Clause 2

HC Deb 25 February 1981 vol 999 cc903-27

RATE OF LEVY

Mr. Rowlands

I beg to move amendment No. 4, in page 2, line 29, leave out 'three pence' and insert 'one penny'.

The Chairman

With this it will be convenient to take the following amendments:

No. 5, in page 2, line 30, leave out 'five pence' and insert 'one penny'.

No.6, in page 2, line 33, leave out 'different from' and insert 'lower than'.

Mr. Rowlands

It will be our wish, unless we get a satisfactory explanation, to divide on amendment No. 6.

The first two amendments aim to reduce the levy, but the third amendment—and, for our part, the most important—attempts to limit the power of the Minister to revise by mere parliamentary order the rates listed in the clause. We believe that he should have the power to lower the rate but that if he wishes to raise it he should come back to the House with fresh legislation. He should certainly not have the power to interfere with and change the rates upwards within the next three financial years, thereby imposing additional levies on the British Gas Corporation.

The amendments also provide us with the opportunity to discover exactly what will be the impact of the levy on the finance and investment programme of the British Gas Corporation, and particularly on its prices. We shall seek, during the course of the debate on the amendments, to get a much clearer and more definitive statement as to how the Government see the impact of the levy and the effect of it on the investment policies of the BGC and on its pricing policy, especially in relation to industry.

During the Second Reading debate on the Bill, several hon. Members in all parts of the House expressed considerable concern about the effect of savage gas price increases on industrial consumers, large and small. It was a common theme which ran through the debate. It has also arisen regularly at Question Time over the last 12 months.

In a marvellous and typically dismissive speech, the right hon. Member for Stafford and Stone (Sir H. Fraser) spoke passionately on behalf of a large number of people in describing the impact of the Government's industrial gas price policy and the zany decision to impose additional energy costs on British companies which are already struggling to survive the recession and to beat international competition at a time when there is a very strong pound.

The right hon. Gentleman summed up the position well when he said: Another aspect must be questioned. I am proud to have in my constituency both Wedgwood and Cornings, which is an important glass manufacturer. I must question whether, at a time when unemployment is rising faster in the West Midlands than anywhere else, it is proper to impose a burden on the gas industry, especially when in most instances our prices are considerably higher than those in competitive countries. I therefore question very much the policies put forward by my right hon. Friend in relation to gas."—[Official Report, 16 February 1981; Vol. 999, c. 80.] So do many other hon. Members in all parts of the House. They also question seriously the policies which have been put forward by the Government on gas prices, and in particular the impact of those price increases on our industrial competitiveness in relation to vital orders, particularly in regard to exports.

The right hon. Gentleman went on to quote some specific examples. He questioned whether it made any sense to impose additional energy costs on companies during a time of recession, and listed a series of comparative prices in pottery manufacturing and in the glass industry, demonstrating the differential in gas costs between companies in Staffordshire and companies in France.

There seem to be smiles from the Government Front Bench at the problems of the glass industry and of Wedgwood and Cornings and the horticultural industry. Perhaps this is indicative of the way in which the Government have responded to the demands and calls made by hon. Members in all parts of the House that the Government should consider the impact of their gas prices policy on the whole of British industry. Members of the Government appear to be the only people not to know that in industry after industry the high gas prices have had a very serious effect on the competitiveness of individual firms.

Mr. Tim Eggar (Enfield, North)

I am sure that we are all listening very carefully to the hon. Gentleman, but will he please explain to the House with some care and precision exactly how the levy increases domestic and industrial gas prices?

Mr. Rowlands

If the hon.Gentleman will contain himself and listen to the full presentation of the case, he will be able to hear the questions that I shall put in order to find out the relationship between the gas levy and the whole of the pricing and investment policy of the British Gas Corporation. I shall also be seeking to see whether it will be possible to do something about industrial gas prices in the coming financial year.

Mr. Norman Lamont

The industrial pricing policy of the British Gas Corporation is the same under this Administration as it was under the previous Administration. Is the hon. Gentleman repudiating that policy? Does he think that there should not be any link at all between industrial gas prices and oil prices?

Mr. Rowlands

I am pleased that my argument is arousing so much interest. If the Minister will bear with me, he will find that during the course of my presentation I shall explain exactly how we see that relationship. I shall be putting several questions to him about the Government's policy concerning industrial gas prices.

The Government should recognise what has already happened to parts of British industry as a result of their energy and fuel pricing policy. Only this week we have had the tragic announcement of the planned closure of Duport in Llanelli, with the loss of over 1,000 jobs. It has meant the closure of a new £20 million furnace that was financed and opened only a year ago. I am told that the energy costs of that works were greater than the wage costs. [Interruption.] The complacency of Ministers over the past year concerning the impact of the Government's gas pricing policy on industry and on its competitiveness—particularly in relation to export orders—has astounded and shocked many firms and industrialists in this country. [Interruption.] The glib responses that the Minister is seeking to make from a sedentary position are illustrative of the lack of response by the Government, and their lack of willingness to respond early enough and fast enough to legitimate complaints about their gas pricing policy.

While energy Ministers quibble over figures, the industry has been collapsing. They are still quibbling over figures. We are still waiting for the famous NEDC report. We understand that it is now due on 4 March. When will there be action on it by the Government?

It is not only because gas is in short supply for industry, and that therefore a high price must be demanded, that the free market prevails in gas prices. In South Wales, for example, gas sales to industry have fallen in the past 12 months by 25 per cent., as a result of the depression that has hit the Principality. That is a terrible commentary on the economic climate and environment of the Principality. In the past 12 months there has not been a great shortage of gas for industry. All that has happened is that there has been a large increase in gas prices to industry, despite the collapse in demand that has occurred in some areas. A 25 per cent. reduction is formidable and a sad comment on the state of the economy, the economic environment and climate created by the Government.

We are right to take the opportunity to discover what impact the levy at the rates proposed will have upon industry's hopes of significant help. As I develop that point I think it will answer the two questions raised by the hon. Member for Enfield, North (Mr. Eggar). What impact will the levy and the rates proposed in the Bill have upon industry's hopes for significant help with industrial gas prices? What effect will it have on the British investment programme? What is the Government's policy towards industrial gas prices? I shall consider the last question first.

The Secretary of State has confessed that he is the culprit, that he is to blame for the exceptionally savage rise in domestic gas prices. He has admitted that in the House and before the Select Committee. He stands either condemned or exalted for it. I suspect the former. His statements on his role and his responsibility for the almost equally savage rise in industrial gas prices have been more ambiguous. In considering the rates for the levy, we are entitled to find out more clearly what will be the Government's view on industrial gas prices in the coming financial year.

Last Monday, as on earlier occasions, the Secretary of State claimed that the Government endorsed the view of British Gas on industrial gas prices for the past financial year. Is that so? What was the British Gas Corporation's attitude last March to industrial gas pricing policies? Did the corporation at any time warn the Government that the price levels it had to apply because of financial targets would cause difficulties, specifically in price comparisons with the Continent? When gas prices were being fixed last spring and problems were arising in many parts of industry, did the corporation tell the Government that if it continued to pursue its policy there would be difficulties and that its prices would go out of line with prices in Europe?

If so, what was the Government's reaction to those warnings? It is important to know whether the Government have been spilling crocodile tears over industrial gas consumer prices in the past 12 months or whether they have been not just a party to but a promoter of a system whereby industrial gas prices have been higher than necessary? That is a fundamental question that I hope the Minister will answer.

5.15 pm

The reason why we think that this is a most ill-timed levy is that we are on the eve of, we hope, a major statement of the Government's policy towards industrial energy costs in general. We were told on Monday that on 4 March the NEDC report would be published and would be the subject of a meeting on that day. The Minister told us that British Gas has already taken steps to cushion the effect of the steep industrial price increases that have occurred.

I was asked about policy. I shall tell the Minister what I think the policy should be. I believe that the British Gas Corporation will be willing to do more than it has already done to assist industrial consumers. It should be asked to stabilise industrial contract prices and to hold interruptible supply prices through this year.

The relevance of the levy is this: where will the money come from? How much will it cost if that policy is adopted? That is the pertinent and proper connection between a policy on industrial gas prices and the rates of the levy in the Bill.

I hope that the Minister will support my suggestion that we should ask the British Gas Corporation to try to stabilise industrial gas prices for this year. How much would it cost if the price were held at the average of renewed contracts and if we held the interruptible supply price through this year? Prices were supposed to increase in steps, quarter by quarter. If we tried to stabilise industrial gas prices in the next financial year, what would be the loss in revenue to British Gas if it followed such a policy?

I have heard that adopting such a policy would cost about £100 million in lost revenue this year. Hon. Members on both sides will recognise the relevance of a decision to lose £100 million worth of revenue to assist the industrial gas consumers and help to stabilise industrial gas prices. If the cost is £100 million, where will the money come from?

The gas levy will make the situation worse. That is the relevance of our amendments. Any relief that the corporation could give will cause loss of profitability, as the levy will continue to be a fixed drain on its activities. I hope that I shall carry some Conservative Members with me in saying that the Government must be flexible in applying the levy rates.

Without the levy the corporation could have covered and carried the cost that we are suggesting—£100 million of lost revenue—to stabilise gas prices for industrial gas consumers. It could do so if the levy were not applied or if the levels proposed for the next financial year were lower. If the full levy is raised—we have had no contrary indication—the impact on British Gas finances could be considerable, both on its current activities and its investment programme.

Will the Minister give us an assurance that, if the Government ask British Gas, or if it volunteers, to assist in a major price stabilisation policy for industrial gas consumers this year, the heavy cost of the loss of revenue will be offset against the levy? Will he amend the rate accordingly?

Mr. Skeet

I am following the hon. Gentleman's argument closely. Is he referring to heavy users of energy, or is he talking about those companies—there are many of them in the United Kingdom—whose energy costs are only about 2 or 3 per cent. of total costs?

Mr. Rowlands

I am expressing a personal view. I do not know what the view of British Gas is on this matter. I believe that if it adopted a policy of price stabilisation for industry it should be a general policy rather than one in which the corporation tried to identify individual firms or industries. I think of the small engineering company that uses gas, albeit marginally. A firm in my constituency had price increases of 35 per cent. last year and it faces a similar increase this year. It is fighting for its life and its exports. It has been heavily export-oriented. Whatever marginal assistance can be given to companies as small as that, even if they are small consumers of gas, will be most welcome and helpful.

The Government should ask the corporation, or it may well volunteer, to try in this financial year to produce a major stabilisation policy for industrial gas prices, rather than continue to let them rise, as has been planned. The cost of such a policy in lost revenue could be considerable—about £100 million. Will the Government give an assurance that if that is so it can be offset against the cost of the levy? The easiest way would be to reduce the levy to accommodate British Gas's lost revenue.

Mr. Peter Rost (Derbyshire, South-East)

Will the hon. Gentleman make it clear that he is not advocating a similar subsidy or price freeze for the domestic gas consumer but is referring simply to industry? Is he aware that if there were such a subsidy or freeze British Gas would be asked to sell at below its marginal cost of supply gas that it has to buy from the Norwegian gasfields to supplement its own gas, at about 10 times the price that it is paying for its cheapest gas supplies in United Kingdom waters? Is that correct?

Mr. Rowlands

I am not sure that the hon. Gentleman's last point is correct. Only British Gas can answer that.

The answer to the hon.Gentleman's first point is that throughout I have used the words "commercial" and "industrial". I have not used the word "domestic". We can have another debate about whether the Government's policy towards domestic consumers is good. My recommendation of a major stabilisation programme for gas prices refers to industrial gas prices.

I do not know how valid was the hon. Gentleman's second point. I know that British Gas could accommodate the cost of such a stabilisation policy—at, say, £100 million—if it retained the profits without the levy, though I do not think that it could do so easily. That is the relevance of the rate of the levy and an industrial gas price stabilisation policy. There is a direct link.

If British Gas is asked to adopt such a policy, or volunteers to do so, to help industry in a year of deep recession, however marginal the assistance in some cases, it will lose £100 million in revenue. Unless the levy is reduced, this will mean the loss of £100 million, when the profits of British Gas—as the Minister showed in replying to the first debate—will be flattened out at about £300 million a year for each of the next three years. That loss is too large a sum to be borne in addition to handing over the moneys required—£420 million or whatever—in 1981–82 at the present rate of levy.

I think that the hon. Gentleman understands the point. I hope that he will have some sympathy with my view. That loss of revenue should be taken out of the gas levy, not from the revenues of British Gas, if such a policy is adopted, as we would ask.

My request is connected with the British Gas investment programme. As the Minister said earlier, the corporation is to embark upon a major investment programme in the next few years. The hon. Gentleman quoted a figure of £4,000 million. There is the exciting Morecambe Bay field, involving £1 billion worth of expenditure over the five years. There is the Rough field, which the corporation has acquired from an oil company in the southern North Sea, the development cost of which will be about £600 million in five years. Both fields will be used as reservoirs, to be tapped cheaply for peak needs. That means that British Gas will not seek large immediate returns on those heavy investments. That will have considerable effects on revenue and the cost of financing the schemes—rightly so. I think that everyone agrees with that policy.

In addition, there is whatever investment British Gas will be expected to put into the gas-gathering pipeline. In our view it would have been infinitely better if the Government had let British Gas get on with it. I think that if they had, it would have started already, and we should not still be trying to cobble together a collection of banks and consortia to finance it. British Gas may well face making a heavier contribution to investment in the pipeline than was perhaps thought would be the case earlier.

Therefore, by any stretch of the imagination, British Gas has a large investment programme, which must be financed out of profits and revenue. If the levy is collected at the full rate suggested in the clause, profit levels will flatten out at about £300 million a year. If we then ask—for good, understandable reasons—for a major contribution to stabilise industrial gas prices this year, that could cost another £100 million, and then the rates of the levy could have a significant effect on British Gas revenues and investment programmes. That is the basic connection that we wish to make with the rates of levy that are the subject of the amendments.

Ministers have told us that British Gas will have enough money to finance and maintain its investment level with profits of £300 million a year. But if, quite properly and reasonably, we add to that a major additional burden, one that I hope the Government will support, of helping to stabilise industrial gas prices for many industries—horticulture, glass blowing and others—the levy could distort and seriously affect the corporation's whole pattern of investment and development. The Government could bring about an absurd situation. With a combination of the levy and financial targets, British Gas could be forced into borrowing in the next few years instead of being self-financing, as at present.

5.30 pm

I hope that we shall receive a response to the amendment in the same spirit in which I have moved it. It is a genuinely constructive attempt to offer a means of helping those in industry most seriously affected by the increase in gas prices at a time of deep recession. If it is suggested that British Gas should bear the burden of assisting industry in addition to paying the full levy proposed in the Bill for 1981–82, there will be the most strong protests not only from British Gas but from many hon. Members. All hon. Members want to help industry. I believe that British Gas wants to help. I hope that the Government, following the NEDC discussions on 4 March, will want to help industry in relation to industrial gas prices. That help will have a cost attached to it. The cost should not be a further burden on the British Gas Corporation. It should be taken out of the gas levy. The only power of the Government to affect the rates of levy in clause 2 is to lower them. The right hon. Member for Stafford and Stone summed up what he thought would happen by saying: Unfortunately, we see this again and again. When the Treasury makes mistakes, it lashes out in all directions trying to scoop in everything that it can."—[Official Report, 16 February 1981; Vol. 999, c. 80.] The right hon. Gentleman pleaded with Department of Energy Ministers to fight the Treasury in this respect.

We do not believe that the Government should have power to scoop up even more than the amount for which they are now asking. We therefore ask hon. Members to support amendment No. 6 which would remove the temptation from the Treasury and the Secretary of State for Energy to raise, instead of lower, the rates of levy in the Bill.

Mr. Skeet

I note, Mr. Weatherill, that you wish hon. Members to economise in our use of time during this Committee stage, but there are one or two remarks that I feel should be made. The hon. Member for Merthyr Tydfil (Mr. Rowlands) did not advance the principal argument. The hon. Gentleman only touched on it at the end of his speech. The hon. Gentleman proposes in amendment No. 6 that the words "different from" should be deleted and the words "lower than'' inserted.

Surely, the crux of the problem is that this is an open-ended situation. By regulation, the Government can replace the figures in the Bill with any figures they like. Even if hon. Members do not accept the figures laid down by the hon. Gentleman, we are placed in a difficult situation unless the Goverment give certain assurances. It may be indicated that the House of Commons would have to consent to an order. I would argue that an additional guarantee is required. There should be a requirement, not merely for the assent of the House of Commons but also for the assent of the other place. That would be an effective guarantee.

Mr. Rowlands

I looked hard at the idea of amending the reference to this House to include both Houses. I understand that, despite what the Government like to claim, this is a taxation measure and cannot be subject to an order in the other place.

Mr. Skeet

What impresses me is that the yield of the tax is £130 million in the first year, £420 million in the second year and £750 million in the third year. Some time during the next decade, gas from the Southern gasfields will come down from its present level of 75 per cent. to about 40 per cent. Assuming that the price of gas goes up substantially, we may assume that the figure will go considerably above £750 million. How much higher will the figure go? I would have thought that the Government would have to introduce a right to charge, as is normally done in water Acts. This would mean that they retained the power to levy charges without including a schedule. However, under clause 2(1 )(a), (b) and (c), the rates to be charged are indicated. As the rates to be charged are contained in the Bill, the Committee should be given an assurance on the level of the upper limit. We must have a datum line and a ceiling.

The hon. Member for Merthyr Tydfil spoilt his case by his references to industrial users and stabilisation. In an intervention, when I asked whether he was referring to all industry or to intensive energy users, he replied that he meant generally. I have a table which shows fuel costs as a percentage of total materials, fuel, wage and salary costs of various industries. At the top is iron and steel with a figure of 18½ per cent.—very intensive energy users. Next come bricks, pottery glass and cement with a figure of 18 per cent., again very intensive.

At the bottom, the figure for instrument engineering is only 2 per cent., for electrical engineering 2 per cent., and for timber and furniture 2½ percent. I shall not go through the entire list, but it shows that most industry is not affected by energy costs. It is ridiculous to suggest that these moneys should be deployed for their benefit. However, I agree with the hon. Member for Merthyr Tydfil that heavy intensive energy users should be considered.

I wonder whether the Minister will give the basis for the calculations—the arithmetical assessments that he has made—of the yields, how they came into being and the assumptions behind them. I tabled a question to the Minister on this matter. I regret to say that I did not receive a very satisfactory reply. The Minister stated The estimated yield of the proposed gas levy takes into account the British Gas Corporation's forecasts of purchases of gas liable to the levy and the rates of the levy proposed in the Gas Levy Bill."—[Official Report, 16 February 1981; Vol. 999, c. 25.] Surely, the levy will determine its rate. The factors that enter into the matter include the increased price of domestic gas which will go up over the next two or three years substantially. This year, there will be a 25 per cent. increase. This will flow into the central pool as profit. Another factor is the anticipated increase in oil prices. It can be assumed that OPEC will advance again in the future and that it will lift oil prices significantly. If that happens, it will have a direct bearing on gas prices because gas prices are linked to oil prices. The Minister said a moment ago that he was keeping this factor very much in mind. I would like his views on the situation in a few years' time when oil prices go up and gas prices, which are connected to them, also escalate.

During the period of office of the previous Labour Government, the British Gas Corporation was working on the assumption that gas prices were based on the gas oil price. The price of gas oil is now about 40p a therm. That would be the position unless certain modifications were made. The modifications which have been made is that renewed firm contracts work out at 75 per cent. of the gas oil price. A recent modification means that new contracts are to come down to the same level.

These profits will rise substantially. That explains our concern about the rate of the levy—whether it will be the Government figure published in the draft Bill, the figure recommended by the hon. Member for Merthyr Tydfil or a figure left entirely to be settled by regulation at some future date. We have not the foggiest idea what it will be. We seem to know, however, that the Southern fields will be with us for many years ahead. Ultimately, I daresay, they will be used as storage vessels. We know that the Government have been carrying out their own negotiations. It is known that they are prepared to pay an amount of about $4.60 per million British thermal units for Algerian liquid natural gas.

The Algerians are demanding a very much higher price. If the price that the Japanese are prepared to accept is anything to go by, it will not be long before we have a full gas/oil parity. If that comes about, the British Gas Corporation will be making a great deal of money and there may be an insufficiency of gas levy charged. The Minister must be frank. He must tell us precisely what will happen. It will not be fair to the House to leave the issue to be settled in regulations at a later stage.

I was rather concerned when the Minister indicated that the British Gas Corporation would be receiving profits beyond what it required and that these should ultimately and necessarily go into the Consolidated Fund for general purposes. He said that in the case of a private company the money would be returned to the shareholders. We are all shareholders in the nation. I am not suggesting that the profits beyond what the corporation requires should necessarily be paid out to everybody. However, heavy and intensive industrial gas users should receive some benefit.

If we are to have some accommodation made for bulk energy users, that will provide for the large companies. However, gas or other energy consumption is often a large proportion of the total costs of many smaller companies, although they cannot be considered as bulk users. They are not likely to benefit from the arrangements that emerge from the NEDO conference.

I hope that the Government will ensure that all those in industry who are struggling to be competitive with enterprises in Europe and elsewhere will be accommodated. If there is another windfall from low-price gas, it is not sufficient to say that it must necessarily go into the Consolidated Fund. It can be utilised for other purposes, including those of intensive energy users both large and small and for future projects that might be of great value to the State.

I have been in favour of constituting a separate fund into which all these moneys would be pooled. It could be drawn out from time to time in suitable quantities, which would be useful for energy requirements. If that is not done, we shall find ourselves in considerable difficulties in later years.

It is conceivable that there will be a problem over the definition of gas. We have a limited definition in the Gas Act 1972. What is gas for the purpose of the Bill? Does it include ethane, propane, butane and methane, for example? Is it of a general application? Do the Minister's draftsmen advise him that it is not necessary to define it closely?

5.45 pm

Mr. Robert C. Brown

The Government's proposal can be described as the high-speed stealing of money or the mugging of the lower paid and the less wealthy in our society. It is a levy that is designed to take back from the British Gas Corporation its windfall profits. Whatever the Government call it, the levy is undeniably a tax on gas consumers. The Bill is entirely in keeping with the Government's policies across the board. Those least able to pay are to be clobbered to benefit those who are already on the gravy train. It is for that reason that I support my right hon. and hon. Friends.

When I was a little lad I used to live in a village called Scotswood, just outside Newcastle. There were a number of small shops in the village. They were not what we nowadays regard as corner shops. They were more or less kitchen shops in people's houses. I worked in one such shop from 7 to 12 years of age, when, alas, slum clearance did away with my livelihood, which in those days was the princely sum of 2½p a week.

The common feature of all these shops was that they were known as tick shops. Little or no money ever passed across the counter at the time of purchase. At weekends people tended to pay a few shillings off what they owed the shopkeeper.

For as long as I can remember the gas industry has had tick customers. In my young days tick customers were known as credit customers, or those who had their gas supplied by ordinary or credit meter. In the area that I represent, and in the area in which I was born, there were many more prepayment or slot meter customers than tick customers. The tick customers were those fortunate enough to have jobs. Unfortunately, we have returned to the situation in which the number of prepayment customers is increasing steadily because of the high level of unemployment.

If a person buys a car, for example, on credit the tendency is that he will have to pay interest on the money that he borrows. That means that tick customers pay a heavy price. The contrary applies in our fuel industries. Those who pay by a quarterly account to the gas boards pay a smaller sum than those who pay in advance for using the gas supplied through prepayment meters. That has never ceased to amaze me.

Those who use the prepayment meter, or the slot meter as it is commonly known, are those who are being penalised most heavily under the terms of the Bill. The sad feature is that those who are paying in advance for the privilege of burning a cubic foot of gas by means of a slot meter are often living in areas where unfortunately people tend to use gas meters as piggy banks. That means that those users are penalised twice. They cannot afford to obtain their gas on tick through a credit meter and they have to invest in 50p pieces in operating a slot meter. These consumers will be penalised to the greatest extent by the clause and the Bill generally.

I want to refer again to what I said on Second Reading, because the effect is different on different income groups. I said: By 1983 the poorest households will be spending nearly 15 per cent. of their disposable income on fuel compared with only 6 per cent. for those earning £50 a week or more."—[Official Report, 16 February 1981; Vol. 999, c. 90.] There are few hon. Members who have to choose between having a meat and being warm. I repeat what I said on Second Reading, namely, that this stark choice will face many people in the coming years.

No matter how eloquently the Minister may argue that the gas levy will have nothing to do with future gas prices—and it is difficult to know how he can make this assertion—if the amendments are not accepted, we could reach a stage, depending on the state of the economy or whoever is in the Treasury at the time, where the figures of 1p, 3p and 5p are increased to 3p, :5p and 7p, or to 5p, 7p and 9p. The levy will undoubtedly affect future gas prices. Even if the figures stay as they are, we may reach a stage when the British Gas Corporation finds itself short of cash flow for heavy investment programmes at the very time when it is most likely to need it

Mr. Skeet

Perhaps it would be possible to avoid these difficulties by having fresh legislation in a few years' time to insert new rates, rather than proceeding by regulation.

Mr. Brown

That is a fair suggestion. On the other hand, in three or four years' time we may have fresh legislation in any case. That is regrettable, but it is part of our parliamentary system that no Government can be bound by the legislation of a previous Government. However, I should like this legislation to be right. We do not want to have to depend on something being brought forward in two or three years' time. I should have been happier had amendment No. 6 read: "leave out 'different from' and insert 'no higher than'". However, my hon. Friend and I are both seeking the same end.

I am sorry that amendments Nos. 9 and 10 have not been called. The right hon. Member for Stafford and Stone (Sir H. Fraser) has an interest in a glassworks, as I have. The managing director of the Lemington, Newcastle-upon-Tyne glassworks, Fred Goodwin, has worn a track coming backwards and forwards to see me. I have been in correspondence with the chairman of Northern Gas, Brian Clegg. He is not an unsympathetic man, and I am sure that he gets no pleasure from seeing Lemington glass having to put people on the stones time and again, 200 or 300 at a time. We have lost over 1,000 employees at the works during the past few years. The major cause has been the cost of gas, which has been forced on Clegg, as chairman of Northern Gas.

I come back to the point that I made on Second Reading. I cannot support a proposition that seeks to use the windfall profits of British Gas simply to give a handout to all major industrial gas consumers. A major problem is that we look at our fuel industries in isolation from one another. Today we are discussing gas; last week we were discussing coal; next week it may be oil or nuclear energy. We should be talking about the fuel assets of this country and how best to deploy them. It is wrong that a major industry should burn gas when it could do the job more efficiently with coal, nuclear power or electricity. The subsidy suggested by my hon. Friend should be given to small glass manufacturing plants of the type that I mentioned, where gas has to be used for the selective heat that is requried.

The sources that we have are not finite. Even coal will eventually run out. That is all the more reason why, in a profitable industry like gas, we should use the money raised to investigate: new sources of energy. If we are to survive we must find new sources of energy. Meanwhile, we must make the most efficient use of the resources that we have.

Mr. John Wells (Maidstone)

I wish to make a brief plea on behalf of the horticulture industry. My hon. Friend the Member for Bedford (Mr. Skeet) touched on the problems of the heavy industrial user.

The horticulture industry is a special user of fuel in three respects. Our Dutch competitors are sitting on top of a gasfield and therefore get gas at minimal cost. It seems, unfair to British glasshouse growers that Dutch glasshouse users have extremely cheap gas. They feel that the prices that the Dutch enjoy are in contravention of EEC rules.

The hon. Member for Merthyr Tydfil (Mr. Rowlands) rightly touched on the Morecambe Bay project, which is near one of the major British glasshouse centres. I understand that the Morecambe Bay project—I am no specialist in these fuel debates—is very much in the future, and therefore has to be paid for. If the levy is put at this rate, less capital will he available for new developments such as the Morecambe Bay project. Therefore, one of the key areas of the British glasshouse industry will be put in jeopardy.

I have not come to the House this afternoon to pretend that gas is the major fuel used in the glasshouse industry. I am well aware that today it provides only a small part of its energy. However, the Government should be aware that if gas could be developed near our glasshouse industry we could achieve stabilised gas prices, which would go a long way towards helping the industry.

6 pm

All the profitable and modern fuel equipment and structure of the industry has gone in with Government grants of up to one-third of the cost and in certain cases more. It is an absurd misuse of that taxpayers' money to penalise a man who has installed a gas-powered boiler if he finds the price of gas moving against him and changes to oil or, incredible as it may seem, coal. In rural districts the glasshouse industry is even installing wood-fired boilers. That is an absurd retrogression into the Middle Ages when places such as Morecambe are sitting on a vast potential reservoir of gas.

I hope that my hon. Friend can give comfort to the glasshouse industry over its need for price stability and reliable continuity. If it is possible to get a consensus among glasshouse growers that gas is good, more and more will use it. If they do not have confidence, they will not move towards gas and the uncertainty will remain. I hope that my hon. Friend can give the industry a little confidence.

Sir Hugh Fraser (Stafford and Stone)

I support my hon. Friend the Member for Bedford (Mr. Skeet). I commiserate with the Opposition over the fact that amendments Nos. 9 and 10 were not selected. Had they been, I should have felt inclined to vote with the Opposition.

My constituents, too, are concerned with the glassmaking and pottery industries. Gas is a high content in their prices—14 per cent. at some ends of the pottery industry and 8 to 9 per cent. in the glass industry. In industries such as paper, the proportion is as high as 40 per cent.

The concept of the Bill is entirely wrong. It is not a question of 1p, 3p or 4p. Enormous profits will be made, which should be put to better purpose than being returned to the maw of the Treasury. Precisely the same is true in the forestry legislation, where the profits from the sale of land will go not to increasing forestry but to the Treasury. The Government are obsessed by a foolish consideration. We are faced with a major slump. The main objective of any Government should be to do some pump priming, at little cost, which will get factories working, profits up and people back into employment. I hope that the pottery industry will have a boom because of the Royal marriage, but that is a one-off occasion, and it will be a fairly shortlived boom.

The speech of the Secretary of State was to the effect that industry has to acclimatise itself to the fact that gas prices will get higher and higher. Tell that to the Marines! We know that there is a coming shortage of fuel. That is no great revelation from God. Sheikh Yamani keeps telling us that there will be less and less oil available, but why inflict on British manufacturing maximum damage in the three years that will probably be the worst of the world slump? That is what the Government are doing by putting up industrial gas prices.

I agree that the price of domestic gas should go up. I say again that we are over-subsidising domestic gas, but gas should be cheap for industry. The price of gas is still going up.

Mr. Albert Roberts (Normanton)

Without an ample supply of energy and heat there is no civilisation. The right hon. Gentleman says that the Government's overall energy policy is topsy-turvy. The price of gas to domestic users should be cheaper. Thousands of people are suffering because they cannot afford proper heat.

Sir Hugh Fraser

One can turn a private supply of gas, electricity or coal on or off according to one's needs. Industry cannot do that. In some instances it uses energy 24 hours a day. That is why industrial prices should be kept as low as possible.

Luckily for the Government, amendments Nos. 9 and 10 have not been debated. However, I hope that fairly soon the Government will accept the principle of amendment No. 9. The financial surpluses should go to help heavy users of gas, which is the best way to help industry to get moving again. The best way to help the glass, pottery, paper and a great many other industries is to use the profits accrued by charging the high prices for precisely those sectors that the Government propose to help. I hope that that will be the Government's intention. If not, I shall come at them again and again in the House until they take some action.

Mr. Geoffrey Dickens (Huddersfield, West)

It is common knowledge that I attacked the Government on the savage increase in gas prices. I did so cheerfully. The increase is appalling.

What is the money being used for? I am distressed that the House of Commons under successive Governments has approved of taxpayers' money being shovelled into nationalised industry and has neglected the private sector. As a Conservative, I support the private sector, which is where our wealth comes from. It does not come from nationalised industries.

British Gas appears to be set on a policy of crushing the private sector. We have civil engineers—the distribution people who are laying the pipes and welding while the gas is in the pipes, which is dangerous, because it cools the pipes—working with expensive plant bought up on the strength that there would be opportunities from British Gas. We shovel money into British Gas. It justifies its offshore activities. It needs money, and therefore comes to the House. Politically, we do not appear to have the will to control its activities. We should force the corporation to send out tenders and give private industry an opportunity. Private industry is being crippled. Millions of pounds of plant is standing idle and hundreds of men are dying to get on with the job of distributing more gas.

One million people were persuaded to switch to gas from oil, electricity and coal, because of the corporation's television advertising of cheap North Sea gas at the turn of a switch. Where is it? British Gas and the Government have hoodwinked the public. Cheap gas no longer exists, but we owe that gas to private industry, the 1 million people who have switched to gas, and the new users waiting to be connected. The private sector is waiting to connect industry and the public. There is still a demand to use gas because, by the skin of its teeth, it is still slightly cheaper than other forms of energy.

The Government must look after the private sector. If British Gas comes to us for additional money to support its activities, this Conservative Government jolly well have the right to support private enterprise. If we do not, we are failing as Conservatives. I did not come to the House for that. Had amendments Nos. 9 and 10 been selected, I should have voted with the Opposition. It amuses me that dozens of Conservative Members in the Lobbies, restaurants and bars said that they would support me and the Opposition when previously I went against the Government. Where were they on the night of that vote? They were not with me. I was the only person sitting on the Government Benches who abstained from voting.

Mr. Russell Kerr (Feltham and Heston)

They went in with the Government.

Mr. Dickens

Yes, they did. If hon. Members intend to support private enterprise, let them come to the House and be answerable.

Mr. Rost

My hon. Friend the Member for Huddersfield, West (Mr. Dickens) has a valid point. He is reflecting the many letters that we have all received from angry constituents, who fail to understand that the era of cheap energy is over. They have been deluded by politicians who for many years have pretended that gas would be cheap and plentiful for ever more. Because British Gas—a State monopoly—and politicians have deluded the public into that concept, more and more consumers are feeling thoroughly cheated.

British Gas is the sole buyer of all available gas. It was able to screw down the available resources from the early discoveries at low prices—so low that it was not worth while to explore for more gas in the North Sea. It has now so over-exploited its market because its fuel has been half the price of any alternative fuel—and anybody who was not an idiot naturally scrapped other forms of fuel and switched to gas—that it is now having to scramble around among the Norwegian gasfields to buy gas from Norway. Indeed, 20 per cent. of our gas now comes from Norway at 10 times the price that British Gas has been prepared to pay our producers in the North Sea. That is a ridiculous position.

Meanwhile, we are still flaring gas in the North Sea. Why? Because British Gas has so held down the price, condoned by weak politicians who have been afraid to face up to reality and to face the public with that reality—

Mr. Rowlands

Nonsense.

Mr. Rost

The price has been so held down that it has not paid to invest and build a pipeline to get the gas into Britain, where it is needed. The petrochemical industry could now be thriving, instead of being beaten by overseas competition.

The Continent has always had to pay a more economic price for gas because it has been imported. Nobody was prepared to sell it at other than an economic price. State monopolies have not deliberately held down prices. The Continent has adjusted to the realistic world price for gas, just as we have all had to adjust to the realistic price for oil.

Sir Hugh Fraser rose—

Mr. Rost

I wish to finish this point. The domestic gas consumer on the Continent pays a higher price for gas than does the British domestic consumer. He does not feel cheated, because the price rise has come about gradually. On the other hand, industry on the Continent has paid a lower price than industry in Britain. That is because there has been more genuine competition in that area, and State monopolies have not been able to charge their tariffs with politicians condoning that because they have been too gutless to persuade the consumer that gas must be paid for at the marginal price at which it is produced. I give way to my right hon. Friend the Member for Stafford and Stone (Sir H. Fraser).

Sir Hugh Fraser

My hon. Friend has passed the point at: which I wished to intervene.

6.15 pm

Mr. Rost

Having got that point off my chest, I turn to the amendments. I listened with great care and sympathy to the hon. Member for Merthyr Tydfil (Mr. Rowlands) when he spoke in support of his amendments. I sympathise with his point that there should be an adjustment in the tariff so that industry is not unfairly penalised. But that can be sustained within the proposed tax levy regime. It can be, and it should be. There should be adjustments for industry without that necessarily meaning a lesser take. However, I do not accept the rather hypocritical attitude of the Opposition to gas pricing.

The Labour Government's 1978 Green Paper on energy pricing laid down plainly that windfall oil profits should be taxed, rather than prices to British consumers being artificially lowered. Unfortunately, they did not pursue that policy. They did not convince the public of the realities. Yet the Opposition, and the House, have advocated that policy to the Americans to achieve realistic world prices. The Opposition also advocated that Britain as a whole—both the economy and consumers—would benefit from taxation, rather than only the producers of the oil.

In their Green Paper on gas prices, the Labour Government advocated that gas prices: need to be related to the expected cost of future supplies … and this implies prices higher than can be justified by the view that price increases should be limited to those made necessary by cost increases actually incurred. If that is not a clear and precise statement by the Labour Government of the policy that this Government are now carrying through, I should like to know what is.

The only difference is that we have had the courage to face the unpopular decision to advise consumers that if gas prices are not now allowed to rise by 10 per cent. to 25 per cent. a year they will feel even angrier in two or three years' time, when gas prices will have to rise not by 25 per cent. but by 200 or 300 per cent. a year. As the early supplies from our southern gasfields begin to run out—as was pointed out by my hon. Friend the Member for Bedford (Mr. Skeet)—we shall have increasingly to supplement them with more expensive supplies from newer fields in the North Sea, or even from Norway, at 10 times the price that the consumer is now paying for gas. Unless we give the consumer that pricing signal now, in a sensible and realistic manner, and allow the market in gas to adjust gradually over the years, we shall be criticised even more for weak leadership and for failure to face realities.

I support the Government's strategy on a gas levy. It is no more immoral for gas to make a contribution to the Exchequer than it is for oil to do so. Goodness knows where we would be today if oil revenues were not boosting the economy and helping to continue such worthwhile projects as British Steel and British Leyland. Those oil revenues are keeping us afloat. Therefore, there is nothing immoral in a contribution from gas. We must bear in mind that the levy on gas is entirely and exclusively a levy on the early North Sea gasfields—those not already paying tax. The levy is a windfall tax on the early contracts, which are unrealistically low compared with present energy prices. It is right that the State should take the benefit and redistribute it in the way that it thinks best, on behalf of the nation as a whole. Some of that money is going back in the extra benefits that the Government are giving to those least able to pay their fuel bills. That is how it should be. Rather than the benefit going exclusively to the consumers of gas, it should go to the nation as a whole to be reallocated in the most sensible way.

I oppose the amendments. They are hypocritical in that they refuse to face the realities of world energy prices. They pretend that tomorrow will never come. They will continue to delude the consumer and the nation as a whole instead of allowing the consumer to adjust to the inevitable over the longer term.

I believe that the levy should go ahead. These wrecking amendments are unfair to the hon. Member for Merthyr Tydfil, who made a constructive contribution to the debate. They represent more the view of the Labour Party, which is not prepared to look back on what it proposed when in office. I think that it should be condemned for that. I hope that the Committee will reject the amendments.

Mr. Norman Lamont

The effect of the three amendments would be to lower the levy on the British Gas Corporation. As my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) made clear in his admirable speech, they are wrecking amendments. The first and second of the amendments would reduce the levy from 3p and 5p a therm in 1981–82 and 1982–83 to 1p a therm in both cases. The effect of the third amendment would be to ensure that any variations which could be made in the levy under the terms of the Bill could be only in a downwards direction.

The amendments would result in a loss of revenue from the levy of £290 million in 1981–82 and £620 million in 1982–83. The BGC's post-levy profits, if the amendments were carried, would be £750 million and £1,100 million.

My right hon. Friend the Member for Stafford and Stone (Sir H. Fraser) repeated many of the anxieties that he expressed on Second Reading. My hon. Friend the Member for Maidstone (Mr. Wells) expressed anxieties about the investment programme. I assure my right hon. and hon. Friends that there is sufficient money in the BGC, even after the levy, for the necessary investment for the increased supply of gas and the strengthening of the transmission system. My hon. Friend the Member for Maidstone referred to Morecambe Bay. The initial stage of the Morecambe Bay project is in the corporate plan. All that is taken account of in the calculation of the levy. Without the levy, the BGC would accrue huge bank deposits for which it has no immediate use.

The effect of amendment No. 6, as I said, would be to reduce the flexibility that would otherwise be available to restrict variations in the levy to downward adjustments only. The purpose of subsection (2) is to allow for the possibility of varying the rate of levy each three years as specified in subsection (1).

The rates of levy in the Bill take account of the anticipated sales and financial forecasts made by the BGC. Other things being equal, we intend that the levy should be left unchanged in the initial three-year period. However, we cannot exclude the possibility of unexpected changes. Forecasts of sales might prove to be wrong. Forecasts of oil prices might also prove to be wrong. I shall be coming to the point made by my hon. Friend the Member for Bedford (Mr. Skeet) about the assumptions on which the forecasts are based. Obviously, these forecasts could prove to be wrong. Therefore, it makes no sense to restrict the flexibility to alter the levy. Any order to alter the amount of levy would have to be laid in draft before the House and would be subject to the affirmative procedure. Therefore, right hon. and hon. Members would have every opportunity to discuss and investigate it thoroughly.

A large part of the debate has revolved round the question of industrial energy prices. I strongly reject the charge made by the hon. Member for Merthyr Tydfil (Mr. Rowlands) that the Government are complacent about this matter. The Government take complaints about energy prices extremely seriously.

The Government responded quickly. They were anxious that the NEDC task force should be set up to investigate the problems of bulk and energy intensive users. The Government will obviously await the findings of that report on 4 March and will prepare a speedy response to it, because, as my right hon. Friend the Member for Stafford and Stone said, this is a serious and urgent problem. I assure my right hon. Friend that we shall consider it very quickly.

I ask my right hon. Friend to bear in mind the fact that the Government, in consultation with the Gas Corporation, have also taken a number of steps. We have asked the Gas Corporation to investigate ways in which relief could be given to the bulk users of gas. We have asked the corporation to consider a new type of premium contract, halfway in price between an interruptible and a firm contract, which would have certain limited periods of interruption.

In response to the situation, and after talks with the Government, the Gas Corporation has announced that the prices of new firm contracts will come down in the second and third years to the general level of renewal prices. That concession will be of substantial help to a number of firms. Some of the complaints that have been made to the Government have fallen in the specific area of those with three-year contracts linked to the price of gas-oil. They will achieve some relief.

I point out to the hon. Member for Merthyr Tydfil and to my right hon. Friend the Member for Stafford and Stone that the Government recognise the problem that faces energy intensive and bulk users of gas. My hon. Friend the Member for Bedford was right to underline that problem.

It is a problem, not only for British industry, but for industries in other countries. French industrial gas prices rose by 120 per cent. in 1979–80. German industrial gas prices have gone up by 70 per cent. The rise in gas prices following the massive rise in oil prices is sweeping across the industrialised world.

What happens in other countries may be similar to or ahead of what happens in this country in some instances. The comparisons which are often quoted are very much distorted by the movement of the pound. In the past year the pound has appreciated against the French franc by 27 per cent. and against the deutschemark by 23 per cent. Obviously, that makes the apparent comparison look much worse than it is. Even though the Gas Corporation is putting up its prices less than other utilities in Europe, it is still difficult for the Corporation when these comparisons look so different because of the movement of the exchange rate.

My hon. Friend the Member for Bedford made the key point that when analysing the problem one should not forget that, in addition to bulk users, there are energy-intensive businesses which are quite small or medium users. That is a problem to which it is difficult to find a solution.

The problems facing the steel industry, for example, do not involve all high load factor users of electricity or of gas. It is difficult to find a way of helping those consumers. Although they are energy-intensive, they are not all bulk users. The problem is to find a way for the utility to identify those people without being placed in the invidious position of having to discriminate and decide that this person should get this concession and that person should get that concession. I hope that my hon. Friend will agree that that is a formidble problem. It is one to which the Government are addressing their minds.

My hon. Friend the Member for Bedford also asked on what assumptions the pence per therm figures for the levy were based. They are related to the corporation's assumptions, not just on sales but on oil price increases over the three-year period of the financial target. Those forecasts are broadly in line with those used by the Department. There are considerable uncertainties about the likely rates of increase. A number of different forecasts and scenarios have been made by the Department. However, that uncertainty would embrace real average annual increases, in the range of 3 to 4 per cent. per annum, in the oil price. Therefore, the expectations of the Gas Corporation and the Department are consistent.

Mr. Skeet

I shall not press my hon. Friend on what his estimates will be for oil prices, because that could be invidious. He has made his calculations on what he considers will happen in the next four five years. Will he put a ceiling on the rate increases? After all, if the prices of 1p, 3p, or 5p went up to 6p or 7p that could be severe.

Mr. Lamont

I do not think I could make that forecast. The future is so uncertain that it is difficult enough to look ahead six months, let alone six years. Many people have been proved wrong in their forecasts about energy prices.

My hon. Friend the Member for Maidstone referred to the problems of the Dutch growers. He was worried that we would not have enough investment. I hope that I have given him some assurance on that point. He rebuked me for disagreeing with him on one point. I was shaking my head merely when he referred to users of gas who found the price moving against them. I can see that this comment will be greeted with uproar, but there is a difference between the price going up and the price moving against them. Although the price of gas has risen, people who have invested in gas facilities have done well because, if they had not invested in gas the prices of the alternative fuels which they would have used would have gone up much more. That is what is so often forgetten when we talk about the disadvantage to industry of the rise in the cost of gas. More people in industry use oil than gas, and they have much heavier costs.

My hon. Friend made that point about the horticultural industry. I agree with him that the Dutch horticultural tariff is causing serious problems for our industry. That is recognised by the Government.

We have been pursuing this matter at the Council of Ministers in the EEC. Unfortunately, the death of Mr. Gundelach caused some delay in the processing of this matter, but it was raised at the Council of Agriculture Ministers yesterday. The United Kingdom, supported by Germany and Denmark, emphasised the need for early action. The Commission said that legal procedures were already under way. I assure my hon. Friend that we will not lose sight of this matter.

My hon. Friend the Member for Huddersfield, West (Mr. Dickens) said that British Gas did not use outside contractors enough. I have corresponded with my hon. Friend and told him that, as a result of his representations, I have had meetings with business men and trade federations who are most affected by the corporation's contracting policy. The Government believe that, whenever it is efficient and economic, the corporation should contract work outside. That is one of the points in the corporate plan which we are carefully examining. I assure my hon. Friend that I am putting pressure on the corporation. I am asking it to examine this matter closely.

The hon. Member for Merthyr Tydfil asked what would be the cost of a freeze on gas prices. He was referring both to firm and interruptible prices. There would be no cost in the financial year of 1980–81. Broadly, the figures which he quoted for later years are about right. He asked what would be the effect of any such concession on the levy. He is postulating a hypothetical situation. We must see what the NEDC report on industrial prices states, and what the response of the Government will be. They are more likely to affect the EFL and the financial target than the levy. However, I shall consider what the hon. Member has said.

My hon. Friend the Member for Bedford referred to the appropriate rates of levy after 1982–83. No decision can be taken yet on those rates. As I emphasised, the House will have the opportunity to debate and vote upon future proposed rates of levy if the Government propose to vary them. After 1982–83 the levy will be set at a rate consistent with BGC's financial objectives.

I hope that I have answered most of the points that have been raised. I agree with my hon. Friend the member for Derbyshire, South-East that these are essentially wrecking amendments and that the Opposition's case is unrealistic. Uncomfortable and unpleasant though the adjustment to higher energy and higher gas prices is, it is happening in almost every country. I cannot think of a country where energy prices are not rising faster than prices in general. That is a reflection of the great pressure of demand for energy in a world of insecure supplies, which knows that energy is becoming scarcer and that it is finite. That has created the situation in which BGC makes its windfall gains. Therefore, the Government feel that they are right to present the Bill in this form. I therefore invite the Committee to reject these wrecking amendments

Amendment negatived.

Amendment proposed: No. 6, in page 2, line 33, leave out 'different from' and insert 'lower than'.—[Mr. Rowlands.]

Question put, That the amendment be made:—

The Committee divided: Ayes 153, Noes 190.

Division No. 84	6.38 pm
AYES
Abse, Leo	Callaghan, Jim (Midd't'n&P)
Alton, David	Campbell-Savours, Dale
Anderson, Donald	Canavan, Dennis
Archer, Rt Hon Peter	Carmichael, Neil
Armstrong, Rt Hon Ernest	Carter-Jones, Lewis
Ashton, Joe	Clark, Dr David (S Shields)
Atkinson,N.(H'gey,)	Cocks, Rt Hon M. (B'stolS)
Bagier, Gordon A.T.	Concannon, Rt Hon J. D.
Barnett,Guy (Greenwich)	Conlan, Bernard
Beith, A. J.	Cook, Robin F.
Bennett, Andrew(St'Kp'tN)	Cowans, Harry
Bidwell, Sydney	Craigen, J. M.
Booth, Rt Hon Albert	Crowther, J.S.
Boothroyd, MissBetty	Cryer, Bob
Brown, Hugh D.(Provan)	Cunliffe, Lawrence
Brown, R.C. (N'castleW)	Cunningham,DrJ.(W'h'n)
Brown, Ron(E'burgh,Leith)	Dalyell, Tam

Davidson, Arthur	McElhone, Frank
Davies, Ifor (Gower)	McKay, Allen (Penistone)
Davis, T. (B'ham, Stechf'd)	McKelvey, William
Dean, Joseph (Leeds West)	McWilliam, John
Dixon, Donald	Marks, Kenneth
Dormand, Jack	Marshall, D(G'gowS'ton)
Dubs, Alfred	Marshall, DrEdmund (Goole)
Duffy, A. E. P.	Marshall, Jim (LeicesterS)
Dunlop, John	Mason, Rt Hon Roy
Dunn, James A.	Maynard, Miss Joan
Dunwoody, Hon Mrs G.	Millan, Rt Hon Bruce
Eastham, Ken	Molyneaux, James
Ewing, Harry	Morris, Rt Hon C. (O'shaw)
Field, Frank	Morris, Rt Hon J. (Aberavon)
Fitch, Alan	O'Neill, Martin
Fitt, Gerard	Palmer, Arthur
Flannery, Martin	Park, George
Fletcher, Raymond (Ilkeston)	Pendry, Tom
Fletcher, Ted (Darlington)	Penhaligon, David
Foot, Rt Hon Michael	Powell, Rt Hon J.E. (S Down)
Ford, Ben	Powell, Raymond (Ogmore)
Forrester, John	Prescott, John
Foster, Derek	Rees, Rt Hon M (Leeds S)
Foulkes, George	Richardson, Jo
Freud, Clement	Roberts, Albert (Normanton)
Garrett, W. E. (Wallsend)	Roberts, Ernest (Hackney N)
George, Bruce	Robertson, George
Gourlay, Harry	Rooker, J.W.
Graham, Ted	Ross, Ernest (Dundee West)
Grant, George(Morpeth)	Ross, Stephen (Isle of Wight)
Grant, John (IslingtonC)	Ross, Wm. (Londonderry)
Grimond, Rt HonJ.	Rowlands, Ted
Hamilton, James(Bothwell)	Sandelson, Neville
Hamilton, W.W. (C'tralFife)	Sever, John
Hardy, Peter	SiIkin, RtHonJ. (Deptford)
Harrison, RtHonWalter	Skinner, Dennis
Hart, Rt Hon Dame Judith	Soley, Clive
Haynes, Frank	Spriggs, Leslie
Heffer, EricS.	Steel, Rt Hon David
HomeRobertson, John	Stewart, Rt Hon D. (W Isles)
Homewood, William	Stott, Roger
Hooley, Frank	Strang, Gavin
Howell, Rt Hon D.	Taylor, Mrs Ann (Bolton W)
Howells, Geraint	Thomas, DrR.(Carmarthen)
Huckfield, Les	Urwin, RtHon Tom
Hughes, Mark(Durham)	Varley, Rt Hon Eric G.
Hughes, Robert (AberdeenN)	Wainwright.R.(Colne V)
Jay, Rt Hon Douglas	Watkins, David
John, Brynmor	Welsh, Michael
Johnson, James (Hull West)	Whitehead, Phillip
Johnston, Russell (Inverness)	Whitlock, William
Jones, Barry (EastFlint)	Wigley, Dafydd
Jones, Dan (Burnley)	Willey, RtHon Frederick
Kerr, Russell	Williams, Rt Hon A. (S 'sea W)
Kilfedder, JamesA.	Williams, SirT.(W'fon, )
Lamborn, Harry	Wilson, Gordon (DundeeE)
Lamond, James	Young, David (BoltonE)
Lestor, Miss Joan
Lewis, Ron (Carlisle)	Tellers for the Ayes:
Lyons, Edward(Bradf'dW)	Mr. George Morton and
McCartney, Hugh	Mr. James Tinn.
McCusker.H.
NOES
Alexander, Richard	Bright, Graham
Ancram, Michael	Brinton, Tim
Atkins, Robert (PrestonN)	Brittan, Leon
Atkinson, David (B'm'th.E)	Brown, Michael (Brigg&Sc'n)
Baker, Nicholas (TV Dorset)	Bruce-Gardyne, John
Bell, SirRonald	Buchanan-Smith, Alick
Bendall, Vivian	Buck, Antony
Benyon, Thomas(A'don)	Budgen, Nick
Berry, Hon Anthony	Butcher, John
Bevan, DavidGilroy	Carlisle, John (LutonWest)
Biggs-Davison, John	Carlisle, Kenneth (Lincoln)
Blackburn, John	Carlisle, Rt Hon M. (R'c'n)
Boscawen, HonRobert	Chapman, Sydney
Bottomley, Peter (W'wich W)	Clark, Hon A. (Plym'th, S'n)
Boyson, DrRhodes	Clarke, Kenneth (Rushcliffe)
Braine, SirBernard	Colvin, Michael

Cormack, Patrick	Mates, Michael
Corrie, John	Mather, Carol
Costain, SirAlbert	Maude, Rt Hon Sir Angus
Cranborne, Viscount	Mawby, Ray
Crouch, David	Mawhinney, DrBrian
Dean, Paul (NorthSomerset)	Maxwell-Hyslop, Robin
Dickens, Geoffrey	Mellor, David
Dorrell, Stephen	Meyer, Sir Anthony
Douglas-Hamilton, LordJ.	Miller, Hal(B'grove)
Dover, Denshore	Mills, lain(Meriden)
Dunn, Robert (Dartford)	Moate, Roger
Dykes, Hugh	Montgomery, Fergus
Eden, Rt Hon Sir John	Moore, John
Eggar, Tim	Mudd, David
Elliott, SirWilliam	Murphy, Christopher
Fairgrieve, Russell	Myles, David
Faith, MrsSheila	Needham, Richard
Fenner, Mrs Peggy	Nelson, Anthony
Fisher, SirNigel	Neubert, Michael
Fletcher, A. (Ed'nb'ghN)	Newton, Tony
Fletcher-Cooke, SirCharles	Osborn, John
Fookes, Miss Janet	Page, John (Harrow, West)
Forman, Nigel	Page, Rt Hon Sir G. (Crosby)
Fowler, Rt Hon Norman	Page, Richard (SW Herts)
Fox, Marcus	Patten, Christopher(Bath)
Fraser, Peter (South Angus)	Pawsey, James
Fry, Peter	Percival, Sir Ian
Garel-Jones, Tristan	Pollock, Alexander
Glyn, DrAlan	Prentice, Rt Hon Reg
Goodlad, Alastair	Price, Sir David (Easleigh)
Gorst, John	Proctor, K. Harvey
Gow, Ian	Pym, Rt Hon Francis
Gray, Hamish	Rathbone, Tim
Griffiths, PeterPortsm'thN)	Rees-Davies, W. R.
Grylls, Michael	Renton, Tim
Hamilton, Hon A.	Rhodes James, Robert
Hampson, DrKeith	Ridsdale, Julian
Hannam, John	Rossi, Hugh
Haselhurst, Alan	Rost, Peter
Havers, Rt Hon Sir Michael	Sainsbury, HonTimothy
Hawksley, Warren	St. John-Stevas, Rt Hon N.
Hayhoe, Barney	Scott, Nicholas
Heath, Rt Hon Edward	Shaw, Giles (Pudsey)
Heddle, John	Shelton, William(Streatham)
Higgins, Rt Hon Terence L.	Shepherd, Colin(Hereford)
Hogg, HonDouglas(Gr'h'm)	Shersby, Michael
Holland, Philip(Carlton)	Sims, Roger
Hooson, Tom	Skeet, T. H. H.
Howell, Rt HonD.(G'ldf'd)	Speller, Tony
Howell, Ralph (NNorfolk)	Spicer, Jim (WestDorset)
Hunt, David (Wirral)	Spicer, Michael (S Worcs)
Hunt, John(Ravensbourne)	Sproat, Iain
Hurd, HonDouglas	Stainton, Keith
JohnsonSmith, Geoffrey	Stanbrook, Ivor
Jopling, Rt Hon Michael	Stevens, Martin
Joseph, RtHonSirKeith	Stewart, Ian(Hitchin)
Kellett-Bowman, MrsElaine	Stewart, k.(ERenfrewshire)
Kershaw, Anthony	Stradling, Thomas.J.
Knight, MrsJill	Taylor, Teddy (S'endE)
Lamont, Norman	Tebbit, Norman
Lang, Ian	Temple-Morris, Peter
Latham, Michael	Thomas, Rt Hon Peter
Lawrence, Ivan	Thompson, Donald
LeMarchant, Spencer	Thorne, Neil(IlfordSouth)
Lloyd, Ian (HavantA W'loo)	Thornton, Malcolm
Lloyd, Peter (Fareham)	Trippier, David
Loveridge, John	Waddington, David
Luce, Richard	Wakeham, John
Lyell, Nicholas	Walker, B. (Perth)
Macfarlane, Neil	Walker-Smith, Rt Hon Sir D.
MacGregor, John	Wall, Patrick
MacKay, John (Argyll)	Waller, Gary
McNair-Wilson, M.(N'bury)	Ward, John
McNair-Wilson, P. (NewF'st)	Watson, john
Madel, David	Wells, John (Maidstone)
Major, John	Wells, Bowen
Marlow, Tony	Wheeler, John
MarshallMichael(Arundel)	Whitney, Raymond

Winterton, Nicholas	Tellers for the Noes:
Wolfson, Mark	Mr. Peter Brooke and
	Mr. Selwyn Gummer.

Question accordingly negatived.

Clause 2 ordered to stand part of the Bill.

Clauses 3 to 7 ordered to stand part of the Bill.

Bill reported, without amendment.

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

The House divided: Ayes 188, Noes 151.

Division No. 85	[6.50 pm
AYES
Alexander, Richard	Elliott, SirWilliam
Ancrarn, Michael	Fairgrieve, Russell
Atkins, Robert(PrestonN)	Faith, MrsSheila
Atkinson, David(B'm'th, E)	Fenner, Mrs Peggy
Baker, Nicholas (NDorset)	Fisher, SirNigel
Bendall, Vivian	Fletcher, A. (Ed'nb'ghN)
Benyon, Thomas(A'don)	Fletcher-Cooke, SirCharles
Berry, Hon Anthony	Forrnan, Nigel
Bevan, David Gilroy	Fowler, Rt Hon Norman
Biggs-Davison, John	Fox, Marcus
Blackburn, John	Fraser, Peter (SouthAngus)
Boscawen, HonRobert	Fry, Peter
Bottomley, Peter (W'wichW)	Garel-Jones, Tristan
Boyson, DrRhodes	Glyn, DrAlan
Braine, SirBernard	Goodlad, Alastair
Bright, Graham	Gorst, John
Brinton, Tim	Gow, Ian
Brittan, Leon	Gray, Hamish
Brown, Michael(Brigg & Sc'n)	Griffiths, Peter Portsm'thN)
ESruce-Gardyne, John	Grylls, Michael
Buchanan-Smith, Alick	Gummer, JohnSelwyn
Etuck, Antony	Hamilton, HonA.
Budgen, Nick	Hampson, DrKeith
Butcher, John	Hannam, John
Carl isle, John (LutonWest)	Haselhurst, Alan
Carlisle, Kenneth (Lincoln)	Havers, Rt Hon Sir Michael
Carlisle, Rt Hon M. (R'c'n)	Hawksley, Warren
Chapman, Sydney	Heath, Rt Hon Edward
Clark, HonA. (Plym'th, S'n)	Heddle, John
Clarke, Kenneth (Rushcliffe)	Higgins, Rt Hon Terence L.
Colvin, Michael	Hogg, Hon Doug las (Gr'th'rn)
Cormack, Patrick	Holland, Philip (Carlton)
Corrie, John	Hooson, Tom
Costain, SirAlbert	Hordern, Peter
Cranborne, Viscount	Howell, Rt HonD. (G'ldf'd)
Crouch, David	Howell, Ralph (NNorfolk)
Dean, Paul (NorthSomerset)	Hunt, David (Wirral)
Dickens, Geoffrey	Hunt, John(Ravensbourne)
Dorrell, Stephen	Hurd, HonDouglas
Douglas-Hamilton, LordJ.	JohnsonSmith, Geoffrey
Dover, Denshore	Jopling, Rt Hon Michael
Dunn, Robert(Dartford)	Joseph, Rt Hon Sir Keith
Dykes, Hugh	Kellett-Bowman, MrsElaine
Eden, Rt Hon Sir John	Kershaw, Anthony
Eggar, Tim	Knight, MrsJill
Lamont, Norman	Marshall Michael (Arundel)
Lang, Ian	Mates, Michael
Latham, Michael	Mawby, Ray
Lawrence, Ivan	Mawhinney, DrBrian
LeMarchant, Spencer	Maxwell-Hyslop, Robin
Lloyd, Ian (HavantA W'loo)	Mellor, David
Lloyd, Peter (Fareham)	Meyer, Sir Anthony
Loveridge, John	Miller, Hal (B'grove)
Luce, Richard	Mills, Iain(Meriden)
Lyell, Nicholas	Moate, Roger
Macfarlane, Neil	Montgomery, Fergus
MacGregor, John	Moore, John
MacKay, John(Argyll)	Mudd, David
McNair-Wilson, M.(N'bury)	Murphy, Christopher
McNair-Wilson, P. (NewF'st)	Myles, David
Madel, David	Needham, Richard
Major, John	Nelson, Anthony
Marlow, Tony	Neubert, Michael

Newton, Tony	Stainton, Keith
Osbom, John	Stanbrook, Ivor
Page, John (Harrow, West)	Stevens, Martin
Page, Rt Hon Sir G. (Crosby)	Stewart, Ian(Hitchin)
Page, Richard (SWHerts)	Stewart, A.(ERenfrewshire)
Patten, Christopher(Bath)	Stradling Thomas, J.
Pawsey, James	Taylor, Teddy (S'endE)
Percival, Sirlan	Tebbit, Norman
Pollock, Alexander	Temple-Morris, Peter
Prentice, Rt Hon Reg	Thomas, Rt Hon Peter
Price, Sir David (Eastleigh)	Thompson, Donald
Proctor, K. Harvey	Thome, Neil(IlfordSouth)
Pym, Rt Hon Francis	Thornton, Malcolm
Rathbone, Tim	Trippier, David
Rees-Davies, W. R.	Waddington, David
Renton, Tim	Wakeham, John
Rhodes James, Robert	Walker, B. (Perth)
Ridsdale, Julian	Walker-Smith, RtHonSirD.
Rossi, Hugh	Wall, Patrick
Rost, Peter	Waller, Gary
Sainsbury, HonTimothy	Ward, John
St. John-Stevas, Rt Hon N.	Wells, John(Maidstone)
Scott, Nicholas	Wells, Bowen
Shaw, Giles (Pudsey)	Wheeler, John
Shelton, William(Sfreatham)	Whitney, Raymond
Shepherd, Colin (Hereford)	Wilkinson, John
Shersby, Michael	Winterton, Nicholas
Sims, Roger	Wolfson, Mark
Skeet, T. H. H.
Speller, Tony	Tellers for the Ayes:
Spicer, Jim (West Dorset)	Mr. Carol Mather and
Spicer, Michael (SWorcs)	Mr. Peter Brooke.
Sproat, Iain
NOES
Abse, Leo	Fitch, Alan
Alton, David	Fitt, Gerard
Anderson, Donald	Flannery, Martin
Archer, Rt Hon Peter	Fletcher, Raymond(IllKeston)
Armstrong, Rt Hon Ernest	Fletcher, Ted(Darlington)
Atkinson, N.(H'gey)	Foot, Rt Hon Michael
Bagier, Gordon A.T.	Ford, Ben
Barnett, Guy(Greenwich)	Forrester, John
Beith, A. J.	Foster, Derek
Bennett, Andrew(St'kp'tN)	Foulkes, George
Bidwell, Sydney	Freud, Clement
Booth, Rt HonAlbert	Garrett, W. E. (Wallsend)
Brown, Hugh D. (Provan)	George, Bruce
Brown, R. C. (N'castle W)	Gourlay, Harry
Brown, RonaldW. (H'ckn'yS)	Graham, Ted
Callaghan, Jim(Midd't'n&P)	Grant, George(Morpeth)
Campbell-Savours, Dale	Grant, John (IslingtonC)
Canavan, Dennis	Grimond, Rt Hon J.
Carmichael, Neil	Hamilton, W.W.(C'tralFife)
Carter-Jones, Lewis	Hardy, Peter
Clark, Dr David (S Shields)	Harrison, Rt Hon Walter
Cocks, Rt Hon M. (B'stolS)	Hart, Rt Hon Dame Judith
Concannon, Rt Hon J. D.	Haynes, Frank
Conlan, Bernard	Heffer, EricS.
Cook, Robin F.	HomeRobertson, John
Cowans, Harry	Homewood, William
Craigen, J.M.	Hooley, Frank
Crowther, J. S.	Howell, Rt Hon D. (G'ldf'd)
Cryer, Bob	Howells, Geraint
Cunliffe, Lawrence	Huckfield, Les
Cunningham, DrJ.(W'h'n)	Hugnes, Mark(Durham)
Dalyell, Tam	Hughes, Robert (Aberdeen N)
Davidson, Arthur	Jay, Rt Hon Douglas
Davies, Ifor (Gower)	John, Brynmor
Davis, T. (B'ham, Stechf'd)	Johnson, James (Hull West)
Dixon, Donald	Johnston, Russell(Inverness)
Dormand, Jack	Jones, Barry (East Flint)
Dubs, Alfred	Jones, Dan (Burnley)
Duffy, A. E. P.	Kilfedder, JamesA.
Dunlop, John	Lamborn, Harry
Dunn, James A.	Lamond, James
Dunwoody, Hon MrsG.	Lestor, Miss Joan
Eastham, Ken	Lewis, Ron(Carlisle)
Ewing, Harry	Lyons, Edward (Bradf'dW)
Field, Frank	McCartney, Hugh

McCusker,H.	Ross, Wm. (Londonderry)
McElhone,Frank	Rowlands,Ted
McKay, Allen (Penistone)	Sandelson,Neville
McKelvey,William	Sever,John
McWilliam,John	Silkin,Rt HonJ.(Deptford)
Marks,Kenneth	Skinner,Dennis
Marshall, D(G'gowS'ton)	Soley,Clive
Marshall, DrEdmund(Goole)	Spriggs, Leslie
Marshall, Jim (LeicesterS)	Steel, Rt Hon David
Mason, Rt Hon Roy	Stewart, Rt Hon D. (W Isles)
Maynard, Miss Joan	Stott, Roger
Millan, Rt HonBruce	Strang, Gavin
Mitchell, R.C. (Sotonltchen)	Taylor, MrsAnn (Bolton W)
Molyneaux,James	Thomas, DrR.(Carmarthen)
Morris, Rt Hon C. (O'shaw)	Tinn, James
Morris, RtHonJ. (Aberavon)	Urwin, RtHonTom
Morton, George	Varley, Rt Hon Eric G.
O'Neill, Martin	Wainwright,R. (ColneV)
Palmer, Arthur	Watkins, David
Park, George	Welsh, Michael
Pendry, Tom	White, FrankR.
Penhaligon, David	Whitehead, Phillip
Powell, Rt Hon J.E. (S Down)	Whitlock, William
Powell, Raymond (Ogmore)	Wigley, Dafydd
Prescott, John	Williams, Rt Hon A.(S'sea W)
Rees, Rt Hon M (Leeds S)	Williams, SirT.(W'ton)
Richardson, Jo	Wilson, Gordon (DundeeE)
Roberts, Albert(Normanton)	Young, David (BoltonE)
Roberts, Ernest (Hackney N)
Robertson, George	Tellers for the Noes:
Rooker, J. W.	Mr. Joseph Dean and
Ross, Ernest (Dundee West)	Mr James Hamilton.
Ross, Stephen (Isle of Wight)

Question accordingly agreed to.

Bill read the Third time and passed.