HC Deb 19 October 1981 vol 10 cc21-3

The following Question stood upon the Order Paper:

7. Mr. Peter Viggers (Gosport)

To ask the Secretary of State for Energy if he will make a statement on the divestment of certain assets of the British Gas Corporation.

The Secretary of State for Energy (Mr. Nigel Lawson)

The House will be aware that I issued a direction last week under section 7 of the Gas Act instructing the British Gas Corporation to dispose of its stake in the Wytch Farm onshore oilfield. This needs to be seen in the context of the Government's overall plans for privatisation and competition in the oil and gas industries.

First, the Government propose to introduce legislation to allow the transfer—I would hope next year—of the entire oil-producing business of the British National Oil Corporation to the private sector, with the State retaining only a minority stake.

Secondly, the Government will also be seeking powers to privatise the British Gas Corporation's substantial offshore oil business. These powers will also enable the Gas Corporation to be required to dispose of its showrooms. As we have made clear, it is essential that safety standards are fully maintained. This will require complex safety legislation for which there is unlikely to be time during the coming Session of Parliament. However, the Government remain fully committed to breaking this monopoly as soon as practicable.

Thirdly, the Government also intend to introduce measures to abolish the Gas Corporation's unique statutory rights over both the purchase of gas and its sale to industry in particular. These outdated privileges have acted as a serious disincentive to the exploration and development of gas supplies on the United Kingdom continental shelf with the result that British industry has not had all the gas it needs. The measures to be introduced, which will include effective private access to the Gas Corporation's pipeline system, will for the first time introduce real competition into the market for gas.

Mr. Viggers

Does my right hon. Friend accept that his proposals will be enthusiastically supported on the Conservative Benches and, indeed, in the country because in a high risk industry State monopoly and State investment are not in the best interests of the consumer? Can my right hon. Friend be more specific about the sums of money involved and the timing?

Mr. Lawson

Substantial sums of money are involved. Indeed, I believe that it is no exaggeration to say that the measures that I have outlined add up to the biggest programme of privatisation to come before Parliament. In addition, the measures will introduce much-needed and long-overdue competition where it matters most. I share my hon. Friend's view that the proposals will be good for British industry, for the successful development of our oil and gas industries and, above all, for the nation.

Dr. David Owen (Plymouth, Devonport)

Is the right hon. Gentleman aware that his statement will be seen as pure party political dogma? Does his decision to allow the BNOC to have a minority stake mean that he is prepared to renegotiate all the participation agreements? If he has to reopen the negotiations on the participation agreements how will he safeguard the 51 per cent. of oil previously agreed? Now that the BNOC is to be a minority shareholder, is he certain that that will not reopen the whole question of the United Kingdom continental shelf rights? Instead of taking comfort in safety regulations, would it not be preferable to recognise that the wrong decision was made about gas? Is the right hon. Gentleman aware that the proposal will be construed as the Government bending to industrial blackmail?

Mr. Lawson

The right hon. Gentleman clearly misunderstood what I said about the participation agreements. I believe that I stated clearly that the BNOC's oil-producing business—the upstream business—was to be privatised but that its trading operations were to remain 100 per cent. State-owned, so there will be no impact on the participation agreements. With regard to his question about gas, I am sorry to see that even though the right hon. Gentleman has switched parties he is still in favour of monopoly.

Several Hon. Members

rose—

Mr. Speaker

Order. I propose to call two more hon. Members from either side of the House. This is a reply to a question, not a statement.

Sir Charles Fletcher-Cooke (Darwen)

Will my right hon. Friend confirm that there is to be no interference with or reduction in the rights of landowners at Wytch farm and that their present and future interests are fully secured?

Mr. Lawson

There is no reason to assume that the rights of landowners will be affected in any way.

Mr. Merlyn Rees (Leeds, South)

Is the Secretary of State aware that this is no way to put to the House a fundamental change of policy and that there must be a procedure to enable us to find out what the Government are up to? Is the House aware that the Government are once again showing, as they do on all occasions, that they are anti-public enterprise, even when, on any criteria, such enterprises have proved successful in other parts of the world?

What legislation will be required? I hope that it will not be such as to give a Secretary of State powers to act without parliamentary approval, as appears to be suggested in the proposals.

Is the right hon. Gentleman really saying that a private company will increase the supply of gas and supply it at a cheaper rate than does the British Gas Corporation? Finally, will the right hon. Gentleman accept that we are at least grateful that he has announced the death of the proposal to sell gas showrooms?

Mr. Lawson

The right hon. Gentleman huffs and puffs in his customary way. There is every reason to suppose that under this freedom more gas will be developed and brought ashore which will be for the good of British industry. There is a shortage of gas. It is the only fuel of which there is a shortage. That shortage will be ended.

There will be ample opportunity to debate the details of the legislation. The Queen's Speech, which will contain the proposals, will be debated in the normal way. When the legislation comes forward it will be debated in detail in the House, as is right and proper. I felt that it was for the convenience of, and as a courtesy to, the House that at the first available opportunity after the Summer Recess I should say what we intend to do.

Several Hon. Members

rose—

Mr. Speaker

Order. As the House knows, I do not usually count the Front Bench when I say that I shall call two further Members from either side. I usually call the Front Bench at the end. I shall therefore call two more hon. Members from one side and one from the other.

Mr. Tim Eggar (Enfield, North)

I congratulate my right hon. Friend on his bold and imaginative statement, which was long overdue. Will he confirm that on the whole, the British Gas Corporation's monopoly of distribution and purchase has done untold harm to the economy over a number of years? Will my right hon. Friend go further than his statement and confirm that he will bring in legislation to ensure that he can introduce private equity into the British Gas Corporation in its new state?

Mr. Lawson

I am grateful to my hon. Friend for his kind words. I believe that the monopoly has done harm to this country, particularly in recent years. That is why I propose the changes that I have outlined. However, I think that these proposals are substantial and go as far as we should go. It is not my intention to introduce legislation to have direct private equity participation in the public utility that is the British Gas Corporation.

Mr. David Penhaligon (Truro)

Does the Secretary of State believe that the Wytch field would have been developed earlier, or at all, if the proposals that he has now made had been implemented a decade ago?

Mr. Lawson

The straight answer is that I do not know. I do, however, know that taking Britain's new-found North Sea oil industry as a whole, it was private enterprise that made it the success story that it is. It is private enterprise that is the key to its continued success.

Mr. Peter Hardy (Rother Valley)

Will the Secretary of State accept that what he has announced is such a sweeping betrayal of the national interest that we should debate the matter now rather than wait for some incidental interventions in the Queen's Speech debate next month?

With regard to showrooms, will the right hon. Gentleman say what action he is taking about those companies that imported appliances in anticipation of the divestment? These companies may have contributed to Conservative Party funds in anticipation of that divestment. Will he advise British Gas to tell importers to send the appliances back?

Mr. Lawson

The hon. Gentleman's crocodile tears in his last sentences are not intended, I believe, to be taken seriously. There will be ample opportunities for debate. It is uncharacteristic of the hon. Gentleman to be so impatient that he cannot wait for the Queen's Speech, which is not so far distant.