THE SCOTTISH ECONOMY: NORTH SEA OIL AND GAS

HL Deb 13 December 1972 vol 337 cc612-742

2.49 p.m.

THE VISCOUNT OF ARBUTHNOTT rose to draw attention to the state of the Scottish economy with special reference to the opportunities offered by the discovery of oil and gas off the coast; and to move for Papers. The noble Lord said: My Lords, I rise to put this Motion before the House with no more qualifications than being a North-East Scottish farmer. However, I have always believed that the prosperity of my countryside and my community is inextricably tied up with the prosperity of the nation and of the Scottish economy. My credentials are indeed slender, but I hope that they are probably as good as many who have ventured opinions on the subject of oil in recent weeks or months.

We tend to forget how quickly this has all come upon us. It was only in October a year ago that the B.P. Forties field was proven and about that time some of us were wondering what effect their overland pipeline would have on the countryside as it came through from Aberdeenshire to the Forth. We thought we should have a meeting addressed by someone on the subject of oil, but we were told at that time that there was no one in Scotland who could do it. The Scottish Council were going to have their conference in February (which I attended) and that had to be addressed by international speakers. After that, we were able to call meetings in Scotland to which, at last, Scottish and British spokesmen could speak with some authority.

We were all dimly aware of the immense possibilities and opportunities for Scotland that lay in the discovery of oil off the coast. As a result of a conference that was called in Aberdeen in April of this year only, a Scottish co-ordinating committee of those concerned with the conservation of the countryside was set up under the aegis of the Development Department and chaired by the Director of the Countryside Commission for Scotland. For nearly a year there has been the Standing Committee on Oil set up by the Secretary of State, but, so far as I know, little else has transpired since then of a co-ordinating nature.

Through the summer and autumn of this year I have become increasingly aware of the uncertainty in Scotland about anything to do with oil. There is apparently no co-ordination of policy thinking, no direction, just a drift from one decision to another. At the same time there seems to be all the superficial evidence of a boom: rising prices in the property market; land hunger around Aberdeen; local authorities apparently being hurried into hasty decisions; talk of speculators, and so on. It really seems that disorder, rather than order, reigns. So where do we stand now?

I was going to say a word about the size of the resource, but I am rather frightened of doing that in view of the recent exchange across the Floor. However, I should like to make a plea for some standard unit for measuring this resource. I would much rather that we talked about "barrels", and when we are talking about production talk about "barrels per day". It is easy enough then to use a factor of 50 to multiply that into tons per year. But tons can be long or short. Some people talk about billions of barrels, but billions can mean one thing in America and something else in France and in this country. In measuring the recoverable reserves, therefore, may we not talk about barrels and use the factor of the milliard—a thousand million? The best evidence that we seem to have is that there is a considerable resource, but we should remember that only 20 per cent. of it is so far explored and another 80 per cent. has still to be investigated—admittedly, with probably progressively less successful results.

The best estimate that I have been able to arrive at is that there is the possibility of obtaining some 10 milliard barrels of oil from the whole of the North Sea, which could mean a production of two million barrels a day by 1980. That needs to be set against the Western European demand by the early 1980s which will be ten times that figure. But it would be nice to have some estimate of our own oil demands in the context of a total energy policy. We ought also to put this recoverable reserve in world perspective. I gather that the total Middle East reserves amount to 370 milliard barrels; there are 60 milliard in North and West Africa; 37 milliard in the United States; and 14 milliard in Venezuela—all of which areas are more fully explored and evaluated than anything in the North Sea.

Another way of looking at it is to take the highest figure that we can for the North Sea—we may have 3½ million barrels per day coming from the wells in production there—and to set that against a known 4 million a day at present in Kuwait, 10 million a day in Saudi Arabia and 4 million a day in Iran. Of course, we still have a considerable oil field oft our shore, which, after exploration and evaluation, looks like giving us an industry with a working life of 20 to 30 years at least. I believe that we should give credit to Government for the degree of success in achieving this international interest in our fields.

I believe it is impossible to calculate the revenues at present: so much needs to be taken into account and there are so many variables. Of far greater importance to me is the way in which Scotland can make use of the new industrial possibilities and win a fair share of the work that will be generated by this development. I leave it to others to enlarge on how the revenues can be calculated and how they can benefit the economy of Scotland or the United Kingdom. Production in the United Kingdom sector of the North Sea will always be important, but would it not be equally important to develop it more slowly for maximum benefit to Scotland and the United Kingdom? I do not say that the gas off England is English or even East Anglian, but is there not room for some more purely Scottish advantage from the oil found off our shores?

There seem to be two ways in which Scottish industry can become involved: there is the heavy engineering side for off-shore works and the on-shore servicing facilities. I should like to take the heavy engineering first, because everyone admits that this is an extremely difficult field for Scottish industry to break into. The technology is new to this country but is already very well known and developed in other parts of the world, particularly in America, Japan and Holland. The oil companies naturally have long-standing associations with companies from these other countries. The package deal concept controlled by consultants who are at present mostly American and Dutch means that the chance for British or Scottish industry to break in can successfully occur probably only when and if British consultants are increasingly brought into the production of specifications, which will then perhaps have less of a transatlantic flavour.

There must be the capability in our industry, particularly in the construction of rig modules and similar highly specialised equipment; but so far very little evidence of its participation can be seen. I believe that until a British company has a licence to build a complete rig or production platform. or build it on its own, the real involvement of Scottish or British firms will not occur where the Norwegians seem to have succeeded.

It has been said that British management was slow to react. But we have a situation where many industrial managements have not the resources in time or the cash flow to embark on ambitious diversification programmes into a highly competitive and aggressive international industry. "Stop-Go" and freeze conditions of post-war economic policies and a lack of any corporate plan for industry has been a disastrous environment for the British industrialist, and it seems possible that the very speed of the oil development organised by Government is in danger of spoiling it once again. Can we, or should we, keep up this cracking pace if it is going to mean that Scottish industry will not have the chance to catch up and get into this very competitive field?

Most encouraging at present, I believe, is the progressive action of the Scottish banks and finance groups in advancing participation of joint Scottish and European projects such as the new Viking barge. That this Scottish finance is also being sought by Continental groups is surely a healthy sign. It is preferable that it should be done this way, and the initial integration with associated companies gives the group immediate maturity and insight into the work and spreads the risk; otherwise, the knowledge and expertise would take too long to develop. But I am afraid there seems to be a lack of excitement and readiness on the part of many of our larger corporations to participate in this progressive planning. I should like to know what the view of the Government is on this.

Is there now really such a great need for urgent development of the oilfield? If we are looking for a life span for this industry of at least 30 years, is there not now a chance to take a little more time to allow Scottish industry to assimilate their forces and then go into it from strength? I do not believe this will happen until more British consultants can get into the field, from which we hope they will bring in Scottish and British firms. Is it not possible that perhaps the Norwegian plan, of evolving the industry from the bottom upwards and making sure that the complete package is constructed in their yards, using a growing number of their own technicians, is a better example to follow? It is a disgraceful state of affairs, in my opinion, that when small shipbuilders in Scotland are on their knees for work American Gulf Builders are boasting about orders they are bound to get from the North Sea. This is a field in which Scottish yards should be ahead of everyone, and yet we seem to be seeing preferential treatment go west.

I believe that the great need and the great gap is in development and research in the new deep sea and ocean bed technology. Surely positive Government help and assistance is needed there. There is here a great educational challenge and something to which young men and women in Scotland will react if given the chance. The new technical developments are perfect for our universities, but there has been no clear policy or lead from Government in this research field. I believe that there are also opportunities on the Clyde for the development of our underwater technology in existing experimental and research departments. The educational need, I believe, is paramount for Scotland, and it is vital to keep this expertise in Scotland and build it up there. It is a new frontier of knowledge. There is a need for a new kind of man with a new kind of approach in a new industry that has all the right ingredients for Scotland. But where is the drive and the guidance?

The really vital factor, however, is in the development of the on-shore supply and servicing industry. We are geographically placed in a commanding position to all that is going on in the North Sea. The advantages are there if only they can be developed correctly. I believe that we have about ten to fifteen years in which to develop that advantage, to make sufficient profits to become economically fit to go out into the wider North Sea market, which will then be a European market and finally a world one. Existing firms can be and are being invigorated by new men and new management and new management techniques. Opportunities are being grasped by local businessmen and firms up and down the East Coast of Scotland. However, the planning of this development is the most crucial aspect of all so far as Scotland is concerned. We must not see a proliferation of bases. The degree to which service industries are concentrated on existing port or urban communities should aid their development and lessen the amenity problems elsewhere.

I should like to mention one success story, because I think it has a moral, and it is in my own birth town of Montrose. Montrose had room to expand. It was geographically placed in the right area. But more important than anything was the fact that ten years ago the harbour authority decided to make itself profitable and to look for work. It now has the advantage of a good port with good labour relations, and the authority itself is co-operative and healthy. Montrose has done something for itself, and the rewards, we hope, are coming. But more important than that, if nothing else happens, it will be left with a good harbour facility, and I have no doubt it is looking forward to East Coast work with Europe in the future. It is what comes after oil that should be in our forward planning now. There is ample opportunity for local firms and businessmen, if they are ready to meet a very keen market and have done their research homework first of all. But once again one hopes that the rush to get oil ashore will not get in the way of sensible long-term planning of the various facilities and the infrastructure that is required.

This leads me to the point about which some of us feel most strongly of all. It is the whole environmental question and the participation of local government in the decision-making process. It would be a condemnation, I believe, of all our planning methods if local authorities think that they need to throw compulsory powers around purely to regulate development. Our planning system is sophisticated and stringent, and is widely accepted by developers. But local authorities surely need an overall plan to guide them, under which general supervision can be exercised from a central planning office. There has been a lack of co-ordination and direction here, in my opinion.

Shetland is a good example. There appears to be a first-class appreciation by the local authority of the needs of local people. They have produced a development plan and given it wide distribution. Shetlanders are still split half and half as to whether or not they welcome the oil industry. They on their own account have built up a fully employed work force based on their own industries and their local natural resources, especially in sea fishing. Can it be wondered at that they are a little cautious about how far to welcome this new giant industry?

But should any local authority really be left so much on its own to work out its own salvation in what must be a far wider problem? If there is no co-ordinating plan or direction from above, all the local authorities will be seen to be making too many decisions too quickly and with too few people engaged in the process. This, I believe, will affect environmental decisions most of all. There are too many overworked planners. When the cost of the infrastructure is considered in money terms, and that there is a ten-to-one investment from the public sector to help the oil company to develop its on-shore base, surely this should give a national interest for a far larger say in what is being done and where. It needs clear-sighted direction to make sure that the money is well spent at the right place and at the right time.

The social and community environment is of prime importance in my thinking. But almost as important, surely, is the question of the amenity and physical environment of the East Coast, in fact of all Scotland. Two sad examples of what might happen come immediately to mind, at Dunnet Bay and the Loch of Strathbeg. It would be the greatest pity if, where the oil or gas authority wants to see the development carried out, a hard pressed local authority took a planning decision towards the quick and easy development against the amenity interest. Surely the Government will make it its business to call in for decision by the Secretary of State those cases that are clearly going to be of high public concern.

Finally, I wish to follow with a philosophical note. I have been surprised at the amount of sympathy I hear on all sides for my personally held belief that Scotland feels that it is missing out on something good, and that it is not getting the right leadership or direction towards where it could be going. I do not believe that it is a matter simply of native caution; I feel that there is at the present time a basic lack of initiative within Scotland. Centralisation can be part of the problem, but I do not see independence as the answer. There seems to be a growing feeling that Scotland needs to have a clear national identity through which it can contribute fully to the development of this oil resource and thus take with us a really valuable contribution into our wider role in Europe and the world. Of course it is necessary also to identify local communities within a region, but just as important will be the need to let Scotland have an identity within Europe. Until there is a clear definition of what devolution is all about, and what it means for Scotland, there will never be a proper resurgence of the Scottish economy, and the opportunity offered by North Sea oil and gas will have been missed.

This is a serious subject, my Lords, but I should like, if you will allow me, to end on a slightly lighter note. Most Scots would deny that they had ever been born with a silver spoon in their mouth: our environment is too harsh for that. In my own case I have always associated childhood memories of a spoon in the mouth with bath time and the internal administration of oil in one form or another, and always, I was told, for my ultimate benefit. The spoon is poised again, and my fear as a Scot is that an officious nanny in Whitehall will tell us that oil is not all that good for us, after all, or, worse still, that a clumsy nursemaid in Dover or St. Andrew's House will empty out the bathwater by mistake and send the spoon, the oil, the baby and everything down the plug hole. My Lords, I beg to move for Papers.

3.12 p.m.

LORD HUGHES

My Lords, it is a custom of your Lordships' House that when a Motion of this kind is moved the succeeding speaker should begin by expressing thanks to the noble Lord who has initiated the debate. This is done whatever the circumstances. On this occasion it is no mere formality when I say that. I could almost scrap everything I wished to say on Scottish oil because I find so little in what the noble Viscount has said that I would not have wished to say myself. Even the partly Nationalist sentiments which he expresses fit in with the views of so many of us who say, "I am not a Scottish Nationalist but …".

The noble Viscount speaks most infrequently in your Lordships' House. I think you will agree with me when I say that the loss, because of that decision of his is ours, and we hope that, for our own benefit, he will agree to take part more frequently in our debates. I do not know who decides who is to initiate these Scottish debates; and certainly the noble Viscount was not my choice. But, looking at it with hindsight, if I were now asked who should initiate this debate on the Scottish economy, I should have no hesitation in saying, "The Viscount of Arbuthnott". His speech has been in the best tradition of Scottish debates, in which we seek not necessarily to be completely non-controversial but to get as many points as possible which will have a common Scottish interest, and try to concentrate on the things that we might agree about rather than the things about which we may differ. We do not always succeed in doing that, but I think that we all try to make that our aim.

This debate is on the Scottish economy, with particular reference to Scottish oil, but it is not the wish of Scottish Peers that it should be confined to Scottish oil because we have only one debate a year on the matter of the Scottish economy. Therefore, because of the way in which the noble Viscount has spoken, I have decided to adhere to my view that I will go a little wider than just Scottish oil. However, if speeches are not to be too long or too boring—and I think that some of your Lordships feel that all Scottish speeches are both long and boring—one must be selective. I therefore wish to confine myself to three subjects: oil, steel, and the effects of United Kingdom entry into the E.E.C. on oil in Scotland.

During the two and a half years of this Parliament there have been three major economic events: the discovery of large oil reserves in the North Sea; the decision to enter the E.E.C.; and the effect of Government policy on employment. All of us in Scotland are worried about unemployment, whether we look at the short term or the long term. Two organisations, the Scottish Trades Union Congress and the Scottish Council (Development and Industry), have made this a major priority in their activities, and in doing so they have reflected views very widely held in Scotland. Let me take the most recent expression of these views. Last Friday week the Scottish Council had a meeting with the Secretary of State for Trade and Industry. They were putting a case for the steel complex at Hunterston. First of all they emphasised the cardinal importance in all major decisions of this kind for regional needs to be kept in the foreground. I would remind your Lordships that in debating entry to the E.E.C. it was my fears that an effective regional policy for Scotland would not be possible which alone determined me to vote against entry. So far, and even with the benefit of five minutes with my noble friend Lord Diamond before coming up, my fears still remain unallayed, although I say now, as I said then, that I hope that events will prove me wrong rather than that they will prove me right.

May I quote very briefly from what the Scottish Council said during their meeting with Mr. Walker: While job opportunities have been diminishing, unemployment has been rising. Twelve years ago, there were 79,000 people out of work in the whole of Scotland. During the year just finished, an average of 80,000 were out of work in West Central Scotland alone. Differentials in unemployment between Scotland and Great Britain were narrowing from about 1963, but in the 1970s they have steadily widened. It was in that context that the Scottish Council were pressing their views so strongly on the new Secretary of State for Trade and Industry, as they had previously done with his predecessor, Mr. Davies. The change for the worse in the last two and a half years (and it was because I knew I had this remark in my notes that I said that I did not always succeed in being wholly non-controversial; and I now enter into the realms of what noble Lords opposite will undoubtedly regard as controversial) is because of Government policy and not, as Ministers sometimes aver, despite Government policy. It is in the context of this deplorable position that steel is so vital for Scotland.

The Scottish Council, if I may quote further on this particular point of the importance of a steel complex at Hunterston, had this to say: The investment which has been made by the B.S.C. in finishing processes has been associated with the up-dating of some existing plants. There has been no extension of finishing processes to accompany the growth of steel-making at Ravenscraig. A large volume of Ravenscraig production will in fact be sent out of Scotland for finishing. The effect of the absence of any development of products has a cumulative effect in inhibiting the growth of engineering activity. This will be sharply accelerated by the forthcoming introduction of basing points, which will add further cost margins to users distant from a production base. We therefore look upon investment in finishing processes as being vital to engineering growth and therefore to employment generation—including employment in the engineering industries which may be developed to meet the expanding markets for oil equipment. This in turn will also necessitate an increase in steel production to feed the finishing units: in future the Ravenscraig capacity will go to the increasing production of strip steel. This is one part of our case for pressing for the establishment of a 3 million ton unit at Hunterston. The Scottish Council went on to say: We realise the pressures upon the B.S.C. to obtain returns from its huge investments in other areas, and we know the careful calculations which have been made on market growth. But we believe that 10 years is too short a timescale in which to view such investment plans. We recall that 20 years ago we were told that 22 million tons a year as a British steel production figure was a pipedream. At the same time we were told that ore carrier, would not exceed 25,000 tons in size. As recently as 8 years ago an authoritative report set a limit of 65,000 tons. Now we are at 200,000 tons and in the future we shall certainly see very much larger ships carrying ore. My Lords, these changes in estimates remind me very much of a supplementary question this afternoon about estimates of 150 million tons of oil going down to 75 million in the short period of a year. As my noble friend Lord Blyton said, a number of estimates made in the last twenty years have been totally wrong; in fact, he said that they were all wrong. I would not go so far as that, but certainly the trend has been in the direction he stated. The Scottish Council went on to say: Only Hunterston in Britain can offer deep-water of this kind, and the new ore terminal planned there by B.S.C. is a recognition of this. Other countries are spending scores of millions of pounds in creating a resource such as nature has provided free at Hunterston. Looking beyond 1980, world markets for steel are likely to continue to be expansionist, and our approach should be to develop sites beside the ports which will handle the next generation of ships. Other steel-making areas of Britain have maximum handling capacities from 100,000 tons up to about 200,000 tons. If Scotland is denied Hunterston steel, it will not only be a well-known Glasgow businessman who will take the view, which he has already expressed, that this Government have written Scotland off. Whether the Government do that by intention or by ignorance—and it does not matter which—it will be a point which the people of Scotland have very much in mind in all their future considerations of Government activities.

Let me now turn to North Sea oil, or perhaps I should say—because it is appropriate in view of the way in which the noble Viscount, Lord Arbuthnott, spoke to it—to Scottish oil. First of all, I should like to touch briefly on an important point which figured in his speech to a very large extent, and which would have been elaborated by my noble friend Lord Llewelyn-Davies, if he had not been laid low by flu. What he would have said—and I am summarising very much a telephone conversation that I had with him yesterday—is that in grasping all the economic advantages of North Sea oil, let us not overlook the years ahead. North Sea oil will not he inexhaustible. The day will come, as it came to so many coal pits, when commercial supplies are no longer available. Do not let us reproduce in Shetland, in the Orkneys, in Ross and Cromarty, the conditions with which we have all become too tragically familiar in so many min ing villages in Scotland, or in the North-East of England or in Wales. At least part of this new wealth must be used for safeguarding the future of these areas. I therefore welcome what the Secretary of State said in the Scottish Grand Committee last week, when he made these remarks. The finding of oil in the North Sea will have important effects on the social and economic character of various parts of Scotland, and I know a number of hon. Members have felt with me that we must examine this closely. I have, therefore, decided to ask the Political Economy Department of Aberdeen University, subject to the agreement of the University Court, to carry out a research study into the present and future impact on the areas of Scotland most affected. This study will be started early next year and will be carried out in close collaboration with the Government Departments concerned."—[OFFICIAL REPORT, Scottish Grand Committee, 5/12/72; col. 14.] I think at least Scottish noble Lords will agree with me that the Secretary of State could hardly have made a better choice for a study of this kind than the University of Aberdeen. The study will of necessity be a fairly lengthy one; I believe that the period is likely to be some three years. However, the problems will not necessarily wait three years to be created. The solutions may take a lot longer than that to find, but the problems can be created during that time. So I hope that the Secretary of State's official advisers in St. Andrew's House, together with the local authorities, will take full cognisance, as the noble Viscount has suggested, of the way in which they handle these matters at the beginning, because it will not be to the long-term advantage of Scotland if we become wealthy in the 1970s, the 1980s and the 1990s, but create another almost insoluble problem for our successors in the early part of the next century. I hope, therefore, that the Secretary of State will appreciate that it is not only the long-term solution which is necessary, but quick and continuing surveillance of the position as it develops, and nothing should be allowed to be done which is incapable of being reversed when the report is received in some three years' time.

In the short term, there will undoubtedly be help to the overall Scottish economy. but it will be limited. Even the best estimates of the number of jobs which will go to Scotland in the next year or two have, unfortunately, but a very limited impact on an unemployment figure still well in excess of six figures. But the extent to which, in the short term, the oil will produce new business and new jobs for Scotland depends, as my noble friend Lord Balogh made clear a fortnight ago, on Government policy towards the oil companies. The Department of Trade and Industry have indicated that in a few years' time the tonnage of supplies for drilling and production will reach half a million tons a year. Some of this must come from Scotland automatically, because it will obviously be the cheapest and the quickest source of supplies; for instance, perishables will undoubtedly be supplied in this way. But some—perhaps much—will come from elsewhere. Whether it is little or much really depends upon what the Government do. I think that much more is needed than is presently indicated by the Secretary of State. Speaking in the Scottish Grand Committee, he said: In the issue of licences to particular companies or groups the Government have taken into account the extent of the contribution which the applicants have made, or are planning to make, to the British economy, including the growth of industry and employment. The Government are now watching carefully to see that companies operating the licences do give full and fair opportunities to British industry to compete. What the Government find will be taken into account when further applications for licences are being considered. [Col. 8.] A little later on he said: First, we have encouraged and assisted speedy exploration in the formidable conditions of the North Sea and we are continuing to do so. Secondly, we are aiming to win as many suitable projects and jobs for Scotland as we can". My Lords, I do not think that that goes far enough at the present time. Is it sufficient to say, "Well, all that has taken place in the first round is water under the bridge; we will use what we have learned from this only in the allocation of future licences"? It is not outwith the Government's powers to ensure that at least some of these more favourable requirements for Scotland are imposed, if need be, on present licensees. Other countries, Norway in particular, have found it both possible and in the national interest so to do.

There is the question, for example, of the underwater pipeline. This subject was raised by an interjection during the speech of the Secretary of State. He had been talking about a contract for piping placed with the British Steel Corporation, but this was for a pipeline on shore. He was asked about the underwater pipe, and he said: But I understand that the British Steel Corporation simply does not produce the sort of pipeline which is needed in the North Sea, and it could not, therefore, have met the required delivery date. That pipeline is being supplied by the Japanese, but I, like the hon. Member, would have liked it to have been manufactured by the British steel industry. Naturally, however, B.P. could not wait for the British Steel Corporation to start turning out a new product". [Col. 11]. That may be all right for one particular requirement at a particular time, but I have heard nothing said about any decided attempt being made, either by the Government or by the British Steel Corporation, to change that position for the future. Are we going to have the ridiculous situation that pipes laid under the North Sea are, in perpetuity, to come to us from Japan? When did Japan acquire this technique? They have not been making steel for undersea oil for the last 50 years: I doubt whether they have been doing it for the last five years. Are we now in the position that a technique which the Japanese have mastered is beyond the capability of a nation which prided itself, and particularly the Scottish part of that nation, in being leaders in the engineering field? Surely we must look to some of this equipment—and perhaps the most important part is some of the contracting—being produced in the British Isles, and preferably in Scotland.

My Lords, I said that my third subject was the E.E.C. I want to talk about the E.E.C. only in its context with oil. My attention has been drawn to a magazine (it was not sent to me and I did not buy it, but I got it: I did not "pinch" it, by the way; it was given to me in the best Scottish tradition) in which there is an article by Professor Odell, who is at the Netherlands School of Economics. He was quoted more than once, I think, by my noble friend Lord Balogh a fortnight ago, and he is a recognised European expert in energy. Some of the things he says certainly give me cause for concern, and I should think they would give cause for concern to a number of Scots. The article is in the context of the difficulties which face Western Europe, with its dependence for so much of its energy requirements on oil imported from the Middle East, because, on the one hand, that oil is at the mercy of the Governments of those countries and of their policies of extracting the maximum possible benefit for themselves (not a concept with which necessarily we should disagree when, after all, here we are trying to do exactly the same thing for ourselves) and, on the other hand, much of that oil is then in the hands of principally American companies. So a very large part of Europe's needs are in the control of non-European parties. But Professor Odell sees a light in the darkness. He in fact saw this position as being a challenge to the possibility of the Western European economy continuing to be viable—he put it as strongly as that—but he said that North Sea oil could change that.

Professor Odell said: The development of this potential does, of course, require expenditure on the required infrastructure and official policies which encourage its absorption as quickly as possible into the energy economy.". Your Lordships will recollect that in the debate a fortnight ago the noble Lord, Lord Tanlaw, put forward the point of view, which again, I think, was covered by the noble Viscount, Lord Arbuthnott, that it may not necessarily be in the best interests of the United Kingdom, or of Scotland, to develop these resources at the most rapid possible pace. But, my Lords, it might be very much in the interests of Europe as a whole that it should be done in that way. Professor Odell, having said that what were required were official policies which encourage its absorption as quickly as possible into the energy economy", then went on: This unfortunately is as yet by no means automatic but as the maximum possible use of indigenous natural gas is so much in the economic and strategic interests of Western Europe, any narrow nationalistic or company policies which would have the effect of inhibiting its rapid development ought to be effectively constrained at a European level". That refers to gas; but if, at Brussels, there is to be a European constraint on the way in which gas is developed in the North Sea, is it not reasonable to expect that they will regard oil in exactly the same way?

Professor Odell goes on to say: … then positive and appropriate policies become the critical element for controlling its incorporation into Europe's energy supply". Professor Odell is making a very clear bid, as did M. Spaak a month or two back, to the end that oil was not Scottish, that oil was not British, that oil was European. As a reluctant opponent—and therefore I would have been an equally reluctant supporter—of entry into Europe, I think this may explain to a certain extent the change of attitude of at least some of those who had previously opposed our entry into Europe. They may have realised even faster than some of us did that we had something on which Europe would like to get its hands.

My Lords, I should like to ask Her Majesty's Government to say quite specifically whether North Sea oil is to remain solely under our own control or is to be subject to the E.E.C. Since I wrote these notes I have received—it was handed to me after I came into the Chamber—a copy of a letter which the noble Lord, Lord Drumalbyn, wrote to the noble Earl, Lord Lauderdale, and in it he touches fairly effectively on these points. I hope that when the noble Lord comes to speak he will find it possible to give the assurance for which I ask, because I believe that assurance is in fact given in his letter to the noble Earl, Lord Lauderdale. But I think it would allay at least some fears if it appeared in the Record of this debate.

My Lords, the United Kingdom as a whole will benefit from North Sea oil. The value of that import may be anything between £800 million a year and £2,500 million a year. I want to make it quite clear, because of past misconceptions, that I am talking about the value of the product, not the revenues that come from it. To that extent it means an import saving for the United Kingdom of these figures. The benefit which will accrue to the United Kingdom as a whole is therefore this: that in these Islands it will be possible for an expansionist policy to be pursued on a scale which has hitherto been impossible, because every time we have had an expansionist policy it has eventually come to an end through balance-of-payment difficulties. I think that with an advantage of anything between £800 million and £2,500 million, obviously the need for any "Stop-Go" is pitched very far in the future beyond the year 1981.

If the United Kingdom as a whole is to get a benefit of this kind which will enable the whole British economy to develop in a way hitherto regarded as impossible, it is not unreasonable for me as a Scot to suggest that the benefit of the revenues derived from this oil (whether it be £100 million, £200 million or £400 million a year) should be earmarked for the redevelopment of Scotland. It is our natural resource. If we had been an independent country we should have taken the lot. The fact that we are part of the United Kingdom is no reason for depriving us of it. if this were done, in addition to what would have come to us in the ordinary course of events, the Government—either this one or their successors; because we are not talking about things that will be possible in 1972 and 1973, but of things that will be possible to the fullest extent in the 1980's and beyond—will for the first time be able to make the country of Scotland as wealthy, not merely as any part of the United Kingdom, but, as any country in Europe.

In the two and a half years of this Parliament the discovery of North Sea oil and our entry into the European Economic Community has called for a tremendous change in the way in which Scotland must look to the future. I think that all of us, whether we are in one political Party or another or in no political Party at all, must consider the extent to which these two items alter our thinking of even two and a half years ago. If we fix ourselves firmly on the lines that we were thinking about in 1970, we will do no service to Scotland in the future. I am certain that the Party which I represent are aware of this and will seek to cast their thinking accordingly. I believe that other political Parties will do the same and that any who refuse to do so will do service neither to themselves nor to Scotland.

3.52 p.m.

LORD TANLAW

My Lords, like the noble Lord, Lord Hughes, I am extremely grateful to the noble Viscount for initiating this debate and for the way in which he did so. I think he will understand that his remarks on devolution and decentralisation were extremely well received on these Benches. I should like also to think that perhaps the lack of co-ordination and direction, as well as the lack of information that he mentioned in his speech, could be the result of not carrying out these policies of decentralisation much earlier.

I also agree with much of what Lord Hughes has said, and especially with his remarks about pipeline manufacture and a deep-water terminal. I was disappointed in one respect, but I hope that the noble Lord, Lord Hoy, may be able to remedy that. I was hoping that the noble Lord, Lord Hughes, would explain a little more clearly his interpretation of what is public ownership so far as this concerns the oil reserves that have been discovered around the Scottish coasts at the moment. I should like to add, since he was good enough to make reference to remarks that I made about the speed of development of these reserves, that I am going to make the same remarks this afternoon. But I did say that this should be done within the context of a national energy plan and an energy plan for Europe. I should like to think that this is logical. Before coming to the main part of my remarks I should like also to say a word about the noble Marquess, Lord Aberdeen, who is about to make his maiden speech. I am looking forward to hearing what he has to say on this subject. It is a fine subject on which to start one's record in this House.

My Lords, the purpose of my contribution from these Benches this afternoon is primarly to seek information. It was almost a year ago that we had a debate of the same title as this one but without the special reference to oil. I believe that all noble Lords, mainly Scots, who took part in that debate recognised that as a constructive debate. There was also a singular lack of controversy in the views expressed as to what were Scotland's needs and what remedies were needed. These were put forward without having at that time the figures or the confirmation by the Government of the oil discoveries that are being made commercially viable. For my part, I should have been pleased to deliver Lord Polwarth's speech from these Benches and I should hope that he would have been equally at home making my more modest contribution from where he sat at that time.

I should like to pick on one of the main points that the Minister spoke of a year ago. He was at that time speaking from outside the Administration and was able to give us an objective assessment. For want of better words, I should like to quote his own: Regional policy is but one of the many responsibilities of the mastodon, the Department of Trade and Industry. He went on to say: We should seriously think about a separate Ministry of Regional Development, with considerable devolution in Scotland's case to the Scottish Office and in other parts to other bodies, and through these, to the new local government regions. I think the noble Viscount who initiated the debate has been saying approximately the same thing this afternoon. I believe that the Minister at that time put his finger on the real problem of Scotland's economic future, which is the Government's role in the economy and how it is to take effect. The economic potential of the recent oil discoveries has created an entirely new situation and called for an entirely new strategy. I look forward to hearing the Minister at the end of the debate declaring this strategy.

At the time of the last debate there was no definite indication of the potential size of the oil reserves around the Scottish coast. There were many hopes. We now have more figures and more information and, controversial though they may be, they seem always to get larger. To-day, the situation is much clearer. The effect of Scottish oil discoveries on the national economy may be as devastating as James Watt's discovery on the principle of the condensing steam engine two centuries ago. Therefore any hesitancy there may have been last year about the wisdom of developing the infrastructure through such projects as Ocean span and a deep-water terminal should have evaporated by now and there should be no doubt about finding the funds to help finance them. These projects have been on the drawing board for some time and I should like to mention them once more as a reminder to the Government, since we have heard little about their progress.

Let us take Oceanspan. So far as I am aware, there is still no official information on the Government's position or on their attitude to this project. Yet I am convinced that the latest known facts make its implementation more rather than less urgent. As the noble Lord, Lord Hughes, said, tankers are growing in size, increas ing in draught and unmanœuvrability. I think it is even less likely that they will make safe passage around the North Cape or through the English Channel in years to come. Insurance and environmental considerations may even ban tankers from these areas. There is also another factor: the type of crude oil coming from the North Sea may not be readily saleable in the United Kingdom and European markets without blending with Middle East oils. This will mean that more refining capacity must be built (and I should like to think that it will be built in Scotland) before the oil is sold in the United Kingdom or in Europe or is re-exported elsewhere. I look forward to hearing the views of the Minister on this subject.

The question of communications came up in the last debate, and I have no doubt that it will be raised again by a number of noble Lords this afternoon. We know something about this from a recent Question concerning Turnhouse Airport, where after ten years a second runway has still not been built, and from the leaked report about British Rail's anticipated closures, which included Scotland. From the report published in the newspapers it seems that more rail closures may be anticipated, apparently for reasons of internal accounting, without any consideration of the new discoveries and the oil development which is to take place in Scotland. I feel that there must be some clear-cut statement from the Government about what is to be the future of British Rail in Scotland in view of the oil discoveries, and at the same time we should like to see some movement over the new runway at Turnhouse.

Unemployment was mentioned in our last debate and this, too, will be mentioned again to-day. I am pleased to see that the figure of 141,000 a year ago has now come down to 126,805 in mid-November. This is a very welcome drop small though it may be. But may I draw the attention of noble Lords to the position of the unemployed young persons registered in Scotland during the year which has intervened since our last debate? It is very grave. The monthly average for the year 1970–71 was running at 8.2 thousand and has increased now to 11.9 thousand. The total increase over the past year indicates that 45,194 young persons are on the dole. I feel that we should not be too complacent about the overall drop, although of course we are pleased about it. Let us think about the young persons who are still looking for jobs and whose careers are still before them.

There is one main factor respecting the unemployed in Scotland. Inevitably the majority are in either the central or the western part of the country. In these areas there are technical skills, yet machinery is lying idle. Unemployed young people are a major concern to us as Liberals and they should be a concern to everybody. For this reason I regard it as essential that the Government take the opportunity during this debate to commit themselves to the projects that we have been talking about for a year and that have been lying about without any form of commitment from the Government. It is important that we get this commitment so that these young people may have careers to which to look forward.

My Lords, I would also put forward from these Benches a suggestion about which the Government have the power to do something. It is to start the revitalisation of the Clyde Belt industries immediately—not at a stroke: a hammer blow was what I had in mind, an auctioneer's hammer. A large number of exploration licences are, I understand, coming up for auction. I do not know where these licensed areas will be or which will be offered to potential buyers. But I suggest that the Government should consider that the actual areas for exploration should be covered from the West side of Scotland. It is here that we have the unemployment and empty and dying towns. I feel that already we have seen the pattern established by what has happened on the East Coast where a small town can become a thriving community and the unemployment figures start to decrease.

My point is that unemployment is primarily based on the West side of Scotland and in the Central Belt, and I feel that if exploration activities started from the West Coast of Scotland there could be equal activity and employment in the areas where it is most needed. I am thinking of areas like Galloway where, I understand, there are good prospects in the Solway Firth. Some much-needed work could be brought to Galloway, and perhaps use could be made of the port facilities at Cairnryan which people have talked about for so many years but which have not been used. There are many other coastal areas which could benefit, in my view, by this simple change in Government policy—if it is a change. I should like to think that this is what the Government have in mind for the next round of licences.

I should like to say a word about the Liberal proposals for a Scottish oil development corporation and a Scottish development bank. There is a real need for these organisations. Take, for instance, planning, which was mentioned by the noble Lord, Lord Hughes. Surely far too much is being put on the local planning authorities. Some of the projects before them are not related to the provision of primary schools or extensions of the sanitary arrangements at town halls. We are talking about the development of whole industrial areas of Scotland. At the moment, I think there is no correlation between industrial and planning policies. A Scottish oil development corporation could bring these two interests together and give the local people technical assistance and advice. This should be done through a Scotish oil development corporation and not through one of the myriad Government Departments or local government departments which in spite of all the hard work done, do slow down development of the infrastructure on a considerable scale.

My Lords, the building industry in Scotland is in the wrong place in relation to where the development is. Local builders in Aberdeen and elsewhere are most likely doing very well, but in my view they are not big enough. There must be a massive increase in the building industry and in the number of tradesmen available to carry out the necessary development of the infrastructure in these areas. Again I suggest that a Scottish oil development corporation could assist greatly in this direction.

The creation of a Scottish development bank has been mentioned before. I believe it is necessary to separate the funds to be used to develop Scotland and the Scottish economy from the "action men"—if you like to call them that—who would help with the planning, the co-ordination and the provision of that flow of information which has so far been lacking. I see nothing wrong about a development bank; in fact, I see everything right in it. Again I should like the Government to give a clear commitment, and if they do not want to create a development bank, to say how are they going to fund the development of the infrastructure.

I should like now to come back to the question of a national energy policy which I raised in a debate in your Lordships' House on November 22. I feel that the debate this afternoon is in danger of becoming academic, because we cannot discuss this Motion properly without the Government's declaration of a national energy plan. For instance, how can those responsible for the future of the Scottish mining community give a clear undertaking to their men that there is a future demand for coal without showing that there is a definite place for them in the national energy plan, not only for Britain but also for Europe? None the less, I welcome the assistance provided by the Government about which the noble Lord, Lord Drumalbyn, has been explaining to people on the spot. But I ask myself: are they giving this help as an act of faith? No doubt the assistance has been given for very good reasons, but how can they be so sure without having a national energy plan to justify it?

What about those who have to site and design power stations? Who will tell them how those power stations are to be powered unless the Government make clear from where the energy is to be drawn and when? The design of a power station is extremely important for the same reason. I hope, therefore, that during the debate the Government will give a clear indication about their power station policy. This would be helpful, especially to the Scottish mining community. When I raised the subject before, the noble Lord, Lord Drumalbyn, suggested a debate. I am saying, with respect, that a debate may be a waste of time unless there is a White Paper on which to base it. We are already having some controversy, even this afternoon, about figures. I feel that a debate on a national energy plan is essential, but without proper information on which to base a contribution I cannot speak from these Benches and do my job properly. It seems that the figures we are being given are not enough, and sometimes they are not accurate. It is extremely difficult to carry on the job of trying to make constructive suggestions to what is a national problem to every Scotsman when we have not the adequate facts and figures to our hand.

In conclusion, my Lords—and I apologise for taking slightly longer than usual—I am sure that other speakers will cover in great detail of depth and sincerity many of the other outstanding problems: and I hope that they will put forward many suggestions. We should stop and think and take a long, hard look at the Scottish economy, in view of these oil discoveries. We should stop and take a long, hard look at the future energy policy of this country and of Europe. And I hope that the Government may stop and have a long, hard look at their own structures of administration, and ask themselves whether they are of the correct shape to develop the Scottish economy for the future.

I believe that there are many agencies that can help the Government to stop and think. There is Lord Rothschild's Think Tank," which is just one source from which the Government and Whitehall can draw new ideas. I should like to think that the noble Lord, Lord Rothschild, is at least considering the problem of a national energy plan and that of regional development. Finally, our friends in Norway, as the noble Lord, Lord Hughes, has rightly said, and as I am sure other noble Lords will agree, are prepared to take their time; they are prepared to stop and think, and to take advice from every available source, before committing their country to long-term undertakings that their children and grandchildren may live to regret. I suggest, my Lords, that we should follow their example.

4.2 p.m.

THE MARQUESS OF ABERDEEN AND TEMAIR

My Lords, it is with a great feeling of nervousness that I, an unknown, rise to address your Lordships in this noble Chamber. I am fully conscious of the fact that it is the accident of birth that brings me here, and at the risk of being a bore I should like to give your Lordships my credentials. In 1644 Sir John Gordon had his head removed for extreme devotion to the Royalist cause. His son was the Lord High Chancellor of Scotland. My great-great-grandfather was a Prime Minister, and before that a foreign Minister. My grandfather was Governor-General of Canada and a Viceroy of Ireland. My uncle was very well known in local authority work in the L.C.C. and of Aberdeenshire. And my father, who lately sat in your Lordships' House, was a very brave man who commanded two battalions of Gordon Highlanders in the Great War, having turned his back on staff appointments. He was President of the F.B.I. in the last war. What fascinated me about my father was that in 1903 he was admitted to the Associated Shipwrights Society as an apprentice joiner—and I have here his union book. Unfortunately, I am not a member of a trade union but, like my father, I have the greatest respect for those excellent friendly societies.

My Lords, in Scotland we have an enormous opportunity confronting us. It is difficult for the ordinary layman, in which category I include myself, to understand all that is going on. I read of steel, with particular reference to Hunterston, and the decisions that are taken or not taken are difficult to follow. I read of the writhings of the Clyde and of the militancy of the coalfields. I read with admiration, and perhaps envy, of the complex North of Inverness. I live in the North-East, and I fancy that I know it fairly well. It is one of the most beautiful counties in Great Britain with the highest mountain massif. It has a large and fertile area devoted to agriculture and forestry, which is practised with enormous skill and, one hopes, being a farmer, success. We have facilities for shipyards and are the shore base of the largest fishing fleets. Noble Lords have touched on this matter, but I should like to emphasise that in my view we have there already most of what is required and it just wants a jolly good boost.

We also have great beauty of scene, plenty of fresh air—some say at times a bit too fresh—wild life in abundance, unspoiled beaches and every opportunity for re-creation. In an area that has become sometimes accustomed to a rather high rate of unemployment, we obviously have great opportunities in front of us. We have had mineral exploration with us for several years now, and we are of course the nearest land to the oil and gas. It is with mixed feelings that most of us in our county look at all these developments. I learn that the oil pipe is going to make landfall in Cruden Bay. This is the most delectable unspoiled beach, where, incidentally, I and my family take our swimming exercise—and one hopes that we shall be able to continue to do this. Rattray Head, another beautiful beach, is I understand down for industrialisation. Just by Rattray Head there is a lovely loch, the Loch of Strathbeg. I am told that the Royal Navy have their eyes on it. Please, my Lords, what do the Royal Navy want with the Loch of Strathbeg? For centuries it has been the home of every kind of wild fowl. Where a person ventured there a few years ago—it was quite an expedition—now many go to observe and to get their refreshment.

I realise that we must have power, and we are promised an immense power station at Peterhead. That is probably in the right place—and I will not go on about that. We badly need, in my opinion, a dual carriageway road from Fraserburgh and Peterhead to the South; and I have no doubt that Elgin would not say "No" to this. We are also faced in this tremendous period of change and opportunity with a change in the methods of local government. We are faced with the raising of the school leaving age.

Nothing, or very little, has been said so far about education. To my misfortune, I am chairman of the Aberdeenshire Education Committee, and we are quite desperate when we look at the problems with which we are faced. We are very short of buildings, although we have many fine schools. We have had a disastrous building strike which has meant that many schools are either half built or not built at all. We have a splendid body of schoolteachers, although it is curiously patchy in its incidence—but, of course, it is up to the local authority to deal with that. But buildings we must have and, much as I admire the Scottish Education Department, I find that their decisions are a bit slow in coming—and when they do come they are rather painfully inadequate. This morning I received a document from the Scottish Conservative Central Office —a very valuable document—and the only reference I could see concerning education was one produced by the Scottish National Party, who recommend that there should be 10 per cent. more spent on education. I am not proposing to become a Scottish Nationalist, but that sum is painfully inadequate. I should like to ask that it be represented to Her Majesty's Government that we need much more spent on school buildings. As a corollary, perhaps I might add that I believe school teachers are not paid enough. I imagine most people feel that; but this splendid body of people should have a reward commensurate with the work they do.

It is absolutely vital that we should have quick decisions on matters of this sort. The processing of plans and applications and the release of money is, in my opinion, altogether too slow. I think it has been said by noble Lords that overall planning of a very high order is a "must". I should like to add to that, if I may, that it is of vital importance. We have a plethora of planning committees. They are very good in themselves and are composed largely of local people who are straight amateurs in the matter of planning. I feel that we need an overall plan administered by an overall planner.

Perhaps I might remind your Lordships of the regional commissioners who operated during the war. I remember with particular affection the splendid work done by the noble Lord, Lord Shawcross, in the Manchester area during some of the worst years of the war. He had more or less absolute powers; and I think that a similar arrangement is what we need now in the North-East of Scotland. With all respect to both St. Andrew's House and Dover House, I feel that they are slightly too remote. I should like to see a regional commissioner in the North-East, moving among the people, learning about their problems and listening to what they say: someone with the power, as I say, to make quick decisions. Many people from all walks of life have come up to me and made remarks of this nature, because they find themselves so perplexed with what they are faced. I have been to North-East Lincolnshire and to North-East Durham; and I am terribly anxious that we should not turn the North-East of Scotland into the kind of wasteland of steel and concrete that those other corners have become.

We really must conserve our resources on land and on sea, and keep pollution down to an absolute minimum. A little time ago I read that the average family has double the income it had about ten years ago and, further, that families do not spend this money on food but on gadgets and things that tend to increase pollution. We pay lip service to technology; but what does it bring in its train?—unemployment, dissatisfaction and misery. It seems to me that there are now more "drop-outs" than ever before. Of course we want prosperity, and we want it quickly; but if man, in his wild search for this prosperity, pollutes his environment and loses his soul, what is the point of it all? May I beg your Lordships to press for the most urgent and comprehensive powers to be granted for the North-East of Scotland?

4.15 p.m.

LORD DRUMALBYN

My Lords, it is with the greatest of pleasure that I start by welcoming my noble friend and congratulating him very warmly indeed on his maiden speech. He began by saying he was unknown. At least so far as I am concerned, he is not unknown—for we met in university days a long time ago, and I may say that fortunately we were generally on the same side when we were playing rugby football. I am very glad indeed to see him on the same side again now. My noble friend made an eloquent plea for keeping the beauties of Scotland and preserving what we often refer to here as "human values". He has referred also to other points which, if I may say so, might perhaps be more appropriately dealt with by my noble friend in winding up, as they come within the ambit of the Secretary of State for Scotland. But I can say to him that we very much welcome his arrival. We honour him for himself; we honour him for his father, for whom we had the very greatest respect and affection; and we hope we shall hear him speak often.

Secondly, I should like to thank my noble friend Lord Arbuthnott for having introduced this debate to-day. It is in every way timely, and he has injected a great deal of careful thought into the debate. I hope I shall be able to meet many of the points that he has raised.

Two things are transforming the situation in Scotland at the present time. The first is North Sea oil and the second is the operation of the Industry Act. The fortunes of Scotland have tended generally to follow in the wake of the fortunes of the United Kingdom as a whole; but the combination of these two factors offers the possibility that Scotland may lead the recovery in investment which is just beginning to take place in the United Kingdom as a whole. I can tell the noble Lord, Lord Hughes, that, so far as we are concerned, there is certainly no question of writing Scotland off. I hope that in the course of my speech I shall be able to "raise his pecker" just a little from the rather low level from which he seemed to be speaking.

Nobody can deny the existence of a continuing economic problem in Scotland, but already there has been a marked recovery from the trough of unemployment at the beginning of the year. On the provisional figures for November, there were over 23,000 fewer unemployed than there were then, and the trend is downwards, despite the season of the year. The improvement is reflected also in the rate of notified redundancies. The monthly average shows a decline from 3,600 a month in 1971 to 2,000 a month for the first ten months of this year. We have, of course, redundancies in the pits and elsewhere, and the Government have just indicated the steps they are taking, at any rate to alleviate the position in the coal industry. There is undoubtedly an atmosphere of greater confidence in Scotland for 1973. No one can go into Scotland without noticing the difference now. Apart from industries related to the production and transport of oil, the sectors of industry which seem to offer the best hope of growth potential are, for example, electrical and instrument engineering, vehicle production and drink and tobacco.

The Industry Act became law in August and the regional development grants have been in operation since October. As for the discretionary assistance, known as selective financial assistance, applications are being processed as quickly as possible, but much depends on the applicant's supplying promptly all the information needed; applications for selective financial assistance must be examined properly to ensure that public money goes only to worthwhile projects likely to prove viable. Since its inauguration the Scottish Industrial Development Board has met several times to consider specific applications and is developing its general role of encouraging the expansion and modernisation of industry in Scotland. The new incentives will take some time to make their full impact on the investment decisions of firms; and it will take time to translate such decisions into new jobs. The fact remains that the response by firms in Scotland to the availability of selective financial assistance has been quite encouraging.

Every effort is made to draw the attention of industry in Scotland to the assistance the Government can offer. An advertising campaign is being conducted in both the national and Scottish Press. As a result of this campaign, since October 1 about 500 inquiries have been received from undertakings interested in development in Scotland, and the advertising campaign will continue. As at December 10, 61 applications were being considered by the Scottish Industrial Development Board. Offers have already been made in some cases. Of the 61 applications, some 10 came from immigrant companies.

Noble Lords will recall that while selective assistance must benefit employment, it is no longer confined to the provision of new jobs—and this is very important for Scotland—nor is it restricted to incoming industry. It is available not only to provide employment, but to maintain and safeguard it. It is available for modernisation as well as development. It remains true however that those projects which will create employment will have preferential treatment. They may qualify for loans at concessionary rates, or for interest relief grant on loans obtained from private sources. They may also qualify for removal grants for an undertaking transferred to Scotland. Other projects are eligible for loans at commercial interest rates where the assistance required cannot reasonably be obtained from commercial sources. I think I can say to the noble Lord, Lord Tanlaw, that perhaps his pessimism about the capacity of Scottish industry to avail itself of the new opportunities that are before it was a little misplaced.

Training is of immense importance; assistance for it has been improved, and grants for training or retraining workers for additional jobs have been increased. Government training facilities are being expanded to 3,500 trainees a year in Scotland by 1975. As we are talking so largely about oil, and as my noble friend Lord Balerno is here, I should like to recognise in particular the initiative of the Heriot-Watt University in establishing an Institute of Offshore Engineering.

But apart from all this the situation in Scotland has been transformed by the discovery of oil in Scottish waters of the North Sea. As the article in the Guardian put it on Tuesday, "Scotland is on the brink of something big". Of course it is said that people in general, and the Government in particular, have been slow to recognise the potentialities for Scotland. I sense to-day some thought that we were moving too quickly towards the extraction of oil. However that may be, that certainly does not apply to the Government. It is little over a year since it was definitely known that there was oil in quantities which were worth exploiting. Since then the Secretary of State and my noble friend the Minister of State for Scotland have been constantly proclaiming the opportunities that this offers for enterprises and employment in Scotland.

The Guardian speaks of the Government as rather belatedly starting to talk about Scotland becoming the Texas of Europe. In fact the Secretary of State himself used the phrase many months ago—indeed, I believe he coined it. While we are on that point, I should like to refer to the point which the noble Lord, Lord Hughes, made about our position in the E.E.C., and the general position of oil. I think he said that he had seen the letter which I wrote to my noble friend Lord Lauderdale in answer to the questions he raised in the last debate. I should like to reassure noble Lords that the position is exactly as I stated in that letter. On joining the E.E.C., the United Kingdom's energy policies will of course be shaped to take account of the needs of the community as a whole. But I must make it absolutely clear that the Government regard the petroleum resources of the entire United Kingdom Continental Shelf as national assets in just the same way as the mineral deposits on land in the United Kingdom. The obligations to the Community have still to be worked out, but the Government will be very careful to safeguard legitimate national interests as the Community energy policy is developed. There can be no doubt, as I said to my noble friend, that the petroleum resources of the whole of the United Kingdom Shelf will continue to be treated as national assets in our policy for their exploration and exploitation, and we shall ensure that British interests are taken fully into account as the Community energy policy is developed.

I should like to say a word about the planning aspects that my noble friends the Minister of State and the Secretary of State for Scotland have been undertaking in Scotland. It is right that at the start of this debate we should get this matter in perspective. In co-operation with the Department of Trade and Industry, the Secretary of State has been planning the work and the expenditure which will be needed to handle the oil, the vast proportion of which is likely to be landed in Scotland. There is the enormous sum of £60 million for improvement of roads, notably from Central Scotland to Invergordon; there are 700 houses to be built in the North of Scotland by the Scottish Housing Association for workers in industries connected with oil; there is the harbour and other developments at Peterhead, Wick and Lerwick. There are special liaison arrangements established by the Scottish Development Department with local planning authorities and with the statutory and voluntary conservation bodies.

If local authorities are in any doubt about planning applications, they have only to consult the Scottish Office. They are not right out on a limb, working in isolation. Special efforts have been made to draw the attention of industry in Scotland to the opportunities. My colleague at the Department of Trade and Industry, Mr. Peter Emery, has himself written to 100 Scottish firms. Many firms have already won important orders for equipment—pumps, generators, deck modules, cranes, plate bending, machinery and pressure vessels for flotation tanks. I shall come to offshore structures in a minute. We are greatly indebted to the noble Lord, Lord Taylor of Gryfe, (who is not in his place at the moment) for presiding over the committee which is in overall charge of the campaign to attract industrial investment to Scotland. No doubt this also will play its part in enabling Scotland to take advantage of new opportunities.

The noble Viscount, Lord Arbuthnott, mentioned the subject of our general offshore policy. I will not repeat in detail what I said on November 22 about the success of our licensing policy so far. I shall simply remind the House that it has been enormously successful in achieving rapid development of our sector of the Shelf; that this development has been more rapid than in any other sector of the North Sea, and that the United Kingdom sector should in 1980 be producing more oil than all these other sectors put together. My noble friend argued that we were possibly going too fast; that we should be exhausting our reserves too quickly, and I think the noble Lord. Lord Hughes, said the same thing.

LORD HUGHES

Not quite, my Lords.

LORD DRUMALBYN

But, my Lords, there is an optimum speed at which to do this. Had we not gone ahead as quickly as we could we should not then have attracted industry to start up in Scotland to meet these opportunities. The resources were not there at the time, but the mere fact of the rapid development over this short period has already, as the article in the Guardian brought out, brought people in with great rapidity to meet the needs of the oil companies in their exploration and transport.

The three principal objectives of our policy are still: to maximise production of oil and gas; to ensure that the Exchequer gets a due return from the exploitation of a natural resource, and to ensure that British industry is given a full and fair opportunity to compete for orders.

LORD HUGHES

My Lords, if the noble Lord will permit me to intervene at that point I would remind him that what I said was related to the assurance which he has given about this oil remaining a British asset; that there was a difference between developing it as rapidly as our interests required and developing it as rapidly as European interests required. That was the point on which I was venturing a note of caution about speed.

LORD DRUMALBYN

Yes, my Lords, I accept that. I should have to give further thought to the question of how different the policy would have been had we been developing it as fast as European industry required; but the fact remains that so far as the policy of development here is concerned, I think it has gone ahead as fast as it could possibly do, and I believe it was right that it should do so.

As I said, the noble Viscount, Lord Arbuthnott, injected a doubt as to whether it is in the national interests or in the interests of Scottish industry to encourage rapid development in the North Sea. He queried the balance of payments security advantages of North Sea oil. I do not think that the balance of payments advantages need to be proved. In 1971 our oil imports for the United Kingdom as a whole cost £1,000 million, most of it in foreign exchange. This is an enormous burden on the balance of payments and I do not need to remind your Lordships that during the last few years the balance of payments has given us a little passing trouble in the management of our economic affairs. Moreover—does the noble Lord wish to intervene?

LORD BALOGH

My Lords, perhaps the noble Lord the Minister would reflect that what counts is a net relief to the balance of payments, not a gross relief to imports of a visible kind, and if we have too good conditions for the oil companies what we gain on trade figures we shall lose on the balance of payments in invisible exports, in terms of profits and dividends repatriated. I fear that the Minister does not wish to take this in.

LORD DRUMALBYN

My Lords, this is not the first time that the noble Lord has made that point, and I can assure him that it has been well taken in. If he wishes to develop it further I think he is going to speak to-day. The point that I am making at the moment is that there is a serious adverse balance of payments through these imports, and whatever way one looks at it the development of our oil will mean a considerable benefit to our balance of payments. Moreover, without North Sea oil, this burden, already heavy, is likely to increase substantially. The price of oil is likely to rise in future as the producing companies increase their revenue, and if oil companies move into more and more difficult areas to keep pace with the rapid increase in demand the reduction in our import bill brought about by North Sea oil will be very welcome indeed.

The reduction in dependence on possibly insecure imports will also be valuable. The noble Viscount, Lord Arbuthnott, pointed out, quite rightly, that North Sea reserves are likely to be very much less than those in other petroleum-rich areas, such as the Middle East. This is fair comment; indeed it is useful to put our finds in perspective like this, and I hope that some of our compatriots who have given their very proper enthusiasm free rein will take note of it. But, equally, we should not underestimate the importance of our finds. They will, in the Government's estimate, provide the equivalent of half our total demand for oil in 1980; indeed, many of our critics say that production will be higher than this. if the United Kingdom were to-day producing the 75 million tons of oil a year which the Government estimate we should get in 1980, we should be the ninth biggest producer in the world.

The noble Viscount, Lord Arbuthnott, also questioned whether rapid development is in the interests of Scottish supplying industry. I know it has been argued that slower development, even if it had other disadvantages, would at least give British industry an opportunity to equip itself to meet the new demands falling on it. I can understand that argument, but I am not convinced by it. The more rapid development is, the more orders there are. Breaking into the supplying market requires a heavy investment in capital and expertise. Firms are naturally reluctant to commit this investment unless they can see a big market developing fast. Above all, British supplying industry is unlikely to get into the world offshore market, which may be three or four times as big as the British alone, unless they have a big home demand. Not the least of the advantages of the American suppliers in the world market is that they had the first, and still the biggest, home market. I invite noble Lords to look at what is actually happening. The market for oil producing equipment has developed very fast. It was only about a year ago that the first oilfield (the Forties) was proved commercially viable. But within that past year, the record of British industry has been better than ever before, as I shall demonstrate in a moment or two.

I should like to deal with one more point before I leave general licensing policy. The noble Viscount, Lord Arbuthnott, suggested that the figure of £100 million for Exchequer benefit is an underestimate. He may be surprised to hear that I agree with him. It would be a very optimistic man who would say that oil prices will not go up. Increases in producer country revenue and rising demand will almost certainly mean that they will go up, perhaps substantially. In that case, royalties, too, will go up. Second, the £100 million takes no account of the producers' liability to corporation tax, but I will not go into that further because these are matters for the Chancellor. I will only say here that it is impossible to forecast the exact level of tax payment in 1980 or any other year.

Forecasts of revenue are based of course on forecasts of production. I know that our estimate of 75 million tons in 1980 is regarded as conservative. We do not claim that we are necessarily right. We spoke about this at Question Time to-day. The level of oil production in 1980 will be determined by how much oil there is in place, and how quickly it can be produced. Before it can be produced, vast sums have to be spent—about £2,000 million—and novel technological problems overcome. It takes six years from the beginning of the development of an oilfield to its reaching peak production. By this time-scale, and with these problems, 1980 is not so far away. Our estimate of 75 million tons is therefore an estimate, not of peak production, but of the production that will have become possible by then. It follows that there is good prospect of its being exceeded later in the 1980s, although we must always remember that production from some of the first fields to be developed will by then be starting to fall. Peak period production is only about three years.

I come to the third objective of the Government's policy: to ensure that British industry is given a full and fair opportunity to compete for orders. The performance of British industry in supplying goods and services to the North Sea operators is much better than has sometimes been suggested. Over the period 1964 to 1971, about 50 per cent. of the orders placed by 12 leading operators were with United Kingdom-based firms. In relation to the Forties field B.P. recently estimated that in terms of value about half of the orders for equipment have been placed to date in the United Kingdom, and they consider that this figure may increase to over 60 per cent. for the balance of orders. Seventy per cent. of their expenditure on labour is for British labour. This is encouraging but there is room for improvement, particularly over orders for the manufacture and installation of offshore structures for the highly technical and very expensive contracting services associated with offshore development. But even here British industry has already begun to show its ability to get orders, and three offshore structures are now being built in Scotland, two at Nigg Bay for the B.P. Forties field, and one at Burntisland, for Shell. Shell estimate that of their £9 million expenditure for their Auk platform about 60 per cent. will go to United Kingdom-based firms.

The British Steel Corporation, to which the noble Lord, Lord Hughes. referred. have turned a disused coal site into a plant for offshore structures at Methil, in Fife, where I believe they are making what are called the jackets on which platforms stand. They are working on a £6.5 million contract from B.P. for the 135-mile land line to the Grangemouth refinery, and they are at the present time looking into the question of offering pipes to take the place of the Japanese pipes; but, as the noble Lord knows, a Statement on steel in general is to be made before long. They are producing plate for heavy structural fabrications at Clydebridge and at Dalzell and there is a £9 million development programme in progress at Clydeside Tube Works to meet future growth in demand for seamless tubes. The B.S.C. say that they have supplied 90 per cent. of the seamless tubes for well casing and conductor pipe in the North Sea over the past five years. There are of course delays, but they are inevitable because of the necessity to comply with planning procedures. The planning applications for an oil refinery and an ore terminal at Hunterston have necessarily to go through the normal processes.

The oil companies are working in a difficult and highly dangerous environment with complex and expensive equipment. Their investment is massive and they require very high standards of equipment and material. In these circumstances it must be a matter for them to decide, in the light of their commercial and technical judgment, where they place their orders. It is up to British industry to prove that it can compete, and many firms are already doing so successfully. Quite apart from our international obligations, it would be neither sensible nor practical to introduce protective measures aimed at forcing oil companies to "buy British" or "buy Scottish". Only a fully competitive British supply industry will be able to compete in this market and in the rapidly expanding world market for offshore goods and services.

There are, however, specific ways in which the Department of Trade and Industry can help. For a start, it is important to identify the particular problems facing British industry in its efforts to capture orders for the North Sea market. For example, we need to find out why certain orders are at present going overseas. We have therefore asked the oil companies to let us have periodic returns of the orders they have placed and will be placing for equipment, materials and services for use in the North Sea. We shall discuss these returns with the oil companies and identify the products and services which British industry is failing to supply. The Government will then see what can be done to help British industry to improve its performance in these areas, and this will involve discussions with the sectors of industry concerned. We shall provide a stimulus where it is needed. I fully agree with the noble Viscount's contention that we need more British consultants to play an active part in designing offshore equipment and structures and in project management. Perhaps it was encouraging, therefore, to hear that for their Brent field Shell/Esso have employed British consultants for the design of the production process facilities and utilities to be installed on one of the offshore platforms. As with industry generally, it is up to the professions to secure as much of this work as possible, and the Government are willing to help wherever appropriate.

In conclusion, I should like simply to say that the future lies in the hands of Scotland itself. The Government are there to give every possible assistance. As I have tried to indicate, they have been helping with the infrastructure as a whole. As for the supply of equipment, exploration and the rest, I would say in passing that licences are freely granted for exploration. They are not exclusive licences and they are freely granted. There is nothing to prevent exploration off the Galloway coast should anyone wish to do so. All this work is going on at a very commendable pace. Scotland can be proud of the way in which it is at present meeting the challenge that lies before it, and I believe that with the assistance which the Government hope to be able to provide we shall be able to go ahead even more successfully in the future than we have been doing so far.

LORD HUGHES

My Lords, before the Minister sits down, and as he referred to a limited extent to steel (understandably, because, as he said, a Statement is to be made about steel generally), may I ask him to indicate whether that Statement is likely to be made while Parliament is sitting, as it would be unfortunate if it were made during- the Christmas Recess?

LORD DRUMALBYN

My Lords, I am afraid that I am not in a position to give the noble Lord that assurance.

4.47 p.m.

LORD LOVAT

My Lords, in thanking the noble Viscount, Lord Arbuthnott, for introducing this debate, I wish slightly to alter the tenor of the discussion by taking him up on the first line of his Motion in which he draws attention to the state of the Scottish economy. The debate has been almost entirely about oil and a little about steel and Hunterston. I hope that I will not embarrass the noble Lord, Lord Polwarth, when he comes to sum up if, on the subject of the Scottish economy in general and the Highland economy in particular, I touch briefly on some indigenous industries which, while they do not really find a place in to-night's debate, should be discussed fully on a future occasion. I agree with the remarks of the noble Lord. Lord Hughes, about this. Clearly, one debate is not nearly enough in which to deal with the problems which we in the North have to face. I am speaking particularly about agriculture, fisheries and forestry, and I feel that we must have a debate on these three subjects. I will to-night simply drop some marker flares, so to speak, on subjects about which the Government must be prepared to expect some subsequent quite heavy bombing.

On the subject of fisheries, which is very near to the hearts of those in the Northern Highlands, in the discussions over our entry into the Common Market not sufficient attention was given to inshore fishing. It became a bargaining counter and we are far from happy about the ten-year period which has been agreed and which will be reviewed in due course. We feel very much the same about hill farmers and the future of hill farming, something which is vital in an area in which it is impossible to grow grain or cereals.

Probably the most important point to be made about forestry is the fact that the Government White Paper must have come as a shock to noble Lords in all parts of the House. We are dependent for forestry requirements to the tune of £700 million a year in terms of our balance of payments and, as I see it, the White Paper represents a complete reversal to encouragement to grow trees where nothing else can profitably be grown. With the greatest respect to the Forestry Commission—and, of course, to the noble Lord, Lord Taylor of Gryfe—we cannot accept the cross benefit study, which does not make sense to private growers.

LORD TAYLOR OF GRYFE

My Lords, perhaps I may interrupt the noble Lord just to say that the document is not a document of the Forestry Commission. I believe that should be established. The document comes in fact from the Government. I will refrain from commenting on the contents of the document, but I wish to put the Record straight.

LORD LOVAT

I fully appreciate that and I was going on to say that we knew the Commission's hands were tied.

From there, my Lords, while congratulating the noble Marquess, who is not at the moment in his seat, upon his splendid maiden speech, and on his cheerful exposé on the tremendous fortune which has fallen to those in the NorthEast—they say in Aberdeen that only a poor man washes his own Cadillac nowadays—one moves to the unattractive thought that something like 23 per cent. unemployment exists to-day in Harris, where the tweed industry is in disarray and where the whole of the Western Isles seems to be given over to things like rocket ranges and submarine torpedo-testing zones. Railway lines are being closed in an area where one day the Celtic basin and the seismic surveys indicate that there may be a great deal of oil. That seems to be an extraordinarily muddled conception both of planning and of the best use of land. I feel that an insufficient number of speakers have touched on the nuts and bolts of the infrastructure of making use of the potential which may exist in the West as well as in the East. The two parts of the Highlands of Scotland are clearly suffering from a grave imbalance. Again, although it is not a matter of oil, I feel that the tourist industry must be thought of in the context of the Scottish economy. In the Islands we do not have enough money to build roll-on/roll-off ferries and we do not have the ships to take the tourists out to look at the part of the country which they want to see perhaps more than any other.

Having said that, I should like to get back to oil, because in oil we see a tremendous breakthrough for the whole of the North of Scotland, and fringe benefits will certainly rub off on the far North. I hope that later in the debate the noble Earl, Lord Cromartie, will enlarge on the potential which exists in the Moray Firth area. Here, my Lords, I feel that the Government are not up to the mark in the organisation of the best man uses of the resources which are now within our reach. We have not the money: a penny on the rates in Inverness-shire produces only something like £1,100 or £1,200. Everything depends on the rates. We have no money, for instance, should oil be brought back into the inner Firths or into any protected waters, to deal with pollution and the purification of our river boards, because there is none up North. We have not the rates to do that. We do not have the rates to provide the money to improve the roads, the piers or the harbour facilities. In all these things I suggest that the Government are lagging far behind. I would suggest, also, that events have overtaken the Government. I do not think that one can say that sufficiently strongly.

I further suggest that during the present hiatus, prior to the implementation of the Wheatley Report, a land policy is required not only to help oil but to help industry, agriculture, forestry, fisheries, tourism; and, I would add, national parks, of which we do not have one in Scotland to-day. We have forest parks and parks for the conservation of rare species of animals and birds, but we do not have national parks. These things are needed in Scotland, whether in the North or in the South.

This operation should be planned rather in the way of a military exercise or manœuvre. We have a breakthrough, but there is a real risk of a breakdown. The infrastructure of the oil industry, from what I have heard—and I visit both the Invergordon area and Aberdeen —is deplorably had. If any of your Lordships from the North had wished to drive South to attend this debate he would have found himself unable, for the past three days, to get through the Drumochter Pass. How can one run something with a big hat and a Texan bodyguard? The oil men simply do not understand this kind of thing: nor does anybody else. In Aberdeen one talks of a few thousand houses being required for the oil people in the area; but behind the needs of the oil people are all sorts of ancillary and subsidiary requirements. I understood on my last visit to Aberdeen that something like 18,000 houses may be needed, and there is no water supply to service those houses. As the previous speaker said, where is the electric light, and where are all the things coming from that one takes for granted unless the Government plan now? I am not going to say any more because there are 23 other speakers, but I urge the Government to think along these lines or we shall find ourselves behind the clock.

4.56 p.m.

THE EARL OF PERTH

My Lords, as the first of the last 20 speakers I, too, must be brief in speaking because, unless we are going to be provided with refreshment to-night, we shall be lucky if we are home by midnight. I shall try to be brief and I am sure that others will be brief, too. The noble Viscount, Lord Arbuthnott, in opening the debate certainly gave us all great food for thought, and I hope and am sure that the Government will consider very carefully the points made by him with great moderation. I should like also to join others in congratulating Lord Aberdeen, my noble kinsman, on his maiden speech.

If Scotland were a nation on its own to-day—and in this matter I feel a little as the noble Viscount, Lord Arbuthnott, and the noble Lord, Lord Hughes, did: I am not a Scottish Nationalist vet, but perhaps we are going that way—our countrymen would be in a state of great excitement. For the first time in centuries, perhaps ever, they would see ahead of them full employment, no need to worry about emigration, and a period of great prosperity. Why is that? Quite simply, it is partly because of the Scottish oil discoveries (North Sea oil discoveries, if you will) and partly because of the natural advantage of the deep waters of the Clyde—unique in this part of the world and where the great oil carriers of the future, of half a million tons or more, can come and unload: the gateway to Europe from the four Continents of the world as the Oceanspan plan foresaw.

On oil, my Lords, I shall speak very shortly. There are two points: first, when I was addressing your Lordships at the time of the Address on the Queen's Speech I regretted that the British Petroleum Company had postponed indefinitely their refinery expansion at Grangemouth. I have since heard from Sir Eric Drake, the chairman of that company, the great company which has done so much for Scotland. that I was wrong. British Petroleum is not cancelling or postponing indefinitely the Grangemouth expansion; it plans to phase it with its North Sea oil programme. That is good news. I hope that the phasing will be sooner rather than later. I would hope also if another refinery is established, as I trust may be the case, that that fact will not alter the company's plans. For that to happen would be too bad. This other oil refinery must surely be on the deep waters of the Clyde. Three abortive attempts have been made to get planning permission for such a refinery. I would ask the Government to consider taking the initiative in saying where a new refinery could be set up. This would be invaluable and would get things moving.

My second point on oil is the question of delivery dates of oil equipment. I hear on various sides that the delivery of this oil equipment is rather unreliable. I do not know whether this is true or not, but what I do know is that the great oil companies must have the equipment which they order on time. If something goes wrong in delivery dates their whole programme for a year can be put out, and that is something that they cannot risk. So I wonder whether the Government would consider letting us know whether or not this is the case. The noble Lord, Lord Drumalbyn, spoke a little about this matter. Perhaps what I am going to suggest is not necessary, because the noble Lord explained how the Government were watching what industry was doing and comparing notes with the oil companies, but my idea would be that they should immediately start an inquiry into the facts of this matter, the inquiry to consist of three men—one trade unionist, one from industry and one other—to check whether there are delays in oil equipment deliveries, and if so, why. However they make their report, it should be done very quickly and the outcome should be widely publicised, so that the oil companies cannot have this excuse for not placing orders in this country.

Now I come to the question of communications. Oceanspan has been debated twice in the last two or three years, but I feel, with the noble Lord, Lord Tanlaw, that I do not really know what is happening, or whether we are making any progress on it. It is just as important for us, and indeed for the United Kingdom, that we should be getting on with it as it is for the South of England to have the Channel Tunnel. I think it is more important. Millions are being spent on studies of the Channel Tunnel. What is happening in regard to the infrastructure for Oceanspan? My second point on communications is in regard to the railways. We all know about the leaked report which said that the South West of Scotland and the Highlands were not going to have any railway. I can imagine nothing worse than this matter remaining uncertain. Just think of a new company which wants to set up somewhere in Scotland. They would say, "We are not going to choose the Highlands, we are not going to choose the South West of Scotland, unless we know there are going to be railway communications there". I have given notice to the noble Lord, Lord Polwarth, that I would ask the question whether he could not kill, once for all, the rumour that the Government would support such a stupidity as this.

Now I touch on steel. I will not go into it in any detail, because not only have the Scottish Council (Development and Industry) made their recommendations, but the noble Lord, Lord Hughes, has told us a good deal of what they said. Rather would I try to touch on it with a very broad brush. The British Steel Corporation, helped, I think, by some of the very careful people in the Treasury, came to the conclusion that the right figure for us was somewhere between 28 and 36 million tons of steel capacity. I think that is the most chicken-hearted decision. Japan, I believe I am right in saying, already has a capacity four times as great as that. We are now talking about the future. Are we to be a fourth-rate industrial Power? Because let us make no mistake, whoever produces steel is a great industrial Power, whoever does not is not. So I hope that this matter will be reconsidered. We have an advantage in this connection in Scotland which is unique, namely, as I have said, the deep waters of the Clyde. We know that an ore terminal is to be set up to take advantage of that. But is that to be all? Surely we should have in Scotland, and near Hunterston, a real grass roots, green grass, whatever they call it, new plant set up, with a capacity of some millions of tons. I am sure it is right economically. And even if it were not. I would say that this at least is something that Scotland should enjoy in return for the Scottish oil coming from Scottish waters.

This is a one-day debate. I did not interrupt the noble Lord, Lord Hughes, when he said that we have one day in the year, but I certainly will give notice to the Whips—and I feel I have many others behind me—that we consider it all wrong that we should have only one or even two debates in the year. So when the time comes I hope that what Lord Hughes has said will be taken in conjunction with what I have said and the echo of support I have had from the other Benches.

THE EARL OF LAUDERDALE

My Lords, if I may interrupt the noble Earl, I would ask whether it is not the case that this debate is in fact a sort of spillover from the last Session which was so overcrowded that we did not have time for it? Therefore we are certainly entitled to two days in this Session, if not three.

THE EARL OF PERTH

My Lords, I am certainly in agreement with the noble Earl on two days if not three days. All the same, even a one-day debate I am will be studied by the Scottish Office, sure and I do not underrate the value of that, but it will not get really wide publicity in the Press and on radio. And if it does —and I hope it will—all the same it is a one day wonder. It is not good enough.

A little while ago I pressed the noble Lord, Lord Polwarth, to set up the Scottish Convention as soon as possible, and he gave your Lordships a rather encouraging reply. He said that after the local government reform measures would be the time to introduce the Scottish Convention, and the Government had that in mind. That is very logical, but I am not sure that logic is always right. I would again impress on the noble Lord the need to bring in his plans for a Scottish Convention sooner rather than later. Then we could discuss, not only on one day but over the months, in Edinburgh, where the people of Scotland can hear about it, the various things which may lie ahead for us, and work out our plans for our future, this great future which is within our grasp. Then we could fill our people with enthusiasms and with the determination to work for the greatest benefit of our own country, and with that the benefit of the whole of the United Kingdom.

5.10 p.m.

LADY SEMPILL

My Lords, I welcome this opportunity of taking part in what has become an annual debate on employment and industry in Scotland. Much of this debate has been concentrated on oil and steel. However, I should like to concentrate my few remarks on a much older industry but one which nevertheless is of first importance to many parts of Scotland, the fishing industry. While we all welcomed the announcement by the Minister yesterday that a friendly temporary settlement of the fishing dispute with Iceland is a possibility, nevertheless it has brought considerable uncertainty to the minds of our fishermen. In the first place, it brings immediate difficulties to our distant water fleets. We all know that any limitation of their traditional fishing rights can result in serious repercussions for the middle water fleets, by a concentration in those fishing grounds where both these fleets earn their living. I should be grateful if the noble Lord, when he comes to reply, could give us an assurance that this point has not been overlooked.

I should also like to ask my noble friend about the development of industry that is being encouraged by the Highlands and Islands Development Board. Last year's report was very encouraging, and I hope that this year's efforts are no less favourable because in many villages on the Northern coast of Scotland it is the fishing industry on which they rely for their livelihood. One final point: has the Scottish Council made any searching enquiries as to home industries, or other branches of work, which could mop up the unemployment among women?

5.11 p.m.

THE EARL OF CROMARTIE

My Lords, I should like to start by paying a sincere tribute to my noble friend Lord Aberdeen on his maiden speech. We are also all very grateful to my noble friend Lord Arbuthnott for introducing this debate. It is of tremendous importance to the whole of Scotland, and not least to the area in which I live, where we have seen a major development on the Eastern seaboard of my own county, Ross and Cromarty. This has, of course, produced great problems which we have endeavoured, and are endeavouring, to overcome, and on this count I should like for a moment to comment on the tug-of-war which is apt to occur between extreme conservationists—often people coming from the South to find peace in the Highlands where they have settled—and those of us who have for so long struggled to stem the ever-increasing unemployment and exodus of our younger population. Let us be quite clear that the great majority of us who have seen the necessity for the introduction of some form of industry are just as keen conservationists as are the other side, and we certainly do not wish the most beautiful country in the world to be turned into an area of "dark satanic mills", as happened in the past and unnecessarily spoilt so many areas in the Lowland belt of Scotland and large parts of England.

Perhaps it is very much easier for us who have an intimate knowledge of the past history of the Highlands to form a balanced judgment. To go no further back than the 19th century, we had the tragedy of the clearances, and since that period we have had two world wars which decimated the Highlands—the first one in particular, when the best part of a generation was wiped out. Since then we have seen tremendous strides in technology, which means yet again that more and more young men must leave to find employment, as ever fewer workers are required in agriculture, forestry and fishing. Their jobs have to a great extent been taken over by machines, and these industries, with the exception of tourism, were the basic and only sources of employment for the men and women of the Highlands.

Let us now look at the other side of the picture. In the area of Easter Ross there is no longer unemployment, and the young men and women are not forced from the homes of their ancestors. I hope very much that the Government will make a great effort to see that some of this prosperity rubs off on the Western seaboard and the Western Isles, especially the Island of Lewis, where the unemployment rate stands at the disgraceful figure of 23 per cent. The Highlands and Islands Development Board have undoubtedly been helpful, especially in their aid to the fishing industry, and we all agree with their policy of counter-drift, which was aimed at bringing back many of those who had to leave their homeland due to what one can only describe as economic evictions. But, having said that, I must add that, like many others, I am not enthusiastic about Sir Andrew Gilchrist's statement that he now wishes to flood the Highlands with Englishmen. We, like the Welsh, have our own culture and our own way of life and do not wish to see this submerged by anyone else. Perhaps his statement was made to keep the ever-increasing personnel of the H.I.D.B. employed answering angry letters from Highlanders. Sometimes one misses the down-to-earth and utterly self-disinterested work done by Mr. Rollo and his few devoted helpers when they ran the Highland Fund.

Now a brief word about the projected torpedo range in the Applecross, Kyle of Lochaish, area. As I have mentioned before, one hopes desperately to see something which will hold the population in the West, but I hope that in this case a decision can be made by the local fishermen themselves who may be affected and not by an assortment of politically motivated persons from God knows where.

In connection with the West, I hope that the Government will impress upon British Railways the social necessity for the retention of the Kyle railway line. It would, of course, greatly help those who would like to use this railway but cannot do so at present if the trains coming from the West were timed to connect with trains going East to Aberdeen and the regions South of Inverness. At last some effort is being made by British Railways to make this line more viable, which is a welcome change from the previous deliberate rundown in service and efficiency. But, my Lords, much remains to be done to re-create a good and viable service.

As well as the social necessity for this line, it cannot have escaped the notice of the Minister of Transport that the number of heavy lorries on our inadequate road system is rapidly increasing; a process which will continue. And in the summer confusion is worse confounded with the addition of tourist traffic, and especially that other menace, the caravan column. It does not seem out of place to suggest that a considerable proportion of the heavy traffic which not only pollutes the atmosphere but destroys roads, bridges and buildings, could well be channelled on to our railways, and on certain roads caravans should be restricted to specified hours in the twenty-four. All civilised residents in these islands should be grateful to Members of all Parties in another place who resisted the great pressures put upon them to authorise the introduction of even larger juggernauts to our roads. Let us hope that the Ministers of Environment and Transport will see to it that this decision is rigidly enforced, despite the pressures which will continue from Europe, and from certain interests within our own shores who could not care less about the quality of the environment if its preservation precluded any increase in their profits.

Finally, I wish to support my noble friend Lord Perth. I have one final question to ask the Minister; and now that the Common Market question is out of the way I trust that we may have a reply. When do Her Majesty's Government really expect to implement the recommendation of the Secretary of State for Foreign Affairs to set up the Scottish Convention? In case the new local government reorganisation is put forward as an excuse for not answering the question, I would add that the fact of having a regional and district set-up will not necessarily make local government more local —which of course is the object of the exercise—but some form of Assembly in Edinburgh could well make decisions which are now only too often made by civil servants. It could also greatly assist the Secretary of State for Scotland, who now has the impossible job of representing every Ministry in the United Kingdom over a vast area where communications are greatly inferior to those in England, where there are Ministers galore.

5.19 p.m.

LORD BALOGH

My Lords, I must at the beginning apologise for my intervention. Though I see very few kilts and no sporrans, this must be considered a private occasion, and a "Lowland Hungarian" ought not to tread where Highland Scots until recently feared to tread. I am very glad to hear from the Minister that he has now organised a system by which British industry can be made aware of the supply demands of the oil companies, and that the oil companies are being talked to a little. I am all in favour of this, and if I contributed to this position, my presence here was well worth while.

I am intervening in this debate for two reasons. The first reason is one which I think I shall suspend; that is, the fact that certain figures which were given to us did not really come out as they should have done. But I understand that I shall have a bout with the Minister tomorrow, if the noble Viscount, Lord Colville of Culross, does not intervene to give me a lecture in etiquette. The second reason is much more important—indeed, vitally important. There is now a Conservative Government in Norway, with a sizeable stake in the North Sea, which has followed the sort of policy that I have been advocating for the last eight years. New regulations have just been issued which ought to be brought to the attention of your Lordships' House. First of all, there are to be royalties of between 8 per cent. and 16 per cent., as against our fiat 12 per cent. This is sensible, because smaller fields ought to be taxed less than larger fields. On the other hand, 12 per cent. is not sufficient in the case of the larger fields. But that is not all. The price at which royalty payments, and all other payments, are to be fixed is, unlike ours, to be a posted price; that is to say, you cannot fix the transfer price by just arranging between the production subsidy of a multi. national company and the refinery and selling end of that same company. There are no arms' length purchases in this commodity, just as there are none in aluminium.

There are also very stiff licence fees in Norway, running into thousands of pounds per square kilometre. Our fees are ridiculous at about £300-odd. What is very much more important, there are very stiff surrender regulations; that is to say, companies which have licences have to surrender after a time on the basis of a chequer-board arrangement, which allows the Crown to recoup itself for successful development. On top of that, Norway seems to have learned from the authorities in Monaco. Like the authorities in Monaco, they have a double zero which we in this country disdain from using because we are so pure. But learning from that excellent example, the Norwegians have provided that once a discovery is made they can participate to the extent of between 30 per cent. and 50 per cent. of the total, while they lose nothing on failures.

Since we last discussed this subject—in fact, this happened only this afternoon— there has been a speech by M. Spaak, the son of Papa Spaak, who has done so well by us in the matter of the Common Market. M. Spaak has explained to us what the Common Market will mean. According to him, the Common Market will mean that we shall have to give up the monopoly buying power of the Gas Board. He has also explained that of course there will be absolute equality in supplying the companies. There will be no preference at all for Scotland. Furthermore, the price will be so fixed that we might even have to have a further subsidy for these poor oil companies whose stake, according to my calculations, amounts to only 80 per cent. per annum. I hope that the Government will take an extremely stiff line on this matter. I fore-warned them that they would have to face dedicated men of very high ability in Brussels, especially the French who are absolutely itching to get their fingers in our pockets, and it seems to me that it behoves the Government to get a really good anti-Market representation. I think that Professor Kaldor would be a very good candidate for this job of catching them on the way into our pockets, because he is very good at anticipating.

In my last speech I said that the Government would say three things and, behold!, the Minister has obliged. I predicted that he would talk about riskiness, and he did. But there are some very interesting figures in the Financial Times—that Maoist journal. The risk overall is one in 15 in commercial discoveries, and last year it was one in eight. So that, learning by doing, we are getting better and better at it and, obviously, the risk is diminishing. But as the risk is diminishing the Government are granting better and better terms. This is economic nonsense of such absolute extravagance that one becomes simply speechless—and I am sometimes quite voluble. The other interesting fact is that, far from people being discouraged, half of the total oil reserves discovered up till now have been discovered in the last year, as have one-third of the gas reserves. So that this terrible fear of people flitting away, pulling their towers behind them, is somewhat exaggerated.

Then I said that the Minister would say that rapid development is absolutely essential. It is very interesting that he made two most important arguments against rapid development. So well briefed is the Minister, and so faithfully does he carry out his instructions that, in an aside, he based his argument on the fact that prices will go up because an energy crisis is looming ahead. I do not know about this energy crisis, and there are differences of opinion. But I would not base my argument on that point, as the Minister did. If prices go up, of course we ought now to buy as much oil from Kuwait as possible, carefully hoarding our oil in the sea for a later occasion when prices have gone up. But given these lugubrious predictions, it is obvious that the price of oil will rise very fast and, therefore, the policy which the Minister advocates is that much more nonsense.

The Minister also said that if we had not had this tremendously fast development, industry in this country could not have limbered up to produce the goods. But is that an argument? On the contrary, what has happened is that the Ministry consistently derided and criticised us, saying that these massive oil and gas supplies would not be available. They denied that the figure would be 2.000 million cubic feet per day; they denied that it would be 3,000 million cubic feet; they now deny that it would be 6,000 million to 8,000 million; and now the figure is between 6,000 million and 7,000 million or perhaps even 8,000 million if we take in Ekofisk and Frigg, and certainly if we take in Brent.

Of course, there is absolutely nothing in the argument that we want to become independent of the Arabs, because we cannot become independent of them. It is very sad. I should love to be independent of the Arabs: I would do anything to become independent of the Arabs. But we cannot, because even in the best of circumstances, with the most optimistic calculations, we shall be depending on the Arabs for at least one-third of our own supplies, and if Europe as a whole is taken in—and, of course, the Community has already laid its finger on the affair—then, of course, for very much more.

What is happening, my Lords, is that when the British negotiators appear the oil companies nudge each other, indicating, "Here comes the sucker". To have to say this in a Scottish debate is really absolutely terrible. I have always thought that the Scots made the Grand Canyon because they lost sixpence. Here they lose £1,000 million per annum, and they sit there with great equanimity, rubbing their hands. My Lords, something is very wrong in the world if Scots have lost their canniness with regard to economics.

LORD HUGHES

My Lords, would my noble friend absolve the Scots from his strictures? So far as I know, the Department of Trade and Industry is not noticeably infested by Scots.

5.32 p.m.

LORD BURTON

My Lords, first let me congratulate my noble friend Lord Aberdeen. In the past I have been more inclined to sit under his hammer, for he was for a considerable time chairman of the Scottish Landowners' Federation. But this evening I feel he has talked himself into a job as the first Regional Commissioner for the North-East. I should also like to congratulate my noble friend Lord Arbuthnott: in his speech He covered, in far more fluent and coherent a manner than I could have achieved, many of the points I wanted to make. He pointed out the great prospects for development and the clamour for Scotland to participate. My noble friend Lord Drumalbyn voiced the feeling which is widely felt that we are on the brink of something big.

Then I must congratulate the noble Lord, Lord Hughes. It is not the first time we have thought along the same lines. Your Lordships will be pleased to hear that he has completed a further large section of what I wanted to say this evening. He emphasised that the oil would not last for ever. There is indeed a great fear of ghost towns and concrete jungles. Many of us are worried about what has been happening in Easter Ross. They have the very best agricultural ground in the Highlands and we were much relieved to hear last week that Ross-shire County Council are taking another look at matters. Furthermore I was pleased to hear my noble friend Lord Cromartie say this evening that he felt that a very close look would have to be taken. We cannot replace agricultural ground, but we can replace this concrete jungle.

My noble friend Lord Drumalbyn gave an indication of what the Government are trying to do, but more Government guidance is required. We have of course the Scottish Development Corporation and the Scottish Council (Development and Industry), but much is being left with local government. We know nothing about it. We were told that more technicians were required, but the poor local councils are really quite in the dark about this enormous oil complex which has come upon us. I wonder whether there is not a case for a special oil development body, a separate body altogether to look at the total development.

There is one section of our infrastructure which can be developed without any fear of its becoming obsolete when the oil is worked out, and that is our transport. If you go to Dalcross, the airport for Inverness, nowadays you really begin to wonder whether you are in Texas— until of course a Stornaway plane comes in. When this plane comes in you find that it is full, yet the airways tell us that they are losing money. I have great difficulty in following this. Indeed, I regret that I shall have to leave before the end of this debate because I have a public inquiry in Inverness to-morrow and I shall have to catch the only train that will get me there in time.

However, I should like to take this opportunity to congratulate the Government on what they have done for our roads. In the last few years they have done more than has ever been done before. They have given us vast sums of money which is only now beginning to work through the mammoth amount of paper work that has to be done before work actually starts on the ground. We have been given a new bridge at Ballachulish, these two enormous bridges across the Firths, the A.9 development (I know that there is a clamour for more dual-carriageway on this, and I am fairly happy that what we shall get in Inverness will not be too bad after all); and then we have had enormous sums of money for the West. I am most grateful to the Government, and in spite of what Lord Lovat has said about the Pass of Drumochter I hope that this will shortly also be open 24 hours per day, because if we can get a dual-carriageway on a short section we shall be able to keep it open the whole time.

My Lords, there is one small point with regard to roads which I think could be simplified. I mentioned this difficulty of getting through the paperwork. A landlord is not told about the purchase of a piece of ground until the draft order is published. I believe that this has occurred on account of problems which have happened in England where an early indication has been given and various different parties have wanted the road shifted. But a landlord does not hear until perhaps he gets a letter from the district valuer offering a price for his ground. If there were much earlier consultation I am sure that we should get through our road planning very much more easily. I would ask the Government to look urgently at this because I think there is a great deal of room for streamlining in this matter.

Turning again to the West, as one speaker has said there may well be considerable development of oil there, and in this area I feel that it is high time we got the piers and ferries sorted out. We are in great difficulty here; so many different bodies are involved. Each pier apparently belongs to a different body: it may be a district council; it may be the Department of Agriculture; it may be the county council concerned.

LORD HUGHES

It may be a private owner.

LORD BURTON

Yes, indeed; some are privately owned. When the regions begin to operate there will still he three regions involved. I feel that the answer here is to set up a working party to look at the whole of this system, rather as has been done for the A.9 where a working party seems to be working extremely well. If we had a working party of the officials concerned in this thing I am quite certain that we should get a very much better system and a very much greater economy than we have at the moment, where roll-on boats are being prepared for piers that are not suitable for them.

While I am on waterways perhaps I may say that I believe that there is a Consultative Paper on our inland waterways—and I am very concerned about the Caledonian Canal. This might well be handed over to our Highland Regional Authority, and we are very loath to accept this. The canal has been largely destroyed in the last ten years. I say without any hesitation that the way it has been destroyed is wicked. I have previously raised this matter in debate and I have been told that it is just a question of day-to-day management. But it is far more than that. Boats have been allowed to speed through there, away above the allowed speeds and their wash is pulling away that wonderful old pitching which has lasted for 200 years. Enormous destruction has been done over the last ten years. I think this must be stopped at an early date. It is quite easy; you just do not allow a boat through the next loch until the appropriate time has elapsed. It is too easy to stop it, and I do not know why it has not been done.

Things really are moving in the North. Scotland is on the move and I should like to congratulate the Government on what they have done.

LORD HUGHES

My Lords, the noble Lord has spoken for only seven minutes, so before he finally resumes his seat may I ask him one question. While I appreciate his desire to give every credit possible to the Government, is he not going a little too far when he gives them credit for achievement where the only credit for at least some of these things is that they did not rescind decisions taken while I was at the Scottish Office?

LORD BURTON

My Lords, I never thought the Opposition were backward in coming forward, but I cannot remember the noble Lord, Lord Hughes, ever publicising the fact that he was going to put bridges across the Firths. I cannot remember him even saying that he was going to give us a lot of money for the A.9. It may be that Ballachulish started in his day, but I would not be quite sure.

LORD HUGHES

My Lords, I was not being as favourable to my own side as was the noble Lord to the Government. I was no more claiming all than he was giving any away. What I said was that in the case of some of these things all that the Government could claim was that they had not rescinded decisions taken while the previous Government were in Office. If he looks at the Record he can pick them out for himself and it would be easy for him, perhaps in the next debate, to take another two minutes at his excellent rate of speed to correct the Record.

6.40 p.m.

LORD ORR-EWING

My Lords, I have two apologies to make in rising. First, although I have heard the opening speeches and the speeches up to now I cannot stay for the full length of this debate because of a long-standing evening commitment. Secondly, although I bear a Scottish name my grandfather was entirely Scottish and was domiciled there—I have been a Sassenach since birth. I hope that I am not trespassing in a tender area in speaking in this debate. I had some sympathy for the noble Lord, Lord Blyton, the noble Lord, Lord Hughes, and the Government Front Bench, when the estimates on energy were discussed during Question Time to-day. I remember 20 years ago, in 1951/52, when the Government of the day having got forecasts from most erudite and well-informed sources, said that they reckoned that in the early 1970s (to-day) 306 million tons of coal equivalent would be needed, and 200 million tons, they said, would come from the mines and that there was no chance of getting any more. That turned out to be untrue. If we had a good balance of payments we could buy all the coal we needed cheaper than we could mine it.

The second figure mentioned was 100 million tons to be provided by oil, and it would not, they said, be possible to get more because the world oil reserves are running out. This, too, proved to be totally untrue. We have the Nigeria discovery and all the under sea resources that have been discovered since and that we are discussing to-day. The last 6 million tons were to be met by nuclear power stations and as your Lordships know these have not come forward as successfully as was anticipated, despite the immense sums of public money which have been behind their research, development and early production. In that equation no allocation whatever was made for any natural gas from overseas or from the North Sea. So here was the equation of 20 years ago in which all the factors were entirely and absolutely wrong. So I am rather in sympathy with Lord Blyton's statement. I hope that on this occasion the massive sums which were announced yesterday are correct in supposing that it is worth writing off the debts of the Coal Board by £475 million and giving aid of £1,200 million to keep the coal mines going. I hope that the forecast is more accurate now than it was 20 years ago.

My Lords, I want to raise another matter, and in doing so find myself much in sympathy (although it is not always so) with the noble Lord, Lord Balogh, with whom I entirely agree that we ought to be far more nationalistic in the next round of allocations. There have been four rounds of allocations already, but a new one must be coming along. I think that when it does come along we should follow the example of Norway and France in their nationalistic policies and look after our own interests, particularly as, in Scotland, where unemployment is so rife and where engineering know-how is so plentiful they would benefit from a more nationalistic policy.

Understandably, some of the consortia are dominated by the big U.S. oil companies because they had the technological experience and had been tapping oil from much shallower depths-200 feet rather than 600 feet—in the Gulf of Mexico. Understandably therefore in the first allocation they had a dominant part. Many of them received allocations and blocks that they could not drill or could not develop. After a given time, these are now to come back and, in oil terms, be "relinquished". It will be for the D.T.I. to say how they should be reallocated. Alternatively, these companies, which cannot develop these blocks, may bring in another partner, a sub-contractor, to take on responsibilities which they cannot meet. I urge that if this happens the D.T.I. should see again that the sub-contractor is a British company.

Therefore in these three areas—first, the next round; secondly, the relinquishment. and thirdly, the new partners—the D.T.I. and Her Majesty's Government could insist that there are met the following five criteria: first, that they are United Kingdom companies; second, that they are based in the United Kingdom; third, that they employ largely United Kingdom personnel: fourth, that they use United Kingdom manufactured equipment; and fifth, and not least, that they pay United Kingdom taxes. If all these five criteria were adhered to I am sure that the United Kingdom in general, and Scotland in particular, would benefit. I should like an assurance that where private enterprise firms have got resources and funds, they be given the opportunities of bidding. I do not believe that it is sound to allow the Coal Board to use its efforts and its money to join consortia for the development of oil. It cannot be sound policy to encourage one producer of one energy fuel to take a big interest in another energy. That might have been sound when the future of coal was in doubt, but in view of this recent announcement about financial aid I suggest that other people should be concerned with the development of these offshore oil resources. I think I am right in saying that if we were operating under the United States anti-trust laws the Coal Board would not he allowed to take an interest. It is a little disturbing that one of the consortia in which the Coal Board are interested, in which they are partners with U.S. Continental Oil and U.S. Gulf Oil, they have ordered an oil rig worth £10 million, not in Scotland, not in the United Kingdom, but in Norway. So we are not getting a nationalist policy even where you have a strong bidder in the consortia which is a nationalised industry.

I should like to see the Government giving development contracts and, if necessary, launching aid, because I believe that in the long term the ability to solve the engineering problems of winning undersea raw material resources will be of use not just in the North Sea but all over the world. This will pay Britain off not only in the next few decades but in the next century; for more and more the world will continue to need raw material resources, and more and more these must come from under sea overseas as well as from the North Sea.

On October 3 I attended at the D.T.I. a maritime technology convention at which the Minister, Mr. Heseltine, was in charge. I was impressed by the tremendous opportunities and at the snags. Informed criticism was made, and I hope we are going to have soon a Government announcement. We ought to have one as a result of this criticism. Many points arose, but I do not have time to list them. We need a Government announcement showing just what will be done as a result of that conference. I was glad to see as one off-shoot that there has been established a Ship and Maritime Technology Requirement Board under Mr. Nigel Broakes. I hope that this will yield dividends.

My Lords, may I take one more minute to talk on a totally different subject from that which has been raised this afternoon? I plead for a little help for tourism and recreation. I am President of the National Ski Federation of Great Britain, and that covers the Scottish National Ski Council. I would remind the House that 100,000 mainly young people go ski-ing in Scotland for recreation. That is good for them; it is a challenge and shows their tremendous guts and resourcefulness in getting there and attaining a standard where they can take part with credit in international races. It is a great reflection on their character and dedication. But the roads to these recreational ski-ing places are appalling. They are bottlenecked and every weekend there is single-line traffic in both directions. I urge that when thinking about tourism we should also think of recreation. If we do not provide recreational facilities for those who are now in Scotland, and particularly for the young people, they will emigrate to England where life may be somewhat easier. So let us bear in mind not only tourism but also recreation for those who live in Scotland and who will in the future be needed to make Scotland prosperous.

5.50 p.m.

THE DUKE OF ATHOLL

My Lords, I should like first to congratulate my noble friend Lord Aberdeen and Temair on his most happy maiden speech extolling the virtues of the North-East. Speaking of tourism, I feel that perhaps he ought to be made, not Commissioner for the North East but the tourist officer. It is an area where tourism has not been developed perhaps as much as in some other parts of Scotland; but with him to do it I am sure that it would be highly successful. I should also like to congratulate my noble friend Lord Arbuthnott on the way in which he introduced this debate. I acted as a dove between Lord Perth and Lord Arbuthnott when the debate was being arranged, and he has come up to my highest expectations. I thought it was an extremely happy speech with which he introduced the Motion.

The fact that I am going to be very brief is not because I do not appreciate how important is the subject of this debate, but because there are a score or more other speakers and much of what I wanted to say has already been said and I should hesitate to "take the clothes" of anyone who may follow me. I am going to speak briefly about four subjects. The first one is communications; and here I must declare an interest. I wish to speak about the A.9, Perth—Inverness road; and, as I expect many of your Lordships are aware, I have a personal interest in this road in that for a certain distance it passes through land which I happen to own.

My Lords, the Perth-Inverness road is being looked at from one end to the other, so far as I can make out, and I think this is a very good thing. I have no complaint about it. But what I should like an assurance about from the Government is that they will publish the result of their look as soon as possible and that when they do so they will stick to it. There has been a Dunkeld bypass on the plans for about fifteen years now which has prohibited quite a bit of development around Dunkeld. Now it appears that this route will probably be totally forgotten and the road will go somewhere completely different. I therefore hope that we shall be given some indication as to when the result of the Government's present look may see the light of day and we who have an interest in the result may be allowed to know where the road is likely to go and that, having published the result, the Government will stick to it in the future.

On the question of communications I should like to reinforce everything that was said by my noble friend Lord Perth about railway closures. This leak of the future railway plans, or possible plans, which appeared makes planning extremely difficult, because no one is going to risk building a factory or setting up a business in a place where the railway may be cut off in the near future. I think that my noble friend could do more good for the confidence of industry both in the North of Scotland and in the South-West if he could assure us that the leak was entirely untrue and that the Government have no intention of agreeing to such a drastic reduction in the railways in the Highlands and in the South-West of Scotland.

Secondly, I should like to say a word about dereliction. I think that anyone who has been to the Island of Hoy and seen what Lyness is like will know what I mean when I say that short-term industry and short-term employment simply is not worth while in the Highlands or, for that matter, probably anywhere—certainly not in the Highlands of Scotland. I hope that the planning authorities and the Government will not be so carried away by the thought of getting a few extra people employed for a comparatively short time that they will allow the building of oil rigs in such places as Dunnet Bay and Ardayne Point, both of which are at the moment extremely beautiful but would be absolutely wrecked if concrete basins remain there after the oil rigs have been floated away. I am sure this has to be properly planned on a long-term basis so that there will be continuous employment for those who are engaged on them. I was cheered by what the noble Lord, Lord Hughes, said he thought the noble Lord, Lord Llewelyn-Davies, would have said had he not been suffering from the 'flu. I agreed entirely with what the noble Lord, Lord Hughes, felt that his noble friend would have said.

I was slightly worried when my noble friend Lord Drumalbyn described Scotland as "the Texas of Europe". He appeared to be very complacent about this description. I have always thought (not that I know Texas) that Scotland was far nicer than Texas, and I should be absolutely horrified if the Scots became in any respect like the Texans. So I hope that this was only a picturesque phrase, and a somewhat exaggerated one.

I believe that we have to be careful not to try to correct unemployment unsuitably. We are all agreed that the unemployment figure, particularly in the West of Scotland, is far too high, but there are dangers in trying to bring in unsuitable industries too quickly. I very much hope that we shall not get so carried away by the thought of reducing the unemployment figure that industries which cannot last and cannot be viable will be introduced in unsuitable areas. I think there are plenty of job opportunities in the East of Scotland, but many people are very reluctant to move. This is understandable and would, I think, apply to us all. Therefore I congratulate the Government on having put through the Housing Financial Provisions (Scotland) Act. I am absolutely convinced that one reason why people are so reluctant to move (the only one we can do anything about curing, because the rest are almost entirely emotional) is the problem of finding somewhere to live. If a man is living in a house and paying a cheap rent, and knows that he has no hope of getting another house with an equally cheap rent in another area, he tends to stick where he is for the sake of paying a low rent. I think that this Act should go some way to make labour in Scotland more mobile and I hope that the corollary will be that there are houses available at proper economic rents in the areas where there are jobs. I hope the Government will see that this is so and will introduce a really large building programme in areas such as Aberdeen and Easter Ross, where there is a great demand for housing and where many jobs are available.

I should also like to suggest that many firms are too complacent about the housing of their employees. It is a recognised practice in the farming and forestry industries, but not I think in any others, that employers should provide employees with a house. This is largely due to the fact that their work in remote areas where one or two extra people on the housing list is, percentage-wise. quite a large addition. I do not think that firms have ever done this—at any rate, not to any great extent and I consider that where they are setting up in remote areas they might contemplate building or acquiring houses for their employees instead of expecting the county council or the local authority to do it all. I feel that firms could help themselves and that this is something that might be encouraged by some fiscal methods.

Finally, my Lords, I think we must all recognise that, notwithstanding the boom conditions in the East, there is still an unemployment problem in the West of Scotland particularly in the more remote parts. I would ask the Government therefore whether enough is being done to encourage mineral development and exploration. I believe there is some very promising looking diatomite on Skye—this, I think, is mentioned in the Report of the Highlands and Islands Development Board—and there are certain feldspar outcrops in various parts of Sutherland. I feel that at the moment mineral development is tending to be neglected. I do not know for what reason. It may be something to do with the taxation of minerals, although I thought that the situation had been improved to a considerable extent by the Finance Act introduced in 1969 by the late Government.

LORD BURTON

My Lords, if I may interrupt my noble friend, I think the trouble with this diatomite on Skye is that we have not a Skye bridge. We hope that this Conservative Government will produce one for us.

THE DUKE OF ATHOLL

I thank my noble friend. I am pleased to know exactly what the trouble is. I am sure that as Chairman of the Inverness-shire Roads Committee he will be pressing for the bridge as hard as he can. My Lords, these are but a few brief points, and I hope that my noble friend will be able to answer them all satisfactorily when he comes to reply.

6.1 p.m.

VISCOUNT THURSO

My Lords, more years ago than I care now to remember, I worked as an under-cattleman at Mains of Haddo, and therefore it is with enormous pleasure that I start my remarks in your Lordships' House this evening by congratulating my ex-boss on a most excellent maiden speech. A very kind and considerate boss he was, except when he jibed me about my old school, my politics and my religion.

LORD HOY

He did not leave out much!

VISCOUNT THURSO

No; he did not. I am sure that we shall enjoy his contributions to our debates in your Lordships' House, and I am sure we recognise the sterling work that over the years lie has done in and for Scotland. I should like to thank the noble Viscount, Lord Arbuthnott, for introducing the debate. His was an excellent example of how to introduce a debate of this kind, although a difficult speech to follow, because he put so well so many of the points that many of us wanted to make. I hope that as we go along we shall not lose sight of the many important and useful things contained in his speech.

I am one of those who believe that the Government were probably right to explore at the speed with which they did at the start; although, along with the noble Lord, Lord Hughes, I agree that now they can afford to slow down. This, I feel, is where the noble Lord, Lord Drumalbyn, slightly missed the point. Nobody was criticising the speed of exploitation. What they were criticising was the speed of exploration which the Government are on record as wishing to continue. We feel that now it is proved that there is an enormous reserve in the North Sea—we argue about the quantity —we are in the driving seat, and we ought to sit back and consider whether we are getting the right conditions for the exploitation of this immense and valuable resource, which belongs not only to Scotland, but to the nation as a whole.

What we must remember, my Lords, is that there is nothing permanent about the oil boom. The noble Viscount, Lord Arbuthnott, pointed out that it would last for maybe 20 or 30 years. Therefore it would be extremely short-sighted if we satisfied ourselves with merely a few jobs in service industries. We have not long in historical terms to take advantage of the boom, while it is on, and what happens now will affect the future for many years to come. Therefore we must develop our oil in a positive manner; and we must develop it positively for Scotland. The value of oil is not the cash that it brings in now, but rather the momentum which it can give to the Scottish economy. It is the meanest possible short-sightedness to ask, as was asked in The Times this morning, for oil to pay the coal bill. Certainly the country should pay the coal bill and pay the miners; but it should not use oil to pay for our shortcomings in the past. It should use oil to build for the future; to justify roads, harbours and the expansion of communities, so that at the end of the day, when the wells run dry and the industry eventually has to run down, there will be no oil bill to be met.

The Government are small-minded if they think that a few tens of millions of pounds spent priming a pump, which at their own conservative estimate will feed £100 million of revenue annually into the Exchequer by 1980, is enough. We must feed far more into the pump at the moment so that we get a proper flow into the economy of Scotland as a whole. We have not been nearly successful enough in getting feedback into British or Scottish industry—and this has been said throughout the debate. We must build up know-how and technology, and not leave it to others outside the Government to provide the cash and the initiative. It is wonderful that the Heriot-Watt University have taken the initiative, and that the Wolfson Trust have provided the cash: but what are the Government doing?

My Lords, planning has been referred to as the key in the whole of this discussion, and with that I agree. As has been said in many speeches to-day, more imaginative planning is required. We want this planning to take place in Scotland —and this was a plea both from the noble Viscount, Lord Arbuthnott, and from the noble Marquess, Lord Aberdeen. I should like to endorse strongly that what we want is planning which will think now about the future, after oil has gone away. We want planning which will build up communities over wide areas of the country. Let me give your Lordships an example of the way in which this sort of planning and thinking can be done. We know that there is already a build-up of industry about the Cromarty Firth. We have seen the smelter; we have seen Brown and Root, and we know that Wimpeys and all sorts of people are there and are coming in. There are more industries coming into that area than there will be people to be employed in these industries.

The quickest way of achieving new workers and new places for work people to live in is to put a bridge across the Dornoch Firth. With a bridge across the Dornoch Firth you could bring into play all of the communities on the East coast of Sutherland. If you took the railway across the same bridge, and thereby shortened the route to the North, you could even bring communities up as far as Wick and Thurso into the general prosperity of the Cromarty Firth. This would be of immense value, and it is the sort of direction in which we want our planning to go: not just in a negative way, waiting for an initiative and saying "Yea" or "Nay" to the initiative, but by working out ways of spreading the benefit from one area to another. It is all very well being proud of providing half a dozen berths for oil service vessels at Peterhead, but if the Government asked their own consultants they would find out that four similar berths could be constructed at Scrabster for £5,000 less per berth. I feel that this is the sort of thing that should be being done now, because we know that more berths will be needed: this is the kind of thing to which the Government should be giving backing.

We want the sort of planning which, if it is decided to set up a gas-fired power station at Crimond, will be thinking now of the various industries which could be sited around Buchan, using the power which this power station could produce. Planners should be thinking now of the way in which small communities and towns can be built up as a result of these industries, and they should be thinking now of the atomic power station which will ultmiately have to replace the gas-fired one when the well runs dry. This sort of planning can take place only in Scotland. That is where the pulse of Scottish affairs can be felt. It is sometimes hard for those of us in your Lordships' House, many of whom live and work in Scotland, to appreciate the abysmal ignorance of Scotland, Scottish affairs and Scotsmen which is all too common within the general administration of this country. Yet this exists, and until we get the day-to-day decisions taken where the feeling of Scotland can be absorbed by officials (as it were by osmosis), we shall not really get the type of planning which Scotsmen desire.

The only way round it is to move large bodies of the administration into Scotland, especially those dealing with oil. We on these Benches have called for a Scottish Oil Development Corporation, backed by a Scottish Development Bank, and I have heard to-day many noble Lords from other Benches asking for something extremely similar. In calling for a Scottish Development Corporation and a Development Bank, we have not been dogmatic about how they should be provided: what we have asked for is something along those lines. We still ask for these things, but if we cannot get them exactly as we have described them we would ask that as many as possible of the Government offices which deal with oil development matters should be moved North to Scotland. Though it is a national asset, there is no doubt that the lion's share of the North Sea oil potential is the share which belongs to the Lion Rampant. We have it on the authority of a Government Front Bench spokesman in your Lordships' House that this makes it Scottish oil and subject to Scottish law.

Many noble Lords, in particular, Lord Hughes, to-day have asked that the revenue from this Scottish oil should be used for the benefit of Scotland. I should like to endorse that on behalf of those on these Benches. The best way to use this national asset in the national interest is to use it to get the Scottish economy into top gear quickly and get it to "takeoff". This debate must not end here to-day. It must continue, and it should continue in Scotland. I would ask the Government to give us more devolution. This would help to overcome the apparent lack of Scottish initiative which was referred to by the noble Viscount, Lord Arbuthnott. We may not get home rule from the present Government—but what about the more refined version they promised us a few years ago: "Home" rule? Scotland is on the brink of great possibilities. We must put Scotland in a position to use these possibilities to the fullest advantage and we must not let them slip.

6.15 p.m.

VISCOUNT STONEHAVEN

My Lords, my first pleasant duty is to congratulate my noble friend Lord Arbuthnott for introducing this Motion to-day and affording us an opportunity to discuss the problems of Scotland. I also wish to congratulate heartily my noble friend Lord Aberdeen on his extremely fine maiden speech. It was witty and full of common sense—the type of speech you expect him to make, if you know him. I hope we shall hear from him many times in the future. T have, I believe, an interest to declare since I own about four acres of bog through which the B.P. pipeline is going to bury itself. I do not know whether that makes me an oil magnate or not; but anyway, there it is. The Scottish economy is of course dependent on a prosperous United Kingdom economy and a prosperous E.E.C. economy. We are now, or shall be, in a bigger group than we used to be; and I think we must not lose sight of that fact, because if we do we shall get into trouble.

The size of this oil boom is largely a matter of conjecture and all kinds of figures are being talked of, but there is one pleasing aspect; that is, that the unemployment figure within a twelve-mile radius of Aberdeen is lower than it has been for a very long time indeed at this time of year—I believe it is the lowest ever—but of course there are still too many unemployed in Aberdeen. Numbers are well down, however, and they are also decreasing in Peterhead, I am glad to say. I think that this represents a much more satisfactory measurement of the oil boom than any other. We want to get people working so that they can become prosperous.

The risk capital which is required is simply enormous. I believe that, at any rate in the first stages, it is right that those who put up capital and take the risk should get a reasonable, if not generous, return. You cannot expect people to take a risk if you are going to be mean about revenue. I do not say that that should be the case when the venture has been proved and people are jumping on an existing bandwagon: that is another matter. But what I believe should be stringently enforced and insisted upon is that when any firm puts up a production platform they should keep on that platform a large quantity of detergent and the particular type of sea "harrows" which have been developed by the research people for dealing with pollution. With the best will in the world, there will be spills. It is no use saying there will not be. Wherever oil has been produced so far there have been spills. We should insist on having the means to stop that spillage and to deal with it before it comes ashore. That is where the Government should be tough, and they should be damned tough.

May I just refer to Lord Balogh's figures? I am not absolutely sure what he said, but I was told during the Standing Conference on North Sea Oil which was held in Inverness last October that about 27 dry holes are drilled for each successful hole. A dry hole costs just as much to drill as one that works, and the approximate figure for that is £1½ million. Therefore, to get any oil out of a hole in the ground you have to spend somewhere in the order of £42 million before you start producing. That is the kind of money required; and we in Scotland at the moment are not equipped to deal with risks and technology of that kind. I am therefore happy that we are going into partnership with people who know; and it is a partnership, for more than half the crews of these drilling rigs are Aberdoneans. The service boats are largely manned by Aberdoneans, too. So we are getting this technology whether we like it or not, and it is very right and proper that we should.

A very high proportion of the cost is in back-up services. Those who supply the services, materials, et cetera, on time at the proper price will get the jobs. I do not ask for any preferential treatment other than that. We are capable of doing it, and we shall go on doing it. Nor should we be too keen on what the Norwegians have done, because that is just a racket. All they do in Norway is to get a gang of people, establish a company and say, "This is a Norwegian company". It has not worked out; they are nothing like as far ahead as we are and they are envious of what we are doing. Therefore we should get that out of our minds for a start.

Major servicing items are cement, casing pipes and drilling mud. I do not think that a single bag of this cement is produced in Scotland. I do not know how many casing pipes are produced in Scotland, and I do not know how much drilling mud is produced in Scotland. If you cannot produce it in the country, then you cannot supply it. It must be remembered that these holes are over two miles deep. A hole may require between 500 and 1,000 tons of cement. This varies a great deal, and it has to be supplied through the servicing boats. The benefits to the district come from employment, not in vast risks and major technology at this stage.

At the moment England is supplying this cement and getting a very fair slice of the supply cake. Wellheads are being built by consortia, and I am glad to see that my old firm, Dormon Long, are in partnership building one of these wellheads. This is the way that it should be done. The design work is also being done in the same way. We are not being shouldered out of it, although we should be on the alert to make quite sure that we get our rights. I entirely agree with people who take that attitude. Whatever the size of the oil boom in Scotland turns out to be, it is no cure for Scottish economic problems, having regard to the West Coast, the Central Belt, heavy industries, and such projects as Oceanspan and Hunterston. I will not ask the Government to earmark cash for any one project, but I maintain that the Government owe it to Scotland to take the decision to back Hunterston and give us a steel complex, and also give us Ocean-span. That is their share of the deal; they owe us that. It is no good saying, "We are getting this amount of money, you should give us that", and so on. I feel as strongly as everybody else that this is a deal that we should insist upon as hard as we can in ordinary honest, straightforward fairness on behalf of the Government to the Scottish effort, and also the Scottish luck of geography.

The tax yield that the Government seem to be getting, together with the royalties, amount to £1 million a day. From that large sum they can afford to be a little generous and give Scotland a few of those pounds for Hunterston.

The Hunterston steel complex would benefit not only Scotland but the whole of the United Kingdom. In Scotland we have an enormous opportunity, but we have to overcome an unfortunate image that has been building up of labour troubles, late deliveries and interminable red tape. If we can regain our position here we shall regain Scotland's position of leading the world in every project that we put our hands to.

The oil boom will last 20, 30 or perhaps 40 years. What then? This fact underlies the necessity of forward planning. The Scottish Office and the S.D.D. say that they are doing all that they can. I want to quote for a moment the actual happenings at a public inquiry after a planning decision was referred to the Scottish Office. The decision was challenged and they called for a public inquiry. The decision was made on a housing matter. The inquiry started on February 23 and continued on February 24, 25 and 28. The reporter took down the proceedings in longhand. There was no shorthand-writer there; there was no tape recorder—there was nothing even in this modern day and age. The reporter was taking down the proceedings, licking his finger, as we all used to do. The report was produced to the Scottish Office on July 5. The Scottish Office then sat on it for 140 days, which is the longest gestation period that I have ever imagined for anything. They then agreed with our original planning decision, and there we are! This does not impress me, and it does not impress the oil men. It is ridiculous to say that all the machinery is perfect because it is not. The district valuer was not involved. That is their usual get-out.

There should be some form of coordinating authority—call it what you will, for I am not sure myself. We are divided into too many groups trying to plan without co-ordinating. We do not even co-ordinate supplies. Many jobs are running late on programme, and so on, because these projects are not coordinated by one single head. I do not mind what you call it; I do not mind a Liberal, Labour or Conservative suggestion, so long as something is done. If we do not do it we will get into trouble. Another matter which I do not think has been mentioned is that I think it is vital to take the S.T.U.C. into all these considerations and in this planning. The S.T.U.C. perhaps does not have the management technique and know-how to put Scotland where we want it; but they have the management technique and know-how to put us where we do not want to be. Therefore they should be taken into full consultation.

I want now to say something about pollution and the environment. It is estimated that within 20 miles of Aberdeen in the next five years they will require 16,000 houses as a minimum. All our sewerage works are either overloaded, working to capacity or there are not any at all; the sewage just goes straight through into the sea. I want to put in a plea that the S.D.D. should tell the people who give planning consents that not one house should be built before the sewage works is installed. They build houses and say, "Oh dear, oh dear! Look at the sewage"—and then we get all these troubles. This is happening everywhere and it should be looked into and stopped.

There are two other points I should like to make. Owing to the temporary nature of this industry, if it is possible it is best to build a steel frame building rather than one made of reinforced concrete. It is possible to cut up a steel frame building when you have done with it, and you can even sell it. A reinforced concrete building is expensive to knock down and it cannot be sold. The house building programme will be stretched beyond its capacity, so serious consideration should be given to Swedish timber houses, of which there are several types on the market, cheaper than we can build ourselves. This should be regarded, perhaps. as a temporary housing measure. At the end of the day, if you have a wooden house at least you can burn it.

6.31 p.m.

BARONESS ELLIOT OF HARWOOD

My Lords, I will be brief but I should like to draw your Lordships' attention to one or two industries other than oil and North Sea gas and to take you also down to the Borders, which so far nobody has mentioned and where some considerable industrial developments are going on. We have been talking about planning, forward planning and different kinds of employment, but so far I have not heard a single one of your Lordships mention women in Scotland. If you are going to move a great number of the population about, if you are going up to the Cromarty Firth or the North-East or the West, you cannot do it unless you also think about the women who go with their men into these new areas. With regard to employment it is important also to think of possibilities for employing the women as well as the men, because in this day and age women also want to work. The planners in the Scottish Office should give careful consideration to the arrangements to be made when large numbers of the population are being moved, to ensure that the employment of women is not left out of consideration.

I should like to endorse all that has been said about the development in the West. I only want to touch on that because I have known Glasgow and the West of Scotland intimately for some forty years and I know how dreadful it is when large numbers of people are unemployed in that area. To-day there are far too many people unemployed in Glasgow and the West, and there are plans, which the noble Viscount, Lord Stonehaven, and others have mentioned, to develop in the West the great complex which would include the deep water port at Hunterston and the development of a new steel industry complex. That is something which the Government should think of very seriously indeed, because if you have (as you always have in Scotland) this imbalance of population, with 4½ million people living in Glasgow, Lanarkshire and the West as opposed to 1½ million living in the rest of Scotland, you must concentrate on the areas where there is heavy unemployment and give them first priority. I hope that in the great rush of enthusiasm for the North-East and for oil and gas, and so on, people will not forget that unless we get new development in the West, unless we get the steel complex that has been planned, unless the admirable development along the lines of Oceanspan takes place and unless we get the deep water port, everything else will be only an alternative for the subject of employment and development. The real employment and the real development must be in the West.

I should now like to say one word about the Border because, as your Lordships know, I have lived and worked there and there is now a possibility of development in that area which will give a considerable amount of employment. Curiously enough, in the Borders there is not any unemployment. In fact there is a shortage of labour and it is a place where, given a planned development, which we have in the Tweedbank scheme, quite a large number of people could be employed and could live in agreeable surroundings where the overpopulation, the overcrowding and the slums of many of our industrial areas simply do not exist. I know that to-day I am speaking to someone, the Minister of State, the noble Lord, Lord Polwarth, who is entirely in favour of this scheme. I hope that the Government will give as much help as they possibly can to this development in the Borders. It has been planned for a long time but it has been delayed by one or two difficulties. Now the difficulties have been overcome and it is planned to start.

The scheme, which will cost £14 million, is quite a large one. Inquiries are already being made with regard to new factories in the Borders. The Borders cannot take them yet, because the houses are not built, but the plans are laid and the county councils—both the Selkirk-shire and the Roxburghshire councils—are co-operating; and we are hoping that the scheme will get off to a good start. Already there are in the three Border counties 37 new firms, employing 1,630 people, and by 1975 the estimate for employment is 3,248. Many of these people will come from areas of unemployment and areas where at the present moment work is not available for them. It is quite expensive to move people from, let us say, the West of Scotland to the Borders. It takes something like £8 per person per week for a family to move and to start in a new area. There is also the costly business of "flitting" from a long distance to the Borders, and I think the Government will have to make some provision to help people, either by way of grant or by way of loan, when the big drive for factories and employment is really on.

I think we can help the economy of the country enormously by developing this area in the Borders. It is true—and I regret it very much indeed—that our railway has been removed and that we no longer have a railway into the Borders. On the other hand the roads are being, improved 100 per cent. and the distances are not so great; therefore it is not too difficult to develop in that area, in spite of the fact that the railway system is now non-existent. There is a scheme, which is working very successfully, called the Border build-up, which is collecting information about the needs of industry and the practical help which is wanted in that area. The Department of Employment is being exceedingly helpful and it will be able to carry on the work which will fall upon it once the new factories are started. The Minister of State knows all this as well as, or better than, I do, because, as I have mentioned before he and I both live in the same area.

I am also hopeful that the reorganisation of local government in the area will be extremely valuable, taking four counties and making them into one region. Developing the industrial area with the four counties will, I am sure, be a valuable and good thing to do. It will also share the expense and help to see that transport is developed to lead to the centre, near Galashiels, where the Tweedbank development will take place. All is set for a big development there, provided we can get help for housing—the Scottish Special Housing Association is doing this work—as well as some help for the families who will move to the area.

This scheme is small compared with the schemes which the noble Viscount, Lord Thurso, and others have mentioned, which run into hundreds of million of pounds. On the other hand, it is important for us to do something about the depopulation of the Borders. In this area is space for new industry and it should be developed in the interest of the whole economy of Scotland. I feel that this is likely to take place. I hope that in the whole picture of what I believe to be a very encouraging development throughout Scotland it will be realised that there is an area in the South which is anxious to share in the development, along with the area in the North about which we have been talking so much to-night and which I agree is of vital importance at this time. I hope the Minister of State will consider the Borders an area in which he has special responsibility and interest, and that he will give what financial help and drive he is able to provide.

6.43 p.m.

LORD FERRIER

My Lords, I wish to begin by thanking the noble Viscount, Lord Arbuthnott, for introducing this debate and to join with others in congratulating him on the thoughtful, well-informed and elegant way in which he did so. I intend in my speech to refer to only three specific matters which, as a result of the debate, I can now class as matters of infrastructure. They are the Inverness-Kyle Railway, the confrontation which is now going on between the Scottish Transport Group and Western Ferries and the coming need for the upgrading of the A.1 road between Edinburgh and Newcastle.

It happened the other day, at a British Road Federation conference in Glasgow, that I found myself sitting next to a high official of one of the oil companies exploiting the North Sea. I took the opportunity of asking him whether he thought any of the three items to which I have referred could be associated with oil. "Of course'', he said, "they are all concerned with oil development in the North Sea." He said that that was so in respect of the first two because of the real prospect of further finds of oil and gas in the West, and in respect of the third because of the extensive refinery and ancillary complex which is inevitable in the Firth of Forth. This point was illustrated by the noble Lord, Lord Tanlaw, who spoke of the enormous amount of work which will be associated in an ancillary capacity with this industry on the East coast.

As for the attitude of British Railways towards the Kyle Railway—and not only towards the "leak" to which the noble Earl, Lord Perth, referred—it was reiterated over the week-end, in a reply to Mr. Russell Johnston. that it is proposed to close the Kyle Railway at the end of 1973. I join noble Lords who have asked whether it is not time that these rumours were scotched once and forever because this talk is coming in for very bitter criticism and as time unfolds the criticism is becoming more and more vehement as conditions in the North and West make the decision more and more inexplicable. The depopulation of the Highlands and the accompanying deterioration in the economy of the country would, as it is, be reason enough to maintain existing communications, but to this must be added the situation as it is to-day, overlaid by the prospect of oil and gas in the Minch and elsewhere in the West. How can one reconcile the establishment of our claim to Rockall and the Continental Shelf with the elimination of the main East-West artery which the Kyle Railway provides? What the noble Earl, Lord Perth, said put me in mind of something I heard on the wireless over the week-end, or otherwise read in the newspapers—namely, that a large and important construction organisation is studying Loch Carron as a site for a plant. Quoting from memory, that firm said that it was doing that "because of its proximity to the Kyle Railway." That proximity will not be of much use if that railway is to come to an end in 1973.

Will a road system in that mountainous area, in the weather conditions that are ruling there at the present time, be adequate to provide economic transport for heavy industry? Such a thing does not make sense. Other noble Lords have pointed out the enormous volume of material which is necessary in support of the oil industry. But what of the defence consideration? Mention has been made of the torpedo range at Raasay and similar considerations, but apart from the specific connection with the Royal Navy, surely in terms of defence an East-West rail artery is essential. In a letter from an officer of the Scottish Council for Development and Industry to me the other day it was suggested that there appears to be no liaison between the Defence Department and the Department of the Enviroment. I can hardly believe that to be so. If it is so, may we be told why it is the case?

As for the intrinsic value of the railway, I have never been satisfied with the sums of British Railways which lead them to contend that it can never pay. The noble Lord, Lord Tanlaw, also referred to British Railways' sums. May I ask the Minister who will reply and who is an eminent Scottish chartered accountant with wide industrial and business experience to put on his accountant's hat and, with it on, consider the figures as they are presented by British Railways? I have been informed that the factor for interest and depreciation which they apply to the system is based on a formula laid down by British Railways' headquarters in London. But has not the basic cost of the undertaking been written off several times over by the various subventions made to the railways system by the State? If not, how is it that the figure of £750,000 for the whole thing has been spoken of as its capital value to-day? I think I am right in mentioning this figure as having been openly discussed by an organisation which contemplates taking it over as a private railway. Is the interest and depreciation factor in the present estimates of running costs based on this sort of figure or on London's formula?

I was glad to hear my noble friend Lord Cromartie say he thought that British Railways were doing something to improve the service. But are they doing enough? Why was not the heavy passenger traffic during the tourist season reinforced by additional trains? And where were the observation cars? Sold! sold! And surely not only on the Kyle railway but also on the Mallaig line these obser vation cars were very popular and such vehicles could be made very much more popular again.

My mind turns back to that part of the speech made by the noble Earl, Lord Perth, on November 7 in the Address in Reply to Her Majesty's gracious Speech when he said: London may have a new airport at Maplin and hundreds of millions of pounds are provided for that. Londoners must have better transport, so let us construct another line, the Fleet line, and provide money for that"— [OFFICIAL REPORT, 7/11/72, col. 263.] and so on. The whole thing is incomprehensible to me and to many other of your Lordships. The noble Earl went on to say in the same speech: Look at other suggestions which have been made; for example, that fares on our ferries —which are essential to the Western and the Northern Isles—should be increased. Imagine what this will mean to the livelihood of many people."—[col. 263.] That brings me to my next item, which is the provision of proper sea transport for the Western Isles, because as it is to-day, and as another noble Lord has said to-day, that is in a muddle. The Scottish Transport Group very nearly managed to swallow the enterprising, effective and profitable Western Ferries undertaking into the maw of their organisation which notched up a trading loss of £1 million last year, which after a Government grant (a Government grant. mark you!) of £640.000 made a net loss of £381,000. S.T.G. ships have been altered to compete with Western Ferries in the Islay/Jura trade. They are ships which are not only over-elaborate and consequentially overstaffed, but are too large and, what is more, in consequence they are dependent upon a pier in Islay (Port Ellen) which may be occupied by grain ships for the distilleries for many hours at a time, perhaps for a whole day. Is it not possible for some overall direction to produce some co-ordination rather than a confrontation in these shipping services?

My noble friend Lord Burton made this point: can we not have co-ordination of services such as these in order to make the best use of limited equipment until more ships are built or more bridges built and are at our disposal? Talking of coordination, I have a letter here from Western Ferries which reads, in part: We seek the freedom to co-exist that has been granted to British Caledonian. The Scottish Development Department have a long and profoundly unsatisfactory record in development. As you know, the Government announced their intention to withdraw their subsidy from MacBraynes in respect of the Islay/Jura/Colonsay and Gigha complex, and to give a very small subsidy to Western Ferries. This scheme foundered on the twin rocks of the S.D.D. and Argyll County Council's technical experts, who between them were unable to implement the provision of terminals for the company's ships. The company would, of course, prefer to provide its own terminals, since these are vastly cheaper than those erected with public money. I believe that that is a useful point to bear in mind. But why was the Highland Board specifically barred from supporting this company, as I believe it was? The writer goes on: I believe that there is an identity of interest between the local community, local government, central Government and operator, in stimulating traffic, and that therefore financial support should take the form of something akin to a negative V.A.T. or a rebate on every ticket sold."— and not an increase in fares such as the noble Earl, Lord Perth, mentioned in the speech to which I have already referred.

But, what has all this to do with oil exploitation? It is that the whole transport system of the Western Isles should be streamlined and reinforced to be ready to take advantage of the oil developments when they come. And indeed it is needed even without the oil development, to meet what many noble Lords have asked for, namely, a spread of employment in the islands where such serious unemployment exists. I hope that something will be done about this, if only to save me from the sort of ordeal which I went through when I caught the "Claymore" at 5 o'clock in the morning at Tyree and sat down to breakfast at Coll at 7 o'clock opposite a lady who had sailed from Castlebay. I was subjected to an harangue which I will not repeat to your Lordships, though I remember much of it. She was irritable of course. She was talking of the ship and said, "When do you think it arrived? At 1 a.m. in the morning. And when do you think it sailed? At 3 o'clock in the morning" So, she was pretty hungry and she finished up by saying, "What you want to do is to rub the island of Barra off the map!" My Lords, let us be saved from such harangues in the future.

My next point refers to a quite different problem; namely, the changed situation which the oil discoveries in the East in the North Sea (or let us call it in the Scots sea) will bring to the transport situation in South-Eastern Scotland. Every effort for years has been towards developing the West Coast Carlisle/ Glasgow routes of road and rail. I refer to the development of the electrification of the railway from Euston to Glasgow and the splendid roads stretching from the M.6 to the A.74. What is happening now though? Ancillary supply establishments and vast storage and refining developments will take place on the East Coast, and Grangemouth and Leith will be among the places concerned. The time seems to have come, therefore, to upgrade the A.1 from the Forth Road Bridge to Newcastle. At long last the planners have proposed the construction, long overdue, of the Southern bypass of the City of Edinburgh, marked out as it was a quarter of a century ago. It now becomes an absolute and urgent necessity for the City of Edinburgh, already overburdened by its internal traffic upon which through-goods vehicles are superimposed. What the full volume of the coming and going which will follow the oil exploration will be, and when it is superimposed upon this, it is difficult to estimate. The situation will become intolerable and, what is more, the old A.1 via Haddington—which is bypassed—Dunbar which is bypassed—and Berwick—which is not yet bypassed—will have to be converted into dual carriageway or motorway standard as a contribution not only to the roads from the North but also from the M.8 from Glasgow, especially in conditions like they are at the moment when the A.74 is hardly passable. But to return to the Edinburgh bypass: how can it be put in hand before 1975? I urge the Government to see whether some anticipatory means can be adopted to speed up the financing of that project.

My Lords, I would end by drawing attention to a letter in the Scotsman this morning some of which refers to the accident in which an articulated lorry ran away opposite St. Giles's Cathedral and ended up against John Knox's house. As one of my English friends said at lunch: "Well, that is used to hard knocks!" However, the letter contains these paragraphs: I am unable to interpret the theology of the matter, but it is obvious that the needs of historic Edinburgh and the needs of modern transport are irreconcilable. Behemoth, the High Church and John Knox will never get along together. Why should a load of 20 tons of frozen meat on the way from Aberdeen to London be in Edinburgh at all, far less in the High Street? If ever a vehicle by itself could emphasise the need for a bypass the artic, in the High Street has done so. There are two items in the debate I should like to pick up. One is the risks involved at the beginning of this enterprise. I was talking to a Texas oil man in East Lothian the other day and I asked him what insurance rate was chargeable on the rigs, and he said 13 per cent. I asked what was the insurance rate in the Gulf of Mexico, and he said 7½ per cent. I think that is a fair measure of the risks which have had to be faced by the entrepreneur in the first efforts to get oil from the North Sea, and it is very reasonable that the Government should have provided a proper reward for that.

The noble Earl, Lord Perth, talked of the exchanges he had had with the Government over the Scottish Convention, whether that could not be established before 1975. That leads me in my closing remarks to make a reference to the excellent maiden speech of my noble friend Lord Aberdeen, whose father was held in such high respect and affection in this House, and to his suggestion that perhaps, if we cannot have the Convention soon, we might have district commissioners.

7.2 p.m.

LORD LYELL

My Lords, I wish to begin my remarks by adding my congratulations to those of my noble colleague to the noble Marquess, Lord Aberdeen, on the excellence of his maiden speech. I am sure we shall all look forward to hearing from him on other wider Scottish issues in the future.

So far as oil and the Scottish economy are concerned, I do not think that any of us should consider that the East and North-East coast of Scotland bears any similarity at all to Texas or the Iranian Gulf which are the two other oil producing centres of the world. There is, however, a great deal of activity which would not otherwise be evident, including the building of enormous drilling rigs both at the Upper Clyde shipyards and at Ardersier, the installation of a pipe line carrying the North Sea oil from Cruden Bay to Grangemouth, and also rapid improvement to many ports, large and small, in East and North-East Scotland. The scale of all this activity is much greater than could have been foreseen even two years ago, and there is a corresponding amount of strain on the resources of Eastern Scotland; for example, in communications, in housing and in other amenities sought by the human influx which has followed the exploitation of North Sea oil. Such a strain, I believe, can be borne.

But there are certain immediate advantages which also accrue from the discovery of such large quantities of oil. Already smaller points on the East coast have been transformed by rapid and competent development. These improvements are continuing all the time, with well organised and willing co-operation in the provision of all kinds of services to the oil rigs and oilfields. Aberdeen is the natural centre for such a major development of Scotland's resources, and it is gratifying to see such examples of confidence in the future as the transfer of B.E.A.'s helicopter services and administration to Dyce airport. There is also a resurgence of confidence in other parts of Scotland as a result of the discovery of oil. We have only to look at the Upper Clyde shipyards which have obtained orders for the enormous and complicated oil rigs which are necessary to drill in the North Sea. Ardersier is also the location of another yard where rigs are under construction, and it seems that much of the activity carried on at Ardersier will have a lasting effect on the economy of the North of Scotland.

I cannot believe that we should properly consider ourselves to have reached the promised land at this stage, but there is clear evidence that the East of Scotland, and indeed the small ports, are capable of development to take the responsibilities of servicing oil rigs. Here I make no apology for mentioning Montrose, which is very near my home. These ports are already looking ahead to future prospects, and I believe that the imminent entry into the E.E.C. will ensure a large amount of growth in the traffic using these ports. The facilities are there; there are excellent roads and good railways connecting East Scotland with the North of England and also the West of Britain.

I should like to add my wholehearted support to the noble Viscount, Lord Arbuthnott, when he points out that the growth of the Scottish economy engendered by the discovery of oil will cause us to look more directly Eastwards to Europe, and in particular to Scandinavia, Denmark, North Germany and Holland. I believe that much of the existing export traffic is already being channelled through the Eastern ports. There are also plans for roll-on, roll-off docks at Dundee, and I do not imagine that Montrose, Aberdeen and Grangemouth will be far behind. The growth of livestock and agricultural exports is already providing traffic which will be seized by Scottish ports, as opposed to Hull, Immingham, Felixstowe and Harwich.

We in Scotland now have an ideal opportunity to ask the Government that a proportion of North Sea oil revenues should be reserved for Scottish development alone, and I believe that this should be handled by a Scottish authority, either the Scottish Council (Development and Industry) or a possible Scottish Development Bank. Such funds could contribute to seeking out the best advice from the best economists and—may one use the term?—"think-tanks" in the world, and I believe that this advice could provide a starting point for a completely rejuvenated and re-born Scotland. We have certain geographical disadvantages, but should the Scottish Council (Development and Industry) be strengthened by the availability of a proportion of oil revenues, there are two avenues of discussion which ought to be taken up. The first is Oceanspan. This could provide an utterly new and different industrial scene for Scotland. My noble colleagues, Lord Perth and Lord Lauderdale, have long been among the foremost in pressing for the implementation of this scheme, and I think they must take considerable pleasure in the prospect of its coming nearer to fruition. Secondly, following from the prospects of Oceanspan we should take as an example the country of Belgium, which is already the largest European manufacturer of partly assembled motor cars and lorries. I can forsee the possibility of Scotland's obtaining much of the same type of industry.

The Scottish Council (Development and Industry) will have plenty of ideas for the industrial and commercial future of Scotland; tourism, agriculture, whisky and woollens already contribute greatly to the Scottish economy. Scotland will grow or not, dependent on how we seize this opportunity to find industries which can be viable in Scotland, set them up and nurture them, and see that they can contribute to Scotland and also, I hope, to Europe. Oil and the revenues from it give us, particularly everybody in Scotland, an immense boost for the last third of the 20th century and well on into the 21st century. Already the East of Scotland is changing, for richer if not for better, and if only some of the revenues from Scottish oil are reserved for Scotland the whole face of commercial Scotland, from Aberdeen in the North-East to Ayr in the South-West can be changed. The will to change the face of Scotland, I believe, is present in the Government, and the leaders are also in evidence. The noble Lord, Lord Polwarth, the Minister, has a long and distinguished career in promoting Scotland, and we are also very lucky in the noble Viscount, Lord Arbuthnott, who shows that he has grasped the details and the wider scene which are necessary to obtain the best from Scottish oil. We have this chance to help Scotland and it is one which will not be offered again, certainly not in my lifetime. We must seize it. I should like to add my thanks to the noble Viscount, Lord Arbuthnott, who has given us the opportunity to raise these points to-day.

7.10 p.m.

LORD BALERNO

My Lords, I, too, should like to express gratitude to the noble Viscount, Lord Arbuthnott, for the clarity and conciseness with which he covered a very wide field, and gave us such a good start for this debate. I should also like to congratulate my noble friend Lord Aberdeen on his maiden speech. It was certainly no surprise to me that it was of such a high standard, for in the First War his father was my commanding officer, and in the Second War I was his.

Several noble Lords have spoken about the necessity of preserving the countryside of Scotland in face of all these developments, and we must pay attention to getting our country fully civilised with all these people coming in. In this connection, I would draw your Lordships' attention to that focus of civilisation which exists in the North-East of Scotland centred on Haddo House. Cultural activity there is of the very highest order, and that is an enterprise which ought also to be further assisted by the State. In the same breath, I should like to make a further point about the Historic Buildings Council of Scotland, who are fairly short of cash. The Government have timidly taken some steps to enable the Council to give assistance to the ancient historic churches of Scotland. That is something which could be of help towards keeping Scotland decent and beautiful, despite all the commercial development that will be taking place.

My Lords, the main burden of my address to you to-night is on the universities, and what they can do. It has always been a tradition of the Scottish universities—and the younger Scottish universities have taken it up, too—that they have a duty to the community. I believe that they held this view in the past in an even stronger way than some of the old universities in the adjacent Kingdom. In consequence, the universities of Scotland have already started work in connection with North Sea oil, each university according to its available resources. Naturally, Aberdeen, being the nearest, is in the lead. The Geology Department has a very high reputation, and it came rapidly into action at the first hint of North Sea oil. Already they have made no small contribution, and how good it is can be judged by the fact that they are already doing contract research for some of the companies.

The noble Lord, Lord Hughes, mentioned the survey that the Government have commissioned of the Political Economy Department of the university. I think that we should congratulate the Government, because they seem to have anticipated this before the generality of Scots appreciated the importance of making this particular kind of survey. The university is also providing the oil operators with immediate servicing, such as chemical analyses, which are so important in the early stages of development. Despite the astonishing rate of development, the value of this aid from the University of Aberdeen is very considerable.

It is, I know, a work of supererogation to draw the attention of my noble friend Lord Polwarth to this. He knows far more about it than I do, for he is Chancellor of that University. However, he is a man with little liking for blowing his own trumpet, so perhaps I can be excused for blowing it for him. He has made a considerable contribution to his adopted university. The involvement of Strathclyde University with oil goes back well over 100 years to the cracking of the shale of West and Mid-Lothian. This led ultimately to the great complex which we now have at Grangemouth, which is going to play an even more important part in the immediate future. Latterly, at Strathclyde, work has been largely concentrated on the diversification of the uses of gas and oil. Quite notable progress has been made by their Department of Microbiology in what is really the conversion of North Sea oil and gas into protein. This has implications far beyond the welfare of the Scot. It is going to make a most important contribution to the feeding of the expanding population of the world. Strathclyde University recently mounted a special conference with the Universities of Glasgow and Stirling and with Paisley College to embark on the aspects of science and technology underpinning the industry. A great variety of new projects is thus opening up, some of them based on work already in progress. But there are no resources and no money.

My noble friend Lord Drumalbyn mentioned the gift of the Wolfson Foundation, as did the noble Viscount, Lord Thurso. The gift was to set up at the Heriot-Watt University an institute of offshore engineering. Work has already started in this field, and I should like to give your Lordships one example to illustrate it. The torpedo-shaped animal is called ANGUS. This stands for "a navigable general underwater surveyor". It is designed for underwater inspection, for maintenance, and for surveying, while the human master stays dry and warm above the water. Missions for ANGUS will include the effecting of certain repairs and making adjustments. The Science Research Council have provided some of the money to help him to develop his skills, but his perfection will involve the university in a considerable further sum of money. That is just one of the projects of this institute of underwater technology.

Other universities are also at work. At Dundee some very interesting work is being done on occupational medicine concerned with this work. At Edinburgh, both the Geophysics and Geology Departments are giving guidance to the companies. The Geophysics Department is helping them to find oil, and the Geology Department is dealing with the drift on the sea bed as it affects the pipelines. When a pipeline is found to be uncovered, is it the fault of the constructor, or is it the drift of the sea bed? There are infinite possibilities for litigation in the future if the exact scientific knowledge is not available. Having made inquiry of the universities of Scotland, I am impressed by the way in which their work is complementary. There seems to be no difficulty about finding plenty of problems, and this is as it should be.

Another point about the Scottish universities and oil is the training of the scientists and engineers. Aberdeen has already arranged postgraduate courses in petroleum geology, and likewise at the other universities. The major snag is that the Scottish universities have no funds for more postgraduate scholarships or fellowships, and the Minister for Education and Science has recently announced a reduction in the number of postgraduate scholarships. The students are there and anxious. But there are no funds, and if we do not train these postgraduates we have no right to belly-ache that the Universities of Texas and of Oklahoma will provide for the next half-century the top management of the oil industry in Scotland.

Whatever may be the decision of the Government about the amount to be given to the University Grants Committee over the next four years, it will not solve this problem at all. The job of the University Grants Committee is to share out this vote as equitably as possible among all the universities of the United Kingdom. But, in passing, I would say that there are large differences between the universities, the least well-provided getting some £400 per student less than those better provided. I wish to make the point that by relying on their existing methods of finance the Scottish universities cannot possibly make the decisive contribution that it is within their power to make to the development of the North Sea oil. It seems to me to be entirely reasonable to ask that a first charge on the revenues from these oilfields—and on the monies already coming in—should be adequate provision for the scientific and technological basic knowledge. Indeed, my Lords, I would put it much stronger. The people of Scotland expect the Government to do everything possible to ensure that the native skills and talents of the Scots get every chance in the development of their own natural resources.

Some years ago, I visited Texas and Oklahoma and I have been back since then. I was deeply impressed by the contribution which the universities were making to all aspects of the development of oil and natural gas. Let me give your Lordships an example. In the year 1909, the Pearson financial empire in Texas was threatened with total doom. In desperate straits, Sir Weetman Pearson appealed for help to the Professor of Geology at the University of Oklahoma. The Professor took along with him his assistant—salary 15 dollars a month, all paid by the State. By the end of that year, the Pearson fortunes were touching rock bottom, but within another six months the assistant had started the drill into one of the greatest of all oil strikes. Mexican Eagle was saved and Lord Cowdray had made another fortune.

Seventy years ago it was the professors at the State Universities of Texas and Oklahoma who produced the basic knowledge for the discovery, and then for the development, of oil in North America and Mexico. At that time, many people were thinking that the oil resources of the world or, at any rate, of North America, were running out. Today, the oil industry throughout the world is once again facing a whole series of new problems and, just as seventy years ago a good measure of the progress depended on the universities, so it does to-day. But to-day the scientific field is a much wider one. Not only do geology and geophysics play a very important part, but there are aspects of pure physics and pure chemistry which are fundamental to the development of the oilfields, and these are largely channelled through the technologies which are being developed. Electrical engineering is terribly important. The opportunity for Scotland is not merely the seabed around Scotland. If our universities develop the technologies for our own under-deepwater oilfields, then they will be applied throughout the world wherever oil and gas can be discovered. And the Scot will go with them, just as the Texan is coming to Scotland now. We just cannot afford to await the slow processes by which universities have to find support. I would make the strongest possible plea for direct grants from the Government to reinforce the success which certain university departments in Scotland have already achieved. These grants should be made now and they should be made generously, for to-morrow may well be too late.

7.25 p.m.

THE EARL OF MANSFIELD

My Lords. I direct my few brief remarks to-night to three aspects of the tourist industry, or matters connected with the tourist industry, which many of us who jive in the rural or agricultural parts of Scotland believe will be the salvation so far as the population is concerned. Those of us who live in Central Scotland look perhaps a little wistfully to the North-East, with the glittering but transient prospects of riches from oil; we look enviously to the West and South where vast quantities of public money are pumped in to help ailing industries; and we wonder where we stand in the future. There are many of us who believe that the tourist industry offers the best hope for those parts of Scotland which may well have good agricultural land but have a steadily declining number of people to keep up their head of population in order not to become merely week-end places of buts-and-bens for refugees from the towns. So far as the tourist industry is concerned there is no lack of ideas, and many people, such as those who travel on the infamous A.9, to which I shall return, see a lot of results of private enterprise at Aviemore and other such places. But most tourist ideas are what are called "capital intensive": they take a large amount of money to provide any revenue at all. I can illustrate that by the fact that if, for instance, one is putting up a caravan site, each pitch costs not less than £300 if it is to be up to inter national standards, and in some parts of Scotland, where each pitch is expected to have a caravan on it for but sixty nights, the return cannot be more than 6 or 7 per cent. on the capital involved.

The Scottish Tourist Board is an excellent institution and is doing its best with its limited resources to help those who have the bright ideas for tourist projects but who do not have sufficient cash to put them into operation. Unfortunately, applications to the Board are a cumbersome and bureaucratic process and compare most unfavourably with, for instance, an application by a farmer who wishes to improve his farm. It is perfectly possible for a farmer, if his tackle is straight, so to speak, to put in his application with whatever documents are necessary and get at least outline consent in six weeks or so for whatever he wants to do to promote the future well-being of his farm. So far as tourism is concerned, there are many cases where many people have their bright ideas in one summer but are unable to get the Board to act before the next summer, so a whole year goes by when they are unable to do anything to put their ideas into execution. I would ask my noble friend Lord Polwarth, to see whether he can somehow model the Tourist Board's method of handing out public money on that of the Department of Agriculture, which is quick, efficient and fair.

The second point on which I would dwell very briefly—and here I have to declare an interest—is that of caravan site standards. I run a small caravan site and there is no doubt that many of the tourists who bring such wealth to Scotland bring their homes behind them, as it were, in caravans. Those of us who live in Scotland are determined that caravans should not be an excrescence on the face of the land, and that they should be put in places with proper facilities. But here the local authorities in Scotland are far from being unanimous about what the proper site standards should be. Last summer, I asked my noble friend Lord Sandford whether he would comment on the proposed new model standards which were the outcome of a working party set up by the Department of the Environment and, more especially, by the Welsh Office. He was good enough to say that he would commend those new model standards, which are very much cheaper for the operator, to local authorities. But one local authority in Scotland announced that it was not at all bound by anything set up by the Department of the Environment, because it is English, and still less was it bound by anything set up by the Welsh Office. It said that until a working party was set up in Scotland and reported in Scotland, it intended to accept none of the recommendations at all. The situation is therefore little short of chaotic. The would-be putters-up of caravan sites are unable to proceed because they know that standards are going to come eventually, and they do not wish to put their hard-earned cash into standards which will not be necessary in the long run.

The third point I would make concerns the now notorious A.9. Any of your Lordships who travels North across the Forth and up the M.90 knows that it ends well short of Perth and that one is then plunged into Glencarse, and gloom reigns supreme, so far as I am concerned, until Inverness. I fully appreciate that the Government are committed to taking a look at this terrible road. It is inevitable, both because of the tourist traffic and more especially because of these huge lorries, that eventually it will have to be a dual carriageway. There will come a time when money will have to be spent, and I beseech the Government to take the decision earlier, rather than later, so that all those of us who travel this road, whether for pleasure or for business. will at least do so more pleasantly than we do now.

7.31 p.m.

LORD RANKEILLOUR

My Lords, what strangeness is gripping this Kingdom, that an area such as the Highlands —a space of perhaps 5 million acres—should first be held to ransom by its own people, in less enlightened times. and now be in dire peril from possibly another Beeching and others? This debate is supposed to review the arrival of the new North Sea oil strikes in relation to the economy of Scotland. But we cannot take this in isolation, since without communications there will be no oil—an oversimplification, no doubt, but fundamentally true. Highland life is by no means a bed of roses. It really is rather hard going; and the more that can be done to even it, the better. If railways are to be ripped up and one is to be left with highly inadequate roads for present-day communications, it will surely be very unfair to the population. It is always being said that no county can take on its own stretch of main line rather than have it pulled up. This may well be so, but think how brilliantly some men in this country run their manufactories and manpower! Could we not see even one of them taking on a redundant West Highland railway? A private railway can be run so much more imaginatively than the present indifference to order. Even if the railway is not pulled up, it would be in the interests of British Rail to put their property to the very best use to the public that they can. That would include a supreme effort at presenting their trains, staff and redundant buildings to the greatest advantage: observation cars; attracting the portage of farm animals to Lowland markets; smartly turned out personnel; and a considerable improvement in the way that the trains are stopped and started. Sudden stops and starts can be quite alarming and rather uncomfortable, especially to a person with my sort of figure.

As to transport, my Lords, in the West Highlands communication is undoubtedly the main factor to its economy. We have the odd main road already out of date although newly-widened. With the A.9, the main route into the territory is still painfully slow in its widening operations, making driving somewhat hazardous; though if ever finished it will still not suffice. But trains, my Lords, should still be regarded as the strongest link in this set-up. It was an ancestor of mine who was the first, or one of the first, to try to raise interest in building a rail-road into the West Highlands, but his great dream came to nothing. It was deemed too expensive, and the mountainous terrain too fierce to tame. Faint hearts indeed, because when the railway was constructed the West Highlands thought that it could then expect a progressive future. Now comes word—word of mouth, that is—that this line is to be pulled up. Do I hear aright? Can it be that some faceless autocrat in some British city has taken such a dotty decision as this?

My Lords, when the snow comes the roads sometimes block, but the train usually gets through. When the roads flood it sometimes does not affect the train. But our little autocrat would not know that: he probably thinks that we have an airport, docks and hovercraft service instead. The signs of the end are there. Many railway cottages have been wantonly pulled down, despite the pleas of homeless people and the do-it-yourself brigade; our cattle and sheep consignments to the Lowland markets are refused by the railway company; spur lines and passing places have also been ripped up; and even the harmless little stations have been bulldozed flat, often in growing villages, as indeed is the case in my own. Who is steering this ship? Is anyone at the wheel at all? Is it Government policy to turn the West Highlands back into a wilderness again? I seem to remember reading the writings of a step-ancestor of mine. Sir Walter Scott, in which he praised the great beauty of the `Nest Highlands and exhorted his readers to explore that wild and roadless countryside. It was largely due to him that roads were built to attract tourists to become more advantageous and then in time came the trains, mostly bent on much the same mission. It matters not at all whether the tourist wants the Highlander or the Highlander the tourist: they both need inland and island transport, train or packet steamer, and it is beginning to look as if neither will have either.

My Lords, the Government must realise that they cannot run down a chunk of the United Kingdom just because it is not paying its way. It is neither sporting nor far-sighted. The East Coast oil boom is bound to mean a large influx of people during the next few years, many of whom will need houses, land, entertainment, schools, fresh air and leisure occupations. What will they find? It may be narrow, bumpy roads and almost no trains—near sterility. It may seem of paltry importance to most people in this Kingdom that railways are to be pulled up and inadequate roads left to cope with the massive timber lorries, motorcars, road trains and heavy, wide construction equipment, which are the bane of one's life these days. But to those of us who live in the hills it smacks of the lack of basic strategy. I should like to see a great deal more passenger traffic on the Caledonian Canal and waterways between Fort William and Inverness, to link up the industrial Highlands in the East and the restful areas of the West.

My Lords, my contribution to this debate may not at first appear to have anything to do with the Scottish economy and the oil boom, but let me say that without modern communications the communities will have neither and they might as well pack up and depart—if there is any method of doing so by then. As the Government are ultimately responsible for virtually everything that happens in the United Kingdom, I hope that heed will be taken of my words; for if I am ignored Sir Walter Scott will have wasted some of his time, and time is highly underrated in a man's life—and that is horrifying if one thinks about it.

7.39 p.m.

THE EARL OF LAUDERDALE

My Lords, in following my noble friend Lord Rankeillour I cannot help remembering the wittiness of his maiden speech in one of these debates a year or two ago. We hear him too little; and how pleasant it is to follow him! On the questions of transportation, to which he referred, I shall return. I should begin by thanking my noble friend Lord Arbuthnott for introducing this debate so splendidly, so usefully, so constructively, so concisely. And I must congratulate my noble friend Lord Aberdeen on his maiden speech, which was so witty, so worthy and so welcome.

I should like to apologise to my noble friend Lord Drumalbyn because during a debate that almost matches that on the Longford Report for competition to speak, I had to nip out to slake my thirst, and therefore I missed one or two of the things which he said. But may I thank him for his long letter, which I am glad to say has been circulated to other Members who took part in the last debate on oil. I should like to thank him for going to great trouble, and to express the hope that any letters which are written to noble Lords as a result of this debate may perhaps also be copied and distributed to other noble Lords taking part, because they are of general benefit and interest. Here I take up Lord Hughes's point, even though it points to a certain salty controversality about our consensus: it is as Scotsmen and for Scotland that we speak presently in this great Council of the nation.

To my noble friend Lord Polwarth, may I extend sympathy; because he will now have not 40 or 50 but 70 or 80 questions to answer. I think this is the first of these debates that it has fallen to him to answer. I had the privilege of putting to him the first Question that he took at the Box. He took that ball pretty well, and I know that he will take this one; but may I say, I think on behalf of everybody, how much we welcome him at the Box, and as our Minister of State. That cannot be said vigorously enough. I am sorry that the noble Lord, Lord Taylor of Gryfe, has disappeared from the list of speakers. One would have waited for him even if one had not to wait for one's own speech. The noble Lord, Lord Lyell, was good enough to make complimentary references to my enthusiasm over Oceanspan—now "old hat"; it is everybody's talk.

Perhaps one should say a word about the honorary Scotsman among us to-day from the plains of Hungary. I do not believe that either the revenues or the degree of public sector participation in the oil industry is a serious and fundamental matter. I believe that this is tilting at a windmill; and when Mr. Cross-man betters the noble Lord, Lord Balogh, to-day in The Times by saying that the oil companies' profits might well in the general interest be limited to 40 per cent., I believe that they will take that up quickly enough. On the current targets of 50p a barrel that are being talked about in knowledgeable quarters against capital costs, operating costs and interest costs of about 40p per barrel, private enterprise would be happy if a 25 per cent. return could be guaranteed; but those figures discount exploration costs—

LORD BALOGH

My Lords, the noble Earl's figures disprove his contention.

THE EARL OF LAUDERDALE

What is always so agreeable about the noble Lord, Lord Balogh. is that we go round in circles as in a danse macabre. This is not the moment to go to quite the depths that he was able to descend to in the North Sea oil conference this afternoon. if the oil companies could be guaranteed 25 per cent. I think they would be very pleased. But those figures discount exploration costs and the critical difference between the reserves in being and the reserves recoverable—which in the Forties field is not more than 40 per cent. They overlook the facts that not all the acreages are equally good (and the public sector has done pretty well); not a single platform is yet in place in the North part of the North Sea; not a single exploration rig is active in the North part of the North Sea; not a single mile of deep-sea pipe has yet been laid in the North areas of the North Sea. To the noble Lord opposite (who is itching to be back on his feet) and to Mr. Crossman, I would draw attention to Henry V, "the man that once did sell the lion's skin while the beast lived, was killed with hunting of him".

LORD BALOGH

I must say that the noble Earl is the nearest thing to a cuttlefish because he has now, to mix my metaphors, raised so many hares, that one is hardly able to follow him. He is so nimble in spite of his bulk. It seems to me, however, that if he is talking about the profit as a percentage of the price, this has nothing to do with what amount is earned on the investment—and we now know what the investment will be not of the British but of the Norwegian side in Ekofisk. I can assure the House that I should be willing to grant them 25 per cent. on capital investment, including all these complicated matters that the noble Earl so ably enumerated and which left his own side of the House absolutely aghast and gaping with admiration.

THE EARL OF LAUDERDALE

My Lords, I must not weary the House by pursuing this dialogue, except to say that I confess I get the same sort of pleasure out of seeing the noble Lord, Lord Balogh, on his feet on this subject as I did out of seeing the noble Lord, Lord Gladwyn, on his feet whenever I spoke on the Common Market.

On the industrial spin-off the picture is a mixture. Half the development expenditure after drilling is in permanent hardware. Only 15 per cent. of that is material; 85 per cent. of it is hookup, packaging and craftsmanship. So there are good and bad points. A good point, for example, is that at Nigg Bay Brown and Root, in training welders, riggers and fabricators, have had a 94 per cent. success from training 672 unskilled people. The bad point is that in delivery terms one gets comparisons of this kind: platform cranes, Britain, 14 months; U.S.A., nine months; pumps, Britain, four months; U.S.A., 2½months; pressure vessels, Britain, 26 weeks; U.S.A., eight weeks—though I am bound to say, for good or worse, 28 weeks in the rest of the Common Market. A good point is North Sea Assets Investment's part in this 65-milliondollars Viking Marine Equipment plan to finance a semi-submersible pipe-laying barge. It is a critical enterprise, for only by practice in this submarine field can we hope to sell future research results to companies busy in the North Sea. We must show we have had this experience undersea in order to reap the future fruits of our research. The bad point is that this barge is to be made in Holland. Another good point is that 100 million tons per annum, or 2 million barrels per day output in the United Kingdom sector means 10 major fields of about 200,000 barrels a day, or 35 platforms by the 1980s, or three or four platforms per annum. The bad point is that no indigenous United Kingdom platform design capability exists at the present time.

Here are four practical points which have been distilled, I quickly say not by me, from a slim volume which reached me this afternoon covering a conference, the Oil in Britain Convention, at Windsor at the beginning of this week. It was organised by the World Oil Technical Services Limited. These points on industrial spin-off are worth mentioning. One item is that British industry appears to be looking for a lower risk point in its investments in North Sea oil than that expected by the exploration companies. The second conclusion is that some difficulty is experienced in interpretation between American, European and British standard specifications to determine the minimum standards required. The companies, to be successful, need detailed market research on oil company requirements. This, no doubt, is forthcoming from various activities set in hand by the Government; but it was admitted at that Conference (and I think this is generally agreed) that American companies have an advantage in that they enjoy what they call "in house", inside knowledge, of pending contracts and development. That gives them a lead.

But more important questions, I believe, relate to energy and price policy for Britain in general, and this matter was raised by implication by the noble Viscount, Lord Arbuthnott. We in Britain are now moving into a high food cost and therefore a high wage cost economy in Western Europe, in the greatest economic policy change since the repeal of the Corn Laws. I would suggest that it is in United Kingdom, and indeed therefore even in purely Scottish, interests that we should seek a policy to offset these new high food costs, on-costs, by cheaper power. Whether it be oil, steel, or chemicals, electricity costs to British industry are the highest in Western Europe so high that many companies, like I.C.I. at Stevenston, have had to set up their own power plants, which only have the effect of reducing the load factor on the nationalised energy industry and thus raising the cost to industry in general.

But, thanks to our geographical position, to which the noble Viscount, Lord Arbuthnott, alluded rather more delicately than I propose to do, our offshore oil prices could be manipulated greatly to the British advantage. I therefore welcomed Lord Drumalbyn's assurance in his letter to me of December 12, which was circulated to others who took part in that oil debate, in which he said: The petroleum resources of the whole of the U.K. Continental shelf will continue to be treated as national assets in our policy for their exploration and exploitation and we shall ensure that British interests are taken fully into account as Community energy policy is developed. That, I believe, is a most important statement, and we are very glad to have it, but I should like to press the Government to do a little better than my noble friend's answer in the same letter when he said that in formulating the Community's common energy policy he could not at this stage attempt to "anticipate or indicate the Government's assessment of the individual points before the discussions are under way."

My Lords, I, and I think others, would like to know what is our policy in approaching the Common Market countries on energy policy. The simple fact is—as the noble Viscount, Lord Arbuthnott, hinted and I am saying quite bluntly—that Britain's share of the Continental shelf, let alone the slope, is Europe's largest. So it may be that Britain could apply (this perhaps will appeal to the noble Lord, Lord Balogh, who is now in a more relaxed, more recumbent, position; and let him stay that way!) an OPEC-type kind of tactic. We might say, tax crude exports, so as to be able to negotiate a high "posted price" or its equivalent for Western Europe; and, having done so, we might subsidise British consumption by fiscal devices and drawbacks, thus to ensure that we subsidise our energy supplies and so offset other high living costs that we are going to encounter inside the E.E.C. I ask my noble friend Lord Polwarth not to try to answer me now. I know that in due time there will come out of the machine a letter over his signature which I shall be very glad to have and which I know will not be signed without his own very careful attention to it.

A number of noble Lords—the noble Viscount, Lord Arbuthnott; the noble Lord, Lord Burton; the noble Lord, Lord Lovat, and the noble Viscount, Lord Thurso—have drawn attention to the need for infra-structure planning. In the Common Market, incentives to industry are going to be closely monitored so far as the peripheral areas are concerned to make sure that what is known as "parallelism" takes place. But there is nothing in the Common Market regional policy prospects which would prevent infrastructure aid to peripheral areas, even on a massive scale. My noble friend Lord Polwarth, in his first Parliamentary reply in this House, said, on April 27, that there was no need for a special department within the S.D.D. to watch the oil situation. However, his colleague in another place, Mr. Younger, told an Edinburgh conference in June that infrastructure should match—"match" was the word—the progress of oil development. I would go further: infrastructure should anticipate oil development and, taking four or five examples in turn, let us go back to the road business because the more this is hammered into Ministers' heads, the better. Here I take up Lord Perth's point that the A.9 is as vital to Scotland as is the Channel Tunnel to the South of England. The noble Duke, the Duke of Atholl, the noble Lord, Lord Mansfield, and the noble Lord, Lord Rankeillour, have all spoken about it and the noble Earl, Lord Cromartie, referred to the trucks that hurtle along that road.

My Lords, by 1975, each of the 27 rigs then expected to be operating in the Northern North Sea out of the East of Scotland and the Orkneys and Shetlands will need something like 25,000 tons of freight per annum; in other words, 675,000 tons of freight a year. That, of course, supports the case for keeping open the Highland Railway. But much will go by road anyhow because of the dockside door-to-door advantage and above all, in the case of the Orkneys and Shetlands, the roll-on/roll-off facilities to be had at Scrabster. Split up into loads, this volume of freight could be about 2,700 tons each working clay or 135 30-ton trucks each way daily on the A.9 and the A.94 together. If that is now shortly in prospect for the routes to the North and the North-East, what about the routes to the West—Kyle, Ullapool and so on—and what about preparation now for developments in the Minches and the Hatton Bank? In the face of all the arguments deployed to-day, do the Government still stand by the old-fashioned approach, this cost-benefit analysis approach, that road decisions should be taken on the basis of current use? Will they write a serious letter on that subject to all of us who have asked this question?

My Lords, another aspect of communications relates to radio and telegraph frequencies. Rigs that may be 120 miles out at sea, say in the Auk, must take care to avoid interfering with merchant shipping frequencies. Very often they cannot use a teleprinter circuit at night because it is overloaded on land. A tool-pusher may well have to book his call to his headquarters through Stonehaven and then just wait, and in this business you cannot wait save at a very heavy cost. Data link facilities—the noble Lord, Lord Hughes, will remember that I raised this matter in the first debate of this kind that I attended and which he answered so ably, as he always does—depend on siting the trunk switching centres which presently are limited to Aberdeen, Inverness and Oban. What about Wick or Thurso and also Lerwick?

The noble Lord, Lord Lovat, raised another point in connection with infrastructure; namely, water. He did not say so, but I am passing on the information that each rig needs about 12,000 gallons of fresh water each day, about two-thirds of which is distilled on board. This could build up to a demand of about a quarter of a million gallons a day on the North and East coasts. Any refinery which was established in those parts could be a large user of fresh water, anything up to 2 million gallons a day for a throughput of 10 million tons per annum of crude. These are quite large figures related to the presently impounded and linked sources of supply. We all know that Aberdeenshire housing has been delayed by the water shortage. The North-East of Scotland Water Board, and others, have been pressing for a water grid pipeline from Loch Glass in Easter Ross down to Inverness-shire then the North-East and eventually to Central Scotland. I ask the Government—again this is no doubt a matter for a letter later—what studies do they have in hand on this?

Then, my Lords, energy North of the Caledonian Canal. There is scarcely an over-supply of this just now: say, 300 megawatts from Dounreay once the prototype fast reactor is in operation, and 200 megawatts from hydro—say 500 in all. But the trunk line south of the canal goes by Kintore and is vulnerable to weather. Surely there is a case here for considering the extention of the national gas grid North of the Caledonian Canal, instead of simply to a terminal at Crimmond? And secondly, is there not a case for pricing, to entice Frig! Field gas ashore at Nigg, for extra power in the far North, for butane for carbon blocks for British Aluminium and as a petrochemicals feedstock? Surely here there is a case for enticing, or at any rate studying the possibility of enticing, crude oil refining on the Cromarty Firth so that the lower fractions could serve power generation and the lowest fractions could provide petro-coke to British Aluminium while the balance went for petrochemicals feedstocks.

Then, my Lords, the fourth example. What about land use, which has been referred to by my noble friends Lord Lovat and Lord Stonehaven. There is a virtual black market traffic in land options at the present time. Lawyers' letters pass from hand to hand. The trade is brisk, invisible and frightening. Often options are sought and bought irrespective of planning prospects, because those who engage in this traffic believe that the economic pressures will be stronger than the planning authority's power to resist them. Since only land ownership is recorded in the Register of Sasines there is no official track of this traffic. It all means of course that land tends to be held back and sterilised. It makes the district valuer's figures a laughing stock. Surely land use studies, useful as they are, cannot be enough by themselves. Do we not need a policy towards speculative developers trafficking in these pieces of paper? Do we not need some policy towards keeping track of this traffic? What is the Government's view about that; and will they write in due time?

My Lords, my noble friend Lady Elliot of Harwood anticipated me with a plea about the Borders. The Borders have got very little out of this bonanza. Berwickshire at the last census (and now we have the full figures) showed another drastic population drop—about 7.4 per cent. over a decade. This reveals the same sort of sociological conditions as we have known in the past in the Highlands: an above average proportion of the elderly—in this case 14.8 per cent. of the men—are more than 65 years of age. Can Berwick-upon-Tweed, can Eyemouth, come in on this bonanza? About 100 exploration blocks lie within reach of Berwick-on-Tweed. The Auk Field is about the same distance from Berwick as it is from Aberdeen—142 miles.

Then there is the old question of the East-West trunk road between the Borders and the Clyde. For several years we have heard the arguments about there now being insufficient traffic. We know that the same argument can be used, and has been used, of the Highlands. But if the maximum benefit from the Tweed-bank scheme is to be obtained, then there must be a proper road link, worthy of the name, able to carry heavy traffic from the North-East of England and the South-East of Scotland to the Clyde. Then, of course, on the same theme there is the question of dualling the Al trunk road between Newcastle and Inverness.

My Lords, whether it be roads, I believe that the Government are largely trailing behind events; whether it be water, I believe they are largely trailing behind events; whether it be power supply, I believe they are trailing behind events; whether it be radio telegraph or data link communications, I believe they are largely trailing behind events; whether it be land use action against the traffic in paper options, and social provision in terms of housing and other amenities, I believe that the Government are still trailing behind events. Do they really think that the case is no longer proved for some central co-ordinating authority, be it a special division of the Scottish Development Department, or be it in some other form? If the North Sea Shelf is 600,000 square miles, the European Shelf is three times as big at 1,800,000 square miles, and the world shelf is 50 times as big at more than 27 million square miles. My Lords, such is the scale of our opportunity.

8.5 p.m.

LORD STRATHCLYDE

My Lords, I intrude only briefly into what has been a most interesting debate with notable speeches, during which many suggestions have been put forward for the strengthening of the economy of our country, with much attention given as to means of taking advantage to the greatest possible extent of the discovery of oil in the North Sea. The possibilities in that connection are enormous, and one can only hope that they will be seized with avidity and exploited with courage, determination and resolution. The Government and industry each have a great part to play. There must be no dithering, no vacillation, if we are to secure the great prize which is well within our grasp. But, at the same time, we must be careful not to forget to cherish those industries which have over the years served us well, and continue to do so.

In that connection, I should like to look with your Lordships for a moment at what I believe is, if not our greatest, certainly one of our greatest industries; namely, Scotch whisky. Here I must declare an interest. Not only do I like a little drop of it every now and again, but I also hold shares, and have for many a long year, in the Distillers Company, as do other members of my family. While industrial rate of growth during the past five years has been disappoint ing, being only about half of that of the United Kingdom as a whole, the whisky industry has a robust record of growth. Last year it exported over 70 million gallons, valued at £227 million. Over the last 20 years its exports have grown annually at a rate of 9 per cent. in volume and 11 per cent. in value, and that in spite of discriminatory taxation against it in the United States, Australia and New Zealand; while in Canada it has to fight domestic whiskies on a most unfair basis. Much the same discrimination is shown in France and Japan, while in South America inferior spirits locally brewed are frequently passed off as genuine Scotch whisky. Our entry into the Common Market provides more problems, but here I am glad to think that the Government have been alerted and are working to ensure that, should an alcohol régime be established in the Community, Scotch whisky will not come under its control. On that issue, it is absolutely vital for the future of this industry that the Government should succeed.

One would not expect that an industry with such a wonderful export record—an industry employing over 23,000 people, many in remote areas where alternative employment is difficult to find; which provides much work for transport and at the docks, one-third of the traffic going through the Clyde Port Authority being supplied by this industry, and which over the last four years invested no less than £100 million in new plant and machinery—would be called upon to face discrimination in favour of imported wines in our own country. The level of duty on imported sherry, for example, in relation to alcoholic strength, is only one-third of the duty which has to be paid on Scotch whisky—and on that product the duty is also very much higher in the United Kingdom than it is on other alcoholic drinks, whether they be beer or British fortified wines. In addition, the duty on whisky has to be paid before it can be released from bond. In effect, it is just an additional tax.

In view of its record and the revenue which it produces, this great Scottish industry is truly worthy of Government assistance and help—help to obtain for it fair trading terms in the United States, in Commonwealth countries and elsewhere in world markets where it faces discriminatory high taxation; help by diplomatic pressure to remove restrictions in countries where imitation is prevalent; help through a substantial cut in excise duty, such as is needed (I am advised) to protect it within the Common Market. My Lords, is it not really high time that a better way be found to tax alcoholic drinks by charging a flat rate of duty according to the degree of alcoholic strength?

Finally, the Government should surely allow, as is general in commerce, a period of credit for the payment of duty. I know of no other industry in the United Kingdom which is called upon to bear such a savage burden of taxation as this great Scottish industry. It does not seek, or ask, for favours. It asks for fair dealing and justice from the Government and the Treasury, which are situated here in the capital city of our much larger and wealthier partner and neighbour.

8.13 p.m.

LORD HOY

My Lords, it falls to me to wind up the debate from this side of your Lordships' House. I should like to mention the last two speeches first, because it was interesting to find that in one of them the noble Earl, Lord Lauderdale, talked of having been away slaking his thirst, while the last speaker, the noble Lord, Lord Strathclyde, extolled the benefits to be gained from drinking Scotch whisky. For a quarter of a century I may say that I had an interest in this subject because I represented Leith in the House of Commons, and in my constituency we had almost every blend of whisky to be found in the country, so that this trade was not unimportant so far as my constituency was concerned, both from the point of view of employment and of revenue. I would just add the wish—and I do not want to introduce any dispute at this time—that the company with which the noble Lord is associated would reach a settlement in connection with another matter; and I am certain it would be a settlement along lines that would be welcomed by everyone, both in your Lordships' House and elsewhere.

We are grateful to the noble Viscount, Lord Arbuthnott, for opening this debate, I should like to add my congratulations to those of other noble Lords on the way in which he did it. May I also congratu late the noble Marquess, Lord Aberdeen, on his maiden speech, which I enjoyed enormously. He pinpointed a little problem which is not new to your Lordships' House: that is, the question of amenity and employment. The noble Marquess seemed to think—and I am sure he was sincere in this—that he would give up the right to preserve his own private bathing quarters if in fact a little industry could be introduced into that particular bay. We often hear noble Lords saying in connection with this question—and not only noble Lords, but all of us—that we must have employment. I remember one noble Lord saying that he did not mind just how well the economy developed, because we must really develop it, provided that we did not have people. Of course, that is rather a limiting factor. If you are going to have development then you must have people. I am certain that the noble Marquess would welcome people if it meant that they were going to have a job of work to do there.

May I turn now to the question of employment in Scotland. I was delighted to hear the noble Lady, Lady Sempill raise the question of the fishing industry. We all talk about the importance of oil, steel and many other industries, but do not let us forget that this particular industry is equally as important to the fishing villages of Scotland as the larger ones. I believe that the noble Lady was asking your Lordships' House, even if we get into what might be regarded as a quarrel (even an international one, as in the case of Iceland and ourselves), not to forget the importance of this industry to certain ports in Scotland. I am sure we are all grateful to the noble Lady for the contribution she made.

The noble Lord, Lord Drumalbyn, encountered a little difficulty with his employment position. He seemed to be congratulating himself on the reduction in unemployment figures recently. I do not want to appear Party political on this issue, but I have seen it happen so frequently in days gone by. After all, the noble Lord did not say that it was his Government which got the figures up to this height; and now that they have got them down a little he wants congratulations. I am bound to remind him that during the 1969-70 debate, when the unemployment figures were considerably lower than they are to-day, the noble Lord and his noble friends were lambasting the Government of that day for having such high figures. Yet they compare more than favourably with those that we have to-day. I agree with him that unemployment is a scourge. Indeed, as a member of a family which lived with unemployment many years ago, I can personally remember the poverty and misery that it created in our household. Therefore we congratulate any Government, regardless of their political persuasion, which can reduce unemployment figures. But just let me remind the noble Lord and his noble colleague, Lord Polwarth, that unemployment figures are far, far too high for the good of Scotland and its economy.

The question of oil obviously always brings troubles. I do not claim to be an expert on the oil industry. To-day we have so many experts that one begins to wonder where the truth lies. My noble friend Lord Hughes to-day raised a question with the noble Lord, Lord Drumalbyn; and it is amazing what people can do, not only with figures but with language. The noble Lord, Lord Drumalbyn, said that the noble Baroness, Lady Tweedsmuir (the predecessor of the noble Lord, Lord Polwarth), had not been precise in her language, or that she was "not sure". Whatever else one might accuse the noble Baroness of, one cannot make the accusation that she is not precise. She is always extremely careful. What she said in the debate on November 24, 1971, at col. 1032, was this: Coming as I do from the North-East of Scotland, I am of course immensely interested in the development of the major new oilfields of the North Sea. The companies concerned are understandably guarded until further development, but it appears that oil will be available from the Northern sectors of the North Sea to the extent of at least 50 million tons a year by the mid-'seventies,… Then she made a forecast that it would rise to something like 150 million tons by 1980. It may be that there has been a re-thinking. It may well be that people have had to revise the figures.

All I say to the noble Lord is that if a figure of 50 million tons is to be reached by 1975, it is going to be a poor performance if between 1975 and 1980 we can add only another 25 million tons. So the noble Lord had better look at the figures again because I have seen other figures raised in a debate on this subject in another place. During the debate on oil in Scotland Professor Odell, who is also regarded as one of the great experts in this line, was quoted as suggesting that the figure quoted by my honourable friend Mr. Douglas might well reach 300 million tons. This really is a tremendous figure. The Secretary of State then interrupted to make sure that the figures my honourable friend had quoted were correct. My honourable friend gave them again and quoted the source for so using them.

LORD DRUMALBYN

My Lords, it may help if I made it clear that what my noble friend was doing was to repeat figures that had been given in another place in a debate a few days earlier in Committee, and quoted by Mr. Younger there. He made it quite clear that the Northern sectors of the North Sea to which he was referring were both sides of the Northern sectors, both the Norwegian and the United Kingdom figures. We have been able to look this up since the Question was asked.

I notice that in the Financial Times to-day the Deputy Director-General of the Norwegian Ministry of Industry quoted a figure of 50 million tons as the likely rate of production in 1980 for the Norwegian side. The noble Lord may be right in saying that we may do better than that. We may, but I was being asked about the estimate and the disparity between the 75 million tons plus the 25 million tons, and the 150 million tons. The disparity is not that great if you divide it between the two sides. That lessens the difference still more.

LORD HUGHES

My Lords, even on that point, the arithmetic is still not right. In the part of Scotland that I come from —and I am not a chartered accountant—75 and 50 do not add up to 150.

LORD DRUMALBYN

My Lords, I have just said that. I have just said that between 125 and 150 there is a disparity of 25. Admitted that there is a disparity, but not the large disparity that we were discussing earlier to-day.

LORD HOY

My Lords. I think it is a very large disparity. Even with 25 million tons it is one-sixth of the total quantity that we are discussing. That is large, and the noble Lord has now said that since the Question they went back and had another look at the Answer. This Answer was made 12 months ago. That is a long time ago. It seems a little reticent to wait for 12 months to find out what the true answer is. All I am saying is that this bandying of figures strengthens the case that has been made in another place, and this House, for a White Paper laying out the facts of the situation.

LORD BALOGH

My Lords, I do not know whether the noble Lord, the Minister, knows that Professor Odell has further modified his estimates. His estimate is. including the Irish Sea and also the Northern Approaches. that the figure is more than 300 million tons, and it is more like 500 million tons for Europe as a whole. Professor Odell's figures have always been denied and derided, but he has always come out top.

LORD HOY

I am grateful to my noble friend for the information that he has given us. I will not take the matter any further, except to say that when the original Answer was given Norway was never mentioned at all.

LORD DRUMALBYN

My Lords, it was in the other place, as I said. My noble friend quoted the same words, but did not complete the meaning by making it clear, as my honourable friend in another place had done. It covered both sides, and mentioned specifically the United Kingdom and Norway.

LORD HOY

My Lords, I am sorry that the interpretation given to your Lordships was faulty.

LORD DRUMALBYN

It was not.

LORD HOY

Yes it was. My Lords, if a part is left out, then of course it is not a correct position. All we can go on in this House is the information supplied to us. However, as I have said, I will take the matter no further at the moment, except to say once more that it strengthens the case being made on all sides for a White Paper, so that the matter can be explained easily to people like me—I had better not include anyone else. I am certain that when I say that I speak for myself in wanting to be able to under stand this matter clearly, I am also adding a word for many other Members of your Lordships' House.

What is to be done in the future? We have also had a discussion about the profits that are to be made. I see varying figures. I have listened to my noble friend Lord Balogh. I have known my noble friend for a long time and I do not doubt his figures. Yet I have had another set of figures given to me to-day by one who is regarded as an eminent professor. His figures show that the profit per barrel on the average cost in Britain is somewhere in the middle of the scale. In other words, he is saying that the profits which are going to be made by the companies are not exorbitant if you consider them in relation to either the top bracket or the lower bracket.

What I agree with—and I do not seek to dissent from it—is this. When the decision was first made it was said that speed was the essence. This was agreed by both Governments. Surely it is not unusual, after one has got under way. to think out what has been done, and what the terms might be in the future. I should have thought that it was incumbent upon any Government to take this into account; and that this Government, no more nor less than any other, would do so. There are a considerable number of fields yet to be allotted. There is a strong feeling in the country that public participation has not been as great as it ought to have been, and that the proceeds from this industry will not find their way in any considerable quantity back into the national Exchequer. We are arguing —as most people are to-day—that this natural resource at least ought to be of considerable direct benefit to the country. We know and appreciate that it will provide employment; but even then there is a great deal of doubt as to the number of jobs that it will provide.

In the future I see two things: one is on the educational side, because I was interested, as all of us are, to hear what the noble Lord, Lord Balerno, said about the research work being undertaken by the Heriot-Watt University. He will tell your Lordships, and be glad to do so, that this has been made possible to a great extent by the generosity of the Wolfson Foundation. But the university requires more than that if the job is to be undertaken. The noble Lord was making a serious statement when he said that there were post-graduate courses and graduates to do the job, but that lack of finance was preventing them from taking up these jobs. If this is so, the Government must look at it again; and indeed they must do more than that on the educational side. I think they will have to expand the whole of the training and educational facilities of this country with regard to oil, so that we shall be training our own people to undertake these tasks and be, if not independent, at least much less dependent than we are at the moment on other countries supplying these experts and technicians to us.

In paying this tribute to the Heriot-Watt University may I also remind the Government that they have asked the Aberdeen University to undertake a piece of specific research? I should like to ask the noble Lord whether in fact money has been made available. My information is that the University is having considerable difficulty in getting this piece of work off the ground, purely because cash is not available. I do not know whether that is so or not; all I will say to-night is that if the Government want to ask universities to do this work they must make the finances available to them.

There is one other subject to which I wish to turn now, because the hour is getting late. This is a memorandum that I have personally received from the Metallurgical Plant Makers' Federation. They are complaining that, owing to a lack of Government decision, it is impossible for them to get on with their job. As I understand it, they operate in the main in the South, although there is a very large firm in Coatbridge and there was a second in Glasgow, but because of lack of orders the whole thing had to be transferred from Glasgow to the South. These people say that they must have a decision in regard to British steel very quickly, because the long-term arrangements for the British Steel Corporation simply cannot be gone ahead with, owing to the fact that the Government will not make a decision. If these plant-making organisations are to play their part, they must have information from the Government at an early date. As I understand it, the Federation comprises seven associations of about 69 companies. It represents suppliers to the home and overseas markets in the full range of metallurgical plant, from ore unloading to the handling of finished products. They then go on to point out that the great problem once more is the home market, and they tell me that this is clearly shown by the value of orders placed by the British Steel Corporation with member companies of the Federation. They were as follows: in 1969, £18 million—I am giving the sum in round figures—in 1970, £107 million; in 1971, £45 million. As a consequence, this very important section of the British economy is finding it extremely difficult to go ahead with its work. It seems to me that unless we can get these companies and this type of business working our economic recovery will be greatly retarded. I say to the noble Lord that not only could we have this undertaking in Glasgow but (who knows?) if we get this information early enough we could get an expansion of this type of work in Glasgow and in Scotland generally, where we are not inexpert in this field of industry.

So I say to the noble Lord that these are the issues which are standing out in the country to-day. I think the Government must provide a paper in regard to oil; they must tell us what they are going to do on education; they must tell us what the real prospects are, and indeed what the forecast will be, so that we may get rid of these differences. There is no need for any quarrelling between both sides: if we know the facts we can make the decision. Secondly, the noble Lord must look at the job of the industrial constructors. I am willing to send the correspondence to the noble Lord, but he must make a decision on it.

Finally, I wish to say one word about roads. I will not repeat what has been said about the A9. I am told that the noble Lord, Lord Ferrier, in my absence was quoting his own case, which is fully reported in the letters to the editor of the Scotsman this morning which the writer claims made a greater justification for the ring road than all the work done by the noble Lord. That is rather a backhanded compliment; but the way in which he related how the refrigerated lorry left the doors of St. Giles's Cathedral very rapidly, proceeded down the High Street, crossed the bridge, went down the next part of the High Street and finished up in John Knox's house, I thought made the case very tellingly. On all these subjects we must get decisions. What we have sought to do in the course of to-day's debate has been not even to criticise. We have not resorted to the virulent language used by the noble Lord, Lord Rankeillour, nor to the rum-bustiousness of the noble Earl, Lord Cromartie. All we say to the Government to-day is this: these are the subjects with which Scotland is confronted; please give us the answers.

8.37 p.m.

THE MINISTER OF STATE, SCOTTISH OFFICE (LORD POLWARTH)

My Lords, we are getting to the end of a wide-ranging and, I have found, absolutely fascinating debate which I can say quite genuinely has been almost entirely helpful and constructive. I am extremely grateful to the noble Viscount, Lord Arbuthnott, and to all those noble Lords who have given of their time and talents to bring this about. A great many suggestions have been made and a great many questions have been asked. To attempt to answer them is a daunting task, and if at this hour I concentrate on the main issues and do not attempt to reply to every point made I suspect that I shall have your Lordships' gratitude rather than the reverse.

The noble Lord, Lord Strathclyde, asked us to take a look at Scotch whisky. I suspect there are a few of us who will want to do something more than that to it. I can, however, assure the House that my colleagues and I will look seriously at everything that has been said in the debate and will do our best to answer by correspondence where, for reasons of time or otherwise, I cannot deal with the questions to-night.

To start, may I, too, offer my congratulations to my noble kinsman Lord Aberdeen on a knowledgeable, persuasive and human speech. We all know the record of service of his family, and the notable contribution which his father made to our debates from practical knowledge starting on the shop floor in industry. I am glad to recall the fact that our mutual ancestor was the Lord Aberdeen who subsequently became Prime Minister, and I understand that he made his maiden speech 165 years ago. The knowledge of the noble Marquess, Lord Aberdeen, in regard to the North-East of Scotland is of great value. I hope that the arrival of the pipeline at Cruden Bay will not unduly disturb his bathing activities—I think probably it will not. May I assure him at this point that no decision has yet been taken about developments at the Loch of Strathbeg, to which he referred, nor indeed at Dunnet Bay. Both are cases of difficulty and problems and they are being looked at extremely carefully before any decision is made. This brings out the point which has been made to us on a number of fronts; namely, the time taken to arrive at decisions in matters of planning. Here lies the problem. Surely it is better to arrive at the right decisions rather than at over hasty decisions. Somehow a balance must be struck.

These debates on the Scottish economy have become almost an annual event and when, a year ago, I was rash enough to initiate the last of them myself, little did I suspect that this year I should find myself on the other side of the fence —on the receiving rather than the delivery end. The Motion refers particularly to the effects of the development of North Sea oil and gas, and much of the debate has concentrated on this aspect. I am very grateful to my noble friend Lord Drumalbyn for dealing so fully and so ably with much of this aspect earlier on. But, however vitally important it may be. we must keep it in perspective and remember it as only one of the factors in the equation which is the economy of Scotland, the equation the solution to which is the clue to our prosperity.

As I said in the debate a year ago, Scotland's economy is a microcosm of that of the country as a whole. It reflects in a particularly vivid way some of the problems which the whole country is facing. Scotland's fortunes are inextricably bound up with those of the United Kingdom. That said, Scotland's particular troubles are the legacy of our industrial past—of an early industrial development, of the impact of two cataclysmic wars and of the depression years between them. As a result, we have been faced with a great problem of modernising and restructuring our industry. Much has already been achieved but there is still more to be done.

One effect of this state of affairs is that changes in the British industrial climate are felt more sharply in Scotland, certainly as regards the downward trend. The upward trend takes longer to develop and tends to reach a lower peak. In the long-term, the development of oil—that includes gas for the purposes of this debate—with its stimulus to industry can, I believe, play a large part in making Scotland as strong industrially as the rest of the country. Basically, we are indeed strong, as I am convinced following the visits I have paid during the eight months since I took office to over 30 companies throughout Scotland, some old-established, some newcomers, some large and some small. Generally, I found a feeling of quiet confidence, an awareness certainly of difficult markets but no atmosphere of the dejection or despair that one might expect from so much one reads or hears about in Scotland to-day.

Companies on the whole are slimmer and more efficient. This has not helped the employment figures, but as successive Governments have ceaselessly preached we must be efficient if we are to compete successfully in the world of trade. I have the impression that that shake-out of labour has now largely taken place, leaving us better placed for the fresh advance. On one other point I found nearly all these managements agreed; namely, that they were poised for recovery and growth of business but that all that was missing was that clement of confidence which is so necessary above all if industry is to invest in modernisation and expansion of new premises and plant—something of the greatest importance to Scotland, where the making of capital goods is still such an important part of the pattern of our industry. That confidence they were all agreed will return only when it is clearly seen that the monster of inflation is being contained. As your Lordships know well, the Government have taken this as their first and most urgent task. It is vital for the country's future. It is doubly so for Scotland's, for only if inflation is contained can we look forward to that period of sustained economic growth which is the prerequisite for Scotland's emergence from the uncertainties of the present to the assured prosperity which I believe North Sea oil can help us to achieve.

As I said a year ago, and as I repeat to-night, all of us must realise that we have a great responsibility to do every thing in our power to create a state of affairs where no able and willing man or woman should be unable to find a reasonable job of work. I share the regret of the noble Lord, Lord Hoy, that the unemployment figures are not better. I am happy at least that there has been some improvement, an improvement both from the time I spoke a year ago and over the last six months, where the trend is clear. On the national level the signs of demand and output continue to show an improvement; I do not think I need go over all the encouraging signs that we now have. Certainly there is no doubt that Scotland is sharing in the consumer boom that is evident elsewhere in the country. We have only to go into the shops at this Christmas time to see this, and the C.B.I.'s Industrial Trends Survey confirms that the trends in Scotland are following the national pattern. This is a very valuable survey on which I congratulate the C.B.I.

My Lords, the other encouraging point to remember is that we in Scotland have still to feel the impact of the very substantial range of inducements provided under the Industry Act, of which my noble friend spoke and under which some applications have already been cleared and others are well advanced in the pipeline. We in Scotland have an added attraction to our advantage, and that is the supply of high-quality labour available for industrialists coming from outside. We have particular opportunities in relation to the European Community, in many countries of which there is a shortage of labour. I believe that with our entry into the E.E.C. we shall find ourselves an attractive location for American industry, which has provided so many of the new jobs in Scotland since the war but which latterly has tended to establish within the Common Market bounds. I, too, would like to pay tribute to the work of the Committee under the noble Lord, Lord Taylor of Gryfe, who unfortunately is not in his place at the moment.

I have been very much impressed since coming to the Scottish Office by the close links that have been established there at official level between ourselves and Brussels. These have been fortified by the visits to Scotland of a number of Commissioners of the E.E.C. I have made a return visit to Brussels and discussed with them our mutual problems, and I have formed the impression that our regional policies here are most unlikely to be considered incompatible with Community rules in this respect. Furthermore, an important step was taken at the Summit when the Commission were asked to review again the regional problems of the members and to establish a Community Regional Development Fund, the principles of which are to be worked out during the next six months. I have found that there is in Brussels a considerable understanding of the regional problems affecting Scotland, and I believe that Scotland will benefit in due course from those regional policies. We will maintain those contacts. To-morrow morning—to be precise, in about 12 hours from now—I am leaving on a visit to France, at the invitation of the French Government, to exchange experience with their Minister responsible for regional development on their problems in this field and to see something of their actual achievements, and I hope to visit Germany in the same cause later on.

Coming to the nub of this debate, namely oil, so much has been said and so much more could be said that I will try somehow to keep my remarks brief. A great deal has been said about the need for the Government to take initiatives. I am all for the Government taking initiatives in those fields where they can usefully do so, but we must recognise that in many spheres the Government are inevitably unequipped and quite unsuited to take initiatives. We are here moving into what are largely uncharted waters. This oil business is all new and our experience of it comparatively short. I think we still have, as it were, almost a love-hate relationship with it; we want the oil, but we are a little frightened of what we shall do with it and what it will do to us. One is therefore getting a diversity of views and an even greater diversity and number of experts, as we have already been reminded, and there is something of a tug-o'-war as to what should be the priorities in our development of it.

While I have been previously attracted by the proposition advanced by some noble Lords to-day, and by myself a year ago, for the earmarking of revenues from oil against the infrastructure building up and so on, I am bound to say that for a variety of reasons I have changed my view, not least because of the number of claims that have been advanced during this debate against those revenues. They would be hard put to meet all the claims that have been made upon it. But seriously, from a more practical point of view, those revenues do not start to flow for a year or two yet and will not build up for some years thereafter. What we must do is spend and spend now on infrastructure and other support for the industry and that is what the Government are doing.

We are beginning to see the results very clearly. Developments already announced, at least two years before the oil starts to flow, stand to provide at least 8,000 new jobs, with perhaps another 3,000 at the peak of the construction of the B.P. pipeline. About a dozen oil rigs were serviced out of Aberdeen during the summer and the number operating off the coast will be building up rapidly over future years. My noble friend has given other examples of the work going ahead on the construction of platforms on the East Coast. Here I think I heard my noble friend Lord Lauderdale suggest that there was no British effort in the building of platforms. I may have been mistaken.

THE EARL OF LAUDERDALE

My Lords, may I correct the noble Lord? The point I was trying to make was that there is no indigenous design capability in that field.

LORD POLWARTH

I stand corrected, but having myself visited the scene of the construction of one by Redpath, Dorman Long at Methil at least I can say that it is being British built.

My Lords, the Steel Corporation is sharing well in the orders for the land pipeline and in a number of other directions. Many Scottish companies are already now in the business. The other day my right honourable friend the Secretary of State saw the pumps waiting ready two weeks ahead of delivery time, which will propel the oil from the platforms of B.P. through the pipelines all the way to Grangemouth. Many companies are actively seeking business. The North-East Scotland Development Association's mission has just returned from Texas. Some sixty members went there and a number of orders have been already secured. There is intense interest and hopes of more to come. That is what we want to see and it is encouraging to see it happening.

This too, I believe, as other noble Lords have said, is only a beginning. I do not think that there is any question of waiting ten or fifteen years for this to become a British world-wide oil industry as one noble Lord suggested. I believe this is one of the reasons for getting ahead with this operation speedily rather than holding back. We stand more chance that way with our industry going in at the deep end, getting the skills now, and in a year or two's time being in a position to go out and get orders throughout the world as oil is developed elsewhere.

May I say a word now on the question of infrastructure—that unlovely word. I offered a prize for an alternative word a few years ago which still remains to be claimed. The additional money, as I said, is being spent well before the royalties are coming in and on a broad front: on port facilities in Peterhead, Aberdeen Harbour, Lerwick, Montrose, Dundee and Leith.

The road programme has been mentioned by many noble Lords, and notably that famous, or infamous road as it has been called, the A.9. I would only say that at least this Government are tackling the virtual reconstruction of this road throughout its length but it cannot be done overnight. Apart from anything else, here again we shall have the problem that in safeguarding the rights of the individual there may well be many inquiries to be held before this can be finally dealt with. This is just another of those conflicts with which we have to deal. But for those who seek a dual carriageway the whole way North, I would say that personally nothing would give me greater pleasure. But in looking at the total resources available, surely the important thing to do is as quickly as possible to get a reasonable single carriage way for as much of the way as possible at first and let the luxury part of it come later. As has been said before, we are extending the improvement North right across the Black Isle, bridging two Firths in the process, and even if we cannot include the third at this time as was suggested, let us hope that one day that can come too.

My Lords, a great deal is going on on the front of house building.

LORD HUGHES

My Lords, would the noble Lord permit me to interrupt now that he has left that subject? Would it be possible for him to write to those of us who are particularly interested in the A.9, letting us know what the difference in cost would be between the road as it is projected by the Scottish Development Department and what it would cost if it were made dual carriageway for its entire length? Because if I disagree with anything that the noble Lord has said on this subject, it is that there are few of us who would accept that a dual carriageway in the context in which we are now discussing it is a luxury.

POLWARTH

My Lords, I shall certainly see whether that information can be provided and, if so, that the noble Lord is given it. There is then the question of how this is all to be organised. During the debate there have been a number of calls from noble Lords for the setting up of special departments, special bodies, to deal with the problems of oil. That is a natural reaction to a new and largely strange problem, but we should look very carefully before we set up new bodies because there is clearly room for conflict with the functions of existing ones, and local authorities and others are rightly jealous of their functions. A number of Government Departments are involved, and the right way to set about this is to ensure the maximum co-ordination and development of the functions of existing bodies, Government Departments, and others. The Scottish Office, through the Economic Planning Board, keeps all the Departments in Scotland in very close and constant touch. This is under the chairmanship of a senior member of the Regional Development Division of the Scottish Office with whom I personally am in very close and regular touch, and to those who ask for a special division of the Regional Development Division to deal solely with oil, I would say only that virtually all their members are involved in one way or another with the problems arising from the oil industry and are very closely aware of them. This machinery provides the necessary co-ordination, but we keep an open mind on how it should be operated. Here again, the important thing is the maintenance of maximum flexibility. The oil situation is changing and developing all the time and we must be ready to respond to those changes in what is the right way.

May I say in connection with the support of Departments that my right honourable friend the Secretary of State for the Environment announced to-day in another place that a branch of the Ports Directorate will soon be stationed in Edinburgh. It will be working in close co-operation with the Scottish Office and with the National Ports Council and will be responsible for co-ordinating advice to Scottish harbour authorities and others concerned with port developments in Scotland. That will be particularly valuable for the North Sea developments.

There are many other aspects: there is the question of environmental control, and that is a whole great field of its own. We have a planning machine. Doubts have been cast on its ability to cope with the current situation. The right thing to do, and what we are doing, is to back up the existing planning machinery giving it the necessary resources where it does not have them, and the necessary advice. That is the way we are moving, and as we come on to local government reform we shall have much stronger and more effective machinery in this whole field of planning. I would be the last to claim that the planning system was perfect, but we have this problem of balancing private interests against public development and that is not as simple as one might always think. We are concerned to ensure that the procedures move as quickly as possible compatible with proper planning, and as a new step towards this, and to avoid delays of the kind mentioned by one noble Lord, we have just appointed a full-time inquiry Reporter in addition to using the services of part-time ones.

The local authorities are becoming increasingly aware of the need to maintain proper control of these developments. Shetland County Council have lodged a provisional Order seeking powers in this connection, on which I cannot comment as it is now lodged. It will be duly going through the process. Ross and Cromarty County Council, whose convener, the noble Earl, Lord Cromartie, spoke with such vigour, have, I understand, placed a standstill on planning permission on that busy stretch of coast until they can sort things out to see what there is room for in the future. So I do not feel that there is a serious risk of development running riot.

May I try to deal at this late hour with only a selection of the points raised by individual speakers. I should particularly like to refer to the remarks of the noble Lord, Lord Hughes, and others concerning the plans for the future of the steel industry. It is common knowledge that after long consideration these plans for development have now been put forward, and at this moment are under close scrutiny by the Government. It will, therefore, not surprise your Lordships when I say that I cannot make any statement on them to-day. But about certain basic facts there is no secret. On the one hand, if our steel industry is to compete in world markets, it must be modern and efficient, and it is widely agreed that this must inevitably result in fewer jobs for the same or even a greater output of steel.

On the other hand, the Government have made it clear that in considering the Steel Corporation's plans, social and regional considerations will be taken into account, which is right and proper for an industry occupying such a central place in our industrial scene. It is between those two principles that a proper balance must be struck: between the right and the need for the Steel Corporation's management to exercise a proper degree of commercial judgment in forming their future plans, and the needs of industry and the community at large. What has been represented to Ministers as Scotland's real need—represented by responsible bodies such as the Scottish Council, the S.T.U.C. and C.B.I.—is a steel industry thoroughly viable in the long term and able to meet Scottish industry's essential needs for steel, not forgetting those for North Sea oil equipment. That seems to me a thoroughly reasonable goal, the logic of which I am sure my right honourable friend the Secretary of State for Scotland is doing and will do his best to impress on his colleagues when the plans for the Steel Corporation and the cases of all the different areas of the country in this connection are under consideration, as they are just now.

The noble Viscount, Lord Arbuthnott, covered a wide range in his initial speech and I hope he will excuse me if I do not deal with it blow by blow. I would refute his suggestion of a lack of leadership and direction. In this business of oil there are so many different aspects. I think that there is leadership; there is leadership at the oil company level; I think that there is leadership in Government in those matters in which it is proper for Government to lead. What I sense is a very great determination in Scottish industry to get in and make the most of these great opportunities before them.

The noble Lord, Lord Tanlaw. spoke of the Oceanspan project, as did other noble Lords. I have always emphasised that this is not a project but a concept, and a very imaginative one. We are well aware of this valuable asset of deep water. But we cannot compel individual enterprises to make use of it. Hunterston is there. We have already the oil terminal construction which is agreed, and we have a planning application for an oil refinery with adjacent industrial works. That is before my right honourable friend. We must try to ensure the best development of that site in the light of the applications to make use of it, and indeed in the light of the environmental consideration as well, and this we shall do our best to do.

The noble Lord, as well as others, also raised the question of Turnhouse Airport and an additional runway. I can only say that no one is more keen than my right honourable friend and myself, as very frequent users of that airport, to see this matter resolved. The inquiry was lengthy and complex, as was the reporter's report, and I can only say that we hope to be able to announce a decision comparatively soon.

LORD HOY

My Lords, I do not want to interrupt the noble Lord, but is it not a fact that the reporter's report has been at the Scottish Office for three months now?

LORD POLWARTH

My Lords, that is so: and of course while it is sub judice I must not discuss details. But the important thing is that the right decision should be reached rather than a hasty one. I have done all in my power to expedite the decision, and I do not think the noble Lord will have to wait long.

LORD HUGHES

My Lords, from the fact that the report has been three months with the Secretary of State, it seems that not only was it a stinker of a problem but that there appears to have been a stinker of a report.

LORD POLWARTH

My Lords, I think I had better not be drawn in that respect. We are well aware of the problems of the rail closures. I do not think it would be right to be drawn by the noble Earl, Lord Perth, into categorically denouncing or writing off an individual report or projection that escaped somehow from the Department where it was hatched. I can say that I have been in close touch with my right honourable friend the Minister of Transport Industries; that he is very well aware of the problems of Scotland—he has visited it in my company recently—and that there is a considerable range of options under consideration.

The Kyle line is a difficult case. The decision was made, duly announced and promulgated, to close this line about a year ago, subject to its continuance to the end of next year, 1973, and to the provision of suitable alternative bus services. If other conditions arise which could make it a somewhat more viable project than at present—I understood it receives a subsidy or requires a subsidy, of £180,000 a year—then I have no doubt the case may be reopened. We must remember, however, that we must consider the conflicting claims on public resources of the maintenance of a road system to take the increasing volume of road traffic for which there is such a preference, alongside the railway system as well. I am all in favour of railways; I am an enthusiast for them, and I hope to see the maximum amount of Scottish railway retained when these plans are brought out.

THE DUKE OF ATHOLL

My Lords, will my noble friend not agree that until the so-called "leak" report is denied, people are not going to invest large sums of money in those parts of Scotland which may, in the future, have no railways? I should have thought, therefore, that it was essential for the Government to deny this report as soon as possible.

LORD POLWARTH

My Lords, I will convey the noble Duke's comments to my right honourable friend. I think that is all I can undertake to do.

THE EARL OF PERTH

My Lords, many others of us feel exactly the same way. And may I ask that it be represented to the Secretary of State that we do feel in that way?

LORD POLWARTH

My Lords, I have given the undertaking that I will duly represent it.

Time runs on, and I do not think that we can possibly cover everything that has been raised. We return to this fundamental issue of who gets what out of the oil, raised by the noble Lord, Lord Balogh, with his customary knowledge and skill. I think I had better confine myself to saying that I might be even wiser to avoid arguing with him in his absence than in his presence. I was grateful for the congratulations accorded by one or two noble Lords on some of the things that the Government have done—particularly the noble Lord, Lord Burton, with regard to roads. It is good occasionally to have a pat on the back. I could not entirely agree with the noble Lord, Lord Orr-Ewing, when he wanted us to adopt what appeared to me to be a totally nationalistic line regarding the further development of the further round of oil licences. I believe that that would be going just a little too far in an international world.

I think at this time I really must be drawing to a conclusion, except that I might mention one subject that is of much importance, and that is the contribution which is being made, or which can be made, by our universities to research in this field. We had a notable contribution from the noble Lord, Lord Balerno, and I congratulate Heriot-Watt, of whose Court he is the chairman, on their enterprise in getting ahead with this underwater technology project. I was glad to have from the noble Lord, Lord Hughes, the commendation of Aberdeen for their efforts in this field, particularly since I am their Chancellor. That does not mean that I know any more about it, because Chancellors are never told what the university is doing. On the question of finance for this project, I can certainly assure the noble Lord that it is being provided by the Government to the tune of £35,000.

I realise that there is a problem here of the finance of universities. Universities are financed on the principle of receiving block grants through the Universities Grants Committee, and it is left to them, I think quite rightly, to determine within that grant their own priorities. For specific research projects universities look to the Research Councils for specific grants, and I understand that the Science Research Council has been looking into the question of research into marine technology and is prepared, in principle, to make grants for specific projects in fields related to oil exploration. I think that the parallel was drawn of American universities. There are some fundamental differences here. So far as I know, by and large they are not financed federally. Some of them are State financed, and many of them depend to a much greater extent than we do on outside support, including the oil industry. I think it would be not unreasonable to look to the oil industry for a greater measure of support for research projects of this kind in our universities. The problem of lack of funds for postgraduate scholarships was mentioned. I understand that it would be open to universities to make a case to the Research Councils for more awards to be given to post-graduate students. But, by and large, I have much sympathy with the thought that more funds should be forthcoming for this kind of work, and I should like to take the matter up with my right honourable friend in whose field universities lie.

I think I should draw to a conclusion, but, in a way, I take some comfort from the almost equal division of speeches this evening between two ideas—the thought, on the one hand, that Government policy is allowing too much development too fast, and the thought, on the other hand, that it is allowing too little. Indeed, one or two speeches seemed to lean in each of these directions at different moments. I think this suggests that in seeking to ensure a proper balance between industrial growth, on the one hand, and the protection of the environment, on the other, the Government are having some success. The last thing I would claim is that all Scotland's problems will be solved—whether by the good fairy Oil, or by any other cause—by the time of next year's Scottish debate, if we have to wait so long for one. That would perhaps be expecting too much. But, as I said before, I think we have reasonable cause for calm confidence that a brighter future lies ahead. How bright a future, and how far ahead, lies very largely in the hands of us all Government and politicians, management and men, ordinary folk up and down the length and breadth of Scotland. But the fact that so many noble Lords have taken part to-night is evidence of a widespread interest, which is extremely good.

Government's role in this whole field of industry and development, including off-shore oil, is. I firmly believe, not to initiate, direct and control, so much as to provide the conditions, the guidance, the back-up support to private enterprise. This, I submit, the Government are doing on a considerable scale. As regards enterprise, the oil companies themselves have given a great lead which is being followed to an increasing degree by the potential suppliers to it. Alongside these efforts, we must all play our parts. We must seek the opportunities rather than sit at home hoping for them to come to our door. Rather than moan about our shortcomings, we must blow our trumpet and tell the world our undoubted stories of achievement and success. Above all, I would ask all Scots in every section of the community to make their own resolve to play their part in the months ahead in the fight against inflation, for it is only by a united effort that we can win this fight; and unless we win we shall never attain that prosperity and happiness which we all so dearly desire for our native land, and which oil brings within our grasp.

9.17 p.m.

THE VISCOUNT OF ARBUTHNOTT

My Lords, it is my pleasant duty to hasten your Lordships to the slaking of your thirst, but before I do so I have an even more pleasant duty; that is, to add my congratulations to those of your Lordships to my noble friend Lord Aberdeen on his maiden speech. Indirect reference has been made to Haddow House and its choral society, and I can assure your Lordships that he would have bettered his performance to-day only if he had sung it instead of saying it. May I thank all of your Lordships for taking part in this debate. I entered your Lordships' House with trepidation, and I was very grateful to find how many of the points I raised seemed to find an echo in what was said later on. Of course I am also grateful to my noble friends Lord Drumalbyn and Lord Polwarth, for their replies to some of the points that I made. I must confess that I think the role of Scottish industry, British industry, and the part it is taking so far is perhaps still being exaggerated. I still think there are many of us who doubt whether effective guidance is being given to local authorities in the very wide problem which they are facing. Nevertheless, I hope that this debate has brought those problems out to full discussion. Without further ado, my Lords, I beg leave to withdraw my Motion.

Motion for Papers, by leave, withdrawn.