LORDS AMENDMENT (Hansard, 11 November 1975)

§ Lord BALOGH
My Lords, there has been extensive debate both here and in another place on the subject of this Amendment. The debates were important and your Lordships' Amendment gave the other place an opportunity to reconsider their views. They had an especially full debate on this question, as was only right in view of its importance, but reaffirmed their earlier view which was, as I mentioned to your Lordships, that Part II of the Bill represents an entirely proper and legitimate exercise of Parliament's right to legislate and the Amendment would defeat the object of that legislation. I know that some noble Lords feel strongly on this matter but, as the House will have noted, a question of privilege arises and I take it that, in accordance with custom, noble Lords, whatever their views on the question, will not wish to press such an Amendment against the Commons. My Lords, I beg to move.

Lord CAMPBELL of CROY
My Lords, as the noble Lord, Lord Balogh, has said, this is one of the most important matters discussed under the Bill. The Commons Reason given is a financial one and of course that is their business and certainly we would not wish to resist their view. But a principle is involved which hitherto British Governments have upheld, together with most of the rest of the world. Without this Amendment, this Bill is a departure from that principle. The Bill has the effect of abrogating contractual rights during the period in which it was freely agreed between the parties that those rights should run. Our Amendment would have made provision for compensation when a licence was revoked as a result of new conditions introduced by this Bill.
This was mainly to protect British interests abroad and Britain's good name. In the Anglo-Iranian Oil Company dispute in 1951 a Labour Government firmly stated, 1766 that rights acquired by foreign nationals by virtue of concessionary contracts are property rights and that as such they are entitled to the same protection as international law grants to the property rights of foreigners". That is a quotation from the Government's memorial at that time and that was upholding a principle of great importance to Britain. Having myself in 1951 been the member of our Security Council delegation in New York who had the task of explaining to the world Press the attitude of that Labour Government, I find singularly distasteful Ministers' accusations that we are more concerned about compensation for oil companies than about the national interest. If British concessionary rights in the Western Hemisphere or elsewhere are at any time in future unilaterally curtailed or terminated this Government will bear a very heavy responsibility.
Ministers have used what I think are specious arguments about the licensing terms. I would point out that the second and third rounds of licensing were during the time of a previous Labour Government in 1967 and 1969. A very good example was to be seen last week—the Forties field where the oil was turned on just over a week ago. It was licensed under the second round in 1967 and it is a large and prolific field. The reason of the terms of licensing, which was carried out by a Labour Government in the case of that field, cannot again be used as an argument that in some way the Conservatives were responsible for a situation which the Government are now taking these draconian measures to remedy.

§ Lord LLOYD of KILGERRAN
My Lords. I should like to support the noble Lord, Lord Campbell of Croy, on this very important matter. In view of its importance, may I remind the House of what the noble Lord, Lord Balogh, said, in this House on 31st October as recorded in col. 771 of the Official Report. He said: The Government's aim in bringing in this legislation …was designed to restore the balance between national interest and fair treatment of the oil companies.

§ Lord BALOGH
Hear, hear!

§ Lord LLOYD of KILGERRAN
I am glad, my Lords, to have that support 1767 from the noble Lord in a sedentary position. In so far as fair treatment is concerned, I regret that among the vast new powers in the Bill the Government did not go further in fairness to these oil companies which have so far invested vast sums of money and technological resources in the North Sea project. I had hoped that the Government might provide among these varied powers a procedure for claims for compensation to be made—a procedure to be introduced without, of course, admitting that compensation was payable.
Is the noble Lord in a position to say whether his Government have received claims for compensation? No doubt precise claims for compensation are premature because this Bill has not yet passed, but is the noble Lord in a position to say whether claims for compensation have been made? May I make the further suggestion that if claims for compensation are in the offing, the Government ought to reconsider setting up a procedure such as was set up after the last war in respect of very substantial claims by inventors. May I repeat the word "inventors", because frequently in this House I am misunderstood and am recorded as having said "investors" Claims by inventors were dealt with by a special commission that was set up by the War Department. Perhaps the noble Lord will be able to give an assurance that if there are to be large claims a procedure of that kind will be set up to avoid unnecessary and lengthy litigation.

§ Lord BALOGH
My Lords, I am very sorry that the noble Lord, Lord Campbell of Croy, indulged in history rewriting just now. I do not wish to bring out the controversial aspects of this question, but merely to say that the Government do not believe that this Amendment is justifiable. However, the noble Lord tried to put a gloss on history and I shall now take it off. The noble Lord cannot distinguish between the situation in the third and the fourth rounds. In the third round everybody expected that no oil would be found in the Northern waters. I well remember that the first sign of oil in the Northern waters was about 10 years ago. One of the most notable experts in the Government assured me in 1966…67 that the chance of finding sizable oil reserves in the North Sea were very low. However, in 1969 1768 Ekofisk was discovered and in 1970 the Forties Field was discovered. The Government then received £137 million worth of offers from the oil companies for a few squares of submarine soil, but they went on as if nothing had happened. The Government continued to give these rather splendiferous terms as if we were a banana republic.

Lord CAMPBELL of CROY
My Lords, the noble Lord has spoken about what he was told in 1967. However, in one of our earlier debates the noble Lord, Lord Lee of Newton, said that as the Minister responsible in 1965–66 he knew that there was a great deal of oil below the North Sea.

§ Lord BALOGH
My Lords, I must congratulate the noble Lord, Lord Lee of Newton, on his prescience, but I do not believe that it was shared by anybody else—certainly not by me. However, he was right and I was wrong, and I must apologise for my doubts regarding his prescience. This Amendment might cost the taxpayer hundreds of millions of pounds a year in the 1980s. The objection is the implication that the controls contained in the Bill would, without the Amendment, cost the oil companies sums of this order. By challenging Mr. Jenkin on whether a Conservative Government would pay compensation, no answer was forthcoming. While I can see a certain political case, and more especially the American analogy which I quoted in the last debate, it is quite conclusive that what we are doing is not retrospective. We arc taking remedial action in the national interest to eliminate certain weaknesses in the licensing system which was introduced in 1970 for the new round.

§ The DEPUTY SPEAKER (Lord Maybray-King)
My Lords. I am advised that Amendment Nos. 9 and 10 on the one hand and Amendments Nos. 11 and 12 on the other have been marked in the wrong order. Therefore, I am calling now Amendment Nos. 11 and 12.