HC Deb 29 July 1975 vol 896 cc1521-79


Order for Third Reading read.

4.22 p.m.

The Secretary of State for Energy (Mr. Anthony Wedgwood Benn)

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

The Bill is a major piece of legislation designed to develop and to defend a basic British interest—the oil resources discovered around our shores. Much is said about those resources, and I should like to introduce some words of caution. Offshore oil does not offer an automatic cheap solution to the nation's economic problems. Indeed, the investment involved by the companies concerned is enormous. Offshore oil is not a panacea that will allow us to sit back and enjoy the benefits. Anyone who has had even a brief acquaintance, as most hon. Members who have considered the Bill will have had, with the complexities and the risk, both financial and physical, of the oil man trying to win that oil will appreciate that. It is not even the greatest energy resource in the United Kingdom. We are rich in coal and gas. We are already supplying much energy from the North Sea, and we have a formidable nuclear capability as well as the oil.

We do not even own the oil. When I hear the debates about Scottish or English oil, I sometimes wonder whether those who argue so gaily about who owns it remember that under the licensing arrangements most of the oil is the property of the licensee. It does not follow that all natural resources benefit the people in whose territory they are discovered.

That having been said, our oil, gas and nuclear power offer this country energy self-sufficiency by 1980. They make us in energy terms far and away the strongest country in the Common Market. They offer us a better prospect of security of supply and influence in the world. I am reminded of what Ernest Bevin said after the war to the miners: "Give me 100 million tons of coal, and I will give you any foreign policy you want." I quote from memory. [An HON. MEMBER: "It was 50 million tons."] Was it? I consulted my hon. Friends on the back benches to find out the correct amount. It is still true that energy resources bear very much on a nation's power.

Our policy, contained in the Bill, which the Committee and the House on Report have authorised, and outlined in the manifesto, was to secure the maximum benefit possible for the British people and to provide for a proper defence of our legitimate interests. That is partly a matter that must be achieved in international negotiations. We must be constructive members of the Common Market, but at least I set myself the objective there of being as tough and, I hope, as skilful in support of our national interests as the French have always been in support of theirs. In our relations with the oil companies we must also see that those interests do not pass unsecured.

The House will know that in relations with the oil companies many companies of varying sizes are concerned. Some are small and highly specialised, such as the Hamilton Company, whose first oil came to the Isle of Grain. There are others of enormous size. Exxon with a turnover of$45 billion a year, Mobil with a turnover of$20 billion a year, and Gulf with a turnover of$17 billion a year, are the three biggest. They are companies of immense size with which the British Government, at present without much experience, will have to deal. I think that the House and the nation recognise that we need their investment and skill to develop the oil. They know that we need it. They must also know that any British Government would intend to safeguard the interests of our people with the same vigour as they would defend the interests of their company.

There is a substantial overlap of interest between the companies and the Government, but no "automaticity" of common interest. That is why we have thought it right to introduce the Bill. I believe that in the dealings between a British Government and the oil companies the right thing to do is to be absolutely straightforward, open and above board. I believe that in some of the things said in Committee hon. Members have underestimated the sophistication and experience of the oil companies in dealing with Governments around the world which have had their national interests to defend. But the key relationship should be one of complete straightforwardness and openness in the negotiations with them and in the legitimate defence of our interests.

We inherited from our predecessors a situation in which the national interest could not be safeguarded. We have had much discussion about this matter. I do not want to go back over it in any controversial spirit, but the fact is that there were long licences with only a requirement to drill for a short period. There were no provisions for participation, no petroleum revenue tax or royalty arrangements, no information powers or depletion control, no control over the ownership of licences or over flaring. We introduced the Bill to remedy those deficiencies. It provides for the establishment of the British National Oil Corporation and the National Oil Account, for participation and information and depletion control, and refinery and pipeline supervision. I believe that the powers in the Bill are the minimum necessary for any Government who find themselves with these resources to husband and secure.

In the course of the Committee and Report stages, amendments have been made. In accordance with normal practice, I should like to report to the House the gist of the main amendments. The main amendments to Part I were on the theme of making more information available to Parliament and the public or greater openness in government. Clause 15 was amended to require the annual report of the BNOC to contain a wider range of information, with particulars of consents given to the corporation to expand its activities downstream, and of general and specific directions given by the Secretary of State and the financial duties laid upon him by the corporation.

Yesterday, on Report, an undertaking was given that Parliament would be told how much petroleum revenue tax the BNOC would have paid if it had been liable. We have also provided for parliamentary audit and scrutiny of the National Oil Account.

I believe that, with all those provisions taken together, Parliament will have an opportunity without precedent for informed discussion of the corporation's affairs. This is only right. I said in Committee that it was my intention that this should happen, and I believe that the amendments have secured this. We have also made amendments to Schedules 2 and 3 which relate to new seaward and landward licences.

These amendments do not affect the principle of the Bill because the Government are determined to take substantial new controls over physical operations in the North Sea and over dealings in licence rights and to apply them to current licences—a step which we believe to be necessary. We have, however, thought it right to take full account of what the industry told us about the practicalities of control and the genuine difficulties which the industry could demonstrate were created for licensees or bankers. Hence our amendments, while not reducing the effectiveness of Government control, took account of the legitimate points made by the industry in its representations.

I think the industry would agree that no Bill of this character has ever been so fully discussed with those affected by it. I hope that that will be an indication of the relationship that Government will have on an outgoing basis with this industry. It reflects the theme of openness, and I am grateful to the industry for the help and advice it has given although I cannot and must not seek to commit it to the amendments we have made.

There have been a number of changes made giving the Government new controls over the rate of production. This is a most important new control and we regard it as crucial that it should be effective. The industry argued that as originally drafted it would have made it impossible for it to calculate the profitability of its investments and so would have made financing difficult. We therefore introduced amendments which left the Government with effective power to control the start of new fields, cut back existing fields and ensure that the licensee knew before developments started the maximum amount of cut-backs he could suffer.

We made another adjustment, also essential, to enforce continuing exploration to make it clear that unreasonable demands could not be placed on the licensee. We adjusted our power to ensure third party use of pipelines and to make it clear that the cost of any necessary modifications would be borne, as seems only reasonable, by the third party rather than by the owner of the pipeline. This was another case where we took account of the practical points raised by the industry. Those were the main amendments.

I come now to a brief report on the current state of participation, which was the subject of interrogation in Committee. The first round of meetings with the companies with commercial interests was last December. The Chancellor of the Duchy, the Paymaster-General and the Minister of State outlined the Government approach to participation at those meetings. In the following months both the Government and the companies concentrated their attention on the oil taxation legislation. Following the passage of that measure and the introduction of this Bill, the Government are now having constructive and detailed discussions about participation with over 20 companies, including companies large and small, United Kingdom and foreign, who have publicly announced their acceptance of participation in principle—BP, Burmah, Deminex, Tricentrol and Black-friars.

We have put financial proposals to the companies. We have invited them to put forward alternative proposals. Some have already done so. We have also said that we are willing to enter into discussions about the disposal of BNOC oil and the terms to be incorporated into operating agreements to ensure that minority interests are safeguarded. Our objective is to negotiate participation in a way which does not delay development and which protects the interests of those who are putting up the money for development while enabling BNOC to enter into an effective partnership with the companies, securing for the nation a direct title to a share of the oil. Anyone who has experience of complex negotiations and a complex industry will know that such negotiations take a long time. I cannot go into details. It seems to me, coming new to it, that the Government's proposals are fair and reasonable and that the negotiations have got off to a good start.

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

If the negotiations are unsuccessful will the Minister respect existing contracts?

Mr. Benn

Having failed, in my judgment, during Report stage yesterday to establish that the Government have behaved improperly, the hon. Gentleman ought not to try to imply on the basis of that shaky foundation that improper conduct might occur in future. I come now—

Mr. Skeet

No answer.

Mr. Benn

—to platforms. Production platforms are an important element in the offshore market not only because of their value but because of the value of the equipment placed on them. An installed platform can cost anything from£100 million to£150 million and the Government have regarded it as essential to encourage a strong platform building capability within the United Kingdom. Last Friday I placed in the Library details of our new forecasts of the demand for production platforms and announced that the Government have decided in the light of the forecasts to secure the development of a further site for the construction of concrete platforms. The new forecasts show that by the end of 1980 it is expected that 53 platforms will have been ordered for the United Kingdom sector of the North Sea although the range of possibilities is wider than that—from 43 to 61.

While these figures are lower than last year's estimates, the reduction in demand does not affect our estimate that self-sufficiency will be achieved by 1980. The 30 platforms which we estimate remain to be ordered represent a considerable opportunity for British industry, producing in total between£4 billion and£5 billion worth of business. If no further sites were developed for the construction of concrete platforms, we estimate, given the present capacity, that a number of orders would require to be placed abroad representing a loss of£200 million to£300 million in contracts to the United Kingdom with all that that would mean for employment and the balance of payments. We have concluded therefore that to maximise our involvement in the market it will be necessary to secure the development of further sites.

Mr. Gordon Wilson (Dundee, East)

May I ask the right hon. Gentleman whether, in view of the Government's platform policy and the down-turn in the orders forecast, the Government will make it in any way mandatory for all future platform construction orders to be steered towards Scotland and to sites which have been prepared? Second, will the right hon. Gentleman say what role the Government have in mind for encouragement of the important and developing market of sub-sea completions?

Mr. Benn

I would be grateful if the hon. Member would allow me to complete what I was saying. I am coming to that point. I do not believe that a statement in the North-East of England, where Laing's Offshore Pipes have been responsible for producing the Graythorp platforms, to the effect that all platforms should be built in Scotland would make industrial or political sense. The hon. Member is exceeding himself if he is now making aggressive attacks into England where platforms are built.

We have decided—and my hon. Friend the Minister of State announced this in Glasgow on Friday—to support development of a platform development site at Hunterston by the Andoc Consortium. The basis of support is a guarantee under the Offshore Petroleum Development (Scotland) Act covering loans up to a maximum of£1.5 million together with interest charges raised by Andoc with the Clydesdale Bank Limited to cover the cost of development. The guarantee will cease to be operative once the consortium has won an order.

In deciding to support Andoc we have ensured that we shall have sufficient capacity to meet the demand for platforms and we have taken positive steps to maximise British involvement in the offshore market. Having established this industrial capacity on a long-term basis for the permanent workforce, it is clearly of the greatest importance that as far as possible there should be continuity of work to make full economic use of those facilities and to avoid the loss of skilled craftsmen, key supervisory staff and workers.

There has been a temporary lull in the ordering of oil production platforms, which has understandably given rise to a good deal of concern both to unions and management at platform and module fabrication sites. We know that on present plans a number of orders are likely to be placed in 1976. If continuity is to be maintained at these sites it is desirable that the orders should be spaced out with a few of them being brought forward to the latter part of this year. Such rationalisation, if it is possible, is as much in the interests of the oil industry as it is in the interests of the United Kingdom industry. Without a reasonably even workload, the oil industry might find that there is not adequate capacity available in the United Kingdom to meet its requirements.

I announced when I was in Scotland recently that I am proposing to write to the chairmen of all the major oil companies operating in the United Kingdom sector asking them to consider these points and to let me have their comments. I hope that their response will be such that we can usefully take the necessary initiatives to overcome the present problem.

I now turn to the industrial content.

Mr. Sydney Bidwell (Ealing, Southall)

Does my right hon. Friend know anything of the Russian curiosity about what we are doing, and has he any thought about that? Perhaps we can sell the Russians some of our blueprints and make a bob or two in our present situation. Is there any reason why the Russians should not be supplied with these details? The Russians seem to be extraordinarily furtive and curious, with their naval activity, about what we are doing.

Mr. Benn

I am not qualified to comment on the question of Russian trawlers in the North Sea, except to say that platforms are built openly. We cannot miss them for about 50 miles around. If we are anywhere in the vicinity of Nigg we can see them being built. Russia is one of the biggest, if not the biggest, oil producing country in the world. Russia has a great deal of technology.

One of my interests in the development of our industrial capability is that we should be able to utilise our know-how in our domestic industry to achieve a commanding position in export markets. To that extent my hon. Friend is bearing on the point with which I sought to deal. There is now a market worth£1 billion a year in the United Kingdom. It provides employment, directly and indirectly, to many people. In Scotland alone, 40,000 oil-related jobs have been created.

It is the Government's intention that the industry should provide on a competitive basis a major and progressively increasing share of our domestic offshore market. This should be used as the foundation on which to establish a growing export market. But if that is to succeed, British industry must be given a full and fair opportunity to compete for business. The offshore oil operators have indicated their acceptance of the principle of full and fair opportunity. But there have been occasions when only lip service has been paid to that concept.

The present arrangements which the offshore supplies office uses rely on varying degrees of voluntary co-operation. I should obviously prefer to maintain these arrangements on a voluntary basis. We have drawn up a memorandum of understanding and a code of practice setting out in detail the procedures to be followed by all licensees and their contractors. We put this memorandum to the United Kingdom Offshore Operators' Association with a view to their giving an undertaking to adhere to the principles contained in it. That will, in effect, codify the existing practice which we have tried to establish. I should add, for the benefit of overseas competitors, that we are doing no more than we did in the past—namely, seeking a proper opportunity. Once that opportunity has been established, it is up to British industry to grasp it to the full.

There are differing views as to the involvement in the market at present. The most pessimistic analysis gives the figure of 40 per cent. United Kingdom content for all the orders placed in 1974. However, if we allow to a differing extent for the lag in certain areas of services of capability, or available capability, we reach a figure of nearly 60 per cent. or possibly even higher. The precise statistic is not important. The key to it is to see that the involvement of United Kingdom industry is progressively increased this year and in the future.

More needs to be done. My discussions with the operators will proceed on the basis of advancing that progress. The Opposition are entitled to know, in deciding whether to give their full hearted consent to the Bill—as I hope they will —the background against which the Government's policy is developing. That is right. It is the normal practice.

I now turn to two other important issues. The first is the development of normal membership of the trade union movement within the oil industry. I had the opportunity when I was in Aberdeen recently of meeting the committee concerned with this matter, which represented four major unions. It made representations to me on two scores. The first was access to permit membership to develop. The other was a safety aspect, which it connected closely with trade union membership I have undertaken to raise this matter with the four unions most concerned at a national level. I refer to the TGWU, the AUEW, and the seamen's and boilermakers' unions. I shall seek to inquire into the policy of the companies on this matter, to which the Government attach great importance.

The associated point arose in the recent Select Committee Report, on which I am not able to comment in detail in anticipation of the Government's formal response. It highlights the major importance of training and of providing a higher content of United Kingdom personnel in the oil industry. I attach a great deal of importance to that.

I now wish to say a few words about the progress in the North Sea. The Government reported in this year's Brown Book that 1974 had been a year of rapid expansion in exploration activity, and continued success in the discovery of and progress with oilfield development, with the result that 1975 would see the first production of United Kingdom offshore oil and the beginning of the climb to large-scale production within a few years.

Events since then have emphatically concerned the continuing momentum of activity in exploration. An average of just under 30 rigs have been operating on the United Kingdom Shelf in the first half of this year—more than ever before over a comparable period. Twelve new discoveries of oil have been made since the Brown Book was published. The third and fourth giant platforms have been towed out from the British yards and successfully installed on the field, raising the total number of fixed platforms now in position on the oilfields to six, with the converted drilling rig on Argylle making a seventh, and a concrete platform for the Beryl field now being installed. Our first month's production is behind us. If all goes well Argyll will be joined by three more fields before the end of the year.

The prospect of becoming a major producer, with all that that means for our international trading position, is steadily drawing closer. By the end of next year we hope to produce nearly 20 per cent. of our national consumption, thus eliminating a large volume of expensive imports. By 1980 and after our production rate should be equivalent to national demand.

I am happy to tell the House that Lord Kearton has accepted my invitation to become the first chairman of the British National Oil Corporation, subject to the enactment of the Bill. He will be chairman of the organising committee which I propose to set up to prepare for the establishment of the corporation. Having had the privilege of working with Lord Kearton not only as a long-time member of the atomic energy board and as chairman of the Industrial Reorganisation Corporation, I believe that his record in industry in addition, which is known to us all, allows me to say that the House will wish him well in his new appointment.

Mr. Patrick Jenkin (Wanstead and Woodford)

Will Lord Kearton be a part-time of full-time chairman, or a full-time chief executive?

Mr. Benn

Lord Kearton will be the chairman of the British National Oil Corporation and chairman of the organising committee. I shall be making a statement later about the BNOC. However, as the right hon. Gentleman knows better than most, after a Second Reading, and before enactment, the Government are in a position to announce only the organising committee. That is the intention. I believe that the Opposition will allow me to announce to the House the name of the chairman of the BNOC, and I shall be making further statements later.

The priorities for the policy we are adopting are that the BNOC should steadily develop its own capability and that we should increase the industrial content in North Sea operations, and that we should stimulate the normal trade union representation and develop the training of United Kingdom staff for that purpose. We shall move towards another round of licensing, when that becomes appropriate, in which we shall have an opportunity of taking into account the experience we have had and also some of the new powers which the Bill will give us.

The assets we are discussing constitute an important part of Britain's future. We have a duty to develop them rapidly, to safeguard them and to use them for the benefit of our people. Any Government would need to do that. Whatever may be its deficiencies in detail, the Bill is a serious attempt to secure on behalf of the British people their rights to a share of these resources, and I invite the House to give the Bill a Third Reading.

4.50 p.m.

Mr. Patrick Jenkin (Wanstead and Woodford)

The Secretary of State in his new and unaccustomed guise has beguiled the House, as he beguiled the Committee, with honeyed, soothing words, but we learnt fairly early to look at the small print and to realise how much or how little the right hon. Gentleman said. Neither he this afternoon nor his predecessor in the Second Reading debate on 30th April devoted any significant part of his speech to the Bill. They both preferred to talk about all the other factors surrounding the Bill rather than about the provisions of the Bill itself.

In the Second Reading debate I described the Bill as a "devastatingly bad" Bill. Despite the large number of amendments to which the right hon. Gentleman drew our attention this afternoon—which ran into some hundreds over the various stages of the Bill—it is still a devastatingly bad Bill.

It is a bad Bill primarily because it creates the irrelevant, unnecessary and damaging British National Oil Corporation. Another reason why it is a bad Bill is that a large part of the Committee stage and the whole of the Report stage were conducted under the stultifying constraints of the guillotine. It is difficult to decide which was the more unnecessary, the setting up of the BNOC or forcing the Bill through the House on a guillotine.

As a measure of the inadequacy of the debate, out of 150 amendments and two new clauses on yesterday's Order Paper, almost 100 were never reached. On Report and in Committee many amendments that were reached were not moved —in order to save time. Many others were dealt with hastily and superficially, again to save time.

This is no way for Parliament to handle a Bill which was described by the right hon. Gentleman's predecessor as: one of the most important ever to be brought before Parliament."—[Official Report, 30th April 1975; Vol. 891, c. 482.] There was only one reason for the guillotine, and that was that the Government were five months late in introducing the Bill. It is an outrageous abuse of power by a dictatorial parliamentary majority which has shown itself constantly to be more interested in doctrinaire Socialism than in national solvency.

What is so sad and what I find so depressing is that I believe that with good will and with an absence of dogma we could have agreed on a sensible pattern for this industry which is so vital for the future of Britain. We agree that the Exchequer should have a proper share of the revenues from the oil and gas. We agree that the Government should exercise proper controls over the operations. We agree that the Government need to have an expert understanding of the workings of the industry. We agree that there must be powers to regulate the rate of depletion. We agree that every effort must be made to press ahead with the development of offshore oil fields and exploring for new reservoirs if we are to achieve and sustain self-sufficiency. We agree, too, that for the forseeable future, only the oil industry can undertake these immensely complex and difficult tasks. That was underlined in the recent report by the Select Committee on Nationalised Industries. I only wish that in his constant reiteration of the need, as he says, to "defend" the national interest, the Secretary of State would stop casting the industry in the rôle of the enemy of the national interest.

We all agree, too, that it is essential that the industry is able to raise the cash to finance the investment involved and we agree that we need to secure a higher share of offshore orders for British industry. not only for platforms but also for drill rigs, pipelay barges, lifting barges and all the other areas where at present we have little or no capacity.

In all those matters, both sides of the House are agreed. What a tragedy it is that from the start the Government approached the problem in a typically doctrinaire way, using the occasion simply to lurch further along the road towards State Socialism. I say "typically" because the Bill is absolutely typical of the activities of the Labour Party. There is a vast extension of the public sector at huge cost to the taxpayer, with no discernible benefit whatever to the British people. I am content to adopt the verdict given on earlier nationalisation, of which we have long experience, by the hon. Member for Hartlepool (Mr. Leadbitter) when he said: I expect that at least the Government will respond and say that if there is a need to have a better kind of nationalization, it arises from the terrible mess that nationalised organisations have brought about."—[Official Report, Standing Committee D, 17th June 1975, c. 444.] My fear is that in this Bill we have the makings of yet another terrible mess.

I will not rehearse this afternoon all the defects of the Bill. My hon. Friends will no doubt be able to do that admirably. I shall refer only to one which the Secretary of State did not mention, but which is central to the creation and management of BNOC. I refer to the financial arrangements in the Bill.

The House will be aware of the general structure. The Bill sets up a National Oil Account. Into that account will go the£900 million to be borrowed under the Bill, all the royalties to be paid by the industry, all the BNOC revenues, although, as we established in Committee, they will consist largely of the bogus profits arising from the exemption from PRT. Out of the National Oil Account will come the sums needed for the corporation's capital investment, for its revenue expenditures and for the payment of compensation to companies which are obliged to surrender 51 per cent. of their interests. If there is a surplus, that surplus goes to the Consolidated Fund.

The sums we are talking about are vast. The royalties will build un to between£500 million and£600 million a year from 1980. The PRT exemption is worth at least another£500 million a year. So in addition to the£900 million in the Bill, we shall have well over£2,000 million up to 1980 and continuing at a figure of at least£1,000 million a year indefinitely thereafter.

Throughout the Committee stage, the Government never sought to deny the figures I put before the Committee. We argued that there was no need for a National Oil Account and that it was just a device to conceal the true magnitude of the funds necessary to finance the Corporation. I can understand that at this time the Treasury would be reluctant to see figures of the magnitude of£2,000 million or£3,000 million appearing on the face of the Bill. That would hardly be good for confidence.

One effect of the National Oil Account is to bypass effective parliamentary control of expenditure. Another is to weaken Treasury control of public expenditure. But the worst feature is that the National Oil Account is nothing more than an open-ended slush fund to finance State Socialism on a scale far beyond anything ever considered in the Industry Bill.

The powers of the corporation under Clause 2 are virtually unlimited. The only constraints are that some of them require the consent of the right hon. Gentleman. I find that officials in the House came to describe this measure as the "Pipelines Bill". In fact, the Bill is an enormous sewer down which thousands of millions of pounds of taxpayers' money will pour endlessly in support of futile, irrelevant and expensive Socialist schemes.

Mr. Russell Kerr (Feltham and Heston)

Is the right hon. Gentleman aware that the Select Committee on Nationalised Industries will specifically be looking into many of the matters about which he is now sounding off, and will in the natural course of events be reporting back to this Chamber?

Mr. Jenkin

I am delighted to hear that, but it will be a great deal too late. The Bill is now in its final stages in this House. We have yet to see what another place will do with it, but the powers are in the Bill. I hope that the hon. Gentleman will agree, with his responsibilities as Chairman of the Select Committee on Nationalised Industries, that no Parliament should give such vast, unregulated and open-ended resources to any Government, and that no Parliament should gives such unlimited powers to any Minister, let alone this Secretary of State, who has recently been tipped as Arthur Scargill's selection for No. 10. It means that revenues in the form of taxes and royalties, instead of being available for a reduction of the public sector borrowing requirement, for the modernisation of industry in Scotland and elsewhere or for an improvement in our social services will be squandered on the extravagant dreams of the Socialist oil sheikhs on the Government benches.

In the closing stages of this debate it is right that I should set out the Conservative approach to this legislation—

The Under-Secretary of State for Energy (Mr. John Smith)

Before the right hon. Gentleman turns to the Conservative approach, does he not recognise that under Clause 40 the National Oil Account has to be audited by the Comptroller and Auditor General, and that a report must be put before Parliament? Is not that an open way of having parliamentary control?

Mr. Jenkin

We discussed this matter at length in Committee. The hon. Gentleman is naive indeed if he believes that yet one more account from the Comptroller and Auditor General will significantly strengthen parliamentary control over the huge sums that will flow through the National Oil Account.

We remain entirely unconvinced that the benefits of taking a majority participation are remotely commensurate with the costs to the taxpayer as envisaged by Her Majesty's Government. We believe that a combination of proper taxes and a proper system of regulatory controls would ensure for the nation the benefits we must have from this national resource. We believe that the Government need to be much better equipped than they are to supervise and control the development of this resource. We believe that a properly constituted Oil Conservation Authority should be established to take over detailed execution of policy, absorbing parts of the Department of Energy in so doing.

We shall have to deal with the BNOC as we find it. It would be wrong for me to try to lay down specific proposals at this stage. We would see no sense in trying to build up the BNOC as an integrated oil company merely to duplicate the work of either the British oil industry, which is second in size only to that of the American industry, or of the regulatory authority which we would seek to establish. We would wish to consider a number of solutions. One might be to adopt the so-called BP solution for any holding then in the ownership of the BNOC. Another solution might be to follow the pattern of other countries in allowing members of the public to subscribe for shares in the enterprise.

I turn to the question of staffing. The Government are seeking to recruit many kinds of technologists for the BNOC such as geologists, geophysicists, reservoir engineers, petroleum engineers and economists. The Select Committee made it abundantly clear that such people are likely to be scarce for some time to come. Therefore, those who are recruited will have no difficulty in finding alternative employment if they wish to move elsewhere. I would expect, however, that many of the experts who join the BNOC between now and the next election could well join the staff of the conservation authority when that body is set up.

Despite the searches that have been made—and we note what the right hon. Gentleman said about Lord Kearton—but my question was not answered whether Lord Kearton is also to be the chief executive—we assume that the Government have not yet found the chief executive for whom they have been so extensively searching, despite the offer of a salary that would make even Mr. Paul Getty blush. However, if a chief executive is found, I cannot offer him the continuing prospect of running the BNOC as a fully-integrated State oil company. We see no purpose in investing taxpayers' money in such a venture.

Mr. Benn

There will be no job for you either.

Mr. Jenkin

The Bill has already done grave damage to the momentum of investment in the United Kingdom Continental Shelf.

Mr. Robert Hughes (Aberdeen, North)


Mr. Jenkin

Despite the bland optimism of the right hon. Gentleman, we know that the number of production platforms that will be needed is now substantially less than was estimated last year. To talk of a temporary lull is to deceive himself. We know that the number of rigs working on exploration is well below the figure which was forecast earlier for the middle of 1975. We know that the Government are seriously concerned that the rundown is already threatening jobs in many of the industries which supply and service the offshore effort. We know that no financial deals specifically linked with the United Kingdom Continental Shelf have been finalised for many months.

This is a tragedy for Britain. It is doubly tragic in that it stems not from any change in our need for self-sufficiency in oil—that need remains as great as ever it was—but from the crumbling confidence of the oil industry. For that the Energy Ministers on the Front Bench, the Government, the Labour Party and this Bill bear a grievous responsibility.

I ask the House to join me in refusing the Bill a Third Reading.

5.8 p.m.

Mr. J. Grimond (Orkney and Shetland)

I start by offering my good wishes to Lord Kearton. However much we may disapprove of the setting up of the BNOC, we wish him well. He is a very able man. However, I cannot help commenting upon his appointment. It is typical of the way we do things in this country. Lord Kearton is a man of my age—that is to say, he is, perhaps, in the late prime of life. He is very expert in synthetics, so he is taken at this time into an entirely new industry of great complexity and difficulty. I would have thought that he still has a great deal more to give to the synthetics industry. However, the custom of this country is not to keep people in industries which they know something about but to retire them for the purpose of allowing others to gain promotion.

What we are talking about is not doctrinaire Socialism. I have never been one to complain about doctrinal opinions in this House. After all, that is what the House of Commons is about. My complaint is that this is State capitalism. That is illustrated by the fact that people move in and out of the great so-called private businesses into the national businesses and find no difficulties and no differences in doing so. The motives are largely the same. The only difference is that State capitalism is removed from the discipline of the market.

I have two questions to ask about the appointment of Lord Kearton. First, when shall we know what his salary is to be? Can we be told about that?

Mr. Skeet

The Secretary of State would not tell me.

Mr. Grimond

Perhaps the Minister who makes the winding-up speech for the Government will tell us what his salary will be.

I suppose, too, that we can be absolutely certain that he will live in Scotland. The Government have made great play of the fact that the headquarters of BNOC will be in Scotland. The chairmanship will be a time-consuming job. Whether the person concerned is or is not the chief executive, he will have to be in his office all day and will have to live in Scotland.

Mr. Alexander Fletcher (Edinburgh, North)

In Committee I was assured by the Under-Secretary of State for Energy that the chairman of BNOC not only would live in Scotland, but in Glasgow.

Mr. Grimond

That is a very interesting comment.

I should like to deal with two specific points. In Committee I raised the question of the wide powers contained in Clause 2, particularly the powers given to the corporation to discharge the services demanded of it by other Ministers of the Crown. I regard the provisions of Clause 2(1)(d) as being outside the Title of the Bill and I hope that the Government will re-examine this matter. I do not see why the powers are not limited to the purposes of the corporation.

I also asked some questions about Clauses 20 and 21 and Schedule 4. It should be made clear that the whole of the Bill is subject to the ordinary planning procedures. There will be difficulties over the subject of landfall. The Minister may determine the route of the pipe, but as soon as installations take place on land questions of access will arise. Those are matters for local authorities and involve planning consent. That matter should be clear in the Bill.

I also raised the question of information and consultation and, if necessary, compensation to those affected—for example, certain land holders, local authorities and fishermen. The Minister said that he would look into these matters. I hope that he will find time this afternoon to assure the House that these points will be dealt with in another place. I attach the greatest importance to them.

On the wider matters dealt with in the Bill I should like to emphasise that one of the most serious considerations involves breaches of contract. I make no apology for dealing with this question again. The Government have given no reply to it. It is one thing for people to understand that they are subject to general changes in taxation. It is a different matter when the Government are breaking commercial or semi-commercial contracts entered into in specific cases. If a Government Department grants a lease, for instance, it must abide by it. It is not entitled, if there is no break in the lease, to demand a higher rent simply because other rents have been increased.

What is the reason given for this course of action? The Government say that it is to be done in the national interest. The Government confuse the situation by referring to "the national interest". What does it mean? In reality they are talking about the Government's interest—which is very different from the interests of the people in the country at large. This point is obvious to anybody who goes about the country. One of the unfortunate features of our society is the dislike and distrust of the Government by those whom they govern. All Governments attempt to extend their power. Ministers, advisers, top bureaucrats all seek to build their empires. This has been the story throughout history. I regard greed for power as more dangerous than greed for money. The tycoons who operated in the nineteenth century were not nearly as dangerous as Ministers and bureaucrats who are intent on extending their empires. At the moment the Government machinery is extending its power and also providing those involved with more money.

I do not agree that people regard the nationalised industries as belonging to them, or that they feel they are any better served by those industries than they are by private enterprise. I said in Committee that if we were to ask people in the street whether they prefer the nationalised industries to Marks and Spencer's, they would overwhelmingly plump for the latter. If the man in the street is asked whether he would rather have cheap petrol from Shell or BP or expensive petrol from BNOC, there is no doubt what his answer will be.

A serious feature of the Bill is that the Government have a vested interest in expensive petrol. Ministers know that unless they can keep up the price of North Sea oil they will be in a fearful muddle. It is now a definite interest of the Government to keep up the price of that oil.

Mr. John Smith

The right hon. Gentleman is seeking to address himself to the test of popular acceptability. Is that a wise course for a Liberal to take?

Mr. Grimond

I do not know that it necessarily applies to Liberals but the fact is that we now have a Government whose success of operation is tied to expensive oil. When the people come to realise these things they will not be pacified by being told that it is part of the business of extending the national interest.

The most extraordinary feature of the Bill is its lack of contribution to solving our present economic situation. It will increase the numbers needed in the Civil Service. It will slow down development in the North Sea. It will involve the taxpayer in vast speculation of a highly dangerous sort. It will make devolution in Scotland more difficult. It will create uncertainty at a time of economic difficulty, and, I repeat, it will not assist in any way in the solution of our present economic crisis.

Mr. Russell Kerr

Now the right hon. Member is being doctrinaire.

Mr. Grimond

I am being doctrinaire about this matter because I regard this as a bad Bill. It is a Bill produced by lunatics for a lunatic situation brought about by the Government.

Mr. Deputy Speaker (Mr. Oscar Murton)

I should like to remind the House that this debate will conclude at 7 o'clock and that there are a considerable number of right hon. and hon. Members who desire to take part. Ten-minute speeches would be in the interests of all.

5.18 p.m.

Mr. Robert Hughes (Aberdeen, North)

The right hon. Member for Orkney and Shetland (Mr. Grimond) will forgive me if I do not follow him down the road which he trod when seeking to canvass the general views of the public about the nationalised industries compared with the operations of private industry. If they are asked whether they prefer cheap petrol from BP or Shell to a more expensive variety from BNOC, of course they will say that they prefer the cheaper petrol from private industry. Similarly, if people were asked whether they would prefer cheaper petrol from BNOC to a more expensive petrol from Shell or BP they would give the answer that they would prefer the cheaper petrol from the corporation. I am not sure that the answer to those questions is relevant or would have any great meaning. Therefore, I shall not be tempted down that path, especially since the Chair has appealed for brief speeches.

I very much welcome the Third Reading of this Bill. There was a commitment in the Labour Party election manifesto to set up the corporation, to take State participation in the oil industry, and to see that the British people get the best benefit from these vast resources. This should be welcomed in all parts of the House.

The right hon. Member for Wanstead and Woodford (Mr. Jenkin) made his usual declaration about doctrinaire Socialist policies. That course is always followed by Opposition Members when the Labour Party in Government pursues policies which equate with those in the Labour Party manifesto. We are then accused of being doctrinaire. However, when the Opposition, in their manifesto commitments, rely on taxation as the best way of dealing with the North Sea oil problem they wish to be regarded as being objective and not in the least concerned with a doctrinaire approach. That is a transparent attitude. It would be more honest to tell the country that they believe in the private enterprise system. They are entitled to say that, and if they were to take that course the situation would be far clearer for the general public. It is a little sad that they should constantly accuse Labour Members of being doctrinaire.

Mr. Patrick Jenkin

I hope that the hon. Member recognises that I tried to indicate the very wide measure of agreement on objectives that exists between the two sides in this area, and that it was only the adherence of the Labour Party to the doctrines of public enterprise that has produced this dreadful Bill.

Mr. Hughes

I am afraid that the right hon. Gentleman's explanation of his major speech added nothing to it, so I think we should just let the matter rest.

The one sad comment I make about the Bill is that it has taken too long to appear. The members of the Labour Party's working party on the North Sea, on energy resources, which as long ago as 1967 produced the suggestion that there should be a national hydrocarbon corporation, must be a little sorry that the Minister of Fuel and Power—or whatever he was then called: the titles change so rapidly that I cannot keep up with them —did not act on the working party's proposal. Otherwise we should now be in a much better position than we are to make BNOC succeed.

I still have no doubts that BNOC will succeed, and, despite the worries expressed from time to time about staffing, training, and so forth, I think it is worth recording that the Norwegians, when they were visited by the Select Committee on Nationalised Industries, said that they were much more optimistic than even the British Gas Corporation, the National Coal Board or the oil companies in Britain. Indeed, the Select Committee said—I can quote chapter and verse if required—that Norway's experience in developing and expanding its staff should give us confidence for the future. I believe that there is a great deal of confidence in the future.

I am very happy indeed that my right hon. Friend and the Under-Secretary of State were able to announce the development of the Hunterston site. It is an earnest of the Government's commitment to see that in Scotland we get as much benefit as we can from the technology of North Sea oil and the orders relating to it.

We are all agreed that we want to see the maximum possible British commitment not only to production platforms but to other aspects of North Sea technology. The Bill gives, in my view, a first-class outline of the role of the BNOC in Clause 2(1): (a) to search for and get petroleum existing in its natural condition in strata in any part of the world; (b), to move, store and treat petroleum and anything derived from it; (c) to buy, sell and otherwise deal in petroleum and anything derived from it". That is a very wide and detailed remit, but one of the most important parts of the Bill is Clause 2(1)(f): to provide any person with advice or assistance of any kind, including research services and training facilities, as respects any matter in which the Corporation has skill or experience. I hope that my right hon. Friend and my hon. Friend the Under-Secretary of State will encourage from the beginning the growth of research into technology, and into expanding technology, for in a sense this great enterprise in the North Sea is going on not only because of the need for Britain to become self-sufficient in oil, and the need to get energy resources. It also derives from a growth of technology. The exploration of the North Sea for oil would have started much earlier if the knowledge and know-how of oil companies had been such that they knew a lot more about underwater technology.

I want to see stress laid on technology. We in Scotland—I say this partly as a Scottish Member and partly because of my recognition of the needs of other development areas in the United Kingdom—have seen panaceas of one kind and another presented for the malaise of Scottish industry which has lasted over decades. The last time we had such a forward-looking policy and some prospects of a secure and an expanding future was at the time of the growth of the electronics industry. When the electronics industry came to Fife and to other parts of Scotland—my hon. Friend the Member for Fife, Central (Mr. Hamilton) can quote from his own experience—we thought that this would give us something to build on. In fact, technology passed us by, and now we have seen the beginning of a decline in that industry. How serious this has been is not a matter for debate now, but it tends to suggest that we must not look to one single business as a panacea for the unemployment evils of Scotland.

We know that the technology in the North Sea has changed even in the short time of its exploration. We have seen the different kinds of platform and the move towards concrete structures, and there have been discussions about undersea completions, and so on. If we are to progress in the export market, as my right hon. Friend suggested, we ought to be keeping technology up to date so that we are not passed by.

Again, I want to stress that while North Sea oil gives us the possibility of a secure base upon which to build the economy of Scotland and elsewhere I am a little concerned that we may become so optimistic that we regard North Sea oil as being the only solution to our problem. There have been umpteen reports about the economy of North Sea oil, the economy of work offshore and on shore, but I have always had a nagging concern and worry, which I expressed almost from the moment that North Sea oil was first discovered. It is that the traditional industries in Aberdeen, in the north-east of Scotland, would fail to survive the stresses and strains of sudden high wages and the demand for labour, and would, as a result, go to the wall.

I am afraid that that will happen, that when the exploration is finished and the production gets into full swing the number of jobs will decline. There will still be a residue of jobs—perhaps 10,000 or 12,000 in the north-east—but the economy will not continue to build up in the way that it has in the past, and it will not remain at that high level. If in the process we destroy our existing industries and have nothing with which to replace them and the boom begins to pass us by, the people in the north-east of Scotland will feel aggrieved. I hope that we shall be able to look forward to improving the technology and bringing in new industries which will give us a long-term future.

I would agree with one comment made by the right hon. Member for Orkney and Shetland (Mr. Grimond). Whatever our differences in the Standing Committee, whether doctrinal differences or differences in detail about BNOC, or about the future, we are agreed on one thing—that we want to see the best possible for BNOC, and to see it succeed.

The right hon. Gentleman said—or it may have been the hon. Member for Bedford (Mr. Skeet) from a sedentary position—that what we are seeking is not Socialism but State capitalism, and I would not quarrel about that. This is certainly State capitalism. I am not naive enough to suggest that we can suddenly arrive at a full-blooded Socialist society —even if we were to agree on what that is—in the process of the carrying through Parliament of a Bill with the rather esoteric totle of Petroleum and Submarine Pipe-lines Bill. A productive State enterprise with an expanding future is one of the things I should like to see on the road to Socialism. At the end of the day what matters is not abstract concepts of State capitlaism or otherwise, but how people in this country will benefit.

I said yesterday that up to now all our natural resources had been raped for the benefit of the powerful and the big. I believe that today is a significant one because it is a start towards the time when the resources of this country will be harnessed for the benefit of the people at large. That must be good for the people and good for us all.

5.29 p.m.

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

I want to indicate to the Under-Secretary of State my reasons for not supporting the Bill.

First, the Bill establishes a new State entity, the BNOC, when it is unnecessary to do so. The vast accumulation of political powers may become a powerful source of political patronage for the Government parties. This has been amply illustrated by ENI of Italy, which is very much the model for the BNOC.

Second, BNOC, coupled with 51 per cent. participation in North Sea commercial oil fields, is a farce. This involves negotiations with between 36 to 40 companies. It is based on the fiction that the people own the assets of the enterprises, but ultimately they become concerned in paying the bills and writing off the losses. Participation, as was indicated recently by the Shah of Persia, in granting a 49 per cent. stake to employees and the public in manufacturing companies, would have been much more preferable.

Indeed, acceptance of the principle outlined in the Alberta Energy Co. Ltd., under which 50 per cent. of the company's capital was open to public participation, and which I recommended at the Committee stage, would have been a much more acceptable alternative. I said in Committee that the total shareholding of any one investor had been limited to 1 per cent. of the share issue. The company is capitalised at$500 million and is divided into 100 million shares. Thus, it was open to everyone in Canada to buy a block of the stock. Of course, first preference was given to Albertans, with second preference going to Canadians. In the case of the BNOC, we have State capitalism, where the holders of all stock are the British Government. The individual has no interest whatsoever. He has only indirect contact through this House.

Third, substantial encroachment of the State into the private sector is likely to lead to unfair discrimination against firms operating in the area and will engender competitive advantages for the BNOC through privileged access to capital and exemption from PRT. The Secretary of State refused to write into the Bill a clause similar to that appearing in the Iron and Steel Act guaranteeing fair trading conditions.

Fourth, the Government have adopted an insular attitude to British oil, especially over their approach to the depletion provisions—model Clause 16. Mr. Simonet is right when he suggests that Britain must not hog the oil which is available in the Community as Britain is virtually the only producer. The provisions in the Bill probably are incompatible with Article 11 of GATT and Articles 34 and 37 of the Rome Treaties and may well create difficulties in carrying out our pledges under the pooling arrangements agreed with the International Energy Agency. I make brief reference to a speech by Mr. Simonet on 8th July in the European Parliament. He said: You cannot ask others to organise a system of protection aimed at allowing the production of your oil, and at one and the same time insist at every opportunity on the fact that you want to keep it to yourselves…I do not see why you should not produce it to satisfy your own needs and those of others, thus easing the pressures on your balance of payments, and also in order to sell it. Fifth, Clauses 18 and 19 constitute a gross breach of contract involving existing licences by the Government themselves who supposedly are the authors of law and the guardians of citizens rights. This legal larceny has been perpetrated by Parliament itself, and it seems to have created no concern among Government supporters, although compensation and arbitration have been refused to the aggrieved parties.

Sixth, the provisions in the Bill are bureaucratic and would make the labyrinth of passages in "Alice in Wonderland" look like a straight road. Emperor Diocletian would have been proud of the Socialist Government's performance.

Seventh, an acceptable form of control, conservation and the maintenance of good oil field practices could properly be maintained by a conservation agency such as that noted in Alberta, Canada, that of the Railroad Commission in Texas and that of the Petroleum Inspectorate in Norway. The experience of these and other nations has been completely rejected by the Government in their determination to press ahead with further State control.

Eighth, the Bill is premature, even though it was introduced late in the present Parliament. Negotiations over securing 51 per cent. participation have not yet been completed and will remain outstanding until the end of the year. Agreements have not yet been reached with the companies on the contents of the model clauses. These are simply imposed on existing and new licences. Financial arrangements are in doubt and, as matters now stand, they will add a further burden to the Government's borrowing requirements. The National Coal Board is being deprived of its assets virtually without compensation.

Finally, the Government have no experience, little expertise, have chosen the wrong model, and are about to set up a State entity with little understanding of what it is intended to do.

I do not think that it would be right to sit down without congratulating the new chairman of the BNOC. Temperamentally, he may get on very well with the Secretary of State. In future—and he may have several years ahead of him before he is merged with the British Gas Corporation—he will have to do his best. I hope that his salary is proportionate to it. I look forward to hearing further details.

I agree with my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin), however, that we cannot agree with this Bill. It is a piece of Socialism. It is bad legislation. It is bad for Parliament, and bad for the people.

5.35 p.m.

Mr. Dennis Canavan (West Stirling-shire)

I, to, agree with the former Secretary of State for Energy who said that this was one of the most important pieces of legislation ever to come before this House. Certainly it is, in my view, one of the most important to come before this House in my short time here. I was privileged to be here to witness the genesis of the Bill. I sat here dutifully when it was introduced and given a First Reading. I was privileged to take part in the Second Reading debate. In Committee I even spoke out now and again, when the Whip allowed me. I cannot remember his advising me to vote twice, but I voted dutifully when the occasion arose, and I notice from Hansard that even last night on Report I am credited with a three-word intervention. However, I am determined to get my oar in on Third Reading before the Bill goes to the other place and finally on to the statute book.

I was surprised to hear the right hon. Member for Wanstead and Woodford (Mr. Jenkin) say that there had been some disadvantage suffered by the Opposition as a result of the guillotine. My memory is that in the early stages of the Committee proceedings we were subjected to a lot of time wasting tactics on the part of the Opposition. They dealt at great length with very trivial amendments, with the result that even eager young Government supporters like myself who were willing to speak on more serious aspects found it very difficult to do so.

Mr. Patrick Jenkin

The hon. Gentleman will recall that during the passage of the guillotine motion not one word of criticism was uttered about the time that the Opposition had taken on the Bill to date. In 19 Sittings of the Committee the Government got 19 clauses. That is extremely good progress. This Bill has been guillotined because of Government incompetence.

Mr. Canavan

The real reason for the guillotine was the time-wasting tactics of the Opposition and the critical state of the country's economy which necessitates getting the Bill on the statute book as soon as possible.

It would not be so bad if Opposition Members came up with reasonable arguments against the Bill. Unfortunately, much of what they contributed in Committee was sheer trivia or doctrinaire type remarks. They also tried to take advantage of the fact that there was a change in the Government's boss half way through the Committee when the present Secretary of State took over. They took advantage of this and tried to make silly political capital about it, combined with very personal remarks about my right hon. Friend's ability in his present job and his public acceptability in his previous job. However, the Secretary of State has shown by his brilliance and expertise that he is a very able person—

Mr. Skeet

Which one?

Mr. Canavan

Both the previous Secretary of State and the present one have shown their ability to offer a measure of continuity in order to get this Bill on to the statute book as soon as possible. It is clear that Conservative Members are becoming a little annoyed about my criticism of them.

Unfortunately, the hon. Member who represented the Scottish National Party in Committee was not much better. He complained—and the hon. Member for Aberdeenshire, East (Mr. Henderson) was at it again last night—that his party was not sufficiently strongly or fairly represented on the Committee. He said that this showed a lack of democracy and that it was completely unrepresentative.

It is some time since I taught mathematics. However, I remind the House that there are 11 Scottish National Party Members in the House, of a total of 635. There were 25 Members who served on the Standing Committee. Taking 11, dividing it by 635 and then multiplying the answer by 25, we get an answer of approximately 0.43. Unless we accept that the hon. Member for Dundee, East (Mr. Wilson) is less than half a man or less than half a mind, it appears that the Scottish National Party had more than double the representation to which it was entitled.

Mr. Gordon Wilson

Is the hon. Member for West Stirlingshire (Mr. Canavan) aware of the complicated rules that exist in the House concerning membership of Committees? On the basis of his own calculations, can he explain how members of the Scottish Conservative and Unionist Party fare? That party, which is an entirely different organisation from the Conservative Party, which does not have the word "Unionist" in its title, issues its own separate manifesto for Scotland.

Mr. Canavan

I have no idea of the machinations that go on behind the scenes of the debating Chamber in selecting Committees any more than the hon. Member for Dundee, East. However, I am making the point that the hon. Gentleman's party seems to have had more than twice its entitlement when we consider its proportionate representation in the House.

There have been two attempts, one a full-blooded attempt in Committee and the other a half-hearted attempt last night, by the Scottish National Party to break up the British National Oil Corporation into either four separate units or four divisions with a certain degree of autonomy. I imagine that any Scotsman would be pleased with the news that the BNOC will have its headquarters in Glasgow and thereby bring great benefit to the Scottish people. However, the Scottish National Party wants to break it up into four sections. Either it is being illogical by acting against the best interests of the Scottish people by wanting to hive off three-quarters of the BNOC elsewhere, or it is being selfish in wanting the lion's share which it imagines it will get, although perhaps the people of Orkney and Shetland would act differently if the SNP ever got the powers it is after. In any event the Scottish National Party is showing a complete disregard for the under-privileged people of this country. When I say "this country" I do not mean just the under-privileged people on Clydeside and other areas in Scotland, but also, for example, the people in the constituency of my hon. Friend the Member for Leeds, West (Mr. Dean), or my hon. Friend the Member for Hartlepool (Mr. Lradbitter),or, indeed, anyone else who has spoken out and put in a great deal of work in committee and a great deal of work for the under-privileged.

Mr. Gordon Wilson


Mr. Canavan

I shall not give way any more because I am too often accused of making long speeches.

It was quite significant that last night when the Scottish National Party had a second bite at its chauvinistic cherry, it could only muster seven members in the Division and not the full first eleven. I am glad to see that the hon. Member for Moray and Nairn (Mrs. Ewing) is gracing us with her presence tonight, because she was conspicuous by her absence along with other Scottish Nationalist Members last night. It would appear that they have been quite defeatist in that respect.

Another unfortunate aspect is that in Committee Opposition Members from all parties sought to limit the scope of the BNOC so that it would not have the power and ability to operate at international level. They wanted to restrict its powers to territorial waters, whereas the Labour Party envisages it operating with the same powers and the same scope as the multi-nationals whose interests many Opposition Members are determined to defend.

In my view it is not a question of whether the control of the oil, the resources and the benefits from the oil are administered through a company based in Scotland or England or Northern Ireland or Wales. It is not a question of nationality or geography. It is important that the control is based in such a way that the company is answerable to elected representatives of the people and that the profits from that company are applied to the needs of the people. That is the main reason why the BNOC is being created.

I am sorry to see that the right hon. Member for Wanstead and Woodford has gone to the safety of the cross benches. Perhaps he will return to his seat and explain an article in The Scotsman of 1st July this year. The article was called "Free Enterprise Day". The right hon. Gentleman took part in a full supplement advertisement concerning the benefits of free enterprise. Heaven knows where the benefits of free enterprise are when we consider the state of the economy which the previous Conservative Government left us with. The right hon. Gentleman concluded a long, and, no doubt, well paid article, with the following remarks, that we ought to recognise that the private enterprise oil industry is far the best instrument available to make sure we get the benefit of our new 'black gold'. The operative question is who are the "we" to whom the right hon. Gentleman was referring? Perhaps he means the multi-nationals and other private entrepreneurs who paid him very well and who paid The Scotsman very well to publicise this claptrap.

Mr. Patrick Jenkin

I was paid nothing whatever for that article.

Mr. Canavan

The right hon. Gentleman was paid nothing perhaps in pounds and pence. I often contribute to various journals for nothing, and indeed, I expect nothing in return. However, I am sure that, even if the right hon. Gentleman did not benefit individually from the article, his party and he indirectly will benefit from the various companies which put money into Conservative Party funds.

In my view the profits from the oil should go to the benefit of the people of this country and the Bill is a useful instrument to that end. I ask my hon. Friend the Under-Secretary of State to tell his right hon. Friend the Secretary of State that the success or failure of the Bill will hinge upon the success or failure of the participation negotiations which are taking place between the Chancellor of the Duchy of Lancaster and the oil companies. It is regrettable that only three relatively minor companies have so far come to an agreement. I hope that my right hon. Friend the Secretary of State for Energy will ensure that he is seen to be the master of his own household and tell the Chancellor of the Duchy of Lancaster that we do not want the control of the oil to remain with the multinational oil companies. We want the control to rest with the Department of Energy, which is accountable to Parliament, so that the full fruits and benefits of the oil can go to the working people of this country.

5.47 p.m.

Mr. Gordon Wilson (Dundee, East)

I do not wish to follow the example and the remarks of the hon. Member for West Stirlingshire (Mr. Canavan). If I did so I should waste about 10 to 12 minutes saying absolutely nothing.

I turn to the initial comments by the Secretary of State for Energy. On the question of the benefits which will come, as he said, to the British people, if we analyse the sort of benefits which will come we find that they are few. The one thing that the hon. Member for West Stirlingshire did was to question very closely the Under-Secretary of State for Energy about what kind of negotiations are proceeding on participation. If he looks at the position more closely he will discover that already the sell-out has taken place and that there will be no effective participation except in very onerous terms on existing licences.

From the point of view of my party we must examine the various tests which the Bill applies. I do not accept that the maximum benefit to the British people is any sort of litmus test. Our test is the maximum benefit to the Scottish people to whom the oil belongs. Comments have been made by certain hon. Members about selfishness and British oil. I should like to hear them say that they would give the oil and resources to the southern part of Italy, India or other countries. They have no intention of doing that. They want to maintain as much as they can for the people of England who constitute 90 per cent. of the population of the United Kingdom.

On participation, I want to lay a considerable degree of emphasis on what the Government are doing. This is part of the package with which we are dealing. We dealt first with offshore development in Scotland. The Government got their sums wrong in the autumn regarding the numbers of orders coming in for platforms.

Secondly, we dealt with the Oil Taxation Act, as it now is. Those who served on the Oil Taxation Bill Committee found that, while all the work was being done in Committee, the negotiations were proceeding outwith their presence. At the end of the day we discovered—this view is not shared by others on this side of the House—that the Government had sold out at what we calculated was a 65 per cent. take, but what they calculated was 70 per cent. which, in our view, was still too low.

It was said that, with public participation, the incremental benefit to the United Kingdom would be increased. Looking at the interesting document which was issued by the House of Commons Library, we find that on participation it is intended to increase the take which any Government would get from a resource such as oil or natural gas. In this instance we find that the effective participation element is being taken as a form of control or regulation of the oil industry in the North Sea rather than as a means of upgrading the interests which the people have in that resource. Therefore, it is with grave disappointment that I must register the way that this sell out has taken place.

I should like to question the Government again on this matter. If they say that there is to be no gain or no loss what increase do they expect to receive in the overall percentage take? Will it go up from their figure of 70 per cent. to something like 80 per cent. or 90 per cent.? We do not know. This is an opportunity for the Under-Secretary of State, who claims to be privy to what is going on between the three Ministers who are dealing with this matter, to let the House know. We are entitled to know, regardless of our various political viewpoints, what is happening behind our backs.

What amount of the annual royalties and revenues, is likely to be sent to the BNOC, particularly in view of its structure?

What compensation will be paid to the oil companies for any participation which the Government may get on existing licences?

All these questions were posed at different times in Committee. In effect, the Government are asking us to sign a blank cheque on the fundamental question of participation with which we are really in agreement.

Criticisms were made last night about the structure which has been adopted for the BNOC. I will not rehearse them in great detail because we went over them yesterday. At the end of the day we have a body which will be highly centralised, which will not adopt either of the two structures which I suggested, and which leaves in doubt what sort of contribution or control Scotland will have over its offshore industry.

The news of the appointment of Lord Kearton must be cause for some concern. We do not know what experience he has of Scotland. Will the Under-Secretary give an undertaking that Lord Kearton, like the other members or employees of the BNOC, will live in Glasgow? Will he live in Scotland? Will he be a full-time chairman devoting his whole efforts towards the development of the Scottish interest? If the hon. Gentleman cannot give these undertakings, we shall view Lord Kearton's appointment with some jaundice. Could not a Scot, skilled or unskilled in the oil industry, be found to take this position?

Mr. William Hamilton (Fife, Central)

Hamish Watt.

Mr. Canavan

Hugh Fraser.

Mr. Wilson

Will the Under-Secretary tell us what proportion of the offshore market presently goes to Scotland? I noted that the Secretary of State went from the 42 per cent., which I had seen quoted in the Scottish Press a few days ago, to about 40 per cent. as the minimum British involvement in the offshore market. What is the Scottish figure? This figure should be known to the Government. What is the Offshore Supplies Office doing? It should be able to produce the figures. Our estimate is that it is somewhere in the bracket 18 per cent. and 25 per cent.

Mr. John Smith

indicated dissent.

Mr. Wilson

I notice the hon. Gentleman indicates disapproval of those figures. If so, will he level with the House and let us know what Scotland's share is?

I was also disappointed to hear that the Secretary of State, imbued as he is with English nationalism, gave no undertaking to ensure that Scotland had all the platform orders which were going out to developments in the Scottish area of the North Sea. He also said that he could give no answer to the important question of sub-sea completion. This sector of technological development will grow with increasing rapidity over the years. I should like Scotland to play a fairly large role in that market.

Mr. John Smith

Is it not time that the hon. Gentleman recognised that out of eight developed platform sites, seven are located in Scotland? It is foolish to ask for 50 per cent. of all jobs to be in Scotland when the truth is that over 50 per cent. are already established there.

Mr. Wilson

I cannot reconcile how the Government's share of the Scottish offshore oil market is placed at 50 per cent. when the British share is placed at 40 per cent.

Mr. Iain Sprout (Aberdeen, South)

The Under-Secretary said "jobs".

Mr. Wilson

I was referring to overall supplies. We have to take in all equipment, not just the platform industry.

I should like to go into the failure of the Bill to spell out the kind of role which Scotland will play in the refining industry. On two occasions I put down amendments, which were not taken for discussion, about the influence that the Secretary of State for Scotland might have in this area. I should like Scotland to get an ample share of any added value which could come from the development of this valuable Scottish resource.

It is clear to the Scottish National Party that the Government have reneged on their original proposal, just as they did on the Oil Taxation Bill. They stipulated that they intended to increase the United Kingdom's involvement or share. Yet, on taxation, they went for a lower level than many other countries have done. In this Bill, which sets out a structure for participation, the Government have not shown to the satisfaction of my party, nor, I should think, to the satisfaction of the House, that there will be any incremental benefits from a participation negotiation carried through on the basis of no gain, no loss. I fail to see what good that will do to anyone. My hon. Friends and I reserve the right, should we form a Scottish Government, to renegotiate both the participation and oil taxation questions.

Because of our complete disappointment at the way in which the Government have handled these matters and their failure to ensure the maximum Scottish involvement and benefit, we shall follow the same course as we took on the Oil Taxation Bill. We gave the Government the benefit of doubt on Second Reading. They failed to take advantage of opportunities given to them in Committee for increasing the amount of devolution and the Scottish element. Therefore, we shall have no hesitation in voting against the Bill.

6.0 p.m.

Mr. Russell Fairgrieve (Aberdeenshire, West)

We are witnessing this afternoon the Third Reading of an iniquitous, monstrous and unnecessary Bill. It has nothing to do with getting the oil out of the North Sea, the standard of living of the British people or what is happening in the North-East of Scotland where I have the privilege of representing a constituency. It is merely further nationalisation. That is the only object of the Bill.

During the Committee stage, it was stated clearly from both sides that we had had 25 years' experience of Morrisonian nationalisation since the war and it was not working. Yet here we are producing another act of nationalisation.

This is merely doctrinaire Socialism and an extension of Clause Four—which would be better described as four claws around the British economy. The Government prefer the standard of living of the people of Scotland and Britain to be lower in a Socialist state than to have a higher standard of living with private enterprise flourishing. Those are the depths to which they have sunk. This will involve a colossal cost to the taxpayer for no good reason. The Government could get all the money they need through taxation without spending the thousands of millions of pounds necessary to set up the British National Oil Corporation.

During the passage of the Bill, Ministers said there was to be a new concept and that the Government were to set up a company to operate on commercial standards that would be understandable in the industrial world. The first decision was to site the headquarters of the corporation in Glasgow. That was not an industrial decision. It was a political decision. All the oil companies are going to Aberdeen and the headquarters of the corporation should have been there. The second decision was that the BNOC would be relieved of petroleum revenue tax while other companies will have to pay it. The BNOC will be given a head start. It is obvious from the beginning that this is not a commercial company but merely an extension of nationalisation.

I hope that all hon. Members will come into the Lobbies and vote against what I have already described as this iniquitous, monstrous and totally unnecessary Bill.

6.03 p.m.

Mr. Joseph Dean (Leeds, West)

We are now reaching the final stages of a Bill which has been described as perhaps the most important Bill to go through in this session of Parliament. The right hon. Member for Wanstead and Woodford (Mr. Jenkin) spoke in similar terms earlier in the debate.

What has become clear during the passage of the Bill is that the issue between the two sides is not one of detail. The word "doctrinaire" has been used in the debate, and this is an issue of doctrinaire principles. I said in the Second Reading debate that we have different philosophies, and there comes a point when they are irreconcilable. The Opposition's philosophy is that this new fund of wealth, on which so much of our future depends, will be better looked after by the private sector having more direct control, with the Government retaining some control through being able to impose financial stringencies in certain circumstances. I do not share that view. Because of the importance of North Sea oil to our economic survival, maximum control should be retained by the Government. I think that that view will stand the test of time and will be valid long after the BNOC has started its work and begun to deliver the goods.

The hon. Member for Wanstead and Woodford spoke as if this measure was being blitzed through by a dictatorial Government with no concept of democracy. One would think the Government had a copper-bottomed majority and was able to dragoon through any measure, but the Government have a realistic majority of one over all other parties. If the Opposition are so keen to oppose this Bill, why was our majority in the vote early this morning well in excess of one. I do not know the exact figure—it will be in tomorrow's Hansard —but I think it was in excess of 30. Where were the Opposition Members who are supposed to be so concerned to stop the Bill. They are not here to vote. The Government are getting substantial majorities. We ought to be winning by one, but we are winning far easier than that. I only hope our Test team does as well.

The utterances of the hon. Member for Dundee, East (Mr. Wilson) sometimes makes me think that he is from a political Brigadoon somewhere. Certainly some of his utterances are not of this world. He and other hon. Members have complained about the headquarters of the BNOC being situated in Glasgow, but in Committee Scottish Members from various constituencies were pleading for the headquarters to be established in their areas. This only highlighted the divisiveness of Scottish politics. Each hon. Member was paddling his own canoe and was not concerned with the rest of Scotland. It may be that because decisions taken in London are made in the total British interest the people of Scotland are getting a far better deal. I should point out to the hon. Member for Dundee, East that if a Scottish Assembly is established, however the voting system is loaded, it will be dominated by Glasgow, its conurbations and the west coast of Scotland. The people from Dundee and the east coast, whether they like it or not, will have to face the facts of political life that they will be in a minority.

Mr. Gordon Wilson rose

Mr. Dean

I will not give way. I think the the hon. Gentleman has had as much time during the previous stages of this Bill as anybody is entitled to.

Complaints have been made that the time allocated for consideration of the Bill was not sufficient, but during this brief debate I have not heard one new facet introduced. One would have thought that hon. Members with a genuine grumble against the lack of time would have had some new shots to fire. That has not been so.

I also ought to warn off the hon. Member for Dundee, East when he loosely throws the subject of devolution into the ring of this Bill. A short time ago, I visited Northern Ireland and saw what happens in a small nation where a form of devolution is introduced. I was appalled at the number of people working on behalf of the community, in jobs with substantial salaries, in areas with populations less than those administered by some town clerks in this country and certainly less than the populations administered by the majority of county clerks. The hon. Member for Dundee, East has suggested dividing the BNOC into four divisions. One can accept that there may be a shortage of staff in the oil industry until it starts to gear up, but nothing could be more destructive than to talk about fragmenting it.

There will be other chances to debate devolution in Scotland. Our debate yesterday went a little wide of the mark. However, there is no guarantee that hon. Members will run headlong for the type of devolution that is propagated by the hon. Member for Dundee, East. I certainly do not subscribe to his views, and I know that many hon. Members on both sides of the House will think very carefully before they indulge in a political exercise that could be possibly tremendously expensive and which would make the last local government reorganisation look puny by comparison.

I welcome the Bill. It secures for this country major assets which have been discovered in the North Sea and I hope that hon. Members will support the Government in the Lobby.

Mr. Deputy Speaker (Mr. Oscar Murton)

I must make another appeal for short speeches. A considerable number of hon. Members still wish to speak, and the time is drawing on. Five-minute speeches would be acceptable, but this matter is in the hands of hon. Members.

6.12 p.m.

Mr. John Hannam (Exeter)

I shall not take up the points raised by the hon. Member for Leeds West, (Mr. Dean), but I must refer to the hon. Member for West Stirlingshire (Mr. Canavan) who, in his usual humorously aggressive manner, accused the Opposition of employing delaying tactics in Committee. The only filibuster speech in the whole Committee was the one he delivered while holding the fort during the absence of one of his colleagues on one occasion when a vote was due. The charge of delaying tactics cannot be levelled against my hon. and right hon. Friends and myself.

My confidence in the workings of the parliamentary system is at a rather low ebb at the moment. In the last year I have sat on three major energy Bills. The first was the Oil Taxation Bill, which was ill-drafted and wrongly conceived. Fortunately, it was handled by responsible Treasury Ministers, who realised before the final stages that it was necessary drastically to amend the Bill if it was not irreversibly to damage the financial structure of North Sea operations.

During the proceedings on the Bill my hon. Friends and I found ourselves in the strange position of being attacked for being gloomy and for being the spokesmen of the oil industry. Nevertheless, the next day the changes that we were trying to secure were introduced by the Government. In the end the Bill was not at all the destructive measure which it threatened to be in the early stages. If, after their actions on that Bill, the Government had not shown themselves to be so hell bent on pursuing the Left-wing ideological course which they embarked upon with the Bill now before us, they could have enjoyed the prospect of a consensus about the undoubted need for certain depletion and pipeline controls and taxation measures to ensure the right take from the North Sea for the British people. However, that has not been the case.

This Bill has been rushed through Parliament at a very late stage. We are denied the opportunity of debating in detail certain very complicated aspects of it. In seven hours yesterday we had to try to deal with about 150 amendments and new clauses, and instead of having a dozen or so important debates on such crucial issues as PRT, the National Oil Account, the revocation of licences and retroactivity, we had only three major debates and one short discussion.

If one could feel that the remaining issues, which could affect the whole economic future of this country, were going to be examined carefully and in detail in the other place, one would not feel so bad about this situation. The trouble is that the Government's legislative programme is in such a mess that we cannot feel confident, with the spate of Bills in the other place, that such deliberations will take place there. It appears that the careful examination which should be given to such a complex measure will probably be denied this Bill.

Mr. John Smith

It is important to get these facts straight. Does the hon. Member not concede that every clause of the Bill was discussed in Committee?

Mr. Hannam

I concede that by the very nature of our legislative procedures each clause was approved by the Committee, but not every one of them was adequately discussed by the Committee. We had deliberately to forgo discussion on many amendments which we did not move. I remember our having to make do with the shortest possible debates on many important issues.

In two General Elections last year the British people expressed their dislike of extremist policies, but through default they found themselves landed with the worst programme of irrelevant, damaging Left-wing interventionism this country has ever experienced. A loss of personal and corporate freedoms will result from Bills now going through Parliament. We are supposed to be the defenders of the people's freedoms and rights, but these massive intrusions of State control and power are being carried through in all the present Socialist measures. The Bill before us has its fair share of those. It could have been a non-doctrinaire measure, but that has not happened.

The BNOC will have powers to work as a commercial operator in the North Sea, in refining, and in downstream retail and manufacturing activities. There is a lack of compensation and arbitration procedures for the enforced sharing of pipelines. There is the non-commercial exclusion of the BNOC from the PRT, a tax which its competitors will have to pay. Vast funds will be diverted from the Treasury into the National Oil Account. All these factors arc having a serious and damaging effect on British and overseas confidence in the oil sector.

There is increasing confusion and uncertainty among the major oil companies, yet it is upon them, as the Secretary of State admits, that we shall continue to depend for many years for the costly and risky development of our oil resources. The thrust and determination of our oil programme has been severely undermined by the Government's policies. Treasury Ministers have been falling over backwards—and energy Ministers seem to have been following suit—to try to reassure overseas developers and investors, but they have not succeeded, and each successive step towards majority participation and the imposition of severe State controls has resulted in further cut-backs and delays in oil activity.

It is therefore all the more vital that we should somehow maintain a reasonable momentum in our exploration and development programme. But with costs in the oil industry reaching astronomical heights most oil companies are thinking again about their financial programmes. I have even heard stories of finance directors saying that they will shoot the next man who makes a successful oil discovery for the company.

This Bill is totally irrelevant and unnecessary for dealing with our real problems. The Government could have chosen not to pursue their manifesto policies, which are of an irrelevant Socialist nature; they could have secured a consensus from both sides of the House about the controls which are necessary in this sphere. But, instead, we have had another expensive and damaging Socialist measure, which will result in this country falling even further from its position as a leading industrial manufacturing nation.

6.20 p.m.

Mr. Alexander Fletcher (Edinburgh, North)

This is, indeed, a sad day for the House, because rather than finding that we are reaching the end of a piece of legislation which has a major contribution to make to the country's interests in the North Sea, we find a great deal of disappointment because the Labour Party has failed to produce any new ideas, or to introduce anything in the way of a new concept into the question of State participation. State control or nationalisation, particularly as it relates to this new asset in the North Sea.

All hon. Members will agree that legislation is extremely important to regulate our oil operations. Indeed, as my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) indicated in his excellent opening speech, there were considerable areas of agreement across the Floor of the House, and a great deal of co-operation might have been achieved in Committee in particular to find an answer to the difficult question of producing a balanced control and regulation of our activities in the North Sea. Instead the Government plodded on, pushing their Bill through the House without one new idea, without any search for agreement or any indication that they had learned anything from past experience of nationalised industries.

It is sad to think that the Labour Party is so short of talent and new ideas that its contribution to this debate and to the legislation has resulted in producing what can only be described as a carbon copy of the National Coal Board, British Rail or some of the other well-worn nationalised industries that have failed singularly to make any positive contribution to the economy as a whole.

The biggest disappointment is the fact that half way through our debate a new Minister took over the Department, but the Bill remained the same and the ideas remained the same. One finds it hard to believe that the former Secretary of State and the present Secretary of State have so much in common that not a single sentence of the Bill has been changed as a result of the change of Minister. We have an identikit Secretary of State for Energy, almost regardless of the individual who takes over the responsibility. That was another major disappointment to those hon. Members involved in the Bill.

The Bill has given the House a further opportunity, if that, indeed, were necessary, to sample the greed which motivates the Scottish National Party. That party seems to be getting into the same frame of mind as the Tribune Group. It is fanatical in its aim of destroying anything it can about Scotland's reputation, and it proceeds at every opportunity to bring out nothing other than the worst possible representation and image of Scotland, a country that I am happy to represent in this House. In doing this it is similar to the Tribune Group in that it appears to represent no one but itself and the far-flung ideas it has for Scotland.

My biggest single disappointment about the Bill and other Bills during this Session of Parliament is the inability of this House to legislate for anything other than a Parliament. There seems to be no motivation at all to produce legislation that might last at least for a decade, if not for a generation—legislation that would have consent and approval across the Floor of the House. After this Session comes to a busy close, as it will, there must be as, I am sure, there will be, some effort across the Floor of the House to try to throw off some of the constraints of party doctrine and the straitjackets that seem to keep both sides of the House involved in matters in which we do not particularly believe. If this were the case there might be some future legislation that would be more worth while than the legislation against which I shall be happy to vote this evening.

6.25 p.m.

Mr. Arthur Palmer (Bristol, North-East)

The House knows of the interest I take in energy questions, but I confess that, mainly for reasons of time, I have not followed in any detail the passage of the Bill. I did not serve on the Standing Committee, as did many hon. Members present this evening.

I am puzzled about the kind of remark made earlier by the hon. Member for Exeter (Mr, Hannam), I made a note of what he said. He regards this legislation as a piece of: "Left-wing interventionism in the economy". It is nothing of the kind. This is not a Bill for the nationalisation of the oil industry. It is impossible to nationalise the oil industry because it is an international industry. [Interruption.] I hope that hon. Gentlemen will take my point because it is not an unreasonable one. This is surely a proposal for establishing in the United Kingdom a State-owned oil enterprise. There is nothing revolutionary about that. Such enterprises are to be found in most modern industrial countries.

I should have thought, that, if anything, the establishment, under, I agree, rather favourable terms for its management, of a State-owned oil enterprise, is a contribution to the mixed economy rather than to anything else. It is not from any point of view a massive increase in socialisation. Some of my hon. Friends would say "More's the pity", but there it is. It is nothing of the kind suggested by the Opposition. When they use such an argument it becomes impossible for both sides of the House ever to reach any realistic debate. I respectfully suggest that the British Conservative Party should follow the example of some of its sister or brother parties on the Continent and bring its thinking up to date on State participation in the mixed economy.

But I have risen principally to ask about the membership of the corporation and particularly the announcement that Lord Kearton is to be made chairman of the organising committee. This follows precedent in relation to the establishment of other national corporations in the past. An organising committee was set up for the electricity supply industry. When nationalised later, usually the chairman of the organising committee becomes the chairman of the new corporation. I imagine that that is intended to be the destiny of Lord Kearton.

Lord Kearton is an admirable man who has given great service to his country and to industry. As to whether he is the right choice for an oil enterprise is not for me to say. The story went around that the Government were looking for a big figure in the oil industry to head this new corporation. It appears that they have not found him. At one time there was a suggestion that the salary for the post might be as much as£70,000 a year. I do not know what the right salary is for the head of a nationalised board in the abstract. It is hard to say. However, the House is entitled to some more information about the Government's thinking on this particular appointment. Is Lord Kearton to be paid this kind of salary or is he to be on a lower rate?

The Boyle Committee, which reported fairly recently on the salaries of the chairmen and deputy chairmen of the publicly-owned industries, asked for considerable increases. The Government decided not to give those increases at present although at the same time they granted increases to judges, air marshals, generals, senior civil servants and so on. The answer that was given by the Prime Minister was that the Government could not accept the Boyle Committee's recommendations at this stage, but would put the question of top industrial salaries to Lord Diamond's committee which is looking into the distribution of wealth in this country. That committee has not yet reported. If Lord Kearton is to be chairman of the oil corporation, is his salary also to be referred to Lord Diamond's committee, or is it a matter for separate negotiation?

If it is seriously intended to follow the line of argument used in some of the financial newspapers that we shall not get the right kind of man to head this new State corporation in competition with the international oil corporations unless we pay a salary in the region of£70,000 a year, I can only point out that we shall cause a vast amount of dissatisfaction to the chairmen of the Central Electricity Board, the Electricity Council, the Gas Corporation, British Airways, the Coal Board and so on. The Government must get some rhyme and reason into this business.

I do not know how large this corporation will ultimately be. It may be large. It may be small. However, the amount of capital is certainly not likely in a hurry to equal the amount of capital employed in the electricity supply industry, for instance. An appointment of this kind, clearly of great interest all round, should not be mentioned casually. The House and those of us who follow those matters in some detail are entitled to a little more information on the Government's thinking about its terms and conditions.

Mr. Speaker

I understand that there are seven and a half minutes left for back benchers. I hope that they can be divided between the hon. Member for Gosport (Mr. Viggers) and the hon. Member for Derbyshire, South-East (Mr. Rost).

6.31 p.m.

Mr. Peter Viggers (Gosport)

I am grateful for the opportunity of speaking on Third Reading. No one has mentioned Clause 43, which provides for the Government to compensate the Bank of England for any loss it may incur as a result of taking Burmah Oil shares. It follows from that clause--which in my view merits a separate Bill—that the Government, through the Bank of England, have control of more shares in British Petroleum. This is an extremely serious matter. I regard the Government as doing substantial damage to this important British company—BP—by retaining ownership of the shares.

The Bill puts forward several measures, the most important of which is the creation of the BNOC. The National Oil Account confuses anyone who wishes to see the amount of money involved in the BNOC, because elementary arithmetic shows that the amount involved will be between£2,500 million and£3,000 million. If one follows through the elementary arithmetic, one finds that each person in this country is being obliged to put LSO into this oil company run by the State. That means that every family is to put£120 into this State corporation. If the Government were honest and were to put to every head of household the question "Do you wish to invest£120 in this new State corporation which has no particular financial provisions attaching to it?", the answer would be a resounding "No".

I can summarise the matter in one sentence. Whatever the Bill is wrapped up to look like, it remains an ugly, boring bit of nationalisation, and we shall vote against it with zest.

6.33 p.m.

Mr. Peter Rost (Derbyshire, South East)

If there were anyone left in Britain still in doubt as to why this nation is in such a mess, he should have been here over the last two days to see how this most important legislation has been steamrollered through under guillotine without adequate discussion and without even those hon. Members who played a major role in the Committee having the opportunity to make a five-minute contribution on Third Reading. That is quite unacceptable.

The Secretary of State said today, as he has said previously, in justification for this legislation, that there is a need to defend the North Sea in the national interest. Who is attacking it? The only threat to the North Sea is by the Secretary of State and by this legislation.

I oppose the Bill in principle because I dislike the arrogant and misguided assumption by those on the Government side of the House who assume that State bureaucratic enterprise can do the job better and that, therefore, it must be in the national interest that it should do it. I reject that in principle. This legislation should be rejected because it creates a wolf in sheep's clothing—a blatant, monstrous piece of further nationalisation. It is nothing else.

The BNOC will be trading unfairly. It will be discriminating against the private sector. It will have privileges which the private sector will not have. It will have limitless powers for downstream dabbling at the taxpayer's expense. It will have no proper commercial or financial accountability. What is even worse, it will have limitless funds with which to do this.

The BNOC is unnecessary. We already have an efficient oil industry that is serving the nation well. The BNOC will be costly because it will divert scarce financial resources which need not be diverted. It will be wasteful, harmful and damaging—because it will not produce any more oil, it will not produce oil more quickly, it will certainly not produce it more cheaply.

This legislation should be rejected because it creates another monstrosity the National Oil Account. This will bypass the Revenue and the Treasury and will create for the Secretary of State and the BNOC their own private source of taxation. At a time when we have an economic crisis and when the Government are having to rethink their priorities and cut public spending in housing, health, education and other major priorities, here we have this extravagant piece of bypassing the Revenue for an extravagant programme of nationalisation. Why cannot this taxation be used for more urgent priorities and in areas in which it would produce a constructive and positive return to the national economy?

I believe that the Government arc here threatening a major sector of our industry which is serving the nation well. By participation, by the creation of the BNOC and by the establishment of the National Oil Account we have here the arrogant assumption that the State can do it better, without any shred of evidence in support of it. It is pure Socialist dogma, playing at party politics with Britain's standard of living, prosperity and economic viability at stake.

When will the present Government face the realities of the nation's economic crisis? It really is time that the House woke up to the irrelevance of this unnecessary, wasteful, costly and damaging legislation—this Bill and other legislation. It will not create a penny more of new wealth for the nation but will dissipate the nation's wealth. I ask the House to refuse to give a Third Reading to a piece of legislation which the nation cannot afford and which even this Socialist Government should be ashamed at having introduced.

6.37 p.m.

Mr. Hamish Gray (Ross and Cromarty)

It is tragic that we have to conclude the proceedings on this very important Bill under the strictures of the guillotine. I had arranged with my hon. Friend's to take only 10 minutes in concluding for the Opposition. To be fair to the Minister, he has agreed to take only twelve and a half minutes. It seems ridiculous that the Third Reading of a Bill of this importance should be curtailed in such a way.

The passage of this Bill through Parliament will be remembered for three principal reasons. First, along with the Community Land Bill and the Employment Protection Bill, its introduction formed part of a trio of unequalled notoriety designed to placate the extreme Left wing of the Labour Party and carried through with a callous disregard of the best interests of this country. It is purely a sop to that wholly-owned subsidiary of the Labour Party—the Tribune Group.

The Bill will be remembered, secondly, as having been subjected to a guillotine without any real justification. Every reasoned argument for the decision can be and has been effectively countered. The Secretary of State made no criticism of the Opposition's tactics throughout the passage of the Bill. In the debate on the timetable motion, the Secretary of State said, It is no part of my purpose to make a complaint about the conduct of the Opposition. The right hon. Gentleman also said, emphasising the details and complexity of the Bill, Speaking as a newcomer to the issue I must make it clear that I find it a difficult Bill. I say that candidly. That did not prevent him, however, from forcing the guillotine upon us. He also said, As I say, it is no part of my purpose to make a complaint, but this is an essential Bill and I shall come to the reasons why we regard it as essential."—[Official Report, 7th July 1975: Vol. 895, c. 108] That was the most truthful part of the whole speech. The Bill is essential to the Government. As my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) pointed out, it was introduced live months too late. That is the only reason why we had a guillotine. As a result of the guillotine, my hon. Friends have been deprived of full participation in discussion on vital sections of the Bill.

The third reason for which the Bill will be remembered is the measure of nationalisation which it introduces into the oil industry. To date, the industry has provided the much-needed investment in the North Sea, and it has created more than 40,000 jobs in Scotland alone. It is tragic that it should have the cold hand of nationalisation placed upon it.

The Bill as amended in Committee and on Report loses none of its basic objectives, with many of which we do not disagree. That was instanced by the vast number of constructive amendments which my right hon. Friend and my hon. Friends moved. Many of them were probing amendments, seeking information all the time.

It was noticeable that the Secretary of State said very little about the Bill this afternoon. He spent most of his time talking about the oil industry. The simple reason was that the Bill is very little changed. Although some of our amendments have been accepted, there is no change in the Bill's principle, no major concession, though the amendments made at our request go a small way to help to improve the Bill.

Having asked the Secretary of State on a number of occasions when he would announce the name of the chairman of the BNOC, I take this opportunity to congratulate the chairman on his appointment and to wish him every success in his new task. If he reads Hansard, as I am sure he will from now on, he will see that we wholly dislike the concept of the body of which he has been made chairman, but we wish him success and hope that he will make the best of a bad job.

It is difficult at short notice to find out about someone like Lord Kearton, but I was able to find a little bit of information about him from The Times of 6th November 1970. It is contained in a report of a talk he gave to the Institute of Directors, with bigness in business as his theme. It says: Lord Kearton said companies increasingly need to be of very considerable size in order to function effectively. That probably gives an indication of his thinking then. I wonder whether he still thinks the same. The report continues: Yet, as Lord Kearton pointed out, in most of the important sectors of a modern industrial society"— he named oil, steel, chemicals and so on— greater integration, rationalisation and less 'competition', in the traditional and liberal sense, are what industrial logic requires". That is interesting. It perhaps gives some indication of what Lord Kearton's views may be. We hope that when he takes over the BNOC he will try to operate it as a highly competitive corporation. If it has to exist, it must exist in competition with the private sector, and must show that it is capable of doing so.

The Secretary of State regaled us with the achievements in the North Sea. If he can regale us with such achievements in two or three years' time—achievements of the BNOC—he will justify his case, but the achievements to which he referred this afternoon were all those of the private sector. The right hon. Gentleman should not forget that.

The Secretary of State also made some interesting comments about jobs and platforms. What he said was welcome, although we shall want to study carefully his words about the future of employment in the platform industry. Although I have disagreed vehemently at times with the hon. Member for Dundee, East (Mr. Wilson) in Committee and on Report, I wholly agreed with what he said this afternoon about the future of submersibles. I hope that the Government will pay close attention, and will help research on the subject. The great worry that many platform yards have is that if the time comes when their method of construction is superseded there could be a great danger of redundancy and unemployment in their areas. I hope that the Government will accept that the hon. Gentleman's point is valid, and that full research will take place.

I was disappointed that the Secretary of State did not see fit to give us today what he was not able to give us in Committee—a definite policy on refining capacity. We have repeatedly asked both him and his predecessors to spell out a Government policy on refining, and future refining capacity. That has not been done by either of them.

It was interesting to hear from the right hon. Gentleman about the negotiations on participation. I hope that the Government are not being over-optimistic. I have no doubt that they have kept in mind the thoughts from some of their back benchers that it appears to be only some of the small companies who show enthusiasm for participation. For the larger companies the situation is very different. We shall wait and see. I hope that as information is obtained the Government will present it to us.

I promised the Minister that I would give him his twelve and a half minutes, and I think that I have just about timed it correctly. We shall certainly oppose giving the Bill a Third Reading, principally because of the content of Part I, to which we have objected from the outset.

6.47 p.m.

The Under-Secretary of State for Energy (Mr. John Smith)

Many Members have referred today to the importance of the Bill, and I do not disagree with that. Some of them felt that we had not discussed it for long enough. I believe that we have discussed it extremely carefully indeed, exhaustively at times. The Bill, every clause of which was considered in Committee, has had a very fair run through Parliament, and has been fully considered. It is correct to say that it is a vital part of the Government's policy.

The Bill should be seen in tandem with the Oil Taxation Bill as the major steps that the Government are taking not only to close the gaps in North Sea oil policy that they inherited but to assert formal public control and ownership over a new source of wealth in our offshore waters.

The Bill sets up the British National Oil Corporation, with its headquarters in Glasgow. My right hon. Friend the Secretary of State today announced the name of the chairman. My hon. Friend the Member for Bristol, North-East (Mr. Palmer) asked questions about the chairman. Perhaps he will await the further statements which my right hon. Friend has said he will make.

It was my hon. Friend who directed us to an important feature of the Conservative attack on the Bill. He said that in essence participation in the North Sea and partnership between a publicly-owned corporation and privately-owned oil companies was the mixed economy in practice. It has always puzzled me that Conservative Members think that it is non-dogmatic and non-doctrinaire to oppose the extension of public ownership in any shape or form, and yet that it is doctrinaire for the Labour Party to propose any extension of public ownership. The truth of the matter, and, no doubt, this is why they are elected to Parliament, is that Conservative Members arc concerned to defend private rights and private property at every conceivable opportunity. They do not believe in the mixed economy.

What we are suggesting in setting up the BNOC is that the State ought to have proper control over and a proper share in the ownership of an important national asset. When the Government took over the reigns of office 15 months ago they inherited neither a proper policy for the taxation of North Sea oil nor a proper policy for the control of it. It is amazing that in February 1974, when the Government were elected, there was no depletion control whatever for the North Sea. It is a staggering fact for anyone to take on board.

In the course of proceedings on this Bill we have been attempting to close such gaps in the Government's powers. The right hon. Member for Wanstead and Woodford (Mr. Jenkin) told us earlier that there was a great deal in what the Government proposed to which the Opposition did not take exception. He instanced depletion controls. I understood him also to mean that he was in agreement with the Government having greater powers to obtain information from the companies. I do not seek to blame the right hon. Gentleman personally because he had responsibility for energy matters for only a short period of time. The important question we are driven to ask is: if the Conservatives agree with it now, why did they do nothing about it when in office? We know that there were no proper taxation proposals. There were conflicting statements about such things as the ring fence from Conservative spokesmen.

We had to start from scratch when we became a Government. The fact that we have now passed the Oil Taxation Act and established a regime which will return to public 70 per cent. of the profits from the North Sea, that we are nearing the end of considering this Bill which will set up a national capability in oil exploration and production and will introduce controls over depletion and other matters, is a tribute not only to the perspicacity of the Government but to their determination in carrying through such policies in so short a period of time.

The right hon. Member for Orkney and Shetland (Mr. Grimond) raised questions about the interests of the fishing industry which we discussed from time to time in Committee. The right hon. Gentleman may not have had a chance to look at the amendments carried last night. One of them met the problem of the fishing industry in relation to pipelines. There was another matter on which I gave an undertaking but about which we have not tabled any amendment. I will consider this further. There are some questions remaining about drafting. I assure the right hon. Gentleman that I have not forgotten what I said in Committee.

The hon. Member for Dundee, East (Mr. Wilson), representing the Scottish National Party, told us that he would vote against the Third Reading of the Bill. I had some difficulty in following his reasoning since his party voted for the Second Reading. However, I do not think that I would benefit much from hearing his explanation again. It will be no surprise to many of my hon. Friends that the SNP voted with the Labour Party on Second Reading and intend to vote with the Conservative Party on Third Reading. Many of my hon. Friends have had to put up with that sort of behaviour from the SNP on many occasions.

We have to consider whether the Government should approach offshore developments with a laissez-faire attitude, whether we should sit back and let the oil be exploited by the privately-owned companies with very little in the way of public control and nothing by way of a public share in the ownership. That is a policy which the Conservatives have followed. It is well known by many objective commentators on the offshore scene that the Conservative Government let policy drift. We have seen many journals not noted for their adherence to Left wing policies making a point of that.

We also know that every country producing oil except the United States has adopted participation as part of its policy. We know that in the concessions given by the Republic of Ireland, and the Greenland concessions given by Denmark, participation was a major feature. As a political party the Conservative Party is not only out of step with opinion in this country but out of step with opinion and practice in most of Western Europe. This participation policy and the feature of State companies are aspects of oil-producing countries. We are not indulging in any major departure.

On many occasions my right hon. Friend and I have pointed out that what the Government seek to achieve is a partnership with the privately-owned oil companies, a partnership which reflects the importance of our national interests and the need for proper development of our North Sea resources, with proper control over them and a fair return to the nation from them.

I have been asked on many occasions why we are following a policy of participation. Let me briefly remind the House of its importance. It is important that we secure a 51 per cent. title to the oil and that we ensure major public control through the BNOC acting in partnership with the companies.

In future licensing rounds it will be the BNOC which will afford the national capability to the Government. The Government have made clear, in line with their manifesto commitment, that in future licensing rounds the Government will retain the option of 51 per cent. State participation. If we have a policy of participation it follows that there should be a State oil company. The Opposition have consistently attacked the notion of a State oil company. They have not been very clear or forthcoming about participation. The right hon. Member for Sidcup (Mr. Heath) said on a previous occasion that he had not ruled out participation for future licensing rights.

We know that the all-party Public Accounts Committee criticised the previous Conservative Government in 1971 for not having considered participation. These remarks indicate that the use of participation is not only widespread throughout the oil-producing countries but is something which at least some members of the Conservative Party did not think wholly foreign to their instincts.

I have repeatedly asked the Conservative Party to tell us clearly whether it is in favour of participation in any future licensing round over which it might have control. It has refused to answer. If the Conservative Party were against it in principle I could understand that position. The fact that it has not ruled out participation as an instrument of policy for any future Conservative Government must make us wonder whether a great deal of the opposition to this Bill is hypothetical.

It is important that the House gives a Third Reading to an extremely important Bill. It is vital to see this measures in conjunction with the Oil Taxation Act. When this Bill reaches the statute book we shall have gone a long way to achieving our policy for the development of offshore oil. We take the view that these are vital British resources which must be developed in the interests of the British people. We have followed a Government that neglected these interests shamefully and woefully. We have had a great deal of work to do to cope with the defects in the Conservatives' policy, to close the gaps, to create the framework of a national capability and a fair return for the nation. For these reasons this Bill commands the support of the House. I hope that it will receive an enthusiastic Third Reading tonight.

6.59 p.m.

Mr. John Moore (Croydon, Central)

I am delighted to have one minute of the time of the House, having been deprived of that time by the incredible methods of a Government seeking to guillotine this debate. It is a classic illustration of the appalling way in which our parliamentary process has produced shatteringly bad legislation. As a result of this legislation there will be a new nationalised industry. However, instead of black gold from the North Sea there will be fool's gold.

I have had one minute in which to endeavour to present to the House a case for destroying a proposed nationalised industry in view of the horrors of the past.

I ask that the Bill should not be read a Third time.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 290, Noes 277.

[For Division List 308 see col. 1771.]

Question accordingly agreed to.

Bill read the Third time and passed.