HC Deb 27 July 1981 vol 9 cc916-39 10.24 pm
Mr. Edward Rowlands (Merthyr Tydfil)

I beg to move, That the British Gas Corporation (Disposal of Wytch Farm Oilfield Interests) Direction 1981, a draft of which was laid before this House on 26th June, be not made.

In issuing this direction the Government are motivated by nothing other than ideological spite. There is no justification for it on any rational ground. It must be seen very much as part and parcel of an unprecedented campaign of sneer and abuse by Ministers and their supporters against the British Gas Corporation and its personnel. This, against a corporation that, despite Government economic policy and the recession, has within the last two years achieved a great deal in terms of development and profitability. It is in that context that this campaign of sneer and abuse has been lodged.

I hope that the Under-Secretary of State will not trot out some of the lame and pathetic explanations that he gave in a recent Adjournment debate. He cannot possibly argue that the direction has something to do with the monopoly position of British Gas, as he attempted to do a couple of weeks ago. The issue of the Wytch Farm direction has nothing to do with the monopoly aspects of British Gas. British Gas has no such monopoly in oil or gas exploration. It has an important and useful role to play, but it does not hold a monopoly position.

The hon. Gentleman cannot argue or produce a shred of evidence to suggest—as he indicated in his Adjournment reply—that private enterprise somehow does such things better and would have explored and developed Wytch Farm more efficiently or less expensively. The British Gas Corporation has spent about £25 million—its half share—in a perfectly productive 50-50 arrangement with the private sector. Of that sum, £3 million of British Gas money has been spent on minimising the environmental impact of the development on the local countryside. The field is bringing in an annual revenue of £22 million and a return of over 40 per cent. on assets. Therefore, the figures speak for themselves.

The venture is profitable and successful. The story of the discovery and development of Wytch Farm is one of successful State enterprise, foresight and skill, in partnership with BP. There is no case for destroying that successful partnership, yet that is what the direction will achieve. In 1972, BP—the private sector part of the partnership—voluntarily relinquished the operatorship of the oilfield to British Gas. BP had been sceptical about its potential and was reluctant to embark on a decent drilling programme to explore the field further. However, a small team of geophysicists, geologists and engineers at British Gas believed otherwise. They had faith in their surveys and assessments. That faith and commitment have been vindicated since 1972. Not only is there the oilfield—which they believed existed—there is a second, deeper, major reservoir of oil. The British Gas team has been the driving force in the exploration of Britain's largest onshore field.

I should have thought that this spirit, initiative, enterprise and skill would be applauded by the Government. I should have thought that it would be recognised by ministerial visits. The Prime Minister might have made a flying visit. I do not think that the Secretry of State for Energy has visited the area since taking office. Has the Under-Secretary been there since taking office? I do not know, but I should be interested to find out. He shakes his head. Neither the Secretary of State nor the Under-Secretary has been to see one of our finest onshore oilfields. Why? They do not want to know how successful a public enterprise has been in developing the oilfield. If they had gone to see the field they would have realised how skilfully and sensitively it has been developed in one of the loveliest parts of Britain. Great care has been taken in terms of the local environment.

What is the reward for the commitment and enterprise of that exploration team, which has achieved so much in developing that onshore field? Its reward has been only a kick in the teeth from the Government and the prospect that it will be broken up as a result of the forced sale of assets. That is an utterly disgusting way to treat the efforts of individuals. In addition, there are wider consequences. I refer to the problems of losing the direct experience and data that are derived from the corporation's operatorship and the possible impact of that on a number of existing partnerships between British Gas and other operators in the North Sea, and on its ability properly to service a number of gas purchasing contracts.

These are partly technical issues, but they are none the less of legitimate concern, and I ask the Under-Secretary whether he has considered some of the practical consequences of the enforced sale and removal of British Gas from this important onshore exploration operation.

But if those are the practical consequences, there are more direct consequences of the enforced sale. Will the sale mean a major hold-up in the further exploration and development of the oilfield? The Minister ought to know that there is a myriad of agreements with landowners, easements and consents, which have been built up over the years—probably many more than the usual number, in view of the sensitive environmental arrangements. I understand that all such arrangements are strictly with British Gas and no one else, and that some of the vitally important ones are not transferable to any would-be new owner of the oilfield. A large number of these, therefore, will have to be renegotiated. A two-year delay would be a conservative estimate of the effect of the sale of the oilfield on the whole exploration and the development of the field. This in itself would reduce the potential valuation of the field by between £10 million and £20 million.

That brings me to the real scandal that will arise sooner or later from the direction. I believe that the way in which the direction has been framed and the way in which the Government are trying to push it through will lead to a disgraceful piece of national asset stripping. We are deeply opposed to the principle of such a nasty exercise. But even by the criteria of the Conservative Party this could be potentially an act of gross financial mismanagement, and another step in the Government's rake's progress through public assets that has been characteristic of them since they took office. For petty cash now, the Government are to force a public corporation to sell a vital national asset at a price that cannot possibly reflect its true potential value at this time—and all to make, at best, a marginal dent in this year's public sector borrowing requirement.

Mr. Peter Rost (Derbyshire, South-East)

When the hon. Gentleman talks about financial mismanagement, will he accept that there is a case for arguing that there has been financial mismanagement by British Gas in concentrating its efforts on oil exploration instead of gas exploration, as a result of which it now has to import a quarter of its gas from Norway, at twice the price that it is paying British producers?

Mr. Rowlands

This was a joint operation with British Petroleum whereby BP voluntarily relinquished its operatives to British Gas. There would not have been a really successful onshore oilfield at Wytch Farm had it not been for the determination, involvement and commitment of British Gas in relation to the exploration of the field. That surely is something in which we ought to rejoice, rather than sniping and sneering at it, as so many Conservative Members have been doing.

In any commercial transaction or negotiation there is a time to sell, and there is certainly a time not to sell. As every commentator has observed since the order was made, never has there been a worse time to impose such an enforced sale, given the likely pattern of oil prices in the next few months. In addition to that, there are important factors that would make it absolute financial and economic madness to compel any organisation to divest itself of Wytch Farm at this time, given the state of the development of the oilfield. The field has not yet been delineated. The reserves, the reasonable full potential and the pace of development cannot be sensibly determined at this stage of the exploration. Neither, therefore—this point should appeal to Conservative Members—can an accurate and high enough price tag be placed on the field. The real value of the potential is changing as the exploration programme of British Gas proceeds.

That is not the view only of British Gas of myself and others; it is the view of the distinguished City oil analysts. Wood Mackenzie. In a recent report the firm states: Given the uncertainties surrounding timescales, the production profile and the shape of future development, any economic analysis of Wytch Farm must be of a tentative nature". The figures of 100 million barrels of reserves in the oilfield' and 16,000 barrels a day potential and a mere valuation of $440 million may be shown up in the next 12 months to two years as wide of the mark. It is in that context and that sort of vice that the Government are forcing British Gas to divest itself of a major and potentially more profitable asset.

Mr. Tim Renton (Mid-Sussex)

I declare an interest as political consultant to Wood Mackenzie. Does the hon. Gentleman recognise that trial drilling could lead to dry holes? It is not necessarily a fact that further drilling will add greatly to reserves. It may—for the national sake we hope that it will—but it is not certain.

Mr. Rowlands

That is the point that I am making. It may, because British Gas has been so keenly interested and has generally been proved right more often than anyone else on the development of the oilfield. It may prove that there are more reserves than Wood Mackenzie or anyone else knows.

Even by Conservative criteria—I hope that the hon. Gentleman will support this, given his practical knowledge and involvement—now is not the time to sell when the nature and scope of the oilfield has not been delineated.

As they made clear in a recent Adjournment debate. the Government intend to force British Gas to sell its assets within the financial year. I shall consider the power that the Government have to do that in a moment. The Government will collect a couple of bob from the public sector borrowing requirement in this financial year and the timing becomes an issue of vital concern for the valuation and the development of the field. They want to force the sale now and collect the loot this year.

Will the Minister confirm that British Gas has warned the Secretary of State that it is unlikely that anything like the true eventual value of the oilfield is to be realised by the proposed enforced sale? Has British Gas stated that, because that is a serious statement? It should either be refuted completely or the Government will be faced with a series of significant issues of public financial policy.

For example, putting aside the political and philosophical difference between the two sides of the House and taking the practical arguments, what will be the position after all the bids have been made and British Gas tells the Secretary of State that the price that has been offered falls far short of its valuation of the field? Will he say "Sell and be damned"? Will he say "Sell irrespective of the potential gap between the bids made and the valuation of the oilfield by British Gas"?

If Ministers wish to ignore such warnings and possibilities and adopt such a cavalier attitude on such an important vital national asset, Parliament should not. Parliament has always had a traditional duty to investigate any possible misdealing in national assets—any selling short of public assets in any form. If, as is possible, British Gas is forced to sell Wytch Farm at a depressed price because of this direction, the Ministers should be held responsible for any loss in this disgraceful act of asset stripping. If a local authority behaved in such a way the district auditor would pounce on it immediately and councillors would be threatened with surcharge.

If the enforced sale, at a foolish and stupid time in the exploration and development of the field, led to the divestment of a national asset to a private beneficiary at a price below its potential value, it would be close to misappropriation of public and national assets. If that situation arises, Ministers ought to be brought to book for it.

I suggest, therefore, that given the position and the seriousness of the issue of public finance involved, the Comptroller and Auditor General and the Public Accounts Committee should investigate and consider the sale of Wytch Farm before any deal is completed. That is a perfectly reasonable request. At least let us ask one body or one person whose task it is to make sure that such matters are brought before the House.

I understand that the Select Committee on Energy is also considering the possibility of making a report. I hope that both Committees will do so, so that Parliament will have a much greater opportunity to consider the wider issues of public finance that are involved.

Mr. Arthur Palmer (Bristol, North-East)

The Select Committee on Energy has asked for evidence already. Does not my hon. Friend think that it would have been as well if, instead of taking this action so quickly, the Government had waited for the Select Committee's report?

Mr. Rowlands

I believe that we should have the benefit of a much greater and detailed scrutiny of the whole implications of the direction before any final action is taken. In a moment I shall say why I think that the Select Committee may have that opportunity.

There is another aspect that is worthy of greater attention than this one-and-a-half hour debate allows—the nature and limitation of the direction. The Government have chosen to use this piece of subordinate legislation because they want to duck substantive legislation. In doing so, they must spell out exactly the scope of the instrument before us tonight. The Secretary of State has clearly been advised that he can deal with the matter in this way. No one is disputing that. However, will he or the Under-Secretary confirm that he does not have the power under this direction to dictate either the timing or the manner of the sale or disposal? This could be vital. Will the Under-Secretary confirm that no deadline is imposed or can be imposed by this or any other direction under section 7(2) of the Gas Act 1972?

Secondly, as to the manner of the disposal, will the Minister confirm that he has not and cannot lay down in a direction how British Gas must dispose of the asset? The Secretary of State does not lay down in this direction that it must be disposed of in terms of cash. It does not say that British Gas must sell for cash the assets of Wytch Farm.

I was very interested in the reference in yesterday's The Sunday Telegraph to this position. One could envisage a situation in which British Gas could comply with this directive by an exchange of assets. That possibility is neither hypothetical nor fanciful. One could envisage that a major oil company with gas licences and gas production assets might well seek to do a deal with British Gas in a swap arrangement. If, in return, British Gas obtained certain gas interests, it surely would be acting within its proper interests and that would certainly be consistent with its statutory responsibilities and duties.

Will the Minister confirm that that is so, that this direction does not outlaw such a possibility, and that it is perfectly open for the corporation to comply with the direction in this manner without further penalisation or administrative bullying by the Government?

Such is the rottenness of this case, particularly with a direction of this kind, that it is not surprising that even some of the Government's best friends do not want to know them. Strong objections have come not just from Socialists or even from full-time professional executives of British Gas. Is it not also true that the six part-time members of the board have been equally condemnatory of this sale?

Let us consider who they are, in case anyone thinks that they have a vested interest. One is Sir Ernest Woodruffe, a former chairman of Unilever. One would not think that he was a card-carrying member of the Labour Party, or a Socialist. What has been his view? What advice has he given to the Government? Another member is Mr. Greenbury. He is an executive of Marks and Spencer. I should have thought that the present Government believe, almost to adulation, in the infallibility of Marks and Spencer executives. Another part-time member is Mr. Douglas Badham, whom we know well as a Welsh industrialist and strong Conservative.

Has the Secretary of State met the six part-time directors? Has he asked for their advice, or received advice from them? Will the Under-Secretary tell us what arguments they put to the Government? Did they support the sale of Wytch Farm? Those independent industrialists do not owe their living to being professional appointees to British Gas.

Mr. Robert Sheldon (Ashton-under-Lyne)

Is it not likely that some of those industrialists will follow the advice of the Government and seek to ensure that public industry behaves as commercially as private industry? Private industry invests in success and disposes of failure. At Wytch Farm, the Government are trying to sell success while maintaining the failures.

Mr. Rowlands

There are many other aspects of success in British Gas. Certainly it makes no sense to sell every successful asset.

As the Under-Secretary had to confess in a recent Adjournment debate, the only reason for the direction is Tory ideology. Under the law of Conservatism, no State or public enterprise can be efficient, profitable or enterprising. If there is any evidence to the contrary, the enterprise must be sold. All evidence of a successful public sector must be destroyed.

That is why the Government are trying to sell the wonderfully successful radiochemical centre at Amersham over the heads, of the staff who made it such a success. That is why, wickedly, they propose to sell Wytch Farm over the heads of those who have successfully explored and developed the oilfield.

Just as it is Conservative Party philosophy and policy that have led the Government to issue the direction, the policy of a future Labour Government will be to revoke the direction and restore this important national asset to the public sector. So that there can be no doubt and no argument in the; next Parliament, let it be clear to any City institutions or oil companies that are contemplating purchase that a future Labour Government will not pay a penny of additional compensation. No one will be allowed to make a single penny profit out of this grubby asset-stripping exercise.

Viscount Cranborne (Dorset, South)

The hon. Gentleman has been expressing considerable concern about the price that the Government can obtain from the sale of this asset. Is it consistent that he should give the undertaking that he has just given? Will not that depress the price?

Mr. Rowlands

Given the way in which the Government are behaving towards national assets and trying to force this sale, it does not need words from hon. Members to depress the potential valuation or possible sale price.

On the fundamental principles and philosophy that divide us, and on a series of specific grounds, I ask all my colleagues to vote against the disgraceful direction.

10.48 pm
The Under-Secretary of State for Energy (Mr. Norman Lamont)

The hon. Member for Merthyr Tydfil (Mr. Rowlands) has overdone and exaggerated his arguments. He presented the direction as a sort of monetarists' "High Noon". I shall seek to give some of the background to the direction to show how it stems from Government policy, accords even with some of the instincts of the previous Labour Government, is in the national interest and will contribute to the important national objective of getting a more efficient use of resources in the public sector and a more efficient gas corporation.

Much has been said about efficiency and success, and I am happy to pay tribute to both the work force and the chairman of the Gas Corporation. There have been great achievements, but it would be wrong to say that there; is not room for improvement. There have been great engineering achievements. As my hon. Friends know well, there is another view of the Gas Corporation. When the Gas Corporation published its report last week, the Financial Times asked the question Efficient? and went on As usual, the 80-page annual report fails to include the data which might make it possible to analyse such a claim.

The article added: Where exactly these profits arise is hard to tell. British Gas presents itself as an integrated concern, baffled at why the Government thinks it has some juicy parts which could be sold off. Oil revenues rose from £92m to £120m during the year, but the impact on profits is obscure. At the showrooms, the other currently coveted area, the gross profit on appliance sales was £54m but this is meaningless without any indication of relevant costs.

I do not endorse everything in the article. There are some points with which I would disagree. It seems to me, however, that the article makes one important general point—that the bigger, more extensive and varied a State monopoly becomes, the more difficult it is to tell whether it is efficient. Profitability is no guide to efficiency when one has a monopoly supplier and a near monopoly purchaser of gas and when one has a utility that is in receipt of windfall profits caused by the rise in energy prices. In this instance, profitability is not a guide to efficiency.

The Gas Corporation is one of the largest gas utilities in the world. Its activities range not simply from gas and oil exploration and development but also to the sale of appliances in the High Street. The point has been made before that few utilities in the world are in the business of the transmission of gas and the retailing of appliances.

Dr. J. Dickson Mabon (Greenock and Port Glasgow)

On a point of order, Mr. Deputy Speaker. How do the hon. Gentleman's remarks relate to what we are discussing? The proposal before the House is about the disposal of an oilfield. It has nothing to do with the transmission of gas.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

Order. I am following closely the hon. Gentleman's remarks. The Chair will decide what is in order or out of order.

Mr. Lamont

The point goes wider. I shall demonstrate to the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) why this is relevant. There is no other gas utility in the world of this size that has such a wide spread of activities. The result is that this massive integrated business is able to subsidise its unprofitable parts from its profitable parts. That is not necessarily in the public interest, as the Monopolies and Mergers Commission found in its investigation of the sale of gas appliances. That is why the Government are looking at the peripheral activities of the Gas Corporation and why they have decided to remove those that should be performed elsewhere.

The Gas Corporation's main function is the purchasing and distributing of gas in the United Kingdom. The public utility role as a gas distributor is a challenging and worthwhile one in itself. We need an efficient gas utility. But the Government do not believe there is any reason why the gas utility in this country, alone of gas utilities in the world, should be in the business of exploring for and developing oil on the present scale. I cannot think of any other gas utility that is involved in the development of oil.

Before the Opposition deride this proposal as a weird piece of doctrine from Chicago, I should point out that some of the doubts about whether a gas utility should be in the business of oil development obviously crossed the mind of the last Labour Government. In clause 12 of the Petroleum and Submarine Pipe-Lines Act, they took the powers to transfer the oil interests of the Gas Corporation to BNOC. Therefore, the last Labour Government clearly thought that it was questionable whether the Gas Corporation should be involved in oil exploration and development on the scale on which it is involved.

Dr. Mabon

I should like to intervene briefly, since I know a little about the matter. Is it not true that when one explores for oil or gas the other element can be found coincidentally, and without any precognition of what the circumstances will be? Therefore, it is clear that British Gas, with BP, was involved in Wytch Farm in hoping that there might be some gas, even if perhaps not enough to justify the exploration. Would the corporation be free to sell to any oil company that it wished, and particularly to the British National Oil Corporation?

Mr. Lamont

The corporation would be free to sell to any oil company, but obviously, as the right hon. Gentleman well knows, not to BNOC.

Dr. Mabon

Why not?

Mr. Lamont

Because it is an object of the Government's policy that the proceeds should be available to reduce the public sector borrowing requirement.

Mr. Rowlands

Will the Minister give way?

Mr. Lamont

In a minute.

The last Labour Government had doubts about the Gas Corporation being involved in oil development on this scale. No doubt Labour right hon. and hon. Members will point out that what they envisaged was a transfer of the oil interests within the public sector—as the right hon. Member for Greenock and Port Glasgow has just advocated—from the corporation to BNOC. But if it is common ground—and I do not see how they can argue that it is not—that there is some doubt whether the corporation should be involved in oil development on this scale, and if it is logical that that should be transferred away from it, we say that there is no reason why it should be transferred only within the public sector; it could equally be transferred to the private sector.

Mr. Rowlands

As this is a matter of vital concern, about the whole nature of the direction that we are debating, will the Minister now make it clear that the direction does not, and cannot, force British Gas to sell assets for cash, and that it has power under the direction to exchange assets for gas assets from a major oil company, for example? I ask the hon. Gentleman to answer "Yes" or "No".

Mr. Lamont

The Government have made it clear to the corporation that they expect to receive the proceeds from the disposal of Wytch Farm. They have powers under existing legislation to obtain excess proceeds from oil development.

Mr. Denzil Davies (Llanelli)


Mr. Lamont

I shall not give way. I wish to develop my argument further.

Mr. Davies


Mr. Deputy Speaker

Order. The Minister is obviously not giving way.

Mr. Davies

On the question—

Mr. Deputy Speaker

Order. The right hon. Gentleman must resume his seat, as the Minister is not giving way.

Mr. Lamont

One of the Government's objectives is to return to the private sector activities that can be done equally well there. That is why the Government have sold a majority stake in British Aerospace, and why we are taking steps to enable us to transfer British Airways, the National Freight Corporation, Cable and Wireless, some of the peripheral activities of British Telecom, the British Transport Docks Board and some—

Mr. Robert C. Brown (Newcastle upon Tyne, West)

On a point of order, Mr. Deputy Speaker. The Minister's speech is outrageous. There is nothing in the order about British Aerospace or any public enterprise other than British Gas. [HON. MEMBERS: "Bogus point of order."] There is nothing bogus about it; it is the Minister who is being bogus.

Mr. Deputy Speaker

The direction requires the British Gas Corporation to dispose of its interest, and the Minister is in order in giving his reasons.

Mr. Lamont

Against the background that I have described, there is no reason why the energy sector should be in any way different. Wytch Farm will be one of the largest privatisations. When we reintroduce the Bill to enable private capital to be introduced into BNOC, energy will be able to make the largest single contribution to this Government's privatisation programme—and so it should. It is not necessary for the State to own energy, and it is not necessary for it to own oil wells. [HON. MEMBERS: "Why not?"] It is not necessary for security of supply.

The Government's decision on Wytch Farm should be looked at not in isolation but in the context of the corporation's oil interests as a whole. As I said, the Government see no justification for a gas utility to be involved in oil development on the present scale. It was for that reason that we raised with the British Gas Corporation the idea of grouping its oil interests into a separate subsidiary, in which 60 per cent. of the shares might have been floated off to the public, and where there would have been a management contract with the British Gas Corporation, enabling those who had been involved in the oil interests to continue with their work.

Hon. Members may feel that that was an attractive approach and that it was a more evolutionary approach than the one now before the House. Certainly, the Government felt that it was an attractive scheme. If the British Gas Corporation could have produced an alternative scheme which would have satisfied the Government's objectives we would have considered it, too. We put the plan to it, but unfortunately it failed to find favour with the British Gas Corporation. We discussed the plan with the corporation over a considerable period.

Meanwhile, the Government's target for disposal of assets for 1981–82, which was announced in the Budget, included a contribution from BGC's oil assets. In the circumstances, when the British Gas Corporation was unable to view with favour the idea that the Government put to it, the Government decided to press ahead with action on Wytch Farm. That is consistent with the Government's policy objectives, and my right hon. Friend is satisfied that it will not impede the British Gas Corporation in the proper discharge of its duties. However, we are considering the question of the corporation's other oil assets, and we still hope that the corporation will view favourably the idea of a separate subsidiary.

Mr. Merlyn Rees (Leeds, South)

There is a great deal of heat, and people are angry. The Minister can assist the House. This direction forces the British Gas Corporation to dispose of the shares. In the noise that was generated, the Under-Secretary said that, under the Petroleum and Submarine Pipe-Lines Act 1975, the British Gas Corporation can be forced to act in a certain fashion. Will he explain that, because it is not in the direction, and it is germane to this matter.

Mr. Lamont

It is not in the PSPA Act but in the Gas Act 1972.

The proceeds from the sale of Wytch Farm will help to reduce the public sector borrowing requirement.

Mr. Denzil Davies


Mr. Lamont

No I shall not give way. It cannot be said that I have not given way.

Mr. Davies


Mr. Deputy Speaker

Order. The Minister clearly does not intend to give way.

Mr. Lamont

I am entitled to put the Government's case. I have given way four or five times.

The proceeds will help to reduce the public sector borrowing requirement. Opposition Members find that a shocking admission. No doubt they were equally shocked when the Labour Government decided to sell shares in British Petroleum. I see little distinction between selling oil wells and selling shares in an oil company. There is no difference in principle, although there is a considerable difference in scale. The Labour Government sold shares in BP worth £500 million at 1977 prices—£850 million at present day prices. I shall not be giving away a secret if I say that most commentators have suggested that Wytch Farm will realise somewhat less than that, although I should be happy if they were proved wrong.

There is no reason to think that BGC will not get a good price. The price will be the result of commercial negotiations, and will of course depend on the BGC's effectiveness in those negotiations. There is no lack of interest from companies, both large and small. There is no reason why uncertainty over reserves should depress the price. There is always uncertainty over the evaluation of oil fields. It can work both ways. If the reserves turn out to be less than Wood-Mackenzie analyses, the proceeds would considerably exceed the value of the field.

Mr. Davies

Will the hon. Gentleman give way?

Mr. Lamont

I turn to the more detailed misapprehensions and misconceptions. It is said that without the Gas Corporation's drive and determination, oil would not have been found at all. I am happy to pay tribute to the Gas Corporation's skill and professionalism in developing the field. It is hard to accept that the corporation's partner, BP, which has an outstanding record in exploration and development world-wide, would not have discovered or developed oil. After all, it paid half the bills in the development of the field. Drilling is always a priority. BP has world-wide interests, whereas the Gas Corporation's interests are confined to the United Kingdom. BP had to decide its priorities. There is no reason to conclude that it would have abandoned the field or not developed it.

The hon. Member for Merthyr Tydfil questioned the rationale of the Government's decision on the ground that the corporation's share in the field would be profitable. I find it difficult to believe that prospective purchasers' expectations are not reflected in the price. Furthermore, the public sector borrowing requirement will be reduced, not just by the proceeds, but by the savings on capital expenditure. That is a more important consideration, when talking about the corporation's oil interests as a whole.

Mr. Davies

On the PSBR—

Mr. Deputy Speaker

Order. This is a short debate and other hon. Members are anxious to speak. All the noise delays the debate.

Mr. Davies

On the PSBR—

Mr. Deputy Speaker


Mr. Lamont

In the last few years the Gas Corporation has spent £150 million on the development of its oil interests. That money could have gone towards reducing the public sector borrowing requirement.

Much has been said about the opposition of the chairman and the corporation to the Government's decision. Other chairmen of other nationalised industries have found that there are benefits and advantages in removing their subsidiaries from the public sector borrowing requirement. They have seen that there are advantages in releasing their subsidiaries from the constraints imposed by public expenditure. The subsidiaries are able to develop in their own way, subject only to the constraints of the market. The Government are then able to commit funds to tasks which the private sector cannot undertake. [Interruption.] Perhaps Opposition Members do not want the Government to find the money to pay for unemployment measures such as those announced this afternoon. Perhaps the Opposition are more wedded to doctrine than to trying to help the unemployed.

The hon. Member for Merthyr Tydfil claimed that the loss of the corporation's interest in the field would damage its exploration and production capability and shatter morale. Questions of morale did not bother Labour Members when the Labour Government decided to remove the National Coal Board's oil assets, not at a market price but at a robbery book value price. Who were the asset-strippers then?

Nothing in the directive requires the corporation to reduce its effort in gas exploration and development. The corporation will continue to retain a significant operating capability in the Rough and Morecambe fields. Those are major challenges that will make major demands on the skill of the management and work force.

The directive is an important step in the Government's privatisation programme. It is an important step towards opening up the nationalised industries. I see no reason why it should damage either the industry or the consumers. Indeed, we intend that both should benefit. The Opposition's case is based on the obscure and indefensible idea that what is owned by the State benefits the nation, and what is owned by the public and individuals does not. We reject that approach. I invite the House to approve the directive.

11.11 pm
Dr. J. Dickson Mabon (Greenock and Port Glasgow)

I congratulate the Government on reappointing Sir Denis Rooke as chairman of the British Gas Corporation. He is a singularly devoted public servant. We know that he has vigorously opposed the disposal of Wytch Farm. No one could claim him as an ideologue of either the Conservative Party or the Labour Party. He is a straightforward, highly respected, commercially minded business man, who wants to do the best for Britain.

We have cited the six part-time members of the corporation, its chairman and many other commentators who are against the directive. We are witnessing not a defence of Wytch Farm in the interest of the Labour Party—the Minister called it a doctrinaire concern—but something that is perfectly justifiable in the national interest. I repudiate the Minister's remark that the Opposition regard anything owned by the State as sacrosanct and anything owned by the public or individuals as not of national benefit. Many hon. Members on both sides of the House have some regard for what is called the mixed economy. They accept that there is a legitimate place for public enterprise, especially successful public enterprise, of which, beyond doubt, Wytch Farm is a good example.

All the Minister's irrelevancies in his speech have nothing to do with the argument about the oilfield. If the corporation, in the process of its excellent work at Morecambe and the East Anglian gasfields, were to strike oil, would the Minister say that that field, discovered by accident, must be sold by order? Is that his argument?

The Minister's argument about the switching of assets postulated by the Labour Government in the 1975 Act was that we would transfer legitimate oil fields from the National Coal Board, the British Gas Corporation, or any of the energy industries, to the new British National Oil Corporation. If the Minister wanted to follow the spirit of that Act he would transfer Wytch Farm to the BNOC. He has not been quite frank with the House. He is saying that he will act under the 1972 Act and dispose of the oil field. I do not know how he can justify that.

My hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) was right to ask the question—and the Minister was wrong not to answer it—how, when the oilfield is put up for auction, will it be determined who buys it, in what circumstances and so on. We do not know anything about that. My hon. Friend referred to the involvement of the Comptroller and Auditor-General. That is one possibility. My hon. Friend the Member for Bristol, North-East (Mr. Palmer) asked why the Select Committee had not been given an opportunity to consider the matter. I cannot understand the precipitate haste with which the Government want to go ahead, within the context of the directive. I can understand it within the context of reducing the public sector borrowing requirement. The Minister let that cat out of the bag in the middle of his speech. I understand all sorts of Tory doctrinaire reasons for the haste, but I am arguing not about Tory doctrine but about the sense of the issue.

I wish to ask the Minister a question, and perhaps he will answer me at the end of the debate or intervene now. If Wytch Farm were exchanged by the corporation for the gas interests of an oil company, would that be acceptable to the Minister? Would that be acceptable to the Government?

Mr. Rowlands

More importantly, does the direction prevent that from happening? Does it outlaw that? That is the inference to be drawn from the Minister's remarks.

Dr. Mabon

I suggest that that is not possible. Is my hon. Friend right? Am I wrong? Who is right? There is great interest in the debate in the oil and gas industries. Concern is not confined to the corporation. It is not only the taxpayer who is listening but many others. I hope that the Minister will answer the question, which has been put to him repeatedly in different forms. I hope that he will answer it before the House divides on this measure.

This process of privatisation is not comparable with the selling of BP shares. When the Labour Government took the decision to sell the shares there were many Ministers who did not like it. However, Governments are Governments and collective responsibility is still collective responsibility. In the best Churchillian manner, we did not reduce control. We held on to more than half the shares. In this instance there is a 100 per cent. give away.

Mr. Norman Lamont

The right hon. Gentleman will recall, on reflection, that what he has said is not accurate. The Labour Government retained 51 per cent. of the shares in BP by merit of 20 per cent. that were the subject of a court action, and the voting rights attached to the 20 per cent. were suspended. The Government did not have control of the company. Will the right hon. Gentleman accept that the sale of BP shares was designed specifically to reduce the public sector borrowing requirement?

Dr. Mabon

At that time I was a Minister in the Department of Energy. I arrived late on the scene for political reasons with which the House is familiar. My right hon. Friend the Member for Bristol, South-East (Mr. Benn) and I discussed the claim of the Burmah Oil Company in great detail with company officials. We were convinced that we were right to proceed. Since then the courts have justified the belief of the Department of Energy and the Ministers who were involved in the transaction. The Minister's argument is nonsensical. We did not decrease the Government's share of BP shares to less than 51 per cent.

It is unfair that the Minister is prepared to argue with me on that issue but will not say whether there can be a transfer of assets as a result of the disposition that is contained in this measure. May we have an answer? Will it be possible for a transfer of assets to take place from the corporation to an oil company in respect of its gas interests?

11.19 pm
Viscount Cranborne (Dorset, South)

I am most gratified suddenly to find, and perhaps contrary to the traditions of the House, that the Opposition are taking an interest in my constituency. Having heard the yapping of the poodles, I am under no illusion that they take the matter as seriously as it deserves. I have even less doubt about whether their masters feel the same way.

Last week I received a letter dated 14 July from the Association of Clerical, Technical and Supervisory Staff, a subsidiary of the Transport and General Workers Union. The letter states: At a meeting recently held at Furzebrook rail terminal —which, for the information of Opposition Members, is in the middle of my constituency and is an important constituent part of the oil field— great concern was expressed by our membership and your constituents regarding the Government's plans to dispose of this national asset. There is nothing in any way inconsistent so far with the position adopted by Opposition Members. On behalf of our members, I should like to request a meeting to discuss the implications both locally and nationally.

As I am sure Opposition Members will agree, it is important that all one's constituents should have the opportunity to express their views if they feel strongly about the matter, or even if they do not feel strongly. Therefore, with my usual urgency, I got in touch with the union concerned. I said that in view of the imminence of tonight's debate, I would be more than happy to meet representatives last Saturday morning, when I would listen carefully to their views and we could discuss what was expressed at the meeting.

Imagine my surprise when the message came back, not directly from the local officer Mr. Nortcliffe, but from his secretary—such is the grandeur of those people that they cannot be prevailed upon to come and talk to me themselves—to say that he did not really think that it would be appropriate to meet me on a Saturday as he did not think that the trades union concerned could be prevailed upon to break into its weekend to discuss such matters.

I am under no illusions, having listened to the debate, that the poodles will yap, and, when they yap, they will mean what they say. After that little story, I am bound to say that I am a little doubtful about whether their masters feel as strongly as they do.

This matter is something which should be a cause for concern to the House. It should be a cause for concern to the hon. Member for West Bromwich, West (Miss Boothroyd), who, I was gratified to learn, also took a considerable interest in the affairs of my constituency. I am sorry that she is not present this evening. She took such an interest that on 8 July she initiated an Adjournment debate on the subject with her usual elegance and turn of phrase. She put forward many sensible reasons why the sale should not take place. She said: had it not been for the initiative taken at the time by British Gas, and had it not invested and backed the geologists' report, no exploration would have been carried out, because the private sector was not prepared to take the risk involved.

That is a remarkable statement. To take one example, we know that BP has been exploring since 1939 onshore. It has been taking risks exploring onshore for several decades, before British Gas ever thought of exploring for oil. To say that the private sector was not prepared to take the risk is patently not so. One has only to look at another part of my constituency—Kimmeridge Bay, where, since 1959, BP has not only been exploring for but has also been producing oil in small quantities.

The hon. Lady also said that British Gas has a monopoly in concern for the environment. The Opposition rightly make great play with the beauties of my constituency. It is probably the finest part of the United Kingdom. It contains large expanses—sadly, not as large as they were—of heathland and huge quantities of wild flowers. I know that the hon. Member for Merthyr Tydfil (Mr. Rowlands) is deeply interested in them and has a far better knowledge of them than I have. There are many rare species of flowers and birds on the heathland of eastern Dorset. I need hardly remind the hon. Gentleman that, for instance, no less a rare species than the Dartford warbler has one of its last habitats on the heathlands of the Arne peninsula, where the BGC is even now drilling for oil.

Again I quote the hon. Lady: There is ample evidence to show that the local authorities in the Dorset area have responded to the care taken in protecting the environment and preserving the landscaping. They have obvious faith and trust in the partnership that has been forged with British Gas. I—along with the hon. Gentleman I am sure—have been fairly frequently to visit that important part of my constituency. I have observed that there is an excellent working relationship between the BGC and the Dorset county council, which is the competent planning authority.

However, what is worrying the Opposition's argument of the ecological case is that they imply that no other oil explorer has a similar relationship. I suggest to the hon. Gentleman that BP, which has been exploring in Dorset for far longer than the BGC, shows an equal concern for what goes on in the ecological world of Dorset, something that all of us who live in the place and love it know is far more important even than the production of oil. There is no doubt that with a proper partnership of the kind forged by exploration companies—no matter who they are owned by—that may continue whether the wells are explored by companies in the private or public sector. Therefore, it does not seem that the second of the objections that the Opposition advance on a local basis for the sale can stand up, either.

However, when we come to the central point of the Opposition's argument, both objections suddenly appear rather peripheral. Another point is very much the nub of the matter. The hon. Member for West Bromwich, West put it well. She stated: I give the Minister fair warning that we shall not support the sale of Britain's seed corn and that with the return of a Labour Government those assets which he now intends to sell will be restored to British Gas at the earliest opportunity."— [Official Report, 8 July 1981; Vol. 8, c. 554–56.] The hon. Gentleman repeated that rather ominous promise again this evening. It is there that we come to the nub of the difference between the Opposition and the party that I have the honour to support.

It is a curious fact that the Labour Party seems to believe that an enterprise cannot be of any use to the country and cannot constitute seed corn unless it is owned by the State. [HON. MEMBERS: "Rubbish".] That is the burden of the remarks made by the hon. Member for Merthyr Tydfil.

Mr. Rowlands

Throughout my remarks I pointed out that a joint venture between the public and private sectors, on a 50-50 basis had successfully developed Wytch Farm. That is an excellent example of a successful mixed enterprise, which should not be destroyed by this wilful proposal.

Viscount Cranborne

If the hon. Gentleman will bear with me I shall answer that point. This extraordinary view about State ownership seems to lie at the nub of the argument. What is the point of State ownership? The Labour Party seems to think that it is a good in itself. Of course, we must accept that there is a role for the State in the economy. How could we argue otherwise when we shell out huge sums to support British Leyland, and British Steel? No one would quarrel with the policy that we have pursued in that regard.

Mr. Palmer

Does not the hon. Gentleman realise that the British Gas Corporation did not exist until 1972? It was created as a result of Conservative legislation. It was that legislation that made the ownership of Wytch Farm possible.

Viscount Cranborne

That does not nullify my point. If the hon. Gentleman bears with me, he will be able to judge it. In a curious way the Labour Party seems to have as touching a faith in public ownership as it has in the leadership of the right hon. Member for Ebbw Vale (Mr. Foot). The difference between the Labour Party and the Conservative Party is that the Conservative Party cannot see any point in public ownership if the job can be done at least as well by the private sector. If we sell the assets, there will be plenty of demand for the money raised by the sale. There will be demands for the type of public expenditure that Opposition Members are all too keen on pressing for.

I pay tribute to the Labour Party for the compassion that it shows for the under-dogs in our society. Every time that I come into the Chamber I hear cries for more expenditure on hospitals, schools, and the Welfare State. However, if the Labour Party advocates the locking up of assets that could be readily bought—

Mr. Deputy Speaker

Order. This is a very short debate. The hon. Gentleman should turn to the question whether the British Gas Corporation should be required to dispose of its interest.

Viscount Cranborne

I am coming to that point, Mr. Deputy Speaker. I shall accept your rebuke as gracefully as I can. The nub of the matter is that if we can raise the money, we can devote it to the other legitimate Government enterprises, for which there is a crying need in this devastating economic storm. There is no earthly reason why we should delay the sale. My only plea is that my right hon. and hon. Friends should get the maximum amount of money from the sale and ensure that the sale is for cash rather than for the exchange of shares.

11.35 pm
Mr. Robert C. Brown (Newcastle upon Tyne, West)

I promise to get to the nub of the argument.

I intend to ask the Under-Secretary of State three questions. First, is it not possible that this profitable public enterprise will be sold to any comer at the diktat of this prejudiced Government for no reason other than that it is a profitable enterprise?

The Under-Secretary has already answered that question. It is uncharacteristic of the hon. Gentleman, but I have never witnessed such prejudice as he displayed tonight. When we heard the announcement by the Minister for Consumer Affairs about the sale of gas showrooms I thought that I had heard it all, but the complete and utter prejudice of the Minister of State was as nothing compared with the Under-Secretary's. The hon. Gentleman's prejudice made the ugly sisters look almost like Cinderella. He almost screamed "Why should the State own an oilfield?" I ask: Why should not the State own an oilfield, particularly if it is profitable and successful?

It has been assumed throughout the debate that any transfer of assets from the British Gas Corporation will be to an oil company. Is it not likely that the "any comers" to whom I referred could include latterday Charlie Clores, with no interest in oil or gas production other than the prospect of making money from property speculation? If the answer to that question is "Yes", is it not within the bounds of possibility that, having been forced to sell off its assets, the British Gas Corporation will be called upon to operate the oilfield that it is now operating on the basis of a fee-paying agreement with whoever comes in on the asset-stripping exercise on behalf of the Government? I believe that that is likely to happen.

The Under-Secretary, in effect, said that under the Petroleum and Submarine Pipe-Lines Act 1975 the Government can force the British Gas Corporation to dispose of this asset, but when challenged he tended to back off and mentioned the Gas Act 1972 which is mentioned in the order. I suggest that he does not know his "Ps" from his "Gs". Whatever he may say about market forces, and so on, there can be no denying that a sale such as this, which is forced out of sheer political prejudice, must downgrade the price that the corporation can obtain for this successful venture.

11.38 pm
Mr. Tim Renton (Mid-Sussex)

It is interesting that in this short debate the Opposition have come more to life than for many a month—certainly more than in the debate on the motion of censure. The reason is that, though the Opposition Benches are sparsely filled, the selling of some assets in the public sector causes an atavistic horror on their part.

The hon. Member for Merthyr Tydfil (Mr. Rowlands), in what is a serious debate about whether the Gas Council has a role in exploration, kept talking about national asset-stripping as if it were some vice from Soho that was moving to Westminster.

The hon. Gentleman may recall that when we considered the privatisation of British Aerospace we were accused on national asset-stripping, but does he believe that 90 per cent. of employees of British Aerospace who took up shares in that offer—58,000 out of 64,000—would consider that to have been national asset-stripping?

What is asset-stripping about offering for sale, on the best possible terms, an asset that the Government currently regard as being superfluous or unnecessary in the public sector? There is nothing whatever in that to do with asset-stripping. There may be an ideological difference between the two sides of the House—that is what has stirred up the Benches so much tonight—but it is not asset-stripping or national asset-stripping, by any definition of those terms.

The hon. Member for Merthyr Tydfil spoke on the question whether it was the right time for sale, and I declared my interest. I agree that we all hope that the reserves of Wytch Farm will be shown to increase over the years ahead, but there can be no geological certainty that that will be the case. There is an old saying in the mining business, in which I spent about 20 years before coming to the House—[Interruption.] Opposition Members should listen for once. There is an old saying in the mining business that many a good mine is ruined by sinking a shaft. That means that often the highest price can be put on a mineral asset shortly after the initial exploration stage, because that is the time when speculative interest is greatest. People pile in thinking that there may be 400 million barrels of oil instead of 200 million, or that there might be half a trillion cubit feet of gas instead of a quarter trillion cubic feet.

These are all commercial judgments that the bidders have to make, but certainly there will be great speculative interest in the purchase of Wytch Farm, because the extent of the reserves is not known. In consequence, it is possible that the Government will get a higher price than they would if they waited for five years. The hon. Member for Merthyr Tydfil shakes his head as if he knows precisely what was there. The right hon. Member for Bristol, South-East (Mr. Benn), when Secretary of State for Energy, always assumed that it was he who actually put the oil under the North Sea. The hon. Member cannot be certain about the reserves at Wytch Farm, and I submit to him that so far the Government have been extraordinarily successful in the timing of their sale of assets. Indeed, those who bought ICL shares and even BP shares might well consider that the Government had been all too successful in their timing.

I hope very much that the sale of Wytch Farm—coming, as it does, at a moment when the reserves are unknown—will produce a very good price. Of course, it will go to reduce the PSBR. I cannot understand why the right hon. and learned Member for Llanelli (Mr. Davies) got so excited at the thought of that. Perhaps it is because he yearns to be back in the Treasury team again.

I support my right hon. and hon. Friends on the Front Bench tonight. I have always had great admiration for Sir Denis Rooke since the time when I was on the Select Committee on Nationalised Industries in the last Parliament. I always thought that he was the most impressive witness to appear before us. He knew his business backwards. I am glad that he has been confirmed in his appointment, but I suggest that the Ministers should consider moving further and introducing private capital into the whole of British Gas as soon as possible.

Indeed, I suggest to my right hon. Friend the Secretary of State that he should consider adding British Gas to his British National Oil Corporation Bill in the next Session, so that we can bring private equity into every aspect of British Gas. I believe that Sir Denis would very much prefer that solution, and that he would work very much more closely with the Government on that solution than on the present policy of hiving off bits and pieces of British Gas, because, unfortunately, we were not able to get Sir Denis and his board members to agree to the setting up of Gas Council (Exploration) Limited and to the offering of 60 per cent. of it to the British public. I believe that Sir Denis would rather follow the route of British Gas having private capital being injected into it. I urge my right hon. Friends to think along those lines.

11.45 pm
Mr. Norman Lamont

The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) got extremely heated and accused me of not answering his questions. The right hon. Member may have been able to hear my answers and I might have been better able to hear his questions if the right hon. Member for Llanelli (Mr. Davies) had not insisted on making so much noise.

I partly answered the right hon. Gentleman's question in reply to an intervention by the right hon. Member for Llanelli. The position is that the directive does not prevent the British Gas Corporation from exchanging its interest for, let us say, an interest in a gas field, but we have made it clear to the Gas Corporation that we expect to receive the proceeds from the disposal. Furthermore—I believe that I was crystal clear, and I do not understand why the hon. Member for Newcastle upon Tyne, West (Mr. Brown) is confused—we have the powers under section 16 of the Gas Act 1972 to get excess revenues from oil interests.

The hon. Member for Newcastle upon Tyne, West also asked various questions about the person to whom Wytch Farm would be sold. Would it be sold to anyone? Would it be sold to an asset stripper? Would it be sold to one of Sir Charles Clore's companies? The hon. Gentleman is living somewhat in the past, as Sir Charles Clore has long passed away as the demon figure of the Left. We shall use precisely the same criteria as those we would use in allocating a licence in the North Sea. As the right hon. Gentleman knows, those criteria are not published, but they take into account the track record and suitability of applicants. We shall have regard to the general suitability of anyone to whom the licence may be assigned.

My hon. Friend the Member for Dorset, South (Viscount Cranborne) referred to the care that the Gas Corporation has taken of the environment. I agree that the Gas Corporation has done an extraordinarily good job in looking after the environment around Wytch Farm. There is no reason for anyone to suppose that private sector companies interested in buying the field will not be equally concerned about doing a good job on the environment; and we can take that into consideration.

There has been a vast amount of heat generated in the debate, but the hon. Member for Merthyr Tydfil (Mr. Rowlands) overstated his case that no good reason has been given for a gas utility still to be involved in oil development on the scale that it is. That was a doubt that the Labour Government had—

Mr. Rowlands


Mr. Lamont

It is all very well for the hon. Gentleman to moan about it, but it is plain from the legislation that the Labour Government thought that there were doubts about the Gas Corporation being involved in oil development. At a time when there is restraint and pressure on public expenditure, all our constituencies have claims for schools, projects and suffer a shortage of facilities. Every hon. Member is under pressure in his constituency. It is commonsense that the Government should raise money that can be used for a thousand good purposes.

As my hon. Friend the Member for Mid-Sussex (Mr. Renton) said, there is no reason why transferring an oilfield from the public to the private sector should be remotely described as asset-stripping. It is still available for the community at large and for the benefit of the country. My hon. Friend was correct when he said that there is no reason why anyone should conclude that the Gas Corporation would get a bad price because this is a forced sale. Many companies are interested in buying the field and the price, as my hon. Friend said, will take into account the uncertainties. As he said the price may turn out to be better than the value of the field.

My hon. Friend the Member for Mid-Sussex said that we should go further and bring private capital into other areas of the BGC. I referred to plans that we have in the energy sector, which is, and should be, the biggest contributor to the Government's privatisation programme. As I have said, we intend to pursue the idea of a separate subsidiary with private capital in it for the oil interests of the cororation. That is an important and valuable step forward in the Government's commitment to rolling back the public sector, improving competition and furthering our programme of lessening the influence of the public sector.

11.50 pm
Mr. Rowlands

The Under-Secretary and those Conservative Members who have spoken from behind him have given no good reasons why a very successful joint enterprise of public and private money—British Gas and British Petroleum—which has developed one of the most successful onshore fields in Britain should now be broken up and destroyed, except for purely ideological party reasons as stated by the Under-Secretary.

The hon. Member for Mid-Sussex (Mr. Renton) made some interesting and thoughtful remarks. There is a profound difference between the possibility of selling shares to people in companies and an asset-stripping exercise of the kind that is being imposed. [Interruption.] It is an asset-stripping exercise for two reasons. First, the enterprise is being taken away from those who have made it the success that it is, and there is no suggestion—

Mr. Norman Lamont

Will the hon. Gentleman give way?

Mr. Rowlands

No, because I have only three or four minutes.

The enterprise is being taken away from those who have made it the most successful enterprise imaginable, a successful oilfield. Secondly, there are sufficient grounds to suspect that it will be sold at a price that is far lower than its true potential.

Mr. Norman Lamont

Will the hon. Gentleman give way?

Mr. Rowlands

No. The Minister has had his few minutes. Perhaps he will let me have mine.

Secondly, the Under-Secretary has stated that he does not have power under this direction either to force the time at which the BGC sells this asset or the manner in which it sells it. He used the phrase "We would use our powers to ensure who bought it." Under this direction, he has no such powers. The BGC is the only organisation or corporation that can dispose of this asset.

The Government have not acquired these assets. They have no control over the timing or manner of their disposal. It is perfectly reasonable for British Gas to consider a deal in which it could exchange these assets with an oil company in return for gas production assets or other gas assets in the North Sea, which would be consistent with what Conservative Members claim to be the practical objective of the direction.

Finally, crocodile tears have been shed by the Undersecretary and others, saying that all that they want this money for is to help the unemployed. In fact, all that they want the money for is further to reduce the PSBR, which will help none of the unemployed and no one in the social services or local communities.

On both philosophical and practical grounds, we reject this direction. It will destroy a very successful joint enterprise between the public and private sectors. I have no hesitation in asking all of my right hon. and hon. Friends to vote for the prayer.

Question put:

The House divided: Ayes 227, Noes 289.

Division No. 290] [11.55
Adams, Allen Ewing, Harry
Allaun, Frank Faulds, Andrew
Anderson, Donald Field, Frank
Archer, Rt Hon Peter Flannery, Martin
Ashley, Rt Hon Jack Fletcher, Ted (Darlington)
Ashton, Joe Foot, Rt Hon Michael
Atkinson, N.(H'gey,) Ford, Ben
Bagier, Gordon A.T. Forrester, John
Barnett, Guy (Greenwich) Foster, Derek
Barnett, Rt Hon Joel (H'wd) Foulkes, George
Beith, A. J. Fraser, J. (Lamb'th, N'w'd)
Bennett, Andrew(St'kp't N) Freeson, Rt Hon Reginald
Bidwell, Sydney Garrett, John (Norwich S)
Booth, Rt Hon Albert Garrett, W. E. (Wallsend)
Boothroyd, Miss Betty George, Bruce
Bray, Dr Jeremy Gilbert, Rt Hon Dr John
Brown, Hugh D. (Proven) Golding, John
Brown, R. C. (N'castle W) Gourlay, Harry
Brown, Ronald W. (H'ckn'y S) Graham, Ted
Buchan, Norman Grant, George (Morpeth)
Callaghan, Jim (Midd't'n & P) Grant, John (Islington C)
Campbell, Ian Hamilton, James (Bothwell)
Campbell-Savours, Dale Hamilton, W. W. (C'tral Fife)
Cant, R. B. Hardy, Peter
Carter-Jones, Lewis Harrison, Rt Hon Walter
Cartwright, John Hattersley, Rt Hon Roy
Clark, Dr David (S Shields) Healey, Rt Hon Denis
Cocks, Rt Hon M. (B'stol S) Hogg, N. (E Dunb't'nshire)
Cohen, Stanley Holland, S. (L'b'th, Vauxh'll)
Coleman, Donald Home Robertson, John
Concannon, Rt Hon J. D, Homewood, William
Conlan, Bernard Hooley, Frank
Cook, Robin F. Howell, Rt Hon D.
Cowans, Harry Hoyle, Douglas
Cox, T. (W'dsw'th, Toot'g) Huckfield, Les
Crowther, J. S. Hughes, Mark (Durham)
Cryer, Bob Hughes, Robert (Aberdeen N)
Cunliffe, Lawrence Hughes, Roy (Newport)
Cunningham, G. (Islington S) Jay, Rt Hon Douglas
Cunningham, Dr J. (W'h'n) John, Brynmor
Dalyell, Tam Johnson, James (Hull West)
Davidson, Arthur Johnson, Walter (Derby S)
Davies, Rt Hon Denzil (L'Ili) Jones, Rt Hon Alec (Rh'dda)
Davis, Clinton (Hackney C) Jones, Barry (East Flint)
Davis, T. (B'ham, Stechf'd) Jones, Dan (Burnley)
Deakins, Eric Kaufman, Rt Hon Gerald
Dean, Joseph (Leeds West) Kerr, Russell
Dempsey, James Kilroy-Silk, Robert
Dewar, Donald Kinnock, Neil
Dixon, Donald Lambie, David
Dobson, Frank Lamond, James
Dormand, Jack Leadbitter, Ted
Douglas-Mann, Bruce Leighton, Ronald
Dubs, Alfred Lestor, Miss Joan
Duffy, A. E. P. Lewis, Arthur (N'ham NW)
Dunn, James A. Litherland, Robert
Dunwoody, Hon Mrs G. Lofthouse, Geoffrey
Eadie, Alex Lyons, Edward (Bradf'd W)
Eastham, Ken Mabon, Rt Hon Dr J. Dickson
Ellis, R. (NE D'bysh're) McCartney, Hugh
Ellis, Tom (Wrexham) McDonald, Dr Oonagh
English, Michael McElhone, Frank
Ennals, Rt Hon David McGuire, Michael (Ince)
Evans, loan (Aberdare) McKelvey, William
Evans, John (Newton) Maclennan, Robert
McNally, Thomas Sandelson, Neville
McNamara, Kevin Sever, John
McWilliam, John Sheerman, Barry
Magee, Bryan Sheldon, Rt Hon R.
Marks, Kenneth Shore, Rt Hon Peter
Marshall, Dr Edmund (Goole) Short, Mrs Renée
Marshall, Jim (Leicester S) Silkin, Rt Hon J. (Deptford)
Martin, M(G'gow S'burn) Silkin, Rt Hon S. C. (Dulwich)
Mason, Rt Hon Roy Silverman, Julius
Maynard, Miss Joan Skinner, Dennis
Mikardo, Ian Snape, Peter
Millan, Rt Hon Bruce Soley, Clive
Miller, Dr M. S. (E Kilbride) Spearing, Nigel
Mitchell, Austin (Grimsby) Spriggs, Leslie
Mitchell, R. C. (Soton Itchen) Steel, Rt Hon David
Morris, Rt Hon A. (W'shawe) Stoddart, David
Morris, Rt Hon C. (O'shaw) Stott, Roger
Morris, Rt Hon J. (Aberavon) Strang, Gavin
Morton, George Straw, Jack
Moyle, Rt Hon Roland Summerskill, Hon Dr Shirley
Mulley, Rt Hon Frederick Taylor, Mrs Ann (Bolton W)
Newens, Stanley Thomas, Dafydd (Merioneth)
Oakes, Rt Hon Gordon Thomas, Jeffrey (Abertillery)
Ogden, Eric Thomas, Mike (Newcastle E)
O'Halloran, Michael Thomas, Dr R.(Carmarthen)
O'Neill, Martin Tilley, John
Owen, Rt Hon Dr David Tinn, James
Palmer, Arthur Torney, Tom
Park, George Urwin, Rt Hon Tom
Parker, John Varley, Rt Hon Eric G.
Pendry, Tom Wainwright, E.(Dearne V)
Penhaligon, David Walker, Rt Hon H.(D'caster)
Powell, Raymond (Ogmore) Watkins, David
Prescott, John Weetch, Ken
Price, C. (Lewisham W) Welsh, Michael
Radice, Giles White, J. (G'gow Pollok)
Rees, Rt Hon M (Leeds S) Whitlock, William
Richardson, Jo Willey, Rt Hon Frederick
Roberts, Albert (Normanton) Williams, Rt Hon A.(S'sea W)
Roberts, Allan (Bootle) Wilson, William (C'try SE)
Roberts, Ernest (Hackney N) Winnick, David
Roberts, Gwilym (Cannock) Woodall, Alec
Robertson, George Woolmer, Kenneth
Robinson, G. (Coventry NW) Wrigglesworth, Ian
Rodgers, Rt Hon William Wright, Sheila
Rooker, J. W. Young, David (Bolton E)
Roper, John
Ross, Ernest (Dundee West) Tellers for the Ayes:
Ross, Stephen (Isle of Wight) Mr. Frank Haynes and
Rowlands, Ted Mr. Allen McKay.
Ryman, John
Adley, Robert Boyson, Dr Rhodes
Aitken, Jonathan Bright, Graham
Alexander, Richard Brinton, Tim
Amery, Rt Hon Julian Brittan, Leon
Arnold, Tom Brooke, Hon Peter
Aspinwall, Jack Brotherton, Michael
Atkins, Rt Hon H.(S'thorne) Brown, Michael(Brigg & Sc'n)
Atkins, Robert(Preston N) Browne, John (Winchester)
Atkinson, David (B'm'th,E) Bruce-Gardyne, John
Baker, Kenneth(St.M'bone) Bryan, Sir Paul
Baker, Nicholas (N Dorset) Buchanan-Smith, Alick
Banks, Robert Buck, Antony
Beaumont-Dark, Anthony Budgen, Nick
Bendall, Vivian Bulmer, Esmond
Benyon, Thomas (A'don) Butcher, John
Benyon, W. (Buckingham) Butler, Hon Adam
Best, Keith Cadbury, Jocelyn
Bevan, David Gilroy Carlisle, John (Luton West)
Biffen, Rt Hon John Carlisle, Kenneth (Lincoln)
Biggs-Davison, John Chalker, Mrs. Lynda
Blackburn, John Chapman, Sydney
Blaker, Peter Churchill, W. S.
Body, Richard Clark, Hon A. (Plym'th, S'n)
Bonsor, Sir Nicholas Clark, Sir W. (Croydon S)
Boscawen, Hon Robert Clarke, Kenneth (Rushcliffe)
Bottomley, Peter (W'wich W) Clegg, Sir Walter
Bowden, Andrew Cockeram, Eric
Colvin, Michael Joseph, Rt Hon Sir Keith
Cope, John Kaberry, Sir Donald
Corrie, John Kellett-Bowman, Mrs Elaine
Costain, Sir Albert Kershaw, Anthony
Cranborne, Viscount King, Rt Hon Tom
Crouch, David Kitson, Sir Timothy
Dean, Paul (North Somerset) Knight, Mrs Jill
Dorrell, Stephen Knox, David
Douglas-Hamilton, Lord J. Lamont, Norman
Dover, Denshore Lang, Ian
du Cann, Rt Hon Edward Langford-Holt, Sir John
Dunn, Robert (Dartford) Latham, Michael
Durant, Tony Lawrence, Ivan
Dykes, Hugh Lawson, Rt Hon Nigel
Eden, Rt Hon Sir John Lee, John
Eggar, Tim Lennox-Boyd, Hon Mark
Elliott, Sir William Lester, Jim (Beeston)
Emery, Peter Lloyd, Ian (Havant & W'loo)
Eyre, Reginald Lloyd, Peter (Fareham)
Fairbairn, Nicholas Loveridge, John
Fairgrieve, Russell Luce, Richard
Faith, Mrs Sheila Lyell, Nicholas
Farr, John McCrindle, Robert
Fell, Anthony Macfarlane, Neil
Fenner, Mrs Peggy MacGregor, John
Finsberg, Geoffrey MacKay, John (Argyll)
Fisher, Sir Nigel McNair-Wilson, M. (N bury)
Fletcher, A. (Ed'nb'gh N) McNair-Wilson, P. (New F'st)
Fletcher-Cooke, Sir Charles McQuarrie, Albert
Fookes, Miss Janet Madel, David
Forman, Nigel Major, John
Fowler, Rt Hon Norman Marland, Paul
Fox, Marcus Marlow, Tony
Fraser, Peter (South Angus) Marshall, Michael (Arundel)
Fry, Peter Marten, Neil (Banbury)
Galbraith, Hon T. G. D. Mates, Michael
Gardiner, George (Reigate) Maude, Rt Hon Sir Angus
Gardner, Edward (S Fylde) Mawby, Ray
Garel-Jones, Tristan Mawhinney, Dr Brian
Glyn, Dr Alan Maxwell-Hyslop, Robin
Goodhart, Philip Mellor, David
Goodhew, Victor Meyer, Sir Anthony
Goodlad, Alastair Miller, Hal (B'grove)
Gorst, John Mills, lain (Meriden)
Gower, Sir Raymond Mills, Peter (West Devon)
Grant, Anthony (Harrow C) Miscampbell, Norman
Gray, Hamish Mitchell, David (Basingstoke)
Greenway, Harry Moate, Roger
Grieve, Percy Monro, Hector
Griffiths, E.(B'y St. Edm'ds) Montgomery, Fergus
Griffiths, Peter Portsm'th N) Moore, John
Grist, Ian Morgan, Geraint
Grylls, Michael Mudd, David
Hamilton, Hon A. Murphy, Christopher
Hamilton, Michael (Salisbury) Myles, David
Hampson, Dr Keith Neale, Gerrard
Hannam, John Needham, Richard
Haselhurst, Alan Nelson, Anthony
Havers, Rt Hon Sir Michael Neubert, Michael
Hawkins, Paul Newton, Tony
Hawksley, Warren Normanton, Tom
Hayhoe, Barney Nott, Rt Hon John
Heddle, John Onslow, Cranley
Henderson, Barry Oppenheim, Rt Hon Mrs S.
Hicks, Robert Osborn, John
Higgins, Rt Hon Terence L. Page, John (Harrow, West)
Hill, James Page, Rt Hon Sir G. (Crosby)
Hogg, Hon Douglas (Gr'th'm) Page, Richard (SW Herts)
Holland, Philip (Carlton) Parkinson, Cecil
Hooson, Tom Parris, Matthew
Hordern, Peter Patten, Christopher (Bath)
Howell, Rt Hon D. (G'Idf'd) Patten, John (Oxford)
Howell, Ralph (N Norfolk) Percival, Sir Ian
Hunt, David (Wirral) Peyton, Rt Hon John
Hunt, John (Ravensbourne) Pink, R. Bonner
Hurd, Hon Douglas Pollock, Alexander
Jenkin, Rt Hon Patrick Porter, Barry
Jessel, Toby Prentice, Rt Hon Reg
Johnson Smith, Geoffrey Price, Sir David (Eastleigh)
Jopling, Rt Hon Michael Prior, Rt Hon James
Proctor, K. Harvey Tebbit, Norman
Pym, Rt Hon Francis Temple-Morris, Peter
Raison, Timothy Thomas, Rt Hon Peter
Rathbone, Tim Thompson, Donald
Rees, Peter (Dover and Deal) Thorne, Neil (Ilford South)
Rees-Davies, W. R. Thornton, Malcolm
Renton, Tim Townend, John (Bridlington)
Rhodes James, Robert Townsend, Cyril D, (B'heath)
Rhys Williams, Sir Brandon Trippier, David
Ridley, Hon Nicholas Trotter, Neville
Rifkind, Malcolm van Straubenzee, W. R.
Roberts, M. (Cardiff NW) Vaughan, Dr Gerard
Roberts, Wyn (Conway) Viggers, Peter
Rossi, Hugh Waddington, David
Rost, Peter Wakeham, John
Sainsbury, Hon Timothy Waldegrave, Hon William
Shaw, Giles (Pudsey) Walker, Rt Hon P.(W'cester)
Shaw, Michael (Scarborough) Wall, Patrick
Shepherd, Colin (Hereford) Waller, Gary
Shepherd, Richard Ward, John
Shersby, Michael Warren, Kenneth
Silvester, Fred Watson, John
Sims, Roger Wells, John (Maidstone)
Skeet, T. H. H. Wells, Bowen
Speed, Keith Wheeler, John
Speller, Tony Whitelaw, Rt Hon William
Spence, John Whitney, Raymond
Spicer, Jim (West Dorset) Wickenden, Keith
Spicer, Michael (S Worcs) Wiggin, Jerry
Sproat, lain Wilkinson, John
Squire, Robin Williams, D.(Montgomery)
Stainton, Keith Winterton, Nicholas
Stanbrook, Ivor Wolfson, Mark
Steen, Anthony Young, Sir George (Acton)
Stewart, Ian (Hitchin) Younger, Rt Hon George
Stewart, A.(E Renfrewshire)
Stokes, John Tellers for the Noes:
Stradling Thomas, J. Mr. Spencer Le Marchant and
Tapsell, Peter Mr. Carol Mather.
Taylor, Teddy (S'end E)

Question accordingly negatived.

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