HC Deb 02 April 1974 vol 871 cc1093-164

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Coleman.]

3.32 p.m.

Mr. Patrick Jenkin (Wanstead and Woodford)

By common consent, the oil discoveries off Britain's Continental Shelf represent an asset of almost incalculable value to our nation. The Department of Energy will shortly be publishing up-to-date forecasts of production, and I have no doubt that these will indicate, depending on what assumptions are made about prices, the likely benefit to the balance of payments and the prospects of this country being self-sufficient in oil. Indeed, the latest evidence suggests that offshore oil could certainly meet all our oil needs by 1980. Only today a Press release from the Burmah Oil Group has indicated a further substantial find of oil in the Ninian field. Self-sufficiency could represent an annual benefit to our balance of payments of sums of £4,000 million, or even higher.

It really is almost impossible to exaggerate the significance of this development for our people. It is impossible to overstate the crucial importance of having realistic, practical and soundly based policies for offshore oil. It is vital, too, to recognise the importance of maintaining confidence on the part of the operators so that the rhythm and momentum of exploration and development are maintained.

The purpose of this short debate is to warn the Government that by making premature, foolish and unconsidered statements they risk forfeiting confidence and losing that rhythm and momentum of exploration and development. I acknowledge straight away that the present minority Labour Government have been in office only four weeks. When he replies, the Secretary of State will no doubt argue that that is far too short a time for him and his col- leagues to have worked out any detailed policies.

While it is important that delay in announcements should be kept to the minimum, that is not the burden of my complaint today. Indeed, I recognise that the Government face a particular difficulty in this regard. After all, they radically changed course only a few days before the General Election. I described the process whereby that change took place when I addressed the House on 13th March in the debate on the Gracious Speech. I recognise that they have abandoned the full-blooded nationalisation policies to which they had committed themselves in their document "Labour's Programme—1973." I recognise that Ministers in the Department of Energy are now searching for policies which do not commit the Government to the "full ownership and control" which they indicated in their manifesto. I recognise, too, that it takes time to study the more rational alternatives which must replace the extreme Socialist policies which the Government have sensibly abandoned.

I do not, therefore, complain if there is a short delay for reappraisal. But will the Secretary of State give some indication of when he hopes to make a full statement of the Government's policy on this matter?

However—and here I come to the point —given that there has been this shift of ground, given the fact that the Government need to consult the industry and given that such consultation is bound to take a little time, surely it would have been wise for Ministers to have observed a period of silence until they were ready to discuss their revised policies in public. That is my main complaint this afternoon. Instead of that period of silence which the circumstances would seem to have demanded, Ministers from the Prime Minister downwards have chosen to make a whole series of foolish, premature, inconsistent and, indeed, contradictory statements calculated to sow the maximum of doubt and anxiety where there ought to be certainty and confidence.

It is all too clear that what has been happening is that, in the absence of any settled policy, various Ministers have been putting forward their own ideas of what they think ought to be done, giving their own variations of policy and riding their own pet hobby-horses as if they were at some weekend Fabian political seminar.

They are not at a Fabian political seminar. They are Ministers responsible for an industry which is currently investing hundreds of millions of pounds a year and employing thousands of skilled technicians in developing this most vital of our national assets in some of the most arduous and testing conditions in the world.

As I read the speeches which have been made by the Government I gain the impression that they do not realise the extent to which every word they now say is studied with extreme care by all those involved in this industry. I can assure the right hon. Gentleman the Secretary of State that the industry is becoming increasingly confused and anxious about what the present minority Labour Government are up to. [Interruption.] The hon. Member for Fife, Central (Mr. William Hamilton) may have his own anxieties. Perhaps he may also agree that in the circumstances silence would have been golden.

It is necessary to spell out briefly but with some particularity what it is that Ministers have said which is giving rise to this concern, which is, I assure the Secretary of State, very real.

I take, first, the issue of State participation. I start with Lord Balogh and his article in the Banker which was published shortly after the General Election, although written before it. He referred, as had others before him, to the Norwegian system of carried interest—I quote it as he wrote— "between 30 per cent. and 50 per cent.". While there may be arguments about the merits of carried interest as a system of ensuring Government control, it is right for me to say now from this Dispatch Box that when we were in Government we certainly did not rule out a minority carried interest as one way of securing the public interest.

But what has happened since then? First, we had the Prime Minister speaking in Leith just before the election, when he made it clear that he was envisaging not a 30 or 50 per cent. carried interest, as Lord Balogh had done, but a majority stake. He said: We are going to make it 51/49 per cent. to ensure control. The House will recognise that that is a totally different matter. It envisages the companies as junior partners, and by itself totally transforms their prospects, and by itself is already giving rise to anxieties.

Since the election these waters have become further muddied. The right hon. Gentleman the Secretary of State for Energy, in the debate on 13th March, referred not to 51 per cent. but to 60 per cent. or even 100 per cent. He was referring to a number of Middle Eastern and other oil-producing countries and said: full nationalisation seems to be possible there."—[OFFICIAL REPORT, 13th March 1974; Vol. 870, c. 342.] The implication was that if full nationalisation was possible there, it will be possible here to. Is that what he meant?

Mr. Tam Dalyell (West Lothian)


Mr. Jenkin

If I may be allowed to finish this part of my remarks, I shall give way to the hon. Gentleman.

I do not think the Secretary of State for Energy meant that at all. He must know that the conditions in this country are entirely different from those that apply in the Arab oil-producing countries. If he did not mean it, why did he say it? It has served only to exacerbate doubts.

Mr. Dalyell

If we are on the subject of implications, I should like to know what is implied by this attack on my right hon. Friend the Secretary of State for Energy and the suggestion that we somehow want the companies to be junior partners. Is it the Opposition's view that the companies should be senior partners and behave as such? Let us get that clear.

Mr. Jenldn

The companies are investing huge amounts of money which they are raising in the market and are taking considerable risks.

Mr. Russell Kerr (Feltham and Heston)


Mr. Jenkin

Taxation is an entirely separate matter. We have said that, although it is the right, as my right hon. Friend the Member for Altrincham and Sale (Mr. Barber) when Chancellor of the Exchequer made clear a year ago, and the duty of any Government to secure that the interests of the whole community are properly protected and we derive a proper share, this would not necessarily require taking a majority share in these companies.

The Secretary of State for Energy said only that it might be possible. Let me refer to what was said only a week afterwards by Lord Balogh, referring to the matter of participation in a speech in the House of Lords. This passage of his speech is so remarkable, that it is worth reading in full: — I must point out that the Sheikh of Abu Dhabi, the Emir of Dubai and the Sheikh of Kuwait have succeeded in getting the companies agreeably and in a friendly way to agree first to a 61 per cent. and lately a 90 and 100 per cent. takeover, or nationalisation—whatever we want to call it—of their holdings in those companies. I do not believe that there could be any doubt that this can and should be done."—[OFFICIAL REPORT, House of Lords, 20th March 1974; Vol. 350, c. 258.] There is no question of a mild 30 per cent. carried interest there. It is a question of a 100 per cent. take-over which "can and should be done". Is that the Government's policy? Is it seriously envisaged that that is what they are to do? Or is it just loose talking by a noble Lord who is more familiar with the common rooms of Oxford than he is with the corridors of power in Whitehall?

Do the companies—despite what I believe were genuine attempts by the Prime Minister and others to indicate a radical change of direction during the election—still envisage having to face the 100 per cent. nationalisation of which Lord Balogh spoke in the House of Lords? If I am asked to give my honest opinion, I do not think that Ministers do so intend. But why on earth do they say so? Do they not realise that these statements are studied and read with great care? It is sheer foolishness to let ideas of that sort gain currency.

Mr. Russell Kerr

I am sorry that the prospects for the community of having a majority controlling interest in these developments so upsets the right hon. Gentleman. Is he aware that this is the standard condition of contract in the Norwegian areas, and, if that is the case, why in Heaven's name cannot we in this country at least have that provision?

Mr. Jenkin

On another occasion I shall perhaps take the opportunity to explain to the hon. Gentleman the real differences and distinctions that exist between this country, which is a major industrial country with a severe balance of payments problem, and Norway, which is a small country entirely differently placed with regard to its major oil discoveries. Perhaps I can develop that subject on another occasion, but not now since this is a brief debate.

Let me take another proposal; namely that there should be a State buying agency. On this subject we seem to be in a situation of total confusion. The Prime Minister said in Leith that, as well as State participation, he envisaged a monopoly buyer of oil on the Continental Shelf— a United Kingdom hydrocarbon corporation with exclusive power like the Gas Board. Lord Balogh in his Banker article said nothing of the sort. He mentioned a national hydrocarbon corporation but he saw it having an entirely different function. He saw it as a holding company for carried interest; he made no mention at all of any monopoly buyer. Yet when we get back to the Queen's Speech and the Prime Minister's remarks, he wanted both. I quote the Prime Minister as follows: the authority buying the oil when it is landed … should also be the body representing the public interest in the majority participation in the process of getting the oil." —[OFFICIAL REPORT, 12th March 1974; Vol. 870, c. 82.] Yet the very next day the Secretary of State for Energy, who devoted nearly three columns of HANSARD to discussing the policy for North Sea oil, said not a word about a buying corporation or anything of the sort. Yet again in the House of Lords in the following week Lord Balogh, recognising that it was becoming party policy to say something about the matter, though unconvinced about this possible alternative to State participation, said: Another course is that of a State buying agency", and went on: The Government have an open mind on all these and other possibilities."—[OFFICIAL REPORT, House of Lords, 20th March 1974; Vol. 350, c. 259.] The Government mind is not so much open; rather it is a collander spewing out words in all directions.

We have been treated to some wild ideas. I assure the Secretary of State that this is causing serious concern to many operators in the North Sea. The Prime Minister, speaking at Leith, spoke of a separate buying corporation for each area —one for Scotland, one for the north-east, one for East Anglia and, when we get oil and gas from the Western seas, one for Wales. The right hon. Gentleman told the Press that he was floating an idea which attracted him personally. Yet when we got back to the House after the election, the right hon. Gentleman quoted the passage which I have cited and said: The words I have just used are the words I used in the General Election. It was on those that we fought the election with regard to gas and oil. I challenge the Secretary of State for Energy to tell the House when he first became aware that this idea of separate buying corporations for each area was firm party policy. Of course it never was—and I hope that it never will be.

The Prime Minister has also indulged in wilder flights of fancy. In the debate on the Queen's Speech, after hinting that the national hydrocarbon corporation would go into distribution of oil products as well as other fields, he said: For example, if such an authority felt it desirable on economic and social grounds to provide low-cost or assisted passenger transport services—for example, in remote rural areas—it could adjust its petrol or diesel selling prices for that purpose."—[OFFICIAL REPORT, 12th March 1974; Vol. 870, c. 82–3.] I would remind the right hon. Gentleman that before one can sell petrol or diesel from crude oil one must refine it. Does the right hon. Gentleman envisage the national hydrocarbon corporation going into refining? Or what did he mean? I do not think the idea was thought out at all; it is a bizarre one.

This is not my main point. This was certainly not the Government's idea, because only a week or so later the Secretary of State for Scotland put an entirely different and much more grandiose idea of how he saw Scotland benefiting from the oil. Not for him the idea of an East of Scotland hydrocarbon board providing cheap diesel fuel to carry the bus revelers coming home from the Ball of Kirriemuir. He said something quite different: I want to see coming direct to Scotland —and it could be done through a development fund or bank—our share of the oil revenues, to be used for the benefit of these areas of Scotland that have suffered dereliction, neglect and decay. I agree with the comment in The Guardian: In pursuing this line, there were moments when Mr. Ross sounded more like a Nationalist than a Socialist. It is very strange that the estwhile hammer of the Nats should the next moment be wooing the hon. Member for Moray and Nairn (Mrs. Ewing). I am sure that we can expect to hear the right hon. Gentleman singing the "Eriskay Love Lilt" at any minute!

I have said enough to indicate the sheer foolishness and irresponsibility of what Ministers have been saying. They have no business to behave like that. For the time being, they are members of Her Majesty's Government. They are bound by the doctrine of Cabinet responsibility and answerable to this House for their policies. If they have no policy—and it is clear that they have not yet got a policy—they should keep silent until they have. If they do not keep silent, if they persist in airing unconsidered views in public, they must not be surprised if investment begins to falter, if exploration slows down and if the sense of urgency begins to fade.

This is an international industry, and what I am about to say is based on some fairly wide consultations with those who are investing hundreds of millions of pounds in exploring and developing our offshore oil assets.

They point out that the oil industry is an international industry—perhaps the most international of all. Other countries are developing their offshore oil and gas deposits. All over the world the energy crisis is stimulating new exploration. New discoveries are being made and new sources of oil are being found. By the end of this year it is expected that the United States will be opening up the Continental Shelf off its eastern seaboard for exploration and development.

Britain cannot do without the skills and expertise of the industry to develop our offshore resources. Of course, it is right to ensure that the British people derive the maximum benefit from it. But it must be done in such a way as not to deter continuing investment by the companies. I must warn the Government that if they continue to make these wild, unconsidered and inconsistent statements they will find that, instead of safeguarding the public interest, which I believe is their genuine intention, they will have damaged it by sheer wanton irresponsibility.

I want to refer briefly to the one decision that the Government have made in this respect. It is the decision not to proceed with the Coastal Sites Bill foreshadowed by the previous administration. The Government's intention is to let the Drumbuie planning inquiry take its course, and the Government must now spell out the implications of that decision. The Secretary of State for Energy failed to do this in the debate on 13th March. Therefore, I return to the charge.

Let me remind the House what is at stake. The consortium of Taylor Woodrow and Mowlem has been seeking a site to build Condeep production platforms. This needs very deep water close inshore. These platforms are required for the deepest oil fields in the Shetland Basin —possibly for the Brent field. The Loch Carron area provides the only feasible sites close to deep water. If permission for development could be given by the end of April and a site could be made available soon after that, the construction of the first concrete platform could begin next spring. It could be completed and installed in the oil field during 1977. Production of oil could start in that year, and we could get full output in 1978.

If planning permission is delayed even until the autumn of this year—in other words, by only a few months—the whole process is put back not just by a few months but by a full year because it will have missed the weather window in 1977.

Mr. George Lawson (Motherwell and Wishaw)

Is not the right hon. Gentleman merely arguing the case which has been advanced by the developers? Can he show the House some expert independent opinion which justifies the arguments which he is advancing so confidently?

Mr. Jenkin

I am putting the case on this as it was put to Ministers before the General Election by the consultants whom the Department employed to advise it on this highly technical and difficult matter.

If we miss the weather window in 1977, we lose all the production in that year and a good deal of production in 1978. Again, the advice given to Ministers in the previous Government was that this would cost about £100 million worth of oil production a year. That is £100 million off the balance of payments, which would be a direct addition to our payments deficit.

Mr. Dalyell

Whose advice?

Mr. Jenkin

I have indicated the source of the advice.

Mr. Dalyell

Taylor Woodrow.

Mr. Jenkin

Either the Secretary of State for Energy or the Secretary of State for Scotland must now tell the House clearly whether the intention is to ensure the installation on site in the oil field of that first Condeep production platform in 1977. There must be no ifs and buts. If it is their intention, how is it intended to ensure that? Alternatively, are the Government willing to lose £100 million worth of oil by delaying installation to 1978?

That is the choice that the Government face. It was the one that they faced when they decided not to proceed with the Bill. But they must now tell the House their attitude on this. We have a right to be told. I recognise that it is easy to earn the plaudits of the environmentalists on this difficult issue. Having done so, the Government must be prepared to spell out the cost to the nation.

This debate is on the motion for the Adjournment, and the Opposition do not intend to divide the House. But that does not mean that the issues which I have raised and those which other right hon. and hon. Members will raise in the course of the debate are not of the utmost importance to the country. The debate gives the Secretary of State a chance to reassure the industry and indicate when he intends to announce his policy. It also gives him the opportunity to answer the detailed questions that I have asked. He is dealing with one of Britain's most crucial national assets. He must show the House, the industry and the whole country a greater degree of responsibility and awareness than he and his right hon. Friends have demonstrated so far.

Mr. Dalyell

Before the right hon. Gentleman sits down, will he tell the House what advice—

Mr. Speaker

Order. The right hon. Gentleman has sat down.

3.59 p.m.

The Secretary of State for Energy (Mr. Eric Varley)

The Government welcome the topic which the Opposition have chosen for their first Supply Day debate. However, I must admit that at first I was a little baffled why they chose to debate offshore oil. After all, they raised it as an issue in the election and they whooped it up for all that it was worth. But it rebounded on them, and they lost votes because of it. They actually lost a Secretary of State.

Why, then, have they come back to it today? I have come to the conclusion that, like a released convict, they have an irrepressible urge to return to the scene of the crime and to try to work out the mistake they made that got them "copped".

To adopt a famous saying of the late Hugh Gaitskell, they will fight and fight and lose again. On this issue the people of Great Britain—of England, Scotland and Wales—support this Government's approach and, if the Opposition do not believe me, they have their way of finding out, and they are welcome to try it.

I agree with the right hon. Member for Wanstead and Woodford (Mr. Jenkin) that offshore oil is a great treasure. It is also a great bonanza and bounty which has been provided at a most critical time in our history. It could be described as the adrenalin pumped into our veins which could provide the regenerative force which our economy now requires. But it will not last for ever. However, during the decades when it is flowing it will help to bridge the energy gap and it will be the salvation of our balance of payments when other less fortunate industrialised countries are bearing the full brunt of international oil price increases.

Her Majesty's Government are determined that there will accrue to the British people their rightful share of the proceeds from offshore oil. This, for reasons which I simply do not understand, is something which the Tory Party do not seem to want. It is amazing that a party which for generations filched the Union Jack as its election emblem wants the Union Jack over the oil rigs in the North Sea to fly at half mast.

The Opposition have attacked us because when it comes to North Sea oil they are not satisfied with our record in office over the past four weeks. The right hon. Gentleman rather suggested that he would not press us on this occasion, because he realised the difficulties involved, yet he proceeded to put the most detailed questions, expecting answers this afternoon. After their record of failure and procrastination over nearly four years, the Opposition have got a nerve to act in that way.

They criticised the previous Labour Government for having set a precedent on licensing policy—a precedent which they followed. If we were wrong on that, why did the Opposition not change the rules? After all, the round of licensing which really mattered was the fourth round, in 1971. The Opposition were completely responsible for that round, which was the first round after recognition of the true potential in the North Sea for oil—not gas, which up to then had attracted most attention. Yet the Opposition handed out licences in 1971 as if they were detergent coupons.

The Leader of the Opposition the other day warned us against the perils of retrospective action. We do not need his warnings. We understand the position perfectly well. The last man in the House who has the right to warn us about retrospection is the right hon. Gentleman who through feckless folly got all this retrospection talk going.

One of the most formidable documents ever produced by a Select Committee of the House was the report on North Sea oil and gas by the Public Accounts Committee under the chairmanship of my right hon. Friend the Paymaster-General. The right hon. Member for Altrincham and Sale (Mr. Barber) preened himself on having reacted quickly to that report by the proposals he made in his Budget a short time later to plug the hole through which revenue was gushing. He went on to explain that the issues were too complex for him to legislate in last year's Finance Bill, but the issues went on being too complex in the year that followed. After all, it was not necessary, as I understand it, for him to wait for another Budget to do it. He could have taken action without waiting for his next Budget.

In any case, as my right hon. Friend the Chancellor of the Exchequer pointed out last week, the right hon. Member for Altrincham and Sale had decided not to meet another point made by the Public Accounts Committee in relation to group relief for capital allowances on investment unconnected with the North Sea.

Mr. Patrick Jenkin

May I qualify that, as there is a misunderstanding here about what my hon. Friend the Member for Worthing (Mr. Higgins) said. He accepted the main burden of what the Public Accounts Commitee recommended but indicated that the matter which the right hon. Gentleman has in mind was still under consideration, and I can say that that matter had not been decided in the sense which the right hon. Gentleman has just described. Exactly where the ring fence should be drawn was being considered up until the last minute. That should be put on record.

Mr. Varley

I got an impression from the right hon. Gentleman this afternoon that we ought to have policies ready to parade before the House. He has certainly given this impression to myself and to many of my right hon. and hon. Friends. It is right and natural that my right hon. Friend the Chancellor should wish to consider this matter within the context of our overall policies, especially as he now has the invaluable advantage of the assistance of my right hon. Friend the Paymaster-General.

However, the Opposition do not stop there. They now question the Government's estimates, and some of the statements made, about oil reserves and control in the North Sea. This afternoon the right hon. Gentleman went so far as to take the unprecedented step of involving in political controversy one of the most uncontroversial political figures in public life, my noble Friend Lord Balogh. The Opposition seemed to detect some inconsistency in statistics which he has put forward, as against other available figures. With the Opposition's record in this matter, I am surprised at them.

The hon. Member for Leicester, South (Mr. Boardman) may recall that during the debate on the Queen's Speech I intended to refer to him in the most friendly way but was prevented from doing so by a rather lengthy intervention from the Leader of the Opposition. I wish to refer to a forecast that the hon. Gentleman made last year when he was Minister for Industry. He forecast a target production figure for North Sea oil of 25 million tons by 1975.

I am sorry to have to tell the House that there is no chance of that figure being achieved next year. There has been a slippage due principally to the failure to deliver vital equipment and supplies on time, and in consequence next year's production of North Sea oil is likely to be not 25 million tons but more like 5 million tons. Any slippage is of course disappointing, but this is only a temporary setback, I think, and we shall be getting substantial supplies by 1976 and we shall be well on target for the production previously forecast for 1980. I do not wish to criticise the hon. Gentleman for getting it wrong. After all, it was his hon. Friend the hon. Member for Harrow, Central (Mr. Grant) who speaking from this Dispatch Box, almost exactly a year ago, in a North Sea oil debate, rightly declared, Forecasting is anything but an exact science. Only time will tell whether the Government or their critics are on target."—[OFFICIAL REPORT. 30th March 1973; Vol. 853, c. 1752.] His hon. Friend the Member for Honiton (Mr. Emery), also speaking as a Government Minister, was even more frank when he said in February 1973, In the drive being given by the Government to encourage industry to participate in supply to the North Sea, I do not think it matters one iota whether the Government or IMEG are correct on the exact amount of oil that may he delivered by any given date, whether 1975 or 1978."—[OFFICIAL REPORT, 5th February 1973; Vol. 850, c. 196.] The House will remember that it was the hon. Member for Honiton who only eight months ago confided in us, saying, My hon. Friend the Minister for Industry and I for a number of months have been making it clear that we do not regard it as an energy crisis."—[OFFICIAL REPORT, 19th July 1973; Vol. 860, c. 913.] I am fully confident that the House will accept that in reminding it of these quotations the furthest thing from my mind is to try to make cheap debating points. The message is much simpler when one considers what the right hon. Gentleman said this afternoon. The message is really: "Lay off Lord Balogh." The right hon. Member for Wanstead and Woodford tried it some time ago, in 1964, when a back bencher, and did not emerge with much credit. Therefore I have some advice for him—in future lay off Lord Balogh.

Mr. Patrick Jenkin

That is a very interesting proposition. Is he advising the House and those in the industry not to pay the slightest attention to what his noble Friend says? If that is what he is saying, it is a pretty strange doctrine.

Mr. Varley

The right hon. Gentleman and I came into the House at the same time and I am simply reminding him that in 1964, from a position on that side of the House, he made an attack upon Lord Balogh which I think he regretted. I am just advising him in the most friendly way that perhaps he should be careful and that what he should do is record that the open season on Lord Balogh is over—[Interruption.] I certainly want to give the House the up-to-date information as quickly as possible. We shall be publishing a new version of the Brown Book on North Sea oil next month; the right hon. Gentleman could at least have waited for that.

But present forecasts look very good. The right hon. Gentleman mentioned the Press announcement by Burmah this afternoon about Ninian which also is very encouraging. I felt it right to tell the House that there had been a slippage in output of oil from the North Sea. This initial slippage underlines the need for everything to be done to ensure that delivery dates and production programmes are maintained. Accordingly, after consultation with my right hon. Friend the Secretary of State for Scotland, I have decided on a substantial expansion of the Offshore Supplies Office with particular emphasis on extending its operations in Scotland and other areas where more industrial development is needed.

It is now our intention that the Offshore Supplies Office, which was set up in 1973, should ensure that British industry is given full opportunities to supply and equip offshore operations. The main responsibility lies with the industry itself to seize these opportunities and to establish a leading position in the rapidly growing international business of offshore supplies.

There are hopeful signs that many companies will succeed in this field. However, I am also concerned that the Government should play their full part in encouraging this development and I am reviewing what more we should do in consultation with the Secretary of State for Scotland and other Ministers. As more staff are recruited, my intention is to establish the Offshore Supplies Office headquarters in Glasgow, with representation in other industrial regions and in London. The detailed arrangements will be subject to consultation with the staff concerned. I know that this decision will be welcomed in Scotland.

I hope that Scottish industry will increase its efforts to secure the major share of offshore supplies and contracts for which it is well placed to compete. I am sure that the industry in the North of England and elsewhere will also be encouraged to gain additional orders for Britain by the measures that I have announced.

Mr. Peter Rost (Derbyshire, South-East)

The Secretary of State's announcements will no doubt be most welcome, but what will he do to ensure that enough British steel is made available to give British industry the opportunity to play a bigger part?

Hon. Members

After the three-day week?

Mr. Varley

The answer has just been given by my hon. Friend. There would have been more steel available for North Sea operations had we not been on the three-day week.

The announcement that I have just made is the first of what will be a series of decisions as our policy on North Sea oil emerges. In fulfilling our election pledge to secure the maximum public advantage from our own resources", we shall seek to achieve this with the fullest possible consultation with the oil companies. In our dealings with private industry, we shall not emulate the previous Government in the spirit of vengeful confrontation with which they sought to harry and humiliate the publicly-owned coal, steel and electricity industries. Our aim will not be private gain but the public good.

Mr. J. Bruce-Gardyne (South Angus)

Before the right hon. Gentleman leaves the question of offshore supplies, may I ask whether he is aware, or, like the Under-Secretary of State apparently, unaware, that American offshore operators in the Gulf of Texas do not allow any but American-registered shipping to provide offshore services? What is he doing either to change that embargo or to apply it in respect of British shipping in North Sea waters?

Mr. Varley

We are looking at all these problems. We are certainly considering strengthening the Offshore Supplies Office. That is what we are setting out to do, and my announcement today is the first step.

I sometimes marvel at the effrontery of the Conservative Party in accusing us of creating uncertainty among those who wish to invest in North Sea oil. This is from a party which executed so many U-turns in its industrial policy that business men did not know whether they were coming or going. I sat on the Opposition Front Bench and watched them as they abolished investment grants and then, after a decent interval, brought them back. I watched them as they brought the butcher into Upper Clyde and then performed emergency surgery.

To his credit, the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) moved from the Government to the back benches while all these somersaults took place. He is on record in a Sunday Times article only a week or two ago as saying that it created great uncertainty and inflicted great damage on British industry. So let them not criticise us if we take the necessary time to frame the policy for oil which suits our national needs. After all, if we were to come out immediately, as the right hon. Member for Wanstead and Woodford suggested, with a fully fledged scheme, they would accuse us of instant Government and gimmickry.

When Britain becomes an oil-producing country on an international scale, this Government are determined that other oil-producing countries will not look down on us as an under-developed country cousin scrambling for the morsels that the oil companies let us have. The established oil-producing countries, where they are not nationalising outright, are ensuring a massive share of oil revenues for their Governments. It is incredible that the right hon. Gentleman should suggest that we have no right to look at this matter and to take our time to come up with our plans.

Mr. Patrick Jenkin

The Secretary of State has been accusing me of saying things which I expressly stated at the beginning of my speech I was not going to say. I realise that perhaps he did not recognise exactly the tenor of my accusations and charges, but he should acknowledge that I said it was right that the Government should take a little time over this.

Mr. Varley

The impression that the right hon. Gentleman gave was certainly not that. Let us look at some of the facts with which we must deal. At present prices, by 1980, pre-tax profits from the North Sea might be at least £3,000 million a year—and I do not have to tell the House that these prices could rise. Of these vast sums, current taxes and royalties will collect less than half, compared with between 75 and 90 per cent. take by the OPEC countries, and about 60 per cent. of the profits will be remitted abroad to foreign companies. If we allowed this situation to continue, the benefit to our balance of payments would be minimal and we should get the lowest take of any oil-producing country.

I always read the Leader of the Opposition's speeches carefully. I was particularly moved by his plea to the Conservative Central Council last Saturday when he said, We should let the Tory lion roar. When he is denouncing the Liberal Party or facing the Young Conservatives or dealing with Mr. Enoch Powell from a safe distance, the Leader of the Opposition can summon up a passable imitation of a roar, but when it comes to Britain's oil he reminds me of that famous speech by Bottom in "A Midsummer Night's Dream": I will aggravate my voice so that I will roar you as gently as any sucking dove; I will roar you as 'twere any nightingale". In the right hon. Gentleman's opinion, Britain has no right to behave like an independent State. He thinks we should be looking over our shoulder all the time. Six weeks ago in Edinburgh the Leader of the Opposition tried to send shivers down our spines with hallucinations of the Americans nationalising British Petroleum's share of Alaskan oil. Is President Nixon now to replace Mr. Mick McGahey as the right hon. Gentleman's favourite bogyman? Is the Opposition—

Mr. Anthony Fell (Yarmouth)

Are the Opposition.

Mr. Varley

There has been an argument over many years about whether we refer to Government and Opposition in the plural or singular.

The Opposition are entitled to their allocation of Supply Days. If they are scared to debate housing, the Common Market or industrial relations—very well. If the Opposition want to use their Supply Days like this when we have been in Government for only four weeks—expecting us to come forward with carefully worked out plans—then we shall know how to treat them. We shall listen to the scare stories of hon. Members opposite and treat them for what they are worth.

We welcome any opportunity to stand up for Britain and the right of the British people to derive the true benefit from this precious national asset. When we are ready we shall present our policies on taxation for the approval of the House. We are confident that we shall meet with the approval not only of the House but of the British people as a whole.

Mr. Speaker

Order. I understand that two more Front Bench speakers will try to catch my eye before seven o'clock. That does not leave very much time for back bench Members. I hope that their speeches will be short today, unlike yesterday.

4.21 p.m.

Mr. Russell Fairgrieve (Aberdeenshire, West)

This House is what it is because of the varying characters and personali- ties of those who pass through it, not the least being my predecessor in Aberdeenshire, West, Colonel Colin Mitchell. Although his sojourn in this place was brief, it was not uneventful, and he added his touch of individuality to its annals. Whereas most mortals go though a political process varying in length of time before being elected and then, throughout the years, are either re-elected, rejected or retire, he seemed suddenly to decide to go to Parliament and then to leave Parliament. It was a sort of Aden without the pipes and drums. Thereafter it must have been difficult to tame such a wild spirit and to ask him to sit and listen and then to vote and vote throughout the night on some aspect of, say, local government in Glasgow, when the frustrations of his thoughts would be turning to the "barren rocks". He will be remembered by his many friends in this House who must wish him well in his new venture in a part of Scotland where the air is always fresh and the mountains ever visible.

The constituency which he had and now I have the honour to represent is a mixture of the traditional and the new. It is some 2,000 square miles in size and stretches from about eight miles of coastline north of Aberdeen back into the Grampian mountains beyond Ballater, Balmoral and Braemar. The electorate is 54,000 and rising at just over 1,000 per year so it is presumably a future candidate for the Boundaries Commission.

This continuing rise is, of course, not unconnected with the subject of this debate. Of the electorate, about two-thirds live in the many towns, villages and farms of this large area and one-third in the urban ring around the city of Aberdeen. Agriculture is the predominant industry in the larger and traditional part of the constituency, and those not directly involved in it are, in most instances, dependent upon it or provide services to it.

We are the largest production area in the country for beef and grow the best beef in the world. We produce also pigs, sheep, milk and grain and are served by a marketing organisation of great renown and competence. The one-third who live in the urban ring mainly commute to Aberdeen and practise their various professions there, or teach in university or college or work in industry. There are also resident families from Canada, Holland and America, and other countries working for the various oil companies now established in Aberdeen.

As regards other industries, we are most famous for paper making, of which there are four substantial mills. We have some well-known distilleries and our beautiful countryside is an increasing attraction for tourism. Also, and in the current political "out word", the monarchy has a holiday home in our constituency. There is a nationally known bacon curing factory and an internationally known textile firm, where I had the privilege of serving my own apprenticeship many years ago.

This debate is about oil, and to that I now turn. Other speakers will be discussing technicalities, figures, outputs and problems, but I would like to paint the canvas with a broader brush, to look at how we should treat this oil in a longer time scale. There is no doubt that estimates of the amount are continually being revised upwards, and it is also possible that, as well as off the East Coast of Scotland, there is oil under the sea to the North of Scotland and to the West of the United Kingdom, whether that is called off the coast of Scotland, England, Ireland or Wales.

I want to speak of this oil in a Scottish and in a United Kingdom context. From the United Kingdom viewpoint it is vital that this oil flows as quickly as possible because of the fundamental difference it will make to our balance of payments and to our energy problems Any comparison with Norway is comparing like with unlike, as it does not have an energy or payments problem with its current population and industrial setup.

I cannot believe that it is beyond the wit of man in the last quarter of the twentieth century to get the oil flowing without damage to country or conservation interests. After all, Scotland is about the most sparsely populated country in Western Europe and in the North there is still room to move. With a coastline in Argyll as long as that of France, surely we can locate the service functions and construction platforms in areas which will not spoil amenity. Planning procedures must be speeded up and objections, after an immediate and fair hearing, must be resolved with haste. Oil means jobs in Scotland, and for the first time since the war we are seeing net emigration turn to net immigration. No one with Scotland's interests at heart should gainsay this.

Looking at these new horizons, I worry at the methods we have been using for so long now in the United Kingdom to try to help such areas as Scotland. We give grants to firms that would expand anyway and we support special areas to which businesses would go regardless. We give incentives to capital expenditure which would take place without such subsidies. If all these huge amounts had been channelled into what is now called the infrastructure, how much better would the end result now be.

Consider oil and Aberdeen. British Petroleum, Shell or Burmah are not there because the grants are better in Aberdeen than in Guildford. The support they want is in the one area where it has not been forthcoming and that is in communications. Time does not permit me to analyse rail and air traffic, although in the former fundamental reappraisal is now absolutely necessary and in the latter case we might well be considering smaller planes and shuttle services, as well as an immediate speed-up with the building of a proper airport at Aberdeen.

But I will comment on roads Aberdeen, the oil capital of Europe, is connected to Edinburgh, the capital city of Scotland, by 120 miles of road, of which 20 miles are motorway and 10 miles dual carriageway, but the remaining 90 miles of single track go right through the city of Perth and meander along through half a dozen towns and a score of villages. Heavy traffic shares the road with farm tractors and hay floats, and now, as the juggernauts pull out of Coatbridge, Motherwell and Airdrie, night and day, laden with pipes and equipment for the North Sea, these picturesque villages are rattling to bits. Tempers are fraying and frustration is building up fast.

I would not want to become a road bore in this House, but one is tempted to take a leaf out of the book of the Roman Senator Cato who, whether he was speaking on the Roman equivalent of the health service or defence estimates, prefaced every speech with the words "Carthage must be destroyed". Fortunately for this House Delencla est Carthago scans better than "When will the road to Aberdeen be dual carriageway?"

I said earlier that I wanted to look at oil for Scotland in a longer time scale, and by that I mean what happens if and when it runs out—say, around the end of this century. Here we must look at the lessons of history. At the time of the first Industrial Revolution three natural resources were discovered in the West of Scotland. These were iron, coal and deep water. Thus the great shipbuilding industries of the Clyde grew up. But something else grew with them. It was knowledge and prestige so that throughout the world the profession of ship engineers became dominated by Scotsmen. We are now being given another chance after generations that have been too often characterised by a tendency to export our brains and rely on outside help at home.

This new exciting industry is on our doorstep and we in Scotland are best placed to learn from it. So, when at the turn of this century men wish to drill for oil in the China Seas or off the South American coast and prospectors ask "Where can we get the necessary technicians and firms?" the answer will automatically be "If you want the best offshore engineers and ancillary services in the world, you can get them only from Scotland."

How can the Government help in this process? The answer is there for all to see. Only America could afford to send men to the moon with all the romance entailed. The cost was fantastic but the technical spin-off invaluable. Completely new computer techniques and micro-circuitry were learned. Here we speak of Concorde and the millions of pounds it will lose being justified by the long-term gains in aeronautical engineering. But oil will be profitable. What a godsend for Government investment. Aberdeen University has established a chair of offshore engineering and the Heriot-Watt College of Edinburgh University has followed suit. Why should not there be massive Government investment, in the infrastructure, particularly communications. What about the Navy? Could it not be interested in developing new under-water techniques? What about the Royal Air Force? Could it not be perfecting a new dimension of helicopter practice? A new technical college lies under the North Sea. Why not learn in it? How much longer must the country await realisation of the goals that are lying within its reach?

This oil presents greater immediate prizes and long-term opportunities to this country than Concorde, Maplin or the Chunnel. Have we got our expenditure priorities right? Here we have this treasure and this opportunity off our shores and still we persist in retaining the paths to it as a somewhat sophisticated form of obstacle race. The time is long overdue for the country, regardless of political party or dogma, to admit fault and remedy the situation by a massive and realistic approach to the one obvious new national asset that has hit us this century.

4.35 p.m.

Mr. David Lambie (Central Ayrshire)

I congratulate the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) on his maiden speech. I knew his predecessor very well as a man of independence who sometimes created trouble in the Whips' Office. I hope that the hon. Member will carry on the same policy and will prove himself to be of independent mind. He took the opportunity today of speaking in a debate that vitally affects not only his constituency but his country. It was a well thought out and reasoned speech, and I hope that he will make many more like it in this Parliament.

At the beginning of the debate the right hon. Member for Wanstead and Woodford (Mr. Jenkin) complained that Ministers were speaking too much on the subject of North Sea oil. He said that they had broken some form of secrecy that had been maintained by his Government. My complaint as a back bencher is that Ministers have not so far spoken enough. They have not told us at this stage what the Government intend to do, although I am grateful to my right hon. Friend for stating that they are still prepared to carry out the policy on North Sea oil that was put before the country at the election.

I am glad that my right hon. Friends are now speaking out on North Sea oil because I believe that the oil companies have played one of the biggest confidence tricks in history in negotiating the agreements they struck with the last Government. The Conservatives are certainly afraid that people might know of the agreements they made with the oil companies. Although in 1964 they enacted the Continental Shelf Act which vested ownership of oil and gas in the State, they object to following up that policy and nationalising the oil itself. In order to overcome the tremendous financial problems of the United Kingdom, particularly the tremendous problem of the balance of payments, they sold out to the oil companies at figures that no other country would tolerate. They did not tell us about the corporation tax which would not be paid by the oil companies. They did not tell us about the blocks which had been licensed too cheaply compared to what other countries were getting for similar deposits. They did not tell us that too many foreign companies were able to avoid British income tax by offsetting losses in other areas, and they did not tell us about the disgraceful situation on royalties.

I am glad for the United Kingdom that Ministers are now speaking up, because the more the people speak out the more we shall know about the tremendous reserves which are contained under the North Sea. I have figures of the reserves but they may well be out of date. Every newspaper article shows that the reserves are rising. My figures are that there are beneath the North Sea 30,000 million barrels of oil worth approximately £130,000 million—four times the National Debt. These figures become even more fantastic in view of the returns the oil companies are getting and will get. The annual pre-tax profits of the known Scottish oil reserves will be not, as my right hon. Friend has stated, £3,000 million a year, but, on the latest figures, £4,000 million a year.

I hope that my right hon. Friend the Minister will also listen to Lord Balogh, because these are his figures. The figure of £4,000 million a year is calculated on the basis of the current price of about $10 a barrel. If the price goes up —and oil has been sold at about $17 a barrel—it will yield pre-tax profits from the known reserves of about £6,800 million a year. These are fantastic sums. I realise that other parties in Scotland are pointing out what a tremendous difference the money would make if it were spent totally within Scotland. I do not wish to enter into that argument now. I want the Government to spell out their intentions and give us a definite timetable of the process to take over the known assests from the oil companies and put them into the hands of the people of the United Kingdom.

The ownership of oil has changed within the past two or three decades. The system used to be that the large international oil companies would take over large tracts of land or areas of sea and develop them in the best interests of the companies and the landowners. As a result there are now multi-millionaire sheikhs and other multi-millionaires controlling the oil companies.

The Government would do well to consider the changes which have taken place in other areas. For example, one of the major oil producers in 1951, the Iran Government, nationalised all oil. In 1954, as a result of international pressure, the Iran Government rescinded that decision and gave back control to the oil companies. In 1972 the Shah refused to join in the campaign for participation or part-ownership of the oil concessions in his own country. He refused to join the march forward of the other Arab countries. However, last year even the Shah had to come forward with a plan to nationalise the entire production operation of the major oil companies. At the same time he guaranteed them supplies for the next 20 years.

I was disappointed when my right hon. Friend gave the impression, when he came to say what the Government intended to do, that he was waiting for more time so that he could counter the arguments put to him by the civil servants who do not support a policy of complete nationalisation along the lines carried out by the Shah of Persia. In the fairly short time that I have been a Member of this place I have sometimes wondered whether it would not be better to change the civil servants and keep the Government. We might do better to get rid of the civil servants who have been advising successive Governments during the past 10 years and replace them with the Arabs who have been advising the Shah of Persia. The time for us to look again for wisdom towards the East is nigh.

I welcome my right hon. Friend's statement that Scotland will get more control of the oil development and especially the spin-off from North Sea oil development. I welcome that, and the people of Scotland will do likewise.

I am not so much concerned with the spin-off from oil development, exploration or exploitation but what we will do with it when the oil is landed, if it is ever landed, on the shores of Scotland. It has been said that we can expect in the next year only 5 million tons of oil from the North Sea: where will that oil be refined? At present it cannot be refined in Scotland because the only major refining capacity is the BP refinery at Grangemouth. BP has been carrying out a strange game for about three years. In the previous Parliament I tried to get from the Government some idea of when BP would carry out its plans to expand its refining capacity at Grangemouth. We are still waiting for a decision.

It is known that BP is building a pipeline from Aberdeenshire to Grangemouth. We know that facilities are being built to enable the oil to be taken from Scotland but we do not know whether BP will expand, as it has promised during the last three years, its refining capacity at Grangemouth. My opinion is that it has no intention of doing so. I hope that my right hon. Friend will put pressure on BP to increase its refining capacity.

Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)

In view of the concentration of my hon. Friend on my constituency and his quest for headlines at every turn, does he accept that he is not doing Grangemouth any good by making such statements about BP? Is he aware that BP has said that it is not a question of whether the expansion takes place but when it takes place? Those of us who are concerned with such matters in my constituency have a difficult enough job getting expansion on its way without my hon. Friend continually insulting those who have to make decisions. In so doing he is making our job just that bit more difficult.

Mr. Lambie

I only wish that my hon. Friend was on the Front Bench and not on the back benches. If that were so we might get some progress. Unfortunately, he is not in a position to take a decision. I have listened to BP's story about promised development for the past three and a half years. We can wait only so long. The oil is not waiting, and next year 5 million tons of oil will reach Scottish shores. I am trying to help by putting pressure on BP. My hon. Friend knows as well as I that BP has no intention of increasing the refining capacity at Grangemouth. I am hopeful that the Government will put pressure on BP.

My main concern is where the oil will be refined. We are told that by 1980 there might be 100 million tons of oil to be refined. I have seen figures which suggest that we may have to deal with 150 million tons. By the early 1980s the annual production from North Sea sources could be approximately 300 million tons. Where will it be refined? It is all very well telling the Scottish people that there will be the spin-off from the offshore development, but the greatest spin-off must come from the refining process and the associated processes of the petrochemical industry.

I hope that tonight we shall a statement on the Government's intention to deal with Ayr County Council's plans to change the use of land at Hunterston from agricultural to industrial purposes and to deal with the applications from the Chevron Oil Company and from the Orsi Company to build oil refineries at Hunterston. If Scotland is to gain long-term benefit from the oil resources of the North Sea we must build up a petrochemical industry. To do so we must have the oil refineries.

It is strange that following the conclusion of this debate we shall deal with Private Members' Bills. One of these Bills deals with the building of a new refinery on the Thames. My right hon. Friend the Secretary of State for the Environment, who deals with planning applications in England and Wales, has given planning permission in principle to increased refining capacity in the South-East of England, which already has too much of it. Yet my right hon. Friend the Secretary of State for Scotland is still delaying a decision on applications to build oil refineries in the Hunterston area.

I hope that the Labour Party wins the next General Election in Scotland. We can do so by seeing that we nationalise North Sea oil and bring the financial benefits of it into the corpus of the people of Scotland and of the United Kingdom. We must also develop the assets of the Clyde in order to build up the steel, oil-refining and petrochemical industries, based on the deep water at Hunterston. I repeat what I have said many times before, especially to the Scottish National Party. If we are to use the wealth of North Sea oil to benefit the people of Scotland, we have to nationalise it.

Mr. Fell

Everyone talks about North Sea oil only in terms of Scotland. North Sea oil is already being landed in Norfolk, where garages are selling it. Why should it be thought that North Sea oil is the preserve of Scotland and that Scotland should gain everything from it?

Mr. Lambie

Scottish Members have to be forgiven if they keep talking about North Sea oil in relation to Scotland, because when we are in London we hear so much about England and London that we show a natural reaction.

Where the Labour Party fundamentally differs from the Scottish National Party is in Labour's belief that if we are to receive the maximum financial benefit from North Sea oil we must nationalise it and take complete control of it. We shall never get the benefits to the people of Scotland by giving the international oil companies control of North Sea oil, as the Scottish National Party would do. The Arab countries have been oil rich for the last 50 years but they have also been among the poorest populations in the world. Oil and oil reserves do not automatically lead to riches and prosperity for a country.

My fear is that if we were to follow the policy of the Scottish National Party, and did not nationalise our North Sea oil, we should be in the same position as the Arab countries were 10 years ago—one of the richest countries in the world, with huge oil resources and a poor population. Yet that, in effect, is the policy of the Scottish National Party.

4.54 p.m.

Mr. J. Grimond (Orkney and Shetland)

I add my congratulations, and those of my right hon. and hon. Friends, to the hon. Member for Aberdeenshire, West (Mr. Fairgrieve). Having heard his admirable maiden speech, the House will realise even more than it did the remarkable qualities of my hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel), who narrowly defeated him in 1970.

I intend to be extremely brief because it is not long since I made a speech about oil. It was, alas, before my passion for cleanliness left me as the rather curious spectacle that I present now, with my arm in a sling. But as the question of oil is of great importance to my constituency, I am sure that I shall be forgiven for speaking about it again.

I congratulate the Secretary of State for Energy on moving the Offshore Supplies Office to Scotland. Many of us think that the major control of energy and oil should be there. Whatever happens in Norfolk—and no doubt there is admirable North Sea oil there—the one part of the country which has little energy to give us is the South-East of England.

Mr. T. H. H. Skeet (Bedford)

What about natural gas?

Mr. Grimond

Natural gas is well spread over the whole of the United Kingdom as far as this place is concerned.

There is also the question of the American embargo on any but American ships servicing the oil rigs. When I raised this matter in the last Parliament, I was assured that it was under consideration, and I hope that action will be taken.

I should like to be assured that the Government are giving attention to a long-term strategy for energy. It is cleat that, however long they last, our oil and coal resources are dependent on vegetable matter which is expendable. One cannot predict too far ahead, but we should have some idea of what are likely to be the main uses for coal, natural gas, oil and, later, nuclear energy for some years ahead.

Undoubtedly, those parts of the world which will be most hard hit by the shortage and cost of energy are the underdeveloped countries, whose position will become desperate. It will surely be for the developed and better-off countries to curtail their own demands—which are ever increasing—in the interests of helping the underdeveloped parts of the world.

I shall not speak about the developments needed in Orkney and Shetland because I have spoken about them before and this is only a short debate. I am glad that the Minister of State is to visit Orkney and Shetland soon, when he will see the situation for himself. There is great urgency in this matter. It has been raised time and again by the local authorities and by me and there is a great deal to be done. Today, the Zetland County Council Bill has at last passed through both Houses, and the Government might look at it as a possible model. It will, I hope, achieve something which we all want—a higher percentage of the revenues from oil retained for the people.

It does not do this by nationalisation but by what I would call an up-to-date version of the civic enterprise of Joseph Chamberlain, which should have great appeal to at least two parties in this House and might even be acceptable to the Labour Party. But the Bill will not go the whole way and a great deal needs to be done in the provision of infrastructure and in new developments, such as technical education as well as services.

What should the companies pay for the oil? I hope that we shall be enlightened about the development costs. Is it true that the companies can arrange matters so that our taxpayers pay for most of the deveopment? The amount of profit the companies have to retain must surely depend very much upon development and exploration costs. However, I think that we all agree that there must be some levy both for the local authorities, for Scotland and for the United Kingdom Treasury.

I mention Scotland not in any chauvinistic spirit but because for years we have been told that we are an impoverished area which must depend largely on subsidies from the South. Apart from anything else, it would be good for the development of enterprise in the North if we could feel that we were getting a share of the natural resources which lie not in our land but in the adjacent seas.

I do not suppose that the Government can state their pricing policy today but it is of crucial importance. "Nationalisation" is such a vague term that it is difficult to carry on a useful debate in the time we have. I have no objection to public authorities taking a share in some of the developments. But the State has had a large stake—I believe that it is 50 per cent.—in BP for many years and it has had little effect on the development of BP. I think that we have to look at the whole structure of the Government for handling our energy problems. I am not in favour of putting the nationalised industries outside the control of this House. I hope that a Ministry of Energy will be a continuing part of our governmental structure and that it will have considerable control of developments.

Finally, a word or two about planning. There is widespread anxiety about the danger from rigs. As will be well known, several extremely serious accidents have already taken place. What would have happened had those rigs been in production? Are the Government satisfied that they could have controlled the appalling pollution that might have taken place?

I was surprised to hear the right hon. Member for Wanstead and Woodford (Mr. Jenkin) say that it was now a matter of extreme urgency to make up our minds about Drumbuie. It is 18 months or two years since I urged the previous Government to reform the planning laws. I said that they ought to have a Ministry for Energy, that they ought to set up a high-level committee and carry out a survey of sites and that their present procedures were wholly inadequate to the situation they faced. This was all brushed aside for a year. Even now, when asked where he got the information upon which he justified his Government's representations for the Drumbuie inquiry, he says, "That comes from the highest sources." Where, in fact, do they come from? His own man, Mr. Bullock from the DTI, cross-examined by Mr. Donald Ross, said that his department did not employ the same level of technical adviser as the construction companies. They relied on information from the construction companies and the oil companies, and on available literature. It is not good enough that the Government should come to these inquiries almost briefed by the companies. This whole planning question is one of great difficulty. A great deal of local opinion is in favour of industry. People want jobs, they want earnings. But there are all the counter-questions of environment and of the future; of the community, of reparation and so forth.

My position is perfectly clear. We want more industry in the Highlands, but it must be controlled. I am convinced that the Government's planning procedures are not adequate. On the other hand, I am also convinced that simply to put through a Bill for compulsory purchase, largely at the behest of the interested companies, would be totally wrong. The public authorities must keep control and make sure that the public are consulted and, further, see that all this is done in public.

I am told that the mood in which the DTI presented its evidence at Drumbuie was very different from the mood in which it left it after cross-examination. I believe that the whole of those procedures must be examined in detail before we decide what ought to be done in the future.

The inquiries are too long, too expensive and too cumbrous. They were never designed for this purpose. There have got to be planning procedures and there are very important points about who should control the land. Should it be the local authorities? Should it be the Government? We must be assured of two things: first, that the Government stand for the public interest and do not depend for their briefs upon the interested parties; and secondly, if greater control is to be taken by the Government, it must remain in Sootland. The new Bill was to have been a United Kingdom Bill, but the only sites are in Scotland.

I hope those two points will be borne in mind and I trust that the Government will be able soon to produce a shortened planning procedure and to assure us that those who have to object can be compensated from public funds. I do not at present blame the Government for the position, because the last Government left it for two years before doing anything about planning.

5.3 p.m.

Mr. Tam Dalyell (West Lothian)

Knowing what the time situation is in a three-hour debate, I shall confine myself to three points. First, I congratulate my right hon. and hon. Friends on their decision to make Glasgow the centre of operations. We asked for this, the promise has now been delivered, and I thank them.

My second point is directed more in the direction of the right hon. Member for Wanstead and Woodford (Mr. Jenkin). I thought that it was a tremendous give-away that he talked in terms of senior and junior partners. He asked—and he will correct me if I have got it wrong—"Did the Labour Government think it right that the oil companies should be the junior partners?"

I harp back to that because the reverse of the coin is that the decisions should be made by the companies and not by the State, or whoever represents the public at any given time, or any given Government. Having sat through four Finance Bills with the right hon. Gentleman, I shall willingly give way to him if I have got him wrong, and apologise if I have.

Mr. Patrick Jenkin

The hon. Gentleman is seizing on a phrase that I used. I am sure he will recognise that the question of majority or minority control is separate from any question of the slow of revenue to the Exchequer, which can be dealt with by taxation, or any question of the actual control over the rates of production, or the destination of oil, which can be dealt with by the terms on which the licences are issued. I referred solely to the question of participation.

Mr. Dalyell

That has been cleared up, at any rate partially, and there is no justification for taking up the time of the House by going further into that argument.

Thirdly, I echo much of the argument of the right hon. Member for Orkney and Shetland (Mr. Grimond). It is not good enough that the Government should depend on highly interested advice when decisions have to be made about Drumbuie. I shall not go over all the evidence that has been adduced by the National Trust and representatives of the Department of Trade and Industry at the inquiry.

The central issue is where the advice comes from, and the question I should like answered it: what evidence is there that the Condeep design, which is probably moderately good, is the only design to fit the circumstances?

We should like an expert opinion from the Government as to what alternatives there are. When we have the Government's assessment of the alternatives for getting the oil out of the North Sea, and the Celtic sea, a judgment can be made on rational grounds whether we should go ahead with Drumbuie. I hope that during the wind-up speech that crucial evidence will be forthcoming.

5.6 p.m.

Mr. Alexander Fletcher (Edinburgh, North)

I join in the congratulations extended to my hon. Friend the Member for Aberdeenshire, West (Mr. Fairgrieve) on his maiden speech which was full of imaginative ideas not only on the question of North Sea oil but on the rôle that his constituency plays in this important matter.

I, too, propose to refer to the importance of North Sea oil to Scotland which, incidentally, is a better place to live in today than it has ever been. That is proved by the number of people returning to live in Scotland and by those who are coming to live there for the first time

There are several reason for that turn of events. The first is the strength of the British economy during the past few years, which has again been endangered by last week's Budget. Nevertheless, the Finance Bill has yet to get through the House and, hopefully, something drastic will happen to it on the way, because the strength of the Scottish economy depends, as ever, on the strength of the British economy as it affects nine out of ten jobs in Scotland.

On the question of the economy generally, and offshore oil in particular, one of the key factors in the continuing success of these developments is the political stability of Britain as a single political and economic unit. Offshore oil is one of the keys to the future prosperity of Scotland and the whole of the United Kingdom, and it is tremendously important. Thus, all proposals made by the Government this afternoon have to be considered extremely carefully.

There is one proposal on which I should like to congratulate the Government, and that is the proposed strengthening of the Offshore Supplies Office and the removal of the headquarters of that department to Glasgow. This will be welcomed with great interest in Scotland. I urge the Government to move the whole of the Department of Energy to Edinburgh, where it would be ideally located to deal with Britain's requirements regarding North Sea oil.

The Secretary of State did not give us any hope regarding the present planning procedure—to which the right hon. Member for Orkney and Shetland (Mr. Grimond) referred—when he outlined the Government's plans and proposals. My right hon. Friend the Member for Wan-stead and Woodford (Mr. Jenkin) made particular reference to Loch Can-on and Drumbuie, and I shall refer to the planning procedures in general, as I believe them to be of tremendous importance to the development of North Sea oil.

The problem is that developers cannot programme their operations to meet the requirements of the oil companies as long as the present planning procedures remain. They are too time consuming, and even the best public inquiries have great difficulty in grappling with the physical, economic and environmental requirements of a proposed development. The result is that oil companies and their contractors are in a dilemma. They do not know the Government's intentions. If that is serious for the development and for the developers involved in North Sea oil, it is much worse for objectors. The present procedures are a nightmare for those who object to planning proposals. People are left entirely in the dark about the Government's proposals.

Public inquiries are an exercise only for the affluent. On a major development, the cost to objectors may be £20,000 or £30,000. That has to be met entirely from private subscription. It is deplorable that the Government have made no proposals to ease this burden. This is a peculiar exercise in egalitarianism on the part of the Labour Party. It stifles at birth public participation in these proposals, and it stifles them for the worst possible reasons. It is aburd that the Government should not reveal their intentions during the course of a public inquiry.

In relation to the existing planning procedures in Scotland, I understand that the Secretary of State is the protector of the public interest. Therefore, I am not suggesting that he has to reveal his hand before the reporter has made his report to him and the recommendations are known. However, I suggest that the sponsoring Department—whether it be the Departments of Trade or Industry or the Department of Energy—should state its views clearly and openly right from the start, so that developers and objectors may be able to assess the full ramifications of a proposed development.

I hope that the Minister will undertake to offer some hope to those who are deeply involved and concerned in this matter. If the Government fail to react to the need to simplify and sharpen the planning procedures, offshore oil will remain neither Scottish nor Welsh, nor British but will be the property of King Neptune, and there is no advantage to anyone in that state of affairs.

5.13 p.m.

Mr. Ronald Atkins (Preston, North)

I, too, should like to add my congratulations to the hon. Member for Aberdeenshire, West, (Mr. Fairgrieve). He evidently loves Scotland, as I do. Scotland is my favourite resort, and I say that as an Englishman born in Wales. I love all three countries and the people of all three countries. It saddens me to see enmity between hon. Members when they should be united in the love of the United Kingdom.

Mrs. Winifred Ewing (Moray and Nairn)

There is no enmity.

Mr. Atkins

It seem like it sometimes. Of all the places I love in Scotland, Drumbuie, or the area round it, comes first. For that reason, I have some sympathy with the remarks made about Drumbuie by the right hon. Member for Wanstead and Woodford (Mr. Jenkin).

However, I have no sympathy whatever with his remarks on the public ownership of national resources.

I beg the Conservative Opposition to give up their doctrinaire attitude. They are out of line with Tory parties in Europe and elsewhere. Those Conservative parties, when the national interest is at stake, are prepared to accept public ownership.

In fact, the present Conservative Party is not what it used to be. In the past, it was much less doctrinaire. I believe that it was a Conservative administration which took a majority shareholding in the oil company that later became BP. That happened at a time when public ownership of an oil company was unique. I do not think public ownership existed outside this country, but the Conservative administration then realised that such a move was in the public interest. If that were so then, it surely is today. We should not see the profits from North Sea oil and gas being whittled away, going to foreigners rather than Britishers.

Mr. Fell

Cannot the hon. Gentleman control himself on this matter and hold himself back, at least until the companies have got the oil ashore? Then perhaps he can talk of nationalisation.

Mr. Atkins

Can the hon. Member for Yarmouth (Mr. Fell) hold himself until I have finished my speech?

We heard frequent Opposition arguments—I heard them from 1966 to 1970—to the effect that we were not sufficiently generous to the oil companies. When they regained office in 1970 the Conservatives proceeded to be generous. But oil companies were never deterred, despite the fears expressed. Moreover, nearly all expert opinion today tends to believe we were much too generous.

I know that the Opposition claim to be the patriotic party and they use the Union Jack—shall I say that they sully it?—as a party emblem at their political meetings. But what kind of patriotism is it that makes compatriots of big business men in America and foreigners of poor Britons? The Conservatives are totally inconsistent in that matter. We have often seen Brtain being robbed of revenue and wealth which is hers by right. Countries from Norway to America and to the Middle East are getting much fairer rewards. We are the least regardful of British interests.

I beg the Opposition to adopt a more sensible attitude and to attune themselves to the nation's wishes. The British nation wants to share in these rich national resources.

I am very fond of Drumbuie—it is my favourite resort—Kyle of Lochalsh, and the whole of that area. Every year I go to Inverness-shire and stay either in that delightful nationalised hotel—the Station Hotel—or in a hotel in Dingwall. Every day when I am in that area I take the train between those places and Kyle of Lochalsh. I do not, as do other hon. Members, pollute the atmosphere and disturb the peace of the countryside by going by car. I now know the inhabitants of the area extremely well. The only unpleasant village in that area—I know it well—is Drumbuie, because of the corrugated roofs of the cottages and the general higgledy-piggledy mess of the place. But I have grown to know and love the people well. It has disturbed me that in recent years there are more and more foreigners moving into second homes and beginning to regard the place merely as a holiday place, and nothing else.

I was gravely distressed when, two or three years ago, I heard that the line between Inverness and Kyle of Lochalsh was to be closed. I regard that line as a lifeline for the Highlands. I took steps to fight this closure through an organisation to which I belong, but to no avail. I realised what the closure would do to the area, particularly as there was considerable unemployment in the area as well. The fact that the ferry was no longer coming from Hebrides to Kyle of Lochalsh and that the line was to close meant that there would he still more hardship. More young people—more natives, if one prefers—would be pushed out in favour of people who want to use the area for their own pleasure for only a couple of months of the year.

I was terribly distressed. But when I heard that there was a chance of this railway line being saved through a minor industrial development in the Drumbuie area I was happy. I knew that I would cease to go to this area if the railway line were closed. On the other hand, I knew that if the essential industry were established in the area it would save not only the countryside but the community, and that is what we should be concerned about. Many people shed crocodile tears about people leaving the Highlands. It is no good doing that without providing work, communications, and other amenities, to keep them there.

The development at Drumbuie will be there for about 15 years. When the company leaves, any Government who have the interest of the country at heart will ensure that the place is left rather better than it was before.

I have not relied on the information from construction companies on people's feelings about this development. I have been to Kyle of Lochalsh myself and asked people in the street and some of the tradesmen. Sentimental stories have been told about the crofters of Drumbuie, but most of them are not crofters in the true sense of the word. They are industrial workers who happen to live in these cottages and who work in Kyle of Lochalsh when there is work for them. Some of them are, naturally, holding out because they hope to get better compensation. I do not blame them, because the contractors can afford it.

The opinion in Kyle of Lochalsh and Drumbuie itself it not against this. Much of the opposition comes from second home owners, some of whom are Lowlanders. Therefore, this situation should be considered from the point of view of the community and not from any environmental sentimentality. I am not environmentalist, which is one reason why I believe in railway transport. But I am certain that the community should be maintained in this area, and I believe that this is one of the projects that will help to do so.

Any Government could insist, if they took the powers, that this development was entirely in line with good planning requirements. I beg my right hon. Friend the Secretary of State for Scotland to bear this in mind.

Mr. Dalyell

Some of us are very sympathetic to my hon. Friend's general argument. Does he also understand that the mind boggles, for those of us who have been at Nigg frequently, and see the lack of infrastructure there, at what the cost of the infrastructure would be in housing, schools, and so on, at Drumbuie?

Mr. Atkins

I agree that the development is bad there, but it is for us to prevent that. It is not a development on the same scale or for so long a period.

As the right hon. Gentleman said, this is a unique site. There are few sites anywhere in Scotland that have the deep water alongside a railway. The railway runs right along the coast at Drumbuie—it must be the nearest railway in the world to considerably deep water. What is to prevent us from insisting, if we give planning permission, that all transport be by this railway and not by the Highland roads?

There are many developments elsewhere in Scotland—and let us remember that other people like attractive scenery and unpolluted atmosphere, too. Why shove a development somewhere else if it is undesirable? But I think that the undesirability of this site has been exaggerated. What is to prevent our insisting on good planning and everything being carried by rail? There are few other places in Scotland—certainly no other places with deep basins near the land—that will make it possible for all the traffic to be carried by rail.

Mr. Hamish Gray (Ross and Cromarty)

The hon. Member is referring to my constituency, and I am sure that he will not mind my interrupting. I hope that he is not pre-empting the public inquiry now taking place, because as it goes on, there is no doubt that more and more sites are being described as suitable. Even in the Loch Carron area itself, whereas in the first instance we were led to believe that Drumbuie was the only possible site, several other sites are becoming increasingly popular. Indeed, as the inquiry goes on, some of those who originally did not think that they were suitable sites are coming around to the idea that they might be.

Mr. Atkins

I am coming to that in my summing up, which is very close now.

Despite the objectors' saying that there are lots of other sites—and I should like to point out that my subject is geography—I do not agree with them. I think that they are somewhat prejudiced—quite as prejudiced as any of the contractors are. I think that one of the places the hon. Member mentions is Kishorn. He will notice that there the contractors have offered to provide an ocean liner as the accommodation for their workers so as not to interfere with the scenery. We could make similar requirements.

One of the most serious problems in the country today—and it will be for many years—is our balance of payments. It is a question of saving a good deal of foreign currency by doing work in Scotland that would otherwise be done in Norway, and I beg the House to give this scheme sympathetic treatment.

5.29 p.m.

Mr. Iain Sproat (Aberdeen, South)

We have a very short time to discuss this extremely complex matter. I hope, there- fore, that the hon. Member for Preston, North (Mr. Atkins) will forgive me if I do not take up the interesting and sympathetic arguments which he advanced. Perhaps I could say, as background to anything else that I say in a moment or two, that I believe it to be vital, whatever party is in power over the next decade, that that party give to the oil and oil-related industries a feeling of confidence, of knowing exactly where they stand—they may not like where they stand, but at least they must know—and a certain continuity of policies. I hope, therefore, that it may be possible to narrow the gap between the two Front Benches.

I have no time to go in great detail into the various policies involved in the new Government's package of oil policies, but I hope that at least they will contain among them the following. First, to turn to a non-controversial matter which was mentioned in the excellent and thoughtful maiden speech of my hon. Friend the Member for Aberdeenshire, West (Mr. Fairgrieve), there is the whole question of the infrastructure. He rightly emphasised how important this is. As the Secretary of State for Scotland quite properly and generously said the other day, his predecessor did a great deal to improve the infrastructure in terms of roads, harbours—at Aberdeen and Peterhead—and Dyce airport, and so on. Much was done, but there is an undoubted need for an increasing commitment to improvement in the infrastructure of the North-East and the Highlands.

Second, coming from Aberdeen, I must mention another non-controversial subject, fishing. I hope that the Government will bear in mind that there is still considerable concern and suspicion in the fishing industry about how it will be affected by the new developments in the North Sea. This results partly from lack of knowledge of what is going on. It is extremely difficult for the industry to find out, but, even when it does know, it is still worried.

The hon. Member for Aberdeenshire, East (Mr. Henderson) gave me a commitment yesterday that he would have regular meetings with the fishing industry. I hope that the industry will keep him to that commitment, to ensure that its concern and suspicion are removed as far as possible.

A more controversial matter is the Government's financial relationship with the oil companies. We should act upon the principle that there must be the maximum return for the community which does not provide a financial disincentive to the fastest possible development of our oil resources. I believe—I have yet to be convinced otherwise—that the best way to implement that principle is by gathering revenue through a combination of, first, corporation tax or equivalent company tax, the loopholes having been closed as my right hon. Friend the previous Chancellor of the Exchequer indicated, second, a royalty on the wellhead price, third, a barrelage tax, and fourth, licence fees.

I confess that, with hindsight, I wish that I, and, no doubt, others of my right hon. and hon. Friends, had pressed the Conservative Government to spell out exactly what that was likely to mean. They gave the people general assurances. I wish that it had been possible—though I understand that at the time it was difficult—to spell out exactly how the people of Scotland and the people of the United Kingdom would benefit from the revenue that, indubitably, will be gathered through these or other methods.

There are other options. The hon. Member for Ayrshire, Central (Mr. Lambie), perhaps inevitably, mentioned nationalisation. I hope that the Government will reject that totally. Whatever else may be true of the oil industry, it would ruin the prospects of Scotland's development. I hope that the Government will reject totally the sort of nationalisation which he advocated.

The second option is a national hydrocarbons corporation. I should not be an implacable opponent of a corporation formed in certain ways. We have yet to hear from the Government exactly what they have in mind. I should not necessarily oppose, for instance, some sort of interest taken by a corporation of this sort. I cannot help feeling that one of the attractions for hon. Members opposite of a national hydrocarbons corporation is that it is a sort of half-way house between the nationalisation being urged upon them by the Left wing of their own party and by hon. Members such as the hon. Member for Ayrshire, Central, and the more commonsense approach displayed by my right hon. Friend the Member for Wan- stead and Woodford (Mr. Jenkin). If it is just a half-way house, it is a very bad reason, but it is the sort of attraction which they feel lets them off the hook. It is half way towards nationalisation, and therefore half way towards pacifying their Left wing. I hope that that will be the least of reasons.

Mr. Skeet

What is the point in having another State agency when already State agencies—the National Coal Board and the British Gas Corporation—are conducting operations in the North Sea?

Mr. Sproat

I am coming to that. I am merely trying to be open-minded. I do not say that I should necessarily be obliged to oppose any form of national hydrocarbons corporation. There are arguments for it, and we have yet to hear from the Government what precise form they propose for such a corporation.

The hon. Member for Dudley, West (Dr. Phipps), in an interesting speech the other day, put forward a number of reasons why he was in favour of such a corporation. He said that it would consist of a body of men who had practical expertise, that it would have some sort of control over the companies involved and that it would guarantee proper British participation.

All those are virtues, but they are not virtues that would arise only from a national hydrocarbons corporation. They could as easily come from the Department of Energy. Indeed, I should be surprised if the Department of Energy did not already feel that it had a body of men with considerable expertise in this matter. We may feel there are not enough such men, and that as technology develops there will need to be more. None the less, I should have thought that the Department of Energy would feel that way.

Dr. Colin Phipps (Dudley, West)


Mr. Sproat

I must get on. We have less than an hour before the Front Benches wind up the debate.

I now turn to the question of benefits for Scotland. Benefits there must be, benefits there already are, and more benefits there will be, but benefits for Scotland do not mean some sort of special levy which goes into a special Scottish bank and can be solely used to benefit Scotland, any more than we can have a special levy on the car industry of Birmingham for the benefit of the people of Birmingham, or a levy on the gas off the East Anglian Coast for the benefit of the people of East Anglia. Any such recommendation would be inconsistent with the social and economic unity of the United Kingdom.

But there must and will be special benefits for Scotland through other means. We already have 6,000 new jobs directly as a result of oil, and another 9,500 jobs for projects already planned. That does not include spin-off or the increasing momentum of the oil discoveries. There have been huge increases in wage packets. That brings considerable problems for industries outside the oil industry, but, none the less, the standard of living has already gone up considerably. It is estimated that £300 million will be spent annually on servicing, and that a large proportion of that will be spent in Scotland.

I have already mentioned improvements in the infrastructure—roads, harbours, new office blocks, new housing—but housing is the greatest single problem at present as a result of the oil development in the North-East. We already know that for every £100 the Treasury spends in total identifiable public expenditure in England, £120 is spent in Scotland. With more revenue coming into the United Kingdom Treasury, Scotland will benefit more because she will get more out. It is too often forgotten by the people of Scotland that they benefit in this way.

It is most important that Scotland should have the chance to participate fully in the downstream development of oil and petrochemical complexes which have already been mentioned. It is a chance to learn the operational expertise on the spot, so that when new oilfields are discovered elsewhere in the world it will be to those who have learned their techniques in Scotland that people will turn. It must be of benefit to any shrewd businessman or industrialist to be closest to the place where the action is. My own constituents in Aberdeen have benefited in that way.

There will be new departments at universities and new Government Departments.

I welcome unreservedly what was said this afternoon about moving the Offshore Supplies Office to Glasgow. I hope that the hon. Member for Edinburgh, East (Mr. Strang) will also consider carefully, as he has promised, my suggestion that a major part of his Department—not the whole of his Department as suggested by my hon. Friend the Member for Edinburgh, North (Mr. Fletcher); that would be absurd—could be moved with sense to Aberdeen so that there would be a direct interface between a Government Department and the men taking the operational decisions on the spot.

The Secretary of State has promised that he will make an announcement about changes in the future, and I hope that that is one of the changes.

The Under-Secretary of State for Energy (Mr. Gavin Strang)

I think the hon. Gentleman is going a little further than any Government commitment. I am sure he would acknowledge that the promise of an announcement by the Secretary of State is a tremendous advance in the context of Scotland.

Mr. Sproat

Yes. I said that when the Under-Secretary was whispering to the right hon. Gentleman. I welcome that unreservedly and feel that it is a big step forward for Scotland.

Much has already been said on planning procedures. The Minister mentioned the other day the difficulties of balancing the two sides, and I accept that. But I hope that it will be possible to substitute a positive planning procedure for what is basically a negative planning procedure in Scotland. There should be places in Scotland where companies which wish to carry out certain projects know they will get permission. I should like to see rather more positive planning procedures adopted.

On the question of conservation, if I had to choose I would be on the side of those who believe in speedier development. I know that speedy development of oil must be balanced by proper concern for conservation of the landscape. By and large, it is vital for this country that we obtain the oil as fast as possible, but surely it is possible in the new package of oil policies, which the Government are to put forward to find a means whereby it is imperative that companies should restore the landscape. I know that there are powers to enable this to be done, but let us make it explicit and let the Government set up a fund for restoration where companies have failed in their commitments or perhaps make insurance compulsory to make sure that the landscape, by whatever means, is restored after the oil boom is over.

5.42 p.m.

Dr. Colin Phipps (Dudley, West)

The House will recall that I have an interest in these matters. There are two points which I should like to develop—me the pace of development, and the other the British involvement in the service and supply industries.

I hope that my right hon. Friend the Secretary of State will not be misled by much of the Opposition's rhetoric, particularly during the election, about the necessity for rapid development of North Sea oil. The Opposition found themselves in the position of the bankrupt who saw the possibility of a pools win around the corner if they could hang on long enough.

The country is in a difficult economic position which will not be affected by the fortuitous gambling winnings of finding oil in the North Sea. We must get our economy right independent of the North Sea bonanza round the corner. The North Sea bonanza is the icing on the cake; it should be the bonus for our society, not the means for getting us out of an economic scrape. In looking at the pace of the development in the North Sea, we must take into consideration the social and environmental factors.

I have worked for a number of years in many countries in oil fields and in the areas in which the supply industries for oil fields have been developed. Oil fields have been characterised by the companies themselves developing what are known as oil camps. The oil camp is the company essentially creating its own infrastructure. It builds houses for its workers; it builds schools, hospitals and everything else required to support the oil field or the constructional process.

However, when these processes are no longer required the houses and the infrastructure remain, but employment does not. I am thinking particularly of Venezuela where I spent six years. I can think of seven oil camps round Lake Maracaibo which today are derelict. They were complete in that they were living communities with schools and everything else that a community needs. It would be a disaster if oil camps—which we should be paying for them rather than the companies—spring up in some of the most beautiful country in Great Britain only for them to become derelict within 20 or 25 years. In the case of things such as platform building, it is highly likely that they will be derelict prior to that time.

In pursuing a rapid development of the North Sea, I should like to see the Government producing work particularly in those areas where work is most needed. There seems to be no reason why we cannot look to those areas in Scotland, in particular, and later possibly in Wales and other parts of Great Britain, where there already exists an infrastructure and where there is already a requirement for work. I am not suggesting that it will be easier to produce things on the Clyde and to ship them around the North, but it may be very intelligent for us in the long term to do so. However, I hope that we take our time in coming to the proper decision about where these developments should take place.

In touching on the second point, which is the question of British participation, particularly in the service and supply industries, I very much welcome the expansion of the Offshore Supplies Office and its setting up in Glasgow. British participation is pitifully small. The reasons for this are fairly easy to understand. It is something which I have characterised previously as the Norwegian jumbo-jet syndrome. If the Norwegians were to build a jumbo-jet, they would find a great deal of consumer reluctance among the airline companies which fly aircraft around the world. However, if the Boeing Company of Seattle were to have a factory in Norway and build jumbo-jets there, it would find immediate acceptance of the aircraft.

This is very much the case with this industry. It is the experts in the industry who are supplying the drilling barges and equipment which find acceptance, and they find that acceptance because they have been doing it for years. It is a very expensive, highly complex and expert business. I speak as a man involved in advising companies. I find myself having to advise them to use one of the international drilling companies in preference to a company set up in the last couple of years, for instance, in Britain.

What this means is that if British industry is to get its proper and full share of the service and supply industries, it must do it initially in partnership with the international service companies. We must form partnerships with the international service companies so that they will help British companies to learn the business and to participate with them in the North Sea.

But there is no way in which we can coerce major American or international companies into doing this. The oil companies will use them by preference, anyway. But there is no reason why the Department, particularly through the medium of a national hydrocarbons corporation, could not say quite definitely to the oil companies that our licensing policy will be to give licences to those oil companies which promote the association of British industry with the international oil industry.

I assure hon. Members that, despite the deterrent effect of which we have heard so much from the Conservative Party, most of the oil companies are enthusiastic about the remainder of the North Sea and other British waters currently unlicensed. They will be only too delighted to put pressure on American and other service companies to take British partners in tow. Our offshore oil industry will be very large and will last for many years; but the offshore oil industry world-wide is a huge business and will last for a very long time. The only way in which we shall have British participation not only here but internationally is by devising a policy here and now which will ensure that this expertise is developed in Britain.

5.52 p.m.

Mr. Gordon Wilson (Dundee, East)

I commence by congratulating the hon. Member for Aberdeenshire, West (Mr. Fairgrieve) on his maiden speech, which was stylish and well-argued. It is significant that he chose to make his maiden speech on a subject which is of great consequence to Scotland, namely, our offshore oil resources.

The question of oil is one of those motivating forces which is substantial in its implications for the United Kingdom as well as for Scotland. There is considerable dissatisfaction in Scotland at present about the way in which the offshore oil industry has been managed. It is also clear that the news which was announced by Burmah of the extension of the Ninian field has led to an increase in value of Burmah and ICI shares—those being the two companies involved in the announcement. The companies' shareholders have started to benefit. But once the oil begins to flow the profits of offshore oil generally by 1980 will vary between £3,000 million and £4,000 million, depending on which estimate one accepts and upon the value of each barrel of oil at that time.

There is no doubt that, subsequently the British Government will benefit from taxation, whatever taxation policies are ultimately adopted. Indeed, in last week's Budget debate the Chancellor of the Exchequer seemed to be anchoring many of his main hopes for the future on the existence of the oil off the Scottish coast. But in this matter we cannot give just passing mention to Scotland because the Scottish people will not now tolerate that sort of treatment. There has been hardly a word about how Scotland is to benefit from the revenues. Some vague formulae were mentioned in the Gracious Speech. I appreciate that in the Gracious Speech it is not possible to define matters in great detail, but it is disappointing that nothing specific has been mentioned.

It seems to me to be almost impudent for the Conservative Party to have raised this debate at all, because during their period of office they presided over the disintegration of any coherent oil policy in relation to oil off the Scottish coast. They had no policies. I was not a Member of the House at the time, but for my sins I read HANSARD and the statements which were being made by Government spokesmen of the Department of Trade and Industry, sometimes as many as four Ministers, on subjects relating to oil—and a confusing picture it was.

I am sure that the Scottish National Party will welcome the Government's intention to strengthen the Offshore Supplies Office and to move its principal base to Scotland. Any move of that sort will have our support; but I do not suggest that it is a major advance for Scotland. It is a minor advance.

There are still other decisions of greater importance which the Department of Energy or the Secretary of State for Scotland have to take. There is the question of the location of the Department of Energy itself. I have mentioned this matter in an earlier speech in relation to the Hardman Report. Is it not desirable that a major Government Department should be set up in Scotland? If so, what better than the Department of Energy, perhaps excluding the parliamentary section? If the Secretary of State for Scotland can function while having a parliamentary section in Whitehall and the majority of his civil servants in Edinburgh, why should not the Secretary of State for Energy be placed in a similar situation? Although the transfer of the Offshore Supplies Office meets with approval, it is not enough. That will be the attitude of the people of Scotland.

I am not entirely impressed by the fact that the Government are not prepared to state at this stage what their policies will be. Since Labour were in opposition for three years, surely it would have been possible in that period to have worked out their policies. Although I understand that there may be a dispute between the hon. Member for Central Ayrshire (Mr. Lambie) over nationalisation—a dispute which he has more with his governmental colleagues than with the Scottish National Party—it is clear that in the course of the election the Government changed their attitude, or defined it, to a policy more in line with what is happening in Norway.

One hopes that this may have stemmed from Lord Balogh, who for some years has been suggesting that Norwegian procedures should be followed in this country. Indeed on 22nd November in the House of Lords the noble Lord dealt with the Conservative Government's policies. In that debate Lord Balogh mentioned the "suckers" in Britain and Scotland, by which he meant the British and the Scottish people and the way in which their interests had not been looked after by the Conservative Government.

The Scottish Nationalist Party welcome the Government's policies on social justice, but there is a most interesting announcement today in the Financial Times about what the Norwegian Government are proposing to do before the main flood of revenue comes into the Norwegian Exchequer. The Norwegians have negotiated a loan of £150 million. That may not seem very much in the rarefied altitudes of this House, but when related to the size of Norway in population terms it is a very substantial loan indeed. They are using it to help to finance a decrease in social security contributions, an addition equivalent to 1 per cent. of wages. There will also be a 2 per cent. tax cut and increases in pensions and child allowances and it is hoped that there will also be a 3 per cent. to 4 per cent. increase in real incomes in Norway in the coming year. The announcement has been welcomed by the trade union organisation and also by spokesman for the employers' association in Norway.

We in Scotland are determined not to lose out through the discovery of oil off the Scottish coast. I should like to quote from "Roustabout", a magazine published in Aberdeen after the General Election. I must emphasise that it is not a publication that particularly favours the attitude of my party. The magazine says: Scotland's Oil…? We don't see it that way… But the big message from the General Election is loud and clear. Let either major party ignore the aspirations of the Scottish people in the development of North Sea oil at their peril! The magazine goes on to stipulate: What we want to hear now is something about the roads, the airports, the massive infrastructure needed for us to take full advantage of oil developments. Let us hear no more about delays in planning procedures…about Scotland having to wait until London makes up its mind…Let's now start treating North Sea oil seriously. I emphasise that quotation is from a source not sympathetic to the basic attitudes of the SNP, but it recognises the strong feeling held throughout Scotland that we must play a much more important rôle in the development of the national resources off our coast.

I had intended to give some gentle, but chiding, advice to the hon. Member for Edinburgh, East (Mr. Strang) who is now Under-Secretary of State for Energy. I welcomed the hon. Gentleman's appointment, and I hope that he will fulfil the functions of his office to ensure that the benefits of the oil discoveries are reflected in the Scottish economy, but I am afraid, having read some of his recent speeches, that I detected creeping into them a note that was more on the lines of the speeches of Lord Polwarth who dealt with these subjects in the House of Lords on behalf of the then administration. I would ask the hon. Gentleman to change his script writer or the civil servant who has been helping him and to strike out in his own inimitable fashion to make sure that Scotland's interests are protected.

It is evident that anybody in this Parliament who thinks of playing the London game is in danger of alienating the support of the Scottish people. This is a message which has been taken to heart not only by the remnants of the Scottish Conservative Party but also by Members of the Labour Government. The Scottish people is sensitive on this subject and will not allow Scotland's interests to be ignored as has happened before.

When Scotland has 89,658 people out of work—that is, 4.2 per cent. of her insured population unemployed compared with a figure of 1 per cent. in Norway—no Scot of whatever political complexion can stand by and see one of the most important natural resources ever discovered in our country looted indiscriminately without benefit to Scotland.

6.2 p.m.

Mrs. Maureen Colquhoun (Northampton, North)

I hope I may be forgiven for saying that, as a new Member of the British House of Commons, I feel a little insecure. In listening to this debate, I wondered whether I had not by chance strayed into a Scottish assembly. But my credentials for speaking are an Irish mother, a Welsh father, a Scottish husband and the fact that I was born in England. If anybody can do any better than that, I suggest that they join the Liberals.

One of the exciting things about British oil is that for the first time in our history as a nation we have a chance to look at a new mineral resource and decide what is the best use we can make of it for the good of the nation as a whole. This has never happened before. Britain has been fortunate over the centuries in its mineral discoveries, although in each case the sole consideration has been that of private profit. At various times in our history minerals such as tin, salt, lead and iron have had their day and have been rejected because they have no longer been considered profitable. For more than 2,000 years what was considered to be good for private business was considered to be good for the British people as a whole. Today we know that that is not the case. With oil we have a chance to make a fresh start—or have we? This is the question that causes me considerable dismay.

Is it already too late to deal with this immeasurably large asset in a Socialist way? Are we already prisoners of decisions taken, of contracts signed, of handshakes given, of banquets exchanged, of undertakings in public and of secret deals in private? How can we temper the amount already promised to business? Is the gravy train already loaded and on its way? The best we can do is to slow it down.

Will our successors on these benches in 50 years' time find themselves in the same position as Members of the Labour Party did in the post-war years when they had to consider the future of the coal industry? They found that they had been given the job of clearing up the damage created by greedy private industry whose main concern in the past had been to grab all they could, with no consideration for the needs of tomorrow.

British oil is held out to be the treasure of treasures and the bonanza which will enable us to live happily ever after. There is a terrible danger in this because, even if it is true, it will distort our judgment. We have, on the one hand, business driven on by the lure of unlimited wealth. On the other hand, we have the Government driven on by the prospect of unlimited cash for building social services, for building perhaps the largest hospitals in the world, for raising the school leaving age to 45, and for replacing the three-wheeler invalid cars by Silver Ghosts.

That is not the climate in which we can make the right decisions about the oil that we are discussing today. I would prefer it to be left under the sea for another 20 years than to be dealt with in a blind and stupid way.

What shall we do with the oil when we get it ashore? It would be wicked to burn it in power stations or in cars. The wisest statement that I have heard recently came from an Arab who said that oil was too noble a substance to burn. Shall we use it in a more creative form as a plastic or a s the basis of a new foodstuff? To burn it would be surely as short-sighted as it was to burn our trees for fuel, as we once did. They are so much more valuable as furniture or paper.

Even today, we still have not been told the whole truth about oil. I suspect that there is even more oil, on a scale at which we can only guess. I believe that the last General Election was really about whether the great power implicit in these enormous deposits of wealth was to be handled in a Tory way or a Socialist way.

The Labour Party won the election. Let us use that power properly. It is quite right for this Government to take some time to consider how best that can be done.

6.8 p.m.

Mr. T. H. H. Skeet (Bedford)

The hon. Member for Northampton, North (Mrs. Colquhoun) has made a very interesting speech. Apparently she has been talking to the Shah of Persia, who has disclosed the fact that oil must be used very carefully since it may become more valuable in the ground after 20 years. However, if we come to the conclusion that energy can be derived from sea water, oil may no longer be used for fuel but for other requirements.

I turn immediately to the speech of the Secretary of State for Energy. He suggested that the profits which may accrue to the country are £3,000 million, on which the tax impost is £1,500 million.

The Secretary of State and I agree about one matter, and it is that the State should have an equitable allocation. However, I do not agree with the right hon. Gentleman that the State should be totally greedy and not allow anything to those who are producing the oil.

I have been amazed to hear all the suggestions which have been put forward in the debate so far because no one has pursued the possibility that I have raised in a Question to the Minister about a posted price for North Sea oil. I have been told simply that the Government are considering the proposal. If the Government were to adopt my suggestion, there would be no need to set up an assembly of State agencies, including a British hydro- carbons corporation and a number of regional bodies which would busy themselves and employ a large number of bureaucrats.

Let me refer to a paragraph which appeared in The Petroleum Economist of April 1974: On these assumptions, the government would receive $2 a barrel royalty plus $6.50 a barrel by way of tax, making $8.50 a barrel in all, while the tax-paid cost to the company would be $9.50. The government's income would compare with a present host-government take of $7 a barrel on Arabian light crude. It would be equivalent to roughly £26.50 a ton. On an output of 2 million barrels a day, or 100 million tons a year, it would bring in a total revenue of £2,650 million a year—or almost £4,000 million if production rose to the 3 million barrels a day level which is widely anticipated. What is all this talk about setting up a host of Government agencies? We are, after all, talking about tax available to the economy which can be utilised for further investment in industry, for the social services or for any other requirement of the Government.

We have also heard a great deal about carried interest. One hon. Member implied that we should pursue the ideas which have been adopted in Norway. However, the two countries are not comparable. In Norway, half the energy requirement comes from hydro-electricity. In the United Kingdom, that as a source of energy is much smaller. The Norwegians have decided to decelerate the extraction of oil from the North Sea to the extent that they are closing down for further exploration below the 62nd parallel.

I have made it clear earlier that before the Government start to quarrel with the National Coal Board and the British Gas Council, which are already in the North Sea, and before they quarrel with British Petroleum in which they have a 48 per cent. interest, they might consider some of these agencies be used for their purposes.

In the Dumlin extension with Conoco and Gulf, the National Coal Board has a 33.3 per cent. interest. In the Hutton field, the board has a similar interest. In the Hutton extension, the British Gas Corporation has a 25.7 per cent. interest. In the Montrose field, the Gas Corporation has a 30.77 per cent. interest. In the Beryl field, it has a 10 per cent. interest. The Forties field is 100 per cent. BP. In the Ninian field BP has a 50 per cent. interest with Ranger Oil having the balance. To bring in a new body with no expertise and to set it up as a internationally integrated organisation does not make sense.

The previous administration intended to bring forward a Bill to deal with planning controls. When he made his original statement, the then Secretary of State said: It has become clear that, if at least one such site —that is, one concrete platform site— does not become available this summer, we could lose a significant proportion of the oil which we would otherwise be extracting from the North Sea in 1977 and 1978."—[OFFICIAL REPORT, 31st January, 1974; Vol. 868, c. 626.] It is extraordinary that the present Secretary of State is prepared to allow the Drumbuie inquiry to proceed to its final conclusions.

The Secretary of State has also been advised that the Anglo-French Howard-Doris consortium has decided that unless it can get planning permission through, it will seek a site in Scandinavia, possibly in Norway. Will this be good for British industry? I hope that the right hon. Gentleman will discuss this possibility with the Under-Secretary for Energy, who told a Labour Party conference in Ayr, We recognise that we might well have to introduce a Bill to enable us to secure quickly and compulsorily certain sites for building platforms. The Secretary of State has one idea. The Under-Secretary apparently has another. I suggest that the Government put their heads together to decide whether it would not be better to bring in a Bill to deal with all the vexatious problems of planning.

I recollect repeated occasions on which the Secretary of State, then on this side of the House, asked the Government of the day whether they were prepared to produce a document on fuel policy for the United Kingdom. I asked the same sort of question. I wanted to know when were we to be told how oil, natural gas, coal and atomic energy were to fit together in a fuel policy. But no document on this has yet been produced. We have been told that the Labour Party, through its research organisations, has been working for a long time on this, but little new detail is coming forward today. The Government could easily have postulated something, but nothing has appeared.

Why have we no policy yet on this? Why can it not now be said what the position will be for oil in the next five to 10 years? Why can there not be predictions about oil and about the position of coal? We are having a debate without having available any of the facts of the fuel policy which the Government have in mind. The Government are increasing uncertainty not only for companies involved but also for back benchers. The Scottish nationalists want a model produced of the whole of the part of the North Sea relative to Scotland. They want to know about infrastructure and about where the tertiary, secondary and primary industries will be, and how the population will be assimilated. We are told by the Highlands and Islands Development Board that there will be another 20,000 to 30,000 people in that area in future years. How will this mosaic be dealt with? Will the Government say whether they have prepared a model of the North Sea? If they have and if it is ready, may we have an opportunity to look at it?

6.16 p.m.

Mr. Eric Moonman (Basildon)

The comments of the hon. Member for Bedford (Mr. Skeet) are relevant. The only point upon which I disagree is his assumption that the Government—still precious after three to four weeks—could now be criticised for not producing a fuel statement. This has been a continuing problem of successive Governments, and back benchers on both sides want to see it put right.

I hope that in the concluding speech account will be taken of some of the points raised by back benchers. The previous debate on energy, on 13th March, was a thoughtful debate, but there was not adequate opportunity for a full reply. I hope that Ministers will appreciate that there is deep concern among industry, specialists and hon. Members about energy problems.

It would be a poor practice, and a change of practice, if we were now to become accustomed to a procedure—which did not apply when I was previously in the House until 1970—in which winding-up speeches are regarded as an opportunity for further political exercises, with the result that back benchers who have taken the trouble to raise questions are unable to get a meaningful response.

While the debate on 13th March was thoughtful, it did not get to grips with the important decisions which have to be taken. As other hon. Members have observed, it is now almost a privilege for hon. Members who do not represent Scottish constituencies to take part in these debates. There is an almost Pavlovian response to the word "energy" by hon. Members representing constituencies north of Glasgow.

I am delighted that industry has now become an acceptable subject for debate—this was not previously the case—but it would help if some hon. Members get the facts right and were less emotional on the matter. Hon. Members can relate many experiences regarding energy, particularly those relating to the eastern sector of England. But let us not turn this into a regionalised debate. The issue is much more serious. Perspective seems to be lacking in these debates on energy.

I do not criticise the Opposition for providing the opportunity for a debate on energy, but I am concerned that the debate has not been sufficiently far-ranging. It has been narrowed down to one form of energy—oil—and we have not looked at other forms of fuel such as coal.

Coal is still one of the cheapest primary fuels available, even if we are to pay the miners a respectable wage. It makes good sense to use coal as the principal fuel for generation of electricity and to keep oil for uses for which coal cannot be substituted. But we must not leave it at that. More money must be spent on research into the better use of coal and into better ways of getting it out of the ground and into the power stations. What research projects are taking place into getting better results from coal?

The nuclear power question has not been resolved. When considering an integrated energy policy, we must make a decision regarding nuclear reactors. There has been much speculation in the weekend Press about this. Indeed, it seems that the weekend Press combined a review of the problem of Concorde with looking at the question of nuclear reactors.

The Government have a responsibility to put many people out of their misery and must take a meaningful decision on nuclear reactors. The right hon. Member for Wanstead and Woodford (Mr. Jenkin) said, rightly, that this is an international problem which must be looked at across countries and continents.

In the last month or two we have had to come to terms with the idea of becoming one of the world's major oil producers. But the reaction to this idea in some parts of Britain has become alarmingly small-minded. I would not wish to try to stifle the Scottish National Party in claiming Scotland's rights, but we ought not to concede those claims. We should not think in terms of only Scotland or only Britain. We should think in terms of Europe as a whole, and if we get our terms right we have a future in Europe. The EEC has made clear that it understands that the oil is Britain's. But we must see the larger context of North Sea oil as part of a coordinated European energy policy.

I hope that the Government will now come forward with plans for getting Britain's share of the North Sea oil bonanza. We must disillusion oil companies that there is no public support for Government participation in North Sea oil. On the contrary, the majority of well-informed people welcome some kind of State participation to get the financial benefits for the nation as a whole, not only for the international oil companies.

The right hon. Member for Wanstead and Woodford said this afternoon that the example of Norway was not comparable with Britain's situation. I do not understand that argument. The hon. Member for Bedford (Mr. Skeet) mentioned this point, and other people have also decided that because we have a problem regarding our economy we cannot use the type of scheme which operates in Norway. At best this is a rather phoney argument.

Let us look at the Norwegian experience. The Norwegian Ministry of Finance made clear in a White Paper published on 15th February that the key role in exploration as well as in exploitation would be played by Statoil, the wholly-owned Government corporation set up in 1972 to operate the State participation interests in North Sea oil. In a subsequent White Paper the Norwegian Ministry of Industry said that Statoil should have in principle a minimum 50 per cent stake in all the licences due to be allocated in the current concession round, and made clear that there was little prospect for speculative enterprises.

Those are not only adequate methods of operation but also sound principles, and I cannot see why they should not apply in this country. Norway has already ensured financial benefits for the nation through area fees, which in future will rise sharply after nine years, and through royalties fixed on the basis of a mutually-agreed royalty price, not much different from that suggested by the hon. Member for Bedford. The same applies to income tax.

Mr. Skeet

If the companies are prepared to accept the posted price and to pay taxes accordingly, what is the need for a whole variety of State companies?

Mr. Moonman

It has been pointed out that Norway is getting the best of both worlds. It is trying to use both methods. In a flexible industry, it is necessary to have as many new ways as possible of dealing with the problem. This is good business sense and not a doctrinaire point of view.

The Norwegian Government have between 5 and 40 per cent. of the interest in eight developments. There is no danger of the oil companies withdrawing from either the Norwegian or the British oilfields if we follow suit. The North Sea is much more stable than the Middle East, where nationalisation has been more arbitrary than anything we could think up or anything that the Scottish National Party could devise in the next three or four days.

Turning to the future, we must begin to consider some of the new technologies. Admittedly this debate has been about oil. This is the wrong perspective: there are other forms of energy. Solar energy is not science fiction. It can be used not necessarily as a substitute for fossil and nuclear fuels but in addition, for topping up. If the Secretary of State cannot answer this today, he might consider this form of energy and also the possibility of setting up a Select Committee.

After all, in a dozen countries, including the United States, the USSR, Israel, Japan and Australia, several million homes get their hot water from solar energy. Maximum exploitation will re- quire the building of a satellite solar power station. This is an excellent opportunity for a joint approach in Europe, but all our efforts will come to nothing unless the Department of Energy succeeds in breaking the stranglehold of Government red tape.

The Sunday Times said last weekend: The total incompetence of the British system of government at taking difficult decisions is underlined by the nuclear affair as much as by Concorde and Maplin. The arrogance of the 'behind closed doors' system of decision making is matched only by its ineptness. Profound changes are still needed. We have heard a great deal about open government over the last few years. This is the type of vehicle which would not only help the basis of decision making but would improve it.

We have the opportunity to turn over a new leaf in regard to energy. Will the Minister commit himself to a total energy policy? To do so meaningfully will mean getting across the answers to the fundamental questions that I now wish to put. First, what is the lead time to produce the necessary technological innovations and economic and social rearrangement? This was very much the point over Drumbuie. Second, how reliable are our estimates of our fossil fuel reserves? Third, how long will the world stocks of natural fuels last, and what is the availability of natural substitutes? Most important of all, is my right hon. Friend's Department equipped to answer these questions and make the decisions which are implicit in the answers?

6.28 p.m.

Mr. Alick Buchanan-Smith (North Angus and Mearns)

I should like to start by congratulating my hon. Friend the Member for Aberdeenshire, West (Mr. Fairgrieve) on his maiden speech. We were all impressed not only by the sincerity of his case on behalf of his constituents but also by his knowledge of the oil industry as it affects his constituency and North-East Scotland.

My hon. Friend showed a good balance in what he said. He showed concern about the present and about the Government's investment support which will be necessary in housing, and also in communications so that the people in North-East Scotland know what the Government are doing. He also looked to the future and the tremendous challenge for Scotland in sharing in the new technology and taking it to different parts of the world. Those who elected my hon. Friend will realise that they have in him a champion of their cause.

I thank the Secretary of State for Energy for his announcement about strengthening the Offshore Supplies Office in Glasgow. I hope that Scottish industry will respond to that lead. I wish well to the efforts of the departments which will be operating in Scotland in this way.

I also congratulate the right hon. Gentleman on what was implicit in his speech—the abandonment of the policy of nationalisation. This was in contrast to the hon. Member for Central Ayrshire (Mr. Lambie), who impressed upon his Government his desire for that policy. It did not go unnoticed that the hon. Member for Dundee, East (Mr. Wilson) pointed out that the hon. Member for Central Ayrshire had more in common with the Scottish National Party on this issue than with his own Front Bench. I hope that that does not go unnoticed in Scotland.

Mr. Gordon Wilson

I think that the hon. Gentleman has misconstrued my remarks. I was saying that the hon. Member's argument was more with his own Front Bench because it is within his Front Bench that he would hope to make changes, whereas any argument that he might have with us would be simply a matter of argument over why the carried-interest system is much superior, particularly in the early stages, to outright nationalisation.

Mr. Buchanan-Smith

I am glad that the hon. Member has modified his remarks, which were ouite clear to me, especially wtih regard to the future.

I thank the Secretary of State for the two or three things I have mentioned, but that is all I can thank him for. He left me with the impression that his speech had been written in advance of the debate and had not taken into account what my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) had said. He did not try to answer any of the questions put to him by my right hon. Friend.

I was interested in the right hon. Gentleman's concern about Lord Balogh —apparently a new protected breed which seems in danger of extinction. Apart from that, however, the right hon. Gentleman's speech was barren concerning tile future of the industry. My right hon. Friend did not ask the Secretary of State for a fully-fledged oil policy. He acknowledged that the Government had been in office for only a few weeks and that we want them to come to considered decisions.

What my right hon. Friend asked for but did not get was clarification of the many conflicting statements which the Secretary of State and his right hon. and hon. Friends have made about oil since they came to office. This is the kernel of the problem for the industry, which needs confidence and continuity. The right hon. Gentleman gave us neither, and he clarified none of the confusion which has surrounded statements made in recent weeks. He gave us a further proliferation and confusion of half-baked politics.

What was particularly curious was the right hon. Gentleman's obsession with the continual comparison of oil policy here and in the Middle East. This shows a total ignorance of the fact that Britain has a completely different economy and plays a different rôle in the world. We are a developed, mature country, an industrial nation trading in many commodities in almost every part of the world. The right hon. Gentleman's speech was yet one more example of the super, insulation of modern Socialism. I hope that his hon. Friend will attempt to reply to some of the pertinent questions put by my right hon. Friend. If he fails to do so, those concerned with this issue will have confirmation of their fears that the Government's mind is barren.

I turn to what we did during the years we were in government. [Laughter.] It is all very well for Labour Members to laugh. Some of them have not been to the areas where developments are taking place. They have not seen the great achievements. I say to the hon. Member for Dundee, East that there is no impudence on our part in raising this subject. We have a record in Scotland of which we are proud. I am happy that it should be deployed and discussed now. We have a fine record of achievement particularly in connection with the support of North Sea oil and offshore oil generally in Scotland. It is only in the past three and a half years that many of the opportunities have become realities.

The last Conservative Government invested millions of pounds in support of North Sea oil. We began a road improvement programme costing £60 million. This included work on the A9 from Perth to Invergordon and on the East Coast, on the Perth-Aberdeen-Inverness road. Ports are fundamental to the exploitation and development of North Sea oil. Anyone who visits Aberdeen, Peterhead, Montrose or Lerwick can see for himself the scale of the investment that has taken place under a Conservative Government. There has been similar investment in airports at Dalcross and Dyce. Housing has also been encouraged through local authority activity and the Scottish Special Housing Association.

Mrs. Winifred Ewing

What about schools?

Mr. Buchanan-Smith

We have also put money into education and other services. Investment in such services was exempted from the public expenditure cuts of last year. That was a measure of the importance we attached to this work. I ask the Minister to give us the assurance that this area will continue to be exempt from any future cuts in expenditure.

The action taken by the Government in the past few weeks does not encourage us to hope that the investment which we have stimulated will be carried forward with the same enthusiasm. Instead there has been increased expenditure in other directions. We see the risk of growing inflation following the surrender to those who oppose a coherent incomes policy. In the past week there have been swingeing tax increases on industry with a consequent threat to the growth of the economy. This puts at risk our programmes of investment and threatens current development. I ask the Minister to assure us that the work we began will be continued.

The Secretary of State spoke about slippage. That is something which can occur in this type of situation. But we are worried about the reasons for it. We have to accept the unavoidable reasons. What worries us is that some of the reasons may be avoidable. This was the burden of the questions put by my right hon. Friend the Member for Wanstead and Woodford. There could be tremendous dangers to planning inherent in this slippage question. The whole issue of planning brings into focus the conflict and confusion among different members of the Government.

Just after he came into office, the Secretary of State for Scotland was reported in the Scotsman of 13th March under a headline saying Mr Ross scraps Bill to acquire oil sites. The Aberdeen Press and Journal of 29th March carried the following headline: Strong-arm hints by Strang. On the one hand we have the Secretary of State saying that he intends to go slowly and wants to consider things while his colleague, using the mailed fist, lightly veiled, says "If you do not get things moving, we are prepared to shorten planning procedures." We have a right to know what the position is.

The statement made by the former Secretary of State on 31st January was sensible, taking appropriate account of the realities of the situation. Our proposals contained real safeguards. [Interruption]. I ask the Secretary of State to read the exchanges which took place on 31st January. In those exchanges we made it clear that our new planning procedures would be confined specifically to the production of offshore oil and gas. We pointed out that they would avoid proliferation of sites and would include provision for the proper restoration of sites. We in no way eroded the position of the Secretary of State for Scotland as regards his planning functions. Our proposals would have protected the rights of individuals and maintained the position of the Secretary of State for Scotland.

We have had no clarification so far of the Government's policy. I hope that we get it soon. What is worrying is that if confidence and continuity are lost, not only shall we lose production but we shall lose the opportunity for the United Kingdom to participate in the building and supply of modules for the production rigs. That is where we have to balance the effect on areas where the rigs are to be built with the effect on central Scotland and the industry there. These must benefit as much as the areas where development takes place.

Time does not stand still on this matter. We want to hear the Government's policy on how they will ensure that central Scotland and west Scotland benefit from North Sea oil.

6.46 p.m.

The Minister of State, Scottish Office (Mr. Bruce Millan)

During the debate we had the most agreeable maiden speech by the hon. Member for Aberdeenshire, West (Mr. Fairgrieve), and I begin by congratulating him on it. It was fluent and thoughtful and the various points he made will be taken into account by my right hon. Friend and myself. We look forward to hearing further contributions from the hon. Member whether on North Sea oil or on other matters.

The Government welcome the debate because it gives us an early opportunity not to produce an absolutely definitive policy about all aspects of North Sea oil and energy policy, because that could not be expected within so short a period, but of saying a number of important things about certain aspects of oil development. I shall not try to deal with questions of overall energy policy as my hon. Friend the Member for Basildon (Mr. Moonman) suggested I should, because that is a very wide subject. There is at present in progress an urgent review of energy policy generally and my right hon. Friend will announce the results of that and the form of the various inquiries in due course.

I want tonight to deal exclusively with oil. I begin with the remarks by the right hon. Member for Wanstead and Woodford (Mr. Jerkin). The simple answer is that the Conservative Government gave the oil companies in the North Sea more favourable terms than they had been able to obtain in any other part of the world, and we intend to see that this is changed. We intend to see that the national interest is protected at every point, and I fail to understand why the Opposition should get so excited and so dismayed at the prospect.

A number of references have been made to the Norwegian experience. I accept that Norway is not on all fours with the United Kingdom. However, the Norwegians adopted a very much tougher policy with the oil companies and have not frightened them away. It is utter nonsense for the Conservatives to say that the kind of proposals so far suggested by the Labour Party—the proposals that in due course we shall bring forward—are likely to scare the oil companies away from the North Sea. We are looking at all the possibilities in this sphere, which is what the right hon. Member for Wan-stead and Woodford is demanding, including the establishment of a State hydrocarbon corporation for oil with exclusive buying rights, with pre-State participation on the Norwegian model whereby the State may acquire an interest in fields already proved commercial, paying a proportion of the exploration and development costs and receiving the same proportion of the oil or profits.

We are reviewing licensing policy generally. Our conclusions on all these matters—these are merely some of the possibilities we are considering—will be announced in due course. I take it rather badly to be criticised by the Conservatives at this early stage on matters of licensing policy when only a year ago the most devastating Public Accounts Committee report ever issued showed very clearly the utter neglect of the national interest by the Tory Government in their policies on licensing and taxation of profits. On taxation I can only repeat what my right hon. Friend the Chancellor said in his Budget statement and, later, in the Budget debate. We are looking at these matters and we shall ensure that the oil companies in the North Sea pay their full share of profits tax in Britain and are not able to avoid it by devices arising either through defects in the taxation system or by artificial devices created by the oil companies.

The potential revenues coming to Britain are substantial. My right hon. Friend mentioned the latest estimates that the Government have made of profits of £3,000 million a year by 1980. These figures of course could be an underestimate depending on how the price of oil rises in the meantime. We intend to see that in the national interest we get our fair share of these vast profits which will be made out of the exploitation of an asset which is already nationalised. North Sea oil and gas are already owned by this country and cannot be exploited except by licence from the Government.

On the rate of extraction, the announcement today by the Burmah Oil Company of its latest find suggests that the reserves in the North Sea will be considerably increased. It now appears from today's indications that the Burmah find will be the biggest yet in the North Sea—bigger, for example, than the Forties field.

We pledged in our election manifesto to ensure that Scotland shared fully in the benefits of North Sea oil in terms of the revenue and otherwise, and that is a pledge we shall discharge when we produce our policies, which I hope will not be very long from now. There has been a general welcome to my right hon. Friend's announcement this afternoon about the setting up of the headquarters of the Offshore Supplies Office in Glasgow. I am glad that it was welcomed by the Opposition, particularly since we pressed that policy upon them when we were in opposition at the time of the establishment of the office and we were turned down because, in the immortal words of the then Under-Secretary of State for Energy, the centre of the energy industry in the United Kingdom was London and must always remain in London. That was an immutable fact according to the hon. Member for Honiton (Mr. Emery).

We have always recognised the need for the maximum involvement of Scottish industry not only in the exploitation of North Sea oil but in the offshore exploration and exploitation carried on in other parts of the world. This is a burgeoning industry on an international scale and we are not simply looking to the opportunities in the North Sea. The decision to site the office in Glasgow is a deliberate statement of the Government's view that it is important that the west central belt of Scotland should share fully in North Sea oil developments.

I turn now to the proposed centre for drilling technology. One of the gaps identified in the Government's review last year of education and training in offshore development was provision in the United Kingdom of short courses of training for senior personnel involved with drilling. These are drilling superintendents and tool pushers in charge of drilling operations on rigs offshore and engineers engaged by companies who are being trained as drilling engineers.

The Petroleum Industry Training Board has been looking at this matter and we expect to receive from it shortly a report which will go in the first instance to the Manpower Service Commission. The training board and the industry are agreed that the centre should be located in Scotland, probably at Livingston. I hope we shall soon have the final recommendations on the location. This is of great importance to Scotland. The decision has already been reached that this important training centre, which will serve the whole of the United Kingdom, should be established in Scotland. I take particular pleasure in making that announcement because with some of my hon. Friends I went to see the previous Minister of State, Department of Employment and Lord Polwarth several months ago to ask for an assurance that the centre would be established in Scotland. We did not get that assurance.

Mr. Ewing

Is my hon. Friend aware that Scottish Members do not wish this opportunity to pass without giving their thanks for yet another shift of the important offshore drilling technology centre to Livingston?

Mr. Millan

I welcome my hon. Friend's intervention. I wish that we had had some "Hear, hears"' from the Opposition.

Mrs. Winifred Ewing

Hear, hear.

Mr. Millan

The Scottish Nationalists are very welcome.

I now turn to the question of the Drumbuie oil production platforms. I take the two points that were made by the right hon. Member for Wanstead and Woodford. He asked whether we can guarantee that what we are doing will produce in 1977, a Condeep design for the North Sea, a platform which will have been constructed in Scotland. I cannot anticipate the decision that my right hon. Frind will make as planning Minister as a result of the Drumbuie inquiry.

If Conservative Members were so anxious about getting this design in the North Sea, they should have done something about the planning considerations long before 31st January. As the right hon. Member for Orkney and Shetland (Mr. Grimond) has accurately said, he and a number of other hon. Members asked the previous Government continually to say what their policy was on planning matters. It is no good coming along on 31st January, two days before the election is announced, and suggesting that a Bill will be introduced, and then complaining because the next Government do not take up that Bill.

My hon. Friend the Member for West Lothian (Mr. Dalyell) asked a pertinent question: whether the Condeep design is the only suitable platform designed for conditions in the North Sea. The previous Government had advice not only from the Department and from the construction companies but from the oil companies and from independent sources on the design of production platforms. I do not want to go further than that.

Evidence was given to the inquiry about such matters, and eventually a decision will have to be made on the evidence. My right hon. Friend will have to make up his mind following the inquiry. It is important that we clarify the matter, and I accept what my hon. Friend has said.

Mr. Dalyell


Mr. Millan

I can assure my hon. Friend that I take his point. I cannot go further than that.

My right hon. Friend the Secretary of State for Scotland is Scotland's planning Minister. He intends to discharge that function and he will not be overridden by any other Minister. I make that statement with the full concurrence of my right hon. Friend the Secretary of State for Energy. He does not believe that the same thing should happen now as happened under the previous Government—namely, when Lord Carrington was overriding the planning responsibilities of the Secretary of State for Scotland.

We have already said that in the meantime we are not proceeding with legislation for the acquisition of sites on the lines proposed by our predecessors. We shall not do so for two reasons. The first reason is that we did not want to have the Drumbuie inquiry prejudiced. The second reason is that we were not convinced that the kind of legislation which the previous Government had in mind was necessary.

We recognise that the circumstances with which local planning authorities are confronted in dealing with oil-related planning applications raise political and environmental issues which are novel and difficult. We are considering how we can best review the operation of the existing planning procedures, especially in the difficult and important oil-related applications. We must try to operate the machinery in a way which minimises possible delay and confusion. I hope that soon after Easter we shall be able to indicate how we have decided to proceed. Any review will take account not only of the need to take urgent action but also of the need to allow objectors their right to put their objections.

We have made two important announcements today about the Offshore Supplies Office and a centre for drilling technology. They are only the first of the important announcements which we shall make in our review of oil policy for the benefit of the people of Scotland and the people of the United Kingdom as a whole.

Mr. Walter Harrison (Treasurer of Her Majesty's Household)

I beg to ask leave to withdraw the motion.

Motion, by leave, withdrawn.

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