HL Deb 19 April 1934 vol 91 cc661-93

Order of the Day for the Second Reading read.


My Lords, the Bill which I have the honour to present to your Lordships for Second Reading this afternoon possesses certain provisions which may possibly arouse apprehensions in certain of your Lordships' minds, especially amongst those of your Lordships who sit upon this side of the House. I would venture, therefore, to remind your Lordships that the development of modern civilisation, which has brought with it units of organisation on a scale far beyond that which our fathers knew, requires from us in its turn a corresponding modification in certain of the views which our forefathers held, and, in the circumstances of their day, quite properly held, with the utmost rigidity. The creation of vast corporations which are necessary to the business world of to-day has imposed upon us all a certain measure of surrender of individual and private rights.

It is our intention, if it conforms with the desire of the House, not to conclude this debate to-day. If that is so, and if the debate continues throughout the afternoon, it will then be possible for us to renew our discussions on this subject on Tuesday next; but I feel that your Lordships will be guided by the course which the debate takes. I would venture to ask your Lordships, therefore, to approach the subject, as in my experience is your Lordships' usual habit, with what I may call an open mind. I only trust that any inadequacy in my own exposition of the measure will not prejudice it in your Lordships' minds. As I have said, it is with an absolutely open mind that I desire your Lordships should approach the very important question which is raised in the measure that I have the honour to submit to you this afternoon.

If the age in which we live, and in which I include the years from 1900 upwards, has earned a distinguishing name, by reason of its possession of some sharply defining characteristic, I have no doubt in my own mind what that title should be. This age, this century, is the age of petroleum, just as the nineteenth century, the age that has now been superseded by the present one, has quite justly been termed the age of steam. We may perhaps attach too much importance to speed, particularly speed of locomotion, in the present century, and I have no doubt that not a few of your Lordships regret the development of the internal combustion engine, in the history of which petroleum holds so commanding a place. But no matter who regrets it, the internal combustion engine has come to stay, and its advent has produced a revolution in the history of fuel. The present century has seen an enormous development in the use of petroleum, and it is now an important commodity in the national economy of almost every country in the world. In 1900 the world production of oil amounted to about 22,000,000 tons. By 1929, which was a year of record output, it had increased by over nine times, to more than 200,000,000 tons, and, but for the worldwide industrial depression of the last few years, it would undoubtedly have far exceeded that figure. In 1933 the output was again something like 200,000,000 tons. For a number of years eight countries have produced nearly 96 per cent. of the world production, and none of these is a part of the Empire. The eight countries in their present order of precedence are the United States of America, Russia, Venezuela, Rumania, Persia, Mexico, the Dutch East Indies and Colombia. The first three accounted in 1932 for about 81 per cent. of the total.

In spite of the fact that experts have declared their belief that oil may exist in this country, so far no effort of a substantial kind has been made to discover it, apart from the programme of drilling carried out at the expense of the Exchequer by Messrs. Pearson and Sons, Limited, during the years 1918 to 1922. When that programme was decided upon, the urgent need of undertaking the work had been forced on the Government by the enormously increased demand for oil to which the War had given rise. The Government voted a sum of £1,000,000 for the purpose, and actually a sum of about £570,000 was spent in an endeavour to discover oil. Unfortunately this effort met with no substantial success. Eleven bore-holes were sunk, but although several of these showed traces of oil, only two produced oil in measurable quantities. One of these wells is, however, still producing small quantities, and altogether about 2,500 tons of a high grade oil, as good as some of the best American crude oil, have been obtained from it. In 1922 it was considered urgently necessary to bring to an end all emergency expenditure, and in this case the Government decided that they were not justified in continuing the expenditure of public money on such a very speculative enterprise.

But those who are familiar with the story of the search for oil will know that the sum spent by the Government was very small compared with the amounts that have been expended in establishing the existence of oilfields in other countries. No one associated with the oil industry would suggest that the work carried out by the Government had exhausted the possibilities of oil finding in this country. Judged by modern standards, it would be regarded as no more than a scratching of the surface, and as possibly affording some clue as to the line of search in the future. There have been considerable advances in the technique of oil development during the past ten or fifteen years, and petroleum geologists, who might have discarded this country twenty years ago as not worth serious consideration, have acquired additional knowledge from their activities in other parts of the world, which have caused them to change their views in regard to a number of territories. As the President of the Board of Trade indicated in reply to a question in another place on the 22nd March last, the Government, having received information of renewed interest in this question, decided, after reviewing the whole situation, that the only satisfactory course open to them was to take a long view on a matter of such importance to our national economy and security.

The present position is that any one who desires to prospect for oil has to obtain a licence under the Petroleum (Production) Act, 1918. Although the Act has been in force for over fifteen years, only seven licences have been granted and three only of these are in force at present. None of these licences was granted to a recognised oil company. For all practical purposes the Act can be regarded as little more than a dead letter, since the amount of development work done has been negligible. In the course of the debate on the Bill of 1918 in your Lordships' House, the Government made it quite clear that that legislation was intended as merely a provisional stage. During the period of the War, the Government had used their powers under the Defence of the Realm Act to carry out the scheme of drilling. They had the right to enter on land and to authorise their agents to carry on the work of drilling, and all questions of compensation could be settled under the emergency legislation. But, with the possibility of the disappearance of wartime powers, the Government decided that something must be done to prevent a situation arising in this country such as had occurred in some countries where there was no legislation to require the orderly search for oil, and they accordingly submitted to Parliament the Bill which became the Petroleum (Production) Act, 1918. The noble Lord, Lord Elphinstone, who was in charge of the Bill in the House of Lords, then said that at a later stage, when the matter would be considered under more normal conditions, Parliament would have to settle several rather difficult questions if oil development was ever to take place in this country.

That the difficulties are real may be gathered from certain expressions of views which I shall quote. Some time ago a responsible British oil company wrote to my right honourable friend the President, of the Board of Trade in these terms: On several occasions during the past four years this company has been invited by various private interests to carry out exploratory work with a view to testing the oil-bearing potentialities of certain localities in the United Kingdom. While we are anxious to do all in our power to prove the existence of petroleum in commercial quantities in this country, we have not hitherto felt ourselves justified in incurring the necessary expenditure owing to the difficulties experienced in acquiring surface and mineral rights from numerous surface owners, notwithstanding the provisions of the Petroleum (Production) Act of 1918. The Oil News of the 29th March, 1934, commenting on the present proposals, remarked: The main defect of the 1918 Act was that under it, although anyone could get a licence to drill, practically no one could make an agreement with landowners on reasonable terms for the would-be licensee. That, to our knowledge, has prevented scores of desirable parties from applying for licences. Again, if your Lordships will permit me, I quote these words from a leading article on the Bill which appeared in the Petroleum Times of 31st March: …the British Government has at last taken what appears to us a sensible step in cutting the Gordian knot which has deterred oil exploration in the past. While surface owners will be safeguarded, the ownership of the oil beneath will be vested in the Crown, and measures are to be taken to remove the almost insuperable lease and royalty difficulties which previously hampered oil search, These views are representative of responsible opinion in the oil industry, and the conclusion to be drawn from them is that no really substantial and qualified concern is likely to undertake the difficult and highly speculative work of searching for oil in this country, and if found, of developing it, without a material change in the present legislative position.

If a search for oil in this country on an extensive scale is to be secured and if results are to be obtained within a reasonable period of years, there are three main requisites. The first of these is the grant of exclusive rights over reasonably large areas. The second is the provision of machinery through which it will be possible to obtain facilities to enable necessary operations to be carried on where these cannot be secured by voluntary means; and the third a clear determination of the position in regard to royalties. Perhaps your Lordships will allow me to take the last condition first, as it is clearly the most important. There are two aspects of the question of the ownership of mineral rights which are of most concern in a consideration of the present problem—namely: 1, Does the existing system seriously hamper the search for oil? 2, If any change is desirable, is there any practicable alternative to the proposal to vest the property in petroleum in the Crown? As regards the first point, the views expressed by the oil industry make it clear that the position in regard to royalties is one of the principal factors which has hampered the search for oil in this country in the past. These views, as your Lordships are no doubt aware, have been supported by officials and advisers, who from time to time have been requested to consider this matter on behalf of the Government. Is there then any practicable alternative to show to our proposal to vest the property in all petroleum in the Crown?

One alternative had been put forward in a Bill introduced by the Government in another place in August, 1917. In this measure an attempt was made to preserve to the surface owner some interest in the mineral rights. The Bill required anyone licensed to search for petroleum, who produced petroleum, to pay what amounted to a nominal royalty of 9d. a ton into a Royalties Fund, the balance of which, after meeting the expenses of administration, was to be divided amongst those who could substantiate a claim to a share of it. Where operations for the getting of petroleum were commenced in any district, the Board of Trade were required, on the application of any person who appeared to them to be interested, to prepare a scheme defining the area, the persons interested in the land in the area entitled to receive payments out of the Fund, and at the same time regulating the distribution amongst such persons of the sum available for distribution. Claimants on the Fund had to satisfy the Railway and Canal Commission as to their right to share in the Fund. Although the Government of the day had a very large majority in another place, the Bill was strongly opposed on the ground that it would set up a new vested interest in a mineral not hitherto produced in this country, and the existence of which in commercial quantities had not even been proved. On a Division, the proposal to set up a Royalties Fund was defeated, and in spite of their strong position, the Government of the day decided not to proceed further with the Bill.

The Duke of Northumberland's Bill also sought to preserve the position of the mineral owner. The relevant clause of the Bill made provision for payment of royalties, and said: The persons entitled to the petroleum rights in a petroleum prospecting area or in a defined portion thereof are all persons who shall prove themselves to be legally entitled to the petroleum or any portion thereof in the said area or in the said defined portion thereof. The prospecting areas referred to were to be determined by an Advisory Board set up by the Geological Survey Department. But discussions at various Oil Congresses have established the fact that very great difficulties have arisen in the United States of America, where efforts have been made to overcome the royalty question by schemes of unit development. It was pointed out at the World Petroleum Congress held in London last year that, even with present technique, which has been greatly improved since the discussions took place in Parliament in 1918, it is not possible to determine subsurface conditions until many wells have been drilled and production established over a very wide area.

A recent report by the United States Geological Survey Department points out that the first difficulty encountered in securing unit development under private ownership is of nature's making, i.e., the difficulty in determining the limits of the oilfield. To accomplish most in the way of economical development, the unit plan should be adopted as soon as possible after the discovery of the pool. That is, the pool of petroleum which I understand is the technical term. Obviously, however, this is a time when least is known of the extent of the pool itself, and at the start the aid rendered by geological science is commonly limited to facts bearing on the location of the axis and the general shape of the structure. The practical result of this common situation is that for a considerable period after discovery, exact knowledge of the unit's natural boundary, however desirable, is unattainable. One case, referred to at discussions which took place at the annual meeting of the American Petroleum Institution two or three years ago, showed that, in one attempted pooling scheme—that is, where the owners desired to come together—the area was first drilled in 1911, and proposals for consolidating the properties were not made till 1923. Then discussions went on between the property owners and oil companies for over two years, and consolidation was finally effected for approximately two-thirds of the properties. Pooling schemes may well be described as superficially attractive, but extremely difficult to work in practice, and they can never be really equitable in operation, which is the important point.

The Government who introduced the 1917 Bill, and also were responsible for the Act of 1918, continued to give consideration to the question of finding a solution to this problem of royalties. Petroleum, being a fluid, is different from other minerals, and in July, 1919, the then Minister of Munitions, Mr. Kellaway, who was responsible for petroleum, expressed the view, after a very careful review of various alternatives, that it would be an almost insoluble problem to devise any equitable scheme for the allocation of royalties as between neighbouring landowners, owing to the relatively small size of estates in this country, and the impossibility of determining from what point in a petroliferous area the supply tapped by any boring is actually drawn. That discloses the difficulty with which we are faced. In October, 1919, the Government accepted the conclusion of the Minister of Munitions, and decided that legislation should be introduced to provide that the ownership of all petroleum from boring in the United Kingdom should be vested in the State, and that no compensation should be paid to owners of land in respect of oil itself. Mr. Bonar Law himself intimated the Government's decision in another place, in reply to a question, early in 1920. Although a Bill was prepared, it was never introduced, and in 1921, interest in oil in this country having flagged, the Government decided not to proceed with the legislation.

Under the Act of 1918, therefore, a differentiation had been established in regard to petroleum as compared with other minerals. Owners of mineral rights in petroleum had lost their freedom to develop any petroleum which might exist under their land. They could only do this by obtaining a licence, and if someone else had been given a licence which embraced their land, they could not obtain such a licence. The law in regard to the payment of royalties on petroleum in this country has not yet been defined. If a licensee found oil, he would probably claim that he was only required to pay royalty to the landowner on whose land he was actually drilling, although in fact the oil might be drawn from under a considerable area of neighbouring lands. Such a claim would probably be contested, and litigation would follow. If the Courts then decided that royalty was payable to any one who could establish a claim, endless litigation would follow in an attempt to determine the claims. The matter is therefore so important that it ought to be settled in the legislation now before Parliament, and I venture to submit to your Lordships that there is an overwhelming case for accepting the proposal contained in the Bill, which will have the effect of vesting the property in oil under a central control. For the reasons which I have already given, the Government are satisfied that the case for the unification of the ownership of oil can be distinguished from that of other minerals, and we would not have put forward the proposal unless we were satisfied, after the most exhaustive examination, that it offers the only practicable solution.

I will now pass to another of the three conditions which I have said are necessary to petroleum development in this country—namely, the grant of exclusive rights over large areas. In theory the Act of 1918 gives the Board of Trade power to grant exclusive rights over unlimited areas to permit of the search for, and the getting of, petroleum; but when that Act was passed it was realised that a position of great difficulty would arise if a licensee who had been granted a large area were to find oil. By the issue of the licence, as I have already pointed out, all owners of mineral rights in the area are debarred from sinking shafts in their own land to secure oil which they will claim is legally their property. These owners would have a grievance if they could not secure the development of any oil which they had reason to believe might exist below their land, or if they could not ensure the payment of a royalty on any oil which might be drawn from under their land, whether through a borehole on their own land or a borehole on adjoining property.

With this difficulty in mind, the Board of Trade adopted the practice of granting exclusive rights only over small areas, but even in an area of four or five square miles there may be dozens, and possibly hundreds, of owners. In short, if oil should be found, the position of the Government under the 1918 Act would be untenable, even although licences had been granted only for small areas. The limitation of the grants to small areas has hitherto not been a matter of great importance, but the position is changed entirely by the indications of renewed interest, which afford grounds for hope that a further search for oil on a substantial scale may take place if only suitable conditions can be established in this country. The Government are therefore faced with this position: either they can continue to work, as in the past, under the 1918 Act, in which case spasmodic, under-capitalised and inefficient efforts will be made to find oil; or they must be in a position to grant exclusive rights over large areas, in which event a systematic and efficient search for oil is likely.

Let me now address myself to the remaining one of the three conditions which I have named, the grant of facilities to enable operations to be carried on. The views attributed to the oil industry, to which I have already referred, make it clear that one of the principal reasons why serious interest has not been taken in oil development in this country is the difficulty which arises over the acquisition of the necessary surface rights and way-leaves. The Act of 1918 provides that the grant of a licence shall give no right to the licensee to enter on land. Since that Act was passed, Parliament has set up machinery in the Mines (Working Facilities) Act, 1923, which enables those engaged, or who desire to engage, in mining operations to secure the grant of facilities by applying to the Railway and Canal Commission where such facilities cannot be secured by voluntary arrangements. The Act as it stands is not considered to apply to petroleum, but the need for such machinery is not less in the case of petroleum than in that of other minerals. In fact, the need is, if anything, greater.

Before an oil company can decide which are the best sites for commercial drilling, test boreholes have to be put down in addition to a great deal of other exploratory work, and if facilities to carry out this work, and later on to develop the field along proper lines, cannot be obtained, satisfactory results cannot be secured. If oil is discovered, it must be transported to storage tanks and refineries, and for this purpose it is essential for economic reasons to lay pipelines. These pipelines may be many miles in length, and would have to cross the property of a large number of landowners. One owner who declined to grant facilities could hold up a scheme indefinitely. It is difficult to see how Parliament could justify refusing to companies concerned in the development of petroleum the machinery which has already been made available for other mining operations. The Bill proposes to vest in the Crown the property in oil which may exist in this country, and this divorcing of the mineral and surface rights constitutes an additional reason for giving to licensees the right of applying to the Court for the compulsory acquisition of facilities where these cannot be secured voluntarily. And it is on this account that special provisions have been made in the Bill, which deal with the question of compensation for the acquisition of rights compulsorily, which are supplemental to those contained in the Mines (Working Facilities) Act. These are set out in Clause 3 (2) of the Bill.

The Duke of Northumberland's Bill of 1918 provided that the grant of a licence shall empower the licensee to enter upon all lands within the petroleum prospecting area or the defined portion thereof in respect of which such licence is granted for these purposes. Although the Bill was not quite clear on this point, the licensee was apparently left to make his own terms with the landowners. He was also required to pay compensation for surface and certain other forms of damage and disturbance. In the event of disputes, the matter had to be settled by arbitration. In theory, the Bill went further than the present Bill by giving the licensee the right to enter on land. But it appears to have ignored the difficulties which were bound to arise, if satisfactory arrangements could not be made, for reasons such as are set forth in Section 4 (1) of the Mines (Working Facilities) Act, 1923. These are:

  1. "(a) that the persons with power to grant the right are numerous or have conflicting interests;
  2. "(b) that the persons with power to grant the right, or any of them, ascertained or cannot be found;
  3. "(c) that the persons from whom the right must be obtained, or any of them, have not the necessary powers or disposition, whether by reason of defect in title, legal disability or otherwise;
  4. "(d) that the person with power to grant the right unreasonably refuses to grant it or demands terms which, having regard to the circumstances, are unreasonable.
A further point which the Bill did not provide for was the grant of facilities outside the licensed area. Oil might be produced in large quantities, but unless it could be transported by the only practicable means available—namely, pipelines—the operations would be held up indefinitely. It was because it had been generally recognised, even by the organisations representing mineral owners, that difficulties in regard to the proper carrying out of mining operations under the present system of royalty ownership do exist, that Parliament passed the Act of 1923.

For these reasons I submit that the provisions in the present Bill are preferable from every point of view to those in the Duke of Northumberland's Bill. Any difficulties which arise will go before a properly constituted Court with a long experience of these matters, and in settling them the Court will be able to take all relevant matters into consideration. Legislation giving compulsory rights of access to land would have been inevitable whenever a large scale search for oil was proposed. It is now necessary on this account, and still more necessary now since the suggested separation of the ownership of the surface from the ownership of the mineral removes some of the existing incentive to grant surface rights.

I have endeavoured to point out to your Lordships, as briefly as I may, the principal provisions of this Bill, but I now come to that part of my speech which deals with the political aspect, which is doubtless occupying many of your Lordships' minds at the present moment. I think I need hardly say that I gladly find myself in political association with the great body of the members of this House, and, though there may frequently be differences between us in our outlook on those doctrines which constitute and enshrine the political principles of the Conservative Party, we have consistently endeavoured to maintain what are known as the rights of private property. But other political Parties in the State have taken an opposite point of view, and there is, and probably always will be, an acute division of opinion on this particular subject. Those noble Lords who have put down the Motion for the rejection of this measure have done so on the principle that, in their view, the rights of private property are infringed by the provisions of this Bill, and I agree with them to the extent of saying that certain preconceived ideas of property are infringed by any proposition which contains any element of nationalisation, which is the acquisition by the Crown of property hitherto held by individuals.

But let me remind the House that gold and silver are vested in the Crown, so that one can justly say that the rights of private property have already been so far infringed and that gold and silver are nationalised. At the same time, the same description would apply, in some degree, to the coal royalties which exist under the sea, so there is nothing really new in the State ownership of minerals. There have, therefore, already been inroads made into the doctrine of private property, the main principles of which we have upheld, and which we are proposing to continue to uphold, and no one more strongly than myself. I hardly think I need tell your Lordships that, with the very strong views I hold in connection with the rights of property, I have been very exercised in my mind over the consideration of this measure. But I have now come to the very definite conclusion that, in this connection, these rights, which may be said to exist over royalties, must give way to the interests of the country in securing and ensuring the exploitation of a commodity on which so much of the national well being depends, from the commercial standpoint as well as from the point of view of national defence.

I have endeavoured to put before your Lordships the very serious obstacles which, under air present system, confront and hamper the exploitation of oil. It can truly be said that the position in which we find ourselves at the present moment, the fact that there is no real effort at exploitation of oil, is due entirely to the overwhelming difficulties which have confronted those who have been prepared to make the necessary experiments. I may very well be told, and no doubt this side of the question will be put, that this is all very well, but that the owner of land is entitled to receive some benefit for the exploitation of minerals below the surface, on the analogy of coal and other minerals, but there is a difference, which I think your Lordships should consider, and that is that coal properties have, in the main, been purchased for the purpose of winning coal, and that other properties have been sold with a reservation of mineral rights, which proviso has really referred to those minerals of whose existence we are cognisant. No one can claim that oil comes into this category. There is no estate in this country as yet which has been bought or sold because of the possible increase of value owing to the discovery of oil, and it does seem to me that the nation, as represented by the Government, are well within their rights if they claim that any new and unlooked for discovery of oil should be vested in the Crown. This course, apart from the fact that it will avoid all the difficulties to which I have alluded, will, at the same time, prevent a development of an additional vested interest, such as those which have been quite properly developed in connection with the coal and other mineral industries.

So far as oil is concerned, this country can take a decision now without having to take into account vested interests, for, virtually, the existence of oil in workable quantities is quite unknown. The only serious work which has been carried out was financed by the Exchequer, and the only discovery of a producing well, and that a very small one, was the result of that work. Leaving aside the three licensed areas scheduled in the Bill (which are exempted from the provisions of Clause 1) no land in this country has acquired any added value as potential oil-bearing property. It is, therefore, the considered view of the Government that no injustice is being done by assigning the ownership in the oil to the Crown. Further, my Lords, the Government believe that the policy which the Bill proposes in regard to oil is the right policy, because it will enable this country to make the most of any oil which may be proved to exist. In fact, the Government regard it as an essential step in establishing such conditions as will enable private enterprise, properly equipped and financed, to undertake the work of searching for oil. We believe that under this policy, if oil is found, it will be developed in an orderly manner, and in the most economical way; the landscape will not be disfigured needlessly; products will not be wasted; and the nation generally will benefit by the royalties to be paid to the Exchequer. I beg to move.

Moved, That the Bill be now read 2a.—(The Marquess of Londonderry.)

LORD DYNEVOR had given Notice to move as an Amendment, That the Bill be read 2a this day six months. The noble Lord said: My Lords, I have put down a Motion for the rejection of this Bill. The sting of the Bill is in Clause 1 in the words: The property in petroleum existing in its natural condition…is hereby vested in His Majesty…. In other words nationalisation; and that is the principle that I object to. I will own that the Bill is a perfectly straightforward one, and that the proposals are put forward by front-door methods. There was an attempt under the notorious Budget of 1909 to nationalise a large part of the value of unworked minerals by means of a back-door method, for the Commissioners of Inland Revenue, backed by the Government, tried to argue that if a person did not answer the optional question "W" in the notorious Form IV, then the unworked minerals were to be treated as having no value as minerals, with the result that when the unworked minerals were leased or sold the Government would nationalise one-fifth of the capital value. Luckily we had then, as we still have, Law Courts to see that the individual has fair play. Both the Court of Appeal and the House of Lords, sitting in its judicial capacity, unanimously agreed that the contention of the Government was ultra vires, that owners who had not declared the mineral value in Form IV could not be prejudiced, and that the minerals had not to be treated as a separate parcel of the land as directed by the Act. So that attempt at partial nationalisation failed, and since then the Act has been repealed.

This Bill is a stepping-stone to the nationalisation of all unworked minerals—coal, ironstone, slate, tin, marble, gravel, sand, and all other unworked minerals. Many of the same arguments could be used on their behalf. The Russian Government have seized all minerals and everything else, including oil, and then they sell the oil. That is what this Bill proposes as regards natural oil, for it gives the Government power to grant licences to bore for oil to anybody or any company, and then to charge a royalty, and as the Government will have, like Russia, a complete monopoly, it can charge any royalty it likes under Clause 2 on property which has been nationalised. Why are not the Government content with the existing 1918 Act? I tried my best to follow the argument used by my noble friend Lord Londonderry, but it seems to me that that Act really is all that is necessary. Nobody under that Act can bore for natural oil without a licence from the Government, who naturally would not grant licences too near each other so that the same pool should be drawn upon by different licensees, and therefore there could be no idea of things happening in this country such as we are told happened in Texas. I am not necessarily standing up for the 1918 Act. That was a War measure, passed at a time when there was little opposition and when members were engaged in other spheres, but that Act does preserve to the owner of the land all his rights except that he cannot bore for oil without a licence from the Government.

Why is this Bill wanted? I should very much like to know why this great extension is required, because there are individuals and companies ready to bore under the 1918 Act; there is a list in the Schedule, to this Bill of those who have already had licences. I had hoped we should hear who it is to whom the Government are going to grant this great monopoly, and who it is who is asking for this great monopoly. Why do not the Government centre their attention on producing oil out of coal? It would do far more good. The coal industry is depressed. Thousands of miners are out of work with small prospect, owing to the great foreign competition, of being absorbed again into their industry. We have a fine coalfield in this country. I suggest that the Government should turn their attention to making the extraction of oil from coal a paying proposition. We should then be completely independent of the foreigner in war time. Ships now use oil instead of coal. Then let the oil come from coal. Every miner would bless the Government who sees his livelihood taken away from him because oil is used instead of coal. This Bill is a gift to the Socialists and a great lead to them, which they naturally like, for nationalisation. If your Lordships pass this Bill I am quite certain you will regret it, for you will have given way on the great principle of nationalisation. I ask your Lordships to refuse to give this Bill a Second Reading and beg to move the Amendment which stands in my name on the Paper.

Amendment moved— Leave out ("now") and at the end of the Motion insert ("this day six months"). —(Lord Dynevor.)


My Lords, the controversy on this measure is of a domestic character and our proper function is not to be participants but spectators. I do feel, however, that I should, on behalf of my noble friends behind me, make a few remarks on the historic speech which has been delivered by the noble Marquess who moved the Second Reading of the Bill. I do not know if the noble Marquess realised that his speech will be perhaps more quoted than that made by any Minister in the present Government during their period of office, and I do not think I have ever heard put so admirably, so succinctly and so clearly the arguments for State control of an interesting and rising industry which manifestly should belong in essence to the whole country.

The noble Marquess in the early part of his remarks said that the last century was the age of steam and the present century seemed to be the age of petroleum. I think that is right so far as we can judge the present moment and the near future. With a very inexpert gaze into the further future I am not at all sure that I should not say that the twenty-first century may be the age of electricity, electricity, unlike either coal or petroleum, being an inexhaustible force. However that may be, so far as we can see now there is likely to be a development in this country, if proper facilities are given, of the production of petroleum, and it certainly is only wise that the Government of the day should take the earliest opportunity, as the noble Marquess said, before a new vested interest arises, to give all possible facilities for the development of this new industry. I could not help envying the noble Marquess because, in spite of the opposition which he will receive from the Benches behind him, he no doubt will carry this measure through, and it will be carried through in another place. I thought of what would be the fate of an exactly similar measure if we were to introduce it. There is no doubt that the opposition, in which I am very much afraid the noble Marquess himself would have joined, would have been extremely violent. But no word shall fall from me to dot the "[...]i's[...]" and cross the "t's" as to the exact meaning of this Bill.

The noble Marquess is in a difficult position for the time being, and I think many of his noble friends behind him are repeating to themselves the French saying Qui s'excuse s'accuse, when he tries to make out that he is an unalterable protector and champion of private property. But however that may be, we welcome this Bill. We believe that it is the proper course to take, we believe that the arguments brought forward by the noble Marquess are unanswerable, and no further words from our Benches will interfere with the course of the debate which I should be surprised, in spite of what the noble Marquess has said, to see continued for more than one day. Without labouring the point any further, we on this side of the House believe that, quite apart from any labels of Socialism or Nationalisation, which are always liable to arouse political passions, this industry requires to be taken in hand at once and with a large view, and that the Government are taking the proper course.


My Lords, if none of your Lordships desire to say a word I venture to offer one or two observations on the subject. I was very interested indeed in the speech of my noble friend Lord Londonderry, and I am not at all surprised that it met with the subdued plaudits of the noble Lord opposite (Lord Ponsonby of Shulbrede). In fact I rather congratulate the noble Lord on the scale of his speech. I thought he would have made rather more of the opportunity, but no doubt his reticence was due to policy, and when the Bill is, with his powerful aid and that of the great masses he commands, passed through this House and possibly through another place, I think we shall hear rather a different note of triumph in his voice.

I was very interested to hear my noble friend the Marquess of Londonderry announce himself as the great champion of private property. I thought it quite necessary that he should make that announcement when he was delivering to us the speech that we have heard this afternoon. It was quite necessary that he should reinforce in our mind the idea that he is the champion of private property and that he objects to Socialism, when he was arguing so convincingly for acquisition and nationalisation—without compensation, if I may make that addition—which he advocated this afternoon. I do not know what is the particular reason for bringing in this Bill at this particular moment. It may be that the Government have information not open to us and that there is, or ought to be, or might be a great development of the oil industry in this country. At one time I thought my noble friend put his point rather high. He told us of this development of the oil industry on which so much of the wellbeing of this country depends, and so it is possible that the Government have in their inner resources some knowledge which is denied to us; but I can only deal with the Bill on the basis of the Bill itself.

There may be another reason for all that I know for its introduction. This Government has sometimes been accused, whether fairly or unfairly, of being a Conservative Government and merely a Coalition in name. I agree that this Bill will give them a great tactical advantage in reply to that suggestion, because if they are ever charged with an excess of Conservatism they will only have to say: "Look at the Oil Bill introduced by the noble Marquess, Lord Londonderry, and passed. It was a Bill for the confiscation of oil property and not a single penny was to be obtained as compensation by the unfortunate people who owned the oil." I rather think that will be a powerful reply. I am very glad to know that we shall go into the next Election with so strong an argument in favour of this Coalition Government, which I still support.

May I address myself to one or two of the more detailed arguments of the noble Marquess? I am, of course, not criticising this Bill with any desire to prevent oil development in this country. If it is necessary that oil should be developed, the State should take all the powers necessary as regards surface rights and the marketing of this oil. I am not opposing that for one moment, but I think that there are in this Bill certain principles which deserve more than cursory notice from your Lordships. I should like this measure to be referred to a Select Committee, if possible, in order that these difficult administrative questions and also questions of principle might be more carefully examined by your Lordships than can be done on Second Reading. I am not opposing in any way the development of the oil industry in this country.

What I do question is whether, on the facts as we know them, it is really necessary to take such drastic action as the acquisition at one swoop of all oil rights in the country without any compensation to the owners at all. I say advisedly "to the owners," because it is quite obvious that this is not merely a declaratory Bill to say that oil under the surface shall belong to the State. It was admitted in the speech of the noble Marquess and it is shown in the Bill itself that sub-surface minerals belong to the individuals who own the surface. If that was not so it would not be necessary to place this proposal in the forefront of the Bill. I do not think that my noble friend drew a very clear or definite distinction between oil and other minerals. One does not see on the face of it why the same rights should not apply to oil as to coal, or china clay, or iron ore and so on. We are well aware that nowadays coal is oil. It is much the same thing and can be converted very easily. Yet a man may have oil on his property and have no right to it, while his neighbour has coal which he can get and convert into oil and deal with as he likes.

The noble Marquess has drawn what, to my mind, is a practical distinction and not one of principle. His argument was that oil is a fluid and therefore, as you cannot establish your claim over a fluid in the same way as you can over a solid, sonic distinction must be drawn. It was a sort of chemical argument he presented to us. In passing I may say that the distinction has not been drawn hitherto in the case of water. A man may sink a well and draw water from his neighbours. I believe that he has an absolute right to do so and he frequently does do so. One of the arguments of my noble friend the Marquess of Londonderry was that you must have large areas when dealing with this question and that as a matter of practical politics it would be difficult to assign to each owner of the surface the exact amount of royalty that he ought to receive. He quoted a good deal from the Act of 1918 and said a good deal about what the Government of that day proposed to do. I am not very much impressed by that historical argument, because we all know that things were done during the War and at the end of the War under rather emotional conditions which are not quite suitable to the cooler atmosphere in which we find ourselves to-day.

He also talked a good deal about information drawn from American experience, from the meetings of American oil-drillers and so on. I submit that that analogy is not perfectly accurate because the nature of the oilfields in this country through the geological survey are pretty well known. There are considerable distinctions between this country and America. The oil areas in this country are much smaller than they are in America. Let me make it quite clear that I am not arguing against the unit development of oil. I fully recognise that you cannot possibly allow anyone who likes to go and sink his shaft in an oil area, and draw off the oil or the gas as the case may be, for the simple reason that what enables you to win the oil is very often the pressure of the gas and if the gas is drawn off it takes away that pressure which enables you to get oil through the pipes, and makes it impossible to win the oil except by an expensive process of pumping. I allow myself that technical observation because I want to show how fully I admit—as all who have studied this subject admit—the necessity of unit development. But at, the same time I say that these units in this country are not so very large.

I say, further, that the limits of deviation are defined, or the factor of migration, as it is called in oil, is limited; that is to say, each field is bounded. It is not a question of sinking a well in the middle of Warwickshire and sucking all the oil from Northumberland, or anything of that kind. That cannot be done; the field is limited, and therefore, as the field from which the oil can be drawn is limited, it follows that it is much less difficult than I think was represented by my noble friend to make those pools and arrangements between the oil-getters and the surface-owners which he suggested. We have no doubt been alarmed by the experience of the United States, but they, after every sort of experiment and every sort of mistake, have in many of the States of the United States really arrived at a system by which they can apportion such royalties as there may be between the owners of the surface.

It comes to this, therefore, that really my noble friend's objection is, I think, rather a qualified one, and a question of whether it is practicable or not. He says that the difficulty of apportionment is great; he says that the time taken in apportionment might delay things. I entirely agree that nothing of that sort should be allowed, but it is perfectly possible to devise a scheme by which these royalties could be evenly and fairly divided among the owners of the surface in a way which would not at all delay the getting of the oil. Supposing you found one of these rather smaller oil pools, and one single owner, let us say, owned the surface of the land, would my noble friend's objection hold good in the same way? Because obviously there would in that case be no difficulty of division. And if there were two owners, or three owners, it would be perfectly easy to make a division. I am not quite sure, then, whether it is only where there are a number of owners that he makes use of this practical difficulty, or whether, where there are one or two owners, he says that they also must suffer because the matter might be more difficult in a case where there are more owners. I dare say we shall hear later what is the real principle upon which this oil is to be entirely taken charge of by the Government; because I certainly cannot agree that either the knowledge that we have in this country of the oilfields, or even the complexity in some cases of the ownership, prevents this question from being settled.

After all, there are great many other problems in which difficult questions of apportionment are dealt with. You do not, however, at once go to the opposite extreme and say that because apportionment is difficult nobody shall have anything, and that the owner himself shall have the pleasure of seeing the oil coming up from his own land in a "gusher," we will say, and the satisfaction of knowing that everybody else is going to get something out of it and that he is the only person who will not. I am, of course, excepting compensation for surface disturbance, though I am afraid that compensation for loss of amenities is in most cases not worth having.

My noble friend also dealt with another point, though I think he placed it rather among his political and not among his practical arguments. He was explaining to us how difficult it was to make the assessment, but I do not think that he was satisfied with that, because after having dealt with all the difficulties of assessment, he proceeded to try to put the matter on a general ground of principle. The first point of principle which he put before us was that land in this country had not so far (I think he said) been transferred on terms of payment for the oil rights, or with reservation in certain cases of the oil rights themselves. That is a principle upon which no doubt other noble Lords will have something to I do not myself fully appreciate it. I should call it perhaps the doctrine of ignorance; that is to say, if you do not know that you have got a certain valuable thing in your possession, you have no right to it, you cannot transfer it for money, and the State claims it. I do not know quite how far that principle is carried. Take the case of some mineral which you can acquire properly; if you have got, we will say, china clay under your land, you can transfer that land without knowledge of your china clay, without any reservation of the rights, and without any payment for it, but surely that does not prevent the purchaser or the owner of the land, whether or not this transaction has taken place, working that china clay and getting money out of it? The mere fact that there is ignorance (or shall I say temporary ignorance?) of the situation, surely does not confer at once these rights upon the Government.

Let me put another question. In many cases there is no ignorance of it at all: the owners know that there is oil under their land. In those cases is there another principle which is to be applied? In those cases, are they to be allowed any compensation or not? Or whether they know that there is something under the land or whether they do not know that there is anything under the land, are they to be treated with the same severity, the same harshness—the same equality, if you like—by the Government? When you come to draw these fine distinctions you get into all kinds of difficulties with regard to ungotten coal and matters of that kind. Take oil shale. That is exempt from the operation of the Bill. There is oil in the shale; but if the oil seeps out of the shale and forms a pool, am I to understand that it belongs no longer to the owner of the shale but to the Government?

I could follow out these curious distinctions at much greater length if I chose, but I submit that the Government ought to hesitate very long before they say that merely on the ground of ignorance or of impracticability they should acquire, without one single penny of compensation, all the rights to these valuable minerals which may be discovered under the surface of the land. Of course it may be that we are discussing very little. It may be that there is very little oil in this country. It may be that other oilfields to be developed will be on the same basis as those which have already been developed and are producing very little. But if there is real value and wealth to be had from this, I would argue that not only should the Government get money from its licences, not only should the expoiter who is to procure the oil get something, but the man who certainly has a prima facie claim to some compensation for the oil apart from this Bill should also be considered.

Speaking from these Benches I venture with great respect, and with more timidity in the presence of my noble friend Lord Londonderry, to put forward what I cannot help thinking is a Conservative scheme. I know that he has devoted a great deal of attention and thought to this Bill, and after grave reflection he has come to the view that a little dose of Socialism is really a strengthener for Conservative principles. That may be so, of course; I do not know. Sometimes these mixed diets are very good, and too much Conservatism may be rather destructive. Nevertheless, in view of, I will not say the threat, but the observation, of the noble Lord opposite that my noble friend's speech will be remembered in years to come, and that quotations from it will be circulated throughout the Socialist ranks, I would ask him to weigh that carefully for a moment and to consider whether, when he carries his Bill, as I have no doubt he will, and it gets into a later stage, he will revert for a moment to his older Conservatism and think that it would not really very much damage the Bill, or the getting of the oil, or the interests of the country, if those who hitherto imagined that they were the possessors of what is beneath the soil had some share, however small, in the oil that is gotten from it.


My Lords, I do not wish to keep you any longer than is necessary, but I do feel that a word from these Benches is indicated on a Bill of this importance. The noble Earl who has just sat down has, if I may pay him the compliment without impertinence, very adequately to my mind pulled to pieces the speech of the noble Marquess who introduced this Bill; but there were one or two points made by the noble Marquess upon which I myself, and I believe other members of your Lordships' House, would like to have some further light. We were told that oil is fundamentally different from any other mineral, and the only argument, I think, which was put up in favour of that proposition, was that oil was a fluid. The noble Earl cited the case of water. Perhaps water is in a category rather of its own, but there is to my mind an even better parallel, and that is brine. In the great salt beds of Cheshire, and—I am not certain of this—Worcestershire, salt does occur in the form of a concentrated solution, as brine, and this brine is mined very much in the same way as oil is got from the earth. It is obtained by sinking a shaft and pumping it to the surface, and it may well be that the brine is pumped from a distance of ten or twelve miles away from the shaft. There has been no difficulty in the past in regard to the owners of the land under which brine occurs, and it seems to me that this argument, that oil on account of its fluidity is different from other minerals, does fall somewhat flat.

We were also told, and I think we are agreed, that if oil in commercial quantities exists in this country it is essential to develop it. I believe that no member of your Lordships' House would venture to contradict that argument for a moment. It seems to me, however, that this Bill is one which is more likely to restrict the development of oil. The noble Marquess told us that only seven licences to search for oil have been granted by the Board of Trade. He did not tell us how many licences have been applied for. It may be that all the applicants have been granted licences, but at all event it seems clear to me that there are companies willing to search for and bore for oil under the law as it at present stands. If that is the case, why should we wait for a monopoly, such as this Bill intends to create, before we develop this oil? We are told that unrestricted competition, wild-cat drilling for oil such as we see in Texas, will prevent development. I spent close upon a year in the Texas oilfields, and no one can doubt the ill results of uneconomic oil boring and drilling, but Texas is a very different story from England. Land in the oilfield of Texas was worth a mere fraction of what I understand land in the oilfield of England is worth, and it seems to me that compensation for surface rights would be so large an item of cost as to discourage anything in the nature of uneconomic or wild-cat drilling.

Then we were told that there was nothing new in this principle of expropriating minerals to the Crown, and gold and silver were cited as examples. Offhand I cannot say what the production of gold and silver in this country amounts to in a year, but it is so small that I think we can afford to disregard it. Secondly, we were told that coal found under the sea was the property of His Majesty. Of course that is so, because land under the sea—that is the best way I can describe it—is His Majesty's land. It is the property of the Crown. I think I am right in saying there is no private property below high-water mark, or at all events below low-water mark, and so coal found under the sea is naturally the property of the Crown, but that seems to me to have no bearing whatever upon the principle that oil should be made arbitrarily the property of the Crown.

Lastly, if I might take up a moment of your Lordships' time to answer the argument about the difficulty of compensation owing to the large number of surface landowners, it seems to me to be perfectly simple, even supposing that over an oil pool there may be a hundred or even two hundred owners. Admittedly, until the pool has been worked for some time its exact delimitations cannot be known, but after a period of working the area of the pool can be determined with great accuracy, and it seems to me, therefore, perfectly simple to put an obligation upon the oil-gaining company to set aside such and such a sum, whatever may be determined, by way of royalty, to be paid out to the surface landowners at such time as the delimitations of the pool have been determined. It seems to me that the Government in this Bill are saying: "We gave a licence to drill for oil on Mr. Smith's land, but we don't know whether the oil which is coming up under that drill may be coming up from the land of Mr. Jones or anybody else"—my inventiveness for names is on short time to-day. Because it may be bad luck on Mr. Jones that the well is sunk on Mr. Smith's land, why should he not be compensated and enriched for the mineral value which is under his land? It seems to me that there is no reason to penalise Mr. Jones just because it is his bad luck that the drill is upon Mr. Smith's land. It is just as though, one person having drawn a horse in a sweep, the Government are saying it is bad luck that everybody cannot win and therefore they intend to take over and own all the sweep tickets. It seems to me a peculiar form of justice and one which has no precedent in the fundamental and general tenets of the law of this country. I cannot see that the noble Marquess has made out any case whatever for acceptance of this Bill.


My Lords, if none of your Lordships have any observations to make I propose only to say a few words, and I say them out of deference to Lord Dynevor and Lord Peel and, of course, Lord Stanley of Alderley, and their criticisms. Let me start at once by saying that I have always recognised, as I am sure my noble friend Lord Londonderry has always recognised, that the Government, in asking your Lordships to give your assent to the principles of this Bill, naturally have to justify the proposals which we are laying before the House; but I will add that I have always thought that one of the prized privileges of the Party to which I have the honour to belong, and to which the great majority of your Lordships' House have the honour to belong, is that in considering the merits of any particular case we decide according to the merits and justice of that case as presented to us and we are not misled by any shibboleths or labels in deciding what we think is wrong merely because people can fling an inconvenient label in our teeth.

I was a little disappointed by the very frank appeal to prejudice which seemed to me to characterise the speech of my noble friend Lord Dynevor. He told us that this Bill was a stepping stone to the confiscation of all the unworked minerals in the country, that it was doing the same thing that Soviet Russia was doing, that the passage of the Bill was a gift to the Socialist Party, and so on. I do not think that it is by what I regard as rather extravagant accusations of that kind that the merits of the Bill are going to be decided. Let me, if I can, state quite frankly and shortly the reasoning by which this Bill has commended itself to the Government of which I have the honour to be a member, and not merely to the Socialist members of the Government, as my noble friend Lord Peel seemed to suggest.


No, I did not say that. I said that the Conservatives wanted to purge themselves of the idea of being a Conservative Government.


Then let me reassure my noble friend. We are not bringing forward a Bill which we believe to be wrong in order to purge ourselves of the accusation of being right. Let me state the case quite shortly. It is, in the opinion of the Government, eminently desirable that if there be oil on a commercial scale in this country that oil should be developed. It is desirable not only from the point of view of defence, it is desirable also from the point of view of our exchange and from the point of view of our commercial welfare. Secondly, it is obvious from experience that the 1918 Act, to which my noble friend Lord Dynevor called attention, has proved, and must prove, ineffective to achieve that purpose. It has proved ineffective in practice because, as has been pointed out, there have been only seven licences granted in all, even under the stress of the later days of the War, in the sixteen years that have elapsed since the Act was passed. In answer to the noble Lord, Lord Stanley of Alderley, I think four other licences were applied for, but the applications either were withdrawn or refused; making a total of eleven applications in all in the whole sixteen years.

And the 1918 Act was bound really to prove not only ineffective but most unjust—bound to do much more injustice than anything that my noble friends Lord Peel and Lord Dynevor suggest is being done by this Bill; because under the 1918 Act what happened was this. The Government had the sole right of granting or refusing a licence. Lord Dynevor says: "The Government can grant a licence; they will refuse licences where owners are developing too closely to one another; they will grant a licence to one owner and refuse it to his neighbours, and that will make for the orderly development of the oil fields." Just think what an intolerable burden that puts upon the Government, and what an injustice it works against every landowner in the district except one. The Government have to select one particular spot on which they will allow boring for oil to take place. By doing that they ensure that the owner of that particular plot of land shall be entitled to obtain a royalty, not on the oil under his land, but on the oil under all his neighbours' land, and that that particular person shall be enriched at the expense of the community and of his neighbours, and he shall be enriched through no effort of his own, but through the accident that a particular prospector has selected his plot, as the most suitable or the easiest for sinking that well. There can be no measure of justice in that, and it would be, and is I think, an intolerable burden to put upon the Government that they are in effect to make a present to one man of the whole of the royalty on all the oil in a great district by allowing the particular borehole to go down on his land, and then saying that no one else must sink a borehole, because that would be to interfere with the proper development of the field.

It was suggested that there ought to be a new provision under which in some way —I think Lord Stanley suggested it—for an unknown period an unknown proportion of the oil, or the value of the oil, should be set aside, and at some unknown date it, should be divided up between all the owners of what he then said would be delimited as the area of the oilfield. I do not profess to be an oil engineer, but I should be very much surprised to hear that it would be possible to ascertain, within anything like such precise limits or within any reasonable measure of time, what the exact shore of the oilfield underground may happen to be. That proposal, I think, has only to be stated to show how impossible the suggestion really is.

The 1918 Act, then, is a failure, and must be a failure, because it works an impossible injustice on the community at large. "Then," says my noble friend Lord Dynevor, "do not let us bother about developing oil. Let us make oil out of coal." I agree with him that it is eminently desirable that we should encourage the production of oil from coal. He will forgive me for reminding him that the Government have taken very drastic, and I hope very efficient steps for securing that very end, and that we have done that before we ever introduced this Bill, because we have already arranged that, for a period of ten years at least, there shall be an average preference —I am speaking from memory as to figures, but I think I am right—of no less than 4d. a gallon on all the oil produced at home as compared with oil imported from abroad. Already, as a result of that provision, there have been started great works to do the very thing which my noble friend desires—namely, to distil oil from coal. We are therefore doing our best to encourage the production of oil from coal in the way which we think most likely to achieve that end. But we are not content, because of doing that, to abandon the hope of finding oil in commercial quantities in this country; and if we are to pursue this object then we must take a practical means of attaining the end.

Now it is said—my noble friend Lord Peel used the phrase several times—"You are not compensating the owners for the value of the oil which is under their land." It is quite true we are not. We are not compensating them for the value of the oil that is under their land, or, for the matter of that for the value of oil which is under their neighbour's land. But it is fair to remember that at this moment—and that is one reason why the Bill ought to be introduced and passed, as we think, at this stage—there is no value in the oil under their land, or under their neighbours' land. In the three cases in which licences have been granted and are being worked we have been careful to exclude those areas altogether from the provisions of the Bill, because we recognise that, in accordance with our principles it would not be right to say that, where vested interests have been created and there is a chance of land having appreciated by the possibility of oil being found there, that value should be taken away without due compensation being given.

In the cases with which this Bill deals —the rest of the country—there is no value at all to-day in the possible oil rights, in the chances of finding oil under the soil. But we have been careful to provide that where in any particular place arrangements are made, or asked for, for the sinking of wells or for boreholes, or in any way interfering with the actual rights that exist, interfering with the surface rights, there shall be paid not merely full compensation in the sense of the full market value, not merely full compensation for any loss of amenity value, but in addition to that it is expressly provided in the Bill that there shall be an addition of 10 per cent. because the acquisition is a compulsory one and the owner may not necessarily desire to realise that asset. So that we are careful to give full compensation in every case in which any valuable right is interfered with. All we do is to say before there is any value established, before any vested right is created, that the oil if it exists—which nobody knows—shall belong to the State in future; but that any interference with the rights of property on the soil, or with the value of the property under which the oil is situated, shall be fully compensated for to the owner whose property is interfered with.

There was a suggestion made that there is already an admirable way of compensating owners of land where brine is taken, but the only compensation I know in such a case is compensation if the brine is taken away and the land sinks and damage is done by subsidence. Apart from that there is no compensation. That being so, I suggest to your Lordships that really what we are doing now is a reasonable and fair thing. It is suggested we are going to give a monopoly to someone, and I was asked to say who was going to get that monopoly. We are not proposing to give a monopoly at all. What we are proposing to do is to arrange, if application be made on suitable terms, for reliable and responsible people to have an opportunity of looking for the oil on the promise, if they find it, of paying reasonable compensation to the State for the oil they take. If that is done nobody will be a penny the poorer than they are to-day, and the State will be enriched by a new source of national wealth discovered and established which does not now exist, and that will be done in a way which does no harm to any one and which will be for the national good.

Then it is said this is a gift to the Socialists. I would venture to say that the gift to the Socialists would be the rejection of this Bill. When one listened to the noble Lord opposite, Lord Ponsonby, when he jeered at the Front Bench of the Conservative Party and said how the speech of Lord Londonderry was going to be quoted in the country, one could detect very well how anxious he was, by assisting my noble friend Lord Dynevor to label the Bill Socialism, to encourage some of your Lordships to be misled into voting against it and thereby do his Party the greatest benefit which your Lordships could possibly achieve. What would he said would be this: that this House, which is accused of being reactionary and selfish, was so blind to the national interest that it was determined to prevent the development of a great source of national wealth such as this oil may well be, because the oil when discovered was going to be treated as an accretion of the national wealth and was not going to be treated rather for private profit. To interfere with vested interest would be contrary to all the principles of our Party. This Bill does nothing of the kind. It carefully excludes those cases in which any vested

Resolved in the affirmative, and Amendment disagreed to accordingly.

On Question, Bill read 2a committed to a Committee of the Whole House.