HC Deb 15 July 1985 vol 83 cc109-14

Question again proposed, That the Bill be now read the Third time.

Mr. Portillo

I was pleased to have my right hon. Friend's assurance that that matter could be reviewed from time to time.

I hope that the Bill, which I support, will have a short life as an Act. My right hon. Friend has conducted the proceedings with considerable charm, and I thank him for that. However, he has not succeeded in convincing me that the agency will play a useful role, in particular in enhancing our security of supply. I look forward to the introduction in due course of an oil and gas agency abolition Bill. In November I shall listen extremely carefully to the Queen's Speech to see whether that welcome Bill will be included in next Session's business.

10.1 pm

Mr. Bruce

Today the Government have finished a job which I and the Labour party feel they should not have started. We have reached the point where it is as well to move on to a new policy to confront the changed circumstances. My colleagues and I felt that it was right and proper for the United Kingdom to have an integrated state oil corporation, as the British National Oil Corporation originally was. Its break-up is not in the United Kingdom's interests because it reduces the Government's bargaining power with oil companies. It has not been the Government's most conspicuous performance on privatisation, as many shareholders are discovering. However, it is now as well to finish the business, and for the Government to address themselves to developing an oil and gas policy, which they have not yet done.

We are producing oil at the rate of 1 million barrels of oil a day more than our domestic requirements. There was never any agreement or debate either inside or outside the House that we should move through self-sufficiency to that level of production, but that is what we have done. In reality, the production, pricing and taxation policies of the United Kingdom North sea are determined by the Organisation of Petroleum Exporting Countries, not the United Kingdom Government, and not in accordance with the British national interest. That happens to suit the Treasury's interests.

The generation to come will wonder why we produced 1 million barrels a day above our requirements, and why we constructed a taxation system that made it attractive for multinational companies to produce British North sea oil rather than oil from other reserves in other parts of the world, especially as that tax structure did not necessarily suit our national interests.

The Labour party's attitude is often rightly suspicious, but wrongly hostile, towards the oil companies. It does riot seem to recognise that oil companies have skill and expertise which we use, and from which we have benefited. However, the Government seem not to recognise that the interests of multinational oil companies and the British national interest do not always coincide. There is a need for a much stronger recognition of that by the Government and for a much clearer debate on what our policy should be.

Now that we are to pass this Bill, the Government should consider their policy in a clear environment, because it is high time that we had a sensible policy for the future development of the North sea. The Government's present policy will come home to roost soon, when production and revenue decrease and they realise that they have not provided for that sad and rainy day.

10.4 pm

Mr. Mike Woodcock (Ellesmere Port and Neston)

The present chairman of Rolls-Royce, Sir Francis Tombs, recently said that decision-making in the private sector tends to be market and profit-related whereas decision-making in the public sector tends to he highly variable, politically influenced and slow. He was speaking from vast experience of private and public sector management, and most Conservative Members would agree with his sentiments. Of course, most Labour Members would disagree with them.

That division of opinion typifies the difference between the Government and the Opposition on the Bill. Arguments have dealt with which functions are best carried out by private industry and which are best carried out in the public sector. The British oil industry is typified by fierce, free competition, and its success in exploiting our national oil resources profitably provides an excellent case history of the benefits of free competition. It is a profitable industry that contributes massively to the public purse. It enjoys no subsidy, it is largely free of oppressive trade unions, and it has learnt the lessons of economic reality—all very different from some other primary energy industries.

Those characteristics of the oil industry are clearly typical of many large commercial organisations. However, we would all agree that some functions are better carried out by state enterprise than by private enterprise.

When I examined the Bill, I could see no problem with participation agreements and with royalties in kind. However, with my hon. Friend the Member for Enfield, Southgate (Mr. Portillo) I had some reservations about pipeline operations. We have 1,000 miles of pipeline and 41 installations established for war. Some strategic use remains, but their commercial use has been overtaken by events. One could argue that private interests would have operated the system more effectively than did the public sector, but against that we must consider the fact that the principal reason for establishing the pipeline was strategic, that the strategic element remains and that it could increase in the future.

We must come to terms with the fact that the pipeline system is little used in areas with a high defence use, but is used commercially much more in areas with a low defence use. It is difficult to establish suitable terms when defence and commercial considerations mix. However, the commercial users in my constituency at Stanlow, which is served by the pipeline, and the commercial operators in Humberside convinced me that they were happy with the present arrangements and that the management of the pipelines should remain with the state. That is why I concluded that the pipelines would be better managed by the agency.

The Bill is desirable because it renders to the private sector those functions which should be rendered to it, and leaves in the public sector those functions which are best carried out there. I welcome the Bill, which I am sure will contribute to the ever-increasing fortunes of our oil industry.

10.8 pm

Mr. Dalyell

Like several of my colleagues from central Scotland and the senior staff of the BNOC, some of whom are my constituents, nothing will persuade me that that organisation was broken up for any other reason than political dogma. It is a crying shame, and the nation will learn to regret having given up the BNOC. I am sure that it was a mistake.

One question that arose out of the debate has not been answered. Suppose that there is an understanding between British Petroleum and the Government. Is it sensible and right that that understanding should be in the form of a letter from a head of department in BP to a Parliamentary Under-Secretary of State? If there are these understandings, without going too much into the heirarchy about it, for heaven's sake, is not the right thing to have it from the chairman of BP to the Secretary of State? If they are so important, why is it done at such a low level?

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

The House divided: Ayes 185, Noes 94.

Division No. 274] [10.10 pm
Alison, Rt Hon Michael Bruinvels, Peter
Ancram, Michael Buchanan-Smith, Rt Hon A.
Baker, Nicholas (N Dorset) Buck, Sir Antony
Beaumont-Dark, Anthony Budgen, Nick
Beith, A. J. Burt, Alistair
Bellingham, Henry Butterfill, John
Benyon, William Carlile, Alexander (Montg'y)
Bevan, David Gilroy Carlisle, Rt Hon M. (W'ton S)
Biffen, Rt Hon John Carttiss, Michael
Biggs-Davison, Sir John Channon, Rt Hon Paul
Blackburn, John Chapman, Sydney
Blaker, Rt Hon Sir Peter Chope, Christopher
Boscawen, Hon Robert Clark, Hon A. (Plym'th S'n)
Bottomley, Peter Clarke, Rt Hon K. (Rushcliffe)
Bottomley, Mrs Virginia Cockeram, Eric
Bowden, Gerald (Dulwich) Colvin, Michael
Bright, Graham Coombs, Simon
Brinton, Tim Cope, John
Brooke, Hon Peter Corrie, John
Brown, M. (Brigg & Cl'thpes) Couchman, James
Browne, John Cranborne, Viscount
Bruce, Malcolm Currie, Mrs Edwina
Dorrell, Stephen Pollock, Alexander
Douglas-Hamilton, Lord J. Porter, Barry
Dover, Den Portillo, Michael
du Cann, Rt Hon Sir Edward Powley, John
Dunn, Robert Proctor, K. Harvey
Dykes, Hugh Raffan, Keith
Eggar, Tim Rhodes James, Robert
Emery, Sir Peter Rhys Williams, Sir Brandon
Evennett, David Ridley, Rt Hon Nicholas
Eyre, Sir Reginald Ridsdale, Sir Julian
Fairbairn, Nicholas Robinson, Mark (N'port W)
Fallon, Michael Roe, Mrs Marion
Favell, Anthony Ross, Stephen (Isle of Wight)
Fenner, Mrs Peggy Rowe, Andrew
Fox, Marcus Ryder, Richard
Garel-Jones, Tristan Sackville, Hon Thomas
Gower, Sir Raymond Sainsbury, Hon Timothy
Greenway, Harry Sayeed, Jonathan
Gregory, Conal Shaw, Sir Michael (Scarb')
Griffiths, Sir Eldon Shelton, William (Streatham)
Hamilton, Hon A. (Epsom) Shepherd, Colin (Hereford)
Hayhoe, Rt Hon Barney Sims, Roger
Henderson, Barry Smith, Tim (Beaconsfield)
Hind, Kenneth Soames, Hon Nicholas
Hogg, Hon Douglas (Gr'th'm) Speller, Tony
Holland, Sir Philip (Gedling) Spencer, Derek
Howells, Geraint Spicer, Jim (W Dorset)
Hunt, David (Wirral) Stanbrook, Ivor
Jenkin, Rt Hon Patrick Steen, Anthony
Knowles, Michael Stern, Michael
Lang, Ian Stevens, Lewis (Nuneaton)
Lawler, Geoffrey Stevens, Martin (Fulham)
Lennox-Boyd, Hon Mark Stewart, Allan (Eastwood)
Lightbown, David Stewart, Andrew (Sherwood)
Lilley, Peter Stewart, Ian (N Hertf'dshire)
Lloyd, Peter, (Fareham) Stradling Thomas, J.
Lord, Michael Sumberg, David
Macfarlane, Neil Taylor, Teddy (S'end E)
MacKay, Andrew (Berkshire) Tebbit, Rt Hon Norman
Maclean, David John Temple-Morris, Peter
Maclennan, Robert Terlezki, Stefan
Madel, David Thompson, Patrick (N'ich N)
Major, John Thorne, Neil (Ilford S)
Marlow, Antony Thornton, Malcolm
Marshall, Michael (Arundel) Thurnham, Peter
Mates, Michael Townend, John (Bridlington)
Mather, Carol Tracey, Richard
Maude, Hon Francis Twinn, Dr Ian
Maxwell-Hyslop, Robin van Straubenzee, Sir W.
Mayhew, Sir Patrick Waddington, David
Merchant, Piers Wainwright, R.
Mills, Iain (Meriden) Wakeham, Rt Hon John
Mills, Sir Peter (West Devon) Walden, George
Moate, Roger Wall, Sir Patrick
Montgomery, Sir Fergus Waller, Gary
Moore, John Ward, John
Morris, M. (N'hampton, S) Wardle, C. (Bexhill)
Morrison, Hon P. (Chester) Warren, Kenneth
Murphy, Christopher Wells, Sir John (Maidstone)
Neale, Gerrard Wheeler, John
Needham, Richard Wiggin, Jerry
Nelson, Anthony Wilkinson, John
Neubert, Michael Winterton, Nicholas
Newton, Tony Wolfson, Mark
Nicholls, Patrick Wood, Timothy
Normanton, Tom Woodcock, Michael
Norris, Steven Yeo, Tim
Osborn, Sir John Younger, Rt Hon George
Ottaway, Richard
Page, Sir John (Harrow W) Tellers for the Ayes:
Page, Richard (Herts SW) Mr. Donald Thompson and Mr. Tony Durant.
Peacock, Mrs Elizabeth
Percival, Rt Hon Sir Ian
Archer, Rt Hon Peter Bennett, A. (Dent'n & Red'sh)
Atkinson, N. (Tottenham) Bermingham, Gerald
Bagier, Gordon A. T. Bidwell, Sydney
Banks, Tony (Newham NW) Brown, Gordon (D'f'mline E)
Benn, Tony Brown, Hugh D. (Provan)
Brown. N. (N'c'tle-u-Tyne E) Evans, John (St. Helens N)
Buchan, Norman Ewing, Harry
Caborn, Richard Fatchett, Derek
Callaghan, Jim (Hey w'd & M) Fields, T. (L'pool Broad Gn)
Campbell-Savours, Dale Fisher, Mark
Clark, Dr David (S Shields) Flannery, Martin
Clarke, Thomas Foster, Derek
Clay, Robert Gilbert, Rt Hon Dr John
Cocks, Rt Hon M. (Bristol S.) Godman, Dr Norman
Cook, Robin F. (Livingston) Golding, John
Corbett, Robin Gourlay, Harry
Corbyn, Jeremy Hamilton, James (M'well N)
Cowans, Harry Hardy, Peter
Craigen, J. M. Hart, Rt Hon Dame Judith
Dalyell, Tam Haynes, Frank
Davies, Ronald (Caerphilly) Hogg, N. (C'nauld & Kilsyth)
Davis, Terry (B'ham, H'ge H'l) Home Robertson, John
Deakins, Eric Hoyle, Douglas
Dewar, Donald Hughes, Robert (Aberdeen N)
Dixon, Donald Lambie, David
Dormand, Jack Lamond, James
Duffy, A. E. P. Leighton, Ronald
Eadie, Alex Lewis, Terence (Worsley)
Eastham, Ken McCartney, Hugh
McDonald, Dr Oonagh Powell, Raymond (Ogmore)
McGuire, Michael Prescott, John
McKay, Allen (Penistone) Randall, Stuart
McKelvey, William Redmond, M.
McNamara, Kevin Robertson, George
McTaggart, Robert Rogers, Allan
McWilliam, John Rowlands, Ted
Madden, Max Short, Ms Clare (Ladywood)
Mason, Rt Hon Roy Skinner, Dennis
Maxton, John Stewart, Rt Hon D. (W Isles)
Michie, William Stott, Roger
Millan, Rt Hon Bruce Thompson, J. (Wansbeck)
Miller, Dr M. S. (E Kilbride) Tinn, James
Oakes, Rt Hon Gordon Wardell, Gareth (Gower)
O'Neill, Martin Wareing, Robert
Orme, Rt Hon Stanley Wilson, Gordon
Parry, Robert
Patchett, Terry Tellers for the Noes:
Pavitt, Laurie Mr. Lawrence Cunliffe and Mr. Sean Hughes.
Pike, Peter

Question accordingly agreed to.

Bill accordingly read the Third time, and passed.