§ Order for Second Reading read.
§ 4.42 p.m.
§ The Minister of Power (Mr. Frederick Lee)
I beg to move, That the Bill be now read a Second time.
Through a very wide range of our industries, new techniques are evolving, and the structure of many of these industries has to change in order to take care of the new processes by which they manufacture their goods. This applies in the energy industries as well as in other manufacturing industries. We believe that the gas industry has evolved a new dispensation under which the 1948 provisions in some respects are not applicable.
The Bill has two separate but interconnected purposes. The first is to make certain changes in the structure of the gas industry which was established by the Gas Act, 1948. The second is to provide the opportunity for the gas industry to develop the large-scale storage of gas in suitable underground strata.
The need for this legislation stems from the technological changes which are taking place in the gas industry. When the industry was nationalised in 1948 there was a large number of separate gas undertakings providing gas from over a thousand local gas works. As the late Hugh Gaitskell said, when introducing the nationalisation Bill:gas is a local service, and we think that to a great extent it should be decentralised."—[OFFICIAL REPORT, 10th February, 1948; Vol. 447, c. 228.]The organisation chosen for the industry—12 area boards responsible for both production and distribution in their own areas and a Gas Council mainly advisory and federal in character—reflected this position and was well adapted to the tasks then facing the industry, which were integration of production and distribution on an area basis. This process of integration has been vigorously pursued and has enabled the boards to reduce the number of works to fewer than 300 at present.
During the last few years technological advance in the industry has been very rapid. New processes have been 580 developed or are in course of development which can produce gas at a considerably reduced cost; some of these are the result of the gas industry's own research, others have been developed by private industry. New techniques have enabled the gas industry to draw upon completely new sources of supply, and in October last year the first cargo of Algerian methane arrived in the Thames, a most notable achievement in gas transportation.
The industry is just beginning to get the first benefits of what has so far been done, and further technological change is in prospect. New or improved processes of producing and transporting gas will no doubt be developed and, above all, there is the possibility of natural gas being found under the North Sea. It cannot, of course, be assumed that any gas will be found there or that, if it were, the amounts would be significant in relation to our fuel supplies. But the chance of a major discovery of natural gas does exist and, if it were realised, it would have a major impact on our fuel economy as a whole and on the gas industry in particular.
Some of these developments are still within the capacity of individual area boards. But others are or would be on a scale transcending the needs of one board. The imports of natural gas from Algeria supply a number of boards, as would a major find of gas in the North Sea. Underground storages of the kind which the industry seeks to develop are also likely to be of a capacity greater than that needed by any one Board.
The scope for integration and coordination is no longer, therefore, limited to the area of one board, and while the industry has managed within its present organisation to carry out one joint scheme—the Algerian methane scheme—for the supply of gas to a number of boards, the organisation is not really suitable nor was it designed for this kind of activity.
It is these changes in the gas industry and the prospect of others in the future which have led the Government to introduce the Bill before the House. Both management and workers have shown a very commendable desire to take advantage of the opportunities for modernising this old-established industry. The Bill will help them to do so in two ways. It will provide an organisation which will 581 enable the industry to take full advantage of new developments and it will provide the opportunity for the gas industry to use a method of gas storage which is widely used abroad, but has not so far been developed here.
The need for legislation on these matters was put forward by the Select Committee on the Nationalised Industries nearly four years ago, in its Report on the gas industry. It is almost 20 years since a report on the gas industry of comparable importance was made; this was the Heyworth Report and, just as that Report formed the basis for the organisation chosen in the 1948 Act, so the Select Committee's Report is the basis of this present legislation which seeks to modify that Act.
The Select Committee considered that technological advance had brought the gas industry to a position not envisaged in the Gas Act of 1948. Whereas the emphasis of that Act was on the independence of area boards, it seemed to the Committee that technologically the emphasis was now on their interdependence. In the Committee's view, the present structure of the industry was not suitable for the development of the large-scale production and distribution facilities, on a national rather than an area board basis—the kind of change which we are discussing—which seemed to them to hold out the best prospect of reducing costs of gas production and supply.
To meet this new situation the Committee proposed that either the Gas Council should be given powers to manufacture gas and supply it to the area boards, or, as the Committee itself preferred, a thirteenth board should be established responsible for large-scale production and distribution.
The Government agree with the Committee's view that the structure of the industry needs to be brought up to date, but consider that the first of the alternative solutions considered by the Select Committee, namely, to extend the powers of the Gas Council, would best meet the needs of the industry. This was also the view of the previous Government as the Minister's predecessor explained last year to the Select Committee.
We believe that this solution will enable the right balance to be struck between centralised and local supply. 582 Not all the technical developments which are taking place point in the direction of production and distribution on a scale transcending the needs of individual boards. Indeed, some of the processes of gas production which have been developed since the Select Committee carried out its examination of the industry, are well suited to the needs of individual boards.
As new developments take place the balance of advantage between central and local supply may from time to time change, and our aim is to provide the industry with a structure which will enable it to select whichever method is the most advantageous to the users of gas. This, the Government believe, can best be achieved by giving a strengthened Gas Council powers not supplanting but complementing those of the area boards and a general responsibility for promoting co-ordinated development of gas supplies. This involves the minimum change in the existing structure which, I believe, has a very great deal to its credit and it is the solution preferred by the industry itself.
The Select Committee also examined the other matter dealt with in the Bill, namely, underground storage of gas in natural porous strata, and drew attention to its potential importance to the industry and the need to provide new statutory powers if it was to be developed. This is, as the Committee then pointed out, one particular example of the way in which the economics of gas supply can be improved by the use of new techniques—new at least in this country—operating normally on a scale larger than that required to meet the needs of individual boards.
This form of gas storage has not so far been used in this country but it is widely used abroad. Indeed, in the United States, where it was introduced at the end of the First World War, there are now well over 200 underground storages in use. Canada, also, has developed these storages and since the end of the Second World War European countries have made increasing use of them. The nearest examples are the French storages at Beynes and Lussagnet and the two German storages near Hamburg and Hanover.
583 The essential requirement for this form of storage is a layer of porous rock usually shaped like a dome and covered by an impermeable layer of rock through which the gas cannot penetrate. These conditions can be found either in depleted oil or gas fields or in water bearing rocks called aquifers. The gas, when injected through boreholes drilled into the porous layer, is stored in the rock pores, displacing in the case of an aquifer the water previously held there. In other words, the gas is stored in the ground in the same way as it would be in a natural gas field and we are so to speak imitating a natural phenomenom.
I would emphasise that, because in this country, although it is a new conception, we are, in fact, trying to do what nature itself does, as it were, to replace gas in its own natural evironment, and this, I believe, is one of the greatest guarantees for the nation. It is not any sort of hare-brained idea. It is something, whether we like it or not, which nature has been doing for many thousands of years.
In suitable conditions, very large quantities of gas, measured in thousands of millions of cubic feet, can be injected into the porous rock. This, of course, is on a quite different scale from the traditional method of storing gas in gasholders whose capacity is measured in a few million cubic feet and its development in this country would provide the gas industry with a new method of meeting seasonal variations in the demand for gas. In summer, when the demand falls, gas can be stored in the underground storage, to be withdrawn in winter to help meet the increase in demand and provide greater security of supplies.
We are all familiar with the winter load problems of the electricity industry, but I do not think that it is generally appreciated that the gas industry has a precisely similar problem. Indeed the amount of gas used in the winter months is already 50 per cent. higher than in summer and this seasonal difference is increasing as the gas industry makes a greater contribution to heating, especially in the home.
§ Mr. Robert Sheldon (Ashton-under-Lyne)
I was wondering whether the natural gas has a smell which is as dis- 584 advantageous as that of manufactured gas and, if so, how this would affect it if it were stored.
§ Mr. Lee
My hon. Friend has raised a point of very considerable importance. I will deal with it as I go along.
The gas industry has been able to use this natural advantage of being able to store gas to even out short-term variations in demand. Underground storage will enable the industry to make the maximum use of its ability to store its product, and provide for longer term seasonal variations in demand. Underground storage would be particularly suitable for the storage of natural gas which is now arriving from Algeria. This has a high calorific value, which enhances its value as a reserve, and is non-toxic and does not pollute water. These are points which I am sure my hon. Friend had in mind. If given the powers sought in the Bill, the gas industry plans to use underground storage for natural gas and for other gases which have similar characteristics or can be treated to make them suitable.
The value of underground storage as a means of meeting seasonal demands has been recognised for a long time in other countries and the United Kingdom is one of the few large users of gas which has not so far developed this form of storage. Last year the Gas Committee of the Economic Commission for Europe arranged, at the invitation of the French gas industry, a symposium in Paris to discuss modern methods of gas storage. Nineteen countries took part and much of the discussion was concerned with underground storage in porous strata.
Those countries which have already developed this storage were quite certain that it has proved of great benefit to their gas industries and they intend to bring into use additional storages wherever suitable conditions can be found. Therefore, it is quite clear from that symposium and the discussions which then took place in Paris that this is one part of gas technology in which the United Kingdom is behind other countries.
This is not because the gas industry has failed to recognise the importance of underground storage. The Gas Council has been prospecting for possible sites for a number of years and in 1961 presented a Private Bill which would have given 585 the necessary statutory powers to develop an aquifer-type storage at Winchester.
Those of us who were then Members of the House will remember that the Bill met with substantial opposition. A number of Members felt that the Private Bill procedure was not appropriate for this new development. I felt at the time that they were well justified in taking that view. The Bill was withdrawn and the then Minister of Power decided to initiate a full examination of the problems raised by the underground storage of gas in this country.
As a result of that examination the previous Government accepted that the opportunity for the development of underground storage in this country should be provided by public legislation, and early last year my predecessor informed the Select Committee on Nationalised Industries that it was intended to provide for underground storage of gas by the gas industry in the legislation which would be required to amend the structure of the industry.
We, also, are convinced that legislation on underground storage is needed arid that this should take the form of public and not private legislation. Only public legislation can provide the safeguards and controls which the Government consider are the essential prerequisites for this new development.
That gas can be stored safely in underground strata has been established in the many storages which are now operating abroad. The geological conditions which are necessary for the storage to be feasible and safe and the methods of operation are well known. We are not here dealing with a novel and untried development. But it is new in this country and it is very understandable that those faced with the prospect of having gas put under their land should be anxious about the possible risks involved. The essence of safe practice lies in carrying out the operation in the right conditions and in the right way. If the site selected for an underground storage satisfies the necessary geological requirements and the storage is operated in accordance with well-established practice, the Government are confident that underground gas storage will not endanger the public.
The main purpose of the legislation is, therefore, to provide a system of control and supervision which will ensure that 586 underground storage is only allowed to be developed and operated in conditions which do not involve risk of danger to people, property or water resources. Its further purpose is to facilitate this development where it is safe and advantageous.
§ Colonel C. G. Lancaster (South Fylde)
The right hon. Gentleman has been dealing with natural storage under porous strata. Will he say something about manmade storage underground? I am sure that he is aware of the developments which the French have been making in North Africa. They are probably applicable to this country.
§ Mr. Lee
We read of these developments, but I doubt whether they are applicable to the Bill. The principle of underground storage has long been accepted by the French, but we are not making provision for that within the scope of the Bill. It is one of those things which probably will happen in future in Britain as well as in France.
§ Colonel Lancaster
It is being considered at this moment. It is not something which will happen in the dim future. It is a method of storage which is possibly equally applicable to the natural method, with which the right hon. Gentleman has been dealing. I wonder whether the right hon. Gentleman would like to develop that point, because it is something that we should consider in conjunction with the Bill.
§ Mr. Lee
I understand the hon. and gallant Gentleman's point. All that I am saying is that we are not legislating for it within the Bill. That matter can be developed in Committee, but for the moment it is not in the Bill.
The changes in the organisation of the industry are dealt with in Part I of the Bill. Clause 1 empowers the Gas Council to manufacture, acquire and supply gas to the area boards and gives the Council the duty of promoting and assisting the co-ordinated development of efficient and economical gas supplies on a countrywide basis. When the Council exercises its new powers it will be subject to obligations similar to those already imposed on the area boards under the Gas Act, 1948.
The Council will be required to act in accordance with capital development programmes submitted to and approved by 587 the Minister; to promote the welfare, health and safety of its employees; and to comply with the same minimum standard of financial performance as is imposed on the area boards in the 1948 Act. The Council will also be able to supply gas direct to a consumer, but in each case the Minister's consent will be required and given only after consultation with the board in whose area the consumer is situated.
Clause 2 enables the Minister to appoint three additional members to the Council. This is not obligatory. It gives the Council the opportunity to appoint, if necessary, three additional members. At present, the Council consists of a chairman and deputy chairman and the chairmen of the 12 area gas boards. If the Council is to be given new functions, some increase in that part of the membership which is free of the responsibility of running an area board is probably necessary. The area board chairmen will still provide the majority of the membership and the Council will retain the federal character which it was intended to have when the 1948 Act was passed.
Clause 3 deals with rating. Under rating legislation the area gas boards are rated not on individual gasworks or other operational assets, but by a formula under which the liability to rates of each board is determined by the amount of gas sold in its area. The Gas Council, since it has not so far had operational powers, is not included in this formula.
The Clause will bring into the formula any operational assets which the Council may occupy in exercise of its new powers to manufacture and supply gas. The purpose is to ensure that the total liability to rates of the industry does not alter because a particular function, which, if carried out by an area board, would have been covered by the rating formula, is instead performed by the Gas Council.
I turn to the provisions in Part II on underground storage. The basis of the Government's proposals for the control of the development of underground storage is provided by Clause 4. This prohibits a gas authority, which for this purpose means the Gas Council or an area gas board, from storing gas in natural porous strata underground unless it first obtains a storage authorisation order from the Minister.
588 This gives the Minister an overriding control on any proposal by the industry to develop this form of storage. In exercising it, the Minister has a statutory obligation to have regard to the safety of the public and the protection of water supply. These considerations will also apply when the Minister decides whether the kind of gas proposed for storage is suitable.
Schedule 2 of the Bill sets out the procedure which must be followed when a gas authority seeks a storage authorisation order from the Minister. This gives to everyone who may be affected by the proposal the opportunity to express his views and have them considered. The application must be advertised and everyone concerned must be notified.
If at this stage objections are made, the Minister must hold a public inquiry into the application—and may, indeed, do so even if there are no objections—unless the objections are trivial or frivolous or the objectors choose to be heard instead at a less formal hearing. If, after considering the report of an inquiry, the Minister decides to grant the proposed order, and the affected local authorities or other public bodies specified in the Schedule maintain their objections to the proposal, the order will be subject to special Parliamentary procedure.
Clause 27 of the Bill amends this procedure so as to enable petitions of general objection to a proposed order to be automatically referred to a joint committee of both Houses unless either House resolves to the contrary. Without this amendment, it would be necessary for either this House or the other place to resolve to refer any such petition to a joint Committee before it could be considered there.
I turn again to the central theme of safety control. The Minister's control will continue, after an authorisation order has been issued, throughout the life of the storage. Clause 16 of the Bill empowers the Minister to impose conditions on the development and operation of the storage in the interests of safety and the protection of water resources. He will be able, if necessary, to stop the gas authority injecting gas or to require the withdrawal of gas. If he decides that it is not safe to allow the storage of gas 589 to continue, he can, under Clause 18, order the storage to be taken out of operation.
Clause 19 provides for the appointment of inspectors with powers to carry out inspections and tests, and Clause 17 for the reporting and investigation of accidents.
I hope that the House will agree that these provisions of the Bill establish a comprehensive system of control of underground storage, and we believe it right and sensible to do so. But it is to be hoped that this care in providing for all eventualities, however remote, will not be taken as implying that this form of storage is full of risks and dangers. We believe that it is unlikely that the provisions for dealing with accidents and unsafe conditions will ever need to be invoked.
I am sure that the House will agree with me in saying that as this is a new departure we want to impress on everybody that it is not a question of believing that there is any risk in this proposal. We want to get the balance right as between making quite certain of the safety of the project and not frightening people into believing that all these safeguards are essential and will ever be invoked.
So far, I have mentioned provisions for ensuring that an underground storage is developed and operated safely by the gas authority. It is also necessary to ensure that the actions of other people do not infringe safety. We have looked at the matter from the viewpoint of the industry. We have to ensure that actions outside the industry do not infringe safety. For example, mining, quarrying or other excavations, if they went deep enough, might jeopardise the gastightness of the storage.
Therefore, Clause 5 of the Bill enables the Minister to control these operations both in the gas storage itself and in a surrounding area, described by the Bill as the protective area. The extent of the protective area and the depths at which the control operates will be specified in the authorisation order. Control will only apply to operations going down to a considerable depth and will not otherwise affect the use of land in the storage or protective areas.
590 Where, however, it is proposed to penerate below this depth, the Minister's consent will first have to be obtained. If this is refused or granted only with restrictive conditions, the gas authority will pay compensation under Clause 8 for expenditure on works which are thereby made abortive and for any loss or damage caused by the Minister's decision.
Having outlined the way in which the Bill controls underground storage in the interests of safety, I should now mention how it will facilitate its development where it is safe for it to go ahead. To develop an underground storage, the gas industry will need to acquire some land—for boreholes and plant—and the right to store gas under a more extensive area. The amount of surface land required will not be large and the gas industry, like other statutory undertakers, already has statutory powers to acquire land and rights to lay gas pipes, if necessary by compulsory purchase.
Existing legislation would not, however, enable the gas industry to acquire compulsorily rights to store gas under land which it did not own. The porous strata in which gas could be stored might extend under an area of several square miles and it would be unnecessary and usually undesirable that the industry should have to acquire the whole of the surface land above the storage.
Clause 12 of the Bill therefore enables a gas authority to purchase compulsorily rights to store gas in land where these rights cannot be acquired by negotiation. The gas authority will be able to apply to the Minister for the confirmation of a compulsory purchase order under the same procedure which applies when land is compulsorily acquired. This provides the opportunity for the making of objections and their hearing before a decision is reached on whether the order should be confirmed.
Compensation for the compulsory acquisition of these rights will be payable by the gas authority, and where the amount cannot be agreed by negotiation it will be determined by the Lands Tribunal or, in the case of Scotland, by an official arbiter in accordance with the principles which apply when land is compulsorily acquired. These enable people with an interest in the land to claim in 591 respect both of any market value of the rights acquired, assessed in accordance with the rules laid down in the Land Compensation Act, 1961, and of any depreciation in the value of their land caused by severance or injurious affection.
Although the use for gas storage of the strata lying some hundreds of feet below will not of itself affect the occupation of the surface, and experience abroad should reassure people that land need not be affected simply because it is to have gas beneath it, the Government have thought it right to enable compensation to be claimed for such depreciation if it occurs. The Bill therefore allows such claims to be made either when the right to store gas is acquired or, under Clause 7, at the time the storage authorisation order is made.
Clause 14 deals with another aspect of compensation, namely, compensation for any personal injury or damage to property caused by the gas in, or escaping from, the underground storage or the connected boreholes. As I said previously, the Government are satisfied that this form of storage can be safely developed and operated, and the Bill provides the safeguards which I have outlined to ensure that safety. But the use of natural strata in this country for gas storage is new, and the Government have, therefore, decided that the gas industry should be absolutely liable, as provided in Clause 14, towards anyone who, because of it, suffers injury or damage to himself or his property, except where this is caused by that person's own fault or that of his servant or agent.
§ Mr. Peter Bessell (Bodmin)
I wonder whether the right hon. Gentleman would agree that it is important to emphasise that experience overseas has shown that the underground storage of gas is safer than storage above ground. I mention this point because I am afraid that, because of the provisions of the Bill, there is some danger that the public might fear that this is a dangerous method of storage.
§ Mr. Lee
The hon. Gentleman's intervention is most useful. It is the fact that it is far and away safer for gas to be stored underground than stored in gas holders on the surface. Furthermore, one must remember the huge capital investment which will be required to build gas- 592 holders to hold the quantity of gas comparable to that which we shall store underground. In addition, of course, there is the unsightliness of gas holders. It is much safer, and far more economical, to store gas underground than to increase the number of gasholders to that required to hold a comparable amount of gas.
Dealing with the effect on water supplies, special provision for compensation is made for any loss or pollution of water supplies caused by the development or operation of an underground storage. With the safeguards which the Bill provides—particularly the provision in Clause 4, which allows the Minister to authorise only such kinds of gases which are suitable having regard to the safety of the public and the need to protect water supplies—there is no reason why underground gas storage should harm water resources. But, clearly, the Bill should provide for such a contingency, and Clause 15 accordingly sets out the steps to be taken by a gas authority to compensate anyone who is deprived of a source of water to which he was entitled at the time the storage was authorised.
Mention should be made of the provisions to assist the proving of potential sites. Normally, such investigations will take place by agreement with the landowner concerned, but, where this cannot be obtained, the proving of a potentially valuable underground storage might well be prevented. Under existing Statutes—and I refer to the Water Act, 1948, and the Open-Cast Coal Act, 1958—there are precedents for enabling rights of entry on to land to be granted for the purpose of survey and trial borings in default of agreement, and the Government propose that similar powers should be exercisable by the Minister of Power where this is essential for the prospecting and proving of underground storage sites.
The procedure proposed under Schedule 6 will enable the landowners concerned to make representations to the Minister before rights are granted, will require notice to be given before entry on the land, and will provide for the payment of compensation for any damage or disturbance.
Hon. Members on both sides of the House, whatever may be their views on issues such as nationalisation, are agreed that these industries must be allowed to 593 operate with the maximum of efficiency. I believe that this legislation will help the gas industry to achieve this aim and to improve its services to the public.
Looking back on the industry as it was five or six years ago, and then reflecting on its present position, I believe that it is a great story of men who grasped new possibilities and new ideas, who were determined to improve and to modernise the industry within which they were employed, and in the case of managements which they controlled, and I think that hon. Members on both sides will appreciate the forward-looking way in which they have tackled these problems. I believe that we owe them our congratulations for the way in which they have gone ahead, and for the initiative they have displayed in these important matters.
I am sure that in asking the House to give the Bill a Second Reading the House would want me to convey to everyone in the industry our congratulations on what they have done, and our good wishes for the future, in the belief that by providing this new facility for storage we will enable them to make an even greater contribution to meet the demands for energy in this country.
§ 5.26 p.m.
§ Mr. John Peyton (Yeovil)
It is very agreeable on this occasion to be able to offer the congratulations of my right hon. and hon. Friends and myself to the right hon. Gentleman on having introduced what we believe to be a forward-looking and sensible Measure. It is one of which I have some prior knowledge, as I was at the Ministry of Power, but nevertheless I recognise that it is not always possible for Ministers to get a place for Bills in their programme, and I cordially congratulate the right hon. Gentleman on the success that he has had here. He will not be surprised when I tell him that my congratulations are even more sincere because I feel that any legislation of this kind which is introduced at least puts down in the queue some very much less reputable candidates for the attention of the House.
I am comforted today by the fact that I enjoy the support of two ex-Ministers of Power, my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd), and my right hon. 594 Friend the Member for Bridlington (Mr. Wood), both of whom while at the Ministry of Power associated themselves closely with the gas industry and rendered it some distinguished service.
As the right hon. Gentleman said, the Bill is concerned with fitting into our fuel economy a very important development affecting the gas industry, a development which we all hope will enhance the efficiency of the industry, but it follows from that that the other industries for which the right hon. Gentleman is responsible will be affected, and I hope, therefore, that I shall not trespass at all in saying a few words about some of the other industries.
I am sorry that the cordiality which might otherwise be the dominant word in today's proceedings is somewhat overshadowed by what the right hon. Gentleman said outside the House on Tuesday. I do not in any way criticise him for having held a Press conference. It is very desirable that the public should have every opportunity to understand these complicated problems. It is desirable, therefore, that the Press in their turn should be given every opportunity, too, but equally it is important that the House of Commons should be treated with can-dour and given the fullest chance of examining important statements of policy when they are made.
The Minister is reported as having said the other day that the Government could not guarantee a market for X million tons of coal, which presupposes an energy policy at which we have not yet arrived. That was reported in the Telegraph of 10th February. We are rather concerned to know to know when the right hon. Gentleman thinks we will arrive at a fuel policy of that kind, and what is going to happen in the interim. Would we be right in assuming that it is the Government's intention to continue now with what was said when we were in office not to be a policy at all? I exempt the right hon. Gentleman from this charge, but many of his colleagues, when sitting on this Bench, were very fond of levelling at my right hon. Friend and myself the charge that we did not have a fuel policy. Yet we now find ourselves confronted by a Government who are continuing exactly what we were doing—except, we are told, that in about two years' time, when the Energy Advisory Council has been deliberating 595 over a period—and that Council is made up of a strange conflict of views—we shall have visited upon us a new fuel policy, assuming always that the right hon. Gentleman and his friends stay where they are, which I very much doubt. We are very anxious to know what will happen in the interval. Are we right in assuming that competition wil prevail?
§ Mr. Peyton
I am obliged to the right hon. Gentleman. We shall watch his progress with a good deal of interest. He must not forget that we had all been led to suppose that the party opposite had ready a series of policies. I believe that the words they used were "ready to swing into instant action". Now we are hearing the right hon. Gentleman talk of years elapsing before the policy can first be germinated and then given practical expression. That is somewhat surprising, although less surprising after our experience of the last three months.
The right hon. Gentleman did not help his cause the other day. He has obviously been misunderstood by some of his hearers. The Guardian reports him as having said:What I can't say is that the Government cannot do anything to stop people who want to convert from one fuel to another.The Daily Telegraph reported him as saying:I cannot say that the Government will do anything to stop people who want to convert from one fuel to another.If, as I hope, the second version is the correct one—in other words, that the right hon. Gentleman would not seek to stop people who wished to convert—we are going to continue at least a measure of competition, which we believe is the only effective safeguard for the customer.
There was also a report of the Minister's having said:We will do everything we can to give coal a really good break in those areas for which we are responsible.First, we want to know what that means. Can it mean anything save discrimination, and is it not the thin end of the wedge? 596 It would appear to us that if this remark means anything at all it means that Government Departments and organisations under their influence or control will have their freedom of choice fettered. Is this right? If it is, we believe that the right hon. Gentleman is wrong in making such a decision.
§ Mr. Peyton
I am not saying anything of the kind. I am asking what the right hon. Gentleman meant when he said that he would give coal a really good break. Is he going to embark on a policy of discrimination against other fuels?
He will have seen, without drawing much comfort from them, the comments in The Times leader, headed "The Easy Way Out", and saying:The Minister of Power has encouraged the Coal Board to maintain output without mentioning the cost. This must not become a guarantee.On the same day the Financial Times said:But if serious damage to the economy is to be avoided the National Coal Board must shortly begin either to pay its way or reduce its size.I find this conclusion very difficult to resist, but whatever the right hon. Gentleman meant on those occasions I ask him to seek an early opportunity to explain in full to the House what his policy is, even in this interim stage. The right hon. Gentleman laughs. Does he suggest that when a major development of this kind takes place it is unreasonable not to consider other fuels which will be affected by it?
I am aware of the right hon. Gentleman's reported statement that he does not intend to hold back the gas industry from substituting methane, oil and natural gas for its traditional raw materials. This statement is wholly welcome. I congratulate the right hon. Gentleman on making it and hope that he will have the courage to sustain it when in battle with some of his more reactionary colleagues.
The background to the Bill is one of quite extraordinary and dramatic progress by an industry which, about ten years ago, many people supposed to be a spent force. Like the Minister, I want 597 to refer to the Report of the Select Committe—a body which has an astonishing influence on these fuel problems and whose deliberations have again and again proved of the highest service. Governments of both parties are broadly following the recommendations made by that Committee.
I also agree with the Minister that those responsible, both on the Gas Council and on the area boards, are to be warmly congratulated on the progress that has been made. I am grateful to the Minister for having made it quite clear that these sentiments will be widely shared on both sides of the House. It is only right, however, that I should remind him that much of this progress was made under Conservative Ministers, and I hope that we shall not hear any more, from those less fair-minded of his hon. Friends, the fatuous suggestion that, somehow or other, Conservative Ministers have been prejudiced against nationalised industries. Here is one that has made astonishing progress under Conservative rule, and I hope that hon. Members opposite will remember that.
We have to bear in mind the developments which have taken place—the immense reduction in the number of plants, to which the Minister properly referred, the arrival of Lurgi, followed by methane, and the new oil-based processes. We have over the horizon the possibility of a large find of gas under the North Sea and perhaps the purchase at a reasonable price of gas from Holland. It is also right to mention the fact that the design and efficiency of gas-using appliances has been vastly improved. This in itself amounts to a revolution, which has come at a very good time for the industry.
The House knows that the growth of the industry is very considerable at the moment. The present growth rate is about 7 per cent. per annum, and it is constantly increasing. If we want any further ground for hope we have only to look at the sales of appliances. Let me give a few examples. In December of last year the sales of central heating equipment were up by 22 per cent.; those of space heaters by 13 per cent.; of gas cookers by 14 per cent.; of refrigerators by 45 per cent. and of water heaters by 19 per cent., over the same period in 1963. This all bodes well for the future.
598 The gas industry's success has been backed by a powerful advertising campaign. I appreciate that at one stage, when he first came to the Department, the Minister may have had in mind—if one is not embroiled in the struggle in industry one may think this—whether advertising is unnecessary and expensive. I believe, however, that the really vigorous campaign in which the gas industry has engaged has played a marked part in—this horrible word keeps creeping in—creating the new image that the industry now enjoys in the public eye. I hope that the Minister will be very careful before making any intervention in these matters and will leave these responsible industries to use their own discretion where advertising is concerned.
As the right hon. Gentleman has pointed out, and properly so, the Bill gives the Gas Council powers to manufacture, acquire and supply gas. It is now vitally necessary that the industry should no longer be fragmented. I entirely endorse what he said, that the scope for advance by the industry is now no longer within the area of a single board. That is indisputable, and I am sure that what the right hon. Gentleman now proposes is right. The increasing activity at the centre has also made it necessary to strengthen the Gas Council itself by the appointment of additional members. I was interested to hear the Minister say that about 50 per cent. More gas is now used in the winter months. This underlines the very powerful argument for the introduction of underground storage.
As the right hon. Gentleman has frankly recognised, this is quite a new development in this country. I hope I shall not be misunderstood when I say that in this country new developments are not always welcomed with open arms by an enthusiastic public. Some sections of public opinion are often to be found among those who resist change. Please do not let us have any nasty remarks bout "conservatism". I am referring to people who are "conservative" with a very small "c" and are to be found at least as frequently on the benches opposite as on this side of the House.
I wish to put this point seriously to the Minister. It was the intention of the last 599 Government to publish a White Paper at the same time as the Bill was introduced. I am not certain that a White Paper would be the right thing to publish. It may be that some informal document, in more ordinary language than one normally finds in a White Paper, would be better. I will not now mount my favourite "hobby horse", but I hope that the right hon. Gentleman will not disregard this suggestion. It is not made from any desire on my part, or the party for whom I speak, to make difficulties. I am simply saying that this is a new development and I think it would be very useful to the Minister and to the Government if the right hon. Gentleman took every opportunity to give a simple explanation of what it means. I am sure that he would lose nothing by doing so.
The ordinary mortal has very little idea of what a storage is. Some diagrammatic explanation of this would be helpful. It would also be helpful if some information could be given of what are the Minister's ideas about the quantity and type of gas to be stored. There should certainly be information about safety precautions. I am quite satisfied that everything the Minister said about safety precautions being more than adequate is justified. I am absolutely with the right hon. Gentleman on this. I think, therefore, that he would be making a mistake in not explaining this as clearly as he can to as wide a public as possible. He should explain also that water supplies—a tender subject—are adequately protected. To those who are interested in the land, it should be explained that the use of land will be interfered with to a far less extent than anybody might support at first sight.
The right hon. Gentleman said, and I propose to adopt his phrase, that what the gas industry would be doing in respect of gas storage would be imitating a natural phenomenon. That is a very good phrase to use, and I suggest that it be given the widest possible currency in a suitably brief, intelligible document written for the consumption of ordinary mortals and not those who are the recipients of Government literature. They have quite a different taste in language and different standards from ordinary mortals. I do not want the right hon. Gentleman to think that when I 600 talk of the Government literature I am talking about official language. It is on quite a non-partisan basis. Very official language would hardly serve the purpose I have in mind. A brief, clear document of the kind I have described would serve the purpose of the Government and the industry well.
I shall be grateful if the Parliamentary Secretary would say something about Clause 4(1) where there occurs the phrase… such kinds of gas … as … are in the opinion of the Minister, suitable. …We can, of course, discuss this during the Committee stage, but it would be helpful if the hon. Gentleman would give the House some indication of what is in the mind of the Minister about the types of gas he considers suitable, and whether, as the toxic content of gas diminishes—as it will over the years—his view, or the official view, is likely to change about those gases suitable for underground storage. Clause 4(3) states that the Minister or the gas authority… shall have regard to the safety of the public and the protection of water resources.This seems to me to be a slightly vague provision. It places an important duty on the Minister which is fundamental to the whole operation and I should be grateful if, at his convenience, the right hon. Gentleman would consider the point to see whether the words are sufficiently precise. It would, it seems to me, be a difficult task for any court to say whether that duty had been adequately discharged. Such points as controlled operations, compensation, the actual detailed provisions for safety and matters such as compulsory purchase may well be left for discussion during the Committee stage. In such a Bill as this there will, of course, be points which my hon. Friends and myself will wish to put to the Ministers and I am quite certain that they will do their best to answer.
There is one last point I wish to raise with the hon. Gentleman on the question of cost. I am not certain what is likely to evolve regarding the capital requirements of the industry. May I ask what is always a burning question: is the industry likely, either for reasons arising under this Bill or for other reasons, to require greater borrowing powers in the foreseeable future than are at present authorised by Parliament? It would be interesting to have that information.
601 As I said at the start of my speech—and I do not think there is any need to prolong it further—I welcome the Bill, I think that it is a sensible, forward-looking Measure. I only make one qualification, that the Government have not seen fit—I am sure they can remedy this—to take every step possible to reassure the public that all that is being done is the imitation of a natural phenomenon, not the production of some fearful, new and quite strange hazard. If the right hon. Gentleman would give that point consideration, I should be most grateful. With that, on behalf of my hon. and right hon. Friends, I would give the Bill a cordial welcome, and repeat, if they are not too embarrassing to him, my congratulations to the right hon. Gentleman in having gained his way with his colleagues and having secured for this industry the right to go forward on what is obviously a sensible and progressive path.
§ 5.52 p.m.
§ Mr. Arthur Palmer (Bristol, Central)
I think the House will agree that this Bill falls naturally into two distinct parts. In fact, one could almost say it is two Bills, in a sense, joined in the marriage of convenience. The major part of the Bill, in terms of words, is devoted to underground storage, which is a complicated and detailed matter in the legislative sense because property rights and safety issues are involved. Here I agree with the hon. Gentleman the Member for Yeovil (Mr. Peyton) that in the technical or technological sense this is a relatively simple matter, but it is important to explain this to the public. I think it is remarkable that in a country of our industrial antiquity underground storage should be so novel, but there has been much experience in this matter overseas and we can learn from it.
I would also agree with the hon. Gentleman that most of the points on that part of the Bill were Committee points, and I am sure that they will be examined in detail when the Bill goes upstairs. I want instead to direct attention to the first part of the Bill, which is short in words but which makes some changes in the organisation of the industry. It extends tie powers, the duties, the responsibilities and, indeed, the membership of the Gas Council. It seems to me that the changes proposed are too moderate. I must say that I am a little disappointed.
602 I suspect that this is precisely the same Bill that hon. and right hon. Gentlemen opposite would have introduced had they been on this side of the House, which fortunately they are not. It is, I am afraid, very much a Bill out of the Departmental pigeon-hole, and the speech of the hon. Member for Yeovil confirmed me in that view. I regret this, and I shall try to explain why. I think that the weakness of the gas industry, for a long time now, has been the lack of any strong independent national direction in matters of genuine national concern.
The Gas Council is not a genuine federal council because it has no reserved powers, but it is a confederal council, and a confederal council is not an effective executive instrument. I have two reasons for saying that. First of all, the Report of the Select Committee. I was a member of the Select Committee on Nationalised Industries for four years until 1959. Unfortunately—at least, I think that it was unfortunate—because I was not a Member of the House, I was not a member of the Select Committee between 1959 and 1964, but I have now rejoined that hard-working body, so I can speak with some modest knowledge of its activities.
The Select Committee concluded that a council consisting of a chairman and vice-chairman and made up with 12 chairmen of 12 area boards was not sound for directing a large-scale industry such as gas. They thought that there was a tendency for area chairmen to speak with two voices; that they were men who in the everyday administration of the industry were concerned, quite rightly, with their own local affairs. They had then to come to the centre and battle with each other in an attempt to devise some kind of national policy. The Select Committee said that this was not a good arrangement and recommended that it should be changed. That seems to me the first argument for a change in the central direction of the gas industry—the Report of the Select Committee. I do not think that this Bill makes a sufficiently radical change as the Select Committee wanted and suggested.
My second reason for arguing that the Bill is weak on change is my fairly considerable personal experience in the electricity supply industry. It is this form of organisation which from 1958 has been 603 imposed on the electricity supply industry. It did not exist originally. The original 1947 form of organisation had some faults, but I think that to force this confederal organisation on the electricity industry has been a mistake, although it is true it has been mitigated a little by the existence of the Central Electricity Generating Board. The argument used in 1958 when we had the second post-war Electricity Bill was that this confederal "council" form of organisation had worked well for gas and therefore it was a good thing to bring it in to electricity.
I am not sure that it has worked all that well in electricity and there are many people in that industry who think so. But, later on, the Select Committee, quite independently came to the conclusion that that form of organisation was not, after all, working at all well for the gas industry. I know that it is difficult in any large-scale industrial organisation to hold a fair balance between excessive centralisation on the one hand and excessive decentralisation on the other. But, at any rate as far as the nationalised fuel and power industries are concerned, we have had the advantage of two independent inquiries. It is true that they took place some years ago, but, in their day, they were most important independent inquiries. There was the Fleck Report on the coal industry and the Herbert Report on the electricity supply industry.
In my view both those Reports came about as close to a sensible answer on this question of the proper balance between centralisation and decentralisation in large-scale industrial organisations as could be found. If I may summarise their recommendations, both inquiries, starting from different points of view, thought that it was right to decentralise matters which were purely of local concern especially where there could be competition and emulation between component parts. But where there were matters of all-round national concern, of national finance and national responsibility, it was important to centralise under independent management. Centralised independent management was also important, so that there could be power at the centre to check the performance of the local units. It is never sufficient simply to decentralise and leave it to the decentralised organisations. 604 There must be some independent power at the centre to check actual performance and to see that things are done as they should be.
The hon. Member for Yeovil referred to my hon. Friends who had complained about the lack of enthusiasm of Conservative Ministers for nationalised industries. I have never complained. When I take part in debates, as I do from time to time, outside the House on the subject of the merits of public ownership as against private ownership, I often quote in aid the speeches of Conservative Ministers, particularly the two distinguished ex-Ministers of Fuel and Power who are present, the right hon. Member for Bridlington (Mr. Wood) and the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd), to show how, when speaking objectively and impartially as Ministers of the Crown, they get very near to the truth of the success of nationalisation, and that it is only when they are on the party platform that they depart from accuracy. I should like to tell the hon. Member for Yeovil that in one or two speeches from the Dispatch Box he was already beginning to qualify for my quotation book on the excellence of public ownership in practice, but then his fuel and power career as a Parliamentary Secretary was cut short by the events of last October.
§ Mr. Peyton
The hon. Gentleman must not misconstrue me too much. I have always said that nationalisation is a bad idea. I still maintain that view. It worsens every problem of management and I condemn it utterly. However, I still say that Conservative Governments have had to live with nationalised industries and have done so with great success and to mutual advantage.
§ Mr. Palmer
I quite appreciate that the hon. Gentleman must adjust his point of view—I understand the circumstances—but that confirms my belief that, when speaking objectively as Ministers, he and his right hon. Friends have at times become almost enthusiasts, at any rate in the administrative sense, for the industries over which temporarily they have had control.
I now want to say something about hon. Gentlemen opposite which is equally fair but of a very different nature. As thinkers and reformers in the development of public ownership, they have been utter 605 failures during the period they were in office. They always tried to see public ownership in terms of private ownership, or what they imagine to be private ownership working according to some kind of perfect theory. They have failed to see that public ownership on a large scale brings about a revolution which creates its own unique opportunities for improving the rationalisation and efficiency of given industries.
I had hoped that in his Bill my right hon. Friend would break away from all this and would give the gas industry an independent leadership worthy of its very great opportunities. He has not done so. There may be other legislation to come, but I am disappointed so far. He has simply taken power to add three extra members to the Gas Council. He does not seem to be too sure either when he is to appoint them, and in this I think that the Bill is rather weak. The Gas Council remains with its limitations and with all its inadequacy.
It is proposed to give this confederal Gas Council power to act as a wholesaler when in fact it is made up by a joining together of retailers. A sounder way of approaching it would have been to take the final recommendation of the Select Committee and create for the wholesale side of the gas industry, an independent authority, rather in the way which exists in electricity supply industry in spite of the addition of the Electricity Council. Administratively that would have been much sounder. My right hon. Friend should have been bolder.
I have a second disappointment. It is that there is nothing in the Bill to indicate that the gas industry is a branch of the general fuel and power industry, the energy industry of the nation. There is nothing in the Bill as such to require the gas industry to co-operate with the electricity, coal, oil, and nuclear fission industries in promoting overall national fuel and power efficiency. I was not present on 8th December when we debated the Gas (Borrowing Powers) Order—I was abroad on Parliamentary business—but I have read the speeches. I think that it was the hon. Member for Yeovil who referred to the idea of a national fuel and power policy as putting the independent fuel and power industries into a "strait-jacket".
606 That is a vulgarisation of what is meant by a fuel and power policy, an energy policy. What is meant is to take advantage of the common national ownership of coal, gas and electricity to see what sensible economies can be made to promote overall national efficiency while at the same time preserving consumer choice and reasonable technical competition. It is taking the argument to the extreme to say that a fuel policy means abolishing consumer choice. It is perfectly possible for these industries to combine together in cooperation and understanding in the general interests of the country while preserving consumer choice and technical competition.
Something may be done to this end in consultations through the new Energy Advisory Committee in which my right hon. Friend proposes to get co-operation among the national leaders of the fuel and power industries. But this body may suffer from the disadvantage—which in principle is the disadvantage of the Gas Council—that it is a bringing together of men who have to do the job every day and who may reach agreement on the basis, "If you do not interfere with what I am doing, I will not interfere with what you are doing." They will all go away happy, but the net result of the proceedings will be precisely nil. This is always the weakness of an advisory committee of performers, but we shall see what happens in the light of experience.
At any rate. there should be some general national understanding. The hon. Member for Yeovil referred to the coal target. The gas industry's demand for coal will obviously fall in the years ahead, but, on the other hand, the coal demands of the electricity supply industry are likely to increase. Bearing in mind the planned increase in the national product of 25 per cent. by 1970, which means an enormous growth in the national demand for energy, I should have thought that, with one demand moving in one direction and one in the other and allowing for a three or four primary fuel economy, it would be possible to find a fairly steady place for coal which would give that industry some kind of stability. There could be a national fuel and power policy on a basis which would give the coal industry the 607 stability which it deserves and which it has the right to demand, and at the same time in economic terms would permit a proper balance with the newer fuel sources but of course that argument assumes a steady and high rate of growth in the national product.
Locally there should be much closer co-operation and consultation between the gas industry, the solid fuel industry and the electricity industry to promote regional plans to mutual advantage; each in its place on a basis of understanding and without necessarily having to be imposed from above. Surely in these days the fuel and power industries have reached the point when they should be able to organise things so that would-be consumers can get impartial and objective advice on the relative merits of the various fuels. They should be able to co-operate locally in this way so that, without disturbing consumer choice, they are able to give together impartial advice through, say, energy advice centres. This would be to the advantage and economy of the fuel industries and the country in general.
I have made two criticisms of the Bill but I wish it well in its technical proposals. Although I was brought up and trained as an electrical power engineer—and have, therefore, a slight inborn bias against gas—I also wish the gas industry well. I recall in my youth being told that gas was not much good, except, perhaps, for committing suicide.
§ Mr. Peyton
In case the hon. Gentleman has any intentions on those lines I would inform his that gas is becoming less and less useful for that purpose.
§ Mr. Palmer
I assure the hon. Gentleman that I have no such inclinations—none whatever. I was never more alive.
One must admire the energy and determination with which the gas industry has, by technical innovation and leadership, established a brand new place for itself. That will help to stimulate electricity especially, for the electricity industry must now have new ideas which perhaps it has lacked recently because of over-complacency. Nevertheless, I hope that my right hon. Friend will bring forward something far more revolutionary by way of legislation for the gas industry next time.
§ 6.13 p.m.
§ Mr. Geoffrey Lloyd (Sutton Coldfield)
I was extremely interested in the observations of the hon. Member for Bristol, Central (Mr. Palmer) on the organisational principles, more particularly since he seemed to approve so much of those which were laid down and suggested by the Fleck Committee on the Coal Industry and the Herbert Committee on the Electricity Supply Industry, both of which were appointed when I was Minister. I hope, however, that he will excuse me if I do not follow him into that sphere because to do so would take up too much time and detract from my purpose, which is to join my hon. Friend the Member for Yeovil (Mr. Peyton) in welcoming the Bill.
This is, to all intents and purposes, a Conservative Bill. The Minister is fortunate that the preparatory work was done by his predecessor. The Bill sets up the gas industry for its new career. It sets it up organisationally because it must have greater powers at the centre for buying and suplying gas. It also deals with the important question of underground storage which, as hon. Members know, is becoming more important year by year because now that we have got to the point when gas consumption is increasing, it increases much more in the winter than in the summer, for it is primarily a heat supplying industry.
It sets the industry up for its new career, a career which results from the wonderful transformation that has taken place in the industry in recent years. It has changed from an old-fashioned Victorian industry based on an old-fashioned carbonisation process into one of the most highly technological industries in the country, to the point where it has become virtually a branch of the chemical industry.
It is one of the success stories of Conservative Government during the last 13 years in the nationalisation sphere. Years ago consumption of gas was static. We found that it increased by about 1 per cent. in one year, by about 3 per cent. in the next and so on. The year before last I think the consumption was 5 per cent. up on the previous year while last year it was 7 per cent. up on the year before. I am told that last January it was 9 per cent. up on the previous January, even outpacing the electricity industry, as the hon. Member for Bristol, 609 Central will no doubt have noticed with interest.
The same can be said of prices. In the South-East and the Midlands, the area which I represent, consumers were delighted to have a reduction in gas prices. This was a considerable achievement and the industry has been earning good surpluses in recent times. How has all this come about? This achievement is important in itself not only because it is one of the most important major fuel industries in the country but because it has an additional interest, for here we have an example of an old-fashioned industry modernising itself, exactly what all parties want to see the whole country doing successfully for the modernisation of Britain.
Are there any lessons for the country in this in the larger sphere? There are, and one of the reasons why I am addressing the House today is that I was the Minister during the critical phase when the industry began to change from the old-fashioned one it was and took the first decisive steps towards its modern position. In the early fifties, when I became Minister—and this is a point all hon. Members may not appreciate—the industry was going through some very dark days indeed. There was an atmosphere of despair and these were the times when there were annual increases in coal prices and when the price of coking coal to the gas industry was disproportionately increased.
I want to be fair to the coal industry and I should make it clear that that industry also had its difficulties in that coking coal was scarce and difficult to get. The mines were old and many of the seams narrow. However, from the point of view of the gas industry as customers of the Coal Board, it saw itself in a position of constantly mounting prices for its essential raw material. One year the gas industry had to absorb an increase of £18 million in increased cost of its coking coal from the Coal Board.
The industry made an effort to co-operate with the Coal Board to see if there was any hope for it in the supply of coking coal and for moderate prices. The gas industry came away in a mood of desperation. It felt that the Coal Board regarded it as a captive market. There was nowhere else for the industry to go and it felt that it would be dragged 610 all the time and unable to resist whatever was proposed by its supplier. It was from that mood of desperation that the then chairman of the Gas Council came to me and asked whether, as Minister, I would back the industry in a variety of new efforts to free itself from dependence on coal, even if that meant going over to oil firing. I said "Yes".
As the Minister said and as the hon. Member for Bristol, Central as an electrician agreed, albeit grudgingly, perhaps, this was the atmosphere of almost desperation out of which the new energy and enterprise of the Gas Council and the gas industry was formed. Thereupon, work was started in four main directions. The first was the attempt for the total gasification of coal
We are all very sorry that the attempt has not succeeded. We watched it with great hope for some years and, of course, the research chemists did a considerable job in that they succeeded in getting gas by the total gasification of non-coking coals. Alas, it is not possible to present that process as one that can be at all competitive with the total gasification of oil. It is a great disappointment, but those concerned made a good try, and I am glad that they are still going on with the work because in the unexpected ways of research we can always hope for a breakthrough.
The other was the search for natural gas in the United Kingdom. That was something that those in the industry were well advised to do. They did not succeed, but no one can blame them on that score. We must realise that in public as in private industry we must be enterprising. We cannot bring off everything we try, but must, overall, try to achieve success.
That brings me to the subject of methane. I was very much concerned with the early beginnings of the methane effort. I co-operated with the Gas Council at that time in sending officials to America to study the beginnings of that work. I will not go into all the details of this immense and complicated enterprise, but here, again, the gas industry deserves the highest credit for the way in which it has approached this extremely daring conception, and in bringing to fruition this method of importing the gas at minus 270°—for 611 the first time in the world, I think—and feeding it into our gas system, in October of last year—
§ Mr. Lloyd
In my hon. Friend's constituency, I am glad to say.
The methane scheme, although it has been a great success, has been eclipsed by the new oil gasification process. I remember seeing in Sydenham the Oney-Gegi process in 1953. That was soon eclipsed by the I.C.I. process for the production of gas. That, in turn, has been succeeded by and complemented by the Gas Council's own process, worked out by its own research people in Birmingham, on which it is very much to be congratulated. This is a dramatic breakthrough in gas making, in that the capital expenditure is only one-eighth, the physical space required is only about one-ninth and there is a very considerable reduction in the cost of the gas supplied.
It is just as well to remember that while the success of this process is assured, the harvest has not yet been fully gathered in any way. Although the process is successful, the new plants are only now beginning to come into operation in considerable numbers, so we can look forward with great optimism to the progress of the industry.
When we look further ahead we see an even more stimulating prospect, and I am glad that the hon. Gentleman opposite swept aside the ridiculous nonsense talked by his colleagues about the North Sea during the election campaign. The electorate was told that our party had given the rights to their private-enterprise friends and their class-conscious supporters, and the party opposite gave the impression that when it came to power all this would be swept aside, the existing licences disallowed, and so on. We were relieved, but not altogether surprised, when, in the midst of the hundred days, the information was quietly slipped out that the licences had been agreed. That fact carries with it the implication, which is quite true, that a very fine business deal was done by the last Government in the setting-up of North Sea oil exploration.
612 That exploration is going on. We cannot be sure it will succeed. Even if it did not but if we could do a deal with the Dutch, who have one of the greatest natural gas reservoirs in the world—or, even more, if both eventualities came about—there is a tremendous and fascinating future for the industry. It would mean that instead of the industry supplying only 6 per cent. of our national energy needs it could reach between 28 and 30 per cent., and would play a major rôle in the supply of natural energy, as it does in the United States. I also assume, although the industry would be doubtful about giving this assurance, that there would be very considerable reductions in price to the consumer.
All this wonderful development, which has now reached a point at which we have this even more stimulating prospect for the future, has come about not only under Conservative Governments but under Conservative fuel and power policy. I would say that an essential condition of these developments has been freedom of choice for the consumer and freedom of choice for the industry with regard to its own feedstock. I ask the House and the country whether it is reasonable to suppose that these developments would have occurred under Socialist Governments and Socialist policy—
§ Mr. Palmer
I think I am right in saying that the right hon. Gentleman was the Minister of Fuel and Power, as the office was then, when the nuclear power programme, or the first instalment of it, was decided on by the Government. Is it not true that that programme was to a great extent imposed on the electrical power industry, though the industry was, for economic reasons, not too anxious to go ahead with it?
§ Mr. Lloyd
I would not have said "imposed," but I will take the hon. Gentleman up and use what he says as an illustration of my argument, which is that it is very difficult to forecast long in advance the country's fuel position. I can well remember that when I was the Minister the kind of figure of coal output being talked about was not 200 million tons but 220 million tons—some people even spoke of 240 million tons. I suggest that if we had 613 had a Socialist-controlled policy inspired by anything like the principles contained in the speeches members of the party opposite have been making over the years, this industry might well have been tied to coal in a way not to its own interests or those of the country—
§ Mr. Palmer
I was seeking to take the right hon. Gentleman's point that the fuel industries must be able to choose their own feedstock, as he calls it. I say that the electricity industry was not given that freedom but had pushed on it by a Conservative Government an over-large nuclear power programme.
§ Mr. Lloyd
I am sorry if the hon. Gentleman wants me to take up a permanent hostility to the nuclear power programme, because I think that it will be one of the most important basic suppliers of electricity. In support of my point, I must say that in that great classic document of the party opposite entitled "Twelve Wasted Years" we find the statement:Again, in spite of representations from the coal industry, the gas industry is being allowed to go ahead with the production of gas from oil.That shows the attitude of the party opposite in this matter.
That is why my hon. Friend the Member for Yeovil and others of us on this side were made so anxious by the Press conference held recently by the Minister in which there was an actual reference to whether or not the gas industry should be allowed to use oil or would be forced to use coal. That was why we were so anxious when a statement was not made to the House, and we would like an assurance from the Minister to clear up the doubt generated by that conference, that he will, in fact, allow the gas industry to use the feedstock it needs, and to proceed on its development by the use of oil.
I conclude by taking up one point made by the hon. Member for Bristol, Central. He talked about hon. Members on this side saying things to the credit of the nationalised industries when they were Ministers. He will have observed that this afternoon my hon. Friends and I have come forward to give full credit to the gas industry even though we are not now Ministers but are in Opposition. 614 This point should be noticed in the House and in the country. We are prepared to give credit to a nationalised industry. We want the nationalised industries to succeed. We ask one thing from hon. Members opposite, that they should reciprocate and genuinely want private enterprise to succeed. They should stop proceeding with the Steel Bill, which is poisoning the whole public atmosphere on this question.
§ 6.30 p.m.
§ Mr. Christopher Norwood (Norwich, South)
I want, first, to comment on some of the points made by the right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) before I speak more directly to the Bill. It is absurd for anyone to pretend that the changes which have taken place in the gas industry are a reflection of wise Conservative administration—which they are not—or that very similar changes would not have taken place under a Labour Government. The right hon. Gentleman had the honesty to admit that the basic reason for the development and improved condition of the gas industry is its shift to the use of oil. No Government in this country of either complexion could claim the credit for the tremendous change in relative prices that there has been between coal and oil since the time when the right hon. Gentleman was Minister of Fuel and Power, as the office was then called.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
Has the hon. Gentleman looked back at past debates on the gas industry and seen the very virulent attacks which spokesmen from the Opposition Front Bench made upon the whole project of substituting other forms of feedstock for coal? How can he make that statement if he has read those debates? He will find that those debates bear out what I say.
§ Mr. Norwood
This is a misconception. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has made this mistake. The technical developments which take place in the fuel industries are little influenced by the words which are used in a debate in the House. Some speeches made may be well-informed—some not. I am not very interested in what was said many years ago and in different circumstances. I am interested 615 in what is said now. I am interested in a claim which seems to me to be patently untrue. Such a notion will be seen by people outside the House, certainly by people who work in the fuel industries, to be a misconception. I say that with a fair measure of confidence.
I have noticed already in the debate a certain difficulty of position among Opposition Members. On the one hand, the hon. Member for Yeovil (Mr. Peyton) said that he does not like the idea of nationalisation. He said it complicates the problem of management. It makes it almost impossible, I think he said. I do not remember his precise words. On the other hand, the right hon. Member for Sutton Coldfield spoke with what can only be described as affection of an industry over which he was once Minister and in which he has retained a very substantial interest.
§ Mr. Geoffrey Lloyd
The hon. Gentleman is right in thinking that nobody who has been Minister can fail to have—affection is not a bad word—for industries in which he has worked. That must apply also to the electricity industry, and above all to the coal industry, because of the miners. I should not like him to think that there is any difference between my hon. Friend the Member for Yeovil (Mr. Peyton) and myself in our detestation of nationalisation and our belief that this is a wrong principle of industrial organisation.
§ Mr. Norwood
I was not attempting to suggest that the right hon. Gentleman and the hon. Member for Yeovil hold different views. Their views are probably the same in every particular. I do not know. Most hon. Members opposite appear to me to have two suits of clothes. The right hon. Gentleman has confirmed that he has two suits. At one moment, talking about an individual industry, he says that we can talk about it without the platform approach. The next moment he is denigrating the idea of nationalisation.
I do not believe that there could have been the rationalisation which has occurred in the gas industry had it remained under a multiplicity of separate authorities. It is hard to believe that this rationalisation could have happened in 616 those circumstances. If we want the evidence, we are now debating a Bill which by common admission has the support of the Opposition as well as of the Government. The Bill is designed to strengthen the central powers, so far as they exist, and, if anything, to make the centre more powerful.
On the other hand, people are saying that the idea of nationalisation is not good. Yet they accept the principle that there should be a strong central authority. I shall come to that later. My hon. Friend the Member for Bristol, Central (Mr. Palmer) raised a very interesting point on this, with which I do not wholly agree.
My basic point is that the fundamental reason for the success of the gas industry is tied up with its ability to move to a low cost supply of fuel. It is not just that oil prices have moved in favour of users of oil. It is that the particular types of oil which the gas industry has found itself able to use, described as the naphthas, are not marketable in Northern and western Europe to the full extent of refinery production. On the whole, the gas industry has obviously taken a very practical decision here, because from what those of us who have studied this question can see about the situation it seems as though going five or 10 years ahead we can look to a surplus of refinery capacity in what is described by the oil companies often enough as the eastern hemisphere, but at least in the northern and western portions of Europe, and that this fraction will be in abundant and cheap supply.
I was profoundly distressed when I heard the right hon. Member for Sutton Coldfield speak about the North Sea discoveries as if they are already a reality and something on which we can plan. This is an absolute disaster. For illustration, I turn to the question raised by my hon. Friend the Member for Bristol, Central. He pointed out to the right hon. Gentleman that the decision, which now must look rather like an error—this is not necessarily a criticism; it may have looked like the right decision at the time—to go in for a big nuclear programme has placed the most appalling financial burden on the electricity supply industry. Yet people were carried away with the marvellous technology we seemed to be breaking into, with the new techniques, 617 the new science, the new technology, peopled largely by young, excited, interesting men who believed in what they were doing and believed that they were on the verge of a new revolution.
We can say in all fairness that people in all branches of the fuel industry were mistaken in this—not just the Minister and the Ministry but other fuel industries as well. They thought that nuclear electricity would become competitive. They thought too far ahead. They were guilty of wishful thinking. If we can learn anything from this illustration, it is that we should by no means take the discovery of gas in the North Sea as a certainty, still less accept the idea that it would be economic as against manufactured gas from naphtha in centres near where it is to be used.
I do not share the views of my hon. Friend the Member for Bristol, Central about organisation. On the whole, it seems to me that a very sensible decision has been taken about the powers to be given to the Gas Council in the form of organisation. If we have to give credit for that to hon. Members opposite, I suppose we have to give credit. They can be right on occasions, I suppose. They obviously were about this. I do not accept my hon. Friend's general strictures, although they were fairly mild. It appears to me that this is a perfectly reasonable way of doing things.
Unfortunately, it is not true, as my hon. Friend observed, that the form of organisation in the electricity industry is the same. It is precisely because the sponsors of the Bill rejected the temptation to follow the advice of the Select Committee to set up a gas generating board, or a thirteenth board, that I regard the Bill as a thoroughly commendable Measure. Had they done that, they would have reached the situation which we now have in electricity supply where, in effect, we have an industry with two heads.
It is all very well to say that the nominal head of the industry is the Electricity Council, that this is the so-called confederate body and on it all the boards are represented, some more than others. But it is also true that, by its very nature, the producing authority exerts great power in one way of another in its dealings with area boards and, for that matter, with its own individual consumers such as they are. Inevitably, we have grow- 618 ing up two different sorts of view in the two organisations. This is to be regretted, and I regard it as a form of organisation not to be repeated. I am delighted that in this Bill the temptation to follow the advice of the Select Committee has been avoided and my right hon. Friends have gone ahead with extending the powers of the Gas Council.
It has been said, particularly by people in the gas industry, that one day it may be desired to extend the powers still further. If so, we have here, it seems to me, a convenient way of doing it. By the appointment of additional members to the Gas Council, the Council will have a more independent existence at Council level than it did before. I am sorry that my hon. Friend is not here, but it seems to me that in this case, contrary to the view which he expressed, the whole balance of advantage lies with the drafters rather than with the critics. I may be wrong, but my own experience convinces me that I am not.
The other point I have to make about the Bill is more technical though, in a way, much more important. I do not know how many storages the gas industry proposes to introduce. From references to the fact that the storage is more than sufficient for an individual board, I assume that there will be only a few, in which case it may not be a point of the utmost importance. Nevertheless, I have been struck by the enormous difficulty which the industry will have to face if it runs up against objections. It is all very well for us here, and for people in the fuel industry, to say that it is difficult for a rational person to object, particularly if the gas stored is not made from coal, is non-carbonisation gas, that nothing is likely to go wrong, that it is a perfectly natural process, and so on. We can say these things, but the question is whether people locally will believe them.
No one can have sat in the House for more than even a few weeks without being impressed by the tremendous efforts people make to avoid having high voltage pylon lines put across the countryside, although they remain extremely disinterested if the lines are to run 10 or 15 miles from their own constituencies. There are sometimes appalling conflicts almost between neighbours, between one village and another, with one parish council submitting proposals which would send the line right through the area of 619 another. Very commendable, no doubt, as a way of serving one's electors, but the time which can be lost, the energy which can be wasted and the distortion which can be given to technical planning is quite appalling.
It strikes me that the provisions of the Bill, while I well understand the principle of preserving the rights of the individual, may well give the Minister and the industry a hard path to tread. I do not wish to do more than be very mildly critical, but I believe that it offers a good deal too much scope for delay.
Having made those observations, I am glad to note that the Bill will receive the general acceptance of the House, and I thank hon. and right hon. Members for their attention.
§ 6.44 p.m.
§ Mr. Richard Wood (Bridlington)
The hon. Member for Norwich, South (Mr. Norwood)—as did other hon. Members and the Minister himself—gave some attention to the original structure of the gas industry, decentralised as it was, and there has been a certain amount of discussion already this evening about several real or possible developments coming above the horizon which may probably lead to changes. I say "probably" for this reason. As I see them, the developments which have focussed our minds on the probability of change are these.
First and foremost, there was the importation of liquefied methane from North Africa. Second, there was the possibility, which existed in some minds, that the gas grid which was growing constantly within area board territory might develop further into a national grid or something more nearly a national grid in the future. Third, there is the possibility—I think that the hon. Member for Norwich, South was quite right in urging caution in our expectations about it—that there will be a find of gas under the North Sea. Fourth, there is the development, which, in part, is the subject of the Bill, of large natural underground storages.
I do not believe that these developments, or any of them, could not be brought about under the present decentralised structure, but, naturally—I hope that I can say this without putting doubts in the minds of hon. Members 620 about my attitude—I feel that they could be much more easily brought to fruition as a result of some measure of centralisation. There are arguments on both sides. There is the one expressed by the hon. Member for Bristol, Central (Mr. Palmer), and the contrary argument which has been expressed by the Minister and his hon. Friend the Member for Norwich, South. These are arguments for and against such centralisation taking the form of some kind of gas generating board. I have myself always found that the arguments against such a solution were much more convincing that those in favour, and I join with the hon. Member for Norwich, South in being thoroughly glad that it is not this proposal which has found its way into the Bill but the proposal for a strengthened Gas Council with wider powers.
Now, a few words about the issue of competition, which has reecived a good deal of attention this afternoon. My predecessors and I always followed the policy of competition both between the primary and the secondary fuels, but I ought to make perfectly clear that the weight which was given to a number of considerations, strategic questions, social questions, the balance of payments and other economic reasons, combined to create a form of competition which was less pure, or, perhaps one might say, less impure, and certainly very different from the free-for-all which we were, I remember, endlessly and emptily accused of having made out objective.
Naturally, I believe that there was a very good reason for the modifications which were imposed on the completely free operation of competition, although I remember very well that many of the restrictions were always strenuously opposed. But, in general, it was my view then and it remains my view, just as it remains the view of my right hon. and hon. Friends, that the individual fuel and power industries should be encouraged to make the most of their individual intrinsic advantages.
Thus, in the competition between gas and electricity, electricity has and, as far as I can see, always will have the great advantage over gas that it has become indispensable in most houses. On the other side, gas has the powerful advantage that, unlike electricity, it can be stored, and stored relatively cheaply and in great quantity.
621 This leads, as we all realise, to the immense importance of great natural storages which will contain, as the Minister pointed out, many times the capacity of the largest surface gas holder and will do so at comparatively little cost and virtually no damage to the beauty of the countryside. Therefore, if suitable storages can be found, it should be possible for the industry to take advantage of this great natural benefit to solve the problem of its peak load, which has been and is likely to remain, as far as I can see, most vexatious for its chief coimpetitor.
The proposals in Part II of the Bill seem to me to have two main origins. The first is the private Bill introduced by the Gas Council in November, 1961. The second, which has not been much mentioned today, is the pattern of legislation set by the Pipelines Act, 1962. When the Gas Council introduced its Bill, this was the only course open to the industry—and, incidentally, it was the only means by which Parliament could express a view on the project. I was Minister at the time and had no hesitation in consenting to its introduction by the Gas Council.
A number of factors arose however. There were the issues which had been raised during the previous year by the Bill promoted by the Esso Petroleum Company to lay pipelines from Fawley, north-east towards London and northwest to the Severn; and the Trunk Pipelines Bill which was introduced but withdrawn in 1961. Then there was the Government's decision on pipelines—this is relevant on this aspect of the Bill—to establish a new and public procedure for future pipeline development.
There were also a great many natural apprehensions about this new development. I was glad that the Minister used the phrase "natural phenomenon". I also took the view that the apprehensions expressed at the time were ill founded and unnecessary. They were particularly great because the proposed storage happened to be not very far from the magnificent cathedral of Winchester and just about as close to a certain educational establishment there which made its views known in its usual vociferous manner.
Consequently, because of these developments in legislative activity, and because of fears expressed at the time, the Gas Council offered to withdraw the 622 Bill in the early spring of 1962. Afterwards I made an inquiry as to what should be the right procedure and reached the conclusion that it would be right to introduce some procedure on the lines of this Bill, which itself closely follows the precedent of the procedure under the Pipelines Act.
I hope that the Minister, who had something to do with the Pipelines Act, will not take it hard if, at this point, I express the confident hope that the behaviour of the present Opposition during the Committee stage of this Bill will be more responsible and constructive than the aimless, senseless and almost endless verbosity of hon. Members opposite during the Committee stage of the Pipelines Act, which was one of the parents of this Bill.
I want to join with what hon. Members have said—certainly those who have spoken on this side of the House—in congratulating both the Gas Council and the area gas boards on the spirit in which they have tackled what I remember very well was a menacing situation when I went to the Ministry in 1959. My right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) has pointed out that this dangerous situation for the industry existed earlier in that decade and, therefore, virtually existed throughout the whole of the 1950s.
At the end of the 1950s, gas still seemed to a great many people to be old fashioned. Although there were about 13 million consumers of gas, many were asking whether the industry would survive, at least in the form we knew it then. I remember talking about gas at the time fighting for its life although, knowing the industry's leaders as I came to know them, and the prospects of the industry, some of which were just coming over the horizon, I could not doubt that it would fight successfully.
The expansion of the industry during the early years of this decade owes, I believe, a great deal first of all to the men and women working everywhere in it. I was given abundant testimony not only to their devotion to the industry but also to the immensely high morale that exists during the bitter cold weather two years ago when I made a number of visits to gas works and saw people who had worked non-stop for 36 hours and more at a stretch to keep the supplies going.
623 The expansion also depends—and this has been mentioned more today—on the willingness of the leaders of the industry, as they have shown only too clearly, to use modern methods, to experiment with new ideas and to get in on the ground floor of the latest scientific developments. That point was made very clearly by my right hon. Friend the Member for Sutton Coldfield.
I turn now to the ideological aspect which has captured some attention in the debate. The hon. Member for Norwich, South spoke of the difficulty of the Opposition. I have found no difficulty in my position either today or as Minister of Power, when I was connected very closely with a number of nationalised industries. But it is always the case that, when my right hon. and hon. Friends give any justified praise to the conduct of a nationalised industry, some "bright spark"—if I may so refer to hon. Members opposite—gets up and points to our ideological difficulty.
This does not worry me. It emphasises to my mind that those who make the criticism have a more limited view than they should of important questions. I have always felt that the Conservative Government could have been reproached effectively only if they had failed to create the conditions of greater efficiency in the nationalised industries. The state of the gas industry today, as my hon. Friend the Member for Yeovil (Mr. Peyton) pointed out, largely helps, I believe—although the hon. Member for Norwich, South will not agree—to substantiate the Conservative claim to have done a great deal for the nationalised industries. Paradoxically, whatever he says, I cannot help wondering if the state of the industry would be anything like so vigorous as it is today if, for the last 13 years, it had been under the charge of the party which nationalised it.
I remember, for example, the reception given to the Government's announcement of the permission to the industry to import liquefied methane from North Africa. It was not exactly received with enthusiasm. Perhaps I may be forgiven for wondering whether a Socialist Government at that time would have reached a similar decision. I am convinced that that decision—although I 624 share the reservations about the scheme itself expressed by my right hon. Friend the Member for Sutton Coldfield—to move into a new field had an incalculable effect on the industry's morale and confidence in the future.
We are entitled to our own opinions, but, whether or not other hon. Members share my view as to the progress of the gas industry during the last decade under a Socialist Administration, if we had been unfortunate enough to have one, the behaviour of the Government under the stresses and strains of the last 118 days has done absolutely nothing to lessen my scepticism of their willingness to modernise when there is any risk of consequential inconvenience or difficulty.
Fortunately for the Government, in the shape of this Bill there is ready to hand a modernising Measure which is relatively painless and which can be of great value to the gas industry without any danger of direct or appreciable damage to either its suppliers or its competitors. I congratulate the Government on their fortunate legacy and on the speed of introducing the Bill, which I wish a comparatively smooth passage.
However, my congratulations to the right hon. Gentleman will be complete only if, as I fervently hope, the introduction of the Bill means that he has persuaded the Cabinet to weigh the merits of the Gas Bill and the Steel Bill and has convinced his colleagues of the wisdom of introducing a Tory Bill which will improve the prospects of a nationalised industry and at the same time rejecting a Socialist Bill which, by nationalisation, will damage the prospects of the steel industry.
§ 7.3 p.m.
§ Colonel C. G. Lancaster (South Fylde)
Many of us took the opportunity when we last discussed the gas industry, before Christmas, to congratulate the Gas Council, as many of my hon. and right hon. Friends have done this afternoon, on the considerable technological advances which it has made in gas production. I therefore welcome the Bill, which gives facilities for taking advantage of these developments.
I should like for a moment to refer to the Gas Council itself and to the attitude of the Select Committee on Nationalised Industries to the problem. I 625 was on the Select Committee which for rather more than a year had the opportunity to take evidence from the Chairman and Vice-Chairman of the Gas Council and from the area managers. It was, of course, an all-party committee which reached certain conclusions which were not hasty, but which were based largely on the quality of the men we saw. I say at once that we were immensely impressed with the high standard of the area general managers as well as of the Chairman and the Vice-Chairman of the Council itself; but although we were impressed with their high qualities, we concluded that they had the virtues of being men of independent views and so on and that to put them together would not necessarily make the best type of control in a changing world in which new developments were occurring and in which they had to take a centralised view as distinct from their decentralised view in the day-to-day management of their areas.
I agree with the hon. Member for Bristol, Central (Mr. Palmer) that the Bill could have been improved in this regard. An additional degree of independence at the centre would have been an advantage. Three part-time members may be brought into the story and the Council is to have additional powers, but I still feel that the views of the Select Committee were right, and I am sorry that my right hon. Friend the Member for Bridlington (Mr. Wood) does not agree.
I interrupted the right hon. Gentleman to make a suggestion to him, and, if I repeat it, it is only because I believe it warrants careful consideration. I must admit to some personal interest in this, for I have been connected with a private research concern for a great many years and I think that I know a little about this subject. The subject of man-made storage is now arising and is being investigated and several considerations bearing on man-made storage are as applicable to it as they are to natural storage—the possible effect on water measures, matters of security, disturbance and the like. These factors may not be so great, because the man-made storage would be the property of the Gas Council, but a number of considerations which apply to natural gas storage would also be applicable to man-made storage. On reflection, the right hon. Gentleman may 626 consider whether this is an appropriate moment to put his umbrella over the one as well as over the other.
There is one matter which I should like to mention in connection with the exploration of the Continental Shelf. I am sorry that the Gas Council was not able to go in with British Petroleum and went in with an American company. I am sorry that it brushed aside the British contractors. It was offered help and co-operation, but it did not see its way to accept. I think that in the long run that will be found not to have been the wisest thing to do, but it is over and in the past and it is not much good crying about what has happened.
I join with my right hon. Friend in wishing the right hon. Gentleman himself and the Gas Council well in this very big advance which they are making. The Bill generally is very useful and will go a long way to implementing and complementing the advances which have been made, and I wish it and the Gas Council every success.
§ 7.9 p.m.
§ Rear-Admiral Morgan Giles (Winchester)
The whole subject of the storage of gas underground in this country, so far as it has gone, has had a rather chequered history. As my right hon. Friend the Member for Bridlington (Mr. Wood) has pointed out, about three years ago a Private Bill was introduced by which the Gas Council sought to obtain powers to pump gas into the sandstone layer below Chilcombe, which is in my constituency and a little to the east of the City of Winchester.
There was an immediate outcry in Winchester, and the City Council produced a petition to the then Minister of Power. After considerable discussion, the 1961 Bill was withdrawn, and I believe that compensation was paid subsequently to the city council for the costs involved in preparing the petition.
In view of what has gone before, it is very necessary to start with a clean slate and to have a look at the whole subject of gas storage underground with a completely open mind. I am perfectly clear that the Bill does not refer only to the Winchester area but seeks wide powers to store gas underground wherever the geological formation may be suitable.
It must be agreed that the need for the underground storage of gas is real 627 and urgent. The use of gas both for domestic heating purposes and for industry is increasing enormously every year, as has been pointed out by many hon. and right hon. Members. To give only one statistic, the sale of gas space heaters has increased by 500 per cent. since 1951. Incidentally, that is an indication of the improvement in the standard of housing which the nation has come to enjoy during this period. Fortunately, this increased demand for gas coincides with the increased availability of supplies, particularly as a result of developments in the shipment of natural gas from abroad.
With regard to the storage, and storage from season to season, which is the important point, of these increased supplies, it has been estimated that the Gas Council will need to store gas equivalent to 15,000 conventional gasometers costing about £500 million in capital cost. Half a dozen underground sites such as the one previously proposed near Winchester could store all that was required at no greater cost than about £20 million. I hope that I have said enough to show that the economic need for the underground storage of gas is proved beyond all possible doubt.
The question arises, then, why did the previous Bill, the Gas Underground Storage (Chilcombe) Bill, come to such a sticky end? I assure the House that the petition which was presented against the Bill by the Winchester City Council was not the result of cussedness or obstructiveness. It was not presented with any desire to obstruct or delay developments which might be necessary for the general economic good of the country. The objections of the Council were only those which might be expected to be raised by any responsible local or civic authority anxious to preserve and maintain the interests of its inhabitants.
Let us imagine the questions which must inevitably immediately spring to mind when a completely new technique is proposed for the storage of huge quantities underground of potentially explosive and unpleasant gas in a rural area or, even more so perhaps, in an urban area. What do people immediately ask themselves? They ask whether there is any possibility of a massive underground explosion, or any risk of fire. Is 628 there any risk of subsidence of the ground and possible danger to towns or buildings? Is there any risk of contamination of water supplies in any way? Is there any fear of the gas oozing out—and one can imagine it doing so if there were a geological fault—and spoiling crops or agriculture? Is there any chance that the amenities of the countryside will be spoilt by noise, smell, engineering works or ugly buildings? There are always very many people to leap to the defence of the amenities of the countryside in matters like this.
From what I have been able to learn, I am personally of the opinion that the underground storage of gas is absolutely safe as far as human ingenuity can make it, and absolutely unobjectionable. As has been said by many hon. Members, underground storage should be cheaper and safer than the use of gasometers and it should also avoid the waste of valuable building land, which is in all too short supply. I believe that any fears or anxieties which may be held can be set at rest if sufficiently detailed and expert opinion can be obtained and sufficiently thorough experimental work can be done on the proposed storage sites.
It is not too much to say that the success or failure of this Bill will depend on the extent to which the Minister and the Gas Council, as well as the area boards, can explain to the people in the areas concerned exactly what it is intended to do and exactly what the effect will be of the powers which Parliament is being asked to grant.
Apart from the safety and amenity angle, and any strategic considerations, there is a host of questions concerning compensation, compulsory purchase, rates, the rights of local authorities and water boards, public inquiries, and so on. What it amounts to is that the task facing the Minister and the Gas Council is a gigantic educational process. In a matter like this, people can be led, but they cannot be driven.
From such study as I have been able to make of the Bill—and it is a very long and complicated Bill—the important points seem to have been covered. I believe that it does give adequate protection to the rights of individuals and local authorities. But I am sure that hon. Members will agree that in a relatively unexplored field of 629 this sort it is not easy to foresee or to cover all possible eventualities by legislation. Clearly, a great deal will depend on the spirit in which the Government approach the problems involved. I am very grateful for what the Minister said, which showed that he understands this point.
Both local authorities and individuals have it in their power to be difficult and obstructive in the implementation of a Measure like this, even after it has become law. For this to happen in Winchester or anywhere else would be very regrettable and very much to the disadvantage of the economy of the country.
I therefore ask the Minister and the Gas Council to take heed of all local opinion in whatever areas they are contemplating storing gas underground and to consult fully and in detail at every stage, from the original planning onwards. That is where the previous Bill got off on the wrong foot. When it was presented it was more or less a case of a fait accompli and it was a great surprise to the inhabitants in the area concerned. I ask the Minister and the Gas Council not to proceed faster or further than public opinion can run. I hope that when the Parliamentary Secretary replies he will be able to give categorical assurances to the points which I have raised.
§ 7.18 p.m.
§ Mr. Edwin Wainwright (Dearne Valley)
1 welcome the Bill, because I think it is essential for this country that gas should be stored underground. That may surprise some right hon. and hon. Members opposite, because I am a representative of the coal mining industry.
We must always look rather sceptically at anything which has the support, as this Bill has, of right hon. Gentlemen opposite. I have always noticed that whenever it is possible to denigrate the mining industry right hon. and hon. Members are inclined to do it. The Bill will help the gas industry tremendously to compete against the mining industry, but we must appreciate that, whether it is necessary or cheaper, a greater contribution to the economy will be made if gas is stored underground.
The Opposition were in power for over 13 years. Underground storage of gas 630 is nothing new. I know that a small Bill was introduced about three years ago, and the hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles) has mentioned a good deal of detail about it and why eventually it was withdrawn. If we are not careful we will allow public opinion on many occasions to prevent good projects going forward. Whether public opinion was right or wrong on the occasion in question, I am not certain, because I have not given the matter detailed study, but it was obvious that public opinion was dead against the expert opinion obtained by the Gas Council to the effect that the area was suitable for underground storage of gas.
If the time arrives when it is decided that that area might be used and the Minister uses his powers, there will be tremendous criticism about his dictatorial attitude. It is, however, disturbing when one experiences the tremendous objections by the public from the narrow viewpoint of trying to preserve their area as something which is essential to them and treating the needs of the country as something which does not matter.
I am not arguing for or against the use of the Winchester area for the underground storage of gas, but I impress upon the Minister, as I would upon any other Minister, to whichever party he belonged, that far too much time is taken to obtain and purchase land that is required quickly for the benefit of the nation. To take the example of roadways, one finds that a person can raise objections on three separate occasions when the building of a new road is planned. The same kind of arguments can be used at three different hearings. I hope that that kind of practice will not be allowed to operate in this instance. One hearing should be enough for the submission of objections that an individual or a group of individuals might have against the underground storage of gas.
§ Rear-Admiral Morgan Giles
I should like to emphasise that what the people objected to on the occasion of the previous Bill was not what it was intended to do but the way in which it was presented. My point was that these things should be presented in a way that people would accept and would regard as reasonable.
§ Mr. Wainwright
I agree with what the hon. and gallant Member says. It is, 631 however, easy to raise objections no matter how a Bill is presented. Possibly, there was a lack of communication. If a worth-while project is defeated by public opinion because it is wrongly presented the ultimate decision is bound to be wrong. As I have said, however, I am not arguing the pros and cons of whether the area in question was the right one.
I should like to say a few words about the reason for the great move forward towards underground storage of gas. Obviously, over a period of years, there has been a switch from coal to oil. Whereas the present consumption of coal for the production of gas is about 20 million tons a year, within the next few years this figure will fall to 14 million tons and, depending upon the sources of gas supply, it is not impossible for the industry's demand for coal to disappear completely in the not too distant future.
There are various sources of supply of gas. Not only does it come from the Sahara but Holland has offered to supply half of our gas requirements at a rather cheap rate. In addition, there is the important factor that after 15 months of research the Gas Council has suddenly found that gas can be obtained from light distillates more cheaply than by various other means.
Sixty-five plants for the processing of light distillates are to be built within the next two or three years and a further 75 plants are envisaged by the mid-1970s. By the time those further 75 plants are built for the production of that kind of gas the coal industry will have lost its market for the gas industry. I do not know whether that is a good or a bad thing, but I notice that right hon. and hon. Members opposite always seem to look gleefully upon any project that will harm the coal industry.
§ Mr. Peyton
I should like to get the record straight and say outright that there is no truth whatever in what the hon. Member is saying. It is fatuous.
§ Mr. Wainwright
The hon. Member always gives the impression that he speaks on behalf of all his hon. Friends.
§ Mr. Wainwright
On this issue he does not, and one knows it. I do not criticise the hon. Member for Yeovil (Mr. Peyton), because he and I have taken part in many debates on issues concerning the nationalised industries, but what I have said is quite true and I can readily produce sufficient evidence to support what I say. On issues of this kind one has to be broadminded.
I should like to know, if our efforts to produce gas from light distillates are successful, what will happen to the much-vaunted imports of liquefied gas from the Sahara. Was a contract entered into by the previous Government binding this country for 15 years to import 354 million therms of natural gas a year? If so, that is a great pity and there must have been lack of foresight even by the Gas Council. If that is true the nation will have a financial responsibility to bear. If the Gas Council has to do what the coal industry did it will have to bear the loss on that contract should one occur.
The coal industry has carried out its responsibilities without any cost to the nation. When coal was imported it cost the industry between £70 and £72 million—the difference between the price of imported coal and the selling price in this country. Many other penalties have been imposed on this industry, and I hope that on this occasion any impact which the Bill has on the industry, as it must have, will be considered in a more kindly light than has been the case in the past.
The coal industry has gone through a rather tortuous time since 1957. The National Coal Board has met its responsibilities with regard to unemployment by making certain, in consultation with the Ministry of Labour, that work was found for the majority of men who became redundant. This new method of producing gas will mean that some carbonising plants will have to be closed. The Government must ensure that men who become redundant from those plants are looked after. The Government must accept that responsibility, or make certain that the Gas Council accepts it, just as the National Coal Board accepted responsibility for finding employment for men who became redundant. If that is done, the men concerned will co-operate to the full extent with the Gas Council when these closures take place.
633 These new gas works will be a tremendous improvement on the existing ores. They will need only about one-ninth of the space required by the traditional gas producing plants and will cost about one-eighth of their price to build. Thus they will provide a tremendous impetus for the Gas Council to produce cheap fuel. The Government must bear in mind the effect which this cheap method of production will have on the coal industry. The nation should make some contribution to alleviate the blow which this industry will suffer. I hope that serious consideration will be given to the possible effects of the Bill on the coal industry.
Oil and gas can be stored far more easily than coal. This method of storing gas underground could help to lessen the impact of a sudden demand for fuel. These underground reserves could be used when the demand for fuel exceeded the supply. I think, therefore, that the Government's policy should be to allow the coal industry to continue to produce the coal that is required to meet the country's fuel demands, and use gas and oil as buffers during times of shortage.
I hope that everyone will remember the tremendous contribution which the coal industry has made to the economy of this country since the end of the war. It provided us with cheaper fuel than was supplied abroad. I hope that the Government will accept responsibility for the social consequences which might ensue from the closure of pits following an increase in the production of gas, so that the coal industry does not suffer as badly as it has done in the past.
This is a useful Bill. There is nothing new in storing gas underground. We are probably the last country in the world to adopt this method. As far as I know, no accidents have been recorded abroad where gas has been stored, and there should, therefore, be no great objection to storing it in this country. I hope that the Gas Council will not run into difficulties in trying to carry out the proposals in the Bill, because I think that the underground storage of gas will make a great contribution to the betterment of our country.
§ 7.36 p.m.
§ Mr. Bernard Braine (Essex, South-East)
I have no quarrel with the purposes of the Bill. It is quite clear, from 634 everything that has been said, that it is a timely and sensible Measure. I am sure that everyone has welcomed the exciting technical advances which have been made by the gas industry and the contribution which it is making to the national economy. To the extent that the Bill provides a framework within which the industry can develop and expand, and thus better serve the nation. it is a good thing.
I intervene—and I promise to be brief—not to criticise the essential purposes of the Bill, but to focus attention on a point of principle which touches the interests of my constituency. By a curious twist, the Bill contain a provision which, according to the advice that I have received, is likely to have an adverse and unfair effect upon my constituency, and, as far as I am aware, upon my constituency alone.
The Explanatory and Financial Memorandum says that part of the purpose of Clause 3, which deals with the rating of Gas Council and gas board premises, is to clarify the application of the rating law to liquefied gas. Liquefied methane gas is brought into this country and turned into vapour gas for feeding into the national gas grid at a vast plant on Canvey Island in my constituency. Some reference to this has been made during the debate. The plant is operated by the North Thames Gas Board, and it is one of the latest and best of its kind in the world.
It was here that the whole exciting methane gas project started. It is from here that before long about one-tenth of the gas consumed in Britain will come, perhaps even more later on. When completed, the project will cover about 70 acres, including valuable river frontage. It includes jetties, processing plant, and a large number of storage tanks.
When the local authority—the Canvey Island Urban District Council—became aware of the magnitude of the scheme, it made representations to the Ministry of Housing and Local Government that this processing of liquid gas was a manufacturing process within the meaning of Section 11(4) of the Local Government Act, 1958, and the Council, as a rating authority, should therefore receive a substantial proportion of the rateable value as computed by the formula laid down in that Act. I shall telescope my argument 635 because I am aware that this is a constituency point and I do not wish to detain the House. Nevertheless, I think that I shall be able to show that it is a point of principle, and that the House ought to know about it before giving the Bill a Second Reading.
The Ministry of Housing and Local Government replied last June saying that the point was also of concern to the Inland Revenue. It also stated that a working party on rating and valuation was reviewing the formula which governed the assessment of nationalised industries. Naturally, any local authority concerned about its rateable income would hardly be satisfied with this reply. The local authority accordingly made representations to the Urban District Councils Association and the local valuation officer. The latter passed the buck to the Solicitor for the Inland Revenue, and nothing more was heard.
The Urban District Councils Association, however, took the matter up. It thought that the Canvey Council had a good point. It appeared from the replies the Association received that the Government's attitude was that the Council had a valid complaint on this score but that if that point was conceded it would have had the effect of increasing the rate income of Canvey to a great extent to the detriment of other authorities.
If that is so, it seems to me to be a poor argument. Clearly the importation of liquid methane represents a very important contribution to gas production, which will bring enormous benefit to the national economy. This would not be possible if the plant had not been put on Canvey Island. I understand that it is the only plant of its kind in the country. It is Canvey that has provided the land, the facilities and the valuable water frontage necessary to bring in material which can be processed into gas to serve a large population.
We are all constituency Members, and I hope that I carry other hon. Members with me in saying that, contrary to the general practice, the local authority will not be able to draw a rate revenue from industrial premises of this kind and that this is manifestly unfair. Clause 3 is specifically designed to prevent this local authority from getting the benefit that it 636 should. Clause 3(1) is quite specific. It says:No premises occupied for operational purposes by the Gas Council shall be liable to be rated, or to be included in any rate, or in any valuation list or valuation roll.To make sure that there is no doubt about the methane plant on Canvey Island, subsection (7) expressly lays down that the liquefaction of gas and the evaporation of gas in a liquid state
do not of themselves constitute the manufacture of gas or the application of a process to gas".If the matter were left there it would be unsatisfactory and unfair, and the sole purpose of my intervention in this extremely interesting debate is to secure from the Minister tonight some clarification of the matter, and an assurance. I suggest that it is unfair to leave the matter where it is with a local authority and the community which that authority serves being deprived of a fair share of the gas rate of the North Thames Gas Board.
If the land in question were being used by a private commercial concern the rateable value from the jetty alone would be considerable. Indeed, the Ministry of Housing and Local Government has already conceded to the Urban District Councils Association that the present gas rating formula does less than justice to Canvey Island and has indicated that the provision in the Bill is purely a holding operation pending the outcome of the working party review on gas rating. I ask the Minister to bear in mind the fact that another Government Department has said this.
I seem to recall that when the question of the rating liability of area gas boards was discussed, in the Rating and Valuation Bill, 1957, the suggestion was made that where industrial gas from a steel company was purified the value of the premises concerned should be included in calculations for the benefit of the local authority concerned, and a promise was made that such points would be remembered when discussions took place between local authorities and nationalised industries. That promise is not fulfilled in the Bill. The House should, therefore, know that it is being asked to approve an anomalous and unsatisfactory provision. I trust, therefore, that the Minister will deal with the point and will be able to assure me that a 637 reform of the rating of gas undertakings will be carried out to ensure fair treatment to local authorities.
I want to be fair. I know that this is a narrow point, and appreciate that the hon. Member cannot now be expected to give me an exact indication when the working party will report. I recognise that that is outwith the responsibility of his Ministry. But I should be obliged if he would give me an assurance that he and his right hon. Friend will do all that they can to ensure that the working party arrives at a just and fair solution of this problem as soon as possible.
With those few words, I hope, in company with the rest of my hon. Friends, that the Bill gets a Second Reading, and I wish it well.
§ 7.47 p.m.
§ Mr. Patrick Jenkin (Wanstead and Woodford)
I hope that my hon. Friend the Member for Essex, South-East (Mr. Braine) will forgive me if I do not pursue him down the somewhat tortuous paths along which he so skilfully led the House. I skipped Clause 3 entirely because it appeared to me to be a matter of very specialised concern. Listening to the speech made by the hon. Member for Dearne Valley (Mr. Wainwright), I was reminded that he and I will be touring coal board installations next week. I understand that the Whips have been kind enough to give us a dispensation, and I look forward to learning more from hint about the problems of the coal industry.
I learnt something about the coal industry at an early stage in my career when I was conducted round some pits in South Wales, and the industry has always been a particular interest of mine. I look forward to learning more about it. The hon. Member for Dearne Valley and my hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan Giles) made courageous speeches—the one because the industry in which he has spent his life seems likely to suffer as a result of the growth and development o fthe industry and the other because his constituency is obviously affected by the proposals in Part II. If I do not follow what they said in their speeches I hope that they will forgive me.
I welcome the opportunity on this occasion—in contradistinction to what 638 happened last week—of being able to support a Bill introduced by the present Government but placed on the stocks and prepared by the previous Government. I hope that we shall not have the same trouble that we had with that Bill. We have had former Ministers of Power addressing the House, beside other experts.
For a short time I was Deputy Chairman of the Metropolitan District Committee of the North Thames Gas Consultative Council. In that capacity I again learned something of the problems and the exciting possibilities of the gas industry. I have been enormously impressed by the way in which it has succeeded, as I think was said by my hon. Friend the Member for Yeovil (Mr. Peyton), in creating a new image by its splendid advertising campaign and more particularly by the new appliances particularly those used for central heating which have made such an impact. One interesting point is that the advertising of high-speed gas has become so successful that one lady went into her local showroom and demanded that all her appliances should be replaced with appliances to enable her to use the new high-speed gas.
Reference has been made to the importation of methane. This sprang from the initiative of the North Thames Gas Board under Sir David Milne-Watson, who was then its enterprising Chairman and who now has gone to pastures new. I pay tribute to him for the valuable work he did. I welcome the more competitive approach of the gas industry in recent years and the way in which it has successfully struggled to maintain, and now substantially to increase, its share of the fuel market. I was much amused, as no doubt were other hon. Members, by the clever advertisement which the industry put out at the time of the dispute about the pylons over the South Downs. It was a picture of an open field to show how a gas main had been put across country which had been entirely unspoilt. I had some sympathy with the criticism of the electricity authority which felt that this was hitting below the green belt.
The technological advances of the industry in the last few years have brought about a need for structural reorganisation. One point seems to me to have been missed. There have been differences on 639 both sides of the House about whether there should be a centralised organisation or whether the existing pattern of a decentralised organisation should be allowed to continue, and a comparison has been made with the electricity industry. The point which seems to have been missed is that, inevitably, the structure of management organisation will be determined by the technical and the technological pattern of the industry, and the difference between the gas industry and the electricity industry particularly, which is being accentuated by developments over the last two or three years, made the pattern of one industry quite inappropriate for the other.
In the electricity industry the pattern has been of constantly larger and larger units supplying wider and wider areas. With electricity generation, the scale of current and the size of the generators used are so large that a centralised generating authority is the only way in which a supply could properly be maintained and controlled. The gas industry, on the other hand—more particularly now that the Lurgi experiment has, unhappily, not fulfilled the possibilities which at one time appeared to be open to it, and the industry is being developed on an oil-based process—will essentially remain an industry of relatively small units serving much smaller areas compared with electricity. It seems to me to be appropriate that the production as well as the distribution and sales should be controlled by area boards. Therefore, it is right to have the decision embodied in the Bill that the Gas Council should be given the necessary authority and powers in order to take account of modern advance and not that a new thirteenth board should be set up to take over these matters.
The hon. Member for Bristol, Central (Mr. Palmer) talked about the problems of centralisation and decentralisation. It has always appeared to me that any organisation which is alive and developing will go through a cycle of alternative centralisation and decentralisation. It is almost a form of breathing. An organisation which does this shows that it is alive. The moment that there is rigidity and ossification in an organisation, when there is no movement to decentralise authority if that becomes necessary and to centralise it again if, in turn, the discrepancy between the units 640 becomes too wide, then that organisation is dead.
Underground storage seems to me a thoroughly desirable development. As has already been pointed out, the advantage of gas as a fuel is the fact that it can be stored, and the supply problem evened out over the peaks and drops which are inevitable in a business as seasonal as this one. Underground storage in such circumstances is a most valuable asset. If I raise some points regarding the Bill, it is not out of any dislike of the Measure—I welcome it—but because I feel that possibly the Minister might like to deal with them when he replies to the debate.
My first point concerns the question of Ministerial responsibility. Throughout this Bill, with the possible exception of the provisions in the Third Schedule relating to control operations, it is only the Minister of Power who is responsible for the various stages. I can understand that this should be so and that it should be wanted by the industry. After all, the Minister of Power is the industry's Minister. He understands its problems and may be assumed to be sympathetic to the objectives of the industry. It seems to me, however, to carry a danger. If one looks at the Bill and particularly Clause 4(4), one finds some of the factors of which the Minister of Power—who is, of course, sympathetic to the Gas Council's objectives—has to take account—… the desirability of preserving natural beauty, of conserving flora, fauna, and geological or physiographical features of special interest, and of protecting buildings and other objects of architectural or historic interest ..I respectfully suggest to the Minister that these functions should not be performed by the Ministry of Power but either by the Ministry of Housing and Local Government or the Ministry of Land and Natural Resources. The analogy of the transmission lines going marching across the hills is not altogether an unreasonable one and not altogether a happy precedent. If the amenity planning side of the very difficult problems were in different hands from those concerned with the promotion of the technological advance, I think that people would have a greater confidence that the various processes, particularly processes of Ministerial decision, and other facets of the problem, were getting proper attention. Too often it is felt that in 641 these cases the Minister is prosecutor, judge and jury. I have an example of this in an entirely different sphere—I shall be out of order if I discuss it at too great a length—that of traffic in London. My right hon. Friend the Member for Wallasey (Mr. Marples) had these tremendous powers. As well as being the traffic man, he had to take account of all the amenity considerations. This has all been changed, and it is now under the Greater London Council where the responsibility for both aspects is dealt with by different committees. The concentration of these powers in one Ministry, with that Ministry itself being responsible for the promotion of the technological advance in the industry, seems to me to be not an altogether happy arrangement. I suggest that stage one, the preliminary stage of the investigation, should fall within the scope of the Ministry of Power and that stage two, after notices have been served on authorities, landowners and everyone else, should be dealt with by the Ministry of Housing and Local Government or the Ministry of Land and Natural Resources.
What has happened to the technical advisory committee originally suggested as being necessary to advise the Minister on the difficult problems created by the Bill? The Gas Council has its experts who would put forward proposals to the Ministry and will use the best technical advice. Is the Minister satisfied that he has experts of comparable calibre to advise him on what is, for this country, a novel technical problem?
If there is to be an advisory committee, it seems to me sensible and proper that it should be a statutory advisory committee and not some sort of unofficial ad hoc body. I hope that the Minister will say something about what localities other than the Winchester one—the Chilterns site—have been suggested for underground storage. In reply to a question in 1963, my right hon. Friend the Member for Bridlington (Mr. Wood), then Minister of Power, said:Exploration is at present taking place within a broad belt of country between Stow-on-the-Wold and the Wash."—[OFFICIAL REPORT, 18th March, 1963; Vol. 674, c. 16.]That sounds more like a railway line which is about to be closed than a geological stratum. Are there other parts of the country where these underground storage sites will be found?
642 On the question of underground storage, there was a point raised by my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) about manmade cavities. I suggest that it is quite right that these should have been left out of this Bill. The problems are quite different. There are man-made cavities, particularly in salt mines, which are at present being used for the storage of materials and the problems do not apply in the same way as they do to the permeable strata in which gas is likely to be stored. If the Parliamentary Secretary could deal briefly with these points, I should be most grateful.
A rather different point which has been left out of the Bill and, curiously enough, was left out of the earlier Act, the 1948 Act as well, is a definition of what is meant by gas. I was a member last year of a committee of the Association of British Chemical Manufacturers. It had to examine this point in response to a letter from the Board of Trade on an initiative of the Ministry of Power. I should, of course, declare an interest, as I worked for a firm concerned with this problem. The gas industry is very fond of saying that it is not a monopoly, that it competes with other forms of energy and that, in particular, a customer is free to decide whether he should use it or not, but to say that the gas industry is not a monopoly is only a half-truth, because in its sphere it is a monopoly, perhaps appropriately so as a public utility. Its monopoly position is created by Section 52 of the 1948 Act. It takes two forms. The first leg of the monopoly position is that no one else may supply gas without the consent of the appropriate area board, and the Gas Council is now brought into this prohibition by the Bill. The second leg is that the gas board may require other producers to sell to it. Rather strangely, this applies only to gas delivered in pipelines. It is fair to say therefore that the nationalised gas industry has a monopoly position in the supply of gas through pipelines.
§ Mr. Palmer
Surely this was always the case before nationalisation. All gas undertakings, whether company or municiptal, had a territorial monopoly.
§ Mr. Jenkin
That is quite right, but I come to the point of the effect of this today. Even in 1948, refinery operations 643 were still at an early stage in this country, and the petro-chemical industry hardly existed at all. The point which I wish to make is that, clearly, the gas industry which the 1948 Act was intended to cover—and should indeed be covered by that Act and by this Bill—was that which related to the provision of town gas. At that stage, industrial gases were delivered either in cylinders or perhaps in tankers and the provision of a piped supply hardly existed. But today, there are a great many chemicals which are delivered in a gaseous form and are transmitted by pipe-line. I can mention only some examples—the olefins produced by the cracking of hydrocarbons and ethylene and propylene, both used in plastics, and other chemicals, butadiene, used for dyeing and used in synthetic rubber, the liquefied petroleum gases, propane and butane. Hydrogen, is a gas and there are non-combustible gases, oxygen, nitrogen and carbon dioxide. Some have even suggested that superheated steam is a gas which technically could come within the provisions of this Act. Clearly it was never intended to apply to all these chemicals, but the area boards are today treating their position under the 1948 Act as if all these gases come within the scope of the Act and they are, in some cases, requiring that they be approached for consents to pipe these chemical raw materials and chemical teed stocks if they are taken from the chemical manufacturers to their customers.
In practice, this is confined to the combustible gases because it would be too ridiculous to suggest that the gas board would be interested in nitrogen and steam. Of course, there are long-term agreements—20-year agreements—which the industry has entered into with the oil industry, providing for automatic consent, subject to a lot of conditions. That would appear to be not unreasonable, because the oil industry is a fuel industry—but the chemical industry is not a fuel industry. The chemical industry, so I understand, resents this intrusion by the area gas boards into their business. It was never intended that this should be so. This was made perfectly clear by a passage which I shall quote from the then Government spokesman in the House of Lords. Lord Chorley was pressed on this question and he said on 8th July, 1948: 644Before we adjourned, I was asked a number of questions … The first point which I would like to make in answer to the noble Lord, on the question of what sort of gases the Bill applies to, is that in our view it is sufficiently clear from the general tenor of the Bill that it applies to coal gas and not to the various types of industrial gases which the noble Viscount had in mind … I am ready to look at it again, and if any words can be provided to make that clear, by definition or otherwise we shall be glad to insert them."—[OFFICIAL REPORT, House of Lords, 8th July, 1948; Vol. 157, c. 648.]In that event, as hon. Members will be aware, no words were ever inserted and the passage remained as it is today, with the area gas boards claiming some sort of authority over the disposal of a large number of gaseous chemicals transmitted by pipeline, with which I would suggest they have nothing whatever to do.
The point was recognised when the Continental Shelf Act was passed. Section 9 of that Act makes it clear that gases supplied for industrial purposes or even supplied as fuel in connection with industrial purposes are outside the scope of that Act. What I should like to suggest—perhaps the Parliamentary Secretary would give this the most careful consideration, with his right hon. Friend—is that this is an opportunity to bring the 1948 Act into line with the Continental Shelf Act. At the same time, he may also consider the Petroleum Production Act, 1934, which covered the same point. Still better, if possible, gas should be defined and it should not depend on the temperature or pressure at which it is transmitted. It could apply to gases combustible in air and perhaps should apply only to specific gases designated by Statutory Instrument. That would be the fairest and safest way to make clear for all concerned to what gases the prohibition in section 52 applies.
I would submit that the technological advances in the petroleum and chemical industries in the last 12 to 15 years should not unwittingly create extensions of the statutory powers or the statutory monopoly set up by the 1948 Act. This was never intended, and indeed was expressly disclaimed, and the legislation has, to that extent, practical defects. I hope that the Government will be able to accept this and that they will move the necessary Amendments in Committee. If they do not, I and my hon. 645 Friends will have to consider whether this is something that we should do ourselves. I hope that from previous experience that the Parliamentary Secretary does not view that with too much gloom.
I welcome the Bill. This seems to me to be an admirable and necessary advance for a modern, thriving gas industry. It has become in the course of the last ten years a technological, science-based industry right in the forefront of our modern industrial revolution. I and my hon. Friends hope that the gas industry will go forward, able to play a bigger and more important part in the provision of the nation's energy supplies.
§ 8.10 p.m.
§ Mr. Peter Bessell (Bodmin)
I do not propose to take up much time. I merely want to add from this bench my support, and that of my hon. Friends, for the Bill, which is another step forward in the history of this remarkable industry. I am very glad indeed to see that the Government have taken this action expeditiously, and I am sure that it will do a great deal to encourage this industry in its progress.
It will be no surprise to Members of the Government to hear me say that the term "nationalisation" is anathema to me and to my party, and certainly we should not support any further measures of nationalisation, as they are well aware. But this industry has undoubtedly thrived under nationalisation, and I believe that in this case there were strong arguments for putting the industry under public ownership. The fact that it has thrived in the years since the 1948 Act is not only a tribute to the Labour Party, who were in Government at that time, but is also a tribute to the former Government, which had 13 years in office. I do not hesitate from this bench which, however it may be placed physically, can be described metaphorically as a cross-bench, to pay tribute to both major parties in the House for the considerable work which has been done by them to encourage the progress which this industry has made. Tonight we welcome a further measure in that direction.
The industry is efficient. It has carried out its work remarkably well and has given outstanding service to the whole of the British public. It has the merit of being very largely a self-capitalised Indus- 646 try, and the amount of money which it has produced for its own capital development out of revenue should be an example to every other nationalised industry in this country. It has been progressive. There are exciting developments under way, which have been referred to at length by previous speakers. I shall say nothing about them except that we are as excited about them as is everyone else.
Next, there is the contribution to the health of the nation which the gas industry has made. We have all recognised the need to encourage smokeless zones and to discourage the pollution of air, and in this respect the development of the gas industry as a means of heating has already made a remarkable contribution, and it must continue to do so.
Perhaps the final point which every hon. Member and right hon. Member will appreciate is that of all nationalised industries this is perhaps the one about which we receive the fewest complaints from our constituents. That naturally commends it to all of us. I wish that the same could be said about some other nationalised industries, notably British Railways.
Having said that, may I pass to one or two points in the Bill. Clause 1, which widens the powers of the Council and to some extent of the Minister, is, I believe, necessary. I can see no objection to it, and it appears that it is in line with the recommendations of the Select Committee. Clause 3 is welcome because it helps to clean up the position with regard to rating, although I confess that I have some sympathy with the hon. Member for Essex, South-East (Mr. Braine), who undoubtedly made a very strong point, which I hope the Minister will consider in his reply.
Clause 4, dealing with underground storage, represents the bones of the Bill and is a most important step in the right direction. Not only does it represent a very wise use of land and natural resources, not only is it an entirely progressive step for the industry to take, but it is a very much safer and more satisfactory method of storing gas. It is unsightly to see large storage units above ground, and there is also the problem of maintenance, which can be very expensive, whereas maintenance below ground would be 647 negligible and provides a very large area of storage at the minimum capital cost. This aspect of the Bill can scarcely be subject to any criticism.
The financial aspects are dealt with in Clause 30. It is clear that any additional funds will be provided, as at present, under Section 2 of the Electricity and Gas Act, 1963. I have only one word of caution to add. I notice in the Report of the Select Committee on Nationalised Industries, reading volume 1 of the Report of the Proceedings of the Committee, which was set up in November, 1960, that in paragraph 158, on page 37 of the evidence, the South-Western Board stated that self-financing had always been their first aim even at a time when they hoped for an expansion of sales. That is commendable and very much in line with my experience of this particularly efficient Board in the south-western area, and I hope that everything will be done by the Minister and the Government to encourage this attitude towards the finances of the industry, which was certainly encouraged by the previous Government. I hope that this attitude will continue.
From this bench, and without reservation, I welcome the Bill. I believe that it will give considerable encouragement to an industry which hon. Members on all sides of the House recognise as an efficient and admirable industry in every way, and one which is rendering great service to the nation.
§ 8.17 p.m.
§ Mr. Nicholas Ridley (Cirencester and Tewkesbury)
We have had a very good debate on the Bill and many useful speeches have been made. We have had the benefit of one Liberal speech, three Socialist speeches and six Conservative speeches from the back benches, which I hope will be interpreted as a measure of the interest in the Bill. We have had the benefit of the presence of no fewer than four Ministers of Power, two ex, one existing and, in my opinion, one future. We have also had the benefit of the presence of the Minister of Technology for a very short time. I had hoped that he would intervene in the debate, because this is an industry in which technology is playing a very large part.
I hope that my hon. Friend the Member for Essex, South-West (Mr. Braine) will 648 forgive me if I do not pursue his point about the rating of Canvey Island. I should like to hear what the Parliamentary Secretary has to say about that, and I am sure that we can follow the point in Committee, at great length if necessary, because it is clearly a point of great importance to the electorate at Canvey Island.
May I start with a document which I was reading to get some background to the debate? I refer to the Ridley Report, which I was reading this weekend. I turned idly to the Gas Council's evidence in 1952 to the Committee bearing that name, and I read this:Preliminary figures provided by the area Boards show an estimated coal requirement of 36.8 million tons by 1960.Later it stated:… the coal requirement of the Gas Industry by 1965 would be 40.5 million tons".In fact, in 1960 the gas industry consumed 22 million tons and in 1965 it expects to consume 16½ million tons.
These figures bring home more than anything else could how dangerous it is to rely on forecasts of this sort of thing. It shows fundamentally what can happen in the short space of eight or 13 years with a simple forecast of this nature. Incidentally, the same Report forecast a consumption of coal at home of 250 million tons this year. How that would gladden the heart of the noble Lord, Lord Robens, had it come true. However, it is not true and there can never be an excuse for trying to force events to conform to previous forecasts.
I regret that the Minister of Power is not in his place. I am sorry that he was not with us on Tuesday after telling us about his plans for the coal industry and his views on this whole question of forecasting, which has been mentioned a good deal in the debate today. I thought that he might have done us the courtesy of allowing us to question him so that he could elucidate what he meant by his statement. He did not elucidate it this afternoon and, so far, he has provided no opportunity for us to question him about it. I hope that the Parliamentary Secretary will say something about it in view of the widespread worry evidenced by today's debate of what the statement meant and what is the real policy behind it.
649 I am glad that, as far as I can see, the Minister is not going to have a coordinated fuel policy. He talked about trying to get agreement by the autumn, and he went on to say, "Then we will go on to make the thing practicable after the autumn". That is looking a long way ahead and I doubt whether the Minister will be sitting on the Government Front Bench by then, so there is some relief to be felt by us about this whole question now.
§ The Parliamentary Secretary to the Ministry of Power (Mr. John Morris)
To take up the hon. Member's suggestion a little earlier, it is dangerous to make forecasts.
§ Mr. Ridley
We will see how that one turns out.
I am happy to foregive the Minister for his Advisory Committee because I can see that after all the pressure of talk from the other side it was necessary for him to produce something which looks like a committee charged with producing a fuel policy. But when the show is looked into, instead of having substance it becomes just a talking shop for the leaders of the fuel industries, which is something we can in no way complain about. In fact, we welcome it. I return to the Ridley Report on this subject, which stated on page 70:The Minister of Fuel and Power has the statutory duty of generally controlling and co-ordinating fuel supplies and we see no reason why he should share it with any new authority.Nor do we. We see no reason why the Minister should delegate this original duty put on him or why any new arrangements are necessary.
It seems to us from what we can glean from the Minister's statement that there has been no target set for the coal industry—at least, no target which would be underpinned by a Government guarantee. It would, in my opinion, clearly be wrong today to take any action which would try to fix a target, especially when one thinks of those far off shots I mentioned in regard to the coal industry in 1962. I believe that one can affect the supply of coal, but I have never understood how hon. Members opposite intend to affect the demand for it.
The hon. Member for Bristol, Central (Mr. Palmer) talked about consumer choice and said that one could have a 650 fuel policy yet keep consumer choice. I do not believe that one can, because this would affect the demand. If consumers, for price, convenience or other reasons, choose a fuel other than that which one expects, the demand will change and it is inevitable that that must be reflected in the supply. I am sceptical as to what is meant by this whole argument.
§ Mr. Palmer
Surely it is important that the consumers should have impartial advice on the merits of the various fuels, advice which at present they lack?
§ Mr. Ridley
In any system of competition—and I appreciate that this is the difference between the two parties—it is inevitable that advertising must grow up to fulfil the function which the hon. Gentleman is looking for. Where one has, as in this case, two fuels, probably both nationalised, competing against each other, advertising is bound to be the answer because each can advertise its wares to the best advantage. However, I think that the hon. Member will agree that there are few examples in our commercial life where impartial advice as to which is the best product is given to or, indeed, is taken by consumers.
I join with those who have congratulated the gas industry, its leaders and those who work in it for what they have achieved. It is currently supplying 6 per cent. of our energy, as my right hon. Friend the Member for Sutton Coldfield (Mr. Geoffrey Lloyd) pointed out, and I think that it will tend to grow in future. It is, therefore, of the greatest importance that we should debate it, and I congratulate the Government on having had two debates on the gas industry in the first 118 days.
In the first debate the Minister said that it was not appropriate to discuss Sahara methane, Dutch natural gas, North Sea gas and oil derivatives at that time, but we have had a good debate on these subjects and they have been brought into all the themes of today's debate. I had hoped that the Minister would have said a little more about these matters because we would like to know how he thinks the various takes of feed stocks will go. We can only assume that it will not be long before we 651 have another Bill to increase the borrowing powers of the Gas Council. Perhaps on that occasion he will tell us more about the plans for the future. I do not know when the next Bill is likely to be brought forward and perhaps the Parliamentary Secretary will tell us something about this.
The Gas Council has an extremely difficult period ahead because it must evaluate the chances of getting raw materials from all of these different sources and try to balance the advantages of one against the other and of one price against the other. There could possibly be a break-through in North Sea development, a successful arrangement made with the Dutch, in regard to laying a pipeline across the Channel, and a successful bargain made with them on price. On the other hand, if we are unlucky and do not find any gas in the North Sea we might be in a worse position vis-à-vis the Dutch afterwards. The Gas Council has an extremely difficult poker game to play in the future, and I am sure that we wish it the very greatest success.
One of the difficulties of the Dutch scheme will be that the cost of laying a pipeline across the English Channel will require a very large volume of gas to pass through it if it is to be worth while, and to commit ourselves to this scheme will clearly prejudice our chances of getting cheaper gas if we find it in the North Sea. It will be very much harder if the Government in any way try to coerce the gas industry into sticking to agreed figures of coal production, or try in any way to alter the Council's determination to use what fuel it will.
When the Minister spoke in our debate on the last borrowing Bill he seemed to harbour a lot of ill will for the oil industry. He then said:… the time has come for the Government to set up a committee of experts to examine methods used by international oil companies in marketing their products.Later, he said:I would tax very heavily fuel oil. …"— [OFFICIAL REPORT, 8th May, 1960; Vol. 619, c. 264-7.]That sort of unsupported allegation, that sort of attack on the oil industry, typified the speeches of right hon. and hon. Members opposite when they were in Opposition, and when, in this debate, I 652 heard hon. Members accusing this side of being prejudiced against nationalisation, I cannot help telling them that they have not been particularly trustworthy and friendly towards some private enterprise industries in the past. I do not think that there is any need for them to be, so to speak, suspicious of private enterprise, any more than my hon. Friends are suspicious of the existing nationalised industries.
The argument between the two sides must be whether or not the principle of nationalisation should be extended, but these declarations, and points made in the other place, lead one to question whether the gas industry would have fared so well if the party opposite had been in office in those days. The hon. Member for Norwich, South (Mr. Norwood), who made a most interesting speech, questioned that, but I ask him to read what some members of the Labour Party then said about the gas industry's desire to take new forms of raw material.
I am quite certain that the whole House will agree that the Gas Council must take a greater share in determining the policy in the industry, and the possibility of large-scale manufacture by the Lurgi process, the use of methane from all sources, and underground storage, make it essential that the Gas Council should have greater control over the operation of the industry as a whole.
I congratulate the Select Committee on its analysis of the problem as long as four years ago, and the extremely good arguments it put forward. It might be said that it was the Select Committee's initiative that has finally brought this Bill before us. I particularly like the use of "interdependence" as a replacement for "independence" in its Report.
We must all agree that the national plan is important and that local objections to new processes should be subordinate to the national importance. It is just one more example in this industry of the importance of getting the right scale, the right breadth into the industry for it to accommodate itself to new techniques and technology. It is interesting that hon. Members opposite should continue to tell us that only a nationalised industry can achieve this unified overall control, but that when private enterprise tries by takeover bids and by increasing its size to get 653 in the same sort of position as the Gas Council, we have it thrown at us that it is a monopoly, that it is a cartel, and the most shocking and dangerous thing.
Hon. Members opposite cannot have it both ways. If they want centralised control, they must give up attacking private industry when it tries to achieve it—
§ Mr. Palmer
The difference of principle is that in the one case there is public accountability and in the other there is not.
§ Mr. Ridley
I suppose that the hon. Member means by that that it does not matter if a nationalised industry loses money; but it does matter if a private industry loses it.
The arrangements whereby it was the North Thames Gas Board which started to import methane means, I suggest, that there is something peculiar about this. It should surely have been more of a national concern than a North Thames one that methane should have been imported in this way. I personally welcome the provisions in the Bill which increase the strength of the Council and also its powers to manufacture and sell gas.
There was some debate between the hon. Members for Norwich, South and Bristol, Central about whether the Gas Council should have had power to manufacture and sell or whether the thirteenth board, so to speak, should have been brought into existence. My right hon. Friend the Member for Bridlington (Mr. Wood), who came down heavily on the side of the Council having power to manufacture and sell, put the argument at its very best. I agree entirely with what he said.
The Select Committee was very hesitant about whether it was right to recommend a thirteenth board. The Committee ad, mitted in its Report the difficuly that if there were a thirteenth board it would eventually mean the transfer of gas generating assets from area boards to a generating board, with all the attendant difficulties of assessing their value and of book-keeping which this would have entailed. The House is more or less agreed that the Government have followed the right procedure in the Bill.
I do not know quite whether it is right to increase the number of Council members by only three. This is one of 654 the points we should like to probe a little in Committee. It could well be that three is a slightly small number of extra members. There might be room for some part-time members, as there are on some of the other nationalised boards. We will want to be satisfied by the Government in Committee that they have the right structure for the reformed Council.
Moving for a short time to the issue of underground storage, perhaps I should declare a constituency interest. My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) mentioned Stow-on-the-Wold, which is in my constituency. Over the years I saw many drilling rigs round about, but I was never quite sure what they were for until I was told the other day by the Gas Council that it had not found a suitable storage area under Stow-on-the-Wold.
My hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan Giles), who is the most obviously interested of all Members in this project, made the most welcome and responsible speech. I am sorry that I missed it, but I am told that he recognised the need for the Bill and welcomed it in principle. I well remember the time when Mr. Peter Smithers represented Winchester and the very strong opposition which came from him to the Private Bill which came at that time. I can assure the House that it was not his opposition which prompted the then Government to support Mr. Smither's candidature for the Secretary-Generalship of the Council of Europe. Private Bills are unsatisfactory. I think we all agree that it was no correct way to legislate on underground storage to do it by means of a Private Bill.
This Bill, now that we have it before us, includes the sort of compensation terms, safety regulations and Government control which we should all like to see applied to an operation of this sort. It is, however, an unhappy thought what delays have resulted from the failure of the Private Bill to pass the House. It was withdrawn in March, 1962, and in July, 1962, the Government announced their decision to bring in a Public Bill. Now, nearly three years later, we have the Second Reading of that Public Bill. This shows that, if the original mistake had not been made of bringing the matter forward in a Private Bill, we might well have had some leeway, instead of being 655 well behind all our fellow industrial countries in this matter. Germany has had underground storage for 10 years. I am told that the United States has had it for about 40 years. Nevertheless, I want sincerely to congratulate the Government on bringing the Bill forward—not quite in 100 days but nearly so. I congratulate them very much on preferring it to the contentious Steel Bill, about which I am sure they are beginning to have second thoughts.
In order to have an equalised rate of supply of gas in this country we should have to have, I am told, storage capacity for about 60,000 million cubic ft. of gas. The maximum rate in winter can be three times as high as the minimum rate in summer at which the consumer draws gas. If we take the average gasholder as holding 5 million cubic ft., the necessary storage capacity of that kind would work out at 12,000 average gasholders, and I think we should all agree that 12,000 average gasholders would be out of the question. The Chilcomb site is estimated to have storage capacity of 10,000 to 12,000 million cubic ft., so six storages of that size would meet the national problem at present. I think it more likely that it will be hard to find six storages rather than that we shall find more than six. But I hope that the Gas Council is successful in its storage plans and that it will make full use of the enormous benefits which can come to it from such methods.
I press on the Parliamentary Secretary the point which my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) made, that the Bill does not contain provisions for using man-made or other sorts of holes in the ground for storage. The Bill is quite explicit in this repect and only porous strata are mentioned. I should like to know what the position is as regards man-made storages, man-made caverns and the like, and why provision for these has not been included in the Bill. It is most important that all possible storages should be made available.
We are all fairly well satisfied with the safety provisions of the Bill, although we shall want them to probe them a little in Committee. We are relieved to hear that methane is non-toxic, so that, in any case, if there were a leakage from one 656 of the storages, one could probably expect no ill effects on the community.
The compensation provisions, likewise, will need close examination in Committee, but there is one point I draw to the attention of the Parliamentary Secretary at this stage. As far as I can see, there is no provision for consequential damage arising out of an accident from gas storage underground.
§ Mr. Ridley
I hear my hon. Friend tuning up in advance for the argument which he will present later this evening when he will ask that compensation for consequential damage or loss of profits should be considered. This defect appears to be running through legislation from the Ministry of Power, and we shall, perhaps, have to raise the question later.
From these benches we welcome the Bill. We regard it as a very good Bill, though we shall do our best in Committee to improve it. We remember keenly the persistence with which right hon. and hon. Members opposite tried to improve the Pipelines Bill and their devoted efforts in that connection. We promise the Minister and his hon. Friend that we shall give this Bill no less attention in Committee, and we shall do all we can to make a good Bill into an even better one.
§ 8.45 p.m.
§ The Parliamentary Secretary to the Ministry of Power (Mr. John Morris)
We have had a most valuable debate, and it is not often that two former Ministers take part together in a debate of this kind. I say at once that the right hon. Member for Bridlington (Mr. Wood), with his usual courtesy, has sent me a note apologising for not being able to be here at this stage.
Some of the speeches by right hon. and hon. Members opposite sounded very strange to me. The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) drew the history of the gas industry in the 1950s and the atmosphere of despair. Indeed, at one stage he sounded like Brother Pilgrim travelling wearily through the Slough of Despond, but eventually he saw the Promised Land and paid high tribute to the industry as it is now.
Indeed, from a large number of right hon. and hon. Members opposite, we 657 had profuse and justifiable tribute to the industry as it is now, including praise from the hon. Member for Yeovil (Mr. Peyton) the right hon. Member for Bridlington, the right hon. Member for Sutton Coldfield and the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin). If I may paraphrase Shakespeare himself, here, in dealing with a great nationalised industry, we are come to praise Caesar and not to bury him. We have heard right hon. and hen. Members opposite at one moment paying great tribute to this publicly-owned industry and then putting on their other suits, changing from Dr. Jekyll to Mr. Hyde, and attacking public ownership.
The suggestion was made several times that if we on this side of the House had had charge of the industry for the last 13 years it would not be in its present state. The sentiment of right hon. and hon. Members opposite seems to be that they oppose nationalisation as they oppose sin, that nationalisation is a great sin but that they are better than we are at organising sin. That was their theme and the hon. Member for Yeovil said at one stage that, despite the sentiments of praise he had expressed about the industry, he and his right hon. and hon. Friends considered that, inevitably, nationalisation made for inefficiency and created immense administrative difficulties.
§ Mr. Peyton
The hon. Gentleman commits the same crime as did his hon. Friend the Member for Bristol, Central (Mr. Palmer). He must not put into my mouth words I did not use. I said that nationalisation is a bad idea and makes the running of an industry more and not less difficult. Therefore, we on these benches condemn it. However, we are condemned to live, when we are in Government, with the results of what right hon. and hon. Members opposite have done, and in doing so we have helped the gas industry forward to a great measure of success. If the hon. Gentleman would leave my words to stand instead of imputing words to me that I have not used, I should be grateful.
§ Mr. Morris
I do not think that I attributed any wrong words to the hon. Member. What I said does not differ from the terms he has just used. We are back to the original position, that 658 he is against nationalisation—against sin—but that he and his right hon. and hon. Friends are better at organising it if it comes to pass. They try to wear two suits. They say they are against it but that they are better at organising it.
I would prefer to accept the sentiments of the hon. Member for Wanstead and Woodford that, after 16 years of public ownership, we have a modern, thriving gas industry in the forefront of the new industrial revolution. I would say that that is not in spite of public ownership but because of it.
Twelve years after vesting day, a Select Committee of this House reported:The gas industry has reached a point of decision at which old processes and the old structure are being called in question. … Your Committee wish to emphasise that these decisions ought not to be delayed.For precisely these reasons—the technological revolution—the Government are presenting this Bill. In 1948, as my right hon. Friend pointed out, we had an entirely local industry, with over 1,000 gasworks in operation. The task then was to integrate the sources of production and also the outlets for sale in each of the varied areas. A yardstick of the vigour of this great publicly-owned industry in rationalising the mixed and varied structure which was found in 1948 is that instead of 1,000 gasworks, it now needs fewer than 300 plants to meet the country's gas needs.
Without belittling the importance of local developments in the board's areas, the march of technology today demands a supplementation of the existing structure and new powers for storage. These are not separate but are interconnected. The first is necessary because of the great technological changes, and it would be difficult to implement the new powers of storage without having an artificial and out-of-balance weight on the component parts of the structure as it exists now.
I do not want to misquote him in any way, but I think that on this occasion I am on safe ground when I say that the hon. Member for Yeovil asked why we had not published a White Paper. This is a matter of judgment. These issues were canvassed before the Select Committee. My right hon. Friend did not think that there was any conflict of principle and he concluded that there should not be a White Paper. However, I take the point 659 of what the hon. Gentleman was saying and I agree that no stone should be left unturned to explain to the public what the Bill means, what effect the storage proposals will have on the lives of the people concerned.
I am sure that when the time comes to make specific proposals and to take the necessary steps to put the gas underground, the Gas Council will bear in mind the remarks and sentiments expressed by hon. Members today.
§ Mr. Peyton
This is a Public Bill. It should not be left to the Gas Council to explain it in principle. Much more weight would be attached to an explanation from the Government. The Select Committee had the benefit of a long, patient and detailed explanation from Sir Henry Jones. The public will not. It is incumbent upon the Government themselves to make some effort to explain this and new developments to the public.
§ Mr. Morris
The first suggestion is largely met by my right hon. Friend's speech today. He went to great lengths to explain the Bill, especially as it dealt with underground storage. He did it in what I thought were the simple terms for which the hon. Gentleman is now asking. A White Paper is not always the best vehicle to convey the meaning of proposals because of the language and phraseology frequently used in such documents. I hope that my right hon. Friend's speech and the proceedings in Committee will bring to the general public what we have in mind.
§ Mr. Peyton
I do not wish to interrupt the hon. Gentleman unnecessarily. I shall be more content if he will agree to reconsider. I hope that he will give this second thoughts. I am asking not just for a White Paper, but for a simple and reasonable explanation which the public can read at leisure. Ministerial speeches are not always read with that care, from whichever party they come.
§ Mr. Morris
Certainly. I thought that at the beginning of my remarks I made the point that we would consider, in consultation with the Gas Council, what is the best vehicle for dealing with the matter. It is not possible for me to give an assurance at this stage. I thought that I made that point abundantly clear.
660 The hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles)—I am sorry that I missed part of his speech—made substantially the same point, namely, that the objection frequently is not to what is done but how it is done. He referred to the importance of the correct presentation of these proposals. I take his point. My right hon. Friend will consider this as part and parcel of the points made by the hon. Member for Yeovil.
Hitherto, as my right hon. Friend indicated, the Gas Council has had some specific powers. The Bill seeks to confer additional powers on the Council so that it can manufacture or acquire gas and supply it to the boards or, with the Minister's consent, direct to particular consumers; and can make and supply products. On such matters as balancing revenue and outgoings, development and the welfare of its employees, the Gas Council will be in the same position as the boards. The basis of the first three Clauses of the Bill is to put the Gas Council into the shoes, as it were, of the gas boards if at some stage it becomes advantageous for it to carry out certain functions now exclusive to the boards. The problem of organisation became acute last October with the very notable achievement of the importation of Algerian methane.
May I deal briefly with the rating point made by the hon. Member for Essex, South-East (Mr. Braine) without going into all the complications of the matter? All that Clause 3 does is, again, to put the Gas Council into the same position as the gas boards. From the point of view of operational premises, gas boards, broadly, are not rated on the individual works in the industry but on a complicated formula which is based on gas bought and sold by the boards. The first part of the provisions in Clause 3 will not affect the amount which local authorities will receive in rates.
However, the unhappiness of the hon. Member for Essex, South-East stems from another part of Clause 3 which deals with liquefied gas. The position in rating law has been clarified in Clause 3 as far as liquefied gas is concerned—for example, Algerian gas which is imported in liquefied form and then re-gasified. I will not go into the technical process, but the basis of it from the point of view of 661 rating law is that an evaporation plant should not be regarded as a place where gas is manufactured, or as such attract rateable value. This is the bone of contention of the Canvey Urban District Council.
The formula determines the amount of rates which the gas industry pays to local authorities. The only asset which weights the distribution of rateable values in favour of the place where the asset is located is a gasworks. We seek in the Clause to ensure that, for the purposes of rating, this plant at Canvey Island is not a gasworks, and therefore, to the unhappiness of the urban district council concerned, would not weight the formula. However, if the position were otherwise, it would upset the amount of rates every other local authority in the North Thames area received.
I am not entirely happy with the situation as it is. The urban district council has been told that the Clause is to be regarded, as the hon. Member indicated, as a holding operation. I have with me the correspondence between the urban district council and the Ministry of Housing and Local Government, and, as the hon. Member has told the House, a working party has been set up. There is no hardship at present because the system of rating is such that the import of gas in October last will not affect the rates until 1966. There is, therefore, no loss so far to the local authority. While the results of the general review of rating arrangements for gas are pending, I ask the local authority to be as patient as it can and to await what emerges from the review.
§ Mr. Braine
I am grateful to the hon. Gentleman for his careful explanation of the position and I appreciate what he has said. Can he indicate when the rating review might be completed?
§ Mr. Morris
I cannot give any precise indication. As the hon. Member appreciates, the working party includes representatives of the local authority associations and the gas industry. I hope, however, that the results of the review will be available in good time and that the local authority will not be unduly jeopardised by the timing. As I have indicated, there will be the period until 1966 during which nothing happens because the amount of gas produced does 662 not affect the formula until the year but one after that in which it is produced.
I leave the issue of rating and return to the question of the Algerian imports to Canvey Island. The installation at Canvey is owned by the North Thames Gas Board. When the pipeline was built from Canvey Island to Manchester, it went through the areas of at least eight other boards. Because no one central authority could own the whole of the pipeline as it passed from the area of one board to another, each section had to be owned by the board through whose area it passed. Although it was possible in such circumstances to achieve the transportation of Algerian methane from Canvey Island to Manchester, in this day and age such an organisation is not the right kind of concern to put into effect the results of these great technological changes in the industry. The object of the exercise is to have a central authority that can undertake this. This is the answer to the Select Committee's first question about whether the existing statutory powers were sufficient to bring about the successful introduction of a national gas system.
In dealing with the Select Committee's second question—whether, if new powers were needed, they should necessarily be granted to the Gas Council—I come to the comments of my hon. Friend the Member for Bristol, Central (Mr. Palmer) and my hon. Friend the Member for Norwich, South (Mr. Norwood). After a relatively short inquiry, the Select Committee of this House came down in favour of the thirteenth board.
My hon. Friend the Member for Bristol, Central seemed to think that we were not going far enough and that there should be somebody with independent power at the centre to check local boards. It is not correct, however, for my hon. Friend to say, as I understood him to do, that the Bill will leave the industry with a Gas Council with its many limitations. The Bill removes all the limitations which concerned the Select Committee.
Dealing with his second point, that there was not a word here about the Minister of Power's functions with regard to co-ordination with the other fuel industries, perhaps I might point out that under the Ministry of Fuel and Power Act, 1945, he has a duty to co-ordinate the fuel industries.
663 The hon. Member for Cirencester and Tewkesbury (Mr. Ridley), was not entirely happy about the Energy Advisory Council which my right hon. Friend set up. My right hon. Friend was not derogating from any powers or duties laid on him by the 1945 Act by setting up this Council. It is, after all, an advisory council, and at the end of the day it is up to my right hon. Friend to make his decision, but, like other Governments, and like most other Ministers, he has deemed it right to get a fairly wide basis of advice and to have consultations, before he comes to any decision.
The hon. and gallant Member for South Fylde (Colonel Lancaster) raised the question of man-made structures and natural cavities, as did the hon. Member for Cirencester and Tewkesbury. This kind of structure is not covered by the Bill as it stands. The reason for this is that in the past there has been no need for legislation to deal with those particular aspects because, first, structures of this kind are usually smaller, and, secondly, if they are needed, authorities have been able to purchase the whole of the land, or, if necessary, rights in the land to develop these structures. As I understand it, it was because neither the Gas Council nor the area boards had the necessary statutory authority compulsorily to acquire rights in porous structures underground that it was necessary to introduce this legislation. If, however, there is any difficulty, or any legislation is necessary to cover these aspects, I am sure that we can consider the matter in Committee, but I am advised that there is no need for legislation.
As my hon. Friend indicated, underground storage is widespread in the United States, and storages have existed since the end of the First World War. One also meets examples in France and Germany. They are new only in the United Kingdom, and they are necessary because of the wide seasonal variation in demand. Figures were quoted earlier in the debate, but we all know of the high cost of capital development in our fuel industries today to provide the capacity that is needed to meet the wide variation in demand in the summer on the one hand, and in the winter on the other.
The very fact of the importation of methane from Algeria makes it necessary 664 to have some sort of storage capacity in this country. This kind of facility, and this kind of power being given to the industry, should, in due course, enable it to provide gas for the consumer as economically as possible.
The Bill does not deal with any specific proposal. It will be for the Gas Council to bring specific projects to the Minister, and it would be wrong to prejudge what projects might come to him, and what decisions he might make.
As I said earlier, the technique is novel only in this country. The Minister has control over what kind of gas is used, and obviously Algerian gas is a strong candidate because it has a large number of attractions. First, as I said earlier, there is the manner in which it is brought here; secondly, its high calorific value and, thirdly, the fact that it is non-toxic. The hon. Member for Yeovil raised the issue of toxicity and the possibility of changes. There have been changes, and there has been a tremendous success in reducing the toxicity of gas sold to consumers.
Under the Bill the Minister will not be limited as to the kind of gas in respect of which he gives consent for underground storage. Any criterion that he uses may change from time to time, because his duty, as laid down in Clause 4, is to have regard to the safety of the public and the protection of water resources.
The hon. Member also asked whether these words, in themselves, were precise enough. I am advised that they are, but perhaps we can also consider that point in Committee. The hon. Member also asked, as did the hon. Member for Cirencester and Tewkesbury whether the gas industry would need to have more borrowing powers. I would only quote the remark made by my right hon. Friend in the debate on 8th December last when he saidthat 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."—[OFFICIAL REPORT, 8th December, 1964; Vol. 703, c. 1465.]As for the procedure laid down for making these storage proposals, the object has been to ensure that the maximum reasonable protection is given to those affected, and that where non-frivolous objections are made no decision will be 665 taken before an inquiry is held. My hon. Friend the Member for Norwich, South asked a bout the time lost when these inquiries have to be held because of objections. There always is the difficulty of trying to achieve a balance between, on the one hand the urgent need of industry to have these new facilities—the same problem arises in the electricity industry—and, on the other hand, the need to ensure that the public, which is vitally concerned, is given a proper opportunity to present its views when objections are raised. We feel that the right balance has been arrived at in the Bill by having two stages and then providing that specified authorities may invoke a special procedure—a procedure which is confined to them.
The hon. Member for Wanstead and Woodford raised the question of Section 52 of the Gas Act, 1948. There are two main proposals in the Bill—first, to enlarge the powers of the Gas Council and, secondly, to provide authority for the underground storage of gas. It is not intended to have a general review of the 1948 Act, but on the point that the hon. Member makes I am given to understand that the gas industry has made agreements with the principal oil companies about the giving of consents under Section 52 for the supply, by pipeline, of petroleum gases for use in chemical processes. That is an indication that the gas industry has been prepared in the past—and I am sure that it will be prepared in the future—to discuss suitable arrangements of this nature with other interested industries.
§ Mr. Patrick Jenkin
Can the Minister give some indication of what has happened in respect of the proposals that were being discussed by the Board of Trade and the Ministry of Fuel and Power upon the point of defining what gas is covered by the 1948 Act? Have they been abandoned?
§ Mr. Morris
I understand that in practice there has been no great difficulty, in that the Gas Council and the gas boards have made these agreements. On the detailed point of the definition of gas, perhaps the hon. Member would raise it at a later juncture, in Committee. I shall then be prepared to try to answer 666 the point. As I understand it, in practice there has been this working arrangement that has been going on for some time.
The hon. Gentleman raised a number of other points. He asked which Ministry should be responsible for making decisions on points at issue relating to flora, fauna and other matters concerned with amenities when orders have to be made. I think it would be a mistake to think of Ministries and Ministers with their own selfish interests when there is a problem of this kind to be resolved. There are means of discussion within the whole field of Government, and the safe storage of gas is preeminently a matter which should be in the statutory charge of the Minister of Power. The hon. Gentleman also asked about a technical advisory committee. This was raised when the Private Bill was brought before the House. The Minister has at his disposal all the technical advice that he needs, but I will look into the question of the committee to which the hon. Member referred.
I have tried to answer most of the points which have been raised in the debate. I commend the Bill to the House. It is a recognition of the changing demands of 1965 upon the industry. It gives to the industry increased and better machinery to carry out its obligation of maintaining an efficient, co-ordinated and economical supply of gas for the country as a whole. It brings this country into line with long-established developments—I wish to emphasise this—in other countries in enabling the industry to store gas in porous strata underground. One hopes that this will add to the efficiency, flexibility and security of supplies of this important fuel.
This Bill will certainly assist a great industry to provide gas for the nation as a whole as cheaply as possible. This great publicly-owned industry has a fine record of service. It must continue to increase in efficiency and the Bill will give it the means to do so in the interests of all.
§ Question put and agreed to.
§ Bill accordingly read a Second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).