HC Deb 01 May 1984 vol 59 cc315-23

12.9 am

The Minister of State, Northern Ireland Office (Mr. Adam Butler)

I beg to move,

That the draft Gas (Amendment) (Northern Ireland) Order 1984, which was laid before this House on 9th April, be approved.

The purpose of the order is to introduce new legislation that would enable gas undertakers to acquire compulsory new rights over land. The order would also provide statutory authority for Government to make available financial assistance to the Northern Ireland gas industry.

The need for the order arises from recent Government decisions on the future of the Northern Ireland gas industry, which has been widely discussed and debated within Northern Ireland and previously raised in the Chamber. On 10 October last year I was able to announce that a memorandum of understanding between the British Government and the Government of the Republic of Ireland for the supply of natural gas to Northern Ireland had been signed. The agreement came at the end of more than two years of negotiations and will ensure the survival of the Northern Ireland gas industry, with important and beneficial implications for the Northern Ireland economy as a whole.

The main item of legislation pertaining to the Northern Ireland gas industry is the Gas (Northern Ireland) Order 1977. The new proposal is intended to strengthen the 1977 order and thereby ensure the full necessary legislative authority required for the construction of a major gas pipeline and related Government expenditure on the development of the gas industry.

Article 3 of the order provides that the powers of compulsory acquisition conferred to a gas undertaker under article 16 of the 1977 order will include power to create and vest in the undertaker new rights over land. that will remove any uncertainty regarding the scope of the earlier legislation in respect of the vesting of easements such as rights of way. The article is required as a necessary legislative safeguard for the Northern Ireland Gas Company, which is currently preparing for the construction of the main natural gas pipeline.

Article 4 empowers the Department of Economic Development, subject to the approval of the Department of Finance and Personnel, to provide finance for a wide range of purposes, including the maintenance, development and restructuring of the Northern Ireland gas industry.

The agreement with the Republic for the supply of natural gas means that for the Northern Ireland consumer, whether domestic, industrial and commercial, there will be the same choice of fuels as in the rest of the United Kingdom, with all the benefits associated with competition between fuels. Also, the availability of natural gas, which is taken for granted throughout most of the rest of western Europe, will enable Northern Ireland to offer the same energy range as other competitors for mobile international investment. For the Northern Ireland gas industry, the agreement signals the arrest of its decline and the prospect of revitalisation. The order seeks to assist that process.

I am pleased to be able to report that work on the design, planning and routeing of the pipeline from the border to Belfast is progressing well under the direction of the Northern Ireland Gas Company. The signing of the contract with the Irish gas board is expected shortly, and the company is confident that it is on target for the supply of natural gas to Belfast by the last quarter of 1985.

The proposals for the draft order were circulated to all interested parties prior to laying. The generally technical nature of the proposals was recognised, and any relevant comments were of a minor nature. For that reason, I hope that the House will agree to the order.

12.12 am
Mr. Clive Soley (Hammersmith)

The Opposition welcome the order. It is regarded as necessary for the supply of natural gas. We believe that it is a healthy development, for many of the reasons that the Minister gave. It gives choice to consumers in Northern Ireland and will increase the supply of natural gas to about 11 per cent. from the current figure of about 3 per cent. That must be good.

It is also recognised that the order's use has a wider implication in terms of employment. If the Government were not prepared to go ahead with it, there would be significant effects on the gas supply industry, which would decline, with a consequent loss of jobs.

I have no hesitation in welcoming the order on behalf of the Opposition. It is yet another example of good cooperation between north and south, which we also welcome.

12.13 am
Mr. Harold McCusker (Upper Bann)

As the Minister said, this is a short order, but it makes two important decisions about the necessary steps to secure the future of the gas industry in Northern Ireland. Article 3 deals with pipeline construction. Article 4 deals with the finances necessary for future organisation and development of the industry.

I shall make a few comments on the latter article first, and impress on the Minister and his officials the importance of making progress on the future organisation and structure of the industry. Despite the efforts that have been made over the past six or seven months in the Province, and the lavish advertising, the industry is suffering badly. There is concern among the professionals in the industry and among those people associated with it about the fact that the major undertaking, the Belfast one, is losing, month after month, at least 300 consumers a month. If one assumes that the dozen or so other smaller undertakings are losing on a pro rata basis, one could reasonably assume that about 400 consumers are leaving the industry each month, despite the fact that an announcement has been made about its future and about bringing the natural gas from Kinsale. Although there has been widespread publicity — about which I make no criticism—designed to enhance the image of gas, to get away from the old image of the dirty gas works, to show the advantage of natural gas and to link it with those things that we find attractive, and despite all the money that has been spent, the industry is still suffering a serious haemorrhage of consumers.

The professionals now feel that they have passed the stage where the general advertising is doing any good. They are saying that they need aggressive marketing at their own level, where they can start promotional campaigns to sell new equipment to put a competitive edge on the price of the fuel. If they do not get those things, they will he extremely concerned. There is no excuse, because we were well warned about this, and the Minister must have been conscious of this seven months ago.

The Northern Ireland Economic Council, in its document Paper 5 of October 1983, "Northern Ireland Energy Issues: Response to the Government's Discussion Paper", said this:?

However at the price levels which are anticipated we belive that a strenuous marketing effort will be required to achieve the market penetration levels necessary to ensure the financial viability of the project …the project …should be carried forward as quickly as possible to replace the costly town gas industry …the Government should urgently set out the complete natural gas distribution network. Perhaps the Minister will tell us whether he has come to a conclusion on the distribution network throughout the rest of the Province. He has made certain announcements, but he has not given us all the information.

On page 12, the Northern Ireland Economic Council reinforced its concern when it said:

we believe that the world market price levels which have been discussed for the purchase of natural gas from the Irish Republic may he too high to allow the level of sales which will be required to make the project a commercial proposition. It reasserted:

A vigorous marketing and promotion campaign will also be essential to maximise market penetration. The warning bells were being sounded not only by the industry and others such as myself, but by the Northern Ireland Economic Council about the dangers of losing more consumers. It took the opportunity, in its next document, Paper 6 on "Energy Demand Projections" of December 1983, to say:

The experience of introducing cheap natural gas in Great Britain has shown that a rapid increase in market share can be achieved when the price is sufficiently attractive and in circumstances where conversion is relatively simple and cheap. We have to get quickly to a position where the price is right and present and potential consumers can see the advantage of natural gas coming their way. However, that is not the position at the moment, and the loss of 300 or 400 consumers a month to an already much diminished industry is a serious matter. I hope that the Minister will take on board the necessity to give the managers of the 13 undertakings the authority to sell gas, to try to retain consumers, and to offer them a new range of appliances. I hope that he will even now consider reducing the price of gas from its present astronomic level.

To refer again to article 3, which deals with the construction of the pipeline—

Dr. Brian Mawhinney (Peterborough)

I have been listening carefully to what the hon. Gentleman has said. As I understand it, he was asking my hon. Friend to reduce the price of gas, which I suppose is a new way of saying that one is looking for a Government subsidy in terms of the price of gas. Will he give the House some idea of how much Government subsidy he has in mind?

Mr. McCusker

The Government intend to spend approximately £140 million over the next five to 10 years. The Northern Ireland Economic Council, whose opinion should not be discarded lightly, has said that it thinks that this is high-risk money, and that this might not be viable. Gas is being sold in Northern Ireland at three or four times the level at which it is sold in Great Britain. I can buy gas in Vincent square for about 35p or 36p per therm. In my home towm of Portadown, the cost would be 130p per therm. If we are to achieve the take-off required to reach a high volume of sales, perhaps we should not wait until the pipeline is constructed to consider dropping the price of gas, but we should step down the price of gas to the level at which it will be sold in a couple of years in the hope that an incentive will be given to managers of undertakings to advise people that such a provision has been made. It might be a useful exercise to consider that relatively small additional subsidy to produce the incentive and the motivation to Northern Ireland industry to safeguard the mass investment of over £100 million that is currently being contemplated.

I am not begging for money, but, as the Government have committed themselves to spending a vast amount of money, it might be wise to spend a few pennies at this stage to secure the long-term future.

Mr. Soley

I reinforce the point made by the hon. Gentleman, with which I have much sympathy. He should not feel defensive about asking for such a subsidy. The Government are happy to subsidise agriculture on a massive scale. A subsidy to energy in the context of Northern Ireland industry and personal use makes a great deal of sense.

Mr. McCusker

I am sure that the hon. Gentleman would accept that many people in Northern Ireland are embarrassed by the frequency with which we are characterised as coming to Parliament with our begging bowl, always asking for something more. I am trying to make a case for the expenditure of a few pounds in a rational and, I hope, intelligent manner, and to say that it would be worth while spending a few pounds in an exercise designed to step down the price to secure the longer term investment.

If I may go back to article 3, everybody in Northern Ireland, particularly the people concerned with the employment prospects associated with the construction of the pipeline, welcomes the assertion made by the Minister in a letter sent to me on 4 April this year in which he said: I can confirm that it is Government's wish and the Gas Company's stated intention that every effort will be made to maximise local employment opportunities on the project and to encourage local sourcing of as many as possible of the elements necessary for all phases of the programme. He continued to describe the efforts that are being made to publicise the potential opportunities available to the various companies interested. Once again, unfortunately, he seems not to be convincing too many people.

Only this week I was approached by a constituent of my hon. Friend the Member for Antrim, South (Mr. Forsythe), a principal in a small but highly sophisticated industry dealing with inspection processes for pipelines who is concerned that he is being squeezed out of an opportunity in the construction of this pipeline. I was also approached by a fairly large civil engineering concern and provided with two weighty documents, which must have cost quite a lot to produce at a time when there is not much work going in Northern Ireland, not as tender documents but in the hope that I could persuade the gas company to consider them for inclusion in the tendering list.

The extent of the concern felt by Northern Ireland companies is clear when they are prepared to go to such lengths. They are haunted by the experience of the Blackwater drainage scheme. One large company after another in Northern Ireland was excluded from tendering for that one major civil engineering project in that sector this year. The project has gone to a company outside the Province and, although much of the work may be done by people in the Province, it seems strange that Northern Ireland companies capable of doing the work did not even have the opportunity to put in a price.

Companies are also haunted by their experience in dealing with Northern Ireland civil servants. There is no doubt that there is a tradition among Northern Ireland civil servants going back many years to believe that anything slightly new or difficult could not be done by anyone in the Province. Senior consultant engineers have told me that, and I understand that there is no shortage of examples in the past 20 or 30 years showing that when a major project was envisaged for the Province the people at Stormont always felt safer giving it to people from outside the Province. Recent experience with the Blackwater project and that continuing tradition among civil servants is a matter of great concern to many people in the Province. I hope that local companies will now be told not just that they will have the opportunity to tender but that they will be included on the various tendering lists when the time comes.

It is right and proper that the British Gas Corporation should be taken on as experts and consultants on this. Nevertheless, there is a fear that the corporation will tend to play safe and recommend for certain aspects of the project people with whom it has worked over the past 10 or 15 years, with whom it feels secure and who it knows are capable of carrying out the work. As one man put it to me, the corporation may well think that there is no one in the sticks with any real expertise in these matters. I was glad that the man came from the mainland and had an English accent because if I had said that I might have been regarded as prejudiced. Having come to Northern Ireland to do business there, bringing a great deal of skill and experience with him, he is concerned that people based in London will tend to play safe and to make recommendations based on experience.

If the industry is to go on developing in the next five to 10 years, inexperienced Northern Ireland people will have the chance to gain experience only if they have the opportunity to do some of the work. They may not be able to do it all alone, but many companies are now entering into agreements with mainland companies which have experience in this sector, offering to share the work with companies from outside provided that the Northern Ireland companies have a share of the action and gain experience for next time. I hope that that point will also be taken on board.

Another mechanism used by civil servants to exclude Northern Ireland firms is the setting of parameters which in effect exclude them by saying that companies may apply for inclusion on the tender list only if they have already completed contracts in excess of £X million. In view of the size of Northern Ireland, not many projects will be valued at that sum. I hope that if the lower level is set at, say, £3 million the many Northern Ireland companies that have completed contracts of £2.5 million or more but under £3 million will not be excluded just because a probably somewhat arbitrary level has been agreed.

I hope that the Minister will consider, first, the necessity to give new impetus to the industry. We need more consumers and we cannot afford to lose those now being lost. Let us do all that is required to involve local people at every level and provide short-term employment opportunities in the construction aspects as well as longterm employment in the ongoing development of the industry.

12.30 am
Mr. James Nicholson (Newry and Armagh)

In many ways I feel slightly inadequate following my hon. Friend the Member for Upper Bann (Mr. McCusker) on a subject on which he is so knowledgeable.

The gas will supposedly come, but I wish to concentrate on how it will come and from where. The pipline will have to cross a fair chunk of my constituency, and it is concern on that point that I wish to express.

My concern is for those whose land the pipeline will travel through to reach other parts of Northern Ireland. I am always concerned when agricultural land is disturbed, and the disturbance involved in this project will be immense. Miles of pipeline will have to be laid, some of which will go through rock, thereby requiring the use of compressors and even blasting. Even after it is laid, there will be continuous maintenance and inspection problems.

Any farmer who owns land along the proposed route will be concerned at the damage that will occur to his property as the pipeline is constructed. Of necessity, fields will have to be dug up, and, depending on the time of year, fields of grass, hay or silage will be trampled under foot. Admittedly, at certain times of year the construction of the pipeline may do very little damage, but at other times—construction will have to take place in inclement weather—the damage could be extremely serious.

No matter how it is reinstated, it will take a considerable time for the land to recover fully, if ever it does. Hundreds of hedges along the route will be ripped out and destroyed and drains will also be ruined, not to mention shores and other amenities. This will be bad enough at the best of times, but it is bound to be worse in imperfect weather.

We have a right to ask whether the areas affected will be restored to their original condition. In the past there have been too many experiences of poor workmanship in the laying of pipe tracks throughout Northern Ireland. The only pill that will sweeten this discomfort to landowners will be the compensation they receive for any inconvenience caused. I hope that they receive sympathetic consideration as negotiations continue, as it will be in the Government's interests to have the landowners' support to ensure that installation runs smoothly.

I remind the Minister that market value plus a little more will not compensate any farmer for the loss of the use of his land. Some of them are small farmers, and if the pipeline runs through their farms they could be hit particularly hard.

I need only refer to the famous experience in the Craigavon area many years ago when farmers received a settlement which in those days could have been regarded as generous. However, few of them now would not agree that, in view of the way they have been treated since, that settlement was deplorable. They should be given fair consideration.

I hope that the Minister will ensure that Northern Ireland firms are allowed to tender. I reiterate what my hon. Friend the Member for Upper Bann said about the Blackwater scheme. Firms in Northern Ireland have felt great resentment because they were not allowed to tender for the scheme. Those firms are quite competent to carry out the job. Indeed, at the end of the day they may do parts of the work. They should be allowed to tender and should be given a fair crack of the whip.

My constituency hopes to gain from any employment created by the scheme. I realise that the Minister cannot guarantee that, but if Northern Ireland firms gained the contract, it would be more likely that Northern Ireland people would be employed. My constituency can do with all the employment it can get, because it has a high unemployment rate.

An enormous amount of money will be spent on laying the gas pipeline. I cannot hide my view that the pipeline should come from the mainland rather than from the south of Ireland. My hon. Friend the Member for Upper Bann agrees with me on that point. Because the pipeline will come from the south, the Government will have to be vigilant. They will have to spend a great deal of money. It always amazes me that they are prepared to spend money on projects that could be dubious at the end of the day. Something must be done quickly to stop the drift from the gas industry, or there will be no industry left by the time the pipeline is ready. I hope that the Minister will consider that point seriously.

I fail to understand why money can be plucked out of the sky for certain projects when the poor dairy farmers of Northern Ireland are being so badly treated. I hope that the Minister will take heed of what has been said.

12.38 am
Mr. Butler

With permission, I shall reply briefly to the debate. I must charitably assume that the remarks of the two previous speakers — the hon. Members for Upper Bann (Mr. McCusker) and for Newry and Armagh (Mr. Nicholson) were hung on articles 3 and 4. They properly widened the discussion, asked questions and made relevant points.

I am delighted that the hon. Member for Hammersmith (Mr. Soley) welcomed something that I brought before the House. I appreciate his brevity in doing so. An important point raised by the hon. Members for Upper Bann and for Newry and Armagh was disquieting, at least in one respect. I had hoped that the drain of customers from the gas industry had been slowed down. However, from the remarks of the hon. Member for Upper Bann, it would appear that that is not the case.

I regret that. The purpose of the advertising, particularly at this stage, is to make it clear that not only is natural gas coming but that the nature of it is different from towns gas. I must tell the hon. Gentleman, and those whom he described as the professionals — the managements of the various undertakings — that they must redouble their efforts in doing their own marketing.

The hon. Gentleman said that they wanted authority to do that—to market—and my answer must be that they are in control of their undertakings. They have a product that is different, but it is up to them—I have made this clear to all with whom I have spoken personally—now that it is known that natural gas is coming, to do everything possible to hold on to their customer base and encourage others back into the fold. If there is any doubt on that score, I shall ensure that my Department contacts them to encourage them in this effort.

They have been closely involved in the present general advertising campaign in the ways that are open to them, through individual contact with their customers and the display of posters and so on. If we can co-ordinate this effort and make more of it, we must do that because if the consumer base dwindles, the more it dwindles the greater the problem the gas industry will have to develop the volume of sales to the level required to show a fair return on the investment.

The hon. Member for Upper Bann asked me to comment on the distribution of gas and the areas to which it will go. I cannot say more than I have. Gas will come to Belfast and go to Londonderry, and it follows that towns close to the pipeline are almost certain to be included as customers for natural gas. I am on the point of receiving the various market surveys that have been carried out. Therefore, I am not in a position to make clear precisely which towns one would expect the gas to go to, and mentioning certain towns would not rule out the possibility of sales to others. I cannot say more than that tonight.

The hon. Member for Upper Bann referred to a reduction in price, and he was challenged on that. It is not a question of there being no subsidy and help for the gas industry, as he knows well. When the hon. Member for Hammersmith makes his usual attack on the farming industry, he should remember that the current subsidy to the gas industry—or, to put it in a better way, to gas consumers—is about £10 million a year. Since 1974, £42 million of subsidy has been put into towns gas in Northern Ireland, so there has been no shortage of money for the industry.

Mr. Soley

Who is attacking the farming industry? I am in favour of subsidies. I am simply asking the Minister to be consistent.

Mr. Butler

Not only are we heavily subsidising the town gas industry, but consumers of electricity are being subsidised to the tune of £60 million a year. That must be borne in mind when considering the pricing policy that might operate between now and the introduction of natural gas.

Hon. Members referred to the use of local contractors and other firms. We are endeavouring to see that, where possible, that is done, and I agree that it has an important impact on jobs. It is not fair to say that Northern Ireland civil servants deliberately seek to exclude Northern Ireland companies. I am sure that that is far from the case. On the other hand, the hon. Member for Upper Bann asked for speed in bringing gas to the Province. If we are to seek speed combined with the satisfactory laying of the pipe, we must be certain of the competence of the firms that are involved. That is surely a first requisite.

I do not think that we could proceed any quicker. We are seeking in only two years to construct a pipeline and to get the gas to the first consumers in Belfast in the autumn of 1985. That is a tight time scale. We are on target at present but there remains a great deal to be done. I recognise the need for action in the interim to ensure those who would be using gas are confident of its arrival.

The hon. Member for Newry and Armagh spoke of landowners' anxieties. There are established procedures for dealing with compensation problems. In statutory terms, the rights of persons affected by vesting orders are translated into financial claims on the compensation front. Arrangements are made to provide so-called accornmodation works either in lieu or part settlement of claims. For the natural gas project, arrangements are being made for the restoration of farmland in conjunction with the commissioner of valuation.

We need the full support of the landowners through whose land the pipeline will pass. The surveying team, which has covered a considerable distance of the land through which the pipeline will pass, is generally finding a good welcome from landowners and sympathy with that which is proposed.

This short debate has illustrated the importance of the project for Northern Ireland and the real interest and concern on the part of representatives of the Province who are members of this place. I do not think that anything has been said that does other than support me in recommending the draft order to the House.

Question put and agreed to.


That the draft Gas (Amendment) (Northern Ireland) Order 1984, which was laid before this House on 9th April, be approved.