Lords Sitting of 14 July 1972

Preamble
The House met at eleven of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Portsmouth.

RACE RELATIONS BOARD'S POWERS
LORD BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper. I may mention that the Question relates more properly to the Act of 1968 rather than to the Act of 1965.
The Question was as follows :
To ask Her Majesty's Government when they will be able to report decisions on the proposals made by the Race Relations Board for amendments to the Race Relations Act 1965.
BARONESS YOUNG: My Lords, I cannot at present add to the Written Answer that my noble friend gave to a Question from the noble Lord on July 4. The Board's Annual Report raises some important matters which require careful thought. It would not be realistic to give a definite date for the conclusion of our deliberations, but we are actively considering the various points made.
LORD BROCKWAY: My Lords, while thanking the noble Baroness for that Answer may I ask her, first, whether when the Race Relations Board was established it was not regarded as a pioneering experiment? Has not the Board after three years' experience made any new proposals? Would the noble Baroness agree that it has served as a code of conduct and conciliation in individual cases, but the Board is now seeking power to prevent discrimination?
BARONESS YOUNG: My Lords, I am sure that we should all agree that the Race Relations Board has done some good and valuable work. I feel that it would be inappropriate for me to comment at this particular moment on the new suggestions that the Board has made in its Annual Report, as we have had
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the Report for only just over three weeks. However, I can assure the noble Lord that my right honourable friend is considering this matter with all the seriousness that it deserves.
LORD BROCKWAY: My Lords, again thanking the noble Baroness, may I ask her whether she could seek to influence the Minister to introduce a Bill during the early part of next Session, which is not very busy—or would she he encouraging me to introduce, for the eleventh time, a Private Member's Bill on the subject?
BARONESS YOUNG: My Lords, I am sure that my right honourable friend will take note of the point that the noble Lord, Lord Brockway, has made. The noble Lord is quite right in saying that the suggestions of the Race Relations Board would require legislation, but this is a matter on which I do not feel that I can comment at this moment.

NORTHERN IRELAND : NEW TERRORIST ATTACKS
11.7 a.m.
THE SECRETARY OF STATE FOR DEFENCE (LORD CARRINGTON): My Lords, I will, with permission, repeat a Statement that is being made in another place by my right honourable friend the Secretary of State for Northern Ireland. It runs as follows :
" Yesterday afternoon a concerted attack was made on the Lenadoon Army post on the edge of the Andersonstown district in Belfast. This post, which had been under continuous attacks for the previous three days, is in an inter-face position and therefore important as a means of preventing sectarian conflict. During this attack some 400 rounds were fired at the post and a digger loaded with an explosive device was rolled down the hill at the post. The device exploded and there was damage to the post but, fortunately, no civilian or military casualties. It was clear that the post could not be maintained unless the area from which it was being attacked by gunmen was occupied. Accordingly the Army moved into the area in strength and are now dominating it.

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"In the Divis Street flats area, Belfast, there was also an extensive gun battle last night. I am now informed that some 3,000 rounds were fired at security forces who fired 1,000 rounds in return. The Army are now occupying the Divis Street flats.
"I regret to inform the House that two soldiers were killed and three soldiers were wounded in these two operations. The Army believe that they hit 28 gunmen.
"There were here two considerable military operations of a clearly offensive character against the Army and endangering the lives of the residents of the areas, many of whose houses were hit by terrorist fire. Rocket launchers have also been used in the area by the terrorists for the first time. These greatly multiply the risks of damage and casualties. The Army, therefore, with my authority, responded by action to control the areas from which the attacks were launched and to protect themselves and the civil population. It is now clear that the civil population of these areas, and so the security forces, have become he objects of deliberate terrorist attack of a character avowed by the terrorists to be of ' the utmost ferocity '.
"Her Majesty's Government's policy remains to seek to reconcile the differences of the two communities whilst acting with the greatest firmness against lawlessness and terrorism wherever it appears."
LORD SHACKLETON: My Lords, we are grateful to the noble Lord for repeating that Statement. We are getting accustomed to these appalling Statements. I take it that the Army were expecting rocket launchers to appear. I do not know whether the noble Lord can say where they come from. Are they the Katyusha type of rockets which were used in Aden and for which there are certain measures, like wire fences, that will make them explode? This is an appalling thought, because these are weapons that are likely to kill many more people than those in the target area. I take it that it was one of the occasions when the Secretary of State felt that his policy of restraint, and of not at this moment going into "No-go" areas, could
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no longer apply ; because this was, as the noble Lord said, in an area where so many people's lives were at stake that the Army simply had to, so to speak, hold the line. Has he any information about arrests made in the course of the occupation of the Divis Street flats? The Secretary of State has shown great restraint in difficult circumstances and in the face of most severe criticis ; he has our support and admiration. Could the noble Lord confirm, as I take it his last sentence means, that the policy of avoiding direct confrontation in the areas where there is at the moment no Army presence remains?—though how long it will go on I do not know.
LORD BYERS: My Lords, we from these Benches wish to express our sympathy with the families of those who have died or been wounded in this most regrettable action. We express also full support for firm action against terrorism in defence of the Army and the civilian population.
LORD CARRINGTON: My Lords, with regard to the question put by the noble Lord the Leader of the Opposition, he is quite right that on this occasion the Secretary of State felt that not only because the military posts were involved, and at risk unless further action was taken, but also because these areas were in an area of interface between the Protestant and Catholic populations it was necessary to take some action. This does not mean that the Secretary of State's policy has in any way changed. I am afraid I cannot tell the noble Lord the number of arrests in the Divis Street area. We have known for some time that the I.R.A. have had these launchers; I do not know offhand what type they are. There is considerable escalation of violence when these are used. There is no doubt that the events of last night and of the past few days since the end of the cease-fire have shown violence of an unprecedented scale. It is a position of the utmost gravity. One can only hope that the people of Northern Ireland themselves realise how near they are to distaster and that they will take some steps to see that this situation is brought to an end.
LORD BROCKWAY: My Lords, in view of the low conclusion to the Minister's Statement would it not be possible

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to encourage combined action by the very large moderate forces in Northern Ireland? There are the courageous deputations of women from Derry to the Provisionals, the S.D.L.P., the Northern Ireland Labour Party, the Alliance Party, the Catholic leaders and the Church leaders. Could not encouragement be given to them to act effectively to bring about a better situation?
LORD CARRINGTON: My Lords, I think everybody would agree with the noble Lord. It was the success of the Government's policy and the measures which my right honourable friend took which led to the cease-fire of a fortnight or so ago. It was through the fact that he brought pressure to bear on the moderates, and that the moderates brought pressure to bear on the extremists that the cease-fire was brought about. Since the cease-fire has now ended it is difficult to see how the moderates could bring pressure on these people. Although one says in the comfort of your Lordships' House that the moderates should do something about it, it is not all that easy for moderate people to convince terrorists with guns that they must behave in a civilised fashion. One can only hope that the vast majority of people in Northern Ireland, who are sensible and do not wish this disaster to occur, will succeed by the overwhelming weight of public opinion in putting a stop to what is a critical situation.
LORD PARGITER: My Lords, will the noble Lord say whether or not it is desirable to draw the attention of the people of Northen Ireland to this alarming new development of using rockets? When bombs have been used some notice has usually been given, so that the civilian population have had an opportunity to get away. They have no opportunity to get away from rockets.
LORD CARRINGTON: My Lords. while it may be useful to draw the attention of noble Lords to the use of rocket launchers, I hardly think it necessary to draw the attention of the people of Northern Ireland to them.
LORD O'NEILL OF THE MAINE: My Lords, is the noble Lord aware how grateful we are in Northern Ireland to the British Army for all the good work they have carried out since they were
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first called in aid of the Civil Power in August, 1969? Are the Government aware that, but for the action of the Army and the wonderful restraint they have shown, we should now have full-scale civil war in Northern Ireland? I should like noble Lords to realise how grateful we are.
LORD CARRINGTON: My Lords, coming as it does from the noble Lord, Lord O'Neill of the Maine, that compliment to the Army and to the British generally is doubly welcome. I only wish that the population on both sides realised that without the British Army in Northern Ireland there would be no hope for anyone there.

EUROPEAN COMMUNITIES BILL
Brought from the Commons ; read 1a, and to be printed.
LAND CHARGES BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
CONTRACTS OF EMPLOYMENT BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

GAS BILL
11.20 a.m.
THE MINISTER WITHOUT PORTFOLIO (LORD DRUMALBYN): My Lords, I beg to move that this Bill be now read a second time. The purpose of this Bill is to provide the gas industry with a new and more flexible structure. Its present structure has changed little since the Gas Act 1948. That Act set up largely autonomous Area Boards, as was appropriate for an industry based on local manufacture of gas. That substantial changes in that structure are needed has been recognised since very soon after substantial finds of natural gas were made in the North Sea in and around the year 1966. The impact which those finds have had on the gas industry is so great that it is not surprising that the industry's organisation needed to change.

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It soon became apparent that the finds were sufficient to justify a complete changeover from the distribution of town's gas to the distribution of natural gas supplied to consumers direct. Very soon afterwards it became clear that sufficient gas would be available to justify planning for a fourfold expansion of the industry in the space of less than ten years.
An operation of this size and complexity can be planned only on a national basis. The industry had to negotiate for the purchase of vast quantities of natural gas, far in excess of what was needed to meet its existing markets ; it had to negotiate in particular the load factor and other conditions of the supply ; it had to plan the development of markets to absorb the gas for which it was contracting ; it had to plan and construct the transmission and storage system to meet loads whose location and load factor could only be positively determined as they build up ; and it had to plan and carry out the enormous job of converting the appliances of all existing consumers to natural gas. It is immensely to the credit of the Gas Council and Area Boards that, despite having to work within a statutory structure designed nearly a quarter of a century ago for entirely different circumstances, they have succeeded so well in carrying through this operation to its present stage. They have been working together on the basis of the plans announced by Mr. Ray Gunter in 1968. The Area Boards voluntarily accepted the leadership of the Gas Council and in many cases agreed to subordinate their local interests to the general strategy adopted by the Gas Council for the industry as a whole. But without legislation to set up the requisite statutory structure for the gas industry, it would not have been reasonable to expect them to continue doing so indefinitely.
It is not only the present Government that have concluded that the new circumstances of natural gas require a new statutory structure for the gas industry. The previous Government took the same view. and introduced their own Bill, which was interrupted by the General Election. The Report made in another place in 1968 by the Select Committee on
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Nationalised Industries, dealing with North Sea gas, accepted the need for change ; and the leaders of the gas industry have been, and are, strongly convinced of its necessity. If it is accepted that structural change is necessary, the question remains what form it should take. Only two alternatives have been seriously put forward. One is represented by the Bill put forward by the previous Government in the 1969/70 Session of Parliament ; the other by this Bill. They can be conveniently described as the "hybrid" solution and the "unitary" or British Gas Corporation solution. Under the "hybrid" solution, the statutory Area Boards would have been preserved, but the Gas Council would have been given such extensive powers over them that the Board's responsibilities, and particularly their financial responsibilities, would have been greatly diminished. Under this Bill all statutory responsibility is to be given to a single statutory Corporation, which will have, as one of its tasks, to create an appropriate management structure for the industry and to amend it from time to time as experience and changes in circumstances may dictate.
I am not going to maintain that one of these alternatives has all the advantages, and the other all the disadvantages. There are advantages and disadvantages in both. But in the judgment of the Government there is a clear balance of advantage in favour of the unitary solution. The principal advantages are, first, that it places the responsibility for the internal management structure of the industry in the hands of those responsible for the running of the industry. Secondly, it enables the industry as a whole to adapt its own internal structure from time to time, as the Area Boards have always been able to do, and avoids having to await further legislation. Thirdly, it avoids a situation in which Area Boards will still have been appointed by Ministers but with powers so severely curtailed that they would not have had, and could not reasonably been given, any statutory responsibility for their own finances and for the financial success or failure of the business they were appointed to run. That would have been the situation under the previous Government's Bill.

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By contrast, the Bill transforms the Gas Council, as from an appointed day, into the British Gas Corporation and transfers to the Corporation all the property, rights, liabilities and obligations of the Area Boards. It provides, for technical reasons, that the appointed day must not be later than July 1, 1973. In practice, we hope that the appointed day will be early in 1973. Subject to the views of the Corporation when appointed, January 1 is the date we have in mind. There is comprehensive protection for those in the industry who may be affected by the reorganisation. Under Schedule 1 employees of Area Boards become employees of the British Gas Corporation from the appointed day. Under Clause 37 provision can be made for compensating anyone who loses his job, or who suffers loss of emoluments, as a result of the reorganisation. Under Clause 36 the Secretary of State has power to make regulations in relation to existing industry pensions schemes, in particular where these may he necessary as a result of the reorganisation.
The Corporation is to consist of a Chairman and from 10 to 20 members. There is a statutory requirement for the Secretary of State to take into account the desirability of having members familiar with the special requirements and circumstances of particular parts of Great Britain. My right honourable friend Sir John Eden announced on Second Reading in another place that the nucleus of the Corporation will be formed by inviting the present Chairman, Deputy Chairman and the existing full-time members of the Gas Council to occupy the corresponding posts in the Corporation. This arrangement will not only provide the necessary continuity of planning and administration, but also give the best possible guarantee that the industry will continue under its new structure to show the same enterprise and spirit of service to the consumer as have characterised it in the past. Including this nucleus, the Corporation is likely initially to consist of about 16 members, of whom about half would be full-time. My right honourable friend intends to include a strong group of part-time members from outside the industry.
As I have said, one of the prime functions of the Corporation will be to determine the internal management structure of the industry. Clause 4 requires them,
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immediately after the appointed day, and from time to time thereafter, to undertake a review of the organisation of management of the industry and to report to the Secretary of State. Any such report is to be laid before Parliament, and the Secretary of State, after considering a report, can give the Corporation directions as to the organisation of the industry. This power of the Secretary of State is very much a reserve one. The prime responsibility for the organisation of management rests with the Corporation, and they are not required to get the Secretary of State's approval before making changes. The Corporation's freedom to determine their organisation is limited in one important respect. Under Clause 4(5) any area organisation they may set up is not to cut across national boundaries in Great Britain. Thus, they could continue to have, as the industry has at present, one area organisation for Scotland and one for Wales ; or they could, if they chose, have more than one organisation in one or both of these countries ; but they could not set up art area organisation covering, say, Northumberland and Berwickshire.
In spite of the Corporation's freedom to determine their organisation, Mr. Hetherington, the Chairman of the Gas Council, has put on record his conviction that the Corporation will take care to see that the regional organisations remain strong and sensitive to the needs of their consumers in each area ; and that it is unlikely that the Corporation would want to start with anything different from the twelve existing Board areas. I am told that the reassurance which he has been able to bring to the staff in the Area Boards has now very largely relieved the anxieties which, as was inevitable, they initially felt when a major reorganisation for the industry was first announced.
The Bill is a substantial one, sweeping up as it does all existing gas industry legislation except for Part II of the Gas Act 1965, which is a largely self-contained code dealing with underground storage of gas. Because of the length of the Bill I shall comment on only a few of the clauses. Clause 2 gives the Corporation their central duty to develop and maintain an efficient, co-ordinated and economical system of gas supply for Great Britain, and to satisfy, so far as it is economical to do so, all reasonable

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demands for gas in Great Britain—in other words to do for Great Britain as a whole what it has hitherto been the duty of each Board to do in respect of its own area. The clause goes on to give the Corporation ancillary powers, which are largely on the lines of those in the existing Acts, but which clarify in various respects their powers in relation to natural gas and oil. It is made clear that the Corporation can search for and produce natural gas any where in the world, but if they wish to do so outside Great Britain and the United Kingdom Continental Shelf they need the Secretary of State's consent ; for this world-wide power is not intended to enable them to go into natural gas production abroad purely as a speculative venture, but only where it is necessary or desirable to do so in order to secure supplies of natural gas for the British market. The Bill recognises that where the Corporation are searching for natural gas they may find oil, instead of or as well as gas. They are therefore given power to produce it, to treat it so as to make it saleable, and then either to sell it or to use it for making gas. But they do not have power to go into the oil refining business, which would be an unnecessary and inappropriate function for a statutory corporation created to supply gas.
Clause 7 contains the normal power to give the industry general directions in the national interest. In addition it contains power to require the Corporation to discontinue activities and to dispose of assets, though this power cannot be used in a way which would impede or prevent the proper discharge of the Corporation's duties. This power, which is similar to powers existing in relation to most of the other nationalised industries, is being taken as a general reserve power ; there are at present no plans to use it.
Clauses 9 to 13, with Schedule 3, make provision for Gas Consumers' Councils. For the first time provision is made for a National Gas Consumers' Council. With all statutory responsibility for the industry concentrated in the British Gas Corporation the consumer should have a voice also al the centre, able to talk to the Corporation on questions of general policy and on all matters of concern to consumers generally. The National Council will be composed in
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part of the chairmen of the Regional Councils which will replace the existing Area Consultative Councils, and in part of other persons appointed by the Secretary of State. The National Council will have the function of considering matters of broad consumer interest, whether on their own initiative or as a result of representations from the Regional Councils. They will have the right, failing satisfaction from the Corporation, to make representations to the Secretary of State, who will be able to give the Corporation directions arising out of their representations. The Regional Councils will have functions broadly similar to those of the Area Consultative Councils at present. Their recourse, failing satisfaction from the Corporation, will be to make representations to the National Council, who, if they think fit, may in turn make representations to the Secretary of State.
Clause 16 introduces a new principle into legislation on gas industry finances. It recognises that the industry, in its exploration for natural gas, is engaged in a highly speculative venture from which very large profits might accrue as a result of very substantial finds of natural gas or perhaps oil. For this activity the Exchequer provides most of the finance, by means of fixed interest loans through the National Loans Fund, and the Exchequer bears the ultimate risk. It is therefore right to enable the Exchequer to share in any windfalls that the industry might enjoy as a result. The clause therefore provides the Secretary of State with power to require the Corporation to pay over from year to year a part of the Corporation's profits which are surplus to the Corporation's requirement. But it was never intended to make it possible to cream off surpluses arising in the normal course of the Corporation's gas supply business, or to prevent the building up of a commercial level of reserves. Accordingly the clause now provides that it is only surpluses attributable to natural gas and oil exploration and production that may be required to be paid over, and that payments can only be required where the Corporation's total reserves at the beginning of the year exceed 10 per cent. of their net assets. These are important safeguards.
Clause 31 deals with the important question of safety in the use of gas.

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Safety is not solely or even mainly a matter for legislation. High standards of care and competence in the installation and maintenance of gas appliances must be the first line of defence. The Government therefore welcomes the continued progress of the Confederation for the Registration of Gas Installers (CORGI), which was set up by the gas industry and the trade in the time of the previous Government. This is now well established and deserves the support of all gas consumers, who should recognise the importance of employing only CORGI-approved installers. Another major contribution to gas safety can come about through the operation of converting appliances to natural gas, which provides the opportunity for all gas appliances, many of them old and in poor condition, to be checked and where necessary replaced. Legislation also has its part to play. The prime purpose of Clause 31 is to continue the existing powers to make gas safety regulations.
These powers have not yet been exercised but they shortly will be in the form of regulations governing gas installations and the safe use of gas. The clause also fills a gap in the existing statutory provisions by providing a new regulation-making power. Over the years cases have come to light where Gas Boards knew that appliances were for one reason or another dangerous, but the owners or occupiers refused to take advice and to correct the defects. Gas Boards at present have no adequate statutory powers to deal with this situation. This Bill, like the previous Government's Bill, therefore provides for the Corporation to be given, by regulations, powers of entry to inspect gas appliances and installations for safety, and powers to cut off the supply of gas where necessary to prevent danger. The powers of entry are to be subject to the provisions of the Rights of Entry (Gas and Electricity Boards) Act 1954, which means that entry without consent can be made only in emergency or under a magistrate's warrant ; and the powers of cut-off would be subject to provisions for an appeal to the Secretary of State.
My Lords, I said at the outset that it was the change to natural gas which had made necessary the structural changes brought about by this Bill. But the natural gas revolution has naturally not
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been able to await the legislation. On the contrary, it has been going ahead full tilt. The progress and plans of the industry are described in a very interesting booklet, Natural Gas on Target, which the Gas Council have produced in connection with the Bill. I commend it to your Lordships. Even during the time the Bill has been before Parliament some notable milestones have been passed. I understand that the programme of converting all consumers' appliances to natural gas is just reaching its half-way mark. That is to say that, out of more than 13 million consumers, over 6½ million now have had their appliances converted. This conversion operation is a vast task, and while there are still some difficulties, I think it can be said that the programme as a whole is progressing reasonably well. Certainly the Boards have made great efforts to learn from experience and to improve their results as they go along, while at the same time keeping costs, which have inevitably been affected by inflation, under as tight a control as possible.
In terms of volume of gas supply, the industry passed the half-way stage of transition to natural gas rather earlier than was expected because sales of natural gas in large quantities to industry have been proceeding somewhat ahead of the general conversion programme. 1971–72 was the first year in which more than half the gas consumed was natural gas supplied direct. At present some 95 per cent. of total demand is being met by natural gas, including both that supplied direct and that which is used to make town's gas.
When natural gas from the North Sea was still at a very early stage, the gas industry entered into formidable commitments in terms of take-or-pay contracts for the purchase of natural gas and of sales targets for its absorption, involving the fourfold expansion of the industry in a decade. At the time and for some while thereafter many people suspected that the industry had overreached themselves. But experience has vindicated their judgment and natural gas is now, as the title of the Gas Council booklet claims, "on target". In 1971–72 the industry's output rose by an unprecedented 30 per cent. over the previous year, and reached a total of 8,686 million therms, or more than

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double the total output of only five years before. There is no reason at all to doubt the industry's ability to reach the target which it set itself in 1967 of absorbing 4,000 million cubic feet a day of natural gas from the North Sea (about 14.000 million therms a year) by the mid-1970s.
Although such good progress has been made, heavy expenditure on investment in natural gas will continue to be needed for some years yet. For the four years up to March, 1975, the Gas Council estimate the industry's capital requirements will amount to just over £1,200 million, of which a little under half is expected to be met from internal resources, leaving about £620 million to be financed by borrowing. This is the background to the increase in the industry's borrowing limits provided in Clause 19 of the Bill. The industry's present borrowing powers are set by an Order under the Gas and Electricity Act 1968 at £2,100 million and can be increased by a further Order to £2,400 million To make comparisons easier, the limit in the Bill includes all British gas stock, whereas at present compensation stock, of just under £180 million is excluded. The new initial limit of £2,500 million is thus effectively only £220 million higher than the current limit. It is expected to cover requirements up to March, 1975, and there is provision for the limit to be increased by Order to £2,700 million so as to cover requirements, which cannot yet be at all precisely foreseen, for a further period thereafter.
We are legislating to replace an Act under which the statutory structure of the gas industry has remained largely unchanged for over twenty years, becoming in the last few years less and less well adapted to existing circumstances. The greatest single merit of the structure provided by this Bill is that it leaves the industry free, within the broad outlines laid down in the Bill, to adopt the form of organisation best calculated to promote an efficient and successful industry, and to vary that organisation as experience and circumstances may dictate. To remove the handicap of an outdated structure and to provide flexibility for the future are the main contributions which the Bill makes to the industry's success in their
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task of providing in the future still better standards of service to their customers. I beg to move.
Moved, That the Bill now be read 2a.—(Lord Drumalbyn.)
LORD DAVIES OF LEEK: My Lords, before the Minister sits back to listen to the speech of my noble friend, may I ask him a question about Clause 16? Why did not the Government in Clause 16 take the opportunity to give a little comfort and succour to that poor consumer of gas, the British housewife. I notice if the Gas Corporation are successful in exploring for oil, et cetera, the profits are to go to the Exchequer. Will there not be an opportunity of reducing the price of gas for the girl who cooks?
LORD DRUMALBYN: Yes, my Lords, of course.
LORD DAVIES OF LEEK: We will come to this in Committee.
LORD DRUMALBYN: My Lords we will of course, come to this in Committee. But not all British consumers consume gas ; they are not all gas consumers, and therefore it is quite justifiable to share, as between the consumers and the taxpayers as a whole these special windfall profits that may arise as a result of gas finds.
LORD DAVIES OF LEEK: My Lords, I thank the noble Lord for that. We will follow it up in Committee.
11.45 a.m.
LORD DELACOURT-SMITH: My Lords, we are grateful to the noble Lord for the very clear and persuasive way in which he has set out the case for the Second Reading of this Bill. With some substantial reservations, to which I shall come in a moment or two, this is a Bill which on this side of the House we can welcome. Indeed it is a Bill we would have been glad to see a little earlier in the Government's period of office, because we believe it would have enabled the necessary reorganisation to proceed sooner. As the noble Lord was so good as to say, it does cover much of the ground, and indeed in many respects follows the lines, of the Bill which was put forward by the Labour Government in the period immediately before the General Election. The present Bill has, of course, also had the advantage of a pretty

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exhaustive examination in another place, an examination which I think by general agreement produced some improvements in the original measure which was put forward.
It does, as the noble Lord said, create a much more centralised industry, as did the Bill put forward by the Labour Government. Indeed, as he brought out, the Bill goes further than the Labour Government's Bill did in this direction of centralisation. I am tempted to speculate what might have been said by some Members of the Party opposite, both in your Lordships' House and another place, if the Labour Government's Bill had gone quite so far in the direction of centralisation and had embodied the abolition of the Area Boards, as the present Government's Bill does. For it is, of course, the case that the Bill as now before us will leave the British Gas Corporation as the only body with a statutory existence, apart from the Consumers' Councils. But there will not be, in the field of operation, any other bodies with a statutory existence.
The noble Lord reminded us of the indications which have already been given of the way in which it is intended that the powers of the newly-proposed National Board should be used and the kind of machinery—non-statutory machinery of course—which initially shall be brought into being ; it will, of course, very closely resemble the present statutory machinery below the national level, but as time passes the Corporation will be able, subject to certain conditions and within very broad limits, to make adjustments. This will, as the noble Lord said, give to the industry a flexibility with which I personally would not be disposed to quarrel in the circumstances.
But since the industry is to take this new form in which there is this greater degree of flexibility, we shall, I think, need to look, when we come to the later stages of the Bill, at the terms of Clause 1, the crucial clause which deals with the establishment of the National Gas Corporation. It was the subject of a great deal of discussion at various stages in another place, but I think there are still some aspects which require further debate and further clarification.
I was interested to notice that when there was criticism in another place of
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what was regarded by some as looseness of expression in Clause 1, the Government spokesman defended the Bill against this charge on the ground that it was a very readable piece of legislation. I am bound to say I thought that was rather an odd expression to use, "Comprehensive", "relevant", "concise", "monumental", even, I have heard advanced as adjectives appropriate to pieces of legislation ; but "readable" I must confess is a new one to me. But, readable or not, Clause 1 will I think require on the part of your Lordships' House a little further discussion at later stages so that we may have a rather clearer idea of what, at any rate so far as the Government are concerned and so far as the powers to be exercised by the Minister are concerned, are the intentions behind these very readable lines which make up the clause.
I spoke earlier of some substantial qualifications which we have on this side of the House, and the noble Lord has touched upon some, at any rate, of the clauses which cause us concern. I think we shall have to look at them. There is anxiety about the definition of the powers of the Corporation, because to noble Lords on this side of the House there appears to have crept in some limitation upon those powers which does not seem to be necessary. I am bound to say that when Bills bearing upon publicly owned industries are brought forward by Conservative Governments there always appears to be great concern to safeguard possible opportunities for private interests and rather less concern to provide that the publicly owned industries should have the maximum scope to develop their operations in the public interest. From this attitude of mind the danger is created that the public interest may in the long run be harmed and that the morale of the staff of publicly owned industries adversely affected. It is, I think, necessary for us to be on the lookout to ensure that publicly owned industries are given the scope which is necessary for them in the public interest to develop their operations in the most effective and in the most economical fashion.
It is not altogether clear to me that it is necessary for the powers of the Corporation to be subjected to some of the limitations which appear in Clause 2. I

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am not convinced that the limitation in the handling of oil found in the course of searching for natural gas should be as strict as is envisaged ; that the Gas Corporation should by Statute be precluded from the refining of such oil. I should have thought that the existence of statutory limitations rather than preventing the Corporation from embarking upon a vast extension of its activities in an adjacent but not its own field, far from debarring the Corporation from doing that would be more likely to place upon it a limitation which could be hampering in the negotiations it has to carry on with some fairly sharp-minded commercial interests in this field of its operations. I think noble Lords on this side of the House will require to be very fully convinced that this limitation is necessary and is in the broadest sense in the public interest.
The Corporation will have the power to manufacture fittings in certain circumstances but, as I understand it, it will require, under Clause 2(3)(b), to have the authority of the Secretary of State to manufacture gas fittings for export. This seems to me to be a very strange limitation to place on it, especially when one bears in mind that it is established that exports would include the sale of these fittings in the other countries of the Economic Community. The limitation would confine the Gas Corporation, unless it secures the consent of the Secretary of State, to the manufacture of gas fittings exclusively for this country. If the Corporation is to have, as it rightly is to have, the power to manufacture gas fittings, it seems strange that it should have this limitation put upon the export of any fittings which it may manufacture or of fittings manufactured for the home market which, with some minor adjustments, variations or modifications, might be suitable for export. One wonders whether there has been over concern about the possible damage to the future prospect of some private interest which has overridden concern for a nationalised corporation having the proper scope to operate in the national interest. So we shall be wanting to know how far these limitations are essential.
My Lords, I now come to Clause 7, which is in a form that we have seen in your Lordships' House before. We
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saw a similar clause applied in the case of the coal industry. Here again there are a number of questions which at a later stage we shall be bound to press—what is the purpose of this limitation or, rather, for this power which the Secretary of State is taking in Clause 7(2)? I should have thought that the existing power given in the first subsection clause, under which the Secretary of State has power to give directions to the Corporation, would have been adequate for any purpose dictated by the national interest. We shall be bound to ask why is the existing power proposed in the first part of Clause 7 not sufficient. We are grateful for the fact that it is envisaged that the powers to direct the Gas Corporation to hive off activities will require a statutory instrument, a draft of which will be laid before Parliament. But, equally, we shall seek an assurance that these powers, if on further consideration the House takes the view that they should remain in the Bill before it becomes an Act, should be exercised by the Secretary of State only with the agreement of the Gas Corporation and not in a way which seems to the Corporation to be a deprivation of a proper activity which it is carrying on as part of the general duties laid upon it by Parliament.
The noble Lord referred to Clause 16. My noble friend Lord Davies of Leek has already given an indication that at a later stage we may well want to look at this clause in some detail, as it is almost without precedent. I think the only precedent for it in regard to a publicly owned industry is in a piece of legislation which also provided, in the case of the publicly owned industry concerned, for a substantial writing-off of debt. We shall want to discuss more fully the circumstances in which the powers envisaged in Clause 16 may be put into use. There will be other matters of detail and other matters of some substance to which we shall no doubt want to draw attention as the Bill is further considered.
There are important provisions, as the noble Lord said, in respect of the representation of consumers ; and, broadly speaking, I think I can say that these proposals, especially in the way in which they have been modified by discussion in another place, are warmly welcomed by noble Lords on this side of the House.

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There are important considerations of safety which may well have to be discussed. I notice with interest Clause 38, which provides—and I welcome this—for contributions by the Secretary of State towards expenditure on the part of the Gas Corporation designed to promote employment. At a time when there is already before Parliament legislation that envisaged such substantial sums of money being made available, generally in circumstances where private firms are the most substantial beneficiaries, it is welcome to see a recognition of the degree to which the operations of publicly owned industries like the Gas Council (as it is now) do promote stable, progressive employment in many of those parts of the country where employment prospects and opportunities are below the average and below what we all desire. So it is a welcome provision in the Bill that there is to be an arrangement under which there may be special contributions by the Secretary of State, which will enable expenditure designed to promote employment to he financed, or partly financed, in this fashion.
This Bill has to be seen to some extent in the context of the energy plans and energy needs of the future. Anxiety is expressed in many quarters today about the rate at which, and the way in which, existing reserves of energy appear to be becoming exhausted. It is important to know what considerations and what priorities the Government have in mind in this connection, and perhaps the noble Lord may be able to say something in his final reply this afternoon about the broad consideration which the Government are giving to the future resources and future energy needs of this country, and the part which they see the industry with which this piece of legislation deals playing in that future.
We are dealing with an industry with a good record. I welcome the tributes which the noble Lord paid in the course of his speech to the existing gas industry under its present form of organisation, which we all agree is no longer the form of organisation most appropriate to the circumstances in which it has to work. I welcome those tributes, and I warmly associate all my noble friends on this side of the House with what he said about the industry in that regard. It has a
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good record operationally, in research, in price policy ; and also, if I may say so, in industrial relations. It was of great advantage to the nation that when natural gas became available from the North Sea there was in existence this publicly owned gas industry which had gone through a period of rationalisation and reorganisation and had been sustained in difficult and rather discouraging years by men of vision and leadership. The contribution which they had made, and the work which they had done, enabled this country to take more rapid advantage than might otherwise have been possible of the new fuel resources which became available to us.
This work, of course, laid the foundations for the rapid growth to which the noble Lord referred, and which has indeed marked the past five or six years in the gas industry. The rate of growth, I think I am right in saying, has been something like 12 per cent. annually— more rapid than any other sustained rate of growth in the industrial sector over that period. It has been to the national advantage that the gas industry has been able to grow in this way and at this rate. But today, and looking to the future, the gas industry has tasks to perform in the service of industry and in the service of the domestic consumer. The industry must be able to render these services efficiently and cheaply, and we must ensure, through the machinery which in this Bill we shall be considering, that the industry is fully responsive to consumer needs.
The industry is, of course—and this is the second aspect of the gas industry when one looks at it in the context of the future—one of the main channels through which it has been possible to develop the natural energy resources of the North Sea and turn them to national advantage. It is of the greatest importance that this Bill should make it the most effective instrument possible for achieving that second vital purpose. It is with these two very vital tasks for the future—vital and extremely challenging tasks—in mind that we on this side of the House shall examine this Bill from the point of view of the degree to which it enables the industry to discharge these two tasks with the effectiveness in the national interest which I know those in the industry themselves would wish.
12.6 p.m.
LORD WYNNE-JONES: My Lords, the noble Lord, Lord Drumalbyn, in introducing this Bill, pointed out that the Government were choosing a unitary solution for the problems of the gas industry. This is a little surprising because, as I recollect, whenever the Conservative Party look at a nationalised industry the first thing they want to do is to break it down. It is rather strange that this time they should do the opposite. I suggest that they are doing it in a completely illogical way ; illogical because they have confused two totally different functions. There is the primary function, which the noble Lord explained very clearly, that since we now have a gas industry that is based on natural gas the need is to have one central board which controls the main distribution of natural gas. This is perfectly true. It is very clear, and this is the justification for having this nationalised industry. But when it comes to the distribution to the local consumer, it is surely absolutely wrong to break down the old system of the Area Boards, which enables the consumer to get local contact and enables him to get, so far as possible, what he needs in his own particular home or factory in order to get the full use of natural gas.
It is quite ridiculous to say that there must be one system which combines not only the main distribution but also the local distribution. I submit that this not only is wrong in general principle but will prove extremely inefficient in actual working. It will be a very retrograde step to dissolve these Area Boards. It is true that some form of regional organisation will remain, and it is perfectly true that those people who are employed in the regions will still be employed in the regions and will come under some sort of regional control ; but there will be no Area Board responsible for the local distribution.
Any one of us who uses gas, electricity, or any one of these necessary services, finds that there are occasions when it is extremely difficult to get adequate servicing. Everyone complains about this. One finds complaints in the daily Press and in the Sunday Press about it all the time, and I have run into this sort of thing myself. Some little time ago my sister, who lives at Reigate, was having great difficulty in getting any satisfaction
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over the proper maintenance of equipment. It had taken about three months to get any sort of answer to her requests. It was only when I myself took up the matter and got straight on to the local manager that I was able to get anything done.
The more this control is removed from the locality, the worse the position will be. In my opinion, it is already too far removed from the actual locality. One already finds that the tendency has been for the Area Boards to be so centralised that they may be covering an area of several hundred, or even several thousand, square miles and it is often extremely difficult for a local consumer to contact the appropriate person in order to get proper servicing. Consequently, I believe that this Bill is wrongly conceived, in the sense that it is breaking down the Area Boards. It is correctly conceived in the sense that it wants one method of primary distribution, but it is wrong in breaking away from the Area Boards. The noble Lord, Lord Drumalbyn, has already said that there will be Consumers' Councils, and that is very interesting ; but the Government are extraordinarily afraid of the common person. When it comes to setting up a Consumers' Council they are extremely careful to propose one which is virtually appointed by the Minister.
One finds, for instance, in subsection (4) of Clause 9 on page 8, the words :
" Subject to subsection (5) below, a Regional Council shall consist of a chairman appointed by the Secretary of State "
why is he appointed by the Secretary of State?—
" and not less than twenty nor more than thirty other members so appointed of whom—
(a) not less than two-fifths and not more than three-fifths shall be appointed from a panel of persons nominated from amongst members of local authorities in the area of the Council by such associations as appear to the Secretary of State to represent those authorities ".
In other words, one is having no direct representation of the consumer at all. What one is getting is a number of local authorities allowed to put forward a panel.
This is no way to get representation of the consumer. In my opinion, it is a complete misunderstanding of who the consumer is. The consumer is not a local authority, although it may be a

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small consumer. You and I and people all over the country are the real consumers, and there should be some proper way of representing the real consumer. Then paragraph (b) of subsection (4) states :
" the remainder shall be appointed, after consultation with such bodies as the Secretary of State thinks fit ".
In other words, the whole panel is rigged by the Secretary of State, and I submit that that is no way to have proper representation of consumers.
When one moves away from the question of the main structure, which I think is quite wrong, one comes to another point. The new Corporation is to be excluded from doing any work at all in the field of refining or petro-chemicals. Why should this be the case? We are told that it is because its real job is to distribute gas. But gas is something which is used for all sorts of purposes, and one of the most valuable purposes for which it can be used industrially is exactly in the petro-chemical field. I remember that 25 years ago, when I went to the University at Newcastle-upon-Tyne, I found myself appointed as an honorary director of coke research. I
did not really know very much about coke, so I thought I must start learning about it. I went off to Holland and visited the Dutch State mines at Limburg.
Those coal mines at Limburg had splendid research laboratories, and I found that a large amount of the work being done by that nationalised industry in Holland was exactly in the field of the manufacture of chemicals from coal. That is something which was often urged by the miners in this country, who wanted our mining industry to be allowed to do that sort of thing. But when the mining industry was nationalised that activity was excluded, and it is being excluded again now. I submit that that is entirely wrong, because it is a very profitable and a very natural activity. It is not an unnatural activity for people who distribute gas to wish to go into the petrochemical side.
Finally, my Lords, we come to a point which is absolutely ignored by this Bill ; that is, the question of safety of distribution within urban areas. I am not referring to the point, which is very properly made in the Bill, of safety in the utilisation of gas and in the appliances
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in a house or factory. That is covered by the Bill and rightly so, because it is very important. But natural gas has entirely changed the working of the gas industry. As I think everyone knows, natural gas is primarily methane, and methane has certain peculiar properties. One of them was found in America years ago when they started distributing natural gas, and it is that if it has any water mixed with it, it forms a hydrate, and that hydrate has the nasty property of freezing at a temperature higher than the freezing point of water. Consequently, one can get a blockage, as they did in America, of the main distribution lines.
In order to avoid this, the water is removed from natural gas and, consequently, natural gas as it is distributed is bone dry ; it has had all the water taken out of it. This dry natural gas is very capably distributed through the main high-pressure distribution lines in this country. There is no complaint about that. But when it comes into the towns the new gas comes into old pipes, and we are back to the old trouble of new wine in old bottles. The pipes will burst, or the various joints may leak. This is well-known. In fact, I know that the Gas Board have been doing research on this point. Inside a city one does not have welded pipelines. Most of the pipelines are socketed and the socket joints are made with hemp and pitch. This hemp and pitch will dry out if you have a dry gas and, consequently, leaks will occur ; in fact, they are occurring all over the country. This matter was raised in another place during the Committee stage and several examples were quoted. The Minister objected, but he finally wrote to one of the Members in another place and pointed out that his figures were wrong ; that so far from there having been 36 leaks in the City of Cambridge, there had been only 25 leaks. But that is still far too many leaks.
The trouble is that when this gas escapes it will get into other ducts. There are well-known cases where it has got into electricity pipelines, and if there is a spark in the electricity the pipelines can explode. It has occurred with the Post Office pipelines, and it can occur anywhere. But in this Bill there is no responsibility thrown upon the Gas Corporation for compensation in this respect. It may be said that there is no reason

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why they should compensate, but may I remind your Lordships that when in 1965 a Gas Bill was introduced by my noble friend Lord Champion, this question of compensation was raised. He mentioned it quite specifically in connection with underground storage which would be necessary in order to have economical storage of gas. He said :
" Underground storage will enable the industry to build up a reserve of gas in summer, when demand is low … " ;—[OFFICIAL REPORT, May 20, 1965 ; col. 565.]
and he went on to say that
" … the storage must be carried out in the right conditions and in the right way ",
and that compensation would be paid if any damage was proved.
My Lords, no compensation is provided for in this Bill, and it seems to me to be quite wrong. Suppose there is a leak of gas. Admittedly, it will not be the fault of the present Gas Board, because they are using pipes which were put in fifty years ago in many cases ; but if there is a leak—and there will be leaks—and if an explosion occurs from such a leak, then, in the terms of this Bill, there is no liability on the Gas Corporation and no compensation need be paid for the damage caused. This, I submit, is quite scandalous.
12.21 p.m.
BARONESS EMMET OF AMBERLEY: My Lords, perhaps I may have your Lordships' indulgence although I have not put my name down on the list of speakers, as I wish to follow the point made by the noble Lord who has just spoken on the position of consumers. I was recently put into a difficulty such as he explained his sister had experienced. Something went wrong with the gas in my house, and I had no hot water. I rang up the engineers, and they very politely said that they were unable to make an appointment because they had been centralised. This remained a mystery to me ; but I could not possibly hang about indoors waiting for a gas man to come or not to come, as the case may be. I therefore took a large piece of your Lordships' writing paper and I wrote to the Deputy Chairman of the Gas Council. I had immediate redress. An appointment was made, somebody came
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and the thing was put right. I had incessant attention. But I said to myself, "What happens to the poor old lady down the street who has not got a piece of House of Lords writing paper on which to write a letter?" I have therefore written back to ask whether this is going to be the general policy of the Gas Council, for the reasons that I have given ; because it is quite impossible these days, when everybody works or when the busy housewife has to do her shopping in the morning or take her children to school, or when somebody lives alone and there is nobody to leave in the house, if the Council do not make appointments and keep them. I hope that the Minister will take this into consideration on the consumer side when he is drawing up regulations.
BARONESS PHILLIPS: My Lords, may I ask the Minister a very short question? He will be very relieved to know that I am not going to make a speech, and this may seem a very minor point ; but under Clause 9, apropos consumer representation, can the noble Lord give us some assurance that the Women's Gas Federation will not be touched in any way? Because this is a very valuable consumer body.
LORD DRUMALBYN: My Lords, if I may be forgiven I did not quite hear what the noble Baroness said.
BARONESS PHILLIPS: I asked that the Women's Gas Federation should not be touched in any way—in other words, disbanded.
LORD CHORLEY: My Lords, I should like to underline the very important point which my noble friend Lord Wynne-Jones has just been making about the danger of leaks occurring in the old-established distribution lines, and his emphasis on the need that liability for such leaks should be dealt with in this Bill. Obviously, to any lawyer this raises an exceedingly difficult point. It is not at all clear that the Gas Board (I was going to say the gas companies) will not be held responsible. That might be an exceptionally difficult point in the law of delictual wrong—torts, as lawyers call it—which I should think would almost certainly have to come to the House of Lords, in its judicial capacity, and the

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principle then laid down might be exceedingly difficult of application in individual local cases. It may be asked, "What is a lawyer doing complaining about splendid opportunities for other lawyers to have large numbers of cases to deal with?" But I am speaking now from Parliament, which ought to lay down rules that will prevent this sort of thing happening. It seems to me perfectly clear that this has not been provided for in this Bill, and that it certainly ought to be.
12.25 p.m.
BARONESS ELLIOT OF HARWOOD: My Lords, I want to say just one word in support of this Bill and of my noble friend Lord Drumalbyn, whose introduction was, I think, a model of clarity, bringing out just the very points to which we most wanted to listen. I should like to emphasise what I think the noble Baroness, Lady Phillips, and I are going to agree on very strongly, and that is the proper implementation of Clause 9, with regard to the consumer bodies. I do not share the fear which the noble Lord, Lord Wynne-Jones, has, that because these matters appear to have the sanction of the Secretary of State that necessarily means that the Secretary of State will appoint these people. He will not do that at all. When I was trying to find people for the Consumer Council, I had to find all the names. I had to consult all the local bodies—the women's organisations, and so on—and it was only after sifting through a great many names that a few were finally put to the Secretary of State and he was asked to sanction them—because that was his job under the Act. It is, of course, the job of the person who is in charge of the appointment of consumer bodies (in those days it was myself, in the case of the Consumer Council, as I was Chairman of the Council) to find these people ; and I hope very much that they will come from a wide selection of the users of gas. The Women's Gas Federation, to which the noble Baroness, Lady Phillips, has referred, is an absolutely admirable body, and I am quite sure that it will be very helpful in finding people of value, both representatively and as users of gas, throughout the whole country, because they are spread throughout the whole of the United Kingdom.
I may not have understood the Minister rightly, but I understood him to say
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that there would definitely be a regional organisation ; that it may not be called exactly the same as the one which exists today, but that there is no doubt at all that there will be a regional grouping of the gas industry in the same way as there is today. I thought he said that they will probably stick to the same regions as they have now. My noble friend will no doubt explain that when he winds up. I quite agree : I think it is most important that the emphasis should be on the regions and on the uses which are made of gas, because they vary very much from one region to another. I also hope very much that the services which we all require, whether from the Gas Board or from the Electricity Board, will be looked at very carefully because sometimes they are excellent and sometimes they are very bad. For myself, I do not think it really has anything to do with the central organisation ; I think it is the local organisation that is sometimes good and sometimes bad. One must therefore do as much as one possibly can to improve the local organisation and the local services.
I think we have all had the same experience as the noble Lord, Lord Wynne-Jones, has had. I have had exactly the same experiences in converting a house which has used ordinary gas for many years and which now has this North Sea gas—a far more powerful kind of gas—put through the old pipes. One gets these awful leaks, and it is very disconcerting. But these are surely growing pains, so to speak, of a new industry, and I am quite sure that the Councils which will be set up under this Bill will be well alerted to these problems. In regard to these leaks (which I agree with the noble Lord, Lord Wynne-Jones, have proved very troublesome) it may be that this problem should have been seen before ; that people should have realised that this would happen more than they thought it would. Nevertheless, it can be overcome, and I think it is a great pity to judge the new organisation and the new set-up that is to be established under this Bill as being inadequate from the start. I myself feel that it is well planned ; that there is a great deal of experience, both in the generating of electricity and in the production of gas, which people will work on ; and I

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am quite sure the noble Lord will see to it that the points which have been raised will be dealt with. I am certain that under Clause 9, the clause dealing with consumer bodies, we need have no fear of appointments being sanctioned by the Secretary of State—for they must be sanctioned by somebody, unless there is an election, which there cannot be here—without the most careful consideration being given to local interests, local organisation, local people and so on. I should like to support the Bill and the Minister who introduced it.
12.31 p.m.
THE EARL OF SELKIRK: My Lords, I apologise for not being here when the noble Lord introduced the Second Reading. I should like to add my congratulations to the Gas Council for the way in which, with the maximum of speed and restoration afterwards, they laid their pipes. So far as I have seen in a number of different places in the country it was an outstanding task and they deserve the fullest congratulations on the way the work was carried out. I would add a word to the remarks of the noble Lord, Lord Wynne-Jones, on consumers. This is a very serious point. I do not want to say that I have no confidence in consumer councils ; but what is needed is an executive person in the area who is known, who can be called into one's house and beyond whom, if he fails, there is someone to whom he is responsible. This is what the Regional Gas Councils represented ; and this is what is now going away.
I beg the noble Lord to let the people know just who is responsible. This material is coming into their houses and I think it of the utmost importance that they should know who to contact in the event of a leak or any other difficulty that arises. I would rather concentrate on this than, for instance, on extending functions to petroleum refining. I would rather keep the Council closely concentrating on what their task is—and that is to see that the consumer is satisfied. For this reason, it is necessary to have an executive man reasonably near to where the consumer is.
12.33 p.m.
LORD DRUMALBYN: My Lords, I should like first to thank noble Lords who
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have spoken for what they have said. They have not spoken with complete unanimity, but I do not think that that ever happens and this is what Parliament is for. But there was unanimity on one thing, on the tributes to the Gas Council and the Area Boards for the immense progress that has been made in recent years in introducing and using natural gas. Naturally, there have been some criticisms and I did not seek to evade these in my speech. I said that, clearly, the Gas Council and Area Boards have been learning by experience. I shall return to that in the course of my few remarks ; and I hope not to detain the House for too long. As the noble Lord, Lord Delacourt-Smith, gave notice of a number of points that he was going to raise on Committee, I do not think I need go into them in any great detail today. He welcomed, in particular, the flexibility given by the Bill ; and I would say on that point to the noble Lord, Lord Wynne-Jones, that that flexibility goes from top to bottom. It may be, as a result of this reorganisation, that the service at ground level will improve ; but this is essentially a matter for the new Corporation in consultation with the advisory bodies that are being set up.
LORD WYNNE-JONES: My Lords, will the noble Lord forgive me for intervening? I appreciate that ; but we have noticed a similar problem arising in regard to B.E.A. and the inability of the Government to tell B.E.A. what it is to do in connection with passengers. I submit that when it comes to the point when one has set up an authority with power, one cannot then go back and tell that authority what to do. I suggested that we take that step now.
LORD DRUMALBYN: As I indicated in my original speech, that power (and it is of the Regional Councils right through to the National Gas Consumers' Council) is to advise the Secretary of State on what should be done. This could result in directions being given ; but I do not think that one can go further than that in the day-to-day activities of the Corporation. In establishing these statutory bodies, one confers on them functions. I think one must leave them to carry out their functions, for experience has shown that by and large they carry them out very well.

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In order to have contact with the consumers there are always these consultative bodies. I am inclined to think that we are improving the nature of consultation very much as we go along. The Post Office Users' National Council has been a great success, and the form of the Councils envisaged in the Bill is designed to make them as independent as possible of the bodies on whose work they are commenting. The Bill goes a considerable way towards improving the situation and this is something that we shall have an opportunity of discussing in Committee. Indeed, while the noble Lord, Lord Delacourt-Smith, said that this is one thing noble Lords opposite would obviously like to discuss, on the whole he welcomed the arrangements in the Bill for representation of consumers. I am not saying that the Bill is not capable of further improvement, and certainly we shall look at it in view of the comments that have been made.
I will not deal with the more detailed points raised by the noble Lord, Lord Delacourt-Smith ; but in regard to his point about the powers being too narrowly confined, I may say that the Bill does not set out to preserve opportunities for private enterprise as an objective in itself. As my noble friend Lord Selkirk said, it sets out to ensure that the Corporation sticks reasonably closely to its primary business and so does not dissipate its energies.
My Lords, the noble Lord, Lord Wynne-Jones, referred to the exclusion from the functions of the Corporation of the refining of oil and petrochemicals. But one must remember that if there previously had been a case for refining, that case has been greatly weakened by the change in the whole nature of the functions of the Corporation. It has now ceased to be a manufacturing board and is becoming a distributor ; so that arguments in favour of its going into further forms of manufacturing are very much weaker now than they were before. The noble Lord, Lord Delacourt-Smith, also referred to the possibility that the limitation on refining would hamper negotiations—
LORD DELACOURT-SMITH: My Lords, before the noble Lord moves on, may I say that I am not sure that I followed his answer to my noble friend?
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I appreciate the change in the functions of the Corporation, as far as gas is concerned, from manufacturing to distributing ; but the manufacturing to which I think my noble friend referred was that of plant, equipment, fittings and so forth. These will still be required. They may be required in greater number ; they may be of different types. But they will still be required. Manufacturing in the sense in which my noble friend used the word will not necessarily be less than was previously the case.
LORD DRUMALBYN: My Lords, that is so ; but I thought that he also referred in particular to the refining of oil and the manufacture of petro-chemicals. It was this particular point that I was concerned with. It is true that as a safeguard against any possibility of exploitation, the Gas Corporation will be in the same position as are the Area Boards at the present time. So far as the manufacture of fittings for export is concerned, the noble Lord will remember that this prohibition appeared in the 1948 Act. This is repeated in the present Bill. It is true that it was not in the Bill as introduced by the Party opposite, but we can discuss this matter again and I need not go into the details now. I will say that it is a repetition of what was in the 1948 Act. I do not think that the limit on refining will hamper negotiations. There is enough competition among refiners to ensure a fair price for crude oil.
I think it was the noble Lord, Lord Delacourt-Smith, who asked about general directions. He asked why Clause 7(2) was needed in view of the powers of general direction in subsection (1). My Lords, Clause 7(1) is limited to general directions, so that a direction to discontinue a particular activity arising from an overwide interpretation of their powers could probably not be given under Clause 7(1). That is why subsection (2) has been included. The noble Lord asked about energy policy in general. Energy policy is a subject which is always under continuous review, for the very good reason that circumstances are changing all the time owing to the availability of supplies, to the prices at which they are being offered, security of supply and so forth. Experience has shown—as I remember very well over a number of years in Parliament—that when Ministers have

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announced an energy policy perfectly suitable at the time of the announcement, within a few weeks something has happened radically to upset that policy. I do not think I need say more about that at present, except to assure the noble Lord that energy policy is under not only continuous review but also very special review at the present time. The noble Lord also referred to Government expenditure to meet unemployment. This is on similar lines to the provisions in Section 2 of the Electricity Act of this year and Section 2 of the Transport (Grants) Act. I was glad that the noble Lord, Lord Delacourt-Smith, welcomed it and I do not think that I need say any more about that.
I come to what was said by the noble Lord, Lord Wynne-Jones. I have dealt with his point about centralisation. I do not agree that it is a retrograde step. This is a question of management. As I said in my opening speech, the whole of the distribution of functions of management is to be reviewed immediately this Bill is enacted and periodically thereafter, and it will be up to the Corporation to ensure that the management is so organised as to give the best possible service to consumers of gas. The absence of statutory local bodies does not mean that the authority and responsibility of local managers will in any way be reduced.
I turn now to the composition of the Consumers' Councils and local authority representation—about which the noble Lord complained, to my surprise. Local authorities are, after all, the elected bodies which are closest to the consumer and this is therefore the easiest and best way to get persons elected by the consumers on to the Councils. Admittedly, they were not elected for that purpose, but in general they are respresentative of the consumers in their areas. I do not know whether the noble Lord is suggesting some system of direct election of members of Consumers' Councils, but I have the greatest difficulty in conceiving how such elections would be likely to arouse much interest, if we are to have bodies of a reasonable size. But I think we should leave that whole question of the various tiers of local representations for discusicussion at Committee stage. I think the noble Lord will find that the representa-
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tion of the individual consumer is generally better than he seems to believe.
LORD WYNNE-JONES: My Lords, my complaint was not that members of local authorities might be on these Councils, but rather that the local councils could not elect any member on to a Council. All they would be able to do would be to present names for inclusion on a panel from which a selection would be made by the Minister ; in other words, it would be a selective and not an elective process.
LORD DRUMALBYN: My Lords, this has generally been the pattern of consumer councils, except where in the past the boards have occasionally themselves nominated the consumer councils or the consultative councils. We consider that that tended to reduce the independence of the councils, and the system of consultation by the Secretary of State with the various bodies, which would continue to include the Women's Gas Federation, seems much more apt to secure the independence of these bodies from the Gas Corporation than a system where the Corporation would select the representatives. I cannot think of any better way to deal with this matter. I noted that the noble Lord, Lord Delacourt-Smith, who has a great deal of experience in these matters, seemed to support it and I was greatly heartened by that support.
Regarding the very important question of safety and distribution, I would say to the noble Lord, Lord Wynne-Jones, that it simply is not true that safety and distribution is ignored in the provisions of this Bill. If the noble Lord will look at Clause 31 he will see that it states :
" The Secretary of State may make such regulations as he thinks fit for the purpose of securing that the public is so far as practicable protected from any personal injury, fire, explosion or other dangers arising from the transmission or distribution of gas by the Corporation … "
In reply to the noble Lord, Lord Chorley, the Bill does not change the normal legal position at common law, that liability to pay compensation for an accident, where the Corporation is acting under a mandatory statutory duty, arises only where there is negligence. Any change in this principle would have to be part of a general change in the law and it is not something which should

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be done for the gas industry in isolation. It does not change the existing situation, and the liability in that way will continue.
LORD WYNNE-JONES: My Lords, if the noble Lord will forgive me for interrupting him again, that is the whole trouble about it. We are introducing a system of natural gas which is almost bound to cause leaks, and then we are saying that this is to be treated as a natural occurrence. I submit that that is absurd.
LORD DRUMALBYN: My Lords, it is not being treated as a natural occurrence. If the Gas Corporation was in any way negligent in maintaining its system, it would be liable to pay compensation.
I do not think that we can go into arguments about whether leaks have been left unattended. I can say that inquiries have shown that all leaks notified by the Post Office have been or are being remedied. I can give the noble Lord more information about that. The Post Office and the Gas Council are studying under board-level direction whether anything can be done to improve procedures and practice—because this is a question of notification by the Post Office people who, I may say in parenthesis, are using much more sensitive detectors of gas than they did before. Any leak is notified to the Gas Council, which notifies the Post Office when it has been attended to, not necessarily when it is being attended to. The Post Office checks again to see that the matter has in fact been put right.
I should like to assure the noble Lord that my honourable friend the Parliamentary Under-Secretary of State for Industry is fully conscious of the need to make gas as safe as possible. Indeed, I have discussed this matter with him, in view of the notice which the noble Lord, Lord Wynne-Jones, gave me that he would raise the question. My honourable friend has asked that these matters be thoroughly investigated in order to ensure that every precaution is taken to protect Post Office workers against accidents. Of course that goes for everybody else as well ; but Post Office workers are in a special position to detect leaks in the system. The Gas Council is only too willing to give any advice and assistance of a technical nature. If Post Office engineers follow the safety procedures
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laid down for Post Office employees they will not be exposed to needless or unreasonable risks. My honourable friend has given an assurance in another place that he will have all the points raised about safety considered carefully, and this is being done. However, I will ask him to consider further the points which the noble Lord has made.
Perhaps I should add that the pressures used in local distribution do not by themselves burst pipes, since they are very low. As the noble Lord said, the trouble arises from the dryness of natural gas, to which the pipes are not accustomed. Transmission and distribution systems are wholly in the hands of the gas industry, and in fulfilling its functions here the industry observes codes of practice which lay down very high standards. The work is subject to supervision. Regulations on this would be unlikely to achieve more than the present arrangements. The policy is to avoid confusing the responsibility for exercising care, which now rests wholly on the industry, by making regulations. The powers contained in Clause 31 are adequate to enable regulations to be made if at some future date this proves to be desirable.
The points made by my noble friends Lady Emmet of Amberley and Lady Elliot of Harwood were largely ones for the industry itself in consultation with the Consumer Councils. The way to secure improvements is to take advantage of the Council's closeness to the situation, and of the advice it gives to the Corporation. I hope that the noble Baroness, with such experience of these matters, will agree that this is the right way of tackling the problem.
My Lords, I hope that I have dealt sufficiently with the immediate problem. I mentioned in passing the point made by the noble Baroness, Lady Phillips, and I hope she will be satisfied.
BARONESS PHILLIPS: My Lords, while I do not want to bother the noble Lord, Lord Drumalbyn, I should like to ask him whether this useful organisation is going to remain untouched. I am not quite clear whether the Consumer Council is a statutory or a non-statutory body. Knowing about the change from the Council to the Corporation, I do not want to hear next that the Consumer Council had suddenly been abolished.
LORD DRUMALBYN: My Lords, it is a non-statutory body and therefore it is up to itself whether it continues in being ; but there is every reason why it should. I was only saying that in the selection of people to serve on the Councils there will be consultation in the future, as in the past.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

GLAMORGAN COUNTY COUNCIL BILL [H.L.]
Reported with Amendments.