HC Deb 20 July 1965 vol 716 cc1475-530

10.3 p.m.

Mr. Patrick McNair-Wilson (Lewisham, West)

I beg to move, Clause 1, in page 1, line 11, to leave out "£900" and insert "£850".

This short Bill seeks to give to the gas industry an alteration in its borrowing powers which were raised from the current £650 million to an ultimate of £1,200 million, with an interim of £900 million. Our Amendment seeks to reduce that figure, as I hope to show, to a more reasonable level. This additional borrowing has been found necessary by the gas industry to cover the capital expenditure in the period up to 1970, together with any other likely contingencies.

While we on this side of the Committee welcome the fact that the gas industry has found itself in a position where it can expand, we nevertheless believe that the sweeping powers envisaged in this Bill should not be allowed to go through without additional parliamentary checks to make sure that the money is spent effectively. We are as happy as anybody that the gas industry has outstripped all the estimates which have been made for it. Only 10 years ago it would have been impossible to envisage the situation where we would be, in this House, considering an expansion programme on this nature.

The National Development Council suggested only last year, when reviewing the growth rate of the industry, that in the current year the figure would be about 5 per cent. We now know that the growth rate has been about 8 per cent. At every corner of the industry one finds expansion and progress. On the sales side, not only in the actual quantity of gas sold, but also in the distribution of space heaters and central heating, one finds that great strides have been made.

All of this we welcome, and in welcoming it we appreciate that additional funds are necessary. What really concerns us is the nature and the amount which it is suggested the industry should be able to borrow. If one looks at the excellent brochure issued by the gas industry, "The Growing Gas Industry", there is there set out the plans which the industry has, together with estimates of expenditure. If we look at page 15 of that brochure, we see estimates of expenditure forecast until 31st December, 1970.

Table 3 shows that the forecast of the gas industry is not an interim figure of £900 million, but a figure of £830 million—£70 million short. This figure, which, in the Amendment, we not only meet but cover with £850 million, seems to us to be very reasonable. Page 16 of the same brochure says—and no doubt this will be touched on in a later Amendment—that the estimates on which those programmes are based have been formulated with great care, taking into account market research". Therefore, we are supported in our Amendment by the words of the gas industry itself.

During the Second Reading debate, the Minister said: The investment of £830 million is substantial by past or any other standards". How right he is when we consider that the money which we are being asked to vote tonight is far in excess of that. We find ourselves in a situation in which both the gas industry and the Minister, having supported the figure of £830 million, are asking for an interim figure of £900 million. In his comments during the Second Reading debate on the financial objectives of the industry, the Minister said: The objective for the next five years has not yet been agreed."—[OFFICIAL REPORT, 9th July, 1965; Vol. 715, c. 2001–2.] The substance of our case is simply this. We are being asked to grant to the industry very considerable additional borrowing powers. We accept that expansion is necessary, but we are very unhappy at the thought of making this very large grant without there being any parliamentary check between now and the ultimate period. Basically, we are asking the country to give the gas industry a very large blank cheque. My hon. Friends and I believe that further justification is necessary. At a time when the fuel industries are facing very considerable uncertainty, with new finds of natural gas, new methods of making nuclear energy, and when perhaps new forms for using existing coal resources can, we hope, be found, we are being asked to make this blanket increase. At a time when everybody on this side of the Committee and, I believe, in the country is looking to the Minister to provide a clearly thought-out fuel policy, this industry is to be given these sweeping increases in borrowing.

Only last week I tabled a Question to the Minister asking him how many times the Fuel Advisory Council had met to discuss the possibility of arriving at a fuel policy. I was very alarmed to find that it had met only twice. It is suggested, I understand, that it shall meet again within the month. But, in view of the uncertainty in the fuel industry, and of the fact that no clearly defined ideas exist as to the relationship between the fuel industries, it is asking too much to grant an interim figure of £900 million without further check.

Over the last 10 or 15 years, we have seen a shrinking in the use of coal in the manufacture of gas. From a 93 per cent. usage, we find today the situation where about 55 per cent. is the figure. If one listens to expert opinion and understands that perhaps that figure will fall at the rate of about 2 million tons a year, one may find by 1974 that the gas industry ceases to be a customer of the National Coal Board.

With this sweeping and very real change in the whole basis of gas making, I believe it is unwise to give to one industry such wide powers without further control. We have heard recently of the very big write-off in the coal industry of £400 million and hon. Members on both sides of the Committee look forward to this money helping to make the coal industry effective and efficient. But the fact is that the money we are talking about tonight, if used, could be a very substantial part of the national income, and all we are asking is that the figure of £900 million should be reduced to something like the figure outlined by the gas industry itself.

Later tonight we may be discussing another aspect of the gas industry in a Bill which deals with underground storage. I must admit to being disappointed when, in his speech on Second Reading, the Minister told us very little about the gas industry's plans in this matter. Indeed, my hon. and gallant Friend for South Fylde (Colonel Lancaster) mentioned it in his speech, and I do not recall that the Parliamentary Secretary dealt with it at all. We have been told nothing of the plans which I understand are going forward for the use of crude oil as opposed to light petroleum distillate for making gas, and I was most interested to read in a comment in The Times of 15th July that the plan for using crude oil as opposed to light petroleum distillate is in an advanced stage.

In that same article, one was told that the Lurgi plant, which is the method of making gas out of coal on which a lot of money has been spent, was described as follows: But the Lurgi process is still an excellent one and a much modified pilot plant is operating successfully at Solihull. However, visitors leave with the impression that this is as much a political sop as a genuine research effort. The point I am trying to make is that, quite apart from the expansion which is taking place, a tremendous amount of technological advance is also taking place within the industry. A lot of new thoughts are coming into the general plans for the future of gas.

I am suggesting to the Minister that it would be far better for him to reduce the figure of £900 million to the one that we have suggested, because it is not a question of stopping the industry from getting the money if it requires it, but merely seeing to it that, if the industry does require this very excessive addition, then parliamentary checks will make sure that we have an opportunity of discussing the matter further.

I hope that our Amendment can be accepted, because I believe that it is a sensible one. It does not seek in any way to inhibit the gas industry. Indeed, it goes further than the suggestions that the gas industry has already made for itself. All we are seeking is to make certain that Parliament and the country shall have an opportunity of studying these matters as and when necessary.

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

I want to understand the hon. Gentleman's case absolutely clearly. Apart from the questions that he has asked, do I understand that the main basis of his case is the figure of £830 million which is to be seen on page 15 of the brochure?

Mr. McNair-Wilson

It is not. The main basis of the case is that we are being asked to vote larger borrowing than is justified as this stage and that the Minister himself referred to £830 million on Second Reading. Our suggestion is to reduce the figure to a level at which the country and Parliament may have an opportunity of discussing the future stages of development of the industry as they arise.

10.15 p.m.

Mr. David Webster (Weston-super-Mare)

I have pleasure in supporting the Amendment so ably moved by my hon. Friend the Member for Lewisham, West (Mr. McNair-Wilson). It is a very moderate Amendment and would carry out the principle, as he said, that Parliament should have adequate scrutiny of public expenditure.

The gas industry is a very thriving nationalised industry and in the last few years it has taken big steps forward. We welcome these developments. There is nothing in the Amendment designed to prevent that type of expansion from continuing. In fact, it is well within the limit set down in the brochure "The Growing Gas Industry" and it is extraordinary that the Government should extend the industry's borrowing powers at this time.

We have seen the changeover from coal to oil. In this connection, a number of hon. Members, doing their job for their constituents, spoke at length on Second Reading of their anxieties and about the switch over from coal to oil and to natural gas and Algerian methane. I will not mention hon. Members by name, for I do not see them here and as I did not give them notice I am not entitled so to do but they expressed their anxieties which are of a non-party nature.

This is a non-party subject. It is a matter for the House of Commons. We wish to scrutinise the development of the industry and keep a close check on it. This is, after all, a five-year programme and it is right that we should keep within the limit so far set and not go beyond it at this time in the country's financial history.

I do not want to go back to last October and November, when there were mutual recriminations about the sudden balance of payments crisis. I am Rapporteur on fuel matters of the Economic Committee of the Council of Europe. When we were discussing the raising of money for borrowing by this country, people said, "We will try to help you and to be understanding of your difficulties but we expect you to be responsible about this and not go on spending money without adequate scrutiny." We on this side are trying to make sure that this kind of responsible qualification is applied to the granting of immense sums of money to a nationalised industry.

At the same time, there is the squeeze on the private sector through bank advances. Not very long ago, the Chancellor of the Exchequer said that if the credit squeeze did not show immediate effect he would tighten the screw. Then, last week, he said that it would not be necessary for him to do so. There was a little flurry in the exchanges and the £ went weaker on that occasion. So the right hon. Gentleman felt fit to go to a miners' gala and say that if necessary he would apply a squeeze.

But there was nothing in this to apply a squeeze to the nationalised industries. I must say that I congratulate the Minister, though I do not agree with him, on getting more out of the Chancellor of the Exchequer than, apparently, did his colleague the Minister of Transport for new roads. We now have that Minister saying that he hopes to carry on the programme left to him by his predecessor but that the problem is to get the money.

It is the duty of hon. Members to look to the priority within the public sector. I am not absolutely against the public sector. I want to have more expenditure on various aspects, but every time an hon. Member comes along with a proposal involving expenditure—say, a new hospital in his area, or something of that nature—he is challenged, or should be challenged, to say how he proposes the money should be raised.

As a former member of the Select Committee on Estimates—which ceased, incidentally, to be the Select Committee on Estimates and became just the Committee on Estimates on the day I joined it—I have always felt it to be the duty of an hon. Member, when putting forward a proposal for public expenditure, to say how he proposes to raise the money, whether it should be by additional taxation or whether by curbing another form of expenditure. I should like to have a number of other forms of expenditure which I think should have greater priority than this, but I do not want to develop that, for I should be getting out of order.

However, every one of us in this Committee is entrusted by his constituents with the duty of scrutinising the activities of the Executive and public expenditure, and it is for that reason that I warmly support the Amendment moved by my hon. Friend. I hope that the Minister will see fit to accept it, as it runs so much in line with the recommendations of the Chairman of the Gas Council.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

It is necessary, I think, to repeat some of the arguments which were brought forward on Second Reading of the Bill, largely for the reason that the Parliamentary Secretary, in his winding-up speech, did not answer those points. He was far too busy keeping his eye on the clock, and on the possibility of getting a further Bill through, to deal with any care at all with the points which my right hon. and hon. Friends made on that occasion. I am sure that he will forgive us if we repeat some of those points, because they have not been answered here.

My hon. Friend the Member for Lewisham, West (Mr. McNair-Wilson) moved his Amendment with great force, I thought, and everything I have to say is in support of what he and my hon. Friend the Member for Weston-super-Mare (Mr. Webster) had to say. The point was well made by my hon. Friend that this increase from £650 million to £900 million, before the first order must be made, before any parliamentary check, as he called it, is brought in, is an increase of £250 million in the borrowing powers of the gas boards, and this is bigger in total than any given in the past by any Bill for borrowing powers. There never has been in any borrowing Bill as much for the gas industry as there is in this first step when the Minister has to make an order. For that reason alone we are quite justified in querying what is being done.

I know that the Minister will say that the electricity industry has had its limit raised, first, to £3,300 million, and then to £4,400 million by the Electricity and Gas Act, 1963, but I think that there are some very serious reasons why this Bill is totally different from that Act. We are now dealing with an industry which is changing, and which is causing very great concern, even among supporters of the Government, as to its future and as to what will be the raw materials which will feed it.

We are living in an age of changing technology and all these unknowns as my hon. Friend described them. We do not know what will be its impact on coal. We do not know what the chances are of finding gas in the North Sea. We do not know what arrangements we will make with Holland, and what will be the future of methane importations from the Sahara.

During the Second Reading debate the right hon. Member for Caerphilly (Mr. Ness Edwards) said: Therefore, we cannot plan too far ahead. We ought not to commit ourselves to spending so much money on the importation of methane in a long-term sense, in view of the new scientific possibilities within our own country and the possibility of gas being found under the North Sea."—[OFFICIAL REPORT, 9th July, 1965; Vol. 715, c. 2022.] It is surely a warning to the Minister that such an eminent spokesman on his side of the House feels that this is too great a sum of money.

I think that my hon. Friend spoke with considerable knowledge when he referred to the technological improvements and the technological uncertainties which the gas industry faced. As he said, hon. Members on both sides of the House are worried about the future effect on the coal industry. I do not think that we on this side of the Committee want to inhibit the gasindustry, but the mere fact that its progress will have an effect on coal, and that this will cause serious social and other problems, means that we must have an opportunity to debate the matter in the House.

My hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) put this very clearly during the Second Reading debate when he said: … it is high time that the fact was recognised that trying to maintain what is a purely artificial level of coal production is no longer wise."—[OFFICIAL REPORT, 9th July, 1965; Vol. 715, c. 2039.] For these reasons, I think that we are right to call for more frequent parliamentary discussions of these affairs.

My hon. Friend the Member for Weston-super-Mare insisted, and I agree with him, that it is necessary to impose criteria on the expenditure of such large amounts of capital in the future. This, I think, ably develops the points made by my right hon. Friend the Member for Guildford (Sir R. Nugent), to which the Parliamentary Secretary did not attempt to reply, as to what tests of profitability would be applied and how we were to assist the contribution which the gas industry is to make with this extra capital in regard to all the other competing claims on the nation's scarce capital. We should like to hear the Minister's answer to that.

I know what careful and useful work my hon. Friend the Member for Weston-super-Mare has done on the Economic Committee of the Council of Europe. It is clear to those who are members of that Assembly that the expenditure of vast sums of money is considered more carefully by some countries than appears to be the case in this House, which is a further reason why the Amendment should be accepted.

The total investment which is contemplated is £550 million from outside sources. That is what the Minister, in the Bill, is giving the industry power to borrow. But, with the 52 per cent. self-financing which has existed for some time, there will be a further sum of nearly £600 million which, presumably, will be invested at the same time from the gas industry's own internal resources. Thus, we are approaching the colossal sum of an extra £1,150 million investment which this industry is to make. When one looks at it that way, at not merely the net borrowing, but at the average capital requirement, surely the Government agree that it is asking a bit much to allow the gas industry to invest that sum of money after only one short debate in this House?

The unique thing about the Bill is that there is this borrowing margin of £200 million. I understand that the gas industry has asked for a total of only £1,000 million by 1970.

The Chairman

Order. I hope that the hon. Gentleman is not going on to the second Amendment.

Mr. Ridley

No, Dr. King. I wish to relate what I am saying to the Amendment that we are discussing.

The Bill says that there shall be provided a sum of £250 million, the difference between £650 million and £900 million, before the Minister has to make an order. We think that is too much. We would like to reduce the sum in the first order to £850 million. That will be a small Amendment for the Government to accept. It is difficult to discuss this Amendment without relation to the others, because either this one and the Amendment in page 1, line 12, at end insert: Provided that the Minister shall not specify an increase of more than £200 million by any one order. would need to be accepted, or the Amendment in line 12, leave out "£1,200" and insert "£1,000", whichever way one looks at the matter, in order to make a sensible job of the Bill.

The gas industry appears to have added £200 million to its borrowing requirements for good luck, so to speak, and on page 216 of its brochure it says that it would facilitate future investment plans if a reserve borrowing margin of £200 million were provided. To facilitate the planning of future investment is surely a very strange requirement when the House is being asked to abandon its control for such a long period. If the forecast rate of capital investment takes place it will be at least 1972 before these borrowing powers run out. Therefore, it is only reasonable to ask for the first order to be made at an earlier date than is expected. I do not want to trespass on a later Amendment, but one will be moved which will ask for more than one order, so that we can on at least two occasions debate this large sum of money.

10.30 p.m.

I do not believe that there is any precedent for having a borrowing margin. The Minister, in answer to an intervention by my hon. Friend the Member for Yeovil (Mr. Peyton) in the Second Reading debate, said: I should have thought that there were plenty of such precedents, but I could not quote one offhand."—[OFFICIAL REPORT, 9th July, 1965; Vol. 716, c. 2003.] We are now asking him to quote one, either offhand or by any other means, because hon. Members on this side of the House do not believe that an extra sum of money has ever been lumped on to the borrowing requirements, just for good measure. My hon. Friend the Member for Lewisham, West was right to call in question this rather peculiar procedure, and we want to hear much more about it.

Our tabling of the Amendments—and particularly this one—does not in any sense imply hostility towards the gas industry or its leadership, or the great work which it has done in the past and which we are sure it will do in the future. If we ask for there to be two orders by lowering the point at which the first check is to be administered, this is not in any sense to be taken as a criticism of the industry but much more as a concession to the needs of Parliament to debate and comment upon this great industry.

If the Amendment is accepted, as I sincerely trust it will be, it will greatly inconvenience a Conservative Government of the future to have to provide this extra time. The burden will fall on our shoulders and not on those of hon. and right hon. Members opposite to provide this extra time. So, with a little parliamentary tactics, I feel certain that the Minister will be disposed to accept the Amendment.

There is not enough spare capital in this country for the gas industry to be able to pre-empt an extra £200 million without giving any reason why it should have it. We do not want to starve it of capital, but we ask that this House should have an opportunity to inquire into what it is being used for, the rate at which it is being used, and its effect upon other fuel industries, and to debate these matters at more frequent intervals than the Bill provides.

Mr. Adam Hunter (Dunfermline Burghs)

I want to repeat some of the fears expressed by my colleagues in the last debate. I have no desire to take part in any of the technical arguments about the fuel and energy needs of other producers in this country. When, on 9th July, my right hon. Friend moved that the Bill be read a Second time, he did so by stating, first, that it was nice to see the enthusiasm of the party opposite for the Bill, which was of the utmost importance to the future of the gas industry. I should be the last to decry or deplore in any way the initiative of the gas industry, for I thought, some years ago, at a time when local authorities were turning from gas to electricity for certain domestic appliances, that the use of gas had lost its appeal. Now the gas industry seems to have the unqualified support of the Government, for the introduction of the Bill is designed to increase the limit of its borrowing powers to £1,200 million.

There is also the point put by my right hon. Friend in the last debate, which conveyed to the House that the margin from the initial limit to the final limit was a reserve borrowing power to meet possible increases in investment consequent on, for example, the discovery of gas under the North Sea. This is tantamount to a decleration that the Government are already aware of what rôle the gas industry is to play in the future energy needs of this country. The coal industry is not yet in that happy position. The people responsible for the nationalised coal industry cannot be blamed for seeing this piece of legislation as the Government's future plans for the gas industry.

Consequently, it is natural that miners, tradesmen and all those associated with the mining industry view with concern the apparent bias in favour of gas. The electricity industry and the coal mining industry are bound to have misgivings when they recall what my right hon. Friend stated in the previous debate, that the gas industry was in extremely good heart, particularly when rapid progress in the gas industry is detrimental to the interests of the two energy producers I have just mentioned.

My right hon. Friend the Member for Caerphilly (Mr. Ness Edwards) and my hon. Friend the Member for Blaydon (Mr. Woof) said sufficient in the previous debate to echo the disquiet then and still in the minds of those closely associated with the mining industry. I must ask my right hon. Friend what are the coal industry's prospects in the growing consumption of energy in relation to the gas industry—

The Chairman

Order. If the hon. Gentleman's right hon. Friend answered him about the prospects of the coal industry in the debate on this Amendment, he would be out of order. I am sorry.

Mr. Hunter

We are told that, given a 4 per cent. growth rate, the consumption of energy in Britain is likely to rise from its present level of 250 million tons of coal equivalent to over 300 million tons next year and to 450 million tons in 15 years. In view of this, I submit that the coal industry should be getting to know soon what its share in the ever-increasing consumption of energy will be.

It is reckoned that 1,000 people are leaving the coal industry every week. There is a great lack of confidence in the industry and the Bill will in no way dispel the understandable fears of all the people in the industry. The greatest danger which I see is that not only miners but skilled craftsmen are getting out. The only effect of this situation is an interruption, if not a complete halting, of the process of mechanisation in the mining industry.

In Scotland, fear abounds for the industry's future. In and around my constituency, many pits have closed and others are likely to close in a few years' time. I was myself a redundant miner.

The Chairman

Order. I am sorry to interrupt the hon. Gentleman. I congratulate him on his ingenuity in arguing the case for the coal industry on this Amendment, which seeks to decide whether we allow the gas industry to borrow £900 million or £850 million. The hon. Member must, however, relate his argument to the Amendment.

Mr. Hunter

I felt that since my colleagues had an opportunity to speak on the subject in the last debate, I might do so now.

The Chairman

May I help the hon. Member? I do not like to look ahead, but the hon. Member might have an opportunity to say some of these things, with difficulty, on Third Reading. Even then, it will be with difficulty.

Mr. Hunter

I am quite prepared to support my right hon. Friend in rejecting the Amendment.

Clearly, two courses are open to the nation. The first is to support the Gas Council's hurried abandonment of coal in favour of fuels and feedstocks, which cost Britain valuable foreign currency. Such a course would, in effect, throw away public money which, acting on figures supplied by the gas boards themselves, the Coal Board has invested in gas coal pits.

The second course is for the gas boards to slow down their move away from coal without swerving from their path towards greater technical efficiency. In this way the nation would obtain some return on the millions of pounds which have been spent by one nationalised industry in support of another.

I repeat that I support my right hon. Friend, but I ask him to move cautiously in respect of the Gas Council's needs and urge him to recognise that the coal industry is anxiously awaiting an announcement on a co-ordinated fuel policy.

Mr. Eric Ogden (Liverpool, West Derby)

Bearing in mind the exchange which you and I had, Dr. King, last night about calling hon. Members to order, may I refer briefly to two statements made by the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) who, in his speech, referred to the effect which the proposals of the gas industry have had, are having and will continue to have on the coal industry. He spoke very briefly of the social effects. I thought that it came ill from an hon. Member on his side of the Committee to speak of the social effects.

Mr. Patrick Jenkin (Wanstead and Woodford)


Mr. Ogden

Because every Question which has been asked by hon. Members opposite during this Session, far from supporting that industry, has been opposing it in every way they could.

May I return to the Amendment? The hon. Member for Cirencester and Tewkesbury deplored the fact that in this Session time had not been found for a debate on the nationalised gas industry, the nationalised electricity industry or the nationalised coal industry. I thought that that was what he said.

Mr. Ridley

I do not recall having said that, and if I said it, I had no intention of doing so. We have had many debates on the gas industry. If I deplore anything it is that we have not had debates on the other fuel industries.

Mr. Ogden

We are in agreement there, if in nothing else. I remind the hon. Member that when I have asked the Leader of the House about debates on the other fuel industries which directly or indirectly depend on the gas industry, my right hon. Friend has said that there is only one more opportunity in this Session for a debate on the nationalised fuel industries, and that that rests with hon. Members opposite.

The Chairman

Order. The Committee seems to be getting into a mood of wishing to discuss anything but the Amendment before it. I ask the hon. Member to discuss the Amendment, which is to decide whether we allow the gas industry to borrow £900 million or £850 million.

Mr. Ogden

In my constituency I have no coal mine, but a fair number of industrial gas installations, and, therefore, it seems reasonable that I shall support £900 million against £850 million. But as those points had been made by the hon. Member, I thought that I might attempt to answer them.

10.45 p.m.

The Minister of Power (Mr. Frederick Lee)

This is a peculiar situation. When the party opposite was in power, in 1963, the House was asked to enact a Measure whereby £650 million of borrowing was possible for the gas industry up to 1970. Tonight, two years later, we are asking for powers to enable the industry to borrow far and away in excess of that sum—remembering that that £650 million was thought by the former Government to be sufficient for the industry up to 1970. That being the position, the best that hon. Gentlemen opposite can now do is to suggest that we are asking for too much.

I should have thought that they would be aware, from their previous experience of these matters—particularly concerning estimating, in which their estimates proved to be so grossly inadequate—of the problems involved and that they would have thought twice before suggesting a smaller sum than we propose.

The hon. Member for Lewisham, West (Mr. McNair-Wilson) spoke of the brochure produced by the gas industry and said that the industry had made out a case for borrowing £830 million. The hon. Gentleman made what seemed a convincing speech—that is, if in fact the industry had asked to borrow £830 million. Instead, that was the expenditure and not the borrowing. If the hon. Gentleman had done a little more research he would have seen, particularly on page three of the brochure "The Growing Gas Industry", that the industry has made out a case for borrowing £1,000 million, plus £200 million, which is the total which we are now suggesting.

Mr. John Peyton (Yeovil)

The right hon. Gentleman is following his Parliamentary Secretary in almost intentionally misunderstanding what my hon. Friend said. We are not concerned about this £830 million. We quite understand that. By the Amendment we want to limit the total borrowing of the gas industry under the Bill to £850 million. That is the first step we wish to take.

Mr. Lee

In that case I wonder why his hon. Friend based his remarks entirely on the statement in this brochure about the sum of £830 million. The hon. Member for Yeovil (Mr. Peyton) has made a gallant attempt to come to the assistance of his hon. Friend, but has not succeeded.

Several Hon. Members


Mr. Lee

I have made it clear that whereas the hon. Member for Lewisham, West took the figure to be that of borrowing, it was actually that of expenditure. Thus, his case falls to the ground.

The figure of £900 million, which the Opposition seek to reduce to £850 million, came about as a result of a close analysis of the gas industry which was conducted by eminent officials of my Department. It is not guesswork. I am not suggesting that these officials can estimate these amounts to within a few pounds. However, this sum has been estimated following an analysis of the rate of increasing productivity in the industry and of many other factors. They feel certain that £900 million is the right figure.

The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) suggested that on this basis we would not be discussing borrowing powers again until 1972. I do not quite know how he arrived at that date. We are, in fact, basing our figure on precisely the same time factor in regard to debate as when the Opposition were in office. We believe that with this estimate we will be able to come back to the House in rather more than three years from now, when the House will again have the opportunity to discuss the subject.

I think that I understand how the hon. Gentleman came to that conclusion, but if he looks back at the borrowing record he will find that there has not been an even flow. For instance, in the year 1963–64, at the end of December, 1963, borrowing reached £524 million. By the end of March, 1964, it was £538 million. If we take 1964–65 there is a difference of only £10 million in the borrowing from the end of December, 1964, to the end of March, 1965. In other words, we come to a peak in the third quarter of the year, with precious little borrowing taking place in the following quarter. We are, therefore, following the precedent of hon. Members opposite who, when in office, arranged for the House to have an opportunity of discussing the industry's borrowing powers every three years.

We all agree that the industry has been growing extremely rapidly, and in the brochure there is a table which shows how rapid that growth has been. In 1961–62, there was a 1 per cent. increase over the previous year. In 1962–63, it was 3 per cent., and in 1963–64 it was 5 per cent. It is now running at 8 per cent. On those figures, the probability is that we are under-estimating rather than over-estimating. The figures show that in each succeeding year there has been not only an increasing amount of gas consumed but an increasing rate of growth from year to year. Historically, therefore, I should have thought that if we were to accept the Amendment we would have to come back to the House sooner than would otherwise be the case.

As I have said, it is because of the gross under-estimating of the right hon. and hon. Gentlemen opposite that we are here now. They believed that they were borrowing sufficient to cover the period up to 1970, and the fact that they have been proved wrong—I do not blame them—is proof of the speed at which the industry has been growing—

Mr. Ridley

Does the right hon. Gentleman think it a bad thing that we should be here tonight? Surely, it is very useful that we should be able to discuss this industry now.

Mr. Lee

We are here, as I have said, because the hon. Members opposite grossly under-estimated the speed at which the industry would move—yet now they seek to tell us that we are asking for too much. In view of all this—

Mr. Patrick Jenkin

Will the Minister give way?

Mr. Lee

No. The hon. Member will have the opportunity if he wants to speak later.

In view of all this, and as the annual capital expenditure of the industry will continue to increase fairly rapidly—having had careful estimates from both the gas industry and my Ministry—the conclusion has been reached that this is the right figure. Weighing against that the underestimating of the past, it would be a grave mistake for the House to fix a figure short of that which we suggest. I therefore ask the Committee to reject the Amendment.

Mr. Ridley

I express sympathy with the hon. Member for Dunfermline Burghs (Mr. Adam Hunter), who wished to draw attention to the effect upon the coal industry of the Gas Council's policy. The hon. Member was ruled out of order on certain points and, therefore, I will not attempt to follow him. The fact that the hon. Member wished to bring those points to the Minister's attention is, surely, evidence enough, if it were necessary, of the need for the House of Commons from time to time to discuss the affairs of these industries.

The Minister alleged that the borrowings will be used quicker than was expected. He made the point that my right hon. and hon. Friends, when they were responsible for these matters, underestimated and that we are discussing the matter again sooner than might otherwise have been the case. My hon. Friends are greatly pleased that this should be so. We see no objection to discussing these matters—

Mr. Lee

Nor do I.

Mr. Ridley

—and having a debate at any hour of the night when the Minister likes to examine these things.

The hon. Member for Liverpool, West Derby (Mr. Ogden) got me slightly wrong. I at no time suggested that we had not had a debate on the gas industry. The hon. Member made a more serious charge, however, against me and my right hon. and hon. Friends in saying that we on this side were not interested in the social effects of policy in the coal industry. We do not in any way want to maintain uneconomic production of coal, but, at the same time, my hon. Friends are fully aware of the need to take account of the social effects of such a policy. We should not, however, let the social effects stand in the way of reshaping the industry if at sometime that is necessary.

The Minister has given a poor answer to the case put forward by my hon. Friend the Member for Lewisham, West (Mr. McNair-Wilson). The Amendment cannot be taken on its own, because it links with the other Amendments. I have no doubt that although the Minister may not wish to take a £50 million cut in the first borrowing requirement, he will be prepared to look favourably upon the second and third Amendments, in line 12, which my hon. Friends will be moving in due course.

We are not satisfied with the Minister's answer. We will urge him, on future Amendments, to accept the principle of further Parliamentary control, which we on this side welcome, although he appears to resent it and to be slightly frightened of it. On the basis that we will press the later Amendment, I advise my hon. Friend the Member for Lewisham, West, to let this Amendment go so that we may proceed to the major points which follow.

Mr. McNair-Wilson

I beg to ask leave to withdraw the Amendment.

Amendment by leave, withdrawn.

The Chairman

Before we come to the second Amendment, might I point out to the Committee that the Chair will not be prepared to hear all the same arguments on the second Amendment. We now address ourselves to the maximum amount permitted under the Bill.

11.0 p.m.

Mr. Peyton

I beg to move, Clause 1, in page 1, line 12 to leave out "£1,200" and to insert "£1,000".

I am obliged to you for your warning, Dr. King.

The Minister will be the first to acknowledge that he had due notice of these Amendments. We on this side are extremely disappointed with both the paucity of the reply which we received on Second Reading and the meagreness with which the right hon. Gentleman has answered the previous Amendment.

The Minister has made a good deal of the fact that the previous Administration under-estimated the gas industry's borrowing needs. So did the gas industry. Its expansion was not and could not have been foreseen. However, an underestimate of borrowing needs is easily put right; an over-estimate is much more serious, particularly in the context of the present economic situation.

On Second Reading, I asked a number of questions which have not yet been answered. I asked where the money was to come from. It is easy for the Government to introduce a borrowing Measure of this kind and not even begin to try to treat with the importance it deserves the question where the money is to come from. There is much competition for limited resources and it is incumbent upon the Government to explain how these demands are to be fitted in with demands coming not only from the other fuel industries. We have not yet had even a cursory explanation of how the money is to be spent and we are entitled to something more than the kind of introductory brochure which the Gas Council has very properly put before Parliament. However, for the Minister merely to quote from such a document is wholly inadequate.

The Amendment is concerned to increase the total borrowing powers to £1,000 million instead of £1,250 million, and is a reasonable and modest demand to make. The grounds on which we rest the Amendment are what the Minister and the industry have said, and I do not think that we need stronger grounds. We have asked and still have not been told whether there is a precedent for the disproportionate procedure whereby £250 million is to be raised under the Bill and £300 million by order. We disapprove of that very much and the Minister has not yet seen fit to comment upon it.

Both the industry and the Government have made it absolutely clear that a £1,000 million limit to borrowing powers would probably be enough to see the industry through until 1970. Page 16 of "The Growing Gas Industry" says: An extension of borrowing powers to £1,000 million would, on the evidence of Boards' present capital programmes, cover requirements to the end of 1970. There follow these words: Faced with these uncertainties, the Council takes the view that any error in the demand estimates discussed earlier, particularly in the estimate for peak demand, is more likely to be in the direction of under-estimation than of overstatement. In this situation it would facilitate the future planning of investment if a reserve borrowing margin of say £200 million were provided to meet possible major fluctuations in investment in the later years, bringing the new limit of borrowing to £1,200 million. The Minister and the Government know perfectly well that if there was a serious under-estimation of £200 million before we reached 1970, it would be open to them, or any following Administration, to come to Parliament and ask for this remedy. I do not believe that it is right for the Government to come here and ask for £200 million, which, on their own confession, they do not really need. If I may refer the Minister to no less an authority than himself—opinions may vary as to the weight of his authority, of course—in col. 2003 of the OFFICIAL REPORT for 9th July, he said: This is, as the memorandum points out, to allow a margin of reserve borrowing to meet possible increases in investment consequent on, for example, the discovery of gas under the North Sea. Then he goes on, after a question from myself: I should have thought that there were plenty of such precedents, but I could not quote one offhand. This is not something which has not yet begun to mature. The actual work in the North Sea is proceeding. The people now investing are confident to the tune of £80 million up to now, and if we do not make provision for a distribution to take place it may well be that, although they find gas, many years would have to elapse before the gas industry got the necessary borrowing powers and for operations to begin. I should have thought that to allow a margin of this sort against the probability of finding gas under the North Sea was right. I think that we need this degree of margin to meet that situation."—[OFFICIAL REPORT, 9th July, 1965; Vol. 715, c. 2003.] I ask the right hon. Gentleman: how long does he think it would take the gas industry to make the necessary arrangements, and for all the arrangements to be made, once gas had been found in substantial quantities under the North Sea? He must answer this because if he cannot, then it means that confessedly his present demand for money is made on the vaguest of backgrounds, without even a hint of adequate justification. Therefore, I say to the right hon. Gentleman that the demand now is unjustified. He knows perfectly well that if substantial supplies of gas were found under the North Sea he or his successor, could come to Parliament the following day, or week, and he would readily be granted the money, because there would be a need for it.

For any Government to ask Parliament for sums in the neighbourhood of £200 million to be granted, just in case they might be needed, is intolerable. The House of Commons has a traditional task of safeguarding the taxpayers' interest— [HON. MEMBERS: "Hear, hear."] The Minister and his supporters utter a derisory, "Hear, hear." That is just the trouble. We believe that the party opposite has no regard for such a matter, and are very anxious to have the contrary proved.

I believe, and I said it a long time ago, when I sat on the benches opposite, although not on the Front Bench, that Parliament was in danger, and had become, the Pekingese of the Administration. I do not accept the kind of argument, put forward by the Parliamentary Secretary in reply to the Second Reading debate, that all we are being asked to do is to authorise this borrowing, and not to confirm the expenditure of the money. As I pointed out to the Parliamentary Secretary, Ministerial discretion is a very different thing, according to which side of the House one looks at it.

At the moment, I must confess that I am apt to take the most jaundiced view of ministerial discretion, and I feel certain that I carry all my right hon. and hon. Friends with me. We do not think that Ministerial discretion is something to be greatly respected. When it comes to asking for another £200 million "just in case we need it", I am bound to say that any lingering fragments that one might have for Ministerial judgment disappear altogether.

I have no doubt that the hon. Gentleman for Brixton (Mr. Marcus Lipton) is having a very interesting conversation, but at the moment we are trying to discuss the fate of several hundred million pounds. If the hon. Gentleman wishes to intervene, I will, of course, give way.

Mr. Marcus Lipton (Brixton)

The hon. Gentleman made his point at least 10 minutes ago and has been repeating it ever since. There is no need to keep repeating it.

Mr. Peyton

I had no idea the hon. Gentleman had been listening at all. However, the point I am making is an important one, and I hope that the Government will take a serious look at it before they admit to Parliament and to the public that they are asking for £200 million, the need for which, by their own confession, is not clear.

Perhaps I might remind the right hon. Gentleman of what his hon. Friend the Parliamentary Secretary said in winding up the Second Reading debate: The hon. Member for Yeovil (Mr. Peyton) asked for precedents for the margin of £200 million. I concede at once that there are no exact precedents, but we are here dealing with an unprecedented situation in that, in part, this £200 million may well be required for North Sea development."—[OFFICIAL REPORT, 9th July, 1965; Vol. 715, c. 2074.] We all look forward to it, but, as I understand, a good deal of time would probably elapse before the necessary arrangements could be made for the transport of such gas or oil as was found there and its subsequent accommodation in the fuel economy of the country. I am more than satisfied that that lapse of time would be quite sufficient to allow the Government at the earliest possible moment to come to the House and say that this is the amount of money that is required for such a purpose.

To ask us now to give this reserve borrowing margin of £200 million is intolerable and should not be agreed to. At any rate, we look forward with a good deal of eagerness, though not all that amount of hope, to the reaction of the right hon. Gentleman.

11.15 p.m.

Mr. John H. Osborn (Sheffield, Hallam)

It always seems to be my fate to make speeches on the subject of gas, if not exactly by gaslight, certainly not in daylight. Last time I spoke, on 8th December, it was at 11.48 p.m. I would like to draw to the attention of the Committee one particular phrase that I used then: As Members of Parliament, we are trustees for the taxpayer and the taxpayer's money."—[OFFICIAL REPORT, 8th December, 1964; Vol. 703, c. 1491.] That was on the last Gas (Borrowing Powers) Order.

The first thing that occurs to me—and I would have raised it had I been called in the Second Reading debate—is that the figures that we have in the prospectus of "The Growing Gas Industry", as it were, do not to my mind necessarily coincide with the figures which are presented in the Command Paper 2295, "Government Expenditure Below the Line, 1964–65."

The Command Paper refers to £46 million for 1961–62 and to £60.9 million for 1962–63, with an estimate of £101.3 million and a forecast of £82 million for 1963–64. According to the table quoted by the Minister—I hope that he will listen to me, because this is not a speech based on a oratory. This is a time when we, as trustees for the taxpayer, have a chance of looking at a prospectus. The scale of expenditure is much greater than the average problem facing the board of any company or group of companies.

In the column for 1961–62, there is the figure of £46.1 million, which compares with £46 million. There is the figure of £60.9 million capital investment, which compares with £59.2 million. For 1963–64, in the column concerned with the industry's finances, we have the figure of £92 million against an estimate in the Command Paper of £101.3 million. Such discrepancies would have to be adequately explained by any board of directors and it is reasonable to ask for an explanation of these differences tonight. We have discussed the expanding capital programme of £117 million, which is £140 million per annum as outlined in the Command Paper.

I congratulate the members of the Gas Council, particularly the Chairman, on the fact that we in this House at last have a prospectus of some sort—"The Growing Gas Industry"—to guide us. I wish that we had a procedure by which to examine the various clauses, particularly the financial implications, of the prospectus in very much more detail. Because we have before us a blank cheque for a very vast sum of money—£550 million—and we are discussing on this Amendment a reduction from £1,200 million to £1,000 million because the exact nature of expenditure of the last £200 million is not known.

Why is it not known? Because we do not as yet know whether or not the researches in the North Sea will be successful. I, as a trustee, am very unhappy about giving this blank cheque. As an enthusiast for the gas industry, I hope that the discoveries in the North Sea will be fruitful, and that there will be a good case to spend the money, but a few weeks ago I saw a picture in one of the national newspapers of one of the rigs being used by one of the joint enterprises of the Gas Council.

At this time, when we have to-look at every item of capital expenditure, it is necessary to ask are we containing the gas industry in the correct bounds within which it should be contained? It is said that we must expand the industry. If a company has not the money to expand and cannot find it because it is not there, it expands at its own peril. It could well be that we in this country have to watch very carefully the rate of expansion and capital expenditure of all our industries, including the gas industry.

Not that we do not want that expansion to take place, but we must live within our means and this is one of the few occasions we in this House have of examining whether we have the means to go ahead with the programmes that we want. There is a very good case for not giving a blank cheque for this final £200 million until we as a nation can see exactly where we are going.

I believe that contributions on a more detailed Measure of this type should not be too long. I have made my point and I would be most grateful if the right hon. Gentleman would assure us that the gas industry will be confined to what it should do and no more and that there will be no unnecessary empire building, particularly when many activities of the gas industry could be taken on by other agencies. The activity in the North Sea, for instance, could be farmed out to other people who would not use the taxpayers' money.

Mr. Peter Bessell (Bodmin)

I entered the Committee this evening with a completely open mind towards these Amendments, and I deliberately avoided seeking to catch your eye, Dr. King, on the previous Amendment, because I wanted to hear the arguments from this side of the Committee. I am bound to say that the arguments which have been put forward by hon. Members on this side have not impressed me.

Considerable tributes have been paid to this great industry, in which everyone takes a pride. The Minister has already said this evening that the figures contained in the Bill were reached in agreement with the industry itself. As there has been no suggestion by any hon. Member that there has been any extravagance by the Gas Council in the past, or by the area boards, and as they have, as we know, conducted their affairs well, and are indeed, a source of great pride to the whole nation, I believe that these additional powers for which the Minister is asking leave tonight should be granted without question. I should be sorry if the sort of arguments we have thus far heard for the Amendments, and for this one in particular, were accepted by the Minister.

It is my belief that the Gas Council will have a tremendous part to play in the future of industry. I think that it has already shown it is capable of providing the nation with an essential source of power at a reasonable price, and it has contributed to the health of the nation in helping to rid us of many of the smoke-polluted zones of the country. We are now entering a new and quite exciting phase of the industry's development; we are thinking in terms of exploration for natural gas under the North Sea and possibly elsewhere.

There is the question, too, of new methods of underground storage, and, also, there are the experiments which are being made in the providing of other forms of artificially produced gas. In all these circumstances it does not seem unreasonable to me that the Minister should seek to have a cushion, and that the Gas Council itself should feel that it is necessary for this cushion to be provided. It may well be that on many aspects of the Government's record of spending to date I would be among the first to criticise, but I do not believe that the Ministers' right hon. Friend, the Chancellor of the Exchequer would do other than protest very loudly if he exercised his power to permit the Gas Council or the area boards to borrow funds which were other than completely necessary.

For my part, in view of the fact that the power of the Gas Council is limited by the Minister's consent under the Bill, I am more than content to leave the figures as they stand, and I hope that the Minister will not be too impressed by arguments which, if I may say so with the greatest respect, I feel have led to a great deal of artificial heat being generated, and not as much light as the Bill deserves.

Mr. Webster

I am surprised, in a way, that the hon. Member for Bodmin (Mr. Bessell) has spoken like that, because I know him to be concerned with finance, and I know that before he would accept any new form of expenditure by a firm which was proposing to double its expenditure he would look very closely at it indeed. Here there is a doubling of expenditure over the next five years. I was rather surprised at his saying there had not been much light in the arguments which have been put forward.

This is an industry whose self-financing will increase very considerably due to discoveries both of the oil process and of the Algerian methane, both of which, we hope, will bring down the cost per therm very considerably and, at the same time, make it very possible to keep well above the average of 10.2 per cent. earned on capital, which figure contained in the White Paper, No. 1337, is of great significance at the present time.

It is a change from 44 per cent. in the present year to 52 per cent. average over the next five years, but this average, like all averages, conceals the fact that by 1970 it will be 62 per cent. self-financing, and by that much more it means that there there should be less of the cushion which the right hon. Gentleman has given.

I do not think that many chairmen of companies would go to the public and say that they want a cushion for five years' ahead, not only for going up from £650 million to £900 million that we have gone to already, which is a very considerable percentage, but up by yet another 20 per cent. over that increase. I am sure that as a merchant banker the hon. Gentleman would look more than twice with an exceedingly jaundiced eye on this subject.

Mr. Bessell

There is one point to which I should like the hon. Gentleman to address his mind. In the past the estimates for the borrowing requirements have been much lower than has proved to be necessary. Would not the hon. Gentleman agree that this is an argument for providing the cushion for which the Minister is asking?

Mr. Webster

No, because it means that we had great Parliamentary scrutiny, and that is what we are here for.

The other thing is that in relation to the Gas Bill, which we are soon to discuss in its amended form, I asked for a greater amount of clarification of the Gas Council's powers. In the past these estimates may have seemed inadequate, but, at the same time, we had the estimates of fuel sales by the fuel industry, which were greatly over-estimated. It is very difficult to look into the crystal ball and plan for five years ahead or anything like that, but we cannot allow this extra £200 million to be given simply on the order procedure. Even if it is cloud-cuckooland, we should have a liberal Minister of Power coming to the House and being accountable for this extra £200 million which the right hon. Gentleman hopes to obtain.

We are giving away a tremendous amount of money tonight. We are giving away our right to have the matter dealt with in the proper way, namely, through a proper borrowing powers Bill, and this at a time when the First Secretary of State is talking about major breakthroughs. This is about the biggest breakthrough that we have had in the financing of the nationalised industries.

What is the purpose of providing this money? If a private proprietor discovers oil and natural gas under the North Sea, what is there to prevent the Minister—perhaps he will assist me in my ignorance of this matter—using this money to nationalise and take over these newly-found deposits? [Interruption.] The hon. Gentleman is making an intervention from about halfway down his throat, and I cannot hear him very clearly.

Mr. Thomas Swain (Derbyshire, North-East)

I said "exploiter" is the word in the correct context.

Mr. Webster

I am glad the hon. Gentleman has proved that he can get to his feet.

In a useful document which Sir Henry Jones but before the British Electrical Power Convention, on 22nd June, he made a survey of the progress of this industry, and of its appliance side.

Because of the reduction in the cost per therm to the user, there has been a tremendous increase in the use of gas space heaters. The number rose from 244,500 in 1959–60 to 744,000 last year. The figure for this year is estimated to be 920,000. In respect of warm air and central heating appliances it has risen from 13,000 to 120,000.

11.30 p.m.

What is the money to be used for? We know that the Minister of Power is the arch nationaliser of the Cabinet. He is proud of it. I always like a man who is honest and straightforward in his declarations on this subject. But we say that if this money is to be used without adequate Parliamentary redress so that the industry can go into the manufacturing side of the appliance industry we must have a close look at what was said before the Select Committee on Nationalised Industries, oddly enough not regarding the gas industry—although I have that report—but on the railways. I now quote the present Minister of State for Economic Affairs, then a very prominent member of that Committee. On page 195, at Question 1444, the Minister of State said to the Chairman of British Railways—

Mr. Edwin Wainwright (Dearne Valley)

On a point of order. Is it in order for the hon. Member to talk about the railways industry when we are discussing an Amendment to the Gas (Borrowing Powers) Bill?

The Deputy-Chairman (Sir Samuel Storey)

I understood the hon. Member to be preparing to apply his quotation to the question why we should not grant the increase in borrowing powers.

Mr. Webster

Yes, Sir Samuel. I am grateful to you and to the hon. Member for Dearne Valley (Mr. Wainwright) for allowing me to underline the reason why I am putting the point.

If the nationalised industry is going into manufacturing it will be almost impossible for it to decide which way the overheads should be distributed. The Minister of State said to the Chairman of the British Transport Commission: What you are saying is that quotations are given which do not cover the full overheads. Sir Brian Robertson replied: I would say that is so, because there is a dearth of new orders. The Minister then said: Therefore, it may not necessarily pay the Commission to place the orders with the workshops and get the higher overheads in the workshops. Sir Brian went on at considerable length to explain why it is that in a nationalised industry it is almost impossible to spread the overheads and make sure there is an adequate costing.

Those of us who have been round the dockyards and any other public undertaking know that when we have a diversification of industry throughout these vast undertakings it is almost impossible to make sure that there is not a tremendous amount of subsidy, and that the taxpayers' money will not be used for the unfair subsidisation of manufacturer against taxpayer. [Interruption.] If the Minister is trying to get me out of order by talking about agriculture, I would much prefer that this additional money were given to the unfortunate dairy farmers in my constituency. But the Minister is trying to waste time. We want a greater scrutiny of borrowing powers in respect of this process of giving money by order.

In the present Session we have had far too many Bills which have given immense powers of delegated legislation, sometimes by positive and sometimes by negative Resolution procedure. When we are giving away the taxpayers' money it should be of concern to us that there is adequate Parliamentary scrutiny. Hon. Members opposite below the Gangway, who have been noisy both in the foreign affairs debate and so far in this, seem to think that taxpayers' money is of no concern to them. It is of concern to me, and it is the duty of Parliament to protect it.

Mr. Ogden

I want to make three very brief points. The hon. Member for Weston-super-Mare (Mr. Webster) was once the secretary of the Conservative Party Parliamentary Committee on Transport—

Mr. Webster


Mr. Ogden

That may explain why railways were brought into the debate. He continually spoke of our giving away vast amounts of money. I may have missed part of the debate—I do not think that I did, but I may have done. I ask my right hon. Friend to tell us whether we are giving anything away tonight. The hon. Member for Yeovil (Mr. Peyton) said that over-estimation is much worse and much more serious than under-estimation. He has had considerable experience of fuel and power. He seems to be under the impression that the Government are giving away either £1,000 million or £1,200 million.

Mr. Peyton

Let there be no misunderstanding about this: I thought that I had made it clear. The hon. Member should understand that what we are asked to agree to tonight is the authorisation of a further borrowing by the gas industry of a total of £1,200 million. The Minister and the Treasury, of course, approve the expenditure, but we are saying that, as the House of Commons, we should not part with so large a sum of money merely subject to Ministerial approval before it is spent. This ought to be clear in the hon. Gentleman's mind. After he has heard more debates on borrowing powers Bills, no doubt he will not make such confusions in the future.

Mr. Ogden

Whether we part with it or give it away is a matter of words. This is the impression of the Opposition argument received by some hon. Members on this side. Again, the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) used such phrases as the "trustees of the nation" and "blank cheques". This is the impression going out from benches on the other side of the Committee. This is why I ask my right hon. Friend to make it clear. I would ask hon. Gentlemen with experience on the other side, are they really suggesting that the gas industry will spend, at any time in the next period, £200 million more than it actually needs? Are they saying, on the one hand, that this is an efficient, good and growing industry, but that just because it has the ability to borrow this money and use it, that is what it will do out of sheer devilment? This is the suggestion of hon. Members on the other side of the Committee, with the honourable exception of the hon. Member for Bodmin (Mr. Bessell).

Mr. Patrick Jenkin

The hon. Gentleman the Member for Liverpool, West Derby (Mr. Ogden) has entirely misunderstood the argument from this side of the Committee. If one followed his argument to its logical conclusion, one would have to ask: why stop at £200 million? Why not go on to £500 million extra? The whole point of the argument is that these nationalised industries are accountable to Parliament. This is the one opportunity which we have to exercise our powers of control and scrutiny over these great State enterprises. It should not be said that we should authorise the expenditure of sums in such large dollops that we have only the most limited opportunity to discuss the affairs of these industries—perhaps only once every five or six years.

The argument advanced on this side in favour of the Amendment is that the sums which the Minister has written into the Bill are too large in the circumstances, that they attempt to tie our hand too far ahead. It is essential that we should have an earlier opportunity to express our views, as the House of Commons, on this industry for which we are responsible. The margin which it is sought to write into the Bill, which will be exercisable by affirmative order, is huge. It requires considerably more justification than the right hon. Gentleman was prepared to give it on Second Reading.

I make this assertion on two grounds, which are different from those advanced so far from this side of the Committee. No doubt the hon. Member for Bodmin (Mr. Bessell) will be interested to hear them. He may find himself persuaded by them, even if he was not persuaded by the arguments of some of my hon. Friends. The two grounds upon which I make the assertion that the margin is too large for us to accept at this time are these. First, the degree of uncertainty which must be regarded as surrounding the whole of the energy industry of this country is such that we cannot possibly say that we know what will happen by 1969–70. For this reason, we cannot possibly entrust the Minister, or indeed—I say this with respect to my hon. Friend the Member for Yeovil (Mr. Peyton)—his successor with powers to authorise the expenditure of these substantial sums in the light of this uncertainty.

The second argument which I advance in support of the proposition is that the precedents which have been mentioned, in so far as they have any point, are irrelevant. Indeed, we have heard of no precise precedent. The precedents which have been mentioned do not support the authorisation of margins of this magnitude.

May I deal with the argument about uncertainty. It has been common to both sides of the Committee, as it was to both sides of the House on Second Reading, to express the view that in the last few years the gas industry has been revolutionised. As recently as five or six years ago it could be described as a moribund industry, struggling for survival, but today it has arrived at a state in which it is expanding and thriving.

The point has been made—it was made again tonight by the Minister—that few people foresaw this revolution. I was astonished by the right hon. Gentleman's reply to the earlier Amendment. If he had read the speech made by the present Minister of Transport, and the speech made by Lord Blyton in that debate on the 1963 Bill, he would have realised what sheer effrontery it was for him to accuse my hon. Friends of grossly under-estimating the requirements of the gas industry. If it had been left to the right hon. Gentleman and his hon. Friends, the industry would have made no progress at all. They were against the substitution of oil for coal, against the importation of natural gas and against the exploitation of the gas fields under the North Sea. Yet all these have been the springboards from which the industry is making its present progress.

This process of change or revolution in the industry has not ended. It is still undergoing a rapid transformation. For that contention I start by relying on the industry's pamphlet, "The Growing Gas Industry", and I quote from page 16, where the writer makes the point about uncertainty: But at the present stage of development even recent experience may be a poor guide to future gas demands: changes within and outside the industry could materially affect the predicted course of demand: in particular, the discovery of substantial deposits of natural gas beneath the North Sea would give an extra fillip to sales long before that gas could be marketed.

Mr. Ron Ledger (Romford)

That quotation is the best argument which I have heard so far for the extra borrowing power. Would the hon. Gentleman read it again?

Mr. Jenkin

I thank the hon. Member for giving the opportunity to explain the case more fully.

In the light of the uncertainty surrounding the future of this industry, can we honestly justify at this stage the expendditure of these substantial sums of money? Perhaps the hon. Member does not regard the extra £200 million as a substantial sum. In the light of the major uncertainties which surround the future of the industry, this cannot be justified.

Mr. Ledger

The hon. Member has been too clever by half. He became too excited in reading that pamphlet and read a few sentences too far for his own argument. It is clear that the quotation is a justification of making this extra money available. I challenge the hon. Member to read again exactly what he read to the Committee and yet not reach the conclusion that the gas industry is justified in asking for extra money.

11.45 p.m.

Mr. Jenkin

Fortunately, the passage I read was brief enough for most hon. Members to carry in their heads. I have no intention of wasting the time of the Committee by reading it again. Even if the hon. Member for Romford (Mr. Ledger) were right, and even if that justified the authorisation of an extra £200 million from the gas industry's point of view, are we bound to accept the views put forward by the gas industry?

Mr. Ledger

You can continue the argument, but in your heart you know that you have been too clever. You made a mistake and you should admit it.

Mr. Peyton

I am sure that you have never been too clever, Sir Samuel. I hope that you will correct the hon. Gentleman.

The Deputy-Chairman

Order. That is correct, but I thought that the hon. Member for Romford (Mr. Ledger) had not realised what he was saying.

Mr. Ledger

I apologise, Sir Samuel. I should have said that the hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) has realised that he made a mistake, that he read too much of that passage and that it would be in his own interest to leave the topic before getting himself into even deeper water. I challenge him again to read the whole of the passage which he quoted.

Mr. Peyton

Before my hon. Friend continues with his remarks—

The Deputy-Chairman

Order. It is unusual to allow two interventions at the same time.

Mr. Peyton

I thought that my hon. Friend had given way.

The Deputy-Chairman

The Committee must observe the custom of not allowing two interventions one upon the other.

Mr. Ledger

You are making it worse.

Mr. Jenkin

I am sure that you have never made anything worse, Sir Samuel. On the contrary, I am sure that you have been an influence for virtue and purity throughout your long experience in Parliament. In any case, the hon. Member for Romford is entitled to his view. He has made it at least three times. Perhaps we can leave it there and I will be permitted to continue with my argument.

The argument about the uncertainties of the discovery of natural gas in the Continental Shelf merely confuses the future of the industry. The second point—and I will do no more than mention it—is the recent announcement by the right hon. Gentleman of the breakthrough in nuclear power. Although we have not yet seen the figures, we have been told that this will substantially reduce the cost of electricity and that it represents a major advance for the electricity industry, to match the advance recently made by the gas industry. He would be a bold man indeed who could say that in five years' time the pattern of demand for the various competing forms of fuel will be reckoned to be what it is now. It is a major change, but it accentuates the uncertainty to which I have drawn attention.

The third point—it is of a somewhat different nature and I will dwell on it at greater length—seems to strike at the roots of the whole argument adduced by the right hon. Gentleman on Second Reading to justify expenditure on this scale. It relates to the future of the hydrocarbon oil feedstocks which appear at present to be so rapidly supplanting coal as the primary raw material for the manufacture of gas. In opening the debate on Second Reading the right hon. Gentleman referred to a number of reasons which had led to the great advances made by the gas industry and went on. The new and more efficient processes for making gas from oil, the growing availability of cheaper oil feedstocks surplus to refinery requirements … "—[OFFICIAL REPORT, 9th July, 1965; Vol. 715, c. 1997.] That is taking a very sanguine view indeed of the raw material position which may face the gas industry in four or five years' time. As I will show, there is a good deal of evidence to suggest that although it appears that these oil feedstocks are at present surplus in Europe, this may not turn out to be the case in four or five years' time and that the gas industry, which seems to be swinging rapidly towards these feedstocks, may find itself in great difficulty.

In view of this uncertainty, therefore, is it right that we should authorise expenditure which, presumably, is being put forward on the basis, to quote the right hon. Gentleman's words, that this abundance of feedstocks will be available from refinery surpluses?

In an earlier debate, my hon. Friend quoted from the interesting article in The Times of 15th July, which obviously stemmed from something in the nature of an open day given by the Gas Council research establishment at Solihull. I, too, would like to quote from that article, because it seems to me that the authorities at that establishment are tending to take the same view. The article states: With a rapidity which is almost frightening, gas boards from one end of Britain to the other are rushing to tie themselves to the coattails of the oil industry. More than 40 plants to produce gas from light petroleum distillate are now in the pipeline—yet knowledgeable people"— and I would ask the Minister to listen to this, because it is the core of my argument— both inside and outside the industry are already forecasting a shortage of their basic feedstock. The article goes on to say how the industry had come to rely so much on the light distillates for feedstock: At the time it was offered to the gas industry it was without a major market.. Today it is struggling to satisfy the needs of one of the fastest growing markets in the world, for Britain is not alone in the rush to produce cheap gas from light petroleum distillate. This view is not without influential support. I would draw the right hon. Gentleman's attention to a paper, which has not been circulated widely in this country, but which may be regarded as providing serious support for the view that we may be heading towards a situation of shortage in this light distillate feedstock in Europe. I wish to quote from the paper, written by Mr. Ralph Ericsson, of Ericsson Chemical Industries Inc., which was delivered by him in February of this year at the 55th National Meeting of the American Institute of Chemical Engineers at Huston, Texas. Mr. Ericsson was examining the whole European supply position for this light distillate feedstocks. He made the point, as many others have made it, that the situation in America is entirely different, for reasons that it would be quite wrong for me now to go into. The situation in Europe has developed on its own lines, so no conclusions can be drawn from what has happened in America.

Mr. Ericsson says: As far as the petrochemical feedstock situation in Europe is concerned, there are several very interesting events taking place which will have to be put in proper perspective before attempting a forecast. The "Light Naphtha" which has been extensively used in Europe as a feedstock for petrochemical plants, ethylene in particular, has consisted of a heavy gasoline cut. With only about 15 per cent. of total petroleum product demand consisting of gasoline, the increased demand for heating oil has created embarrassing quantities of gasoline and this is part of the reason for the great interest in petrochemical operations based on naphtha in Europe. Mr. Ericsson goes on to examine the question. I will not bore the Committee by reading the paper in full, but he notes: … the question now arises"— and he talks of the petroleum distillates— where is it all coming from? and he goes on to draw the conclusion that within a few years we will find ourselves in a position of shortage of this middle cut, if I may call it that, of the cracking operation, the light petroleum distillate.

I quote again: So, while there is little doubt that there are more than enough known reserves of oil to keep the refining industry going for a century or more, and the refining industry is growing at as fast a pace as marketing of the products can be arranged, proliferation of supplies will keep pressure on the price of crude. A little further he states: So, as strange as it may seem, it appears that while crude prices are almost certain to go down, naphtha prices are about equally certain to go up. I should like to know whether the Gas Council, in putting forward these pro- posals for substantial expenditure over the next few years, has taken these forecasts of its raw material position into account.

In defence of the Gas Council and of the Minister, I am bound to say that that is by no means a unanimous view. There are commentators who have taken an opposite view. There was a recent article by Mr. George Tugenhat, of the London School of Economics, who is a great authoritiy in these matters, in Chemical Engineering Progress for April, 1965. He said that although the demand for naphtha and for these light distillates is increasing, nevertheless the supply will keep pace with it; he did not expect a shortage. He stated: I do not think that any scarcity will develop in the supply of this material over the next seven years or so.

Mr. Ogden

The hon. Member is saying that the gas industry should not rely upon this raw material because it will not be available, and then he states that it may be there after all. The only point that the hon. Member has made so far is that this is a first-class reason for relying on the nationalised coal industry.

Mr. Jenkin

The hon. Member is entitled to his argument. My argument is whether, in face of these uncertainties in the vital matter of the industry's raw material supply position, it is right that the House of Commons should at this stage authorise the expenditure of these substantial sums of money for five or six years ahead. Nobody can say what the position will be. Nobody can declare with confidence that the industry will be able to fulfil the forecasts which have been made for it.

Our contention is that expenditure should be authorised only as far ahead as we can see. When one gets beyond that position, the industry, through the Minister or his successor, should come back to the House of Commons and ask for an increase in the borrowing powers at that stage.

Mr. Bessell

Throughout his speech, the hon. Member has argued that the gas industry is a thoroughly well organised, well managed and well conducted business organisation, and he has argued that great changes are likely to take place during the next few years. Are not these two facts linked, and is not this a good reason for giving these additional powers to the industry and to the Minister?

Mr. Jenkin

To follow the hon. Member's argument to its logical conclusion, why should Parliament retain any control over these industries? To follow that argument, there would seem to be no reason for imposing any financial restraint upon the management of the nationalised industries, and yet, as my right hon. Friend the Member for Guildford (Sir R. Nugent) said powerfully on Second Reading, they are deriving all their financial resources from the taxpayer. Surely, the taxpayer has a right to require the expenditure to be justified at fairly frequent intervals rather than that a blank cheque or carte blanche should be given to these industries to spend as they will when the future is doubtful.

Mr. Bessell

I ask the hon. Member to appreciate that what we are talking about is a cushion of £200 million in a total of £1,200 million. It is not a question of Parliament abrogating the right of control. It is simply a matter of Parliament giving to the Minister certain additional powers which I believe to be justified.

Mr. Jenkin

I differ from the hon. Member in that this is a question not of £200 million in £1,200 million, but of £200 million on £550 million, which is a much larger proportion of the total sum. The existing borrowing limit is £650 million and we are being asked to increase this to £1,200 million. We suggest, in the Amendment, that the additional £200 million should not be—I am glad that the hon. Member is now looking at his papers and agrees with me—

Mr. Bessell

It is £1,000 million.

Mr. Jenkin

—that the extra £200 million should not be authorised. [Interruption.]

The Chairman

Order. This is a debate, not a conversation between two hon. Members.

12 m.

Mr. Jenkin

I was under the impression, Dr. King, that I was on my feet and entitled, in those circumstances, to address the Committee.

Mr. Bessell


Mr. Jenkin

I have given way to the hon. Gentleman enough already.

The Chairman

I was protecting the hon. Gentleman in the course of his speech.

Mr. Jenkin

I am very grateful. I had not intended to suggest otherwise, Dr. King. To recapitulate—[HON. MEMBERS: Tedious repetition.]

The Chairman

May I remind hon. Members who are interrupting that interruptions prolong and do not shorten speeches?

Mr. Jenkin

The core of my argument is that there are such major uncertainties for the future of this industry that it is wrong that Parliament should be asked at this stage to authorise sums for further ahead than any man can honestly say that he can foresee. To take even this one factor which I have examined in some detail, and which is a very important factor for any industry, namely, its raw material supply, who can put his hand on his heart and say that the situation is now so certain and that the future is so clear that it is right that at this stage we should give authority to the Minister to bring forward an order to authorise the Gas Council to spend these sums of money five or six years ahead? Not the right hon. Gentleman, I vow.

The right answer in this case is to authorise expenditure for as far ahead as we can reasonably see and for the Minister then to return to Parliament to justify further expenditure beyond that. Clearly, this is a question of degree. We would not expect the Minister to come back every year. In a debate some years ago, the question was asked: how many bites at the cherry would you expect to take? The answer is for as far ahead as one can reasonably see. In this industry at this time, in view of all the uncertainties, not only North Sea gas and not only the advent of nuclear power, but also the uncertainties of the fuel stock supply, the answer cannot be more than three, or three and a half, or possibly four years. That is my first argument in support of the Amendment.

The second argument is that of precedents. I have taken the trouble to look out the precedents on this issue of the margin of borrowing over the amount which Parliament authorises automatic- ally when it passes the Bill, the amount which can be authorised by statutory order. It appears that since this procedure began, which was only in 1959, which is comparatively recently, there have been only 13 instances of borrowing powers being authorised in this way. They are contained in seven statutes. We are here being asked to authorise the making of an order to raise the borrowing powers by £300 million, from £900 million to £1,200 million. In only two of those 13 instances has the amount been larger than that, and in only one was the equivalent amount asked for.

The two larger amounts were both concerned with the electricity industry and, as the right hon. Gentleman will know full well, the electricity industry has been spending capital on a very much larger scale than the gas industry expects to spend even in its wildest dreams. In the Electricity (Borrowing Powers Act), 1959, the margin was £500 million. It is interesting that it was on the Committee stage of that Measure that this new procedure was introduced, this sort of splitting into two stages. In the Electricity and Gas Act, 1963, the amount was £1,100 million. The existing authorisation when the 1959 Measure was introduced was £1,400 million and the original Bill proposed to increase that to £2,300 million.

As a result of pressure, not from hon. Gentlemen opposite, but from hon. Members on this side, it was felt that this was too big a chunk for the Minister to authorise without coming back to Parliament, and powerful speeches were made in the Second Reading debate of the Bill. As a result, in Committee the then Paymaster-General, my right hon. Friend the Member for Barnet (Mr. Maudling), introduced the interim figure of £1,800 million, beyond which a further Statutory Instrument would have to be passed by affirmative Resolution of the House before the sum could be exceeded. In the 1963 Act the figure was £2,300 million. It was proposed to add a further £1,000 million to make it £3,300 and a further £1,100 million to take it to £4,400 by order.

The interesting thing about that proposal was that there was no debate on the matter at all. The Committee and Report stages and the Third Reading all went through on the nod. No one on the then Opposition side of the House was sufficiently interested in the matter, although there was £1,100 million being authorised by the order.

Electricity is a different case from gas. In the first place, it is a very heavy spender of capital and it is undergoing a transition from coal-based power stations to nuclear power stations. This poses a tremendous demand for new capital. In the second place, it is interesting to note about these two applications, that in each case, for stages one and two the figures were the same, or very nearly the same. In the present case, stage one is £250 million, and stage two is £300 million, an increase of one-fifth.

For these reasons, for the uncertainty of the industry, particularly with regard to its raw material feed stock and for the inadequacy of such precedents as do exist, I support the Amendment to reduce this figure to £1,200 million to £1,000 million.

This would make the margin to be sought by order £100 million and would bring forward to an earlier date the point at which the industry would have to come back to the House to seek further authority for borrowing for capital expenditure. In the light of the precedents and uncertainties this would seem to be an entirely desirable step for Parliament to take, in order to have an opportunity to assert its control over this industry, and to make sure that the spending was subject to proper parliamentary scrutiny on behalf of the taxpayer.

For these reasons, I support the Amendment.

Mr. Frederick Lee

I feel cheated. I sat here, almost as man and boy, listening to the hon. Gentleman the Member for Wanstead and Woodford (Mr. Patrick Jenkin), clutching page 16 of "The Growing Gas Industry" to quote just those words he quoted, in order to show how wrong he was. He beat me to it. I have a huge pencil mark all over it so that I could get the right place. I think that the hon. Gentleman must have got the wrong place.

The hon. Gentleman talked about expenditure. We are not discussing expenditure tonight. We are discussing borrowing. The gas industry will have to justify everything that it wishes to submit. Hon. Gentlemen talk in terms of not having the opportunity to discuss the subject again for x years. I tried to meet them in the last Amendment on that point. If they wish to discuss the annual White Paper there is nothing at all to prevent them from discussing this issue each year. It is so much nonsense to talk in terms of Parliament losing its control over the industry. If the Opposition wish it can have an annual debate on this issue.

The hon. Gentleman who charged me with being the arch nationaliser should understand that the Tories beat me to it. They nationalised the resources of the North Sea, and I am annoyed to think that I shall never have a chance to do it.

Mr. Peyton

The charge that we nationalised the resources of the North Sea is a very odd one. You will recall, Dr. King, that the right hon. Gentleman's right hon. Friend the First Secretary was accusing the Tory Administration of handing out this valuable asset to their friends in the oil industry.

The Chairman

Order. Even if I do recall it, I think that this digression has gone far enough.

Mr. Lee

The hon. Gentleman has got it wrong again, but I will discuss it with him on another occasion. Indeed, the Opposition can discuss it at their will each year.

I have pointed out that the gas industry cannot merely take the full sum without justifying the expenditure of every penny of it. Therefore, the rather wild exaggerations that we have heard during the course of the discussion are not in any way comparable with what the House is being asked to do.

I mentioned in the debate on the last Amendment that the industry is now advancing at an increase of about 7½ per cent. per annum. If that increase goes on at anything like the pace that we have seen in the last few years, the £1,000 million may well be expended long before the time period in the Bill, and the £200 million may well be necessary even without the considerations of the North Sea at all.

I will try to meet the Opposition on the point that they make about £200 million being too large a sum to allocate at this stage. I will give them this assurance. If the gas industry's demands were nowhere near the £200 million extra that we are now discussing, I would not ask permission to lend £200 million. I would limit it to the amount that we in the Ministry, along with the gas industry, believed was necessary for the operations in mind. In other words, suppose that they came to me and said that there was a need for £100 million above the £1,000 million that we have discussed. I would then not authorise the payment of the £200 million—the difference between the Amendment that the Opposition are moving and the £1,200. I would merely authorise that which I felt was necessary for the operations that the industry had in mind, and then they would have to come back again and prove that they needed whatever was left of the original sum.

I would have thought that is going a long way to meet the Amendment. The £200 million is not a minimum, it is the maximum. If the industry's requirements do not come up to the total, then I will not authorise the full amount to be borrowed.

Mr. Peyton

I appreciate that the right hon. Gentleman is trying to be helpful. What I would ask him to clarify is this. He has made the point all along that the Government are not authorising expenditure here, but merely seeking borrowing powers for the industry. We accept that; there has never been any argument about it. He has also made the point that the gas industry has to prove the need for every pound of expenditure. He has said all along that the necessity for the need for every pound of expenditure has to be proved by the gas industry to his and the Government's satisfaction.

We accept that. What I am not clear about is what he is adding to that, because I understood him to say that, over and above the £1,000 million, the gas industry would have to prove their need. What is he really adding by this Measure?

12.15 a.m.

Mr. Lee

We are discussing an Amendment to leave out £1,200 million and to substitute £1,000 million. The basis of the argument is that, whereas the Opposition can see the point of having £1,000 million, there is a huge sum over and above that of £200 million for which they can see no justification. I am meeting that argument by saying that, although I think they are wrong, in the event of their being proved right that it is not necessary to have the full £1,200 million, I would not authorise the £200 million. I would merely authorise the sum which the industry could prove necessary for its requirements.

That, surely, meets the point that the Opposition have laboured. If the industry cannot prove its case, it will not get a halfpenny. This is where the difference between asking for borrowing power and actual expenditure is so important. Surely my statement meets the Opposition's argument. I give the Opposition my assurance and I hope that they will withdraw the Amendment.

Mr. Peyton

What the right hon. Gentleman has said does not really meet the point but the way in which he has said it and the fact that he has been moved at all is some recognition that there is a point of substance here, and for that at least we are grateful. I remind him, however, of what my hon. Friends have said.

My hon. Friends have made it clear that our demands add up to additional opportunities for Parliamentary scrutiny of the expenditure of a certain sum of money, the need for which has not yet been proved. I do not want our intention misconstrued. There is no hostility on the part of the Opposition towards the gas industry and its present plans for expansion, which we believe to be useful and appropriate and which can make an immense contribution to the national economy.

What we are concerned about is that any nationalised industry should be represented by the Government with a request that a £200 million borrowing power should be authorised without proved need. We are not opposing the Bill, but we ask the Government to tell us why it is necessary. The hon. Member for Bodmin (Mr. Bessell) made a strange intervention, backed up by two rather odd companions, with carefully prepared notes and an open mind, and then showed himself only too anxious to give an enthusiastic "yes" to anything the gas industry may ask for.

Mr. Bessell

The hon. Gentleman has my assurance—and many hon. Members will have observed it—that I prepared my notes during the speeches of his hon. Friends.

Mr. Peyton

I am glad to know that. But it became clear during the speech of my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) that we were concerned with an increase of borrowing power of £550 million, within which a borrowing margin of £200 is a fairly high proportion. It is clear that the hon. Member for Bodmin had this a bit wrong.

We accept, of course, that the gas industry will have to justify itself to the Minister, but that is not the argument. We know perfectly well that the gas industry has to justify the Ministers the expenditure of the money. We on this side of the Committee are not Ministers.

Mr. Robert Maxwell (Buckingham)

Hear, hear.

Mr. Peyton

Very well, if the hon. Gentleman wishes to intervene we will always give way to him.

Mr. Maxwell

I am obliged to the hon. Gentleman and will take him up on his invitation. I hope that he and his hon. Friends will not be Ministers for a very long time—because of the way they have been carrying on.

Mr. Peyton

I am very grateful for that, and if the hon. Gentleman wishes to intervene further in the debates tonight we shall, of course, be only too pleased to welcome his interventions with the normal enthusiasm.

The Chairman

The hon. Member should know that the Chair discourages invitations to intervene.

Mr. Peyton

I am really terribly sorry, Dr. King, that we are not together on this. I did think you would be the first to share my enthusiasm for the hon. Gentleman's interjections, and I am very shocked, though humbled, to know you disagree with me, and naturally, I shall change my mind immediately. I am very grateful to you for bringing me so sharply into line, and correcting my judgment, which, I recognise, needed it.

To get back to the argument, I do not want there to be any doubt about this. Both the Government's spokesmen have constantly trotted out this point that the actual expenditure of the money will be subject to constant supervision by the Government. We accept this. All we are saying is that if the Government say, as they are saying, and as the industry is saying, that they want this borrowing margin for the industry, then the time will come later on to come to the House of Commons and say, "This is the moment we want it." But to authorise now, by a proposed Act of Parliament, money for which, confessedly, the need is not established is, in our view, wrong.

The Minister said—and I am rather concerned to probe this a little further, if I may—that the gas industry will throughout its use of the money, the borrowing of which we are now to authorise, will have to prove the need for every single pound and shilling. All right. How is that different from what he has said in relation to the £200 million borrowing margin? This is where I am a little bit in doubt.—[Interruption.]—I do not think that the mere fact that it is the subject of an Amendment makes all that difference. I am so sorry to have to repeat this argument, but what the Minister has said all along is that the actual expenditure will have to be approved pound by pound. Now, in discussing this Amendment, the Minister appears to suggest some special procedure will attach to the last £200 million. In that case, what the Minister said did not really mean very much.

Mr. Frederick Lee

We are discussing an Amendment by which the hon. Gentleman and his hon. Friends are seeking to cut down borrowing by £200 million. It is they, not I, who attach all that importance to this point. I am asking them to agree to my having permission to borrow. The expenditure which the industry incurs we discussed on the last Amendment. We put the case why that was being done. We come to this last tranche which the hon. Gentleman thinks so important. I have said that if, on examination, we were to find that the industry's requirements were not such that it would be necessary for the industry to have it all, then we would not authorise it; we would not authorise any more than the industry could prove it needed. While I am on my feet I will go further, and give an assurance that I will expect the industry to produce a further brochure justifying that expenditure when the industry asks for it. The hon. Gentleman made the distinction between Ministers and people who do not get the opportunities to study the matter. I repeat the assurance that I will expect a further brochure from the industry.

Mr. Peyton

I do not wish to be unreasonable, but I am bound to come to the conclusion, though I welcome this assurance as a slight change of wind, indicating some willingness to consider the points, and some sympathy with the points, which have been put forward from this side of the Committee, that it nevertheless does appear to me quite clear that the Minister is not really indicating anything very different between his examination of the expenditure of the last £200 million and the way he treats the first £350 million of the amounts with which we are concerned. It is a slightly hollow offer, though I appreciate and welcome the right hon. Gentleman's desire to please.

I do not understand why, when these words about a reserve borrowing margin are used—in other words, there is here a clear confession both from the industry and from the Minister that there is no proven need for this money—it is unreasonable for the Opposition to ask the Executive to come back to Parliament when the need for such money arises and say so. That is the reason for the Amendment, but in view of the Minister's at least reasonable attitude to what we have said, although he has not gone very far with us, we would not wish to press this to a Division.

Amendment negatived.

Mr. Patrick Jenkin

I beg to move, Clause 1, in page 1, line 12, at the end to insert: Provided that the Minister shall not specify an increase of more than £200 million by any one order. The previous Amendment having been negatived, the purpose of this Amendment is to suggest an alternative and possibly less painful method by which the Minister can bring to this House for Parliamentary scrutiny the further, or part of the further, expenditure for which no case has as yet been made out.

I referred in an earlier debate to the 1959 Electricity (Borrowing Powers) Act which first authorised this two-stage procedure. During the Committee stage of that Bill, on 17th February, 1959, at column 254, my right hon. Friend the Member for Barnet moved an Amendment which had the effect of introducing this affirmative Order procedure and establishing the two-stage process. In doing so, my right hon. Friend wanted to make it absolutely clear to the Committee that it was to be open to the Minister, when bringing forward an Order pursuant to the Act, to make the Order cover part, as well as the whole, of the additional amount, and that he was not to be obliged to bring forward one Order for the whole amount.

It will be remembered that in that Bill the extra margin was £500 million, and in those circumstances it was perhaps not unreasonable that my right hon. Friend should have emphasised that aspect of the matter. He said that the Minister's hands should be left untied, and that he should be free to introduce an Order for part of the additional margin, or the whole of it if he thought fit. My right hon. Friend wanted the Minister to be left with a degree of flexibility; that he should not be required to introduce an Order for the whole amount.

In this Amendment we are going one stage further. This is a new procedure. It is not based on any precedents. It has not happened before. But in the circumstances of this case I submit that the Amendment is a reasonable one. It would afford Parliament a degree of control over the borrowing powers of this rapidly developing industry which would seem to be justified.

12.30 a.m.

I have already referred to the uncertainties that face the industry in the future, and it seems reasonable that Parliament should retain at any rate this degree of control over the granting of additional borrowing powers. I would much rather have it this way, so that we periodically have an opportunity, in considering either a Bill or a statutory instrument, of reviewing the progress made by the industry, and to look at its future, than to have the continual sniping attacks which seem to have come from both sides of the House as the industry develops.

I was talking to the chairman of one of our nationalised industries the other day, and he likened his job to that of running a large private company, with the annual general meeting constantly in session. This seems to be not a bad analogy, and one can understand the difficulties of the top management in these enormous concerns in trying to manage the day-to-day affairs of their industry in the face of the inevitable barrage of criticism they receive not only from the public but also, at times, from the House. It would go a long way towards removing the need which many hon. and right hon. Members feel constantly to probe the intentions of the industry and to ask what its future is to be if, periodically—in the case of this industry not less frequently than once every three years—a proper inquiry were made and a proper debate held in which the question could be examined dispassionately and at proper length, so that the industry could go forward secure in the knowledge that it had Parliamentary support for its development.

The Amendment provides that the additional margin of £300 million, over and above the £900 million written into the Bill, should not be authorised all in one, and that not more than £200 million at any one time should form the subject matter of an order, and that therefore, when the £200 million is approaching exhaustion, a further authorisation should be made when the Minister can ask the House to authorise the borrowing of the additional £100 million.

In view of what the Minister said in reply to the preceding debate about his desire to scrutinise this additional margin with extra special care—that it would be examined with more than the usual thoroughness with which the Ministry examines the proposals of various industries—and in view of his assurance that if the industry does not make out a case he will not sanction expenditure, it seems to me that the Amendment would go very little further, and that it would be a proper courtesy to hon. Members, as trustees of the taxpayers, to make sure that they should be the ones to authorise this additional tranche of expenditure. I hope that the Minister will see the force of my argument and accept the Amendment.

Mr. Ridley

We have not so far achieved a great deal of acceptance by the Minister of the main proposals that these Amendments have dealt with, concerning greater Parliamentary control over the borrowing of these large sums by the gas industry. All that we have so far been offered by the right hon. Gentleman is a brochure for about 1970, or whenever it may come, and we are grateful to him for this offer of an extra brochure. But we want a slightly more solid concession to the principle which we have been debating tonight, and this Amendment gives him the opportunity to give it to us. My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin), with his accustomed clarity and accuracy and brevity, has moved the Amendment, which I commend to the Committee.

The Minister has resisted the previous Amendment only on rather flimsy grounds, which fall down in relation to this Amendment. I should like to mention both the Minister's main standpoints, because I think that they are relevant to this Amendment. First of all he says that we are not discussing expenditure: we are discussing borrowing only. The whole Committee would accept that, but the mere borrowing itself must, of course, control the amount of investment and the number of activities which the industry can undertake, and borrowing can be financed directly from the taxpayer.

I would direct the right hon. Gentleman's attention to such a year as often happens in our financing, when the Budget is in surplus and that surplus is used to pay the capital to nationalised industries. It could otherwise have been raised by borrowing on the market. In those years there is a direct outpouring of the taxpayer's money towards the capital of the nationalised industries. This is a very good reason why we in this Committee should be concerned about where it all goes.

The Minister's second and more important ground has been that he would not agree to this last tranche of £200 million of borrowing margin unless the Gas Board proved to him the need for it. We are not satisfied that the Minister alone should have the need proved to him. The House of Commons, which will have to agree to the borrowing, either now or at a later stage, should surely be consulted when that further tranche is asked for. We are being helpful to the Minister in this, because, in asking for a further order, we are asking for something which would be less trouble to the Government of the day than a borrowing powers Bill.

We have now reached £650 million; after another £200 million, we would reach £850 million and, after a further £200 million, we should reach £1,050 million. With two orders, he would get as far as the £1,200 million. We could have short debates about them, but, if it were felt to be an important matter, they could be much longer, as they have been tonight. If there was a point of major principle, we could use the opportunity for Parliament to debate the principle.

So, by this means, the Minister would achieve much more flexibility and would use much more Government time than under the previous Amendments. I believe that it would satisfy the case put by many of my hon. Friends this evening, and to which the Minister has not produced a satisfactory answer. We look forward to hearing from the Minister that he is prepared to accept the Amendment, so ably moved by my hon. Friend the Member for Wanstead and Woodford.

Mr. Frederick Lee

I am sorry to have to disappoint the hon. Gentleman. It was, of course, clear that the object of the Amendment was to make me come twice for authority. This goes back to the theme of these discussions, the amount of control which Parliament will exercise. So far as the gas industry is concerned, there have been five debates on the industry during the course of the last nine months. If the Opposition require more debates on the gas industry, it is well within their powers to arrange for them. I do not want to go over the arguments again which I adduced against the last Amendment. I have tried to show—and this is relevant again—

Mr. Webster

The right hon. Gentleman says that if the Opposition wish to do so they can easily find time. I have been to the Library and checked whether there was ever a Supply Day chosen for this purpose in the whole of "the thirteen wasted years" about which we hear so much. The Opposition of the time never took a single Supply Day for that purpose. The right hon. Gentleman's criticism does not seem to be very apt.

Mr. Lee

If the hon. Gentleman studies what I said he will see that I was not referring to Supply Days.

We believe that the first tranche of £900 million will expire at about the end of a period that the Conservative Party, when in Government, determined was the right period before a further debate—after about three-years. They were in power when the gas industry began this vast expansion and they laid down the rules of the game. As the hon. Member for Yeovil (Mr. Peyton) says, one sees these things from a different angle when one has moved to the other side. But as they have determined the period, and as I think that a three-year period is reasonable, I think that hon. Members opposite should agree that we should preserve roughly the time factor between discussions which they laid down.

Mr. Peyton

I am grateful to the right hon. Gentleman for saying that his intention is to obey the rules of the game as we laid them down. What we quarrel with—I hope that he understands this point—is that £250 million is authorised by the Bill immediately and then a larger sum, £300 million, is authorised by order. This is a new procedure as far as I am aware. If it had been £250 million followed by £50 million or £100 million, we should not have quarrelled with him, but he is going very much further than that.

Mr. Lee

If that is the case, it is difficult to see why hon. Members opposite moved the first Amendment to reduce the sum from £900 million to £850 million. I am not impressed by their argument that the House cannot exercise a great deal of control by the two tranches which we suggest. This is the fifth time in nine months that we have discussed the gas industry. There are also regular annual events which provide an opportunity for the House to debate the gas industry. Every year my right hon. Friend the Chief Secretary has the duty of presenting to Parliament a White Paper on the level of investment and borrowing for the nationalised industries. In addition, I present the Annual Reports of the Gas Council and the Area Boards, together with the report which I make on my functions under the Act. In addition, there is the possibility of debating the nationalised industries on Supply Days, although I was not including those days in my earlier comment.

I went a long way to meet hon. Members opposite on the last Amendment. I feel that I am not being unreasonable in asking the House to agree that the two tranches for which we ask should be maintained. If there is a find of gas in commercial quantities in the North Sea there will be a huge impetus to the demand for gas. There is no doubt about that. The very fact of finding commercial quantities of gas in the North Sea would have an enormous effect on the demand. I suggest that it is better for the industry to be able to proceed with its affairs rather than my having to come back to Parliament to ask for further powers.

12.45 a.m.

The hon. Member for Yeovil spoke about my being able to seek futher powers at a later date, but what would happen if, in about three weeks' time, a huge find were to be made in the North Sea? Three or four months would have to elapse before I could seek those powers from Parliament. Since the House of Commons will have the rights, privileges and so on which I have described, I suggest that it is right and proper to allow the industry to take advantage of the possibilities to expand when they occur. I hope, therefore, that hon. Gentlemen opposite will not press the Amendment. I have tried to answer their questions in a reasonable way. In the interests of the gas industry and the nation, we should be allowed to proceed in the way set out in the Measure.

Amendment negatived.

The Chairman

Under Standing Order No. 47, the Chair is of the opinion that the principle of the Clause and any matters arising thereon have been adequately discussed in the course of the debate on the Amendments proposed thereto. I propose, therefore, to put the Question forthwith, That the Clause stand part of the Bill.

Question put accordingly and agreed to.

Clause 2 ordered to stand part of the Bill.

Bill reported, without Amendment: read the Third time and passed.

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