HL Deb 21 March 1978 vol 389 cc1701-8

3.38 p.m.

The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey)

My Lords, with the leave of the House I shall now repeat a Statement on the White Paper on North Sea Oil being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

"With permission, Mr. Speaker, I wish to make a Statement on the White Paper, The Challenge of North Sea Oil, presented to Parliament this afternoon. Copies of the White Paper are in the Vote Office.

"First, I thank all those whose research work, technology, skill and enterprise, often carried out in hazardous conditions, have made this great new resource available to our country.

"The purpose of the White Paper is to give Parliament and the country an account of this new resource, its consequences for the economy and how the Government believe that it should be used.

"The development of North Sea Oil has given us a new industry—the offshore oil industry—which has brought over 100,000 new jobs, including some 60,000 to Scotland. This industry is now beginning to build on the success of British technology in the North Sea by pursuing similar outlets in other parts of the world, where there is evidence that countries are interested in buying the technology and expertise that this new British industry can offer.

"North Sea Oil will make Britain independent of imported energy for the next decade or more. The rate at which it is pumped ashore will help determine the time the oil will last. Agreements already made govern this policy for the next few years, but there will be important decisions to be taken to determine the depletion policies of the 1980s and 1990s.

"The oil will increase Britain's resources in three ways. It will increase our national income by about £6 billion a year by the mid-1980s. Second, it will help our balance of payments by about £8 billion to £9 billion a year by the mid-1980s. Third, thanks to the action taken by the present Government to offset the effect of the policy we found on coming into office under which a high proportion of oil is in the hands of overseas owned companies, it will in future add substantially to the national revenues. The estimate is that total revenue yield from the North Sea, including gas, will approach £4 billion a year by the mid-1980s.

"In considering how best these benefits should be used, the Government have been conscious, above all, that the oil is a valuable but temporary bonus. It will last for many years but not indefinitely. Our objective is that when the yield begins to decline the British economy and British society will have been strengthened by its use and not weakened.

"The Government's conclusion is that the benefits should be concentrated in four main areas.

"First, there will be more resources for industrial investment to re-equip our industries, so that they can meet the competition of the next two decades and create new jobs. The full value of such new investment will only be realised if it is coupled with higher productivity to enable us to compete successfully in the world.

"The Government have an important rôle to play through the system of investment incentives, selective assistance, and the work of the National Enterprise Board and Development Agencies.

"Most of the new investment will be financed by industry itself through the renewed confidence that will result from greater economic stability, so maintaining a steady and consistent growth in the economy.

"Second, we shall increase the funds devoted to energy conservation and to new energy investment—our immensely valuable coal reserves, nuclear and other energy sources—to be ready for the time when the flow of oil diminishes.

"Third, the Government will reduce the level of personal taxation so as to increase take-home pay and work incentives.

"Fourth, we will improve the standard of certain essential services; rebuild the inner cities; train and retrain more people to equip them with the necessary industrial skills and improve our social services.

"The Government very carefully considered a proposal to create a separate fund for North Sea oil revenues and expenditure. On the surface it is an attractive idea, but for the reasons explained in the White Paper we conclude that there is no satisfactory way of separating and identifying the public spending or the tax reliefs specifically made possible by North Sea oil.

"The Government will, however, present to Parliament an annual progress report showing how the priorities set out in the White Paper are being observed, and setting out the revenues received.

"To sum up, the Government's purpose is to use the proceeds of North Sea oil to strengthen the country's industrial and social base, and to bring to fulfilment the national recovery that has already begun".

My Lords, that concludes the Statement.

3.44 p.m.

Lord STRATHCONA and MOUNT ROYAL

My Lords, the House will be grateful to the noble and learned Lord for repeating this Statement, but I feel bound to say that I find it disappointingly imprecise after all the buildup we have had and what we had been led to expect. I am also intrigued to see that the White Paper is to be called The Challenge of North Sea Oil, whereas in fact I would have thought that the challenge had already taken place and been met by, as the White Paper says, the research work, technology, skill and enterprise of those who have carried out these works. I do not think any of us, private or public, find it a great challenge to know how to spend our money; it is not usually one of the problems we find very difficult.

However, I think we can welcome one statement in the White Paper, where the Government refer to their decision not to treat North Sea Oil in a special fund; this in itself makes one wonder whether the White Paper was really all that necessary if this was the decision they were finally going to come to. I must say that I am dismayed at the attempt on the part of the Government to claim the credit for the benefits which are going to accrue to this country, which they appear to do. I think this is basically a phoney Statement, and in so far as it is not a phoney Statement it is basically referring to something to which I have so often referred, their dishonest attempt to go in for retrospective legislation and talk about this so-called voluntary participation. So I am not very impressed by that claim. However, I think we can also welcome their statement: Our objective is that … the British economy and British society will have been strengthened by its use and not weakened. Certainly we can welcome their continued lip-service, at least, to energy conservation, though I would have been happier if we could have had some reported action rather than a continuation of the outpouring of words.

Naturally we welcome reductions in personal taxation, but, then again, when we come to talking of improving the standard of certain essential services I wonder whether this means that the Government intend to return to a policy of increasing public spending, in which case one would have some doubts about it. The Statement leaves me in considerable doubts when I have a quick glance at the White Paper, which I have only seen in the last five minutes. The conclusion of the White Paper says: This means setting clear priorities for the use of North Sea benefits So far as I can make out, the White Paper does not in fact set out these priorities. How then can the Government talk about presenting to Parliament how the priorities being set out in the White Paper are being observed when, so far as I can see, they are not set out at all?

Lord TANLAW

My Lords, from these Benches we should like to add our thanks to the noble and learned Lord for this Statement. I believe, too, that it is a general Statement which gives us certain hopes for the future, although they are perhaps limited in scope. I am very pleased to note that the noble Lord made a distinction between the new jobs created by oil in Scotland and those elsewhere in the United Kingdom. I am not quite sure why this distinction was made. Perhaps he is thinking in terms of allocation of part of these funds specifically for a Scottish fund or Scottish purposes. Perhaps he might like to mention something about this. I also welcome the fact that Her Majesty's Government have recognised that the oil we have at our disposal is limited. I wonder if the noble Lord could say whether there are any new areas as yet unexplored, or have we really come to the bottom of the barrel, as he rather implies in this Statement?

We, too, welcome the four beneficiaries the noble and learned Lord has given in this Statement, and particularly energy conservation. When the White Paper comes up for debate we intend to inquire more fully into it. I would conclude with one final question, which I think Her Majesty's Government had some difficulty in asking themselves. It is a moral question. With regard to these oil revenues, are they going to act as trustee or as executor? In my view, if they had created a separate fund they would have recognised that all these revenues do not really belong to us in this generation; they are separate, in my mind at least, being put aside for future generations to help them in this energy gap the noble Lord has mentioned. In the penultimate paragraph the Government imply that they wish to act as an executor, not quite carving up the revenues but at least showing an account of how these funds are being spent. I, for one, am disappointed about this, because I regard these revenues, if we are to generalise, as belonging not entirely to this generation but also to those of the future. Perhaps the noble and learned Lord will put my mind at rest about his particular views on this subject.

3.50 p.m.

Lord McCLUSKEY

My Lords, I thank the noble Lord, Lord Tanlaw, for his welcome and the noble Lord, Lord Strathcona and Mount Royal, for his more muted welcome of the White Paper. The noble Lord, Lord Strathcona and Mount Royal, thought that it was not a challenge to know how to spend one's own money. I should have thought that the whole challenge of politics in a civilised society was to know how to distribute the income that the Government derive.

As regards the special oil fund, we all appear to be at one and I am glad to acknowledge that the spokesmen for noble Lords opposite, and for the Liberal Party, take the same view as the Government. With regard to the suggestion that on the matter of conservation it is words only, I should simply like to remind your Lordships that there is another report which is receiving consideration from the Government at present and that is the Third Report from the Select Committee which contains 22 recommendations on the development of alternative sources of energy for the United Kingdom. The Government are considering the report and will reply to it when the work has been completed Of course, in so far as positive recommendations which are worth following emerge from that—and one hopes that they will—then the revenue from North Sea oil will be able to be applied towards developing those alternative sources.

It is also suggested that the White Paper does not set out the priorities. I think that one has to read it and form One's own judgment. I would suggest that when noble Lords read the White Paper they will see that the priorities are very clearly selected and set out.

As regards the first point raised by the noble Lord, Lord Tanlaw, Scotland was specifically mentioned. I think that the reasons for that must be judged by your Lordships. The one that I would offer to your Lordships is as follows. There are many misguided people in Scotland who say: "When are we going to get some benefit from the oil?" The simple point is that Scotland, in terms of job opportunities, actual jobs and, indeed, infrastructure which is reflected in the rate support grant, has already benefited immensely from the oil and that is why I say that these people are essentially misguided. I think that it is proper to mention Scotland if only to show that the Scots have already done extremely well. I was asked a question about unexplored areas. In the context of this White Paper I am not really prepared or ready to answer that particular matter which arises in relation to energy rather than in relation to revenue and expenditure.

I take on board the final point that was made by the noble Lord, Lord Tanlaw. The White Paper endeavours to make it plain that the Government are against some short-term spending spree, but are concerned with the long-term improvement, development and strengthening of the economy for the benefit of all now and later.

Lord TAYLOR of GRYFE

My Lords, the Statement that has just been made is very welcome. As the objectives which the noble and learned Lord has outlined have important implications for the future of the economy of this country, I wonder whether it is intended that this White Paper be the subject of an early debate?

Lord McCLUSKEY

My Lords, I think that my noble friend Lord Taylor of Gryfe will appreciate that that is a question that may be looked at by the usual channels.

Lord MACKIE of BENSHIE

My Lords, when the noble and learned Lord speaks of the great benefit deriving to Scotland from the discovery of oil and the creation of 60,000 jobs, will he remember that Scotland derived similar benefit from the Industrial Revolution and we are now paying for the mess that was left behind in central Scotland? Perhaps that aspect should be considered?

Lord McCLUSKEY

My Lords, of course one hopes that we shall learn something from the lessons of history.

Lord STRABOLGI

My Lords, with the leave of the House I suggest that now we should return to the Employment Subsidies Bill.