§ 12.42 p.m.
§ The Minister for Industry (Sir John Eden)
With your permission, Mr. Deputy Speaker, I should like to make a statement on the future structure of the gas industry.
The present statutory organisation of the gas industry was established in 1948 and has remained virtually unchanged ever since. In recent years, as a result of the successful exploitation of the discoveries of natural gas in the North Sea, there has been a fundamental alteration in the nature of the industry. The local manufacture of gas from coal and oil is rapidly declining and natural gas already accounts for the bulk of gas used in this country. The supply of gas has now to be organised on a national scale.
This transformation needs to be reflected in a new organisation structure for the industry involving increased central direction combined with the maximum possible management flexibility. I have therefore decided that there should be a single statutory authority for the industry. Legislation is to be introduced to establish, I hope early in 1973, a British Gas Corporation combining the responsibilities of the Gas Council and the area boards. 1867 The corporation will have primary responsibility for determining the internal management structure of the industry, and for the appropriate devolution of functions to local managements. It will have the duty of reviewing its organisation from time to time, and reports of the reviews will be laid before Parliament.
At the same time, I am anxious that there should continue to be Scottish and Welsh administrative units of the industry, and the Corporation will be required to provide for them. In making appointments to the Corporation, I shall also have regard to the advisability of including members familiar with regional requirements and circumstances.
There will also be provision for the continuation of local consumer consultative machinery, and in addition a National Gas Consultative Council will be established.
As is usual with reorganisations such as this, the Bill will provide for compensation to be payable to board members and employees who are adversely affected by the reorganisation.
The period until the new Corporation has assumed full responsibility will inevitably be difficult and one of some uncertainty for those who work in the industry, particularly the members and staff of area boards. But in view of the fine record of service which has characterised this industry at all levels. I have no doubt that those concerned will do their utmost to keep the industry working smoothly during the transitional period.
Over the last 20 years the area boards have made a great contribution to the development of the gas industry. I should like to pay tribute to all who have served on them, especially for the way in which latterly they have co-operated with the Gas Council in planning and executing the change to natural gas. But now we must look to the future and devise a structure which will best meet the needs of the industry in the years ahead. Given the nature of the technological advances which are being made I am sure that the creation of a single statutory authority will enable the industry to make the most of its opportunities while serving the interests of its customers.
After 12 years as Chairman of the Gas Council, Sir Henry Jones, who has 1868 made such an outstanding contribution to the industry, will be retiring at the end of this year. He will be succeeded by the present deputy chairman, Mr. Arthur Hetherington. Mr. Denis Rooke, now member for production and supplies, will become the new deputy chairman.
§ Mr. Michael Foot
I thank the hon. Gentleman for the notification that he gave me of the statement and, indeed, for the statement itself, which will go some way towards removing the uncertainties which the industry has had to endure during the last 12 months.
When we come to consider the Bill in the autumn we shall wish to examine it in great detail, in particular to see what methods are proposed for safeguarding the interests of individual areas, particularly Wales, Scotland and those with special problems.
As the House has so much business ahead of it, may I confine myself to general matters and ask the hon. Gentleman whether he is aware—as I am sure he must be—that the proposals which he has put to the House involve eating almost all the words which he and his hon. Friends used in the discussions on the previous Gas Bill that was being introduced, but that we shall be willing to wait until the autumn to examine the scale and quality of the feast?
§ Sir J. Eden
I am grateful to the hon. Gentleman. The Welsh and Scottish units will be administrative ones, and the extent to which responsibilities are delegated from the centre will reflect national boundaries. The legislation, subject to further discussion about details, is intended to provide that no change shall be made in this matter without subsequent legislation.
With regard to the meal which the hon. Gentleman is wishing on me, obviously he recognises that we have moved considerably in time from the earlier considerations which led to the preparation of the previous Bill. It was based on experience gained up to 1968. We are now having to look well ahead to the future, taking account of the way in which the industry has been developing.
§ Sir H. d'Avigdor-Goldsmid
Is my hon. Friend aware that strengthening the 1869 consumer side by the creation of a National Consultative Council will be generally welcome to consumers throughout the country? This is a matter which has been looked at by the Select Committee on Nationalised Industries, which will shortly be reporting on it.
The Select Committee has many times had the opportunity of hearing Sir Henry Jones give evidence. He has made an outstanding contribution to the Committee's debates, as well as to the industry.
§ Sir J. Eden
I am grateful to my hon. Friend, and I am looking forward with keen interest to the report of the Select Committees on Nationalised Industries on this matter.
§ Mr. Leslie Huckfield
Is not the hon. Gentleman aware that the centralisation proposed in the creation of the Corporation will remove far more of the administration of the gas industry from the final consumer? Is he not aware, also, that the creation of national consumer consultative machinery will make the situation even worse? Is he really not aware that what is required is the continuity of meaningful local consumer consultative machinery? Will he ensure that if he has local consumer machinery he will make appointments not just from local authorities, but from consumer groups as well?
§ Sir J. Eden
It is obvious that an industry of this nature—especially one that supplies the needs of such a large number of individual customers throughout the country—must have effective devolution of responsibilities and administration from the centre. I have no doubt that that will continue to be the case in the future organisation. The consumer consultative machinery will continue to meet the needs of the consumers at local level. As for appointments to the consultative councils, I see no need 1870 to change the existing practice but I will take account of the views put forward by the hon. Member and shall bear them in mind when appointments are to be made.
§ Mr. Emery
I congratulate my hon. Friend upon his statement, which makes it clear that this is the first major breakthrough towards obtaining a modern management structure in a nationalised industry. On the question of reorganisation, can my hon. Friend say anything about the capital structure as it exists at the moment, as compared to that which he envisages in future? Does he believe that there will be a need for greater borrowing powers than those already given to the industry? Can he give the House an assurance that the profitability that the gas industry has been able to achieve in the last three years—averaging about £14 million—will be continued? Further, can he tell the House whether the new board will include outside non-executive directors—which is not the case with the present Gas Council?
§ Sir J. Eden
The extent to which the new organisation of the industry will lead to any changes in borrowing powers will not be affected by the proposed structure. Although the borrowing powers aspect of the question will inevitably be as enshrined in any legislation that comes forward in due course, they will not be affected by the proposals that I have outlined in my statement this morning. On my hon. Friend's second point, about the composition of the Corporation, the details have not yet been finally settled, but the total membership will be between 10 and 20. We intend that it should have the ability to attract people from outside the industry in the form of part-time members such as my hon. Friend describes.