HC Deb 04 May 1965 vol 711 cc1120-9

(1) Section 52 of the principal Act (which prohibits any new piped supply of gas except with the consent of the Area Board and in accordance with such conditions as may be attached to that consent) shall have effect subject to the following provisions of this section.

(2) An Area Board shall give their consent under that section to the supply of gas if the supply is for such purposes as are mentioned in the next following subsection.

(3) The said purposes are industrial purposes which do not consist of or include the use as a fuel of the gas which it is proposed to supply except in so far as the gas is required to provide heat or other energy required—

  1. (a) for a process in which the gas is used otherwise than as a fuel; or
  2. (b) where such a process is one of a series, for any further process in the same series, not being a process in which a bulk product is converted into manufactured articles;
and in determining whether any industrial purposes are as mentioned in this subsection the use of any gas derived, otherwise than as a by-product, from the gas which it is proposed to supply shall be treated as the use of that gas.

(4) If any question arises whether the purposes for which gas is to be supplied are purposes mentioned in the last foregoing subsection, it shall be determined by the Minister.

(5) Notwithstanding anything in subsection (1) of the said section 52 an Area Board shall not attach any conditions to their consent to a supply of gas for purposes so mentioned, except conditions requiring the supplier of the gas to provide, periodically or on request by the Board, information with respect to the type of gas supplied, the amount supplied and the use of the gas supplied; and any person aggrieved by any such condition may refer it to the Minister, who may confirm, vary or revoke it or impose instead some other condition which the Area Board could have imposed under this subsection.

(6) The said section 52 shall not apply to natural gas gotten in Great Britain in pursuance of a licence under the Petroleum (Production) Act 1934.—[Mr. Lee.]

3.55 p.m.

The Minister of Power (Mr. Frederick Lee)

I beg to move, That the Clause be read the Second time.

Mr. Speaker

I think that it might be convenient to discuss with this new Clause the right hon. Gentleman's Amendments to the Title, Nos. 27 and 29.

Mr. Lee

Thank you, Mr. Speaker. That would be convenient.

To continue on the note of non-controversial legislation, hon. Members who were members of the Standing Committee which considered the Bill will recall that an Opposition Amendment was moved during the course of our proceedings. Indeed, I believe that, during the Second Reading debate, the Bill was criticised for failing to include any provision on the monopoly which the gas industry enjoys of piped gas supplies by virtue of Section 52 of the 1948 Act. The hon. Member for Wanstead and Woodford (Mr. Patrick Jenkin) referred to consultations which the Ministry had initiated during the summer of last year with the gas, oil and chemical industries about the possible amendment of that Section.

The hon. Member complained on that occasion that, as the Section now stands, it allows the gas boards to claim authority over the disposal of a large number of gaseous chemicals transmitted by pipeline with which they have nothing whatever to do. He then went on to urge that the opportunity presented by the Bill should be taken to bring the 1948 Act into line with the Continental Shelf Act of 1964 and that, at the same time, the Government should consider the Petroleum (Production) Act, 1934, which also makes provision in respect of the supply of natural gas.

When we reached the Committee stage, as I said, there was also an Amendment moved by the Opposition to this effect. I pointed out on that occasion that we were not prepared to come to a hasty conclusion on these matters merely in order to put something in the Bill before we had had ample time to consider it. I did not then feel that it would be satisfactory to accept any kind of Amendments which suited one of the contesting parties, but which would plainly be against the interests of another of the parties.

I stressed, however, that the Government intended to continue with the work which had been done in the industry, to look at Section 52 so that we could reach a view of what was best in the general interests of our economy. I then gave an assurance that I would do everything possible to bring the parties together and to get a solution of the problem, if possible, in time for a Government Amendment to be tabled during the Report stage of the Bill.

The Clause is in fulfilment of the undertaking which I then gave. It is the outcome of a meeting which was held at the Ministry, at which the Petroleum Industry Advisory Committee, the Federation of British Industries, the Association of British Chemical Manufacturers and the Gas Council were represented. It represents a compromise between different viewpoints, but it is one which, I believe, meets the reasonable requirements of the parties concerned, even though, as every compromise, it has not given all of them all the things which they would have liked to have.

4.0 p.m.

In our discussions in Committee I told the hon. Member for Essex, South-East (Mr. Braine) that I would try to get a compromise to meet all the real difficulties which he had outlined. I said that I had no wish to impede the chemical industry or any other industry and that I did not want to inhibit them in the great work they were doing.

As I see it, the new Clause represents a course of action which those who are practically involved in these matters have discussed together round the table at meetings which we have called. I believe it is a balanced sensible solution and I ask the House to accept it in that spirit.

Two principal changes will be made if the new Clause is passed. First, it is made obligatory for the gas boards to give their consent to the supply of gases for the same purposes as were laid down in Section 9(4) of the Continental Shelf Act; that is, to an industrial supply for "non-fuel" purposes. Secondly, the Clause provides that natural gas obtained from the British mainland under a licence issued under the Petroleum (Production) Act, 1934, shall no longer be within the scope of Section 52 of the principal Act. Hon. Members will remember that natural gas obtained under the Continental Shelf Act was taken out of the scope of Section 52 by Section 9(1) of that Act.

Subsection (1) provides for Section 52 of the principal Act to have effect subject to the following provisions of the new Clause. Subsection (2) provides that an area board shall give its consent under Section 52 if the supply of gas is for such purposes as are set out in subsection (3), which closely follows Section 9(4) of the Continental Shelf Act. The effect of these two subsections is that the Gas Board's consent must be given to a supply of gas in pipes where it is to be used for industrial processing and not as a fuel.

In such a case, part of the gas supplied may be used to provide heat or energy for the actual process through which the gas is put, or for any further process in the same series, other than one for converting bulk products into manufactured articles. The process must, however, involve more than the mere reforming of the gas; otherwise the gas industry's monopoly of gas supplies for fuel use could be breached by someone setting up a plant which merely altered the calorific value of the gas he had obtained and left him free to use this derived gas for fuel purposes. It is the purpose of the last three lines of subsection (3) to prevent this happening. They do not, however, prevent the use of gases which are by-products of a genuine non-fuel process by the person operating the process, but he will not, of course, be able to supply them to third parties through pipes without the consent of an Area Board.

Subsection (4) provides for determination by the Minister of any dispute as to whether the purposes for which gas is to be supplied fall within the purposes set out in subsection (3). Subsection (5) restricts the conditions which an area board may attach to an "obligatory" consent to conditions requiring the supplier of the gas to provide the board, periodically or on request, with information as to the type and quantity of gas supplied and its use. It provides that anyone aggrieved by any such condition may appeal to the Minister, who may confirm, vary or revoke the condition or impose some other condition which the Area Board could have imposed under this subsection.

Subsection (6) removes from the scope of Section 52 natural gas obtained under a licence issued under the Petroleum (Production) Act, 1934. At present natural gas found in the mainland falls under the provisions of two Acts. The Petroleum (Production) Act gives the Minister—not the gas boards—the power to consent to its supply for industrial purposes, if he is satisfied that the area board concerned has had the opportunity to buy the gas at a reasonable price. But it appears that, in spite of this, the gas board may claim that its own consent for any piped supply of the gas is also necessary under section 52 of the Gas Act. Without suggesting that a gas board would seek to thwart the Minister's decision by refusing a consent in such circumstances, the position is clearly anomalous. The purpose of the subsection is to end this anomaly by removing from the scope of Section 52 of the Gas Act natural gas to which the Petroleum (Production) Act applies. Natural gas obtained under the Continental Shelf Act is already so excluded by Section 9(1) of that Act.

I hope that it is not necessary for us to go over the detailed and rather technical discussion we had in Committee. I gave the Committee the assurance that I would do everything possible, between then and Report, to bring to a successful conclusion the discussions between the industries which have been going on for a considerable time. I hope that the House will feel that the outcome, which is contained in the new Clause, is a fair and proper one and one which satisfies each of the industries that its interests are being looked after by the Government.

I said, and I repeat, that there are issues within these matters which are not completely settled to the liking of everyone. I hope, however, that hon. Gentlemen opposite will agree that I have fulfilled the undertaking which I gave in Committee. I have fulfilled it in the best way I could. On that basis, I hope that the House will agree that the new Clause represents a satisfactory conclusion to a very difficult subject indeed.

Mr. Bernard Braine (Essex, South-East)

The right hon. Gentleman referred, not unkindly, to the Amendment which I moved in Committee seeking clarification of the intentions of the Government about the supply of industrial gases which are used as raw materials in our fast-growing chemical industry. The right hon. Gentleman will recall that we had a long and detailed—and, I am afraid, at times somewhat technical—discussion. It was, however, one of my most enjoyable experiences.

I have been a member of many Standing Committees in the 15 years I have served in the House. I cannot recollect belonging to a Committee in which the discussion flowed more easily, or where the atmosphere was more pleasant than in Committee on this Bill. I regarded it as a privilege to be a member of the Committee and I take this opportunity to say that this was largely due to the right hon. Gentleman and to the admirable part played for the Opposition by my hon. Friend the Member for Yeovil (Mr. Peyton).

There was certainly need for clarification of the existing statutory position as set out in the Gas Act, 1948. Section 52 of that Act provides that nobody should supply gas through pipes without the consent of local gas boards. The position had arisen in which some gas boards were claiming that this provision gave them a statutory monopoly in the supply of gases through pipes. This was not the intention of Parliament in 1948 and I do not believe that it was in the mind of the right hon. Gentleman. In recent years we have seen far reaching, one might say accelerating, technological changes taking place, not only in the gas industry. These changes are to be welcomed and the Bill takes account of them as regards the gas industry. Changes have been taking place in the chemical industry and doubt on this point was becoming extremely frustrating to that industry and, I suggest, if allowed to develop, could have been damaging too.

The former Government were anxious to find a solution to this problem, probably by amendment of Section 52. Last July, they invited the views of the chemical industry. Many of us were disappointed that the Bill did not deal with the matter initially and the impression was given to the industry—I certainly had the impression—that it would be a long time, possibly three, four or five years, before a satisfactory solution would be found.

The prospect of such a long delay was alarming to our fastest growing and most technologically advanced industry. That was why we pressed the matter in Committee. The right hon. Gentleman was careful not to commit himself in Committee and I recognise that that was the right course for him to have taken. However, he was kind enough to say that he would do his best to bring together the spokesman of the gas and chemical industries and his own advisers. He has been as good as his word and the new Clause is the result.

It is clear that the modest arguments which I have advanced in Committee—along with the more cogent arguments adduced by my hon. Friends—about the urgency of the matter have been accepted by the right hon. Gentleman and his advisers. The new Clause is, therefore, wholly acceptable to me. I can only speak for myself, but I have taken some soundings and I believe that it is also fully acceptable to industry.

Again speaking for myself, while I might harbour some harsh thoughts about the right hon. Gentleman on certain other controversial matters which will be engaging the attention of the House later this week, I take this opportunity to thank him for the way in which he met our point and, perhaps even more, for the speed with which he and his advisers addressed themselves to the problem.

4.15 p.m.

Mr. Patrick Jenkin (Wanstead and Woodford)

I wish briefly to express my gratitude to the Minister for the expedition with which he and his Department have got on with the process of confrontation which we urged on him in Committee. As the right hon. Gentleman said, I first raised this point on Second Reading. At that time we were given the impression that it would not be practicable to deal with this matter in the Bill. I think that that was the accepted view on the matter in his Department.

That makes us all the more indebted to him and to his officials for the great energy they brought to the resolving of the arguments between the parties concerned, between the chemical industry and the gas industry and between the chemical industry and the oil industry. If I may say so, it reflects favourably on those responsible that they were able in so short a time to arrive at an agreed solution with as little fuss and trouble as there apparently was.

This solution, of course, does not give everyone everything—that, in the nature of things, would be impossible—but I can assure the right hon. Gentleman that those with whom I have spoken in the chemical industry count themselves well satisfied with this Clause, and feel that it meets the industry's reasonable requirements in the circumstances they envisage as likely for the future. I would express my own personal gratitude for the efforts that have been made to bring this matter to what most people would regard as a thoroughly satisfactory conclusion.

Mr. John Peyton (Yeovil)

I cannot refrain from expressing my profound regret that the benches behind the Minister are not as packed as they are likely to be on Thursday, when we have a very much less agreeable fixture to fulfil. Had they been, hon. Members opposite would have been able to experience an atmosphere of merited cordiality not likely to be repeated later in the week.

Mr. Speaker, perhaps happily for yourself, you do not have the privilege of serving on Standing Committees. Had you served on the Standing Committee on this Bill, you would have heard my hon. Friend the Member for Essex, South-East (Mr. Braine) electrify us with his intellectual insight into the problems, and the profound observation that, for him, gas was gas. However, to make that remark and just leave it there would be wrong of me, because I am sure that it will be admitted that the Standing Committee owed my hon. Friend a great debt of gratitude for the forceful and clear way in which he deployed an argument full of technical problems, the outcome of which is of great significance for an important segment of the industry. I am sure that I take the right hon. Gentleman with me when I tell my hon. Friend how much we appreciate what he then did.

I say without qualification that the Minister has been as good as—indeed, better than—his word. He told the Committee that he would do his best to arrange the confrontation which we then suggested, and I am very conscious of the fact that he pressed forward in a way that exceeded my hopes. We truly appreciate what he has done. I hope that the right hon. Gentleman will be good enough to pass on my words of appreciation to those in his Department who have had a great deal of experience in dealing with this intractable problem over the years, and whose labours are now greatly appreciated.

We are extremely glad to know that the Minister will now be able to modify the rather strange and dangerous remark for a Minister to make in a Standing Committee, which was that such a Committee was not competent to make a decision of this order. Perhaps we could agree on the common ground that at least a Standing Committee can play a valuable part, if not in making a decision at least in extracting one from the machine. At any rate, we on this side congratulate ourselves on our part in the operation.

The Minister humbly confessed in Standing Committee that he was unable to look into the inner reaches of a noble Lord's mind—a particularly surprising observation when the noble Lord to whom he referred was none other than Lord Chorley. The observations the right hon. Gentleman had in mind were those made by Lord Chorley during the passage of what became the Gas Act of 1948. Between the Committee stage and now, the Minister has made a very useful exploration into the recesses of Lord Chorley's mind. He has obviously found out what was there, has understood it and has acted on it. We congratulate him on doing that.

I would be more than human if I did not quote back to the right hon. Gentleman the words he used just now, when he said that he had continued with work that had been going on in the Ministry. Perhaps I might utter, with all the earnestness and vigour I can command, the pious—but, I must say, inadequately founded—hope that the Minister will bear that precept in mind, will attempt to follow it in other contexts, and will not stray from the paths of righteousness into the errors with which he seems to be threatening us from time to time.

Mr. Lee

I am grateful to the hon. Member for Yeovil (Mr. Peyton), but I confess, Mr. Speaker, that I was a little alarmed lest your own personal safety might be put in some jeopardy. Electrocution is not a thing that I, with my great affection and respect for you, Sir, should like to see happen to you. Indeed, had the hon. Gentleman mixed, not metaphors but fuels, you could have been gassed during the progress of this new Clause.

I was glad that the hon. Gentleman referred not only to me, but to those who have to do the work in this case. One has to depend for this kind of confrontation, if that is the right word, on the very able and competent band of officials who, once the undertaking had been given, worked like Trojans to get this result that we have all acclaimed. I am grateful to the hon. Gentleman and to his hon. Friends for the way in which they have accepted the new Clause.

Question put and agreed to.

Clause added to the Bill.

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