction at some time in the price of gas. He conducted an argument with himself which was brought to no conclusion. He referred, rather mysteriously, to a transitional period, during which the aim must be to stabilise the price of this fuel. He went on to use words indicating that the price had already been stabilised. He referred to the reduction in the average costs of making gas without leading us on to any conclusion from that.

The right hon. Gentleman continued that a new Act of Parliament would be necessary soon which would—we took comfort from this—give us a better opportunity to survey the state of the industry. I profoundly echo the hope of the right hon. Gentleman that we shall have a better opportunity of surveying the state of the industry than the one we are enjoying, or tolerating tonight. I should like something a little more precise from the right hon. Gentleman than the suggestion that soon it will be necessary to have another Bill before the House authorising increased borrowing. Perhaps he can tell us when.

May I interpolate that we welcome very much the Answer which the right hon. Gentleman gave at Question Time earlier today that the Government have decided to continue the policy—which was attacked very largely by hon. Members opposite when in Opposition—of financial objectives for these industries. As I endeavoured to suggest at Question Time, while we applaud his decision, we nevertheless extend him some sympathy in the difficult task which he may have of explaining this to some of his colleagues.

As the right hon. Gentleman pointed out, it is not long ago that this industry appeared to be thoroughly moribund. Happily, however, the professional mourners have been proved wrong. They were premature in arriving at a decision that this industry had not any future. Instead, we have had remarkable developments such as Lurgi, methane, and the new oil-based processes, and, I think it fair to add, the skill and determination of those involved in the industry. I should like to take the opportunity to pay my tribute to Sir Henry Jones and Sir Kenneth Hutchison particularly. By their tenacity, determination and skill they have seen that all the opportunities available to the industry were used and exploited to the maximum. I am certain that the whole House would agree that they had served this industry with very great distinction. Added to these new processes, which have opened up quite a new future for the industry, we have the prospects of Dutch gas and even new supplies which may be won from the North Sea.

I think that the progress of the industry may be measured very well by looking at the sales of appliances which over the first six months of the present financial year have shown, so far as space heaters are concerned, an 18 per cent. increase over the same period last year. One must always bear in mind that last year showed a marked increase over the year before. In addition, sales of central heating units have increased by about 14 per cent.

It is clear from these figures—and it would be possible to produce others like them—that the demand for gas is likely to expand. It is also clear that the new developments demand that we have a clear new look at the requirements of the industry. Very high on the list of priorities is, I believe, the project of underground storage. This is necessary if the industry is to make full use of its investments.

It is also necessary that there should be some amendment of the industry's structure. The Report of the Select Committee on the industry not long ago made the point perfectly clear that the Gas Council was woefully weak for the functions it was called on to perform. I think I am right in saying that a Bill is ready. Indeed, have not we been told that this is so? Are we now being told that this Bill is being put back; that no time can be found for a Measure which that Select Committee considered was necessary and desirable and that instead that time will be filled in with an iron and steel nationalisation Bill? The Minister laughs at that, but I hope that his laugh will be heard in the country, because what we are saying now, and we will go on saying it, is that the Government must realise that it is their duty to make sure that this and other industries already in public ownership are given every opportunity to succeed.

Hon. Members

Hear, hear.

Mr. Peyton

I am pleased to have that applause from hon. Members opposite. I will take time—and there is plenty of it—to remind them that this industry left the gloom and failure and emerged into a highly successful, modern, thriving industry under Tory administration. It was already under public ownership.

My hon. Friends and I are always being told—we have listened to this idiotic claptrap from hon. Members opposite for many a long day—that the Tory Party is somehow prejudiced against the publicly-owned industries. Yet it was during the period of Tory Administration that this industry embarked on a highly successful period of progress.

We hope that the Government will take seriously their responsibilities towards these industries and will do all they can to see that they have every chance of succeeding and every chance of prosperity—that is, before they conduct other ill-judged and ill-timed experiments in public ownership.

I hope that the Minister will give us his views on the subject of underground storage. Is it a necessary part of the gas industry's future progress and, if so, when will he make provision for it?

We should like to know when the Dutch gas is likely to be available, and at what price, and for what period. If recent Press reports that we are considering taking up to half our needs from Holland are true, can we be told how that supply will be married with supplies that may become available from the North Sea? We have not had from the Government or from the Minister any evidence that this matter has received the most careful consideration.

When does the right hon. Gentleman expect the industry to be able to provide substantially non-toxic gas? The development of the industry contains the seeds of some very serious problems for the coal industry. Some three years ago, 84 per cent. of our gas production was based on coal; in three years from now that figure will have dwindled dramatically to about 40 per cent. Will the right hon. Gentleman confirm or deny that abort 50 per cent. of the gas Indus- try's research programme is devoted to means of producing gas from coal?

Whatever may be the research position, the problem of the relationship between the gas and coal industries remains a serious one. Despite that problem, however, I hope that the Minister will not be led into arresting the gas industry's progress because of pressures on behalf of coal. He should emphatically reject any idea of giving to each industry a fixed share of the fuel market. We believe that all these industries should compete and, in competing, give the customer not only the best value for money but the widest freedom of choice.

We have had rather ominous references from the party opposite to the importance of a co-ordinated policy for the major fuel industries, and we have now come to the point when we must ask what that means. So far, we have not been told. if in 1955 we had had what I believe is meant by a co-ordinated policy for these industries, where would the gas industry have been today? I do not doubt that it would by now have been stagnating. It would certainly have gone beyond the point of no return. There would have been no dramatic recovery such as it has experienced.

A document entitled "Twelve Wasted Years", produced by the party opposite and published in September, 1963, contains the following paragraph: In spite of representations from the coal industry, the gas industry is being allowed to go ahead with the production of gas from oil. These are the complications resulting from making two public authorities compete, when a positive programme of co-operation (e.g. siting Lurgi plants on coalfields and distributing the gas by high-pressure pipeline) could satisfy both the nation's fuel requirements and the stability of the industries concerned. Does the right hon. Gentleman share the belief implicit in that paragraph that it is wrong to make two publicly-owned industries compete? I should like a clear answer to that question tonight. If we cannot get it tonight, we shall press for a clear answer unceasingly in future.

I very much hope that the right hon. Gentleman, in confronting the admittedly complicated problems of the fuel economy of the country, will resist any temptation he may have felt or still feels to regard himself as omniscient or to adopt a policy which implies an assumption of infallibility. None of us can see the future of this industry. Prophecies and guesses have been numerous and they have almost never been right. The right hon. Gentleman was good enough to confess tonight that forecasting is a risky business. I hope, holding that belief as he does, he will not make the cardinal and almost unforgivable error of committing the fuel economy of this country to such a shaky and unfounded basis as a guess.

I hope that the right hon. Gentleman will refrain from putting the gas industry or any other fuel industry into a straitjacket. I hope, despite all that the party opposite has said, that he will adhere to the policy of allowing them to compete in order that they may better serve the public interest.

I end by repeating what I said at the beginning. I very greatly regret that this Measure should have been brought before the House at this late hour. I am sorry that the Minister apparently does not echo these sentiments. I believe that the standing of the House of Commons—if I may mention such a thing to such a Government—demands that we should be given a full opportunity of considering carefully the position and prospects of such an industry. I do not believe that conduct such as we have had from the Government in these circumstances is particularly flattering to an industry which I should have thought well deserving of warmer congratulations from the right hon. Gentleman.

10.43 p.m.

Mr. Christopher Norwood (Norwich, South)

I suppose many hon. Members have said this before and many will say it again. I rise with a great deal of humility and a great deal of pride to make my first speech in this House. I do so on this Measure at this hour particularly because I have worked during most of my adult working life in nationalised industries. While I wish to avoid contention where possible, I can only observe that this gives me a somewhat different view from that held by the hon. Member for Yeovil (Mr. Peyton).

I am proud to be in this House. I am proud to represent part of the City of Norwich. I can say no more than that no man could feel happier to represent a finer or fairer city or be more proud of the confidence expressed by the electors.

The background of this request for additional borrowing powers is simple. It is the renascence of the gas industry. From 1950 to 1959 the sales of the industry remained virtually constant. Since 1959 the gas industry has shown a remarkable increase in sales. There is an explanation for this, an explanation—again I cannot avoid this point of contention—which cannot be gainsaid by a speech as inconsistent as the one made by the hon. Member for Yeovil.

If we go back to 1954, we find the first of the public estimates put forward by the Gas Council, estimating for 1959–60 the sale of slightly less than 3,000 million therms. My right hon. Friend the Minister has made the point that forecasting is a most uncertain business, and I know this well to my cost. The fact remains, however, that against that estimate of nearly 3,000 million therms, sales in 1960 amounted to 2,500 million therms. In other words, on that occasion the estimators shot high.

In February, 1960, a further publication appeared. All three publications to which I shall refer were, incidentally, published under the previous Government. For the first time in the history of the gas industry since the war, the February, 1960, publication began to stress the importance of using oil-based products—in other words, gas from oil. In this publication, the shift to oil is justified by arguments of the load factor type, that since oil plant is cheap capital-wise it is reasonable to install it, cutting the capital cost with plant to meet peak load. That is a legitimate argument; I do not think that many would argue against it. That same publication points out—and to do so within a matter of a few paragraphs is "sitting on the fence"—that one of the great things about gas is its importance to the nation in helping to extract the utmost value from coal.

What about the forecast that was put forward in February, 1960? The forecast for 1965–66 was slightly over 2,800 million therms, or a lower figure than the pundits six years previously had forecast for that same year of 1960. The forecast for domestic use was about 1,350 million therms. The interesting thing about this forecast is that both these figures were exceeded in 1963 and 1964 and there is every indication that sales will continue to rise. Indeed, one of the few remarks made by the hon. Member for Yeovil with which I can agree was his comment that it looks as if the sales of gas will increase. My goodness, the industry's whole plan is based on that assumption. The plan for every other fuel industry is based on that assumption too.

We can, therefore, describe the estimate made in 1960 as a low shot; the forecasters shot low. One of the things about forecasting is that one cannot be right. if anyone could be right about forecasting, there would be no need to be a forecaster. There are other more profitable activities.

In October, 1963, the pamphlet "Gas Goes Ahead" was produced. That is a fair title. It describes what has happened in the gas industry. Gas has gone ahead. The previous estimate in 1960 was in terms of a 3 per cent. per annum increase in overall gas sales. In October, 1963, "Gas Goes Ahead" thought in terms of a 5 per cent. per annum increase in gas sales. Tonight, we have heard from my right hon. Friend the Minister that 5 per cent. is now reckoned to be low.

What is the reason for that? Is it, as the hon. Member for Yeovil suggested, because of a renascence in Government administration? I reject that suggestion, because in that case the hon. Gentleman must account for the previous nine years of stagnation in the industry. What has happened is that the gas industry has been able to shift from dependence upon one fuel. Unlike virtually any other industry, it has been able to shift away from its dependence upon coal and to move into cheap oil-type sources. This has freed the gas industry to adopt new price policies, which it has done.

We come back to the argument—unacceptable to hon. Members opposite but still true. Let us see the extent of this change. Perhaps I may burden the House with a few more figures. The measure of this change is shown by these gas industry figures for 1958–59 relating to new plant installed in the industry, the plant that commits one for the future. It shows the managerial type of decision that one is making, and one is, after all, committed to that plant.

In terms of million cubic feet of capacity, in 1958–59, 31 million cubic feet of carbonisation plant were installed; 71 million cubic feet of oil gasification plant; and other plant—mainly water gas and producer gas—about 5 million. Those figures already show a shift to oil compared with previous years. In the last year for which figures are available, 1963–64, the figures for new carbonisation plant installed were 1 million for coal carbonisation, 262 million for oil gassification and for the other category 92 million.

This is the extent of the shift away from coal. An industry which in the middle 1950s was using 28 million tons of coal, is now using 21 million tons of coal and by the 1970s, on the most optimistic estimate, will be using 14 million tons of coal. In the context of Great Britain's current fuel situation this seems to me to be a curious arrangement. It is the explanation of the gas industry's success, of its promotional tariff and of its freedom to advertise. It is, I think, a most compelling argument—and this is why I have strayed into the field of contention in this speech—for some sort of complete re-think about the co-ordination of the various fuel industries in this country. On that point I could not be more wholeheartedly in support of my right hon. Friend the Minister of Power.

In asking for the indulgence of the House in having perhaps spoken more strongly than one should in his first speech, my reason is that I work in the fuel industry and there is a tremendous amount to be said for the policy put forward by my right hon. Friend.

10.53 p.m.

Mr. Geoffrey Lloyd (Sutton Coldfield)

I am very happy to have the duty and the pleasure of congratulating the hon. Member for Norwich, South (Mr. Norwood), as a Member from the gas industry, on his very thoughtful speech.

Mr. Norwood

I am very sorry, but I must make it plain that if I said that it was a slip of the tongue. I am from the fuel industry—the coal and electricity industries.

Mr. Lloyd

I hope the hon. Gentleman will forgive me for making that mistake. It is true to say that every hon. Member enjoyed his speech very much and will look forward to hearing him speak on fuel problems on other occasions.

We on this side of the House are very pleased that the right hon. Gentleman has brought forward this Order, but we are scandalised that he should do so at this hour of the night in view of the fact that it deals with a huge sum of money which ought to be spent on making a further major breakthrough in the magnificent progress of the gas industry in recent years.

The Minister said that a remarkable change had occurred in the gas industry in the last five years. In saying that, he was paying tribute to the progress of the gas industry under a Conservative Government. If I may say so, I resent very much the attitude of hon. Members opposite, because I would remind some of them, and particularly some of the older Members and those in the miners' group, that I was the first Minister of Fuel and Power after the Labour Government of 1945–51 and that Sir Winston Churchill said that while we were opposed to further nationalisation and although, as he said in his inimitable words, it might somewhat mar the symmetry of party controversy, it was our job to do the best we could for the industries that were nationalised at the time.

Mr. Popplewell

The House is much indebted to the right hon. Gentleman for drawing to its attention the fact that he was the first Tory Minister of Fuel and Power to operate the nationalised gas undertaking. Are we to take it that he was responsible for the ten years of stagnation in the industry and that it was possible only in the last four or five years, after he had left office, to make progress?

Mr. Lloyd

I shall address myself to that very point. I prefer to take the history of the industry farther back than four years. I think not so much of a remarkable change in the past five years but of an entire transformation in the past ten years. Ten years ago, the gas industry was facing a bleak outlook. It was completely tied to coal. The cost of coal was going up rapidly each year. Gas and coking coals were becoming increasingly scarce, and the National Coal Board took the view, therefore, that cok- ing coal must bear a large increase in price. This was a source of deep frustration to the gas industry, and the outlook was very bad.

I well remember the chairman of the North Thames Gas Board, now Sir Michael Milne-Watson, coming to see me in 1955 and, in the context of the fuel shortage, speaking of the possibility of bringing to this country in tankers natural gas frozen to a temperature of—260 degrees Fahrenheit and using it to supply our towns here. The House will understand what a daring conception that was at the time. Nevertheless, I encouraged him to go ahead because I could see what the possibilities were.

It is of interest to know how the project began. A big industrialist in Chicago, Mr. Wood Prince, felt that he was being squeezed by the natural gas suppliers of that area, and he determined to free himself by a ruthless pursuit of the principle of competition. He decided to be the first man in the world to buy gas down in the Gulf of Mexico and to bring it up the Mississippi in special ships. Very hazardous procedures were involved. Nothing like it had been undertaken before. Mr. Prince decided to make special ships with balsa wood as insulation, as steel becomes very soft, almost soft as paper, at such low temperatures, and he carried out experiments in the Louisiana Flats. I arranged, in concert with the chairman of the gas board, that British safety engineers from the Ministry of Transport should go across and familiarise themselves thoroughly with the dangers and the safety precautions which might be necessary for this new method of transporting methane so that, if we were able later to proceed with it, we should be well acquainted with the safety precautions necessary in this hazardous enterprise and be able to proceed faster.

All this helped the industry a great deal. Afterwards, there were difficult negotiations involving the oil companies, and, eventually the consortium was formed which finally brought matters to success. The gas industry deserves great congratulation for its enterprise, and so do the big companies which have worked with it.

The question of the gas grid then immediately arose. It would not be worth while bringing in great quantities of natural gas if it could be used only in one area. The industry was, therefore, led right on to the next great development, the gas grid, which everyone agrees has been a great success.

A new era opened for the gas industry. The existence of supplies of methane and the establishment of the gas grid put the gas industry in a favourable bargaining position with the petroleum companies when it came to make agreements about the light petroleum distillates, the next important development.

First of all, we have the I.C.I. reforming process which is the basis of most of the gas production from oil at the present time and which is very successful. Then we are glad to know—and I am especially proud of this—that a great deal of research work has been done by the gas industry in its research institute in the West Midlands, very near Birmingham. There, the scientists have found what they believe to be an even better process, the catalytic rich gas process.

Alas, we are disappointed that their equally enterprising experiments to find a way of gassifying low grade coal have not so far been successful, but one is glad that they are continuing with this research. We hear of even more possibilities—of oil from the North Sea and of a deal with the Dutch. We do not know the details, but they are obviously big possibilities.

But the industry having taken these several large leaps forward in technical progress, there remains one very important development which will crown all these others and bring them to full fruition, both for the industry and the consumer. This is underground storage.

The industry has done a great deal of research into this. It knows that it is technically possible. That side is well worked out. What is necessary is legislative provision to enable the work to be done. We know from my hon. Friend the Member for Yeovil (Mr. Peyton)—and the right hon. Gentleman has confirmed it—that a Bill is ready now which would enable this great work to continue and to continue fast. We are very disappointed that the right hon. Gentleman, in a somewhat pedestrian statement on the state of the industry at the present time, never once looked ahead, never once saw the vision of the Britain that the Prime Minister has spoken about.

Mr. Lee

Will the right hon. Gentleman tell us whether he came in while I was speaking?

Mr. Lloyd

I was here the whole time. I never heard the right hon. Gentleman putting forward and saying what further great progress would be made if underground storage could be brought in. Perhaps he will tell us whether he is prepared to bring in a Bill and bring it in fast. I am sure that my right hon. and hon. Friends would be prepared to support it and give it a good passage so that the industry could fulfil its promise.

But instead of working hard on such a Bill, the right hon. Gentleman is spending his time on fulfilling what The Times calls the symbolism the Government need—the Iron and Steel Bill. If the Government put in more work on a gas storage Bill, they would serve the country better. If they do not bring in such a Bill they will be betraying the gas industry and greatly hurting the interests of the gas consumers.

This is important not only for householders. It is equally important industrially, as I appreciate, coming as I do from the West Midlands, which is the greatest consumer of industrial gas in the country and where gas plays an enormous part in the annealing of metals for the big Birmingham metal companies. It is very important that we should have the benefit from underground gas storage.

By providing gas storage on a big scale we can take advantage of gas in a way that the electricity industry cannot take advantage of electricity. The stored gas would enable the gas industry to continue at an even pace throughout the year, using accumulated stored gas when necessary in winter. This is just the sort of thing the Prime Minister has asked us to consider in moving into the modern, technological age with capital intensified industries and reduction of costs.

It is gas storage which will enable the country to get the real benefits of the previous fine progress in the industry and give the consumers the opportunity of possible price reductions. The figures are very impressive. From coal carbonisation a therm of gas costs about 1s.; from methane, 7½d.; from these new gas processes only 5½d. The figures speak for themselves. I appreciate the caution of the industry, and indeed of the right hon. Gentleman when he talks with authority and responsibility about the possibilities of price reductions, but the figures speak for themselves. The hon. Member for Norwich, South showed how the industry is changing over from the 1s. a therm process to the 7½d. and 5½d. processes, and it is quite clear what the trend can be.

If we can add to the possibilities of price reductions the increased efficiency resulting from underground storage, we can then make real progress in a very important fuel for the householder, and in many parts of the country a basic fuel for industry as well. I therefore urge the right hon. Gentleman to lose no time in bringing forward the Gas Storage Bill and to give it priority over the Iron and Steel Bill.

Mr. Charles Loughlin (Gloucestershire, West)

I respect the right hon. Gentleman's great knowledge of the gas industry, and I appreciate the point that he is making about gas storage, but is it not true that for some considerable time the gas boards desired to store gas at Winchester? Can the right hon. Gentleman tell me why his Government never brought in the Bill to which he referred?

Mr. Lloyd

In this country every regard must be had to the susceptibilities of local objections, but I understand that that has now been surmounted and that the Bill is ready and would have been brought in.

11.6 p.m.

Mr. Ernest Popplewell (Newcastle-upon-Tyne, West)

We are all very interested in the enthusiasm shown by the right hon. Member for Sutton Cold-field (Mr. Geoffrey Lloyd) for the undertaking for which he had so much responsibility during the early days of the Tory Administration. I am somewhat surprised that the right hon. Gentleman and his hon. Friend the Member for Yeovil (Mr. Peyton) should charge the Government with neglect for not going ahead with the underground storage of gas. During 13½ years of Tory rule there was talk about the possibility of importing methane gas, but they did nothing about storing it underground. It therefore ill becomes them to accuse the Government, after less than two months in power, during which time they have tried to restore the good name of this country—something which was necessary after the neglect and ineptitude shown by the Tory Administration—of neglect in dealing with this question. It is remarkable what a complete change-about there has been. It is astonishing what happens when the Tories are in Opposition.

I add my congratulations to my hon. Friend the Member for Norwich, South (Mr. Norwood) on his knowledgeable portrait of the situation facing the fuel and power industries as a whole. He rightly pinpointed the tremendous difficulties involved when this question is being discussed. In spite of the statements of the hon. Member for Yeovil, I think that there is a need for a comprehensive fuel policy. The tenor of the debate is indicative of the essential part played by fuel in our economy, and we must, therefore, ensure that all forms of fuel are utilised in the best interests of the nation.

The gas industry can rightly claim that with the importation of oil, methane gas, and so on, from abroad it can play a large part in providing a cheaper fuel, but we must also think of our own natural resources, and not allow profitability, which is so dear to hon. Gentlemen opposite, to be the only factor in deciding which fuel to use. There are social factors to be taken into consideration in working out our fuel policy.

Sir Harmar Nicholls (Peterborough)

The hon. Gentleman is making a point about profitability. That is one way of looking at it. Keeping down production costs to maintain full employment is another.

Mr. Popplewell

Both those points have been considered, but what I am saying is that social needs have to be assessed as a criterion in addition to mere profitability.

I was extremely intrigued to hear the protests which came from the other side of the House about this Order being considered at this late hour. It made me wonder how many times right hon. and hon. Members opposite used to ask us to debate these Orders at this time of night. During the comparatively brief spell when the right hon. Member for Sutton Cold-field was at the Ministry of Power, did he not discuss this type of Order at a late hour or listen to discussions on other Orders from other Departments? Did this not happen under his own Administration?

I was amused by the hon. Member for Yeovil in his synthetic and histrionic protest which filled this side of the House with sympathy for his gestation—[Interruption.]—yes, I said gestation. We were further interested as the debate unfolded to discover that very little came from Members opposite which related to this Order. We did not see any real desire to talk about fuel, and I suggest that at the first opportunity the Opposition ask for a Supply Day to be used for discussion of this important topic. I assure right hon. and hon. Members opposite that we shall be most delighted to discuss the subject with them.

To return to this Order, I compliment my hon. Friend on the way in which he introduced it. He certainly dealt with its merits. I should like to ask, first, whether he would have another look at the gas industry as a whole. For example, he said that the industry had to supply half of its investments from current revenue—some £50 millions of investment. That amount has to be provided from a total of £100 millions a year. Is not this putting an undue proportion of expenditure on the undertaking? Is it not mortgaging too much of the future to expect so vast a sum to come from current revenue?

The hon. Member for Yeovil talked of the straitjacket in which the gas industry found itself. I agree, but I hope that this Government will take it off this industry and other publicly-owned undertakings, and give them full commercial freedom to compete on equal terms with private enterprise. The hard fact is that this straitjacket was put on the publicly-owned industries by hon. Members opposite.

Why not allow the gas undertaking to produce the component parts which it feels are essential for the sale of its wares? Hon. Members opposite had the opportunity to do that, but the opportunity was never taken because the straitjacket was imposed which prevented such freedom. We should give the same commercial freedom to the publicly-owned industries as private enterprise enjoys. The success story which would then unveil itself, in spite of the shackles which have been placed by hon. Members opposite on the nationalised undertakings, would rocket upwards and astound the Minister. Even in the remarks of the right hon. Member for Sutton Coldfield one could trace a certain amount of pride in the achievements of the gas industry. He was one of the persons who was concerned with its administration when he was a Minister, and we have heard many former Tory Ministers defending publicly-owned undertakings, although politically and from a doctrinaire point of view they condemned them.

My right hon. Friend indicated that £650 million would not be sufficient. This is typically Tory administration. In the past a number of half-measures have been put forward by hon. Members opposite when they were in the Government. On many occasions we have been asked to subsidise an undertaking that, given commercial freedom, would not need a subsidy. We have heard many Tory Ministers say that these subsidies would be required only for a short period. This is the same thing all over again. I therefore suggest that before my right hon. Friend comes forward with a request for a further extension of this kind he should take the first step towards giving complete commercial freedom to all the undertakings for which he has responsibility.

If that happens we shall be able to go a long way not only towards providing a more efficient service but to reducing the price of gas and keeping prices at a much more stable level. This is very necessary. If we want to repair the damage done to our balance of payments by the Tory Administration the best way of doing so is by keeping prices stable, and by avoiding the vicious circle which has bedevilled us in the past.

I put these suggestions to my right hon. Friend for further consideration. I am sure that if he follows them even hon. Members opposite will not be able to cast stones at publicly-owned undertakings in the way they have done in the past. Instead, they and the nation will realise the wonderful success stories that can be told by these undertakings.

11.18 p.m.

Colonel C. G. Lancaster (South Fylde)

I join with my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) and with the hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell) in expressing my congratulations to the hon. Member for Norwich, South (Mr. Norwood) on his excellent maiden speech, which was so well-informed, modest, and to the point.

I also take this opportunity of congratulating the hon. Member for Newcastle-upon-Tyne, West on being appointed Chairman of the Select Committee dealing with nationalised industry matters. I am sorry, however, that in his new-found position he did not refer to the Select Committee, because four years ago it considered the gas industry in considerable detail.

I am not concerned with debating this matter at this late hour, but I am concerned with the cursory manner in which the Minister put forward his claim for £50 million, and the slight reference that he made to the developments in this immensely important industry. Of course the House would wish to give him the additional finance for which he is asking, but we are justified in saying that the gas industry has perhaps been more successful in selling gas than in forecasting its future financial requirements. It is only a short time ago that the House made provision for its financing at the rate of £600 million.

I, of course, cannot agree with the hon. Member for Newcastle-upon-Tyne, West when he says that this £50 million is a gross imposition on that industry and that it is too large a proportion of their net returns to have to put into their own capital requirements. Ever since the inception of the Select Committee inquiries into the various corporations, one of the things which has struck me most, particularly recently, is what pleasure the chairmen of these corporations express towards the White Paper which laid down the new system of financing and gave them a feeling that they were themselves contributing so substantially to their own requirements.

Hitherto they had to go cap in hand to the Treasury for any money they wanted. It is impossible for them to go to the public market which would be the most ideal means, but they are, of course, given power to level their prices so that they can make very large reserves, and do make large reserves. I have noticed that they are glad to have the opportunity of contributing so materially from their own reserves in order to meet their own capital requirements. Undoubtedly this £50 million will not, I am sure, be the end of the story. The Minister will be coming back within a short time to ask for more. That in a sense is a measure of the success which is attending the efforts of this industry. It is remarkable and everyone who has spoken has paid tribute to that.

Since the Select Committee's inquiries into the gas industry, it has risen from approximately £2 million net profit to last year's considerable increase at round about £9 million. If the Minister's forecast of a 7 per cent. increase holds good, and I have no reason to suppose it will not, we can expect that £9 million to be improved upon considerably. One of the things that does give satisfaction is the fact that since we inquired into the industry it has made considerable provision for its own obsolescence, amounting to something like £19.5 million. That is one of the recommendations we made and it has carried it out faithfully.

As to the industry's developments, as my right hon. and hon. Friends have said, these are considerable. The cost of making gas in new oil reforming plants has been reduced in relation to electricity produced by conventional coal-or oil-fired methods by more than four times. That, as it progresses, will have a very real bearing on the importation of methane. As the Minister said, we have quite recently had the first ship bringing Sahara methane into this country and we are at present, I understand, in consultation with the Dutch about bringing in methane from Holland either by ship or possibly by some cross-Channel pipe.

Whether the whole of this development in regard to methane will not be submerged by the big development brought about by oil gasification by two very remarkable developments enabling us to get rich gas from naphtha, and whether we shall find methane even in these early days beginning to take a back seat as against developments on oil gasification, I think is open to question. In either case it is inevitable that the development of this industry vis-á-vis the other energy producing industries is bound to be very great indeed.

In the United States 30 per cent. of the energy requirements in that great country today comes from gas. In this country at the present moment it is of the order of 6 per cent. That, I think, gives the House some idea of the immense developments which lie ahead of us. I join with my hon. Friends in saying that I hope that the greatest freedom will be given to this industry to develop, either through the use of methane or oil, and the like, so that it can play its part in bringing about a reduction in prices.

There is plenty of room for electricity. The requirements of industry for electricity are by no means satisfied. But equally there is a great field not only in regard to gas fires and space heating, and the like, but for the use of gas in a great variety of industries as well. Gas has a large part to play, and if greater freedom is given to the industry to compete with electricity and oil, the greater will be the advantage to the country itself.

I go further and say that I wish that the Minister had been able to hold out some greater hope that we should see a reduction in prices in the not too distant future. As I say, such advances have been made that it is now possible to produce gas at a price one-quarter of that produced under pure oil or electricity methods. This must give some indication of the fact that a considerable field of opportunity lies ahead of us in bringing about a reduction in the price of gas itself.

My right hon. Friend referred to the price of a therm of gas. I am not entirely with him. I thought that gas produced by the conventional method cost nearer 1s. 3d. than 1s.

Mr. Geoffrey Lloyd

I was giving the more conservative figure of 1s., having taken credit for coke and its by-products.

Colonel Lancaster

My own figure was something of the order of 1s. 3d. whereas a therm of gas produced by methane was of the order of 8¾d. and a therm produced under this new oil method was nearer 6d. This gives some indication of the very wide opportunity that exists for producing gas between, as I say, 1s. 3d. a therm or, as my right hon. Friend says, 1s. a therm and 6d. It shows that there is every chance of a considerable reduction in the not too distant future.

Having dealt with that, I want to go back to two of the recommendations made by the Select Committee and which, of course, were not referred to in the Minister's speech tonight. The first was in regard to the structure of the industry itself. The Select Committee made a very definite recommendation that that should be looked into and that it should be improved.

We came to the conclusion that a council consisting of a chairman and vice-chairman and 12 area chairmen was not a sound method for controlling the industry. The 12 area chairmen were considered to be of a very high level of ability and men of considerable independence of thought. We considered that the job of attempting to be an area chairman and to sit on a central council and to speak with two voices was asking too much of these men, and that, indeed, they were not doing the job effectively. We noticed this particularly in their approach to the Lurgi process. They did not speak with one voice and it looked unlikely that they would on the developments that lay ahead. We strongly recommended—and the House will realise that it was an all-party Committee—that the council should be reformed. I hope that before long that matter will be looked into.

Another matter which received our attention and recommendation was the question of the underground storage of gas. This is a subject of immense importance and it has not been possible until recently to speak with any great experience about it. It is an involved geological problem. Mention was made from the benches opposite about the underground storage of gas at Winchester and that that scheme was dropped. I can assure the House that it was not dropped because of local objections but because the best advice both in this country and from the Continent was that the risks in storing gas under the strata underlying Winchester were too great to warrant such a development.

It has been shown that there are other, more suitable, strata, clay in particular and, in some cases, sand. Clay is the most suitable for underground storage. But whether it is done in clay or otherwise, the necessity to push ahead now that a great body of experience has been gained is paramount, for whatever developments we have been discussing tonight, they will not be wholly satisfactory until we can get the full benefit of not only these new processes but of being able to store the gas.

Like all hon. Members, I agree with the necessity for this Order of £50 million. I wish that the Minister had elaborated his case rather more on some of the matters which are essential for the future progress of the gas industry. The opportunities for the industry are immense, possibly greater than any of the other industries concerned with power. We all wish the industry well.

11.33 p.m.

Mr. Neil Carmichael (Glasgow, Woodside)

At this late hour, I do not wish to speak at great length. I felt that, since we are discussing something as great as the gas industry, not to have a voice from Scotland would be remiss, particularly since the history of the gas industry in Scotland has been even more remarkable than in other parts of the country.

Because of the geographical layout and historic nature of Scotland, we have entrusted a vast amount of work to the Scottish Gas Board. It is surprising to realise that that board has undertaken 200 work projects for a population of about 5 million people. Hon. Members representing East Midlands and North-East constituences speak about the gas industry's progress in vastly more heavily populated areas.

Because of the geographic layout of Scotland and the history of the gas industry there, the Scottish Gas Board has a particularly difficult task. It may surprise hon. Members who represent densely populated areas like the East Midlands and the North-East to realise that on vesting day the Scottish Gas Board was responsible for nearly 200 production works, and this for a population of about 5 million. Because of the Board's work the producing units have been cut by two-thirds, and this process is continuing.

There is not the slightest doubt that only a nationalised industry could have got such rationalisation, and pulled up the industry in Scotland by its bootstraps. We had from the other side a curious blend of speeches—well-informed for the most part, but always one sensed that though hon. Members had to praise the industry they were somehow sorry that it had succeeded as a nationalised industry. It was rather difficult for them to admit that a nationalised industry had done so well.

The hon. Member for Yeovil (Mr. Peyton) said that he wanted to encourage the nationalised industries, but nobody who listened to him for very long could feel that that was so. I see that in the debate on the nationalised industries on 18th June the hon. Gentleman voted against any expansion—which was really a vote of no confidence in them.

Criticisms of my right hon. Friend's brevity, and of the time at which this Order is being debated are also very largely a matter of "going through the motions." We all know that it is quite customary for such Orders to be discussed fairly late at night, while my right hon. Friend explained that he did not speak at length because the gas industry spoke for itself. He was speaking of a going concern and wanted additional authority to enable it to go ahead. From the speeches of hon. Gentlemen opposite it was evident that they, too, regarded gas as a going concern—so why should they criticise my right hon. Friend for his statement?

Of four main things that must be done fairly quickly, three relate to gas. First, the Gas Board must continue its search for a non-toxic gas. Some parts of the country have it, and it is high time that this work was speeded up. Particularly in some of the older areas where the underground pipes and the installations are ageing, we must have non-toxic gas as soon as possible. We have to accept the fact that removal of the toxic substances will probably mean a slight increase in cost, but I am sure that people would be quite willing to pay such a marginal increase if they could feel that the old hazard from gas had been completely removed.

Next, investigation of underground storage is quite vital. Here, one felt that hon. Members opposite were quite willing to let us have underground storage in return for giving up steel. They will give us almost anything if we will give up steel, but as we feel that steel is just as important to the economy as the decision to nationalise the gas industry has proved to be, they are unlikely to be successful in their efforts in that direction.

In addition to the grid being extended, as was discussed by a previous Minister of Fuel and Power in a very well-informed speech, we must move to the supergrid very quickly. I hope the day is not too far ahead when, if Glasgow, Edinburgh or some other Scottish city is short of gas, we can push supplies to it from Birmingham or Manchester—although if the history of the last 13 years is anything to go by and were to continue, the gas would more likely be pushed the other way. In British terms the distances may be great, but in Continental or American terms they are as nothing. The supergrid must be started from some point fairly soon.

Most important of all—I am sure that I shall have little support from hon. Members opposite on this—if we are to have competition I am quite happy about it so long as it is in the production of fuel. We are fast reaching a stage where we must have a co-ordinated policy for selling fuel. This is particularly true of domestic sales. The average householder who wants to install central heating is bewildered, not by people genuinely telling him what is the best way to go about it, but in most cases by those suggesting the best way which will get a particular individual a bonus as against another individual interested in another fuel wanting a bonus.

I should like to see in the centre of big cities, instead of gas or electricity showrooms or a coal utilisation centre, a fuel and power centre where trained engineers and salesmen would be able to look at a particular problem and say that for an individual house or process the obvious answer is gas, electricity, oil, or some other type of fuel. The time is coming very quickly when we should end this wastage which as a nation we should not tolerate. In the next 10 years I hope gnat we shall see the day when instead of being badgered with brightly coloured brochures we shall have factual evidence given by people in the industries who are now engaged in cutting each other's throats. I commend this suggestion to my right hon. Friend. I know that many people in the fuel industry would like such a set-up.

My right hon. Friend made a perfect point when he said that he was putting forward a prospectus for a growing, expanding and healthy industry. I am happy to await the further Measure and the longer report he has promised to introduce.

11.43 p.m.

Mr. Peter Bessell (Bodmin)

It may be somewhat impertinent of me as a new Member to compliment the hon. Member for Norwich, South (Mr. Norwood) on his maiden speech, but I should not like the occasion to go by without a word of compliment from this bench. On behalf of my party I add my congratulations to those which have been expressed by other hon. Members.

I have a sneaking suspicion that at this hour of the night hon. Members in all parts of the House would be far happier to be in their beds than listening to me. [HON. MEMBERS: "Hear, hear."] I share their view entirely and I shall therefore address myself to the point with brevity. I do not feel that we can allow the debate to finish without a word of congraulation from the Liberal bench to this great industry. There is no doubt that there has been a wide measure of agreement on both sides of the House tonight in spite of appearances to the contrary. The gas industry has gone forward in a way which is deserving of great praise. I certainly shall not enter whether that is the result of its being under public ownership—although, for the record, the Liberal Party voted with the Labour Party on that during the 1945 Government—or whether it is the result of Conservative administration in the past 13 years. I am sure that all hon. Members agree that the greatest possible praise is due to the industry and I am glad of the opportunity to say this tonight.

There has been a great rise in demand, which is satisfactory to the industry and to the nation as a whole. This is in part due to the fact that it is no longer regarded as sensible to get up in the morning to a cold bedroom and to take a cold bath. Although our Victorian ancestors thought this virtuous, it is much more practical to enjoy the modern amenities of heat and comfort. This is also part of the general rise in national prosperity. We should not, however, overlook the fact that it is also due to the considerable technological advances in the gas industry. Great credit is due to the industry for the strides it has made, particularly in recent years, in domestic heaters as well as in the industrial field. It is necessary that this work should be encouraged, that there should be a continuation of the programmes of modernisation, that there should be a full examination of methods of underground storage and that every opportunity should be examined for research into new sources of gas.

Whilst giving that encouragement, we must pay tribute to the industry also for the fact it has produced so much of its capital requirement from its own income and resources. In this way, the industry sets a remarkably good example to other nationalised industry.

One aspect of the industry which is important concerns the extension of smokeless zones. Gas has a great part to play in this and from a health standpoint, apart from all other considerations, this great industry should receive encouragement. In future, too, we in this House should look carefully at proposals for the further advancement of this great industry. I conclude by saying that we on this bench give support to the purpose behind tonight's Measure and that we welcome it.

11.48 p.m.

Mr. John H. Osborn (Sheffield, Hallam)

As, perhaps, one of the last speakers in this debate, I will endeavour to be brief. My position is rather difficult, however, as I have not attended or taken part in the proceedings of the Select Committee on Nationalised Industries; and I cannot claim to be an expert on the industry, although I made my maiden speech on the gas industry. Firstly, I therefore congratulate the hon. Member for Norwich, South (Mr. Norwood) on his maiden speech tonight.

There is a difficulty. As Members of Parliament, we are trustees for the taxpayer and the taxpayer's money. We are also trying at this late hour to make a wider appreciation of the possibilities of gas and of the gas industry. Our debate tonight has, perhaps, been a compromise between the two. We have before us an Order which, in two main sentences, decides that the gas industry should be allocated more money.

One of my difficulties as a trustee is in trying to underwrite the activities of the Select Committee. It might have been better if the Select Committee on Nationalised Industries had looked at the Order and given us the benefit of its advice before we had to debate it in the House of Commons.

We learn from the Minister's statement that the increase in gas sales is likely to be about 7 or 8 per cent. as against the estimate published six months ago of 5 per cent. in the current year and a figure of 3 per cent. in the previous year. We have thus had confirmation of the increase in demand for gas.

We have also the annual White Paper. The latest one, Government Expenditure Below The Line 1964–65, was published in April. On page 17, it contains an appreciation of the "Estimated Issues out of and Receipts into the Consolidated Fund Below the Line". This gives a figure of roughly £20.8 as against £68.8 million quoted by the Gas Council the year before. That would indicate a slightly reduced requirement. Does this match up to the proposals which have been put forward by the Minister this evening?

As the taxpayer's trustee, I find my position similar to that of a trustee looking at a private company which wishes to expand. The problem of managing a nationalised industry is similar to the problem of managing a large industrial concern. The company goes to its merchant bankers or its stockbrokers and asks for more money. It might be a private loan from the bank or a public issue of debenture stock or preference stock. There would have to be a prospectus. Therefore, if private industry wanted this extra money, we would demand much more information than the Minister has given us or than has been published in the various reports.

We want to know how much capital has already been invested in the industry, what the increase is going to be in each particular endeavour of the industry, and we want to know more about the current return on capital. One figure bandied about is 10.1 per cent. If therefore all this money is wasted, it is the taxpayer who pays. This is going to be the increasing problem of running our nationalised industries.

I see the hon. Member who is Chairman of the Select Committee on Nationalised Industries which dealt with the gas industry. This could well be his problem as the years go by.

Mr. Popplewell

If the hon. Gentleman looks at the Select Committee's Report on the gas industry, he will find that this Order is more in accord with the recommendations that the Committee made at the time.

Mr. Osborn

That is exactly what I have been doing, as I knew that this subject would be debated, and I shall pursue my point. We come back to the information which is before us, namely, that we are asked to raise the borrowing powers by £50 million. What could I find from the Select Committee's Reports? There are two Reports that we have a chance of studying. The first was printed on 5th June, 1962. Perhaps I may quote from paragraph 38, in Part II of the Report, on page 10: The Committee … believes that a minimum standard rate of return should be laid down for the Boards by the Minister in respect of large investment projects, and that this should introduce a greater sense of realism into the plans which are to be made. I gather that is what the hon. Member was referring to. This is excellent. But do we know that this now applies? This is the recommendation of the Committee, but has it been implemented?

Let us look at the Second Special Report which was published in March, 1964. The hon. and gallant Member for South Fylde (Colonel Lancaster) has referred to paragraphs 43 and 44. Reference is made to the two alternative ways of reorganising the gas industry. To what extent has that been carried out? To what extent is that necessary in connection with the increase in these borrowing powers?

There is also mention of the increase in the number of Council members. Paragraph 49 refers to legislation to provide for the development of underground storage of gas, the advantages of which have been referred to in the Committee's Report. There comes a stage when, if we are asked to vote more money, as representatives of the tax- payers, we surely ought to know what progress has been made towards implementing these recommendations.

I apologise for raising at this hour technical questions which, admittedly, are Select Committee questions, but this is part of the routine of politics and part of the work which we must do as Members of Parliament if we are to look after the taxpayer's money which, in this case, is to be spent by the gas industry.

There have been other documents and reports. The excellent summary in "Gas Goes Ahead", a development plan to 1970, gives some idea of the industry's proposals, which we welcome, but there seems to have been a remarkable increase in its borrowing powers lately, and this calls for redoubled energy in scrutinising how the money is being spent. It would have been more satisfactory if an equivalent kind of document, perhaps in the form of a statement, had been presented with this Order so that we could assess for ourselves what progress had been made along the lines of the plan rather than take the Minister's word for it.

I made my maiden speech four years ago on the gas industry, and I referred then to the importation of methane from the Sahara and to the creation of the gas grid. In the past four years, the first section of the grid has been established. I welcome the Minister's announcement of the level of gas imports, 350 million therms a year, and his reference to a price of 6¼d. per therm, which is remarkably cheap.

In my maiden speech I spoke also about the economics of the household use of gas, a matter which was dealt with this evening by the hon. Member for Glasgow, Woodside (Mr. Carmichael), and I discussed the merits and demerits of various forms of fuel for heating a house. Much has changed in four years. There has been a dynamic change in the gas industry itself.

But the industry has had its successes and its disappointments. I have had the privilege, as many hon. Members have, of going to Birmingham and West Fife where the Lurgi process has been put into operation. These projects may in due course be worth while, and continued expenditure on them will be justified, if in the end we find a process which will enable us to use low grade solid fuel.

One can praise the industry sometimes, and other times not. What is most interesting now is that various customers and would-be customers are surveying their own requirements in the light of a possible price of 6d., 8d. or 10d. a therm. This contrasts with the average present price of gas of 22.77d. per therm to the consumer. Such a reduction would be remarkable and much to be welcomed if it could be implemented and if the industry could still earn a return on capital invested.

It would be with reluctance, therefore, that one would object to the giving of this increased borrowing power if the consumer can look for reductions in price of that kind at the end of the day. So far, we have only the Minister's word for it. It is a far cry from 22.77d. per therm to the promise before us, but, if the promise can be fulfilled, there will be vast changes.

The hon. Member for Woodside spoke of the toxicity of gas. In the last four or five years, the carbon monoxide content has come down as a result of the introduction of new processes. Whereas 10 per cent. would have been regarded as normal, it is now 3 per cent., and this factor makes the use of gas more safe. I am referring not to the risk of explosion after leakage from pipes but to the other hazard which sometimes discourages its use.

I could in conclusion raise many other points but it is not my wish to do so now. We in this House should know how this money is to be spent and be sure that it is spent in those areas where it should be spent and not outside them. For instance, to what extent should we encourage the Gas Council in North Sea activities? Would it not be better—and this was indicated in the Select Committee's Report—for that type of exploitation and development to be carried out by outsiders, with the encouragement of the Gas Council, which would do more purchasing from outside? There will have to be agreements with the Dutch. Would it not be better for the Gas Council to concentrate more on that kind of thing than on North Sea developments itself?

These questions are nebulous but in the Yorkshire area where I come from we hear of extensive developments in the Humber and Hull. Would this not be in- evitable if adequate resources of natural gas were found in the North Sea?

It is difficult at this late hour to judge correctly whether or not this money is being spent wisely by the Gas Council, because we do not know. The gas industry has had a very fine record in the last four or five years and therefore my inclination is to support this Order. But on future occasions we shall want much more information before we can judge whether or not the money is being well spent.

12.1 a.m.

Mr. Robert Cooke (Bristol, West)

Even in the West Country there is considerable interest in the gas industry and, indeed, in Bristol we have a gas works of some considerable quality. It was only in the village of Chew Magna that the industry originally escaped nationalisation and this was because no one knew about the works there until a new main was dug, when it became part of the nationalised undertaking.

I do not wish to detain the House too long so I will try to compress my remarks on the more important aspects. Gas is a most significant form of power and has enormous social advantages, some of which have been mentioned tonight. As one who is keen on the preservation of our countryside, I might emphasise the complete absence of pylons and wires and other excrescences on the surface of the ground.

Mr. Cyril Bence (Dunbartonshire, East)

What about gasometers?

Mr. Cooke

I am coming to them. I dearly love the hon. Member for Dunbartonshire, East (Mr. Bence), although I cannot call him my hon. Friend, but I shall not follow him now in his sedentary interruptions.

This is a vitally important industry and that is emphasised by the fact that the hon. Member for Norwich, South (Mr. Norwood) chose to make his maiden speech on the Order at this late hour. That is indication enough of the importance of the subject. He said that he would not be controversial but did enter into controversy in his remarks about a complete rethinking of national fuel policy.

I could not help thinking that underlying that was the fear that perhaps the nationalised coal industry might find itself contracted still further because the gas industry was coming to rely less and less on coal. Certainly the hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell) had very stern words to say about it. He suggested that the coal industry must not be sacrificed in the name of profitability.

What on earth does that mean? Surely we are not to be asked to run any industry as a social service for those employed in it. Before that statement evokes a roar of disapproval from hon. Members opposite, may I say that I realise that, in the great changes that are taking place in our great industries, of course the welfare of those employed in them and who will have to change their jobs is of great importance to this Government, as it was to the last.

That must be a paramount charge on any changes that take place. The idea that he had in mind was that an industry should be kept going in an unproductive way purely as a social service to provide employment for those in it. The gas industry, to which we are being asked to vote considerably increased funds, must exist on its own and must make use of every modern invention which comes to hand.

Hon. Gentlemen opposite are doing their best to prolong this short speech of mine. I have no intention of inflicting myself on the House for longer than is necessary—[HON. EMBERS: "Hear, hear:]—but I must warn hon. Gentlemen opposite that there is a limit to the patience of even the most saintly hon. Member, and it may be necessary to take up some of the interventions, mostly made from a seated position.

The Minister was rather coy in his forecasts of future policy and future trends, and even this glossy booklet, one of a fistful which I was handed from the Vote Office when I asked for the papers on this debate, does not go very far. Perhaps the right hon. Gentleman will take a leaf out of the book of his right hon. Friend the Postmaster-General who, the other day, on purely hypothetical figures, forecast losses in the postal services for five years ahead. Perhaps the right hon. Gentleman could use that type of crystal ball in getting a much more satisfactory view of the future of the gas industry.

Much more could be said about this subject, and especially about the future methods of producing gas, but one would not wish to go into those technicalities at this stage, because no doubt there will be other opportunities for doing so. The House will recall that a day or two ago the Government, somewhat reluctantly, confirmed the licences for activities in the North Sea, which have a considerable bearing on this subject. If that is any indication of the sort of attitude which the Government are going to adopt to this vitally important industry, and indeed to others, on which the whole future of the economy depends, there is not much hope for this country. The future of the economy cannot be settled by borrowing money from abroad at exhorbitant rates. It can be settled only by working for it.

Mr. Bence

Not at ten past twelve.

Mr. Cooke

The hon. Gentleman says not at ten past twelve. Surely that is typical of the attitude of the Government. They want to work for only eight hours a day. I do not know whether it will be a five-day week. I doubt whether it will be; it is more likely to be four. That is the sort of attitude which the Government adopt. We are discussing a vitally important matter at this late hour, and all that we can get from hon. Gentlemen opposite is ribald laughter. I have not even attempted to make a speech which was remotely amusing. I could do better than this if I were trying to put on a comic turn. But the House of Commons is not the place for that.

There are a few final thoughts which I should like to give the House. One of these is on the question whether the gas industry should have some permanently fixed share in our fuel policy. We have heard that sentiment expressed. Surely that would be a most dangerous attitude to adopt. One must be flexible in this. One must be able to adapt oneself to future needs. Are we going to have a Ministerial reply which will give us a little more indication—[HON. MEMBERS: "Not tonight."]—That is all that we hear from hon. Gentlemen opposite. Before we vote this money, we ought to have an assurance from the right hon. Gentleman that the Government are prepared to grasp all the new opportunities of the technological age. What is the new Minister of Technology doing about the future of the gas industry? We are being asked to approve this expenditure. The House has a right to know what is going to be done with it.

12.10 a.m.

Mr. Frederick Lee

I should like to join in the congratulations offered to my hon. Friend the Member for Norwich, South (Mr. Norwood) on a most admirable maiden speech. It was most knowledgeable and full of interest for the whole House. I heartily congratulate him upon it and assure him that we shall look forward to hearing future contributions from him on this subject.

I began to get a little alarmed when the hon. Member for Yeovil (Mr. Peyton) leaned so far across the Dispatch Box as almost to do himself a mischief in his great anxiety to criticise me for having dared to bring on this Order for discussion at so late an hour, but I should like to draw the attention of the House to HANSARD for 29th July, 1963. There, at column 171, we read, GAS (BORROWING POWERS) ORDER.

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."—[OFFICIAL REPORT. 29th July, 1963, Vol. 682, c. 171.] That was at 10.29 p.m., and the hon. Gentleman got through his explanation in three minutes flat and sat down at 10.32.

Mr. Peyton

Perhaps the right hon. Gentleman would also be good enough to inform the House for how long the debate continued and, secondly, whether I spoke again.

Mr. Lee

If the hon. Gentleman does not wish to have a reply to this debate, then that is splendid. We can then all go home, but at least I should like to mention this ersatz approach to the debate, about starting at a late hour, and at the same time complaining that I confined myself only to what is in the Order. This comes ill from one who did exactly the same thing in 1963, but managed it in only three minutes.

Tonight we have heard of ventures in the North Sea, and possibilities of an agreement so far as Dutch natural gas is concerned, but, at this stage, these things, important though they are, have nothing whatever to do with whether or not we agree to an increase of £50 millions for the Gas Council. Those other matters are vitally important issues and I venture to think that we shall discuss them, but for hon. Members opposite to criticise me for the alleged narrowness of my speech because I confined myself to the increased borrowing and did not talk about Holland or the North Sea, is not the best of criticism.

It seems tonight that my hon. Friends have been badly out-done in the pæans of praise and the superlative approval for the benefits of nationalisation. "The junkyard of nationalisation". Where have we heard that expression? The right hon. Gentleman who once held the position I now have showered congratulations on this nationalised industry for the remarkable speed with which it had gone ahead, and the way in which every opportunity had been grasped in order to eliminate the fears which faced the industry only four or five years ago.

To say that it is a very fine compliment for all the things which we have advocated over the years is one thing; to think of all the denigration of the nationalised industries, which has been a constant theme of the Tory Party and which has cost the party millions of pounds in propaganda, is another. These things can be brought up against hon. Members opposite when the occasion arises.

The hon. and gallant Member for South Fylde (Col. Lancaster) and the hon. Member for Yeovil raised the question of storage, and the need for the reconstruction of the industry itself. These are not issues which come within the general discussion of this £50 million, although I agree that they are vital ones. The Select Committee reported four years ago. There is no question of the Gas Council being in any way held up for lack of those powers. Nevertheless, I recognise that if we are to have success in the North Sea venture—if, indeed, at some stage there is agreement between the Gas Council and the Dutch authorities—such storage would become utterly inevitable.

But when we receive criticisms from the hon. and gallant Member we remember that it was four years ago that the Select Committee reported, and also that when a Bill came to the House it was not sponsored by the Tory Government but by the Gas Council as a private Bill. The criticism that was made in that debate was centred on the fact that it was a Private Bill. Why is it that that which was not deemed necessary prior to 15th October, namely, for the Government to introduce a Bill, has suddenly become imperative within a few days of 15th October? We reject the rather cynical approach of hon. Members opposite, who had years in which to introduce such a Measure and did not believe that it was imperative, but have now suddenly found—they being out of office—how important and vital it is that this Measure should be on the Statute Book.

I, too, want legislation as soon as possible. I agree that there is a need for giving more power to the Council as distinct from area boards. National ventures such as we have been discussing, whether for importing methane or searching, for gas beneath the North Sea, require more power at the centre. I repeat, however, that at the moment we are not holding up any progress in the industry. We hope to get the necessary legislation, and the Bill is practically ready, but there is the question of priorities in the Parliamentary timetable, and I cannot say when it will be possible to introduce the Measure. It will certainly he introduced long before the industry could be held up for lack of the necessary power, but I cannot say that it will be introduced this Session.

Mr. Geoffrey Lloyd

I appreciate that the question of the powers of the Gas Council would not hold up anything, but surely the right hon. Gentleman would agree that it is urgent that the industry should have this Bill to give it power to get on with underground storage.

Mr. Lee

I do not dissent from that. I repeat that it is not holding up the development of the industry at the moment, nor can it for some time. Secondly, I accept what the right hon. Gentleman says; I, too, would like to get this legislation as soon as possible.

The reasons why the Gas Council requires increased borrowing powers I gave in the course of my opening speech, and at this time of the day I am pretty sure that a repetition of what I said would hardly be appreciated in any part of the House.

During the debate there has been no dissenting voice from the basic argument that this is a highly successful industry, and because of its success it now requires an increase in its borrowing powers. Much of the investment already undertaken cannot possibly yield results in the meantime, and therefore this £50 million is necessary. If the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) had any doubts whether this is a good investment I would say that many people would love to put the £50 million up as private people, if they had the chance. I may be exciting ideas among hon. Members opposite when I say that, since past history has shown that whenever nationalised industries are guilty of making profits they immediately become candidates for denationalisation in the eyes of the party opposite.

I was asked whether we would further competition in the nationalised industries. It is a fantastic situation that apparently these days the Tories are advocates of more cut-throat competition in the nationalised industries and the elimination of any competition for the private ones. This is a fantastic situation. I hope that the House will now be prepared to agree that we have made the case for the increase of £50 million. I commend the Order to the House.

12.20 a.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

The Minister was remarkably quick to rise to his feet, and I might have let him to bed before I had opportunity to wind up the debate from this side of the House had he not made such an unsatisfactory speech at his second attempt as well as at his first. It is not our fault that the House is troubled at this late hour with discussing this important matter. We did not put down the Order for tonight. If the Government had not troubled themselves with a lot of contentious legislation and asked us to take this Order late at night on top of it, hon. and right hon. Gentlemen would not have been sitting on the benches opposite longing for their rest in the way they now do.

I hope that the Government, when they come back to the House for more borrowing powers for the Gas Council, will make certain that they give us a full day's debate. When the present Act was debated it was done at a more suitable time than ten o'clock at night—the time when the debate on this Order started. In spite of the late hour we have had a good debate and I congratulate my right hon. and hon. Friends upon the assiduity and attention with which they attend the affairs of the Gas Council. The way in which my hon. Friends have taken part in this debate goes a long way to disprove the allegations that the Tories do not care for the nationalised industries, which have been made so freely from the other side of the House.

The right hon. Gentleman said that this Order had nothing to do with the various projects we have been talking about. This Order is for £50 million new investment by the Gas Council. It is right that we should discuss the form of that new investment before we agree to the Order going through the House tonight. There is every need and right for the House to discuss future developments and processes which are coming into the manufacture of gas and which are revolutionising that industry so that it can break away from its past.

The hon. Member for Newcastle-upon-Tyne, West (Mr. Popplewell) went a bit far. He talked about gross neglect and ineptitude on the part of the Tory Government with regard to the gas industry. Can he really substantiate that? I hope that he will have the grace to withdraw those words. This industry has prospered and gone ahead on the evidence and testimony of all those who have spoken in this debate, yet this was how the hon. Member described the contribution of the last Government to what has been done. Those words were not worthy of the hon. Member.

Mr. Popplewell

rose—

Mr. Ridley

I hope that the hon. Member is asking me to give way so that he can withdraw.

Mr. Popplewell

I referred to the ineptitude and gross mismanagement of the Government of past years by saying that it was taking us so long to clear up the mess before we could get on with all these things. What I referred to was the Tory Government putting the publicly-owned industries into a straitjacket and not allowing them full commercial freedom. That is correct, as everyone knows. If that freedom is given, as I hope and trust it will be given by my right hon. Friend, these publicly-owned undertakings will be even more successful than they have been previously.

Mr. Ridley

The hon. Gentleman has already made one speech and in his second speech, just like the Minister, he seemed to me to add nothing to his first.

The point is that under the Conservative Government this industry prospered. There were all the new projects which we have been discussing tonight. Sahara methane was brought in by my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd). He was the originator of this scheme. It is one of the new schemes which has allowed the Gas Council to break away from the past which it inherited from the Government of the right hon. Gentleman's party in 45–51.

I hope that the Government have no prejudices against the import of methane. Reading through past debates on Orders for borrowing powers for the gas industry, we see that time and time again on the then Opposition Front Bench there has been this prejudice against any increase in the Gas Council's sources of fuel or its power to get fuel from elsewhere. I was very pleased—and I congratulate the right hon. Gentleman for this—that the Minister did not tonight repeat what was said when his party was in Opposition. I am also pleased to read that the Gas Council has opened negotiations with the Dutch to explore the possibility of laying a pipeline across the channel in order to import Dutch natural gas.

These are most important negotiations. If they succeed in bringing them off it will mean cheaper methane coming to us under the English Channel rather than having to import it from the Sahara. I hope that in due course we shall hear something about the scheme from the right hon. Gentleman. There is also the question of the possible supply of natural gas from the Continental Shelf.

My hon. Friend the Member for Bristol, West (Mr. Robert Cooke) mentioned the fact that the Government have decided not to revoke the licences. I hope that this is a genuine conversion and not merely because it was too late to change the decision of the last Government—a genuine conversion that will allow the gas industry to take what sources of fuel are most economical for it and not be tied to trying to boost the sales of coal, and will allow it to roam free and make its own fortune where it may.

All these sources are going to increase the consumption of natural gas by some 320 million therms by 1965–66. This underlines again the importance of the points which my right hon. Friends have made concerning underground storage. I really do not think that we were very impressed by the right hon. Gentleman's answer as to when he was going to bring in this legislation. The point is that despite many technical and other difficulties the legislation was, more or less, ready to be introduced into the House. Had my right hon. Friends won the election it would probably have been going through the House at the present time. Just because the party opposite won the election the Bill has been put back.

The right hon. Gentleman said that he thinks it is unlikely that the Bill will be brought in this Session. This is a very serious matter. It means that the Government are putting their other Measures—we dread to think what they will be—contentious Measures and quite unnecessary Measures, in front of the future development of the gas industry.

The Lurgi process has not yet been proved to be economic and there is not yet any known means of making gas from coal which will be as cheap as the means by which the industry has been doing it lately. I hope that hon. Members opposite will accept the fact that wishful thinking will not change it.

We have been told throughout the debate by the hon. Member for Glasgow, Woodside (Mr. Carmichael) and other hon. Members opposite that in some ways we have been beastly to nationalised industries. I should like to quote from the speech of a very well loved Member of the House, now recently ennobled, Mr. Blyton. Speaking in the last gas debate he said: After facing this with patience and tolerance, we now receive another blow from the nationalised gas industry, which is importing liquid methane and using oil, with the backing of foreign capital."—[OFFICIAL, REPORT, 29th November, 1963; Vol. 685, c. 723.] If that is not attacking the nationalised industries I do not know what it is. Here is a clear attack from the then Opposition Front Bench on a nationalised industry, the Gas Council, which was trying to improve its competitative ability and make itself pay. Who were allowing it to go ahead? The Tories. Who were distracting it? Hon. Members opposite. So please may we have less of this argument?

Do the Government see what modernisation means today? Do they understand the full implications of the technological age? Or are they going to stick to their reactionary and protectionist outlook and stick to the theory of a co-ordinated fuel policy, with each fuel industry having a separate, alloted share of the market? The only hope is for all the fuel industries to compete. The hon. Member for Glasgow, Woodside who said, in effect, "Let them compete in price but not in sales", seemed to be begging the question. How can one compete in price if one does not try to sell against another, describing the relative attractions as well as the relative prices of the products?

Following on what my hon. Friend the Member for Yeovil (Mr. Peyton) said, I hope that we are not going to have an attempt to straighten out the future of these different industries by placing them in pre-ordained channels, because as the hon. Member for Norwich, South (Mr. Norwood) said in his admirable maiden speech, forecasting is a very difficult and dangerous business. Forecasts have often failed in the past. Have the Government accepted that this is so?

The hon. Member for Newcastle-upon-Tyne, West claimed that we should on all possible occasions use indigenous fuel. This has been a constant cry from hon. Members opposite; that for the sake of our balance of payments we should use indigenous fuel. What is the point of this year lending about £300 million abroad or giving aid in the form of grants? We have given long-term credit guarantees to the tune of £1,350 million. All our efforts are strained to increasing the amount we can lend abroad.

Should we lend less abroad and import more from the underdeveloped countries, such as the Sahara, from which we are importing methane? Or should we achieve more in the underdeveloped countries by lending more money which we have saved on our balance of payments? We cannot do it both ways and I hope that in this endless argument about the balance of payments we will bear in mind that trade is often much better than aid.

The Government are tonight asking the House to grant £50 million. The Minister said that the new Bill to increase the borrowing powers of the gas industry would be required fairly soon. We should still like to know when that will be. When the last Measure was introduced, in 1963, the then Minister of Power said that it would last until the seventies. With the accelerated rate of capital investment, the Minister is already forecasting a new Bill, which means that he has used up the £125 million. I hope, therefore, that he will inform the House as soon as possible when the new Bill will be brought forward.

I remind him that he has left many questions unanswered. A large number of points have been raised by hon. Members on both sides of the House and, although many of us are waiting to go home, that is no excuse for leaving some of these vital questions unanswered. I hope that, perhaps before Christmas, perhaps very shortly afterwards, the right hon. Gentleman will allot us another day to debate these great industries, which we on this side take with great seriousness and concern.

I echo the words of my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) who ended his speech by congratulating the Gas Council on making a profit of £9 million this year. We should like all the nationalised industries to do this, and we therefore have great pleasure in allowing this Order to go through, but we again appeal to the Government not to treat the whole matter quite so cavalierly.

Question put and agreed to.

Resolved, That the Gas (Borrowing Powers) Order 1964, a draft of which was laid before this House on 23rd November, be approved.