HL Deb 15 February 1979 vol 398 cc1398-400

3.24 p.m.

The Earl of LAUDERDALE

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 what information they would require before agreeing to refund royalties on an otherwise unprofitable offshore oilfield.

Lord STRABOLGI

My Lords, the Government would require information sufficient to demonstrate to us that the benefits to the nation from making a refund would justify its cost and that without the refund the development concerned would not go ahead. In the first instance it would be for the applicant to provide the information which would enable us to be satisfied on these points. Naturally, further information may be requested by the Government.

The Earl of LAUDERDALE

My Lords, in thanking the noble Lord for that reply, may I ask whether he is aware that in at least one case an applicant company was confronted by such an enormous questionnaire, requiring such extensive research, that it reckoned that the cost of the effort of answering the questionnaire was likely to be greater than the benefit of the refund, and is this not rather a counter-productive procedure?

Lord STRABOLGI

My Lords, I find this difficult to believe; but I must put it to the noble Earl that the sums involved might be large and we must have sufficient information to satisfy ourselves that a royalty refund is in the national interest and is necessary to allow a project to go ahead.

The Earl of LAUDERDALE

My Lords, is the noble Lord aware that, without wishing to embarrass individuals or companies on the floor of the House, I would be most willing to give him personally and privately the information which he doubts that I possess? But may I ask him this question: Is he aware that on one occasion recently a company applying for this advantage was invited to provide information about its activities at the other end of the world, which have nothing whatever to do with the North Sea at all?

Lord STRABOLGI

My Lords, it would be for applicants to supply the information to persuade us that their application should be granted. The nature of their application and the sort of case they seek to make will determine what further information is required.

Lord BALOGH

My Lords, does my noble friend not agree that the noble Earl is about a month too late with this Question, given the present situation?

Lord STRABOLGI

My Lords, that may well be so. If I might just develop the other point—because I am trying to be helpful to the noble Earl and to the House—in this sector the initiative has to come from the company seeking a refund. We are ready to do business and it is up to the company to prove its case. What we are not ready to do is to use the power to refund as a form of negative income tax for oil companies.

The Earl of LAUDERDALE

My Lords, seeking to reciprocate the noble Lord's eagerness to help me and the House, may I ask one final question; namely, how many companies have in fact applied for such remission of royalty?

Lord STRABOLGI

My Lords, we received one application, which we rejected.

Lord DAVIES of LEEK

My Lords, is my noble friend aware that some of us may not know whether we are a month too late or a month too early? But is he further aware that some of us have now had a practical example of the economic system which I spoke about a month ago; namely, that of socialising the losses and privatising the profits of the oil companies, and whatever else might be said about it, it is rather seeking to socialise losses in oil when one of their competitive ventures fails.

Lord STRABOLGI

Yes, my Lords. These are the British Isles, not the Cayman Islands.