HL Deb 31 October 1975 vol 365 cc743-75

11.15 a.m.


My Lords, I beg to move that this Bill be now read a third time.

Moved, That the Bill be now read 3a.—(Lord Balogh.)

On Question, Bill read 3a, with the Amendments.

Schedule 2 [Production licences for seaward areas]:


My Lords, I beg to move Amendment No. 1, which is directly consequential upon an Amendment which your Lordships' House made at the Report stage.

Amendment moved— Page 102, line 24, at end insert ("and an agreement in so far as it provides that, after any petroleum has been won and saved from the licensed area, it shall be exchanged for other petroleum.")—(Lord Campbell of Croy.)

On Question, Amendment agreed to.

Schedule 3 [Production licences for landward areas]:


My Lords, it might be convenient if I explained that Amendments Nos. 2 and 3 are also directly consequential upon the Amendment that was made at Report stage. I beg to move.

Amendments moved— Page 127, line 6, at end insert ("and an agreement in so far as it provides that, after any petroleum has been won and saved from the licensed area, it shall be exchanged for other petroleum.") Page 156, line 19, at end insert ("and an agreement in so far as it provides that, after any petroleum has been won and saved from the licensed area, it shall be exchanged for other petroleum."—(Lord Campbell of Croy.)

On Question, Amendments agreed to.


My Lords, I beg to move that this Bill do now pass.

Moved, That the Bill do now pass.—(Lord Balogh.)


My Lords, I thought that the Minister himself might be speaking first to this Motion. Having for the convenience of your Lordships' House tried to deal speedily and concisely with the Amendments at Report stage on Wednesday after your Lordships had had an all-night Sitting, we thought that we ought to save the general discussion until the debate this morning. So there are some comments which I, and some of my noble friends, should like to make on the Bill, which we reserved to today rather than make last Wednesday's proceedings much longer than they need have been.

I would remind your Lordships that this Bill reached our House very late in the Session, and the Second Reading was on the last day, 7th August, before the Summer Recess. We have been busy both last month when we returned during the Recess and had two days of Committee and again this month, in examining the Bill and seeing what revision was necessary. I believe that we have been able to make some worthwhile changes and additions. Much of the Bill is necessarily technical as regards licensing and similar matters. We on this Bench have approached it with the object of providing the best arrangements by which to win offshore oil quickly up to 1981. We have also approached it with a view to what would be required in order to apply sensible depletion policies after 1981.

Offshore oil is a new, valuable and welcome resource for Britain. In later years I believe we may well be shocked that we ever used it as fuel, because there are so many other uses as a source of ingredients for the manufacture of goods which are needed by the world, which I am sure we shall concentrate on in years to come; for example, in the plastics industry. The oil will last for only so long. In 40, 50 or 60 years, perhaps less, most of it is likely to be used up. It is against this background that we look at the contents of this Bill.

We on these Benches believe that the British National Oil Corporation (what is known as BNOC) is an unwieldy collossus which is not necessary. It will be expensive to set up, and it will take time, which the country can ill afford, to get itself established with staff and the necessary expertise; and I remind your Lordships that there is only a limited amount of both of those available in the country, or, indeed, outside in the world. In the matter of licensing, which takes up a large part of the Bill, powers are to be given to the Minister and there is to be the enforcement of changes to licences, which again we believe to be largely unnecessary. The Bill could, therefore, have been much shorter and this would certainly have eased the burden on Parliament at this time.

The effect of the Government's actions concerning offshore oil in the last year and a half has been to slow up offshore operations. For the first year of the Government's time in Office there was uncertainty while they were making up their minds. Later there has been apprehension when the proposals have become known.

We have made improvements to the Bill, with the help, I readily acknowledge, of the Government, and I will explain briefly what they amount to. The Government for their part have added a provision whereby the accounts of the BNOC will give separate information about its various activities. This is important considering that it will be engaged in so much; it will have powers, for example, even to run petrol stations at the roadside. The Government have also added a provision which will enable the amount of petroleum revenue tax which would have been payable, if BNOC had not been given exemption, to be made known each year soon after the accounting year is over. Our view is that BNOC should not be given exemption from this tax. We feel that as it is working in competition with other companies, there is greater danger of advantages being gained by this company which it will not be possible to observe from the outside. However, I acknowledge that this is a considerable improvement, made to the Bill in your Lordships' House by the Government, that they have put something in the Bill to meet this criticism.

The Government have also altered the unjusifiable threat of revocation of the whole of a licence. We do not think their Amendment goes far enough, as we demonstrated on Report with some additional supplementary Amendments which would, we think, have completed what the Government were doing. The trouble is the restricted definition which the Government have taken of what is a commercial field. Nevertheless, I acknowledge that on this point, on which there was so much anxiety in the industry, which has to carry out the difficult task of extracting the oil, the fact that the Government have had a considerable change of mind. This change in the Bill is an advance. The Government have also introduced arrangements for representations to be made by a Licensee to a Minister in certain circumstances on technical and financial factors, and again this was meeting anxiety among the operators. These are all improvements which the Government have made as a result of pressure and argument which we and others have been able to put to them.

Let me outline the improvements which we have made in your Lordships' House, though without the full agreement of the Government. There will be further opportunity now for the Government to consider these points. We have removed the anomalous requirement whereby there should be two civil servants on BNOC who would still be employees of their Departments and responsible to their Ministers. We have added arrangements to deal with possible unfair discrimination or unfair practices arising from BNOC's proposed activities. The Government have said that the Fair Trading Act 1973 would cover this. It might make some contribution, but I remind your Lordships that that Act was addressed to unfair trading as regards customers and consumers in the country, and did not apply to this kind of situation in industry. On licences, we have added a provision for compensation where there is a revocation of a licence as a result, of an act or omission relating to the new changed part of a licence arising from this Bill and not arising from the original terms entered into by both the parties. This will certainly improve the position of Britain abroad. It means that British companies operating abroad and in offshore waters abroad may not be threatened with the same kind of sanction without compensation. On depletion policy, there is now in the Bill the assurance, given in the words of the then Secretary of State for Energy, Mr. Varley, on 6th December, and this assurance means that the companies know that they will have reasonable protection from a very delayed return for the massive investment which they have put in, along with protection from major alterations of programmes at short notice.

In the pipe-lines section of the Bill there is now a period of grace before a termination of an authorisation, and in that period of grace any alleged contravention can be remedied. This was as a result of an Amendment moved by the noble Lord, Lord Lloyd of Kilgerran. And on pipelines also, there is an addition providing a proper basis for the allocating of costs when third parties are to make use of spare pipe-line capacity. There is also now in the Bill an addition which incorporates the Government's undertaking not to withhold approval under powers in the Bill in order to enforce on a company their policy of 51 per cent, participation. The Government have said that that policy and its fulfilment is to be on a voluntary basis and, therefore, presumably they will commend this addition to the Bill. This is important because it is one of the chief I elements, as we understand it, of the Government's policy. But this 51 per cent, participation is still wrapped in mystery. It is apparently being pursued in private discussions with the individual oil companies. We are told that as a result the companies are to be no better or worse off financially.

Last Monday some noble Lords may have seen the "Panorama" programme in which the interviewer said to the noble Lord, Lord Balogh: The chairman of Shell says that oil company executives are baffled and bewildered by the Government's intentions". To which the noble Lord replied: I never complain about what the oil industry is saying. If I were an oil man I would say the same things. That was interesting because the noble Lord is an eminent economist and if he, as an economist, were working for an oil company, it is clear from what he said that he would be baffled and bewildered by the Government's intentions on the 51 per cent, participation. I applaud his frankness and there is certainly every reason for bewilderment.


The noble Lord must understand the irony, my Lords.


My Lords, I hope that the several million viewers will have understood the irony, too. However, I must draw attention to the more sinister side. Of course I absolve any noble Lord sitting on the Front Bench opposite from this, but it is something which is naturally causing anxiety, particularly among the many engaged in offshore activities who are not necessarily familiar with British systems. It is that there is a possibility of undue pressure being brought on individual companies, arising from the powers which the Government have, to give or withhold assent to schemes and programmes on our Continental Shelf.

My noble friend Lord Strathcona and Mount Royal when he speaks later, will go more fully into the question of 51 per cent, particpation, but it is important that the Government should make it abundantly clear that they are not using the powers which they are being accorded under the Bill, and which they already have, to force companies into this 51 per cent, participation. I have pointed out at an earlier stage of the Bill that there has been a certain amount of coincidence. I asked a question, but I have not yet received an answer, so I hope that there is an opportunity now for the Government to provide that answer. I will put the question again: have there been any cases since the policy of 51 per cent, participation was adopted where companies have sought permission to rearrange interests in a licence, and have received that permission, without their also having to announce acceptance in principle of 51 per cent, participation? It is a coincidence that, so far, all the announcements relating to such cases have included the companies—which were clearly under some pressure to get Government agreement—announcing that they accepted in principle this 51 per cent, participation, whatever that may consist of. I ask the question again: Are there any companies which have not accepted this participation?—because this is the kind of coincidence which naturally provokes the anxiety which I have mentioned.

Let us consider the effects of the Government's policies. There is a danger that they will delay operations on our Continental Shelf, so this means that there is still a danger that the oil which was expected by 1980 will not all be available. I am not suggesting that companies which have already committed themselves to a large investment will not go ahead with their particular programmes; it is the next stage to which I am drawing attention. Companies are looking very critically at their later programmes. The noble Lord, Lord Balogh, has, in his charming way which we know so well, given currency to a little known word—"risklessness". He has used this word in your Lordships' House to describe operations in the North Sea. It has been supported in our recent debates during the last few weeks by statistics showing that the ratio of dry holes in the North Sea to the total number of holes is rather less than in other major oil provinces in the world. That may be so, but that argument completely ignores the formidable conditions in the North Sea and the enormous costs involved. In those circumstances and with the licensing and taxation systems which are now being imposed, fields which had previously thought to be commercial may not be so—and this may be the case even with large fields which apparently contain a lot of oil.

The Economist recently drew attention to the Government's policies and their effects. On the 51 per cent, participation negotiations, it said that these were being carried out mostly with the smaller companies which were in financial straits. Ironically, said the Economist, this meant that those companies might be placed in a worse condition compared with the large companies. Then it referred to the difficulties with progress payments on fields which are now being developed. The financial institutions and the banks are reluctant to help with finance. Then, decisions on whether to develop fields are being shelved and the banks will not lend on balance sheets or on the promise of oil to come. The article also referred to the reluctance of companies to take on new fields, and it gave as examples the Hutton, Andrew and Maureen fields. Plans have already been shelved for the last two.

I turn to exploration. The Government have been telling us that during this year the drilling rigs in the North Sea—these are the vessels which carry out exploration drilling—have averaged about 29, but the United Kingdom Offshore Operators' Association has pointed out that the research it has carried out shows that the average next year will probably be 20, so that there is likely to be a reduction from 29 to 20 drilling rigs on the exploration side.

Turning to production and the platforms—the massive structures which are permanently established in the oil fields in order to control the flow of oil—we find that the Secretary of State is quite rightly worried about the lack of orders. Your Lordships will recall that a platform can be worth about £100 million if it is built in this country and would be a strain on our foreign exchange if it were built abroad. Unfortunately, some orders for platform building went abroad during the uncertainty of last year. However, until the plans for oil fields are certain, companies cannot be expected to order and, as I have indicated, they are not committing themselves to these future plans because of the uncertainty and because of some of the contents of the Bill. That is one of the main reasons for the delay in platform orders.

On Monday—in three days' time—there is to be a day of national celebration when the first oil from the Forties field is piped ashore. I say straight away that this has been the result of a great feat. Four platforms have been placed in the Forties field, over 100 miles of pipe-line have been laid on the sea bed and more than that have been laid on land. The cost of laying pipe-line on the sea bed now is about £1 million a mile. The company concerned—BP—and the other companies who are suppliers or have been working with them were given every encouragement. During the last three years they have been pioneering and coming up against new difficulties in this enterprise. We should ensure that similar enterprise in other fields is not strangled at the early stages.

I am glad to have been given the opportunity to be there in Aberdeen shire on Monday, having made a modest personal contribution to the exercise in the Forties field. In December 1971, the first ever application for a platform building site was made for Nigg Bay; a large part of the shore in an area of natural beauty was to be the site. There were, naturally, objections regarding wild life as well as the environment and there were also worries about the effect of the oil industry's activities on the countryside. However, I took a risk—in part of this "riskless"operation—and as the planning Minister, I decided against a public enquiry, and thereby saved up to a year. I am glad to say that that decision has been vindicated because the massive operations at Nigg Bay have in general been accepted in the area and the necessity for a public inquiry has not since been regarded as something which I overlooked. The first platform for the Forties field was built at Nigg Bay and one of the other four was also built there. The opening would not be taking place next Monday but would be some time ahead—perhaps a year ahead, because of the "weather window" in the summer—if that planning decision, with out a public inquiry, had not been taken in a matter of a few days.

The enterprise, ingenuity, skill and incredibly hard work needed for offshore oil operations should be encouraged by the Government. The policy of the Government now will determine what happens in the 1980s, but we need investment from abroad. We cannot do it all ourselves. Of course, we want British industry to become increasingly involved in these activities and to be able to use the techniques elsewhere in the world in years to come. This will be a valuable invisible export for Britain. But to obtain the best results for Britain the Government should encourage the investment and the potential massive effort that are still available, because if they do not these may well be diverted to other shores.

11.40 a.m.


My Lords, may I, as one who has taken an active part in dealing with Amendments to the Bill, offer from the Liberal Benches our good wishes to the noble Lord, Lord Kearton, as the first chairman of the British National Oil Corporation. However much we from these Liberal Benches still disagree with many aspects of the Bill, and indeed with the procedures of the Corporation, we wish the noble Lord well in the immense task to which he is now committed. The new Corporation clearly has a vast responsibility, affecting vitally the future interests and assets of the United Kingdom, particularly in the North Sea.

As Ministers in this House and in the other place have repeatedly said, the Government are seeking to achieve—and these words are very significant in this industry— a partnership with the privately-owned oil companies, a partnership which reflects the importance of our national interests, and the need for proper development of our North Sea resources, with proper control over them and a fair return to the nation from them."— [Official Report, Commons, 29/7/75; col. 1577.] These are indeed very important aspirations which we hope the noble Lord, Lord Kearton, will be able to carry out.

Of course I realise that the Government have had to close the gaps in the North Sea oil policy which they inherited from the Conservative Government. The all-Party Accounts Committee had, for example, criticised aspects of the Conservative Government's policy in 1971. We on the Liberal Benches recognise that there should be proper control and a proper share in the ownership of such an important asset, the new wealth which has been found around our shores. The rapid build-up of this oil industry followed by its rapid decline must, as the Government have pointed out, be prevented; and we realise how the economy of both Scotland and Wales was affected by the rapid rise followed by decline in the mining and shipbuilding industries.

On looking back at the four days in which this Bill has been discussed in your Lordships' House (during the Committee and Report stages), it is important that I say that I feel strongly that this House has acted well in its vital function as a helpful Revising Chamber of great national significance. Sincere efforts have been made from all sides of the House—from the Conservative Benches, the Liberal Benches, the Cross-Benches and the Government Benches—and I pay a particular tribute to the noble Lords, Lord Balogh and Lord Lovell-Davis, upon whom the heavy burden of dealing with this important Bill, with its great significance to the future of this country, has fallen.

During this constructive debate the Government have given a number of important concessions and explanations in the light of the matters put to them in this House and from industry. Some of us may think that they did not go far enough, but the fact is that in the course of the debate concessions and explanations were given, and although many of these concessions and explanations were not put into the Bill, as some noble Lords wished, I consider that the fact that the concessions and explanations have been given openly in this House is a great contribution towards the efforts of the BNOC in the national interest. I hope that the oil industry will recognise also that the Government have taken a number of important steps forward in the light of the discussions in your Lordships' House. The Government, in the words of one of their Ministers, are trying to protect the nation's inheritance for this, and future, generations.

We from these Liberal Benches welcome and applaud the great investment, technical and financial, so far made by many oil companies in the North Sea. We recognise, and I think it is fair to say that the Government have recognised, in; the course of this constructive debate, many of the present anxieties of the oil companies and international finance houses. During the Committee stage of the Bill I submitted to your Lordships that the powers of the Corporation and the Secretary of State, particularly under Clause 2, were unnecessarily wide. The Government's answer was that these wide powers were vital, as the Minister put it. I to safeguard the United Kingdom in getting a large take from the North Sea. The Minister also said—and this is significant in relation to the difficulties of negotiations which the BNOC may have to face—that it was important to keep these wide powers to avoid, weakening the bargaining position of Britain with these very big and extremely skilful oil companies."—[Official Report, 24/9/75; col. 358.] In the light of my personal experience of dealing with large companies in the course of my profession for a number of years, I sympathise with the difficulties which this Corporation may have in negotiating with very large companies.

I pay tribute to the fair-minded way in which the noble Lord, Lord Campbell of Croy, has presented so much of the case during our debates. So far as the revocation of licences is concerned, as the noble Lord has pointed out, important concessions have been made by the Government in the light of Amendments put forward from both the Conservative and Liberal Benches. On the financial side, I attach considerable significance to the fact that the Leader of the House, the noble Lord, Lord Shepherd, a member of the Cabinet, himself took part in the debate dealing with one of my Amendments to Clause 9, intended to make the British National Oil Corporation subject to the petroleum revenue tax. This is a technical matter, yet one of very considerable importance, and there was a similar Amendment to mine put forward from the Conservative Benches. The noble Lord the Lord Privy Seal listened sympathetically to our views and, although such a busy man, he listened to the anxieties of the industry expressed to him. During that debate he gave, as a member of the Cabinet, certain important undertakings. In the result, an important Amendment was introduced by the Government at Report stage and that, in my view, was a very considerable step forward by the Government; and we appreciate that concession.

In conclusion, I wish to say that, despite the remaining defects of the Bill, I have been impressed in the Committee and Report stages by the sincere attempts from all sides to help improve the Bill. We on the Liberal Benches do not have access to the resources, nor have we the contacts that the Government and Conservative representatives have. However, from these Benches we have tried to be helpful. It can be said without ostentation that if one examines who took part in these debates, one sees that many of your Lordships—including myself, if I may say so—who have tried to help in the debate, have in the course of their professions and business activities outside this House had, often before they came to it, to conduct difficult negotiations, often on a national scale, with companies as large and as skilful as the oil companies to which the Minister referred in his words which I mentioned earlier.

As the Government have repeatedly said, everything must be done in the national interest, and I am sure that the British National Oil Corporation, under the chairmanship of the noble Lord, Lord Kearton, with his vast business experience, will be able to adopt in the national interest a constructive and realistic approach in dealing with both the oil companies and the Secretary of State.

11.50 a.m.


My Lords, I think this will be the last time I shall have to declare my special interest as a director of the British Petroleum Company, since it is our custom to bow out gracefully at the age of 70 and I fear that that time is coming very soon indeed. There is no dispute that the basic aim is that North Sea Oil should be fully exploited for the British people. It is indeed an operation full of risk, even if those risks are not precisely the same as those that are found in the Middle East. I think the North Sea weather creates as many difficulties as the most inhospitable desert sands. The arguments during the passage of the Bill have been about the best way of fulfilling our basic aim, and the Bill has been improved substantially during the debate in your Lordships' House. If I have voted for Amendments to the Bill, it is because I believe that the system proposed by the Government will be improved by them, and I hope that the Government will now look at them in this light.

I do not think that any of the critics of the Bill consider that the Government have any unworthy motive in embarking on this system. The fear has been rather that they do not fully understand the effect of what they are doing. If the Government find by experience that they were in some respects mistaken, I hope they will admit it and take remedial action. But what will matter most is the spirit in which the Act is carried out. We must rely largely on the assurances which have been given in and outside your Lordships' House. The Government must interpret the national interest in the widest sense and beware of killing the goose that lays the golden eggs. We must not allow a spirit of enmity to grow up between the companies and the Government, nor a spirit of distrust. There must be real co-operation and a real effort by each party to understand the other party's views. I do not want to discuss the question of participation, since my company is now in negotiation with the Government, but I can say that I trust that the Government will not forget their explicit assurance that all these negotiations on participation will be genuinely free negotiations and will be conducted on the basis that those companies already possessing licences will not be financially worse off than before. We must all hope, for it is a matter of vital concern to the country, that common sense and moderation will be observed by all concerned.

11.53 a.m.


My Lords, this is the eighth and final day on which your Lordships have been concerned with this Bill, and I have had the pleasure of being present on all those occasions. I hope the House will forgive me on this occasion if I keep an appointment shortly after one o'clock, even if the Minister is speaking. I, like other speakers, feel that we have achieved a considerable result from our long deliberations and, if our Ministers opposite have from time to time boiled over and used words which perhaps they have afterwards regretted, I am sure this is due to overtiredness, and I think most of us would overlook it and forgive that. I have to confess that I do not like the Bill. I think it will create a totally unnecessary and increasingly large bureaucracy; I think it will cost the taxpayer unnecessary and extra money; I think it will cost the nation priceless time and I think it will discourage the adventurous, the risk-takers and the wealth-creators at a time when we want to give them every incentive. I still believe, as the official Opposition does, that these objects could have been more quickly, and incidentally much more flexibly, achieved through taxation arrangements rather than through this very clumsy form of nationalisation.

I fully accept the mixed economy. I think every genuine democrat accepts this, and I hope the Government will continue to back it. They mentioned it in the last Queen's Speech, and I hope that on 19th November we shall hear the same phraseology again. But I cannot help feeling that, despite their so-called dedication to the mixed economy, they are being pushed from the Left of their Party in the other place, and of course by the Left Wing in those unions which are dominated by the Left Wing. I hope they have the courage to stand up and not be pushed further in this direction.

I do not like further nationalisation for five reasons. I think it has been proved —and perhaps Monty Finniston's experience in the British Steel Corporation is the most outstanding and recent example—that it leads to over manning; he believes that he has 20,000 surplus people there and could achieve the same result with many less people, and certainly compared with other competitive nations that is true. Over manning tends to lead to labour intensive industries, and in recent years they have set the pace for wage claims; this has fed back into the private sector, and, therefore, has disadvantaged the private sector in its desire to export the maximum for our country.

The second point is that successive Governments continue to exert too much interference, and so often for short-term political ends, on the nationalised industries. I particularly worry about BNOC because in many ways it is to be more vulnerable than some other nationalised industries; it is more directly under the control of the Minister, and, therefore, I think, more vulnerable to political interference. I cannot think that this is good for efficient operation. The third point I wish to make is that I think in nationalised industries, for reasons we have understood, partly because of size and partly because of public responsibility and Parliamentary procedures, decisions take longer, and I think in the North Sea speed, above all, is essential.

Fourthly, I cannot help feeling that the nationalised industries so seldom make profits, but they make losses, and these losses have to be carried by private industry and by the taxpayers. You have only to look at the losses in the current year of the six biggest nationalised industries, two of which made modest profits. The Post Office lost £307 million, electricity, £257 million, British Rail, £158 million, gas £44 million. So in those four alone you have losses in a single year of £766 million. I may say that many of their prices were kept down under political pressure at that time, so the losses will be very much greater this year. So I see an enlarging unprofitable public sector, and a diminishing and therefore less profitable, private sector.

I have been through and analysed just how much debate on this Bill has taken place in both places. It is interesting to see just how much any Government has to amend a Bill, particularly one as complicated as this. In the Commons there were no fewer than 70 Government Amendments to their own Bill, and five Conservative Amendments, among the many which were tabled and discussed, were accepted. The Commons had 56 Sittings in Committee and in the main House, and your Lordships' House have, as I said, had eight full Parliamentary days on this Bill. Here there have been 34 Government Amendments, and I think even now there may be some more; I will draw your Lordships' attention to something later. We tabled some 44 Amendments, and of these seven were passed on Division, nine were more or less consequential, one was accepted by the Government without dissent, and one was moved and passed by the Liberals. So we have had, during the course of Parliamentary discussion, 104 Government Amendments. Let no one suggest that legislation does not need the most careful examination.

I am bound to say that I wonder whether even today we have got it completely tidy. I may be wrong about this, but I would direct the Government's attention to it and perhaps they may need to do something about it; at column 541 of Hansard there were some consequential Amendments, and Lord Balogh said: My Lords, this was discussed before, so I think we can accept it". The noble Baroness who was on the Woolsack said: My Lords, with your Lordships' permission I will put … these consequential Amendments. Then it is said "Amendments, by leave, withdrawn". I think we have not got it completely right yet, despite all the discussions we have been having. No doubt the noble Lord will look at that.


My Lords, I understand that that was just an error and a correction is being issued.


My Lords, I am delighted to hear it. It fits in perfectly with the next section of my speech. Many of our Amendments have sought to write undertakings into the Bill instead of relying on Hansard. This underpins the fact that one cannot rely merely on Hansard. Sometimes it says exactly the opposite to what is intended. I quite concede that that is an eror of the time. Perhaps we were all a little overtired and did not notice it. It also suggests that one wants the most careful attention paid to these matters. I still feel that some of the points that have been made so much of in the various stages of our debates should have been written into the Bill. I prefer to see them there, but I think we must just have to differ. However, we will watch during the next few years to make sure that all those assurances which the noble Lord and his Assistant Minister, the Under-Secretary, have given to this House and another place, are completely adhered to.

Lastly—and I do not want to keep your Lordships because there is much business to be done—I come back to something which I know that the noble Lord, Lord Balogh, does not like. It still think it is my duty to ask for a categorical assurance that pressures will not be exerted on the companies when they want to make a change in the terms or their development plans or in any progress that they wish to make. They should not then be told (as my noble friend Lord Campbell of Croy said), "You can do this only if you agree to 51 per cent, participation." I do not believe it was a coincidence as he suggested. I think this was part of a policy which, if not approved at Ministerial level, certainly seems to be acting further down the line. I know of two cases. The noble Lord is perfectly justified in saying: "Quote them!" I believe the people who have given me this information to be entirely honourable but, quite understandably, they have to work with and live with this Bill and, for the moment, with this Government, and they do not want to roughen relationships. Therefore they say, "Terribly sorry; but we must work with this Bill and do not wish to have our names given."

But, my Lords, I heard of another case only this morning where one group had wanted to extend their drilling obligation—and noble Lords will know that when you get licences you are asked to do the drilling within a certain time. For various reasons this group was not able to keep to the timetable and asked for an extension of the drilling obligation by one year. They were told that if they did that they must agree forthwith to participation. My Lords, the case is not imaginary; it is a fact. I cannot help feeling that the noble Lord should come clean and say, "Yes we believe in participation and I am afraid that this is going on." This is what we fear is going to happen and it is what the operators think will happen, and I have quoted a specific case which came to my ears only this morning.

My Lords, I do not like this Bill, I think there were simpler ways of doing it. I think we have improved it very considerably in both Houses and I hope that, despite the general un satisfactoriness of the whole concept, the North Sea oil industry will prosper despite the machinations of this Bill and this Government.


My Lords, before the noble Lord sits down, may I ask whether he does not agree that Hansard has a really remarkable record for accuracy?


Yes, my Lords, I do.


My Lords, may I dare to make a few remarks following on the contribution by the noble Lord, Lord Orr-Ewing? With him, I believe still in a mixed economy; but when I hear noble Lords opposite, on the Conservative Benches, speaking on this Bill, I find them so old-fashioned. They seem to me still to believe that the "golden goose" is a monopoly of capitalism. That is one thing.

I found the speech of the noble Lord, Lord Lloyd of Kilgerran, on the Liberal Benches, much more sympathetic, and his flattery and sympathy I hope will not be construed as irony and that it will be taken at its proper face value. Not only this country but the world today is in a very turbulent state economically and to say that one simply hates this Bill or that one hates nationalisation seems to me to be always falling back on what has happened in the past and to produce no idea which is fresh and new. That is really all I have to say on this Bill.

12.7 p.m.


My Lords, before this Bill passes I should like to say one or two things. Having already taken part in the formation of one new corporate body some years ago, I am conscious of the difficulties with which a Minister is confronted in consulting the board and filling the senior posts. In this case we cannot best judge the issues, as the organising committee (with the exception of the Chairman, the noble Lord, Lord Kearton, and the Secretary) are to us faceless men, and we do not have the benefit of a report as to the national need which would have normally preceded the White Paper and which would give us the options so that the present public debate can take place. We have had to judge the issues very much on a political basis and we are left to wonder how this Corporation will fare.

Many noble Lords have expressed justifiable fears about the Corporation and the way it will exercise its powers and conduct its business. Experience has shown over and over again in the past that a newcomer, a latecomer, to an international capital-intensive and highly-competitive business runs very grave risks. The chances of success are at the best only fair. The difficulties of ICL competing against the dominance of IBM is one example. The investment required in British Leyland to keep up with world markets is another. The fight taking place at the moment by British industry for a stake in the world-wide offshore markets against dominant US contractors in a further case—and, as I have already said, the US contractors are getting their rough weather and deep sea experience in our own backyard in the North Sea. Even if BNOC is in a privileged financial position, as it obviously is, it still has to pit its wits against the best international brains and no amount of money will buy it a place alongside the "Seven Sisters".

My Lords, this Bill has been about three things: first, the plumbing of the Continental Shelf, to use a crude phrase; second, participation—and here I think that the noble Lord's Department has a definition of "participation" which is different from the Department of Industry definition when trying to agree participation in the British Leyland case; and, finally, control. There well may be overlapping issues, but I feel that certain matters such as safety and inspection should have been consolidated under a completely separate Bill.

In passing, I should like to thank the noble Lord for his undertakings to approach the Chancellor of the Exchequer on the question of the outrageous 25 per cent. VAT rating on submersibles. Clearly, the industry will be grateful for his intercession at a critical time in the development of our Continental Shelf resources. I should like to thank him also for his reassurances on the question of research. But I think that as a result of our debates it is quite clear that the Government not only wish to take the opportunity of introducing a controlling body, but also to incorporate in it instruments of nationalisation, which will gradually and relentlessly work their way into every aspect of offshore activity. For instance, it will be seen that if an owner has a pipeline to which development potential is attached, then the Secretary of State can step in to see that he does not realise this. We have received assurances that the owner will be no worse off, but development value is a matter of opinion and the clause which covers this point does not give sufficient reassurance to the industry.

One wonders what will happen to these pipelines. Eventually, presumably, they will be surrendered to the State. Perhaps they will become long distance sewerage outfalls of the future—who knows? But one thing is certain, the original investor will have no place in the deal. Legislation of this participatory nature is not necessary, as many noble Lords have said. The designated areas are not so tied to the economic life of the country that they must be put in a legal province of their own; for example, like the waterways of Holland.

We talk about devolution, my Lords, and if anybody is in a good position to devolve itself, it is the BNOC—the oil province of the offshore shelf—a developing territory with prospects of a budget surplus. The Secretary of State then may even have his own Assembly, if he wants it. If one looks at the position in which the BNOC is placed, I believe that the least it could do would be to invest in some of those offshore facilities which our country finds difficulty in financing, such as derrick barges, supply vessels, lay barges and other major plant. I have used the word "plant", but perhaps to be all-embracing I should say "things". These are the tools of the contracting organisations, and the tools which earn them the revenue in overseas concessions. As I said before, the BNOC will of course be in a position to attract European Investment Bank loans for offshore projects. It ought to figure in the second round of EEC projects in the hydrocarbon sector. I hope that the Government will encourage the BNOC to look at this position rapidly.

Finally, I would ask the Government to remember that the oil industry has an offshore order book worth £800 million per annum in our waters. The Government are trying to secure full and fair opportunity for British industry in competing for this business. British industry is now securing something like £400 million worth of orders per annum, which is about half the total sum. But they get this business only if the £800 million is there from the oil companies in the first place. Already we have heard that the Secretary of State is worried about the lack of oil company orders. But at the end of the day it is the engineering industry of our country which could be the real victim of oil company participation. I hope that the Government will bear this in mind.

12.14 p.m.


My Lords, throughout this debate a number of us have been struggling to master a new technical field which is unfamiliar to us. The Amendments carried in this House have generally addressed themselves to the major issues in the Bill, and I hope I shall not be accused of being smug if I say that, on the whole, this House has shown its customary good sense in dealing with some difficult issues and very difficult technical issues.

Therefore perhaps I may begin by thanking my noble friends behind me for the contributions they have made, and particularly thanking the Peers on the Cross-Benches and Liberal Benches. We can honestly say that all parts of the House have contributed, and it would be wrong of me not to pay tribute also to the customary courtesy which has been extended to us by noble Lords on behalf of the Government, and, in particular, the noble Lord, Lord Balogh, in what he calls his "regenerate days"—if I remember that correctly!

Generally speaking, the Government have said the right things but declined to commit themselves in the legislation. I was reminded in thinking about this of a premature epitaph which was written for Charles II—whom I am told I claim as an ancestor on the "wrong side of the blanket"! The epitaph said: Here lies our sovereign Lord the King, Whose word no man relied on, Who never said a foolish thing, Nor ever did a wise one. When he heard about this, he replied: My words are my own, But my Acts are my Ministers. That, of course, is a let-out that the noble Lord does not have, so I hope we do not have to write the same epitaph for him! This is a very major policy Bill. The fact it deals in a complicated technical area should not allow us to overlook that fact and getting right the provisions in this Bill will dictate the standard of living of this country for the next 20 years. I have said this before, and I make no apology for saying it again: it is for this reason the House rightly recognises the importance of the issues with which we are dealing.

This is the third leg of the Government's policy for dealing with North Sea oil. We have the Oil Taxation Act and the Offshore Petroleum Development (Scotland) Act. I think that throughout all these Bills we can see the major difference of approach between the Government and those of us on this side of the House. We prefer to use the minimum of Government interference to create a legislative environment which seeks to identify the aims of the companies with those of the Government so that the companies steer a course in the direction which we believe to be in the interests of the nation. We seek to provide suitable incentives and underpin these with long stop safety net controls. The difference of approach was well underlined by my noble friend Lord Orr-Ewing.

On the other hand, the Government prefer the route of intervention, direction, and mandatory order. I consider this is flying in the face of the record of the nationalised industries despite what the noble Baroness, Lady Gaitskell, was saying. I would not accept that we have a blinkered approach to these matters; but I dare say I shall not succeed in pursuading the noble Baroness—and I see that she nods her head. It seems to me those who drafted this Bill have been told to legislate for every conceivable possibility; rather than taking the minimum of powers throughout the Bill, we see the Government trying to arm themselves against every possible element of exploitation. I should like to remind the Government of a definition I often quote. I think it was Neville Shute Norway, whom I think of as an engineer although most people think of him as a novelist, and he once said: An engineer is a man who can do for 'five bob' what any damned fool can do for £1. It is very easy to write in every sort and kind of stipulation. It is much more difficult to think carefully about the things that you really mean and limit yourself to them. My noble friend Lord Campbell has mentioned today that one of the results of the interventionist policy, as exemplified in the Offshore Petroleum (Scotland) Bill, has been the platform building sites at Portavadie and Hunterston, and I believe we now have the situation up there where £14 million of public money has been spent on Portavadie and there is no platform order at the present time. I am not absolutely sure of the facts but I believe that a comparable situation exists at Hunterston. So I would ask the Government these questions—have we any orders? How much money have we spent?

My feeling is that the Government's approach has led us to an inevitable saga of unilateral abrogation of contracts, of forced development plans, depletion controls and threats of total revocation of licences. The first sad result of this approach has been this dictatorial attitude—and I can use no other word—on the unilateral abrogation of contract. Despite the pleas of my noble and learned friend Lord Hailsham of Saint Maryle-bone who pointed out to the Government the damage which they can do internationally, let alone nationally, by this course of action, the Government have persisted in their determination to change the rules in the middle of the game. They have attempted to justify this course on the dubious grounds that misdemeanours of other countries justify misdemeanours by us and they have called in aid the events which have taken place in Alberta, New Zealand and the United States. But even if those precedents would justify their actions, I think we should find that the precedents do not stand up. For example, the Alberta case is misleading because in general the licences were issued within a time limit before which the Government were not going to alter the terms of the licences; in other words, in more ordinary intelligible terms, there was a time limit on the rent lease, and after a period the rent was to be reviewed. What happened was that in all but very few cases the licence terms were changed after that time had expired. The second point, which of course follows from this, was that the companies had had an opportunity to recover a great deal of the investment they had already made before the terms of the licence were altered. I think we shall find that very few of these licences were altered before the original time had expired. I have done some researches— perhaps I should say, rather, that some researches have been done for me—and I can find no record of what the noble Lord called "other Canadian Provinces" behaving in this way.

In the case of New Zealand, again, renegotiation was in any case due to convert the licences into mining leases, and my understanding of the situation there is that the ultimate changes from licences into mining leases were considered by the companies to be the equivalent of arms-length commercial deals. That is not the situation we are talking about here. In the United States, as usual, the situation is a little complicated. Here again, my understanding is that the violation of a conservation regulation—I am sorry about these very long words—issued by the Secretary of State of the Interior is not of itself grounds for revocation. In extreme cases of suspension orders on conservation grounds, this is considered to be tantamount to forfeiture and gives rise to the constitutional requirement for compensation. Any of your Lordships who have been here during the Committee and Report stages of this Bill will know we have had endless arguments on the question of compensation, and the real worry is that there has been unilateral alteration of a contract without compensation. I shall mention the word, because it has not come up in this debate so far, I am glad to say; but the argument as to whether there is an element of retrospection in this kind of thing is something that we need not enter into now. Clearly, it is there, but that is not really the point.

With this unilateral alteration of the contract has gone the imposition of what we consider to be a totally unreasonable sanction. I am very sorry indeed—but let us start with the good news first and let us acknowledge that the Government have come some way towards us on this issue of partial revocation, as it is known in the industry. The Government started by saying that if you decline to do something which the Government wish you to do in one part of your licence, you are going to lose the whole thing, including a commercial field. They have seen the force of the argument that this was manifestly unreasonable. I still regret very much that they have not seen fit to accept our argument about what we call voluntary relinquishment of part of a licence. We argued this at length, both on Committee stage and Report stage. I have tried to make the issue as simple as it is, because I have a simple mind and I believe that the issue is a perfectly straightforward one.

The Government have prattled on about the unity of licences, although I have not seen any evidence in support of their passionate and, as I think, rather blinkered devotion to this concept of the unity of a licence. They have attempted to meet us by extracting certain fields from the threat of total revocation. This has led them invariably into the difficulty of defining exactly to what fields this kind of provision will apply. How much simpler and how much more common-sensical—if that is good English, which I doubt!—it would be to apply a policy of voluntary relinquishment. An oil company says, "You want us to develop this field. We do not think we are either able or willing to do it. We are therefore handing it back to you and you can find somebody else to develop it if you wish, or you can develop it yourselves, and the best of British luck." It seems so intelligible and so logical that I am astonished that the Government find themselves unable to accept it.

This sums up our objection to this area in the Bill and leads me on—I am sorry to go back to it once again—to the unseemly wrangle on participation. We believe this is illogical, damaging and even dishonest. The noble Lord, Lord Balogh, introduced a splendid word I had never heard before: he talked about sacro-egoismo. It has now become part of our standard exchange in this debate and, as I understood him, he was asserting that by participation the nation would be better off. He then turned to the complaints and said that the whole basis of participation is that you will be no better off and no worse off. If the nation is to be better off, where is that betterment to come from if not from a company with whom he is proposing to participate? If the noble Lord has found the philosopher's stone, I suggest to him that he is wasting his time sitting there as a Minister of State. He should be the dictator of the whole country and I think we would all back him, but I venture to doubt that he has made such a brilliant discovery. I would be very pleased indeed if he had. He has been hiding his light under a bushel for a very long time.

The Government justify their seeking for participation on the grounds of gaining control and knowledge. We believe that both these can be better done in other ways. Indeed, it seems to me implicit in the whole belt-and-braces approach of the Government that they agree with this, I too. Half the things in this Bill are devoted to finding other ways of obtaining control and knowledge. If they wanted an example of participation, as the noble Lord, Lord Trevelyan, very well knows, they already have a controlling interest in BP. Why do they not get their knowledge from the oil company's point of view by virtue of their participation—if I may call it that—in BP?


My Lords, the noble Lord suggested that we should use BP in order to spy on other oil companies. What is the confidentiality about that? Noble Lords on the other side have been complaining that we might use BNOC and civil servants under oath for such purposes. He is now suggesting that we should use BP. Where is the logic of that?


My Lords, I do not follow the logic of the noble Lord's question. There have been worries expressed about BNOC being used—to use his words—as a vehicle for spying. I am suggesting that if the Government are anxious to have a vehicle for getting inside the oil company's view of things they have it ready made on their doorstep now. Furthermore, they have an association of oil companies, the United Kingdom Offshore Operators Association, which is in continuous dialogue with them about the problem of how best to exploit our resources. I simply cannot believe that this great edifice which they are building on participation is necessary.

We have been assured by bankers that one of the worst remaining problems in non-recourse financing—the off-balance-sheet loans required to develop an oilfield—is the lack of information in legally binding form which is available on participation. Far from helping to provide finance for the North Sea I am suggesting that the Government's inept handling of the participation issue has made the question of financing vastly more difficult. I invited the noble Lord before to publish details of what he is proposing and negotiating about with the companies. When we talked about this on the third day of the Committee the noble Lord said: It is obviously impossible to have a model participation submitted before Parliament because each case differs so much from every other case. In some large fields the situation near the shore in low water … we have small fields set in areas where torrential rains and snow such as in the North Passage …".—[Official Report, col. 876, 15/10/75.] All that is true but I cannot see that that particularly affects the nature of participation and the kind of negotiations which are required.

Furthermore, can the Government imagine that any public company which announced it was making a bid for another company would be allowed a year's silence before they issued the details of the kind of proposals they were making. This is absolutely incredible. The Stock Exchange would never stand for that kind of behaviour and even if it did everybody would be up in arms. Then we come back—and I have to harp on this—to the element of hypocrisy in this question of the voluntary nature of participation and negotiations. The Government say, "Where is the evidence?" Surely enough circumstantial evidence has been produced. At least it would require some kind of denial from the Government. The noble Lord, Lord Lovell-Davis, is a journalist—I am sorry he is not here at the moment—and he knows very well that if an allegation is made and is not denied it would be regarded by the public as implicit that there was some truth in the allegation. So far the Government have never attempted to refute any of these sinister coincidences which have been referred to so often in these debates and were referred to again by the noble Lord, Lord Orr-Ewing. Indeed, when we moved the Amendment which attempted to give legal force to the noble Lord's assertion that he insists that these negotiations are voluntary, it struck me that most of the case he was arguing was devoted to justifying the use of pressure to obtain participation rather than saying that participation was indeed voluntary. The article in today's Economist is headed, "Participation go away", with a very benevolent picture of the noble Lord. I only hope that "participation go away" is what we shall find in the future.

My Lords, we believe that reasoned arguments have been put forward for the Amendments we have carried in this House. Most of these Amendments have commanded Cross-Bench and Liberal support and I hope that the Government will take note of this. I thank particularly the noble Lord, Lord Lloyd of Kilgerran. We are not seeking to make Party debating points. We want to generate for this country the revenue we need so desperately to start repaying the enormous sums we are borrowing, secured by our oil. I sincerely pray that the Government will not feel that pride demands that they should reject on principle all the Amendments coming from this House. If they do, I am sure we shall all live to regret it. Instead I hope that they will show that they have listened and also understood as the noble Lord, Lord Trevelyan, said. I hope they will show that they have understood and perhaps even learned, and dare I use the word, I urge them to press upon their colleagues the need to show their own favourite word, flexibility.

12.39 p.m.


My Lords, despite the strictures we have just heard may I begin by thanking the noble Lord, Lord Campbell of Croy, and also the noble Lord, Lord Strathcona and Mount Royal, for the helpful way, especially in the latter part of our exercise, in which they expedited our business which obviously is contentious and complicated. The Government's aim in bringing in this legislation and the other two pieces of law—the Scottish legislation and that concerning petroleum tax—was designed to restore the balance between national interest and fair treatment of the oil companies. This balance was rudely disturbed in 1970–71, in the fourth and biggest round, which was undertaken in the knowledge of the wealth of the North Sea which was patent and which tilted the balance altogether against the national interest.

I must confess that I am a little astonished at the self-righteousness which has been expressed on the opposite side on this piece of legislation. It ill-behoves people who have been in Government which did nothing for two years after the PAC Report. The proposed arrangements which were announced would not have prevented any really skilled oilmen—and they are very skilled—from jumping the ring-fence and disappearing abroad with their profits. I may be very prejudiced—indeed I am, just as noble Lords opposite are—but I found nothing in the Amendments moved by the Opposition which did not act against the national interest. It would have weakened con troll over the technical exploitation of the fields and in this way, therefore, shortened their life and decreased the quantity of oil eventually to be recovered; and there would have been large losses of revenue by way of compensation and otherwise—unjust compensation, I may add.

I accept, of course, the very helpful suggestion of the noble Lord, Lord Campbell of Croy, about tax exemption and the loophole, which was extremely helpful to us and I am sure was not inspired by some of the people who have benefited. May I also tell the noble Lord that the United Kingdom industry as a whole has not made an estimate for the number of rigs which will operate in the North Sea. It was the estimate of the company of the noble Lord, Lord Trevelyan.

We have had a debate with a number of themes or set motifs. It was like a Wagnerian opera. Whenever the noble Lord, Lord Campbell of Croy, rose the Siegfried motif was heard and he said his little bit; and the noble Lord, Lord Strathcona and Mount Royal, was the Brunhilde motif. Immediately we got the appropriate wording. But today, of course, they repeated each other and both motifs were heard in a cacophonous ensemble. Co-operation is necessary because of physical possession and knowledge. Knowledge of certain kinds is not available from BP. I am sure the noble Lord, Lord Trevelyan, will confirm that we never used BP as a guinea-pig; and far less would we want to use it as a spy for us, because the international complication which that might cause would be really overwhelming. The noble Lord said the objective could be reached by other ways. How could it be reached in an industry where there have to be self-policing arrangements. I do not know why this is such a terribly difficult concept to digest. I am sure it is my fault that I have not explained it sufficiently, although I spoke about it 50 times—or, at least, it seems to me 50 times. Again the Opposition is wishing to alter the balance which has to be reached between these very powerful companies and the national interest.

Both the noble Lord, Lord Strathcona, and the noble Lord, Lord Orr-Ewing, asked me to say whether these participation agreements are not helped on by certain conditions. I can only say that our special agreement negotiations are normal commercial negotiations in which all sides, obviously, use their full bargaining power. Nothing on earth would lead me to abjure that power because it has to be used in the national interest.


Is that what the noble Lord calls "voluntary", though, my Lords?


Of course, my Lords. Voluntary agreements between big oil companies are also sometimes influenced by bargaining power. They are called voluntary, of course; but, as some people said, some are more voluntary than others. But it is exactly the same in the private sector. To put people in the Bosphorus with their hands tied behind them, as Turkish Sultans used to do, would not be the best way of ensuring the national interest in this matter.

I am glad to say that there is a constant pressure on us to allow outside interests to get into the North Sea at this point, and, so far as one can make out. this pressure is increasing rather than decreasing. The problem is how to safeguard the national interest even in this process. I very much agree with the hope of the noble Lord, Lord Trevelyan, that the relations with the industry will be smooth, friendly, frank and co-operative. I do hope so. I do not think noble Lords have ever heard me attack an oil company. I have always been high in praise both of their technical skill and, of course, of their intellectual skill in presenting their case, which I am sure has been proven by debates in this House. They are extremely good providers of home notes. But we have to be a little reciprocal.

A noble Lord referred to one of my rare appearances on the "box". The other participants were American, who said that we have been confiscating their property. I must confess that this is a misrepresentation of fact of unparalleled gravity. It cannot be said often enough that we are not nationalising. Even where the State owns almost three-quarters of the shares of a big oil company, in no way have we treated that company differently from the way in which we treat any other oil company. We have not put upon it any kind of pressure, although we could easily have done so.

I must apologise for the fact that, in a burst of fury, I said certain things which perhaps I did not mean. I ought to have said that the noble Lord, Lord Orr-Ewing, uses horrid innuendo, not filthy language. I withdraw that. His tirade against a nationalised industry was totally irrelevant. If electricity bills are kept low and therefore the electricity industry suffers a loss, what has that to do with OPEC, oil prices and the profits from oil? I am very puzzled about that.

I am equally puzzled by the remarks of the noble Lord, Lord Ironside. The noble Lord seems to want Britain to become an industrial graveyard, immense in its decay, for employment and output, yet at the same time he wants us to embark on a very costly course of research and development. I cannot stress too emphatically that it is not only a large oil production from the North Sea which is important. It may be important from the point of view of the EEC, but from the point of view of Britain what is most important is that there should be a large production of oil and a large stake in the industry. If we do not have a large stake in it, whatever we shall gain on the visible trade side we shall lose on the invisible trade side. In certain circumstances that might be up to £1,500 million to £2,000 million out of a total gain of about £4,000 million in 1980. With Cromwell, I beseech noble Lords to get away from that kind of attitude.

We are opening a new chapter in the history of the exploitation of the sea and I look forward to intensified close co-operation between the Government and the industry. Some of the Government's critics have said that our proposals have been animated by hostility to the industry. Nothing could be further from the truth. Our objective has been only to protect the national interest. The national interest demands an adequate Government "take" from and control over the industry. We have always stood firm on that principle and we invite the judgment of history on our treatment and the treatment of the previous Government of this problem.

We recognise that the national interest also means that the industry must be given an assurance that it will be treated reasonably so that it can continue to invest scarce resources of capital and knowledge. That is the principle of participation, and it is also the principle which we apply to this Bill. It is fair to say that no comparable piece of legislation has ever been so fully discussed with the industry that is affected by it. We are proud of the fact that a number of Government Amendments are to a very large extent the outcome of consultations with the industry in the hope that we shall gain the maximum benefit for the country as a whole.

I shall not weary your Lordships further. I am sure that we shall all meet again at Philippi when the Bill comes back from the House of Commons. Therefore, I shall reserve my more florid passages for that occasion. To sum up, the Bill is immensely important. It fills important gaps in our control over and ability to benefit from the North Sea operation. It opens a new chapter in the history of the North Sea. I invite the industry to work with us in making the new arrangements that are contained in the Bill work to our common advantage, and I invite the House to open a new chapter by passing the Bill.

On Question, Bill passed, and returned to the Commons.