PROVISIONS SUPPLEMENTARY TO SECTION 9 (Hansard, 24 June 1982)

§ The Under-Secretary of State for Energy (Mr. David Mellor)
I beg to move, That this House doth agree with the Lords in the said amendment.

§ Mr. Speaker
With this it will be convenient to take Lords amendments Nos. 11 to 17.

§ Mr. Mellor
These amendments are virtually identical to those that we have already discussed and approved in respect of clause 2. Therefore, I do not wish to take up the time of the House by repeating the arguments in any detail. Essentially, the amendments fall into the same three categories outlined by my right hon. Friend the Secretary of State in respect of clause 2. It may be best for me to move the amendment fairly formally. I can then reply to the points that are made in the debate.

§ Mr. Merlyn Rees
I want to raise three points. First, the Minister has said that this amendment simply repeats for British Gas what we have been debating for Britoil. It was explained that the change in clause 2 would enable BNOC to increase the share capital of Britoil, which had been established as a £100 company. Does the inclusion of the same words in clause 10 mean that the Government have taken some decisions about the means of disposal of BGC's assets?
In Committee the noble Lord said that they had not made any final decisions about privatisation of the Gas Corporation's oil assets and still less about the methods that would be adopted to do that. The amendments suggest that some preliminary decisions have been taken.
Secondly, the Secretary of State explained that we should not get so hot under the collar because the clause 478 dealt with a particular case. Our feeling is that if there is a particular aspect of company law to be dealt with, why not have the statute law to deal with it rather than take overweaning general powers? The same powers are now being taken—which are unusual—to deal with a form of disposal that we know not of. All we know from the Government is that they will dispose of the oil assets and the gas showrooms. In fact, the powers taken by the Government in the measure enable them to dispose of the lot.
On top of that, we now have this general power. In terms of what I have heard tonight it may not be strictly relevant, but I note that the Secretary of State already has powers to override under the Gas Act 1972. He can direct the BGC to do whatever he wishes. I grant that is not in the context of a Companies Act, but I am not enamoured of the explanation that I have read in another place and on the oil part of the Bill. The same provision should be in clause 10 unless the Government are clearer in their mind as to what the nature of the privatisation will be. It has been put there in case there is a problem.
Thirdly, I should like to return to clause 10(3) and relate it to amendment No. 14. Much rewriting has taken place. The substance of the discussion that we have had so far has been that in the case of oil it was rewritten because the Government had not taken into account the need for a participation agreement. That is the whole point of the discussion so far between Britoil and BNOC. That is why clause 2 was amended. Now we have the same amendment in clause 10. Does it mean that a participation agreement can be put in between a hived-off subsidiary of BGC and BNOC? Of all my points, I regard that as by far the most important. Therefore, may I repeat it for just 30 seconds?
The first part of the Bill is rewritten to enable a participation agreement to be entered into between the rump of BNOC and Britoil. What is the purpose of it here? Will there be a participation agreement between a subsidiary of BGC on the oil side and BNOC? If there is not, what is the purpose of it when its whole purpose in the first part of the Bill was to deal with a participation agreement on the oil side of the Bill?
I understand why the Minister did not go into the matter at length. We have gone into it before. However, in our view those three points are relevant. We shall not be voting on the amendment or any others to the Bill this evening and I shall explain why on the most important amendment in a moment.

§ Dr. J. Dickson Mabon
When the Minister replies, will he be kind enough to say what is implied by amendment 14(c)? When the transferor—I presume BGC—passes over the assets, whatever they may be, will the borrowing limit then go down because the transferee acquires it, not being another corporation?

§ Mr. Mellor
The issue involved in these amendments is essentially the same as in clause 2—the transfer of upstream assets in a public corporation into the private sector. That is why, except for the necessary differences between the BNOC and BGC in legal essentials, the arguments that apply to the relevance of the amendments to clause 2 apply equally to clause 10. I do not need to go further on that.
I shall respond to the questions asked by the right hon. Member for Leeds, South (Mr. Rees). No decisions have been taken on the precise method of the privatisation of 479 BGC's offshore oil assets. A number of options are being examined in detail. Until that work has been completed, it would be premature to speculate on which route is likely to be preferable. That is why the amendments take their present form.
We have always made this point clear. At this stage we are not able to give the House as much information about the disposal of BGC's assets as about the Britoil disposal. That is why the Bill provides that any direction under clause 11(1) requiring the corporation to provide for a disposal will be subject to parliamentary scrutiny in the form of the negative resolution procedure. Therefore, as soon as there is flesh to put on the bones of the scheme, the matter will come back before the House.
The right hon. Gentleman appreciates that the recent example of the proposed Wytch Farm disposal means there is considerable opportunity for the House to consider the matter. There was a debate on it on 27 July last year, following an Opposition prayer against the order. There was also an Adjournment debate on 8 July. Therefore, there have been two debates on that issue. There is no reason why there should not be similar procedures for the BGC disposal.

§ Mr. Merlyn Rees
I understand the Minister's argument. If we are to follow the same lines as in the first part of the Bill, we are doing that for setting up Britoil with 49 per cent. of the shares held by the State. Will we have lots of little Britoils or will they be sold completely to private enterprise? If they are sold to the private sector, surely we do not need the provisions in the Bill. We can draw the conclusion that the Government will set up a number of little Britoils in the gas sector, otherwise this provision would not be needed.

§ Mr. Mellor
I understand that the right hon. Gentleman is seeking to probe exactly what the Government's intentions are. He should not read anything into this beyond what I have already said. This is a complex issue. Once one removes the argument about whether the provision should be made and looks at the ways of implementing it, there are technical difficulties to be overcome. No final decision has been taken. I repeat that we are conscious of our duties to the House. That is why, when the decisions are taken, there will be ample opportunity, when the House is in full possession of the relevant facts, for the matter to come back before the House, if the Opposition wish, under the negative resolution procedure. There is no such provision in part I of the Bill because the situation is different.
The right hon. Gentleman referred to the repeat of amendment No. 7 and the legal point. It is extremely narrow, as my right hon. Friend has already made clear. It relates only to matters elsewhere in the clause. It is by no means as broadly based as might be assumed when one looks at the words by themselves.
I respectfully suggest that when the other place went over that ground, assisted by Lord Wilberforce, nothing emerged to suggest that there was any reason to fear that some undesirable phraseology had been introduced into the law. It is no more sinister in part II than in part I. I take the right hon. Gentleman's point. The amendment is narrow in its ambit, relating only to technical matters on which my right hon. Friend the Secretary of State has already commented. Knowing the important debates to 480 follow, unless the right hon. Gentleman wants me to continue, I shall not go further down that road in this discussion.
The right hon. Gentleman raised an important point about participation arrangements. Once again, I must say that I cannot give hard and fast information about that. We are presently considering what arrangements would be most appropriate for the assets involved. Our aim will be to strike a fair balance between the interests of the future owners of the assets and the objectives of the participation policy to which the Government are committed.
If the disposal involved the making of a scheme as provided in the Bill, the arrangements could be established under the scheme. However, there are other ways of achieving our objectives. We shall choose the option that is best suited to the requirements. I appreciate that I am not giving the right hon. Gentleman concrete information—I do not seek to deny that—but I am adhering to the position that we have made abundantly clear already, which is that no final decisions on this complex matter have been reached. However, I shall rely on the fact that the House will have the opportunity to consider the proposed arrangements when they are brought forward.

§ Mr. Merlyn Rees
I take that point. We shall have the chance to consider the options. BNOC trades all BGC oil at the moment. It looks as if that will not last, and we shall have to see what the proportion is. I have figures that show that in sixth round licence 303 the BGC has 100 per cent. interest, in 304 it has 100 per cent. interest and in 302 it has 73.3 per cent. interest, Amerada has 16.6 per cent. and Texas Eastern 10 per cent. The BGC is a substantial owner of oil. The procedures in this part of the Bill are the same as in part I. We shall look carefully at the information that one day we shall receive on the Floor of the House.

§ Mr. Mellor
I assure the right hon. Gentleman that as soon as the decisions are taken they will be made known. That debate will take place when the Opposition require it.
The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) asked me a question. If there is any borrowing in relation to the assets, it is right for it to be deducted from BGC's borrowing limit when the disposal is carried out. That is what the words to which he referred will achieve.