HC Deb 15 June 1977 vol 933 cc485-521

8.16 p.m.

The Minister of State, Department of Energy (Dr. J. Dickson Mabon): I beg to move,

That this House authorises the Secretary of State to pay, or undertake to pay, by way of financial assistance under section 8 of the Industry Act 1972, as amended by section 22 of, and Part I of Schedule 4 to, the Industry Act 1975 and section 1 of the Industry (Amendment) Act 1976, as grants in respect of interest on money borrowed for obtaining in the United Kingdom goods and services for each of the projects specified in column 1 of the Table below carried on by persons specified in respect thereof in column 2 of the Table sums which, together with the sums already paid or undertaken to be paid by way of such financial assistance, exceed the sum of £5 million but do not exceed the sum specified in respect of the project in column 3 of the Table.
TABLE
(1) (2) (3)
Project Persons carrying on Project Maximum amount of financial assistance
Establishment offshore of production platforms and other installations with their equipment for the development of the Ninian oilfield Chevron Petroleum Ltd. BNOC (Ninian) Ltd. Imperial Chemical Industries Ltd. Murphy Petroleum Ltd. Ocean Exploration Co. Ltd. BP Petroleum Development Ltd. Ranger Oil (UK) Ltd. Scottish Canadian Oil and Transportation Co. Ltd. London & Scottish Marine Oil Co. Ltd. £43 million
Establishment offshore of a production platform and other installations with their equipment for the development of the Thistle oilfield BODL Ltd. Burmah Oil (Exploration) Ltd. BNOC (Thistle) Ltd. Deminex UK Exploration and Production Ltd. Deminex Oil and Gas (UK) Ltd. Santa Fe (UK) Ltd. Tricentrol Thistle Development Ltd. Charterhouse Petroleum Development Ltd. Conoco Ltd. Gulf Oil (Great Britain) Ltd. BNOC (Exploration) Ltd. £18 million
Establishment offshore of a production platform and other installations with their equipment for the development of the Forties oilfield BP Oil Development Ltd. £10 million
Establishment offshore of a production platform and other installations with their equipment for the development of the Brent oilfield Shell (UK) Ltd. Esso Petroleum Co. Ltd. £9 million
Establishment offshore of a production platform and other installations with their equipment for the development of the Frigg (UK) gas-field Total Oil Marine Ltd. Aquitaine Oil (UK) Ltd. Elf Oil Exploration and Production (UK) Ltd. Total Marine Norsk El Norge A/S Aquitaine Norge A/S Norsk Hydro Produksjon A/S £9 million

The offshore supplies interest relief grant scheme was introduced in October 1973. I say that to remind the hon. Member for Glasgow, Cathcart (Mr. Taylor), in case he wants to be pejorative about that order and to recall its history.

The grant scheme was introduced under Section 8 of the Industry Act 1972. As the House knows, affirmative resolutions arise under this section of the 1972 Act when the amount of financial assistance to be provided for a single project is likely to exceed £5 million. For the purposes of this resolution, the United Kingdom offshire oil and gas fields named in it have been considered as a separate project. That is the reason for the detail on the Order Paper.

The amounts shown in column 3 of the table in the resolution are maxima. The grants are payable in instalments, either six-monthly or annually, over a period of up to eight years to the participants in the development of the fields named in column 2 or the successors of those so named.

Let me remind the House of the origins of this scheme. As the extent of the North Sea's potential became apparent in the early 1970s, there was concern that British and particularly Scottish industry would not get its fair share of orders for offshore supplies for equipment and for services in markets where other powerful suppliers were long established overseas and quite entrenched. This was at a time when precisely those British industries which seemed best placed to cater for North Sea requirements were suffering from the shortest order books.

Against this background, the previous Government commissioned a firm of independent consultants. IMEG, the International Management and Engineering Group, was commissioned in 1972 to study the developing offshore market and British industry's place in it. Its report early in 1973 confirmed that British industry was indeed missing out. I might say that this was a very good report in my estimation and that of many of my colleagues.

The report estimated that only between 25 per cent, and 30 per cent, of money spent up to that time by oil companies in developing the offshore fields had been spent on orders to British companies, and it recommended more positive policies on the part of the Government.

Among its findings, IMEG noted that the availability of medium-term credit at officially supported preferential rates was a significant element in the competitiveness of the tenders submitted to offshore operators, and it went on to state that in this respect British companies were at a disadvantage compared with overseas suppliers. This situation arose from the fact that the powers available to the Export Credits Guarantee Department are designed to encourage trade with other countries. Sales by United Kingdom firms to the United Kingdom Continental Shelf are outside the ECGD's remit. Many overseas suppliers, on the other hand, are able to secure the advantage of export credits supported by their national credit institutions since their sales to the UKCS are straightforward exports. As a result, the ability of United Kingdom firms to compete in this challenging new market was increasingly being adversely affected by an inability to offer competitive credit terms.

It was accordingly decided in October 1973 to introduce a scheme which would operate directly on the cost of credit obtained to finance contracts for the supply of goods and services for fixed offshore installations for our Continental Shelf. This Government share the view of the previous Government that the scheme is necessary to counter subsidised competition from suppliers in other countries and believe that it should be maintained.

It is a key objective of Government policy that British industry should have a full and fair, opportunity to succeed in the difficult UKCS market which, despite its currently depressed state, is still worth around £1,000 million a year and is likely to remain at about that level into the 1980s.

Nobody could be more delighted than I to see that the hon. Member for Ross and Cromarty (Mr. Gray) has come into the Chamber to speak for the Opposition on this matter.

Mr. Teddy Taylor (Glasgow, Cathcart)

I hope that the Minister is not in any way suggesting that I, also on the Opposition Front Bench, could not give a very full and devastating condemnation of Government policy on oil rigs.

Dr. Mabon

No, I am not suggesting that. The hon. Member for Cathcart (Mr. Taylor) would definitely give an adequate reply. Whether it would be a friendly one is quite another matter. I would prefer the hon. Member for Ross and Cromarty, who is a much nicer man, but that is a matter of personal preference.

The industrial capability that is being built up in the United Kingdom to meet the particularly stringent requirements of the UKCS should enable our industry to exploit the vast potential of the world wide offshore market. British industry has substantially increased its share of orders for the UKCS market from 35 per cent, in 1973, when the study was commissioned, to rather more than 50 per cent. in 1975 and 1976. Later we shall be discussing orders for the current period.

It would be unrealistic to attribute all this improvement to the interest relief grants scheme; other factors include our proximity to the market and the considerable United Kingdom offshore industrial capacity that has been built up. But the oil companies share the Government's view that the scheme does reasonably counterbalance the availability of foreign preferential credit rates and have confirmed that it is taken into account in their contract decisions.

As for the operation of the scheme, an oil or gas field operator ordering or installing a production platform or pipeline may apply to register with the Offshore Supplies Office of my Department a contract he places with a United Kingdom supplier which meets certain basic requirements. Broadly, these are that the contract value must be £100,000 or more —although grant may be paid only on up to a maximum of 80 per cent, of the contract value—and the contract must be for the provision of, a fixed offshore installation on the United Kingdom shelf outside territorial waters, or plant, machinery or other goods for fitting out such an installation, or services directly connected with the provision of such installations.

Mr. Peter Rost (Derbyshire, South-East)

I wonder whether the Minister would tell us what assistance this will provide for the United Kingdom steel industry, which we understand is still not in a position to supply the offshore underwater piping. What have the Government done since 1973 to put the industry in a better position to compete for this huge market?

Dr. Mabon

That is a very fair point. In July 1976 I discussed this personally with Sir Monty Finniston, that excellent former Chairman of the British Steel Corporation, and he said that he was investigating the possibility of opening one of BSC's installations to see whether it could produce that size of pipe which, incidentally, the Americans are not able to produce for their installations in Alaska and other parts of North America. The information from Sir Charles Villiers, Sir Monty's successor, is that investments are going on in Hartlepool to such an extent that the Corporation will be able to put forward competitive tenders.

The BSC has looked very seriously at its capacity in RDL, not just for steel platforms, but for steel modules as well, in order to see how it can compete in this market. I hope that there will be a vigorous effort. The hon. Member for Ross and Cromarty has questioned me because he thought that the remarks of Sir George Sharp were prejudiced, but Sir George has been misreported, as they say in these political days. It is not quite like that.

The BSC is making an earnest attempt to get into the market for pipelines and modules, which is considerable and expanding. [Interruption.] Yes, it is expanding. There are still seven more fields to commission and a lot more afterwards, if we are lucky. I say to anybody in the business that the bonanza is not over and there is a lot to be done. I am sorry that the BSC, up to now, has been unable to rival Japanese and other efforts in this regard.

Mr. Hamish Gray (Ross and Cromarty)

Does the Minister agree that the BSC is not only not able to rival foreign competitors but is not able to rival the yards at Ardersier and Nigg Bay in my constituency? Both these yards have obtained contracts, so the BSC is not only unable to rival foreign competition.

Dr. Mabon

I find it difficult to decide whether the hon. Member is acting as shadow spokesman or as the hon. Member for Ross and Cromarty. It is difficult to ride two horses at the same time, especially when they are travelling in opposite directions. The two yards in question are doing well, but they have a substantial American interest. I do not begrudge them that; I am merely saying that it contributes to their success. On the other hand, RDL has had a hard time, but it has put up a good performance. It has delivered on time, but there have been many difficulties. I have reservations about one or two thing that have happened in the past in connection with RDL. However, it is a fair competitor.

We in Britain—and I mean "Britain" since we have three yards in Scotland and one in England—should not quarrel among ourselves about the orders. Our main dedication lies in obtaining orders for Britain. It is true that others, in Holland or Norway or elsewhere, may challenge us, but we must beat them fairly at their own business and obtain the orders for ourselves. I believe that the Nigg installation is admirable, Arder-sier is splendid, and RDL first-class. I also believe that Laings is one of the best yards in the United Kingdom. All four deserve to be widely considered. The foreign yards are not very good, and we should concentrate on obtaining orders for our own yards.

We are talking about a whole range of contracts for steel and concrete production platforms and deck structures and module fabrications. I received a deputation this very evening from a Clydeside firm in that connection. This embraces a wide variety of products: process plant and equipment, well casings, well-head communications and safety equipment as well as pipework. There are many associated engineering and supporting services connected, for example, with design work, project management and installation. All these matters are covered by this affirmative resolution. The total number of contracts so far registered under the scheme approaches a figure of 500, with total expenditure in the United Kingdom in excess of £800 million.

Having registered a contract under the scheme, the consortium financing the field development of which the contract forms part may claim interest relief grants on borrowing undertaken specifically to finance that field. Individual consortium members must satisfy the Offshore Supplies Office that, for example, the borrowing they undertake is of a genuine arm's length nature. Grant has been fixed since the start of the scheme at 3 per cent, per annum, payable on the outstanding balance of the qualifying loan. The maximum period for which grant may be claimed is eight years for any particular project, with provision for progressive reduction of the outstanding qualifying amount over the last five years.

To revert to the resolution now before the House, the amounts of assistance for which I am asking the House for approval are my Department's estimates of the likely maximum grants payable under contracts associated with the probable development of each of the five fields named. These estimates depend, I quite agree, on many uncertain factors, including the nature, scale and timing of development programmes, the proportion of contracts likely to be won by United Kingdom suppliers, the extent to which applicants make qualifying borrowings to finance such contracts, and the timing of the repayments of such borrowings. The estimates have been prepared after consultations with the operators, but they are our estimates.

The maximum amounts of grant for which approval is sought are admittedly large. To put the grant in perspective, I can say that broadly, each pound of grant represents between £8 and £10 of business for the United Kingdom. For the five fields in question—making allowances for contracts still to come— we are looking to over £800 million worth of work for United Kingdom companies. I should also add that the total amounts of grant envisaged will not be realised —if they ever are—until 1982–83.

Mr. Rost

Will the Minister fill in the details by explaining how much has already been granted under the scheme and whether, in his view, this is a satisfactory reflection of the contribution that British industry has been able to make to North Sea oil development?

Dr. Mabon

I suspect the latter, but I shall not deal in generalities. If I have an opportunity to reply to the debate I may be able to give the figure, which I hope will be supplied to me in the course of our proceedings.

The present resolution concerns only five fields. There are 14 other fields currently under development on the United Kingdom Continental Shelf, but in none of these cases is it yet clear whether assistance under the scheme will exceed £5 million. These cases are being kept under review, and we shall return to the House to seek approval for any more affirmative resolutions that may prove to be required, if and when the need is established.

In line with the provisions of Section 8 of the 1972 Act, it has been made clear to the oil companies in the published "Guide to Industry" on the scheme, and repeated in every letter accepting a contract for registration under that scheme, that the Secretary of State cannot pay or undertake to pay sums exceeding 5 million by way of grant unless and until the House has approved a higher sum.

It would be appropriate for me to say a few words about the EEC Commission's inquiry into the scheme. Although the Commission raised no objection when the scheme was introduced in 1973 it has since expressed to the Government its concern that the scheme may be distorting competition within the Community. It has suggested that the scheme might be modified. We have told the Commission that we consider it necessary to maintain an effective scheme to counter subsidised competition from suppliers in other countries—not necessarily EEC countries—and that while we doubt that the scheme causes problems in intra-Community trade, we are prepared to discuss any proposals that the Commission might wish to elaborate. The Secretary of State for Energy met Commissioner Vouel on 16th May when the subject came into the discussion. It was agreed that officials on both sides would get together on the matter. In the meantime, the Commission has been notified of our intention to put the resolution before the House.

Mr. Anthony Nelson (Chichester)

Will the Minister elaborate on this, because it is an important matter? My understanding is that action is to be taken by the Commission under Article 93(2) to modify the system and that this follows the representation that has already been made by the Government to the Commission. Will the Minister say exactly what action is envisaged and whether, following these discussions, a stop or hold has been put on any action under that article?

Dr. Mabon

The response from the Commission has been extremely friendly. Many of the misconceptions about the scheme that have been in the minds of many people in Europe have been dispelled and I do not imagine that the Commission will proceed much further than it has done. I believe that it recognises that our scheme is perfectly fair and reasonable and that it is not ready to proceed further in the matter.

That may not be the outcome, but the Government take the view that in any process that may follow this we should be willing to defend our position. Even though the original scheme was introduced by our predecessors, who were ardent pro-Marketeers, we believe that the scheme quite justifies itself in the best pro-Marketeer sense and is in no way antipathetic to the interests of the Community. On the contrary, if the scheme were dispensed with it would work against the Nine rather than for them. We shall maintain that argument if any challenge is made. I am open to correction, but I think that we have reached the end of that road of contention and misunderstanding and that we are now able to see the light on this scheme.

Mr. Teddy Taylor

Since this is one of the few opportunities that we shall have for discussing this matter, we are entitled to more information. Is the Minister saying that the Commission is satisfied on the basis of the discussions it has had about the scheme and that the Commission believes that it is not inconsistent?

Dr. Mabon

If the Commission is wise it will be satisfied. I know that the hon. Member for Cathcart is not the most ardent pro-Marketeer in the House—I can think of other hon. Members who are more intensely pro-Market than he—but I believe that on reflection the Commission will realise that in the changed conditions of today that is not an unreasonable position for us to take in relation to the development of the North Sea. On this matter I hope that we shall receive as much support from those in favour of the Market as from those who are against it, that it will be realised that this is the situation and that it will not be challenged. Therefore, the views of the Commission apart—and I am surprised that the hon. Member for Cathcart should be bedazzled by the Commission, because he should be more concerned with the position of the House —I ask the House to agree to the resolution, with or without the approval of the Commission. I hope that the House will thereby demonstrate its support for the continuation of this policy, which has been pursued by both Conservative and Labour Administrations.

The House will be well aware—many Members whose constituencies are directly affected will be keenly aware—of the concern that exists among unions, managements and work forces about the difficult time that the offshore supplies industry has been facing during the last 18 months or so and is still facing because of the hiatus in ordering. This has been brought about by the escalating costs of developing our oil and natural gas resources offshore and the need seen by the oil companies, in view of this experience and developing technology, to reassess their investment plans.

Without the resolution, the scheme would collapse. It would effectively be at an end. The continued availability of preferential credits for overseas supplies means that we must continue to help to ensure the competitiveness of our hard-pressed supply industry and thereby reduce the risks to the heavy investments that the industry has made in this business in terms of capital, management and engineering skills and, above all, to reduce the risks to the jobs involved.

I appeal to members of the Opposition and other parties to join the Government in supporting the resolution.

8.41 p.m.

Mr. Hamish Gray (Ross and Cromarty)

I apologise to the Minister for not being in my place for his opening few sentences.

Mr. Teddy Taylor

My hon. Friend did not miss much.

Mr. Gray

I shall not comment on that intervention. I shall read what the Minister said and judge whether I was deprived of any great pearls of wisdom.

I am glad that the Minister acknowledges that the initial scheme was introduced by my party when in Government. On 6th November 1973, my hon. Friend the Member for Bosworth (Mr. Butler) asked the Secretary of State for Trade and Industry what progress he had made in preparing a scheme to improve the credit terms available for sales of British equipment and services for the development of United Kingdom offshore oil and gas resources. Mr. Christopher Chata-way, who has now sought remuneration elsewhere, replied: Accordingly my Department is now ready to provide, under Section 8 of the Industry Act, interest relief grants at 3 per cent. per annum on credit obtained to finance contracts for the provision of British goods and services for the construction of fixed offshore installations used in the development of hydrocarbon resources on the United Kingdom Continental Shelf. To qualify, orders for goods and services must have been placed on or after 1st October 1973. These grants will help to create fair competition in this market."—[Official Report, 6th November 1973; Vol. 863, c. 119.] That shows that as long ago as 1973 my party was fully alerted to the necessity for a scheme such as this and took the initial steps to ensure that the investment of British companies in the North Sea was wholly safeguarded. Those facts are at variance with what we have been told by the Government about the inadequate measures taken by the last Conservative Administration. I am glad that the Minister confirmed that he inherited the scheme, and I am pleased that the Government have not cast it aside.

The motion, which authorises the Secretary of State to make payments under the Industry Act 1972, is relatively narrow and we are grateful to the Minister for broadening the debate. The order is narrow because its provisions deal mainly with Section 8 of the 1972 Act. About £90 million is involved, and it is essential that the House should examine carefully the way in which the money is being used. This is the first time that we have been able to debate this specific subject.

The annual reports by the Secretary of State for Industry have included references to assistance to offshore projects. The 1974 report, for example, said at paragraph 51: Other projects may be considered under Section 8. Three large projects in that category were under consideration at 31st March 1974. That again highlights the fact that, because the Conservative Party when in Government introduced the measure, aid was at that time being considered although, because these measures were in their infancy, it was not necessary actually to pass money at that stage.

Paragraph 52 of the same report goes on to explain that the Offshore Supplies Office administers the special offshore supplies interest relief grant scheme designed to help United Kingdom firms to compete with overseas suppliers. We are grateful to the Minister for going into such detail on how the scheme operates at present. United Kingdom suppliers, as we know, are not eligible for ECGD facilities, while overseas suppliers have access to loan finance at preferential rates from their national export credit institutions.

In the report of 1975, this is clearly spelt out at paragraph 52. I shall not repeat it because it is virtually what the Minister has explained to us already. But my hon. Friend the Member for Chichester (Mr. Nelson) raised the important question of the effect of our EEC obligations on the administration of what is proposed in the motion. My hon. Friend the Member for Glasgow, Cathcart (Mr. Taylor)—to whom I am indebted for taking my place for a few minutes while I was detained elsewhere —also raised the same question.

I should refer also to my hon. Friend the Member for Bedford (Mr. Skeet), who, with his usual ingenuity—

Dr. J. Dickson Mabon

Where is he?

Mr. Gray

My hon. Friend has given me his apologies tonight because he has an important group of constituents visiting him in the building, and this has prevented his being in the Chamber.

I was about to say that my hon. Friend received a Written Answer on 8th June 1976 in which the Minister of State said that he had not received any complaints from our European partners at that time. I am glad that he has elaborated on that tonight. May I put it to him, however, that on 31st March 1974 it was known that contracts valued at about £100 million were in final stages of preparation. One comes, therefore, to the question of the EEC attitude towards those contracts and the fact that what is here proposed would be applicable to them. Was its attitude cleared during the renegotiations which the Minister's Government undertook before the referendum? If it was, there is no question of the EEC taking exception to what we are doing now. But it would be interesting to know from the Minister whether this specific point was raised with our partners in the Community at that time.

The report of 1975, paragraph 50, states that by that time 193 contracts were registered under the scheme and that these involved maximum qualifying borrowing amounting to £128 million, on which assistance to a maximum of 3 per cent. for up to eight years would be provided. However, at that time the amount which had been paid out was only £44,000. By March 1976, however, contracts registered under the interest relief grant scheme numbered 130, and by then £1.1 million had been paid out. This is recorded at paragraph 56 of the 1976 report.

The motion reveals the interest that has been shown in the development of the North Sea. Despite what the Government may say and what the hon. Member for Dundee, East (Mr. Wilson) may say on behalf of the Scottish National Party, this interest was undoubtedly built upon the firm foundation of the terms of the licences issued by the Conservative Government when they were in power.

Each round of licences must be considered in the light of the current situation. I shall always defend the Conservative Government for the licences which they issued when in power. There is little doubt in my mind and in the minds of many people that, had the attractive terms offered by the Conservative Government at that time not been offered, the prosperity which is about to be appreciated in this country from North Sea oil would not exist.

Mr. Gordon Wilson (Dundee, East)

Is the hon. Member saying that the discovery of oil in the Forties Field did not represent a change of circumstances which should have led to the automatic tightening of licensing conditions? I accept that the conditions before the discovery of oil in the Forties Field justified the then Government's action, but not afterwards.

Mr. Gray

I do not agree with the hon. Member although I take his point. I am glad that he concedes my point about the licences issued prior to the discovery of oil in the Forties Field.

The Forties Field was the first major discovery. It was to the advantage of this country that the terms which applied to that field should have encouraged British Petroleum to exploit the oil to its full extent. It was because of the confidence which the Conservative Party gave to this project that we are all now about to reap the benefit.

Mr. Gordon Wilson

Is the hon. Member aware that the Forties Field was discovered in 1969? The Conservatives therefore took office in 1970 with the knowledge that Forties had been discovered, and that would have affected their judgment about the terms.

Mr. Gray

I do not accept that. The hon. Member is unintentionally misleading the House. Although oil in the Forties Field was discovered in 1969, its full potential was not known until many years later. Only last year British Petroleum announced that the potential of the Forties Field was even greater than had been originally believed. It would have been foolhardy for the Government to change the rules before they knew the full extent of the development. I defend my party without any fear.

Situations change and, as they change, so do the awarding of grants and the determining of the criteria upon which grants should be extended. I am satisfied that the steps taken by my party when in Government were justifiable in the light of the circumstances that prevailed at that time.

The motion deals principally with the application of grant aid to those involved in the platform and module industry. I declare an active interest in platform yards since I represent a constituency in the North of Scotland which has within its boundaries two of the largest oil platform building yards in Britain.

The Nigg Bay yard produces steel platforms and the Kishorn yard builds concrete platforms. I am proud to say that they have achieved worldwide success through private enterprise. They were helped because private industry in the two places was welcomed by the local community. They use local labour, and where local labour is not sufficient it is imported. They have produced platforms and won orders in competition with such organisations as the British Steel Corporation, Methil, Graythorpe and yards on the Continent. The Nigg Bay yard has a very proud record. The enormous central platform that is being built at the Kishorn yard for Chevron will undoubtedly attract further orders.

Mr. Neville Sandelson (Hayes and Harlington)

Will the hon. Gentleman give way?

Mr. Gray

The hon. Gentleman has only just come into the Chamber. He does not come in very often, so he can sit and listen.

Mr. Sandelson

I come in all the time.

Mr. Gray

In that case we do not see the hon. Gentleman.

Mr. Sandelson

Perhaps that is because the hon. Gentleman is not here very often.

Mr. Gray

When the hon. Gentleman has sat it out for a little while I may give way, but he cannot walk in and interrupt my speech like this. I have great sympathy with the hon. Gentleman, who has problems—

Mr. Sandelson

I have no problems.

Mr. Gray

I shall not give way, whether or not the hon. Gentleman has problems. We shall take care of our problems; he can look after his.

We must also say that the question of diversification is very important indeed. For these yards the oil platform industry is very important indeed, and it will not last for ever. We all appreciate and realise that. The Minister of State himself has from time to time raised the question of diversification. Indeed, in an article which appeared in the Financial Times as long ago as 7th December 1976, the Minister of State is reported as saying that the necessity for diversification was absolutely essential and that companies are being urged to diversify and to look outwards to potential exporting markets. He went on to name the opportunities available in the Middle East, South-East Asia, Brazil, the Soviet Union. Australasia and the Far East. We know that many of our platform yards have followed this up and have tried to attract attention from those areas, and not without considerable success.

The Government's policy concerning the oil platform yards was wrong. I am sure that the right hon. Gentleman would not try to deny the fact that about £20 million to £25 million was spent unnecessarily in yards at Portavadie and Hunterston which have not attracted a solitary order to date.

Mr. Gordon Wilson

We told them so.

Mr. Gray

Yes, indeed. They were told repeatedly. However, they went ahead with this and, while I do not wish to be too carping about it, it was an unfortunate misjudgment at the time, but it is a misjudgment for which the Government must accept responsibility.

Concerning the question of the grants that are now available, perhaps this is a suitable time for us to revise the criteria for which those grants are offered. Indeed, it is for the Government seriously to consider whether it is any longer practical to offer the grants on the scale on which they have been offered in the past if they are convinced that companies will develop in any event. That is something that each Government in turn must consider very carefully.

I know that the right hon. Gentleman has taken this on board and will no doubt be considering it in the future. However, it might even be the case that, where highly profitable and potentially highly profitable exercises are to be entered into by major companies, there might be a case for at least some of the grants being given in the form of loans, so that it can be repayable at a future time. I shall not go further than that, but I think it is a point that the Minister will wish to consider carefully.

I have one or two questions about the relationship of the motion to the rest of the administration of the Act under which the grants are given. May we have some idea of what percentage of the total grants made under the 1972 Act goes to the oil-related purposes for which the motion refers? I realise that that is a broad question. Perhaps the right hon. Gentleman will touch upon it when he replies. In these days of devolution, or separation, as the hon. Member for Dundee, East might describe them, what proportion of the £90 million has gone to yards in Scotland or yards working for basic companies in Scotland? I realise that in the context of the United Kingdom it is difficult to make such a sub-division because sub-contractors do not necessarily locate themselves within the narrow confines of the home countries. However, it would be useful to be given some indication.

I should like to know what estimate the Government have made of the use that may be made of Section 8 of the 1972 Act over the next few years. For example, the Minister mentioned the number of fields that are likely to be developed over the next few years. It would be useful to know what forward prediction the Government have made over the next three years, for example, of the amount that is likely to be payable under Section 8 to companies developing the North Sea potential.

I hope that the right hon. Gentleman will mention briefly the British National Oil Corporation, which is mentioned in the motion from time to time. There is a slight difficulty because the BNOC will presumably be receiving grant aid although it does not operate on the same basis as the other organisations with which it is in partnership. For example, it does not pay petroleum revenue tax. It is in a number of fairly privileged positions when compared with its partners. In what way is grant being paid to it?

In the Corporation's report it is pointed out that in its early stages most of its liability was due to the interests that it had taken over elsewhere. Perhaps the right hon. Gentleman will say a word about that. The House will be interested to know in what category it has received grant under the Act.

I do not wish to detain the House very much longer. I am sorry that the hon. Member for Hayes and Harlington (Mr. Sandelson) has found it necessary to leave the Chamber. I was anxious to give way to him. I am sure that he had a valuable contribution to make. However, with these few remarks I wish the motion well. I hope that the various peripheral parts of the United Kingdom, especially the peripheral parts of Scotland, and not least the constituency of Ross and Cromarty, may benefit in due course from anything it has to offer.

9.8 p.m.

Mr. James Dempsey (Coatbridge and Airdrie)

I was interested in the remarks of my right hon. Friend the Minister of State, who in his usual lucid fashion explained the operation of the grants. I was attracted to his contribution when he referred to the benefits to industry in general, especially in Scotland. I was sorry that he did not develop that approach a little further. Some of us would like to know to what extent the grants will benefit the spin-off jobs throughout the whole of Scotland.

There seems to be some misunderstanding about the contribution that British Steel Corporation has made towards the development of the capacity for piping in the North Sea. It is clear that it has done remarkably well. I can recall questioning why the very wide dimension of pipelining could be done only by Japan. At that time it was the only country that specialised in this dimension. I thought that we in this part of the world should be doing something about it.

It has been pointed out to me that if we had to provide such piping we should have to equip a special mill. What would happen to the mill at the turn of the century when the demand for North Sea piping had been met? What would it then be used for? If it were to be made redundant, the Opposition would be the first to criticise the BSC for the lack of marketing knowledge and failure to anticipate trade trends.

That is why the BSC concentrates on supplying other types of piping. For example, my contituency has done jolly well out of the North Sea development. We opened a works that had been closed so as to deal with North Sea piping. We have modernised an old hand repairing mill which might by now have been closed—the Imperial Tube Works at Airdrie—and are in the process of spending £18 million expanding it, increasing the number of jobs from 200 to 720.

These are some of the benefits that we have gained from the BSC's imaginative entry into North Sea piping supply. If my hon. Friend says it has now found some means of competing with the Japanese for the specialised piping they manufacture, I wish the BSC well.

Mr. Michael Marshall (Arundel)

One can understand the hon. Member's valid point about his constituency sharing in these benefits, but, on the BSC argument which he advanced, would he not consider that it is sad that the BSC did not foresee and take advantage of this demand? Otherwise, why were the Japanese able to take advantage of it? The hon. Gentleman talks about what will happen at the turn of the century, but surely there was a time scale here which we in this country could have enjoyed. Would he not agree on reflection that a major problem was the total uncertainty about investment intentions due to constantly changing Government intervention in the BSC's affairs?

Mr. Dempsey

No, I do not think that Government intervention had anything to do with it. In accordance with the per- formance of publicly-owned industries, this was a commercial decision, based on the fact that this type of product was strictly limited and that the Corporation could see no further use for a mill beyond that time. That was the reason given at the time, a few years ago.

Times may have changed and there may be other markets abroad. It is well known that the Japanese were specialising in that type of piping, not merely for North Sea oil but for developments in many other parts of the world.

Therefore, I can only convey to the hon. Gentleman the advice that I received from the management of the BSC at that time when we pressed this demand. I can only relay to the House the replies given to me.

But we can still do much better. I want to draw the Minister's attention to the section of the Industry Act which is operating. I am never too sure what elements are implemented by the Secretary of State for Industry, the Secretary of State for Scotland and the Scottish Development Agency respectively.

I hope that I shall be forgiven for mixing my metaphors, but in Scotland there is an inordinate demand for small factory space for oil-related developments. But I am dashed if we have such facilities. I have done all I can to induce the powers that be to provide them. I even invited Sir William Gray, the Chairman of the Scottish Development Agency, to meet me. He courteously did so. I took him over a few sites which are tailor-made for the construction of small factories to take advantage of oil-related developments in the North Sea. That was 18 months ago, but there has still been no decision by the SDA, which, I understand, operates Section 7 of the Industry Act to provide industrial grants for building factory developments and equipping factories. As far as I know, not one small factory has been built over that period in the whole of my area and outwith my constituency.

I appeal to my right hon. Friend to use his good offices with whichever agency is responsible to get cracking and let us have the small units which are in so much demand by up-and-coming business men. We need new skills and young management. We need not only to encourage working people and provide jobs but to encourage the development of skilful management and stimulate young people to think of making a go of it themselves—for example, setting out on the path to having their own little concern and thus making a contribution to oil-related jobs and providing more employment, especially in areas of very high unemployment, and at the same time retaining and expanding the skills of which we can be very proud in our part of the country.

All those opportunities are being lost because we have no small factory units. I appeal to my right hon. Friend to discuss the matter with his ministerial colleagues and try to bring about a decision to develop such small units, to encourage such jobs and to make the maximum of the oil-related developments taking place off the North Coast of Scotland.

9.12 p.m.

Mr. Gordon Wilson (Dundee, East)

I suppose that this is yet another chapter in the great North Sea oil bungle by both Governments. I had an exchange with the hon. Member for Ross and Cromarty (Mr. Gray), and I was disappointed that, with his usual ability to slip round difficult fences, he did not accept my point that the Conservative Government from 1970 onwards were well aware of what the Forties oilfield meant. If the data about the field had not been supplied to the Government, or if they did not take it in, that was another bungle by them. I am not blaming the hon. Gentleman personally, because he did not then occupy his present position. The mess in which the last Conservative Government left the economy generally is well known, so it is only to be expected that they were not immune from making the wrong decisions in other matters.

We are discussing an interest subsidy. The Minister put quite a good gloss on it when he talked about the export credits guarantee incentives and said that they did not apply to the home market. That was a strong argument, about the only one that can be applied to this scheme. If the scheme has produced employment and contracts, as I am sure it has done, it is to be welcomed, but we must examine it to see whether in other circumstances, with other approaches, public money might have been saved.

We must accept—this is part of he procedures that we sometimes look upon with a degree of doubt—that at this late date there is nothing much we can do because the scheme has been in existence and we are now putting a rubber stamp on the expenditure which has been promised as part of two Governments' proposals for expanding the amount of United Kingdom involvement in the offshore industry.

I question much of the financing. The hon. Member for Ross and Cromarty referred to the two yards at Hunterston and Portavadie, where there was substantial previous expenditure by the Government on the provision of facilities which have never been used. It would not surprise me if at some time the Public Accounts Committee turned its attention to those two yards. I know that the Government have often said that at some time in the future those yards may be used, but we must realise that, with the paucity of orders facing the industry, if an order goes to those two new yards it will be to the detriment of the existing yards and those now employed in them.

As to whether these grants were necessary, the oil companies already get a massive allowance from the Government for the purpose of petroleum revenue tax. If I recall the figure correctly from the Committee dealing with oil taxation two years ago, about 75 per cent. of the capital cost was provided in an uplift allowance. That allowance was to apply not only to the capital expended, which presumably was 100 per cent., but also to the interest on the capital before any return accrued to the company. If that 75 per cent. was an interest allowance, we have here yet another subsidy being made available to the companies, which will get a rebate of interest on platforms which is not deductible from the PRT uplift allowance, as it is called.

Will the Minister comment on the extent of the financial incentive being made available to the Government? We have two separate things. The companies are getting a rebate on the petroleum revenue tax because they are allowed to set off an allowance for interest. Under the position here, we find that they are also being given a cash subsidy for placing their orders with certain yards located in Scotland.

As the hon. Member for Ross and Cromarty said, as and when the bonanza is made known the conditions of the licensing should be made progressively tougher. I hope that there will not be much disagreement on either side in relation to that. One must obviously strike the best possible bargain in the national interest, particularly if one is disposing of a national asset.

The argument which develops—I shall not make too much of it tonight—concerns the point of time at which the toughening-up process should have been started and whether we have gone far enough at present. My party feels that successive Governments have been far too slack and that the oil companies have virtually been laughing at the Government for being so soft for so long.

Mr. Gray

I put to the hon. Gentleman the converse argument that as the oil is depleted the time will come when it might be suitable to make the terms of the licences that much easier where there is a need to develop marginal fields.

Mr. Wilson

There are two separate aspects to that. I would not disagree at all on that with the hon. Gentleman. As and when the negotiating position changes we should not take cognisance of that, but while the negotiating position is strong I think that we should. We should also separate the fact that smaller or marginal fields should be dealt with in a different way from the major fields. Here, in relation to the motion, we are certainly dealing with the major fields. Ninian must be very high up in the league. Thistle is no mean development. There may be some argument over Forties, which was one of the first developments and, therefore, might possibly have been dealt with in a different way from some of the others. Brent is hardly the smallest —it is in fact the biggest—and Frigg is the biggest gasfield in the North Sea.

From all these aspects, I think that we should relate our discussion to the major fields. I concede that there is an interest in developing the marginal fields. I have said so frequently, and particularly in relation to the oil taxation measure, and the Petroleum and Submarine Pipe-lines Bill.

What could the Government have done? Once they had appreciated that oil was present in large quantities and could be developed, and that because of this the oil companies themselves would have a continuing interest in taking out new licences, it should have been made clear to the companies that, if they transgressed blatantly in buying equipment for the North Sea which was not produced from Scotland, they would not be given any further licences, or, at least, their opportunities for getting licences in the plummier areas would be rendered much more difficult.

I think that the Government are perhaps considering some of the proposals I have been making, but they would never dare admit this because most of the fighting is done out of sight. Nevertheless, what is being done is being done far too late. The production licences could have been made dependent upon the purchase of suitable quantities of equipment from Scotland.

The Minister of State referred to the somewhat greater than 50 per cent. share of the offshore market which is now enjoyed by the United Kingdom. I think that the figure is about 52 per cent., but unfortunately he has never told us what the Scottish figure is. There have been many requests for him to estimate that figure. It is a very important market. With the OSO located in Glasgow, I should have thought that it would be easy for it to calculate the Scottish share, or at least to make a fairly intelligent guess. Is the figure 20 per cent., 25 per cent. or 32 per cent.? The Minister is unwilling to say, and even Professor Donald Mackay has commented on the difficulty of extracting information from the Government.

If the Minister of State is about to repent and give that information, we shall cry "Hallalujah!" and be glad that he is prepared to tell us what it is. Whether we believe him is another matter. If hon. Members want me to give an estimate. I would put it at between 25 and 32 per cent. I am not sure that I would believe the Minister's figure, and given a choice between the two I would probably prefer my own.

I do not want to annoy the Minister, because he has been taking a suitably anti-European line. Only yesterday he was pulling at the beards of his European comrades, telling them to take their hands off British oil. I only wish that he would tell his English colleagues to take their hands off Scottish oil. Since he is beginning to learn, we hope that in a few years he will see reason on this score, particularly as the oilfields will be under totally Scottish control at that time.

The European Commission may take the view that this scheme, faulty as it is in many ways, should be discontinued for the benefit of the Commission. I accept the Minister's argument that the implementation of the scheme might be for the benefit of the nine members of the Community as well as specifically for the benefit of the United Kingdom and Scotland. But he should tell his comrades in the EEC that they are not going about their activities in such a way as to gain public popularity. The reputation of the Common Market has been falling sadly in the last two years.

The EEC is quite prepared to grab our fish. It is trying to grab our oil, and even now it is trying to grab the oil jobs. It is trying to grab the jobs from Ross and Cromarty, and even the hon. Member for Ross and Cromarty, who has been a loyal supporter of Brussels, appears to be coming round to the opinion that Ross and Cromarty must come before Brussels. [Interruption.] Apparently the hon. Gentleman does not believe that. So be it. We should tell the Common Market in no uncertain terms that if it wants to retain any popularity in Scotland it should cease this impertinent interference in our affairs.

I was interested in the remark by the hon. Member for Ross and Cromarty that instead of giving grants we should consider loans. In an earlier debate—I believe it was on the Cromarty oil refinery—the point was made that we should consider large advances or loans to petrochemical institutions on the basis that these should be separately negotiated. As the hon. Member said, many of these organisations would want to come here anyway and there is no point in subsidising an industry which is only too desperate to set up camp in a given area. That idea should be followed through. It might even be applied to the Cromarty refinery itself.

The Government should perhaps now look at the question of giving more atten- tion to the revision of the technology in the yards concerned to develop tension-leg platforms which have export potential. That is where a large part of the market will develop.

Only last week I was in the United States. Although the Americans are very anxious about the environment and about pollution which might be caused to their sea-going areas, it seems only a matter of time before their shortage of oil and gas will drive them to developing their Continental Shelf in a more active fashion than they have been doing lately. If that is so, and if other countries follow suit, exportable platforms will undoubtedly be a far better bet than the present ones, which are large and cumbersome and not easily transportable from one part of the world to another, particularly if there is the danger of foul weather in the process.

I welcome the motion. It has undoubtedly produced some employment in these difficult days. That is welcome, but I still share many reservations about whether it is necessary. A lot of push and pull will still have to take place before we get the benefits for which we have had to pay so expensively to the tune of £89 million.

9.27 p.m.

Mr. Anthony Nelson (Chichester)

The comments of the hon. Member for Dundee, East (Mr. Wilson) on the need for research and development in this important industry will meet with agreement on both sides of the House. However I am bound to say that some of his remarks on the handling of North Sea development by successive Conservative and Labour Governments appeared slightly less than objective. One cannot help wondering how even an independent Scotland would have been able to raise sufficient finance to offer a scheme similar to that which we are debating this evening.

I start by paying tribute to the outstanding performance of the many companies involved in the offshore supply industry. There is no doubt that many United Kingdom companies have responded successfully and profitably to the immense challenges presented by the discovery of North Sea oil within the last decade. The fact that United Kingdom offshore supply companies account for half the contracts in the North, Celtic and Irish Seas is a great tribute to the flexibility of the North Sea oil supply industry and its ability to see opportunities and profit from them.

This has been a £1 billion-a-year market, which the managing director of Esso has projected as doubling to a £2 billion-a-year market until 1980. Therefore, there are still tremendous and growing opportunities for the British offshore supply industry. I have no doubt that it will be quick to seize the opportunities that that presents.

Mr. Michael Marshall

Would not my hon. Friend take his argument wider and agree that the hon. Member for Dundee, East (Mr. Wilson) is in a way urging the case for further State intervention at an early stage?

Is it not the case that had it not been for private enterprise the whole of this exercise would never have got off the ground? We ought to be mindful of the fact that the Scottish National Party is pushing more State interventionism in the whole of this argument.

Mr. Nelson

I am sure that my hon. Friend is right in his comments. Indeed, despite the SNP's criticism it patently would not have been able to raise sufficient finance to offer anything like the scheme that we are debating tonight at the beginning of the development period. We have been told by the Offshore Supplies Office at the Department of Energy that the proportion of the market that United Kingdom companies supply could be increased to about 60 per cent. It is quite clear that even if the proportion increased only by about 10 per cent. the amount of money that we are talking about would be very considerable indeed. Equally, it is true that it will be much more difficult to increase the size of our share of the market over the 50 per cent. level and that it will become more costly as time goes on.

It is also clear that although many of the companies operating in the North Sea have given undertakings that they will provide full and fair opportunity for all suppliers to compete for orders, there is to some extent an indication of a bending of the rules, in that national pre- ferences are creeping in. The perhaps poor performance of the Norwegian supply industry in supplying only about 15 per cent. of the Norwegian Shelf has been followed by clear action by Statoil, the Norwegian agency, to increase its percentage of orders for its own country. The fact that many nationalised oil operators are now acting in joint partnership with public and independent oil companies is perhaps the first sign that there will be much greater pressure for orders to be placed in the countries concerned and that the operators will not be able to offer the full and fair opportunities for tendering that they have been able to in the past.

I want now to say a little about the EEC Commision's report on the operation of this scheme, not only because of its relevance to this motion but because it is very important for future Government intervention and any form of assistance to industry provided under successive Industry Acts.

The Minister indicated earlier that the Commission had informally withdrawn its threat to take action under Article 93(2) of the Treaty of Rome, but it is clear and in writing, in paragraph 221 of the Sixth Report on Competition Policy, that The Commission therefore decided to initiate the procedure under Article 93(2) of the EEC Treaty in respect of the scheme. That followed representations that the Government had made. If the Minister is now saying that the Commission has withdrawn the intention of any action under this article he should be quite unequivocal about it, because this is very important for all the companies operating in the offshore supply industry.

Some of the observations in the EEC Commission's report are interesting in considering the basis of interest relief schemes. In its report, the Commission differentiates between the interest relief that is given to suppliers and that which is given to operators. It feels that although there was a case for such selective financial assistance being given to potential supply companies at the beginning of the development period this has ceased to be the case and should be discontinued. There is no doubt that the recipients of the funds that we are now discussing will exclusively be operators in the North Sea, rather than supplying companies.

However, on the question of operators, the EEC Commission also feels that competition within the Community will be seriously disturbed by an escalation of the funds made available through this and similar schemes.

It is true that it was a Conservative Government who introduced the 1972 Industry Act, but it is equally true that this Government have, through amendments in the Industry Act 1975 and by orders which have vastly increased the funding made available through these Acts, radically transformed both the intention of and the criteria for providing selective financial assistance to industry. The level at which it is being provided now is very different from that envisaged during the passage of the 1972 Act.

Equally, it is clear that the intention at that time of assisting and providing Government encouragement for the development of an offshore supply industry has been acted upon by the private sector and has been successful. But it is proper, when we are considering further expenditure of public and taxpayers' money on these schemes, to question whether, now that the industry has developed, this is really the best use of taxpayers' money.

I believe that there are serious questions—I would not put them as strongly as criticisms—which the House should debate and consider on the efficacy of interest relief grants. After all, if a case for providing interest relief grants can be made for the offshore supply industry, there may be a case for other areas of industry as well where potential markets exist both at home and abroad. I have no doubt that this Government would be the first to seize on this possibility, if it offered a means of overcoming serious political difficulties on employment.

I believe that the extension of interest relief to other areas is something that the British Government cannot afford at present. There may be less of a case for the provision of such schemes at a time when inflation is falling, not rapidly but to some extent and, as a reflection of that, interest rates are falling more sharply.

If the Government offer a grant to a major offshore supply company aimed at meeting some of the cost of interest on capital in setting up plants when interest rates are 14 per cent., they must be satisfied that without such assistance the company would fail to set up productive machinery. If, in the course of another six months or a year, interest rates fall to 11 per cent., the 3 per cent. benefit that the Government gave to that company would become redundant.

In that situation, when interest rates have fallen, as they have done in recent months, is it still appropriate for the Government to provide extra support and subsidy, when that support was supplied originally to encourage the setting up of productive capacity and to make the tendering of supplies from that company more competitive internationally. When interest rates fall, so do the production costs of the offshore company concerned, and therefore it should be more competitive or cheaper than for companies of other countries. This is an important area, because the figure that we are discussing tonight—potentially £89 million —appears firmly fixed. I would welcome an indication whether this figure is a maximum or whether, with a further fall in interest rates, our liability could be substantially smaller.

On the question of the effect of extending the scheme to other areas of industry—

Dr. J. Dickson Mabon

We are not talking about that.

Mr. Nelson

The Minister says that we are not talking about that, but we are talking about support for the offshore supply industry and money that has gone into Hunterston, Marathon and other sectors through selective industrial assistance. This matter should be discussed in a motion of this nature, because it is an alternative means of spending public money, and public money, by its very nature, is limited. Therefore it is proper and responsible to look at the best possible way of spending public money.

I question whether interest relief grants are the best way of doing this. I feel that many of the projects enunciated in this motion are immensely important, but I underline the query made by one of my hon. Friends whether this investment would have been undertaken by the companies involved without public finance being made available.

I come to the very important question of the British Steel Corporation. It is clear that the potential market provided by the North Sea gas development could provide a potential pipe market for the BSC. I would welcome an indication of the extent to which those requirements are compatible with the needs of the North Sea oil industry in wanting a large diameter trunk line pipe. I do not know the size of the pipe required in the gas industry, but this is an important matter. If we are talking of setting up and funding, through public finance, massive investment in plant in the British Steel Corporation to provide high-quality pipe for the North Sea oil industry, we shall lessen the risk if there is also a market in the gas production industry.

The Minister said that he hoped the British Steel Corporation would be able to respond to the demands of operators in the North Sea to a greater extent than in the past. If we were given some indication that the Corporation was able to supply these requirements it would underline the importance and viability of this manufacturing plant within the BSC.

This has been an important debate. It has given us a rare opportunity to examine in depth the reasoning and methods of the Government's selective finance for industry at a time when the amount of money provided in various forms to various companies has escalated substantially.

I am increasingly concerned at the level of finance that is being made available through the Government's selective approach to many companies, whether it is an interest relief scheme, an accelerated project scheme, or a grant that is being made available under Section 7 or 8 of the Industry Act. As with the National Enterprise Board under the 1975 Act, I suspect that the Government are taking out funds from productive industry and placing them where they will be less efficiently used.

I welcome the fact that we are now discussing the placing of public money in an industry in respect of a product that is of immense importance to the British consumer and our economy. To that extent I welcome the provision of this finance. The debate has given us an opportunity to lay down some markers on the extent to which the Government are using on an increasing scale taxpayers' money in a questionable way to finance speculative public sector projects for political rather than commercial considerations.

9.43 p.m.

Dr. J. Dickson Mabon

The hon. Member for Chichester (Mr. Nelson) made an interesting speech. I cannot help reflecting that when I first came to the House the late Iain Macleod told me "The trouble is that you talk well, but you talk for so long". The hon. Member for Chichester made a good case at the beginning on a number of points but went on to talk with 20: 20 hindsight, as the Americans say, about schemes which had been developed in the past.

I should like to tell the hon. Member for Ross and Cromarty (Mr. Gray) that the scheme envisaged in 1973 was a sensible one even from a Conservative Bow Group point of view. I do not think that anything we have added has made it any less sensible.

What is at the end of the road? The hon. Member for Dundee, East (Mr. Wilson) came to the House when we were in the middle of discussions and decisions on this subject. Indeed, it was a Conservative scheme financed by our money. We had to defend the raising of the taxation to pay for the scheme. In other words, it is a Labour scheme although conceived by a Tory principle. At the end of the day we have captured 52 per cent. of the offshore Continental market— indeed, I believe that the figure is even higher since we have achieved from our own capability about two-thirds of the capital goods market. We are under no illusion that not all of that is due to our enterprise. Our competitors are not free enterprise agents.

We have only to look at the Dutch, French and German systems and the various other support systems that exist either overtly or covertly. I do not have to go into that. The Commission originally accepted in 1973 the scheme that I am now defending in the sense that it raised no objection when it was introduced. It is true that the Commission has since expressed concern about the scheme's effect on intra-Community trade. We are having discussions, but it is difficult for a Minister, even in this House, to reveal everything that goes on in discussions. We hope that we shall be able to obtain an acceptable solution to persuade our eight colleagues in the Common Market that our scheme is a sensible one from both our point of view and from theirs.

Mr. Nelson

The Minister will be aware that in the Sixth Report the specific recomendation of the Commission was that if the United Kingdom scheme was to continue it should also be made available to supply companies in European member States. Can he tell us what is the Government's attitude to that?

Dr. Mabon

As the hon. Member might know—and as I believe he suggested, although if it was not him it must have been the hon. Member for Dundee, East—we are hoping that the House will look at this, investigate it and make comments. However, I take the point, but if we are to borrow from each other in the Common Market and if the scheme is to be introduced in the other eight countries I should like us to borrow from a few of their schemes. Some of those schemes are enormously inventive and very able. I commend the French ones particularly. I am sorry only that the Japanese are not in the Common Market, because they have even better schemes than anyone else. I am all in favour of fair competition with the aid of these schemes, and I am willing for us to look at them in the light of circumstances at the time.

As for this scheme, it was conceived by the last Government and implemented by this Government. It is a sensible scheme and, with hindsight—although it has its defects—has on the whole been successful. I make no apology to the House for defending it.

As for the future, we must look at new developments in the light of circumstances. The hon. Member for Dundee, East talked about the future. I take the view that long after the oil industry has gone we shall still be building oil platforms for the rest of the world, whether for the United States, Mexico, Venezuela, Brazil, Indonesia or any other country, in the same way as we built the railways for other countries long after we had developed our own. We could be in the business, whether it is building tension-leg platforms or other platforms. That is what the motion is about—creating a capability for Great Britain that other countries would like to have and that the Americans certainly do have. We must be able to compete with them, not only in our own market—in which we have captured two-thirds of the capital goods business—but in the markets of the world.

Mr. Gordon Wilson

Will the Minister bear in mind that it is not sufficient to rely simply upon the platform industry? If platforms are like the railways, the sub-sea wellhead units may be the aircraft of the future. We should try to balance the two. At the moment there is a definite lack of wellhead and sub-sea wellhead installation development within the United Kingdom. Perhaps the Government could give equal attention to that as to the maintenance of capacity in the yards.

Dr. Mabon

I am not sure that that is entirely fair, but we are concerned about it and I take the hon. Gentleman's point that we ought to try to develop as much as we can of what he calls the toughening-up process. However, being a member of an Opposition party—not so much the official Opposition, but a minority party—it is terribly easy for him to have 20:20 hindsight, to complain, to switch policies every 10 minutes and to be wise.

I have exposed the hon. Member for Dundee, East I do not know how many times for his foolishness in the past and for saying things that he much regretted later. However, I take his point that we should be looking at these problems on what he described as a fairly intelligent basis. Scotland has about half the offshore business. It may be more: it depends on when the estimate is made. That is not bad for a country that has only one-tenth of the employment in the United Kingdom. Considering our capability in Scotland, it is good that we should have half the business and I do not resent the fact that England and Wales, which have nine-tenths of the people, have the other half of the business.

Mr. Gordon Wilson

Is the right hon. Gentleman saying that Scotland has 25 per cent. of the total business? My estimate was that we had between 25 per cent. and 32 per cent. compared with the total United Kingdom figure of 52 per cent. Is the right hon. Gentleman going for the lower end of my estimate?

Dr. Mabon

These are rough figures. I think that it may be rather more than the lower end of the hon. Gentleman's estimate, but I do not think that we should be arguing in these terms.

The hon. Gentleman referred to Portavadie and Hunterston. I am ashamed that he should go along with the Rightwing criticism of the Conservative Party that we should not have made a bet on Portavadie and Hunterston. We think that there is one concrete order on the way. It could go to the Dutch or the Norwegians. The style of the order is such that in the United Kingdom it could go only to Portavadie, Hunterston, Ardyne or even possibly Kishorn, although I do not think so. If we shut Portavadie and Hunterston, we shall make sure that the order does not go there. That would be a mistake.

If we get the order at Hunterston, the hon. Member for Dundee, East will have to apologise. If we get it at Portavadie he will have to apologise miserably, and if we get it at Ardyne he will be embarrassed because the yard is supposed to be closing down and all the rest of it. We cannot make predictions in this business.

Laing's is officially shut down but is actively canvassing the possibility of a steel order on Teesside. It may get 1,000 jobs from it, and I say good luck to the venture. The job of a Minister is to get orders, whether concrete or steel, for Britain. Wherever the orders may be and whatever yards are involved, the basic concern of Ministers is to get the orders for Britain. I make no apology for that to the Common Market, the Scottish National Party or anyone else.

My hon. Friend the Member for Coat-bridge and Airdrie (Mr. Dempsey) made a very good speech about the interests of the British Steel Corporation and distribution in Scotland. He asked what proportion of the grants payable benefited Scotland. It is clear that the scheme is of substantial benefit to Scottish-based industry. I cannot give the exact figures now. As the hon. Member for Dundee, East said, there are difficulties because of the amount of sub-contracting on both sides of the border, but we believe that about half of the expenditure which qualifies for grant is incurred in Scotland, and that is a very large sum of money.

My last comment is this. It is often thought that the Grampian Region of Scotland is the main beneficiary of Scottish offshore activity. In fact, that is not so. It is marginally so, perhaps, if one takes various areas into account, but what is true also is that Strathclyde, miles away from the North Sea, is a one-third beneficiary in terms of jobs in offshore oil production. Moreover, many areas of England, in the North-East, as well as Wales, are beneficiaries of North Sea oil production.

Therefore, the motion before the House, which I am happy to know has been well received by hon. Members on both sides, is a British matter concerned with the welfare of the offshore oil industry of the United Kingdom.

Question put and agreed to.

Resolved,

That this House authorises the Secretary of State to pay, or undertake to pay, by way of financial assistance under section 8 of the Industry Act 1972, as amended by section 22 of, and Part I of Schedule 4 to, the Industry Act 1975 and section 1 of the Industry (Amendment) Act 1976, as grants in respect of interest on money borrowed for obtaining in the United Kingdom goods and services for each of the projects specified in column 1 of the Table below carried on by persons specified in respect thereof in column 2 of the Table sums which, together with the sums already paid or undertaken to be paid by way of such financial assistance, exceed the sum of £5 million but do not exceed the sum specified in respect of the project in column 3 of the Table.
TABLE
(1) (2) (3)
Project Persons carrying on Project Maximum amount of financial assistance
Establishment offshore of production platforms and other installations with their equipment for the development of the Ninian oilfield Chevron Petroleum Ltd. BNOC (Ninian) Ltd. Imperial Chemical Industries Ltd. Murphy Petroleum Ltd. Ocean Exploration Co. Ltd. BP Petroleum Development Ltd. Ranger Oil (UK) Ltd. Scottish Canadian Oil and Transportation Co. Ltd. London & Scottish Marine Oil Co. Ltd. £43 million
Establishment offshore of a production platform and other installations with their equipment for the development of the Thistle oilfield BODL Ltd. Burmah Oil (Exploration) Ltd. BNOC (Thistle) Ltd. Deminex UK Exploration and Production Ltd. Deminex Oil and Gas (UK) Ltd. Santa Fe (UK) Ltd. Tricentrol Thistle Development Ltd. Charterhouse Petroleum Development Ltd. Conoco Ltd. Gulf Oil (Great Britain) Ltd. BNOC (Exploration) Ltd. £18 million
Establishment offshore of production platforms and other installations with their equipment for the development of the Forties oilfield BP Oil Development Ltd. £10 million
Establishment offshore of production platforms and other installations with their equipment for the development of the Brent oilfield Shell (UK) Ltd. Esso Petroleum Co. Ltd. £9 million
Establishment offshore of production platforms and other installations with their equipment for the development of the Frigg (UK) gasfield Total Oil Marine Ltd. Aquitaine Oil (UK) Ltd. Elf Oil Exploration and Production (UK) Ltd. Total Marine Norsk El Norge A/S Aquitaine Norge A/S Norsk Hydro Produksjon A/S £9 million
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