ALTERNATIVE VALUATION OF ETHANE USED FOR PETROCHEMICAL PURPOSES

HC Deb 13 July 1982 vol 27 cc957-80

Mr. Robert Sheldon

I beg to move amendment No. 159, in page 108, line 6, leave out clause 129.

Mr. Deputy Speaker

With this it will be convenient to take amendment No. 187, in page 199, line 31, leave out schedule 16.

Mr. Sheldon

Clause 129 covers the alternative valuation of ethane used for petrochemical purposes. We debated that matter late in the Bill. Many changes were made in the clause. The amendments were large and numerous. The clause was taken at the end of the Finance Bill debate, which was an unusual procedure, because of the late consultations that were taking place.

The reason that we have sought to bring back the matter on Report is the great disquiet that we have seen as a result of Imperial Chemical Industries suing the Government over certain matters concerned with clause 129. We thought it right that those matters, so recently discussed and debated in Committee, ought to be brought forward for further examination in the light of subsequent events.

When we discussed the matter in Committee, the Minister of State said that he would use the period between the Committee debate and our return to the Floor of the House to consult ICI and the oil industries in an attempt to find a solution that was acceptable to both. There is a great deal of unease that the Government are favouring one company rather than another. The House naturally must be concerned about the demand for equity between the oil companies on the one hand and the chemical industry, in this case ICI, on the other hand. Clause 119, as it then was in Standing Committee, extended oil taxation to mixed gases. As a result of developments in Scotland and elsewhere, Shell, Esso and BP have their own ethane and can transfer it to chemical operations.

The substantial question that was before the Committee and still remains before the House is: how do we value internal transactions upon which PRT and corporation tax will be raised? Because those taxes are involved, a large sum of money is in question. The normal method of valuation—market price—is denied to us because of the restricted outlet of ethane gas. The valuation as decided by the Treasury and the Inland Revenue was to be based on a formula that was to be revealed in confidence to the Inland Revenue. That is natural enough and we understand the reasons for it. These matters are not generally disclosed. But ICI is at some disadvantage because it does not know the basis of costing and, therefore, the basis of taxation. We understand the problems that are involved.

Shell is an important part of the groups that are developing the projects. It has its own ethane cracker project which has been developed over several years. Shell and Esso, as developers of the Brent field, had to find a secure outlet for ethane from that field. The feedstock necessary to establish the project was not to be bought from an independent supplier but to be provided by an affiliated company. The attempt to discover a suitable method for obtaining a suitable transfer price is the major cause of the problem as we see it.

Ethane can be valued as a fuel. That is one of the solutions that ICI advanced. The Government believe that that is one of the problems to which they have discovered the solution. I wish that that were so. ICI does not agree that the Government have discovered the solution. The Government have failed to convince ICI that the solution is fair to it and the oil companies.

ICI was also worried about the lack of certainty about a sufficiently frequent examination of the pricing formula which would decide price in the absence of the market price. Despite what the Minister may say, all parties agree that it will be difficult to estimate a price for ethane. The formula that will be determined in agreement with the Inland Revenue will not be revealed to ICI. It may therefore feel that it may be discriminated against. That may not be so, but ICI can not say with certainty that it is operating competitively in a fair and open market.

The price of the feedstock that ICI uses is known with certainty. Anyone can establish its commercial price. The price of its competitors' feedstock will not be known quite so clearly. If ICI is beaten on price, it will not know whether that is because the feedstock has been valued at a lower price, whether its competitors' plant is more efficient or whether it is operating at a loss. Those considerations are not normally found in the commercial world. ICI therefore believes that it has a grievance which it has brought to the attention of hon. Members.

A number of important companies in which the Government have an important interest are in conflict. That is the great problem. The companies are important for the development of the economy of various parts of the country and for the jobs and the progress that they can bring. It is no happy solution to try to find a compromise, as the Minister did, only to have it rejected by a major part of the petrochemcial industry. As a result, an important national company—ICI—is now suing the Government in a situation that is entirely without precedent.

Mr. Eggar

Is the right hon. Gentleman coming to the view that ICI should have the right to decide whether the Government introduce the clause and thus perhaps to gain a competitive advantage over a rival and possibly to jeopardise jobs at Moss Morran?

Mr. Sheldon

I am certainly not saying that. The important consideration is that there are two types of development. Our task is to retain both the one that is already in existence and the one that is in development. ICI feels that arrangements may be reached between the Inland Revenue and the companies in secret and unannounced—I do not deny that there are good reasons for that—which might have a serious effect not just on ICI's profits but on its very viability. The Minister must therefore seek to assure both ICI and the oil companies as well as the House on that point.

The Minister gave an undertaking in Committee that there would be discussions. We hoped to arrive at a solution that would be seen to be fair between the various companies and would be accepted by them. Unfortunately, he has failed to do so. Nevertheless, a solution is clearly needed and we believe that it is possible to find an arrangement of the kind that we discussed in Committee which would be acceptable to the various groups, perhaps on the lines of the Shell suggestion. That might meet the requirements of ICI. Shell suggested that the proposed forward estimate of the value of the ethane being transferred into the petrochemical plant should accord with the kind of pricing formula that one would expect between two independent companies. That is similar to the solution suggested by ICI.

I think that if the Minister pursues that line of thought he may find a solution. I hold the Government responsible in these matters. They had the basis for a compromise and an agreement of enormous concern to two very important parts of the country where jobs and progress are vital. He owes it to the House to try to find a solution in that way. I hope that he will do so. I regret that he has not done so in the time that was available to him.

Mr. Harry Ewing (Stirling, Falkirk and Grangemouth)

I declare an interest at once. The amendment proposed by my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) would have serious repercussions for my constituency and certainly for the development of the Shell-Esso plant at Moss Morran.

If any Member of Parliament thinks for one moment that we can please the chemical companies with some legislative proposal or compromise agreed among ourselves in the House, the experience of each and every one of us should prove the contrary. I hold no brief for any of them. My brief is to protect employment, not just in my constituency, or even just in Scotland and the North-East, but throughout the United Kingdom.

I do not accept that the proposal that the clause should be withdrawn from the Bill will protect unemployment, and for that reason I am against it. My experience of chemical companies is that, whatever we do for them, we then come up with another excuse for doing something further to assist them with the problems that they present to us from time to time.

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Mr. Dick Douglas (Dunfermline)

Especially ICI.

Mr. Ewing

I have also had the experience of BP in my constituency. I hold no brief for any of the companies. The House must decide whether the Government's proposals at this stage in the development of Moss Morran, against the background of British Petroleum's investment decisions announced last week, should be accepted to allow those developments to proceed. If the clause is withdrawn, the investment decisions announced last week will be cancelled and there will be a serious danger—some of my hon. Friends will speak to this—that the development at Moss Morran will also be stopped.

As to the difference in the feedstocks, British Petroleum has also used naptha at its Baglan Bay cracker, so it has an interest in preserving a viable naptha cracking market in the United Kingdom. BP also has an interest in the Stockton-on-Tees cracker. The problem arises because of the new chemical feedstock that is due to come on stream in 1983—ethane from the North Sea.

It is all very well for ICI to say, in the document sent to hon. Members, that perhaps the answer is to remove the clause from this year's Finance Bill and to return in 1983 with alternative proposals. Everyone in industry and commerce knows that massive investment decisions are now being taken to meet the date when the ethane will be available from the North Sea. It will be available to BP at Grangemouth in 1983. The Shell-Esso cracker at Moss Morran is not due to come on stream until 1986, but these investment decisions are being taken now and the uncertainty created by the removal of the clause would be unacceptable.

The job consequences for Fife, the Central region of Scotland and for the Grangemouth and Moss Morran travel-to-work areas would be serious. I know that my hon. Friends from the North-East of England have had the same experience of job losses in the petrochemical industry, but in the past eight to 10 years we have lost more than 1,000 jobs in the petrochemical industry at Grangemouth. That is the most industrialised part of Scotland. Even the jobs that will be created as a result of the conversion of the cracker at Grangemouth and the construction of the plant at Moss Morran will not compensate for the job loss that we have suffered during the past eight years. Central Scotland and the surrounding area is not the only area to suffer losses. They are prevalent throughout the United Kingdom.

However, that is no reason why ICI should deliberately attempt—however unkind it may be to say so—to prevent the development at Moss Morran. The background is interesting. When it was known that substantial quantities of ethane were available in the North Sea, the proposal was to bring the gas, not into Moss Morran, but to Stockton-on-Tees, to reverse the flow in the joint pipeline that runs between Stockton and Grangemouth and pumps it back to Grangemouth. That is what ICI wanted.

My hon. Friend the Member for Dumfermline (Mr. Douglas) is more of an expert than I am. I am in favour of coming as far south as possible, but I am more strongly in favour of using the chemical feedstuff that has its origin in Scotland being made available to the plants being constructed in Scotland, as well as to the plants in the North-East of England. It ill becomes ICI at this stage in the development of the North Sea gas field to come up with such a rejection of the Government proposals.

The discussions have been going on for some time. There was a hiccup in the development of the Shell-Esso plant at Moss Morran. Everyone thought that it was to do with industrial rates in the Fife region. It had nothing to do with that. It had nothing to do with derating plant and machinery outside buildings, which in Scotland are subject to rating, but which in England and Wales are derated. That is not the problem. The problem is whether it is possible to strike a proper tax margin for ethane gas. That was discussed in October last year. We now have an objection from ICI.

I have a double interest, in that both BP and ICI have plants in my constituency. Although the ICI division at Grangemouth is involved in fibre rather than chemicals, it will feel the consequences of the decision by the House tonight. To suggest that we should withdraw the clause and jeopardise any investment decisions in relation to the Scottish economy is an outrage.

The people of Falkirk, Grangemouth, Stirling, Clackmannan and Fife will be badly affected by the withdrawal of the clause. I hope that my colleagues will not press the issue to a Division, because there is no reason why we should disagree with our colleagues in the North-East of England. I hope that the clause will remain. If we vote, I shall vote in favour of the clause remaining in the Bill, because it is important for the development of the Scottish economy and for the economies of the North-East and other parts of the United Kingdom.

Mr. James Tinn (Redcar)

We are becoming only too accustomed to the dismal exercise of swapping statistics of hardship and unemployment and accounts of the impact of measures, particularly Government measures, in our respective areas. I do not disagree with my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), or with other hon. Members who may follow, as to the seriousness of job losses and unemployment in Scotland, any more than my hon. Friend and others would question the seriousness of our job losses in the North-East. We are not competing with each other on this level. We regard every case of unemployment as an individual tragedy. At the same time, we have the responsibility of representing our own areas to the best of our ability, and when measures are proposed which are likely, in our view, to worsen the impact of unemployment, it is obviously our duty to do what we can to oppose them.

The impact on my own constituency, where the Wilton plant is situated, can hardly be exaggerated if ICI's fears prove to be justified. The loss of up to 10,000 jobs would be on a scale that we have not seen anywhere in the United Kingdom up to now—not even in my own town of Consett, where 6,000 jobs were lost.

My hon. Friend rightly spoke about the 1,000 job losses in the chemical industry in his area. In steel alone we have lost 10,000 jobs over recent years on Teesside, and we are now called on to envisage the possibility of another 10,000 if ICI's figures are right. That is the question: is ICI right? The Government insist that ICI is wrong and that there is no need to worry about the consequences of the measure.

I have rather more confidence in ICI's ability and its knowledge of its own business, and in its ability to forecast the future and the impact of the measure on the future, than I have in Treasury Ministers, certainly of this Government and perhaps even of previous Labour Administrations. I doubt whether the Treasury has shown such skill and exactitude—.especially when we recall its forecasts in the past—as to allow any of us to place undue confidence in its assurances that in the present case ICI is wrong.

I have read what the Minister of State said in Standing Committee. I understand that the Government are insisting that all they are doing is to correct an existing anomaly in the tax system. I think that the Minister of State said that it makes no difference to the tax revenue. That strikes me as very odd.

I should have thought that Shell, Esso and BP were under the impression that they were getting something from the clause. I should have thought that they were under the impression that it would put some money into their pockets and that they would benefit from it. It is hard to see how they can benefit if there is no impact on the revenue. Have they been kidded along that the measure will do things for them when that is not the case? Or have the Government made a deal with them? Is it right, as has been suggested, that the development at Moss Morran is to be cancelled? Can the Minister confirm that Grangemouth is to go? I would regret it just as much as my hon. Friend. Or has pressure been put on the Government? I would be the last to complain if this Government, who have done it so rarely, were to intervene to protect jobs. But are they? Is that the reason? If they are intervening to protect jobs, presumably a benefit is accruing, and, rightly or wrongly, it is a concession to those companies.

11.15 pm

Is the concession justified? As I understand it. it applies to the ethane transfer from the oil companies through their pipelines—the Flags pipeline—to their subsidiaries. It is argued—no doubt, rightly—that it is not possible to establish a market price. That, I believe, is the heart of the problem that confronts the Government. There are no arm's length sales in the commodity whereby a fair price can be assessed. That has led to the anomaly which the Government seek to rectify.

Before I come to the Government's method of solving the problem, may I ask: is there no other way? In fact, the ethane has an alternative use. It has a use as fuel oil, as well as a use in the petrochemical industry. ICI's suggestion that the price for tax purposes in this transfer to the subsidiaries should be based on the best price for ethane as a fuel oil would not destroy the advantageous position that the plastic producers—the ethylene producers using ethane as their feedstock—at present enjoy. Incidentally, those of us who support the ICI case—and certainly ICI—recognise that ethane has an inherent cost advantage. No one is trying to destroy that. No one is seeking protection against that natural advantage. It is ironical that, had the Government allowed the gas-gathering pipeline to go ahead, ICI would have had access to a supply. At the time when ICI was negotiating for a price for ethane, the oil companies were asking for a premium on its fuel oil cost. They were asking for the fuel oil cost plus, when ICI had thought of getting it through that pipeline. However, that opportunity has gone.

What would the damaging impact of this formula be on the ethane-using plastics producers?

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

The idea, as I understand it, is that ICI wants to level up the commercial advantage. As there is considerable ethane in the North Sea, it is quite possible for ICI to buy it at some future date. The other installations at Moss Moran are not expected to be in operation between 1982 and 1984. I put it to the hon. Member for Redcar (Mr. Tinn) that ICI has a highly advantageous natural gas contract with the British Gas Corporation, and it is buying its gas very much below 10p per therm. I shall not give the price; I merely say that it is an advantageous price. Fisons, on the other hand, in order to produce ammonia, got rather annoyed about it. There may be fairness or unfairness, but should we take into account the environment and all the circumstances involved?

Mr. Tinn

Of course we should. I have never been tempted by the scent of a red herring and I do not intend to follow the one that the hon. Gentleman has trailed some length across the Floor of the House.

I do not wish to detain the House longer than is necessary, but 10,000 jobs on Teesside are worth a few minutes of our time. I was about to make the point that the alternative pricing formula proposed by ICI based on fuel oil would still leave the ethane-using producers with an advantage. The present price of ethane as a fuel oil is 26p per therm. The price of naphtha, which ICI accepts and makes no complaint about, is 33p per therm. We make no complaint about that advantage, but it seems odd that we should be thinking about giving a further tax concession that it is calculated would amount to £50 per tonne out of every £300—about £17 per tonne in addition to the natural advantage enjoyed by the ethane producers.

Mr. Eggar

rose—

Mr. Tinn

After my last experience, and as I do not wish to detain the House, the hon. Gentleman will forgive me if I do not give way.

The proposal is not necessary, but since the Government seem determined to press it I must turn to consider how it would work. It seems that the oil companies are to be offered the option of electing to submit a formula to the Inland Revenue Board to fix a price for taxation purposes in the absence of a fairly determined market price.

The Minister quoted the relevant passage in Committee on 24 June. He said: Then paragraph 2(1) makes it clear that an election will be accepted if 'under a relevant contract.… for the sale at arm's length of the ethane to which the election applies, the contract prices would not differ materially from the market values determined in the accordance with the price formula specified in the election; and if the Board are not so satisfied they shall reject the election.—[Official Report, Standing Committee A, 24 June 1982; c. 975.] If I understand that gobbledegook at all, it imposes on the Board a duty not to accept the formula submitted by the applicants unless it conforms with the Board's estimate of the market price. A moment ago I was expressing my understanding that there is no recognised market price. What will guide the Board in deciding whether the submitted formula is fair and fits in it with the market price when there is no market? I shall be interested to hear the Minister's reply.

I hope that when the oil companies make elections to the Board, other interested parties, such as ICI, will be able to express their views as well. It may well be that the Government will concede that point. If they do, it would be rather like giving a torch to a blind man if ICI have to make its representations in complete ignorance of the formula submitted by the oil companies. How can it argue reasonably about a proposal about which it knows nothing? Why should it be so damaging to the oil companies for the taxed costs of their raw materials to be disclosed? Why should it be such a problem for ICI to know what the oil companies have to pay in tax on their ethane when everyone knows what ICI pays in tax for its naphtha? I find that difficult to understand.

I am also concerned about the five-year review and the long-term stability that seems to be given by it. But, even more important, this concession applied to ethane—mistakenly, we believe—is also to apply to other liquefied petroleum gases such as propane and butane where these are mixed together. Both have a clear market value. None of the problems which it is claimed attach to the valuation of ethane attaches to either of these. What is more, 25 per cent. of ICI's feedstock comes from these liquefied petroleum gases from its Ninian field. On these, ICI pays the full commercial price for tax purposes.

Not only is it proposed that users get what in my view is an unjustified concession on the ethane that they use; they are also to get the concession on the butane and the propane that they use. Twenty-five per cent. of ICI's feedstock intake will be of these gases, and the company will have to pay the full tax on it based on the commercial price.

I make no apology for detaining the House on this matter. I want finally to stress again the impact on the whole Teesside area if the Government's proposal is accepted. I understand the concern of my hon. Friends from Scotland about the 2,000 construction jobs which might not go ahead. They hope for 2,000 jobs over three or four years, with a few hundred jobs remaining afterwards. I share their concern. But I invite the House to measure that concern against the loss of 10,000 jobs on Teesside. In my opinion, the answer is inescapable. It is to support the amendment for the deletion of the clause.

Dr. Jeremy Bray (Motherwell and Wishaw)

The amendment has to be seen as my hon. Friends have seen it—in the light of the industries at stake and not just as an abstract question of fiscal principle. It has been presented as a matter of jobs in Scotland versus jobs on Teesside. Presented like that, there is no way in which my hon. Friends representing constituencies in Fife can abstain in any vote that threatens Moss Morran, and no way in which my hon. Friends representing Teesside constituencies can abstain on any vote that threatens Wilton.

I am no more disinterested or interested than any other hon. Member, but I have two specific interests or disinterests to declare. First, I represent a Scottish constituency and am anxious to see Scotland gain the greatest possible number of jobs from North Sea oil and gas. Secondly, I worked in ICI at Wilton for six years before I was first elected to Parliament for a Teesside constituency, and I worked not on some remote irrelevant problem, but on the planning and optimisation of production of ethelyne from plants which basically had the same configuration then as they have now. I left the employment of ICI immediately on my first election to the House and have never been employed by the company in any capacity since then.

To trace the background, and perhaps to see some way forward in the extremely difficult situation that we are facing, it is helpful to go back to 1976, when we first heard talk of Moss Morran and when ethylene demand in the United Kingdom was projected at about 2 million tonnes per annum. It was obvious that new capacity would use ethane, but Moss Morran was no threat to ICI operations on Teesside. However the bottom dropped out of the ethylene market, and of the petrochemical market generally early in 1980, partly as a result of the economic and industrial policies of "You know who".

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The demand for ethylene in the United Kingdom is now projected at about 1 million to 1.2 million tonnes per annum, of which Moss Morran will represent 50 per cent. It is 5 per cent. of the European market, but ethylene is a highly inflammable and explosive gas which is expensive to transport. There are pipelines connecting all the major United Kingdom producers and consumers, but there are no connections in Europe and none is envisaged.

The House may be aware that ICI was negotiating for ethane supplies from the gas-gathering pipeline until the cancellation of the pipeline, when the project was sabotaged by the Government. It was dependent thereafter on its competitors in the chemical industry, on BP, Esso and Shell, as effective sole suppliers of the reduced supply of ethane that is now available as a result of the cancellation of the gas-gathering pipeline. In this changed situation in the supply of ethane and in the changed market for petrochemicals—

Mr. Eggar

Will the hon. Gentleman confirm that ICI and BP were offered the ethane by Shell and Esso and that it is now being used at Moss Morran?

Dr. Bray

The hon. Gentleman will be aware also that ICI offered to Esso and Shell the sale of an ethylene plant at Wilton as easily the cheapest way of using the ethane. The issue of the sale of ethane to ICI is no longer an option, as it is not on offer. There is no market for it, because the vendors are unwilling to sell it.

That method of adapting the No. 5 cracker at Wilton to take ethane rather than naphtha feedstock would have been easily the cheapest way of absorbing the ethane capacity. However, it was not a solution that was acceptable to the oil companies. It is true that the ethane route for the production of ethylene is cheaper, but ICI has a complex which is dependent on products from feedstock which cannot be produced from ethane. It is, therefore, dependent on the continued use of at least some naphtha to provide the products needed for the aromatics, the benzenes and the xylenes for the production of nylon and polyesters as well as the production of the ethylene for the ethylene oxide, ethylene dichloride and vinyl chloride and on into the polyvinyl chloride market.

The complex cannot be sustained if the ethylene economy is undermined. It is not practicable to continue operating the nylon plants and the polyester plants—the monomers—if there is not an economic market for the ethylene which is necessarily co-produced with the raw material for the nylon and polyester. My hon. Friend the Member for Central Ayrshire (Mr. Lambie) is well aware of the tragedy of Ardeer and the loss of nylon production at that plant.

Mr. David Lambie (Central Ayrshire)

And Monsanto.

Dr. Bray

And Courtaulds at Aintree.

All that nylon capacity was vulnerable because it was not knit into the kind of complex that exists at Wilton, with the support not only of other chemical byproduct schemes but also on the energy side. The power station at Wilton produces a great amount of pass-out steam that is used in the nylon and other processes at the same time as it generates electricity. If one took away the demand for steam, the electricity for the electrolysis of chlorine would become uneconomic and the whole house of cards would fall to bits.

In that situation we are in serious danger of abandoning our position on synthetic fibre monomers and a great deal of petrochemical production generally. It would be for the convenience of ICI if Moss Morran disappeared, but that will not happen. My hon. Friends and myself in Scotland will ensure that it does not. Likewise, however, if Moss Morran is allowed to undermine our ethylene economy, ICI is not kidding when it says that the future of Wilton as a whole is seriously threatened. Once that investment of many billions of pounds is lost there is no chance of the plant being rebuilt in Scotland.

The dilemma that we are in is due to the random and irresponsible hands-off attitude of the Government and their total lack of an industrial policy. Such matters cannot be left to legalistic judgments by the Inland Revenue of tax laws framed in ignorance of a great many of the costs and other factors involved. These huge capital projects have to be looked at primarily in terms of their own cost structures, and then the tax and grant impact added to the basic economics to find the sensible solution.

When I was a Teesside Member, I said that it was cheaper to pension off chemical workers on full pay in the south of France than to pay development area grants to keep them in jobs in the chemical industry. I received small thanks from my hon. Friends in the North-East for saying so. But it is the utmost folly to base job creation on huge capital-intensive plants which cost about £1 million or more per jpb created. It is an absurdly stupid way to build up employment in the development areas. That does not mean that we do not need the industries, but they are a wildly inefficient way to create jobs. However, where the plants already exist, just because there has been such a huge national investment, it is folly to dismantle and destroy them. That applies just as much to the steel as to the petrochemical industry.

The sensible course is to look at the operating costs and capacities of existing plants, the cost of different feedstocks, new plant and plant conversion to see what the best solution is without tax. The Treasury, the Inland Revenue and the Department of Industry have made no attempt to put together the information needed to reach a judgment. They believe that the problem can be resolved by gamesmanship and competition in a situation where competition cannot exist. We are talking of only one plant.

Having made proper examinations of the costs and benefits from the alternative solutions pre-tax, the Government should then add the tax and grant regime in such a way as not to distort the economic decisions, palatable or unpalatable, which then have to be adjusted for the necessary social considerations about which we all feel so strongly, but with full knowledge of the costs.

That is the basis on which we try to manage the North Sea oil tax regime. We try to create a tax structure that does not distort the basic economics of the situation. Surely it is rational to try to follow the same practice in the petrochemical industry. This miserable clause fails to do that.

Although ICI has a strong case, which the Government have failed to consider, and there are claims in Scotland that will have to be accommodated, it was wrong for ICI to go to the European Court to seek a resolution of the matter. We can sort out our industrial problems within this country. We have miserably failed to do so on this matter and the problems will not go away. They will still be with us in two years' time when the next general election is due. It is likely that the clause will be passed, Moss Morran will go forward and ICI will face difficulties over the viability of its petrochemical plants on Teesside. The next Government, not this miserable Government, will have to solve the problems.

Mr. William Rodgers (Stockton)

I agree with the hon. Member for Motherwell and Wishaw (Dr. Bray) that this is a miserable clause. The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) was reasonable to the point of ambivalence and I understand why that was. Hon. Members on both sides of the House have direct interests in the outcome of the debate. I have no such interest, but I am a Teesside Member and I agree with the hon. Member for Redcar (Mr. Tinn) that the right course is for the Government to withdraw the clause.

I should prefer the amendment not to be pushed to a Division, but if there is a vote I shall vote for the deletion of the clause. I hope that the Government will listen to the debate, dwell on the point made by the hon. Member for Motherwell and Wishaw at the end of his speech and accept that there is still time to find an accommodation that will meet the needs of all parts of Britain and will result in no loss of employment.

The hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) was as reasonable as ever, while being honestly partisan. He referred to the need to strike a proper bargain. What is at stake is a fair decision which will help both ICI and the oil companies. I do not believe that it is impossible to achieve that, but it will not be possible if the Government do not accept the amendment.

The Government's position is incomprehensible. The hon. Member for Motherwell and Wishaw was wrong when he said that ICI had taken the matter to the European Court. It has taken the issue to the High Court, which is a most unusual procedure. We have all reflected on whether that was proper, given that the Bill is before the House, but it was clearly the court of last resort for ICI. I hope that the Government will tell us about the discussions that they have had with the company since the Bill was considered in Committee.

There is no doubt that the clause involves clear and damaging discrimination against one company. If it were a Bill, instead of a clause in the Finance Bill, it would be appropriate to look at it in terms of hybridity. It makes a distinction in terms of rights between one private company and others. If it were a Bill it would not be acceptable to the House or to our Clerks.

I take the point made by the hon. Member for Stirling, Falkirk and Grangemouth about the need for industry in both the public and private sectors to be able to know what the future holds when making investment decisions, but, given the controversy that has arisen, the clause could be withdrawn for further discussion and reintroduced in next year's Finance Bill or, if necessary, brought back in special circumstances before then.

We are not committed to an annual cycle to settle these matters. It would be deplorable if we were. Many of us have thought that the idea of an annual Budget and Finance Bill is a mistake. This matter, which is directly related to the future of industry in the whole of the United Kingdom, is surely one at which the Government could have another look and come back to the House.

If I refer to the clause as corrupt, I do so in the philosophical and not in the moral sense. It does not involve corruption on anyone's part, but it does involve a philosophical distinction of corruption in so far as it differentiates in favour of some private companies owned by their shareholders and against others. That is another reason why the Government should withdraw the clause and examine it again.

I wish to put forward a series of propositions by which the clause must be examined. If there has been a conscious decision by the Government in favour of selective support, that is intervention by the Government of a remarkable type, but if that decision has been made in favour of selective support for Moss Morran and against Teesside, it is right that it should be said and defended today. But if it is not a decision in favour of selective support and conscious intervention, it is a gross error. The Government must decide which it is.

11.45 pm

There is an alternative and, here again, I believe it is for the Government to say. First, and most plausibly, ICI is incompetent as a judge of its best interests. If the Government take that view, they should say that ICI has no case and that if the clause remains in the Bill it will not be damaging to ICI or to employment in the way that the hon. Member for Redcar has suggested. That is another argument that the Government can deploy, but they must choose if they wish to do so. But, if ICI is not incompetent as a judge of its best interests, it is for the Government to say that ICI has been deliberately misleading Members of Parliament and the House in arguing the consequences of the clause as it sees it. Those are the different reasons the Government can give for seeking to maintain the clause in the Bill.

In view of our debate tonight, the discussions in Committee and the breakdown of negotiations between the Government and this major British company, and in view of the action that ICI has taken in the High Court, the right course is for the clause to be withdrawn.

May I suggest a procedure? This is not a division between the two sides of the House or between sectional geographical, regional or constituency interests, although those considerations come into the matter. It is a matter of interpreting the clause and deciding where its burden will lie, to whose advantage it is and to whose disadvantage. This is a unique situation. I should like to suggest to the Government that they should withdraw the clause and submit the principle and their own proposition to the Select Committee on Industry and Trade. That is an unusual procedure but a wholly fair one. No one would be prejudiced by the delay and in the end, when a recommendation was made by the Select Committee, the House would be prepared to accept it.

The right course for the Government is to withdraw the clause. I should be sorry to vote against it but will do so in the absence of an alternative.

Mr. Douglas

I shall try to be brief in my remarks about the amendment. I am a trifle disappointed with my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). I normally agree with the line that he takes on such issues, because he is competent on Treasury and tax matters. One of the suppositions and fears underlying the proposals to delete the clause is that somehow or other the Inland Revenue will be taken in by the machinations of Shell and Esso and, perhaps, BP. If there is a fear of a tax concession—I deal quite bluntly with my hon. Friend the Member for Redcar (Mr. Tinn) and others who have expressed that fear—and of an advantage in tax terms, that is a matter for the Public Accounts Committee to examine. It is for the Public Accounts Committee to go behind the tax deals to see if there is any loss of revenue. A searching examination would be involved. Unlike the right hon. Member for Stockton (Mr. Rodgers), I do not take the view that this is a tax concession to Shell, Esso and BP. It is to remove, I understand, an anomaly in the Oil Taxation Act 1975. If the companies did not have a long-term view of the pricing arrangements for ethane, it would have been difficult for them to undertake a capital investment of the Moss Morran type.

It would be delightful to share the happy, academic and statistical view of my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) under which we would start again on the industrial strategy. My hon. Friend knows that Moss Morran and Braefoot Bay are under construction. It is not possible to go to the constituencies of my hon. Friends the Members for Fife, Central (Mr. Hamilton) and for Kirkaldy (Mr. Gourlay) and say "Look boys, we will start again." It cannot be done.

Dr. Bray

If my hon. Friend had listened more carefully, he would have heard me say that it is necessary to consider the existing stock of plant. That stock determines the present operating costs. No stock of plant will stand still either at Moss Morran or on Teesside. It is necessary to consider the logic of future developments. The position in two year's time will be different to that of today.

Mr. Douglas

It is necessary to examine existing stock. It is also necessary to take account of the gases coming from the North Sea. Everyone would be happy if Almighty God had provided them in different proportions. When ethane was known to be available, neither ICI nor BP expressed interest. An arm's length deal could have been done. When the gas-gathering system was mooted, ICI thought, perhaps correctly, that it would be able to do a deal with BNOC and British Gas. I do not recall the right hon. Member for Stockton saying at that time "We should have the gas gathering system." I do not recall the hon. Member for Cathness (Mr. Maclennan) arguing that the ethane should be sent to safeguard jobs in central Scotland and to create Moss Morran.

Mr. Robert Maclennan (Caithness and Sutherland)

The hon. Gentleman must recall vividly that my right hon. Friend the Member for Greenock and Port Glasgow (Dr. Mabon) spoke in just those terms for the Social Democrats.

Mr. Douglas

Where is the right hon. Member for Greenock and Port Glasgow (Dr. Mabon), the former Energy Minister, tonight? I am sure that he would accept the argument of Shell and Esso. I know enough about the oil companies to know that one thing one does not do is trust them. [HON. MEMBERS: "Oh".] One does not trust the oil companies because one day they will all fight each other and we shall try to arbitrate between them. The next day the oil companies will come together and fight us. I know sufficient about that.

Therefore, we must face reality. It is an unfortunate reality from the point of view of my right hon. and hon. Friends from the North-East. If I were in their position, I would do exactly the same as they are doing. They are right to defend their corner. ICI is right to put the pressure on the Government.

The right hon. Member for Stockton proposes the coitus interruptus view of the Social Democratic Party. We will stop now, and Shell and Esso can have their investment and go on with their project when the review by the Select Committee on Industry and Trade has been carried out. We cannot carry on industrial policy in that way. No one sensible who has anything to do with industry would propose it.

What do we do with the ethane? Is it proposed that we put it back in the ground? Do we flare it? It is obvious that it will be used for industrial purposes. My major argument against ICI's case is as follows. I play the Scottish card. Is it suggested that as a result of the finds in the North Sea in Scotland we cannot have new petrochemical developments or protection of existing petrochemical developments which will assist other petrochemical developments in the south through the ethylene pipeline and other developments? If that is what ICI is saying, Scottish Members will be entitled to rebel against ICI's case.

I do not accuse ICI of being incompetent. It has a great deal of difficulty in relation to the international petrochemical market. It has much difficulty in matching the opposition. Is it being suggested that the only opposition that it will face is a 500,000-ton cracker at Moss Morran? That is a ridiculous contention. My hon. Friend the Member for Motherwell and Wishaw understands the technical terms better than me.

If ICI is afraid that there is a concession in taxation remission terms, we should share that fear and go behind it as far as possible. I do not think that the Inland Revenue are fools. No one who has anything to do with them could take that point of view. Perhaps there is some mistake in the administered price. The House should investigate through the Public Accounts Committee.

I have the background of Scotland, particularly Fife, as do many of my right hon. and hon. Friends. If the amendment is pressed to a division, there is no way I can support the Opposition.

Mr. Ian Wrigglesworth (Thornaby)

I have tried to follow the hon. Gentleman's argument. The jobs of 9,000 people on Teesside are threatened. Is the hon. Gentleman saying to those 9,000 workers that their jobs are not under threat of that, if jobs are under threat, their jobs are less important than those in Scotland?

Mr. Douglas

As a lifelong member of the AUEW, I am hardly likely to take that view. ICI's case should not be examined merely on the basis of its submission. Perhaps that is a matter for the Select Committee on Industry and Trade which could examine ICI's case. If it is believed that the companies with which it competes are getting an unfair tax advantage, the matter should be examined.

One must return to the reality of what one does with the ethylene. It cannot be given to ICI. It must be used in petrochemical development. It is perfectly fair that the price structure is made as transparent as possible.

12 midnight

Mr. Ted Leadbitter (Hartlepool)

No one is better able to convince Members of Parliament that they should fight each other on a regional basis than large companies. Whenever I hear threats of lost work or of "If we do not get this" and "If we do not get that", my ears prick up. It is not the House's duty to respond to threats that deviate from the facts of the argument. The House makes a judgment about legislation and whether it will seriously affect employment prospects. It is up to the Government to convince the House of their arguments. They have had several consultations with oil companies and ICI. The House does not yet know all the facts.

The oil companies rightly want to persuade the Government that tax concessions are important to them because of the £500 million of investment at Moss Morran. Anyone may try to achieve a tax reduction. Because it is not at the North Sea exploration production level, ICI is trying to persuade Members of Parliament that it is disadvantaged. It says that because it must buy naphtha for its production of petrochemicals at 33p per the therefore faces a bill of £500 million. It argues that, because of that Bill, it will lose £500 million worth of investment and 9,000 jobs.

A couple of simple questions must be asked. [Interruption.] The House might be aware that if it does not listen I shall talk for an hour. I have the Floor and I am just the chappie to keep it. The House determines the use of its time. I should enjoy reflecting after my speech on how the time was wasted.

The outcome of the negotiations appears to have given Esso, Shell and BP what might nicely be called an in-house transfer price advantage in relation to the chemical subsidiaries. In dealing with its naphtha production, ICI must have an arm's-length contractual arrangement which places it at a competitive disadvantage in the same area of production. That seems quite wrong. The Government must assure themselves that they have not made an error in the clause in such a way as to promote a situation that is unacceptable to two or three major private industries.

It is not often that I agree with the right hon. Member for Stockton (Mr. Rodgers) these days, but on this issue I do, although I do not accept that withdrawal of the clause would solve the problem. I should prefer the Government to convince the House that the dangers that we see in the Bill—not the companies' threats about unemployment—do not exist. I hope that the Government can do that and give some assurance to my part of the country, which is suffering excessive unemployment. In my constituency, 35,000 men are out of work, 2,000 young people have no firm jobs and almost 1,000 young people have not even a first offer of a job. Moreover, unemployment on Teesside is forecast to rise by a further 14,000 in the next two years. We cannot afford a judgment by the House on the legislation before us that will add to the job losses already forecast.

I appeal to the Government to respond to the request that I and others have made. They know all the facts of the matter and all the arguments that have been deployed and they have been party to a large number of discussions. The matter was debated thoroughly in the Standing Committee and the Opposition at any rate have decided that there is no political gain to be derived from fighting one another on a regional basis. We must bend our minds to the consequences of the legislation itself. If the Government will give an explanation, a Division may be avoided. I am afraid that Scottish Members might be pressed into supporting the Government, but I have no choice. If I am not satisfied with the Government's explanation I shall vote against their proposals.

Mr. Crouch

I shall detain the House for only a couple of minutes. [Interruption.] I was here until 4.30 this morning and I wish to speak on this issue.

We are dealing with two major industries—the oil industry and its by products and the chemical industry. In considering the problem of clause 129 we must be concerned with whether we may be damaging one or other of those important industries. Having worked all my life in the chemical industry—at one time I was with ICI, but I no longer have any connection with it—and as chairman of the all-party group on the chemical industry and also the all-party group on chemical studies dealing with the oil industry and others, I am somewhat split in my views on this.

I believe that the Government should pause tonight in dealing with clause 129. As they rush into this with typical Treasury logic in the belief that it is right and correct, they may well damage a major industry. The chemical industry could suffer due to the overcapacity and overproduction that could result from what in simple terms is a subsidy to the North Sea oil producing companies producing a product that will then go into the chemical industry at a far cheaper price.

It is a late hour for us to discuss such complicated matters, but all discussions with Treasury Ministers are complex. With my limited knowledge of the two industries, I plead with the Government to think beyond the range of Treasury and Inland Revenue matters and to consider two of our major industries. Perhaps even at this late hour the Treasury can think again about clause 129, which might cause irreparable harm because of unprofitable over production.

My right hon. Friend the Secretary of State for Education and Science, formerly the Secretary of State for Industry, often used to ask me "Everything is all right with the chemical industry, is it not?" I used to say "Yes", but I have not said it recently. There are signs on the horizen of great danger for the chemical industry in Britain, Europe and the world. They are signs of overproduction. ICI already overproduces and no longer makes a profit in some of its major divisions. We cannot afford to see our industries get into such a state. Clause 129 could produce overcapacity in our major earning industry and could produce fundamental change and disadvantage for our industrial future if we are not careful.

I urge Treasury Ministers to think carefully about the clause. Is it not worth postponing it for one year? Such a postponement would give everyone time. The oil industry is involved with the chemical industry, which has not let Britain down. It employs many people, has great productivity, good industrial relations, good research and great investment and export achievements. Let us not do anything that might jeopardise it. We have an opportunity tonight to pause for at least one year before taking a step that might cause irreparable damage.

The Minister of State, Treasury (Mr. John Wakeham)

I am grateful to the Opposition for enabling such an important debate to take place. I understand the anxiety that hon. Members have expressed about their constituents' jobs. The Government share that concern, but they must do the right thing. I doubt whether I shall satisfy everyone tonight, but I shall try my best. I shall also try to avoid the ex-family squabbles that have broken out, but I shall try to go coolly and slowly through the matter to make it as clear as possible.

Where oil or gas is not sold at arm's length—for example, in transfers between affiliates—it must be valued for tax purposes at the price that it would fetch in a comparable arm's length deal. That is a necessary and internationally recognised rule to prevent oil companies from reducing their tax bills by imposing artificially low prices. The principle is clear, well known and accepted. Without it, integrated companies could unfairly undercut their non-integrated competitors, so the detailed rules must be drawn up carefully so as to favour neither the independent nor the integrated company. Therefore, we must examine the way in which independent companies draw up arm's-length deals.

12.15 am

Crude oil and the heavier gases are sold on relatively short-term deals and, where the contracts last for a longer period, there are provisions for the price to be renegotiated at least as frequently as once a quarter. But lighter gases, such as ethane, would be sold at arm's length in long-term deals lasting up to 20 years with a price formula to operate during the life of the contract. I should tell the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) that many examples of long-term contracts for the lighter gases last longer than this contract.

Such a formula would usually comprise a base price and an escalator which changes the price regularly over the contract period in accordance with a published price indicator. Renegotiation of the formula would be possible, if at all, only years apart or in specially defined circumstances.

Under the existing tax rules, the valuation rules for ethane, unlike those for crude oil and the heavier gases are anomalous in that they provide for monthy valuations and simply do not reflect what is happening on the open market. They therefore expose inter-affiliate deals to great uncertainty and risk which cannot be justified.

The essence of the Government's case for the clause is that it does not represent a concession, but removes an anomaly. The hon. Member for Redcar (Mr. Tinn) was the first to make that point. To continue to tax ethane under the existing inter-affiliate system in schedule 3 to the 1975 Act would not be in accordance with what happens in the market place.

Mr. Tinn

In the absence of a market for ethane, how will the Inland Revenue determine whether the election formula is justified?

Mr. Wakeham

The matter is complex and I shall deal with it.

Clause 129 and schedule 16 remove the anomaly by allowing companies involved in non-arm's-length transactions to elect for valuations to be based upon a long-term price formula. The formula cannot be any selected by the oil company. It must be comparable in the base price and the escalator with what arm's-length parties would agree. It provides the certainty that is present in third-party deals.

It is not right to say that there is no market in ethane. There are certainly a number of long-term contracts in Europe and the Revenue has evidence of what buyers and sellers are prepared to pay. It is certain that there is no short-term market in ethane.

I was asked about Shell's proposals. I have not had the opportunity to discuss the proposals with Shell, but they seem to be similar to the proposals in the Bill. If ICI believes that further useful discussions could take place between Shell and ICI to see whether there is common ground, the Government would be happy to consider that.

Representations were made to the effect that confining the scope of the clause to commercially pure streams of ethane was too restrictive. We accepted that there was a good case in principle and in practice for the clause to be extended to mixed streams where, as with ethane, they would also be sold on long-term contracts in arm's-length deals.

ICI's petrochemical plants use naphtha which ICI has to buy on the open market. It is a feedstock that is more expensive than ethane and is therefore at a natural competitive disadvantage. The purpose of the clause is to give neither an additional advantage nor an additional disadvantage to ethane compared with naphtha. There is no dispute between the Government and ICI about the fact that naphtha has a disadvantage; indeed, ICI recognised it during all our discussions. ICI's position is not that the clause will do harm to ICI; its view, as I understand it. is that the clause might do harm to ICI. ICI does not know, nor do I know, what valuation will be agreed between the Inland Revenue and oil companies.

When we debated the Bill in Committee, I explained that we had tried to reassure ICI that the clause does not involve any element of subsidy to its competitors, but in view of the concern expressed by several hon. Members at the time, I undertook without commitment to hold further discussions with ICI before Report in an endeavour to allay its fears. Since the Committee stage, my right hon. and learned Friend the Chancellor of the Exchequer and I and officials have met ICI repeatedly, and every effort has been made to clarify points of doubt and to give all reasonable assurances on the principle and operation of the clause.

My view is that ICI appreciates that there is an anomaly in the existing rules but is concerned about the proposed remedy in clause 129 because it fears that it might lead to too low a valuation. But the proposals do no more than model the tax valuation on the price formula which independent parties, dealing at arm's length, would agree. If the proposition is that the Inland Revenue would agree a valuation, it is one that I will not accept. The Inland Revenue has statutory duties imposed upon it pertaining to the care and maintenance of the tax system, and to agree a valuation that did not take into account all the proper factors would be tantamount to a wilful neglect of those responsibilities.

Mr. Wrigglesworth

Will the Minister accept that the feedstock that ICI would be obtaining would cost about 33p, as against 16p for the other feedstock in Scotland?

Mr. Wakeham

I certainly do not accept that. I understand that ICI has quoted the figures. Therefore, the figure of its own price that it pays for naphtha is presumably right. The figure for ethane is agreed between the Inland Revenue and the oil companies concerned, and I have no knowledge of it. It would be quite wrong for me to know. I do not know and no Minister knows the price. What we know is the formula. The tax affairs of any taxpayer in Britain are confidential and are not discussed between Treasury Ministers and the Inland Revenue.

Dr. Bray

Will the Minister agree that there is a considerable possibility that the companies involved in the case would agree to full cost disclosure to enable a sensible solution to be reached?

Mr. Wakeham

If companies wish to reveal information they may. It is not possible for the Inland Revenue or the Government to breach the long-accepted rules of confidentiality. If companies are prepared to reveal information as a result of the discussions that is up to them. The Government would not require them to give details of confidential information.

One of ICI's specific fears was that the evaluations under the clause would ignore what ethane would fetch for fuel use. That is another point that the hon. Member for Redcar made. That never was intended, but due to ICI's worries we introduced an amendment in Committee which would put beyond doubt the fact that the valuation would reflect the highest price an arm's-length seller would receive for the ethane for fuel or petrochemicals. Unfortunately, ICI felt that that did not go far enough.

Mr. Tinn

The hon. Gentleman continues to refer to the price that would be paid in arm's-length dealing. The need for the machinery arises because there are no arm's-length deals in this commodity. How will the Inland Revenue determine what is a fair market price when it has nothing to go by?

Mr. Wakeham

There are some long-term contracts for ethane in Europe. The Inland Revenue has plenty of information about those, and I do not believe that it will be as difficult as the hon. Gentleman thinks to arrive at a fair price.

ICI argued that ethane should be valued at the equivalent of heavy fuel oil, which the company suggests is about 26p a therm. It wanted that included in the legislation as a floor to the valuation. I am advised that there is no simple market price for ethane that could be properly written into the legislation. The price can vary considerably with the volume of gas, its position, and the specification and timing of any agreement. It is those considerations that the Inland Revenue must bear in mind when it looks at contracts on which it is asked to form an opinion. If the Inland Revenue is not satisfied that such contracts are fair and proper it has a statutory duty to reflect that opinion.

During the discussions with ICI it was suggested—this was a point made by the right hon. Member for Stockton (Mr. Rodgers)—that the legislation might be deferred until next year because valuations do not have to be made for a few years. Arm's-length purchasers would agree contracts with long-term price formulae for their ethane supplies before committing themselves to the substantial capital expenditure involved. In an attempt to agree in non-arm's-length negotiations what would happen in an arm's-length agreement it would be essential for the oil companies to agree the price and arrangements for their long-term supplies before they could involve themselves in substantial capital expenditure.

The possible application of the clause to actual valuation of certain mixed streams could arise fairly soon. Deferment would prejudice the companies compared with those involved in third-party negotiations and put important investments at risk. Against that, it has been argued that we are putting investment and many jobs at risk at Wilton. We have investigated the matter thoroughly. Naphtha-based crackers such as those at Wilton face a challenge with ethane becoming available, not just from the North Sea but also the Middle East, when the market is already depressed.

Ethane cannot take over completely from naphtha. It does not produce a wide range of products. There will still be a future for efficient naphtha crackers. Whether or not that will be so—it would be a rash man who forecast the long-term future of any industrial plant in a rapidly changing world—clause 129 does not put its future at risk. It removes a tax anomaly against inter-affiliate deals. It would be wrong to keep such an anomaly to protect naphtha-based crackers. The end result could be a weaker and not stronger United Kingdom petrochemical industry.

12.30 am

ICI is seeking in the courts a declaration that the clause is contrary to article 92 of the Treaty of Rome as constituting a State aid to industry that distorts competition. It is now a matter for the courts to decide and it would be wrong for me to prejudice the outcome of the case. But the Government's advice is that the clause is not a State aid as it does no more than put inter-affiliate deals on all fours with arm's-length deals for tax purposes. In doing so, it follows the internationally accepted principle of arm's-length valuation.

I am sorry that ICI has felt it necessary to take that step, with its potential repercussions on areas outside the tax treatment of its case. But it should not dissuade hon. Members from agreeing to the clause, which, as I said in Committee, despite the controversy that it has aroused, is no more than a measure to remove a tax anomaly arising under existing legislation that might otherwise inhibit worthwhile investment.

Failure to pass the clause could put in question the future development of Moss Morran and Grangemouth and the jobs in those places. To discriminate against certain tax-paying companies because of a call by one company that faces a difficult problem would be to act in a way not in accordance with the generally accepted principles of taxation. It would not be right to solve a difficult problem by treating unfairly and unjustifiably another company's tax affairs. The implicit criticism is that the Inland Revenue would not be able to carry out its statutory duties responsibly and efficiently, but I do not believe that.

The Government understand the problem that ICI faces because of the natural advantages of ethane over naphtha as a feedstock. We are not prepared to wash our hands of the problems on Teesside. We are prepared to continue to talk to ICI to see whether we can find a way in which it is right and proper for the Government to assist in dealing with the difficulties. But it cannot be by unfairly treating a tax-paying company that submits that the present valuations for ethane are inappropriate.

Mr. Robert Sheldon

The Minister rightly points to the seriousness of ICI's case and the potential repercussions.

It is wrong that matters have been allowed to come to the pass where important large companies that have enormous consequences for employment, development and other industrial prospects are placed in a difficult position because the Government came late to a discussion and understanding of the important issues.

The promise to extend the consultations that were to take place between the Committee and Report stages of the Finance Bill has not produced the solution that was hoped for. It may be that there has been insufficient time for the discussions that we expected. It is not the legislation that is important. The legislation will not take effect for a year or two, or even longer. There is no ethane being used under the legislation. The industry rightly wants to be able to plan on the basis of an agreement. It is up to the Minister to obtain such an agreement, so that the assurances can be given.

The Minister said that he was prepared to enter into discussions on the basis of the Shell memorandum, the purpose of which is to ensure that the forward estimate of the value of the ethane being transferred to the petrochemical plant will equate with the pricing formula that one would expect to see between two independent companies.

That is similar to the arguments being put forward by ICI and should form the basis of a number of useful discussions. I look forward to seeing such discussions continue. We should come to a resolution. The clause should not proceed, so that discussions of the kind that have been mentioned can take place. We shall continue to press for a solution that is satisfactory to such important companies. We shall expect the Minister to come to the House at some stage with such a solution. Meanwhile, we cannot allow the clause to proceed. These matters should be decided in the interests of the companies concerned. Assurances can and should be given on the basis of which companies can develop and advance.

Question put, That the amendment be made:—

The House divided: Ayes 174, Noes 299.

Division No. 271]	[10.26 pm
AYES
Abse, Leo	Evans, Ioan (Aberdare)
Adams, Allen	Ewing, Harry
Allaun, Frank	Faulds, Andrew
Anderson, Donald	Field, Frank
Archer, Rt Hon Peter	Flannery, Martin
Ashley, Rt Hon Jack	Fletcher, Ted (Darlington)
Ashton, Joe	Ford, Ben
Atkinson, N. (H'gey,)	Forrester, John
Bagier, Gordon A.T.	Foster, Derek
Barnett, Guy (Greenwich)	Foulkes, George
Barnett, Rt Hon Joel (H'wd)	Fraser, J. (Lamb'th, N'W'd)
Benn, Rt Hon Tony	Freeson, Rt Hon Reginald
Bennett, Andrew (St'kp't N)	Garrett, John (Norwich S)
Bidwell, Sydney	Garrett, W. E. (Wallsend)
Booth, Rt Hon Albert	Golding, John
Boothroyd, Miss Betty	Gourlay, Harry
Bray, Dr Jeremy	Graham, Ted
Brown, Hugh D. (Provan)	Hamilton, James (Bothwell)
Brown, Ron (E'burgh, Leith)	Hamilton, W. W. (C'tral Fife)
Buchan, Norman	Hardy, Peter
Callaghan, Rt Hon J.	Harrison, Rt Hon Walter
Callaghan, Jim (Midd't'n & P)	Hart, Rt Hon Dame Judith
Campbell, Ian	Hattersley, Rt Hon Roy
Campbell-Savours, Dale	Haynes, Frank
Canavan, Dennis	Heffer, Eric S.
Cant, R. B.	Hogg, N. (E Dunb't'nshire)
Carmichael, Neil	Holland, S. (L'b'th, Vauxh'll)
Carter-Jones, Lewis	Home Robertson, John
Clark, Dr David (S Shields)	Homewood, William
Clarke, Thomas C'b'dge, A'rie	Hooley, Frank
Cocks, Rt Hon M. (B'stol S)	Howell, Rt Hon D.
Cohen, Stanley	Hoyle, Douglas
Coleman, Donald	Huckfield, Les
Concannon, Rt Hon J. D.	Hughes, Mark (Durham)
Cook, Robin F.	Hughes, Robert (Aberdeen N)
Cowans, Harry	Hughes, Roy (Newport)
Cox, T. (W'dsw'th, Toot'g)	Janner, Hon Greville
Craigen, J. M. (G'gow, M'hill)	Jay, Rt Hon Douglas
Crowther, Stan	John, Brynmor
Cryer, Bob	Johnson, James (Hull West)
Cunningham, Dr J. (W'h'n)	Jones, Rt Hon Alec (Rh'dda)
Dalyell, Tam	Jones, Barry (East Flint)
Davidson, Arthur	Kaufman, Rt Hon Gerald
Davies, Rt Hon Denzil (L'lli)	Kerr, Russell
Davis, Clinton (Hackney C)	Kilroy-Silk, Robert
Davis, Terry (B'ham, Stechf'd)	Kinnock, Neil
Deakins, Eric	Lambie, David
Dean, Joseph (Leeds West)	Lamond, James
Dewar, Donald	Leadbitter, Ted
Dixon, Donald	Lestor, Miss Joan
Dobson, Frank	Lewis, Ron (Carlisle)
Dormand, Jack	Litherland, Robert
Douglas, Dick	Lofthouse, Geoffrey
Dubs, Alfred	McCartney, Hugh
Duffy, A. E. P.	McDonald, Dr Oonagh
Dunlop, John	McElhone, Frank
Dunnett, Jack	McGuire, Michael (Ince)
Dunwoody, Hon Mrs G.	McKay, Allen (Penistone)
Eadie, Alex	McKelvey, William
Eastham, Ken	MacKenzie, Rt Hon Gregor
Edwards, R. (W'hampt'n S E)	McNamara, Kevin
Ellis, R. (NE D'bysh're)	McTaggart, Robert
English, Michael	McWilliam, John
Ennals, Rt Hon David	Marks, Kenneth

Marshall, Dr Edmund (Goole)	Shore, Rt Hon Peter
Marshall, Jim (Leicester S)	Short, Mrs Renée
Marshall, Michael (Arundel)	Silkin, Rt Hon J. (Deptford)
Martin, M (G'gow S'burn)	Silverman, Julius
Mason, Rt Hon Roy	Skinner, Dennis
Maxton, John	Smith, Rt Hon J. (N Lanark)
Maynard, Miss Joan	Soley, Clive
Meacher, Michael	Spearing, Nigel
Mikardo, Ian	Spriggs, Leslie
Millan, Rt Hon Bruce	Stallard, A. W.
Miller, Dr M. S. (E Kilbride)	Stoddart, David
Mitchell, Austin (Grimsby)	Stott, Roger
Morris, Rt Hon A. (W'shawe)	Strang, Gavin
Morris, Rt Hon C. (O'shaw)	Straw, Jack
Morton, George	Summerskill, Hon Dr Shirley
Moyle, Rt Hon Roland	Taylor, Mrs Ann (Bolton W)
Newens, Stanley	Thomas, Dr R. (Carmarthen)
Oakes, Rt Hon Gordon	Thorne, Stan (Preston South)
O'Neill, Martin	Tilley, John
Palmer, Arthur	Tinn, James
Park, George	Torney, Tom
Parker, John	Urwin, Rt Hon Tom
Parry, Robert	Varley, Rt Hon Eric G.
Pavitt, Laurie	Wainwright, E. (Dearne V)
Pendry, Tom	Walker, Rt Hon H. (D'caster)
Powell, Raymond (Ogmore)	Weetch, Ken
Prescott, John	Welsh, Michael
Price, C. (Lewisham W)	White, Frank R.
Race, Reg	White, J. (G'gow Pollok)
Radice, Giles	Whitehead, Phillip
Rees, Rt Hon M (Leeds S)	Whitlock, William
Richardson, Jo	Williams, Rt Hon A. (S'sea W)
Roberts, Albert (Normanton)	Wilson, Gordon (Dundee E)
Roberts, Allan (Bootle)	Wilson, Rt Hon Sir H. (H'ton)
Roberts, Ernest (Hackney N)	Wilson, William (C'try SE)
Roberts, Gwilym (Cannock)	Winnick, David
Robertson, George	Woodall, Alec
Robinson, G. (Coventry NW)	Woolmer, Kenneth
Rooker, J. W.	Wright, Sheila
Ross, Ernest (Dundee West)	Young, David (Bolton E)
Rowlands, Ted
Sever, John	Tellers for the Ayes:
Sheerman, Barry	Mr. Lawrence Cunliffe and
Sheldon, Rt Hon R.	Mr. Ron Leighton
NOES
Adley, Robert	Brinton, Tim
Aitken, Jonathan	Brittan, Rt. Hon. Leon
Alexander, Richard	Brotherton, Michael
Alison, Rt Hon Michael	Brown, Michael (Brigg & Sc'n)
Alton, David	Brown, Ronald W. (H'ckn'y S)
Ancram, Michael	Browne, John (Winchester)
Arnold, Tom	Bruce-Gardyne, John
Aspinwall, Jack	Bryan, Sir Paul
Atkins, Rt Hon H. (S'thorne)	Buchanan-Smith, Rt. Hon. A.
Atkins, Robert (Preston N)	Buck, Antony
Atkinson, David (B'm'th,E)	Budgen, Nick
Baker, Nicholas (N Dorset)	Bulmer, Esmond
Banks, Robert	Burden, Sir Frederick
Beaumont-Dark, Anthony	Butcher, John
Beith, A. J.	Butler, Hon Adam
Bendall, Vivian	Cadbury, Jocelyn
Bennett, Sir Frederic (T'bay)	Carlisle, John (Luton West)
Benyon, Thomas (A'don)	Carlisle, Kenneth (Lincoln)
Benyon, W. (Buckingham)	Carlisle, Rt Hon M. (R'c'n)
Berry, Hon Anthony	Chalker, Mrs. Lynda
Best, Keith	Channon, Rt. Hon. Paul
Bevan, David Gilroy	Chapman, Sydney
Biffen, Rt Hon John	Churchill, W. S.
Biggs-Davison, Sir John	Clark, Hon A. (Plym'th, S'n)
Blackburn, John	Clark, Sir W. (Croydon S)
Blaker, Peter	Clarke, Kenneth (Rushcliffe)
Body, Richard	Clegg, Sir Walter
Bonsor, Sir Nicholas	Cockeram, Eric
Boscawen, Hon Robert	Colvin, Michael
Bottomley, Peter (W'wich W)	Cope, John
Bowden, Andrew	Cormack, Patrick
Boyson, Dr Rhodes	Corrie, John
Braine, Sir Bernard	Costain, Sir Albert
Bright, Graham	Cranborne, Viscount

Crawshaw, Richard	Knight, Mrs Jill
Critchley, Julian	Knox, David
Crouch, David	Lamont, Norman
Dorrell, Stephen	Lang, Ian
Douglas-Hamilton, Lord J.	Latham, Michael
Dover, Denshore	Lee, John
du Cann, Rt Hon Edward	Lennox-Boyd, Hon Mark
Dunn, Robert (Dartford)	Lester, Jim (Beeston)
Durant, Tony	Lewis, Kenneth (Rutland)
Eden, Rt Hon Sir John	Lloyd, Ian (Havant & W'loo)
Edwards, Rt Hon N. (P'broke)	Lloyd, Peter (Fareham)
Eggar, Tim	Loveridge, John
Elliott, Sir William	Luce, Richard
Eyre, Reginald	Lyell, Nicholas
Fairbairn, Nicholas	Lyons, Edward (Bradf'd W)
Fairgrieve, Sir Russell	Macfarlane, Neil
Faith, Mrs Sheila	MacGregor, John
Farr, John	MacKay, John (Argyll)
Fell, Sir Anthony	Macmillan, Rt Hon M.
Fenner, Mrs Peggy	McNair-Wilson, M. (N'bury)
Finsberg, Geoffrey	McNair-Wilson, P. (New F'st)
Fisher, Sir Nigel	McNally, Thomas
Fletcher, A. (Ed'nb'gh N)	Madel, David
Fletcher-Cooke, Sir Charles	Major, John
Fookes, Miss Janet	Marland, Paul
Forman, Nigel	Marten, Rt Hon Neil
Fowler, Rt Hon Norman	Mather, Carol
Fox, Marcus	Maude, Rt Hon Sir Angus
Fraser, Peter (South Angus)	Mawby, Ray
Fry, Peter	Mawhinney, Dr Brian
Gardner, Edward (S Fylde)	Maxwell-Hyslop, Robin
Garel-Jones, Tristan	Mayhew, Patrick
Glyn, Dr Alan	Mellor, David
Goodhew, Sir Victor	Meyer, Sir Anthony
Goodlad, Alastair	Miller, Hal (B'grove)
Gorst, John	Mills, Iain (Meriden)
Gow, Ian	Mills, Sir Peter (West Devon)
Grant, Anthony (Harrow C)	Miscampbell, Norman
Gray, Hamish	Mitchell, David (Basingstoke)
Greenway, Harry	Moate, Roger
Griffiths, E. (B'y St. Edm'ds)	Monro, Sir Hector
Griffiths, Peter Portsm'th N)	Montgomery, Fergus
Grylls, Michael	Moore, John
Gummer, John Selwyn	Morris, M. (N'hampton S)
Hamilton, Michael (Salisbury)	Morrison, Hon C. (Devizes)
Hampson, Dr Keith	Morrison, Hon P. (Chester)
Hannam,John	Mudd, David
Haselhurst, Alan	Murphy, Christopher
Havers, Rt Hon Sir Michael	Myles, David
Hawkins, Sir Paul	Neale, Gerrard
Hawksley, Warren	Needham, Richard
Hayhoe, Barney	Nelson, Anthony
Heddle, John	Neubert, Michael
Henderson, Barry	Newton, Tony
Heseltine, Rt Hon Michael	Normanton, Tom
Hicks, Robert	Ogden, Eric
Higgins, Rt Hon Terence L.	Onslow, Cranley
Hill, James	Oppenheim, Rt Hon Mrs S.
Hogg, Hon Douglas (Gr'th'm)	Osborn, John
Holland, Philip (Carlton)	Page, John (Harrow, West)
Hooson, Tom	Page, Richard (SW Herts)
Horam, John	Parkinson, Rt Hon Cecil
Hordern, Peter	Parris, Matthew
Howell, Rt Hon D. (G'ldf'd)	Patten, John (Oxford)
Howell, Ralph (N Norfolk)	Pattie, Geoffrey
Howells, Geraint	Pawsey, James
Hunt, David (Wirral)	Penhaligon, David
Hunt, John (Ravensbourne)	Percival, Sir Ian
Irvine, Bryant Godman	Peyton, Rt Hon John
Irving, Charles (Cheltenham)	Pink, R. Bonner
Jenkin, Rt Hon Patrick	Pollock, Alexander
Jessel, Toby	Porter, Barry
Johnson Smith, Sir Geoffrey	Prentice, Rt Hon Reg
Jopling, Rt Hon Michael	Price, Sir David (Eastleigh)
Joseph, Rt Hon Sir Keith	Prior, Rt Hon James
Kaberry, Sir Donald	Proctor, K. Harvey
Kellett-Bowman, Mrs Elaine	Raison, Rt Hon Timothy
Kershaw, Sir Anthony	Rees-Davies, W. R.
Kimball, Sir Marcus	Renton, Tim
King, Rt Hon Tom	Rhodes James, Robert

Rhys Williams, Sir Brandon	Skeet, T. H. H.
Ridley, Hon Nicholas	Smith, Cyril (Rochdale)
Rifkind, Malcolm	Smith, Dudley
Rippon, Rt Hon Geoffrey	Smith, Tim (Beaconsfield)
Roberts, M. (Cardiff NW)	Speed, Keith
Roberts, Wyn (Conway)	Speller, Tony
Rodgers, Rt Hon William	Spence, John
Roper, John	Spicer, Jim (West Dorset)
Ross, Stephen (Isle of Wight)	Spicer, Michael (S Worcs)
Rossi, Hugh	Sproat, Iain
Rost, Peter	Squire, Robin
Rumbold, Mrs A. C. R.	Stainton, Keith
Sainsbury, Hon Timothy	Stanley, John
St. John-Stevas, Rt Hon N.	Steel, Rt Hon David
Scott, Nicholas	Steen, Anthony
Shaw, Giles (Pudsey)	Stevens, Martin
Shelton, William (Streatham)	Stewart, A. (E Renfrewshire)
Shepherd, Colin (Hereford)	Stewart, Ian (Hitchin)
Shepherd, Richard	Stokes, John
Shersby, Michael	Stradling Thomas, J.
Silvester, Fred	Tapsell, Peter
Sims, Roger	Taylor, Teddy (S'end E)
Tebbit, Rt Hon Norman	Ward, John
Temple-Morris, Peter	Warren, Kenneth
Thomas, Rt Hon Peter	Watson, John
Thompson, Donald	Wells, Bowen
Thorne, Neil {Ilford South)	Wheeler, John
Thornton, Malcolm	Whitelaw, Rt Hon William
Townend, John (Bridlington)	Whitney, Raymond
Townsend, Cyril D, (B'heath)	Wickenden, Keith
Trippier, David	Wiggin, Jerry
Trotter, Neville	Wilkinson, John
van Straubenzee, Sir W.	Williams, D.(Montgomery)
Vaughan, Dr Gerard	Williams, Rt Hon Mrs (Crosby)
Viggers, Peter	Winterton, Nicholas
Waddington, David	Wolfson, Mark
Wakeham, John	Young, Sir George (Acton)
Waldegrave, Hon William	Younger, Rt Hon George
Walker, Rt Hon P. (W'cester)
Walker, B. (Perth)	Tellers for the Noes:
Waller, Gary	Mr. Peter Brooke and
Walters, Dennis	Mr. Archie Hamilton.

Division No. 272]	[12.37 am
AYES
Abse, Leo	Forrester, John
Allaun, Frank	Foster, Derek
Alton, David	Fraser, J. (Lamb'th, N'w'd)
Anderson, Donald	Freeson, Rt Hon Reginald
Archer, Rt Hon Peter	Garrett, John (Norwich S)
Ashley, Rt Hon Jack	Garrett, W. E. (Wallsend)
Ashton, Joe	Graham, Ted
Atkinson, N.(H'gey,)	Hamilton, James (Bothwell)
Bagier, Gordon A.T.	Hardy, Peter
Barnett, Guy (Greenwich)	Harrison, Rt Hon Walter
Barnett, Rt Hon Joel (H'wd)	Hattersley, Rt Hon Roy
Beith, A. J.	Haynes, Frank
Benn, Rt Hon Tony	Heffer, Eric S.
Booth, Rt Hon Albert	Holland, S. (L'b'th, Vauxh'll)
Boothroyd, Miss Betty	Homewood, William
Bray, Dr Jeremy	Hooley, Frank
Brown, Ronald W. (H'ckn'y S)	Howell, Rt Hon D.
Callaghan, Rt Hon J.	Hoyle, Douglas
Callaghan, Jim (Midd't'n & P)	Huckfield, Les
Cant, R. B.	Hughes, Mark (Durham)
Carter-Jones, Lewis	Hughes, Robert (Aberdeen N)
Clark, Dr David (S Shields)	Hughes, Roy (Newport)
Cocks, RtHon M. (B'stol S)	Janner, Hon Greville
Cohen, Stanley	Jay, Rt Hon Douglas
Coleman, Donald	John, Brynmor
Concannon, Rt Hon J. D.	Jones, Rt Hon Alec (Rh'dda)
Cowans, Harry	Jones, Barry (East Flint)
Cox, T. (W'dsw'th, Toot'g)	Kaufman, Rt Hon Gerald
Crawshaw, Richard	Kerr, Russell
Crowther, Stan	Kilroy-Silk, Robert
Cryer, Bob	Kinnock, Neil
Cunliffe, Lawrence	Lamond, James
Cunningham, Dr J. (W'h'n)	Leadbitter, Ted
Davidson, Arthur	Leighton, Ronald
Davies, Rt Hon Denzil (L'lli)	Lewis, Ron (Carlisle)
Davis, Clinton (Hackney C)	Litherland, Robert
Davis, Terry (B'ham, Stechf'd)	Lofthouse, Geoffrey
Deakins, Eric	Lyons, Edward (Bradf'd W)
Dean, Joseph (Leeds West)	McCartney, Hugh
Dixon, Donald	McDonald, Dr Oonagh
Dobson, Frank	McElhone, Frank
Dormand, Jack	McGuire, Michael (Ince)
Dubs, Alfred	Maclennan, Robert
Duffy, A. E. P.	McNamara, Kevin
Dunnett, Jack	McWilliam, John
Dunwoody, Hon Mrs G.	Marks, Kenneth
Eastham, Ken	Marshall, Dr Edmund (Goole)
Ellis, R. (NE D'bysh're)	Marshall, Jim (Leicester S)
Ennals, Rt Hon David	Martin, M(G'gow S'burn)
Evans, loan (Aberdare)	Maynard, Miss Joan
Evans, John (Newton)	Meacher, Michael
Faulds, Andrew	Mitchell, Austin (Grimsby)
Field, Frank	Morris, Rt Hon A. (W'shawe)
Flannery, Martin	Morris, Rt Hon C. (O'shaw)
Fletcher, Ted (Darlington)	Moyle, Rt Hon Roland
Ford, Ben	Newens, Stanley

Oakes, Rt Hon Gordon	Stallard, A. W.
Palmer, Arthur	Steel, Rt Hon David
Park, George	Stoddart, David
Parry, Robert	Stott, Roger
Pavitt, Laurie	Strang, Gavin
Pendry, Tom	Straw, Jack
Powell, Raymond (Ogmore)	Summerskill, Hon Dr Shirley
Prescott, John	Thomas, Dr R.(Carmarthen)
Race, Reg	Thorne, Stan (Preston South)
Radice, Giles	Tilley, John
Rees, Rt Hon M (Leeds S)	Tinn, James
Richardson, Jo	Torney, Tom
Roberts, Allan (Bootle)	Urwin, Rt Hon Tom
Roberts, Ernest (Hackney N)	Varley, Rt Hon Eric G.
Roberts, Gwilym (Cannock)	Wainwright, E. (Dearne V)
Robinson, G. (Coventry NW)	Walker, Rt Hon H. (D'caster)
Rodgers, Rt Hon William	Welsh, Michael
Rooker, J. W.	White, Frank R.
Roper, John	Whitlock, William
Ross, Stephen (Isle of Wight)	Williams, Rt Hon A. (S'sea W)
Rowlands, Ted	Williams, Rt Hon Mrs (Crosby)
Sever, John	Wilson, Rt Hon Sir H. (H'ton)
Sheldon, Rt Hon R.	Wilson, William (C'try SE)
Shore, Rt Hon Peter	Winnick, David
Short, Mrs Renée	Woodall, Alec
Silkin, Rt Hon J. (Deptford)	Woolmer, Kenneth
Silverman, Julius	Wrigglesworth, Ian
Skinner, Dennis	Wright, Sheila
Smith, Cyril (Rochdale)	Young, David (Bolton E)
Smith, Rt Hon J. (N Lanark)
Soley, Clive	Tellers for the Ayes:
Spearing, Nigel	Mr. George Morton and
Spriggs, Leslie	Mr. Allen McKay.
NOES
Adams, Allen	Butcher, John
Aitken, Jonathan	Butler, Hon Adam
Alexander, Richard	Cadbury, Jocelyn
Alison, Rt Hon Michael	Campbell, Ian
Ancram, Michael	Canavan, Dennis
Arnold, Tom	Carlisle, John (Luton West)
Aspinwall, Jack	Carlisle, Kenneth (Lincoln)
Atkins, Robert (Preston N)	Carlisle, Rt Hon M. (R'c'n)
Atkinson, David (B'm'th,E)	Chalker, Mrs. Lynda
Baker, Nicholas (N Dorset)	Channon, Rt. Hon. Paul
Banks, Robert	Chapman, Sydney
Beaumont-Dark, Anthony	Churchill, W. S.
Bendall, Vivian	Clark, Hon A. (Plym'th, S'n)
Bennett, Sir Frederic (T'bay)	Clark, Sir W. (Croydon S)
Benyon, Thomas (A'c'on)	Clarke, Kenneth (Rushcliffe)
Benyon, W. (Buckingham)	Clarke, Thomas C'b'dge, A'rie
Berry, Hon Anthony	Colvin, Michael
Best, Keith	Cope, John
Bevan, David Gilroy	Corrie, John
Biffen, Rt Hon John	Costain, Sir Albert
Biggs-Davison, Sir John	Craigen, J. M. (G'gow, M'hill)
Blackburn, John	Cranborne, Viscount
Blaker, Peter	Critchley, Julian
Body, Richard	Crouch, David
Bonsor, Sir Nicholas	Dewar, Donald
Boscawen, Hon Robert	Dorrell, Stephen
Bottomley, Peter (W'wich W)	Douglas, Dick
Bowden, Andrew	Douglas-Hamilton, Lord J.
Boyson, Dr Rhodes	Dover, Denshore
Braine, Sir Bernard	du Cann, Rt Hon Edward
Bright, Graham	Dunn, Robert (Dartford)
Brinton, Tim	Durant, Tony
Brittan, Rt. Hon. Leon	Eadie, Alex
Brooke, Hon Peter	Eden, Rt Hon Sir John
Brotherton, Michael	Edwards, Rt Hon N. (P'broke)
Brown, Hugh D. (Provan)	Eggar, Tim
Brown, Michael(Brigg & Sc'n)	Ewing, Harry
Browne, John (Winchester)	Eyre, Reginald
Bruce-Gardyne, John	Fairbairn, Nicholas
Bryan, Sir Paul	Fairgrieve, Sir Russell
Buchanan-Smith, Rt. Hon. A.	Faith, Mrs Sheila
Buck, Antony	Furr, John
Budgen, Nick	Fell, Sir Anthony
Bulmer, Esmond	Fenner, Mrs Peggy
Burden, Sir Frederick	Finsberg, Geoffrey

Fisher, Sir Nigel	Marland, Paul
Fletcher, A. (Ed'nb'gh N)	Marten, Rt Hon Neil
Fletcher-Cooke, Sir Charles	Mather, Carol
Fookes, Miss Janet	Maude, Rt Hon Sir Angus
Forman, Nigel	Mawby, Ray
Foulkes, George	Mawhinney, Dr Brian
Fowler, Rt Hon Norman	Maxton, John
Fox, Marcus	Maxwell-Hyslop, Robin
Fraser, Peter (South Angus)	Mayhew, Patrick
Gardner, Edward (S Fylde)	Mellor, David
Garel-Jones, Tristan	Meyer, Sir Anthony
Glyn, Dr Alan	Miller, Hal (B'grove)
Goodhart, Sir Philip	Mills, Iain (Meriden)
Goodhew, Sir Victor	Mills, Sir Peter (West Devon)
Goodlad, Alastair	Miscampbell, Norman
Gorst, John	Mitchell, David (Basingstoke)
Gow, Ian	Moate, Roger
Grant, Anthony (Harrow C)	Monro, Sir Hector
Gray, Hamish	Montgomery, Fergus
Greenway, Harry	Moore, John
Griffiths, E. (B'ySt. Edm'ds)	Morris, M. (N'hampton S)
Griffiths, Peter Portsm'th N)	Morrison, Hon C. (Devizes)
Grylls, Michael	Morrison, Hon P. (Chester)
Gummer, John Selwyn	Mudd, David
Hamilton, Michael (Salisbury)	Murphy, Christopher
Hamilton, W. W. (C'tral Fife)	Myles, David
Hampson, Dr Keith	Neale, Gerrard
Hannam, John	Needham, Richard
Haselhurst, Alan	Nelson, Anthony
Hastings, Stephen	Neubert, Michael
Havers, Rt Hon Sir Michael	Normanton, Tom
Hawkins, Sir Paul	O'Neill, Martin
Hayhoe, Barney	Onslow, Cranley
Heddle, John	Oppenheim, Rt Hon Mrs S.
Henderson, Barry	Osborn, John
Heseltine, Rt Hon Michael	Page, John (Harrow, West)
Hicks, Robert	Page, Richard (SW Herts)
Higgins, Rt Hon Terence L.	Parkinson, Rt Hon Cecil
Hill, James	Parris, Matthew
Hogg, Hon Douglas (Gr'th'm)	Patten, John (Oxford)
Holland, Philip (Carlton)	Pattie, Geoffrey
Hooson, Tom	Pawsey, James
Hordern, Peter	Percival, Sir Ian
Howe, Rt Hon Sir Geoffrey	Pink, R. Bonner
Howell, Ralph (N Norfolk)	Pollock, Alexander
Hunt, John (Ravensbourne)	Porter, Barry
Irvine, Bryant Godman	Price, Sir David (Eastleigh)
Irving, Charles (Cheltenham)	Prior, Rt Hon James
Jenkin, Rt Hon Patrick	Proctor, K. Harvey
Jessel, Toby	Raison, Rt Hon Timothy
Johnson Smith, Sir Geoffrey	Rathbone, Tim
Jopling, Rt Hon Michael	Rees, Peter (Dover and Deal)
Joseph, Rt Hon Sir Keith	Rees-Davies, W. R.
Kellett-Bowman, Mrs Elaine	Renton, Tim
Kershaw, Sir Anthony	Rhodes James, Robert
Kimball, Sir Marcus	Rhys Williams, Sir Brandon
King, Rt Hon Tom	Ridley, Hon Nicholas
Knight, Mrs Jill	Ridsdale, Sir Julian
Knox, David	Rifkind, Malcolm
Lambie, David	Rippon, Rt Hon Geoffrey
Lamont, Norman	Roberts, M. (Cardiff NW)
Lang, Ian	Roberts, Wyn (Conway)
Lawrence, Ivan	Robertson, George
Lee, John	Rossi, Hugh
Lennox-Boyd, Hon Mark	Rost, Peter
Lester, Jim (Beeston)	Rumbold, Mrs A. C. R.
Lewis, Kenneth (Rutland)	Sainsbury, Hon Timothy
Lloyd, Peter (Fareham)	St. John-Stevas, Rt Hon N.
Loveridge, John	Scott, Nicholas
Luce, Richard	Shaw, Giles (Pudsey)
Lyell, Nicholas	Shelton, William (Streatham)
Macfarlane, Neil	Shepherd, Colin (Hereford)
MacGregor, John	Shepherd, Richard
MacKay, John (Argyll)	Shersby, Michael
MacKenzie, Rt Hon Gregor	Silvester, Fred
Macmillan, Rt Hon M.	Sims, Roger
McNair-Wilson, M. (N'bury)	Skeet, T. H. H.
McNair-Wilson, P. (New F'st)	Smith, Dudley
Madel, David	Smith, Tim (Beaconsfield)
Major, John	Speed, Keith

Speller, Tony	Wakeham, John
Spicer, Jim (West Dorset)	Waldegrave, Hon William
Spicer, Michael (S Worcs)	Walker, Rt Hon P.(W'cester)
Sproat, Iain	Walker, B. (Perth)
Squire, Robin	Waller, Gary
Stanbrook, Ivor	Walters, Dennis
Stanley, John	Ward, John
Steen, Anthony	Watson, John
Stevens, Martin	Wells, Bowen
Stewart, A.(E Renfrewshire)	Wells, John (Maidstone)
Stewart, Ian (Hitchin)	Wheeler, John
Stokes, John	White, J. (G'gow Pollok)
Stradling Thomas, J.	Whitney, Raymond
Tapsell, Peter	Wickenden, Keith
Taylor, Teddy (S'end E)	Wiggin, Jerry
Temple-Morris, Peter	Wilkinson, John
Thomas, Rt Hon Peter	Williams, D.(Montgomery)
Thompson, Donald	Wilson, Gordon (Dundee E)
Thorne, Neil (Ilford South)	Winterton, Nicholas
Thornton, Malcolm	Wolfson, Mark
Townend, John (Bridlington)	Young, Sir George (Acton)
Townsend, Cyril D, (B'heath)	Younger, Rt Hon George
Trippier, David
Trotter, Neville	Tellers for the Noes:
van Straubenzee, Sir W.	Mr. David Hunt and
Viggers, Peter	Mr. Archie Hamilton.
Waddington, David

Question accordingly negatived.