Oil and Gas (Enterprise) Bill

HC Deb 01 April 1982 vol 21 cc449-91

[2ND ALLOTTED DAY]

3.53 pm

The Minister of State, Department of Energy (Mr. Hamish Gray)

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

This is a moment for which we have waited for more than 114 hours of serious and sometimes even tedious debate. We are now reaching the conclusion of this important part of the Government's legislative programme. We all know that it is an Opposition's privilege to be negative. Opposition Members are entitled to carp and criticise as much as they like and they can sometimes convince those—

Mr. Merlyn Rees (Leeds, South)

rose—

Mr. Gray

Perhaps the right hon. Gentleman will allow me to develop my argument a little.

Mr. Rees

On a point of order, Mr. Speaker. We have now reached the Third reading of a Bill that has detained us for many hours. We understand why the Secretary of State has not been with us on many occasions, but should he not be present now?

Mr. Gray

Throughout our deliberations the right hon. Gentleman has been extremely understanding. My right hon. Friend the Secretary of State has many important duties to perform—[Interruption.]—and it is appropriate that he should seize the opportunity of having the last word on the Bill when he concludes the debate. Yesterday the Opposition could not even manage double figures. It is hardly appropriate for the Opposition to criticise my right hon. Friend when their Members have absented themselves from the Chamber for hour after hour. We do not blame the Opposition. We appreciate that they have their problems.

Let us return to the much more important subject of the Bill's merits and contents and of the opportunities that it will provide. Throughout the Committee stage constructive contributions came only from Conservative Members. We heard little more than carping criticism from the Opposition and we never heard a constructive proposal from them. I am glad to see the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) in the Chamber. He made some useful contributions. At least he has been constructive, and that is something.

Let us consider our achievements in relation to the British National Oil Corporation. Throughout our long debates there were far too many misconceptions about the Government's plans for BNOC. Some were genuine misunderstandings, others were no more than the Opposition trying to scaremonger and create apprehension in the minds of the public. However, we are not misled or deterred in any way by such things.

I should like to put the record straight. We are not abolishing BNOC. From the outset we consistently stated that the corporation would remain in existence under State control. We said that its primary role would be to trade in participation oil. That represents an important contribution to the security of the nation's oil supplies. We are not giving up our controls or regulatory powers over the North Sea. They will be unaffected by the creation Britoil. The independent BNOC will be completely separate from Britoil. BNOC will continue in being, ensuring that the national interest is properly safeguarded.

We are not, in any way, engaged in asset-stripping. BNOC's oil-producing business will be transferred to Britoil as a going concern. There is no question of BNOC's assets being sold off individually. We are not leaving Britoil at the mercy of any creditors who may wish to take it over. The articles will contain effective safeguards for Britoil's independence.

The Opposition's pathetic attempt yesterday—after so much song and dance during the weeks before—to criticise the articles serves only to show the care that we took to provide articles that adequately cover the situation. That was highlighted by the debate on new clause 1. The articles will contain effective safeguards for Britoil's independence and the safeguards will be triggered if there is an attempt to take over voting control of the company or to control the Britoil board or its composition.

Our plans represent an imaginative approach to the problems of a public-sector oil corporation and they should command the support of all who wish to reverse the steady expansion of the State in our national life.

Mr. Dick Douglas (Dunfermline)

The hon. Gentleman will recall that I asked yesterday whether the articles of association had been referred to the council of the Stock Exchange. The answer given was in the affirmative. May we have the council's comments on the articles? Are they available to the House?

Mr. Gray

The hon. Gentleman has been in the House for as long as I have. He knows perfectly well that such correspondence and exchanges of views are confidential. Such information is not available to the House.

I deal next with the Government's proposals for the British Gas Corporation. At this stage in the Bill's progress through the House it might be appropriate for me to suggest that the time is ripe for others to come to terms with the provisions that we are proposing. One can admire the putting up of a good fight, but not the bad loser—not that I would ever suggest that Labour Members would be bad losers. They cannot be looking forward to the next election with any enthusiasm—that is for sure.

Mr. Edward Rowlands (Merthyr Tydfil)

Nor are the Tories.

Mr. Gray

We are a philosophical party. We take things as they come. We do not get all uptight in the way that Labour Members do.

No one should doubt the Government's resolve to implement their proposals for the gas industry. No one should doubt that in implementing the proposals the Government expect—they are entitled to expect—the full co-operation of those who are involved.

We have described the gas measures to the House on a number of occasions. I should hesitate to do so again were it not for the misconceived criticisms still being put about in some quarters. There are general powers of disposal in respect of the British Gas Corporation's assets. We have made it clear that in the first instance we intend to use those to privatise the British Gas Corporation's interests in offshore oilfields.

In Committee, my right hon. Friend the Secretary of State gave the assurance that he would not direct BGC, under clause 11(1), to dispose of assets required for the performance of the corporation's statutory obligations to supply on request under schedule 4 to the Gas Act 1972. I want there to be no misunderstanding. At present the Government have no plans to require the corporation to dispose of its interests in gas fields or to dispose of its transmission and distribution pipelines.

Competition will open up new opportunities for industrial and commercial concerns, on which success our economy depends. It is the larger industrial and commercial consumers who expect to be the purchasers of the majority of private gas supplies. However, the Bill also permits private supplies to smaller consumers, with my right hon. Friend's consent. We have made it clear that the purpose of that consent requirement is to permit a check to be made on the adequacy of the proposed safety and emergency arrangements.

The Government also said in Committee that they accept the need for private gas in the British Gas Corporation's pipelines to fall within specifications which do not prevent the corporation from complying with its obligations. Those are proposals which are workable and have full regard to safety.

Mr. Tam Dalyell (West Lothian)

After yesterday, may we take it that the concept of non-premium gas has gone the way of the dodo?

Mr. Gray

I do not think that the hon. Gentleman can make that assumption at all. That was made perfectly clear when my hon. Friend the Under-Secretary spoke on the gas clauses yesterday.

Part 4 deals with the important subject of offshore safety. It is probably the only part of the Bill that is wholly non-political. For that reason, it probably provided us with the best debates throughout our progress in Committee. The Committee spent a considerable amount of time talking about offshore safety and the proposals that had been laid before me by Labour Members, in conjunction with the unions. The general approach was constructive and we made a lot of progress in our thinking along those lines.

I recognise that the industry has invested considerable resources in safety. However, no matter how high the standard of self-regulation by the industry, no Government can abrogate their responsibility for the safety of workers offshore. For example, it would be completely unacceptable if workers housed on accommodation units did not have the same degree of protection as they receive when on drilling and production platforms. It is that thinking that underpins the proposals in clause 23. My Department is discussing with the United Kingdom Offshore Operators Association the application to Hotels of the various regulations made under the 1971 Act and the time scale for their implementation.

The majority of the Burgoyne committee's recommendations concerned points of technical detail on a wide range of offshore operations. Nothing proposed in the Bill will prevent the recommendations from being put into effect. It may be helpful if I review briefly the position regarding the implementation of the Burgoyne recommendations which concern the House and which we have debated and exchanged views upon.

Particular interest has been expressed for the safety of those who work offshore, and that is proper and understandable. Frequent reference has been made to the proposals contained in the North Sea oil charter prepared by the joint parliamentary union offshore group. I discussed the proposals with the group in a constructive meeting on 27 January and subsequently sent the group a written commentary on the proposals contained in the charter. I stand ready to have further discussions with the group when its proposals assume definitive form. As I made clear to the hon. Member for Kingston upon Hull, East (Mr. Prestcott) last night, I look forward to discussing the progress that has been made after the group has had consultations with other Departments.

The question has been raised of the effectiveness of the sanctions available to Ministers to deal with companies with unsatisfactory safety records. Some Labour Members have advocated having the power to ban such companies outright from operating on the United Kingdom continental shelf. Clearly, we would all seek to circumscribe the activities of cowboy companies with a proven record of failure to implement safety regulations. I am persuaded that the combined impact of the powers currently available and the major incentive to the companies themselves implicit in the existence and exercises of those powers, constitute a powerful deterrent against any such rogue companies. I am not persuaded that a total ban is necessary.

As I explained to the House last night, legislation alone cannot ensure safety in the North Sea. A considerable number of factors influence that, not least the training of personnel before they go offshore and the attitude of the companies that are operating in the North Sea. Probably the most important factor of all is the general attitude of the workers offshore—the constant awareness of he necessity for safety and the application of the guidelines that are given in every case.

Finally, hon. Members have underlined the need for the safety regime to keep abreast of technological developments. The entire saga of the North Sea has been characterised by the opening up of new technological frontiers. The application of advancing technology to safety is no exception. Indeed, successive Governments have striven to develop an effective safety regime, flexible enough to take account of new technologies and new situations. The proposals contained in the Bill are entirely consistent with that approach.

The Bill reflects the Government's total commitment. in common with that of their predecessors, to ensure that every necessary step is taken to minimise the risks attendant upon activities in the hostile offshore environment. Clearly we should not delude ourselves into thinking that activities in such an environment can be rendered entirely risk free with legislation or without legislation—certainly not merely by regulation and administration.

We have an obligation to the offshore work force to establish and maintain the best possible safety framework within which offshore oil and gas operations may be carried out, and the Bill reflects the Government's unqualified acceptance of that obligation.

I believe that the measure that we have piloted through the House will be of great benefit not only to the nation but to everyone who is prepared to participate in the resultant Britoil company.

After many hours of serious debate, perhaps I shall be permitted a moment of levity—

Mr. Dalyell

rose—

Mr. Gray

I shall not give way just now. It may well be that what I am about to say is not within the knowledge of the hon. Member for West Lothian (Mr. Dalyell)—

Mr. Dalyell

Before the Minister indulges in his moment of levity, perhaps he will comment on the speech made yesterday by the hon. Member for Derbyshire, South-East (Mr. Rost), who pointed out that the underwriting fees for Amersham, British Telecom, British Aerospace and Cable and Wireless came to £21.3 million. That was not denied. Before we come to the jokes, will the Minister say whether the £21.3 million is the Government's figure?

Mr. Gray

The hon. Member has a happy knack of pouring cold water on anything. That has nothing whatever to do with the legislation that we are discussing.

I was about to comment on the Welshmen who led for the Opposition. It is unusual to have two Welshmen leading for the Opposition. It will not be lost on my Scottish Friends that those two hon. Members made no reference whatever to clause 34. That is not a particularly important clause, but is has been indelibly imprinted on the minds of Welshmen since a week last Saturday. It is a good job that the clause does not contain a subsection (18), otherwise we might well have discussed such a subsection for a long time.

I pay tribute to the right hon. Member for Leeds, South (Mr. Rees) and his hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands), who have co-operated to the full throughout our deliberations. We now look to see whether Labour Members, in their vigorous opposition to the Bill will be able to keep this Third Reading debate going on until 7 o'clock. I commend the Bill to the House.

4.13 pm

Mr. Merlyn Rees (Leeds, South)

The Bill has been with us since the Queen's Speech. We have had a pre-statement, a debate in reply to the Loyal Address, a Second Reading debate and a guillotine motion. It is an important piece of legislation affecting BNOC, gas and safety in the North Sea. It would have been better if on Third Reading the Secretary of State had opened the debate, but I believe that the right hon. Gentleman will reply. I simply make the point that it would have been better had he opened the debate—

Mr. Rowlands

The tradition is that the Secretary of State opens.

Mr. Rees

Certain standards are involved in this, and what I have just said relates to that and nothing more.

It would have been better had the Bill been handled differently at the beginning. We suggested a Select Committee-type approach. Despite what the Minister of State has said today, it was a good Committee. We made the most of it and the Bill was treated in a sensible fashion. Apart from one occasion upstairs and one today, the Minister of State provided us with much valuable information.

On Second Reading, eight promises were made about what would happen on Report. This is not the appropriate time to deal with them, but it seems that four have not been dealt with. Perhaps we can have a letter about that.

We put forward ideas arising from the charter on safety. That was debated last night, and everyone was self-congratulatory about it. We received certain assurances and we shall return to those in the future. Above all, we shall seek to put overall responsibility for safety into the hands of the Health and Safety Commission. We shall also return to the need to control the entry of foreign workers to our rigs. I explained why last night.

We are still convinced that the Bill is misconceived in respect of BNOC. It is wrong to split the corporation into production and trading arms. An integrated company is necessary, and that view is supported by many people in the industry. Although I do not want it done at all, it would have been better to have retained an integrated industry and privatised generally rather than to have split it up in the way proposed—[HON. MEMBERS: "Oh".] I am not advocating that; I am merely saying that splitting it in this way is a fundamental error.

On the production side, there is no monopoly. BNOC produces about 7 per cent. of output from the North Sea and does so successfully. We shall seek to return to an integrated company. There is need for a national company that can talk to foreign companies, and BNOC could talk from strength with such companies.

We shall also return to the role of Government directors, which we discussed yesterday, because I do not believe that any Government have got the role right.

Just as nationalisation in the 1940s was not the end of that story, neither is privatisation in the 1980s the end of this story. One reason is that the alternative economic strategy that the Opposition are developing—[Laughter.] This is a serious point. The ability of the hon. Member for Enfield, North (Mr. Eggar) is such that he would make a good director of a Government company. What is done in respect of a national investment bank or even under the 1972 Act, where Government funds go into companies, is the opposite of privatisation. It is privatisation in reverse. In my view, we must be clearer about the terms of reference of these companies and the role of Government directors.

We are intrigued with the Secretary of State's method of acting through the single share concept. I think that my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) called it the "golden share". Some people are concerned about its propriety. In any event, what a system for the future! All we shall need is an Articles of Association (Enterprise) Bill. We need only include one share that is owned by the Government, and the Government may do that whenever they wish. If that happens, I hope that the Conservative Party will not grumble, because the one-share concept is capable of being developed in other ways. Apparently the Stock Exchange did not grumble. Therefore, it would not be able to grumble if we were to do what I have suggested.

In the 1940s and 1950s, we had Morrisonian nationalisation. Who knows, perhaps we shall have Lawsonite public ownership as a result of the single share concept.

I hope that the lawyers in the other place will look at this matter carefully. The view has been expressed that there is something fundamentally wrong with the single share, given the concept of a joint stock limited liability company and the responsibilities of the firm.

For the future, although there may be some sense in the Government having shares in firms as a general principle, nothing that has been done invalidates our opposition to the breakup of BNOC. There remains a large private sector, consisting mainly of multinational oil companies, and a State company, like Statoil in Norway, is needed to play a role in the North Sea and in the other seas around our coasts.

Despite the brave words of the Secretary of State, there is concern about the methods that are to be used for the sale of BNOC. Last night we learnt that the first that we shall hear about the sale of BNOC will be outside, not in the House. There is to be no report to the House of Commons about the method. So much for parliamentary accountability. If there is to be a repeat of Amersham International, it will be an affront to the country. New methods of selling the company should be found. Last night, the Minister called in aid the sensible words of the hon. Member for Derbyshire, South-East (Mr. Rost), and said that the hon. Member's suggestions would be looked at. So perhaps the method of sale will be different from that of Amersham International. In any event, the House of Commons is not to be told about the method that is to be used. There are other aspects of the Bill, such as the sale of subsidiaries, on which again there is to be no reporting back to the House of Commons. If the Government use the same methods as they used with Amersham International, they will not be able this time to say that it was a good method, particularly as the amount of money involved in BNOC is much larger.

On gas, we oppose the blanket powers given by the Government to sell off the whole of the gas corporation. We are told that the sale will involve the oil operations and the sale of gas showrooms. We shall allow the gas corporation to produce and sell oil, and we shall stop the sale of the showrooms. It does not mean that, in its accounting procedures, the gas corporation should not identify the costs and revenues of the showrooms, as was recommended in the Monopolies and Mergers Commission report. In any case, nothing will happen to the gas showrooms until the next Parliament.

The part of the Bill which forces the gas corporation to carry the gas of private concerns is unclear and ill thought out. Despite the mythical Leicestershire village which was to be supplied with private gas, at least at the beginning, obviously the gas will be supplied mainly to industry. Even here, the oil companies are not jumping for joy. They have warned the Secretary of State—one has to read the papers to discover what is happening in this respect—that the new legislation could be a dead letter, and that potential customers have responded in a muted way. In private it is said that many industrialists doubt whether the Bill will have much of an effect, at least in the next 10 years. There are great problems of logistics, and those industrialists do not believe that it will mean lower gas prices.

I was disturbed to hear what the Minister said last night about the premium use of gas and depletion. It is the Government who decide that the British Gas Corporation should confine its sales to gas for premium uses. To change the policy would be wasteful. To judge from the tone of voice of the Minister last night, I feel that there has been a change of policy about the premium use of gas. The oil companies are interested only as long as they can move into the non-premium market.

Price is at the heart of the matter. Higher prices are needed to justify the development of the gasfields privately. I have heard nothing to change my mind since Second Reading that if the fields are developed the price must go up—a price which would have to take into account the tax regime. It is that, together with the effect that BGC has on the home market, which leads me to deduce that the Government will allow the export of gas, so that a market price of some sort will develop.

In that connection, I note a speech that was made by the Permanent Under-Secretary of State in which he supported Government policy—a most unusual development. If that had happened in the time of a Labour Government, there would have been hell to pay. It is unusual for a Permanent Under-Secretary to make a speech saying that the balance between the public and private sectors in production should encourage innovation, enterprise and efficiency. That is the sort of speech that should be made in the House of Commons.

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

The Permanent Under-Secretary made a speech in which he set out clearly and factually Government policy on this issue. Not only is he perfectly entitled to do that—and there are many precedents for it—but Sir Donald Maitland is a distinguished public servant who has given distinguished service to this country over a considerable number of years. It ill behoves the right hon. Gentleman to cast aspersions on a man of that stature.

Mr. Rees

Sir Donald Maitland is a distinguished man, but I do not believe that to make a speech that could have been distributed by the Tory Central Office is the function of a Permanent Under-Secretary. That would not have happened in the older Departments of State—just as in an older Department of State, the Secretary of State would have opened the debate.

The Permanent Under-Secretary talked about gas exports. He said: If, however, the fresh impetus given to exploration were to result in large volumes of new gas being discovered, this could provide a reserve base large enough to accommodate some exports"— I note the qualification— as well as meeting the needs of consumers in the United Kingdom". We have been trying to find out in the House whether there are to be gas exports, yet we have to read a speech by the Permanent Under-Secretary made to the Institute of Directors to find out.

Mr. Tim Eggar (Enfield, North)

rose—

Mr. Rees

If the hon. Member for Enfield, North (Mr. Eggar) wants to say something, I shall respond to what he says.

Mr. Eggar

I am most grateful to the right hon. Gentleman. Will he explain why the statements made by the Permanent Under-Secretary were so unacceptable to him, given the qualifications that the Permanent Under-Secretary made? Why would that not be in Britain's national interest?

Mr. Rees

It would have been an appropriate matter for a Minister to announce. If we were to be told that we were to have gas exports, which would have a profound effect on depletion policy, it would be better to be told about the matter during the course of the Bill. We are against it in the interests of depletion policy.

Perhaps the Secretary of State will tell us whether, as a result of the Bill, there is to be a change. I said on Second Reading: I accept what the right hon. Gentleman says—that the Government will have the same depletion policy as before". The Secretary of State intervened and said: I did not say that."—[Official Report, 19 January 1982; Vol. 16, c. 183] Therefore, we have not got the same depletion policy. It would be interesting to know what depletion policy will result from the Bill.

Overall, the Government have pressed this legislation under a rosy umbrella of market pricing and competition, in a field where it is inappropriate. That does not mean we are not concerned with efficiency and prices, which will help industry, while giving a return of the investment capital. Speaking on behalf of the Opposition, as I did on Second Reading, we do not worship at the feet of State monopolies. Many changes must be made. Such monopolies were set up a long time ago. We do not sit at the feet of or wors6.ip multinational corporations either. There is a problem in both those respects and it must be considered.

We have been well served on gas production by a modern and integrated gas concern—the British Gas Corporation. This Bill is misconceived. It will not work in the way that the Government believe it will. The whole argument will go on for a long time. Many things in the Bill—parliamentary procedures and single shares—if done by a Labour Government, would have meant the media causing a continuous row. Our actions would have been called "East European". I am disturbed about the parliamentary accountability in the Bill. We have not had an open answer to the implications of the Bill, given our obligations under articles 85 and 86 of the EEC legislation. We shall seek to change this Bill one day. When we do, we shall seek to get much greater parliamentary accountability.

This Bill is only the beginning of the story. We shall vote against it tonight as an earnest of our long-term intention on other aspects of industry. I hope that my hon. Friends will vote against the Bill.

4.24 pm

Mr. Michael Morris (Northampton, South)

It is worth reminding Opposition Members—my hon. Friends need no reminding—what the Bill contains and what are its main tenets.

We are talking about the setting up of a new private enterprise company named Britoil to take over the oil-producing business of BNOC. It is not just good fortune that the company has been so named. It is a reflection of the earnest endeavour of my right hon. Friend the Secretary of State and all Government Members that this company is being set up with the aim of achieving a new, thriving British oil company which, when launched, will have a wide spread of ownership among the public. Part I is the key and dominant factor. The public should take that point on board.

The Bill effectively states that the BGC, whose abilities, sincerity and performance are acknowledged on both sides of the House, should concentrate on what it does best—gas exploration, marketing and all aspects of the provision of gas supplies.

The BGC should not be tempted into undertaking oil exploration. It does not have a high degree of expertise in that area. Public assets should not be deployed in that area through a corporation that is supposed to carry out a different function. My right hon. Friend the Secretary of State was right to be firm and the assertions, suggestions and pressures put on him by the board of the British Gas Corporation in that the corporation should retain its interest in oil.

I hope when my right hon. Friend replies to the debate he will be able to reassure British Gas. There is worry among its management, particularly the middle management—who are perhaps the heirs apparent to the board of British Gas—that it will be viewed as a second-class explorer in the North Sea. There is no reason why British Gas, in its efforts to explore for gas, should be viewed by anybody as a second-class entity. Its expertise in this area is second to none and all hon. Members have a duty to make that known outside the House. We all have a duty to tell the world that we know of no organisation with the expertise of British Gas when it comes to exploring for and marketing gas. We must certainly not do anything to depreciate that dimension.

There is no reason why British Gas should be regarded as a second-class explorer. Some will immediately ask why, in that case, they should allow major industrial customers to buy their gas direct from private companies. Over a period the evidence has shown that when resources are limited—as they must be for any organisation, however large—a degree of competition is no bad thing. Certainly the rate of exploration in the North Sea was not as rapid as certain parties believed it should have been. Therefore, it is right that some competition should be introduced. That can only benefit the performance of British Gas in its North Sea activities.

The Bill was explored in considerable depth in Committee. We owe a "Thank you" to the hon. Member for Merthyr Tydfil (Mr. Rowlands). Of all Opposition Members, he showed the most assiduity. He went into matters in great depth and asked some penetrating questions. I do not want to chastise the right hon. Member for Leeds, South (Mr. Rees). I know that he is a sincere man, but he has been a reluctant reformer. He said from the Dispatch Box yesterday evening that he was not entirely at home with this subject, and we accept that. We realise that he is genuinely concerned about the implications of the Bill.

Mr. Merlyn Rees

I did not say that I was not at home with this subject, and today's proceedings show that I am. However, there are aspects of it that I just do not like.

Mr. Morris

I make it clear that I meant no personal offence to the right hon. Gentleman. He performed better today than he did on other occasions.

My hon. Friend the Minister of State was right to say yesterday evening, particularly when we were discussing part IV, that we had covered the safety dimensions in considerable depth, but the hon. Member for Kingston upon Hull, East (Mr. Prescott) raised some issues that we did not discuss in depth in Committee. I hope that those matters that were unanswered in Committee will be dealt with in another place.

I am still concerned about the immigration laws not applying to those working on oil rigs. Although this is not a matter for the Department of Energy, I put my hon. Friend the Minister on the spot yesterday evening. I hope that urgent representations are being made to the Home Office to correct, in the next parliamentary session, what is clearly an anomaly.

I shall conclude now, because I had no intention of making a long speech. By his direct approach my right hon. Friend the Secretary of State has made clear communications. Some may not like such clarity in communication, but there is no doubt what the Bill is all about. My right hon. Friend deserves great credit, because he has faced the issue of privatisation. Many previous Secretaries of State have not wished to do that. How does one deal with the denationalisation of major facets of the British economy?

Nobody since the war has faced that requirement. There were tinkerings with the Carlisle brewery and other bits and pieces. One can denationalise major assets in Britain. My right hon. Friend has done that—or is at least three-quarters of the way towards doing it. It may hurt the Labour Party to hear that. It may confuse the Liberal Party and the SDP, but the British public want it. The House should express its thanks to my right hon. Friend for getting it done.

4.40 pm

Mr. J. Grimond (Orkney and Shetland)

The hon. Member for Northampton, South (Mr. Morris) mentioned wider ownership. That is one of the matters with which I wish to deal. I should like, first, however, to ask the Government about gas gathering. An amendment on this matter was selected yesterday but was not reached.

I must confess that my Presbyterian soul is still deeply shocked to see the flaring that takes place at Sullom Voe and Flotta and on the platforms that I visit. Has the position over the pipeline reached an impasse? Will no progress be made either by the private sector or the public sector? I should like the Government to reaffirm their determination to find some useful purpose for this gas and to see flaring diminished if not stopped.

What are the companies doing? The first responsibility lies with them. It might be made a condition of their licences that they dispose of gas—or more of it than is now the case—for some good purpose. I do not accept that it is impossible to lay the gas gathering pipeline. If, however, that is the argument, what steps are being taken to see whether the gas can be used locally at Flotta or Sullom? If that is not possible, I should like to know what steps are being taken over shipments. A large amount of gas all over the world is now shipped from point to point. I should like more information about gas gathering and the cessation of flaring.

I should like also to ask about the method of setting up Britoil. I have always considered it a great pity that the Government took no notice of the suggestion made by Mr. Samuel Brittan for a wide dispersal of shares to households in Britain so that all would share in North Sea oil. I intend, in due course, to bring together the Chief Secretary to the Treasury and Mr. Samuel Brittan so that they can discuss this matter. It is perhaps too late to do anything where this Bill is concerned, but it is highly desirable that the widest range of ownership should be involved in Britoil. This is also apparently the Government's view.

To describe someone as a small shareholder can be misleading. A man who has a small shareholding in one company may be a multi-millionaire holding innumerable shareholdings in other companies. There is no means of knowing those who are the small shareholders of this country. All that is known is that in. Britain, certainly in Scotland, fewer people hold industrial shares than in any other Western European country except one.

A great deal more needs to be done. I support the suggestions made yesterday by the hon. Member for Derbyshire, South-East (Mr. Rost). I trust that the Government were serious in saying that they would consider them with care. All the suggestions were good. I wish to stress one or two of them. Small applications should be met in full. The scaling down that took place over certain recent issues has meant that people put in for far more shares than they want and get a smaller amount. I believe that small applications should be met in full. There is something to be said for a two-stage operation whereby only small applications in the first instance are received.

The hon. Member for Derbyshire, South-East made the important point that cheques should be cashed. He suggested that cheques should be held for only a week. In my view, they should at least be held for some time, so that those who put in for large amounts of shares that they cannot meet suffer some penalty. The hon. Gentleman mentioned that stags could be identified. If that is possible, it would be a great step forward. I am not certain how it can be achieved. If it can be done, it should be done.

Unlike the hon. Member for Northampton, South, I find that the more I listen to the right hon. Member for Leeds, South (Mr. Rees) the better he becomes. The right hon. Gentleman said that the Labour Party would look at alternative methods of ownership. I welcome that. I think that the right hon. Gentleman agreed that there were faults in State ownership. One alternative to State ownership is wider ownership, particularly ownership by people working in the company. It is extremely important that this should be pressed forward in the operation of Britoil.

The National Freight Company was a great success when taken over by the people who worked in it. I think I am right in saying that 9,000 of its employees applied for shares and put up an average of £700 each. I think I am also right in saying that 83 per cent. of the equity of the company in reserve shares is confined to those who work in it or their pension funds. That is in startling contrast to Amersham International where, according to the Minister of State yesterday, the amount owned by workers is not 30 per cent. but 3 per cent. I do not protest about the method but Amersham was a mistake. I do not know why the Government cannot admit it was a mistake. Instead they go on saying that it was the greatest success of all time. That is not so. It was not a success from the point of view of the amount of money that was received. Not did it spread the ownership in the manner that the Government want, especially in respect of the involvement of employees in their company.

What can be done now? First, one can have a special category of shares confined to employees. Secondly, one can give employees some rights—for instance, the right to appoint a director. I raised yesterday the issue of Government-appointed directors, particularly in BP. I thought that I received an evasive answer from the Secretary of State who, I suspect, privately agrees with me. It is not clear what advantage BP has gained from having Government-appointed directors. Nor is it clear what they have actually done. Have they protected the public interest? Do we know of occasions when they have intervened to prevent fellow directors of BP acting against the British interest? I doubt it. There is something to be said, I suppose, for having ex-ambassadors as directors when companies operate abroad. This company does not operate abroad. I pray in aid again the support of the right hon. Member for Leeds, South, who said: I have always been sceptical about what a Government director does."—[Official Report, 31 March 1982; Vol. 21, c. 325.] Perhaps we can be told what they do.

In this case, we have the golden share. There is no need to have Government directors on the board. The Secretary of State can intervene to protect the public interest. When the Secretary of State asked me, in reply to my intervention, whether I was saying that Government directors were unnecessary and should be abolished, I can only say that I have heard no convincing reason for having them in this case. It is for the Government to show why ex-ambassadors and civil servants or even trade union officials, accountants and women are essential on the board.

I believe that there is a much stronger case for directors being appointed by the workers. This might be an interesting experiment. It would spread not only the wealth but the responsibility. It would be interesting to see whether industrial relations could be improved by encouraging workers not only to take shares but also to accept some responsibility for running the company. This happens, as the Secretary of State knows, in many countries. I suspect again that the Secretary of State, in private, is rather responsive to the idea. The right hon. Gentleman is looking particularly sphinx-like at this moment. He has learnt from experience that it is unwise to expose his soul too openly in the House of Commons. I ask him to think about the idea in the quietness of his chamber to examine whether this is a possible direction in which we may move.

It may be possible to establish a unit trust and allocate a certain amount of shares for it to the workers. The workers would control it themselves. There are various ways in which employee ownership can be widely extended. I hope that the Government are giving a great deal of consideration to how this can be achieved. I accept that Britoil is a much bigger company and a different sort of company from Cable and Wireless or the National Freight Company. I hope, nevertheless, that the Government will not be content to see only 3 per cent. of the equity go into the hands of employees. I hope that the Government will push on this occasion not only for wider ownership but for the real involvement of those who work in the company in its management and ownership. If they do not do that, the Bill is largely a waste of time.

Mr. Deputy Speaker (Mr. Ernest Armstrong)

It may help the House if I make two comments. First, this is a Third Reading debate. Therefore, hon. Members must talk only about what is in the Bill and not about amendments that were not carried. Secondly, at least 10 right hon. and hon. Gentlemen wish to catch my eye. We have approximately 100 minutes before the Front Bench spokesmen want to speak. Hon. Gentlemen can do the arithmetic.

4.51 pm

Mr. Peter Rost (Derbyshire, South-East)

I am pleased to follow the right hon. Member for Orkney and Shetland (Mr. Grimond), because I, too, have striven to achieve wider ownership. This is one of the main reasons why I support the legislation. I congratulate my hon. Friend and his team on the way in which they have pressed the legislation through with great urgency but not without adequate discussion. It is important legislation.

I support what the right hon. Member for Orkney and Shetland said. It is a pity that the legislation will not give the same opportunities to employees of British Gas that the employees of the British National Oil Corporation will have to become employee shareholders. I should have preferred the Government to consider privatisation of the British Gas Corporation by selling off some of those shares as well. I agree that there are difficulties in privatising a monopoly, so to speak, but the legislation will ensure that it is no longer a monopoly.

Safeguards could have been provided which would have allowed the sale of a minority of the shares in British Gas and given the employees a much-needed morale booster after all the changes that are visualised for the industry. It would have given them a genuine incentive, which is desirable. This has happened in industries which the Government have already denationalised, such as British Aerospace. We expect that others are in the pipeline.

A point which has not been properly debated relates to the gas consumers council which has made representations to me. I understand that they have not been properly investigated yet. It is a little concerned that under the legislation it may not be fully responsible for representing the interests of all gas consumers in future because of the outside gas interests that will develop. I do not regard this as a major obstacle, but I hope that my right hon. Friend will consider it and have discussions with the gas consumers council, if he has not already done so, to see whether its anxieties can be allayed.

The right hon. Member for Leeds, South (Mr. Rees) was constructive in his support of much of the principle of the legislation. I am sorry that the right hon. Gentleman is no longer in the House. His contribution was in strong contrast to the deliberately misleading propaganda that has been put out against the legislation. I am not accusing any specific Labour Member because many of the misleading scare stories about the legislation have originated not from the Opposition Benches but from outside.

It is important that when my right hon. Friend replies he should emphasise that these are maliciously misleading scare stories. It is nonsense for the trade unions involved in British Gas to suggest that 20,000 or 30,000 employees will be thrown on the scrap heap if the showrooms are sold. That by implication suggests that in future no one will install a gas appliance, so that there will not be any work for maintenance workers on repairs or installation, or that the industry is overmanned, by 30,000 people. That is nonsense. It is malicious because all of us, as Members of Parliament, have been inundated by communications from constituents who are not fully appraised of the details of the legislation but are worried by the scare stories.

The legislation will be of tremendous benefit to the consumer. That is what it is all about. There can be no question but that where a monopoly had been established by Parliament and has been encouraged to develop, as British Gas has, it has in its own way done an excellent job. Nobody disputes that. But a monopoly can get too powerful and its justification may no longer be as strong as it was in the early stages of its evolution. This applies to British Gas.

No one can challenge the fact that, because British Gas has had the exclusive right to buy gas, the exploration of gas has been inhibited. Because British Gas has had control over the price it has been prepared to pay, it has discouraged the development and exploration of our potential North Sea reserves. I do not think that I am alone in suggesting that the reserves of gas in the British Continental Shelf are substantial. They will probably last longer than our oil reserves.

We know that a great deal has been discovered already and is unexploited and that much more will be discovered. Meanwhile, because British Gas has had complete control over buying and pricing, the market has been developed rapidly because of under-pricing to the domestic consumer in recent years to the point at which we have to import nearly one-third of our gas from Norway.

Those who argue, as the Opposition have done, that this legislation, by increasing the availability of gas and increasing competition, will increase prices as well should think again. The increase in the price of British Gas has been largely due to the fact that supplies in the southern North Sea basin were no longer adequate to meet the demand and we have had to buy from Norway at European prices. The Norwegians have not been prepared to sell us the gas at prices lower than European prices. It is extraordinary that in our southern basin fields we are getting the gas at a very low price and at the other end of the pricing scale we are paying a high price, the market price, for Norwegian imports.

I hope that my right hon. Friend will agree that between those two extremes is the reality; we could have developed British gasfields at a price between what British Gas has been prepared to pay for the southern North Sea basin and what we have to pay the Norwegians. If that exploration had been encouraged, those resources would have come forward and British Gas would have had an alternative source of supply from the British sector of the North Sea. This would have increased competition and held down prices, or at least evened out the inevitable rise in the price of gas. Those who dispute that must consider what has happened in the North Sea oil industry and in the oil market.

It is evident that today's surplus of oil has come about solely as a result of competition. When competition was eliminated and OPEC had a complete stranglehold on world markets and competition, there was a sudden price increase. Since the free market has to some extent been reestablished in the world oil market, we have witnessed the benefits of competition. I believe that the same will happen to gas as the incentive is provided for gas exploration and development.

British Gas will still be the dominant factor in the market as it will continue to have most of the retail market. It will therefore be dominant as the purchaser of gas. But at least it will have alternative sources of supply. That will benefit the consumer if those buying powers are used skilfully.

I return to the importance of selling Britoil shares. I hope that in due course British Gas equity will also be sold to its employees and to a wide range of the British public. That is important, not merely to provide motivation and incentives for management and employees, but for the wider national interest. More citizens should be seen to be involved in the economy as owners of the wealth-creating process.

It is lamentable in a mixed economy which practises the free enterprise system that still too few citizens are owners as well as earners. As Conservatives we are doing all that we can to promote home ownership, for example, rather than State home ownership, and we are denationalising and encouraging personal ownership of assets rather than State ownership of assets, but it is equally important that we devise a system for further sales of State assets. Britoil will be in the pipeline before long. It is important that we should devise a system that is seen to be fair and encourages small investors to take a stake.

The British National Oil Corporation is also concerned that that should happen. It is seriously considering methods of encouraging the small saver to subscribe to the share sale. There is a possible way of overcoming one of the difficulties of the Britoil share sale. If really small applications are encouraged and nearly all the shares are allocated to the small investor, Britoil may be landed with 500,000 shareholders, each owning £100 worth of shares. The administrative costs of that would be a problem.

All companies like to have many shareholders, but they do not like all shareholders to be small ones because that adds to the costs of keeping the register and sending out annual reports and distributing dividends. A solution that I hope my right hon. Friend will discuss is the establishment of a unit trust which will hold the shares of Britoil for the small saver on a group basis rather than the individul shareholder being registered in his own name. That would overcome a number of the administrative problems of coping with really small savers such as those who cannot even subscribe for £100 of shares, but could buy them by instalments of £10 per month, which would be possible through a unit trust.

Perhaps Britoil could establish trusteeship for a unit trust, holding only its own shares on behalf of many thousands of small savers and investors who want a stake in Britoil. That might be an interesting solution, and I hope that my right hon. Friend will consider it.

I congratulate the Government on introducing this important legislation. It will without doubt be of major benefit to the consumer. I hope that the Opposition, even if they are not prepared to admit it now, will have the grace to admit that the Bill will be of great benefit in due course.

5.5 pm

Mr. Ron Lewis (Carlisle)

In moving the "Chird Reading of the Bill the Minister emphasised—rightly, and I congratulate him on it—the need for safety, especially in the North Sea. I was not a member of the Committee, but I have read the debates on the subject. I gather from the Committee proceedings and from what has been said in the House that the safety aspect has rightly been stressed.

My hon. Friends the Members for Newcastle upon Tyne, West (Mr. Brown) and for Wallsend (Mr. Garrett) often referred in Committee to the unfortunate fatalities in the North of England, and the Secretary of State undertook to send his officers to inquire into the matter. On 9 March, in reply to my hon. Friend the Member for Newcastle upon Tyne, West, the Secretary of State said that he had sent his specialist advisers to the North of England but that they had not at that stage reported.

Not enough is being done about safety in the gas industry and of gas installations. A few years ago I had electricity installed in my home at my own expense Before the electricity board would connect my house to the system it carried out a thorough inspection to make sure that all the apparatus had been correctly installed. I understand that that is not the case with gas installations. It appears that it is possible for gas appliances to be installed without the gas board being under an obligation to inspect what has been done.

While the Bill has been going through its various stages, and in recent weeks, I have been disturbed by facts that have come to light in my constituency on a new housing site that was built by Barratt. I am not condemning or criticising that firm in any way. The gist of the story is that in many of the properties built by that company, gas appliances have been wrongly installed. When the gas board has been called in, it has immediately cut off the supply of gas.

Who will pay for the faults to be put right? In many cases the cost of doing that will be between £100 and £200. No one will accept responsibility. I have tried to get the builders to a meeting, but they say that they are waiting for the gas board. I have discussed the matter with the gas board, and it has been extremely helpful. It has even gone to the extent of offering those involved a cut-price inspection. It has offered my constituents—and, I gather, others in the North of England—an inspection of gas appliances for £5, and I have advised them to accept the offer. For the sake of £5 they can and should ensure their safety. The gas board is being magnanimous about the matter.

In many cases the gas supply has been cut off. Who is to pay? Many of those involved are ordinary working people. The lady that brought the matter to my attention was a Conservative candidate at the last council elections. She is an ardent supporter of the Conservative Party, but she, like others, is extremely worried, because the gas board has cut off her gas supply.

I therefore hope that, if not now, when the Bill reaches another place, the Minister will ensure that there is a better safety net, so that my constituents will not face bills of between £100 and £200. They bought houses from a private company in good faith, and they thought that everything was in order. That is why I plug this plea for my people today. I hope that the Minister will re-examine this issue, to save that expense. I hope that there will be joint meetings with the builders and the gas board, which has been most co-operative. If it is a bad installation, my simple opinion is that responsibility must rest with the developers. I hope that the Government will consider what I have said.

5.10 pm

Sir Russell Fairgrieve (Aberdeenshire, West)

The Bill epitomises something that has been with us since the end of the Second World War—the argument between the Labour Party and the Conservative Party about clause four, the nationalisation of the means of production, distribution and exchange. The Conservative Party makes no excuse for continuing to fight that concept despite arguments from other countries about the continual ping-pong effect in British politics. Although one would not consider trying to run the Army or the police force on a private basis, nationalisation is not the most efficient vehicle for running productive competitive industry.

I was the Conservative Whip for the first leg of the legislation—the Petroleum and Submarine Pipe-lines Bill of 1975. I well remember the right hon. Member for Bristol, South-East (Mr. Benn) telling us that his legislation would not be like the old-style nationalisation of 1945 for the coal, electricity, and steel industries.

The new legislation came in the wake of the white heat of the technological revolution and BNOC would be a properly competitive company in the market. Yet what were the right hon. Gentleman's first three decisions?

First, for political reasons, the headquarters was set up in Glasgow, although the oil was in the North Sea. Secondly, for political reasons, BNOC was exempted from petroleum revenue tax, which all its competitors had to pay. Thirdly, for political reasons, it was headed up by a retired Socialist sympathiser from the textile industry. In other words, the new competitive company was yet another example of old-style nationalisation.

As British Gas has been in business longer than BNOC there has been more difficulty in dealing with the clauses relative to it because it has become more entrenched. As a general principle, however, I have always believed that in a nationalised industry—be it gas, electricity, water, oil or even telephones—the job of the company is to produce the goods and take them to a point of distribution. I have never understood why British Gas should be involved in the retailing of appliances any more than the electricity or water authorities. We do not insist on buying baths and taps from water boards. Why should not the same competitive principle apply to gas?

Mr. Dalyell

As the hon. Gentleman was a Whip on the 1975 Bill, he is in a better position than most to confirm that that legislation, which was not concerned with onshore gas installations, is absolutely no basis for saying that we have a depletion policy. We argued that yesterday, but received no answer whatever.

Sir Russell Fairgrieve

The hon. Member has made an intervention on a completely different point from the one that I was making.

As I have said, we do not regard nationalisation as a suitable vehicle for industrial efficiency. During the passage of the Bill, we have been able to see the shortcomings of BNOC. We have not been able to examine the shortcomings of British Gas because, regrettably, monopoly confirms the old adage that all power corrupts and absolute power corrupts absolutely. So long as there is total monopoly—it has been going on for 25 years—it is difficult to tell whether there could be a more efficient way of dealing with the industry. That is what the Bill seeks to achieve.

BNOC was formed by the Labour Government after the oil had been discovered and brought ashore in the only way in which it would ever be brought ashore—by private industry. Those of us who represent constituencies in the north-east of Scotland realise the vital importance of private industry, be it British, Scottish or multinational, because we must use the exploitation of North Sea oil to learn for the future, so that in the next century when there is drilling for oil off the China coast or off South America and people ask "Where are the best underwater engineers in the world?" The answer will unquestionably be "In Scotland". That is what we must achieve now.

This is a necessary and vital Bill. I welcome it because it is in the interests of all the British people.

5.15 pm

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

This is probably the most important Third Reading debate we have had for a long time. This is a major denationalisation measure which should have received detailed and complete scrutiny by Parliament. Unfortunately, due to the guillotine, it has received anything but complete scrutiny. The scrutiny has been extremely cursory. As this is probably the greatest asset-stripping exercise ever to take place, it is very sad that we have not had the time to scrutinise it fully.

The Government have totally mishandled the conduct of the Bill. They failed to give the necessary information on the first part of the Bill dealing with oil, with the result that the all-important articles of association for Britoil remain largely undebated. In the middle of this period, there was the scandal of Amersham International, on which we have still had no satisfactory answers—only excuses. Yet the Government now intend to sell off valuable national assets according to some vague formula which, according to them, reflects the market value at the time. The time, of course, will be of the Government's choosing. Will they sell at a time of glut? Their own expressed intention is to complete the sale as soon as possible to produce significant effects on the public sector borrowing requirement. When will the sale take place? Will it be a forced sale? That, with the current low price of oil, would mean that the nation's North Sea assets will be literally given away.

We still do not know exactly how much of BNOC's production is to be sold. Will it be 51 per cent., 49 per cent. or what? Because we did not have the articles of association, we still do not know how the Secretary of State will prevent foreign control. He made some suggestions yesterday, but I hope that he will enlarge on them.

We certainly do not know how he intends to deal with the gas assets. The Opposition's anxiety arises not from xenophobia but from a genuine concern that we as a nation should retain control of our energy supplies. A time of crisis, when we really need that control, will be far too late to discover that we do not have it. It is all very well for the Government to commit £7 billion or £8 billion to the development of Trident as a form of defence, but they above all others should realise that the economic weapon is an equally potent defence—they urge its use often enough. Yet here the Government are proposing to give away a vital strategic tool in the control of -our energy supplies.

Many important questions remain to be answered because of the Government's mishandling of the Bill. How will the gas assets be valued? That question is especially pertinent when we talk about the hiving off of Beryl A and B, which the British Gas Corporation has already spent a mint to develop. That is also the case with the Hutton NW field. Will the Government compensate the BGC for its investment? It would appear not, but the Government are saying that the BGC's exploration role will continue unaltered except for one important difference. If the BGC finds oil, the area will be privatised. Who will pay for that? The poor, long-suffering taxpayer will foot the bill while the oil companies, which are not short of a bob or two, will have a relatively cheap asset, as did the speculators who bought shares in Amersham International.

The Government say that only fields that are predominantly oil fields will be privatised; but God did not arrange nature in that way. In many cases oil and gas are found together. What proportion of a field makes it predominantly gas or predominantly oil? Is it 10 per cent, 30 per cent. or 50 per cent? I suspect that the answer will lie more with the need to massage the PSBR than with the Government's stated intention of keeping the BGC a gas-only operation. Of course, that option does not make sense.

However, more serious issues arise. The Government profess, as an article of faith, that the Bill will automatically produce more gas. In Committee, the Secretary of State mentioned a figure of 5 trillion cubic feet of uncommitted gas. He knows that that is not strictly accurate, because the British Gas Corporation has been planning to take that gas for some time. Perhaps the Government mean that the untapped, so-called possible reserves will be developed. One would expect them to be. We accept that higher prices to producers will make that viable, but so would the anticipated gas rundown in the 1990s. We cannot produce more gas just because the price is right. We cannot get what is not there. The BGC is already exploring for new sources, irrespective of price. The Government propose to leave the incentive for exploration to the commercial dictates of oil companies rather than the energy needs of Britain. As they have failed to define a gas field, they are turning the issue into a massive lottery, with the consumer as the loser every time.

As well as the Bill relying on a magic formula whereby gas will be discovered, the Government have come up with an extraordinary proposal for guaranteeing gas supplies. Currently the corporation's industrial sales policy, which is approved by the Government, is a mix of firm and interruptible supplies. The latter are at a much lower price. In order to make their point that there was a shortage of gas, the Government made great play of the fact that Brush Electrical had its gas cut off for 23 days. Now the Government allege that the company spent an additional £100,000 to cover its excess fuel needs, but the Secretary of State did not tell us that it chose costly gasoil as a substitute. He also omitted to mention that it paid less for that fuel.

Significantly, the Government would not answer the question about the future of interruptible supplies. About 45 per cent. of industrial sales are in that category, but as storage builds up so that part of the market will decline. The interruptible sales are large, because the British Gas Corporation interrupts only in case of emergency. However, the Government seem to be promising that in no circumstances will supplies be interruptted. That means that if we have a strike outside our control, such as the Norwegian Statoil dispute, the loss of a sea-line, or a bad winter such as we have just experienced, all pledged gas will go to industrial consumers irrespective of national emergency demands. So far the Government have not spelt out the terms on which the gas will be available.

The lack of clarity goes much further. The Government have frequently said that the BGC will retain its so-called monopoly in domestic supply, but all sorts of hints were given in Committee about whether in future even that undertaking will be worthless. The Secretary of State said that, although in practice industry would probably be the main market for gas, he did not rule out private supplies to new housing estates, presumably to look after offtakes of private gas that cannot be absorbed by nearby industry.

Even more serious has been the notion of the depletion policy envisaged by the Government. The House will be astounded to realise that the recently acquired conventional wisdom that premium fuel should not be used for non-premium enterprises is not accepted by the Government. The Under-Secretary of State went so far in Committee as to question whether bulk steam-raising by gas was a bad thing. If his statement and the Government's philosophy were to be accepted, the Venice declaration on coal, the Coal Industry Act 1980, as well as many other aspects of the as yet thin rag that is called energy policy, would cease to exist. The Bill envisages that gas will always be available for any use, irrespective of whether it is in the national interest.

The Government's guarantees on safety are rather meaningless. We have had vague assurances that, for private supplies, the right of entry to quell leaks would be part of the contract. That is wholly inadequate, because almost at the same time the Government said that this so-called safety provision will be open to sub-contract. That means all things to all people. For example, what happens if a sub-contractor disappears? They have been known to go bankrupt. It would appear that the Government are concerned only to enforce safety by post-mortem. We have perhaps the safest, but unfortunately, in the eyes of the Government, nationalised, gas industry in the world.

There are further serious questions about the transmission of gas. It would appear from the Committee stage that not only will the BGC be forced to pay for constructing pipelines with no guarantee of return, but where the Secretary of State, in his wisdom, wishes to modify a pipeline to take on board private gas, the BGC still remains liable for the safety of the pipeline. That would be rational if the BGC had a final say about the modification, but it will not. The Government gave the game away when they said that that would be tantamount to charging private suppliers an unspecified price.

All that the British Gas Corporation can do is take the Government to court, presumably in order to insist that a particular modification would be unsafe. What sort of writ could be applied for? Nothing in this measure or in any other measure guides us. Presumably it would be an injunction, but the matter has not been clarified by the Government. It is enlivening to see Lord Denning transformed into a top flight gas safety engineer, but we live in the real world and judges are not the best people to decide technicalities. We have a vast store of knowledge in British Gas Corporation which can make that determination. To suggest that this knowledge would be used to destroy the purpose of the Bill would be on a par with suggesting that the Secretary of State would act solely in accordance with mere whimsical doctrine. I do not believe that the right hon. Gentleman would do that.

I am extremely anxious about the prospects of future sell-offs in the industry. I have in mind the research and development station at Killingworth, on the outskirts of Newcastle upon Tyne in the constituency of my hon. Friend the Member for Wallsend (Mr. Garrett). Killingworth is probably the only high level research and development facility in the northern region. Only recently the research station developed a new pig for clearing pipes. That gives us a world-wide opportunity for sales in the gas and oil industries. It would be a scandal to seal off the Killingworth engineering research station.

On Tuesday about 1,000 gas workers lobbied the House. They were primarily concerned not with jobs, but with the public interest. I hope that hon. Members on the Government Benches listened to them, and I hope that they are listening to the Opposition this afternoon. The Bill is misconceived, ill-arranged, mishandled and should be rejected. Unfortunately, because of the Government's huge majority, we know that the Bill willl not be defeated in the House. We must hope that there will be enough noble Gentlemen in another place who are prepared to speak for Britain, to force the Government to see sense and to amend some of the more obnoxious clauses in this bad Bill.

5.33 pm

Viscount Cranborne (Dorset, South)

We have heard from the hon. Member for Newcastle upon Tyne, West (Mr. Brown) a very good example of the expertise that we were fortunate enough to have paraded before us in Committee.

The Bill illustrates, about as clearly as can be illustrated, the inherent weakness of the legislative procedures of the House. Passing legislation is, after all, one of its principal functions. The Opposition Front Bench distinguished itself on this point, as on so many others, in Committee. The right hon. Member for Leeds, South (Mr. Rees) and the hon. Member for Merthyr Tydfil (Mr. Rowlands)—with his animadversions on the eccentricities of the Merthyr Express—drew the Committee's attention, and I hope that of the House, to the absurdities of the way in which Standing Committees are conducted.

Every hon. Member in the Chamber who has taken part in the debates on Report and Third Reading has said that this is a most important Bill, perhaps the most important Bill to come before this Parliament. I am delighted to see that a minority of hon. Members agree with that. However, I am disappointed that the unanimity among that minority is evidently not shared by other hon. Members whose enthusiasm is such that they have found better things to do this afternoon.

The expertise that was paraded before ignoramuses such as myself in Committee was deeply impressive. The assiduity and hard work of the hon. Member for Merthy Tydfil must have impressed the Committee. We were, of course, impressed by my right hon. Friend the Secretary of State for Energy and my hon. Friends on the Government Front Bench.

We had the experience of the hon. Member for Newcastle upon Tyne, West, whose knowledge of the gas industry was of such use to the Committee, and a further example of which we have heard today. We heard from my hon. Friend the Member for Bedford (Mr. Skeet). I am sure he will be making a speech today. His knowledge and skill in matters appertaining to energy is well known and acknowledged throughout the House. I should also mention my hon. Friend the Member for Derbyshire, South-East (Mr. Rost).

However, I am sure that hon. Members on both sides of the House will not object if I say that the fount of knowledge among Back Bench members of the Committee—I am conscious of the presence of the hon. Member for Dunfermline (Mr. Douglas)—on matters relating to oil and gas, was relatively slight. It is wrong for the primary legislative Chamber of Parliament to rely on second-hand regurgitations of experts when examining the Bill, clause by clause and line by line, where modern legislative procedures are concerned.

I support the aims and intentions of the Bill 100 per cent. but if any good comes of it I hope that, above all else, my protests and that of the Opposition will be heard loud and clear by the powers that be and by those who arrange and reform the procedures of this place.

The Bill contains many good proposals—whatever the Opposition may say. However, it would have been far better to have taken evidence in a Select Committee, as the right hon. Member for Leeds, South suggested many times. People such as myself, who are not experts but who were nominated to serve on the Committee, could have formed a judgment and asked questions of those who have the experience.

I enjoyed the speeches of the hon. Member for West Stirlingshire (Mr. Canavan)—I have had the good fortune to serve on two Committees with him—but the great pleasure I derived from his ravings about the House of Lords and from the parading of his prejudices is a poor substitute for the serious business of considering a Bill in Committee.

Mr. Dennis Canavan (West Stirlinghshire)

Say something about the Bill for a change.

Viscount Cranborne

The hon. Gentleman asks me to say something about the Bill. I give two examples in support of my theme. The first relates to the question raised in a predictably distinguished speech by my hon. Friend the Member for Bedford. He rightly questioned the wisdom of splitting BNOC and Britoil. Had I been expert enough at the time I would have supported my hon. Friend. I was diffident about doing so because I had neither the time nor the opportunity to brief myself properly. My hon. Friend put down a series of amendments yesterday, which, sadly, because of the guillotine, were not dealt with. They once again attempted to raise that very question.

Had we been able properly to listen to the evidence of experts, more members of the Committee could have formed a proper judgment about the wisdom of my hon. Friend's thesis and voted accordingly. Instead, we had to rely on the advice of our Front Bench which, I hasten to add, we generally support in principle. But that is not how a Committee should function.

The same applies to the argument about participation oil. Opposition Members use the question of splitting BNOC from Britoil to prop up their argument against denationalisation. I refuse to use the awful new word "privatisation" The argument to justify the existence of a Government-owned trading arm was never properly aired.

Third Reading is not the time to go into the whys and wherefores. But I have tried to educate myself a little on the subject.

Mr. Canavan

Hear, hear.

Viscount Cranborne

As always, the hon. Gentleman provides a counterpoint to my observations.

There is no justification for keeping the trading arm in public ownership. The arguments for selling the lot are overwhelming. We were presented with a fait accompli. It appeared that the justice of keeping the trading arm was implicit in the proposal. We were unable to question it. The inter-related issues of separation and whether we should have participation crude were never properly aired, in spite of the elegant and enthusiastic speeches of so many Committee members.

I say this with diffidence, as I am a relatively new hon. Member. The House is in danger of becoming no more than an Augustan assembly, separate and distanced from the aims and aspirations of the people whom we are deemed to represent. Unless the House begins to reform its procedures, we shall deservedly sink into oblivion.

For all its imperfections—there are two clear ones in the oil section—the Bill attempts to do something which, as my hon. Friend the Member for Aberdeenshire, West (Sir R. Fairgrieve) rightly concluded, will prove of immense benefit to the British people. I hope that the Bill will be used as an example to all hon. Members of the way in which good intentions can be brought about only in part.

5.44 pm

Mr. Gordon Wilson (Dundee, East)

If I have a message for the hon. Member for Dorset, South (Viscount Cranborne) it is that he will find it difficult to persuade the House authorities to change their procedures. While the hon. Gentleman occupies the Government Back Benches, his role is to remain silent. His sole purpose is to put into effect the legislation that the Government, in their wisdom, or lack of it, put before him. The one thing that would send a shiver of horror through the Front Benches of both parties is the idea that Back Benchers should be released from the discipline exerted by the Whips and take an independent stand.

The experiment launched a year ago to combine the Select and Standing Committee procedures has not been followed through with great vigour. I do not like to blunt the hon. Gentleman's idealism, but, after watching the procedures of the House, I believe that we are unlikely to see any change of consequence. I do not say that to undermine the strong argument for change.

Our function on Third Reading is to discuss not the antiquated procedures of the House, but what is in the Bill. My view from the beginning has been that the Bill is misjudged and misguided. As has been said, our proceedings have resolved into a debate on the merits and demerits of denationalisation or privatisation. So far we have not dealt with the benefits that countries throughout the world derive from having a State oil company, not necessarily as a monopoly, but one which may be flanked by private oil companies, and which is there to represent the interests of the State.

Wherever oil has been discovered, one is sure to find a State oil company. There are good and useful reasons for that.

First, it ensures that the national or State interest is looked after by a company that has the opportunity to engage in exploration, development and production. That is a useful instrument. Even though the participation arrangements are still to be enforced, I regret the dismantling of the oil equity side of BNOC.

The second reason is procurement. The issue greatly affects Scotland. Many jobs are involved, both onshore and offshore. Particularly in the areas further away from the oil industry, there is a great need to ensure, through Government agencies, the highest degree of purchase from national suppliers. The international oil market is full of multinational companies with only a passing interest in developing the North Sea oil province. They are inclined to order, as they did when they first came into the United Kingdom market, from existing suppliers.

I regret that the actions that the Government are taking through dogma will lead to BNOC, which has only a small minority of North Sea oil production, being relegated from a vigourous State corporation, with a growing influence on North Sea oil development, to a tiny private oil company, with minimal influence.

I do not wish to exaggerate the importance of the sale of the assets. The Bill has been described as one of the most important to come before the House. If one considers the sum involved that is probably right, but only about £1 billion will be obtained for the assets of BNOC, while the oil revenues this year and next will be about £6 billion. That puts the matter into perspective.

I do not agree that the Government's strategy is correct. They have not dealt adequately with the problem of preventing control by foreign shareholders. The special shareholder procedure may be sufficient to keep out foreign domination, but, having heard the Secretary of State's slim answer last night, I cannot accept that EEC interests can legally be prevented from asserting a claim over the assets. The Secretary of State perfunctorily said that that could be prevented, but those of us who have studied the articles of association take a different view. The matter might be tested in the courts.

My third point about the disposal of BNOC's assets is the price. I return to the remarks that I made on Second Reading. The price of oil shares, like the price of oil, has collapsed. Over the next six or nine months, or a year, it is not likely that the Government will be able to put those assets on to the market and receive a worthwhile return on them. Whereas the Government could have a case for arguing that that could be done over a longer term, they will not be able to do that within the time scale that has been fixed.

I warn the Government that by going for a policy of allowing the price of oil to be reduced and in doing their best to kick the feet from under OPEC, they are in danger of ruining thousands of jobs in Scotland. There is a high cost to be paid for the development of oil in the North Sea. If the price of oil comes down, it is unlikely that that development will go through. Jobs will be scarce if no contracts are given to oil platform yards and other yards. I want to reinforce that argument.

I could say many other things about the Bill. It stems from blinkered dogma and flies in the face of reality. With my right hon. Friend the Member for Western Isles (Mr. Stewart), I shall vote against the Third Reading of the Bill.

5.52 pm

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

The hon. Member for Dundee, East (Mr. Wilson) mentioned the value of State oil companies. I should like to spend one or two moments dispersing that theory.

It is interesting to mention the Sarir field in Libya. The company there was BP which is half owned by the State. It was dispossessed by the Libyan Government. Its association with Bunker Hunt was broken. It eventually led to a court case. In Nigeria, British Petroleum was dispossessed because the Government sought to take over its assets. BP has not been able to get concessions in Venezuela or Turkey. There are two other cases. Pertamina, the State oil company in Indonesia became virtually bankrupt. In Italy there have been allegations of corruption against ENI over certain Saudi arrangements. Those examples are not advertisements for State oil companies.

I support the argument in the Bill to privatise BNOC. Of course, I make no allegations against it. I defended it in Committee. I have sought to keep it intact as a unified operation. What is notorious is that the initial chairman of the company was prepared to say that the company should be privatised so that it could advance further.

It is interesting how in the Third Reading debate most hon. Members have not addressed themselves to the major points and crucial issues in the Bill. There is the disposition of the assets of BNOC so that it can establish itself as a unit in private enterprise. There will be true ownership by the people, with private shareholders—as many as there can be—and not that mysterious mystique of being held by the State over which no one exercises control.

Another point which has been entirely overlooked is the supply of gas by persons other than the British Gas Corporation. Since section 29 of the Gas Act 1972 and section 8 of the Energy Act 1976, there has been only one distributor and one buyer of natural gas. That will be altered by the Bill. That is a crucial point. There will be other distributors, not simply the BGC. Therefore, its monopoly of supply will be altered. I should have thought that many Opposition Members would recognise that. They are surely not in favour of complete monopolies. Changes are brought about by the Bill. There are also two crucial clauses that concern the safety regulations.

Clauses 9, 10 and 11 of the Bill concern the powers of disposal of the assets of the British Gas Corporation. There can be disposals of Wytch Farm under the section 7 of the Gas Act 1972, but that is being amended and extended by the Bill. The BCG should confine itself to gas exploration, gas transmission and distribution. It should have nothing to do with oil in the North Sea. Those assets could be liquedated and the cash handed over to the State.

Clauses 15, 16 and 17 concern the use of pipelines belonging to the BGC. That is where there is a weakness. In future there could be a possibility of the role of BGC being confined to that of a transmission company only undertaking distribution. There is a possibility that it will go on on its present course. I have written to the Secretary of State and have suggested in Committee that there should be a natural gas transmission company. It would have all the advantages that are not apparent in the three clauses that I have mentioned. In those three clauses the ownership of the piplelines rests with the BGC. It can set the rates. There is an elaborate procedure under which appeals can be made to the Secretary of State.

But the BGC has a great ability to delay. If the Secretary of State could consider that matter seriously when the Bill goes to the House of Lords or at a later stage he may be able to change the arrangement so that impartiality and independence could be granted to the applicant companies concerned.

After all, what is the Secretary of State seeking? He is seeking to provide incentives, for example for more gas to be discovered. That can be done if the oil companies have the right to supply. Those companies will be able to compete if they can persuade BGC, under the Secretary of State's guidance, to enable the companies, perhaps in a consortium, to use the piplelines owned by BGC. However, there may come the day when the Secretary of State ceases to be in office and when, by accident or fortune, the Labour Party comes into Government. Does my right hon. Friend think for a moment that a Socialist Secretary of State would allow the transmission lines to be used by private enterprise? I doubt that he would.

One or two other matters are of importance. One is the retention of paragraph 28 in schedule 5 of the Petroleum (Production) Regulations 1976. I refer to the export of natural gas. I suggested in Committee that if a surplus of natural gas was required it would be essential to establish an export price to encourage exploration and development. Sheikh Yamani was here yesterday. I put one point to him: what will be the future price of natural gas? If the price is linked to crude oil, the price of gas will rise whether or not the right hon. Member for Leeds, South (Mr. Rees) wants it. We may wish to moderate that, but there has been a trend of rising prices. BGC started by paying the companies 2.87 old pence per therm. Now prices are rising and it is 16p or 16½p per therm. It could rise further to 20p or 30p per therm. Therefore, a linkage with Europe by joining the two grids would be the best thing that could happen to the United Kingdom.

We are in an impossible position. We have the right to import gas from Europe and a company can export and reticulate it wherever it likes in the United Kingdom. However, without the consent of the Secretary of State, we cannot export gas to Europe. Surely that is contradictory to articles 30 and 34 of the Treaty of Rome.

I sincerely thank the Government for introducing a definition of gas, which is being implanted in the Gas Act of 1972. Another matter, which has not been noticed by many hon. Members, involves the liquefaction of offshore natural gas. Before that can be done the Secretary of State's consent must be obtained. That was provided for in the 1976 Act. Why is it now retained? None of the gas has been exported. None of it has been liquefied, none of the ethane has been extracted and been sent abroad. Why, therefore, must the Secretary of State's consent be obtained? Perhaps the most conspicuous provision is removal of the duty to tender advice to the Secretary of State. What is more, the Burgoyne committee's recommendations have been to some extent implemented.

The Bill is on its way to the House of Lords. Parts of it are not too good, parts of it are remarkably sound, but it contains the prime point of privatising industry and it extends a policy that we have been advocating elsewhere. Let us not think for one moment that the British Gas Corporation, which has been doing extensive lobbying of the House during the course of the Bill, is right in all that it does. It talks about the premium use of fuel. Of its total industrial sales, 46 per cent. at least goes on interruptible supplies. Much of this gas has been used for under-boiler heating where the more suitable fuel is oil or coal. The BGC should take a more correct view of premium fuels.

It has been said that flaring is wrong. Surely some policy has been adopted? I am sorry that the North Sea gas-gathering pipeline was not successful. That was largely because of the attitude of British Gas, which was not prepared to nominate a price for methane, which meant that the banks were not prepared to give credit for development of the project. It was difficult to settle the amount of contribution being made from both sides. Having said all that, we are aware that the FLAGS pipeline, which is shortly to be completed, will link a number of other fields, North-West Hutton, Ninian North, Cormorant and Brent. This is the beginning of an embryo pipeline that will bring gas ashore into St. Fergus and other sites. The Government have controls and regulations and they can specify that the companies must not flare gas. They have to find ways of using it either by re-injecting it or by bringing it ashore.

I support the Bill, although it has weaknesses that have been pointed out to the Secretary of State in Committee. It must be drastically amended before it is finally successful, but I support it for its privatisation provisions. Privatisation in one form or another is what we want. I should have liked to keep BNOC intact, but the Secretary of State, for reasons that I do not understand, has not been prepared to do that. Nevertheless, he is privatising an integral part of it.

6.3 pm

Mr. Dick Douglas (Dunfermline)

We have had an interesting debate and some interesting strictures from the hon. Members for Bedford (Mr. Skeet) and for Dorset, South (Viscount Cranborne) about the procedures of the House.

In his opening remarks the Minister illustrated some of the deficiencies. He spent a good part of his speech dealing with the clauses relating to safety. Last night my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) demonstrated his expertise, which was denied to the Committee. We should have accepted the view expressed by my right hon. Friend the Member for Leeds, South (Mr. Rees), and taken the path of the new Select Committees. Politics is not involved. We are all agreed on that. Under the new Select Committee procedure we would have had the expertise not only of my hon. Friend the Member for Kingston upon Hull, East, but of others.

I cannot remember all of the Committee proceedings but I think that today, in the Minister's speech was the first time that we heard the word "Hotel". We are now on Third Reading, and I am not sure that the Bill covers the problems of flotels. Perhaps the Minister will say whether clause 23(2)(d) covers flotels. We have talked about them but have never had an opportunity to discuss the health problems involved. If there are flotels that accommodate hundreds of workers in congested conditions, we shall have to examine not only safety, but health. There is the minor aspect of the ventilation system that might be used in such vessels. This is something that is not part of an exchange across the Floor of the House. It should have been discussed under the new Select Committee procedure, and that is what we are asking for.

On three or four occasions the Minister used the word "misconceived". He seemed to be suggesting that we had misunderstood the Bill. That is not the case. We shall stop telling the truth about the Bill if the Government and their supporters will stop telling lies about our policies. The Bill is a doctrinaire measure. This is no basis for the economic well-being of the country. It is a doctrinaire measure and will not—[Interruption]—add one barrel of oil or one cubic metre of gas from the North sea. [Interruption.] It will not be to the benefit of the nation.

I do not say that it will not benefit the oil companies. That is a different matter. It may benefit the multinationals. Conservative Members have taken the remarkable view that, somehow or other, the price of gas can be reduced, but we must have an international price by exporting gas. How does that relate to a depletion policy? The Secretary of State will throw the existing depletion policy out of the window and ask for a depletion policy based on the market and price measurement. That is his view.

I take the view that monopolies can be wrong, but BNOC is not a monopoly. How can it possibly be a monopoly in the North Sea? The Secretary of State should do his Back Benchers the justice of listening to them, because on many occasions they were attacking BNOC. I am thinking particularly of the hon. Member for Aberdeenshire, West (Sir R. Fairgrieve). Unhappily, he is not in his place and I do not like talking about people who are not here. Perhaps I was unfair to the hon. Gentleman, but he distinctly said that he was against this type of monopoly. He suggested that a doctrinaire person—Lord Kearton—was being put in charge and that in some way he supported the Government's policy.

Mr. Lawson

indicated assent.

Mr. Douglas

The Secretary of State nods, but he cannot find any member of the present board or of a past one who supports the disintegration of BNOC. If the Secretary of State has something to say, I shall give way. Those on the board—Mr. Sheldon, Mr. Utiger or Lord Kearton—do not support disintegration, because they know that the logic of the industry is to have integration. I do not want to go into the history of Standard Oil, but the logic of the industry is to have an integrated operation.

The hon. Member for Dundee, East (Mr. Wilson) referred to the implications for Scotland. The hon. Member for Aberdeenshire, West said it was a political decision to put the head office in Glasgow. Of course it was. It was a correct political decision as a countervailing power. Did not the hon. Member for Ross and Cromarty (Mr. Gray) support that? Where else would it have been put? The Minister may have suggested Aberdeen, but is there any guarantee that even though, as a sop, Britoil will be registered in Scotland, the unemployment position will be improved?

The oil trading side is likely to be in London. Will the employees be able to participate in the shareholding? They have participated in building up the corporation, but the Government have ensured that they will be denied the opportunity of entering into share ownership.

I have questioned the Secretary of State about referring matters to the council of the Stock Exchange. The Secretary of State was a member of the Public Accounts Committee and he will know that papers can be called for by the PAC. Therefore, it is as well now to know the views of the Stock Exchange on the articles of association. Does it support the concept of a golden shareholding that can outweigh all others? I invite the right hon. Gentleman to come clean with the House on that issue. I invite him to do likewise on the presentation of the prospectus. When will we get the prospectus?

I understand that the right hon. Gentleman desires to sell the company, when he has it in order, by the end of the year. Is that still his intention, bearing in mind the world oil market? I do not believe all that Sheikh Yamani says but I will take his view of the oil market before the right hon. Gentleman's. Sheikh Yamani has power because he can control his national oil assets, but all that the Secretary of State can do is attempt to talk down the market.

The Secretary of State seems to think that there is perfect competition within a market mechanism. He should know that that is not so. If anyone should have told him, it was Sir Donald Maitland, for whom I have a great deal of respect. I was surprised by the speech that Sir Donald made to the Institute of Directors in Scotland. He could have done so only under the instructions of the Secretary of State.

Oil is an international political commodity and instead of enhancing it, holding it and garnering it for the benefit of the British people, the right hon. Gentleman, for doctrinaire reasons, is saying "Let the market decide". The right hon. Gentleman is abrogating his supreme responsibility to securing energy supplies for Britain. He should be rejected and the Bill should be rejected by the House.

6.13 pm

Mr. Tim Eggar (Enfield, North)

I hope that the hon. Member for Dunfermline (Mr. Douglas) will forgive me if I do not take up his remarks.

I wish to raise two issues. I was extremely interested in the observations of my hon. Friend the Member for Derbyshire, South-East (Mr. Rost) about the sale of BNOC. He suggested that one way of ensuring wider share ownership was to proceed through the sale of unit trust holdings in the corporation. I am certain that the traditional City methods of ensuring wide ownerhip are inadequate. We shall not get the degree of wide ownership that we need if we use the traditional City systems.

I have a distinct preference for making shares available through the Post Office network, by employing the system that has been developed most effectively for the dissemination of national savings certificates. I believe that it would be possible to sell convertible stock in BNOC through the Post Office savings network, which could after a period—I suggest between 12 and 18 months—be converted into shares of BNOC. I hope that my right hon. Friend will consider that suggestion carefully.

Secondly, I have never made a secret of the fact that I think that the Bill should contain provisions for the privatisation—I object to that word—of the British Gas Corporation. I maintain that position, which I have held ever since the Bill was published. I recognise that the Bill is to be welcomed as a first step in the right direction.

My belief in the ultimate privatisation of BGC and its division into constituent parts was much strengthened by some documented information which I received recently. In January the corporation requested participants in the Frigg field, which is largely in the Norwegian sector of the North Sea, that it be permitted to pay early for gas due to be delivered to it in March. The corporation will have paid for 13 months of gas supplies during 12 months. The significance of this may not be immediately obvious to all hon. Members.

One major way in which the Government control the corporation is through external financing limits. This year the corporation's EFL is minus £317 million—in other words, it should pay the Government £317 million. Had it not paid for the Frigg gas, which amounted to £100 million in this financial year, the chances are that it would have exceeded its financial limit by a significant amount. If it was trying to hit the limit exactly, it would have hit minus £317 million, but the real figure would have been minus £417 million.

There is some significance in this, because the Government have based their public expenditure plans on the money that they expect to receive from nationalised industries and on what they expect to invest in them. A sum of £100 million is quite significant. The corporation knows very well that if it has done much better than the Government expected and has generated more cash than expected, the Government will return to it in the next financial year and in subsequent years and tighten its cash limits.

Some might consider the financial changes that the corporation has brought about as cooking the books or financial fiddling, but it is certainly significant window dressing.

Before raising this issue in the House I took it up with the chairman of the corporation. He was extremely courteous. He saw me as soon as I asked to see him and he has written to me. I shall not bore the House with the detailed arguments, but I shall describe them roughly.

The chairman said that it was a commercial decision and he gave two reasons. First, he said that there was pressure from the oil companies to change the way in which they were paid by the corporation. I have been assured by the Norwegian members of the Frigg consortium that while they have historically been engaging in discussions with the corporation about payments through bills of exchange, the request for early payment for the gas that is to be delivered in March was not made by them and that the initiative was taken by BGC.

Mr. Rowlands

Many hon. Members do not appreciate the point. I understand that the arrangement between BGC and the oil companies was mutually beneficial and had been in practice for a long time. There is nothing new about it.

Mr. Eggar

It is extremely interesting to note that the hon. Gentleman has been briefed by BGC and knew that I might bring up this subject. He would not have been able to make that point if he has not been so briefed.

I have raised a matter that is not widely known. However, the hon. Gentleman's point about the commercial negotiations does not stand up to scrutiny. In the circumstances, the arrangement cannot be regarded as mutually beneficial. There was only a long-term agreement with the United Kingdom partners in the Frigg field. As the hon. Gentleman knows, the United Kingdom partners have only a small share of that field. The Norwegian partners in that field declined to do anything more than accept early payment for the March gas in this financial year. That is significant.

The other commercial reason that Sir Denis Rooke gave was that there was a need to smooth out BGC's cash flow. He said that the weather conditions are so difficult that BGC must have some flexibility in its cash flow. However, BGC has had that problem for a long time, and it is not new this year. Why on earth should BGC ask for such flexibility this year?

I then asked whether the way in which the early payment had been sought represented an attempt to avoid the cash limits and the external financing limit system. It is worth quoting the letter that Sir Denis Rooke wrote to me. I shall cite extracts, and if any hon. Member wishes to see the full details I shall make them available. He wrote: I was certain it would have been quite properly and commercially negotiated"— that is the arrangement for early payment— and that in those circumstances I certainly saw nothing wrong in making adjustments either way to meet the EFL target. … There is absolutely no point in making adherence to EFL targets even more difficult by building in aberrations stemming purely from the coincidence of weather factors. We all recognise BGC's difficulties with cash limits. However, if the Government have set clear cash limits, it is up to BGC to stick to them. It is unreasonable for it to try to avoid them. I hope that the Government will carefully examine the whole issue and the way in which the accounts have been altered and changed.

I wish to make one further point—[Interruption.] I shall develop the point quickly, if Opposition Members will allow me to do so. All hon. Members believe that Parliament should control the purse strings. Together with many other hon. Members, I strongly feel that the Comptroller and Auditor General should have powers to examine, if necessary—and if Select Committees consider it appropriate—the audited accounts of nationalised industries. [Interruption.] That argument should be adopted by hon. Members on both sides of the House, including the hon. Member for West Stirlingshire (Mr. Canavan).

If anything substantiates that argument it is the story of how BGC has apparently got round the external financing limit.

Mr. Deputy Speaker

Order. Other hon. Members wish to catch my eye, and the hon. Gentleman is straying from the subject-matter of the Bill.

Mr. Eggar

I apologise, Mr. Deputy Speaker. You rose just as I was about to sit down.

6.25 pm

Mr. W. E. Garrett (Wallsend)

As he gains experience of the House, I hope that the hon. Member for Enfield, North (Mr. Eggar) will acquire some understanding of the sensitivities involved in certain debates, particularly when only a limited amount of time is available.

I turn to the Secretary of State's prompt decision on a gassing tragedy in my constituency. He dealt with the matter promptly and sent an official to the region. That was greatly appreciated. On behalf of thousands of householders with equipment with this type of gas supply, I should tell him that he has helped considerably to allay their worst fears. I hope that a report will be issued and widely distributed, perhaps after the inquest on victims.

I have also had reservations about the Committee's progress. There should have been two Bills—one on oil and one on gas. However, experience tells me that, regardless of their political colours, Governments will always try to get three Bills into one. On this occasion, they have tried to put two Bills into one and have failed miserably. Many of the issues that still concern Committee Members have not been fully debated. I wish that the Minister had spent more time on the implications of two distribution systems. When Parliament has given the Minister the necessary powers, I urge him to proceed carefully and cautiously when phasing in, in some cases. a double pipeline and operational system. I hope that he will always ensure that the standards of the two sectors are compatible.

As so often happens, an amending Bill will probably have to be introduced within the next two or three years to alter some of the actions taken in this Bill.

6.27 pm

Mr. David Myles (Banff)

Although time is brief, I welcome the opportunity to say a word or two and to release some of the gasps that I had to pent up in Committee.

I come from North-East Scotland and am well aware of the stupendous achievement involved in extracting oil and gas from beneath the North Sea. Those resources were laid down before the day of the dodo, as the hon. Member for West Lothian (Mr. Dalyell) said. They have lain under the North Sea for many years and have been released so that this generation, and perhaps the next—but possibly no more—can use that pent-up energy for their benefit. There is no doubt that those resources are available because of enterprise. I use that word advisedly, and, indeed, I am pleased that the word "enterprise" is in the title of the Bill. Private enterprise brought that energy to the surface and has made it available to us.

I welcome the fact that the British Gas Corporation will have to break up its operations to a certain extent and that there will be an opportunity for small companies to get in on the gas act.

For the sake of future generations we should look at methane digesters which could come into being on a small scale as a result of gas production, perhaps only on a farm scale. The breaking up of the gas monopoly may make that possible.

6.30 pm

Mr. Edward Rowlands (Merthyr Tydfil)

It is a matter of personal regret that, as we come to the end of our discussions on the Bill, I have to introduce two sour notes.

First, I must tell the Secretary of State that good convention and tradition should have led him to open the debate on the Third Reading of the Bill. We have excused him for, and co-operated with, his periodic absenteeism. We made special efforts on Report in that regard. We think that he, like any Secretary of State, should have moved the Third Reading of this major and important Bill.

The second sour note that I have to introduce relates to the speech made by Sir Donald Maitland. We do not believe that that speech was in order. It crossed the bounds of propriety and decency. Had Sir Donald's predecessor, Sir Michael Palliser, or Sir Robert Armstrong, the Permanent Under-Secretary of State, Home Office, made such a speech under a Labour Government, Conservative Members would have been the first to be on their feet on points of order about the role of permanent officials. His speech about this Bill carried "Yes, Minister" to extremes. It is not just a matter of a factual statement. The speech was a series of political views and opinions which we have debated constantly over 130 hours.

Whatever the permanent secretary's role, it is not to make public speeches in favour of the Bill. That is what the press release was all about. I deeply regret what has happened. The Secretary of State does not need to lecture me about Sir Donald Maitland; I think I know him as well as he does. It is sad and regrettable that for some curious reason he has broken what we consider to be the bounds of normal propriety and convention of permanent secretaries and their relationships with Ministers.

The Bill was no good when we began our proceedings, and it is no better now. It has not been changed at all. I have never come across a Bill to which fewer changes have been made. Labour Members who have served on many more Standing Committees than I have said that this Bill is remarkable for its lack of change. The reason is that the Bill derives from blatant obstinacy. As my hon. Friend the Member for Dunfermline (Mr. Douglas) said, it derives from sheer dogma and doctrine. Even the practical and pragmatic arguments that we put on the gas provisions of the Bill have been ignored.

In the time that is available under the guillotine, let me catalogue the fundamental failings of the Bill and the reasons why we shall oppose it both on Third Reading and in the country. First, as the hon. Member for Bedford (Mr. Skeet) and others have spotted, the Bill breaks up—smashes up—a successful national oil corporation. Even Conservative Members accept that it disintegrates BNOC. We take different views on what we should do about it, but it smashes a successful national oil corporation.

BNOC was profitable and vibrantly successful. It has gained grudging respect, even from the oil industry. The Bill breaks it up in the worst possible way. That point has been made by the hon. Member for Bedford and others both in Committee and in the debate today. The Bill will leave behind a State corporation trading in oil which is weak, vulnerable and with extreme financial difficulties. Indeed, the Government introduced a clause to give grants and subsidies to the State oil company. It takes genius to create a lame duck out of a national oil corporation, yet the Government are on the verge of doing so if the Bill goes through in its present form.

Secondly, by breaking up BNOC, it breaks up the one organisation concerned with the North Sea that was answerable to the Government and the nation alone. It had no allegiance other than to the Government and the nation. We know about the great success story of the North Sea and about the important role of the multinationals in developing the North Sea in the 1970s. That is all very well and good, but in fact and in practice they do not owe allegiance to this nation. They owe allegiance to the shareholders of Houston, Louisiana and elsewhere, and there is no reason to believe that they will invest on the size and scale required in the 1980s.

Coincidentally, the North Sea was helpful to those companies because they were pushed out of the Middle East in the 1970s. However, they may spend more time looking at, and investing in, China in the 1980s. Therefore, the breaking up of the one organisation that is the eyes and ears of the British Government and British nation, answerable to no one else, is in our view a disaster, given the problems that we shall face in the 1980s.

We believe that the Bill will destroy and undermine the control of our oil supplies. We have driven the Government hard and believed that we might obtain some concessions on the participation agreements between Britoil and BNOC. We still have not seen them, and that is another secret and veiled part of the Bill. Nevertheless, we believe that we shall lose control over our oil supplies.

As hon. Members on both sides have pointed out, the Government are absolutely friendless in their belief that they should break up BNOC. They could not even get Mr. Shelbourne to agree to the proposal. Indeed, Mr. Utiger and most of the other members of the board, some of whom believe in privatisation, feel that the Government have done it in the wrong way.

The gas provisions in the Bill are a betrayal of national and consumer interests. The measure will destroy the rights of British Gas to buy gas from the North Sea. It destroys the rights of British Gas to purchase gas from the North Sea on behalf of 15 million consumers. It will destroy the purchasing rights of British Gas. At present it has the right to first purchase, and the Bill will stop that.

As we said on Second reading, the end gain of the Bill is not to supply the Leicestershire villagers with gas that they do not have at present, nor is it to supply gas to Brush Electric. It will eventually allow the oil companies to export their gas to Europe. It paves the way for the export of gas, and Sir Donald Maitland told us so in his speech.

The Bill will also undermine the negotiating power of British Gas with the oil companies. The hon. Members for Derbyshire, South-East (Mr. Rost) and Bedford, as well as the Government, know that British Gas will have to negotiate important contracts to cover consumer gas supplies for the mid and late 1980s. The Bill tilts the whole balance of those negotiations in favour of the oil companies.

Conservative Members have said that they support the idea that the oil companies should get a higher price for their gas. They have been the spokesman for a particular group of companies. They have not spoken on behalf of the nation's consumers. They have spoken on behalf of the interests of a particular sector, as has been apparent in speech after speech. They are willing to undermine the power of British Gas to negotiate on behalf of 151½ million consumers of gas in the mid and late 1980s. That is what the Bill is about. It will benefit private interests at the expense of the nation and of the consumer. That is why we shall oppose it.

There is worse. In clauses 15, 16 and 17 the Bill does something that no Government have done before. It will break up and meddle with the national gas transmission system.

Mr. Matthew Parris (Derbyshire, West)

Hear, hear.

Mr. Rowlands

I hope that that "Hear, hear", together with those of other Conservative Members, will go on the record. When the first problems arise as a result of the interference and meddling of a Secretary of State in a national gas transmission system and when the Secretary of State through his powers of direction overrides the professional and technical judgment of gas engineers and trouble arises, we shall remember who supported the proposal.

There is an even more incredible proposition in the Bill. The Secretary of State says "I take powers of direction to override British Gas and interfere with its national gas transmission system, but I do not accept responsibility for the actions that I shall take". That is what the Government said. When they repeatedly say that if the Secretary of State uses his powers of direction to override the professional judgment of British Gas officials and engineers, one assumes that the Secretary of State will bear responsibility for that—but no. He says "Although we shall override British Gas and have power to do so, we shall not accept responsibility for any decisions that we take". I do not know where hon. Members stand on that. Whatever they think about privatisation, can they possibly support the proposition that when a Minister's decision overrides the responsibility and judgment of an organisation, he is not responsible for the decision that he has imposed? That is a travesty, and it is what is written in the Bill.

Finally, I come to the most fundamental reason why we oppose the Bill. It offends every normal parliamentary convention. It is a crude enabling Bill which gives the Secretary of State enormous power to do what he likes, when he likes, and how he likes, with large assets which at the moment belong to the nation. The amount of parliamentary control once the Bill becomes law will be miserable and paltry. It will consist of a couple of negative orders debated late at night in respect of gas, and not a single one for the disposal of more than £1 billion worth of oil assets.

No matter where we stand on privatisation, we should stand on the side of parliamentary accountability and scrutiny. We have already seen an example of what happens when Parliament loses control or supervision of an issue. It happened with Amersham International, when none of the decisions made ever came back to this House. That is why the Government got into such a mess with that example of privatisation. This Bill is privatisation writ large. We oppose it on the grounds of principle, party philosophy and, more important, because it is a fundamental affront to every sense of decent parliamentary democracy.

6.44 pm

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

I shall start by dealing with two matters of a personal nature which were raised by the hon. Member for Merthyr Tydfil (Mr. Rowlands). If, by replying to this debate, winding it up rather than opening it, I have been guilty of a discourtesy to the House, I apologise unreservedly. However, I assure the House that no such discourtesy was intended.

The second matter that the hon. Member for Merthyr Tydfil raised was Sir Donald Maitland's speech. In that respect I make no apology whatsoever. Sir Donald's speech was his own speech. Of course, he showed it to me before he delivered it, and I approved it. It is a factual statement of Government policy, and he was perfectly entitled to make it. There are many precedents for it. I recall last year, when I was a Treasury Minister, that Sir Douglas Wass, the Permanent Secretary to the Treasury, made a public speech at an important meeting, when he explained Government economic policy. Economic policy is another issue which is not uncontroversial—something on which there is more than one view. The slur that we have heard today on a very distinguished public servant is uncalled for, and I hope that at some stage the hon. Gentleman will see fit to withdraw it.

The Bill was scrutinised in Committee for more than 100 hours, quite apart from the scrutiny that it was given on Report yesterday. When the hon. Member for Newcastle upon Tyne, West (Mr. Brown) complained that the guillotine had prevented a proper scrutiny, that was totally absurd. It is important to get that on the record. The only thing that the guillotine prevented was an indefinite filibuster. The timetable motion that was moved and approved by the House was of such generosity that the Opposition were totally unable to fill the time that was allocated to them. Of the time that was available for debate under the allocation of time motion, the Opposition chose not to use twelve hours.

Mr. Arthur Lewis (Newham, North-West)

On a point of order, Mr. Deputy Speaker. Before you were in the Chair, your predecessor rightly pointed out that Third Reading is a very strict debate, in which one can discuss only what is in the Bill. Where in the Bill is there anything about the guillotine, how long the guillotine operated, and whether or not the guillotine was sufficient? I have not examined the Bill fully, but I can see nothing in it about the guillotine.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

The hon. Gentleman is right, but it is not unknown for hon. Members and Ministers to have a preamble to their speeches. It should not be too long in a short debate.

Mr. Lawson

So much for that. Perhaps I may now say something else that is not in the Bill, Mr. Deputy Speaker. I am most grateful for the informed support—not always uncritical—which I and my Front Bench team have had from our hon. Friends on the Back Benches during the course of the Bill. If I do not have time to reply to all the points that they have raised, I hope that they appreciate that I take their points very much on board, and I will consider all of them most carefully.

I turn to the various arguments that were raised today.

On the first part of the Bill—Britoil and BNOC—one of the Opposition's main points was an attempt to maintain that the nation's security of oil supply would be undermined by the sale of shares in Britoil. That is complete nonsense. We have made it clear that, as with any other oil company operating in the North Sea, there will be a participation agreement between Britoil and BNOC. Participation, of course, is merely one of many aspects which ensure security of supply. In addition, there are assurances given by refiners, which recognise the special obligations to the United Kingdom in times of limited shortage, and BNOC's ability to repatriate oil to the United Kingdom market. That facility remains. These assurances, together with the Government's controls over depletion, licensing and flaring—I will come to the point about flaring raised by the right hon. Member for Orkney and Shetland (Mr. Grimond) in a moment—and the tax and royalty regime, remain wholly unaffected by the Britoil sale.

I hope that during the Bill's proceedings we have dispelled any apprehensions that existed at the beginning, about BNOC's future role. As I made clear throughout, BNOC will remain 100 per cent. in the public sector, trading primarily in participation oil, for which it will retain all the rights that it needs. It would not be in the national interest—as some of my hon. Friends urged—to take the further step of privatising the corporation's trading, as well as its upstream business. That trading is an essential function of the participation agreements. Therefore, the participation agreements have a strategic rather than commercial function. That is why they exist. It simply would not make sense to privatise them. This answers the point made, among others, by the right hon. Member for Leeds, South (Mr. Rees). The right hon. Gentleman said that Britoil should be an integrated company. There is nothing to stop it being an integrated company. It is up to Britoil to decide whether it wants to move downstream; the articles of association state that it may do so. It can have refineries if it wishes, although at present it may not wish to. It can certainly trade and have distribution outlets. It can be fully integrated, but BNOC's role in the participation agreements is something that no integrated oil company can undertake, for the simple reason that such agreements are not basically commercial operations. They exist for strategic reasons.

One of my hon. Friends asked why we should not scrap the participation agreements. In those circumstances, the trading operation would be much smaller than its present large size. The reason we decided—most hon. Members on both sides of the House agreed that this was right—to retain participation agreements was fully explained by my hon. Friend the Minister of State in the fifth sitting of the Committee on 11 February.

On Britoil, the BNOC board formally accepted the Government's policy of privatisation as long ago as January this year. The chairman made no secret of his welcome to the benefits that this will bring to the company and its employees.

Viscount Cranborne

I am grateful to my right hon. Friend for giving way because I know that time is short. My right hon. Friend said that he retains the participation crude for strategic reasons. Surely, there are other strategic raw materials apart from oil. Why do we not have participation agreements for them?

Mr. Lawson

Oil is a commodity of a very special nature, as the events of 1973–74 reminded us all. On gas—

Mr. Merlyn Rees

On the sale of BNOC, will the Secretary of State undertake, although it is not in the Bill, to report to the House what method of sale he intends to use?

Mr. Lawson

The House will, of course, be informed of the method of sale before the sale takes place. That goes without saying. There are, however, certainly no parliamentary precedents for formal procedures to do that.

On gas, we have made a number of amendments as a result of discussion in Committee. That proves, to some extent, the benefit of the Committee. There can certainly be no contention that the Government have been unwilling to consider constructive suggestions on the gas provisions. Nor did the timetable motion prevent any such suggestions. Indeed, all the changes that occurred took place during the operation of the guillotine.

Another point raised concerned gas exports. The Bill changes the present position in no way. I make no apology for that. There is tremendous scope for additional sales of gas to British industry. However, supplies from existing fields, which will soon decline, will be inadequate to meet all those demands. Our proposals will give the exploration efforts of the oil companies the fillip they need. UKOOA has assured me of its unreserved support for the Bill. On exports, the position is simple. If large new reserves of gas are discovered, we will consider exports.

The right hon. Member for Orkney and Shetland asked about gas gathering and what progress had been made. The BGC expects to take receipt this month at St. Fergus of the first gas transported via the FLAGS line. When the western and northern legs are completed next year, it will be taking gas from a total of eight fields. I am confident that oil companies will come forward in due course with gas gathering schemes for other fields.

The complete cessation of flaring would mean virtually the cessation of oil production. Flaring is now running at only half the rate that it was when this Government took office, even though the rate of production has risen considerably.

Mr. Canavan

rose—

Mr. Lawson

I have no time to give way.

On gas provisions, the objections raised may sound very bland and impressive. However, they were raised by people who did not want to see the gas monopoly broken in any way. They did not want competition in any shape or form. The Government are confident that private industry, both suppliers and customers, will be able to make the most of the opportunities the Bill will give them. The newspapers have already reported that an important company, with undeveloped gas reserves, is seriously examining the direct sale of gas to industrial consumers once the Bill becomes law.

I shall do all in my power to ensure that the market is open to such initiatives as speedily and effectively as possible. These powers are important and I commend them to the House. The safety provisions are of equal importance. I am glad that they were widely welcomed on both sides of the House.

The Bill is passing through its last stage in the House of Commons and I reaffirm its importance. Britain's energy sector has been the object of stale thought and received wisdom for too long. Debate has been kept within unspoken limits, which utterly failed to touch on the fundamental issues. There has been a measure of private despair, common to all Governments, about nationalised industries.

The Bill proposes a fresh approach, based on enterprise and change. I fully recognise, in the measures it proposes, that it is not a soft option, either for the industries concerned or the Government. Many would prefer us to leave things alone and let the industries stay as they are. That is not good enough. Of course change is never popular until it has succeeded. In the nation's interest, we must tackle problems and not pretend that they do not exist. We cannot afford to take the easy way out. Of course, it is easy for the Opposition to be negative, as they have been throughout the Bill. They carp and criticise, complain and are satisfied with nothing they are told. We know about that and a good example of it concerned the articles of association. They spent goodness knows how long at the start of the Committee stage complaining that they did not have the articles of association. When they got them, there was nothing they could think of to say or do. They did not criticise the Government directives. They did not criticise the provision to maintain independence. They had nothing to criticise. The whole thing was phoney.

There has not been heard from the Opposition any intellectual or coherent case for clothing their basic prejudices. I look forward to the passage of the Bill. I look forward still more to its implementation. I invite the House to give it a Third Reading. It is a Bill of the first importance. It will create more change and more progress in our energy industries than any previous legislation that has passed through the House.

It being Seven o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to Order [8 March] and Resolution [31 March], to put forthwith the Question already proposed from the Chair.

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

The House divided: Ayes 280, Noes 214.

Division No. 116]	[7pm
AYES
Adley, Robert	Alison, Rt Hon Michael
Aitken, Jonathan	Amery, Rt Hon Julian
Alexander, Richard	Ancram, Michael

Arnold, Tom	Fry, Peter
Aspinwall, Jack	Gardiner, George (Reigate)
Atkins, Robert (PrestonN)	Gardner, Edward (S Fylde)
Baker, Kenneth(St.M'bone)	Garel-Jones, Tristan
Baker, Nicholas (N Dorset)	Gilmour, Rt Hon Sir Ian
Banks, Robert	Glyn, Dr Alan
Bendall, Vivian	Goodhart, SirPhilip
Benyon, W.(Buckingham)	Goodhew, SirVictor
Best, Keith	Goodlad, Alastair
Bevan, David Gilroy	Gorst, John
Biffen, Rt Hon John	Gow, Ian
Biggs-Davison, SirJohn	Grant, Anthony (HarrowC)
Blackburn, John	Gray, Hamish
Blaker, Peter	Griffiths, E.(B'ySt.Edm'ds)
Body, Richard	Griffiths, Peter(Portsm'thN)
Bonsor, SirNicholas	Grist, Ian
Bottomley, Peter(W'wichW)	Grylls, Michael
Bowden, Andrew	Gummer, JohnSelwyn
Boyson, DrRhodes	Hamilton, HonA.
Braine, SirBernard	Hamilton, Michael(Salisbury)
Bright, Graham	Hampson, DrKeith
Brittan, Rt. Hon. Leon	Hannam, John
Brooke, Hon Peter	Havers, Rt Hon Sir Michael
Brotherton, Michael	Hawksley, Warren
Brown, Michael(Brigg&Sc'n)	Hayhoe, Barney
Browne, John(Winchester)	Heddle, John
Bruce-Gardyne, John	Henderson, Barry
Bryan, SirPaul	Heseltine, Rt Hon Michael
Buck, Antony	Hicks, Robert
Budgen, Nick	Higgins, Rt Hon Terence L.
Bulmer, Esmond	Hogg, Hon Douglas(Gr'th'm)
Burden, SirFrederick	Holland, Philip(Carlton)
Butcher, John	Hooson, Tom
Cadbury, Jocelyn	Hordern, Peter
Carlisle, John (Luton West)	Howe, Rt Hon Sir Geoffrey
Carlisle, Kenneth(Lincoln)	Howell, Rt Hon D. (G'ldf'd)
Carlisle, Rt Hon M. (R'c'n)	Howell, Ralph (N Norfolk)
Chalker, Mrs.Lynda	Hunt, David (Wirral)
Channon, Rt. Hon. Paul	Hunt, John(Ravensbourne)
Chapman, Sydney	Irving, Charles(Cheltenham)
Churchill, W.S.	Jessel, Toby
Clark, Hon A. (Plym'th, S'n)	JohnsonSmith, Geoffrey
Clark, SirW. (CroydonS)	Jopling, Rt Hon Michael
Clarke, Kenneth(Rushcliffe)	Joseph, Rt Hon Sir Keith
Cockeram, Eric	Kaberry, SirDonald
Colvin, Michael	Kellett-Bowman, MrsElaine
Cope, John	Kershaw, Sir Anthony
Costain, Sir Albert	King, Rt Hon Tom
Cranborne, Viscount	Lamont, Norman
Crouch, David	Lang, Ian
Dean, Paul (North Somerset)	Latham, Michael
Dickens, Geoffrey	Lawrence, Ivan
Dorrell, Stephen	Lawson, Rt Hon Nigel
Douglas-Hamilton, LordJ.	Lee, John
Dover, Denshore	LeMarchant, Spencer
du Cann, Rt Hon Edward	Lennox-Boyd, HonMark
Dunn, Robert(Dartford)	Lester, Jim (Beeston)
Durant, Tony	Lewis, Kenneth(Rutland)
Dykes, Hugh	Lloyd, Ian (Havant & W'loo)
Eden, Rt Hon Sir John	Lloyd, Peter (Fareham)
Edwards, Rt Hon N. (P'broke)	Loveridge, John
Eggar, Tim	Lyell, Nicholas
Elliott, SirWilliam	McCrindle, Robert
Eyre, Reginald	Macfarlane, Neil
Fairbairn, Nicholas	MacGregor, John
Fairgrieve, SirRussell	MacKay, John (Argyll)
Faith, Mrs Sheila	Macmillan, Rt Hon M.
Farr, John	McNair-Wilson, M. (N'bury)
Fell, Sir Anthony	McNair-Wilson, P. (NewF'st)
Fenner, MrsPeggy	Marland, Paul
Finsberg, Geoffrey	Marshall, Michael(Arundel)
Fisher, SirNigel	Marten, RtHonNeil
Fletcher, A. (Ed'nb'ghN)	Mates, Michael
Fletcher-Cooke, SirCharles	Maude, Rt Hon Sir Angus
Fookes, Miss Janet	Mawby, Ray
Forman, Nigel	Mawhinney, DrBrian
Fowler, Rt Hon Norman	Maxwell-Hyslop, Robin
Fox, Marcus	Mayhew, Patrick
Fraser, Rt Hon Sir Hugh	Mellor, David
Fraser, Peter(South Angus,)	Meyer, Sir Anthony

Miller, Hal(B'grove.)	Skeet, T. H. H.
Mills, Iain(Meriden)	Speed, Keith
Mills, Peter (West Devon)	Speller, Tony
Miscampbell, Norman	Spence, John
Moate, Roger	Spicer, Jim (West Dorset)
Monro, SirHector	Spicer, Michael (S Worcs)
Montgomery, Fergus	Sproat, Iain
Moore, John	Squire, Robin
Morris, M. (N'hampton S)	Stainton, Keith
Morrison, Hon C. (Devizes)	Stanbrook, Ivor
Morrison, Hon P. (Chester)	Stanley, John
Mudd, David	Steen, Anthony
Murphy, Christopher	Stevens, Martin
Myles, David	Stewart, A. (E Renfrewshire)
Neale, Gerrard	Stewart, Ian (Hitchin)
Neubert, Michael	Stokes, John
Newton, Tony	Stradling Thomas, J.
Normanton, Tom	Tapsell, Peter
Onslow, Cranley	Taylor, Teddy (S'end E)
Oppenheim, Rt Hon Mrs S.	Tebbit, Rt Hon Norman
Page, John (Harrow, West)	Temple-Morris, Peter
Page, Richard (SW Herts)	Thomas, Rt Hon Peter
Parkinson, Rt Hon Cecil	Thompson, Donald
Parris, Matthew	Thorne, Neil(IlfordSouth.)
Patten, Christopher(Bath)	Thornton, Malcolm
Patten, John (Oxford)	Townend, John(Bridlington)
Pattie, Geoffrey	Townsend, CyrilD, (B'heath)
Pawsey, James	Trippier, David
Percival, SirIan	Trotter, Neville
Peyton, Rt Hon John	van Straubenzee, Sir W.
Pollock, Alexander	Vaughan, Dr Gerard
Porter, Barry	Viggers, Peter
Prentice, Rt Hon Reg	Waddington, David
Prior, Rt Hon James	Wakeham, John
Proctor, K. Harvey	Waldegrave, HonWilliam
Pym, Rt Hon Francis	Walker, B. (Perth)
Raison, Rt Hon Timothy	Walker-Smith, Rt Hon Sir D.
Rathbone, Tim	Wall, Sir Patrick
Rees-Davies, W. R.	Waller, Gary
Renton, Tim	Walters, Dennis
Rhodes James, Robert	Ward, John
Rhys Williams, Sir Brandon	Warren, Kenneth
Ridley, Hon Nicholas	Watson, John
Rippon, Rt Hon Geoffrey	Wells, Bowen
Roberts, M. (Cardiff NW)	Wells, John(Maidstone)
Roberts, Wyn (Conway)	Wheeler, John
Rossi, Hugh	Whitelaw, Rt Hon William
Rost, Peter	Whitney, Raymond
Royle, Sir Anthony	Wickenden, Keith
Sainsbury, Hon Timothy	Wigley, Dafydd
St. John-Stevas, Rt Hon N.	Wilkinson, John
Scott, Nicholas	Winterton, Nicholas
Shaw, Giles (Pudsey)	Wolfson, Mark
Shaw, Michael (Scarborough)	Young, Sir George (Acton.)
Shelton, William (Streatham)	Younger, Rt Hon George
Shepherd, Colin (Hereford)
Shepherd, Richard	Tellers for the Ayes:
Silvester, Fred	Mr. Anthony Berry
Sims, Roger	and Mr. Carol Mather

NOES
Abse, Leo	Brown, R. C. (N'castle W)
Anderson, Donald	Brown, Ronald W. (H'ckn'yS)
Archer, Rt Hon Peter	Brown, Ron (E'burgh, Leith)
Ashley, Rt Hon Jack	Callaghan, Rt Hon J.
Ashton, Joe	Callaghan, Jim (Midd't'n&P)
Atkinson, N. (H'gey,)	Campbell, Ian
Bagier, GordonA.T.	Canavan, Dennis
Barnett, Guy (Greenwich)	Carmichael, Neil
Barnett, Rt Hon Joel (H'wd)	Cartwright, John
Benn, Rt Hon Tony	Cocks, Rt Hon M. (B 'stol S)
Bennett, Andrew(St'kp'tn)	Cohen, Stanley
Bidwell, Sydney	Coleman, Donald
Booth, Rt Hon Albert	Concannon, Rt Hon J. D.
Boothroyd, MissBetty	Cook, Robin F.
Bottomley, RtHonA. (M'b'ro)	Cowans, Harry
Bradley, Tom	Cox, T. (W'dsw'th, Toot'g)
Bray, DrJeremy	Craigen, J. M. (G'gow, M'hill)
Brocklebank-Fowler, C.	Crawshaw, Richard
Brown, Hugh D. (Provan)	Cryer, Bob

Cunliffe, Lawrence	McDonald, DrOonagh
Cunningham, G. (IslingtonS.)	McElhone, Frank
Cunningham, DrJ. (W'h'n,)	McKay, Allen(Penistone)
Dalyell, Tam	McKelvey, William
Davidson, Arthur	Maclennan, Robert
Davies, Rt Hon Denzil (L'lli)	McNamara, Kevin
Davies, Ifor (Gower)	Magee, Bryan
Davis, Clinton (HackneyC)	Marks, Kenneth
Davis Terry (B'ham, Stechf'd)	Marshall, D(G'gowS'ton)
Deakins, Eric	Marshall, DrEdmund (Goole)
Dean, Joseph (Leeds West)	Marshall, Jim(Leicestser)
Dewar, Donald	Martin, M(G'gowS'burn)
Dixon, Donald	Mason, Rt Hon Roy
Dobson, Frank	Maxton, John
Dormand, Jack	Maynard, Miss Joan
Douglas, Dick	Meacher, Michael
Douglas-Mann, Bruce	Mellish, Rt Hon Robert
Dubs, Alfred	Millan, Rt Hon Bruce
Duffy, A. E. P.	Miller, Dr M.S(E Kilbride)
Dunnett, Jack	Mitchell, Austin(Grimsby)
Dunwoody, Hon Mrs G.	Mitchell, R. C. (Soton Itchen)
Eadie, Alex	Morris, Rt Hon A. (W'shawe)
Eastham, Ken	Morris, Rt Hon C. (O'shaw)
Ellis, R. (NED'bysh're)	Morris, Rt Hon J. (Aberavon)
Ellis Tom (Wrexham)	Morton, George
English, Michael	Moyle, Rt Hon Roland
Ennals, Rt Hon David	Newens, Stanley
Evans, loan (Aberdare)	Oakes, Rt Hon Gordon
Evans, John (Newton)	Ogden, Eric
Faulds, Andrew	O'Halloran, Michael
Field, Frank	O'Neill, Martin
Fitch, Alan	Orme, Rt Hon Stanley
Fitt, Gerard	Park, George
Fletcher, Ted(Darlington)	Parker, John
Ford, Ben	Parry, Robert
Forrester, John	Pendry, Tom
Foster, Derek	Penhaligon, David
Foulkes, George	Powell, Raymond(Ogmore)
Fraser, J. (Lamb'th, N'w'd)	Prescott, John
Garrett, John (Norwich S)	Radice, Giles
Garrett, W. E. (Wallsend)	Rees, Rt Hon M (Leeds S)
George, Bruce	Roberts, Albert(Normanton)
Golding, John	Roberts, Allan(Bootle)
Graham, Ted	Roberts, Ernest (Hackney N)
Grant, John (IslingtonC)	Roberts, Gwilym(Cannock)
Hamilton, James(Bothwell)	Robertson, George
Harrison, Rt Hon Walter	Robinson, G. (Coventry NW)
Heffer, EricS.	Rodgers, Rt Hon William
Hogg, N. (E Dunb't'nshire)	Rooker, J. W.
Holland, S.(L'b'th, Vauxh'll)	Roper, John
HomeRobertson, John	Ross, Ernest (Dundee West)
Homewood, William	Rowlands, Ted
Hooley, Frank	Sandelson, Neville
Horam, John	Sever, John
Howell, Rt Hon D.	Sheerman, Barry
Howells, Geraint	Sheldon, Rt Hon R.
Huckfield, Les	Shore, Rt Hon Peter
Hughes, Mark(Durham)	Short, Mrs Renée
Hughes, Robert (Aberdeen N)	Silkin, Rt Hon J. (Deptford)
Janner, Hon Greville	Silverman, Julius
Jay, Rt Hon Douglas	Skinner, Dennis
Jenkins, Rt Hon Roy(Hillhead)	Smith, Rt Hon J. (N Lanark)
Johnson, Walter (Derby S)	Soley, Clive
Johnston, Russell (Inverness)	Spearing, Nigel
Jones, Rt Hon Alec (Rh'dda)	Spriggs, Leslie
Jones, Barry (East Flint)	Stallard, A.W.
Kilfedder, JamesA.	Stewart, Rt Hon D. (W Isles)
Kilroy-Silk, Robert	Stoddart, David
Kinnock, Neil	Stott, Roger
Lambie, David	Strang, Gavin
Lamborn, Harry	Straw, Jack
Lamond, James	Summerskill, HonDrShirley
Leadbitter, Ted	Taylor, Mrs Ann (Bolton W)
Leighton, Ronald	Thomas, Jeffrey (Abertillery)
Lestor, Miss Joan	Thomas, Mike (Newcastle E)
Lewis, Arthur (N'hamNW)	Thomas, DrR. (Carmarthen)
Lewis, Ron(Carlisle)	Thorne, Stan (PrestonSouth)
Lofthouse, Geoffrey	Tilley, John
Lyons, Edward (Bradf'd W)	Tinn, James
Mabon, Rt Hon Dr J. Dickson	Torney, Tom

Varley, Rt Hon Eric G.	Wilson, Gordon (DundeeE)
Walker, Rt Hon H. (D'caster)	Wilson, Rt Hon Sir H. (H'ton)
Welsh, Michael	Wilson, William (C'try SE)
White, Frank R.	Winnick, David
White, J. (G'gowPollok)	Woolmer, Kenneth
Whitehead, Phillip	Wright, Sheila
Whitlock, William
Willey.Rt Hon Frederick	Tellers for the Noes:
Williams, Rt Hon A. (S'seaW)	Mr. Allen McKay
Williams, Rt Hon Mrs (Crosby)	and Mr. Frank Haynes

Question accordingly agreed to.

Bill read the Third time and passed.