HC Deb 04 May 1965 vol 711 cc1174-86

Amendments made: In line 4, leave out first "and".

In line 6, after "strata", insert and to modify section 52 of the Gas Act 1948".—[Mr. J. Morris.]

Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]

6.45 p.m.

Mr. Frederick Lee

I beg to move, That the Bill be now read the Third time.

On Second Reading, the Bill was generally welcomed as a contribution to the modernisation of British industry. This was, perhaps, to be expected, since its origin goes back to the Report of the all-party Select Committee on the Nationalised Industries which, in 1961, advocated changes in the structure of the gas industry and drew attention to the importance of underground storage of gas. That this Bill should now be receiving its Third Reading even four years after the publication of that Report is very considerable tribute to the work of the Committee and the hon. Members who took part in its deliberations.

The Bill, when introduced, had two main purposes. It has since acquired a third purpose which is reflected in the Amendment to the Long Title. I refer to the alteration we have agreed in Section 52 of the Gas Act. I believe that the Government Amendment maintains the principle, which goes back to before nationalisation, that the position of the gas industry as the supplier of gas for fuel uses, should be safeguarded, while, at the same time, it modifies the Section to take account of the growing use of gases for chemical processing. It is fair to say that the area gas boards have exercised their powers under the 1948 Act in an eminently reasonable way, but, nevertheless, there are advantages in giving statutory recognition to the changes that have taken place since the 1948 Measure was enacted.

The main purpose of the Bill remains the same. It is to enable the gas industry to take full advantage of the technological advances that are transforming not only that industry but very many other industries. As the Select Committee pointed out, the industry's statutory position no longer fully reflects the changes brought about by those advances, and the purpose of this Bill is to ensure that it does so.

The scope that now exists for the development of large-scale supply schemes requires the new powers and responsibilities at the centre which the Bill confers on the Gas Council. We all know that these powers were previously exclusive to the boards, and that the Council itself did not possess them. These powers supplement—they do not in any way replace—the powers of the area boards, and it is no part of the purpose of the Bill to restrict the boards' scope for initiative and enterprise.

Not all the new methods of providing gas require to be operated on a scale transcending the needs of individual boards, and some are well suited for development on an area basis. However, we know the possibilities in the North Sea, and so on, which obviously would not be appropriate or applicable merely to one area board. It is, therefore, right that the Council itself should acquire these powers.

As I said on Second Reading, the aim is to provide a structure which will enable the gas industry to select whichever methods—local or central supply—are most advantageous to the users of gas. Under the present structure of the industry, the area boards have done a very good job in modernising an old established industry. The fact that, as a result of technological advance, modifications need now to be made in that structure, is in no way a criticism of their performance. It is, indeed, a compliment to them.

Since Second Reading, the Bill has been given a careful and searching examination in Committee. Some improvements have been made in its drafting and—what has been particularly valuable—there has been the opportunity to discuss and clarify the intentions behind its more important provisions.

Much of the discussion has rightly been concerned with the safety aspects of underground storage. This is a new development in this country, and some people will be uncertain and apprehensive about its effects. It would seem, indeed, that new methods of storing gas have this inherent tendency to arouse apprehension. In his history of the gas industry, "The Vital Flame", Sir Compton Mackenzie relates the difficulties of Samuel Clegg in persuading everybody that the large cylindrical gasholder, which he had invented, was not a menace to the community. The first gasholders he erected had to be covered by buildings, and when he finally erected them in the open, even expert opinion was convinced that they would be at the mercy of every passing thunderstorm. We have moved on a little since then.

The Bill's provisions for the control of the development and operation of these storages should give assurance that this new means of providing for seasonal changes in the demand for gas will be developed only where this can be done without endangering people or property. But as the hon. Member for Yeovil (Mr. Peyton) and the hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles) have stressed, it will be important, if unnecessary apprehension is to be allayed, to ensure that people who are likely to be affected understand what is involved.

The Government fully accept the need to explain both the nature of underground storage and how the provisions of the Bill will operate. The Parliamentary Secretary gave an undertaking when this question was discussed in Standing Committee that, after the Bill has been enacted, the Government will issue a pamphlet explaining, as simply as possible, what is involved in underground storage and the rights afforded by the Act. This follows the procedure adopted by the previous Government for two Acts affecting private interests for which the Ministry of Power was responsible.

Finally, I should like to express my keen appreciation of the co-operative spirit with which the Bill has been received on both sides of the House, and particularly when it was under discussion in Committee. A good Bill has, as a result, been improved, and I hope that the House will now give the Bill its Third Reading.

7.2 p.m.

Rear-Admiral Morgan Giles (Winchester)

My constituents are very closely concerned with the Bill. As a matter of history, it was very largely owing to the objections raised by the Winchester City Council, and others, that the earlier Measure was withdrawn in 1963. It was absolutely correct to do that then, because that earlier Bill was, by common consent, quite inadequate.

It must, at the same time, be emphasised that there was nothing wrong then with the principle of storing gas underground, just as there is nothing wrong with it now. In the detailed discussions that are inevitable in connection with such a very complicated and technical Bill as this, terms like "some degree of risk" have to be bandied about. It is, therefore, important to make it quite clear that no danger arises directly from the fact that gas is stored underground.

Just as it is possible to be electrocuted from electrical supplies, or run over by motor cars in motion on the road, so it is possible to be poisoned by gas where-ever it is used, but it should be emphasised that there is no additional risk from gas just because it is stored underground I therefore welcome the Minister's promise that his Ministry will issue an explanatory leaflet making that quite clear. All in all, I am, without any reservations, entirely in favour of the Bill.

7.4 p.m.

Mr. Braine

I hope that the House will forgive me if I put what is purely a constituency point. It is now quite clear that subsection (7) of Clause 3 was inserted in the Bill to prevent the Canvey Island Urban District Council, in my constituency, from drawing what it considers to be a reasonable rate revenue from the fine new methane plant which the Minister formerly opened last month, and which started operating last October.

I was delighted to have the opportunity on an historic occasion to welcome the right hon. Gentleman and the Parliamentary Secretary to my constituency, when the Minister performed that opening ceremony. It was an exciting moment for all of us. It was exciting for my right hon. Friend the Member for Bridlington (Mr. Wood), who was present, and who played a major part in sparking off this great enterprise when he approved the Gas Council's scheme in, I think, November, 1961. It was an exciting moment for the Minister, who was certainly in good form and seemed to be enjoying himself, and who congratulated the Gas Council on its combination of calculation and daring—I hope that I have his words right.

It was an exciting moment for my constituents and myself, because we are very glad to know that the plant supplies gas to no fewer than eight of the gas boards, that it is a major factor in keeping down the cost of town's gas, and that it will meet about 10 per cent. of the country's total gas requirements.

Having said that, I must go on to say that, unhappily, because of the peculiar way in which gas undertakers are rated, we have here an industrial plant which covers about 70 acres of a valuable area of land in quite a small urban district, but which contributes practically no rate revenue at all. Indeed, the Canvey Island Urban District Council contemplated action in the courts on the grounds that what took place in the plant constituted a manufacturing process within the meaning of Section 11(4) of the Local Government Act, 1958. Had it been able to prove that, the authority was certain it would have attracted a very considerable rate revenue to itself.

The introduction of the Bill frustrated the council. This is not the time or the place to repeat all the arguments I advanced in Committee. In any case, I think that Canvey's case in this difficult technical rating matter is recognised. Certainly, the Parliamentary Secretary to the Ministry of Housing and Local Government, who I am very pleased to see here now, went out of his way in Committee to be helpful.

The hon. Gentleman explained that there is a working party at present considering rating and valuation. Among other things, it is examining the formula relating to gas and electricity undertakings, and the Railways Board. He said that the Urban District Councils' Association could raise the matter on behalf of the Canvey Urban District Council, but he went further, and I quote: I give the hon. Member a pledge that my Department will put the issue to the working party. We shall make representations to the working party and see to it that this matter is carefully considered. Whether or not this issue is raised by the Association, we will most certainly raise it. That was a very generous approach and both I and my local authority were very pleased it was made. We accepted the hon. Member's assurances in the spirit in which they were offered. But there are still several questions which are worrying the local authority and this is the only opportunity I shall have of putting them to the right hon. Gentleman and the Parliamentary Secretary. Clearly, if the working party does not report fairly soon, then, because of the delay in applying for the rating formula, Canvey may be at a serious disadvantage. The reason I mention this is because the Parliamentary Secretary did say in Committee that an authority with new gas works in its area will not get rates on the extra production for two years and, for clarification, there are three questions I would like to ask.

The first is: has the working party yet considered the matter? If not, can the hon. Gentleman say when the Government are likely to put the point to the working party in accordance with the promise made in Committee? Secondly, can the hon. Gentleman say when it is expected that the working party will report and when legislative effect will be given to those recommendations? I appreciate this may be difficult to answer, but the reason I ask is to find out whether it will before 1966–67. Thirdly, bearing in mind that the plant has been working since October of last year, will the new formula under which Canvey would expect to benefit be applied retrospectively or only from the date on which the Bill becomes an Act?

The point I am trying to make here is that if the new formula applies only from the appointed day under the Bill, then presumably it will always be open to the Canvey Island Urban District Council to establish if they wish that the through-put for the interim period, that is, from last October, when the plant started working, up to the appointed day, amounted to manufactured gas within the meaning of Section 11(4) of the Local Government Act, 1958.

The hon. Gentleman will appreciate that if Canvey Island Urban District Council is free to take this action this would enable it to ensure, assuming that it established its case before the courts, that the rate payment under the existing statutory formula for the year 1964–65 is weighted accordingly.

I hope that the hon. Gentleman will be able to answer these somewhat technical questions and so remove the doubt and anxiety still being caused to the council in my constituency. I hope that he will be able to say that because there is a delay in the application of these rating formulæ he will be able to confirm what the Parliamentary Secretary to the Ministry of Housing and Local Government said in Committee, namely, that the purpose of subsection (7) is certainly not to do Canvey Island in the eye, but is a holding provision intended to avoid an upset to the whole basis of gas rates in the North Thames area.

I hope that this is the answer, but I repeat that the date upon which legislative effect is given to the new formula is obviously of importance to an authority which hopes to gain something more from the operation of this plant than it is getting at the moment.

7.8 p.m.

Dr. Bennett

My interest in this is partly general and partly local, although at no point does it become a constituency matter for me. When the first intentions of starting an underground storage system for gas near Winchester were voiced I was then, or had until recently been, Chairman of the Parliamentary and Scientific Committee, and when we had the opportunity of examining this subject we found that this was, from a national and scientific point of view, an altogether admirable type of innovation which had been proved in other parts of the world and, clearly, had a great future and could have an enormously valuable economic effect.

This was overwhelmingly self-evident. But when I discovered, in the district chosen for the first appropriate anticline where the gas was to be impounded, that the scientific procedures were going ahead but the civil procedures that should go with them were not going ahead, I began to smell a rat. Mr. Peter Smithers, the former Member for Winchester, was serving at that time at the United Nations in Washington, and when a well-known local farmer, Mr. Tom Hewer, of Chilcombe, brought this up to me in a state of high alarm I myself became temporarily involved until Mr. Smithers' return from America.

It seemed abundantly clear that the methods by which the Gas Council and the Gas Board were setting about their business were administratively arrogant. They were not prepared to take any cognisance of the phrase we have heard used repeatedly today, "injurious affection", and other possible damages to people living on the ground over the anticline which was to be used. Numbers of borings were taken and the structure appeared to be sound, but if there were any faults in the structure they would only come to light too late. The point referred to me by this particular farmer, who had built up a very fine farm, was that he might have his holding rendered relatively valueless and would have absolutely no redress whatsoever.

When this situation came up I did what I could to block the progress of what ultimately blossomed into the form of a Bill. I tried to nip that blossom in the bud and when superseded by the then Member for Winchester, this we were duly able to do. It is, therefore, a great joy to me today to be able to welcome the Third Reading of the Bill, which sets out to become a responsible national Bill and, in due course, an Act of Parliament. It sets out what a Private Bill, promoted by the Gas Council or a local gas board, could never bring about because insufficient attention had been paid to the rights of the individual. It was not, of course, a matter of grasping landlords. It was the very unpleasant fate feared by people living on the surface, against which they would have no redress. I am happy to say that I am satisfied that Clause 14 and other Clauses take over willingly and unreservedly the liability to householders on the surface which the Gas Council in its former efforts was adamantly unwilling to attempt to do.

I therefore give the Bill, in my own name and, I am sure, in the names of those who were previously so gravely alarmed by what had gone on, a welcome. This is the combination of national good with local good, or at least not local evil. I warmly welcome the Bill.

7.12 p.m.

Mr. Ridley

I agree with my hon. Friends that this is a good Bill. It has been further improved in Committee. I assure the Parliamentary Secretary that it is a very much better Bill than the next one of which he will be in charge in the House if we read the signs aright. I assure the hon. Gentleman that we shall give that Bill the same careful scrutiny that we have given this one. I thank my hon. Friends who have taken part in the Committee and Report stages for the careful and helpful way in which they have checked every line of the legislation and for the way they have looked after the public interest. It is also my pleasant duty to thank the Parliamentary Secretary for his courtesy and efficiency throughout his conduct of the Bill. The same goes for the Minister, although, true to form, he is not here.

I am sure that Part I provides the right solution and that the Gas Council should be given power to engage in the manufacture, storage and sale of gas. The House is agreed that the thirteenth board solution would have been the wrong solution. Therefore, we welcome the power now given to the Gas Council itself to correlate, organise and centralise the planning of the industry's needs, the planning of new ventures from the new processes, and the organisation of benefits derived from the North Sea or from wherever it may go to buy feedstock gases.

The gas industry is the most favoured of the fuel industries in the position in which it is placed by the Government. There are no import restrictions. It is not tied to coal or to any particular raw material. The measures announced by the Ministry recently have little or no effect upon the gas industry. It is allowed to roam free, to be as efficient as it can, and to use all the processes and all the imports it needs to further its efficiency.

In return for this, we look to the gas industry to use those opportunities and to provide the dividend in the form of cheaper gas in the future which we all expect and hope to see. I go further and add the possibility of exports. We did not raise the question of exports again on Report. There is the distinct possibility, if we are lucky in the North Sea and if we are lucky in our bargaining, that this country will become a net exporter of gas. I remind the House that very little oil is produced in this country, yet it is a net earner of foreign exchange, or at least it was until the Chancellor of the Exchequer introduced his Budget, and I am sure it will be in the future. These things are possible, and it is possible for gas as well. I hope the industry will do it.

My hon. Friend the Member for Essex, South-East (Mr. Braine) has put with great ability the point about the rates at Canvey Island. I hope that the Joint Parliamentary Secretary to the Ministry of Housing and Local Government will take note of what my hon. Friend said. I know that the Parliamentary Secretary is trying to solve this problem and to find an equitable solution. We hope that he will not be too long, because we are certain that the gas industry can at least afford to pay the rates and we hope that Canvey Island will benefit when the solution is eventually found.

Coming to Part II, I am convinced that underground storage in strata is in fact a safer way of storing gas than storing it in surface gas holders. All of us in the House owe a debt of gratitude to my hon. and gallant Friend the Member for Winchester (Rear-Admiral Morgan Giles) for the statesmanlike way in which he has handled this question on behalf of his constituents, well knowing that there is every likelihood that the first storage will be proposed in his constituency. He has been a great contributor to our debates. He will have brought much reassurance and comfort to his constituents from having elicited the fact that there is a very small chance that there could be any flaw or danger in this proposal.

We have examined the Bill rigorously in Committee, principally with regard to safety. I am glad that a pamphlet is to be produced dealing with the safety of these proposals. In respect of compensation we have examined the proposals with great care and have come to the conclusion that they are fair and reasonable. I am surprised that the hon. Member for Poplar (Mr. Mikardo) is not here to complain about the compensation provisions in the Bill. It surprises me very much that he should have turned his attention to Bills more in the popular eye than this Bill which we think is fair and reasonable.

Lastly, the rights of individuals, which were referred to by my hon. Friend the Member for Gosport and Fareham (Dr. Bennett), have been taken care of in the Bill.

With those few words, on behalf of the Opposition I welcome the Bill. We have legislated for cheaper gas. It is now up to the industry to provide us with that cheaper gas in the future.

7.18 p.m.

Mr. John Morris

I shall be as brief as possible in dealing with the points raised in the course of the debate.

The hon. Member for Essex, South-East (Mr. Braine) asked whether the Working Party at the Ministry of Housing and Local Government had considered the matter. I am given to understand that a Working Party has held a meeting. The meeting was to discuss the procedure which it will follow to consider these matters. It will discuss the very points which the hon. Gentleman made to the House. The hon. Gentleman will recall that the Working Party was set up as far back as 1963. He will also remember the points made by my hon. Friend the Joint Parliamentary Secretary to the Ministry of Housing and Local Government, namely, that there was a year's delay on the part of some of the local authorities in sending their views to the Working Party. The Working Party should not be faulted for any delay; there has been no delay on its part. I am given to understand by my hon. Friend that it is seized of the importance and urgency of this matter and will report as soon as it can.

I am asked, further, whether any legislation will be retrospective. It would he wrong to anticipate the Working Party's recommendations. It has to look at the global rating effect, not only of the Canvey Island authority, but of all the authorities within the North Thames area. It would be wrong for me to give any assurance about the nature of any legislation or any statutory effect which is to be given, or may need to be given, to the Working Party's conclusions. We must reserve our position on this. I can merely say that the Working Party is seized of the importance of all the matters which have been so forcibly put before the House by the hon. Member and it will do its utmost to report to my right hon. Friend as soon as possible.

I am glad of the welcome which the Bill has received on Second Reading, in Committee and now from the hon. and gallant Member for Winchester (Rear-Admiral Morgan Giles). On the issue of safety I can only repeat what my right hon. Friend said on Second Reading: The essence of safe practice lies in carrying out the operation in the right conditions and in the right way. If the site selected for an underground storage satisfies the necessary geological requirements and the storage is operated in accordance with well-established practice, the Government are confident that underground gas storage will not endanger the public."—[OFFICIAL REPORT, 11th February, 1965; Vol. 706, c. 585.] I was glad to tell the House earlier that I had the privilege yesterday, through the hospitality of Gaz de France, to visit underground storages near Paris. It is pertinent to point out that in other parts of the world this is a well-established procedure. The sites which I visited are both within 40 miles of Paris and I have the assurance of the President of Gaz de France that he had not come across any difficulties with regard to the safety of the public. Other countries store gas underground and it is novel only in this country. To make assurance doubly sure, if there were any remote chance of anything going wrong there are, as the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) has indicated, adequate and fair terms for compensation.

I also welcome the remarks made by the hon. Member for Gosport and Fareham (Dr. Bennett). In Committee I gave assurances that I would look at a number of points. Most of them have been dealt with on Report and I need not worry the House by going through them again. We went at great length into the point raised about procedure for authorising storages. After having looked at the matter thoroughly again I am satisfied that there will be the right procedure and stages for ensuring, first, that the Minister is aware of all the considerations before authorising any storage, and, secondly, that all individual interested parties will have ample opportunity to make their representations before the inquiries which will be set up.

Another query raised in Committee was whether there was any possible weakness by virtue of the restrictive nature of the words "on that date" in Clause 7. I have taken advice and I assure the House that there is no difficulty. They are not restrictive in the sense of the observations and fears which were voiced in Committee by hon. Members opposite. There is established practice on this point and the words now in the Bill are the proper words for this kind of enactment.

We have dealt either in Committee, on Report and now with all the points raised, I hope to the satisfaction of the whole House. The hon. Member for Cirencester and Tewkesbury indicated that this was a better Bill that I was handling than some of the Bills which we shall be handling in future. The Ministry of my right hon. Friend and myself has been a very modernising Ministry. We introduced modernising legislation in the Nuclear Installations Bill, which is now an Act, and here we have a modernising Bill for the gas industry. I hope that in due course we shall score a hat-trick and introduce a modernising Measure for the steel industry.

Question put and agreed to.

Bill read the Third time and passed.