HC Deb 11 December 1969 vol 793 cc707-75

Order for Second Reading read.

6.45 p.m.

The Paymaster General (Mr. Harold Lever)

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

This Bill arises directly from the discovery of natural gas in the North Sea. The discovery has a profound effect on the industry, and its further development will have an even greater effect.

The gas industry will be undergoing its second major revolution within a decade. It moved from coal carbonisation to oil reforming. It is now rapidly moving to displacing conventional forms of gas more or less exclusively by natural gas mainly from the North Sea.

The effect of this development is that instead of being an industry of fragmented manufacture and distribution the gas industry will become an industry of distribution only. Furthermore, during the next few years we expect to see the size of the industry doubled or trebled. As this great conversion takes place and natural gas takes over entirely from town gas, re-equipping and conversion of appliances and apparatus will involve about 13 million customers. It is vital that, if this great discovery and its many advantages are to be fully exploited, we should organise a speedy and smooth changeover from the old forms of gas-making to the new distribution system and the appliances which will go with it.

It is fairly obvious that the structure of the gas industry which was related to its origins in terms of local gas-making, and which, in turn, was later centralised to some extent in policy making, will change as natural gas from the central source of supply takes over. Therefore, it is inevitable that there must be a change in the structure of the industry giving to the centre which controls these vast supplies of gas appropriate planning powers to undertake the vast operation that lies ahead.

This central control, related to the central source of supply which will almost exclusively exist as natural gas takes over, must be able to plan nationally in matters like capital expenditure, pipeline grids, storage facilities, and the fixing of tariffs. There will no longer be local firms with local apparatus churning out gas, but one great central source from which the tariff must be fixed centrally. It follows that the overall financial responsibility for the industry must be taken by those in control of the sources of supply, the Gas Council.

My predecessor, though he bore a more muscular and less generous title than I myself, gave a general indication of the changes which will be required. These were given a general welcome by the Select Committee on Nationalised Industries and by the N.B.P.I. I do not pray them in aid as specifically approving the proposals in the Bill, but the general need for a reconstruction of the industry along the lines I now propose in the Bill was recognised and welcomed by the Select Committee.

In making this change, which involves some strengthening of the power at the centre of the industry, I have been anxious to provide that we do not either turn the local area boards into mere automata, obeying rigorously some all knowing, all-seeing central authority. I say this for two reasons. First, we want to allow the benefits of the past to accrue in the industrial adventures of the future. The past history of the gas industry was such that we had great pools of talent in the area boards which in many cases had the responsible job, not merely of ensuring the distribution of gas, but of making all sorts of arrangements for its manufacture.

I wish to see that pool of talent, decision-making and experience drawn into the new body, the Gas Council, which will take control centrally as is inevitable because of the developments in natural gas which lie ahead. I not only seek to utilise the talent in this way, but to preserve it for use in the industry and to draw it into the central authority by retaining on the Gas Council the area board chairmen who will form two-thirds of the Gas Council itself. Thus, although it is an exercise in centralisation, it is a rather novel exercise, because we draw into the central authority the people who are exercising authority in the area, getting the benefit of their experience, and ensuring at the same time that we do not have a remote central body unaware of the problems and difficulties of the areas by providing that the Gas Council itself, which has the central authority, is constituted as to two-thirds of its membership by the area board chairmen.

Powers must be available generally to the central authority over the area boards in the nature of the new structure that will arise as natural gas takes over more and more. The central authority will be given power to give directions to the area boards to enable it to discharge the responsibility for the industry, financial and industrial, which is placed firmly on it in the Bill.

Tariffs will be fixed by the central authority, or, if they are fixed by the local authority, they will be subject to amendment by the central authority, so it means, in effect, that tariffs will be tinder the final decision of the Gas Council itself, but that will be subject to two things—

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

Does that mean that tariffs will be the same throughout the country? Is it the intention to fix identical levels of prices throughout the country for identical consumers?

Mr. Lever

No, not necessarily. What will be identical will be the price at which the Gas Council will supply the natural gas to the area boards. Although I am talking of a few years hence, when natural gas will have displaced entirely town gas, there is the interim period in which a certain amount of gas-making will be going on locally, on a diminishing scale, as the natural gas takes over.

The tariff-fixing power of the Gas Council will be subject to two general provisions. First, I need hardly say that any contract entered into already by area 'boards will be honoured. There will be no power in the Gas Council to override existing contracts. Secondly, there is no reason why local costs and local successes in economy and efficiency should not be reflected in local prices to the extent that this will be possible under the new regime. Clearly, as long as the area boards are making their own gas, this might be a relevant and significant factor, but, as this local gas-making is wound up, it follows that there will not be the wide variations in price which might have occurred under the old system, because all the area boards will be gel ting their bulk supplies of natural gas at the same price from the Gas Council. But that is not to say that there will not be complete possibilities for area boards to ensure that any benefits of local efficiency are passed on to the consumer in some variation in price.

The general capital development programme of the industry will be settled by the central Gas Council. That follows logically from what I have said. In the past, it was understandable that there were these area boards each formulating an appropriate capital programme, because they had major tasks, not only of distribution, but of gas-making, to undertake. But, as the natural gas comes through a system of pipes to the area boards, the capital programme which makes this possible ought to be planned and controlled by the Gas Council, and the financial responsibility for that should be upon it, subject always to the approval of the Minister.

Overall financial responsibility will be passed to the Gas Council. The obligation to pay its way, instead of being thrown on the area boards, will be thrown on to the council, so that the industry as a whole, operating as it will be from a central point of supply, will have to pay its way, and the statutory responsibility to ensure that that is done will lie upon the Gas Council.

I hope that no one will make heavy weather of this. I am anxious not to encourage any excessive centralisation which is not industrially necessary. The only centralisation that is taking place is the centralisation dictated by the industrial and economic facts of the new development, and that is mitigated in the way that I have shown, by ensuring that the area board chairmen constitute a majority on the central authority and are able to bring their influence to bear in that way.

Nobody ought to be excited by the fact that because this is a nationalised industry it is inevitable that any powers that it has have to be expressed in statutory form, and so there is talk of "power to give directions" to the area boards by the Gas Council. It is inevitable that those words should be used, but I do not want anyone to imagine that that is the way the industry will operate, with showers of directions corning from some rigid central authority to the area boards. Business will go on in the ordinary way, with the ordinary, reasonable, flexible informality that one would expect in a prosperous and successful industry of this kind, but it is inevitable that I have to use language like "power to give directions" if I am to comply with the need to have an ultimate reserve of power which defines where responsibility lies.

The point of the Bill is not to anticipate clashes between the Gas Council and area boards, but to define in statutory form, as I must with a nationalised industry, where responsibility lies. But I emphasise again that the good spirit and good relations of the industry will, I have no doubt, continue as before.

I propose, now, to say a word about the oil powers in the Bill. I have no doubt that this will be the subject of excited, if not to me exciting, debate today and in Committee. Here again, I hope that the House will try to keep a sense of proportion about this. It has been recognised from the outset of the discovery of North Sea gas that the Gas Council, which will be the great consumer of this gas, ought to be given the opportunity to participate in the exploration processes on what is known as the Continental Shelf. I think that this was accepted by the previous Conservative Government, and I think that it will be generally accepted that the Gas Council, being in the position of the great consumer of this gas, should, if possible, participate in the exploration process, share the risks, and share the gains.

There are other ancillary advantages which will accrue, because, if it is in partnership with private oil companies in making these discoveries, it illumines the situation for later negotiations on prices in many ways, and makes it helpful, because it will be the partnership of the Gas Council and the oil company, or companies, in the exploration which will finally be doing the deal with the Gas Council to sell it the natural gas.

It is one of nature's quirks, rather than a doctrinaire passion of the Labour Party, which has produced a situation in which gas and oil can be discovered; when one is looking for the one, one is liable to discover the other. I assure hon. Gentlemen opposite that this has nothing to do with the constitution of the Labour Party. This is more to do with divine dispensation, or the distribution of geological relationships a great many years ago. If one concedes that the Gas Council ought to be given the right to search for gas in partnership with experienced prospectors, one has to accept, too, that if oil is discovered it should not turn shuddering away from the rich gushes of oil that it finds when looking for gas, but that it should continue to participate with its partners in the exploitation of that oil.

Although the general purpose of these powers is to set the Gas Council into the natural gas discovery picture, for the many reasons which I have given, it may discover oil. If it gets oil, I want the council to be in the same posiiton as any ordinary citizen would be, with the same powers in utilising and exploiting the discovery as any ordinary citizen would have.

Therefore, there are powers in the Bill to get, refine and market oil. I am not suggesting that that will be one of the great purposes of this industry. The primary purpose of this industry is to supply gas to the domestic, commercial and industrial users of this country. But, for the reasons which I have given, we may find ourselves possessors of oil, and, if we are, it should be the sensible view of the House—all political theology apart—that the Gas Council should not be hampered in the exploitation of any such asset, any more than any private citizen would be hampered. No limited company, no private individual who was engaged in exploitation for gas would reject the gush of oil if it came his way. Having got it, no individual or private company would want to be hampered or restricted artificially in the exploitation of the benefits which resulted therefrom.

But I want to assure the House that the general purposes of the Bill are as I have outlined them. There are no secret, mysterious desires to rival the oil companies or to people the country with new petrol stations served by nationalised, mini-skirted girls handing out State stamps, treble, quadruple or quintuple, or anything of that kind. I ask the House to assent to the reasonableness of giving to the Gas Council, which is, after all, representing the public, the country, the same facilities for exploiting any advantages which accrue as would be available to the private citizen.

Mr. Ridley rose

Mr. David Lane (Cambridge) rose

Mr. Speaker

Order. The right hon. Gentleman must decide to whom he is giving way.

Mr. Lever

I give way to the hon. Member on the Front Bench, but I will gladly give way to the other hon. Member later.

Mr. Ridley

I should like to ask the right hon. Gentleman whether what he said would apply to a private company which discovered gas in the North Sea, and whether he would not, therefore, think that it should be given facilities to market and distribute that gas within the United Kingdom. This, after all, is the corollary of his argument.

Mr. Lever

The difference between gas and petrol is this, that the nation has decided—not without protracted debate and detailed discussion, as I recall it—that the gas industry should be a State monopoly and should be owned by the State. If the State had decided, or if Parliament had decided—which they have not—that oil should be a national monopoly, then, of course, I should have had to stipulate that any discoveries of oil piped to this country should be sold exclusively by the State monopoly. But there is no such State monopoly and there is no intention to bring one into being.

We are dealing with two totally different subjects. The gas industry has, by decree of Parliament, been given the monopoly, on behalf of the public, in the supply of gas. The hon. Member is a little out of date if he thinks that we should abandon that notion. His own Government did not take the opportunity of fragmenting this industry, whatever they did elsewhere. I thought that we could say that, in 1969, we were all agreed that the gas industry should be publicly owned and operated.

Mr. Arthur Palmer (Bristol, Central)

I have been following my right hon. Friend's argument closely. Would he extend an equal right to the electricity supply industry, which could make very good use of natural gas and of oil?

Mr. Lever

If I thought that it was reasonable, logical and necessary to extend the right of exploration, refining and marketing of oil to the electricity industry, I should do so, but I know of no disability which has been suffered by that industry in not having these powers—

Mr. Palmer

It burns it in its power stations.

Mr. Lever

It does not follow that, because a nationalised industry burns oil, I must turn it into the oil exploration business. It does not follow that, because it uses sugar in the tea served to its employees, I should put it into sugar refining. One must strike a balance which relates to industrial logic—

Mr. Speaker

Order. This is a debate, not a conversation.

Mr. Lever

I am driven by industrial logic and commercial common sense and not by emotional reflexes. Hon. Members on both sides must decide what propulsion they will use for their arguments.

Mr. Peter Emery (Honiton)

The right hon. Gentleman is always so logical, and is now pursuing his industrial logic, so could he tell us why it is logical to give powers to explore in the North Sea and the Irish Sea to the Coal Board, the nationalised coal industry, and not, as the hon. Member for Bristol, Central (Mr. Palmer) said, to the electricity industry?

Mr. Lever

If the hon. Gentleman will ask me that question when it would be in order for me to give him a proper and comprehensive answer, I should be happy to oblige him; otherwise, we could correspond happily and successfully on the subject without your intervention, Mr. Speaker, which might happen on this occasion.

Mr. Lane

This is a slightly separate point. Before the right hon. Gentleman leaves this theology of his, would he explain something? He said that he was only trying to put the Gas Council on all fours with any other citizen. Why is it necessary to put the council not on all fours, but in a preferential position as regards gas exploration?

Mr. Lever

When I disclaim theology, he must not attribute this to me. I am not saying that I have no theology, but that it is inappropriate in the getting, refining and marketing of oil. I am not denying that I have sometimes some concepts of a theological character, but not in this connection. As for the priority in getting into the search for natural gas, this follows again from industrial logic, because we, the gas industry here, are virtually the sole consumer of this gas—certainly the biggest consumer.

Again, it seems to me industrial logic, which would be followed by any private firm in the same position, that, when its raw material was being searched for in this way, it would want to be in on it. Its leverage as a customer, had it been a private citizen, would have been well recognised by the oil companies. This is an arrangement which not only I but the oil companies find logical. No difficulty would arise from this.

It would be surprising to me if we were the great off-take of natural gas and it the gas industry did not have some interest in the exploration process too. After all, we do not want a situation in which our bargaining power would be of a simply destructive character, consisting of saying, "No, we will not take the natural gas, even when it is discovered". Surely we must try to bring the gas industry into contact with its source of raw material in this way if we possibly can. I do not think that it has the expertise, the resources and equipment which on its own would enable it to carry out this exploration on the largest scale. In many cases, it will be in partnership with private oil companies.

However, as I have said, I keep my theology in a totally different area. This does not cause me any affront or anxiety, and I think that it will provide satisfactory results for everybody.

I have said that I am putting it on equal terms. When the Gas Council operates, and to the extent that it operates, should it find oil, which is not what it is primarily looking for—that is gas—it will operate through sub-companies and not directly as the Gas Council. In other words, before it can operate, it must divest itself of any privileges or advantages of being the Gas Council which arise from various statutory considerations—and of any disad- vantages, for that matter—and operate simply as ordinary companies.

First, I will have appropriate control over their finances, because they can be financed only by the Gas Council, with my consent, and, second, the results of these separate enterprises will be separate financially and will be there for all to see, including the House, of course, which will, no doubt, take into account, should these companies come into being and should they operate, all the circumstances in deciding what money should be provided to enable the Gas Council to carry on.

It will be noted that we have virtually confined the area of operations in the search for oil and gas to territory within our own jurisdiction. We think that this is right. It is always a balance to know how far it is logical for a nationalised industry to spread its wings in related spheres. I do not think that it would be right, certainly not at this point of time, to ask the Gas Council to engage in general exploration for gas or oil outside the area of our own jurisdiction.

The hon. Member for Honiton (Mr. Emery) must remember that preferences are not given to the Gas Council in the sense of its being better treated than other companies who participate in this work, but only that we are liable to give preference to syndicates which include the Gas Council. He will remember that the areas in which licences have been given are areas within our own territorial jurisdiction. It is not unreasonable that the Government should feel that their Gas Council, the great customer, in areas of the Government's own jurisdiction should, if possible, participate in these explorations.

Mr. Robert Maxwell (Buckingham)

Why has my right hon. Friend decided not to allow the Gas Council the right to go in for exploration overseas? Is he not aware that the battle for energy on national scales with nationalised companies is going on and that our competitors have nationalised companies? Will he not reconsider giving the Gas Council the same rights outside our territorial waters that he is now proposing to give them inside?

Mr. Lever

I know of no present need to exercise my mind in the exciting areas that my hon. Friend requests. The Gas Council has every reason to suppose that vast supplies of gas will come from our own territorial areas. I do not know of any qualifications in the existing Gas Council which, much as I respect them, would encourage me to think that they are specially adapted to engage in the world-wide exploration of oil and gas as a commercial venture. If for any reason I come to a surprising and different conclusion, I will acquaint the House and, by a separate Bill, try to give effect to it.

At the moment, I do not expect that the Gas Council would attribute to itself any such urge or talent and, therefore, although I understand my hon. Friend's desires, I do not think that it would be proper to urge the council to go into the wider areas of exploration at this stage of its history. It may be that in the course of the development of natural gas all sorts of things will happen, and the House may think it sensible that other developments should follow. I am not ruling that out, but there is nothing at present to justify an extension to the point which my hon. Friend suggests.

I want, finally, to deal with safety. I should like to make it clear that the gas industry has had the highest standards of safety and a great record of care and skill in this respect. In the past, most of the installing of gas systems and appliances was undertaken by the industry itself. Now, partly because of the great success which the gas industry has hid in recent years, there has been an increasing proportion of these appliances, especially domestic central heating systems, which have been installed by private contractors and even individuals acting under "do-it-yourself" urges, not always matched by appropriate skills.

In fact, up to 500,000 items each year are installed by private contractors and individuals. Many of them are approved and qualified and do first-class work. Others, alas, are not and they are operating in an area where, although there is perfect safety when skill and care are used there may be danger when they are absent. This work is not carried out by approved or qualified people in many cases and nor is it subject to any kind of legal supervision. We have to do something about this.

The Ronan Point tribunal suggested a solution in the statutory notification of new installations followed by a statutory obligation on the Gas Council to inspect and check these installations. I have come to the conclusion that this is not the right approach, partly because it involves an army of inspectors, partly because it would be difficult to rely purely on notification as such and partly because it is the wrong concept that safety lies in the initial installation and nothing further. I regard the safety of gas appliances as a sort of continuing requirement which requires continuing attention to maintenance and workmanship.

I commend to the House the approach in the Bill, which is that standards of installation and maintenance covering workmanship and materials will be established by regulations. The standards must be applied and if they are not, there will be an offence subject to penalty. Hon. Members will be gratified to note that the Gas Council and the area boards are not exempt from the statutory penalties. They are under the same obligation as any other citizen to maintain these standards on pain of penalty.

Secondly, I am encouraging the formation of a self-governing voluntary association of people in the industry so as to try to bring into being a register of qualified gas installers whose standards of work and knowledge warrant their being on a register which can be trusted by the public. This will be entirely voluntary, but I hope that the public will think it in its own interests and safety increasingly to select the people from this register.

There is another aspect of safety. At present, we have a power to enter premises and inspect equipment. The power is inadequate in the interests of safety. Even the powers to cut off gas in the interests of safety are somewhat vague and inadequate. We therefore propose to take power in the Bill, by regulation, to enter premises and cut off gas when a gas leak is suspected, or when there is reason to believe that equipment is in a dangerous state.

I ought to say that this is a reserve power. Most sensible people are only too delighted when danger is suspected to allow skilled people to come in and eliminate its source, but there may be the odd obstinate or contumacious individual who is not only prepared to blow himself up, but who views with indifference a similar fate befalling the rest of the row of houses to which he is adjacent, and we must have power to go in and remove the danger.

Mr. Eric Lubbock (Orpington)

What evidence has the right hon. Gentleman to prove to the House that these contumacious individuals exist? I am sure that he will agree that, other things being equal, we do not want to extend the power of public authorities, or anybody else, to enter people's homes without a warrant.

Mr. Lever

Even other things not being equal, the hon. Member may rest assured that I am sufficiently liberal to share his point of view that we do not want to increase any statutory powers to enter people's homes unnecessarily. If the hon. Member wants me to document the reasons for this provision, I hope that he will await the Committee stage of the Bill, when I can retail an interesting list of examples and experiences of premises which were empty and nobody available to give permission and premises where there was the odd person who was not prepared to allow one in. I think that I can put his mind at rest in that way.

At present, we can enter when there is a leak of gas, but we cannot enter when there is a reasonable suspicion of a leak. It is very difficult to work under that restriction, so we propose to change it so as to be able to enter when we have reasonable suspicion of a leak as well as when we have actual proof that there is a leak.

Secondly, it is no use giving power to enter and stop the place exploding because of a leak of gas and not allowing entry when for other reasons there is a danger of a gas explosion, perhaps due to faulty equipment, or blocked flue, or something like that. Therefore, equally, we are altering that situation so that when we have reason to believe that there is danger, other than the danger of a leak, of an explosion, we are entitled to enter. But I emphasise that this will be carefully safeguarded.

We may enter without a warrant only in an emergency. I think that that is reasonable. One cannot carry the rôle of the citadel status of an Englishman's home to the point of saying that nobody, even in an emergency, can enter the house and stop it from exploding and, alas, blowing up many other neighbouring houses which may be subject to damage and injury from the explosion. But we can enter without a warrant only in an emergency.

If it is not an emergency, even though we have reason to suspect the danger of explosion, whether by leak of gas or by defective apparatus, or something like that, we have to go to a magistrate and get a warrant. I hope that the hon. Member for Orpington (Mr. Lubbock) will realise that I share all his anxieties that we should not trespass upon the citizen's freedom and privacy. That is one of the reasons why I turned down the Ronan Point tribunal recommendation, which might have meant at least 1 million entries, if not necessarily by 1 million inspectors, into people's houses to inspect every single piece of new apparatus installed. I hope that we have achieved a solution, but I shall await the Committee stage and listen to what hon. Members have to say on this as on other aspects of the Bill.

I am not attempting, you will be relieved to know, Mr. Speaker, to cover every detail of the Bill. If there are any problems raised by hon. Members on Second Reading, my hon. Friend will be ready to reply to them. We have an interesting Committee stage ahead of us when we can explore these things at much greater leisure.

The structure of the gas industry at present is due to its history. The new structure is the one appropriate to its future related to natural gas. I expect the industry, on the basis of its great successes of recent years, to have a great and successful future in this new development in which natural gas becomes the sole source of gas for the people.

I hope that the House will give a Second Reading to the Bill, which is necessary to prepare the Gas Council and the industry to undertake the work of the years ahead.

Mr. Speaker

I remind the House that this is a much curtailed debate. No fewer than 12 hon. Members wish to speak. I can call them all only if speeches are reasonably brief.

7.22 p.m.

Sir John Eden (Bournemouth, West)

It is particularly unfortunate that this is to be a curtailed debate and that so little opportunity is given to hon. Members on the back benches to contribute to it. I know how this has arisen and I am not beginning to suggest that there was any particular wish that this important Bill should be pushed into the distant corners of the day's debates, as it has been, but none the less our opportunities on Second Reading have been seriously limited.

As usual, the right hon. Gentleman has been extremely disarming. I wondered at one time why I could ever find it in my heart to oppose anything he asked the House to do. However, he has hardly done justice to the Bill. When he was speaking, I was reminded of a character called Mr. Dooley who said: "It must be a good thing to be good or everybody wouldn't be pretending that he was". He went on to say, "If you'd turn on the gas in the darkest heart, you'd find ii had a good reason for the worst things it done". The right hon. Gentleman, with his usual charm and wit and elegance of phrase, has sought to show us that he has good reasons for everything that he wants via the Bill, but he has not made a case for all the powers for which he is asking.

Hon. Members will agree that the question of safety is extremely important, particularly in the light of the advent of this new fuel. It is a different fuel. It has different characteristics and it requires modified appliances and new combustion techniques.

One particularly important feature is the need for correct ventilation, and many people who are experiencing this for the first time find it rather difficult to adjust to the new disciplines imposed on them in the interests of safety and to ensure that they get the best use from the gas. It is right, therefore, that there should be provision to ensure the proper inspection of installation and to make certain that those who do this work are properly trained and qualified.

Having said that, it is equally right that we should look closely in Committee at what the Minister calls his reserve powers. He sought to allay any doubts and qualms that we might have. He recognised, to put it bluntly, that nobody is against safety but that it is right that we should look closely at the reserve powers to ensure that they are not carried to an extreme point in the definition of the Statute. We must do this to see that there is no abuse of the proper rights of the citizen and that there is protection of his property against excessive entry. Thus, a balance must be struck, and in Committee we will endeavour to probe this matter further.

The next part of the Bill—the restructuring of the industry—attracted some attention from the Minister. This part was originally to have been the major purpose of the Measure. This had long been foreseen. As the Minister said, it had been anticipated for many years, even before the advent of natural gas. Indeed, the 1961 Select Committee on the Gas Industry concluded that the industry would benefit from some integration of the area boards into a national system. Obviously, with the arrival of this new fuel on the scene, it was right that further integration of the industry—of its investment programme and planning—should take place.

This new fuel has led to the superimposition of a new industry onto the old. This must inevitably lead to substantial changes in its structure and organisation. Some of these changes have already taken place. Previous legislation led to the establishment of new members on the Gas Council and the creation of new departments to prepare and pave the way for the introduction of North Sea gas. There are, therefore, already in being examples of substantial co-ordination both in the planning of the development of the industry and of its capital investment programme.

This was well summarised in an interesting article in the Financial Times by Adrian Hamilton in November of this year when he wrote: …major policy decisions on the future of the gas industry have already been taken and the next five years will see just how well they work out in practice. We should recognise that the major policy decisions which have already been taken were taken by the Gas Council and the 12 area boards working together in a federal structure. This has enabled them to co-ordinate developments in the interests of the industry as a whole, while still having regard to the special requirements of each area.

The system which has obtained has given considerable scope to men of top managerial quality. We should be anxious, as the Minister said, to ensure that in the new set-up the opportunities for men of top calibre are just as great in future. As he said, each board is very big business. These boards are now tackling enormous problems which would daunt most of us.

Although in some areas difficulties of a considerable magnitude have been encountered—some of these areas are known to my hon. Friends and I hope that they will speak bluntly on this subject in Committee—the overall record of the process of changeover involved in the introduction of this new fuel has been impressive.

Any system must have good in it if it can produce men of top management quality and men of a sturdy individualistic character such as the Chairman of the Wales Gas Board, Mervyn Jones, who will be known to many hon. Members. We regret that he will not be able to carry on for long in this sphere, although we are pleased to know that he will continue to give public service to Wales.

One great advantage of the present set-up which we do not want to lose is the fact that it has led to flexibility and innovation, particularly in the shaping of tariffs. I was, therefore, interested in what the Minister said on this subject. Another benefit has been that through the area board structure there has been a really close understanding of local market needs and there has always been direct contact with the consumer. These are real benefits which we must not lose.

I have no doubt that further changes in organisation are necessary. For example, one need only consider the enormous investment in the control system and communications network which has come into being as a result of the introduction of North Sea gas. Decisions affecting the whole industry must, therefore, be taken at the centre, and there is no disputing the fact that the operational high command for North Sea gas must be centralised.

But this is not to say that all power should be transferred to the Gas Council. We will, therefore, look very closely indeed at this matter in Committee, despite what the Minister said about these matters having to be written into the Bill. We will examine the choice of words used in the Measure and explore the full meaning of those words; and we will seek what assurances we feel are desirable.

We, too, are anxious to ensure that any centralisation which is not industrially necessary does not occur. However, we will also wish to see that there is adequate consumer representation. It is in this connection that things may have got somewhat out of balance, and perhaps consumer representation has not been lifted forward in the consultative consumer machinery in the new set-up in line with the changing relationship between the area boards and the Gas Council. Changes in the centralised consultative machinery may be desirable to ensure that the voice of the consumer is heard at the centre, where the effective power of decision lies.

From a study of the Clauses relating to the part of the Bill with which I am dealing, it seems that the area boards will have very little effective power left to them. They will be kept in name only, and even small decisions affecting their areas will undoubtedly come to be taken in London. I say this because, having created these new departments at the centre, a bureaucracy will inevitably be set up at the centre. This will mean that the decisions of the area boards affecting their interests will be taken not necessarily at board meeting level—I am not worried about that; I accept that the 12 boards will be represented and will have a say at the centre—but further down the line in terms of operational reality. In other words, decisions will be taken not by men at board level but by men at the centre whose decisions will have a direct effect on the interests of the area boards.

Mr. Harold Lever

I am sure the hon Gentleman is aware that they will not have any authority over the area board employees. In other words only the Gas Council will have authority over the area boards.

Sir J. Eden

I cannot believe that the Minister is as naive as that. No matter what authority one gives to a new department which is established at the centre, it will certainly grow into the position of effectively dominating the decisions of the area boards. However, we can explore this matter further in Committee.

I will only add at this stage that no matter how much one may regret this trend, it is an inevitable consequence of nationalisation. This is being experienced now by, for example, the steel industry. If one creates a monopoly in the public sector, then real power is increasingly drawn into the centre.

Mr. Lubbock

Is not this a consequence of technical innovation? Vast amounts of capital are needed in rapidly advancing industries. Does not the hon. Gentleman think that the same consideraions would apply to, for example, computers, in which I.C.L. has a monopoly of British manufacture, and in aeroengines, of which Rolls-Royce is the sole manufacturer?

Sir J. Eden

I wish to limit my remarks in this connection to the Gas Council.

The Minister was right to anticipate that the third part of the Bill, which brings the Gas Council into the business of oil, would be contentious. So far we have briefly considered the two other parts of the Bill, and while there is a lot to be closely examined in Committee in those parts of the Measure, I have made it clear that, in principle, we have no rooted objection to what the Government propose.

If that had been all that the Bill was about, there would not be a Vote tonight or any need for us to have brought hon. Gentlemen opposite into the Chamber, though looking at the empty benches opposite one wonders why there are not more of them here in view of the discipline of the Three Line Whip. The Bill, like the new 50-penny piece, is many-sided and two-faced, and not even the eloquence of the Minister could disguise its underlying motive. An otherwise innocuous measure has been used as a prop for that shabby old Socialist reject, nationalisation. Time and again the British people have made it clear that they do not want it, but time and again the Labour Party diligently polish it up and try to palm it off as a new product.

In this case the Minister tried to belittle the whole thing. He is obviously not proud of it, and so he sought to make a small matter of it. It is extraordinary that after experiencing the responsibilities of office, the Government could promote such a wholly irresponsible scheme. It is obvious that they are hankering still after those halcyon days when they were in Opposition.

The Minister claimed that this was a comparatively small matter, that there was nothing much in it and that there would be no immediate expenditure. This is spelled out in the Financial and Explanatory Memorandum and there is an extraordinarily elaborate reference about whether or not there is likely to be any oil at the end of the day. Apparently there is no sign of oil, although everybody knows that Amoco is playing its cards very close to its chest and that, when it suits them, the Government will not be averse to playing up the prospects of Cardigan Bay.

The Minister may say that this is just a precaution, just in case that while diligently looking for gas they suddenly come across some oil, and say, "We would not know what to do with it unless we have the whole panoply of powers indicated here". He indicates that we are making a lot of fuss about nothing. I do not agree. If that were the case there would be no need for this part of the Bill at all. It is a matter of congratulation, of course, and some relief, that they did not immediately go the whole way as proposed by the Labour Party National Executive and establish a national hydrocarbons corporation.

This Bill is a lukewarm version of the original Labour Party scheme, but it is not the less unpalatable for that fact. It is rumoured that there has not been a great deal of enthusiasm even for this Measure in high places, but I do not believe it. In this, as in so many matters of the kind, I detect the hand of the Prime Minister. When he has found himself in electoral difficulties he has found it necessary to throw some crumb to the Left Wing, so this Measure has been devised to be just enough to quieten the wild boys without rousing the quiet ones. That is the balance he has tried to strike.

Evidence that that sort of approach does not stand up to closer scrutiny of the Bill was the way in which Ministers have been speaking in its support outside the House. The right hon. Gentleman's predecessor—whom the right hon. Gentleman described as more muscular, but less generously referred to as the last Minister of Power—was at least an enthusiast for what he was proposing. He said: This was but one example of a strengthening and exciting enlargement of the public sector… I did not hear the same hyperbole from the right hon. Gentleman. In "Labour's Economic Strategy", a book which no doubt the right hon. Gentleman has closely studied, it is said that although pressing for the full national hydrocarbon corporation they saw the taking of the gas industry into oil as …a crucial step in broadening the public stake in energy… One notes that this is not because the oil industry is "failing the nation" but because members of the Labour Party think that they are on to a good thing. They never wanted it before 1970 in any case, but now that the most difficult part is over, now that the gas has been found, and now that there are signs of oil—then, brothers, they are on their way: they are out to grab.

The Gas Council, too, has not been exactly backward, and I cannot blame it for any lack of enthusiasm here. The day after the Minister's statement in the House the Gas Council announced the formation of a new company called Hydrocarbons Great Britain Limited. It did not, at the same time, tell us that at least two other companies were registered—Hydrocarbons Production Limited and Hydrocarbons Development Ltd. And we have known for some time that there has been Gas Council Exploration Limited. It appears that the first three companies I have named jumped the gun, which is why powers are now sought under Clause 2 to attempt to put them within the terms of the law.

The House should consider this part of the Bill in conjunction with the new terms for Continental Shelf licensing and, in particular, the requirement that in order to secure a licence in the Irish Sea there has to be compulsory partnership with either the National Coal Board or the Gas Council.

I know that it has long been stated by the Government that one of the primary objectives is to ensure that the search will continue. I do not know that they are exactly helping to bring that about by this form of compulsory partnership arrangement they have devised, but I doubt whether there will be any lack of bidders none the less, for the realities of the situation show, first of all, that competition is keen and, secondly, that there is a great deal of interest in prospects for oil and gas on the Continental Shelf in spite of what is said in the Explanatory and Financial Memorandum; and that this is even further heightened by the possibility of finding hydrocarbon so close to such a large market. That must in itself be a very substantial incentive, and will contribute to the maintenance of interest and the furtherance of work of exploration.

But there is some confusion about the Government's true motives. It was claimed, first of all, that the purpose of this Measure was to help the Gas Council gain expertise which at present it does not have. Later came the argument that the real reason was to strengthen the bargaining power of the Gas Council in any negotiations in which it might subsequently find itself engaged with the oil companies. Now, apparently, we are also told that the purpose of these powers is to enable the Gas Council to exploit any discoveries of oil.

The statement made in July by the President of the Board of Trade seemed to be explicit enough. He made it clear that the Gas Council was to become an operator in its own right in order to …gain the practical experience necessary to equip it to play an even more active role in the further development of the United Kingdom Continental Shelf.…"—[OFFICIAL REPORT, 23rd July, 1969; Vol. 787, c. 1735.] But why should it be necessary for the Gas Council to be brought in?

The right hon. Gentleman then said that he wanted us to be able to develop our own expertise and gradually build a knowledgeable corps of operators within the public sector who can exploit the Continental Shelf on behalf of the people. What exactly has all this to do with the Gas Council? The Council's job is to supply gas, and very well it is doing that, and it should stick to that job. It should not be required by the Government to get involved in the oil business.

There is an implication here which requires closer examination. It may be claimed that under the present system the British people have not benefited as much as they should, so the balance of ownership must be altered in favour of the public sector—as though in some magical way that will do them good. But that statement does not stand up to examination. The speed and scale with which the search for gas has been carried out is universally acclaimed. The like of it has never been equalled anywhere in the world. The companies have worked in the most appalling conditions in the North Sea, in very hazardous circumstances, at some cost in life as well as in material losses. Rigs have gone down—"Sea Gem" and "Consolation". This is not a child's game by any manner of means, but an operation in a highly risky area.

The objective of the 1964 Continental Shelf Act was to get things moving as fast as possible and to bring this new fuel to benefit the British economy in the shortest time, and the maximum British and international effort was deployed to that end. More than £2 million has been spent in this work and, as was noted by the previous Minister of Power, some of the companies have lost considerable sums of money in their search for gas and oil. That the original objectives of the 1964 Act have been achieved is clear from the enormous changes that have taken place within the Gas Industry itself.

More than a million domestic customers are already using natural gas, and this is a tribute not solely to the rapid rate of conversion and the scale with which that has been carried through, on the whole, but to the highly successful search which has been taking place, and to the experience of the companies engaged in this work. About 25,000 appliances are being changed over every week to the new fuel. It now appears that the target of 300 million cubic feet a day will be reached by 1972–73. Before long the balance of payments will benefit, we are told, by as much as £100 million a year.

The Chairman of the Gas Council, Sir Henry Jones, wrote recently that to put this into perspective it must be remembered that the first natural gas strike in the North Sea was made only four years ago. To put that into perspective, I remind the House that it was a Conservative Act and a Conservative Minister that ensured that the search for gas should be prosecuted at the maximum speed by using the experience and resources of private enterprise. No matter how tentatively it may move in this direction, a nationalised industry is totally unsuited for such a high risk business as exploration for gas and oil.

The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Alan Williams)

In that case, will the hon. Gentleman explain why his Government allowed nationalised industries to have 3 per cent. of the original concessions?

Sir J. Eden

Yes, this was a point about participation made by the Paymaster-General. Clearly, now that it is taken into a totally different scale of operations, we shall have to look at the whole question of the Gas Council being allowed to consider exploration.

Mr. Williams

The hon. Gentleman said that these industries were totally unsuited to this work. Does he now withraw the words "totally unsuited"?

Sir J. Eden

No, the hon. Gentleman is confusing the situation which obtains now where the Gas Council is in partnership with an experienced operator and the proposition in the Bill that the Gas Council shall become an operator in its own right.

Mr. Williams

In that case, the hon. Gentleman can only approve of what is happening in the Irish Sea.

Sir J. Eden

That is a new situation which has yet to be developed. All we know about that is that Gulf, a partner of the National Coal Board, has withdrawn its rig and is taking it away from the Irish Sea.

In spite of what the Paymaster-General said, what is contained in the Bill means that the Gas Council is not to be left just with the question of perhaps finding some oil. Although it may not come about at once and although there may not be any immediate dramatic emergence of some new strike—I accept that in respect of the right hon. Gentleman's mini-skirted threats on the forecourt—the ultimate intention is shown in Clause 2 to be clear enough. To put it simply and bluntly, it is to create a State oil company. I do not believe I am being alarmist in saying this.

Through this Bill the Gas Council will not only be given powers to search for oil on the Continental Shelf, but will be able to refine and market oil brought in from any other source. If it is to be limited to oil that it has found that makes no commercial sense and the right hon. Gentleman's industrial logic does not take him very far. If that is to be the case, I predict that later we shall certainly be asked to have it extended—initially no doubt just for topping up purposes and to balance things out—but later it will grow into something much bigger.

These powers, once given, have a habit of growing and the logic of the exercise itself points in that direction. The Gas Council will want it, the Labour Party will want it, and no matter how much they pretend that there is nothing in it at the moment, they will not conceal from us their true intention, which is to set up a State oil company. Dr. Colin Phipps, the consultant petroleum geologist and a member of the Labour Party's North Sea Study Group, wrote an interesting article recently in the New Statesman. It said: Although it may not wish to participate in foreign ventures initially it will almost certainly want to do so once it is well established in the indigenous industry. We should be clear what that means. It is not too fanciful to say that there will emerge out of this comparatively slight Measure, as the right hon. Gentleman would have us believe it to be, the beginnings of a State petroleum company marketing its own brand in this country.

The history of State companies is not happy. Italy has its E.N.I. which began by attacking major international oil companies and is now completely dependent on their co-operation and it costs the Italians a lot of money. In France the ELF/ERAP controlled competition and sought to protect Algerian oil by means of artificial pricing. The situation in Germany shows clearly the difficulties encountered by a small nationally integrated company.

Mr. Lubbock

Will the hon. Gentleman allow me—

Sir J. Eden

No. The hon. Member will be able to make his speech. I do not want to give way as there is not much time. The international oil business is complex and involved and subject enough already to the whim of Governments and the demands of nationalism. This country has always stood out against this trend. We are the base for two major international oil companies. We have always maintained a liberal policy about entry to this country rather than trying to create State oil companies, which is an indefensible proposition.

Mr. Harold Lever

Could the hon. Gentleman assist me to clear my mind? Why does he suspect us of having these large ambitions to set up a State oil company when we already have the means to control one of the greatest oil companies in the world and are very careful to leave it in private occupation and not to exercise that control in a way which would prejudice its prospects?

Sir J. Eden

I cannot interpret what may be behind the actual intentions of the Government or of the right hon. Gentleman, but I am concerned with what is in the Bill. When we study this more closely in Committee, I think we shall see that under Clause 2 the Gas Council is to be given powers to set up subsidiaries which include the right to search for oil. It is clearly possible that the Gas Council might employ those powers in the future to extend its operations. It is that aspect that I find a matter for considerable worry. Because this is such a highly capital-intensive industry in any case it is not a proper field for State activity.

The Gas Council should not be brought into the oil business at all. The right hon. Gentleman should ensure that it keeps to gas. The Minister of Technology and he have spoken in the country about what they call their idea of partnership. This Bill shows just what partnership with a Labour Government can bring about. There is much talk about the need to generate an atmosphere of mutual confidence, but I hope that there is to be no attempt by the right hon. Gentleman in bringing forward this Bill to hoodwink the unwary. It is that that we are concerned about, for this Government are always hungry for more power and, if they cannot get it by direct assault, they will try to get it by stealth. We have seen enough of the fact that for the Labour Party the key to industrial power lies in the transfer of ownership from private to public hands. That is what this Bill is all about.

I have made clear what parts of the Bill we dislike. We shall vote against them tonight, and when we are returned to power they will be repealed.

8.0 p.m.

Mr. Derek Page (King's Lynn)

I was interested in the constructive speech made by my right hon. Friend the Paymaster-General, but disappointed in the speech of the hon. Member for Bournemouth, West (Sir J. Eden), the delivery of which took 40 minutes out of this short debate but said very little.

The possibilities of North Sea gas are enormous. It is pertinent to ask what part the Bill will play in producing the future structure of industry and maximising the country's potential wealth.

Two years ago I had the good fortune to see what the Americans have done, particularly in the enormous fields in Louisiana and Texas, each one of which is of similar size to the North Sea field. It was immensely impressive. I am not saying that the American conditions are all similar to ours, because they are not. Apart from the premium domestic market, there has been an absolutely dramatic development of industry based on gas.

Local wage levels, already high, have risen about three times with the development of the gas. This capital intensive industry pays its workers very well in general. The point had been reached where serious teacher shortages were being experienced in the areas concerned because the teachers could get more pay in the plants than they could from teaching. I do not suggest that we should fall into this trap.

There are four points which will become increasingly important in the long term rather than in the short term. As a short-term measure, I have no grumbles about the Bill. First, what real power is there for effective control of the rate of exploitation? Is the Ministry capable of the very detailed and highly technical analysis of the pattern of development necessary, particularly the rate of production of each well?

I was astonished at how tight public control was over the American wells. Hon. Members opposite would be appalled if they knew the powers that the Texas Railroad Commission has to move in and shut off wells which it suspects of producing more than their quota. There is good reason for this, in that there is a clash between public and private interests here. In general, the private interest is to drill a well and let it rip—to maximise the production over a short period, to maximise the short-term profits. The public interest is to extract much more gradually, because if a well is allowed to rip the total yield over the years is greatly reduced.

So, is there adequate machinery? If so, how will it operate? What voice will the Gas Council have in regulating production in its own wells? What influence will it have in regulating production in private enterprise wells? This is a vitally important question which has been highlighted in places with a much greater experience of gas fields than we have.

Secondly, although the vast majority of natural gas is used for energy production, a rising, although still a small, proportion is used for synthesis. Although the Gas Council is being given power to carry out purification, separation, and the production of by-products, I am not clear how far the word "by-products" applies. Will the council be able to carry out any syntheses?

Wet gas, and probably oil, can be expected to be found when drilling for gas. Salt can also be expected to be found with equal certainty, because a large amount of gas deposits lie underneath the enormous salt domes. In fact, salt is more often found than gas. Elsewhere in the world great use has been made of this, because using the salt and the energy from the gas is the cheapest way of making the two biggest chemical raw materials, chlorine and caustic soda. The cheapest chlorine and caustic soda in the world come from the Texas gulf.

If the exploitation of the field is to make real sense, the Council should not be prohibited from at least selling any salt it may be able to pump out. Should it not also be able to use such salt in its other operations?

Thirdly, has adequate consideration been given to the balance of payments possibilities in connection with gas? I see no reference to direct exports of gas. This is possible in theory, since the Council is to be empowered to sell gas to any customers it wishes. A considerable volume of gas may be available for export from time to time. One thousand million cubic feet of gas could be expected to bring in about £50 million, a sum well worth having on our balance of payments. Will the Council be competent in its present form to handle this? Is it intended to establish a special export department? Should there be a separate entity to handle this?

I am also wondering, in connection with the balance of payments problem, whether any detailed cost-benefit analysis has been carried out of different utilisations of gas so far as they will affect the balance of payments. We have gone for the premium market first. Would it not have been better to have gone for total energy plants producing aluminium rather than for the domestic market first? This would have had a dramatic and beneficial effect on the balance of payments, though it might not have been to the short-term advantage of the Council to have undertaken such an enterprise.

Is there any mechanism for solving a possible clash of interests here? Although it would be in the national interest to operate in such fields producing aluminium smelted by tile use of natural gas, or any of the other hundred and one industrial uses saving imports and producing exports, it would not give the same short-term return to the Gas Council which it can get from going on to internal markets? So, how is such a possible clash between the interests of the nation as a whole and the Council's interests to be solved?

My last point concerns total energy. This is an old hobbyhorse of mine. I have written to the Minister of Technology on this subject. I understand that he is keeping his eye on private developments of total energy, but this is not adequate. Costs of energy are so vital in big industrial processes that private companies concerned in developing total energy play their cards close to their chests and I do not blame them. It we want to know the inner workings of this, if we want the expertise for public use, it is essential that the Gas Council should enter this in a big way in conjunction with the Ministry of Technology and set up its own total energy plant, to learn the real ins and outs of the technology and the economies.

I know that the attitude of the Ministry was somewhat lukewarm about this, but if they would only look at the enormous developments which have taken place elsewhere in the world and the tremendous efficiencies being achieved, I am sure that it would develop more enthusiasm.

Those are the points I wished to raise and on which I would like some comment and clarification from my hon. Friend. Points such as these will be of growing importance. Eventually, as Dr. Phipps said, and he is the leading expert in this field, the logic of the situation will lead to the adoption of the policy which many of us have advocated all along, and that is the development of a National Hydrocarbon Corporation, with its full international implications.

8.12 p.m.

Mr. Dudley Smith (Warwick and Leamington)

As the Paymaster-General said, and as the Explanatory and Financial Memorandum to the Bill explains, the main purpose of the Bill is to amend the structure of the gas industry to enable it to exploit to the full the opportunities brought about by the advent of natural gas. I would submit that in the light of the natural gas conversion programme now proceeding it is very important that the Gas Council ought to have more detailed control and management of this project.

The whole future of natural gas is in question. Despite some of the publicity which has taken place, there are great anxieties in the country about the issues and questions being raised by this programme. In a recent Parliamentary Answer which I received from the Joint Parliamentary Secretary I was told that only just over 8 per cent. of the population had so far been converted. Many people who have been converted are thoroughly sick of natural gas.

There are three main aspects I want to mention and I raise them because my area in the West Midlands was one of the first to be converted. The West Midlands Gas Board uses more North Sea gas than any of the other boards at present. It has 1 million customers and to date it has converted 100,000 people.

Mr. Harold Lever

I ought to make it clear that our purposes are far less evangelical than the hon. Member supposes. We do not seek to convert people, only appliances.

Mr. Smith

The right hon. Gentleman scores a point, but he knows what I am talking about.

The West Midlands Gas Board has converted the appliances of 100,000 individuals and expects to complete its programme in about seven years' time. Leamington Spa was one of the first towns in the area to suffer natural gas conversion. It resulted in over 1,000 complaints to me, as its Member of Parliament, over a period of 18 months. It has reached a state of affairs in which the standing of the board, in the eyes of the public, could hardly be lower. I would not have dreamt that such things could have happened if I had not experienced them personally, interviewed people, and seen their equipment in their own homes. Even now after many cases a year, a large number of appliances are working inadequately and I have many constituents who still do not have proper central heating or adequate hot water.

I have three serious criticisms of the natural gas programme. First, the conversion programme was not properly thought out, the men who carried it out were not properly trained and the system for dealing with complaints was at the best ill-defined, particularly in the West Midlands area. It was certainly lacking any form of co-ordination.

Secondly, the efficacy of natural gas is called into question. Having suffered from the devastating effects of natural gas conversion, many customers tell me that they find it noisy, housewives cannot use it properly for simmering when cooking, and the automatic ignition is well below its pre-natural gas efficiency.

Pilot lights are a great curse. I had a constituent who came to see me last Saturday who explained that despite about 20 visits from engineers she still has to light the pilot light of her central heating system an average of 50 times a day in cold weather. This is an extraordinary state of affairs, which should be giving those who run the boards very real concern. Perhaps the most serious aspect is that cheaper natural gas has not materialised for the private citizen. He now finds that his bills are coming in, following conversion of his equipment, and that he is paying more. He is very upset about it.

Mr. Harold Lever indicated dissent.

Mr. Smith

It is all very well for the Paymaster-General to shake his head. It is all very well to produce Parliamentary Answers such as I and other hon. Members have received, but when a man receives his bill and finds that it is up on the comparable quarter before conversion it is difficult to convince him that he is not paying more.

Mr. Harold Lever

I know that the hon. Gentleman must have seen the evidence that the people were paying more, but has he seen the evidence showing whether or not they were using more?

Mr. Smith

In some cases they are using more gas because it now burns more fiercely and they are having to use more. I do not believe that they are using more in their every-day pursuits. Their mode of life has not changed, they have not got extra equipment in their homes, or extra numbers in their families. But their bills are up. This public relations operation by the gas board, trying to imply that natural gas is cheaper is to say the least misleading and ought to be examined by those responsible for power matters in the Ministry.

The Daily Sketch pointed out earlier this month that complaints have been flooding in from widely differing areas, including Guildford, Southend, Nottingham, and Ashton-under-Lyne, in Lancashire. I know that in Surrey there is great anxiety and, certainly, in the West Midlands there have been protests on a very large scale indeed. I submit that the programme has been tackled at too fast a rate and without adequate preparation. An indication of the strength of feeling can be judged from a letter published a week or so ago in the Financial Times by a gentleman living in Penn, Buckinghamshire, in which he wrote about the appalling failures of conversion to North Sea gas". The writer said that it had been a sorry tale of grossly incompetent workmanship and recalled that at one stage all conversion work ceased until the gas boards caught up with the job of putting right conversions already begun. He said that it was notorious in the areas so far cursed with North Sea gas that it is noisy, that automatic ignition never works at anything like its previous efficiency and sometimes not at all, and that housewives realise to the full how difficult it is to use their gas equipment.

The attitude of the boards and their officials are predictable. They have played the matter down and said that there would undoubtedly be teething troubles, but, overall, nothing much has been wrong. I again submit that this is wholly misleading. There is a very great deal wrong and it certainly needs Ministerial attention. I have had correspondence with my own area gas board and with the chairman of the Gas Council. They have said that they are reasonably satisfied with the progress being made, but are prepared to look at complaints as they come along and to gauge the effect as the complaints come in from individual citizens.

The Bill should perhaps do something towards strengthening the control of the massive operation which is planned over the next 10 years. If it brings about more effective supervision of this programme, in the interests of the individual, it will achieve a reasonable measure of success, even if it has other very undesirable qualities.

However, there has been muddle and confusion. If this is an indication of the alleged business efficiency of the boards of nationalised industries, it is a very sorry state of affairs. If this had been a private industry operation, heads would have fallen by now, there would have been resignations and a complete revision of the whole operation. As far as I know, not a single head has fallen and there has not been one resignation. I hope that my right hon. and hon. Friends who will be responsible for power matters when we take office in the autumn of next year will bear these lessons in mind and will bring proper business efficiency methods and proper conduct to the operations of nationalised industries.

I join my hon. Friend in opposing the Bill, but hope that in Committee there will be further comment on this aspect.

8.21 p.m.

Mr. Ronald Atkins (Preston, North)

In view of the fair, almost academic, speech of my right hon. Friend the Paymaster-General, I was very disappointed that we should have had a reply typical of the doctrinaire statements which we have been hearing for so long from the Opposition spokesmen and other hon. Members opposite. It seems that British Conservatives suffer from a congenital disease which does not affect the Conservatives of Europe. Most of the nationalised industries in Europe have problems because they are basic industries which have suffered from similar problems, whether nationalised or in private hands. When the Tories in Europe consider these problems, they do so without recourse to party banter on whether the industry would be better nationalised or left in private hands. It is a big weakness in this country that whenever the problems of a nationalised industry are discussed the Conservatives try to make party capital out of them.

The Opposition's arguments are not new. The first criticism of the Bill by the hon. Member for Bournemouth, West (Sir J. Eden) was that it builds up centralisation. He said that centralisation builds up bureaucracy. He made an appeal for area boards. He did not say whether the sum total of the reorganisation of the industry would be to reduce bureaucracy. When area boards are set up, there are jobs for the boys and there is a duplication of the work done in the central organisation.

That was the argument which the Tories used about British Railways. They wanted area boards to run British Railways. I know from experience how much duplication that led to and how many extra people were employed who need not have been employed. Beeching acted on the ground that this was an inefficient way of running the railways. Again and again we hear the argument from the Opposition that a nationalised industry can be made more efficient merely by duplicating work in the regions. But that is not something which anyone would force on a private industry, and it is ridiculous that we should attempt to force it on a nationalised industry, particularly the Gas Council.

It is remarkable that the Opposition have the nerve to suggest that nationalised industries have a shabby image when we consider the power industries. Whatever shabby image the nationalised industries have is based, not on their record, but on the talk which we have often heard from right hon. and hon. Members opposite. They often make it a party stick with which to beat the Labour Party. To use that argument this year is particularly stupid in view of the progress which the gas and electricity industries have been making. This year the electricity industry has made a £100 million profit, to the benefit of the taxpayer. When we consider the state of the gas industry when it was nationalised, we realise how much its image has improved since. It was in such a shocking state when it was taken over that most people thought that it had not much life left. But enormous strides have been made since.

How much bleating we get from the Opposition when a Bill is introduced to make the gas industry still more efficient. They speak as if it is a great sin that the Gas Council should deal with any oil found when prospecting for natural gas. Has it not occurred to them how similar these products are and how they are found in close juxtaposition? It would be madness to hamstring a private enterprise concern by saying, "You are allowed to exploit any gas you find, but not any oil you find". The Opposition talk about the Gas Council being keen to grab the oil. Of course it will be keen to do that, particularly if the oil would otherwise fall into foreign hands.

The Opposition have a perverted sense of patriotism. It is true that they would put the British capitalist before the foreign capitalist. But they are always prepared to put the foreign capitalist before the British consumer or the British non-capitalist. [HON. MEMBERS: "Nonsense."] I am sorry if I have misunderstood the Opposition, but that is what they always say whenever a nationalised industry tries to gain as big an advantage as possible for the British taxpayer. I heard it from the Conservatives even when the Government were bargaining to reduce the cost which the Gas Council paid for natural gas, although hundreds of millions of £s of the taxpayers' money were involved.

Time and time again we heard that if we got the figure for which the Gas Council was negotiating no one would prospect for gas any more, but, of course, prospecting has gone on, and our example has given encouragement to the Dutch Government to follow on similar lines. They speak, too, as if it were a shocking thing for the Government to insist, in the exploitation of gas and oil, on a compulsory partnership with companies. At the same time they say that nationalised industries have not the expertise, the technical knowledge, to know how to cope with this industry. By means of the compulsory partnership it is learning and is getting just that expertise. It would seem most inconsistent of hon. Gentlemen opposite to oppose this provision.

My criticism of the Bill would be that the Gas Council has not been given sufficient powers. I should like to see it freer still. I should like to see it as free of restrictions as is the nationalised power industry in Italy, which has complete freedom, and is as free as any private concern.

I finish by asking the Minister particularly to say something about the export of natural gas. It seems to me that the reserves which were forecast have been under-estimated and that in a few years' time we may have much gas to export. I should like to see in the Bill provision of means whereby we can help to hurry up the export of some of the reserves as they are increased.

With that, I congratulate the Minister on producing a Bill which, I feel, will help to bring about a very rosy future for the nationalised industry.

8.32 p.m.

Mr. Eric Lubbock (Orpington)

I must in all honesty agree with the hon. Gentleman the Member for Preston, North (Mr. Ronald Atkins) in what he said about the attitude of the Tories to the Bill. Whenever any Bill with the word "gas" or "electricity" is included in its title comes before the House hon. Gentlemen on the Conservative benches react like Pavlov's dogs.

For example, there were the debates on the 1968 Bill. I have been refreshing my memory of those debates and they make very instructive reading. Many Conservative Members were trying to stop the Gas Council from increasing its borrowing powers to exploit this natural asset. Now we find them all saying what a splendid job the Gas Council and area boards have been doing, and forgetting that they tried to deny them the wherewithal to carry out these tasks. Conservatives, including the hon. Lady the Member for Finchley (Mrs. Thatcher), who, of course, has departed from the scene, said that natural gas would not result in any price reductions.

The hon. Member for Warwick and Leamington (Mr. Dudley Smith) repeated that this afternoon. It is quite untrue. If he looks at the figures over the years he will find that gas has a better record than any other fuel. If one installed gas appliances in one's home in 1959, after 10 years the price of the gas would have increased by 6 per cent. If one installed oil, its price would have increased 19 per cent.; if electricity, 26 per cent; if coal, 55 per cent. So the House will see that over this decade, at any rate, the gas consumer has had a very good bargain indeed.

Mr. Dudley Smith

I was not talking about the last few years, but the past year, since natural gas has come. There are many instances of prices having gone up. I should like to see them come down. I know there has been a trend in several areas for gas prices to be held relatively stable, and I do not criticise that. What I say is wrong is that it should have been implied that, with the arrival of natural gas, gas would be cheaper to the consumer. It is not.

Mr. Lubbock

I do not know what it is like in the hon. Gentleman's area, but the Chairman of the South Eastern Gas Board has given a firm undertaking that as and when natural gas is introduced into peope's homes they will be given a price reduction. I cannot speak for my own constituency, because the conversion programme has not come as far as that, but I am confident that if the chairman of the board tells my constituents they will receive such a reduction he means what he says.

The hon. Gentleman is also being a little harsh in his description of the conversion programme as muddled and chaotic. He should remember that over 1 million consumers have already been converted and that conversions are continuing at the rate of 25,000 a week. It would have been extremely surprising, he will agree, if there had been no complaints at all.

The hon. Gentleman said that, if this had been a private enterprise firm, heads would have rolled and people would have been sacked once the blame had been pinned down. But that does not happen in the private enterprise that I have been used to. When a motor model goes wrong, and the cars have to go back to the works for modification, one does not hear of the service manager or the chief designer being sacked by Ford's—that is simply the first name that occurred to me. He will agree that, with many of the goods which one buys from private industry, when one submits complaints to the manufacturers, one does not expect the chairman to write back and say, "Yes, Mr. Dudley Smith, we quite agree. Your car has gone wrong and we will immediately sack the fitter who failed to put in the ignition key."

So I do not think that the hon. Gentleman is being fair in these disparaging comparisons between public and private enterprise. Nor do I think that the hon. Member for Bournemouth, West (Sir John Eden) has done the House a service in his alarming description of the powers conferred on the Gas Council under the Bill, but I will come to that in a moment, after I have dealt with the uncontroversial part of his speech.

I absolutely agree with him that one of our tasks must be to see that, in whatever framework we devise, men of top managerial calibre are brought into the industry, both at Gas Council and area board level. But I have one anxiety here. I can see that the job of chairman of an area gas board is attractive, because he will sit on the council, but I wnoder whether with so many other function being centralised, the other directors of the area boards will find the job rewarding and using to the full the talents of the sort of people which the Minister will hope to attract.

If one excludes the functions mentioned by the Paymaster-General—the three principal ones were capital expenditure, control of pipelines and fixing of tariffs—what one is left with in the area boards are consumer relationships and marketing on a smaller scale. Even the marketing would be in the hands of the Gas Council for very large industrial consumers. I am not sure that this will be a big enough job to atract the sort of people that one wants on area gas boards. I should like to probe this further in Committee, but the Minister may like to say something about it tonight.

I also agree with the hon. Member for Bournemouth, West, that the voice of the consumer should be heard at the centre, because the effective power will lie there. By that, I do not mean that we should dispense with the area consultative councils. I have found them very useful. I used originally to make complaints direct to the Minister of Power or to whoever in his Department dealt with these matters, but I have recently found that, by going to the chairman of the consultative council, I have had a very good service indeed. I have received prompt action which has generally been successful—even more so, I would say, than when I used to go to the Minister.

This machinery has proved valuable and it is a pity that it is not more generally known to the public. When people come to my advice bureau to draw my attention to what they think are defects in the service which they have had from the area gas boards, I find that they had not been made aware of the existing machinery when they made their original complaints in the showrooms. More publicity might be given to the facilities available to the consumer.

I now turn to the things on which I disagree with the hon. Gentleman. First of all, he says that centralisation is a consequence of nationalisation. I hope that my intervention on this point was not too much of a red herring, when I referred to companies like Rolls-Royce and International Computers Limited. I was trying to say that centralisation and concert ration of power is not a function of whether an industry is in public or private hands. It is a function of other things, such as the capital intensive nature of the industry concerned, the calibre of management required, and so on.

The reason that we need to concentrate the gas industry more today than used to be the case when carbonisation was the principal method of production is precisely the same as the reason that the whole of the computer industry is in the hands of I.C.L. The capital investment of the Gas Council is so enormous, amounting to about £1,600 million, that a programme of that size must be handled centrally.

The lack of any central machinery of this kind already has been felt. To give one example, all the area boards in the gas industry have had control over their investments in computers. Many different systems have been adopted by different boards and each has developed its own software to do precisely the same job. The customer invoice stock control in various area boards must be similar. Surely the experience of the first gas board that undertook this task could have been made available to the rest of the boards. The Gas Council might do well to look into the future computer investment programmes of area boards to see whether these could be harmonised so that the software which is now being developed might be given wider use.

I come to the hon. Gentleman's only fundamental objection to the Bill, the part dealing with the extended powers of the Gas Council. I could not quite make out what he was after. He said at the beginning that he had no rooted objection to the Gas Council having powers to explore. Indeed, he could not have any rooted objection, because if the Gas Council is exploring for gas, then, as the Paymaster-General pointed out, one cannot be certain in advance whether one will find oil or gas in a particular form or a combination of the two.

Sir J. Eden

I am sorry that I did not make it clear to the hon. Gentleman, but when I referred to having no rooted objections in principle that applied to two parts of the Bill, the one dealing with safety and the other with the reorganisation of the industry.

Mr. Lubbock

I am sorry if I have misunderstood the hon. Gentleman. Is it right that he does not like the Gas Council to have powers to explore on its own either for gas or for oil? He does not mind the council have the right to do so in association with AMOCO, but as soon as the Council goes out and undertakes the job without a partner he suddenly finds that objectionable. I think that I now have his attitude correctly.

The whole of the powers of the Gas Council in Clause 2(2) are objectionable to the hon. Gentleman in principle. He is not prepared to entertain the idea that the council can venture into the North Sea and the Irish Sea without having its hand held. I do not know whether he is aware of the fact, but the companies engaged in these operations do not themselves conduct the drilling. They hire firms with wide experience.

Mr. Ronald Atkins

Hear, hear.

Mr. Lubbock

The hon. Member for Preston, North (Mr. Ronald Atkins) confirms what I have said. They hire firms with the necessary expertise in drilling to carry out these operations in many parts of the world. Therefore, it makes little difference whether the Gas Council itself has the management capacity to undertake drilling because it will not do itself the drilling.

Mr. Emery

Would the hon. Gentleman condemn the Gas Council if in future it decided to buy an oil drilling rig?

Mr. Lubbock

It is a most extraordinary proposition that the Gas Council should buy an oil drilling rig. I do not see any point in its doing so. Nor do I see that the powers contained in Clause 2 would be applied in the manner suggested by the hon. Gentleman. If he has knowledge of the Gas Council's intentions to undertake such an operation, I am sure that the House will be interested to hear about it. In the absence of such information I doubt whether it would go into an operation of that kind.

If the hon. Gentleman wants to say that in theory these powers can be applied in many ways—the mini-skirted girls in the forecourt, as the Paymaster-General said—he is correct. If one thought that the powers in subsection (2)(b) were to be applied in that way, one would have the strongest objection to it, and if I have any quarrel with the wording of the Clause it is that before the Gas Council exercises any of these powers it does not have to come back to the House, but merely has to obtain the tacit consent of the Minister, who, under subsection (3)(b) can put an absolute veto on any operations in which he does not think the Gas Council or its subsidiaries should engage.

If the hon. Member for Bournemouth, West is worried about this, perhaps he will be comforted by the thought that next year, as he thinks, the Conservative Party will be returned to office, no doubt he will be appointed Minister, and he can exercise the powers in this subsection to direct the council not to engage in these activities, not to have petrol stations, or to indulge in any down-stream activities, from exploring onwards.

When the hon. Gentleman reflects on this, he wil lsee that it is a gross exaggeration to say that "it is not fanciful to say that out of this comparatively small Measure will emerge ultimately a State oil company". I do not want the House to take my word for this. I want to quote briefly from some journals of a non-political nature which confirm me in my opinions.

For instance, the Gas Journal, of 3rd December, said: Visions of high-speed petrol stations beloved by certain newspaper journalists, are farfetched. Gas World, of 6th December—although my faith in the impartiality of this journal was somewhat lessened when I saw that it was a Benn Group journal—said: Publication of the Gas Bill should go tar to allay some of the irrational fears expressed in earlier uninformed comment. The National Hydrocarbons Corporation bogey seems to have been finally laid and what have been called the 'wilder fears of creeping petrol stationisation' appear to be entirely without substance. The heart of the matter lies in the transfer of greater power and responsibility to the centre and this is looked upon as a logical step, with town gas being phased out over the next few years. That magazine places the emphasis on the reorganisation of the relative functions of the Gas Council and of the area boards, and does not take very seriously the fears expressed this evening by the hon. Gentleman.

In short, this is a sensible Bill, and one which will enable the Gas Council and the area boards fully to exploit the discoveries of natural gas in the North Sea, which have come up to the expectations of the fuel White Paper. There are Committee points with which one might want to take issue, such as those about the rights of entry into private premises, and the exact wording of the new powers to be conveyed to the Gas Council, but otherwise this is a good and sensible Measure, and I canot understand what possesses the Conservative Party to vote against it.

8.50 p.m.

Mr. Rafton Pounder (Belfast, South)

While there are numerous points in the Bill on which clarification will no doubt be sought in Committee, there are three particular aspects which cause me varying degrees of concern.

First, the Bill follows the all too familiar and regrettable trend of giving the Minister very wide but not clearly specified powers. The Bill is laced with phrases such as, "The Minister shall decree", "The Minister shall have power to direct", or "Where it appears to the Minister". Those are three phrases taken at random from the later Clauses. Surely, it is a basic axiom of all legislation that it should be specific and not abound with generalisations. Likewise, the Bill gives blanket powers to the Gas Council, and I have reservations about giving such extensive powers to any statutory body. It is a matter of principle that one should be wary in giving extensive powers to organisations whose accountability to Parliament tends to be somewhat loose.

Secondly, I conceded that there is a clear argument for increasing the powers of the Gas Council vis-à-vis the area boards, and the somewhat harrowing tale told by my hon. Friend the Member for Warwick and Leamington (Mr. Dudley Smith) about the problems of natural gas make me glad that Northern Ireland is not to have the product. While some area boards may not have behaved too brightly about observing the instructions for conversion to natural gas, nevertheless I would have thought that the mood of the country, which has been manifested so often in different ways, is towards decentralisation. With great respect to the right hon. Gentleman the Paymaster-General, who, as my hon. Friend the Member for Bournemouth, West (Sir J. Eden) correctly stated, could charm with any argument, the centralisation of the powers of the Gas Council, even if area board chairmen are to be represented thereon, will not give a desirable impression. With the best will in the world, I cannot see how those who are operating from London can necessarily have a clear or even a passing understanding of what happens in the more remote regions of the Kingdom.

Clauses 1 and 2 are the meat of the Bill and the centre of controversy. The entry of the Gas Council into the oil business inevitably rekindles all the arguments, some of which we have heard tonight and others we shall head in Committee, about nationalisation and Slate enterprise, and I will do no more than say how horrified I was by the statement of the former Minister of Power about exploiting the Continental Shelf on behalf of the people. I will not digress into the realms of nationalisation, bit merely ask the Minister certain specific questions which inevitably arise out of the Bill and out of the powers being granted to the Gas Council.

Should the Gas Council be side-tracked into operations which can be undertaken more efficiently by other people? Surely, the Council's primary responsibility is the marketing and supply of gas, and all other operations are secondary and tertiary considerations. How can the Gas Council have or be expected to have the expertise to operate in the search for and the marketing of oil as efficiently as the oil companies who have been doing it for so long? Searching for oil, and indeed for natural gas, is an expensive and risky venture. Is it right that public money should be put at risk in seeking such commodities? Not everyone is fortunate enough to make a strike in the North Sea or anywhere else. I have read that quite a number of North Sea prospectors have spent over £20 million and found nothing. Is this the sort of undertaking in which a nationalised body should be asked to engage?

What happens if oil is found? Will the Gas Council build a refinery, or will it go to one of the jobbing refineries that already exist? A clearer statement on this is required from the Government Front Bench.

I cannot understand why the Explanatory Memorandum to the Bill contains words to the effect that there is no likelihood of finding oil, whereas one of the main Clauses goes into this in considerable detail.

Let us assume that in fact there is a likelihood of the Gas Council finding oil in the North Sea. Surely it is wholly inequitable that the oil companies cannot go into the gas business, but the Gas Council can go into the oil business. By no standard of commercial or any other judgment is that a fair situation. Of course there may be partnerships, but there is a world of difference between a partnership and an arranged marriage, and that is certainly what will happen with any explorations in the Irish Sea.

Mr. Emery

Shot-gun marriage.

Mr. Pounder

I thought of that, but decided that it might not be the case; however, I would not dissent from that view.

With the emphasis on natural gas conversion and the problems which are allied to it and which must inevitably be in the forefront of the Gas Council's current activities, this is the worst possible moment for it to consider diversification. Its financial resources are fully stretched in undertaking the fairly extensive programme on which it has currently embarked. After studying last year's Gas Council accounts, I do not see how it can have the resources reasonably needed to take it into this new venture at this time. Perhaps we shall have clarification from the Minister later tonight or in Committee.

What is the criterion for the economic justification for the Gas Council to go into the oil business? Clause 2 represents the very worst of legislative practice in that it gives retrospective powers. Why did the Gas Council jump the gun? Why did it anticipate and assume that it had bowers to go ahead when it did not? What steps did the Minister take to reprimand the Council for being so presumptuous?

Clause 1(5) provokes nothing more nor less than a weary smile. Who is kidding whom when it talks about a reduction in the price of gas? Certainly my researches do not reveal any examples of price reductions to domestic consumers in areas within the orbit of the Gas Council. The only area of the United Kingdom where there has been a fall in the price of gas has been in Belfast where the writ of the Gas Council does not run.

I conclude by asking the Minister what is his latest knowledge of the likelihood of finding natural gas or oil in the Irish Sea.

8.57 p.m.

Mr. Peter Emery (Honiton)

I must begin by declaring an interest. As the House knows, I have an interest in a number of oil companies.

The first thing I must do after that is to tell the Minister that it is grossly unsatisfactory that on a Bill as important as this back benchers should find themselves limited to what will probably be 90 minutes of debate. This is crass mismanagement of House of Commons business by the Government, and I hope that the Paymaster-General will make it clear to the Leader of the House that a number of us feel more than indignant about the way in which we are being treated.

I should like to take up one thing which was said by the hon. Member for Orpington (Mr. Lubbock) and I do so in order to try to make this a debate instead of a series of set speeches. I must correct what he said about the Opposition being opposed to the borrowing power in the 1968 legislation. What we opposed was the giving of the borrowing power in one lump. We wanted the Gas Council to return with rolling forecasts. We believed that we were giving it too much at one time, and that is still my view.

Mr. Lubbock

The hon. Member's speech in that debate related to the amount of the borrowing power and not the timing. He said: This borrowing by the Socialists is likely to leave a millstone, a hidden depth charge, to upset the balance of payments at some time in the future…"—[OFFICIAL REPORT, 22nd May, 1968; Vol. 765, c. 646.]

Mr. Emery

If the hon. Gentleman will do his researches a little more thoroughly, he will find that in that portion of my speech I was referring entirely to borrowing from overseas and what I said will be proved correct by the German loan which the Gas Council has already taken and which will have to be repaid.

It is shameful and wrong that the Government should have seen fit to entwine and amalgamate in one Bill the provisions necessary for the organisation of the Gas Council, provisions for safety in the gas industry, and massive and highly contentious legislation allowing the refining and distribution of petroleum to a much greater extent in the public sector 'by the Gas Council, which is not naturally equipped to deal with it.

If one were to describe Clause 2 kindly, one would describe it as enlarging the public sector; to describe it reasonably it could be termed a foolish and harmful piece of further nationalisation; at worst, it is damned, vindictive nonsense. Until now there has been little conflict between the two sides of the House about fuel policy and up to and including the 1967 White Paper and the Continental Shelf Act all this had been agreed. It has been reasonably liberal and the conditions of participation laid down by Ministers of both Governments about the issue of licences have been acceptable not only to British interests, but to foreign interests, on which the hon. Member for Preston, North (Mr. Ronald Atkins) poured scorn, but which in fact have provided the major risk capital in the fast development of the North Sea which has helped us to take it as far and as quickly as we have.

Today we see in this Bill pressure for politically dogmatic reasons on the part of a section of the Labour Party which first gave birth to the proposals for the Hydrocarbon Corporation concept. Now, in order to placate the Left wing, it is reappearing in modified form as Hydrocarbon (Great Britain) Ltd. On that ground it is shaky in the extreme, both economically and internationally.

Past Ministers have aimed to encourage exploration to strengthen the balance of payments and to reduce energy costs. I believe that the new policies will not achieve the Minister's objectives in the way he wants. In fact, the further establishment of State corn-parties elsewhere in the world, particularly Europe, in the petroleum industry has proved a massively costly experiment both in resources and capital. The Minis- ter will realise this when I mention E.N.I. and E.R.A.P. in Europe.

The international implications of the Bill are particularly serious. Both producing and consuming countries need little encouragement to distrust and attack British oil interests. The United Kingdom's foreign investment in oil is a major positive factor on the invisible side of the balance of payments. Many nations do not need to be presented with further examples of nationalisation of exploration, production and refining to want immediately to copy Britain.

The increasing demand for oil will call for ever-increasing investment. While there may not be a shortage of risk capital for this purpose available in this country—although the Minister will have observed that there is not as much risk capital about now as there was—would not Britain's public fund be better employed in providing capital for, for example, roads, hospitals, schools, dealing with the B.B.C. or even assisting the West Country, rather than being used in one of the most risk-operating industries in the world.

Without a shadow of doubt, we should praise Sir Henry Jones and his band of gas men for the magnificent way in which they have reinvigorated the industry in the last 10 years. Whatever might be said in criticism, a magnificent job has been done by the gas industry, both in resuscitating itself and in turning to North Sea gas with such energy and determination. This must have been the greatest exploitation of a natural resource that we have ever seen. I can best illustrate this by quoting from a letter which I received from the then Ministry of Power. With the address Thames House South, Millbank, it reads: My dear Peter, Thank you for your letter of 17th September about the possibility of finding oil or gas under the North Sea. I entirely agree about the importance of this matter and the Government intends to make progress with it as soon as possible. …my Department cannot consider granting concessions until the necessary legislation has been passed. Such questions as the size and duration of concessions and the procedure for granting them now being examined by my Department". That was sent to me by the then Minister of Power, my right hon. Friend the Member for Bridlington (Mr. Wood), on 3rd October, 1963. We had not even got the Continental Shelf arrangement signed at that time. But we have had the legislation, the concessions, the discovery and the exploitation. This has been a remarkable achievement.

As the Minister said, the Bill is designed to centralise matters. I see nothing wrong with that, and the boards are turning from manufacturing to become salesmen and distributors. How-every, they will lose their manufacturing, tariff-fixing and capital planning powers. All along the line the area boards will have their capacity, control and management capabilities reduced, though not entirely diminished. Why, then, need we increase the membership of the Gas Council? This seems a typical bureaucratic saving in reverse, and I hope that the Minister will have further thoughts on this issue.

A number of points are worrying me. The Explanatory and Financial Memorandum says about the financial interest of the Bill: …the Gas Council do not at present have power, and hence cannot establish a subsidiary with power, to search for and exploit oil as a primary object…there is no likelihood at present of any early expenditure by the Gas Council on activities falling clearly outside their existing powers". If this statement is not untrue, then it is certainly written to bemuse or set at ease the worries of ordinary people, for anybody who has followed these matters and is acquainted with the real facts must want strongly to question that statement.

The Minister must have been informed by his staff of Press statements—I have them with me—about a successful discovery contiguous with the United Kingdom Continental Shelf of 2,000 barrels of 51 degree gravity condensates per day. That may be a long way to go, but it is a large and normally commercial find.

I challenge the Minister, if he still holds to the statement he made, to tell the House what he knows about the actual production and exploration—he should give the information at his disposal—of Plot 22/18 owned by the Gas Council and AMOCO. It does not take much investigation to know that rumours in normal gas and oil circles suggest that substantial discoveries, probably not of condensates but of oil, have occurred; and there are rumours that the Gas Council and AMOCO have spent £2 million on that project.

We on this side are worried lest a State oil industry can be provided. The Liberal Chief Whip says that the Bill does not allow that to be done, but I have gone to the trouble of looking at the memorandum of association of Hydrocarbons (Development) Great Britain Ltd. which was the company quickly registered by the Gas Council on 24th July, the day after the Minister made his statement.

In view of the time, I will refer only to Clause 3(3) of the memorandum, which allows the company: To carry on business as producers, refiners and distributors of petroleum, naphtha and other mineral, vegetable and animal oils, gases including natural gases and combustible substances, and to purchase, acquire or get, import, explore, sell and deal in all kinds of fuel and lubricants. It might be said that this provision is just a sop—that it is a general clause seeking all powers—but let not the right hon. Gentleman say that the Gas Council will not take those powers, because it has already done so—

Mr. Harold Lever

The hon. Gentleman is mistaken in supposing that these powers could be read into this Bill. The only powers in this Bill deal with oil which the Gas Council gets in the course of its search—there are no powers to import vegetable oil, and the rest.

Mr. Emery

We can pursue this further in Committee, but the reference is to petroleum. I do not know how the right hon. Gentleman, who is a great expert in the oil industry, wishes to interpret the word "petroleum", but I know how I interpret it, and this provision would allow the Council—

Mr. Harold Lever

Not the Bill. What the hon. Gentleman refers to is the memorandum of association of a company which the Gas Council has formed.

Mr. Emery

If the right hon. Gentleman says that the Gas Council does not have powers to do this it would appear to make the Gas Council look foolish, and the Gas Council is not foolish. If the right hon. Gentleman wishes to go further in this matter, I would refer him to file No. 958879/3 of the register of companies—

Mr. Harold Lever

I do not know how many articles of association the hon. Gentleman has read in his time, but he will know that in them he will see the most quaint range of powers expressed. In the articles and memorandum of association of firms about to set up hire purchase rental business one may find that they have the right to quarry stone, for instance, and to engage in worldwide exploration of all kinds—but it does not follow that they will.

Mr. Emery

But they may wish to do so. I have formed companies and, of course, I seek to make the powers as wide as possible because I believe that one day I might want to use them. I do not think that the Gas Council would wish to take these powers unless one day it wanted to use them.

Mr. Harold Lever

The Bill would not give the Council the kind of powers of which the hon. Gentleman speaks. The Bill wilt not give it any additional power because of any memorandum of association or articles of association of any company which it may now possess or acquire hereafter. The only power the Bill gives is the power to deal with oil that the Council comes across in its searches, and nothing else.

Mr. Emery

I find the right hon. Gentleman's argument slightly misleading, because the powers given are retrospective. I believe that the Gas Council did not have the right to register these companies when it did, and that that is why there is this retrospective provision. It is there because the Government want to ensure that the powers that existed then were as extensive as everyone thought.

We are worried about the cost that this will involve for the taxpayer. We see today that the Gulf-National Coal Board drilling in the Irish Sea is being withdrawn. How much has this cost the National Coal Board? How much in risk capital will have to be put on to the price of coal or borne by the taxpayer in some other way for this discovery?

I see that consumer councils are to be financed by the Gas Council rather than by area boards. Will the Minister consider doing away with all the coal, gas and electricity consumer councils and have ore energy and power consumer council? This is not a party political point, but it seems worth making.

Because many hon. Members wish to speak I will throw away much of my speech and now turn to one last important point. I believe the Government's policy of protecting the home fuel industry has not necessarily brought about the cheapest fuel policy. We must realise the amount of Government intervention. The C.E.G.B. is restricted in the way it buys fuel, there are restrictions on coal imports, the 2.5d. tax on fuel, the ban on Russian oil and pressure on local authorities in the market to buy coal, the sum of £415 million has been written off by the N.C.B., and £46 million of taxpayers' money goes to subsidising the cost of electricity produced by coal burning.

We are giving protection to gas as well as coal. I am not sure that this industry ought to be protected. I wonder if we should think of finding a way of protecting the coal industry and not protecting nuclear power or the gas industry. This all adds up to more Government interference. What worries me about the Bill is something which is known as the law of increasing intervention. This has been described by Professor Collins in his recent pamphlet, A Policy for Fuel? He says that a 'Law of Increasing Intervention applies'. This states simply that once Ministers and officials, distrusting the ability of the market to find what they regard as the 'right' solution, have intervened in a particular area a process is set in operation which tends to lead to progressively increasing intervention. Intervention which appears to be successful will thereby seem to justify itself and so it continues. Lack of success, because of the authorities' inherent distrust of the market, generally appear to lead to their drawing the conclusion that more rather than less intervention is necessary. In addition whatever the degree of success of intervention, it will often lead to the need for new measures to try to correct the market effects which of the original ones". That is what the Bill is designed to do. The Bill gives takeover powers and blanket powers to the Gas Council in Clause 3(2). Those powers concerning petroleum are no help and are unnecessary. Even with the kindly and supposedly reassuring and very bland speech of the Paymaster-General, the Minister is given the most extensive powers of further creeping nationalisation. This will not be to the benefit of the Gas Council, to the benefit of the petroleum industry or of the nation.

9.19 p.m.

Mr. Patrick McNair-Wilson (New Forest)

It is a tragedy that the debate on this important Bill has been so severely curtailed. Many of my hon. Friends will be prevented from speaking because of the shortage of time.

In the few minutes which I can take I shall deal with only two questions. First, everybody wants safety. Therefore, powers of entry are necessary. But there should be due warning to a householder that his equipment is to be inspected. I would like a system similar to the Ministry of Transport test for cars to be operated—a system of regular inspection of facilities and equipment rather than the board making a sudden entry into a house and shutting down equipment. If the householder cannot get it repaired, this can be very serious for families, including my own, in the middle of winter.

I want to follow some of the comments so ably made by my hon. Friend the Member for Bournemouth, West (Sir J. Eden). I want to consider the controversial part of the Bill dealing with the extended powers of the Gas Council. It is obvious that there should be two Bills—one dealing with safety and reorganisation, and the other containing the new powers. The Minister must, for the House and for the country, justify Clause 2 and the other Clauses containing the new powers.

How can risking the taxpayers' money in this high-risk industry of oil and petroleum be justified? The international oil companies spread their risks over large geographical areas and, therefore, can take one place with another. If we are to go into the oil business, for whatever reason—perhaps because we have just stumbled upon some light distillate—we could find ourselves in some uncompetitive part of the business sector.

An international oil company, obtaining its crude oil from different places, can mix good with bad. The liquid hydrocarbon found either under the Irish Sea or on the Continental Shelf may well be unsuitable for our market. Then the Gas Council will either have to blend it with another crude oil or sell it on another market.

Thus the Gas Council or its subsidiaries may be in possession of some products which sell and some which do not. An oil company can overcome this by importing crude oil from other areas. If the Gas Council were in this situation, would it require a tanker fleet to bring in additional crude oil to mix in its refineries with the wrong condensate it was taking from its own fields?

This is an issue which would take the Gas Council into the whole area of big oil business in the marketing of products. The big oil companies diversify right down into petro-chemicals and into other areas. Can the Minister assure us that the Gas Council does not intend to go into the petro-chemical business as well as into the oil business? I should have thought that the logic would lead in that direction.

A private industry maintains rates of return by cutting costs. When a nationalised industry maintains rates of returns, as we have learned, it does so by increasing prices. We are being asked in the Bill to give a nationalised industry a chance to enter into a business which is commercially not viable, which runs counter to all the parameters of a successful oil industry, and where it will find that it has products which are useless. It will have refineries which are underworked. It will have to buy crude to make them work. Either it will lose a great deal of the taxpayers' money, which is my guess, or the business will have to be subsidised in the future.

I regard this part of the Bill as entirely typical of the Labour Party's philosophy—two years ago the steel industry; this year the oil industry; next year, who knows? The fact is that the Government are buying up, or attempting to buy up, British industry with taxpayers' money—like the conjurer, before your very eyes. It is a bad Bill, and we shall reject it.

9.25 p.m.

Mr. Nicholas Ridley (Cirencester and Tewkesbury)

We all regret that this debate has been so short and that so many hon. Gentlemen have not been able to take a part. I, for one, shall make my contribution to shortening the time taken in winding up for the Opposition.

In acknowledging that gas is no longer the old industry, but will be a completely new industry based on a new fuel, we should pay tribute to the industry which is passing for its great service over many years. In welcoming the industry which is coming, we acknowledge, as all hon. Gentlemen have done, that it is an entirely new enterprise.

It has been common ground that some centralisation is necessary—this is the greatest area of agreement which has emerged from the debate—but there has also been an undercurrent of unhappiness that that should be so. The solution that the Paymaster-General proposed, that by making all the area board chairmen sit on the Gas Council he was somehow avoiding excessive centralisation, was simply not accepted.

My hon. Friend the Member for Belfast, South (Mr. Pounder) put his finger on the point: one does not create devolution by making the constituent parts all part of the centre. It is not just 12 area board chairmen who have to be appeased. It is inherent in the Government's approach to centralisation that they will achieve that sort of result.

The only way in which one could achieve some form of devolution would be—I hate this word and apologise for using it—to encapsulate certain parts of the activity and make those parts responsible to the Gas Council for earning a return on the capital which they employ. That could well be done to the exploration part of the Gas Council or the oil company which it intends to set up, or it could be done to the Scottish part or the Welsh part of the distributive network. That could be a much more sensible solution than concentrating on trying to deceive by rigging the composition of the council.

There will be an end to the area boards as we have known them, and this is a great pity. But I hope that more work will be done on finding ways of devolving responsibility down from the centre, for otherwise the heart and soul will go out of those people who are trying to contribute by working their way up through an industry such as this.

There is one grave danger. If all the expertise in an industry like this is concentrated in the Gas Council, there will be no one qualified to be a technical critic. This has been admitted by the C.E.G.B.; there are few people qualified to criticise technically who are not within in. There is this danger from size itself, in that we shall cease to have the ability for open debate about the future and about failings.

Now, another point on the structure of the industry. The history of Gas Acts since nationalisation of the industry has been as follows: 1948, 1960, 1963, 1965, 1968, 1969, and now this Bill. There have been all those Acts of Parliament for this one industry, whereas, to my knowledge, the House has never once debated the electrical engineering industry or I.C.I. How extraordinary it is that the nationalised industries force Parliament to debate their structure, to alter it and mess it about, leaving so little latitude to management. Surely, the Minister of Technology will agree that one of the roles of managerial authority is to be able to make those dispositions in one's organisation which one thinks right, and not to have come to the House for authority every time to change the structure.

If there is one complaint I make it is that we have had to discuss the gas industry too frequently. This is not good for managerial enterprise. The first contentious question is that of the partnership in the drilling operations in the North and Irish Seas. The difference between the partnership envisaged in the Bill and that which exists, is that this partnership is forced and the other is free. Hon Gentlemen who have essayed into marriage will realise that that is quite an important distinction when it comes to matters of this sort.

The reason that has been given for forcing the partnership is very unsatisfactory. It is this curious negative reason which the Paymaster-General let fall, that the Gas Council might find oil, therefore it had better be in on the deal. Secondly, and more extraordinary, he said that we must increase the public stake in the Continental Shelf. This was the reason for forcing the partnership. When we come to think about it, the development of the North Sea has been done with extraordinary rapidity and skill. There have been no complaints about the rate of exploitation, so why is there any need to alter the arrangements?

The reason emerges from the speeches of the rather garrulous former Minister of Power, the right hon. Member for Barnsley (Mr. Mason), who said that we should develop our own expertise and gradually build a knowledgeable core of operators. The reason for forcing the partnership was given away—the State does not know how to look for gas and so will force the people who do to go into partnership so that it can learn from them. This is the motive behind the partnership and it is a fairly obvious deduction that the effect of forcing this partnership will be to slow down the pace of exploitation rather than to speed it up. The point here is to use the power of the State to force a partnership for no other reason than to obtain knowledge from other people to build up a State drilling organisation, at the expense of the exploitation of our natural gas reserves.

There is a major objection and it is that if we take into partnership the person to whom we are to sell our product we are in a hopeless position. If a farmer takes into partnership the butcher to whom he hopes to sell his fat meat, and he gives the butcher the power to decide upon the price, the butcher will take all the profit.

That is what will happen here, because when it comes to negotiating with the Gas Council for the sale of gas it will be the council, representing the forced partnership, which will try to fix the price for the beach-head price of the gas and it will give no profit whatever to that part of the Gas Council in partnership with the oil industry. Instead, it will give all the profit to the Gas Council when it has landed the gas. This is an attractive proposition, to ask someone to go into partnership when the sole monopoly buyer will be the Gas Council and, therefore, the partner will have no means of defending his profit margins even if a successful strike is made.

This is chocking off applications from oil companies which might otherwise have been interested in putting some of their capital into this exploration. In the day of the 1964 Tory Act, there was rapid and universally-acknowledged successful exploitation. Now, with this Bill, the likelihood is that it will steer off the oil companies, make it less attractive, and slow down the rate of exploration for North Sea gas. On that ground alone my hon. Friends are absolutely right to be suspicious of the Bill.

Then we come to the question of the new Hydrocarbon (Developments) G.B. Limited, the new subsidiary which will have power to market oil. The Paymaster-General introduced this new subsidiary rather in the way that the housemaid's baby was described—"It is only a very little one, though". It is a statutory housemaid's baby.

The Government are in a bit of a dilemma. The ex-Minister of Power, when he goes to Barnsley, says: This is but one example of a strengthening and exciting enlargement of the public sector… That is to cheer up the Left wing in the constituencies. On the other hand, the Paymaster-General blandly says, "It is possible that there will be oil at some stage, but it must not be taken seriously". We do not know whether the Government intend to build this concern into a large international oil company or to keep it as a very small company.

The arguments against a State international oil company are so well known that I need not rehearse them. I will simply make one quotation which I think will be convincing to the House: Total nationalisation would, therefore, tend to hinder the exploitation of North Sea gas—and we should also remember that through Shell and B.P. we have a tremendous investment in the energy resources of other countries which could be endangered if other countries followed our lead and nationalised their own oil industries. That unexceptionable statement comes from the Labour Party's document "A National Hydrocarbons Corporation". It at least had the sense to reject setting up an international oil company in competition with the existing major companies.

But, as my hon. Friend the Member for the New Forest (Mr. McNair-Wilson) said, the statutory housemaid's baby is not viable because an oil company cannot take one small source of crude oil and turn it into petrol and make a profit. Two oil companies have tried to do this, E.N.I. and E.R.A.P. Since there has been reference to them, I need say no more than that they were set up for just this purpose—to exploit small deposits of local oil and to try to operate in a monopoly position in their own domestic markets.

The sums of money which these two small oil companies have lost are astronomical—absolutely fantastic. The resulting protection in their home markets and the cost to the taxpayers in the countries concerned have been sorry examples of the folly of this sort of thinking. The Paymaster-General, with his business sense and skill in these matters, should know better than to think that an operation of this sort would have the slightest chance of being viable.

The Government hope that from this vague, woolly thinking about a State oil company will come good profits for the nation. Why not just take the profits without bothering to set up the international oil company? Already a 12½ per cent. royalty will be paid on all finds of gas and oil in the North and Irish Seas. Corporation Tax of 45 per cent. will be paid on the profits arising from any finds. The rents of the blocks have hitherto been £6,000 for the first year, rising to £65,000 per annum for 100 square mile blocks later. There would not be the slightest risk to the Government if not one drop of oil or gas were found. The Government can get their profit from the oil industry and the nation's share of its own resources by this means. They are already doing so under the Tory Act. What more do they want?

In addition, the Government have a 50 per cent. share in one of the greatest oil companies in the world, British Petroleum, which currently can be worth £1,000 million at today's valuation to the Treasury. If they want more, why not buy more shares in B.P. or one or two American oil companies? Then they would at least be putting taxpayers' money into the hands of people who knew something about the exploration and distribution of oil.

For all those reasons, my hon. Friends would be well advised to reject the Bill. If by chance this statutory housemaid's baby finds its way to the Statute Book, I assure the House that when we take office it will be quietly drowned in a bucket of water.

9.40 p.m.

The Joint Parliamentary Secretary to the Ministry of Technology (Mr. Alan Williams)

The hon. Gentleman the Member for Cirencester and Tewkesbury (Mr. Ridley) and I both limited our time at the end of the debate in order to give back benchers rather more opportunity to participate, and I am sure that hon. Members will appreciate it when I apologise for the fact that I shall not be able to deal with every single point which has been raised, and that they will appreciate also that this will not be because I am deliberately running away from points but simply because of inadequate time. Many of the points, in any case, I think hon. Members will recognise, are points which can very easily be dealt with in what I am sure will be a rather lengthy and very amiable Committee on the Bill.

Before going into the main points I wish to make I will deal with one or two individual points which hon. Members have put to me. My hon. Friends the Members for King's Lynn (Mr. Derek Page) and Preston, North (Mr. Ronald Atkins) both felt that it was important that, should we find ourselves in the position of having surplus natural gas, we should be able to export that natural gas. In fact, this power already exists under the 1965 Act. It is also embodied in Clause 3(1)(f), but this is subject to the approval of the Minister, and this applies to a private firm as well which has a field in the Continental Shelf. This control by the Minister, this ability to say yea or nay to the export of gas—and this is in answer to a further point made by my hon. Friend the Member for King's Lynn—is one of the ways in which we are able to control the rate at which the natural gas is exploited in the finds which are made. In addition to that method of control the Gas Council exercises a form of control as well through contracts which it undertakes in so far as these gear the rate of exploitation of a field.

I shall deal in the main body of my speech with one of the points which the hon. Member for Orpington (Mr. Lubbock) raised, but he referred to the need for a co-ordinated policy in relation to computers. This point I agree with completely, and he will be glad to know that the Gas Council has just this matter in hand and that it is developing a co-ordinated policy on hard and soft ware.

The hon. Gentleman the Member for Warwick and Leamington (Mr. Dudley Smith) brought many constituency points which, I am sure he will agree, can in general be dealt with more appropriately in Questions, letters, and, perhaps, in Committee.

Mr. Dudley Smith

I do not want to delay the hon. Gentleman, but they were not purely constituency matters but covered a very wide area of the country.

Mr. Williams

I appreciate that, and I am aware of the fact that the hon. Gentleman has been running advertisements asking people to complain to him if they have any complaints about natural gas—

Mr. Smith


Mr. Williams

—and I am not surprised, therefore, that anyone who shares his common interest in making an Aunt Sally of the Gas Council should contact him.

Mr. Smith

Prove it.

Mr. Williams

It is true, but the hon. Gentleman is free to refute this, and I will give way to him if he wants to do so, and I will withdraw if he does.

Mr. Smith

I have certainly not published any advertisements but I gave an interview to my local paper saying that people with legitimate complaints could get in touch with me, and they did, and they were not frivolous complaints.

Mr. Williams

The information I had is that the hon. Gentleman—

Hon. Members


Mr. Williams

If the hon. Gentleman will allow me. As I say, the information I have is that the hon. Gentleman has indulged in an advertising campaign of some sort for this purpose. If not, I will withdraw, and unreservedly.

But let us take the point which he was making about the higher bills on conversion. The first fact that has emerged is that no written evidence has been submitted to us by the hon. Gentleman or anyone else which substantiates the claim that as a result of the introduction of natural gas there have been higher bills. What has tended to happen is a coincidence of several events. One is the introduction of natural gas in some areas at a time which coincided with N.B.P.I. approval of increases. We have also got a natural increase in consumption. So far—I would be glad to see any written evidence anyone can produce on this—we have not yet seen evidence to prove that natural gas itself increases bills.

To come to the main substance of the debate, because on occasions we became rather heated on the objectives and aims of the Government, it is as well to reiterate what my right hon. Friend the Paymaster-General said at the start about the reason for the Bill being introduced. The aim is to give the gas industry the appropriate structure and powers to utilise the known natural gas resources and any new discoveries of gas or oil on the continental shelf. Most of the provisions in the Bill flow from this objective.

The existing powers and structure of the gas industry reflect the nature of the industry at the time of the initial nationalisation Act, and are geared to bringing cohesion to a thousand separate undertakings which were manufacturing town gas and distributing it locally. The organisation of these undertakings into 12 separate areas was an important rationalisation. As then envisaged, the Gas Council was seen in a far weaker rôle than that which it will need to carry out its functions in the next few years. It was set up to advise the Minister and to promote efficiency, and it had an essentially advisory and co-ordinating rôle. Even today, constitutionally the industry is still federal in structure. This point has emerged from many speeches. The key financial and supply responsibilities for the industry still rest with the areas, and it is important to bear this in mind. The Council at the moment, although with the co-operation of the areas, implements its policy through persuasion and agreement.

It will be seen how inappropriate is this situation in view of recent events. As the hon. Member for Bournemouth, West (Sir J. Eden) said, it is only four years since B.P. made its first discovery in our sector of the North Sea. Since then five major fields have been discovered, and already one-third of our total gas needs are being met by natural gas. It is to the tremendous credit of the industry that we have achieved one of the swiftest rates of exploitation and development of offshore gas of any country in the world.

Mr. Ridley

Would not it therefore be wiser to leave well alone, and have the same arrangements for the next slice as we had for the last?

Mr. Williams

I suppose that the difference between the two parties is that hon. Gentlemen opposite are always satisfied with the past, whereas we always want to build a better future. The fact that progress has been satisfactory in the past in no way abashes us or leads us to think that better progress cannot be achieved, particularly if there is a Labour Government, as I am sure there will be.

In proof of this optimism about the future, I remind the House of the objective, which is to treble the consumption of gas within this country by the mid-1970's as compared with the level of only last year. This will be achieved only if we manage to get considerable industrial as well as domestic use of natural gas. In the relatively short period of a decade 30 million appliances have to be converted in 13 million households and, as the hon. Member for Warwick and Leamington has said, so far about 8 per cent. have been converted; 1 million consumers have had 3 million of their appliances converted.

What emerges from the last four years is a complete metamorphosis in the position of the industry. There has been a tremendous transition in a very short time. They have moved from decentralised production to centralised supply. They are moving from localised distribution networks to a national grid. They are moving from diverse costs of production to a common supply price.

We should pay tribute to the way in which the areas, despite the balance of powers which exists within the industry, have subjugated their local roles to achieving this transition or to helping towards it. But no one can deny that in the long term—I believe everyone has recognised this, although one or two hon. Members have found rather peculiar excuses for its happening, such as its being a function of nationalisation—the managerial and technological logic of the situation demands that at the centre there should now be central investment decisions and greater control of prices and tariffs. This point we have established.

Mr. Keith Speed (Meriden)

While the hon. Gentleman is on the point of expansion of natural gas supplies, are the Government considering changing their policy in regard to dual-fired power stations involving coal-firing and natural gas since so far they have prohibited the extension of natural gas into these stations?

Mr. Williams

If the Government were contemplating such a change, I am sure the Government would announce the fact. Inevitably central decisions on central tariff policy becomes necessary. Consequently, therefore there must be financial responsibility in the industry and if it has control over investment and tariffs then equally it must have the duty of fulfilling financial targets.

The hon. Member for Bournemouth, West rightly raised the question of the possible suppression of area interests if this transference of power takes place. I would point out that of the 19 members of the Gas Council, 12 will be area chairmen. There is therefore ample opportunity for the area point of view to be expressed. I agree with the hon. Gentleman that it is essential that men of the calibre of chairmen of boards should he given the opportunity to use their abilities in the top decision-making. The centralisation is purely concerned with those functions which by their very nature are central. Ample room is left for local initiative and for dealing with consumer needs. The boards will have a duty to provide an efficient and economical gas supply, and will have duties in relation to safety and service.

The hon. Member for Orpington raised an important point when he asked whether there would be ample incentive for the more able members of the boards as opposed to chairmen in what he saw as an inferior rôle as a result of shared powers. At the moment these boards have a turnover of £53 million and on average will soon have a turnover in excess of £60 million. Therefore, they are big businesses in their own right.

Further, in addition to the other aspects of area policy which I have mentioned, one must bear in mind that we are retaining the area organisation of the Gas Consultative Councils so that they will exist to represent area consumer interests but with wider powers than previously. They have in the past been able to make representations to the Minister only on those issues which arise within their own areas, but under the Bill we contemplate that they will have the power to raise as a last resort with the Minister any decision of the Gas Council which has an adverse regional or area impact. This is a substantial widening of their powers and, at the same time, we recognise that a countervailing consumer voice is needed.

We have, therefore, decided, in agreement with the chairmen of the consultative committees and the Gas Council, that these chairmen shall come together as a group and be able jointly to have meetings with the Council to deal with consumer interests and problems.

It would be inadequate if I were to sit down without diverting a little of my attention to the question of oil which seems to be causing a certain amount of animation on the benches opposite. It is difficult to understand why hon. Gentlemen opposite are getting as excited as they are. The Bill is not intended to deal with preferences which will be given to firms undertaking joint ventures with the Gas Council and the N.C.B. in the Irish Sea. That is a separate thing altogether under the Continental Shelf legislation. What the Bill does is to empower the Gas Council to search and bore for oil as well as for gas, to get oil, that is to tap any oil wells that it finds, to refine and market it, either in the crude or the refined state.

These powers relate only to oil found within United Kingdom territorial waters, and the work must be done through a subsidiary. I am sure that hon. Gentlemen opposite will agree that this is desirable because it forces the Gas Council to channel the work through a subsidiary, and a subsidiary which is essentially indulging in a commercial activity loses those advantages or privileges which it would otherwise have as a public utility.

Mr. Ridley

At what rate will the Council lend capital to its subsidiary?

How will it determine the market rate? How can it possibly reproduce the true disciplines of the private enterprise system?

Mr. Williams

The hon. Gentleman must allow me to make my points. This will be dealt with in Committee.

Mr. Ridley

It will not do for the Minister to say that this will be dealt with in Committee. This is a fundamental flaw in his argument, and I wish him to answer my question.

Mr. Williams

The hon. Gentleman must remember that about a dozen Members have taken part in the debate and have raised points on this issue of oil. Each hon. Member thinks that the matter he has raised deserves an answer, and I therefore have to exercise some discretion in the points with which I deal.

Let us consider the provisions which we are imposing in respect of oil. First, there is the power to search and bore for gas. There is no question of principle here. Hon. Gentlemen opposite have given this power themselves. There is no element of principle whether it should be gas or not. The argument is whether the power should exist in relation to oil. Hon. Gentlemen opposite should realise that the quirks of geology are such that it is not until the boring is undertaken that one knows whether one has found oil or gas, or neither. Under the existing law, if the Gas Council finds oil rather than gas, it has no specific or clear power to do anything at all with it. Even if it accidentally discovers oil, it has no power to deal with it.

What we are aiming to do is not to create a monolithic giant which will enter into the international petrol scene. All that we are trying to do is to give the Gas Council the same commercial basis for its operations in the North Sea and in the Irish Sea as that which exists for everyone else.

Question put:

The House divided: Ayes 198, Noes 128.

Division No. 36.] AYES [10.0 p.m.
Abse, Leo Atkins, Ronald (Preston, N.) Beaney, Alan
Armstrong, Ernest Atkinson, Norman (Tottenham) Benn, Rt. Hn. Anthony Wedgwood
Ashley, Jack Bacon, Rt. Hn. Alice Bessell, Peter
Ashton, Joe (Bassetlaw) Bagier, Gordon A. T. Bidwell, Sydney
Binns, John Heffer, Eric S. Oram, Albert E.
Bishop, E. S. Hilton, W. S. Oswald, Thomas
Booth, Albert Hobden, Dennis Owen, Dr. David (Plymouth, S'tn)
Boston, Terence Hooley, Frank Owen, Will (Morpeth)
Boyden, James Horner, John Padley, Walter
Bradley, Tom Houghton, Rt. Hn. Douglas Page, Derek (King's Lynn)
Brooks, Edwin Howie, W. Paget, R. T.
Broughtcn, Sir Alfred Hoy, Rt. Hn. James Palmer, Arthur
Brown, Rt. Hn. George (Belper) Hunter, Adam Pannell, Rt. Hn. Charles
Hynd, John Parker, John (Dagenham)
Brown, Hugh D. (G'gow, Provan) Jackson, Colin (B'h'se & Spenb'gh) Parkyn, Brian (Bedford)
Buchan, Norman Jackson, Peter M. (High Peak) Peart, Rt. Hn. Fred
Butler, Herbert (Hackney, C.) Jay, Rt. Hn. Douglas Pentland, Norman
Butler, Mrs. Joyce (Wood Green) Jeger, George (Goole) Perry, Ernest G. (Battersea, S.)
Carter-Jones, Lewis Johneon, James (K'ston-on-Hull, W.) Perry, George H. (Nottingham, S.)
Concannnn, J. D. Jones, Dan (Burnley) Price, Christopher (Perry Barr)
Conlan, Bernard Jones, Rt. Hn. Sir Elwyn (W. Ham, S.) Price, William (Rugby)
Crawshaw, Richard Jones, T. Alec (Rhondda, West) Randall, Harry
Cronin, John Kelley, Richard Rankin, John
Dalyell, Tam Latham, Arthur Richard, Ivor
Davies, K. Hudson (Conway) Lawson, George Roberts, Rt. Hn. Goronwy
Davies, Dr. Ernest (Stretford) Leadbitter, Ted Roberts, Gwilym (Bedfordshire, S.)
Davies, Rt. Hn. Harold (Leek) Lee, John (Reading) Rodgers, William (Stockton)
Davies, Ifor (Gower) Lever, Rt. Hn. Harold (Cheetham) Rogers, George (Kensington, N.)
Dell, Edmund Lewis, Arthur (W. Ham, N.) Rose, Paul
Diamond. Rt. Hn. John Lomas, Kenneth Ross, Rt. Hn. William
Dickens, James Loughlin, Charles Rowlands, E.
Driberg, Tom Luard, Evan Shaw, Arnold (Ilford, S.)
Dunnett, Jack Lubbock, Eric Sheldon, Robert
Dunwoody, Mrs. Gwyneth (Exeter) Lyons, Edward (Bradford, E.) Short, Rt. Hn. Edward (N'c'tle-u-Tyne)
Dunwoody, Dr. John (F'th & C'b'e) McCann, John Silverman, Julius
Eadie, Alex MacColl, James Skeffington, Arthur
English, Michael MacDermot, Niall Slater, Joseph
Ennals, David Macdonald, A. H. Small, William
Evans, Fred (Caerphilly) Mackenzie, Gregor (Rutherglen) Snow, Julian
Evans, Ioan L. (Birm'h'm, Yardley) Mackie, John Steel, David (Roxburgh)
Faulds, Andrew Mackintosh, John P. Steele, Thomas (Dunbartonshire, W.)
Fernyhough, E. McMillan, Tom (Glasgow, C.) Storehouse, Rt. Hn. John
Finch, Harold McNamara, J. Kevin Taverne, Dick
Fitch, Alan (wigan) MacPherson, Malcolm Thomas, Rt. Hn. George
Fletcher, Rt. Hn. Sir Eric (Islington, E.) Mallalieu, E. L. (Brigg) Thorpe, Rt. Hn. Jeremy
Fletcher, Raymond (Ilkeston) Manuel, Archie
Marks, Kenneth Tinn, James
Fletcher, Ted (Darlington) Marquand, David Tuck, Raphael
Foot, Rt. Hn. Sir Dingle (Ipswich) Mason, Rt. Hn. Roy Varley, Eric G.
Foot, Michael (Ebbw Vale) Mayhew, Christopher Wainwright, Edwin (Dearne Valley)
Fowler, Gerry Mendelson, John Wainwright, Richard (Colne Valley)
Fraser, John (Norwood) Millan, Bruce Walden, Brian (All Saints)
Freeson, Reginald Milne, Edward (Blyth) Walker, Harold (Doncaster)
Gardner, Tony Mitchell, R. C. (S'th'pton, Test) Wallace, George
Garrett, N. E. Molloy, William Watkins, David (Consett)
Ginsburg, David Morgan, Elystan (Cardiganshire) Wellbeloved, James
Golding, John Morris, Alfred (Wythenshawe) Wells, William (Walsall, N.)
Gordon Walker, Rt. Hn. P. C. Morris, Charles R. (Openshaw) Whitaker, Ben
Gray, Dr, Hugh (Yarmouth) Morris, John (Aberavon) White, Mrs. Eirene
Greenwood, Rt. Hn. Anthony Mulley, Rt. Hn. Frederick Whitlock, William
Gregory, Arnold Murray, Albert Willey, Rt. Hn. Frederick
Grey, Charles (Durham) Neal, Harold Williams, Alan (Swansea, W.)
Grimond, Rt. Hn. J. Newens, Stan Williams, Mrs. Shirley (Hitchin)
Hamilton, James (Bothwell) Noel-Baker, Rt. Hn. Philip
Hamilton, William (Fife, W.) Norwood, Christopher TELLERS FOR THE AYES:
Hamling, William Oakes, Gordon Mr. Neil McBride and
Harper, Joseph Ogden, Eric Mr. R. F. H. Dobson.
Hattersley, Roy O'HailOran, Michael
Healey, Rt. Hn. Denis O'Malley, Brian
Alison, Michael (Barkston Ash) Campbell, B. (Oldham, W.) Farr, John
Archer, Jeffrey (Louth) Campbell, Gordon (Moray & Nairn) Fisher, Nigel
Astor, John Carlisle, Mark Fletcher-Cooke, Charles
Atkins, Humphrey (M't'n & M'd'n) Channon, H. P. G. Fortescue, Tim
Balniel, Lord Chataway, Christopher Foster, Sir John
Bell, Ronald Clegg, Walter Galbraith, Hn. T. G.
Bennett, Sir Frederic (Torquay) Cooper-Key, Sir Neill Gilmour, Sir John (Fife, E.)
Bennett, Dr. Reginald (Gos. & Fhm) Corfield, F. V. Glyn, Sir Richard
Bitten, John Costain, A. P. Goodhart, Philip
Black, Sir Cyril Crowder, F. P. Goodhew, Victor
Blaker, Peter Dalkeith, Earl of Gower, Raymond
Boardman, Tom (Leicester, S.W.) Dance, James Grant, Anthony
Body, Richard Dean, Paul Gresham Cooke, R.
Bossom, Sir Clive Dodds-Parker, Douglas Hall-Davis, A. G. F.
Boyd-Carpenter, Rt. Hn. John Drayson, G. B. Hamilton, Michael (Salisbury)
Brinton, Sir Tatton Eden, Sir John Harris, Reader (Heston)
Brown, Sir Edward (Bath) Emery, Peter Harvey, Sir Arthur Vere
Bullus, Sir Eric Errington, Sir Eric Heseltine, Michael
Hiley, Joseph Nott, John Temple, John M.
Hill, J. E. B. Onslow, Cranley Thatcher, Mrs. Margaret
Hogg, Rt. Hn. Quintin Orr-Ewing, Sir Ian Tilney, John
Holland, Philip Osborn, John (Hallam) Turton, Rt. Hn. R. H.
Hunt, John Page, Graham (Crosby) Vaughan-Morgan, Rt. Hn. Sir John
Hutchison, Michael Clark Percival, Ian Waddington, David
Iremonger, T. L. Pounder, Rafton Walker, Peter (Worcester)
Irvine, Bryant Godman (Rye) Powell, Rt. Hn. J. Enoch Walker-Smith, Rt. Hn. Sir Derek
Joseph, Rt. Hn. Sir Keith Pym, Francis Wall, Patrick
Kaberry, Sir Donald Ramsden, Rt. Hn. James Walters, Dennis
Kershaw, Anthony Rees-Davies, W. R. Ward, Christopher (Swindon)
Kimball, Marcus Rhys Williams, Sir Brandon Ward, Dame Irene
Lambton, Viscount Ridley, Hn. Nicholas Weatherill, Bernard
Lane, David Ridsdale, Julian Whitelaw, Rt. Hn. William
Langford-Hott, Sir John Rossi, Hugh (Hornsey) Wiggin, A. W.
Lewis, Kenneth (Rutland) Royle, Anthony Williams, Donald (Dudley)
Longden, Gilbert Russell, Sir Ronald Wilson, Geoffrey (Truro)
McNair-Wilson, Patrick (New Forest) Scott, Nicholas Wolrige-Gordon, Patrick
Maddan, Martin Shaw, Michael (Sc'b'gh & Whitby) Wood, Rt. Hn. Richard
Mawby, Ray Silvester, Frederick Woodnutt, Mark
Maydon, Lt.-Cmdr. S. L. C. Sinclair, Sir George Worsley, Marcus
Miscampbell, Norman Smith, Dudley (W'wick & L'mington) Wright, Esmond
Morgan, Geraint (Denbigh) Speed, Keith
Morrison, Charles (Devizes) Tapsell, Peter TELLERS FOR THE NOES:
Mott-Radclyffe, Sir Charles Taylor, Sir Charles (Eastbourne) Mr. Jasper More and
Murton, Oscar Taylor, Frank (Moss Side) Mr. Reginald Eyre.

Bill accordingly read a Second time and committed to a Standing Committee, pursuant to Standing Order No. 40 (Committal of Bills).

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