Lords Sitting of 12 April 1976

Preamble
The House met at half past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Bradford.
The Lord Poole—Took the Oath.

PASSPORTS: JUSTICE REPORT
Lord ORR-EWING: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have now considered the report by Justice concerning passports and what action they plan to take.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, this report is being studied, but my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs has not yet had an opportunity to consider the proposals.
Lord ORR-EWING: My Lords, while thanking the noble Lord for activating a serious and, I hope, urgent study of this matter, may I ask whether he is mindful that this report by Justice came out in 1974? It seeks two principal points: "That, in principle, executive actions should be reviewable by judicial process." Secondly: "There is a basic human right or civil liberty, namely, freedom of movement, with which the passport is intimately associated." There is some anxiety—it does not matter what past Governments have done—that we ought to review this. Perhaps it will take a long time to consider everything in this report, but on a short-term basis, ought we not to consider the human liberties which are at risk and make sure that all facts are known when passports are confiscated by the authorities?
Lord GORONWY-ROBERTS: My Lords, the noble Lord has made such
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an impressive speech that I was half expecting him to indicate that he would explore alternative Parliamentary procedures in order to give proper consideration in this House to this important and rather detailed matter. What he has said is perfectly true. As I have indicated, we are studying all those aspects of the matter very carefully indeed.
Baroness EMMET of AMBERLEY: My Lords, may I ask the Minister a question which I asked earlier and to which he said he would let me have an answer? To whom does the passport belong? Does it belong to the person or the Government? It would be a good thing to clear up that point.
Lord GORONWY-ROBERTS: My Lords, it is indicated on the passport that it belongs to the Crown.
Baroness EMMET of AMBERLEY: My Lords, with due respect to the Minister, I have just read my passport and it does not say so.
Lord GORONWY-ROBERTS: My Lords, in that case I hesitate to ask the noble Baroness to put down yet another Question. Perhaps she may put the Question or give me the answer after Question Time today.
Lord HATLSHAM of SAINT MARYLEBONE: My Lords, while nobody would wish to press the noble Lord's right honourable friend, so soon after his appointment, to come to a rapid conclusion, will he bear in mind that there are important legal and constitutional questions which need to be solved and cannot and ought not to be indefinitely delayed?
Lord GORONWY-ROBERTS: My Lords, I am most grateful. This report, emanating from an organisation of the highest repute, is being studied very carefully. In indicating that that is so, of course I cannot anticipate any decisions to which my right honourable friend may come.
The Earl of KIMBERLEY: My Lords, in view of the gravity of the Question this afternoon, would Her Majesty's Government seriously consider giving time for a full debate on this matter?
Lord ORR-EWING: My Lords, before the noble Lord answers that question, may I say—
Several Noble Lords: No!
Lord GORONWY-ROBERTS: My Lords, so far as I am concerned, I would be perfectly prepared to allow the noble Lord to say what I thought he was going to say; namely, that the resources of Parliamentary procedure are not exhausted by Question Time.
Lord ORR-EWING: My Lords, is the noble Lord aware that that was exactly what I was going to say? I feel this is a subject of such wide interest that it merits a debate—either an Unstarred Question or a short debate—so that all sections of the House can probe further and draw attention to some of the anomalies which currently exist. Is the noble Lord aware I will seek to raise the matter in some form or other early in May?
Lord MONSON: My Lords, could the noble Lord confirm categorically that, under existing legislation, any person is at complete liberty to leave the country at any time provided that he can produce some valid form of identification, which need not be a current passport, in order to prove that he is not wanted by the police in connection with a criminal offence?
Lord GORONWY-ROBERTS: My Lords, I must resist the temptation to engage in any detailed discussion on this matter. The noble Lord who raised this Question today and a few weeks ago has indicated that he would like to give the House and the Government an opportunity of going into it in detail on an appropriate occasion.

STERLING AND OFFICIAL INTERVENTION
2.42 p.m.
Lord HALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make a fuller Statement of the financial result of operations by the Bank of England
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to prevent the floating pound from submerging and of the Bank's total losses and recoupments each year since the pound sterling was floated.
Lord JACQUES: My Lords, it is not the practice to comment in detail on official intervention in the Exchange Market.
Lord HALE: My Lords, although I accept that Answer, the fact is that every individual outside this House has for the past ten days been commenting ad nauseam and ad lib on all these matters. As this Question was directed to the lack of information which started with a misunderstanding—probably wholly unjust—about a High Commissioner in Nigeria and caused the crisis of selling which meant that the Government of France blamed us for our operations—
Several Noble Lords: Question!
Lord HALE: My Lords, is the noble Lord now aware that in view of the events of last week—the reassurance from all the pundits that the pound is now undervalued by about 3 per cent. or 4 per cent. and may take a little time to recover; the magnificent statement issued this morning by the Arbitration Board on Worker Co-operation, the slight upturn this morning in the value of the pound, and the admirable Budget—I have no further desire to press the Question?
Lord JACQUES: My Lords, my noble friend has said nothing with which I would disagree.

STRANGERS' DRESS
2.44 p.m.
Lord BROCKWAY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows.
To ask the Chairman of Committees whether he will propose that the appropriate Committee of the House should reconsider the rule that men who do not wear ties are excluded from the seats for Strangers below the Bar.
The CHAIRMAN of COMMITTEES (The Earl of Listowel): Yes, my Lords, I will ask the appropriate Committee to consider this matter at their next meeting. I hope that the noble Lord, Lord

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Brockway, will attend the meeting and express his views.
Lord BROCKWAY: My Lords, while welcoming that Answer, may I ask the noble Earl the Chairman of Committees whether he is aware that last week a not undistinguished visitor was on this ground quite courteously refused permission to sit in one of the seats that are available to friends of Members of this House? Is this not an obsolete method of judging men's apparel in these days?
The Earl of LISTOWEL: My Lords, I am now aware of the noble Lord's problem. I am sure that what he has said will be taken into account by the Committee.
Lord CARRINGTON: My Lords, is the noble Earl aware that if everybody had the same taste in ties as the noble Lord, Lord Brockway, this would greatly encourage the wearing of ties?
Baroness EMMET of AMBERLEY: My Lords, would it not solve the problem if a few disposable ties were kept in the Lobby in order to help those who come without ties?
Lord BROCKWAY: My Lords, is the noble Earl aware that I have no prejudice in this matter and regard ties as a very colourful contribution to this House?

COMMITTEES ON OPPOSED PRIVATE BILLS
Baroness WARD of NORTH TYNESIDE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask the Chairman of Committees on what principles Lords are chosen to sit as members of Select Committees on opposed Private Bills.
The Earl of LISTOWEL: My Lords, Select Committees on opposed Private Bills are quasi-judicial in character: that is to say, Committees which reach a decision after hearing argument and evidence submitted by the Promoters and opponents of the Bill. The principle followed in appointing members of these Committees is to ensure so far as possible that members have no interest
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in the purposes of the Bill. This would normally be taken to include a substantial financial interest or a local interest.
Baroness WARD of NORTH TYNESIDE: My Lords, while thanking the noble Earl very much for that Answer and for all the help he has given to me, may I ask whether he can very kindly say whether Members of your Lordships' House or of another place are allowed, if they so desire, to attend before a Committee and ask questions?
The Earl of LISTOWEL: My Lords, in the case of Committees on opposed Private Bills, which are the Committees with which the Question is concerned, noble Lords do not attend the Committees and ask questions unless, of course, they are members of the Committees concerned.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, is the noble Earl aware that this whole House and the public owe an immense debt of gratitude to those noble Lords who undertake this onerous and unpaid form of public service?
The Earl of LISTOWEL: My Lords, I am most grateful to the noble and learned Lord for what he has said. I shall certainly draw his words to the attention of those who serve on such Committees.

ENERGY BILL [H.L.]
2.46 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of ENERGY (Lord Lovell-Davis): My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved, that the House do now again resolve itself into Committee.—(Lord Lovell-Davis.)
On Question, Motion agreed to.
House in Committee accordingly.
[The EARL OF LISTOWEL in the Chair.]
Clause 3 [Implementation of reserve powers]:
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 7:
Page 3, line 20, at end insert—
"( ) (a) If an Order is made by virtue of subsection (1)(a) of this section, then without

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prejudice to the remaining provisions of this section the Order shall be subject to annulment in pursuance of a resolution of both Houses of Parliament; and
(b) any such Order shall expire at the end of the 12 months beginning with the date on which it was made but may be replaced by a further Order to the same effect and such further Order shall be subject to annulment in pursuance of a resolution of both Houses of Parliament."
The noble Lord said: The main part of our deliberations today will again be devoted to the so-called "gas clauses" from Clause 8 onwards, and I shall try to be brief in dealing with the Amendments prior to that. The first Amendment again addresses itself to the problem of Parliamentary control over the exercise in an international emergency of the Secretary of State's discretionary powers set out in Sections 1 and 2. As things stand at present, once an Order in Council is in force under Clause 3(1)(a), only orders made by the Secretary of State under Section 1 are controlled in this way. The Order in Council itself and the directions given by the Secretary of State under Section 2 are not reviewable by Parliament at any time. When one considers the effect which the exercise of the powers in Clause 2 could have on the whole of industry in this country, we feel that some review procedure is necessary and, since these directions are not technically amenable to Parliamentary review, the Order in Council itself should be scrutinised. This is what the Amendment purports to do.
A Parliamentary review is needed far two principal reasons. The first is to ensure that the way in which the Secretary of State's powers are being exercised is wholly and solely consistent with the United Kingdom's international obligations. This is a point which we have already raised, and which arises again several times in this Bill. The second reason is that we want to ensure that the Secretary of State ceases to exercise these very wide ranging powers when the emergency is at an end, and when the need for the powers under international law has terminated. The way in which this whole Bill has been arranged and drafted is, in itself, an example of the danger of an abuse of power by a Government.
As the Bill is drafted, an Order in Council made under Clause 3(1)(b) has
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to be reviewed by Parliament when it is made and then again 12 months later. We would argue that unless, by the passing of this Amendment Parliament is given the opportunity to debate, to question and, if necessary, to overrule the Secretary of State, there will be no control available over these Orders in Council and, in consequence, no questioning of the positively alarming powers under Clause 2. On the whole, we believe—I am sure that all noble Lords will go along with us—that Parliament is a better custodian of this country's international obligations than a Minister acting on his own, however well advised he may be. Therefore, I beg to move.
2.53 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): Like the noble Lord, Lord Strathcona and Mount Royal, I shall attempt to be as brief as possible, because today will be a heavy one and considerable debate must follow as we move nearer to Clause 8, and perhaps beyond. It would not be proper for Her Majesty's Government to undertake international obligations, unless assured powers were available for their implementation. It is therefore right for all the necessary powers to be obtained from Parliament before any occasion arises for the obligations to be fulfilled. In the present case, the circumstances requiring the full range of powers granted by Clauses 1, 2 and 4 will be the declaration of an oil supply emergency by the IEA or the EEC, giving rise to an obligation on all Member States to put into effect joint emergency measures to meet the crisis. In these circumstances, the necessary Order in Council will, of course, be laid before Parliament but the Government could not guarantee that an opportunity would be available for further Parliamentary debate.
Moreover, the Government see it as important to be able to act independently of a time-frame such as an Order in Council expiring 12 months later. Such a provision would take us back more or less to the position under the Fuel and Electricity (Control) Act 1973 with its renewal of powers every 12 months, which, it is considered, was an unsatisfactory basis for any Government to act

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upon in fulfillment of international obligations. For that reason, I would ask your Lordships to resist this Amendment.
The Earl of LAUDERDALE: Does the noble Lord agree that it comes strangely from a former Provost of the great democratic city of Aberdeen to defend anything which is not 100 per cent. democratic? Here is a situation where the Government have said that they must be independent of the time-frame of 12 months, and where they could not guarantee the opportunity to debate an Order in Council. This is a most extraordinary suggestion and, with respect, not altogether worthy and not what one would expect of the noble Lord, Lord Kirkhill, with his unimpeachable democratic background. We need to be absolutely certain that the Secretary of State is wholly and solely within the ambit of the emergency as laid down by the international agreements concerned, and does not stray from it one little bit in terms of time or scope. Of course, it will be argued that this is necessary; that the wider powers and the greater flexibility are needed by the Government in the name of conservation. As a Conservative, I have sometimes been surprised at the breadth of meaning given to "conservation" or for that matter to "conservatism".
When the noble Lord says that it would be quite wrong to enter upon international obligations without first being sure that the Parliamentary powers were there to enable those obligations to be undertaken, he is surely putting the cart before the horse. In a number of cases, this country has undertaken international obligations—the Japanese Treaty of Peace Act 1951 is one case, and the Austrian State Treaty Act 1955 is another—and only afterwards were the Parliamentary powers sought and required. In any case, the courts in this country are not interested in a treaty. They are interested in the rights of the citizen which are enshrined in Parliament, and any infringement or limitation of those rights has to be laid down by Parliament.
If I understood him aright—and I do not want to prolong the debate at this early stage, in view of more controversial matters that are to follow—the noble Lord said that a situation might arise
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when it would be inconvenient to the Government to be restricted by the Parliamentary time-scale, or that the Government might not be able to find time in Parliament. But when, in an emergency, cannot the Government of the day find time to debate a matter of importance? If they cannot, then they should go to the country, and perhaps that is what will happen in any event. But they have no right to say to Parliament, "We are not quite certain of being able to find Parliamentary time for debating an Order in Council, and certainly we cannot be restricted in the way that the Amendment suggests." I can only say that I find that extraordinary language coming from one whose democratic background we respect. He and his noble friend will know that I am most pacific in my intentions, and I am not trying to stir up trouble prematurely.
Lord KIRKHILL: If I may respond very briefly to the noble Earl, Lord Lauderdale—and of course, as a former Lord Provost of Aberdeen, I hope that my democratic concept is at a high level—I would emphasise that I am conscious of the fact that the democratic process must always be paramount. But we are talking of a crisis emergency, and I am advised that legally the procedure proposed in the Amendment would not enable us satisfactorily to meet our IEA and EEC obligations. The Government need power to act immediately upon the declaration of an emergency by the IEA or the EEC—for example, to implement an oil emergency scheme and a demand restraint programme—in the certain knowledge that the Order in Council would remain valid. I think that is the reasoning behind the Government's position.
The Earl of LAUDERDALE: We accept the reasoning, but if an order is subject to annulment in pursuit of a Resolution of both Houses and if it expires at the end of 12 months, surely it does not infringe the Government's proper executive freedom of action. It is subject to Parliamentary approval. Could the noble Lord undertake to look again at this point? I do not wish to prolong unduly the argument, but the position is not very satisfactory. The Amendment states that the order,
"shall be subject to annulment in pursuance of a Resolution of both Houses of Parliament."

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It is not asking for a resolution of both Houses to make the order; the order is subject to annulment afterwards. Therefore, the incidence of the emergency does not affect the argument. On the limitation of 12 months, is it so difficult for the Government to control their timetable that they cannot find time later on to allow debate on these subjects? Would not the Minister concede that at least it is worth looking again at this matter, without necessarily undertaking to come back with a different wording?
Lord KIRKHILL: I am a Scottish Minister paying, as it were, an itinerant visit to the Department of Energy. However, so far as the orders under Clauses 1 to 4 are concerned, may I assure the noble Lord that they are subject to the Negative Resolution procedure. Once an Order in Council had been made, the detail of these orders could certainly be a matter for proper Parliamentary debate.
Lord HAWKE: Would the noble Lord say exactly what obligations the other EEC countries are assuming in pursuance of this aim?
Lord KIRKHILL: I cannot be specific, but I can confirm that in the meantime discussions are taking place.
Lord STRATHCONA and MOUNT ROYAL: Even making allowance for the itinerant nature of the Minister's presence here today, we are bound to find his reply rather disappointing. My noble friend made the point that we are looking only for a Negative Resolution. This kind of point will come up time and again this afternoon during the course of the passage of the Bill, and I am bound to say that I take it as a rather unpromising start to our deliberations that the Government are digging in so firmly behind the ramparts. However, we do not want to prolong unduly this debate. While reserving the right to come back again to this point on Report, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
3.4 p.m.
Viscount LONG Viscount LONG moved Amendment No. 8:
Page 3, line 36, leave out ("12") and insert ("3").
The noble Viscount said: With the leave of the Committee may I take together Amendments Nos. 8, 9, 10 and 11. Returning again to the emergency powers, these Amendments deal with subsections (5) and (6) of Clause 3. As my noble friend has already mentioned. Section 3(1)(b) relates to an order made in an emergency in the United Kingdom. Unless the order is revoked under subsection (4), it may be continued by Parliament the year after it is made and at annual intervals thereafter. In these orders we are seeking to shorten the time from 12 to 3 months.
It is important to recall that in 1973 the United Kingdom was facing a somewhat vicious crisis and that powers had to be introduced under the Fuel and Electricity Control Act. At that time the United Kingdom, with the rest of the world, was being held to ransom by the oil barons. We were slowly being starved of urgently needed fuel, and industry was becoming very worried. In 1973, therefore, the then Conservative Government introduced temporary powers to deal with the situation. I hope that it will never again be necessary to use those powers. I hope that by the time this Bill is passed my noble friends and other Members of your Lordships' House will have produced a Bill that looks something like a Bill and that we shall not have to face again such troubles as starvation of fuel. However, we might have to deal with another problem. We must always look to the future and be prepared for what may come. The United Kingdom has become a party to the International Energy Agreement and also a member of the EEC, and we are seeking to amend subsections (5) and (6) to read "three months" instead of "12 months". When the Minister answers, I wonder whether he could assist us by saying what other emergencies he envisages within the next 12 months. Does the Minister visualise further violent strikes as a result of industrial problems? If so, certainly we need to correct this Bill and not to have it so upside down as it is. I beg to move.
Lord KIRKHILL: The Government consider that to deal effectively with a severe domestic energy emergency—and such an emergency need not involve, as has just been suggested, the question of strikes; it might lead, for example, to the introduction of motor fuel rationing—

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the introduction and successful operation of such measures is possible only if the requisite powers are available for some length of time. To the Government this seems to be an eminently sensible provision. The Amendment proposes that the emergency powers should endure for a period of only three months. I suggest that such a period fails to take account of the special requirements of an energy crisis. As has been mentioned, the last Conservative Administration provided in the Fuel and Electricity Control Act 1973 for emergency powers to be exercisable for a period of 12 months without further Parliamentary review. The Bill as drafted does no more than continue that policy in relation to domestic energy emergencies. It should be borne in mind that the effects of a disruption of energy supplies could persist for some time after the cause of the disruption had ceased to operate. The Government consider that a 12-month period strikes a reasonable balance between the need to provide powers sufficient to manage a domestic energy emergency and the need to ensure that emergency powers are not exercisable for undue periods without Parliamentary control. This is the Government's position, and therefore they wish to resist the Amendment.
Lord DAVIES of LEEK: I agree with the Government that there should be a 12-month period, particularly when one thinks of the physical problem that used to face the Ministry of Social Security in producing quickly an increase in pensions, and also the physical problem of producing ration tickets. I know that the period of time needed is much more than three months. I am not so concerned about the limitation of democracy by taking a 12-month period; I am much more concerned that the Government may not be their own masters when one considers their position in the IEA and the EEC. No longer is it a question of the old adage civis Romanus sum We may have to face the problem of doing what Brussels tells us to do because we have accepted the Treaty of Rome. However, my noble friend the Minister is right in asking for a period of 12 months, because that is a common sense period in which to produce the artefacts needed to introduce rationing or other measures.
Lord HAWKE: I do not believe that argument is valid because I think the Government would have to have the documents ready before they imposed the period. I would perhaps agree that three months is a little on the tight side but I should have thought that six months was ample.
Lord SOMERS: Would the noble Lord not agree that a condition of emergency very seldom lasts for longer than three months? Would he also not agree that a period of three months can be prolonged to 12 months quite easily whereas one cannot shorten 12 months to three months?
Lord KIRKHILL: Initially at least let me assure my noble friend Lord Davies of Leek that the Government view proposals from the IEA or the EEC with a robust sense of judgment and will of course represent very clearly this country's interests in these protracted and continuing negotiations. As to the point raised by the noble Lords, Lord Hawke and Lord Somers, I can only say that this is essentially a question of judgment. Certainly on the example I gave earlier, that of motor fuel rationing, considerable administrative difficulty occurs in the initial stages. I concede that one could argue that a period of six months seems to be reasonable. Against that the advice I have—and the Government have consulted widely on this matter—suggests that 12 months would be the appropriate period and, given all the administrative difficulties, the Governmenst must stand on that period.
Lord WYNNE-JONES: Is it not clear that the sort of emergency that can arise within the country—which is what we are discussing now, and not an emergency imposed from outside—is one which is likely to involve such matters as the stocks of coal? When one is dealing with stocks of coal I should have thought it was difficult within a period of three months to be certain that one has got the stocks back to the point required. As the noble Lord, Lord Hawke, has said, it may well be that six months is possible; but if this Committee is going to spend its time arguing whether we should have three, four, five, six, seven, eight or any other number of months we shall

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be here a very long time. I should have thought the Government proposal for 12 months was not an unreasonable one. In fact, if a period of 12 months was considered necessary by the noble Lord, Lord Strathcona and Mount Royal, in connection with the previous Amendment, I do not see why we should suddenly move to three months now. I think it would be better to leave it at 12.
Lord HAWKE: Why are we suddenly shifting to coal? I did not know this Bill was about coal.
Viscount LONG: We have had a lengthy discussion on these Amendments, and replying to my noble friend Lord Hawke, I am afraid that this Bill involves coal as well as electricity, oil and all the rest. If the noble Lord will look further into the Bill he will probably find that coal is mentioned. I am disappointed that the Government do not want to go along with this idea because I should have thought that since 1973 the Government would be ready to move into action when an emergency takes place. I should have thought three months was ample for the Government in this case. However, having heard from different sides of the Committee that it might be well to have six months or a year, although my own opinion is that three months is sufficient, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
3.15 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 12:
Page 3, line 45, at end insert—
("(7) Where an Order in Council has been made pursuant to subsection (1)(b) of this section the powers of the Secretary of State to make orders under section 1 and give directions under section 2 shall not include power to regulate the price at which crude liquid petroleum or natural gas may he supplied.")
The noble Lord said: This Amendment covers a slightly different point from the last one. The Bill as it stands permits the price control of petroleum products, crude oil and natural gas whenever an emergency obtains, whether it he domestic or international, and what we are seeking to do here once again is to try to separate these two different situations. The Amendment seeks to remove the powers of price control over crude
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oil and natural gas in a purely domestic emergency. Under the International Energy Agency—the IEA—Article 10 clearly talks about supplies of oil being switched between the participating countries which have centrally determined prices and it is accepted that price control may be needed to honour our obligations under this provision. But at the moment we fail to see why similar powers are needed for a domestic crisis of the kind envisaged by Clause 3(1)(b) which seems to us to cover a totally different state of affairs.
First, there is no international obligation to use powers which are of relevance to this particular clause. Secondly, there is a perfectly straightforward practical difficulty in that the Government would appear to be trying to control the price of imported crude oil when they have not got control over what the seller is doing. In other words, any control over a United Kingdom company in these circumstances would logically involve the Secretary of State in directing a company to break its international contractual obligations, and this hardly seems justified in the circumstances. Thirdly, if the Government were to use the powers under this clause to force the price of domestic crude sold on the United Kingdom market below the level which they would obtain if they were exporting to the EEC, then this would distort the EEC market and surely then we should be open to incur the displeasure of our partners in the EEC.
Fourthly, the price of natural gas is at present determined by negotiation between the producers and the monopoly purchasers—the British Gas Corporation—and arising out of these negotiations binding contracts exist which contain escalation clauses. If the Government take control over the pricing of natural gas, which is what they appear to be doing, would this not be tearing up binding contracts concluded by a statutory body in a position to exercise monopolistic power? One can only say that to insist upon these apparently unnecessary provisions to deal with a domestic crisis the Government are once again seriously undermining the already rather wobbly confidence which the industry feels in the good faith of the Government. Therefore I beg to move Amendment No. 12, which incidentally was alluded to when we first mentioned Amendment No. 4 last Thursday. I beg to move.
3.20 p.m.
Lord KIRKHILL: The Amendment, if approved, would deprive the Secretary of State of the power in a domestic energy emergency, that is to say, when an Order in Council has been made under Clause 3(1)(b), to regulate the price at which crude liquid petroleum and natural gas may be supplied. As your Lordships will know, this power is contained in Clause 1(2) of the Bill. The Government cannot accept such a limitation on its powers in these circumstances. My noble friend Lord Lovell-Davis explained on Second Reading that these powers are very similar to those in the Fuel and Electricity (Control) Act 1973—an Act passed by the previous Administration—and the closely circumscribed situation in which the Government see them as being necessary.
It should be emphasised that the Government cannot foresee exactly what might need to be done in a future domestic energy crisis, but on the occasion of such a crisis I cannot believe that taking powers such as are envisaged here would, as has just been suggested, in any way affect the Government's relationships and the mutual confidence evident between Government and the oil companies concerned. In fact, the price control powers might not be needed at all. But in the most severe emergency it is very likely that prices would need to be regulated as, for example, part of a stringent demand restraint programme, and these powers must, in the view of the Government, extend to all petrolem-derived substances, so that control of price may, if necessary, be extended both to the retailing of products and to crude oil. It is for that very concise and cogent reason that the Government would resist this Amendment.
The Earl of LAUDERDALE: Perhaps the noble Lord opposite would help us a little. I was following him until he said these powers might not be needed; but if they were, it would be in the event of a stringent demand control programme. Is the noble Lord saying that the powers to control price are to be used to keep down the price, or to send it up? Surely not to send it up? If, then, the power is to keep the price down, will that not exaggerate this stringent emergency that the noble Lord is foreseeing?
Lord KIRKHILL: It might be to keep the price constant. Certainly under the Fuel and Electricity (Control) Act the price of paraffin has been kept down. and so I think that leaves the options open to the Government of the day.
The Earl of LAUDERDALE: Just for clarity let me at once say that because an Act was passed by the Government I have generally supported, it does not follow that I supported it. I resisted adhesion to the European Community, so we will leave that argument aside as to who did what, and when. If the purpose of the powers is to keep down prices in an emergency, then surely the likely effect of the powers is only to bring about a black market situation on the one hand, or the need for rationing on the other. If the purpose is to put up the price, and therefore discourage over-exaggerated use, surely the emergency would do that anyway; so either way the power is not needed.
Lord KIRKHILL: I think it is impossible to be specific in replying to the noble Earl, Lord Lauderdale, because Government at this time, or indeed at any time prior to the onset of the emergency, do not quite know the full extent or ramification of such an emergency, and therefore Government do not know what sort of overall policy at the point of emergency they should apply. So Government need these rather wide-ranging powers, as I have been trying to emphasise. In passing, I should also make the point that this type of power has been taken by quite a number of oil-producing countries.
The Earl of LAUDERDALE: Why do not Government therefore take powers for rationing as well?
Lord KIRKHILL: Because at this time Government do not see that such a need would be relevant. They cannot bind their future position, and must have a wide-ranging power.
The Earl of KINTORE: I am worried about the side effects on feed stocks. In the plastics industry, the fertiliser industry, the making of pipes and so on, very often those concerned have gone into long-term contracts, and if you "monkey about" with the price of the feed stocks, they do not know where they stand.

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From that point of view it is entirely unreasonable to keep jumping about with prices. We have seen the situation in the nationalised industries. Consider the price rises in the Post Office, on the railways, and so on—nobody knows where they are. To do the same thing in regard to the major supply of feed stocks to 14 or 15 different industries in the country is very bad policy.
Lord KIRKHILL: Government are talking about a crisis situation at this stage, a hypothetical position. I do not think it has been asserted, from this side at least, that there is any suggestion that we should jump about in an improvident manner regarding prices.
Lord WYNNE-JONES: Does not the argument that feed stocks ought to have their price kept steady completely justify the powers proposed by the Government? An emergency situation in which, through one accident or another, the price of feed stocks on the market might vary considerably, could be quite harmful for the petrochemical industry, whereas if the Government have the power to control the price, they could prevent such erratic behaviour. For this reason alone, I think it would be desirable for the Government to have this power.
Lord HAWKE: Would the noble Lord the Minister tell us what powers the EEC countries have in this respect? One can well see a case arising where the United Kingdom might claim that there is an emergency and would try to control the price of oil here. But if it was not controlled in the EEC, the oil would flow over to them. If the EEC and Britain were all subject to price control, they are such an important bloc of world markets that oil would probably have to come to Europe. But if Britain alone has these powers and Europe has not, Britain would be starved of oil, except for the Government's share of North Sea oil, and I do not know how much that amounts to.
Lord KIRKHILL: As I understand the position, nine EEC countries have adopted similar powers to those proposed this afternoon.
3.27 p.m.
Lord STRATHCONA and MOUNT ROYAL: Once again we get back to the curious situation where it becomes evident eventually that the Government are trying
1898
to take powers to deal with what the noble Lord himself called a hypothetical crisis. This, to my mind, gives rise to two questions. The first is a general one: Why rush into print if you have not even thought out what kind of a crisis it is you are trying to deal with? Here we come back to the arguments advanced by the noble Lord, Lord Robbins, when we were dealing with this sort of issue on Thursday, and the black market question raised by my noble friend just now. Secondly, and following the same line of argument, we find ourselves asking: Why is it we have to select petroleum and petroleum products for this very special treatment? If we are dealing with a diabolical crisis which we cannot envisage, surely it will not be enough only to control fuel in the most general sense of the word. We shall possibly need to control all sorts of other things as well. Therefore, why do we have to waste our time trying to take powers which are frightening, certainly to this side of the Committee, and to large parts of the industry? Why do we have to waste our time taking powers apparently especially to clobber one particular industry for a hypothetical situation which we cannot envisage? I find that most extraordinary.
This same kind of thinking goes right through so many issues in this Bill. I am not going to labour the point in this connection; but I must once again say that I totally fail to see why we have to select, and to treat, the petroleum industry in this way. It may well be, when we look carefully at what the Minister has said, that it is something to which we shall again have to address ourselves at some time. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
3.30 p.m.
On Question, Whether Clause 3, as amended, shall stand part of the Bill?
Lord LOVELL-DAVIS: There are two points I should like to raise before we close the door on Clause 3. On Thursday, I asked the noble Earl, Lord Kintore, whether it would be appropriate to answer a question he raised when we reached Clause 8, in which we shall be dealing with provisions concerning gas supplies. However, I think it would be simpler were I to deal with it now. The noble Earl described the difficulties which

1899
could arise over serious plant deficiencies, For instance, Boddam power station was the instance he quoted, where the plant could not take fuel and it had to be piped back to the St. Fergus separation plant. I am sorry that I did not quite understand at the time. The kind of emergency he was referring to would not in the Government's view be sufficient to trigger the Clause 3(1)(b) powers for dealing with domestic emergencies. What we have in mind is that those powers would be used only in circumstances where there is an emergency on a national scale. I can therefore reassure the noble Earl that the Bill does not cover the kind of emergency at an individual plant to which he referred.
At the same time, may I attempt to clarify the matter that the noble Earl, Lord Lauderdale, raised today, and he and others raised on 8th April, about the breadth of power we propose taking in the Bill, and particularly in reference to the comparable powers in the Fuel and Electricity (Control) Act and in Section 2(2) of the European Communities Act. Emphasis was nut on the fact that the Orders in Council under Clause 3(1)(a) of the Energy Bill would not be subject to any Parliamentary scrutiny. By contrast, it was said, similar powers in the Fuel and Electricity (Control) Act 1973 and under Section 2(2) of the European Communities Act 1972 were subject to the Affirmative or Negative Resolution procedure. This is all perfectly true, but the comparisons are not valid, simply because we are dealing with different sets of circumstances. First, the Fuel and Electricity (Control) Act powers are intentionally very wide and could be used to deal with either an international or a domestic energy crisis. The key Parliamentary sanction lies in the annual need to renew the Act. But since the object was to meet both types of crisis by an instrument of admitted bluntness, it was not possible to distinguish, as we are now doing more precisely in this Bill, between the two sets of circumstances. So the Fuel and Electricity (Control) Act Orders in Council require Affirmative Resolution.
With regard to the noble Earl's reference to Section 2(2) of the European Communities Act 1972, this refers to a decision taken by the Government to
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join the Community by acceding to the Community Treaties. The action to be taken under the European Communities Act 1972 is in pursuance of that overriding decision and reflects the need to implement and/or enforce in the United Kingdom various detailed provisions of subordinate Community law. It is quite right, therefore, that the use of such powers should be subject to the Negative Resolution procedure. In the Energy Bill, under Clause 3(1)(a), we are concerned with a situation in which the Government, by virtue of their obligations to IEA and the EEC, must have available power for immediate use in relation to an externally triggered emergency, which could be implemented without Parliamentary sanction. Beyond that, as shown in Clause 15 of the Bill, all orders, with very few exceptions, would remain subject to the Negative Resolution procedure. I do not wish to extend the debate; we have a long way to go. I simply hope that what I have said has been helpful.
Lord KIRKHILL: Before we depart this particular clause of the Bill, my attention has been drawn to the fact that by a slip of the tongue, in response to the second last question put to me, I replied "nine EEC countries". I should have said nine European countries.
The Earl of LAUDERDALE: Should not the noble Lord have said that eight countries have taken powers and one is trying to take them? I do not want to detain the Committee unduly on that. Since the noble Lord, Lord Lovell-Davis, has intervened at last, I want to repair an omission and this is the opportunity to do it. It is some time since he was raised to his present office, and I want in the nicest possible way to congratulate him on it. The Minister of State reminds me of days gone by, when I was a little younger than he is—he is still very young. I went as staff correspondent of The Times to a foreign country, and a local paper said: "Ce journaliste, eminent quoique jeune." I say to the noble Lord: "Cet homme de politique, eminent quoique jeune", and I congratulate him on his eminence. Having said that, I should like to go further. He was good enough to say that the Fuel and Electricity Act and the present Energy Bill are not strictly comparable. This is our complaint. It goes back to the answer which was given by the noble Lord, Lord

1901
Kirkhill, just now. When asked why the Government will not take powers for rationing, he said, "Well, we do not know what the situation will be". But when asked: why do we need price control?—he said, "Because we do not know what the situation will be". Which is it? He cannot have it both ways. There is a fallacy of logic there, which strikes me once again as an Aberdonian.
Lord KIRKHILL: May I ask the noble Earl why I cannot have it both ways in those circumstances?
The Earl of LAUDERDALE: Because if you do not know what the situation is, and from that you deduce a negative conclusion in one case and a positive conclusion in the other, you are contradicting yourself.
Lord KIRKHILL: But my negative and positive conclusions leave room for an ambience of Government thinking.
The Earl of LAUDERDALE: Yes, and the Government thinking is mixed up between positive and negative and we do not know where we are. But I will not pursue it any further.
Lord KIRKHILL: I should have thought that the Government thinking was totally balanced in that case.
The Earl of KINTORE: I should like to thank the noble Lord for replying to my question so courteously. I must apologise for pressing it on him, but as a regional councillor in that part of the world local things are important to us.
Clause 3, as amended, agreed to.
Clause 4 [Other powers]:
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL had given Notice of his intention to move Amendment No. 13:
Page 4, line 16, leave out subsections (3) and (4).
The noble Lord said: I do not think it is necessary for us to move this Amendment, which really is associated with Amendment No. 6 which was carried on Thursday.
Clause 4 agreed to.
Clause 5 agreed to.
Clause 6 [Bulk stocks of petroleum, etc.]:
3.38 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 14:
Page 6, line 4, at beginning insert:
"For the purposes of complying with the obligations of the United Kingdom as a member of the International Energy Agency or a party to the International Energy Agreement or as a member of the European Communities, the Secretary of State may give".
The noble Lord said: With the leave of the House, I think I can speak to Amendments Nos. 14 and 15 together. We are now on the clause dealing with stocks, and it is quite understandable that the Secretary of State should require powers to ensure that strategic stocks are built up, as required by international agreements, under the EEC Treaty and the Directives, and under the International Energy Agreement. This Amendment seeks to ensure that the Secretary of State will exercise his powers of direction only for the United Kingdom's international obligations.
Certainly it is clearly undesirable that the Secretary of State should have any additional powers, totally unfettered by Parliament, to control the level of stocks held by industry. This is bound to cost somebody money, and if such powers are to be imposed then Parliament should seek powers to know why it is necessary to impose obligations on companies. In moving this Amendment, may I ask the Government why they think it is necessary in a purely domestic context to have these additional powers, and why they think that no Parliamentary control whatever is required? I beg to move.
Lord KIRKHILL: The effect of these Amendments is to limit the issue of oil stocking directions solely for the purpose of complying with our international obligations, and I would hope to explain to the noble Lord, Lord Strathcona and Mount Royal, the Government thinking behind their proposition. While the oil stock levels presently dictated by these obligations are somewhat above normal commercial levels and provide an acceptable period of security it is nevertheless likely that for strategic reasons the United Kingdom may wish to set stocking obligations at levels different from those agreed internationally.

1903
In the Government's view problems could certainly arise if the EEC came into line with the International Energy Program by raising the 15 per cent. constraint on the offset allowed for indigenous oil. Under the IEP Agreement the stocking obligation is calculated by reference to the level of net oil imports in the previous year. In the early 'eighties when the United Kingdom is self-sufficient in oil, net oil imports (and the resultant stocking obligation) will be nil and in the next four or five years the level will be progressively reduced. In these circumstances the Government consider that they would need powers to ensure that stocks did not fall below levels which they considered adequate for strategic and other reasons. It is against that background of explanation that I would ask your Lordships' Committee to resist the Amendment.
Lord STRATHCONA and MOUNT ROYAL: This is a complicated matter, as the Committee will have appreciated from the noble Lord's answer. I am bound to say that I thought his case got better as it went on. He started off by saying that it was solely for the purpose of honouring their obligations, and then went on to say, however, that the purpose of this section is different from the international agreements.
Lord KIRKHILL: If the noble Lord will allow me to intervene, may I say that I was attempting initially to explain the purpose of the noble Lord's Amendment, as I saw it, and then on the second phase I was attempting to explain the Government's position. Perhaps I was not as clear as I might have been.
Lord STRATHCONA and MOUNT ROYAL: I am grateful to the noble Lord. Maybe I was getting into the inconsistent situation and not the noble Lord. The best thing I can do in the circumstances is to read his answer carefully, because I must confess that I had not thought about the situation we shall be in as we reach energy independence. However, I was also slightly surprised that my noble friend Lord Wynne-Jones (if I may call him that) was not on his feet because we are back on this problem about where the various international obligations are not wholly directed to the same purpose. The best thing we can do is to
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read what the noble Lord, Lord Kirkhill, has said, and, if necessary, return to this matter later. I beg leave to withdraw the Amendment.
Lord WYNNE-JONES: May I make a comment before this matter is finished. The noble Lord, Lord Strathcona and Mount Royal, in this Amendment has referred particularly to the IEA and the EEC. If one is discussing the overall position with regard to oil there is another body that comes in, and that is NATO, but I think I am right in saying that this is covered by an entirely different agreement which is not the subject of this Bill at all.
Amendment, by leave, withdrawn.
3.44 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 16:
Page 6, line 18, leave out ("substantial") and insert ("wholesale").
The noble Lord said: In moving Amendment No. 16 I am glad to say that I think we can get rid of a number of others, Amendments Nos. 19, 19K, and 18. I am sorry about the order in which I have put them, but this particular problem arises fairly frequently because of the way the numbering on this Bill has finally turned out. The underlying purpose of this Amendment is quite a simple one. We are seeking to ensure equity when these stocking obligations are imposed. The United Kingdom market is supplied by companies which have established refining facilities and distribution networks over a number of years. Then there are other companies operating in much smaller volumes who operate as importers of finished products which are then frequently sold quite near the point of unloading.
The purpose of the Amendment is to ensure that in financial terms an obligation to hold a higher proportion of working capital tied up in stocks is equally divided among the companies to whom it applies. This is an expensive performance. Oil has become an expensive commodity, and holding it in large quantities ties up a great deal of capital. The servicing of such capital imposes an extra operating cost on a company. The purpose of this Amendment is simply to ensure that in exercising their powers the

1905
Government will do their level best to be totally fair in the equity of the distribution of the obligation among the companies. I beg to move.
Lord LOVELL-DAVIS: Since the noble Lord has gathered together Amendments Nos. 16, 19K, 18 and 19, perhaps I may reply to all four. To take Amendments Nos. 16 and 19K first, which are substantially the same, the point of this part of the clause is quite simple. It allows the Secretary of State to prescribe by order the cases and circumstances in which a person subject to a direction under the clause is to be treated as a "substantial supplier".
The Secretary of State intends to define in an order the level of supply at which it is considered appropriate for a person to be subject to a stocking obligation. Our present view is that any undertaking marketing oil or oil products at the rate of about 100,000 tons or more per annum in the United Kingdom should be subject to a stocking obligation and to the receipt of a direction under this clause. Such an arrangement has the advantage that it would cover about 99 per cent. of the oil supplied to the United Kingdom market without including many of the small wholesalers. We do not need or wish to cover these, and I therefore ask your Lordships to reject these two Amendments.
On the subject of Amendments Nos. 18 and 19, on which the noble Lord also spoke, the Government do not believe that these Amendments are necessary. I think that the noble Lord is really simply asking for a governmental response to ensure that the Government will do what they most certainly will, for the Amendments merely seek to include an obligation on the Secretary of State to act equitably in applying oil stocks directions. Of course, this would be done whether or not it is spelled out in the Bill. Indeed, many oil companies agree that our present arrangements under the Fuel and Electricity (Control) Act 1973 are equitable, and we wish them by and large to continue under these new provisions. Having said that, I would therefore ask your Lordships to reject these Amendments.
Lord HAWKE: Is the Minister in a position to give any idea of the quantity of oil stored in terms of months supply,
1906
or is this one of the figures that are never disclosed?
Lord LOVELL-DAVIS: I would rather not give any figures at this time. Representations have been made in this matter and at this time I would rather leave it at that.
Lord STRATHCONA and MOUNT ROYAL: I do not want to be churlish in accepting the noble Lord's assurances. I would have been happier, however, had he taken out the words "of course". The trouble is that he is hearing a different feedback than I am and I do not think we can accept that it goes without saying that the Government are doing all the consultation; at any rate, that is not the way the industry sees it. Once again, however, the Government have asserted noble aspirations and the least we can do is take them at their face value and, accordingly, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 17:
Page 6, line 21, at end insert—
("( ) The Secretary of State shall give any person referred to in subsection (1) above particulars of the proposed direction and an opportunity of making representations before such direction is given.")
The noble Lord said: This Amendment in a sense represents the soft option to the last group of Amendments and, in view of what the noble Lord said, I cannot believe that he would have the face to refuse it because we are really saying that we want him to commit himself to doing something which he said he intends to do, anyway. It should not be necessary for us to be moving this sort of Amendment at all. We have earlier been saying that the Government do not feel it necessary to accept Parliamentary control over all the exercise of their powers, so what we are simply saying here is that they should be obliged to consult with the industry.
There is widespread feeling that the Bill was rushed through with indecent haste, and some of us do not feel that all the consultation took place that might have taken place and that we might have had a rather less unsatisfactory Bill if it had taken place. My hope that the Amendment may prove acceptable to the Government is somewhat reinforced by

1907
the fact that it has been more or less borrowed from an Act which I hardly dare to mention because it is such a horrible thing, the Petroleum and Submarine Pipe-line Act 1975. One of the better features of it, however, was that the Government accepted an Amendment on these lines, and I therefore confidently move this one.
Lord LOVELL-DAVIS: The Government consider that the Department of Energy has always given oil companies full opportunity to discuss their stocking obligations, and certainly would continue to do so. In our view, therefore, this position is already covered by Clause 6(2)(a), which allows the Secretary of State to set a specific time by which stocks must be brought to the required level. The companies will be free to make any representations during this period and therefore consultation in advance of the giving of the direction is, in the Government's view, unnecessary. But so that the noble Lord may not remain perhaps unconfident about other matters as we proceed this afternoon, let me say that the Government are prepared, if he will withdraw the Amendment, to have another look at the matter.
Lord STRATHCONA and MOUNT ROYAL: This is progress indeed and we are all as one. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 7 [Fuel stocks at power stations]:
3.55 p.m.
Visoount LONG Visoount LONG moved Amendment No. 19A:
Page 7, line 6, at beginning insert ("For the purposes of complying with the obligations of the United Kingdom as a member of the European Communities,").
The noble Viscount said: This is a probing Amendment. We feel that at this point die Bill needs tidying up and I hope that the Government will agree to this, if only as a result of the obligations of the United Kingdom as a member of the EEC. We would be interested to learn the Government's reaction to this Amendment.
Lord KIRKHILL: The main purpose of this clause is certainly to implement
1908
our EEC obligations, and my noble friend Lord Lovell-Davis made clear on Second Reading that this is the case. There is, however, no reason to restrict the clause to implementation of EEC obligations. Circumstances, which are not at present foreseen, may arise where the Government might wish, for reasons of United Kingdom energy policy, to require the holding of stocks in excess of EEC obligations. This appears unlikely at the moment, but it seems desirable in our view to retain the flexibility at present conferred by this clause.
Viscount LONG: I am grateful to the noble Lord for that answer. We felt that the Bill needed tidying up at this point.
Lord HAWKE: Is the Minister able to let us know whether the 100 megawatt station covers those subsidiary stations which at a moment's notice produce electricity by means of aero-engines? I cannot remember their exact rating, but I believe that they are between 25 and 30 megawatts each and that sometimes they go in batteries of four and sometimes of two. If they are only in twos they would not be covered by this, but it is important that they should have fuel.
Lord KIRKHILL: During the course of the afternoon I shall be professionally advised on that complex and technical point, and I assure the noble Lord that I shall seek an appropriate moment to give him a reply.
Lord STRATHCONA and MOUNT ROYAL: There is a point I had intended to raise on the Question, Whether the clause shall stand part? But as it has been raised in part by my noble friend Lord Hawke, it might be convenient if I dealt with it now. As I understand it, the EEC Directive specifically says that the matter of stocks is to be determined in the light of the system as a whole and will ensure that continuity of supply will continue to be made available. This provision in the EEC regulations was, I understand, specifically put in after representations from our Electricity Generating Board pointing out that it is anomalous to insist that the stocks are available at each individual station. Yet we find this 100 megawatt limitation in the Bill when, as I understand it, thanks to the representation by our Electricity Generating Board in collaboration with other European Generating Boards, they

1909
removed this detailed restriction which did not take cognisance of the fact that one has the system as a whole and one can frequently make good the supply of one generating station by increasing the supply from another; this is the right way of setting about control, rather than getting down to too much detail, something which worries us about the Bill.
Viscount LONG: When moving the Amendment, I omitted to mention that it might be convenient to the Committee if, at the same time, we discussed Amendments No. 19B, 19C, 19D and 19E, which all have the same wording, although I did not give the noble Lord, Lord Kirkhill, advance notice of this. These, too, are probing Amendments. The Bill confers powers on the Secretary of State in more than 15 important places, but only twice does it say that the Secretary of State "shall" do something, and each time it is only about consultation. Perhaps the Minister could be generous and allow us these Amendments, which would retain the word "shall" throughout the Bill.
Lord KIRKHILL: The Government see a distinction between the position under Amendment No. 19A and that under these further Amendments which we are now discussing. The clause as drafted gives the Secretary of State power to give directions to the operators of certain generating stations requiring them to maintain fuel stocks at a level specified in the direction. The Government's view is that these Amendments would convert that power into an obligation. The Government are already under an obligation, by virtue of our membership of the European Communities, to give effect to Directives such as Council Directive 75/339, which this clause is designed to implement. However, the obligation which Article 1 of this Directive imposes on Member States is to
"…take all appropriate measures by way of law, regulation or administrative action"
to oblige electricity producers to maintain the specified level of stocks. The Amendments would seek to cut down on the discretion which the Government have been given by the Directive, and to compel them to proceed by way of a direction under this clause. That is the distinction which the Government would make between the Amendments.
Lord WYNNE-JONES: Does not the word, "may" do exactly the same as the noble Lord, Lord Strathcona and Mount Royal, earlier suggested?—that is, it makes this optional for the Government, whereas an EEC Directive would indeed use the word "shall" and would say that this had to be done. Surely, when one is considering a number of things which may perhaps be necessary, the word, "may" is very much more appropriate all the way through because it allows an option for the Government to impose such a requirement or not as is considered desirable. "Shall" would seem unduly restrictive.
Lord KIRKHILL: My noble friend has expressed exactly the views of the Government.
Viscount LONG: I thank the noble Lord for his reply. I was only probing with this Amendment to see whether the Government had failed to use "shall" by mistake. Now I know that they have used "may" on purpose, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.5 p.m.
Viscount LONG Viscount LONG moved Amendment No. 19F:
Page 7, line 29, at end insert ("but the specified level shall at all times be sufficient to allow such a generating station to maintain its normal supply of electricity for a period exceeding 30 days.").
The noble Viscount said: With the permission of the Committee, I should like to speak to Amendments Nos. 19F and 19G together. These Amendments deal with the minimum level of stocks required by the EEC and are designed to discover why that level should not be written into the Bill rather than left to the Secretary of State to prescribe by order. They are entirely consequential, but, while we are dealing with this important Bill, would it not be best for the level of stocks to be written into the Bill? Why are the Government not able to do this? Surely, we should all know where we stood then. I beg to move.
Lord KIRKHILL: As regards Amendment No. 19F, Council Directive 75/339 at present seeks to impose an obligation on electricity producers to maintain at least 30 days' stocks. This Amendment would ensure that any direction given under Clause 7 requiring the operator of a generating station to maintain fuel

1911
stocks at a specified level would always impose a requirement that that level should be set at 30 days, or more, even if, for example, the Directive were to be amended to permit a lower level of stocks to be maintained.
The Government consider that Amendment No. 19F appears on the face of it inconsistent with the first Amendment on this clause, No. 19A, which sought to limit the power to give directions under it to cases when this was necessary to implement Community obligations. It would also preclude any relaxation of the requirement imposed by the direction such as is provided for in Clause 7(2)(a)(ii). In a supply shortage, the Secretary of State may well need to authorise a reduction in stock levels in order to permit continued operation of the generating station.
So far as Amendment No. 19G is concerned, the Government consider that the precise amount of stocks required to meet the requirement which will emerge will depend, for example, on the number of generating sets in the power station which are in use throughout the period. The Government consider that the Amendment would deprive the Secretary of State of his powers under subsection (4)(c); that is, the 30 days' requirement. These powers would be denied him were the Amendment to be carried. For those reasons, the Government would resist Amendments Nos. 19F and 19G.
Lord WYNNE-JONES: I wonder whether the noble Viscount, Lord Long, can explain why the period of 30 days is specifically introduced in this Amendment? It seems that, once more, the Amendments are attempting to make the Bill more restrictive than it originally was. My recollection is that the Electricity Board always preferred not less than six weeks as their period for stocking and that the 30 days was a compromise. I cannot help feeling that, if we are to have any control of this type at all in case of emergency, the nature of the control should be left to the Government, in discussion with the Electricity Board and any other body concerned, rather than that we should lay down a specific figure here.
Viscount LONG: In reply to the noble Lord, Lord Wynne-Jones, what we are
1912
constantly trying to do is to tidy up the Bill, to explore it or to make it safe. We are always coming up against different powers, and every now and again we have to find out which is the easiest way to deal with particular matters. We felt that 30 days—one month—would be ample. However, as the noble Lord said, the Electricity Generating Council prefers six weeks. This is really an exploratory Amendment to try to find out whether the Government or the Electricity Generating Council is right. This is something we see all through the Bill. Also, if the Government insist on leaving this out, we feel that it will be a great pity because we believe that, when it comes to an emergency, we might have to ask for a longer stay again. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.9 p.m.
Viscount LONG Viscount LONG moved Amendment No. 19H:
Page 7, line 39, at end insert—
("(5) Notwithstanding subsections (1) to (4) of this section, the Secretary of State shall at all times ensure that, in cases where fuel stocks are held neither on the premises of any generating station for the purposes of its operation nor at a place directly linked thereto, but at a place further removed, such stocks can at all times be conveyed to that generating station for the purposes of its operation.")
The noble Viscount said: I move this Amendment because during the Second Reading debate my noble friend Lord Strathcona and Mount Royal asked the noble Lord, Lord Lovell-Davis, about access points, and we afterwards found that the noble Lord had not replied. Perhaps, therefore, we may have a very good answer this time.
The fact remains that in 1973 we went through problems in order to get the supplies out of the depots and to keep the generating stations going. At that time we came across problems of picketing and similar problems with the unions. We hope that through this Amendment we might get the reaction of the Government on whether the Secretary of State will be in a strong enough position in an emergency to deal with the pickets and to ensure that access to generating stations and depots is available to those who try to deliver the supplies. Article 2 of Section 4 of the Directive 75/339 specially states:
"Stocks shall be held on the premises of the power station or at a place directly linked

1913
thereto. Stocks may be held at a place further removed provided that they can be conveyed to the power station at all times."
We hope that in moving this Amendment we might get an answer from the Government on how they will be strong enough to tackle the problems which lie behind an emergency in which there is not access to supplies. I beg to move.
Lord KIRKHILL: It should be stressed that the Generating Boards already hold more than sufficient stocks at their power stations to meet the requirements of the EEC Directive. In other Amendments to this clause noble Lords opposite have suggested that the clause should be restricted to implementation of the EEC obligations which are placed on Government. In the Government's view, what is now suggested in this Amendment goes far beyond that. In an emergency situation, when the normal lines of supply had, for whatever reason, been disrupted, the Government would have to consider what action they needed to take, and they would make appropriate use of the powers available to them, including those under this Bill and the Emergency Powers Acts. In the Government's view, it would not be appropriate in a Bill of this kind to impose a binding statutory duty on the Secretary of State in respect of one aspect of a possible emergency situation. The Government must be free to take whatever action is appropriate at the time, having regard to all the circumstances. Naturally, it follows from that that the Government would seek to resist this Amendment.
The Earl of LAUDERDALE: The noble Lord says that the Government would have the power to take whatever action is appropriate at the time, but I should like to ask him this question: How long is a piece of string? What the noble Lord said means nothing whatever, although he said it in the nicest, most plausible, and most charming way. On the one hand, the Government are taking wide powers, and they have assured us not once, but a dozen times, that these powers will not be abused. We are not asking them to abuse the powers, we want to make sure that they do not abuse them. We have been told they are taking these powers for situations which cannot be foreseen. They use that argument to produce
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a negative or a positive result, according to taste. But here is an issue which is very serious.
We know perfectly well that situations have arisen in the past where the movement of fuel to power stations has been prevented by picketing; that is a matter of history. We have all shared in the sweat of Parliament, in working over the series of legislative Acts, and charades, relating to the trade union movement. We have all been in it, and we are in it up to our necks. We are not, I hope, trying to make petty Party political points. The noble Lord and his Government say that they are taking wide powers for emergencies of all kinds, and that they cannot predict the circumstances; but when we instance a particular historical circumstance is the noble Lord so blind? Are the Government saying that they will do nothing whatever about the picketing in an emergency of this kind?
The noble Lord is brilliant at having it both ways; I should not like to go gambling with him at any time. But this is a serious matter. Are the Government, or are they not, prepared to take powers, if what they have are not sufficient, and to use powers which they have, to deal with picketing, if that interferes with the supply of fuel in an emergency situation?
Lord DAVIES of LEEK: I am looking at the logic of what is stated in the Amendment. It says simply that the stocks should be "at a place further removed" in order that they "can at all times be conveyed…" Noble Lords lived through that terrible winter in which there was a coal crisis, when an act of God meant that nobody could move the coal. The railways and roads were frozen. Let us use a little common sense. Are noble Lords opposite talking about picketing? If they are talking about picketing, that should be stated in the Amendment, rather than have loose phraseology like this. When there are winters such as I have mentioned, or acts of God, flood and fire, we cannot put in words like these. Every noble Lord knows that in a real emergency the Government have powers, and they can get the powers at any moment they wish. Therefore this Amendment is doing no more than delaying the Committee with a piece of verbiage.
The Earl of LAUDERDALE: What the noble Lord says is not without point. The wording in this Amendment is not very satisfactory; I should be the first to say so. But can we not plead with the Government to look at this Amendment? If it is withdrawn now, will they look at the point to see whether there can be introduced something satisfactory which would meet us all? The wording is not satisfactory as it stands. I, for one, would not go to the gallows for these words at all; in fact, I would not go to the gallows at any time, if I could avoid it! Will the Government consider that there is a serious and genuine point involved, not a Party political point; and will they undertake to look at this matter, perhaps in the spirit of the speech of the noble Lord opposite?
Lord KIRKHILL: I do not seek to reply in any partisan or Party spirit. I wish to reply briefly, to say that the Government do not see any need, under the Bill under discussion this afternoon, to effect statutory powers which would have a bearing on any possible industrial dispute.
Viscount LONG: We have had a very useful airing of this Amendment, but I am disappointed by the Government's reply. I am most grateful for the suggestion by my noble friend Lord Lauderdale that the Government should take this matter back and look at it again. I quite agree with the noble Lord opposite that in addition to pickets I should have mentioned the question of "weather permitting", but I omitted this from my notes. I agree that the winter of 1962–63 was very severe, but I hope that we have come a long way since then, and that there is now more modern machinery to ensure that the supplies get through. I am still very disappointed that every time we come to an important item, one which is touchy, we find the Minister sitting tight on the garden fence, not daring to come down off it to give any word of encouragement. We see that what is proposed is not to be accepted in the Bill under any circumstances. I am naturally disappointed. We shall merely have to sit and wait and hope that there will not be an emergency, either a national one arising from industrial strife, or one caused by the weather. I should think that if there is to be an emergency it will
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arise, first, from the weather. I beg leave to withdraw the Amendment.
Lord KIRKHILL: I promised to respond to the question posed earlier by the noble Lord, Lord Hawke. He asked me about the Government view of the feeding-in complex regarding the 100 megawatt station. The EEC Directive states that the stocking obligation shall not apply to private industrial generating stations with a total capacity of less than 100 megawatts. We regard the 100-megawatt limit as applying to individual stations, not to private generators, which may have a number of stations each of less than 100 megawatts but on different sites and, of course, not connected. I am further advised that only 6 or 7 private stations would be involved in the United Kingdom.
Amendment, by leave, withdrawn.
On Question, Whether Clause 7 shall stand part of the Bill?
Lord STRATHCONA and MOUNT ROYAL: Can I flush anything out of the noble Lord on the other part of the EEC Directive, regarding the grid as a whole, and not going down to holding stocks at specific stations—or did he deal with that just now? I do not think he did.
Lord KIRKHILL: I mentioned that we regarded the 100-megawatt limit as applying to individual stations. However, because I consider this matter to be technical and complex, I will undertake to write in detail to the noble Lord.
Clause 7 agreed to.
Clause 8 [Supply and use of of-shore natural gas]:
4.21 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 19J:
Page 7, line 44, at end insert ("and for the purposes of this Act supply of gas through pipes shall mean and shall be restricted to the case where the gas is in the gaseous state.")
The noble Lord said: We now move into what is perhaps the most difficult, complicated and, indeed, in many ways, contentious part of the Bill—that containing what we have been prone to call the gas clauses, which are Clauses 8 to 12 inclusive. I hope the Committee will forgive me if, in moving Amendment

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No. 19J, I say a few words which apply to all the Amendments, or most of them, that we shall be moving to these clauses, which I suspect are going to keep us busy, I hope to not too late an hour, this evening. First of all, one sees that the heading is:
"Other measures for controlling energy sources and promoting economy".
I have already suggested that the noble Lord, Lord Lovell-Davis, is very good at suggesting that he needs all kinds of powers for conservation measures, and I am frequently totally unconvinced that the reason he is giving is the genuine reason. I think that to some extent the same thinking permeates many of the Amendments that we shall be moving to these clauses of the Bill.
Another reason that is sometimes put forward for some of these powers being taken is the need for power to control the export of the fuels which we shall be bringing ashore from the finds in the Continental Shelf around this country. Yet one does not detect that the Government are really addressing themselves—if indeed this is their objective—to that end. So I do not doubt that they will justify some of the powers that they are taking on the grounds that they are needed to stop undue exports of our energy resources, but many of them go very much wider than we contend they need to go for the purpose for which they aver they require them. This, I think brings us back—and it is no use burking the issue—to a fundamental political disagreement between this side of your Lordships' Committee and the Government on these issues. Are we so sure that the Ministers and their staff in the Department of Energy, or indeed in any other Department, are that much better at determining the national interest (even in the short-term, let alone in the kind of time-scale which applies to these extremely difficult, complicated, technical issues of energy policy) than are members of the industry in competition?
It is easy to say that one specific company's interests are different from the national interest, but I suggest that the kind of problems that have to be resolved for energy policy are very much greater than those which have to be determined within the ambit of one single company's interests. You have to look at the
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industry in competition. Therefore, our case will be—and we shall be making it time and again—that in order to take the powers for which he is asking under the Bill, with all the dangers that go with the infringement of the accepted and traditional freedom of action which the companies have enjoyed in the past, and indeed which industry at large has enjoyed, the Minister has to make a case of a very compelling kind to justify the disadvantages which will follow from these widespread powers of control.
It is all very well to say, as I am sure we shall be saying, "Under this Bill, in some cases the Minister has to give consent, and in that case the licensee, the applicant, has to show that he fulfills certain conditions". Every time you do something like this, what do you do? First, you impose an extra delay while some executive in a company goes through a long fandangle. It has almost become a joke, if it was not so serious, as to what happens under the planning laws in this country if you want to do anything in the building line. So, first, it imposes delay. Then, it imposes another constraint, another consideration, on a difficult problem when an industrial enterprise is deciding how best to deploy its resources. Furthermore, it imposes extra expense by way of staff to deal with these problems, both within the companies and within the Government. I would suggest that, given all these difficulties, a very good case has to be made before we rush into granting these powers to the Government. That is the general issue.
So far as the gas clauses in this Bill are concerned, all these clauses are governed at the present time by Section 9 of the Continental Shelf Act. The principal purpose of that Act, as I understand it, is to protect the British Gas Corporation's monopoly under the Gas Act, so that the supply of gas through pipes for domestic purposes is a monopoly activity of the Gas Corporation. It also gives the Corporation the right of first refusal of any piped supply for industrial fuel use. That is the present situation. The obligation now to offer the gas—except, perhaps, that for feed-stock use—to the British Gas Corporation is retained, but the major change is that the Government now propose to withdraw the right of

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licensees to use their own gas for non-fuel purposes and to leave the discretion of the granting of consent for such use in the hands of the Secretary of State, with no appeal and with no compensation to licensees who have invested under the present regulations. These are the general purposes.
To come to the specific Amendment to which I am supposed to be speaking—and I am grateful to the Committee for their indulgence in allowing me to digress on a generalisation for a moment or two—we are now coming to what to me is a very difficult issue. It is a highly technical issue and my noble friend Lord Campbell of Croy and I will be doing our best to try to explain what we understand to be some of the technical issues and the reasons why we are moving these Amendments which we have discussed at great length with the industry.
The particular Amendment to which we are now addressing ourselves creates a problem right away. I am sorry that the noble Lord, Lord Wynne-Jones, has left for I was hoping for some expert advice from him. We have the product called liquid petroleum gas. I just managed to scrape graduation as a physicist and one of the things that I remember correctly was that there were three states of matter: solids, liquids and gases. We therefore seem to start off by having "clobbered" ourselves with a substance called liquid petroleum gas, which seems to be a physical impossibility. That is the first confusion. I cannot blame the Government for that. At least, I do not think I can; but I should be prepared to try hard to do so. But I believe, in all seriousness, that it leads us into an area of considerable difficulty because through a number of these clauses we find provisions in the Bill trying to define gas by its physical properties—which is to say that it is a gas and not a liquid although, in fact, a large number of these gases become liquids if you apply a little pressure to them. One of the things that we are dealing with here is that it would then be possible to say—unless we do something about it—that it is not a gas we are dealing with for it has become a liquid, and, obviously, it is not subject to controls as a gas.
Now comes the added confusion—and if you think it is complicated already, I may say that I have not even begun. I have pages of names of the chemical products which arise from this crude which comes ashore; even if I could pronounce them, I should bore the Committee to extinction if I tried to run through this long list I have been given. What I suspect has happened—and I am glad that the noble Lord, Lord Wynne-Jones, is back for we may be able to get assistance from an expert of his kind—is that the Bill has been framed in the light of the physical properties of the substance that we are discussing and has then been applied to its chemical uses.
I believe that this is one of the problems which run right through all the gas clauses; and I suppose I could say that it is not the job of the Opposition to straighten it out. It is tempting to make a joke out of it but, unfortunately, it is not a joking matter. This is a very big business indeed, of very great importance to the country and of international importance as well. Once again I have strayed from my Amendment but I will try to drag myself back.
What we are referring to in Amendment No. 19J is the right to supply liquefied petroleum gases—and I apologise then for that contradiction in physical terms. That, as I understand it, includes propane and butane in the liquid form without the need for British Gas Council or ministerial consent regardless of the end use of the product. This also applies to gases covered by Clause 8 and by Clause 10. I have already said that certain gases become liquids simply by compression. I understand that methane is invariably supplied as a gas through a pipe and that also applies to piped ethane unless the pressures of transmission are very high when the ethane is liable to become liquid. But propane and butane become liquid very easily with the slightest pressure and these liquids have in practice always been distributed and supplied by the industry in the form of a liquid. These clauses do not include the supply of these materials as a liquid which is sometimes supplied in containers on lorries or by train or by ship. It seems illogical, therefore, to include these products under the restriction which is

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intended to apply to maintain the British Gas Council's monopoly of the supply of gas far fuel purposes, for that is what their monopoly is intended to be about.
The dangers that follow are several. One of them is that you are inevitably putting the British Gas Corporation in a position where they could distort, and, if they wished, attempt to control, the competitive ability of their competitors in what has been a traditional and significant section of the market which has been controlled by these independent companies. It is not a necessary temptation to put before the British Gas Corporation.
I should like to ask the Government two questions on this particular Amendment. First, does the Minister agree that, as the Bill stands, it would appear also to cover the piped supply of natural gas in solution with other materials? For example, if offshore natural gas is piped ashore as a component of crude, would it not put the British Gas Corporation into the position where they could block the movement of the crude if they exercised their rights, as the Bill stands, to purchase the gas and to demand that the company separate out the gas before they distribute the oil. I apologise for the complications again but it is necessary to do this.
Secondly, does the noble Lord agree that as they stand the provisions in the Bill would apply also to butane where it is used as a blending component in petroleum? In that case, we could find ourselves in a situation where the supply of blending materials for petroleum was coming under the control of the British Gas Corporation. I have tried to give examples and to generalise as to why we believe that an Amendment such as we are proposing is essential to protect the position of the companies in this enormous market in this country. I beg to move.
Lord LOVELL-DAVIS: I must say that the noble Lord, Lord Strathcona and Mount Royal, has cast his net very wide in covering this first Amendment. I am sorry that he doubts the Government need for these powers in terms of energy conservation. I tried to make clear on 8th April how important I consider this and I understood him to agree that he, too, is fully seized of the importance of energy conservation. I do not know how he would propose to advance the cause
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of energy conservation without the powers to do so. We are simply trying to secure those powers. The noble Lord referred initially to the matter of our powers to control exports. Generally we are not proposing controls on exports in gaseous or liquid form. Any Secretary of State who deliberately used his powers under this clause to thwart exports to the European Economic Community, for instance, might find that he was acting in breach of our EEC obligations. In questioning the ability of the Department of Energy—that is, the arm of Government—to exercise these powers, I am not clear who he is suggesting should have the powers; or whether he is saying that these tremendously important natural resources belonging to this country should be handed over to individuals who are outside any Government control.
The noble Lord raised a number of questions and the answers to them will emerge as we continue through the Committee stage. I do not think that I should be led at this stage into great detail. I should like to answer the questions that he raised as to the powers that will be given to the British Gas Corporation. I ought to point out right away that the Energy Bill proposes no change in the coverage of the term "natural gas". Clause 19 defines natural gas as any gas derived from natural strata. Section 9 of the Continental Shelf Act 1964—through Section 1(2) of the Petroleum (Production) Act 1934—refers to natural gas in similar terms. This includes, as well as methane, such gases as ethane, propane and butane, which are gaseous at normal temperatures and pressures. It is true, as he says, that there has been some lack of definition of the chemical components of gas. None of the legislation dating back over the past century covering the disposal and utilisation of gas, including natural gas, has specified the chemical substances covered by the term. However, it has always been regarded as covering all substances which are gaseous at normal temperatures and pressure, even if the substances are not combustible and even if they are piped as liquid.
The heavier gases, ethane, propane and butane, are often liquid under the pressures experienced in reservoirs and during transmission in pipelines, and they are often sold in liquid form. Therefore, they are usually known as natural gas liquids.

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While the Energy Bill proposes no change in the coverage of the term "natural gas", it may be that some companies did not appreciate that these heavier gases were liable to control under Section 9 of the Continental Shelf Act, as they are, if they are manufactured, liable to control under Section 29 of the Gas Act 1972.
We are talking specifically on Amendment No. 19J, the first of the Amendments put down in Clause 8. I should like to take into consideration Amendment No. 20C, since it aims to have the same effect. Amendment No. 19J would exclude from control of supply and use the heavier natural gases such as propane and butane—which are gaseous at normal temperature and pressure, as I have said—where piped in liquid form, whether they were for fuel or non-fuel uses.
A similar Amendment was proposed by the Opposition during the proceedings on the 1965 Gas Act. It was pointed out that acceptance of the amendment would have meant that the extent of the gas industry's monopoly could be eroded by technical developments which enabled an increasing range of gases to be piped in liquid form. This would have had serious effects on the position of the gas industry. The Amendment was defeated, and it was established therefore that the gas industry's control extends to gas in both gaseous and liquid form.
These provisions were retained unchanged in the Opposition's 1972 Gas Act, and have therefore received the blessing of both of the major Parties. The circumstances have in no way changed since 1972, and I can see no reason why we should now limit the powers of the gas industry in the way suggested. Neither can I recommend that noble Lords should accept the second Amendment which by proposing that the liquefaction of the heavy natural gases should be removed from control, where a substantial quantity of liquid methane is produced, seeks to achieve the same object. I can only recommend that the Committee rejects this Amendment.
4.47 p.m.
Lord WYNNE-JONES: This Amendment raises the interesting point about the definition of natural gas. As the noble Lord, Lord Strathcona and Mount
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Royal, pointed out, natural gas could have a number of constituents. But the hydrocarbon constituents cannot go above butane; even butane is not a very important one because butane is a gas which can be liquid at normal temperatures and the next hydrocarbon above it, pentane, is a liquid at ordinary temperatures. It is only methane and ethane which are what one may call the permanent gases, which would not be liquified simply by pressure alone. One would have to reduce the temperature. Consequently when one is talking about natural gas, from the hydrocarbon point of view one is talking about methane and, to a certain extent, about ethane. These are the important constituents of natural gas.
But it is impossible to give an exact definition of natural gas, except that it is the gas which occurs and is brought up in a gaseous form. That is about the only way in which one can define it. One cannot define it by composition. If one is to discuss what can be done with this material, one has to bear in mind that the gas occurs together with petroleum in certain parts of the North Sea. For instance, at the Norwegian Ekofisk boring they have so much natural gas with the petroleum that when the petroleum is brought to the surface the gas bubbles up and has to be separated from the petroleum. They have a complete chemical engineering factory in the middle of the North Sea dealing with this separation. The natural gas is piped to Germany and the petroleum to Middlesbrough. One has a complete separation occurring because their physical properties are so different.
If one is to pump these gases in a liquefied form, without refrigeration it would be impossible to pump methane and ethane; one would have to have a refrigerated pipeline. One could pump the other gases simply by having pressure on the pipeline. I take it this is the point to which reference is being made by the noble Lord, Lord Strathcona and Mount Royal, that these higher hydrocarbons, as they are called, the ones which are liquid at ordinary temperatures, are likely to be used for various industrial purposes and not as a gas for ordinary burning purposes. Consequently any industry which wants these gases would naturally want to transfer them by pipeline; but I should have thought that

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Clause 8(1) made it clear—I raised this matter on Second Reading and should be glad if my noble friend Lord Lovell-Davis could give a definite answer—that this sentence means that it is offshore natural gas, and only offshore natural gas, which the British Gas Corporation can control. I should have thought that meant the gaseous material—the gaseous stuff which is called natural gas—and not a solution of natural gas in petroleum. That would be classified under petroleum and not under natural gas.
Furthermore, when it comes to the liquid gases, there is nothing inconsistent in using that term because all gases can be liquefied and liquid gases can surely be pumped round in pipes, because it is said: "Unless the supply is for industrial purposes". I may be wrong, but I read that to mean that if the material is to be supplied purely for industrial purposes and not as a gas for heating, lighting and so on, it could be pumped round by anybody other than the Gas Corporation. I should like to know whether this is the correct interpretation because, if it is, it seems to me there is no need for any Amendment. In fact, in my opinion, any Amendment would make the matter less clear than it is, because "natural gas" defines this material as well as it can be defined since it is not a material of constant composition. It is not even a material of known composition when you first get it out; it has to be analysed. All one knows about it is that it is gaseous at ordinary temperatures and pressures and not liquid, solid or anything else. So I should have thought that the wording of the Bill was adequate, but I should like to be satisfied that my interpretation of that sentence is correct and that the words "unless the supply is for industrial purposes" mean that if the gas is sent for an industrial purpose then it does not have to come under the control of the British Gas Corporation.
4.53 p.m.
Lord AVEBURY: I thought this subsection was necessary merely to clarify the provisions of the Continental Shelf Act and of the Gas Act 1972. I think the noble Lord, Lord Lovell-Davis, said that in his reply. If I am correct in that assumption, we are wasting time arguing over this Amendment at any great length. However, the point was raised by the noble Lord, Lord Lovell-Davis, and followed
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up in the speech made just now, that when we come to the definition clause it would add to the clarity of the Bill if the phrase "at normal temperature and pressure" were inserted into the definition of "natural gas". That would remove the confusion that has arisen in the mind of the noble Lord, Lord Strathcona and Mount Royal, who says that to him it is a contradiction to talk about "liquefied petroleum gases" when we are talking in particular of propane and butane, which are gases at normal temperature but which, as the noble Lord has just pointed out, can be liquefied by the application of pressure and without refrigeration equipment.
It is also worth bearing in mind that, even if it were not for the provisions of this subsection, the Government would still have power to control the distribution of natural gases by pipeline under the 1952 Pipelines Act, which provides that authorisation is required wherever a pipeline is constructed for the transport of any material, whether it be natural gas, crude oil or coal in a slurry. Therefore, for the mainland of Great Britain, the Government would have the power, even in the absence of this subsection, to prevent anyone from distributing natural gas for other than industrial purposes.
The Earl of LAUDERDALE: Unlike my noble friends on the Front Bench, I have not had the opportunity of discussing this matter with the industry. The first bit of paper of any importance that I saw about this Bill reached me just before lunch today. Of course, I am not a chemist or a physicist, but surely it is obvious we must be very careful about our definitions and intentions in an area of high technology. As the noble Lord, Lord Wynne-Jones, said so prudently—and in my observation the noble Lord is always prudent in his contributions to our debates—one cannot really define "natural gas" except by calling it "natural gas". One thing is quite clear: we must be very careful. The noble Lord, Lord Lovell-Davis, said that no change in the meaning of natural gas is implied here, but the fact is that we surely need to protect the present right to move liquids by pipe. In many cases it is more economic to move propane and butane as liquids. If they can go as liquids by ship or by road or rail, as apparently they can under Clauses 8

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and 10 of this Bill, why can they not go by pipe?
Then there is the important complication, to which the noble Lord, Lord Wynne-Jones, alluded inferentially when he mentioned the Ekofisk field. There is the case where natural gas occurs in and with and as part of crude oil. There are cases where crude oil is brought to the surface and the machinery for handling it is in fact fuelled by the gas which is drawn off. There are cases where natural gas is drawn off at some point on shore, as in the case of the BP pipeline system. In other words, one gets natural gas conveyed in and with and, if I may use a simple layman's journalistic phrase, inside crude oil. Is that forbidden, or is it not? Here is an area of great confusion and difficulty, which may be one that does not lend itself to legislation in any event, but certainly there is a great difficulty here.
Perhaps I might add one other example which was brought to my attention. There are not only gases that are, as it were, inside crude petroleum there is the case of butane, which may be used as a blend in petrol. These are all cases which hitherto have been free of the control that the noble Lord is seeking to persuade Parliament to give in this Bill. This is the point that I want to make quite simply. I have one or two wisecracks up my sleeve, but I will save them for later.
Lord HAWKE: May I ask the Minister precisely what he means by "offshore natural gas through pipes "?because this seems to have rather a wide definition.
The Earl of KINTORE: I am in some difficulty here because, again, under normal temperature and pressure, one of the natural gas liquids is natural gasolene, which is a liquid at normal temperature and pressure once it has been separated. I am no chemist or physicist, but these points have been brought to my notice. The noble Lord the Minister referred to the Continental Shelf Act, as I think it was. The great point now is that for the first time, instead of having to import our feedstocks, we are going to be naturally self-supporting and in fact we shall probably have a surplus of feedstocks for export purposes. To me
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this makes a very great difference. I have one other difficulty in regard to the Bill. Clause 8(1) on page 7, which we seek to amend, refers to, "premises in Great Britain". I should like to ask whether our production platforms are in Great Britain and, if they are, whether they can take off gas to work their own machinery and booster stations. If they are in Great Britain then, clearly, they will be rateable hereditaments.
Lord LOVELL-DAVIS: First, I should like to say that I am grateful to my noble friend Lord Wynne-Jones, who explained some highly complex points regarding gas and the value of this Amendment much more capably than I could ever have done. I should like to assure him that his interpretation is correct. This subsection provides that:
"No person other than the British Gas Corporation shall supply off-shore natural gas through pipes to premises in Great Britain, unless the supply is for industrial purposes."
"Off-shore natural gas" is defined in subsection (7) as:
"…natural gas won under the authority of licences under the Petroleum (Production) Act 1934, as applied by section 1(3) of the Continental Shelf Act 1964".
This provision spells out clearly that the British Gas Corporation have a monopoly in supplying off-shore gas through pipes for domestic and other non-industrial uses. It complements a comparable provision in Section 29(1) of the Gas Act 1972, which applies to other types of gas.
Lord HAWKE: The noble Lord has just answered me, but may I ask him a further question arising out of what he said? He has told us that the meaning of "off-shore" is as defined in the Bill. Natural gas is found off-shore all over the world. If it is shipped to this country in liquefied form in a container, is it caught by this subsection?
Lord LOVELL-DAVIS: No, I do not think it is. One of the problems is that we are dealing with specific Amendments and, with the greatest respect, noble Lords are tending to anticipate later Amendments and are running forward into the Bill, which is liable to confuse us all and to make the proceedings on this clause extremely repetitive. Therefore, I should be very grateful—I ask this not defensively, but because it would be

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for the general benefit of the Committee—if we could confine ourselves to the Amendment under consideration, because this is a complex clause. To continue with what I was saying in reply to my noble friend Lord Wynne-Jones, Clause 8(1) prohibits anyone other than the British Gas Corporation from supplying gas for purposes which are not industrial. The remaining subsections impose controls on supply for industrial purposes.
The noble Lord, Lord Strathcona and Mount Royal, referred to the supply of crude oil with gas. I should point out that this is not caught by the provisions. The supply of gas extracted from crude oil can be subject to first offer, if it is to be supplied for industrial fuel purposes. The noble Earl, Lord Kintore, raised the matter of premises in Great Britain and asked whether it would be possible to use gas without consent to work machinery on a platform. The answer is Yes; of course they would be able to do so. They are outside the Realm and are able to use the natural gas to operate their own machinery.
The noble Lord, Lord Avebury, asked me to consider the matter of definition and, if I may, I shall do so as we proceed with our examination of this clause. The noble Lord, Lord Hawke, acknowledged that I had answered his question about off-shore natural gas in pipes. I hope that I have covered all the points raised. I can only ask noble Lords once again to reject—
The Earl of LAUDERDALE: Will the noble Lord explain how it is that when gas can go as a liquid by ship, rail or road, it cannot go by pipe? What about the situation where natural gas is included in crude oil and is piped, and what about the transmission of butane as a blend in petrol?
Lord LOVELL-DAVIS: I am not sure that I follow the noble Earl. Is he asking whether we have any intention of controlling bottled gas or gas supplied by tanker, or anything of that kind?
The Earl of LAUDERDALE: As I understand the Amendment—and I saw it this morning for the first time—its object is to make sure that,
"…supply of gas through pipes shall mean and shall be restricted to…gas…in the gaseous state".
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But what about gas which is not in a gaseous state? It is not in a gaseous state when butane is transmitted by pipe as a blend in petrol; it is not in a gaseous state when it is included in crude oil. These are simple points which I should have thought the noble Lord could answer.
Lord LOVELL-DAVIS: We are opposing the Amendment, because we wish it to include not simply methane but the heavier gases, and therefore to include the liquids. The liquids themselves should be in the pipe.
The Earl of LAUDERDALE: Would it not be more effective if the noble Lord were to invite us to withdraw the Amendment and say that he will look at the points raised and at the wording and come back next time, because this is not satisfactory as it stands. I am sure he will admit that.
Lord LOVELL-DAVIS: I can certainly do nothing of the kind. I cannot possibly recommend that noble Lords should accept this Amendment.
The Earl of LAUDERDALE: What I am suggesting is that the noble Lord invites us to withdraw the Amendment and undertakes to look at it. That is all we are asking.
Lord WYNNE-JONES: I hope that my noble friend will agree, and that the noble Earl will also accept, that butane dissolved in anything else is not natural gas. Natural gas is the gas which comes off on site. If it is dissolved in something else, then it is part of petroleum and is not natural gas. The term "natural gas" does not describe a substance; it describes a material which occurs.
Lord STRATHCONA and MOUNT ROYAL: I started by apologising for ranging wide. I was aware of the trouble it might create, but I did not see any other way of proceeding and I still do not. I must take up one or two general points which the noble Lord made at the beginning. He talked about not being able to advance conservation without powers. Our main objection to that statement is that he has masses of powers which he does not use at the present time, and we should look askance at giving him more. I thought he rather gave the game away when he talked about powers.

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He seems to be unaware of something called the market place, which has given people greater power throughout this country for a long time, with a certain degree of success; and, indeed, we reached a good deal of international pre-eminence in the days when we used to operate the market place. Therefore, for the noble Lord to talk about handing over power to individuals outside Government control is a fair definition of the main political difference which lies between us. And thank God for it!, and I make no apology for reiterating it.
However, I shall try to behave myself as much as possible, because I have the same interest as the noble Lord in getting to bed at some time in the next two days, and I can sec a danger of our not achieving it. I regret to say that we shall be coming back later, either tonight or tomorrow, to many other Amendments in an attempt to define various terms in this Bill. Therefore I will leave those issues for the moment. About the question of definitions, I say merely that the definitions did not matter so much when not so many powers were associated with them.
The big problem which now arises is that the Government are taking all kinds of new powers and that we are coming back to the old retrospective argument to which again we shall address ourselves later. The plain fact is that the Government now propose a major change whereby licensees will have withdrawn from them the right which they had in the past to use various materials for various purposes. Surely the principal reason for the protective monopoly of the British Gas Corporation was that they were operating a distribution grid, that it would not be sensible if they were not to operate that grid and that in older to operate it a monopoly was required. We do not question that reason, but we question whether it is right to try to remove the competitive element that can be introduced through the supply of some of these other gases by licensees who have built up a very considerable and complex industry. And if this industry threatens, in a competitive way, the British Gas Corporation, I see nothing unhealthy about that; it does not affect their grid.
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The noble Lord then spoke about going back to the 1965 position and the fear that there would be technical advances which would seriously affect the competitive position of the British Gas Corporation. But we are in 1976 and the noble Lord is surely answering that point by saying, "We do not feel that there is any need to change the definitions." Various contracts are associated with the chemical industry which has grown tip alongside the offshore oil industry, and big industries have been established to use some of the parts which are extracted from natural gas. The issue to which we are addressing ourselves in this Amendment seems to us to be absolutely fundamental not only in political terms in resisting the Government in their belief that they can run operations which we do not think they are very good at but also as regards the straight practical issue of trying to extend control to something which is not needed to protect the British Gas Corporation.
Lord LOVELL-DAVIS: The noble Lord referred to the market price as the source of power. This is probably the reason why more and more countries have taken control over their natural resources, and the fact is that the market place has not been adequate to control this situation. I want to make it clear, however, that we have no intention of attacking or discouraging in any way whatsoever the petrochemical industry. The very words of the noble Lord, Lord Strathcona and Mount Royal, show our preoccupation. Several times he said, "This is big business". It is very big business; it is huge business; huge amounts of our natural resources are now being used by the petrochemical industry and it would be folly on our part not to require control. Under no circumstances, however, do we want to discourage, attack or run down the petrochemical industry—far from it.
Lord STRATHCONA and MOUNT ROYAL: I cannot agree with the noble Lord. I do not see the need for this mysterious word "control". The word "control" is becoming our watchword in the debate on this Bill, in the same way as "flexibility" was our watchword when we were dealing with the Petroleum and Submarines Pipeline Act.

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At least I can congratulate the Government upon having found a new word for us to argue about, and I suppose we should be thankful for that. However, I do not agree with the need for the word and that is the truth of the matter. I should very much like the Government to understand that whether or not it is their intention to interfere with this great industry which has grown up and although I quite accept that it may not be their intention to damage it, damage is
Resolved in the affirmative, and Amendment agreed to accordingly
what they are liable to inflict unless Amendments like this are agreed to. I sincerely hope that those who agree with me will support us in carrying this Amendment to a Division.
5.15 p.m.
On Question, Whether the said Amendment (No. 19J) shall be agreed to?
Their Lordships divided: Contents, 78; Not-Contents, 59.

CONTENTS

Aberdare, L.

Fraser of Kilmorack, L.

Penrhyn, L.

Alport, L.

Gainford, L.

Porritt, L.

Amory, V.

Greenway, L.

Rankeillour, L.

Auckland, L.

Gridley, L.

Redesdale, L.

Balerno, L.

Hailsham of Saint Marylebone, L.

Ruthven of Freeland, Ly.

Balfour of Inchrye, L.

St. Aldwyn, E.

Belstead, L.

Hatherton, L.

St. Just, L.

Berkeley, B.

Hawke, L.

Sandford, L.

Birdwood, L.

Hereford, V.

Sandys, L.

Bridgeman, V.

Hylton-Foster, B.

Sempill, Ly.

Campbell of Croy, L.

Killearn, L.

Somers, L.

Carr of Hadley, L.

Kinnoull, E.

Strang, L.

Carrington, L.

Kintore, E.

Strathclyde, L.

Coleraine, L.

Lauderdale, E.

Stralhcona and Mount Royal, L.

Cottesloe, L.

Long, V.

Daventry, V.

Loudoun, C.

Strathspey, L.

de Clifford, L.

Lucas of Chilworth, L.

Sudeley, L.

Denham, L.[Teller.]

Luke, L.

Swansea, L.

Digby, L.

Lyell, L.

Tenby, V.

Drumalbyn, L.

Macleod of Borve, B.

Terrington, L.

Dundee, E.

Merrivale, L.

Thorneycroft, L.

Eccles, V.

Meston, L.

Tranmire, L.

Elliot of Harwood, B.

Mottistone, L.

Trevelyan, L.

Elton, L.

Mowbray and Stourton, L.[Teller.]

Vickers, B.

Emmet of Amberley, B.

Vivian, L.

Exeter, M.

Northchurch, B.

Ward of North Tyneside, B.

Faithfull, B.

O'Hagan, L.

Young, B.

NOT-CONTENTS

Amherst, E.

Elwyn-Jones, L.(L. Chancellor.)

Northfield, L.

Amulree, L.

Norwich, V.

Avebury, L.

Gaitskell, B.

Ogmore, L.

Aylestone, L.

Goronwy-Roberts, L.

Oram, L.

Beaumont of Whitley, L.

Greenwood of Rossendale, L.

Paget of Northampton, L.

Birk, B.

Hale, L.

Popplewell, L.

Blyton, L.

Harris of Greenwich, L.

Sainsbury, L.

Briginshaw, L.

Henley, L.

St. Davids, V.

Brimelow, L.

Jacques, L.

Shepherd, L.(L.Privy Seal)

Brockway, L.

Janner, L.

Stedman, B.[Teller.]

Buckinghamshire, E.

Kirkhill, L.

Stow Hill, L.

Champion, L.

Leatherland, L.

Strabolgi, L.[Teller.]

Collison, L.

Lee of Newton, L.

Summerskill, B.

Cooper of Stockton Heath, L.

Llewelyn-Davies of Hastoe, B.

Taylor of Mansfield, L.

Darling of Hillsborough, L.

Lloyd of Kilgerran, L.

Wallace of Coslany, L.

Davies of Leek, L.

Lovell-Davis, L.

Walston, L.

Davies of Penrhys, L.

Lyons of Brighton, L.

Wells-Pestell, L.

Donaldson of Kingsbridge, L.

Maelor, L.

Winterbottom, L.

Douglas of Barloch, L.

Mais, L.

Wootton of Abinger, B,

Douglass of Cleveland, L.

Maybray-King, L.

Wynne-Jones, L.

5.23 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 20DD:
Page 7, line 44, at end insert:—
"( ) The Secretary of State shall give his consent to the supply of offshore methane under subsection (2) of this section and to the use of offshore methane under subsection (3) of this section when he is satisfied that such supply or use is for industrial purposes which do not consist of or include the use of offshore methane as a fuel. The said purposes are industrial purposes which do not consist of or include the liquefaction of the offshore methane or the use of the offshore methane as a fuel except insofar as the offshore methane is used to provide heat or other energy required:—

(a) for a process in which the offshore methane is used otherwise as a fuel; or

(b) where such a process is one of a series, for any further process in the same series, not being a process in which a bulk product is converted into manufactured articles;

and in determining whether any industrial purposes are as mentioned in this subsection the use of any gas derived, otherwise than as a by-product, from any offshore methane shall be treated as the use of that offshore methane."
The noble Lord said: This Amendment was formerly numbered 21, and I suggest it would be for the convenience of the Committee if we were to discuss with it Amendment No. 20U, which is consequential; No. 20V which contains an accompanying definition and also No. 34 which is consequential. I must declare an interest, because since the last occasion on which we discussed energy in your Lordships' House, in a debate in which I took part very recently, I have become a part-time consultant to an oil company.
With these Amendments we are raising a substantial point and giving the Government the opportunity to consider it and to explain the background to their clause. I do not propose to press Amendment No. 20DD, which would add a new subsection to the clause, but I would point out that it indicates a way in which the Bill could be changed if the principle were agreed. The present position, as my noble friend Lord Strathcona and Mount Royal indicated just now, is that Section 9 of the Continental Shelf Act 1964 governs the position where offshore methane is to be used for feed stock for chemical industries. The Government are then obliged to give consent: that is the present position.
Where natural gas and offshore methane in particular is to be used as a
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fuel, then the British Gas Corporation are given a special position. They have a monopoly for the domestic supply of natural gas and for non-industrial purposes. The Bill seeks to change that situation and it would give the Government the right to approve if natural gas was to be used for feed stock for industrial purposes. So as well as being used as a fuel, where approval is necessary, the Government are proposing that the present situation could be changed and that this sanction should be imposed. This Amendment would restore the obligation to give consent for industrial purposes. It would also leave liquefaction of offshore methane to a decision of a Minister. It would make that change and I should like to point that out to the noble Lord, the Minister. The reason for that is that there is uncertainty about the interpretation of whether liquefaction constitutes a use for the purposes of this legislation. Given a certain interpretation, the Government might be in a position where they would have no control over the export of liquid methane, and we recognise that it is desirable that the Government should be able to control bulk exports of liquid methane. So the Amendment covers that point.
Natural gas, besides being a fuel, can also provide feed stocks for the chemical industry. This second role as a feed stock will probably become more important for Britain since we know that there are considerable quantities of natural gas in the North Sea. I would remind your Lordships that the products of the chemical industry include fertilisers, plastics and synthetic fibres. There are a whole host of materials which are needed for daily life and which are produced, and can in future be produced, in greater bulk from offshore gas. The supplies would no longer be assured to the chemical industry if the Bill as it is now drafted were to go through and that is why we are suggesting that the subsection in the form of this Amendment would allow the Government to enable natural gas, and methane in particular, to continue to be used for industrial purposes without interference by the Government.
So far, the offshore gas which has been obtained from the British Continental Shelf has been mostly methane, but it can also contain ethane, propane and butane, and as my noble friend pointed

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out just now, propane and butane as liquids form liquid petroleum gas, which is a specialised and highly competitive business. Noble Lords will recognise that calor gas and other ways in which these gases are conveyed in bottles have made them useful in various ways in our daily life. It is not of particular interest to the British Gas Corporation that this business carries on. So far as I know, they have never objected to it; it is not part of their scheme for distribution. If the Government were to try and interfere in this business they would not have the expertise that is needed, and it seems most unlikely they will be able to acquire it.
I would ask the noble Lord a definite question. I would ask him whether it is the intention of the Government that butane and propane should be controlled under Clause 8? The Minister himself has demonstrated the fallibility of the Government—if I may have his attention for a moment. He has illustrated the fallibility of the Government because in the Second Reading debate the noble Lord, Lord Lovell-Davis, seems to have made a serious mistake in his own exposition of Clause 8. The noble Lord stated:
"The provision will also enable us to control the conversion of natural gas to methanol liquefaction. These are processes which waste gas and can be justified only in special circumstances."—[Official Report, 22 /3 /76; c. 468.]
The expression "methanol liquefaction" is a very odd one.
Lord LOVELL-DAVIS: If the noble Lord, Lord Campbell of Croy, will give way, it is unfortunately true—I have found cases myself when reading through the Committee stage—that it puts a great strain on the Hansard writers when we are dealing with technical subjects like this. In point of fact, I can clear that one up. I certainly did not say that, but was talking about methanol conversion which is wasteful of gas. I am sorry, but I have come across occasions on the debate last Thursday where the absolute opposite sense to what I said has unfortunately been given. I have taken steps to have this changed in the bound volume of Hansard. I am sorry, there has been a mistake which I did not detect. I will have a look at it.
Lord CAMPBELL of CROY: I seem to have touched on a delicate spot, and I am glad I was able to give way straight away to the noble Lord the Minister for him to agree that what appeared in Hansard, anyway, is nonsense. I am sorry however, that although this is a technical subject, the noble Lord was not able to get the necessary correction made before Hansard went to print, because leaving it to the bound volume, of course, means that it will be a long time before any correction can be made. But the noble Lord has agreed that what he said there was nonsense, and it certainly shows how a mistake like that can be made from the Government Front Bench, and apparently not noticed even for a day or so.
One of the derivatives of methane and natural gas from offshore is ammonia. I must remind your Lordships of the very wide range of substances which are products of ammonia from offshore gas. Ammonia can be produced in this country from offshore gas in much greater quantities in future, and, in turn, this will help the production of dyestuffs, pharmaceutical preparations, the preservation of rubber latex and the prevention of corrosion in boiler plants and power stations. It is also used in refrigeration. I have mentioned also printing processes, and the flameproofing of textiles which are other examples of the uses to which ammonia can be put. As I said at the beginning, this is an extremely important matter on which we should like to have the reaction of the Government now. Therefore, I beg to move Amendment No. 20DD.
5.35 p.m.
Lord LOVELL-DAVIS: This Amendment to which the noble Lord, Lord Campbell of Croy, is speaking, would restore methane to the régime of Section 9 of the Continental Shelf Act 1964, which means that consent would be mandatory if the gas was to be used or supplied for non-fuel purposes. Since the 1973 oil crisis, natural gas has made a growing contribution to the United Kingdom energy economy, and now represents 17 per cent. of our total energy demand. But since supplies of natural gas are finite, it is essential that we use it where it will bring the maximum benefit to the nation. It is impossible to organise pipelines and plan supplies if large quantities

1939
of gas are outside the control of British Gas or the Government.
The change from mandatory to discretionary consent which we are proposing in Clause 8 of the Energy Bill is in no way directed against the petrochemical industry. It will merely mean that the Secretary of State will be able to decide on the optimum use of the gas which may well turn out to be petrochemical use. It is accepted that the value of the gas is enhanced by using it as a feedstock for some petrochemical purposes. But there are other cases such as the conversion of gas to methanol—if I can have the attention of the noble Lord, Lord Campbell of Croy; that is what I said, and I can now make it clear—where its use is wasteful. In the interests of conservation of gas, the Secretary of State must be able to differentiate between valuable and wasteful uses of gas.
If methane were to be excluded from the discretionary control of the Secretary of State when used for non-fuel purposes, this could affect the British Gas monopoly of supply since methane is the main component of the natural gas supplied through the national network. Also, the control of the Secretary of State could be considerably eroded. There is also the physical problem of separating methane from the rest of the natural gas for the purpose of control, and difficulties would be caused by having different regimes for different components. In spite of the representations my Department has had from industry, I should like to mention that in the past 12 years there has been only one case where a licensee has sought consent under Section 9 of the Continental Shelf Act 1964, to use a very small quantity of natural gas himself for petrochemical purposes. I understand that there have been no cases in which consent has been sought for supply.
There need be no uncertainty in planning investment. I am sure that if an application for consent for the use or supply of natural gas for non-fuel purposes is made in good time, a decision will be quickly given. I should remind your Lordships that when the special provisions for non-fuel use were introduced, petrochemical use of gas was negligible, but now supplies to the petrochemical industry account for nearly 10 per cent.
1940
of the total market in this country. The Government are not claiming that this is a bad thing, nor do they want to deter future petrochemical use of natural gas. But the more closely one looks at the problems involved in meeting the seasonal changes in demand, of designing onshore pipeline systems to meet the national demand at minimum price, the more one sees the need for the nation's gas supplies to be looked at as a whole. A situation in which an unknown but very substantial supply of gas is totally outside the scope of co-ordination is bound to lead to an increase in the costs of meeting the overall national demand. It is for these reasons that I ask your Lordships to reject this Amendment.
I might add that the noble Lord, Lord Campbell of Croy, asked whether propane and butane would be controlled. The powers will apply to propane and butane, but I cannot anticipate the decision of the Secretary of State. We have no intention at all of interfering with the natural operations of the LPG industry.
The Earl of LAUDERDALE: As always, I find the noble Lord's speeches of great interest. He has now assured us that the Government have no intention of interfering with the proper operation of the natural gas industry. A little earlier, he said that it will be for the Secretary of State to determine the optimum use of the gas, and he said that, of course, no uncertainty with regard to investment policy need result from this. Sometimes one feels that the noble Lord and his colleagues are a little pained when we raise queries.
Will you press a little slower, said a Front Bench Labour Peer,
There's a purpose in our drafting but it must not be too clear.
How unjustly some Conservatives see dangers in advance,
They suspect it's all a swindle; won't you give our Bill a chance.
The Government have said over and over again that they want investment, they have said over and over again that they want investment in the North Sea. They have said that their proposals do not in any way inhibit or discourage, or need not inhibit or discourage, investment. But surely, since the noble Lord has assumed an appropriate mantle of humility for the liturgical season we are in, and has admitted that he was not quite right the

1941
other day, would he not now admit that investment in fact has been hideously discouraged by recent legislation? When the Government say, "We have no intention to discourage", when the Government say, "We do not discourage", when the Government say, "Our legislation has the purest intentions", we are entitled to look back at the events of the past 18 months and see some of the things that have happened. Surely the noble Lord cannot deny any longer that there has been a great slowdown both in exploration and development in the North Sea.
He and his noble friends told us only a matter of months ago that it was all nonsense to say there was a slowdown, that it was all nonsense that the diminishing demand for gravity platforms reflected any slowdown in development purposes. Now, of course, one reads the headlines in the Press, "Ardyne base could close next year", this when the Government propose another base not very far away. We read, "Urgent bid to save oil rig builders". I have just taken two newspaper clippings of recent dates. Surely the Government cannot now deny that there has in fact been a slowdown and a discouragement of investment resulting from their policies. Therefore, when they say the Secretary of State can and must determine the optimum rate of this or that, surely in ordinary common prudence they would have to admit from recent experience that the Secretary of State's judgments are not always as satisfactory as one could wish. The Secretary of State is not the Lord Almighty.
Lord AVEBURY: If I may interrupt the noble Earl, could he tell the Committee how much additional investment, if any, he thinks is required for us to be able to use all the supplies of methane, which is what this Amendment is about, which will be available from our own sector of the North Sea and the Frigg field between now and, say, 1985?
The Earl of LAUDERDALE: I am much obliged to the noble Lord for his question. I cannot answer it without notice, and I do not think anyone else could. What is damaging is that unless the Government's obligation to allow offshore methane as a feedstock continues as before, there could, and very likely would, be a danger, as my noble friend
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Lord Campbell of Croy pointed out, to ammonia production. Surely, this is something which must be close to the heart of the noble Lord's own Secretary of State. He has proclaimed the desirability of a siege economy and import controls. Ammonia production is very relevant to home food production because of its relevance to fertilisers. It is relevant in other ways, too. Ammonia is relevant, apart from the examples given by my noble friend, to anti-corrosion methods in refineries; it is relevant to effluent control; it is relevant to the printing industry; it is relevant to industrial, and, for that matter, also military explosives; it is relevant to animal feeding stocks; it is relevant to plastic moulds and fibres. All these are industrial uses that are important.
We are saying that it is not good enough for the Government to say that the Secretary of State can and will and is able to determine the optimum use. No Secretary of State has ever yet in history succeeded in determining the optimum use. If the Secretary of State's wisdom is so self-evident, then look at the history of the past 18 months with regard to the Government's Oil and Submarine Pipelines Bill and its effects, the taxation and participation arrangements in the oilfields, and so on. The fact is that the thing has slumped. They know it has slumped. They are now getting frightened. That may explain the slight note of penitence and humility we heard from the noble Lord. I know, of course, that he does not mean to be arrogant at any time. When he confesses that he had been wrong the other day, perhaps he would also take note that this is not an area where a Secretary of State, where any Government, can literally determine from their own resources what is the optimum use. That, surely, is the heart of the answer in his reply to this very sensible and valuable Amendment.
Lord AVEBURY: Listening to the noble Earl, Lord Lauderdale, one would think that the essential supplies of ammonia and other petrochemical products derived from methane would dry up in consequence of the provisions of this Bill, that investment would be insufficient over the next few years.
The Earl of LAUDERDALE: I am not saying that it would all dry up. What

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I am saying is that Government control is liable to make free enterprise dry up; indeed it is one of its purposes. In this particular case there is a threat to the existing right to use offshore methane.
Lord AVEBURY: The noble Lord dwelt on the subject of ammonia and its importance to the national economy, which nobody is disputing. He mentioned some of the products derived from ammonia which are of tremendous importance, and that nobody is arguing about. What we are arguing about is whether the powers taken by the Government in this Bill would in any way interfere with the production of ammonia to meet national requiremets, or perhaps production of any other petrochemical which is derived from methane.
The Earl of LAUDERDALE: If the noble Lord would allow me to interrupt him once again, surely he is here striking, as we are, at the political heart of the matter. We are saying that the Secretary of State, whoever he may be, whatever Government he may be in, even if it were a Liberal Secretary of State, could not conceivably determine the optimum use. It amazes me to hear a noble Lord from those Benches pleading for this kind of control. But I will not interrupt the noble Lord again; he has been very patient.
Lord AVEBURY: We are not in the 19th century any longer and the Liberal Party no longer believes (if the noble Earl would like to catch up with events) in the unrestricted play of free market forces. We do not believe, any more than the noble Earl does, that the valuable methane, which, as Lord Lovell-Davis said, would probably be used as petrochemical feedstock in any case, should be burned under the boilers of power stations. I daresay I take the noble Earl that far with me in my argument. If he is saying that it is legitimate for the Government to give directions to the Central Electricity Generating Board—and for that matter the Scottish Boards if they felt inclined to use methane as a fuel—not to do so, because it is too valuable a substance to use in this way and must be conserved, probably as a chemical feedstock but certainly for what are called premium uses such as domestic heating—if the noble Earl goes that far
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and says that it is perfectly legitimate for the Government to have this power of interference with the free decision of the CEGB to burn the valuable substance of methane under the boilers of power stations, why does he think it is impossible, or not sensible, to go further and say in the future we must contemplate being able to use similar powers to control the use of methane for other purposes, which might equally not be right for the national economy though they may well be right for the CEGB or whatever user one is considering?
I intervened also to ask the noble Earl the question how much additional investment does he think is required in order to exploit the supplies of natural gas being produced in the North Sea and additional supplies we have contracted to buy from the Frigg field, and any associated supplies of gas which may arise from the fields now being developed. He said he was not prepared to give an estimate without looking into the matter more thoroughly. But at the same time he was prepared to say that investment was drying up and in the absence of the passage of this Amendment there would be a serious threat to the uses we are going to make of methane. How can the noble Earl maintain these two propositions at the same time?
The Earl of LAUDERDALE: The Government maintain contradictory propositions.
Lord AVEBURY: It is the noble Earl who advanced the proposition that investment is going to be seriously jeopardised if we do not accept this Amendment, but he has not taken the trouble to find out what volume of investment is required in order to sustain the usage of methane from the North Sea, and from the Norwegian sector of it as well, which is desirable in the national economy. Plans have been made for the use of existing natural gas from our own sector of the North Sea, from Frigg natural gas when it becomes available in 1976, and there is no problem with investment in the natural gas sector of exploiting the North Sea. The noble Earl is perhaps getting a little confused with the situation regarding oil, as one might gather from the discussion which he embarked on of the platforms, the orders for which

1945
have certainly dried up. The noble Earl must realise, if he gives the matter further consideration, that the ordering of platforms is connected with the development of oil, and although there is some natural gas associated with it we have already incurred the vast bulk of the investment necessary to exploit natural gas supplies from the North Sea when we developed the trunk grid.
The noble Earl finally said that it is not for any Government to determine the optimum use of natural gas, and I suppose he would also extend this argument to oil. I take a very different view because I think that in years to come we will find that the supply of hydrocarbons In general from the North Sea is an increasingly valuable asset in relation to shortages of supply in the world, and that in the later 1980s, when these supplies may begin to decline, we shall be entering again into the world market in a situation very much less favourable than that which we encountered in 1973 when, as the noble Lords will recall, oil prices were pushed up sharply by the OPEC countries.
Therefore, it is our duty, and our national duty, to accept any measures which can be advanced by the Government to conserve supplies and to make sure that they are only used for the most absolutely essential national purpose. If we do not do this, by the end of the 1980s, certainly before the end of this century, our descendants, and those who succeed us in Parliament, will say, "What profligacy! How could they have used up all these valuable resources of hydrocarbons from the North Sea, leaving nothing for future generations?" I think in principle, contrary to the noble Earl, Lord Lauderdale, that powers have to be taken by any Government, and I believe that the same powers would have been taken for the same kind of reason if we had had a Tory Government in power now. I think, if anything—and I am tempted to embark on the kind of Second Reading speech we heard from the noble Earl on the last Amendment, but I will resist it—the powers of control which we find in this Bill will prove to be inadequate in the light of experience in the later 1980s.
Lord MOTTISTONE: May I just say a few words? Surely what the noble Lord, Lord Avebury, has been saying
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presumes that the better people to conserve are the Government, rather than anybody else? That is a presumption which I suggest needs seriously looking at before we commit ourselves to that as being the basis for every argument. The other point that is of interest is that the noble Lord, Lord Lovell-Davis, I think said that since the 1964 Act, to which reference has been made, there has been only one very small application for the use of this gas, which might indicate that perhaps it would be as well not to give Draconian powers to the Government to control everything just for the sake of it but to wait and see what happens. There is a lot of time to pass legislation, if there are people rushing forward to take advantage of a situation which might come about if this Amendment is passed, a lot of time to stop the situation when it is necessary. It seems to me that the attitude of mind of the Government, which wishes to have control virtually for its own sake when they have no evidence that this has been necessary in the past, is surely one which should be questioned very severely, and I should have thought therefore that the Amendment we have before us is a reasonable one.
5.55 p.m.
Lord LOVELL-DAVIS: May I first of all say how grateful I am to the noble Lord, Lord Avebury. I entirely endorse what he said. I thought it was an extremely sensible view on the overall situation. What he says is exactly right about control. I do not understand why we should be looking to exclude a particular section of industry in this way. I utterly reject what the noble Earl, Lord Lauderdale, said, about this "very discouraging picture". The basic fact is that production is forging ahead. Huge investment is involved here. It is not perhaps surprising that there is some pause; the fact is that production is moving ahead, and in utterly rejecting the noble Earl's case I only say that I wish I had the time in this Committee stage to compose and declaim our case in verse.
The noble Lord, Lord Mottistone, mentioned energy conservation. I do not know who, if not the Government, is actually going to control this. Who is going to implement any programme of energy conservation if not Governments? Governments, surely, have to do it, and

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they are doing it all over the world. The noble Lord spoke of Draconian powers. This is the most abused word in politics. One can in no circumstances call any of the powers we are trying to take in this Bill, Draconian. If you look at the background of this word it does not mean the sort of powers that we are taking in this Bill. They are far from Draconian.
The other point he made about waiting, as I understood it, until the chaos is upon you before you actually get your powers right, I utterly reject, especially when one has, as we have, an opportunity to take the powers now which will prevent a chaotic situation from developing.
Lord MOT FISTONE: Would the noble Lord confirm that in his first speech on this Amendment he in fact said, "Really, I do not see what you are fussing about because there have been hardly any applications"? I think there was one small one which he quoted. He said, "Therefore, why not have the regulations that we are asking for?" Is that not the case?
Lord LOVELL-DAVIS: I said that there had over the past 12 years been only one case where a licensee had sought consent under Section 9 of the Continental Shelf Act. This was a very small quantity. I did indeed say that. I do not think that in any way invalidates the case for seeking the powers that we are seeking under this Bill. Finally, I should like to get this matter straight—I know I have mentioned it two or three times; but I take it rather seriously and I should like to satisfy the noble Lord, Lord Campbell of Croy, on the matter. I did in fact say:
"The provision will also enable us to control the conversion of natural gas to methanol and liquefaction".
I am afraid what happened was that the "and" was omitted in Hansard. Having said that, may I once again hope that the noble Lord will withdraw his Amendment.
The Earl of LAUDERDALE: When the noble Lord says that production is forging ahead, we all know that. This is production made possible by investment decisions taken nearly 10 years ago. He knows that. It is an old debating trick to say, "Look how it is
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going ahead now". It all arose out of investment taken a long time before this Government laid their fell hand on the matter. With regard to the observations of the Liberal dirigiste sitting on the other Benches, I was not talking of burning gas as a premium fuel in power stations; I was talking about gas as a petrochemical feedstock, which is quite different. I must say that I think that the noble Lord could not have understood what I was saying when he misquoted me in that way. When we are talking about determining the optimum use, I was not saying that we can determine it, or the Government determine it internationally; what I was saying was that the Government were trying to determine it domestically. This is not something the Government can do; it is something only the market and the industry can do.
When the noble Lord talks about investment, the short point is that investment has been made extensively. Investments have been made in the gas fields of the North Sea on prevailing conditions and on the assumption of free access for natural gas for use as petrochemical feedstocks. Now that that free access is no longer assured, the confidence of investors must be called into question, and that is the only point I am making.
Lord AVEBURY: The noble Earl, Lord Lauderdale, has provoked me into intervening once again. The investment which took place leading up to the exploitation of natural gas was under the gas borrowing powers provisions of 1966, and that was also under a Labour Government, so he is quite wrong in thinking that legislation passed under Labour has in any way inhibited investments in the North Sea. I took part in those debates and, speaking from memory, the Gas Council, as it was then, was asking for a further £1,200 million, which was thought to be far too much by the Tory Opposition at the time. Incidentally, Mrs. Thatcher, the present Leader of the Conservative Party, was the Tory energy spokesman at that time and she was vigorously opposing the borrowing powers of the legislation. She was also saying at the time—I reminded the noble Lord, Lord Lovell-Davis, of this some weeks ago—that as a result of the policies of the Government, oil rigs and gas rigs were being driven away

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from the North Sea, that they were going across to Holland and that we would not succeed in attaining the targets that were set out in the 1965 White Paper showing that natural gas would account for 15 per cent. of our energy requirements by 1975. The right honourable lady was absolutely wrong and the noble Lord, Lord Lovell-Davis, has reminded us this afternoon that we are now up to 17 per cent. of our energy use provided by natural gas, and this under legislation criticised by the Tories 10 years ago.
The noble Earl also reiterated that the investment was made under free access provisions; the legislation that operated at that time. But he could not have been listening because the noble Lord, Lord Lovell-Davis, told us that only one application was made under the 1965 Act, and the way in which people have been able to acquire supplies of methane is by negotiation with the Gas Council, as it was then, and as they can do still by negotiation with the Gas Corporation. There is nothing in this Bill at all which prevents the would-be user of methane as a feedstock from going to the Gas Corporation and contracting to buy any quantities he may require, and one of the largest users who negotiated a particularly favourable contract in the early days was ICI. There was some argument not long ago about the Gas Council in the initial days of exploration in the North Sea granting them extremely favourable terms over a long time-scale. It was said that the contract should not have been entered into because they were now buying the gas from the Corporation at prices very much lower than other industrial users which had not had the foresight to enter into such long-term contracts.
The fact is that industrial users have never had any difficulty at all in obtaining whatever supplies of methane they require for use as a chemical feedstock, and they will have no greater difficulty because of the provisions of this Bill in purchasing whatever quantities they require from the Gas Corporation. But at some time in the future—and this is what we are talking about—a user will have access to supplies of his own and will require to use it in a manner which may be absolutely right and commercially sensible from the point of view of his own company but which will be contrary to the national interest. The noble Earl and
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his colleagues are saying that they do not want the Government—not this Government but a future Government—to have powers to control that situation. I hope that they will think again and will not press the Amendment because, if they do so, in a few years' time they will look as foolish as Mrs. Thatcher looks now when one looks back on her remarks on the 1965 borrowing powers.
Lord CAMPBELL of CROY: I do not think the noble Lord, Lord Avebury, could have been listening at the outset of the discussion. I said at the beginning that I had no intention of pressing the Amendment, for reasons which I will not repeat now. The noble Lord, Lord Lovell-Davis, replied to one of my questions and that was whether offshore propane and butane was to be controlled under this clause, and his answer was in the affirmative. I regret that the noble Lord, Lord Wynne-Jones, is not in his place and did not hear that remark because I am sure that he would have had something to say about it and, like me, might not have agreed with it. The noble Lord, Lord Lovell-Davis, gave an assurance that it was not the intention of the Government to intervene in what he described as the LPG industry—the liquid petroleum gas specialised business—and I think he accepted that it was a separate specialised business. In that case, we can see no point in including butane and propane in Clause 8, and that was the reason for our definition of offshore methane and for drafting the subsection we proposed with that accompanying definition.
As to the real reason for the Government proposing these new controls, I do not think that we have had a satisfactory explanation. The noble Lord, Lord Lovell-Davis, spoke of the need for coordination, but I detected little else in what he said. What the Government are proposing is that there should be controls over offshore natural gas for use as feedstock for industry. There are already controls where it is to be used as fuel, for reasons which we have discussed and to which we are not objecting; but do the Government think that Government officials will be better situated, in providing an extra layer in these procedures, to improve the coordination or the efficiency of the chemical and other industries using natural gas as feedstock? In my opening statement

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I said that I thought there would be difficulty in acquiring the necessary expertise to make these decisions. These are decisions which have to be taken by experts in the industry; the whole question of what is to be the optimum use of some offshore methane at a particular time is one on which it would be exceedingly difficult for Government officials to advise Ministers. They would certainly have to lean very heavily on advice from the industry and one therefore asks why it is necessary to try to insert these controls in the procedure which is now operating.
I think that it was Lord Avebury who spoke of plans that are made for years ahead for the industrial use of offshore natural gas and he mentioned that they had been drawn up for some years ahead. I am certain that more plans are being drawn up or are being considered now for natural gas which is in fields still to be developed in the North Sea, fields that have been discovered and thought to be commercial and which are to come into production in the future. However, it is difficult for the industry to make such plans if it cannot be sure that the Government will not step in to veto or reduce the amount of the gas which they propose as part of those plans which should go to feed-stock. These plans need to be made, including the building of ammonia and other plant, for 10 or more years ahead. Now the industries concerned will have at the back of their minds the thought, "We can make these plans, but the Government may step in at a certain moment and simply veto the quantities which we are proposing."
The noble Lord, Lord Avebury, raised the general question of the rate of extraction and we know, from having heard him speak in previous similar debates, that he is in favour of conserving natural gas in our continental shelf for a long period. So far as Lord Lovell-Davis is concerned—I noticed him thanking Lord Avebury—I think that there is no difference between both Front Benches, in that our object is to get as much crude petroleum and develop our offshore oil fields as much as possible in the next five years. We are trying to get ahead without delay during that period. We know that the Government have, in the Petroleum and Submarine Pipe-lines Act,
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taken powers for depletion control. Those powers are limited, but they are there to control the rate of depletion later if that should be necessary. I am asking the Government a further question, because the noble Lord did not give an adequate answer to the question as to what was the real reason for seeking these controls. Is there another purpose in proposing the new controls over offshore natural gas for use for industrial purposes? Is there a particular reason for controlling natural gas to be used for manufacturing and not for fuel?
The only addition which appears to be necessary is to avoid sizeable exports of liquid methane. That might not be desirable but it is covered by the Amendment. Do the Government visualise the British Gas Corporation entering the chemical industry? The noble Lord said that he could give us an assurance that the Government had no intention of interfering with the LPG business, but one wonders whether this control is being sought in order to extend the operations. Hitherto, the role of the Gas Corporation has been perfectly clear and has been understood and accepted by the country. The Corporation has priority in the supply of gas for fuel for domestic and nonindustrial purposes. One naturally wonders whether the Government are thinking in terms of the Gas Corporation extending into this completely new field of activity.
Lord LOVELL-DAVIS: I want first to clarify that last point. I do not think that there is any question of the British Gas Corporation entering the petrochemical business but, frankly, I do not know whether they are in a position, in any event, to do so. So far as I am aware that is not the Corporation's intention and no such thought is in our minds at all in this legislation. So far as the normal LPG fuel industry is concerned, this is far smaller than the volumes of propane and butane which will be produced from the North Sea. It is clearly important for energy policy that the use of these new large supplies should be correct. One possibility is increased petrochemical use. I do not know whether the noble Lord asked another question which requires a reply. I hope not, for we have spent a great deal of time on this clause and we have a very long way to go to get through the Bill. I hope that we shall be able to move faster from now on.
Lord CAMPBELL of CROY: I have occupied a great deal of your Lordships' time. I shall say straight away that I do not intend to spend much time speaking on later Amendments. However, the present Amendment was an important one on which, as I said, we hoped to get statements from the Government. I am grateful to the noble Lord for what he has said, though, as I indicated, we do not regard it as very satisfactory. However, in the light of the debate which has taken place, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.15 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 20C:
Page 8, line 21, leave out ("except for the purpose") and insert ("which results in the production of liquid methane except such small quantities of liquid methane as may be produced in the course").
The noble Lord said: This is another Amendment on the question of rights for suppliers. I fear that we are back in the liquefaction and methane area again. However, this is an Amendment of considerable consequence, the lack of which would. I understand, cause a good deal of concern to the industry. Here, we are seeking to maintain the freedom for the suppliers to extract and process the ethane, propane and butane from the natural gas mixtures and to handle such products as liquids, while at the same time retaining protection for the British Gas Corporation to prevent its being denied supplies of methane as a result or the liquefaction processes involved in such activities. We have already had considerable discussion about that. We have also said before that liquefaction is an essential process in the industry's treatment and handling of natural gas.
The Amendment purports to recognise that the production of liquid methane could deny the British Gas Corporation access to its prime source of specification gas to meet its statutory supply obligations. I hope that that is adequately covered in the Amendment. However, in our contention, there is no justification for the application of controls on the use of liquefaction processes for reasons other than producing liquid methane. The only purpose one can divine here is the desire to withhold consent for such processes
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in order to deny the supplier the outlet of his choice. That, we believe, would run the risk, once again, of distorting a very sensitive market.
The industry sees many dangers if this is done. I shall pick out three: first, the industry could be denied the ability to supply an export market for ethane or liquefied petroleum gas. Surely that would be contrary to the spirit, if not the letter, of the Treaty of Rome and our obligations under that Treaty. Secondly, a highly technical point which has been represented to me and which I pass on to the noble Lord, Lord Lovell-Davis, and ask him whether it is something which he has considered, is whether this would not deny to the industry the freedom to use the supply flexibility which it has built up over the years—I recommend that word "flexibility" to the noble Lord as being something which he normally accedes to—to balance from offshore sources the United Kingdom liquid petroleum gas supply and demand? Incidentally, this is permitted under subsection (5). The refinery production of LPG varies considerably throughout the year and, at times, has to be supple-mented by imported material to match the equally seasonal demand for these products. There is a danger that any control would cut across that flexibility.
Thirdly, might it not deny the industry the use of its supply flexibility to serve the LPG markets from their nearest and most convenient potential source of United Kingdom supply, rather than having to concentrate on imports or products from refineries? Clause 8(3)(b) allows liquefaction,
…for the purpose of providing a supply to the British Gas Corporation…"
or to supply another person where the consent of the Secretary of State has been given. But we believe that these exceptions would not in any way mitigate the unwarranted restraint imposed by the other subsection. We have spoken about this in another context. The liquefaction processes are used to extract the other gases from the methanes and to separate the other gases into their marketable components. Sometimes they have to be stored separately, and, furthermore, there are occasions when it is more economical to supply LPG in a particular form.
I appreciate that these are highly technical arguments, but we have said many

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times this afternoon that against our best wishes we have been dragged into technical areas into which we do not believe it is wise that we should stray. It seems to us that under this clause, as it stands, there would also be a situation where consent would be required for the rather common sense notion of possible liquefaction at remote locations where there might not be a market for piped natural gas; but the separation of the LPGs was essential if they were to be recovered, extracted and used. Perhaps I should leave it at that until I hear what the Minister has to say in reply to our suggestion that for the reasons I have given he would be wise to allow the Amendment. I beg to move.
Lord LOVELL-DAVIS: The situation is precisely opposite to that which has been set out by the noble Lord, Lord Strathcona and Mount Royal. Far from those of us on this side trying to confuse the Committee by technicalities, I get the distinct impression that noble Lords opposite create an enormous smoke screen of technicality. I notice that every Amendment we come to seems to spread out into all kinds of minor technical points. It is particularly noticeable that this is happening at this time, and I wonder what kind of technical advice lies behind this. I have already referred to the purpose of controlling liquefaction. I thought that the noble Lord was to deal with this Amendment when he raised Amendment No. 19J. The purpose of controlling liquefaction is to avoid unnecessary wastage of gas. There is no inherent reason why that should be applied only to methane and not to the other gases. It will make sense to liquefy propane and butanes in many circumstances, and the Secretary of State will recognise the validity of such cases.
These powers are not required as export controls. I have already made that point. We are not proposing controls on exports made in gases of liquid form. I have also shown that we fully recognise the EEC consideration that any Secretary of State who deliberately used his powers under this clause to thwart exports of the Community might find that he was acting in breach of our EEC obligations. Paragraph (b) has brought the liquefaction of gas within the context of use and thus subject to the Secretary of State's consent.
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I do not think I can add more other than say that this is wasteful. It is necessary that it should be under his control, unless the process is for the purpose of any supply to British Gas or any supply already covered by consent. The use of supply from an oil refinery is covered by Clause 10. As I have already said, the use of a supply provided otherwise than through pipes is specifically excluded. We have, I repeat, no intention of controlling the use of bottled gas or gas supplied by road tanker. The noble Lord raised a number of points on this but, frankly, I thought that they were technical I might be wrong, or I might be making a misjudgment, but I felt that to some extent they were a smoke screen. I cannot go into great detail in answering the noble Lord at the moment, and I hope that he will feel able to withdraw the Amendment.
Lord STRATHCONA and MOUNT ROYAL: We have arrived at a rather unsatisfactory situation because it seems that the noble Lord is saying, in effect: "Don't worry, everything is all right. We have the best intentions". I would not question the noble Lord's intentions, although I might question the intentions of some other people. The difficulty in which we find ourselves is that we have taken the trouble to discuss these matters at some length to try to understand what they are about. I am perfectly prepared to concede that our degree of success in understanding what this is all about may appear somewhat limited. I should not regard that as a terrible disaster because this is a very complicated matter. I cannot escape the feeling—and this bears out what we have been saying throughout—that the Government are close to blundering into an area where they are out of their depth. I have produced three specific cases which the noble Lord has suggested amount to putting up a smoke screen. I find that, to a certain extent, we tend to operate in a fog or in a gas, or-whatever one cares to call it. It is sometimes a little easier for me to understand the siutation if I can get specific examples of the kind of reservations and worry felt by those who work in the area we are considering. Those of us who do not work in that area cannot be expected to have the comprehension of those who do. I freely confess my humility in this connection, and I hope that the noble Lord

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might include himself in that category, and I should not be surprised if that went for some of the people in his Department too.
We are saying to him that we have identified a number of possible problems which might arise. We are assured by the people who work in this industry that to them these are not small technical problems, but very major issues, which would both seriously disrupt their operations and work contrary to the best interests of everybody in this country. I do not think it is fair for the noble Lord to say that he will not answer my questions because he thinks that they are a smoke screen. These points have been put forward seriously. What the noble Lord has said merely makes me more worried than ever, because it appears that the Government are unwilling, or unable, to understand—
Lord LOVELL-DAVIS: Will the noble Lord please give way for a moment? Frankly, the noble Lord lost me on a number of the points he raised. I shall certainly write to him and answer these when I have had an opportunity to look at Hansard to see precisely what it was that the noble Lord required answering. One of the points I think he raised was to do with unavoidable liquefaction. The fact of the matter, as I understand it, is that the Secretary of State could always cover unavoidable liquefaction cases by a general order, and would consider doing so. But in respect of the other matters which the noble Lord raised, if he would like me to write to him and would agree to withdraw the Amendment, then it would certainly be up to him if he wished to return to them during Report stage.
Lord STRATHCONA and MOUNT ROYAL: The noble Lord is now talking in an altogether different fashion from that which I understood him to be adopting when we started. I must meet an offer of that kind. I was not aware that I had talked about unavoidable liquefaction, but it is quite possible that I did. At any rate, I was going to suggest that it was essential for us to force the Government to pay attention to these points by inviting your Lordships' Committee to divide on this Amendment. However, if the noble Lord is saying that he will seriously consider the representations we have
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made and will discuss them with us, perhaps by letter, when we can see whether they meet the points, then I would suggest that we defer this until Report stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.32 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 20D:
Page 8, line 25, at beginning insert ("Subject to subsection (6A) of this section").
The noble Lord said: This is a paving Amendment for Amendment 20R, and I would therefore suggest that Amendment No. 20R should be discussed with this Amendment No. 20D, which leads the way for it. I can deal with this quite briefly. In Amendment 20R we propose a new subsection, subsection (6A), under which the Secretary of State would give specific consents in each particular case falling within an order of general application; and then, under our Amendment, such specific consents would not be withdrawn even though the general application was cancelled or annulled.
The reason for this will I think be clear to noble Lords who realise how much industry are assisted if they can plan ahead and, if they have been given a specific consent, they know that they can count on it and that it will not suddenly be withdrawn or altered thereby affecting their plans for perhaps some years ahead. This Amendment is therefore designed and is necessary to obtain the security of supply of natural gas which is needed when an investment has been entered into and when industry are committed. British industry will not be able to plan ahead with confidence unless they can be sure that a specific consent will not be subject to withdrawal at short notice. I beg to move.
Lord LOVELL-DAVIS: As the noble Lord, Lord Campbell of Croy, has said, we are considering this Amendment in conjunction with Amendment No. 20R. I have already I think spent quite a part of this afternoon and evening assuring the noble Lords that this Government do not wish to put companies' investments at risk, and I can assure them that, in exercising his powers under this clause, the Secretary of State would certainly not behave unreasonably. However, I accept that companies may be looking for more assurance, and I am prepared to examine the position further to see in what way

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we may be able to help. I hope that will satisfy the noble Lord.
Lord CAMPBELL of CROY: I am naturally glad to hear the noble Lord say that he is prepared to look at this to see what can be done in this direction. I think he will know from what I have said what is required here, and I hope he will go the whole way; but, of course, in the light of what he has said, at this stage I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 20E:
Page 88, line 29, leave out ("original").
The noble Lord said: This is a probing Amendment. We should have moved another Amendment to go with it, which would be, in line 11 on page 9, to leave out the word "original". This is genuinely a probing Amendment. We are not really very sure why the word was included. The question is: what specific meaning is attached to this word "original" in the phrase "original licensee", and what is the position of a licensee who, with the Government's consent, has "farmed in" to a licence? Because he is clearly not an original licensee. I hardly dare to say it, but would it not have the happy effect of excluding the BNOC from existing licences into which they appear to be, as we see it, trying to shoulder their way? I hate to help the Government in this way, but perhaps in hearing the answer to the question we may get some guidance as to what it was that they had in mind when these words were included in the Bill. I beg to move.
Lord LOVELL-DAVIS: I wonder whether the noble Lord, Lord Strathcona and Mount Royal, would allow me to speak to Amendments Nos. 20E, F and H under the one heading, as they are, I think, all very closely bound together. If he prefers that I do not do that, I will speak to Amendment 20E, but I think it would help if I can take them together.
Lord STRATHCONA and MOUNT ROYAL: We are in a slight difficulty, I think, because my noble friend Lord Campbell was going to move Amendment No. 20H, which also takes with it Amendment No. 20VA, I think. However, may
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I suggest that perhaps the noble Lord should feel free to cover the whole area, and we will do our best not to ask him to repeat himself.
Lord LOVELL-DAVIS: I am most grateful to the noble Lord. In talking to Amendment No. 20E, therefore, I will bring in at the same time Nos. 20F and 20H, in the hope that I can satisfy noble Lords opposite. Under the provisions of Clause 8 as drafted, the use of gas by the original licensees or their associated companies, while requiring the Secretary of State's consent, is not subject to the first offer of British Gas. This is broadly the position under Section 9 of the Continental Shelf Act 1964; but I suspect that the introduction of the word "original" has led to some confusion. The expression "the original licensees" is defined in subsection (7) as
" those who won it under such authority ";
that is to say, those who won the United Kingdom licence. However, it does include any other licensee to whom the licence has been subsequently assigned, so it will not affect BNOC. It was perhaps because this earlier point was not fully appreciated that I think this first Amendment was proposed, and because there appears to have been some misunderstanding I will undertake to consider whether further clarification is needed. I hope that will satisfy the noble Lord.
The second Amendment, Amendment 20F, seeks to ensure that the use of natural gas for terminal operations, which is essential to the exploitation of the gas, is not subject to possible interference because of the British Gas first offer position. The subsection already permits use by the original licensees, but I am prepared to look again at the position of a person or company who is not a licensee but who purchases gas off-shore and needs to operate a terminal. Having given those undertakings, I hope noble Lords opposite may feel it possible to withdraw the Amendments.
Lord STRATHCONA and MOUNT ROYAL: We are grateful that the noble Lord has entirely hoisted on board the point about "original". I would venture to suggest that if we are now saying that "original" does mean the chaps who have joined him, I should have thought there was a clear case for amendment. I welcome the noble Lord

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saying that the Government will see what they can do about drafting a suitable one. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.41 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 20F:
Page 8, line 29, leave out from ("licensees") to end of line 30, and insert ("or any of them or a company associated with them in the same group or any of them,").
The noble Lord said: I should like to add one or two things on this Amendment because I do not think the noble Lord covered all the points I was intending to raise under it. Again, I am grateful to him for his evident willingness to take care of the points that are worrying us. There are several questions which arise. What happens where you have consortia under this clause? If you have co-licencees, the worry is that you can get two companies who join together in a licence and you do not want to bring either of them under the provision of this clause if they are genuinely part of the co-licence. I find it difficult to express myself, but I do not think that this point was covered by the noble Lord.
The other point is that in consortia-type licences, each member of the consortium takes on a "several and joint liability", that dreaded thing which the banks always want you to do when you guarantee an overdraft. The suggestion we are making is that if it is right for members of consortia to take on joint and several liabilities, is it not also right that they should jointly and severally enjoy the benefits which one of them, the principal one, is entitled to under the licence. That was the point I was trying to cover and I am not sure the noble Lord covered it in his answer. I beg to move.
Lord LOVELL-DAVIS: I do not think I can give the noble Lord a direct answer to that particular point. I am not fully aware of the situation so far as consortia are concerned. I understood that "a company associated with them in the same group" refers to subsidiary companies. It is the fact that the group is literally one group under a parent company. Having said that, I do not think I can add more. I am not really
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aware that any other situation will be covered by this subsection to Clause 8. I will have another look at this to see whether I can give any further enlightenment to the noble Lord in writing.
Lord STRATHCONA and MOUNT ROYAL: I am grateful to the noble Lord. If he is saying that he will consider these points, I would ask leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord S IRATHCONA and MOUNT ROYAL Lord S IRATHCONA and MOUNT ROYAL moved Amendment No. 20G:
Page 8, line 30, at end insert ("and except supply and use of quantities of gas which are produced as surplus in the process of meeting a specification laid down by the British Gas Corporation,").
The noble Lord said: This is again one of those famous double negative clauses that we find so difficult to follow. We have introduced an Amendment here to discuss the gas produced as a surplus. I think this may commend itself to the Government; at least, I hope so because I think this is in line with the Government's intention. When the gas industry was nationalised and, I dare say, at the time of the 1972 Gas Act; the British Gas Corporation was to be given a monopoly of public supply of piped gas for fuel purposes. The intention was not to let the monopoly encroach into chemical manufacturing simply because gases are used to make chemicals.
Parliament did not extend the monopoly to encroach on the sale of bottled LPGs which are different in their constitution from the British Gas Corporation specification gases. These are points we have been discussing already.
The purpose of this Amendment is to establish that the British Gas Corporation does not have to be given a further opportunity to purchase gas which has been extracted as a by-product in making a supply available to the Corporation's requirements. The natural gas which the BGC takes is prepared in accordance with a specification agreed with the Corporation. In order to meet this specification, the raw gas is processed and unwanted materials—unwanted by the BGC—are extracted.
Having once specified the supply they need, it would be somewhat of an extension of the monopoly of the Gas Corporation powers if, having satisfied their first option, we then extend their option

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outside the range of the specification gases. It could also mean that the Gas Corporation was in a position to impose upon a supplier an obligation to invest in separation facilities which would really be wholly and solely for the benefit of the British Gas Corporation. Since it seems to me that this was never the intention, I hope that this Amendment, or something like it, may commend itself to the Government, I beg to move.
Lord LOVELL-DAVIS: This Amendment would allow consent to be given for the supply and use for industrial fuel purposes of gas produced as a surplus to the process of meeting a British Gas specification, without requiring the gas first to be offered to British Gas at a reasonable price. I am not quite clear as to what is meant by "surplus", but I assume that it means the heavier natural gases which are extracted from the offshore natural gas during the treatment to bring the gas to the British Gas specification.
These are gases which are to be supplied for industrial fuel purposes and I cannot see any reason why they should be excluded from the "first offer" régime which applies to the supply of all other offshore natural gases. The situation is that if the British Gas Corporation does not want the gas because of its different quality, it will say so and the Secretary of State will be free to grant or withhold his consent. Frankly, I can see no reason for making this so-called "surplus" gas a special case and I can only recommend that the Amendment be rejected.
Lord STRATHCONA and MOUNT ROYAL: I am not going to press this Amendment at this stage. I do not think that we agree with what the noble Lord has told us; but I think we had better study what was said on both sides. It may be necessary to come back to this on Report. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 20H:
Page 8, line 30, at end insert ("or use in the operation of receiving terminals.")
The noble Lord said: With this Amendment I suggest we discuss Amendment
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No. 20VA, which is the definition which accompanies this proposal. I beg to move Amendment No. 20H. The noble Lord, Lord Lovell-Davis, said earlier that in his reply to previous Amendments, he would be touching on the point we raise in this Amendment. I listened intently; but I do not think he dealt with the particular point which this Amendment raises so I will now spell it out. The Bill as drafted could result in anomalous treatment for the use of offshore natural gas for terminal operations on shore. These are terminals where the natural gas arrives. For example, there is an enormous terminal being built in the Shetland Islands at Sullom Voe, and there are other terminals in preparation, particularly in Scotland. At present no prior offer to the British Gas Corporation is required as a condition for consent if the terminal use is by the licensee for his own use; that is, the licensee supplying gas. Consent for such use by a supplier who is not a licensee requires a first offer to the BGC under the provisions of the Bill. So one has the anomaly that if the supplier is using his own terminal facilities, then he does not have to make a prior offer to the BGC; but if that is not so he does.
Where there is more than one licensee using terminals, there could be administrative problems in determining whether or not the licensee's use was confined to his own equipment. In this situation, and considering the small amount of natural gas involved—taking the total that we are dealing with into account—we suggest that the easiest way of dealing with the anomaly is to remove the requirement for any prior offer to the BGC as a consent for permission for any terminal use proposed. We suggest the anomaly might be removed by this simple Amendment.
Lord LOVELL-DAVIS: I have already referred to Amendment 20H which seeks to ensure that the use of natural gas for terminal operations is not subject to possible interference because of the British Gas first offer position. As I have said, this subsection already permits use by the original licensees, but I am prepared to look again at the position of a person or company which is not a licensee but which purchases gas off-shore and needs to operate a terminal. Amendment 20VA is of course consequential upon this. I agree that if the term

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"receiving terminal" were used in subsection (4), it would be desirable to define it in subsection (7). Since I have undertaken to consider whether we can meet the point about terminal use by someone other than the licensee, whether or not we shall need a definition of "receiving terminal", will of course depend on how we decide to meet the point. I hope that the undertaking that I have given will meet the noble Lord's case and that Amendment 20VA will automatically follow from whatever we are able to do about Amendment 20H.
Lord CAMPBELL of CROY: I accept that of course the definition is simply the second part which will accompany the main Amendment if it were made to the Bill. I am grateful to the noble Lord for having seen the anomaly to which I have drawn attention. I should add that the kind of use to which the natural gas would be put at such terminals would be process heat and generators. This is the internal use which we foresee. This anomaly is something which the Government, from what the noble Lord has said, realise ought to be avoided if possible. In the hope that the Government will put down an appropriate Amendment, I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Lord STRABOLGI: My Lords, before we embark on this next Amendment, it may be convenient to the Committee if we had a break here. The Committee has now been dealing with business since three o'clock this afternoon. Also, to break at this stage will enable the House to take other legislation. If this is agreeable, it is proposed that the Committee stage of this Bill should be resumed at about eight o'clock. In the meantime, I beg to move that the House do now resume.
Moved accordingly and, on Question, Motion agreed to.
House resumed.

COMPANIES (NO. 2) BILL [H.L.]
6.55 p.m.
Report received.
Clause 2 [Accounting reference period of a company]:
Lord LYELL Lord LYELL moved Amendment No. 1.
Page 4, line 14, leave out ("31st December") and insert ("30th September").
The noble Lord said: My Lords, the purpose of this Amendment, as the noble Lord will recall from an earlier stage, was an attempt to lighten the burden of work on the Registrar of Companies and also on the accountancy profession. In the course of the Committee stage the noble Lord explained that the date I suggested on the advice of the accountancy profession, 31st March, was the second most popular date for terminating the financial periods, what I call financial years. Therefore I have thought fit to suggest to your Lordships that we should insert 30th September instead of 31st December. Any Company which is uncertain as to when it wishes to terminate a financial period shall give this option to the Registrar. I understand from the accountancy profession that the 30th September is the date next most popular but, at the same time, it would allow the Registrar of Companies and the accountancy profession a reasonable chance of lightening the workload at the other two popular dates, 31st December and 31st March. I beg to move.
Lord WINTERBOTTOM: My Lords, the objective of the noble Lord and the Government is to produce the most satisfactory date for this particular operation. As I understand it, and as I attempted to explain on the similar Amendment moved by the noble Lord in Committee, the main reason for choosing 31st December as the accounting reference date for those companies which do not notify the Registrar of their choice of date is precisely because 31st December is the most popular date at the end of the financial year. We were obviously trying to meet the convenience of the companies in question. To have chosen any other date would have caused more inconvenience both for companies and for the Registrar as more companies would have had either to alter their accounting arrangements to

1967
bring them into line with the date allotted to them or would have had to agree an alternative date with the Registrar.
The Government appreciate that the 31st December peak creates problems for auditors and that they would therefore prefer some other date to be assigned to these companies which do not notify the Registrar of their accounting reference date. But the convenience of the auditors does have to be balanced against the convenience of the companies. I should like to stress one further point, if I may. On reading the Official Report of the Committee stage, I noted that the noble Lord, Lord Lye11, may have slightly misunderstood the intention of Clause 2 in respect of a newly registered company. 31st December will only be allocated to a new company as its accounting reference date if the company does not notify the Registrar of an alternative date within six months from the date of incorporation. A new company therefore has the same opportunity as an existing company to notify the Registrar of its own choice of accounting reference date. It will not necessarily be 31st December. This is why I said in Committee that the Government did not expect there to be a significant increase in the number of companies having 31st December as their financial year-end as a result of the provisions of this clause.
All companies will have an opportunity to notify the Registrar of their accounting reference date. The only ones which will fail to take advantage of this will be those whose choice of date coincides with the date—whatever it is—that will be automatically allotted to them and which do not therefore need to bother to send in a notification and those which are too inefficient to do so. As the Registrar will send out reminders to those companies which do not notify him of their date, this latter group should be very small and it is only these companies which will lead to any increase in the number of companies which have a 31st December financial year end.
Having said this, if the accountancy bodies are still concerned that the provisions in the Bill will cause difficulties for them, the Government would, of course, be ready to discuss these difficulties with them and to see if some acceptable solution could be found. This is a
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purely technical point which can be discussed between now and when the Bill goes to another place. Surely it will he possible for the professions and the Government to decide at the end of the day which date they prefer. We are not bound to any date. All we want is to satisfy the profession as best we can.
Lord LYELL: My Lords, I should like to thank the noble Lord for his very full explanation. In view of what was said at the end of the statement about the Government's intention to satisfy the desires of the profession and of all those who administer companies, as well as to assist the Registrar of Companies, I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Clause 3 [Alteration of accounting reference period]:
7.2 p.m.
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 2:
Page 5, line 15, leave out ("hereafter in this section referred to as").
The noble Lord said: My Lords, at Committee stage I undertook to try to satisfy the noble Lord, Lord Lyell, in drafting a series of Amendments—or a single Amendment, as I then hoped—which would cover his point, which is immediately preceding an apparently very innocent phrase. The point is entirely valid, but when we get down to drafting all sorts of complications follow. With the permission of the House, I should like to speak to Amendments Nos. 2, 3, 4 and Amendment No. 5—which is the key Amendment to satisfy the noble Lord—6, 7, 8, 9, 10, 11, 13, 14, 15 and 16. These all hang together—or hang separately, perhaps! They concern a very simple point, but if we change something which is quite complex some drafting is needed, and this is what we have tried to do. The key Amendment is No. 5. I shall discuss Amendment No. 12 later, because this concerns a separate point.
The Amendments deal with the point raised by the noble Lord, Lord Lyell, during the Committee stage. They will facilitate the alignment of the accounting reference periods of a holding company and a subsidiary by enabling a company to alter an accounting reference period retrospectively for this purpose, provided

1969
the company is not in default in filing or of laying its accounts for the period concerned.
The substantive Amendment is made in the three new subsections of Amendment No. 5. Subsection 1A will provide that a company may, subject to subsections 1B and IC, give the Registrar a notice retrospectively altering the date on which a previous accounting reference period ended. Subsection 1B provides that such a retrospective alteration may be made only if the effect is to make the company's accounting reference date coincide with the reference date of a holding company or a subsidiary of the company. Subsection 1C provides that such an alteration may be made only during the period allowed for laying and filing accounts.
The remaining Amendments to Clause 3—apart, as I said earlier, from the substantive addition to subsection 4—are all consequential. The clause was originally drafted on the basis that alterations would be allowed only in respect of the current accounting reference period. The Amendments to subsection 1 are drafting Amendments designed to simplify the wording and bring it into line with corresponding wording in the new subsection 1A. The other Amendments adapt the provisions of subsections 2 to 8 of the clause to take account of the fact that alterations are now also to be allowed in respect of a previous accounting reference period. The Amendment to Clause 6 is also consequential. Subsection 6 is concerned with the period allowed for laying and filing accounts when an accounting reference period is shortened. The Amendment applies the subsection to the shortening of a previous accounting reference period as well as to the shortening of a current accounting reference period.
These Amendments do not go quite as far as the Amendment which was proposed by the noble Lord, Lord Lyell. Nevertheless, they deal with the situation with which he was primarily concerned; namely, the need to be able to alter a company's accounting reference period retrospectively in order to bring it into line with that of other companies in the same group. I have tried to explain what the three subsections do. The other Amendments in this group are all either consequential or drafting Amendments. The Amendments to subsection 1 are
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drafting Amendments which do not affect the substance of the subsection. They merely clarify the wording and bring it into line with that in the new subsection 1A. The other Amendments, including that to Clause 6, which is now in Amendment No. 16, are consequential. Clause 3 and subsection 6 of Clause 6 were drafted on the basis that alterations could be made only to the current accounting reference period. If alterations to a previous period are now to be allowed in certain circumstances, the provisions of Clauses 3 and 6(b) need to be adapted to take account of this.
The Government Amendments are somewhat more limited in scope than the Amendment proposed by the noble Lord, Lord Lyell, in Committee, which would not have imposed any restrictions on a company's ability to alter a previous accounting reference period but, as was explained at the time, the Government consider that an unfettered right to make alterations retrospectively would be open to abuse, as some companies might take advantage of it to delay the filing of their accounts. In moving his Amendment, the noble Lord, Lord Lyell, explained that its purpose was to make it easier for a company which joins a group of companies to bring its accounting reference period into line with the rest of the group. The Amendments now proposed will achieve this, and for this reason I hope that the noble Lord, Lord Lyell, will feel that our Amendments will go a very long way towards satisfying him. I beg to move Amendment No. 2.
Lord LYELL: My Lords, if I may take together all the Amendments discussed by the noble Lord and which he has explained at considerable length and in considerable detail, it seems, from such conversation as I have had with several members of the accountancy profession, that this Amendment, or this series of Amendments—which, as the noble Lord, Lord Winterbottom, said, may hang together or separately—will satisfy the wish of the accountancy profession. This wish was that companies should be free to carry out such a change in their accountancy reference period. I pointed out in Committee that such a change would be very exceptional and that all we were seeking was that the Registrar of Companies and the Secretary of State should have this power to permit

1971
a company to carry out this manoeuvre, if this is the right word, in exceptional circumstances. These circumstances would be fairly exceptional, and would not occur more than 50 times in a year. This series of Amendments has satisfied me and my friends on this point, and I shall be very glad to accept them.
On Question, Amendment agreed to.
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendments Nos. 3 to 11 en bloc:
Page 5, line 16, leave out ("current accounting reference period") and insert ("that accounting reference period (" the current accounting reference period")")
line 18, leave out (" in the case of the current accounting reference period") and insert (" as the case may require")
line 20, at end insert—
("(1A) Subject to subsection (1B) and (IC) below, at any time after the end of a period which was an accounting reference period of a company by virtue of section 2 above or this section the company may give notice in the prescribed form to the registrar of companies specifying a date in the calendar year ("the new accounting reference date") on which that accounting reference period ("the previous accounting reference period") and each subsequent accounting reference period of the company is to be treated as coming or (as the case may require) as having come to an end.
(1B) A notice under subsection (1A) above shall not have effect unless the company is a subsidiary or holding company of another company and the new accounting reference date coincides with the accounting reference date of that other company.
(1C) A notice under subsection (1A) above shall not have effect if the period allowed for laying and delivering accounts in relation to the previous accounting reference period has already expired at the time when the notice is given.")
line 21, at end insert ("or previous")
line 28, after ("end ') insert (", or (as the case may require) to be treated as having come to an end,")
line 30, after ("falls") insert ("or fell')
line 32, at end insert ("or previous")
line 34, after ("current") insert ("or previous")
line 38, after ("current") insert ("or previous")
On Question, Amendments agreed to.
7.12 p.m.
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 12:
Page 6, line 3, at end insert—
("or
(c) the company is a subsidiary or holding company of another company and the new accounting reference date coincides with the accounting reference date of that other company.")
The noble Lord said: My Lords, this Amendment is an attempt to meet the requirements of the noble Earl, Lord Limerick, who proposed in Committee an Amendment which would have permitted a company to extend its accounting reference period at any time for the purpose of enabling the directors of a holding company to comply with their obligations under Section 153 of the 1948 Act. This section requires the directors of a holding company to secure that the financial years of the company's subsidiaries coincide with the company's own financial year, unless there are good reasons for not doing so. In Committee, I said that the Government were sympathetic towards this Amendment, subject to being satisfied that it would not create any loopholes or abuses. I am glad to say that on further study we have not found any such problems.
This Amendment, although somewhat differently worded, will achieve the result proposed by the noble Earl, Lord Limerick. It will enable a company to extend an accounting reference period, even when it has already extended an earlier period within the previous five years, if the effect is to align the accounting reference periods of a holding company and subsidiary. The clause as originally drafted would have allowed this to be done only with specific authorisation from the Secretary of State. This Amendment will make special authorisation unnecessary, and will thus reduce the administrative burden on both the company and the Department. I think that this is a useful change, and I am grateful to the noble Earl for proposing it.
A company will not, however, be able to extend an accounting reference period beyond 18 months. The Government have carefully considered the suggestion put forward by the noble Lord, Lord Lyell, in Committee, that an accounting reference period of more than 18 months should be permitted in certain circumstances, but have concluded that this would not be desirable. The preparation and filing of accounts at regular intervals

1973
is an important safeguard both for shareholders and creditors, and it is not acceptable that a period of more than 18 months should elapse between successive sets of accounts.
The Government recognise that this limitation may occasionally mean that a company which has to align its accounting reference period with that of other companies in a group has to produce accounts for a period of less than 12 months. But the period will never need to be less than six months. Also, the other proposed Amendments to Clause 3 will greatly facilitate the alignment of the reference periods of companies in a group and, in particular, the ability to make a retrospective alteration for this purpose will normally make it possible to adjust the periods without the necessity of having a short reference period, and without any need to breach the 18 month limit. I hope that that is a satisfactory solution to the problem. My Lords, I beg to move.
Lord LYELL: My Lords, perhaps I may be permitted, on behalf of my noble friend Lord Limerick, who has been unavoidably delayed and will not be here for this stage of the Bill, to express his appreciation to the Government for taking this action.
On Question, Amendment agreed to.
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendments Nos. 13 to 16 en bloc.
Page 6, line 7, leave out from ("given") to end of line 9.
line 22, after ("current") insert ("or previous").
line 35, leave out from ("company") to end of line 36 and insert ("which—

(a) in the case of a notice under subsection (1) above, is earlier than the current accounting reference period, or

(b) in the case of a notice under subsection (1A) above, is earlier than the previous accounting reference period.")

Clause 6, page 9, line 22, leave out ("which is current at the time when a") and insert ("as respects which").
On Question, Amendments agreed to.
Clause 7 [Transitional provisions and savings]:
Lord WINTERBOTTOM Lord WINTERBOTTOM moved Amendment No. 17:
1974
Page 10, line 19, leave out from ("document") to end of line 21.
The noble Lord said: My Lords, this is purely a drafting Amendment. It deletes a proviso to subsection (3) which is otiose. The proviso to subsection (3) adds nothing to the subsection, as the condition which it stipulates is one that is necessarily fulfilled if the other provisions of the subsection apply. Clause 7 is concerned with transitional provisions to facilitate the introduction of the new requirements as to the filing of accounts. Subsection (3) provides that the duty under Section 127 of the 1948 Act (which is otherwise superseded by Clause 1) to annex accounts to an annual return shall continue to apply to a company which, at the date when Clause 1 comes into effect, has laid accounts before a general meeting but not delivered a copy to the Registrar. Without this transitional arrangement, such a company would not be under any obligation to file those accounts as they would be subject neither to the old filing provisions nor to the new.
The proviso provides that this transitional provision shall apply only to accounts which are made out at a date earlier than the beginning of the company's first accounting reference period. But the first accounting reference period is defined in Clause 2 as beginning immediately after the date to which the accounts last laid before a general meeting were made up. The proviso is there-fore quite unnecessary, since accounts laid before a general meeting before Clause I comes into operation must, by definition, be made out at a date before the start of the company's first accounting reference period. It is for this reason that the Government propose that the proviso should be deleted. My Lords, I beg to move.
On Question, Amendment agreed to.
Clause 15 [Resignation of auditors]:
7.18 p.m.
Lord LYELL Lord LYELL moved Amendment No, 18:
Page 18, line 24, leave out ("may resign") and insert ("resigning").
The noble Lord said: My Lords, the purpose of this Amendment is exactly the same as that of the Amendment moved in Committee, when the noble Lord, Lord

1975
Winterbottom, was kind enough to give a lengthy explanation; he has been even kinder since and has written to me. But there is still a doubt in my mind, and in the minds of members of the profession, that the clause does not cover every aspect of an auditor resigning. The purpose of this Amendment which is very simple—and I hope it will not lead to a series of drafting Amendments such as we had earlier this evening—is to cover every case of an auditor resigning.
At the Committee stage, I put the case of an auditor who declined to allow himself to go forward for re-election at the annual general meeting. I believe it is the wish of the profession that if an auditor vacates his office—provided he is not incapacitated through death or illness—in the middle of the year or at the annual general meeting, he should be compelled to issue a statement to the shareholders and to the creditors. Already, under the clause as drafted, the auditor must do this if he discovers financial malpractice and other errors during the course of his audit. He may call a meeting of the company in the middle of the year, and explain his actions and state why he wishes to resign, and he may do this in writing.
All I am seeking by this Amendment is to ensure that when an auditor resigns at the end of the year he must do the same as he would do in the middle of the year. We understand that as drafted the clause permits an auditor to resign without giving a written statement to the shareholders. The noble Lord will be aware that professional etiquette is such that a retiring auditor must, and in every case does, write to the succeeding auditor explaining whether there are any circumstances why the new auditor should not take on the new audit. All that we are seeking to do is to ensure that this aspect of the auditor's etiquette is put into the Bill. My Lords, I beg to move.
7.21 p.m.
Lord WINTERBOTTOM: My Lords, the noble Lord, Lord Lyell, and I have tried to get to the bottom of this matter on two separate occasions—on Second Reading and in Committee. As drafted, the Amendments will not affect the substance of Clause 15. There is no way
1976
other than that provided in this clause whereby an auditor may resign his office. The clause thus already has the effect that a auditor can resign if, but only if, he deposits a notice of resignation containing a statement as to whether or not there are any circumstances connected with his resignation which he considers should be brought to the attention of members or creditors. We are talking now about resignation. The proposed Amendments would merely alter the drafting of subsection (1) and might cast doubt on whether or not a notice of resignation which did not include the statement required by subsection (2) was effective.
The Amendment would not affect the position of a retiring auditor who does not offer himself for reappointment. Such an auditor is not seeking to resign his office. This is the point where the chink of light broke in and then was again extinguished; his appointment is already at an end. He has got to be reappointed for the coming year. Clause 15 does not, therefore, apply to him and would not do so even if this Amendment were accepted.
However, the Government, nevertheless, recognise that there is some concern about the fact that an auditor who does not seek reappointment will not be required to make any statement. The noble Lord has put up a marker and this is being considered. Such an auditor will have already completed his audit of any accounts laid before the annual general meeting and this is an important safeguard. However, the Government will be discussing (this is more positive than my earlier statement about the Government offering to discuss) with the accountancy bodies whether any further safeguards are necessary. With this undertaking and the statement that the Government will be discussing with the accountancy bodies the important and rather difficult point raised by the noble Lord in the two previous stages of the Bill, I hope that the noble Lord will agree to withdraw his Amendment.
Lord LYELL: My Lords, I can say that possibly I am a little more satisfied than I was at the Committee stage. At the same time, perhaps the noble Lord will permit me to say that I am not totally satisfied. Indeed, it was the accountancy profession which raised this point with me and asked me to raise it

1977
with the noble Lord and the Government both at this stage and during the preceding stages. The accountancy profession were not of the opinion, as is the noble Lord, that as drafted the clause states that the auditor may resign "if, and only if". The purpose of my Amendment is to ensure that the clause conveys what the noble Lord says it conveys already. If the noble Lord is prepared to give that guarantee, I am prepared to accept it at this stage, particularly in view of his kind words at the end of his statement, that the Government will continue to discuss this matter with the accountancy profession.
The only purpose of this Amendment is to ensure that any auditor vacating his office at any time—either resigning or not being reappointed—should give a clean bill of health regarding the company's financial state of affairs. As the accountancy profession viewed this clause, there was a danger that in qualifying the accounts a weak auditor need not state the grounds for his dissatisfaction, whereas in a statement he might well need and be compelled to be more explicit on the grounds for his fears regarding the company's financial sickness. That said, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord MONSON Lord MONSON moved Amendment No. 20:
After Clause 27, insert the following new clause
Proxy voting
".—(1) Every notice calling a meeting of a company having share capital which is sent to persons entitled to attend and vote thereat shall be accompanied by a proxy form with provision for two-way voting on all resolutions intended to be proposed. All such proxy forms sent to United Kingdom addresses shall be reply-paid: and if default is made in complying with this subsection as respects any meeting, every officer of the company who is in default shall be liable to fine not exceeding £50.
(2) The above subsection shall not apply to any company whose issued share capital is less than £100,000.
(3) This section shall come into force on 1st January 1978."
The noble Lord said: My Lords, I beg to move Amendment No. 20. This is virtually identical to the Amendment that I moved in Committee but with two alterations. First, I have provided that reply-paid proxy cards should be sent to United Kingdom addresses rather than
1978
to United Kingdom residents. The word "resident" is fraught with fiscal implications relating to domicile. Many possible pitfalls can be avoided by substituting the word "addresses", particularly as a company's sole legal obligation is to send documents to a shareholder's registered address, without having to worry about his or her precise residential status.
The second alteration has been to change the words "fifty pounds" into numerical form so as to bring the Amendment into line with the rest of this Bill where all fines are expressed in numerical form, in contrast to the 1948 Act from which much of the wording of this Amendment has been derived. Contrary to what I implied in Committee, I have not, after all, sought to include in these provisions the Isle of Man or the Channel Islands, because since then I have ascertained that United Kingdom business reply facilities do not extend to these territories.
I do not intend to repeat all the arguments that I advanced on Second Reading and in Committee, but I should like to take up the noble Lord, Lord Winter-bottom, on one point that he made in Committee. In column 1502 he said:
"I have a feeling that we are tending to tell too many people what is good for them rather than leaving them to reach their own decisions as to what they should do."
So far as matters of personal freedom are concerned, I agree entirely with the noble Lord; but this is not a matter of personal freedom. My Amendment would simply limit slightly the freedom of companies so far as their relations with shareholders are concerned. It is a question of consumer protection, which I should have thought was a cause dear to the hearts of members of all Parties in this House. Let us not forget that Section 136 of the 1948 Act already gives to shareholders a measure of protection. This is simply an extension of that protection. It ought to be remembered that, while a retired person, or, in certain cases, a self-employed person, can attend company meetings in person, provided that they do not live too far away and also provided that they can afford the fare, which cannot always be taken for granted nowadays, the only opportunity that a man or woman who is in full time employment has to exert any influence upon the conduct of the company of

1979
which he or she is part owner is by means of the proxy card. We should also remember that collectively small shareholders have lost millions of pounds in recent years as a result of various company failures. In contrast, institutional shareholders tend to have their ears rather closer to the ground and frequently, if not invariably, can get out in time.
Finally, there is nothing in the slightest novel or revolutionary in the proposal that proxy cards should be reply-paid. As I pointed out at earlier stages of the Bill, the overwhelming majority of companies already send reply-paid cards. The purpose of this Amendment is simply to nudge the minority into adopting the excellent practices of the majority. I beg to move.
Lord WINTER BOTTOM: My Lords, I am certain that the House is grateful to the noble Lord, Lord Monson, for the thoroughness and persistence with which he has pursued his point. As I said to him—I think it was late in the evening during the Committee stage—I am always prepared to listen to arguments and at the time I was impressed by his argument. But having given this matter further thought since the Committee stage, the Government find that they must abide by their original view; namely, that this is not something that should be required by the law. The law provides the basic right of a member of a company with a share capital to appoint a proxy. The mechanics of the appointment are something which should be left to the company, not laid down in legislation. The noble Lord, Lord Monson, referred in Committee to the Stock Exchange listing requirements: he quoted two leading companies whom he had consulted as saying that the listing requirements would be a more appropriate vehicle than legislation. The Government are inclined to agree with that.
The noble Lord's Amendment would restrict the scope of this requirement to companies with an issued share capital of more than £100,000. I undertook in Committee to consider whether, despite my objection to the general principle, there was any special category of companies to which the requirement could reasonably be applied. Our conclusion was that it was not an appropriate matter
1980
for the law, even in relation to the largest companies. The use of reply-paid proxy forms is costly. We estimate that for the largest companies the cost of postage involved in providing reply-paid forms which were returned by, say, half the shareholders would be over £10,000 per meeting. We believe it should be left to the company to decide—in accordance with the wishes of shareholders—whether resources should be used for this purpose. I think the point made by the noble Lord is important, but we believe that the arguments against it are stronger.
Lord MONSON: My Lords, I am disappointed in the reply given by the noble Lord, Lord Winterbottom. I do not doubt for one moment that his figure is correct on the assumption that 50 per cent. of shareholders reply, but I believe that would occur only if the company were to have produced poor results, or something was going on which ought not to have been going on. As I pointed out during the Committee stage, in the normal way—if the company's results are good—not more than 10 per cent. bother to reply, and I think that suits everybody. However, I have received no support from any other part of the House, so all I can do is to beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord STRABOLGI: My Lords, I beg to move that the House do now adjourn during pleasure until 8 o'clock.
Moved accordingly and, on Question, Motion agreed to.
[The Sitting was suspended from 7.34 p.m. until 8 p.m.]

ENERGY BILL [H.L.]
Committee stage, on Clause 8, resumed.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 20J:
Page 8, line 34, after ("of") insert ("(a)").
The noble Lord said: This Amendment, and Amendment No. 20K, could suitably be discussed together because Amendment No. 20J is simply a paving Amendment. I would say straight away to the noble Lord, Lord Lovell-Davis, that this Amendment has been put down in order to give the Government an opportunity to present their views to your

1981
Lordships' Committee. It is not an Amendment which I intend to press, but it has an important point.
Amendment No. 20J, which I now move, paves the way for Amendment No. 20K which would enable ethane, propane and butane mixtures to be supplied and used as chemical feedstocks without the need for ministerial consent. It would be a major change from the present situation if this Bill were to introduce discrimination and for industrial non-fuel use of natural gas. Ethane, propane and butane are petrochemical feedstocks which are in common use, and their supply for chemical use can have no conceivable detrimental effect on the needs of the British Gas Corporation. The British Gas Corporation can continue to serve its statutory obligations without any embarrassment on that score. I cannot believe that the British Gas Corporation has asked for this provision in the Bill.
Therefore, the only possible reason for a consent procedure being introduced appears to be to enable the Government to discriminate between suppliers or between users. This is difficult to follow, and I would be glad if the noble Lord, Lord Lovell-Davis, could explain why the Bill should not be amended in the way suggested.
Lord LOVELL-DAVIS: These Amendments seek to establish a different régime for the heavier natural gases than for methane which dominates the gas used in most of the supply system of British Gas by removing the supply and use for non-fuel purposes of such heavier gases from the requirement to obtain the consent of the Secretary of State. The present legal position is that supply and the licensees' use of these gases require consent under Section 9 of the Continental Shelf Act. Clause 8 proposes only two changes to that position: consent would also be required for the use of these gases by persons other than the licensee and the Secretary of State would no longer be obliged to give his consent for gas for non-fuel purposes. Whatever one's views may be of these proposed changes, it is not possible to see how these gases could be exempted altogether from the requirement for consent; that must be needed if only to check initially that the use to which it is proposed they be put is indeed a non-fuel use. It was
1982
For this administrative reason that a Government of a rather different hue introduced in the Continental Shelf Act the notion of requiring a consent that had to be given.
It is true that not all gases are equally relevant to the requirements of the public supply system. But there have been two major changes in the nature of the gas used in that system within the last 15 years. Until about 1960 nearly all the gas supplied by the predecessors of British Gas was derived from coal and consisted mainly of carbon monoxide. During the early and middle 'sixties, this gas was gradually replaced by gas derived from oil and of very different chemical composition. Then at the end of the last decade and the beginning of this natural gas from the North Sea, again of very different chemical composition, replaced the old gas which was of only half the calorific value. It is not possible to foresee how the chemical composition of the gas used in the public supply system may change in future. Indeed, even now, while British Gas supplies most parts of the country with a gas consisting predominantly of methane, in some parts it supplies a butane/air mixture. I therefore strongly advise noble Lords not to accept these Amendments.
However, the Government recognise that there are differences in the kinds of use to which different kinds of gas are at any one time put to the greatest advantage. That is why it has proposed, in subsection (6), a power to give class consents by means of orders of general application. If, for instance, it could give a general consent, say, to all supplies of ethane for the manufacture of ethylene, a lot of administrative work could be saved by both Government and the suppliers, and petrochemical companies and feedstock suppliers could plan on a firmer basis. Accordingly, the Government will be very willing to consider suggestions for orders of general applications for particular gases used for particular purposes.
Lord CAMPBELL of CROY: This Amendment has enabled the noble Lord, Lord Lovell-Davis, to make a statement on behalf of the Government. He has sought to explain why it should be necessary to have the provisions in the Bill and not to make a change of the kind proposed. I am sorry the noble Lord was

1983
not able to be, very forthcoming on this, but I am grateful to him for stating what is the Government attitude. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.7 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 20L:
Page 8, line 37, at end insert—
"(c) the use of any offshore natural gas in the process of separation and intermediate distribution within any facilities owned or controlled by a single company.")
The noble Lord said: I beg to move Amendment No. 20L. This would insert a paragraph (c) which would exempt from the consent procedure the use of offshore natural gas in certain processes within the control of a single company. These gases could be passed through pipes as a small or an incidental part of an operation within a company, but because they are passing through pipes during that operation, the Bill and this clause would appear to apply to those gases. This cannot really be the objective of the Government. I do not believe it can be the aim of the Government to seek to bring that kind of situation within Clause 8. I will give your Lordships an example of this.
There could be a system of distribution of LPG butane or propane by bottle. It is quite normal for that distribution to be carried out by rail or road, or by sea, and the bottles would proceed from a bottling plant. But the gas may have gone into the bottling plant by a length of pipe, and the passage of the gas through that pipe would appear to bring it within the ambit of this clause. But the transit by pipe could be incidental, or only a small part of the distribution operation within the single company. So that is an example of the kind of thing which we do not believe this clause is intended to cover, and which this Amendment would exempt. I recognise that this is a point the Government may not have taken on board, and that they may not like the terms of the Amendment we put forward. But we think it is a point that the Government should recognise. I hope the noble Lord will consider it, and in due course bring forward an Amendment of its own.
Lord LOVELL-DAVIS: I cannot recommend noble Lords to accept this
1984
Amendment. It could, for instance, be interpreted as excluding from control the use of gas in the separation of the components of crude oil within a refinery; such separation requires considerable amounts of energy and the Amendment might lead to the removal of a large part of the nation's resources of natural gas from the Secretary of State's control. Indeed the Amendment could even be construed as removing from control gas used by a licensee or offshore buyer to separate off impurities, for instance, in the case of metals. It seems to me, however, from what the noble Lord has said, that he is concerned lest under the proposed provisions of this clause consent be required to the internal operations needed for storing, transporting and generally handling the gas. We do not think that such operations could be treated as uses if no gas were consumed in them. He referred, for instance, to pipeline transmission within a single company's operations. This would not be a supply and would therefore not be subject to control. There may, however, be some other similar operations in which some gas is consumed. Provided they do not involve British Gas's first-offer position under subsection (4) of the clause, they may be very suitable candidates for orders of general application and the Government would be ready to consider them as such. But, as I say, in view of the implications of this Amendment, I cannot recommend noble Lords to accept it. I should point out, however, that we should be willing to consider the position of gas supplied by pipe for subsequent bottling in LPG plant.
Lord CAMPBELL of CROY: I am grateful to the noble Lord. If I can summarise very briefly his reply, he has indicated that the Amendment itself is defective because it would open the way for other cases than those that I have described, and I started by conceding that my Amendment might not necessarily be perfect. He went on to say that his interpretation of the Bill would in fact mean the exemption which I sought by this Amendment, and that internal operations of the kind I describe would not fall within the Bill according to the Government's interpretation. We will examine what the noble Lord has said, and this may be something which ought to be considered at a later stage to see whether something needs to be written in to make

1985
that interpretation clear. His last remark, indicating that the example I gave was one he would wish to consider, is, naturally, welcomed. In view of that, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.13 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 20M:
Page 8, line 40, leave out ("and").
The noble Lord said: Amendments Nos. 20M and 20N are both paving Amendments to Amendment No. 20P, which is really the substantial one of this group. With the permission of the Committee, I should like to speak to all three together. Your Lordships will be happy to hear that I think I can be brief, although it is an important point. Before I do so, could I just ask the noble Lord whether he can tell us the meaning of this strange phrase in line 2 on Page 9, "or otherwise howsoever". Could he give us some indication of the significance of those words, which presumably mean, "Anything I have not thought of is covered by this Bill and I reserve the right to come back to it when it suits me". I ask him that now to give him a chance to be briefed on the point while I come to the Amendment proper.
This Amendment seeks to do some, thing that has cropped up before. It tries to remove the element of retroactivity in some of the clauses of the Bill. The Government may be prepared to go along with us in this Amendment, because I hope they will be persuaded that they do owe this to the companies in common equity. What this Amendment is seeking to do is to protect the value of existing supply and investment commitments. The companies have entered into commitments in markets for natural gas which have been developed; supply commitments have been entered into on the basis of the freedom to supply which they have at the present time.
Furthermore, one can imagine the position of a company executive, a managing director, justifying to his board an investment which has then been committed for production and use of offshore petroleum on the existing basis with regard to the freedom of disposal of the associated natural gas coming
ashore with the oil. So any new restrictions which are brought
1986
in under this Bill would have a retroactive effect upon an investment already committed. I have used this expression before and I regret having to use it again; but it upsets the companies and it undermines the confidence of the industry in the merit of their investments in the North Sea. Investments have been committed for the use of this natural gas, and the effect of the Bill as it stands would be to place in jeopardy the viability of the investments which have already been committed. This Amendment seeks, so far as possible, to say that commitments which have already been entered into may continue to be honoured under the legislation as it then was. I beg to move.
Lord LOVELL-DAVIS: In replying to these three Amendments, Amendments Nos. 20M, 20N, and 20P, I will gladly, first, answer the noble Lord's question about "otherwise howsoever". I think it means, "Do with it what you will; you accepts the Bill and you takes your choice!" Having said that, the purpose of Amendment No. 20P, which is the most significant one here, is to prevent companies who have committed themselves to investment, or to contracts, before the enactment of the Bill, from suffering financial hardship under new provisions. This might happen if consents previously granted were revoked or if new consents were made subject to more rigorous conditions. Amendments Nos, 20M and 20N are, as the noble Lord said, paving Amendments.
I am aware of the very large sums of money which companies may have to invest in connection with the kind of operations envisaged, and I have some sympathy with their desire to safeguard their investments in any way. I think, however, that Amendment No. 20P is perhaps wider than is necessary. For example, the phrase, "in connection with a contract" seems to me to be particularly vague. I cannot therefore, recommend noble Lords to accept the Amendment in its present form, but I am prepared to consider further to what extent it may be possible to allay the understandable fears of the companies in this respect.
Lord STRATHCONA and MOUNT ROYAL: I am grateful to the noble Lord, We are not by any means wedded to the wording of this Amendment. If the noble Lord accepts the general underlying point

1987
here, it would be churlish of me not to agree to withdraw the Amendment at this juncture. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 20Q:
Page 9, line 2, at end insert—
" (d) shall be given or withheld without unreasonable delay;
The noble Lord said: I beg to move Amendment No. 200. This Amendment deals with the question of possible delays. It would insert paragraph (d), requiring that consent or withholding of consent should take place without unreasonable delay. I am sure that from all sides of the Committee it will be recognised that delays should be avoided because these delicate plans that industries have to make, not only on-shore but also in their offshore plans, will be interrupted or in doubt if consent, or lack of consent, is not announced within a reasonable time.
Therefore we suggest that something should be put in either in the form of this Amendment or something similar. If the Government do not feel that this suggestion commends itself to them, could they give us an indication of what they regard as a "reasonable time". Can the noble Lord give any indication of the number of months in which he thinks that, in normal circumstances—unless there is something extraordinarily difficult—the Government should be able to provide consent or the lack of it, veto the proposal? We should be glad to have the Government's views on this. I beg to move.
Lord LOVELL-DAVIS: I appreciate that companies who have applied for consent will be anxious to receive an answer as quickly as possible in order to know whether or not they should proceed with their plans. The Government, however, could not accept an Amendment which would make every exercise of their powers under the clause a possible subject of litigation. A provision of this kind could, in my view, present more problems than it attempts to solve.
May I turn the noble Lord's question, when he asked me what is a reasonable time, by asking what is an unreasonable delay in this context? A month? A year? Ten years? I must ask noble
1988
Lords to reject this Amendment, and I shall consider what may be done to relieve anxieties of undue delay. I hope that that will satisfy the noble Lord.
Lord CAMPBELL of CROY: I am grateful to the noble Lord for saying that he will consider this point. Certainly if there is anything that can be put in the Bill I think that it will give assurance to those who have to operate under the terms of this clause. I am sorry that the noble Lord, as the instigator of the procedure on behalf of the Government, should not be able to give us some indication of timing as regards the average time, or normal time, in which he would expect consent to be given or withheld, but in view of what he has said I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.24 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 20S:
Page 9, line 5, at end insert:
("(6B) Notwithstanding anything else contained in this Act, the Secretary of State shall not withhold his consent under this section if the effect would be to substantially reduce the economic benefit to the person applying for consent from the offshore natural gas which is the subject of such application")
The noble Lord said: This is an embarrassing Amendment. It is frankly a kite, and a kite with a split infinitive in it, so in any circumstances it does not deserve to succeed. It is essentially a probing Amendment. What we are after here is to point out to the Government that if they exercise their powers in a discriminating and an unfavourable manner they can cost industry dear, and if they cost industry dear this inevitably has a discouraging effect on what happens next. This is the essential point which has been lying behind a number of Amendments we have moved.
By and large, the industries using North Sea gas as a feedstock have done a remarkably good job in this country, I think it is fair to say, and they would seek assurances that a reasonable and lenient view will be taken by the Government, and acceptance of the principle that industry needs to be able to earn a reasonable profit if it is to continue to invest and operate in the interests of the nation. Subject to the disclaimer about the wording, I beg to move this Amendment.
Lord LOVELL-DAVIS: Like the previous Amendment, this one is concerned with the financial well-being of companies which may be affected by the provisions of this clause. We, too, are very concerned with this—after all it has been estimated that some 70 per cent. of the companies' profits will accrue to the Government as a result of corporation tax, royalty, and PRT. We therefore have a definite interest in ensuring that companies' economic benefits are not substantially reduced. Having said this, I must say that we do not see the best interests of the country being served by tying the hands of the Secretary of State in the way suggested. I am, as noble Lords opposite will I am sure agree, now being the soul of reasonableness and co-operation, but I must ask noble Lords to reject the Amendment and to rely here on the good sense of the Government.
Lord STRATHCONA and MOUNT ROYAL: At this stage of the evening perhaps we should be prepared to accept that the good sense of the Government is something we should rely on. I am not sure that we should have accepted that earlier in the day. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 20T:
Page 9, line 5, at end insert—
("(6C) If any person shall feel aggrieved by the withholding of a consent under this section or if at any time any dispute, difference or question shall arise between the Secretary of State and any person as to any consent or any matter related thereto then the same shall be referred to arbitration. Such arbitration shall be in accordance with the Arbitration Act 1950 by a single arbitrator who, in default of an agreement between the Secretary of State and the person concerned as to his appointment, shall be appointed by the Lord Chief Justice of England for the time being (or the Lord Advocate for arbitration in Scotland). Such arbitrator shall have power to award against the Secretary of State compensation in respect of the losses suffered by any person consignent upon the withholding of a consent under this section.")
The noble Lord said: I beg to move Amendment No. 20T, which comes to the question of compensation. The Amendment is designed to provide for compensation and for some machinery in order to regulate the situation where an enterprise using gas has been injured by the Secretary of State in exercising his
1990
powers under this clause. This may be something which the noble Lord, on behalf of the Government, is not prepared to accept. I am reminded of similar debates we had last year on the Petroleum Bills which were before your Lordships then. I must make the point again that the Government may decide to exercise their new powers under this clause and, in the course of doing so, damage a plan and a programme which the industry had entered into; individual companies would be injured by it, and there does seem a case for compensation and for some fair machinery for dealing with it.
The clause is itself based on that covering the licences for on-shore and offshore production under the Petroleum Production Act 1934 as amended by the Petroleum and Submarine Pipe-lines Act 1975—one of the Bills with which we were dealing last year. Of course the Arbitration Act 1950 mentioned is the general Arbitration Act. So we are putting forward in this new subsection proposals for dealing with the compensation when an injury has occurred. The Government at the time will have taken a decision which they consider to be in the national interest; the company concerned, through no fault of theirs, has suffered an injury; should there not be some remedy in that situation? Again on this Amendment I repeat what I said on earlier ones, that if the drafting does not commend itself entirely to the Government, then of course this can easily be put right at a later stage. I beg to move.
Lord LOVELL-DAVIS: This Amendment would allow any dispute between the Secretary of State and any person regarding a consent to be referred to arbitration. I am sure that, on reflection, noble Lords will agree that the question of granting or withholding a consent depends solely on the Secretary of State's view of the national interest, and this is not a justiciable issue. Decisions of this nature are entirely for Government and cannot be referred to arbitration as if they were matters requiring adjudication under a contract. As regards compensation, I have already dealt with the Government's real anxieties concerning those who have already incurred expense in reliance on the present law. But this particular Amendment seems so generally distrustful of Government, of no matter

1991
what Party, and so to question the right of Government to make decisions in the national interest, that I would hardly expect it to be raised here. I cannot recommend noble Lords to accept this Amendment.
Lord CAMPBELL of CROY: The noble Lord has criticised the drafting of the Amendment and, as I said, I expected that he would not necessarily find the drafting to his taste. However, he has not, as I understand it, dismissed the question of compensation altogether and I hope that he will take that point into consideration and that we will be able to revert to the subject at later stages of the Bill. Meanwhile, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 8, as amended, agreed to.
Clause 9 [Disposal of gas by flaring]:
8.31 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 20W:
Page 9, line 20, at beginning insert ("Subject to subsection (3)(c) below").
The noble Lord said: The grouping of the Amendments to which we now come is somewhat complicated and I will, with the leave of the Committee, discuss with Amendment No. 20W, Amendments Nos. 20Z and 20YA, and then my noble friend will deal with Amendments Nos. 20X and 20Y. We are now on the subject of flaring, which we discussed at some length during our debates on the Petroleum and Submarine Pipe-lines Act. The purpose of this Amendment is to remove the requirement to obtain consent from the Secretary of State for routine startup and shutdown operations in industrial plant and to allow flaring for safety measures in the operation of industrial plant. This is a somewhat complicated matter, but I promise the noble Lord that I am in no sense attempting to generate any smokescreens in dealing with it.
The basic requirement for obtaining consent for flaring concerns natural gas. This is supposed to exclude gas made from other sources—such as gas produced in the process of distilling oils in a refinery—but in any plant which takes in natural gas as one of the feedstocks for processing into chemical products or
1992
petroleum, it is impossible to identify the natural gas from the other gases produced by the processes of converting feedstocks into other end products. Thus, the first objection to the clause as it stands is that it is simply not realistic to restrict flaring to natural gas which is not distinguishable from other forms of gas. But the really important point is the safety one. In the course of operating these complicated plants, the balance of the plant at any one time can alter quite radically and frequently many times during the course of a day. This is particularly true of start-up and shutdown processes, but at any time the balance in a chemical plant is a delicate matter and to relieve pressures which build up the normal practice is to flare the gas.
It is contended that it is less damaging to the environment—I mention this in case we come on to that point—to flare rather than simply to discharge it into the atmosphere in the unflared condition. This is the important issue; that is, that companies operating a complicated chemical process should be allowed to relieve pressure buildups, where they have them, for safety purposes. In any case, as I have said, it is the most sensible thing so far as possible to redigest any gases that are generated into the plant, so that all the incentives before the operator are to use any gas he generates. I understand from those who operate these plants that they consider it a much less damaging operation to flare the gas rather than to vent it into the atmosphere in an unflared condition.
The starting up and the shutting down of these plants, while a routine matter, is something that happens quite frequently to maintain the balance of the output required, and starting up or shutting down is the moment at which the balance of the whole process can be thrown out. In practical terms the only way to maintain this balance is occasionally to flare the surplus gas which is generated. I do not want to elaborate on this at length, but the industry assures me that it is not only impracticable but also not sensible to impose conditions of this kind on a process as complicated as this, which traditionally has always got rid of its surpluses in this way. I beg to move.
Lord KIRKHILL: Let me say at the outset that I agree with the noble Lord,

1993
Lord Strathcona and Mount Royal, that the grouping of the Amendments at this point is somewhat complicated. I had hoped to cover Amendments Nos. 20W, 20X, 20Y, 20YA and 20Z, so if I do something of that kind I think that I would be more or less in line with the noble Lord's thinking, although perhaps not stopping off at one of the points he mentioned earlier. I think that there has been a certain amount of confusion about the need for Clause 9, under which the Secretary of State's consent is required for flaring United Kingdom natural gas either at source or elsewhere. The confusion has arisen because there are already similar provisions in the Petroleum and Submarine Pipe-lines Act 1975, and at first glance there appears to be duplication. The main purpose of these Amendments is, I believe, to clarify the issues and to try to avoid duplication, and this gives me the opportunity to explain with as much clarity as I can the position of the Government. Noble Lords may find it helpful if I were to explain the background to the clause and then discuss the Amendments in the light of what I have said.
To prevent the waste of natural gas, the licence terms as set out in the Petroleum and Submarine Pipe-lines Act require that the consent of the Secretary of State must be obtained before the licensee flares gas from the licensed area, whether onshore or offshore. This requirement will, therefore, bite only so far as it is possible to prove that the gas comes from the licensed area. Moreover, it has been suggested that the control may apply only to flaring in the course of activities controlled by the licence, such as the searching for, getting or landing of petroleum. Clause 9 will apply to all United Kingdom natural gas from whatever source, whether it is to be flared at sea or in the United Kingdom It will also apply to anyone, such as an offshore buyer as well as to the licensee, so this matter is, in part, a legal concept.
Amendment No. 20X seeks to leave out, "whether at source or elsewhere". I think noble Lords might now agree that, because of deficiencies in the Petroleum and Submarine Pipe-lines Act, these words are required. That is the view of the Government. Amendment No. 20Y seeks to avoid the situation where a licensee who has already received consent to flare under one Act is required
1994
to apply again under a second Act. I accept that we must do everything to prevent duplication of this kind and my noble friend Lord Lovell-Davis will consider how best to give effect to this.
Amendment No. 20Z and the first part of Amendment No. 20Y cover cases where, in the view of the noble Lords proposing the Amendments, automatic consent for flaring is necessary. I accept that there will be cases in this category. For instance, the noble Lord mentioned the question of safety and it is for this reason that subsection (3) allows consent to be given by order. I hope that the companies will be able to provide us with as much detail as possible so that the necessary orders can be made without delay. But I give this undertaking to the House. We on this side could look again at the question of controls over the escape of flared gas into the atmosphere and we should be prepared to give that our further consideration.
The Earl of KINTORE: I do not want to be tiresome, but I have a particular interest in this. Provided that I can be assured that the companies operating plants will have previous permission to flare when they think it necessary, I shall be happy. One may have only two minutes in which to decide whether or not to flare. If a company has to get the permission of the Secretary of State or any other permission at all except from a purely operational basis, half the town of Peterhead could blow up when the NGL plant goes there. These gases or liquids—whichever one likes to call them—are stored in very large tanks and are refrigerated. If refrigeration is lost because something goes wrong with the refrigeration plant, pressure will build up and they will blow up in five minutes. Flaring is a safety valve and must, under those conditions, be considered as such. I do not pretend to understand the Amendments but, if I have an assurance that there will be complete freedom of operation to the plant operators to flare if companies require to do so, I shall be quite happy.
Lord HAWKE: Can the noble Lord say what is happening at the present moment? It is a little difficult to follow and the question raised by my noble friend is a very interesting one. Did I understand the noble Lord to say that,

1995
under existing legislation, there is something similar in operation? What is the present method of giving the facility which companies clearly require?
Lord KIRKHILL: The noble Earl, Lord Kintore, has raised a most interesting point and one which, in his and my case, has a certain geographical significance. I assure him that, to enable speedy flaring to take place in an emergency, advance permission would be available under the General Order provisions. To reply to the noble Lord, Lord Hawke, the distinction is between permissions which can be granted under the Petroleum and Submarines Pipe-lines Act relative to oil generally and the fact that, on this specific point of flaring, we must make sure that, if necessary, others apart from the licensee can also receive permission.
Lord STRATHCONA and MOUNT ROYAL: It is clear that the Government are not closed-minded about these Amendments and that the issue will largely turn on the nature of the orders which they are proposing to make. I believe that the sensible course will be to leave the matter open until Report stage. My instinct tells me that there will be discussions behind the scenes and that we may be able to get a clearer picture of where we are. Listening to the discussion, I ask myself what will happen if a company in extremis, says, "To hell with the regulations, we are jolly well going to flare, anyway!" I imagine that that is what companies will tend to do and, if my noble friend Lord Kintore is right and the choice is between blowing up Peterhead or incurring the wrath of the noble Lord, Lord Lovell-Davis, I know which way my decision would go. However, if we are saying that the Government have hoisted this point aboard and that they recognise that there is a degree of concern that, as the provision stands, it may be rather rigid, I am content to leave this to a later stage.
Lord KIRKHILL: The noble Lord can rest assured that the North-East Scots will see him all right.
Lord STRATHCONA and MOUNT ROYAL: I think we can rely on the good sense of the North-East Scots, whatever else may happen, so I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.45 p.m.
Lord CAMPBELL of CROY Lord CAMPBELL of CROY moved Amendment No. 20X:
Page 9, line 21, leave out ("(whether at source or elsewhere)").
The noble Lord said: I suggest that it would be for the convenience of the Committee if Amendment No. 20Y were taken together with the present Amendment. Amendment No. 20X seeks to take out words which do not appear to add anything of substance to the clause unless the Minister can show that they are essential. Amendment No. 20Y has as its purpose the removal of the requirement to obtain the consent of the Secretary of State in order to flare natural gas either in an oil refinery or under a production licence.
To deal first with the oil refinery, we recognise that the purpose of the clause is to ensure that natural gas is not needlessly wasted by flaring. In an oil refinery, operations and safety require gas to be flared in certain circumstances. Furthermore, it is immaterial whether the gas is natural gas or some other kind of gas. Once it has entered the oil refinery it is very difficult to identify where natural gas is as opposed to other gases in the refinery.
As regards the Continental Shelf and the production of oil and gas there, this House last year discussed at some length the whole question of flaring under the Petroleum and Submarine Pipe-lines Bill, as it then was. As a result, that Bill, when enacted, contained some special provisions which covered action to be taken in an emergency. There were also other provisions concerning production licences which were not the same as in the present Bill. Since the situation concerning production licences has so recently been covered by that Act, it seems unnecessary to cover the area again by the provisions in this clause. I have mentioned the particular point of emergency flaring which can be carried out without consent under the 1975 Act. There is also, I am advised, the point that the legal position is different. Under the present Bill, a criminal liability arises if there is flaring in contravention of the Secretary of State's direction whereas, under the Petroleum and Submarine Pipe-lines Act, the offence is one arising under civil law and it constitutes

1997
a breach of contract rather than a criminal offence.
These are two examples of the differences and it will only cause confusion if the Government try in the course of proceedings on the present Bill to cover an area which has already been dealt with. So, whether or not the Government happen to like the wording of Amendment No. 20Y, I hope they will take into consideration the points which I have made regarding, first, oil refineries and, secondly, production licences. I beg to move.
Lord KIRKHILL: First, I wish to refer to the legal situation which the noble Lord, Lord Campbell of Croy, has just outlined. Certainly I, or my noble friend Lord Lovell-Davis, could give further consideration to this point, but I do not feel that I can usefully add to my earlier remarks on Amendments Nos. 20X and 20Y, when I attempted my omnibus reply to the noble Lord, Lord Strathcona and Mount Royal. There is nothing more that I can add. The points that I made earlier were, I felt, made explicitly, and so at this time I rest on what I have said.
Lord CAMPBELL of CROY: I appreciate that, with the leave of the Committee, the noble Lord was earlier replying to a group of Amendments, including these two Amendments which we are now considering, on the basis that I would move them later, and I listened to what the noble Lord then said. That course was taken in order to save the time of the Committee, which is something with which I fully concur. None the less I hope that, with his advisers the noble Lord will consider what I have said on these points. Clearly he is not in a position to add to what he said earlier—
Lord KIRKHILL: May I interrupt the noble Lord for a moment to add that I have been advised regarding the point regarding criminal liability. Under Clause 16(3), it is stated that, "criminal proceedings do not lie…" I thought that this might be a useful piece of information for the noble Lord.
Lord CAMPBELL of CROY: I am grateful to the noble Lord for giving such a quick response to that point. But I do not think that it detracts from my general argument that the Bill is seeking
1998
to impose another pattern on one which we went into in considerable detail when considering the last Bill, and for which we think (though we have differences with the Government) Parliament as a whole has produced what was thought to be a suitable pattern; that is to say, the production licences system. It would be untidy and would cause confusion if there were to be imposed on that yet another pattern under this Bill. Unless the Government can show at a later stage of the Bill that there is something seriously missing—which we did not think of last year, and which the Government themselves did not think of when dealing with flaring in connection with production licences—then we cannot see why it should be necessary to duplicate, and go over that ground again. In the meantime, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn. Clause 9 agreed to.
Clause 10 [Refinery gas]:
8.55 p.m.
Lord STRATHCONA and MOUNT ROYAL Lord STRATHCONA and MOUNT ROYAL moved Amendment No. 20AA:
Page 9, line 38, at end insert—
("( ) The Corporation's consent shall be given if the supply is for industrial non-fuel purposes and no conditions shall be attached to such consent.").
The noble Lord said: Here again we are trying to make some nice distinctions. I must go into the background to this matter as I understand it. Clause 8, which we have dealt with at some length, sets up a number of very constricting controls. We have been at some pains to say that we regard them as unnecessarily restrictive. Under Clause 8(5) there is a specific exemption from controls for,
"…gas obtained in an oil refinery from offshore crude brought in by sea transport…"
It allows
"it to be used in that refinery, or to be subjected there to any process of liquefaction."
This is an important exception: otherwise oil refineries would have been in the curious position that the Clause 8 control would have applied to North Sea crude, but the Gas Acts would have applied to them only in respect of imported crude. It does not need much imagination to see the difficulty that there would have been in distinguishing

1999
between what emerges at one end from the things put in at the other.
The difficulty is that this exemption, I understand, does not apply to North Sea crude delivered to the refinery by pipeline. I gather that the Government take this view because, for safety reasons, there is an upper limit to the proportion of gas which can be included in crude transported in this way, whereas this restriction does not apply to crude conveyed by pipeline. So the refineries receiving North Sea crude would be subject to Clause 8 controls. The existing controls are subject to the control that gas supplied by pipeline for non-fuel purposes is subject to consent given by the British Gas Corporation. This is a mandatory consent, which has to be given if the company can show that the gas is not required for fuel purposes. In practice, this means that oil refineries are free to supply other companies, or their own associates, with gases used to make chemicals.
We have addressed ourselves to this point a number of times this evening, and I do not need to elaborate upon it unduly. The change now proposed under Clause 10 would make the consent of the British Gas Corporation discretionary, rather than mandatory, and there is a right of appeal to the Secretary of State; in other words, whereas the companies could rely on getting consent, if they were able to show that it was a non-fuel use for which they were applying (and there was no argument about it), now the situation will be that they can apply, and they would hope to get consent; and if they think that the British Gas Corporation is not being reasonable in not giving its consent, they can apply to the Secretary of State.
This is a provision which worries the commercial organisations engaged in this class of business. It is desirable to them that gases piped in liquid form should be free of all control, whatever purpose they are to be used for. We have argued several times this evening that if liquid petroleum gases are to be free of control—if being conveyed by ship, road, or rail—it is anomalous to control them if they are being conveyed by pipeline. Thus Amendment No. 20AA is an attempt to restore the present position with respect to consent for the supply of
2000
gases for industrial non-fuel purposes whereby consent has to be given if it is demonstrated that this is the purpose for which they are required.
Having embarked upon this argument, it might be as well if I pursue the arguments for Amendments Nos. 2OBB and 20CC which are all addressed essentially to a similar point. Amendment No. 20CC is re-establishing the right which exists at present for refineries to supply gases for use in their own, and associated, companies without the need for any consent for the purpose for which the gases are to be used.
It may be said that the Government would always give consent if the cast, was at all a reasonable one but here we are back to the argument which, again, we have employed a number of times. If consents are always to be given, why bother to provoke the companies and the industry by bringing in regulations the very existence of which, even if they are not going to be used, is bound to frighten the people who are operating within this industry? There does not appear to be any economic case for these controls being taken by the Government, and they do not appear to be needed to ensure those ordinary controls which we have all conceded are necessary to protect the British Gas Corporation's monopoly for the sale of piped gas—that which has always been understood as being a right to supply piped gas for fuel purposes. We have therefore put down these three Amendments to see whether the Government accept that there is a problem here, and whether they are prepared to go any way to meet the situation which, frankly, is creating a good deal of disquiet in the industry. I beg to move Amendment No. 20AA.
Lord LOVELL-DAVIS: I am obliged to the noble Lord for taking this Amendment together with Amendments Nos. 2OBB and 20CC. Incidentally, I note that we are here once again very close to "otherwise howsoever", but perhaps might give a slightly more serious explanation of this from the brief. It really does mean that the Corporation's consent may be given subject to conditions or in any other way. There is thus freedom for the Secretary of State to impose such conditions as he thinks most appropriate in the circumstances.

2001
At present, gas supplied from a refinery, if derived from imported crude, is subject to Section 29 of the Gas Act 1972; if derived from North Sea oil, it is subject to Section 9 of the Continental Shelf Act 1964. So far as supply for non-fuel purposes is concerned, the effect is the same: the consent (of British Gas in the former case, of the Secretary of State in the latter) is mandatory, as the noble Lord, Lord Strathcona and Mount Royal, has said. But the provisions of Clause 8 will make consent for supply for non-fuel purposes discretionary, and so the gas supplied from the refinery, depending on its origin, would be subject to two separate and different regimes. To add to the confusion, which the noble Lord has described in a way I shall not recall, the gas is so mixed in the refinery that it would be impossible to tell its source.
It has therefore been considered that it is right that all such gas should be subjected to a single régime of controls. The Department of Energy has not the resources to cope with the many cases of refinery gas supply that may arise, and so it seems sensible to treat these supplies as coming under the Gas Act régime and therefore subject to the consent of British Gas rather than of the Secretary of State.
But in the case of supplies for non-fuel purposes the provisions allow an appeal to the Secretary of State, who would then apply controls in a manner analogous to that of Clause 8. The first Amendment would therefore breach one of the major aims of Clause 8—to bring all off-shore natural gas under discretionary control. I cannot therefore recommend noble Lords to accept this Amendment. The second Amendment is really consequential on the first, and I assume that if the first Amendment were to be rejected the noble Lords proposing the Amendments would then prefer subsection (4) to be retained.
The third Amendment seeks to remove from the control of British Gas gas provided through pipes from a refinery for the person's or company's own use, or for the use of an associated company in the same group. I think there are grounds for not subjecting to control supply by one company to another in the same group; and, while I ask noble Lords to reject the first two Amendments, I am prepared to consider whether we can
2002
accommodate the third in any way without disturbing the scheme of control established by Clause 8 and by this clause.
Lord STRATHCONA and MOUNT ROYAL: It is a complicated matter, and it is quite evident to me that the Government feel very strongly about it. I think the best thing we can do at this juncture is to read carefully what the noble Lord has said. I do not pretend that I find this issue, which we have had so often, of trying to separate the particular purposes of the particular gases which we are dealing with, a very easy one. I think the best thing I can do at this stage is to beg the leave of the Committee to withdraw this Amendment, while reserving the right to examine carefully what has been said with a view to coming back on this matter at Report stage. I therefore beg leave to withdraw Amendment No. 20AA.
Amendment, by leave, withdrawn.
On Question, Whether Clause 10 shall stand part of the Bill?
Lord LOVELL-DAVIS: May I correct something which I have been informed I said when replying to the noble Lord, Lord Strathcona and Mount Royal? In once again being so unwise as to discuss "otherwise howsoever", I mentioned the consent of the Secretary of State, but in this case it would actually be the consent of the British Gas Corporation. I apologise to noble Lords.
Clause 10 agreed to.
Clauses 11 and 12 agreed to.
Clause 13 [Passenger car fuel consumption]:
9.6 p.m.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 20EE.
Page 11, line 24, leave out ("different").
The noble Lord said: In moving the next series of Amendments, which stand in my name, may I first of all thank the noble Lord, Lord Lovell-Davis, for having written to me about two points; and may I also make an apology to him as to my criticism of the Government, concerning the lack of consultation in the early stages, although I understand that, so far as the retail industry are concerned, the consultations confined themselves to the principle of testing and did not extend to some of the after-effects of this. That is

2003
not of great moment now, but, nevertheless, I should like him to know that I am grateful.
Amendment No. 20EE, which is to leave out the word "different", is there particularly to inquire of the Government exactly what is meant by "different cars in standard conditions". I am also going to ask a further question in connection with "different cars", and that is this. When we are talking about fuel consumption, are we talking only about liquid fuel consumption? In other words, can the Minister shed any light on the position with regard to electric cars? Can he also shed any light on a car which is designed and manufactured specifically to run on LPG? I understand that "different cars really should mean cars of a particular make, a particular model and a particular mark of that model.
While I understand from Lord Lovell-Davis's letter that it is not intended to test every car—that is quite understood—presumably, it is intended to test every car of the type that is offered for sale. Indeed, if it were not so, there would be little point in having a comparative test situation. Could the noble Lord explain exactly what is meant by "different" if he wants to leave it in? Obviously, if he accepts my Amendment, it means all cars of all makes, models and marks. What do we mean by cars in standard conditions? Are we talking about motor cars in standard conditions or test circumstances being of standard condition. I beg to move.
Lord KIRKHILL: The noble Lord, Lord Lucas, has proposed a number of Amendments to this clause. To put them into perspective, I propose to comment briefly on the clause as a whole. The purpose of this clause is to create a better awareness of the importance of the motor car in the energy conservation scene and to encourage over a period of time the greater development and use of cars which offer the advantage of relatively low fuel consumption. Road transport is responsible for something like one quarter of our total consumption of oil; the motorist is using high cost petroleum products most of which are imported at the expense of great strain on our overseas trade balance. Therefore, the importance of encouraging the greatest possible
2004
economy in this area of energy usage cannot be over-stressed.
In our proposed scheme of standard testing of fuel consumption of cars and publication of data which enables true comparisons to be made between different types and models, we are not seeking to prevent the individual motorist from choosing the car he prefers, but only to make sure that where his preference is in the direction of a car of relatively heavy fuel consumption, he exercises this preference with full knowledge of relative fuel economy performances. Nor are we imposing anything unreasonable upon the industry and the trade. For example, in the United States arrangements of this kind have been in operation for some considerable time. So far as our proposed arrangements are concerned, they have been fully discussed with and accepted by the principal national organisations representing the manufacturers, distributors, retail traders, the motorist and the consumer.
With that general comment, which I think it is apposite to make, I would respond to the noble Lord's first Amendment by stating to the noble Lord that the intention of the paragraph now under consideration is that the orders made under the clause may provide for the recording and publication of the results of tests made on single samples of each particular model or range of models in order that ready comparisons might be made of fuel consumption performance of different makes. The inclusion of the word "different" was certainly not designed to enable the Secretary of State to require testing of different cars of the same basic type. In the light of the noble Lord's comments and to remove any doubt as to whether our wording is exactly in line with our intention, I am prepared to have another look at this question.
Lord LUCAS of CHILWORTH: I am grateful to the noble Lord for his early comments regarding the purpose of the whole clause. I am quite sure that the basic intention is not in dispute by anybody. It is how we arrive at the information and what the public do with it. In view of his remarks in regard to the Amendment, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 22:
Page 11, line 31, after ("cars") insert ("and coachbuilders").
The noble Lord said: This Amendment was inserted particularly in relation to the previous one in that where we are having tests administered by manufacturers or importers it seems to me rather important to consider those people who, with the full knowledge and acceptance of the manufacturers, convert a car to a different purpose. I am thinking, for instance, at the present moment, of the British Leyland model Princess which, ex-manufacturer, has no estate conversion.
This work is being undertaken by an outside contractor, in my terminology a coachbuilder. This will completely alter the motor vehicle. If the testing arrangements were restricted to—and I use this model merely as an example—the Princess, ex-British Leyland, it would have little bearing on the estate conversion authorised by the manufacturer; in that the body is altered, the springing may be altered and the rear axle ratio might be altered. Therefore the petrol consumption could be marginally altered. It would not be sufficient under the earlier clause for there to be a different car, make, model or type, and then have excluded what may amount to a sizeable portion of the market. That is the sole reason for adding this description "and coachbuilders". I beg to move.
Lord KIRKHILL: Under subsection (2)(a), orders made under the clause may provide for tests to be made by the manufacturer or, for foreign cars, the importer. By "manufacturer" is meant the concern which markets the car in its own name. Thus if a firm of coach-builders takes an engine and chassis from another manufacturer, builds on to this a special body, and then sells the car in its own name, our intention is that this firm should be regarded as the manufacturer, just as a car sold under the name of the producer of the engine and chassis would be regarded as manufactured by that producer even if the body work is made by someone else.
Lord LUCAS of CHILWORTH: I am perfectly happy with that explanation which completely clarifies the situation.
2006
I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
9.16 p.m.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 23:
Page 11, line 32, leave out ("from time to time") and insert ("at prescribed periods").
The noble Lord said: The purpose of this Amendment is to remove this rather indeterminate description "from time to time". This is similar to earlier descriptions in the Bill such as "howsoever" and "maybe". If we are going to subject a mark of motor car for tests from time to time as the Bill suggests, let us know exactly when we are going to do it otherwise it is upsetting to set down a production run not knowing whether that is going to be subjected to a test. Certainly if a model is changed during a production run—the introduction of a different carburettor, for example—then it may be necessary to call for that later mark to be tested. If it is intended on a long production run to have a quality test during the run, it may be more reasonable for a manufacturer to know exactly at what period in a production run—whether numerically or in date terms—this second test is to take place. "From time to time" has certain meaninglessness about it.
Lord KIRKHILL: I consider this Amendment as being helpful because it enables me to explain the intention behind subsection (2)(b), which is that there should be no regular system of repeating tests, but only that the Secretary of State should have the right to require a check test in the exceptional case where there are circumstances of doubt about the accuracy of the original test. The Government have no wish to impose any regular system of repeated check tests for all models of cars covered by the arrangements. Under the paragraph as it stands, the order made under the clause will have to make quite clear of course—and I emphasis this—what are the circumstances and conditions under which tests may be required to be repeated, and there will be full consultations on these points, as required by subsection (5), before the orders are settled. The noble Lord has that assurance.
Lord LUCAS of CHILWORTH: I am grateful for those assurances. I do

2007
not wish to be difficult about this; but I must confess that I still do not like that expression, "from time to time". It does not mean anything at all. If we are going to subject a motor car for a specific purpose to a second test, then I suggest that it would be better if we found words so to describe that requirement. The noble Lord has been very generous so far. I wonder whether he would care to think of an alternative and perhaps more acceptable form of words. If not, perhaps he will allow me to put some forward at a later time.
Lord KIRKHILL: I understand the difficulty as the noble Lord, Lord Lucas of Chilworth, sees it. Part of the problem in a case of this type is to get the exact form of words which best fits the Government's position at this stage. Thus far we cannot improve on the phrase "from time to time" for the reasons that I have been explaining. I would, as of now, resist the Amendment.
Lord LUCAS of CHILWORTH: I am certainly not going to press this Amendment, but as I still do not like the form of words to fit the description, perhaps I might be allowed, if I can think of something better, to offer it to your Lordships at a later stage. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Lord KIRKHILL Lord KIRKHILL moved Amendment No. 24:
Page 11, line 34, leave out ("and").
The noble Lord said: The proposed scheme of testing fuel consumption of cars and publishing the results will apply to cars marketed in this country, whether of British or foreign manufacture. In the case of foreign-made cars which have been tested in the country of origin under the same internationally agreed testing conditions as we shall be applying, it would clearly not be economical to repeat the tests in this country. Equally, a repeat in other countries of our tests on British-made cars would be wasteful and unnecessary. The purpose of this additional subsection, therefore, is to enable us to make reciprocal arrangements with other countries which have adopted fuel consumption testing based on the same standard test conditions. The first such arrangement would be with the French, who have introduced a scheme parallel
2008
to the one we propose and indicated their desire to conclude an agreement with us. I am sure that there will be general agreement that what we propose is sensible, avoids a waste of resources and is consistent with the maintenance of harmonious relations with our international trading partners.
Lord STRATHCONA and MOUNT ROYAL: I think the noble Lord is possibly confusing us a little here. Would I be right in thinking that Amendment No. 24 is really a paving Amendment to Amendment No. 26 and that the noble Lord has spoken to both Amendments at the same time?
Lord KIRKHILL: I apologise. Of course, Amendment No. 24 is a paving Amendment to No. 26.
On Question, Amendment agreed to.
9.23 p.m.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 25:
Page 11, line 5, after ("payment") insert ("by the Secretary of State").
The noble Lord said: In moving this Amendment No. 25, I am hoping to clarify two points: first, who is to pay and, secondly, how much is to be paid? It is important that we should know at the outset who is expected to pay. If it is the Secretary of State, as I have suggested—he seems to be the person it is reasonable to expect to pay—then the repercussions flow only through general taxation. If, however, it is the manufacturer, then that amount of money, however much or however little it may be, must be added into the product. If that is done, the car tax, which is an immovable tax based upon the wholesale price of the car, will have reflected in it that proportion of the wholesale cost represented by the test.
Your Lordships will know that at the end of the line comes the value added tax, and value added tax is based upon the car tax and the retail price and the whole inbuilt set of costs. Therefore, if the manufacturer, the importer or concessionaire who offers the car for purchase is to bear the cost, the ultimate cost will be borne by the consumer through tax, and I think it is important that we should know here and now who is to pay and what kind of sum is envisaged. It may well be that, on the question of the amount, the

2009
Minister is not able, for reasons one can easily understand, to put a figure on it. But with the multiplicity of makes, models and marks on the market today, both of English-made cars and of imported cars, and with the ever-changing scene, there are a considerable number of motor cars to be tested. Whatever organisation undertakes this kind of work, which must be fairly accurate because it has to conform to international standards, the amount will not be inconsiderable. If it is said, "If the cost is spread over 1 million motor cars it becomes a very small amount for each car, so why are you very worried about it?", I would say that I do not think I am very worried. I just say that before we embark upon this, let us know exactly what we are doing. It is for that reason that I beg to move this Amendment.
Lord KIRKHILL: This Amendment which has been put down by the noble Lord, Lord Lucas of Chilworth, gives me an opportunity to explain clearly the Government's view on this point, although after having listened to the noble Lord I doubt whether that is necessary, because he has more or less given my position in a number of rhetorical questions which he put to me. But I can confirm that following full consultation of organisations representing the interests concerned, including the manufacturers, a scheme of testing fuel consumption of motor cars has been worked out, based on arrangements for self-testing by the manufacturers. During these consultations, the manufacturers' representatives—that is, the Society of Motor Manufacturers and Traders—did not raise the question of cost with the Government. Many manufacturers, of course, already have test facilities and they already make measurements of fuel consumption and publish their results, regarding the cost as a normal component of total production costs. The intention is that a test of one sample only will apply to all cars of that model, and also to all cars of related models which are variants of essentially the same car. Each test will therefore be applied generally to a large number of cars sold; the cost per car, as the noble Lord acknowledged, will generally be very small, and there will be no significant burden on the purchaser, although I cannot give the exact cost. Manufacturers already meet the costs of
2010
tests on exhaust gas emission which are required for environmental purposes. I do not think there is anything unreasonable in expecting the producer to bear the cost of testing now required under this clause. Nor can I see any basis for the suggestion that the taxpayer should pay for something which, in the Government's view, is for the benefit of the individual purchaser of motor cars.
Lord LUCAS of CHILWORTH: I am not in the least surprised to have received a reply in those terms—a reply which I am quite happy to accept. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.28 p.m.
Lord KIRKHILL Lord KIRKHILL moved Amendment No. 26:
Page 11, line 35, at end insert ("and
(d) for official approval to be extended to tests carried out in other countries, and for the results of such tests to be adopted, certified and published in the United Kingdom.")
The noble Lord said: I formally move Amendment No. 26, having previously spoken at length. I beg to move.
Lord LUCAS of CHILWORTH: Obviously, we would find this Amendment quite acceptable but I should like to ask one question. Are we completely satisfied that the arrangements made through the EEC harmonisation schemes, and through the ECE, will be exactly the same as ours, because some motor cars will be tested in climatic conditions which are quite different from our own? As I understand it, the test might be one of actual usage rather than one of a mechanical nature, using, for example, a rolling road in enclosed, almost laboratory-like, circumstances. If we may have an assurance that the tests will be absolutely similar so that there can be no bias for or against a motor car, particularly an imported one, I am sure that we would be quite happy.
Lord KIRKHILL: At this stage I am unable to give an unequivocal assurance to the noble Lord. My information, thus far, is that so far we have negotiated satisfactorily only with the French. In further negotiations we would, to use the noble Lord's own phrase, unquestionably wish to be in as much harmony as possible with international agreements, so that there would be a true comparison of like with like. However, I shall pursue

2011
the point and undoubtedly I shall be able to let the noble Lord know at a later date.
Lord STRATHCONA and MOUNT ROYAL: Earlier we talked about the IEA and the EEC. Is this a matter which will be addressed to either of these international bodies, and will there be a degree of harmonisation between the European countries about the way in which this matter is approached?
Lord KIRKHILL: Again the noble Lord's question advances my state of knowledge beyond its present position. However, as a general proposition I can say that if this position were to obtain in future, it would be covered, so far as this Bill is concerned, by its enabling provision. In part that also answers the question asked by the noble Lord, Lord Lucas of Chilworth.
On Question, Amendment agreed to.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 27:
Page 12, line 6, leave out from ("compiled") to ("issued") and insert ("and").
The noble Lord said: I beg to move Amendment No. 27. I stated the purpose of this Amendment during the Second Reading of the Bill when I think I described the phraseology of this subsection as "rather sloppy". I wish to have removed the words "with a view to a copy of it being". If, as is the usual practice, a handbook is supplied with a new motor car, whatever its make or model, and whatever its country of origin, it seems to me that if the information is put into that manual it will be issued. I cannot see that it helps the manufacturer, the dealer, or the user to have this expression which leaves to them the option of giving a manual or handbook to the first purchaser. If we removed these words, it would be obligatory to include the information in the handbook compiled for and issued to the first purchaser, and that is the purpose of this Amendment. I can see no point whatever in these wishy-washy words which are rather meaningless.
Lord KIRKHILL: The Amendment has the merit at first sight of shortening and simplifying the wording of subsection (3)(b), an intention to which the noble Lord has just referred. I am afraid, however, that it is unsatisfactory
2012
because it appears to have the effect of putting the obligation on the retailer to see that the manual or handbook provided with the car includes the required information about the result of the fuel consumption test. The retailer has no hand, of course, in the compilation of the handbook and the intention was that the responsibility for carrying out the requirement to include necessary fuel consumption data must rest on the producer of the car who produces the accompanying handbook or manual. None the less, in the light of the remarks made by the noble Lord, I am prepared to look again at the drafting of this subsection to see whether the intention can be more clearly expressed.
Lord LUCAS of CHILWORTH: I am most obliged to the noble Lord. Of course he will accept that, if he does not want the retailer to carry the responsibility, a responsibility which he says the retailer should not carry because of the earlier wording, it makes a nonsense of the whole piece. So that unless it can be improved one might as well remove this as it is not even obligatory; it is merely a casual requirement upon somebody. However, the Minister has kindly said that he will look at it, so we will see what comes up at the next stage.
Lord KIRKHILL: I wish merely to say that at this stage the noble Lord perhaps underrates the sheer inventiveness of the Ministerial intervention on this side.
Lord LUCAS of CHILWORTH: I am sure the Minister is absolutely right about that. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
9.36 p.m.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 28:
Page 12, line 8, leave out paragraph (c).
The noble Lord said: This Amendment to leave out paragraph (c) is really quite important, and I think it would be helpful to the Committee if I spoke also to Amendment No. 30, because that offers the alternative. The objections to paragraph (c) are three-fold. First, the paragraph suggests that,
"at any place where he causes cars to be offered for sale, or regularly transacts business with customers relating to the sale of cars, keep posted up".
This implies that anybody who deals in motor cars—that is a franchise holder or a non-franchise holder, a used car dealer, a repairer who now and again sells a motor car—has to keep information posted up. Also by the very words, "posted up" the inference is that there is to be a poster or a chart of some kind. There might be 900 motor cars with test information, so it would be a very large poster that had to be kept posted up. Those are the first two points. Anyone who deals in motor cars, new or used, or even a repairer who sells only occasionally, has to do this and, secondly, he has to deface the walls of his showroom or workhop with another large poster. Incidentally, how is he to alter or amend his large poster? At least that is how I understand the words, "posted up".
The other and perhaps the really important point in this paragraph is contained in the last two and half lines:
"…including not only cars which he deals in or offers for sale, but also those which he does not".
I have discussed this with a number of individuals within the industry and I understand that the Motor Agents Association, who represent certainly the large majority of sellers of new motor cars, have written to the Department of Industry putting forward objections to this paragraph.
It is quite wrong that the seller of a piece of merchandise should be required by law to display information regarding his competitor's product. It is grossly unfair that he should have placed upon him a responsibility to make known those points of his competitor's product as specified in Clause 13. I may be quite wrong, but I do not know of any other industry that is so required to display pertinent information relative to a competitor's product. This seems to me a very serious incursion into his liberty to sell free. If your Lordships' Committee accept what I have said and think this is right, I have provided an alternative in Amendment No. 30. I will accept that the noble Lord the Minister may say, "Now, look here, we are going to all this trouble to have tests and certificates; they really must be made available to The public. It is no good putting all this in a handbook which the customer gets after he has bought: he wants to know
2014
this particular relevant point before he has bought. Where better place than the showroom of the dealer he goes to see? "
Amendment No. 30 provides a far better place; that is, where the public go for information. They go to a great extent to citizens' advice bureaux, to the consumer advice centres, to public and reference libraries. Indeed, so far as motor cars are concerned, I understand that the public are going to consumer advice centres and the departments of consumer protection more and more frequently. Therefore, it seems to me that these are quite obviously the places to put this information: where there are no pressures to be brought upon the intending purchaser; where the facts are plainly to be seen, offered by a clerk in that department or on that library bench.
It is insufficient, and it would be unfair, for a customer to go into a showroom for discussion about the purchase of a motor car and for him to look at a chart and to see alongside it one which apparently has a similar description, with a better fuel consumption. He would then say to the salesman, "Ah, well, this product will do two miles more to the gallon". Let us deal with what is going to happen in practice. The salesman immediately comes with a series of arguments. The consumer is then left even more baffled, because the obvious thing that would come to my mind would he to say, "Well, if you are really thinking about this motor car that does X miles to the gallon as against my motor car which does X minus miles to the gallon, suppose I fit for you a different type of air filter. I am quite sure that we could then get to a fuel consumption equal to this." Here is the client being torn and twisted by perfectly legitimate forms of salesmanship.
I suggest that we delete the requirement that all and sundry who deal in motor cars should have posted on their walls a big poster, very difficult to handle. I suggest that we put all the relevant information in booklet form in places where consumers go for advice. I beg to move Amendment No. 28.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Champion): The Question is, That this Amendment be agreed to. I should here point out that if this Amendment is agreed to, I shall not be able to call Amendment No. 29.
Lord KIRKHILL: It is a fundamental part of the scheme for which this clause provides, and which has been worked out in consultation with the industry, the trade, and the motoring and consumer organisations, that comparative information about the different cars on the market should be readily and clearly available at all car showrooms or other places where cars are sold. The intention is, of course, that in making choices the purchaser should know how his choice of car compares in fuel consumption with all other makes based on tests of samples made under strictly comparable conditions. May I say at this point that it is envisaged that about 106 tests would probably be made. The customer is perfectly free, of course, to choose a model with relatively high fuel consumption if he prefers it for other reasons, but he should have the opportunity to make his decision with full knowledge of comparative fuel consumption performance. It is not sufficient that information is provided about a limited range of models at a particular place. There should be an opportunity to compare any particular model with comparable models of other makes which are also on the market. I cannot agree that this is unreasonable, and I would think that to ask that this should be so would indeed be a fair position for the Government to adopt.
Although there were some expressions of doubt during consultations with the industry and trade on the scheme, the proposed arrangements were in fact—contrary, I think, to the point the noble Lord was attempting to make—accepted with the inclusion of this requirement. The Motor Agents' Association in a letter dated 12th January, and the Society of Motor Manufacturers and Traders in a letter dated 12th March, both accepted the scheme, which includes the following passage:
"An official list of all models of new cars offered for sale in the United Kingdom will be published, using the data obtained from the standard tests, and distributors and retailers will be required to display the most recent copy of the official list at each point of sale."
The National Consumer Council and the Consumers' Association, not surprisingly, attach importance to this requirement. The intention would not, in the Government's
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view, be fully met by the lines on inclusion of the data for particular cars in relevant advertising material.
The noble Lord, Lord Lucas of Chilworth, has spoken to Amendment No. 30 and perhaps I might turn to that. Again I have to emphasise to him that in the Government's view it is quite fundamentally a part of the scheme that the information should be clearly and readily available wherever purchasers of cars are taking decisions of choice. This is the concept behind the Government's view. The whole purpose would be lost if a decision to choose car X is taken without the advantage of being able to compare it in respect of relative fuel consumption with other makes which are on the market. It is, of course, in the car showroom, in the Government's view, not the library, nor the Citizens' Advice Bureaux, nor yet in the consumer advice centre, that practically all these decisions are taken in practice. I think that is as fair a summation of the Government's view as I can give the Committee.
Lord STRATHCONA and MOUNT ROYAL: I would support my noble friend up to a point here. It seems to me that the noble Lord's reply is a little unhelpful. I would go along with him in agreeing that this is the proper place to have this information available. It struck me that there was a strange anomaly in his reply. The noble Lord, Lord Lucas of Chilworth, suggested that there were 700 models, and if I heard the noble Lord aright he was saying there might be 100 tests. That would seem rather a wide discrepancy between what the two sides think is going to be required here. The relevance of that is this. The noble Lord, Lord Lucas, is talking about a big chart. Like the Duke of Wellington and the famous story of the rat in the bottle of wine, he did not say how big the print was going to be.
It seems to me that the case might be met if we considered at a later stage some kind of Amendment which simply said that the information is available and possibly at the point of sale there should be a notice indicating that the information is available on request. If one could envisage some small leaflets, like the information at the back of one of these magazines, for example, which would be available to the customer if he asked for

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it, this would possibly get over the point that is worrying the noble Lord about showrooms, although I am bound to say that most showrooms I have been in would not be seriously disfigured by a chart giving fuel consumptions. I thought the noble Lord was making a serious point and it seemed to me that the Government were saying, "Well, it's up to you to produce a good answer. We are quite satisfied with what we have done". I think we ought to encourage them to try to be a little more helpful in reply to what seems to me to be a perfectly reasonable request.
Lord KIRKHILL: I hope that noble Lords do not feel that the Government are in any way being arrogant on this point. The Government's position is that they have consulted very widely. I would not re-quote the various organisations. I have already mentioned them, and they are on the Record. There has been prolonged consultation and now there is agreement. The Government consider that to meet a reasonable consumer point, this kind of structure is necessary. If I might just conclude on this point, the discrepancy to which the noble Lord refers comes about because there are many variants on the one test, and it is really as simple as that.
9.51 p.m.
Lord LUCAS of CHILWORTH: I cannot take any comfort whatsoever from what the Minister has said. Indeed, he started off by really saying exactly what he said before in his earlier remarks. I missed one point. He said something about "100 tests". Could the noble Lord remind me about what he said about 100 tests, because, as I see it, with the variations as between overdrive and automatic transmissions on the same engine models there would be many more than 100 tests.
Lord KIRKHILL: My point was that the Government think that about 100 tests will cover the range of variants as these relate to the various models.
Lord LUCAS of CHILWORTH: It is obviously late because I have not quite taken that in, and perhaps I can look at it again. Notwithstanding what the noble Lord said, I do not like what he said.
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On this consultation, I have a copy of this letter of 12th January and the reply from, for example, the Motor Agents' Association, which was signed by the acting director-general, in which he said, "Yes, of course any information that comes from your Department is likely to be believed". I do not quite know what the inference was should the information come from anybody else, because in fact the road test reports that are given in both the Autocar and the Motor are held in very high regard, particularly in terms of their fuel consumption. Therefore, already people are beginning to look outside manufacturers' claims and the advertised claims to such magazines as I have mentioned. The consultations which may have taken place with other bodies have not, I think, been taken in depth in so far as the Motor Agents' Association is concerned, and they are the people, the retailers, who have to provide the information, and who have to sell the motorcars.
When I came back from the war in 1948 I started selling motor cars, and I think I know how to sell motor-cars, and I think I know where motor cars are sold. They are sold at home. They are not sold in a showroom. They never were sold in a showroom. Acceptance of a motorcar may be made in a showroom; the trial run may be made from the showroom; the standard of finish may be examined in a showroom. Nine times out of ten the buyer has thought it out at home; using all the ordinary daily Press, the motoring correspondents, the specialist trade, the specialist Press. Today a consumer is much more knowledgeable about what he is expecting out of a car in terms of steering circle, load capacity, fuel capacity, range, and so on and so forth. He then thinks, "It looks like it will be between 'A' and 'B'. Mother will go down, and we will have a look on Saturday". It is the last clinching. It is where the last £5 note is given on the part exchange, which clinches the deal. Specification was done a long time before.
Certainly if the information is to be available to the consumer, let it be so and let it be in those places where consumers go for general information, or let it be at an advisory centre. After all, if a man wants to buy a bathroom suite, for example, he does not go to a builders' merchants and expect to see all the relevant information about all the bathroom

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suites on the market. If he wants to compare all those sort of things he will more likely go to the regional building centre where samples are on view.
From what has been said, the noble Lord will see that I am not satisfied with the answer. I do not think it is fair to burden the retail industry with this responsibility, be it in chart or book form. However, in view of what the Minister has said, particularly regarding consultations, and in the light of the letter which I received last Friday from the Motor Agents' Association—I will consult with the Association and perhaps return to this matter on Report—I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 29:
Page 12, line 8, leave out ("he") and insert ("a person or persons").
The noble Lord said: This Amendment refers quite simply to the business of "he", "she" and "persons". It seems to me rather wrong that we should designate just, "he" in this provision when earlier in the Bill we talk about, "persons". There are, of course, many ladies who run motor businesses, happily most successfully. Are they to be excluded. In the Amendment I suggest the words "a person or persons" to make sure that nobody gets upset by wrong nomenclature.
Lord KIRKHILL: If the noble Lord thinks that "he" excludes "she" or "they" then that is not so, I am advised, because of the provisions of the Interpretation Act. I must, therefore, resist the Amendment.
Lord LUCAS of CHILWORTH: That is a resistance which it is quite easy to fall in with, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 31:
Page 12, line 21, leave out ("trade") and insert ("industry").
The noble Lord said: This may not be a terribly important point and it is perhaps a matter more of pride than anything else. We are here speaking of a number of organisations—of manufacturers, importers, distributors and retailers
—and it seems to me that this mass make up an industry as distinct from a trade. One normally thinks of the motor trade as being dealers in motor cars whereas in fact the whole of the motor industry includes coach builders, painters and all the people who I am sure it is intended to consult. I think it would be a better description and a much more satisfactory one to the industry to be known as "the industry" rather than "the trade".
Lord KIRKHILL: Had the noble Lord but known it, he could have spoken at half the length in moving the Amendment because the Government are aware that this is a choice of a portmanteau term to cover a combination of production, distribution and retailing of cars. The term "motor industry" is possibly preferable to "motor trade" and I am therefore ready to accept the Amendment.
Several Noble Lords: Hear, hear!
On Question, Amendment agreed to.
Lord LUCAS of CHILWORTH Lord LUCAS of CHILWORTH moved Amendment No. 32H:
Page 12, line 32, leave out paragraph (1d).
The noble Lord said: The Amendment is of an inquiring nature. I should particularly like to know what purpose knowledge of the date of manufacture, date of issue or date of importation will serve. All I can think of is that it will positively identify a motor car and a time of manufacture as offered for test. If it has any other meaning, I should rather like to inquire into the matter a good deal further. Can the Minister satisfy me as to what is meant here?
Lord KIRKHILL: This, too, is a helpful Amendment because it enables me to state that the inclusion of date of manufacture and date of issue from the factory or date of importation into the country as features which the Secretary of State may wish to use for identification or classification purposes in orders made under the clause is necessary in order to enable ready distinctions to be made between, for example, the 1976 and 1977 versions of a model of car bearing the same type designation. It does not, therefore, follow that, taking the same example, the test carried out on a sample of the 1976 version will have to be repeated on a sample of the 1977 production.
Lord LUCAS of CHILWORTH: I am much obliged to the noble Lord for that explanation. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
On Question, Whether Clause 13 shall stand part of the Bill?
Lord MONSON: Before we leave the clause, can the Minister say whether it is the Government's intention that these officially approved tests shall extend to include comparisons between a given model of car without such drag-producing extras as spoilers, spotlights, wing mirrors and roof racks, and the same model with such extras? The difference in fuel consumption between the two could be considerable.
Lord KIRKHILL: My reply to that is that, if these are considered to be optional extras, there can of course be no test. The test will have to be a comparison of like with like.
Lord LUCAS of CHILWORTH: The Minister did not say anything at all about electric cars. I asked at the beginning whether we were talking about fuel consumption in terms of liquid fuel or whether we were at any time thinking about electric cars. I understand that this is of some importance to the manufacturers.
Lord KIRKHILL: I confirm that the Minister did not say anything about electric cars, because he does not know anything about electric cars. He freely admits that he does not know anything about electric cars, but he will pursue the point and communicate with the noble Lord.
Clause 13, as amended, agreed to.
Clauses 14 and 15 agreed to.
Lord LOVELL-DAVIS: I suggest that this would be a convenient moment to defer further consideration of Amendments until tomorrow. I therefore beg to move that the House be resumed.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

BARONY OF AMPTHILL
Report from the Committee for Privileges made, and to be printed.