HC Deb 15 June 1973 vol 857 cc1972-84

4.0 p.m.

Mr. Dick Douglas (Clackmannan and East Stirlingshire)

I appreciate the opportunity to raise the matter of the siting of oil refineries in the United Kingdom. I take the view that this is a vital matter to the economic growth of the United Kingdom and to the environmental prospects of areas in which oil refineries are situated or are likely to be situated.

This week we have had a number of excellent debates bearing on environmental and regional topics. We have just completed such a debate. All the considerations discussed on the Maplin Development Bill and in relation to the Channel Tunnel are related to the growth of traffic movements. I was rather struck by some of the statistics involved in the Channel Tunnel debate about movements of traffic. If we were to tackle the problem properly we might include some contingency plans for horse troughs every few hundred yards in case the energy crisis befalls us.

All the assumptions relating to Maplin and the Channel Tunnel involve directly the availability of fuel supplies. Energy policy is a much neglected topic in this House, although the House of Lords has recently discussed it. I hope that we shall have an opportunity of discussing the broad issues of it in the not too distant future.

I wish to deal with a relatively narrow aspect of energy policy under two main headings: first, the general economic and strategic considerations involved in the siting of the refineries; and, secondly, the planning considerations related to two refineries being mooted.

Since 1945 the general policy in the United Kingdom has been to endeavour broadly to keep refining capacity moving in harmony with United Kingdom demands for fuel and fuel products. Currently the United Kingdom capacity is, I am informed, about 120 million tons, which in terms of throughput gives a figure roughly in balance with demand. Projections of demand for fuel in the United Kingdom suggest that we shall require refining capacity of about 150 million tons by 1980. There might be some differences—perhaps 2 or 3 per cent. one way or the other—but broadly the figure of 150 million tons is reasonably accurate.

That would mean either new refineries being created or existing ones being expanded to give an additional output of 40 million to 50 million tons. As far as I can discover—and I should appreciate the Government's assessment of the position—about 40 million tons of oil can be refined in the regions which we might roughly say are in South and South-East England, with additional capacity planned for a further 14.6 million tons. Therefore, roughly half the United Kingdom needs can be supplied by refineries in these regions.

The argument often used for the location of refineries in particular areas is related to the proximity of the refineries to their markets and the claims made about the relative costs of transporting refined products against the cost of transporting the crude oil. But I emphasise that calculations about such costs are taken directly from the oil companies. Nowhere have I seen statistics about the transporting of crude oil and refined products which might involve social cost-benefit analyses.

I turn to the planning considerations. Late last year the Department of the Environment issued a paper on the selection of sites for oil refineries. I should like to comment on some of the views expressed in it. The document refers to the minimum capacity of a new refinery as being about 4.5 million tons per annum, requiring a site of at least 250 to 300 acres. My discussions with oil companies suggest that that type of refinery in modern terms is pretty small beer, and that modern refineries which are being projected, albeit some from the United Kingdom point of view export-oriented, might have a capacity of 24 million to 25 million tons per annum. Therefore, the area of 250 to 300 acres mentioned in the document is for a refinery of minimum capacity.

The document does not show that it is possible to increase the throughput of a refinery without necessarily encroaching on a proportionate quantity of land. It is possible to double the throughput without doubling the amount of land required. That is a deficiency in the document that the Department might wish to rectify. What is the Department's estimate of the land necessary for a 10 million or 20 million ton refinery? That should be spelt out to the local authorities.

A refinery is unable to prove a great generator in terms of employment. The Department takes the view that jobs might be provided for between 200 and 300 people and that the construction side might involve 3,000 people. Consideration of the location of a refinery should, therefore, include the impact of between 200 and 300 people being employed in controlling the enterprise and also an assessment of the impact of 3,000 construction workers in a particular area at a given time.

Another important consideration on the credit side for the location of a refinery in a particular area is the industrial rating charge on the refinery. Refineries can be a substantial generator of spin-off activity from the point of view of refining capacity and even petrochemicals. The rates they pay are a substantial contribution to the local authorities, and this should be mentioned in the Department's document.

On many occasions I have mentioned my interest in North Sea oil, and I make no apology for doing so. Arguments have been put forward about the rate of production from the present and future discoveries in what might loosely be called Scottish waters. The latest, more optimistic, Government view is that output from these waters might be in the region of 100 million tons by 1980. At present only about 9 million tons could be refined in Scotland at the BP refinery at Grangemouth. However, I know from my visits there with my hon. Friend the Member for Stirling and Falkirk Burghs (Mr. Ewing) that there could be an expansion of the Grangemouth refinery on its present site with no encroachment on land that is not zoned for industrial purposes. The refinery could be expanded to achieve an output of 20 million tons per annum without any great dislocation.

There are other projects before the Secretary of State for Scotland for refining capacity in the West of Scotland. The Department's paper states that major refineries will often be developments of such national or regional importance that planning applications will be called in for decision. That is an important consideration because many people might be dissuaded from seeking planning permission because of the cost involved in local inquiries. The paper says that, rather than have applications decided locally, the Secretary of State will send inspectors. On the advice of the inspectors and sometimes not, according to their advice, the decision to allow planning permission will be granted or refused.

Such inquiries are costly and time-consuming because of their restrictive nature. They cannot point to alternative sites for development purposes. Under the Planning Acts provision is made in Scotland and in England and Wales for a planning inquiry commission. Because of the importance of the expansion of refinery capacity, the Government should set up a planning inquiry commission for deciding sites for England and Wales and one for deciding such sites in Scotland. That is necessary because of the strategic importance of the sites and because the companies need to know on what sites they are likely to get planning approval.

I shall dwell for a little while on an inquiry which was completed last year. I know that the hon. Member for Essex, South-East (Sir Bernard Braine) is in the Chamber. I shall try to speed up matters, Mr. Deputy Speaker, so that he might catch your eye. The application which I shall discuss is that made by the United Refineries Limited to develop a site on Canvey Island. The inspector, commenting on the planning application, said: There is not enough suitable land left on Canvey Island for a second oil refinery. … Although the present application is a significant improvement on the 1971 proposal, the amenity objection is still great enough to outweigh the national economic interest and to justify its refusal. That is clear and cogent language.

During the Adjournment debate on 7th December 1972 the hon. Member for Essex, South-East sought assurances from his hon. Friend the Under-Secretary of State for the Environment about the Government's position on the application. The Under-Secretary of State said: I should like to give my hon. Friend at least the assurance that my right hon. Friend will take most fully into account the environmental factors and the views of the local people and of my hon. Friend before reaching any decision upon that application."—[OFFICIAL REPORT, 7th December 1972; Vol. 847, c. 1788.] In fact, the Secretary of State for the Environment overruled the inspector's view and granted planning permission. In a letter to the agents for the applicant, the view is expressed for the Secretary of State that He agrees with the inspector that it would be in the national economic interest for the proposed development to take place. But nowhere in the Secretary of State's analysis or that of the inspector do we get an assessment in any terms that might be loosely described as quantifiable of the national economic interest.

I have paid two visits to Canvey Island. I have met the constituents of the hon. Member for Essex, South-East. They are incensed about the decision. The hon. Gentleman is fully aware of that. It is important that, if a Government Department takes a decision against its own inspector and quotes the national economic interest, that interest should be quantified in some way. The Secretary of State should not take refuge in a vague definition of the national economic interest based on a 1971 application.

Events have moved forward considerably against the siting of refineries in the South-East since 1971. The major consideration, of course, is the discovery of North Sea oil. If we take the argument set out in the Government's White Paper, that the refinery should be located near the market, we come to the view that the United Refineries' application is export-oriented and that the market it is thinking about is not a market in the South-East of England but a market on the Continent or elsewhere.

How does one quantify the national economic interest of putting two refineries, whose total capacity will be only 10 million tons in national terms, in the South-East where it will have a considerable impact on the environment? We in Scotland could easily accommodate the 10 million tons in terms of refinery capacity without encroaching on land in Scotland. This is an unwarranted imposition by the Government in the terms of the Department's inspector and the people in the South-East. I suggest that even at this late stage the Government should get together with the companies and try to persuade them to operate together, with not two refineries but one. But, more important, the sooner the Government tackle the issue of the siting of the refineries and set up planning commissions, one for England and Wales and one for Scotland, the better.

4.16 p.m.

Sir Bernard Braine (Essex, South-East)

I am most grateful to the hon. Member for East Stirlingshire (Mr. Douglas) for focusing attention on a subject of national importance, and one of particular significance to my constituents.

There is no doubt whatever that the decision last year to site one oil refinery on Canvey Island, which has a population of 30,000, was bad enough, but the decision to site a second refinery there came as a complete shock—all the more so because of the assurances that were given to me by the Under-Secretary of State on 7th December. Clearly those assurances have been completely swept aside. That decision on any criterion was a bad one. It was opposed by the local authorities, by the local Member of Parliament, and indeed by the whole population. It was also opposed by the Minister's own inspector. It violates all good planning principles since it sites a refinery close to a residential population living in the path of the prevailing winds.

Yet when I took a deputation to my right hon. and learned Friend the other night, he refused to revoke the decision. When my right hon. Friend is pressed to say why he holds that it is in the national interest, he cannot tell us. He tells us that the company's interest is to have a refinery near the market in which its product will be sold. Nobody disputes that we may need additional refinery capacity somewhere. All that is in issue here is the wisdom of siting refineries in an area which already has too great a concentration of such plants for the health and safety of vast numbers of people.

As for an inquiry, we on Thamesside would support what the hon. Member said. We want an inquiry into the totality of the effect of these piecemeal planning decisions on the environment of our area.

There is also no doubt that oil smell is detrimental to health. The Department of the Environment has not yet grasped the fact that Canvey Island and also Benfleet were places to which large numbers of people went both before and after the war because of the purity of the air. Consistently over the years the statistics of deaths from bronchitis and emphysema show that the rate for Canvey Island is higher—considerably higher—than that in neighbouring areas. This is not a reflection of conditions in the area, but of the fact that many of my constituents suffering from chest complaints of one kind or another came to live there because the air was conducive to easement of their condition.

We know that sufferers from asthma are affected by distress, and there is medical evidence to the effect that smell can cause distress. We already have smell in the area from the existing refineries and now my right hon. and learned Friend has agreed by his stupid decision to increase it. Some of my constituents are already moving away but others clearly cannot do so.

I understand that the Japanese Government have agreed to compensate people whose health has been affected by, in particular, the operations of the Yokkaichi refinery.

Will the Government consider the implications? Can studies on this subject be put in hand without delay? I know that my hon. Friend the Under-Secretary of State is most assiduous in his duties; I have nothing but praise for everything that he has done on matters that I have put to him in the past. I now ask him to press his right hon. and learned Friend for an assurance that these points, particularly the last one, will be considered without delay.

4.20 p.m.

The Under-Secretary of State for the Environment (Mr. Reginald Eyre)

I am grateful to the hon. Member for East Stirlingshire (Mr. Douglas) for giving us the opportunity to debate this important question. In the relatively short time available to me I will deal with as many of his points as possible and also with the important points raised by my hon. Friend the Member for Essex. South-East (Sir Bernard Braine).

At a time when the supply of oil is giving rise to concern in various parts of the world, the benefits we can derive from the North Sea finds are the greater, and I fully appreciate the hon. Gentleman's concern that there should be adequate refining capacity in the United Kingdom so that we can secure the optimum gain from their exploitation. My right hon. Friend the Secretary of State for Trade and Industry is, of course, responsible for the oil industry and is watching the general position. I understand that currently we are refining roughly as much oil as we are using, but that the supply position is -very complex and there are both imports and exports of finished products.

Before I turn to the questions which are more directly my own Department's concern, I should like to say how the Government aim to ensure that United Kingdom refinery capacity keeps pace with our needs. Since we took office our policies have been directed to ensuring that there are the right conditions for industrial expansion. There is currently ample evidence of the success of these policies in the increasing rate of industrial expansion and investment. These are the conditions in which we look with confidence for the oil companies to continue to provide refinery capacity on a scale commensurate with our needs. But the decision to build a refinery is essentially basically one for the commercial judgment of the companies concerned. We can do no more than provide the conditions which encourage long-term investment in the prosperity of the United Kingdom.

I come now to the control under the Planning Acts over the siting of oil refineries. Before such development takes place a planning application must be made to the local planning authority in whose area the land is. Unless the site is in an assisted area where industrial development certificates are no longer required, an application for planning permission cannot be considered unless it is supported by an industrial development certificate granted by my right hon. Friend the Secretary of State for Trade and Industry. In considering an application for such a certificate, he has to have particular regard to the need for providing appropriate employment in development areas. A factor in the case of refineries is that they are essentially capital intensive developments and produce relatively few jobs.

I accept, of course, that there can be a considerable impetus for the creation of jobs in other employment when a major plant of this kind is constructed. I note what the hon. Gentleman said about spin-off in this respect. Even so, we are not dealing with a labour-intensive industry in respect of which control can be exercised with greater effect. In some cases, therefore, proximity to the markets which the company plans to supply may be quite a weighty factor warranting the grant of an industrial development certificate. This is, as I have said, entirely a matter for my right hon. Friend the Secretary of State for Trade and Industry.

But here I would make the point that the general United Kingdom interest to which the hon. Gentleman referred will not best be served by preventing an oil company proceeding with a planning application in a part of the country where it is satisfied that on economic grounds it would be best for it to do so, if the result would simply be that the refinery was not built in the United Kingdom at all.

In considering a planning application the local authority must address itself to proper planning issues. To assist it in identifying these issues, we recently prepared the note of guidance to which the hon. Gentleman has drawn attention. I have noted the hon. Gentleman's comments in this respect and assure him that they will be considered. The note has the additional purpose of helping authorities which are ready to take positive steps to identify suitable sites in their areas if they foresee the likelihood of oil companies wishing to develop there. As is evident from the text of the note, there were close working relationships between the various Departments concerned in drawing it up.

I believe that the note is a useful document in bringing together the issues which are likely to be important in handling planning applications for refineries. It has been sent to all local planning authorities in England, Wales and Scotland, so that wherever there is a prospect of a refinery being constructed the appropriate authority can refer to it.

We have not, of course, sought to spell out which factors should override others. The weight to be given to a particular matter can be determined only in the context of a particular proposal. Nor have we adopted the suggestion which has been put forward that there should always be an environmental impact study. The local planning authority will have to consider the need for particular studies when it has a proposal before it, and it is able to require the applicant to provide such information as it needs to enable it to reach conclusions on the impact.

Oar general policy is to leave matters in the hands of the local planning authorities unless there are regional or national considerations of sufficient importance to warrant the central Government taking responsibility for the decision. Refineries are one of the kinds of development where, in practice, we often find that there are such weighty matters as to warrant calling the application in for decision. My right hon. Friend the Secretary of State for Scotland and my right hon. and learned Friend the Secretary of State for Wales have taken similar action in appropriate cases.

Where applications are before the appropriate Secretary of State in this way a local inquiry is held to give a full opportunity for all points of view to be put forward and weighed in the decision. The local planning authority should have made any necessary studies of the impact of the refinery on the environment, and its findings and views will be brought out at the local inquiry, together with the applicant's case and the views of local people. There will be an opportunity to consider representations about possible alternative sites, and, if there are weighty planning objections to the particular site proposed, permission could be refused on the grounds that it would be premature to permit development on it pending further investigation of alternative sites. In other cases, evidence brought out at the inquiry often points the way to conditions which might be imposed to minimise the adverse effects of the development on the surrounding area.

I believe that the holding of inquiries in this way is in general the most satisfactory way of collecting the necessary evidence on which to determine planning applications for refineries.

I am, of course, aware of the criticism of the decision recently given by my right hon. and learned Friend in the case of the refinery at Canvey Island. In each case the question is whether there are planning considerations of such weight as to warrant refusal of planning permission having regard to any evidence of benefits to the public if the development proceeded. The availability of supplies of fuel in areas where it is in demand is a factor to be weighed.

On the other hand, the effects of the development in generating traffic, creating smell or noise or visual intrusion must be weighed equally carefully. In the particular case in Canvey Island, another material factor was that planning permission had already been given some years earlier for another refinery to be built in that area; there were clear environmental advantages in the revised scheme which was before my right hon. and learned Friend for decision.

Among the conditions imposed when permission was granted for the new proposal was one to ensure that if the new permission was exercised, the old permission could not be exercised as well. The House will appreciate that the decision on an individual case is often a hard one to take. While we give very careful consideration to the views of local people—often very strongly held and forcefully expressed—we have also to consider the wider public interest.

My hon. Friend the Member for Essex, South-East spoke forcefully, and I was sorry to hear what he said. My hon. Friend has a reputation as an outstanding champion of his constituency's interests, and I fully appreciate the intensity of his feeling for his constituents. I have carefully noted all the points he made and I shall ask my right hon. Friend the Minister for Local Government and Development to consider them with the utmost care and sympathy and write to my hon. Friend about them in detail at the earliest possible moment.

I come now to the suggestion that the choice of a site for a refinery should be submitted to a planning inquiry commission. I see no evidence to suggest that this would be appropriate or produce a better decision. A planning inquiry commission would be justified only where the matter could not be determined without a special inquiry of this kind.

The incentives to industry to locate new plant and to provide expansions of existing plants in the assisted areas are available in relation to refineries as to other manufacturing industries. In particular, regional development grants are avail- able towards capital expenditure on new machinery and plant provided in special development areas and development areas. It will, of course, be for the oil companies to consider whether to seek to locate oil refineries in such areas, having regard to the incentives available.

I think it would be helpful to bear in mind that at present the South-East does not have an excess of refinery capacity. In 1971 it held 30 per cent. of the United Kingdom population and took 27 per cent. of domestic oil and yet it had only 23 per cent. of the United Kingdom refinery capacity. The development areas have a high proportion of the country's refineries. Milford Haven capacity at the end of 1973 is planned to be 33 million tons, 24 per cent. of the United Kingdom capacity, and in Scotland current refinery capacity is more or less equivalent to Scotland's needs.

The Question having been proposed at Four o'clock, and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at half-past Four o'clock.