§ Mr. Edward Rowlands (Merthyr Tydfil)
I beg to move,That an humble Address be presented to Her Majesty, praying that the British Gas Corporation (Disposal of Offshore Oilfield Interests) Directions 1982 (S.I , 1982, No. 1131), dated 4th August 1982, a copy of which was laid before this House on 6th August, be annulled.The directions are a mean and petty thing, to say the least. They are also rather absurd, as we shall show. I shall examine first what the directions are all about. British Gas has four modest minority interests in four North Sea oil licences. Yet under the directions it is being forced by the Government to establish subsidiaries to prepare these modest minority irterests for privatisation. We are being asked to set up not one, two or three subsidiaries but six subsidiaries.
I do not know those who are responsible for drafting the directions. I do not know whether the Department of Energy has flipped its lid or gone bonkers, or whether there is some plague or infection going around that manifests itself in. setting up subsidiaries—a form of subsidiaritis. By any standards, these are some of the silliest directions presented by any Government.
I turn now to what each subsidiary is supposed to hold and do. Subsidiary A, listed in the statutory instrument, is to hold all the assets of BGC in the North Sea, all four modest minority interests in the four licences. One would not consider that exactly a large piece of action in the North Sea. One would have thought, however, that it would be enough to enable a debate to take place on that subsidiary. However, there are to be subsidiaries B, C, D and E, each of which will hold little bits of the BGC's oil interests. Into one subsidiary will be put the 25 per cent. share in one BGC licence in the Fulmar field, for example. A completely new subsidiary will be established into which will be put the 25 per cent. share in, say, the North-West Hutton field. That is incredible and foolish enough, but another subsidiary will hold the 10 per cent. BGC holding in the Beryl field. That is the character of the directions. All that is to prepare for privatisation. We must presume that the way is also being prepared for four mini-Britoils with four mini-Shelbournes as chairmen. One is bad enough. The concept of four mini-Britoils with four mini-Shelbournes is a nightmare.
All that is being done in the name of the grand principle of privatisation with which the Secretary of State is closely associated in the Conservative Party. I am glad that the right hon. Gentleman is present. Unfortunately, he has already given that principle a bad name because of the way in which he handled the Amersham scandal. The directions will reduce the principle to low farce with the establishment of this multiplicity of subsidiaries. The right hon. Gentleman must have been the one who spread the infection called subsidiaritis to the Department of Energy.
Pushing back the frontiers of the State is what the directions are all about. BGC' holds four small interests in fields that are entirely dominated by American oil companies. That has nothing to do with the frontiers of the State. Those are minority holdings in fields that are dominated by the Americans. BGC has a 10 per cent. interest in the Beryl field and the other 90 per cent. is held by a combination of American companies. There is no question of pushing back the frontiers of the State. It is a 973 modest holding in a predominantly American controlled and owned North Sea oilfield. It is the same with the Montrose, Fulmar and other fields.
All that BGC has done is to behave, as many Conservative Members have demanded of State corporations, sensibly commercially with modest diversification out of its traditional task and function into acquiring modest minority shareholdings and percentages in those oilfields.
§ Mr. Tim Eggar (Enfield, North)
I was interested in the hon. Gentleman's line of argument. Will he explain why the National Coal Board was directed to give up its oil interests?
§ Mr. Rowlands
I shall answer the hon. Gentleman's point later.
First, I should like to make the simple point that that sensible, modest, commercial diversification by BGC is what was envisaged in the Gas Act 1972, which was introduced by the Conservative Government. It gave BGC the power and the opportunity to go into related oilfield developments. That Act has never been repealed. The provisions were not repealed in the Oil and Gas (Enterprise) Act 1982. We must presume that the Secretary of State and his colleagues think that that is a sensible legislative provision. All that BGC has done is to act under that provision and nothing else.
I shall now answer the point made by the hon. Member for Enfield, North (Mr. Eggar). There has been a not insubstantial secondary benefit for BGC in the usefulness of being a partner in the licences. Everyone knows that when one has such an interest one sits on the operating committees, management committees, and technical committees of the respective oilfields in which one has an interest. One gains a great deal of knowledge through that about engineering, costings, and the commercial and financial aspects of developing the North Sea. All such information is useful for engineering, costing and commerce in BGC's primary role, which is to negotiate with the major oil companies on gas development and the purchase of gas.
Information is obtained from committees. Members of those committees get feedback for the general work task of the BGC's main function—the acquiring of gas and the negotiation of its development with major oil companies in the North Sea. Like the NCB, the BGC is a major influence in the North Sea which extends to its role as purchaser and developer of gas. It derives much useful information from its membership of the operating committee. That answers the point made by the hon. Member for Enfield, North.
Conservative Members cannot possibly say that the costs of acquisition or the development of those minority interests have proved to be a burden on the taxpayer or the consumer. On the contrary, they have provided useful 974 revenue to the corporation. One should compare that with the right hon. Gentleman's crazy policy of imposing 100 per cent. increases in gas prices or the rapacious gas levy tax. That policy is portrayed as pushing back the frontiers of the State. They are all modest but useful minority holdings in four North Sea oilfields.
§ Mr. Michael Morris (Northampton, South)
If those interests are so useful to the BGC in liaising with oil companies, why is every oil company complaining bitterly about its dealings with the BGC?
§ Mr. Rowlands
One reason may be that the BGC is standing up for British gas consumers. Any increase in gas prices has been the direct result of the Secretary of State's policy, not that of the BGC. Moreover, there is no truth in what the hon. Member for Northampton, South (Mr. Morris) says. I have heard of no disagreement between oil companies and British Gas as partners in North Sea oil development. It has been a fruitful relationship. It is about to be destroyed by Conservative Members for silly ideological purposes.
We should also bear in mind the background to the present policy. There is, for example, the debacle about forcing British Gas's arm about Wytch Farm being put out to tender. It has never been denied that the bids for the BGC Wytch Farm interests have fallen well below £200 million. The right hon. Gentleman should give a one-word assurance that there can be no suggestion of his forcing BGC to accept one of those tenders, thereby selling off the Wytch Farm interest at a price far below that of any independent valuation. If that happens, we shall know that the same will apply to all the other interests and the multiplicity of subsidiaries. The House has the right to know where the Government stand on that matter.
The House also has a right to know what will happen to those subsidiaries if the directions are passed. We have a right to scrutinise these sell-outs. Parliamentary procedures have scarcely given us that opportunity so far. The directions reflect the shabby disregard of the right hon. Gentleman and his colleagues for parliamentary accountability. They were thought up during the recess and came into force immediately before the House returned after the recess. It is only the right hon. Gentleman's or his Department's incompetence that prevented us from debating the matter earlier. We were all ready to debate this before the Summer Recess. It is due to the incompetence of the right hon. Gentleman, who at the last minute withdrew the instrument—he shakes his head, so perhaps he will explain why it was withdrawn—thus avoiding the possibility of debate until now, many weeks later.
Even now, this is no more than an enabling measure. It does not tell us what the right hon. Gentleman intends to do with the subsidiaries. He can still sell them off, one by one or in combination. After Amersham International and the other privatisation scandals, we should not leave assets of this kind in the hands of people like the right hon. Gentleman.
§ Mr. Michael Morris
Is the hon. Gentleman criticising the work of the Public Accounts Committee on the dispersal of public assets?
§ Mr. Rowlands
On the contrary, that report was close to being a major indictment of every act of privatisation undertaken by the Government. It found that every one of 975 their basic objectives had gone wrong, at considerable cost to the taxpayer and the nation. That was the evidence given.
§ Mr. Rowlands
It was certainly the case with aerospace. No doubt we shall have the opportunity to debate these wider issues in the future.
This is still just another enabling provision. We are being asked to approve the creation of all these proliferating subsidiaries. Are we to have four mini-mini-Britoils? If so, do the Government propose to dispose of a 51 per cent. shareholding in each of the four subsidiaries holding the assets? Is the reason for creating them that one or more will be sold off lock, stock and barrel with 100 per cent. disposal? What does this measure seek to do besides giving the Secretary of State power to do what he likes when he likes with the assets by breaking them up into these various subsidiaries?
If the Secretary of State plans to sell a majority shareholding in the subsidiaries or dispose of all of the assets in one or more of them, will there be the £1 golden share provision that he produced for Britoil to protect its integrity and to prevent it from falling into foreign hands? Will there be provisions to ensure that no subsidiary can be taken over by foreign interests? All of those questions are relevant because BGC's minority holdings in each of these oilfields are all subject to a pre-emptive right of purchase by its partners. In every case the majority partners are American and they will have the pre-emptive right to purchase if the assets are disposed of.
Are the subsidiaries designed to get around that preemptive right of the American oil companies to buy the BGC interests in those four areas? We asked about this in Committee, and we now ask again. Indeed, our concern was shared by Conservative Members such as the hon. Member for Bedford (Mr. Skeet). I hope that the Minister will now give us the answer that we did not receive when we discussed the Oil and Gas (Enterprise) Bill. If a majority or the whole of any subsidiary is sold, what are the American oil company's rights? What advice has the right hon. Gentleman received on this? What will be the rights of the other partners in the oilfield to make a preemptive bid? The situation is exactly the same as that at Wytch Farm, but in this case it is not BP but American oil companies. Is this no more than an American right-to-buy provision in one form or another? I hope that the hon. Gentleman will give a clear and unequivocal response to that question.
I turn to another aspect of the subsidiaries. Subsidiaries A and F are to hold new participation agreements or rights. I think that they are new because, as I understand, there are no agreements. That is because BGC handed over 100 per cent. of its oil to BNOC. It seems that, yet again, BNOC's rights to that oil and those participation rights will be diluted, and BNOC will lose 49 per cent. of its control of the oil provided by BGC under the licences. Perhaps the hon. Gentleman will tell me whether that is correct.
Of equal importance—the matter was raised by the hon. Member for Bedford—there will be rights to gas in these fields. Fulmar and Hutton will have gas, and BGC has a specific duty in gathering and gaining the gas there. There is nothing in the directions to suggest that the Government will in any way ensure that BGC gets at least the rights to its own gas. Will there be provision for that?
976 This all shows how petty, mean and farcical the directions are. It is privatisation going mad. It is the product of an approach and a mentality of that section of the Conservative Party that at present is in the ascendancy. Its interest has always been in fiddling and juggling around with assets, setting up front companies and shadowy subsidiaries—whatever title or name one gives them. It does not produce anything, it does not make anything; it simply plays around with other people's assets. It is what Mr. Shelbourne and company are all about.
This direction will do nothing for the development of the North Sea. It will not produce an extra barrel of oil. It will, of course, produce much money for underwriters, brokers and the merchant banks. The Public Accounts Committee found out about the enormous underwriting fees paid for doing nothing except selling shares at much lower prices and selling companies at give-away prices.
In the 1970s, this type of Conservative Party played around with property. It was part of the property game, until that turned sour and it burnt its fingers. Now in the 1980s, the equivalent of that property game, apparently, is our national oil assets. We think that it is rotten and disgusting. We oppose it vehemently, and we shall restore these assets to the public sector when we return to power.
§ The Under-Secretary of State for Energy (Mr. John Moore)
I was not quite sure whether we were having a further Second Reading debate, or whether this was a continuation of the Labour Party conference. Having listened to many discussions and debates on this subject, I have the distinct feeling that we should introduce a new Rowlands principle, that the significance of an issue bears an inverse relationship to the passions expressed. Although I noted the many questions, which I shall endeavour to answer, it seemed to me that the arguments were addressed to the nature of the direction that we are discussing.
We constantly come back to the peculiar point that the Opposition find it extremely difficult to understand that the Conservative Party, when in office, has as much right to try to put into practice its philosophical principles as has the Labour Party. [Ho N . MEMBERS: "Ridiculous."] That illustrates my point. The minute that a Conservative Member, at the Dispatch Box or elsewhere in the House, seeks to make a philosophical point, it is immediately regarded as ridiculous. Quite the reverse is true. As the hon. Member for Merthyr Tydfil (Mr. Rowlands) rightly said, this Government are in the process of putting into practice Conservative principles, and we are excessively proud of doing so.
In an effort to help the cause of rational debate, I shall address myself to the particulars of the directions.
My right hon. Friend the Secretary of State for Energy has made clear our policy on the matter. Frequent references have been made to it, beginning on 19 October 1981, when the Government made it clear that they intended to privatise BGC's offshore oil interests—
§ Several Hon. Members rose—
§ Mr. Moore
I have just begun. I expect the debate to continue until well into the night. I shall attempt to respond to all points raised, if I am given the opportunity to do so.
Our intention to privatise the offshore oil interests was debated on a number of occasions during the passage of 977 the Oil and Gas (Enterprise) Act. However, all hon. Members will welcome this further opportunity for debate. During the consideration of the Act, the Government made it clear that Parliament should have an opportunity, via the negative procedure, to debate our specific plans for disposal of BGC's offshore oil assets when these were formulated. Needless to say, I trust that the House will reject the Opposition's prayer.
Before we go any further, we should be quite clear what we are debating. The directions we are concerned with tonight deal only with preliminary work towards the disposal of BGC's offshore oil interests. They do not deal with the disposal itself. That will be initiated by a further statutory instrument, which will also be subject to the negative resolution procedure. There will, therefore, be a second opportunity for debate at some stage in the future.
I shall seek to answer all the detailed points raised about the proliferation of companies, but without seeking to belittle the present debate, I must say that the second debate will clearly be the more important of the two. It will be at that stage that the Government should be able to answer questions on such important issues as the disposal method to be adopted. I cannot answer such points today simply because they have not yet been settled.
It follows that I cannot accept the criticism against laying the directions in the recess—that substantive point was made earlier—which was put forward by the hon. Member for Merthyr Tydfil when the directions were laid on 6 August, and which he repeated today. The directions are just not as important as he implies. The crucial statutory instrument is still to come.
§ Mr. Rowlandsrose
§ Mr. Rowlands
If the crucial statutory instrument in relation to the disposal of BGC assets is the transfer of assets order, why have the Minister and his party refused to extend that procedure to the whole of the transfer of BNOC assets to Britoil, thereby ensuring that we do not have the opportunity to have a crucial debate on a crucial instrument?
§ Mr. Moore
I should not have given way. I shall show that the options are wider than the hon. Gentleman suggested. If I can continue, he may understand the point that I am endeavouring to make.
I certainly accept that in the case of the other statutory instrument the Government should not bring it into effect before the House has had an opportunity for debate. But I find it difficult to see how that argument could be extended to the much more modest directions with which we are currently concerned.
I should also point out that nothing irrevocable has yet occurred as a result of the directions. If the House decided tonight that the directions should be annulled, any of the preliminary steps already taken could easily be stopped. Parliament's right to annul the directions is, therefore, in no sense constrained.
Nor was the laying of the directions in the recess without precedent. Under the previous Administration, for example, well over 100 instruments were laid during the 978 recess each summer, most of them subject to the negative resolution procedure. Those included instruments on such subjects as price control, the amendment of planning permission regulations and the establishment of the circumstances in which mobility allowances would be paid. These would all seem to me to be issues of some importance.
More generally, on the question of precedent, I remind Opposition Members that when the Labour Government disposed of BP shares in 1977 and when Burmah's North Sea oil interests were acquired in 1976, there was no parliamentary procedure of any kind whatsoever. I find it odd, therefore, that the hon. Gentleman should feel able to mount an argument that Parliament is being shortchanged by the present Government.
§ Mr. Dick Douglas (Dunfermline)
On the issue of Burmah, it does not lie in the mouths of private enterprise to defend that failure. It was a failure, and the Government had to take precipitate action to save the company. Conservative Members know that.
§ Mr. Moore
The hon. Member should address himself to my point. The Conservative Party is accused of taking insufficient cognisance of Parliament. I gave two examples of important issues which were not brought before Parliament at all. That is the issue at stake which was raised by the Labour Party, to which I sought to address myself. It is odd that Parliament should be thought to being short-changed by the Government.
Finally, before I leave the subject, may I say that, despite all those points, the Government made every effort to lay the direction before the recess? That is a point to which the hon. Gentleman addressed himself. In the event, not as a matter of incompetence, it proved impossible to complete the legitimate consultations to which the Government committed themselves—although the Government made every effort to do so—with the British Gas Corporation under section 11 of the Act in the time between Royal Assent and the summer adjournment.
I hope that the House will find it helpful if I now attempt to explain in detail what the directions set out to do.
The disposal envisaged will consist of all BGC's interests in offshore oilfields which are either in production or under development. These fields are Beryl A and B, Montrose, Fulmar, Hutton and North-West Hutton. We do not currently envisage any of BGC's present interest in any of those areas being retained, either by BGC or the Government.
However, the Government have not yet decided how the disposal will be carried out. Nor has there even been any decision on timing, although I can say that we would hope to see the disposal completed in the lifetime of this Parliament. Our aim at this stage is merely to establish a basic framework within which all disposal options are retained.
The directions are complex because of the need for flexibility and I shall try to explain them.
§ Mr. Tam Dalyell (West Lothian)
Throughout all the hours in Committee the Under-Secretary of State for Energy and the Minister of State, Department of Energy, spoke not about the disposal of assets during the lifetime of the Parliament but about the disposal of assets when the market was favourable. Are we now to accept that there has been a transfer from the concept of a favourable market 979 to the lifetime of the Parliament? Although I disagree with the Bill, one can understand the disposal of assets on a favourable market, but this is a qualitatively different constraint.
§ Mr. Moore
I cannot accept that. The statement relating to timing must always take markets into account because they are a key factor in any sales decision. That has not changed at all.
The need for flexibility is why the directions are rather complex. Underlying the complexity, the main objective is simply to provide for the interests associated with each of the four fields—taking Beryl A and B and Hutton and North-West Hutton together—to be transferred to four new subsidiaries of the corporation. Those subsidiaries are, for the sake of illustration, referred to in the directions as subsidiaries B, C, D and E. All their shares would be held by a fifth subsidiary referred to as subsidiary A.
Once those transfers have been completed, a number of disposal options will be available. It would, for example, be possible to float all the interests in the form of subsidiary A. Subsidiary A could also be sold to an individual purchaser. Alternatively, subsidiaries B, C, D and E could be sold separately to different purchasers. The option of a direct sale of the interests themselves, rather than of companies holding the interests, would also remain.
There are advantages and disadvantages in each of the options, but the Government believe that it would be wrong to decide between them, or even to rule out any one option, before we are somewhat nearer the time of the disposal. The decision will therefore be taken nearer the time in the light of all relevant factors.
§ Mr. Dennis Canavan (West Stirlingshire)
The hon. Gentleman said that he had had consultations with the British Gas Corporation. Could he name one person in the BGC, on the board, management or in the trade unions representing the work force, in favour of this series of options, all of which are designed to asset-strip one of the most successful pieces of public enterprise in the country?
§ Mr. Moore
That is ridiculous, especially as the hon. Gentleman is referring to consultations that were supposed to be private. If the hon. Gentleman would address himself to the problems, he would understand that the British Gas Corporation equity interests are in offshore oil companies, not the British Gas manufacturing process.
I recognise that there will be some disappointment in the House that I cannot, at this stage, say any more than this, but, as I have already explained, there will be a further opportunity for debate when the statutory instrument is made which will initiate the disposal itself. On present expectations, this instrument will take the form, not of a further direction to BGC requiring it to carry out the disposal, but an order, under section 11(5) of the Act, transferring the shares of the relevant subsidiaries to the Secretary of State before their disposal by him. Whether or not it does, in the event, take this form, there will definitely be some kind of statutory instrument subject to negative resolution which will provide an opportunity for debate. The Government would expect, at that point, to be able to say which of the disposal options was being proposed. It will be at that point as well that the Government should be able to give their views on a number of questions, such as whether it would be 980 appropriate for the articles of association of the new company or companies to include any provisions against undesirable changes in control.
I shall now relate some general comments, which attempt to answer many of the practical questions asked as to what actually appears in the directions.
The requirement for BGC to establish subsidiaries A, B, C, D and E is contained in clauses 2 and 4 of the directions. The provisions relating to the transfer of assets to these subsidiaries are contained in clauses 3 and 5.
The transfers will be carried out by means of schemes drawn up under section 10 of the Act. In order to end up with the position we are aiming for, two schemes will be required. The first will transfer all the interests to subsidiary A in return for the issue of shares by A to the corporation. The second will then transfer the interests relating to the individual fields from subsidiary A to subsidiaries B, C, D and E for the issue of shares by these subsidiaries to A.
I am sure the (louse will welcome the fact that the directions also provide for participation arrangements to be established by way of the schemes before the interests are disposed of. The interests are not, in recognition of BGC's position as a public utility, currently subject to participation, as the hon. Member for Methyr Tydfil pointed out, and I shall endeavour to answer his point. However, it will obviously be right to make them subject to participation before they are transferred to the private sector.
The procedure by which this will be achieved is rather complicated. Clause 3(2) of the directions first requires arrangements for 51 per cent. participation to be established between BGC and A.
§ Mr. Rowlandsrose—
§ Mr. Moore
If the hon. Gentleman is interested in understanding what I am trying to explain, with care, to the House, and has more patience, he will gain more knowledge of a subject that he seems to be interested in.
A's obligations under these arrangements will then, by virtue of clause 5(1), be transferred to subsidiaries B, C, D and E. The corporation's corresponding rights will, by virtue of clause 7, be passed to a further new subsidiary, referred to as subsidiary F. The Government intend subsequently to use section 11(5) of the Act to transfer subsidiary F's shares to the Secretary of State with a view to vesting them in BNOC. The net effect will, therefore, be the establishment of participation arrangements between BNOC anc the four new companies holding the interests. These arrangements will then continue to apply after the disposal regardless of the disposal route adopted.
I hope that the House will welcome these proposals and will also recognise that setting the level of participation at 51 per cent. strikes a fair balance between the interests of the Government's participation policy and the interests of the future owners of the assets. That 51 per cent. is the normal level of participation.
Since the hon. Member for Merthyr Tydfil made this point, let me remind him that going for 100 per cent. would only have brought an extra 0.4 per cent. of current North Sea oil production within British National Oil Corporation's control. That is not a significant figure in terms of BNOC's total access to oil. The hon. Gentleman also raised a point about associated gas. The relevant associated gas of the fields in question is 0.25 per cent. of 981 gas reserves, so again we are speaking of a minimal amount. The British Gas Corporation would still have the opportunity of purchasing that gas in the normal market. The Government will make a summary of the participation arrangements available to Parliament as soon as they have been finalised.
On timing, the directions require BGC to establish all the new subsidiaries and submit the schemes to the Secretary of State by the end of November. Thereafter, the Secretary of State will be able, by virtue of section 10(5) of the Act, to approve the schemes either without modification or—
§ Mr. J. Grimond (Orkney and Shetland)
Does the Government intend that there should be any participation by either the employees of the British Gas Corporation or by the public at large when these subsidiaries are sold off?
§ Mr. Peter Rost (Derbyshire, South-East)
Can my hon. Friend confirm that the original offer to British Gas could still be open—in other words, that the oil interests would be hived off to a separate company with British Gas being given the opportunity to retain some form of participation?
§ Mr. Moore
I hope that my hon. Friend will allow me to keep to the direction of the debate. I made it clear to the House that the Government are keeping all their options open about the ultimate disposal. My hon. Friend will have another opportunity to make his point on the determination of the Government's option.
To continue, after the end of November, the Secretary of State will be able, by virtue of section 10(5) of the Act, to approve the schemes either without modifications or with such modifications as, after consultation with the Gas Corporation, he thinks fit.
Clause 9 of the directions deals with two other points that I should mention. First, it requires BGC to engage an independent petroleum consultant to evaluate the interests and to report by the end of next February. Such an independent valuation will be needed for the disposal, whatever disposal route is adopted.
§ Mr. Moore
He will be entirely independent. He will be reporting to the BGC, but the corporation will not be under any financial obligation as a consequence.
Secondly, it requires BGC to compile, or have compiled, such information about the activities of subsidiaries A, B, C and D and E in order to facilitate their disposal. It also calls, in particular, for an accountant's report on the interests. Such a report will be needed in the event of a flotation of subsidiary A. Its compilation will, therefore, enable the Government to keep this option open.
I hope that this somewhat detailed description which the hon. Member for Merthyr Tydfil clearly wanted will serve to clarify any doubts that hon. Members may have had as to the way in which the directions we are debating are intended to operate. I am well aware that there are 982 many further questions, which I shall try to answer at the end of the debate. Many other hon. Members are seeking to make a contribution.
I hope that the detail that I have gone into has not obscured the merits of the policy underlying the directions. For too long, successive Governments have failed to face up to the crucial question of where the boundary between the public sector and the private sector should be drawn. This Government have not avoided that challenge. We have faced up to it, and we are of the firm opinion that industrial activities are best performed by private enterprise unless there is a positive and overwhelming case for their remaining under State ownership. Private enterprise has been the driving force behind the successful development of North Sea oil. There, therefore, seems to me to be little argument for a public utility, whose main business is the supply of gas, to retain a minor equity stake in North Sea oil. It is far better that this should be transferred to the private sector where it will be subject to the proper pressures and disciplines of the market.
I commend the directions to the House and invite right hon. and hon. Members to reject the Opposition prayer.
§ Mr. Dick Douglas (Dunfermline)
The Minister tried valiantly to present a case for the directions. I offer him no disrespect when I say that the debate should have been opened by the Minister of State who, coming from a Scottish constituency, knows a lot about this issue.
§ Mr. John Moore
The hon. Gentleman should appreciate that within the Department I am responsible for the activities of the British Gas Corporation.—[Interruption.] Opposition Members who keep muttering from a sedentary position about my absence will also be aware that I was leading on a coal measure at the same time. Therefore, my absence from Committee in no way deprived me of an interest in decision making.
§ Mr. Douglas
That is where the Minister gets himself into some difficulty. We are dealing not with the gas activities of BGC but with its oil activities. That is our concern.
The Minister based part of his case on the great foundation of a Conservative philosophy which was last enunciated in all its majesty by the Chancellor of the Exchequer in a speech on 3 July to the Conservative Political Centre, when among other things he said:Yet this first Parliament has seen firm foundations laid in economic and social policy on which we can build during the rest of the decade".As I understand them, those foundations seek to divide the nation on the basis of a doctrinaire policy. It is not a question of whether the Conservative Party philosophy, as in the past, believes in a mixed economy in which the public and private sectors can play their parts. We now have a doctrinaire Conservative policy that despises the public sector when it fails—
§ Sir Frederick Burden (Gillingham)
On a point of order, Mr. Deputy Speaker. I have been in this House a considerable number of years and have attended many debates on statutory instruments. Such instruments are drawn very closely, and in this one I can find no statement whatever about the general economy. It merely deals with the British Gas Corporation—
§ Mr. Deputy Speaker (Mr. Ernest Armstrong)
Order. The Chair will decide whether or not an hon. Member is in order. The hon. Gentleman is quite in order.
§ Mr. Douglas
I am grateful to you, Mr. Deputy Speaker. It was evident from the Minister's remarks that he was basing his case on this philosophy.
Conservatives despise public enterprise when it fails and absolutely hate it with a great passion when it is successful. The BGC is internationally one of the most successful enterprises of its nature and is recognised as such.
We know that for more than 50 years this enterprise has been engaged in offshore and onshore exploration for oil and gas. Its main objective, which has been endorsed by Governments of all political colours, is to gain by whatever means possible the maximum amount of knowledge on both reserves and costs of production of reserves of onshore and offshore gas in the United Kingdom. That is a noble objective. It protects not only the corporation, but the consumer. That is its role. I have argued before that the Government should assess the offshore oil and gas reserves and the costs of production. On that basis, a Government can form their taxation policy and can gain information by which to control the large multinationals.
The Minister talks of consultation, but I challenge him and his colleagues to name any partner in the BGC who has objected to its activities. I do not say that I am particularly well informed, because I do not have the resources that are available to the Minister. Oppositions do not have such facilities. However, not one of the British Gas Corporation's partners has objected to its activities. That is a statement of fact. I do not agree that participation in the fields is minuscule. In several fields participation is substantial and, one way or another, the corporation has control over fairly substantial reserves.
My hon. Friend the Member for West Lothian (Mr. Dalyell) has raised an interesting point about the state of the oil market. The Government are falling over themselves to get ready for a pre-election give-away. The hon. Member for Bedford (Mr. Skeet) knows a lot about such matters and will be aware, as other hon. Members will be, that there is great uncertainty in the international oil market. It is by no means certain what will happen at the next OPEC meeting in December. The Government may be trying to press on in order to avoid that. However, we must bear in mind what is happening in the oil market. In the short term, the market is steady, but we cannot be sure that that state of affairs will continue. The key is Saudi Arabia, but I shall not elaborate that point now. For doctrinaire reasons, the Government have pushed this policy forward. There is no evidence that the corporation's partners or the corporation itself want to take such a step.
984 What is the position of the independent petroleum consultant? Will the House be told the name, given that November is not far away? Surely the Minister can tell us that. Is it Degoyler and McNaughton or someone similar? Will the report be available to the House for assessment? Will there be pro forma balance sheets for the holding company and all the subsidiaries? Will the House be able to make an assessment? We know how the Public Accounts Committee tackled the issue of Amersham International and other investigations. In Committee, we said that we should consider the method of sale. Tender options could be allowed and in that way we would be able to gauge the price. Such things are important in assessing whether the nation gets value for money in the market place.
I vehemently disagree with the chairman of Britoil, Mr. Philip Shelbourne, who is a knowledgeable man. The nation puts a value that is higher than that of the market place on such assets. They have an intrinsic value for the nation, although Conservative Members probably will not understand that. The most important feature of a Government's policy is the securing of an energy supply. To do that, it is essential that there should be a substantial public corporation in the mix of public and private enterprise in the North Sea to advise the Minister about what is going on.
I support the point made by my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) about technology. I have an excellent document which comes from Shell. It is called "The North Sea: a Springboard for British Industry". The Minister for Industry and Informaton Technology wrote the preface. It said:Industrial enterprise and the imaginative exploitation of new technologies are the prime creators of the wealth and jobs. I commend this Shell UK report as a convincing demonstration of the innovative strength and capability of British industry in its impressive response to the challenging demands of the North Sea.Is there anything in that or any other document to suggest that public enterprise has not played its part? Shell claims that 75 per cent. of the goods that it uses in the North Sea come from British industry. There is nothing to suggest that Shell or other companies would have used Britisht goods if we had not created—the Conservative Government were partly responsible—the Offshore Supplies Office. That was public enterprise.
When we see the use of tension-legged platforms by British Gas in part of the Hutton field, is there anything to suggest that British Gas held back that technological development? The only people who want to downgrade public enterprise are the Tories. They do it for narrow doctrinaire reasons which are not for the good of the country. I do not support the directions.
§ Mr. T. H. H. Skeet (Bedford)
The hon. Member for Dunfermline (Mr. Douglas) referred to the Government waiting for a give-away opportunity. The Government are not pursuing that target; they intend to go for a fair price later. That will be subject to a separate instrument. The hon. Member for Dunfermline is not a member of a party that thought about fair compensation for the public. In June 1977, when BP shares were allocated by the Labour Government, 66 million shares were offered at £8.45 a share at the behest of the IMF. We had no opportunity to debate that issue. The Minister gave the House an opportunity to discuss this subject at a preliminary stage, and we are discussing it again tonight.
How did the Labour Party look after the shareholders of other companies? The Burmah Oil Company had to sacrifice its BP stock in 1975. I shall read from a report in The Times of 10 May 1980. Labour Members might be wise to listen. The report states:The Government intervened, and, at its direction the Bank—that is the Bank of England—became an outright purchaser of BP stock…As a result of the 1975 intervention the Government helped itself to Burmah's major asset at an effectively all-time 'low'.We learnt tonight that the Labour Party could not care less about shareholders. It works on knock-down prices, whereas the market price should be the main determinant.
The Minister was right to emphasise that either the establishment of the boundaries between the public and private sectors or the establishment of the correct role for the State to play is crucial for a modern industrial State. I fully accept that view.
The benefits from the North Sea are a product of private enterprise. The private sector generates the lion's share of the oil and accounts for the greater part of the taxes paid into the Inland Revenue. BGC is primarily a public utility. It should be confined to the distribution and sale of gas and the search for gas on the Continental Shelf and elsewhere. A competitive industrial society cannot tolerate the generation of its energy wholly within the public sector. State-produced coal and electricity must be balanced by an expanding private sector in oil and gas.
I fully agree with the principles outlined in the direction. My only reservations are on the complicated procedures involved. The legislature is apparently reluctant to do anything straightforward and simple. Acts and statutory instruments must be drafted in abstruse terms, and the most sophisticated device is used to accomplish those ends.
The procedural complications comprise the establishment of a scheme under section 10 of the Oil and Gas (Enterprise) Act 1982 to transfer interests in BGC to subsidiaries designated as A, B, C, D and E while retaining through A separate creation participation rights. At least six steps are envisaged. The first is that BGC and Gas Council (Exploration) Limited will transfer rights and liabilities of scheduled oilfields to subsidiary A. That is in paragraphs 2 and 3. The second step is that subsidiary A transfers the assets and obligations of the part assigned to subsidiaries B, C, D and E. That is in paragraphs 4 and 5. The third step is the valuation by independent petroleum consultants and the determination of other disposal preliminaries. That is set out in paragraph 9.
986 The fourth step involves participation rights being reserved to company F, which is established for the acquisition and disposal of petroleum. That is in paragraphs 3(2) and 6 and 7.
The fifth step is the vesting of all or any of the subsidiaries in the Secretary of State for disposal. They comprise, first, groups A, B, C, D and E and, secondly, company F. Finally, there will be an order by the Secretary of State under a separate statutory instrument disposing of the groups collectively or separately as he may desire. Also, after vesting company F in himself, he will transfer it to BNOC. That all happens under the authority of section 11(5) of the 1982 Act.
I have gone through the process carefully to show the complicated steps that must be taken. The gentlemen in the Civil Service have worked them out carefully and meticulously doubtless to fit in with all possibilities and with maximum flexibility. But the complications could have been simply avoided. All the assets could have been sold to Britoil, which already has participating arrangements with BNOC and can be relied on because of the 49 per cent. Government interest in the privatised company. That is the most satisfactory alternative.
There is another simple solution which would obviate the complications. An option to the existing partners of the BGC in the relevant field could be made available. Looking at the production licences we find that the companies involved are Amoco, Amerada and Texas East, all of which are American. There are four sets of production licences, and Mobil is involved in three of them.
As well as the 1975 Act we have a considerable amount of other legislation. There are also the participation rights which involve 51 per cent. of the oil. I see no difficulty in allowing a participating company to take over the share interest in any of these fields. The companies are obligated to BNOC by the fact that they must concede 51 per cent. of the oil. They are covered by Acts of Parliament and statutory instruments; thus they are controlled by the State. There is no reason for us to fear complications.
The Minister said that the interests of the British Gas Corporation should be subject to participation before they are transferred from the public to the private sector. That is not necessarily the case, because there could be a transfer of all the interests to one new private enterprise company and participation agreements negotiated later. In the Petroleum 'and Submarine Pipe-lines Act 1975, there is only one reference to participation agreements, in section 2(e), as being part of the function of the BNOC. Already 68 such agreements have been negotiated "voluntarily" and there is no reason to believe that on this occasion the buyers would not agree to follow the lead established by others or to ensure that participation became a condition of the sale. That would negate paragraphs 3(2), 6 and 7 of the regulations.
By following the course that I have suggested, much of the complication could be eliminated by transferring the assets to BNOC—in which the public have a 51 per cent. interest—or to the present licensees or to private enterprise. The deal could be made subject to conditions and the companies could voluntarily agree to enter into a participation arrangement.
I support the Minister's proposal that the interests should be returned to private enterprise, where they will be well looked after and where they can prosper. However, I am trying to identify the holding of subsidiaries B, C, D 987 and E. Which assets will be transferred to company B as distinct from company C? The schedule of assets refers to Montrose, Beryl A and B, North-West Hutton and to Fulmar. Do I assume that each field will be transferred to each of the four companies?
§ Mr. Rowlands
In paragraph 5 of the direction, subparagraph (b) refers to paragraph 2, subparagraph (c) refers to paragraph 3 and so on. It is specified clearly.
§ Mr. Skeet
It is not specified clearly. Paragraph 5(1)(a) states thatthe transfer between Subsidiary A and Subsidiary B of the property, rights and liabilities referred to in Clause 3(1) and (2) above in so far as they relate to, or are comprised in so much of the undertaking of Subsidiary A as relates to, the seaward area specified in paragraph 1 of the Schedule to these directions.
§ Mr. Skeet
The schedule does not say that. Subsidiaries A, B, C, and D are dealt with in the same terms. The fields cannot he shared among the companies. On first examination of the direction, I believed that that would be the likely consequence, but the document does not tell us clearly what will happen. The Minister will have an opportunity either now or later to tell me what will happen.
I turn now to another important issue. The Minister rightly indicated the time limit for disposal which is referred to in paragraphs 2 and 9 of the direction. Timing will be more difficult. There is the precedent of Wytch Farm, under Order in Council 1459 in 1981. It would not be in order to refer to that in too much detail tonight but that order came into operation on 13 October 1981. Today is 26 October 1982. Therefore, a year has elapsed since the order was made. There has been a considerable delay in the disposal of that field—more than a year. Many fields are involved in the direction before the House. Are we to have four times that amount of time to dispose of these assets?
The Minister clearly articulated that he hopes to complete the disposal in the life of this Parliament. I wish him well and it is right to have that aim ahead of him. He has arranged in the direction to establish, all the new subsidiaries by 30 November 1982. He will have the report from the independent petroleum consultant by 28 February 1983. We have been told tonight that there will be a further instrument, possibly under section 11(5) of the Oil and Gas (Enterprise) Act 1982, which will give rise to a debate in the House. I assume that it will not be possible to get rid of these properties to prospective buyers until July 1983, by which time the general election will be close. Anything can happen in those circumstances.
I know nothing about the prospect for a general election or when one is likely to come. However, the Government are perfectly right to pursue this policy, but if they had adopted a simpler method we could have disposed of all of these oilfields at a much earlier date.
The hon. Member for Merthyr Tydfil (Mr. Rowlands) did not mention the selection of fields. I was concerned about Beryl A and B and Hutton. The Minister said that there is natural gas associated with them in each case of about 0.1 trillion cubic feet, but that is only a tiny part of the total production of British Gas. If only it could be arranged on this occasion that the conditions of sale could reserve to British gas the right of access to the gas that is available.
988 The definition of "petroleum" is dealt with in section 16 of the Petroleum and Submarine Pipe-lines Act 1975 in reference to participation oil under paragraph 3(2). Methane is exempted, but I suggest that a modification should be made in the interests of industry and that additionally propane, butane and ethane should be exempted. That would be helpful to the petrochemical industry. This is a matter of definition, but it is by correct definition that one achieves greater justice.
Other hon. Members wish to speak, but there are one or two other matters that I should like briefly to cover. The oil lifted by the British Gas Corporation in 1981 amounted to 17,000 barrels a day, which is a small proportion of the production from the North Sea. Compared with the production in the Forties field, it is minute. It is estimated that British Gas Corporation production by 1985 could be of the order of 66,000 barrels a day. I emphasise that this oil will not be lost. It will be marketed. At present, of course, there is a world surplus.
What about British Gas Corporation oil sales? In 1980–81, sales of oil were made, as obligated, to the British National Oil Corporation and netted about £120 million. This was only 3 per cent. of the British Gas Corporation's turnover. It is minute. Hon. Members must get the matter in proportion.
§ Mr. Skeet
I am glad that the hon. Gentleman raises that point. If it is minute, the BNOC and the country 'will not be injured. It is a matter of operating these companies successfully. In trading and manufacturing interests, private enterprise does best. One has only to look at British Leyland, the British Steel Corporation and the National Coal Board to begin to understand the problems of State corporations. On the other hand, private enterprise possesses not merely expertise but the essential techniques.
I wish to refer also to the production licences. One would naturally conclude that when the British Gas Corporation ceases to be associated with oil fields there will be little interest left. However, it has over 28 petroleum production licences left.
Although the Minister rightly has not dealt with figures, it is open to hon. Members to mention them. The Minister mentioned the possibility ultimately of securing a fair price, which I fully endorse. A fair price is a market price determined and established by the market. The figures, which include Wytch Farm, produced by Wood Mackenzie on 30 July 1981, at $35 a barrel work out: at £550 million. At $38 a barrel, well above the current market price, it works out at £900 million. On the other hand, the analysts, Phillips and Drew, on 12 November 1981, put the value of the BGC interest in the Wytch Farrn at £195 million, and the value of its interests in West Hutton at £191 million, and in Beryl at £109 million. Hutton, Montrose and Fulmar are relatively smaller, but the total is £650 million. The figure, if Wytch Farm is deducted, comes to £455 million.
What the Minister has stated tonight is sound practice. The Labour Party does not, of course, agree. Opposition Members do not believe in market prices. They believe in sequestrating assets as instanced by their calling upon the Bank of England o act over the shareholding of the 989 Burmah Oil Company in British Petroleum. I accept all the provisions of paragraph 9. They will be most satisfactory in practice.
Opposition Members should read the regulations, however complicated. I deplore the nature of the structure adopted, but it will secure ultimately the sale of this property which should be reserved to private enterprise. It will be taken out of the control of the State which should never have been in control in the first place.
§ Mr. Arthur Palmer (Bristol, North-East)
The hon. Member for Bedford (Mr. Skeet) lost me in the mass of detail that he gave. He made an explosive speech, but he succeeded in convincing me that it was not necessary to have the legislation at all because the subject of it is so minuscule. It is a small thing, he said. Therefore, I should have thought that the House of Commons could be occupied with much more important matters.
I shall take up the justification that the Under-Secretary of State gave for the direction. It is based on the main Act. As the House will know, I take an interest in energy matters, but I did not play a part in the discussions on the main Act.
§ Mr. Palmer
Therefore, I come fresh to the direction. The Under-Secretary defended it on the grounds of Conservative philosophical principles. I always understood that the essence of Conservativism was pragmatism and that if something worked well one left it alone. However, the Under-Secretary of State says "No". This has to be done because it is part of Conservative philosophy, some might say Conservative doctrine. It is true that the Conservatives have a majority in the House and not only have the right to apply their policy but, more to the point, the power to apply it. However, does not the hon. Gentleman see that another different principle might unite the two sides of the House? That is continuity in national energy policy. I hope that the hon. Gentleman will deal with that possibility. There is nothing so upsetting to great industries as to have one policy pursued by one party when it is in power and then the diametrically opposite policy pursued by the other party when it is in power.
Therefore, there is a counter-argument for continuity unless the view taken by Conservative Members is that there was a revolution in matters of legislation under the several Labour Governments, so now it is their duty to carry through a counter revolution. If so, it does not assist the general stability of industry or the morale of the staff involved.
The measure takes away from the British Gas Corporation its profitable oil interests. Also, it is another foray into the guerrilla war that the Secretary of State wages against the BGC, particularly against its able chairman, Sir Denis Rooke.
The Government dislike—the Under-Secretary of State seemed to admit it—all nationalised industries but reserve their greatest hatred for the successful ones, particularly those whose leaders dare to criticise the policies of the Government and the Secretary of State for Energy. If it were not for Sir Denis Rooke's great ability, 990 administrative gifts and the loyalty that he excites in his staff, he would have long gone the way of Mr. Glyn England, former chairman of the Central Electricity Generating Board.
A successful nationalised industry upsets the cherished doctrine of the Secretary of State, who is one of the most extreme free enterprisers in the Government, and of those who think like him. As the hon. Gentleman admitted, the doctrine is that national ownership is bad and private ownership is good. That crude doctrine undercuts all the assumptions that we make about a mixed economy in this country. It is the business of Ministers to tell us whether they still believe in the mixed economy. That is a fair question to which the House deserves an answer.
The purpose of the direction and the parent Act is to do away with an alleged national monopoly. The hon. Member for Bedford talked about returning assets to private enterprise. But they were created by public enterprise. There can be no question of returning them. In any case, it was not the Labour Party that nationalised the gas industry. The Labour Party's legislation of 1948 regionalised the gas industry, but it was the Conservative Party that nationalised it by setting up the British Gas Corporation. Powers that the corporation is apparently acting criminally by using were granted by a Conservative Government. I served on the Standing Committee of the 1970s Bill. As I say, the powers that are now so criticised by Ministers were given by a Conservative Government and were defended eloquently then as being in the national interest. The present Conservative Government are very different, I am afraid, from those that we knew in days gone by. The national interest has lost by the change.
I have technical interests. I am an engineer but no geologist. One does not have to be a geologist to know that oil and gas are frequently found together. We should ignore the argument about whether an organisation is nationalised or private. These organisations are an entity in themselves. What sense does it make to insist on one enterprise—BGC—although it works with private oil partners looking only for gas? What reason can be given for it? We will only be told that it is a public utility and must be so confined.
It is simply ideology flying in the face of nature. In the case of Wytch Farm, the Secretary of State has forced the corporation to sell its stake in the largest land oilfield in the United Kingdom. I understand that the BGC has developed that field beneficially and has received an award for environmental protection. I wonder whether the oil companies would have exercised the same interest in the natural environment. I strongly doubt it.
Both the Minister and the hon. Member for Bedford said that the BGC should not be in the oil business. Why not? We have been given no logical reason for that opinion. Who said so? Only the Secretary of State for Energy and the Government. Life itself does not say so.
The BGC is in the oil business and it is in a good position to continue profitably.
The entire measure, including the principal Act, is a triumph of subjective prejudice over objective judgment.
I turn now to the independent consultants. Just how independent are they to be? If the nation's assets are to be sold off in this slipshod and reckless way, it should be the Government's business to obtain the maximum price, not merely to try to achieve a price that has been established by so-called objective consultants. Ministers should 991 occasionally try to remember that they are the Government of a great nation. They should take such decisions themselves and not farm them out to private consultants.
§ Mr. Michael Morris (Northampton, South)
It is usually a pleasure to follow the hon. Member for Bristol, North-East (Mr. Palmer), but he has been philosophising about the principles of the Conservative Party. It may surprise him to learn, after many years in the House, that the Conservative Party believes in private ownership as a fundamental part of democracy. That principle comes first. The State exists only as a provider of last resort.
I know of no evidence to suggest that the private sector, either in the oil or the gas industry, has shown any less regard for the environment than nationalised industries. If the hon. Gentleman has specific examples, I am sure that the House will listen. I hope that he will not make generalised statements that seem to be without foundation.
I wish to cover three points. The first concerns the timing and nature of the direction, which is the essence of our debate today. The second concerns the extraordinary outburst from the hon. Member for Merthyr Tydfil (Mr. Rowlands) and his gross misrepresentation of the Public Accounts Committee report, to which I shall refer in detail in a moment. The third concerns BGC's relationship with the oil companies.
With regard to the nature and timing of the direction, the Minister correctly pointed out that this is a very preliminary stage in our proceedings. The House has the right to reject the direction today. If it does so, the proposals will have to be taken back. But we are not dealing with the details of the disposals. That is for another occasion. We shall rightly debate them when they are introduced, but that occasion is not tonight. Therefore, the hon. Gentleman's outburst at the beginning might be appropriate to another debate, but it was not appropriate today. One must also reflect that he must have made it somewhat with tongue in cheek as section 12 of the Labour Government's Petroleum and Submarine Pipe-lines Act made provision for the possible transfer of oil assets of the British Gas Corporation to BNOC. I do not know what was in the mind of the Labour Government and it is true that they did not put those proposals into effect. Nevertheless, the provisions were made, so somebody in the Labour Party at some time must have considered the disposal of BGC's oil interests, but the Opposition never refer to that.
§ Mr. Morris
I do not know whether the Labour Government were considering a rip-off, but those provisions were laid down in their legislation. Labour Members should have come clean and told us what the Labour Party had in mind with those provisions.
I am surprised that praise was not offered to the Minister for getting on with the process of disposing of these assets. If one criticism is regularly made from both sides of the House, it is that the Governments of both parties fail to implement the policies that they have laid down sufficiently quickly. The Government seem to be getting on with the job and I wish them good luck. I look forward to taking part in a fuller debate when the time comes.
The hon. Member for Merthyr Tydfil referred to the work of the Public Accounts Committee. I use the words 992 advisedly when I say that in my view his remarks were a gross misrepresentation of the work that we did. I refer to the Tenth Report from the Committee of Public Accounts, Session 1981–82, entitled "Department of Industry Sale of shares in British Aerospace; Sales of Government Shareholdings in other publicly owned Companies and in British Petroleum Ltd. ; Postponement of payments", dated 31 March 1932.
The hon. Gentleman's first criticism was of the nature of the underwriters. In the first sale of public assets, which related to BP, in 1977 and 1979, the underwriters were the Bank of England. Who owns the Bank of England? It is a nationalised industry. It was therefore less than fair to suggest that all the underwriting was done by the private sector.
§ Mr. Rowlands
As the hon. Gentleman is quoting the Public Accounts Committee report, will he read out paragraph 14, which says:we doubt whether in these circumstances it was necessary to underwrite the issue at a cost of £2.6 million in order to guarantee receipt of the proceeds—
and the price, which the Committee, of which the hon. Member is a member, felt had been set too cautiously. That is an indictment.
§ Mr. Morris
The hon. Gentleman has missed out on paragraph 14, as I have already moved to paragraph 21. I shall come to the nub of what the hon. Gentleman was saying, which concerns Amersham International. That is in paragraph 23, and it will give me great pleasure to read out that paragraph.We observe that in the Debate on Amersham International in the House of Commons on 16 March 1982 the Under-Secretary of State for Energy explained that in selling the shares of that company the Government had had four objectives.That was "four objectives", not one.The first had been to preserve the firm as an independent British company ;That is a laudable objective.the second to maintain the staff's commitment to the company;I should have thought that that would have found favour with the House.the third to ensure the widest possible spread of share ownership; and the fourth to achieve a good return for the Exchequer. We note that careful attention was given to offering the shares on a tender "Jasis; and that the fixed price method was preferred to ensure that small investors had a fair opportunity. We also note that the Government's advisers, the company's advisers and the stockbroker to the issue had considered that the offer price of 142p was the highest price at which the issue could have been successfully underwritten and subscribed; although we observe from the C&AG's Memorandum that this price was near to the mid-point of the range of possible prices suggested by the Department of Energy s independent adviser W. Greenwell and Co.The conclusions of the Committee were unanimous and on an all-party basis. They were:As we have already observed, this is a field in which it is easy to form a view with the benefit of hindsight.The hon. Member for Merthyr Tydfil and his right hon. Friend the Member for Leeds, South (Mr. Rees) are good at hindsight. However, they were pretty poor at foresight when they were in Government and they would not be any better if they were back in Government.
Further on in the conclusions to paragraph 23 there is the nub of what the Committee had to say:In doing so we recognise that maximising the return to the Exchequer is not the only policy which the Government may wish to pursue … But we are concerned that the maximum return should be obtained consistent with those policies.993 That is not what the hon. Member for Merthyr Tydfil said. He gave a gross misrepresentation of what happened, and I hope that he will withdraw it.
§ Mr. Rowlands
Will the hon. Gentleman read out the section that is appropriate to what I have been saying? For example, will he read out paragraph 26, which says:we have some doubts whether the subsequent sales achieved the full measure of benefit which should have accrued to the Exchequer for the publicly owned shares which were being sold.Earlier, in paragraph 6, the Committee had said that the sum total of the sale of British Aerospacewas a cash deficit of £12 million for the Exchequer.In paragraph 28, the report says:We therefore trust that the adoption for sale of publicly owned shares of this aspect of normal City practice will be very carefully re-examined.29. A further point which should be re-examined is the extent to which the policy of securing a wide ownership of shares in former publicly owned companies is actually achieved.This was Amersham International and British Aerospace. The former was sold at 142p. a share, and the shares now sell at 242p. each. That is the degree of loss to the nation as a result of the hon. Gentleman's policy.
§ Mr. Morris
The hon. Gentleman's protestations would carry more weight if he had put them into his speech at the beginning of the debate.
§ Mr. Morris
The hon. Gentleman had to send for the document, when he saw that I had one. He knew when he stood up that he was twisting the report.
I hope that the Public Accounts Committee will always re-examine every piece of Government work done in the House. I have stood up and criticised my Front Bench for not examining some of the areas we should be examining.
§ Mr. Tim Renton (Mid-Sussex)
Does my hon. Friend recall that, when the price of Amersham International was announced, many newspaper commentators said that they thought the price had been pitched too high? Evidently, the hon. Member for Merthyr Tydfil (Mr. Rowlands) did not. I hope that he applied for a great many of the shares. Many financial experts said that they thought the price was too high. It was only in subsequent days that enthusiasm for the shares increased. When the price was announced the general view was that it had been pitched too high.
§ Mr. Morris
My hon. Friend makes a fair point, which adds to my ammunition.
I shall leave Amersham International and the Public Accounts Committee—[Interruption.] I am happy to debate the Public Accounts Committee at great length. I wish to ask the Minister a question. The Opposition have made great play of the point that British Gas should not be ordered to dispose of its interests because of the great role that it plays in the development of the North Sea, especially in the fields under discussion. Have the companies involved in the fields—Beryl A and B, Hutton North-West, Hutton Montrose and Fulmar, which is Mobil, Conoco, Amoco and Shell—all been hammering on the door of the Department of Energy demanding that British Gas remain a major shareholder? I want to know the answer. Have there been petitions from the workers in the private sector oil companies saying that they want British Gas to remain a firm member of their consortium? Have there been letters to the Department of Energy? 994 These are important questions. Obviously, Labour Members feel that there have been. Perhaps the trade unions have been petitioning on the matter. When it was reported widely in the newspapers during the recess, did right hon. and hon. Members receive extensive correspondence from their consituents and trade unions? I should like to hear from some hon. Member who has had correspondence on this absolutely burning key issue. The silence on the Opposition Benches suggests that there will not be a positive answer. That speaks for itself.
§ Mr. Gordon Wilson (Dundee, East)
I cannot promise the same degree of heat that was generated by the last observation of the hon. Member for Northampton, South (Mr. Morris). Nevertheless, when the Minister spoke to the direction he reminded me of the usual Government stratagem of avoiding giving too much away. The hon. Gentleman said that the direction was not the important statutory instrument, and that there would be another more important one later that could be discussed on its merits.
The Minister said that it was too early to discuss certain matters. In a few months negotiations will be in progress and nothing can be said. We shall find very quickly that it is too late and nothing much can be said to stop the privatisation arrangements that the Government are putting forward.
An argument for the disposal of BGC interests, apart from the ideological one of extending the frontiers of private industry, must be the value that will come to the Exchequer. They are public assets and if they are to be disposed of it must be for the maximum value so that the money is available for other purposes.
The most recent issue of Business Scotland contained an analysis of the disposal of State assets. It said that in the case of the two disposals in 1979—British Petroleum and ICL—the value of the shares has since gone down by 21 per cent. and 31 per cent. That means that the State made more than a profit on the deal. From then on, however, the State seems to have been unable to estimate the value of the interests of which it has disposed. The profit made by those who purchased shares in Ferranti, which was sold in July 1980, was 223 per cent. British Aerospace shares are up 57 per cent. Gleneagles Hotels was a private sale, so we do not know the cost, but we know that Cable and Wireless, since being disposed of in June 1981, has gone up by 94 per cent. There is no figure for the National Freight Corporation, which was a management buy-out, but in the case of Amersham International, which was disposed of in February of this year, the value of the shares has gone up by 75 per cent.
It appears, therefore, that the Government have been unable to measure the value of the assets of which they dispose. That, in my view, should be a cause for concern, particularly as the oil market is extremely variable at present, and no one can foresee with any certainty what the price range is likely to be.
The Minister and other hon. Members referred to the fields that are to be taken over. It is likely that the value which will be achieved by sale by any of the methods suggested by the Government in this instrument will be well under the value of the fields, were they put on the market at maximum value. We see that in the case of Wytch Farm. I know that the hon. Member for Bedford (Mr. Skeet) produced figures from Phillips and Drew to show that the value of that asset was 195 million, whereas 995 other valuations range up to £450 million. Much money is involved, and the disparity between the two valuations again gives cause for concern.
It has been said—it is not an original phrase—that some of the Government's disposals have been more like privatisation than privatisation, because the value has not come back to the Exchequer in the way that it should have done.
I wish to put to the Minister one or two questions about the likely impact of this policy on the British Gas Corporation. The corporation has been exploring and developing for about 30 years—certainly since the early 1950s—and it has been fairly successful. Some of its stakes in the oilfields are not minuscule. Its stakes in Fulmar are minuscule, but in Beryl A and B they are 10 per cent., Hutton 10.31 per cent., North-West Hutton 25.77 per cent., and Montrose 30.77 per cent. Many of those fields are fairly small, compared with the monster fields that were discovered earlier, but they are not to be sneezed at in the current pattern of oil development.
Has the Minister taken on board the problems that may arise for British Gas because of the removal of its offshore oil interests? The hon. Member for Bristol, North-East (Mr. Palmer) said that oil, gas and condensate go together. To some extent one knows in advance what one is likely to find when one bores for oil, but one is never sure what one will merge with. Frequently, oil and gas are close to each other and have to be developed as a whole.
There is and will be a shortage of gas. It is clear that unless more gas is discovered, the United Kingdom will have to import. There is concern about whether the North Sea can provide the gas that is required. In those circumstances it is vital to encourage BGC to do as much exploration as possible.
If BGC is to lose its oil interests, does that include the methane which exists in the fields? Both in Beryl and North-West Hutton considerable gas deposits have been located. Will that not affect BGC in its future exploration and the difficulty of finding partners? Does the Minister intend BGC to be involved in exploration? If the resources discovered as a result of exploration are to be removed from the corporation, much of the incentive for BGC to continue its exploration work will disappear. That is particularly true if the methane found in Beryl and North-West Hutton were to move into private ownership only to be repurchased by BGC for its own needs.
If BGC is to be allowed an exploration and development role, is it not beneficial that it should be allowed to continue its developments, especially in relation to Hutton, where it has the advantage of the use and development of deep water technology? Much of the gas on which BGC will rely in future may come from deep water. Therefore, the practical experience gained from the Hutton development is particularly important.
I do not want to disregard the importance of BGC. For example, the Morecambe gas field is providing considerable work for the Scottish platform industry, and that is to be welcomed. It also has a good reputation in the purchase of English and Scottish goods. If it is to he deprived of a development role in future, part of the tied market coming from the oil fields will disappear.
§ Mr. Nicholas Baker (Dorset, North)
Wytch Farm, which is close to but not in my constituency, has been mentioned. Does the hon. Gentleman agree that two advantages of the sale of that public asset would be, firstly, 996 that such a site would have to adapt—in the first place it would probably have to grow and subsequently contract—while a privately run business is much more likely to be able to adapt to such changes? Secondly, the taxes that accrue to the Exchequer from a viable business are likely to be larger, which is an advantage to the taxpayer.
§ Mr. Wilson
First, the hon. Gentleman should accept BGC's constructive role in developing Wytch Farm. Regardless of one's political views, it has done a good job in that regard. Secondly, if the oil in Wytch Farm were to be kept in the public sector, the State would benefit to the extent of 100 per cent., whereas if Wytch Farm oil—which we are not discussing, incidentally—were to go to the private sector, the taxation that would accrue to the State would be about 80 per cent. to 83 per cent.
What choice will the Government give BGC over the division of the oilfields amongst the subsidiaries? Will the corporation have a free hand in relation to the allocation of the fields to those subsidiaries, or do the Government intend to follow through the order by directing BGC to subdivide its oil-bearing interests into parcels and portions?
I recognise, as the Minister said, that the order is purely a preliminary along the way to the disposal of the assets. What conceivable practical reason is there for the disposal of the offshore oil and gas resources from the public to the private sector? Admittedly., they are valuable in themselves but minuscule compared with the huge fields in the Shetland basin and further south. Does the Minister not think that it would be advantageous for BGC to retain an exploration and development role in partnership with private industry so that we retain not only the entrepeneurial spirit of the private sector but also the steadiness and quality of work that BGC has done for many years?
I do not think that it can be faulted for its operations in the last 20 years. These assets cannot be removed as a penalty for inefficiency or failure. Among the nationalised corporations, BGC is one of the most efficient, and it has a considerable role to play in future if given the opportunity by the Government to develop its position.
§ Mr. Deputy Speaker: (Mr. Paul Dean)
Order. I remind the House that the debate ends at 11.30, and that the wind-up speeches are expected at 11.20. If other speeches are brief, it may be possible to call all those hon. Members who are seeking to catch my eye.
§ Mr. Tim Eggar (Enfield, North)
The hon. Member for Dundee, East (Mr. Wilson) said that the BGC had an admirable record, but earlier he referred to the possibility that not enough gas would be available to supply the United Kingdom. That is because the BGC has been manipulating the demand and controlling the supply. It has not been prepared to fix high enough prices. There has not been enough exploration. As a result, we have a possible supply problem. The fact that the BGC has controlled the demand and supply of gas has led to the considerable problems that we now face.
The hon. Member for Merthyr Tydfil (Mr. Rowlands), who has left us, said .:hat there should be a reason for the BGC continuing to maintain its oil holdings. It was a 997 Labour Government who in section 12 of the Petroleum and Submarine Pipe-lines Act included a provision whereby the Secretary of State could arbitrarily transfer the BGC's oil assets straight to BNOC, in exactly the same way as the Labour Government did with the NCB's interests. Therefore, back in 1975 they recognised that there was complete illogicality in BGC having oil interests.
If the right hon. Member for Leeds, South (Mr. Rees) tries to point out that the transfer could only be to BNOC, my answer is that I have always advocated that, prior to BNOC' s denationalisation and sale, the BGC's oil interests should have been rolled into BNOC, whose interests should then have been privatised.
The hon. Member for Merthyr Tydfil asked whether a complete divestment of the BGC's oil interests was appropriate. Of course, when the Government approached the BGC chairman and asked, "Would you consider selling off part of your oil interests and maintaining a minority stake?", they were told that the BGC would have nothing to do with it. Now, when the Government force divestment of those oil interests, the BGC starts complaining about the poor price that it is likely to get for any divestment, particularly in relation to Wytch Farm. Of course, if the BGC had been prepared to co-operate with the Government over Wytch Farm and had sold a year ago it would have got a better price than it is now likely to get. The outlook for oil prices has worsened and by forcing delays, BGC has almost certainly lost revenue. Of course, the price for Wytch Farm or for any other gas interest is that which the buyer is prepared to pay. There is no question of a forced sale. The value of the assets is fixed by the fact that other parties can bid for them.
For a long time I was worried about the way in which our oil industry had developed because of the power that the State has through BNOC or the BGC. It has stifled the development of a small indigenous United Kingdom oil industry. One need only compare the way in which a few independent companies operate in the North Sea with the number of companies operating in the Gulf of Mexico. The previous Labour Government always gave preference to large State-controlled oil companies and as a result the small independent companies lost out in terms of licence awards and staffing problems.
Therefore, one big advantage of the procedure suggested by the Government is that the assets may be disposed of—I know that the Government have not yet reached a decision—in relatively small parcels, which can then be purchased by small independent United Kingdom companies, giving them oil production, against which they could offset any future exploration expenses. Small independent companies do not have the cash flow or revenue stream for offsetting exploration. If we want an independent oil industry it is important that the small companies should be able to buy into existing production. That would be to the enormous benefit of the United Kingdom oil industry, and of the United Kingdom as a whole.
§ Mr. Peter Hardy (Rother Valley)
I shall try to be brief. We are concerned not that the Government are seeking to short-change Parliament but that they are determined to short-change the nation.
998 I shall refer only to the Minister's speech, as the speech made by the hon. Member for Enfield, North (Mr. Eggar)—which gave credence to our views about the sale—and the speeches made by the hon. Members for Bedford (Mr. Skeet) and Northampton, South (Mr. Morris) should not be taken seriously. They were attempts to distract the House's attention. However, Ministers should have some answers. The Minister should have responded to the questions that he knew to be inevitable. I hope that he will have sufficient time at the end of the debate to supply those answers.
The Minister suggested that the Government are part of the mainstream pedigree of the Conservative Party. He entirely overlooked the fact that BP was nationalised by Sir Winston Churchill and that the Government are different from any other Conservative Administration in modern times. If there is any similarity, it is that Mr. Harold Macmillan said:You have never had it so good",while this Government are clearly determined to go at the end of their period of office saying, "We have never had it so good". There is a simple difference. I hope that the Minister will spend some time in explaining the difference before the debate ends.
The Minister should tell the House who the Government have in mind to act as the independent consultant referred to in clause 9. I hope that the Select Committee on Energy will interview the gentleman to ascertain whether he has the independence and ability to take on such a role. I hope that he will not be a fully paid-up member of the Conservative Party, and that none of his relatives will buy any of the shares or take part in any of the transactions that might follow.
Whether or not an independent consultant is appointed, I believe that the Department of Energy and the Treasury know the value involved in the transactions. Will the Minister give the Department's estimate of the value of the oil interests of British Gas? The hon. Member for Enfield, North may have that information, but the House should have an official estimate.
The Secretary of State should inform the House, if the Minister cannot, what the Government expect to receive now from the disposal of the interests of British Gas. We should be informed also how much less will be received from disposal within the next few months than would have been received if the disposals had taken place 18 months ago when a higher price would have been available. The Minister should tell us why the Government are in such a rush when they know that in 12 months the price may be better, and therefore the national interest will be better served.
What arrangements will be made to ensure that British interests are properly protected? Can we be absolutely sure that the British vultures who may flock round this juicy corpse will have priority? It will be easier for the Labour Party to recover a fair share for the community from British buyers than from those foreign interests who may gather around. We can retrieve our national assets more easily if the Government do not give too much away to alien sources.
There are two or three relevant points. What assurance do we have that the various oil fields that have been mentioned—the Minister has already listed them—will be properly exploited? We need to be sure that the oil will be taken thoroughly from such fields as a result of adequate investment and the maintenance of the policies of British 999 Gas, rather than for some slick operation to take most of the oil and not continue with the exploitation that is in the national interest?
What assurance do we have that the Secretary of State, Ministers and Government members will not be involved in buying shares? I spent a great deal of time in local government and we declared our interests. I hope that the interests of the friends and relatives of Government members will be fully declared.
§ 11.3 pm
§ Mr. Peter Rost (Derbyshire, South-East)
It should be put on record, and I have not yet heard it from the Government, that British Gas has a first class record in the exploration and development of oil in the North Sea. It has a good reputation and has been highly successful.
It is a great pity that British Gas did not accept the first option offered by the Government and allow its oil interests to be hived off in a separate company with a major shareholding offered to the private investor and British Gas allowed to retain a minority holding. That could have been an acceptable option. I understand that the Government put it to British Gas but British Gas rejected it.
The fact that British Gas has an excellent record in oil exploration and development does not necessarily justify the Opposition's argument that it should inevitably be allowed to retain its interests. The talent and technical ability that have made the exploration successful will not be lost. The success is due to the technicians, and the know-how will be passed on to the purchasers.
British Gas would have far better served the consumer and the nation had it concentrated a little less on oil exploration and development and a little more on gas. Because British Gas has used its monopoly to hold down the price of North Sea gas and it has not been rewarding for the oil industry to explore for and develop gas, we now import more than a quarter of our gas from Norway. That is not a good example of British Gas having served the best interests of the consumer and the nation.
§ Mr. John Hannam (Exeter)
Does not the fact that this week the newspapers have reported British Gas's first gas exploration well bear out my hon. Friend's point?
§ Mr. Rost
There is potentially a vast amount of gas in the British sector of the Continental Shelf. Many estimate that the gas reserves are larger than the oil reserves. In the past many oil companies have almost been embarrassed to discover gas, as it has not been cost-effective to develop it. British Gas, as the monopoly buyer, has not been prepared to offer a price that would produce a fair return on the risk and the capital investment, yet it has bought from Norway under long-term contracts at higher prices than it could have got it from British exploration and development. That situation will be remedied by the legislation that the Government have put on the statute book and by this measure.
If the oil interests are hived off to the private sector in whatever option the Government finally decide on, it will allow British Gas to concentrate its efforts on exploring for and developing gas, which is what it should have been doing more effectively in the past. With the private sector also competing under the provisions of the Oil and Gas (Enterprise) Act 1982 for the exploration and development 1000 of gas, the interests of the consumer and the nation will be far better served. Gas will be offered at a competitive price to industry rather than exclusively to British Gas.
I support the measure. It will be far more in the nation's interests if the incentives for the exploration and development of gas are widened and British Gas allowed to get on with that side of the business instead of being too much involved in oil exploration.
§ Mr. Lawrence Cunliffe (Leigh)
On a point of order, Mr. Deputy Speaker. I do not see the relevance of the remarks of the hon. Member for Derbyshire, South-East (Mr. Rost) to a debate on gas. Many hon. Members may have wished to speak about oil, but they have respected the ruling that contributions must be relevant to the debate.
§ Mr. Deputy Speaker
This is a fairly wide debate and I have not yet heard anything that is out of order.
§ Mr. Rost
I am sorry that the hon. Member for Leigh (Mr. Cunliffe) did not listen to my argument or to those of many Opposition Members, including from the Opposition Front Bench, which were far more wide-ranging than my modest contribution.
I conclude, more controversially, by saying that it is a great pity that the debate was launched by the Opposition, because it shows the humbug and hypocrisy of their argument, such as it is. The Labour Government flogged off a huge chunk of shares in BP without a parliamentary debate, because they were afraid that Labour Back-Bench Members would vote against it, and without proper explanation, because it might have embarrassed their philosophy of State ownership. They sold the controlling interest in BP at an attractive price and all those who bought shares made a handsome profit from them. Yet we have heard hon. Members this evening complaining about the Conservative Party, which believes in private enterprise, doing the same thing. I urge hon. Members to restrain their hypocrisy if they are to remain remotely credible. They must accept that the present proposals are not only in the mainstream of the Conservative Party's policy but are in the mainstream of what we believe is in the consumer's and the national interests.
§ Mr. Robert C. Brown (Newcastle upon Tyne, West)
The hon. Member for Derbyshire, South-East (Mr. Rost) ended his contribution with some provocative remarks. 1 shall begin mine by doing so. I wish that the Trade Descriptions Act 1972 applied to statutory instruments, because this direction is fraudulent. People are languishing in prison for much less serious fraud than that which the Secretary of State is perpetrating in this instrument. If the Trade Descriptions Act had applied, I should have tried to prosecute the Secretary of State for producing a false prospectus.
I make no serious allegation about the commencement date, which is factual. However, it is disgraceful that a date should have been set so late in a Parliament, especially in view of the state of the market at present. I accuse the Secretary of State of sharp practice in setting the date. Why was it that Parliament had hardly closed its doors for the Summer Recess when, within three working days—on 4 August—the statutory instrument was made? On 6 August, it was laid before a Parliament that was not sitting and it came into operation on 31 August. That happened despite the fact that Ministers said that the 1001 amendments moved by me in Committee were needless. I was assured many times that there would be ample time for lengthy debate in the House, but this instrument was laid behind Parliament's back and we should have had only one and a half hour to debate it if the earlier debate had not collapsed accidentally.
The direction contains the most fraudulent conversion ever perpetrated on the British taxpayer. Paragraph 1 should read:These directions may be cited as the most monstrous fleecing of the British taxpayer in history.If a sheep fanner had fleeced his tups and ewes in the way that the Secretary of State and the Government are fleecing the British people, he would face the full rigours of the law. It seems that cruelty to animals is treated much more seriously than cruelty to the British people by this Government.
I wish to ask the Minister some specific questions. How much is the British Gas Corporation to be paid for operating these subsidiaries? Will it be fully compensated? Or will British gas consumers be further financially penalised? The British Gas Corporation—the Minister can correct me if I am wrong—will, I believe, have to do all the geological survey work, with the cost to be borne again by the gas consumer. Or will the BGC be paid a commercial rate, to give the gas consumer a fair deal? These questions have to be answered.
I wonder why there should be such indecent haste to strip the assets of this most efficient industry. There can be no doubt that if what remains of British industry, after the ravages of this Tory Government, were half as efficient as the British gas industry, we would be the economic miracle men of Europe rather than the sick men of Europe. Why should these valuable public assets be transferred now and in such haste? As my hon. Friend the Member for Dunfermline (Mr. Douglas) reminded the House, the British gas industry has been involved for nearly 30 years in this type of exploration. In that time, four Tory Governments could have taken this sort of action. The answer is that this is the most doctrinaire and vicious Tory Government this century.
§ Mr. K. J. Woolmer (Batley and Morley)
The debate has revolved not around the details of the directions but what they are fundamentally all about. Hon. Members on both sides are agreed that they are about selling off to the private sector the national asset and interest in oil. Conservative Members have defended the directions on the grounds that what they propose is good. One area in which the Government have gone badly wrong is in their proposals to sell off national assets when this country, unlike many industrial nations of the West, has oil and gas in plentiful quantities.
The Government are forcing a profitable public enterprise to sell off one of the most valuable assets that this nation owns through the public sector. If Conservative Members were debating the selling-off of a loss-making nationalised industry, they would be informing the public that this was a good course to follow in getting rid of a loss-maker. The question that arises is whether they dare tell the public what a good thing it is to sell off profitable public assets. Oil is one commodity that Arab, African and 1002 Asian nations would love to get their hands on. Britain's oil, however, has to be sold off to multinational companies and taken away from the taxpayer.
§ Sir Frederick Burden
Will not the hon. Gentleman take account of the fact that we believe that many of the performances of the nationalised industries show that they are not making the best of the national assets? If they go private, they will still be a national asset and a much greater asset than now.
§ Mr. Woolmer
I wish that I had not given way. This is a national asset that the British public well understands should be in the ownership of the nation. After all, the Gas Corporation makes £1,000 million for the taxpayer through gas levy and taxation. This is an enormously profitable enterprise. Yet the Conservative Party insists that one of the nation's greatest assets should be sold off. The Minister said that the details of how it is to be sold off are to come. The British Gas Corporation does not want to sell, is not prepared to sell and is being forced to sell. We are being asked to sign a blank cheque tonight. When it comes back to us, we shall be told that it is too late, the decision has been made and that the British Gas Corporation has no alternative. We shall have no alternative at all.
I suggest to the nation and to the House that this a fraud upon the taxpayer and the nation. The House should resist the motion and vote in favour of protecting a public asset.
§ Mr. Rowlands
The Under-Secretary of State must not come to the House and use such a patronising and lecturing tone. He was not a member of the Committee which dealt with the Oil and Gas (Enterprise) Bill. The Minister spelt out some of the options. He said, for example, that one of the options would be to sell off completely one or more of the subsidiaries that will be created as a result of the directions. He did not say what would happen if all the American partners holding licences with British Gas exercised their pre-emptive right to acquire those assets from British Gas. That would amount to nothing more than a right for American oil companies to buy our national oil assets. We completely reject that philosophy and approach.
We are not willing to give a blank cheque to Ministers, which is what the directions are and what the whole of the oil and gas legislation has been about. The legislation enables the Government to sell off assets when they like, how they like and at whatever price they like. We already know their tawdry track record of privatisation. We know exactly what happened to British Aerospace shares. We know exactly by how much they sold those shares short. We know exactly by how much Cable and Wireless and Amersham were sold short.
We know what happened to the grand Conservative concept of the wide dispersal of shares. Within 24 hours of Amersham being on the market, more than half the shares of that company had changed hands, and now lie chiefly in blocks of £250,000 and more, in small groups belonging either to the financial institutions or the insurance companies. That is what happens as a result of privatisation. It has nothing to do with the wide dispersal of shares.
We know, too, what has happened to the idea of "benefit to the Exchequer". The Minister constantly 1003 referred to the Public Accounts Committee. The Public Accounts Committee repeatedly pointed out that the Exchequer and the taxpayer are sold short when these assets are sold. For that reason we should refuse to give the Government the powers that they seek and refuse to support the proposals to sell off British Gas oil assets in the North Sea.
It was said that no one forecast Amersham. We on the Opposition Benches forecast in Committee and on the Floor of the House what would happen to Amersham. We forecast how cheaply the Government intend to sell off Britoil shares. We know that will happen to these assets if the Government get their way. We opposed not only the doctrine and philosophy behind the privatisation proposals but the tawdry practices that followed them. The practices have been of very great benefit to underwriters, stockbrokers and merchant bankers. There has been no benefit to the nation either in increased oil reserves or oil development, or to the taxpayer and consumers of Britain. Therefore, I ask my right hon. and hon. Friends to oppose the directions.
§ Mr. John Moore
I apologise to all hon. Members whose detailed points I shall not have the opportunity to answer. I shall do so in detailed correspondence.
I am a little disturbed at the tone of the comments of one or two hon. Members in the last ten minutes of the debate. The remarks of the hon. Member for Rother Valley (Mr. Hardy), for whom I have great respect and personal friendship, were unnecessary, in suggesting that at any time any hon. Member on either side of the House could in any way be involved in personal advantage, but would not follow all the normal rules of courtesy in the House. Knowing the hon. Gentleman's quality and his background, I am sure that he will consider withdrawing later on. Such personal slurs do not improve the quality and nature of our debates.
I shall mention some of the relatively important points that were made. The hon. Member for Dunfermline (Mr. Douglas), together with the hon. Members for Bristol, North-East (Mr. Palmer) and Rother Valley, legitimately asked about the consultants. After competitive tendering processes BGC has, with the Department's agreement, appointed Energy Research Consultants to prepare the petroleum consultants' report. It is a highly reputable independent United Kingdom petroleum consultancy company. The hon. Member for Dunfermline must be aware from his background knowledge that the report will contain commercially confidential information, so it would be improper to make it available to the House. If the disposal proceeds by way of a flotation, which is one of the options, the summary of the report will be available in the prospectus.
The hon. Member for Merthyr Tydfil (Mr. Rowlands), my hon. Friend the Member for Bedford (Mr. Skeet) and the hon. Members for Dundee, East (Mr. Wilson) and Bristol, North-East asked about Wytch Farm. The sale is being conducted by BGC. It is for the corporation to answer detailed questions about it. I gather that BGC has received a number of offers and is negotiating with bidders. Negotiations are commercially confidential. It would be wrong for me to give any details or to speculate on the likely outcome at this stage.
The hon. Member for Dundee, East asked specific questions. I apologise that I cannot answer them all now. Methane is included. It is open to BGC to purchase the gas 1004 in due course, but, as I said in my opening speech when I tried to answer the detailed points, the quantity involved is equal only to one quarter of 1 per cent. of the remaining United Kingdom CS gas reserves. I do not believe that the small minority interest in the offshore oilfields is of any value to BGC's gas operations, particularly as in the cases that we are considering BGC is not the operator.
The hon. Gentleman also asked about the future exploration role, which was a legitimate point. My hon. Friend the Member for Derbyshire, South-East (Mr. Rost) rightly complimented the corporation on its exploration activities. No decision has been taken to change I3GC's exploration role, but its proper business is to supply and distribute gas, not oil.
My hon. Friend the Member for Northampton, South (Mr. Morris) asked me to confirm or deny the number of letters and observations that I have had from the corporation individuals in the House and outsiders about disposal. To my knowledge, no letters have been received in my Department and there have been no approaches from the company.
My hon. Friend the Member for Bedford made an extremely constructive speech. He asked many detailed questions, which showed that he had read with care the details of the direction. I trust that he will understand if I write to him on the points that he raised. I shall note carefully many of the observations that he made, especially concerning the options that I discussed.
The hon. Member for Bristol, North-East, surprisingly, because we do not normally disagree on some fundamental points, mentioned continuity. It is extraordinary to consider that the Opposition have the gall to come to the House and debate continuity but over 20 or 30 years, whenever they have been in office, there has been the constant ratchet movement to the Left in terms of nationalising our primary industries. The hon. Gentleman wants a clear view of monopoly. I should have thought that any and all hon. Members on both sides of the House would not find monopolies anything other than wrong, by definition, and would seek always to avoid monopoly. .I should have thought that that would be the attitude of all those who seek, in a competitive free society, the opportunity to grow. There are roles for regulated statutory monopolies, which can be unavoidable. I understand that. However, the aim of attaining a monopoly is wrong.
We have had a relatively loud debate. However, we have debated only a preliminary step towards the ultimate aim of the privatisation of BGC's offshore oil interests. That fact should not be allowed to obscure the merits of this ultimate aim.
During the past 30 years, the public sector has been allowed to tighten its stultifying grip over more and more of our economy. That process must be reversed. The disposal of the BCC's offshore oil assets will be an important element in that reversal. I therefore commend the direction to the House and invite hon. Members to reject the Opposition Prayer.
That an humble Address be presented to Her Majesty, praying that the British Gas Corporation (Disposal of Offshore Oilfield Interests) Directions 1982 (S.I., 1982, No. 1131), dated 4th August 1982, a copy o F which was laid before this House on 6th August, be annulled.
§ The House divided: Ayes 217, Noes 279.1008
|Division No. 331]||[11.30 pm|
|Abse, Leo||Garrett, W. E. (Wallsend)|
|Adams, Allen||George, Bruce|
|Allaun, Frank||Gilbert, Rt Hon Dr John|
|Anderson, Donald||Golding, John|
|Archer, Rt Hon Peter||Gourley, Harry|
|Ashley, Rt Hon Jack||Graham, Ted|
|Ashton, Joe||Hamilton, James (Bothwell)|
|Atkinson, N.(H'gey,)||Hamilton, W. W. (C'tral Fife)|
|Bagier, Gordon A.T.||Hardy, Peter|
|Barnett, Guy (Greenwich)||Harrison, Rt Hon Walter|
|Barnett, Rt Hon Joel (H'wd)||Hart, Rt Hon Dame Judith|
|Benn, Rt Hon Tony||Healey, Rt Hon Denis|
|Bennett, Andrew(St'kp't N)||Heffer, Eric S.|
|Bidwell, Sydney||Hogg, N. (E Dunb't'nshire)|
|Booth, Rt Hon Albert||Holland, S. (L'b'th, Vauxh'll)|
|Bray, Dr Jeremy||Home Robertson, John|
|Brown, Hugh D. (Provan)||Homewood, William|
|Brown, R. C. (N'castle W)||Hooley, Frank|
|Brown, Ronald W. (H'ckn'y S)||Howell, Rt Hon D.|
|Brown, Ron (E'burgh, Leith)||Hoyle, Douglas|
|Buchan, Norman||Huckfield, Les|
|Callaghan, Rt Hon J.||Hughes, Mark (Durham)|
|Callaghan, Jim (Midd't'n & P)||Hughes, Robert (Aberdeen N)|
|Campbell, Ian||Hughes, Roy (Newport)|
|Campbell-Savours, Dale||Janner, Hon Greville|
|Canavan, Dennis||Jay, Rt Hon Douglas|
|Cant, R. B.||John, Brynmor|
|Carmichael, Neil||Johnson, James (Hull West)|
|Carter-Jones, Lewis||Johnson, Walter (Derby S)|
|Clark, Dr David (S Shields)||Jones, Rt Hon Alec (Rh'dda)|
|Clarke, Thomas(C'b'dge, A'rie)||Jones, Barry (East Flint)|
|Cocks, Rt Hon M. (B'stol S)||Kaufman, Rt Hon Gerald|
|Cohen, Stanley||Kilroy-Silk, Robert|
|Coleman, Donald||Lambie, David|
|Concannon, Rt Hon J. D.||Lamond, James|
|Conlan, Bernard||Leadbitter, Ted|
|Cook, Robin F.||Leighton, Ronald|
|Cowans, Harry||Lestor, Miss Joan|
|Craigen, J. M. (G'gow, M'hill)||Lewis, Arthur (N'ham NW)|
|Crowther, Stan||Lewis, Ron (Carlisle)|
|Cryer, Bob||Litherland, Robert|
|Cunningham, Dr J. (W'h'n)||Lofthouse, Geoffrey|
|Dalyell, Tam||Lyon, Alexander (York)|
|Davidson, Arthur||McCartney, Hugh|
|Davies, Rt Hon Denzil (L'lli)||McDonald, Dr Oonagh|
|Davis, Clinton (Hackney C)||McGuire, Michael (Ince)|
|Davis, Terry (B'ham, Stechf'd)||McKay, Allen (Penistone)|
|Deakins, Eric||McKelvey, William|
|Dean, Joseph (Leeds West)||MacKenzie, Rt Hon Gregor|
|Dewar, Donald||McNamara, Kevin|
|Dixon, Donald||McTaggart, Robert|
|Dobson, Frank||Marks, Kenneth|
|Dormand, Jack||Marshall, D(G'gow S'ton)|
|Douglas, Dick||Marshall, Dr Edmund (Goole)|
|Dubs, Alfred||Marshall, Jim (Leicester S)|
|Duffy, A. E. P.||Martin, M(G'gow S'burn)|
|Dunnett, Jack||Maxton, John|
|Dunwoody, Hon Mrs G.||Maynard, Miss Joan|
|Eadie, Alex||Meacher, Michael|
|Eastham, Ken||Mikardo, Ian|
|Edwards, R. (W'hampt'n S E)||Millan, Rt Hon Bruce|
|Ellis, R. (NE D'bysh're)||Miller, Dr M. S. (E Kilbride)|
|Ellis, Tom (Wrexham)||Mitchell, Austin (Grimsby)|
|English, Michael||Morris, Rt Hon A. (W'shawe)|
|Ennals, Rt Hon David||Morris, Rt Hon C. (O'shaw)|
|Evans, loan (Aberdare)||Morris, Rt Hon J. (Aberavon)|
|Evans, John (Newton)||Morton, George|
|Ewing, Harry||Moyle, Rt Hon Roland|
|Faulds, Andrew||Mulley, Rt Hon Frederick|
|Field, Frank||Newens, Stanley|
|Fitch, Alan||Oakes, Rt Hon Gordon|
|Foot, Rt Hon Michael||O'Neill, Martin|
|Ford, Ben||Orme, Rt Hon Stanley|
|Forrester, John||Palmer, Arthur|
|Foster, Derek||Parker, John|
|Foulkes, George||Parry, Robert|
|Fraser, J. (Lamb'th, N'w'd)||Pavitt, Laurie|
|Freeson, Rt Hon Reginald||Pendry, Tom|
|Garrett, John (Norwich S)||Powell, Raymond (Ogmore)|
|Prescott, John||Straw, Jack|
|Race, Reg||Summerskill, Hon Dr Shirley|
|Radice, Giles||Taylor, Mrs Ann (Bolton W)|
|Rees, Rt Hon M (Leeds S)||Thorne, Stan (Preston South)|
|Richardson, Jo||Tilley, John|
|Roberts, Allan (Bootle)||Tinn, James|
|Roberts, Ernest (Hackney N)||Torney, Tom|
|Roberts, Gwilym (Cannock)||Urwin, Rt Hon Tom|
|Robertson, George||Varley, Rt Hon Eric G.|
|Robinson, G. (Coventry NW)||Wardell, Gareth|
|Rooker, J. W.||Wainwright, E.(Dearne V)|
|Ross, Ernest (Dundee West)||Walker, Rt Hon H.(D'caster)|
|Ross, Stephen (Isle of Wight)||Watkins, David|
|Rowlands, Ted||Weetch, Ken|
|Ryman, John||Welsh, Michael|
|Sever, John||White, Frank R.|
|Sheerman, Barry||White, J. (G'gow Pollok)|
|Sheldon, Rt Hon R.||Whitehead, Phillip|
|Shore, Rt Hon Peter||Whitlock, William|
|Short, Mrs Renée||Williams, Rt Hon A.(S'sea W)|
|Silkin, Rt Hon J. (Deptford)||Wilson, Gordon (Dundee E)|
|Silkin, Rt Hon S. C. (Dulwich)||Wilson, William (C'try SE)|
|Skinner, Dennis||Winnick, David|
|Smith, Rt Hon J. (N Lanark)||Woodall, Alec|
|Snape, Peter||Woolmer, Kenneth|
|Soley, Clive||Wright, Shella|
|Spearing, Nigel||Young, David (Bolton E)|
|Stallard, A. W.||Tellers for the Ayes:|
|Stoddart, David||Mr. Frank Haynes and|
|Stott, Roger||Mr. Lawrence Cunliffe.|
|Adley, Robert||Clegg, Sir Walter|
|Alexander, Richard||Cockeram, Eric|
|Alison, Rt Hon Michael||Colvin, Michael|
|Ancram, Michael||Cope, John|
|Aspinwall, Jack||Corrie, John|
|Atkins, Rt Hon H.(S'thorne)||Costain, Sir Albert|
|Atkinson, David (B'm'th,E)||Cranborne, Viscount|
|Baker, Kenneth(St.M'bone)||Crouch, David|
|Baker, Nicholas (N Dorset)||Dickens, Geoffrey|
|Banks, Robert||Dorrell, Stephen|
|Beaumont-Dark, Anthony||Douglas-Hamilton, Lord J.|
|Bennett, Sir Frederic (T'bay)||Dover, Denshore|
|Benyon, W. (Buckingham)||du Cann, Rt Hon Edward|
|Best, Keith||Dunn, Robert (Dartford)|
|Bevan, David Gilroy||Durant, Tony|
|Biffen, Rt Hon John||Dykes, Hugh|
|Biggs-Davison, Sir John||Eden, Rt Hon Sir John|
|Blackburn, John||Edwards, Rt Hon N. (P'broke)|
|Blaker, Peter||Eggar, Tim|
|Body, Richard||Elliott, Sir William|
|Bonsor, Sir Nicholas||Emery, Sir Peter|
|Boscawen, Hon Robert||Eyre, Reginald|
|Bottomley, Peter (W'wich W)||Fairbairn, Nicholas|
|Bowden, Andrew||Fairgrieve, Sir Russell|
|Boyson, Dr Rhodes||Faith, Mrs Shella|
|Braine, Sir Bernard||Farr, John|
|Brinton, Tim||Fell, Sir Anthony|
|Brittan, Rt. Hon. Leon||Fenner, Mrs Peggy|
|Brooke, Hon Peter||Finsberg, Geoffrey|
|Brotherton, Michael||Fisher, Sir Nigel|
|Brown, Michael(Brigg Sc'n)||Fletcher, A. (Ed'nb'gh N)|
|Bruce-Gardyne, John||Fletcher-Cooke, Sir Charles|
|Bryan, Sir Paul||Fookes, Miss Janet|
|Buck, Antony||Forman, Nigel|
|Budgen, Nick||Fowler, Rt Hon Norman|
|Bulmer, Esmond||Fox, Marcus|
|Burden, Sir Frederick||Fraser, Rt Hon Sir Hugh|
|Butcher, John||Fraser, Peter (South Angus)|
|Carlisle, John (Luton West)||Fry, Peter|
|Carlisle, Kenneth (Lincoln)||Gardiner, George (Reigate)|
|Chalker, Mrs. Lynda||Gardner, Edward (S Fylde)|
|Channon, Rt. Hon. Paul||Garel-Jones, Tristan|
|Chapman, Sydney||Glyn, Dr Alan|
|Churchill, W. S.||Goodhart, Sir Philip|
|Clark, Sir W. (Croydon S)||Goodhew, Sir Victor|
|Clarke, Kenneth (Rushcliffe)||Goodlad, Alastair|
|Gow, Ian||Lennox-Boyd, Hon Mark|
|Grant, Anthony (Harrow C)||Lester, Jim (Beeston)|
|Gray, Hamish||Lewis, Kenneth (Rutland)|
|Grieve, Percy||Lloyd, Ian (Havant & W'loo)|
|Griffiths, E.(B'y St. Edm'ds)||Lloyd, Peter (Fareham)|
|Griffiths, Peter Portsm'th N)||Loveridge, John|
|Grist, Ian||Luce, Richard|
|Grylls, Michael||Lyell, Nicholas|
|Gummer, John Selwyn||McCrindle, Robert|
|Hamilton, Hon A.||Macfarlane, Neil|
|Hamilton, Michael (Salisbury)||MacGregor, John|
|Hannam, John||MacKay, John (Argyll)|
|Haselhurst, Alan||Macmillan, Rt Hon M.|
|Hastings, Stephen||McNair-Wilson, M. (N'bury)|
|Havers, Rt Hon Sir Michael||McNair-Wilson, P. (New F'st)|
|Hawkins, Sir Paul||McQuarrie, Albert|
|Hawksley, Warren||Major, John|
|Hayhoe, Barney||Marland, Paul|
|Heddle, John||Marlow, Antony|
|Henderson, Barry||Marshall, Michael (Arundel)|
|Heseltine, Rt Hon Michael||Marten, Rt Hon Neil|
|Hicks, Robert||Mates, Michael|
|Higgins, Rt Hon Terence L.||Maude, Rt Hon Sir Angus|
|Hill, James||Mawby, Ray|
|Hogg, Hon Douglas (Gr'th'm)||Mawhinney, Dr Brian|
|Holland, Philip (Carlton)||Mayhew, Patrick|
|Hooson, Tom||Mellor, David|
|Hordern, Peter||Meyer, Sir Anthony|
|Howe, Rt Hon Sir Geoffrey||Mills, Sir Peter (West Devon)|
|Howell, Rt Hon D. (G'ldf'd)||Miscampbell, Norman|
|Howell, Ralph (N Norfolk)||Mitchell, David (Basingstoke)|
|Howells, Geraint||Moate, Roger|
|Hunt, David (Wirral)||Monro, Sir Hector|
|Irvine, Bryant Godman||Montgomery, Fergus|
|Irving, Charles (Cheltenham)||Moore, John|
|Jenkin, Rt Hon Patrick||Morgan, Geraint|
|Jessel, Toby||Morris, M. (N'hampton S)|
|Johnson Smith, Sir Geoffrey||Morrison, Hon C. (Devizes)|
|Jopling, Rt Hon Michael||Morrison, Hon P. (Chester)|
|Joseph, Rt Hon Sir Keith||Mudd, David|
|Kellett-Bowman, Mrs Elaine||Murphy, Christopher|
|Kershaw, Sir Anthony||Myles, David|
|King, Rt Hon Tom||Neale, Gerrard|
|Kitson, Sir Timothy||Needham, Richard|
|Knox, David||Nelson, Anthony|
|Lang, Ian||Neubert, Michael|
|Latham, Michael||Newton, Tony|
|Lawrence, Ivan||Onslow, Cranley|
|Lawson, Rt Hon Nigel||Oppenheim, Rt Hon Mrs S.|
|Lee, John||Page, John (Harrow, West)|
|Page, Richard (SW , Herts)||Squire, Robin|
|Parris, Matthew||Stainton, Keith|
|Patten, Christopher (Bath)||Stanbrook, Ivor|
|Patten, John (Oxford)||Stanley, John|
|Pattie, Geoffrey||Steen, Anthony|
|Pawsey, James||Stevens, Martin|
|Percival, Sir Ian||Stewart, A.(E Renfrewshire)|
|Peyton, Rt Hon John||Stewart, Ian (Hitchin)|
|Pink, R. Bonner||Stokes, John|
|Pollock, Alexander||Stradling Thomas, J.|
|Porter, Barry||Tapsell, Peter|
|Price, Sir David (Eastleigh)||Taylor, Teddy (S'end E)|
|Proctor, K. Harvey||Temple-Morris, Peter|
|Raison, Rt Hon Timothy||Thomas, Rt Hon Peter|
|Rathbone, Tim||Thompson, Donald|
|Rees-Davies, W. R.||Thorne, Neil (Ilford South)|
|Renton, Tim||Thornton, Malcolm|
|Rhodes James, Robert||Townend, John (Bridlington)|
|Ridley, Hon Nicholas||Townsend, Cyril D, (B'heath)|
|Ridsdale, Sir Julian||Trippier, David|
|Rifkind, Malcolm||Trotter, Neville|
|Rippon, Rt Hon Geoffrey||van Straubenzee, Sir W.|
|Roberts, M. (Cardiff NW)||Vaughan, Dr Gerard|
|Roberts, Wyn (Conway)||Viggers, Peter|
|Rossi, Hugh||Waddington, David|
|Rost, Peter||Wakeham, John|
|Royle, Sir Anthony||Waldegrave, Hon William|
|Rumbold, Mrs A. C. R.||Walker, B. (Perth)|
|Sainsbury, Hon Timothy||Waller, Gary|
|St. John-Stevas, Rt Hon N.||Ward, John|
|Shaw, Giles (Pudsey)||Warren, Kenneth|
|Shaw, Sir Michael (Scarb')||Wells, Bowen|
|Shelton, William (Streatham)||Wells, John (Maidstone)|
|Shepherd, Colin (Hereford)||Wheeler, John|
|Shepherd, Richard||Whitelaw, Rt Hon William|
|Shersby, Michael||Whitney, Raymond|
|Silvester, Fred||Wiggin, Jerry|
|Sims, Roger||Wilkinson, John|
|Skeet, T. H. H.||Winterton, Nicholas|
|Smith, Dudley||Wolfson, Mark|
|Smith, Tim (Beaconsfield)||Young, Sir George (Acton)|
|Speller, Tony||Tellers for the Noes:|
|Spence, John||Mr. Anthony Berry and|
|Spicer, Michael (S Worcs)||Mr. Carol Mather.|
§ Question accordingly negatived.