BRITISH HYDROCARBON OILS PRODUCTION BILL. (Hansard, 15 March 1934)

§ THE EARL OF MUNSTER

My Lords, I beg to move that this Bill be read a second time. The Bill is designed to give effect to the decision and policy of His Majesty's Government that was announced by the Prime Minister on the 17th July last year—namely, to guarantee a preference over a period of years of not less than 4d. per gallon on all motor spirit produced in this country from coal, shale or peat indigenous to this country or from products thereof. The sole object is to increase the production of motor spirit in this country. Although home-produced motor spirit has in fact been exempt from payment of duty ever since the petrol tax was instituted and has thus enjoyed a preference equal to the full amount of the tax, one of the difficulties of securing the development of processes for the extraction of oil from coal has been the fact that there was no certainty that the preference would con 230 tinue, the petrol tax, as your Lordships know, being voted annually in the Budget, and consequently the heavy capital expenditure involved could not be faced.

Immediately following the announcement by the Prime Minister, Imperial Chemical Industries, Limited, issued a statement that they proposed to proceed at once with the erection of a plant at Billingham designed to produce 100,000 tons, or thirty million gallons, of motor spirit by the hydrogenation of coal. The Chairman of Low Temperature Carbonisation, Limited, has also stated that partly because of this guarantee his company proposes to erect two new works. Some large gas companies are also installing benzol recovery plants, while the adoption of improved processes for recovering benzol are being considered by companies owning coke ovens.

Now I come to the provisions contained in the Bill. Clause 1 provides for the grant of a preference of not less than 4d. a gallon for ten years from 1st April, 1934, on all light hydrocarbon oils made in the United Kingdom from indigenous coal, peat, shale or their derivatives, and should like to impress upon your Lordships that this preference is certainly no new policy for, as already pointed out, home-produced motor spirit has been given a preference for some years. Neither is it a form of assistance granted to a particular industry for it applies to all processes whereby light hydrocarbon oils are produced, whether manufactured by scrubbing the gas at coke ovens, gas works, or low temperature carbonisation works, by refining tar in tar distilleries, by manufacturing spirit from shale oil or by any other process. Clause 2 gives power to the Board of Trade to collect information or to have the necessary information concerning the output of light oils furnished to them. Subsection (2) of Clause 2 is the usual provision to safeguard the disclosure of information relating to individual concerns. Subsection (1) of Clause 3 is the short title of the Bill.

With regard to subsection (2) of Clause 3, there might be some difficulty in understanding the formula as it is placed in the Bill. The subsection provides that the preference of 4d. per gallon shall continue in operation till the 31st March, 1944, or ten years from now. The 231 proviso to this subsection requires the period to be reduced each half-year after the 1st April, 1935, by one and a-half months for each penny by which the preference actually accorded exceeds 4d. per gallon, and the Act is to continue in operation until it is certified by the Treasury that the preference provided has been equivalent to 4d. per gallon for nine years from April 1, 1935, and shall expire on such certificate being given. At the present time there is a Customs duty of 8d. per gallon on motor spirit imported into this country, and no Excise duty on home-made products. The Bill provides that at all times there shall not be a difference of less than 4d. per gallon between the Customs and Excise duties. Therefore presuming the Customs duty remains at 8d. per gallon, and there is no Excise duty during the operation of this Act, the guarantee would expire in four and a half years from 1st April, 1935. The object of the formula is to enable the period to be adjusted proportionately to the actual preference given within these limits of four and a half and nine years from that date.

One word upon the plant which is to be erected at Billingham. It is estimated to cost something in the neighbourhood of £2,500,000 sterling, in addition to plant already in existence which will also be used. On last Monday morning, March 12, it was estimated that 2,080 men were employed at Billingham and that a further 11,000 men were employed by manufacturers of machinery plant, etc., so that the total number of men directly employed on the Billingham hydrogenation plant and equipment was 13,080. When this plant is in full operation it is estimated that it will provide permanent employment for about 2,500 men at the plant or in secondary employment, while the coal required each year will represent the employment of about 1,400 miners. It is anticipated that the plant will be working by March, 1935, and I feel confident that any members of your Lordships' House who know the conditions of unemployment existing in the North-Eastern area will be gratified with the results that we hope will be obtained.

The Bill binds no future Parliament of whatever denomination to accept the Act, although its amendment or repeal will require definite action by both Houses of Parliament, just as is involved by the 232 passing of the present Bill. The main object of the Bill is to try out the hydrogenation of coal and other substances on a commercial scale, and, although I cannot with certainty give your Lordships any indications of the results that will be obtained, I can say that if the scheme is, as I anticipate it will be, a success, the future potentialities of the industry are unlimited, and it might well add a new life to the coal industry. I beg to move.