HC Deb 20 January 1975 vol 884 cc1006-8
14. Mr. Hannam

asked the Secretary of State for Energy what representations he has received from the oil extraction firms engaged in the North Sea since the Government published their proposals for oil revenue taxation and North Sea participation.

Mr. Varley

I am in continuous consultation with the oil companies about all aspects of North Sea policy.

Mr. Hannam

Does the Secretary of State agree that the Government have made a grave error of judgment in not completing the consultations before presenting to Parliament the hasty and ill-prepared Oil Taxation Bill which is based on oil revenue rather than on profits? Will not the Government change their mind, admit their error and change to an excess profits tax rather than a foolhardy tax which will deter development and exploration in the North Sea?

Mr. Varley

I do not accept the hon. Gentleman's strictures. All the oil companies with interests in the 12 commercial oilfields have been seen and informed of the general lines of Government policy, and my right hon. Friend the Paymaster-General made a statement to the Standing Committee last week.

Mr. Skinner

Will my right hon. Friend say whether the Paymaster-General's statement on the preservation of profits for the North Sea oil companies is compatible with the social contract and, perhaps even more important, whether it can also be reconciled with my right hon. Friend's attempt to get a large and significant slice of the £4,000 million of which he spoke before the last election?

Mr. Varley

I can give my hon. Friend an absolute assurance that we stand by the policy we outlined in our manifesto and by the policy I announced to the House in July.

Mr. Norman Lamont

Is the right hon. Gentleman aware that many people think that there is considerable validity in the point made by the hon. Member for Bolsover (Mr. Skinner) and that great confusion has been caused by the Chancellor of the Duchy of Lancaster's statement that the 51 per cent. participation will not affect oil company profits? People cannot see the point of taking a 51 per cent. stake in those companies. The confusion has been compounded by the right hon. Gentleman's refusal to answer the question by the hon. Member for Bolsover—the same question as was asked from the Opposition Front Bench last week.

Mr. Varley

If there is any confusion, it is in the hon. Gentleman's mind. The companies are examining the terms that we put to them and they have promised to come back and discuss them with us further.

Mr. William Hamilton

Since some of the oil companies have threatened to get out of the North Sea, will my right hon. Friend say whether they have indicated where else they could go on less tough terms than the Government are now suggesting?

Mr. Varley

My hon. Friend is on to a strong point. Every major oil-producing country, with the exception of the United States of America, has gone in for participation. Of course, we have always made it plain that there will be a continuing rôle for the companies in the North Sea, and far from exploration activity declining I hope to show in a later answer that it has been stepped up. There is a great deal of difference between exploration activity and development activity.

Mr. Patrick Jenkin

Further to the reply to the hon. Member for Fife, Central (Mr. Hamilton), may I ask whether the right hon. Gentleman is aware that the United States Government are proposing to lease 10 million acres of the outer Continental Shelf during 1975? Does he accept that he would do well to listen to some of the warnings which are now being expressed by the oil companies? Does he recognise that there is a need to come clean on the "no gain, no loss" suggestion by his right hon. Friend, and that, contrary to what he himself has said, neither the oil industry nor the Opposition know what he means or how it can be achieved?

Mr. Varley

The proposal was fully outlined in July when I made my statement to the House. The negotiations and the discussions that we are having with the companies are confidential and the House would not expect me to go into the details of them. At an appropriate stage I shall come to the House and provide the information that it requires.