Lords Sitting of 22 October 1980

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwell.

LORD McFADZEAN OF KELVINSIDE
Sir Francis Scott McFadzean, Knight, having been created Baron McFadzean of Kelvinside, of Kelvinside in the District of the City of Glasgow, for life—Was, in his robes, introduced between the Lord McFadzean and the Lord Harris of High Cross.

CONSUMERS AND THE NATIONALISED INDUSTRIES
2.48 p.m.
Baroness BURTON of COVENTRY: 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 when they expect to complete their review of the position of consumers and the nationalised industries.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Viscount Trenchard): My Lords, the review of the consumer interest in the nationalised industries commissioned by my right honourable friend the Minister of State for Consumer Affairs is progressing and my right honourable friend expects to receive a report later in the year.
Baroness BURTON of COVENTRY: My Lords, as the Minister will probably agree, this had been on the way a long time, I think about a year or so. May I ask if it would be any use putting down a further Question before the end of the present Session or if one should wait until the next one opens? Shall we have a Green Paper as soon as the report is made? Finally, may I ask the noble Viscount whether all
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consumers in all nationalised industries are to be considered or whether there are to be any exceptions, and if so which are these exceptions?
Viscount TRENCHARD: My Lords, it is entirely up to the noble Baroness to decide when she puts down Questions, but I do not think I shall be able to add to the Answer and answers I am giving today during this Session. Yes, it is a rather long time, but these consumer committees have stood for some 30 years within the nationalised industries. There are in all, including Scotland and Northern Ireland, some 47 of them. So it takes a little time to conduct a thorough review after so long into so much. As to what my right honourable friend will do when she receives the report, her options are open. Any major changes would require legislation and then the normal processes, which would involve consultation at some stage, would take place.
Baroness BURTON of COVENTRY: My Lords, I thank the noble Viscount for that lengthy reply, which I do not think really gets us very much further. However, while I realise that it would be no good putting down a Question in the present Session, is he aware that I am particularly concerned with a consumer group which was set up more much recently than 47 years ago? Can the noble Viscount comment on the fact that I have been reliably informed that the civil aviation traveller is being considered at present and can he tell me whether such travellers will be included in the final report?
Viscount TRENCHARD: Yes, my Lords. Although the Airline Users' Committee is not a statutory committee—and this is a subject on which I know the noble Baroness has views—the scope of the review committee will cover airline travellers and what procedures are thought to be best for their interests.
Lord DAVIES of PENRHYS: My Lords, will the noble Viscount bear in mind that there is not only an England and a Scotland, but a Wales too? Surely we should know what the position is so far as Wales is concerned?
Viscount TRENCHARD: My Lords, the figure of 47 which I quoted included Wales as part of the United Kingdom,

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even if I did not make it clear. I was referring to 47 consumer councils, including all the regional ones. Moreover, it is 30 years since the basic structure was established, and not 47.
Lord TAYLOR of BLACKBURN: My Lords, in view of the Minister's statement that it will take 12 months before we receive a report from the committee, would he not be willing to give us an interim report?
Viscount TRENCHARD: My Lords, I did not say that it would take 12 months; I said that my right honourable friend expected a report later in the year. I cannot go beyond that.
Lord LEATHERLAND: My Lords, as the nationalised gas industry is making a profit of about £500 million a year, will the Minister consider reducing the price of gas to both domestic and industrial consumers?
Viscount TRENCHARD: My Lords, that is another question, but perhaps it gives me the opportunity to point out that the consumer has not only the protection of the existing committees. The Fair Trading Act has been used by the present Government and the Competition Bill has been enacted, and a number of parts of the nationalised industries have already been referred to the Monopolies Commission and reports have been received. All those facts are designed to increase efficiency which will benefit the consumer.
Lord LEATHERLAND: My Lords, am I to gather from that reply that we may shortly expect a reduction in the price of gas, in view of the fact that the industry is making £500 million a year profit?
Viscount TRENCHARD: My Lords, nothing in what I said would enable the noble Lord to come to that conclusion.
Lord TAYLOR of BLACKBURN: My Lords, may I point out to the Minister—
Noble Lords: No!
Lord TAYLOR of BLACKBURN: My Lords, may I ask the Minister whether,
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in view of the discontent of staffs in various consumer bodies, he will try to speed things up a little?
Viscount TRENCHARD: My Lords, I shall pass the noble Lord's remarks on to my right honourable friend.

CODE OF PRACTICE ON PICKETING
2.55 p.m.
Lord SPENS: 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 distinguish in the Code of Practice on Picketing between the immunities which protect those engaged in "peaceful picketing" and those which would protect a "mass picketing" demonstration.
Lord LYELL: My Lords, as paragraph 29 of the draft Code on Picketing explains, there is not and never has been immunity for people who seek by sheer weight of numbers to stop others from going to work or delivering or collecting goods. Such mass picketing—whether or not it is described as a demonstration—goes beyond peaceful persuasion and may well result in breaches of the peace or other criminal offences. The law provides immunity only from civil actions and it does so only for those who picket peacefully at their own place of work. However, we agree with the noble Lord that it is important for the code to be absolutely clear on this point and we shall certainly consider whether something more can be done in the final version of the code.
Lord SPENS: My Lords, I am grateful to the noble Lord for that reply, but would he not agree that in view of the disgraceful scenes which occurred at the time of the Grunwick dispute and which have also occurred since then, it is very important that specific warnings should be included in the code? Paragraph 29 refers to "mass picketing", but it is not clearly shown there that flying pickets would be included in that phrase and that flying pickets by themselves have no lawful protection as pickets other than as mass demonstrators.
Lord LYELL: My Lords, I do not think that I should go much beyond my original Answer, except to stress that if picketing goes beyond peaceful persuasion—criminal behaviour consists of intimidation of any sort—then there is a clear breach of the criminal law, and that can be dealt with under the appropriate law. The code does not necessarily have relevance in that area.
Lord BLYTON: My Lords, is the noble Lord aware that there are hundreds of closed shops now in this country with no mass picketing at all but owing to Goverment policies, because people are unemployed? Can the noble Lord do something in that respect?
Lord LYELL: My Lords, I am tempted to ask "Which Government and which policies?" However, I think that we are 24 hours too late. I tried to deal with closed shops yesterday. I do not think I can go further than my previous answers on the civil and the criminal law.
Lord RENTON: My Lords, will my noble friend ensure that his original Answer is brought to the notice of all concerned and given the widest possible publicity?
Lord LYELL: My Lords, in so far as it is within my power I will certainly do that. I will pass on my noble friend's comments to my right honourable friend the Secretary of State.
Lord SEGAL: My Lords, would the noble Lord include the use of foul language in his definition of "intimidation"?
Lord LYELL: My Lords, I hope that I am not going deaf. Did I hear the noble Lord say "sound language"?
Several noble Lords: "Foul language".
Lord Lyell: My Lords, if I have heard aright from noble Lords opposite, there could be most interesting definitions of what is and what is not foul language; but I think we should leave intimidation and matters of that sort to the courts and especially to noble and learned Lords, be they on the Woolsack or in other parts of the House.
Lord DAVIES of LEEK: My Lords, what would the noble Lord do if he accepted a definition of foul language, when in parts of the country foul language is often a term of endearment? I shall not give the noble Lord an example today.
Lord LYELL: My Lords, I should be fascinated to go into etymological details with the noble Lord over the teacups or perhaps in other parts of your Lordships' House, but I shall bear his comments in mind.
Lord WALLACE of COSLANY: My Lords, is the noble Lord aware that such a code would be successful only if it were reached by agreement rather than by coercion? Therefore will he tell the House what discussions have taken place with the TUC and what is the result to date? It is only by co-operation with the TUC that such a code can be successful.
Lord LYELL: My Lords, the Government very much regret that the Trades Union Congress has made it clear that it does not support the code, particularly as the Government have drawn on the TUC's own guidance, in its own pamphlets, when drafting this particular code. The Government do not believe that the decision of the TUC reflects the views of the majority of its members, who have been shown consistently to support the Employment Act and indeed the codes of practice.
Lord ELWYN-JONES: My Lords, when is the code of practice to see the light of day?
Lord LYELL: My Lords, I should be happy to try to give the noble and learned Lord an answer, but I fear the wrath of the usual channels more than I do the House. However, I shall endeavour to find out and inform the noble and learned Lord.
Lord ELWYN-JONES: My Lords, that is a most pessimistic attitude to take. Surely the House takes dominance and precedence over "certain channels" and the Chief Whip.
Lord LYELL: My Lords, the noble and learned Lord will have been in a

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position of pre-eminence long enough to know that there is a Latin maxim which is very relevant to him: it is de juri, non de facto.

THIRD WORLD: PROPOSED SUMMIT
3 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 Her Majesty's Government whether they have now agreed to the proposal in the Brandt Commission report that a summit meeting should be held to discuss means by which the poverty of third world countries can be lessened.
Lord TREFGARNE: My Lords, we were never opposed to the proposal. We have told the Mexican authorities, who are taking the initiative in organising the meeting, that we would be willing to attend.
Lord BROCKWAY: My Lords, yes, but was it not a main recommendation in the unbelievably doctrinaire, 19th century Government paper on the Brandt Report that opposed a summit meeting on this matter? Will the noble Lord convey to the Secretary of State our hope that at the summit conference he will act with the same statesmanship as he did in the case of Zimbabwe to end the confrontation between North and South, which may become as disastrous as the confrontation between East and West?
Lord TREFGARNE: My Lords, as said in my original reply, it is not the case that we are opposed to this proposal. If we are invited, we shall be willing to play a constructive part.
Lord ELWYN-JONES: My Lords, cannot the Government he a little more forthcoming about this? A great deal of expectation attends upon this development in all parts of the world. We ought not to be backsliding on this.
Lord TREFGARNE: My Lords, we are not backsliding; we are willing to go and play a constructive part.
Lord PAGET of NORTHAMPTON: My Lords, is not the major problem with third world Governments their incompetence and corruption, which is very largely the cause of the poverty? These are areas which were not poor and deprived in the days when good government was preferred to self-government.
Lord TREFGARNE: My Lords, I have heard that view expressed by the noble Lord on several occasions, but we have to take the situation as we find it today. There are a number of very serious difficulties in third world countries as regards which we are anxious to do our best to contribute to a solution.
Lord HATCH of LUSBY: My Lords, is the noble Lord aware—and I am quite sure that he is—that the whole burden of the Brandt Commission Report is that the recovery of the North, or industrial world, depends as much on the recovery of the South as does the South on the North? Will he take the interim period between now and the conference to be held in Mexico early next year to ask his noble friend to take an initiative within Government circles to work out at least some skeleton plan in which our interests and the interests of the third world can be moulded in such a way as to produce mutual benefit?
Lord TREFGARNE: My Lords, the first part of the noble Lord's supplementary question, if I heard him correctly, was an assertion that the main burden of the Brandt Report precisely coincided with views that the noble Lord has expressed in this House to me on a number of occasions. I submit that that is not strictly accurate. It is not necessarily the case that the economy of the developed world would improve hand in hand with the economy of the third world if, for example, massive funds were available to be injected there. But the fact is that we must first restore our own economy to health before we can improve and increase the amount of aid that we can make available to those countries. That is an object which is common to both sides of the House, even to the noble Lord and myself.
Lord AVEBURY: My Lords, is the Minister aware that everyone would welcome his assurance that the Government are willing to play a constructive part in the discussions that will take place in Mexico, though we might have preferred the Government themselves to have taken an initiative on this matter rather than to follow the steps of others? But in preparation for this conference, will the noble Lord or his colleagues in the Foreign Office consider holding a meeting in the United Kingdom at which agencies such as Oxfam and War on Want might be able to give the benefit of their advice to the Government, so that a more constructive part can be played than would otherwise be possible?
Lord TREFGARNE: My Lords, we do, of course, maintain good and frequent contacts with the agencies to which the noble Lord refers. As for the earlier part of his supplementary question, the Austrians have invited a number of Foreign Ministers—but not ourselves—to a meeting to be held in Vienna in a few weeks' time in order to discuss the timing and participation of the summit. However, we have not actually been invited to that meeting.
Lord WALSTON: My Lords, can the noble Lord explain why, if Her Majesty's Government are prepared to go to a summit conference if someone else takes the initiative, they are not prepared to take the initiative themselves?
Lord TREFGARNE: My Lords, because the initiative has already been taken.
Lord BROCKWAY: My Lords, is the Minister aware—there is no reason why he should be—that I was in Parliament in 1930, during that recession, and that it was then generally recognised that it was the falling standards of the peoples in the third world that led to the recession in this country? Is it not the case that if their living standards were raised there would undoubtedly be a demand for goods in this country, which would contribute to the ending of our unemployment?
Lord TREFGARNE: My Lords, I think that the noble Lord over-simplifies the problems which cause a world recession. It is not necessarily the case
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that massive aid transferred to the third world would result in increased activity in British industry.

CIGARETTE ADVERTISING
3.6 p.m.
Lord AIREDALE: 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 their attention has been drawn to a cigarette advertisement which appeared in the press last July, offering a "superb English 5 inch silver-plated dish … save £7 against recommended price when you send 10 pack inserts plus £1·50 "; and whether in their discussions with the tobacco industry they will voice strong disapproval of such enticements to people to smoke cigarettes.
Lord CULLEN of ASHBOURNE: My Lords, my right honourable friend is aware of this advertisement, whose content conforms with the provisions relative to promotional offers in the existing voluntary agreement with the tobacco industry. The Government and the tobacco industry are currently negotiating on what should follow this agreement. Both parties are agreed that the details of the negotiations should remain confidential until a conclusion is reached. While, therefore, I can confirm that the promotion of tobacco products is among the subjects under discussion, I must ask noble Lords to await the announcement which will be made on conclusion of the negotiations.
Lord AIREDALE: My Lords, I am much obliged for that reply, so far as it goes. But, as the advertising of cigarettes is under a partial ban, does it not follow that such advertising as is permitted ought to show a good deal more restraint than is the case in this example?
Lord CULLEN of ASHBOURNE: My Lords, as I know the noble Lord knows, a voluntary agreement was entered into by the previous Government in 1977 which came to an end in March this year. It has now been continued until

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such time as the new agreement is reached. The particular advertisement, about which the noble Lord spoke, conforms, as I said, to the many detailed provisions of the agreement.
Lord GATNFORD: My Lords, has my noble friend the Minister any information as to how many inserts there are in each packet of this particular brand of cigarettes? If there is only one, would it not cost, anyway, about £7 to buy 10 packets?
Lord CULLEN of ASHBOURNE: My Lords, my noble friend is quite right. Although this advertisement might appeal to someone who is already a steady smoker, it would certainly not appeal to anyone who was thinking of taking up smoking, since that person could buy the dish more cheaply in a shop than by buying 10 packets of cigarettes and paying £1·50.

FISHERIES POLICY: ECC REPORT
3.9 p.m.
Lord WALSTON Lord WALSTON rose to move, That this House takes note of the Report of the European Communities Committee on fisheries policy (67th Report, H.L. 351). The noble Lord said: My Lords, in introducing this report to your Lordships, first I should like to explain that it was produced under a certain amount of pressure, because it was felt by the Select Committee and I am sure rightly felt, that it was extremely important for the report to be produced and to be discussed by your Lordships well in advance of the final decision being taken (it is due to be taken by the end of this year) in Brussels. Therefore we were not able to go into some of the aspects of this highly complex problem with the thoroughness which I think your Lordships have come to expect from reports of the Select Committee. But I would say that although there are certain aspects which we have not gone into, those on which we have expressed an opinion have been very thoroughly researched and discussed and in no way are superficial. I should like also to express the thanks of my subcommittee and of myself to those who helped us in the preparation of this document, particularly our clerk and our
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specialist adviser who worked not only with a great deal of efficiency but with a great deal of speed and under great pressure. It is largely owing to their efforts that it was possible to produce this report when we did, namely, early in September.
Three things emerge with great clarity from the report. The first is that the United Kingdom fishing industry is in a bad way. It is suffering a very considerable recession, and it was suffering this long before the general recession hit the national economy. As one indication of the way in which the recession in our fishing industry is working, I would point out to your Lordships that whereas in the early 1970s some 85 per cent. of the fish consumed in this country was caught by British fishermen in British vessels, the last figures provided by the White Fish Authority show that in the last quarter some 64 per cent. of our fish was imported. This, in itself, is evidence of the very serious decline that has taken place.
The second point which emerged—this may surprise some of your Lordships as, indeed, it came as a surprise to a good many of us—is that this decline is not primarily due, in fact, it is scarcely due at all, to the operation of the common fisheries policy. As I shall come to later, it is hardly right to say that there is any common fisheries policy at the present time. Nor is it due to our membership of the European Economic Community. It stems primarily from the cod war with Iceland, and that was accentuated by the extension of the 200-mile limit by a very large number—in fact, the great majority—of countries where we normally have been carrying out our fishing.
The third point that emerged clearly is that there is still a great and urgent need for conservation measures to ensure that the fish stock is not further depleted. Conservation measures have been going on now for a good many years. They have been going on under the auspices and with the guidance of Brussels, of the Community, and they are showing signs of bearing good fruit. But there is still no argument in favour of letting up; indeed, there are still strong arguments in favour of making those conservation measures even more stringent than they are at the present time, and, above all,

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enforcing them far more stringently than they are right now. I shall deal briefly but in slightly more detail with these matters in the course of my speech.
So far as the fishing industry itself in the United Kingdom is concerned, we must distinguish between the two different types of fishing—what one may call the distant water fishing, sometimes referred to as the deep water fishing, and the inshore fishing. The distant water fishing has suffered a great deal more than have the inshore fishermen, although that is not to say that the inshore fishermen themselves are not undergoing considerable hardships in certain areas. As I said at the beginning, the main reason for the troubles of the deep water fishermen has been the imposition of the 200-mile limit, particularly round Iceland, which has virtually debarred us from fishing in our traditional waters in that area. Coupled with that has been the great rise in fuel costs, which, as we know, affects every form of industry and affects the fishing industry in a very serious manner, it being an extremely heavy consumer of fuel for every ton of fish that is caught.
It is true that there are still waters off the Newfoundland banks where we could fish and where there is abundant fish, but there we are at a disadvantage with regard to Canada because their vessels have a heavy Government subsidy on fuel and therefore are able to catch their fish in those waters and deliver them into United Kingdom ports at a cost very much lower than our own fishing industry could possibly manage. This difficulty has been compounded by the fact that for some reason the consumption of fish in the United States has declined, and therefore fish which normally would have gone to the United States is being diverted into this country.
The disadvantage has been accentuated further—it is only fair to mention this—by the fact that during periods of prosperity in the distant water fishing industry, before the 200-mile limit was imposed, before the cost of fuel went up, heavy investment was made by large sections of the British fishing industry in vessels for that type of fishing—in other words, vessels not suited for the type of fishing which today is more efficient and profitable.
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So our fishing industry is equipped to a large extent with the wrong type of vessels.
The situation in inshore fishing is serious but somewhat less serious. The inshore fishermen in certain areas are still having a relatively profitable occupation, although in other areas they have been severely threatened by an influx of vessels which normally and formerly would have been fishing in more distant waters. It is worth pointing out that to a fisherman in the South-West or a fisherman off the coast of Scotland, another fishing vessel is a foreigner, whether it comes from Ireland, from Holland or from France, or whether it comes from Hull or from Grimsby; they are equally foreign and they are equally encroaching on the fishing waters which traditionally these local fishermen have looked upon as their own.
Those are the troubles with which the British fishing industry is confronted. They are troubles which are not by any means confined to this country. It is not true to say, as until fairly recently many people were saying, that our troubles were due to the fact that the prosperous Frenchmen or Dutchmen, or whoever it might be, were poaching in our waters and were landing fish here to the detriment of our own fishermen, and were taking fish which really belonged to the United Kingdom. I have only to remind your Lordships of the troubles in the French fishing industry and the strikes and blockades which took place during August to show that dissatisfaction is not confined to United Kingdom fishermen but is prevalent in France and undoubtedly exists in other areas also.
Let me turn from that situation to the common fisheries policy as such. As I said, there is no effective common fisheries policy at the moment, although we hope that there will be one. According to the rules there must be one by the end of the year. At the worst it will remove the very large degree of uncertainty that exists: at the best it will give United Kingdom fishermen reasonable prosperity.
Now conservation—a vital factor in this whole picture. There has been in the past serious over-fishing and depletion of stocks. In the last few years that has been, on paper, very satisfactorily con-

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trolled. There is an international body which lays down the areas for conservation, the size of mesh, the total allowable catch and things of that sort, all of which we found received pretty general approval. These regulations or proposals were put forward by a body of international experts, and there was no suggestion that they were biased in one way or another, or that they were unfair to one particular group or another. There was a suggestion that these conservation measures are not properly policed, and that is a vital factor in this whole matter to which I shall return.
My Lords, let us come now to the proposals of your Lordships' committee. I shall not go through them all. Some of my colleagues on the committee and other noble Lords, I hope, will deal with them. I shall merely pick out a certain number which seem to me the major ones. We propose and urge that there should be exclusive and preferential access for local fishing communities within a 12-mile limit in special inshore areas so that those communities living in these areas are assured of a livelihood, and that they should not have their livelihood threatened by the influx of modern and extremely efficient but lethal forms of fishing which, in one night, can denude the fish population which normally would give weeks if not months of livelihood to the local fishermen.
We also suggest in connection with this that there should be a derogation to national Governments from the Community for the control of this inshore fishing, and that the existing sea fisheries committees which have operated very well in certain areas around the United Kingdom could well be used in this respect. Thirdly, and this is perhaps the most controversial of our proposals, we turn to the matter of what our proportion of the total allowable catch should be within Community waters. Many of your Lordships will have read that the proposal put forward has been of the order of 30 or 31 per cent. should be allocated to the United Kingdom fishermen. That has been strenuously resisted by the fishing industry themselves and we were impressed by their arguments. We were not so much impressed by the fact that it is calculated that two-thirds of the fish caught are caught in what are called British
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waters—what would have been British waters had there not been a Community fishery policy. We certainly accept the fact that fish are migratory animals, and although they may be caught in waters which one can call British it does not necessarily mean that they were born there, bred there, and grew there. But that is a factor which should be taken into account.
What we were most impressed by was the serious amount of loss which British fishermen have suffered as a result of the 200 miles limit and the cod war to which I have already referred, and the loss of the third water fishing that we used to enjoy. For that reason above all we believe that the quota that should be received by the British fishing industry should be of the order of 45 per cent. rather than the 31 per cent. being spoken of at the present time.
I know that there are problems here. This is a difficult political issue. While 31 per cent. and 45 per cent. may appear simple, straightforward figures, there are many technical arguments depending on the type of fish, the value of the fish, and the rest of it, into which I shall not go, but which perhaps other speakers may develop later. I emphasise that we believe that the offer of the Commission of 31 per cent., or the proposal emanating from the Commission, is far too low and the British share should be considerably higher.
Now we turn to the enforcement of the total allowable catch, because after all there is no point in clever gentlemen in Brussels sitting down and saying how many fish should be caught in an area unless one can ensure that those figures are in fact adhered to. We know perfectly well that at the moment they are not rigorously adhered to, although I would say here that we have no evidence to suggest that fishermen other than United Kingdom fishermen any worse at breaking these regulations than are our own. That does not mean to say that they are not worse but we had no evidence to support the assertion that was made to us.
We believe that this enforcement should be carried out in the first place by a vessel licensing scheme. In other words, all fishing vessels should be licensed. They should be licensed in their countries

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of origin, in the EEC countries. Secondly, they should be not only prominently marked so that they can be recognised by fishery patrol vessels—and here I should like to pay a tribute to our own fishery patrol vessels and aircraft, which are acknowledged to be the most efficient in the whole of Europe if not in the whole of the world—but they should be marked so that they can be identified by radar means by aircraft and the patrol vessels, whether it is dark, foggy, or no matter what visibility is like.
The third proposal that we make, a somewhat more controversial proposal, is that the inspection of the catches at the port of entry should be carried out not only by inspectors of the country where the catches are landed, because there is no getting away from the fact that local inspectors living in a small or even a large fishing port are obviously friendly with the harbour masters, the customs officers, the skippers of the trawlers, and all the rest of them, and it is difficult for them to take a firm line when they live in that small fishing community. Therefore, we believe that there should be, in addition to the local inspectors, inspectors from a third country, another Community country, to keep an eye on the proper enforcement of these regulations, otherwise I am afraid there is no doubt that they will be considerably disregarded.
Now I come to the third aspect of this problem, and that is the restructuring of our fishing fleet. As I have already indicated, it is a fleet which is not suited to present-day conditions and it is in urgent need of restructuring. We believe that this should be carried out immediately and that the Government should formulate and announce their plans now rather than waiting for eventual agreement early next year on a common fishery policy. The first thing that should be done is that there should be incentives for the withdrawing of vessels which are in present circumstances unsuitable. We then believe that following upon that there should be, only in the short term, subsidies for new vessels more suited to the type of fishing which will be practised, and that these new vessels not only should receive a subsidy but should be licensed in such a way as to control techniques which are potentially dangerous to fish stocks.
There are now, with the growth of technology in the fishing industry, techniques of fantastic and frightening efficiency which enable one vessel to scoop up the whole stock of fish in a certain area within one night. They are very efficient and very profitable for those who operate them on behalf of the consumer, in that they should give rise to cheaper fish, but they are devastating to the traditional fishermen and to the areas where those fishermen live. While we do not advocate that these should be banned completely, they should be kept under severe control. We therefore advocate a licensing system.
We go on to say that in the long term the industry must stand on its own feet. The subsidies for withdrawing vessels are short term; the subsidies for building new vessels are finite. When this has been done and a common policy is agreed on, we shall be equipped with a fishing industry and fleet which is able to stand on its own feet—if it is possible to use that expression for seagoing vessels—and which should not need any further Government subsidies.
I cannot pretend that there is a large number of people engaged in the fishing industry. Statistically, they are not of enormous importance when the labour statistics of those engaged in other industries throughout the country are considered. In spite of their relatively small numbers, they are important providers of food for this country. They are very important to the economy of small, and frequently isolated, communities scattered around our coasts, especially remote areas which have no alternative employment. Furthermore, they provide a magnificent training ground for the stout and sturdy men who have proved their worth from the days of the Spanish Armada to those of Dunkirk. I believe that this country would be a poorer place without them. My Lords, I beg to move.
Moved, That this House takes note of the Report of the European Communities Committee on fisheries policy (67th Report, H.L. 351).—(Lord Walston.)
3.32 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I would open my few remarks

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with words of thanks to the noble Lord, Lord Walston, who is chairman of this committee. He conducts business not only with great efficiency but also with enormous skill. If your Lordships had the time to read the evidence on the fishery industry that we heard and the detail which we managed to collect before the report was written, you would realise how extraordinarily skilful he was in getting the right people to come to be interviewed, to come and give their point of view to us. He conducted the meetings in such a way that they all gave of their very best. I have sat on many committees in my life and I do not think that I have ever enjoyed them or been more interested in them as I am in the one I now sit on, of which Lord Walston is chairman. I recommend that your Lordships, if you have the time, read some of the evidence given on this extremely important industry.
I would emphasise what Lord Walston said at the end of his remarks, that although the numbers involved in this industry are not on the scale of, say, the agricultural industry or the mining industry, it is an industry which has played an enormous part in our country's history. We are an island, and we have always depended upon people being able to fish around our shores and further afield. It would be nothing short of a tragedy if the conditions under which the fishing industry is working at the present time were allowed to continue. Some may say that the suggestions we have made are not sufficient, but they appear to me, as a member of the committee, to be suggestions that we could possibly carry out. That is more important than producing programmes which it is not possible to fulfil.
It was to some extent a depressing experience, listening to the great history of ports such as Lowestoft, Hull, Aberdeen and so on, and considering their present condition compared to that of many years ago. As Lord Walston has said, much of that is due to the fact that we unfortunately lost the cod war. I suppose most people do not know what the cod war was, but it certainly did a great deal of damage to our fishing industry. It is to some extent the basis of the present, rather depressing condition under which our fishing industry is working.
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We also discovered that the increase in imports of fish from other countries, from 16 per cent. to 30 per cent., was certainly not very helpful but indeed detrimental to our fishermen. Part of this is no doubt due to greater efficiency in other countries. We learned that the Dutch plaice fishing fleet, for instance, is more efficient than our own. It is also because more subsidies are given by other EEC countries to their own vessels than are given in the United Kingdom. There are some areas which are grossly over-fished. Herring, for instance, is very nearly a zero catch in the North Sea today. It was not very long ago that herring was the catch for which all Scottish fishermen went.
We discovered that there was still the problem of mesh sizes which are not strictly enforced and which should be strictly enforced. If I may add a word about the past, I remember that when my husband was Minister of Agriculture in 1933 there were tremendous arguments about mesh sizes. That is almost 50 years ago, and mesh sizes and how they should be enforced are still being discussed. This is a matter which somebody should take hold of and deal with, because it has been going on far too long.
Quotas, as Lord Walston has said, are still in dispute. The United Kingdom would like to ask for 45 per cent. of the total EEC quota. We do not want to have it all of one type. We do not want 45 per cent. of the mackerel, or 45 per cent. of one particular type of fish, but 45 per cent. of the catch, which will appeal to consumers in our own country and be of value to us. It is not easy, but that is one of the things we should try to achieve.
There are always the problems which add so much to the cost of our fishing industry, and these naturally come up when talking to people in the industry. These are the unknown and uncontrollable elements under which they have to work. Nobody knows how to control the weather. They do not know how to control the weather in agriculture. The weather plays a very great part in the fishing industry. Then, the movement of fish from one area to another makes life very difficult for fishermen. Those are matters over which, alas, we have no control but with which the industry has to contend. We feel,

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therefore, that some help from the Government would be well invested bearing, in mind the difficult conditions under which the fishery vessels work. We should like to have 45 per cent. of the fish rather than the present 31 per cent. As two-thirds of the Community catch from United Kingdom waters, our request is surely justified.
Two important points were made in evidence given by the White Fish Authority: the weak demand for fish in the United Kingdom, and the flood of imports from other countries. Imports rose 25 per cent. in the first five months of 1979. I suggest that more effort should go into the selling of fish, as is done by the Dutch. We had evidence that our plaice and sole fleets are not so successful as those of the Dutch. Some help and advice could perhaps be given in this respect.
Evidence from the Fisheries Organisation Society also stressed the fact that fish are more difficult to sell here than they used to be. There was a great chain of shops called MacFisheries. They have all closed down. Although other shops have come in, I think that is a bad sign because it certainly was a fine chain of fish shops.
When we were hearing all this evidence, and it was fascinating to do so, we got the impression—it was not the first time it had come to me—that it was very difficult to get decisions on many aspects of the common fisheries policy from the EEC. This is a criticism we have made many times, particularly in connection with the CAP, and I would suggest that the United Kingdom representatives should press continually for decisions; so often they come too late.
Some interesting evidence was sent to me only yesterday by consumers in the European Community Group and there are several points which it is suggested I might mention today. They are concerned, as indeed a great many other groups are, with the conservation problem—the noble Lord, Lord Walston, put this most effectively—and with the need to license fishing in certain areas. This would help in regard to overfishing, one of the main problems about which we heard many times from those who gave evidence. They also suggest that restricting
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imports would not help United Kingdom consumers, as prices would certainly rise and consumption in consequence would go down.
We should therefore try to tide over the present problems outlined by many of those who gave evidence, and by those who will no doubt speak in the debate today, by helping temporarily and by trying to get EEC grants to aid the industry. It would be tragic if what is part of our island nation should collapse. I therefore urge that the Government use all their influence in the EEC to get a fair deal for the fishing industry. That would not only be a good investment but would continue what the noble Lord, Lord Walston, described as the great tradition of fishing in this country.
3.43 p.m.
Lord CLEDWYN of PENRHOS: My Lords, I too wish to thank my noble friend Lord Walston for the able and comprehensive speech with which he opened the debate. With the noble Baroness, Lady Elliot of Harwood, I pay warm tribute to my noble friend for his most distinguished tenure as chairman of our Select Committee D on Agriculture and Food. It has been a pleasure to be a member of that committee with him and I only hope that his successor will do one-tenth as well as he has done during the last three years.
The report which is before the House has been welcomed in several quarters and I can confirm, as a member of the committee, that members took pains to take evidence over a wide field and that we were very conscious of the profound concern which exists about the future of the British fishing industry. We sought to find the causes and to look for some solutions. My personal impression was that the feeling of anger and frustration was most vividly expressed in the evidence given by Mr. Austen Laing and Mr. C. I. Meek, and noble Lords will see their evidence in the report. Mr. Laing, Director-General of the British Fishing Federation, said in his evidence at col. 31:
"Now we have reached a perilous situation … at all the major trawling ports in the United Kingdom".
At col. 61 Mr. Meek, chairman of the White Fish Authority, spoke of the industry as being in "a desperately

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difficult position". They are known to most of us who have had anything to do with the fishing industry as experts and their words must be taken very seriously indeed. We heard of ships rusting at their moorings, of a decline in the number of fishermen from 34,000 in 1973 to 24,000 last year and of depression in the great traditional fishing ports of this country.
Following our investigation, we concluded that the industry is truly in very great difficulties, and we have said so, but we have also pointed out that the reasons for this are not as simple as some would have us believe. It was not easy to separate the sprats from the mackerel when we came down to it. There are some who blame all the industry's ills upon our entry into the Common Market—a very simple thing to do and a popular "Aunt Sally" these days—and although it is not easy to achieve what we would regard as an equitable common fisheries policy, to which I shall come shortly, it is quite wrong to attribute all our difficulties to our membership of the Community. The position is made clear in paragraph 2 of the report:
"The British fishing industry is undoubtedly at present in grave difficulties. A major factor leading to these difficulties was the bid by Iceland unilaterally to extend its fishing limits. This in due course had the effect of excluding the British distant water fleet from waters which had tradiionally yielded a large proportion of its catch. Iceland's claim to extend from 12 miles to 50 miles the limits in 1972 was followed in 1975 by a further claim to 200 miles".
I do not think there is anyone, whatever his view of the Common Market, who can say that that was not the primary cause of our present plight, and it is wrong therefore to seek to mislead by pointing to some other cause. This major cause of disruption would have taken place even if we had not joined the European Community in 1973. We believe the United Kingdom, as my noble friend pointed out, is entitled to 45 per cent. of the total Community catch. This seems a fairly simple figure but, as my noble friend said, the realities are more complicated than that partly because one has to distinguish between fish caught and consumed by the public and fish used for commercial purposes. We believe equally that the 31 per cent. proposed by the Community at the Berlin meeting is totally unreasonable. Two-thirds of the total catch of all members is taken from
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United Kingdom waters; that is, from the United Kingdom 200-mile fishing limit. At page 25 of the report, in paragraph 6, we have the evidence of the British Fishing Federation which deals in detail with this point:
"The United Kingdom's contribution should not be treated lightly. It is estimated that, properly conserved, the stocks within United Kingdom waters are capable of yielding about 3½ million tonnes of fish annually. At current quayside prices, averaging £200 a tonne, this represents an annual harvest of about £700 million which can go on indefinitely and long after North Sea oil and gas reserves have been exhausted. If the United Kingdom succeeded in obtaining what we consider to be nothing more than a fair share, and taking account of the fact that this share would have an average value higher than £200 million, Britain would still be donating about £200 million worth of natural resources to the rest of the EEC in perpetuity".
That, in my view, is a very substantial contribution from the United Kingdom. The Government must therefore stand and fight for this share of 45 per cent. and our partners in the EEC must understand that members of all political parties in the United Kingdom are united in their conviction that this is our firm objective, and we must support the Government in their effort to achieve it. It is nevertheless equally important to recognise that the future of the industry also depends on conservation, and this, again, is something we do not decide unilaterally. Conservation depends on international agreement and membership of the Community gives us the opportunity to achieve long-term measures.
On the question of inshore fishing, in which Welsh fishermen are especially concerned, the future of this sector of the industry must be secured, and the Committee rightly recommends, in paragraph 50, that there should be a derogation to national Governments for proper control of inshore fishing. There are many other matters which one would wish to discuss, but I want to avoid a lengthy speech. On enforcement, for example, I have the clear impression from our witnesses that our enforcement officers in Britain are far stricter than are the enforcement officers in neighbouring European Community countries. This is something which might be discussed with Community Foreign Secretaries with some profit.
Another point is that the appetite and taste of the British people for fish seems to have changed. Cod at one time was

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cheap and plentiful: it is now scarce and expensive. The denizens of the fish and chip shop have become the aristocrats of the high seas. We are told that this has changed eating habits in a significant way. The noble Baroness, Lady Elliot of Harwood, referred to the decline in demand. It may be that the British people, all of us, need to be educated to new tastes. This is a practical point which I think the fishing industry in general and the retailers in particular must pay special attention to. Like my noble friend and the noble Baroness, I believe that the fishing industry in this country has an enormous contribution to make in the future. The fishing communities of towns like Lowestoft, Grimsby, and Hull, and the Scottish and Welsh fishing ports, are sturdy seafaring communities. It would be a major tragedy to Britain if they declined and ultimately went out of existence. We must, therefore, all cooperate, to ensure their survival in fair economic conditions.
3.52 p.m.
Lord MOTTISTONE: My Lords, I, too, should like to pay particular tribute to our chairman of Sub-Committee D, the noble Lord, Lord Walston, who chaired us with such immense skill over, to my knowledge, at least three years and who has been a joy to work with at all times. Noble Lords will have noticed that the noble Lord, Lord Cledwyn, mentioned that he hoped his successor might have a similar skill in conducting the committee, or words to that effect. Perhaps noble Lords are not aware of the fact that the noble Lord, Lord Cledwyn, is to be his successor, so may I take this occasion to welcome him to the job and say how much I am looking forward to it. He has tried himself out on us with great success.
This is not the time to make a long speech because, I am delighted to say, there are many speakers. The point has been made, and I will not labour it, that the British fishing industry is in a very poor way—and the report makes this very clear—and that that is not due to the Common Market but to much more deep-seated reasons and goes back not just to Iceland but to before that again. I will touch on that in a minute, but I think it is of significance, and I
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trust that the fishing industry may take heart from it, that in my experience there are more speakers for this debate than I can remember in similar debates on similar reports from the sub-committee, on which I have the honour to serve for many a long day. This I believe means that we are desperately interested in this subject.
I would suggest to your Lordships that somehow over the last 20 years or so we in this country have tended to forget our reliance on the sea. You will expect me to say, "on the Navy", because for many years I had the privilege of serving in the Navy. There has been a run-down over the last 20 or even 30 years in shipbuilding, merchant shipping, the fishing industry. The sea is our lifeblood. Forget the aeroplanes, forget continental Europe just across the way; the sea is our lifeblood and we do badly to forget that. I suggest that we ought—and this is no party issue—fundamentally to look again to see how we can reassociate ourselves with the sea in all the ways; and I would say that the fishing industry is a good example of just that.
Again, in trying to rattle through this contribution quickly—this point was made by my noble friend Lady Elliot and certainly by the noble Lord, Lord Walston—I would point out that the scientifically based total allowable catches are essential. There is no doubt about that, and I emphasise the point that the arrangements which are well spelled out in the report for the scientific base of deciding how to allocate what people should catch are unquestionably the right way. As was said to me recently, if we had come to an agreement on a common fisheries policy five years ago we would have done better than we can do by negotiating a solution now, because in those past five years the available fish to catch have diminished because there has not been the proper agreed control over them throughout the Community. However, the sooner we come to a conclusion about how to allocate, the better.
As has been said already, we sought to recommend that at least 45 per cent. of the available fish to catch should be allocated by quota to this country. Had we been negotiating this five years or more ago we would have been able to set our sights

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higher, perhaps not in percentage terms, but there would have been more fish to catch. We have to reach a conclusion over the common fisheries policy as soon as we can and the longer we go on in the sort of uncontrolled way we are doing now, the less likely it is that there will be fish for us to catch. The 45 per cent. is in fact reached in tonnage terms, but it is not tonnage which matters to the fisherman—who is given a figure called a "cod equivalent" in the appropriate document, which is a monetary term—because it is the money he makes that the fisherman is interested in.
It is very important for the European Community to realise that our fishermen fish in areas of which the United Kingdom waters are not just 45 per cent. but 66 per cent., and therefore anything less than that is less than what we might think is a reasonable proportion. We must, of course, think of our Community partners and there has to be a deal, but it would be wrong of the Commission to think that it was doing all right by us in giving us 45 per cent., or something near it, in terms of tonnage. They have got to do better than that, and I trust that our negotiators will be able to achieve that for us.
To take a particular variety of fish, the sole in the North Sea, we are allocated less than 500 tons in the North Sea and the Dutch are allocated over 12,000 tons. That seems to be a ridiculous proportion and quite out of balance with the resources in terms of fishing vessels available to the various countries. It is the sort of situation which needs to be looked at very hard, and I trust that my noble friend the Minister, who is to reply, might indeed be able to talk about sole in the North Sea in response to what I have just said. I shall fully understand if he cannot, but it is possible that with suitable aid he might be able to, as I am an early speaker.
I should now like to turn to the question of inspection, licensing and policing, which has already been touched on. One of the most important points is that the carrying out of our inspection system in this country, which at the moment has a larger sea area to cover than has anyone else, is possible only with the aid of aircraft. The ships just cannot cover it properly, and this means that it is essential that the vessels which fish are not only
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licensed but are well enough marked for the aircraft to be able to see them.
I had my most recent policing experience, though not for fish and not in United Kingdom waters, about 15 years ago in Sabah, North Borneo, where we chased a cigarette smuggler, and caught him. He was very put out, partly because we used our helicopter to find him, and he was not ready for that—that was the use of the air—and also because we went faster than other ships of our class, and he was not ready for that either. The point at issue is that it was extremely difficult to identify the individual craft, because there was a very large number about the area, and it was difficult to pin down the right one. Thus it is extremely important that there should be a proper policing, inspection and marking system, so that ships can readily be identified at sea.
Another point that we make in our report is that there should be Community inspectors in port. I believe it to be very important that the inspectors should be Community inspectors, not national inspectors. I am certain that the other countries of the Community think that we cheat, just as we think that they cheat, and the only way that we can get around this difficulty is by having an international inspection force. That is something that could well be developed, but, so far as I know, the Commission has not yet got around to that in sufficient detail.
I want quickly to make two more points. One is concerned with subsidies, which were mentioned by the noble Lord, Lord Cledwyn of Penrhos. There is a thought, which the report mentions—I think it is in paragraph 17, for those of your Lordships who have the report—that the subsidies to other nations are unfairly excessive in relation to our own. Here I would mention just two points. One is that part of my sailing holiday this summer was ruined by the French fishermen blockading their own ports, so that one could not sail across to Normandy during the month of August. That was because the French inshore fishermen—forget the big ones for the moment—thought that their subsidy was not big enough, and they wanted more. Here only about a month before that we had been discussing the build-up to this report, in which we were saying that the French were getting too much of a subsidy. I had

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the good fortune to be in Strasbourg last week, and it seems to me that in point of fact the subsidies between the nations and the Community are just about right, and obviously they must be kept that way. However I do not think that we need get too "fussed" about subsidies, provided that they remain more or less as they are now.
Finally, our own inshore fishermen are going to be in a potentially stronger position if the various proposals for six-mile limits, and indeed in places 12-mile limits, are enforced. It is very important that they should be in a position to take advantage of this and that they should be properly protected by the bye-laws that already exist to protect them out to the three-mile limit. As I see it, it is very important that the Government should study carefully what are the relevant byelaws and where they have been established, and make quite certain that we are in a position either to use those laws or to modify them, so as to take care of the new position if and when it comes into existence—I say "if" because it is by no means certain that there will be a common fisheries policy on the lines that we hope for. But if there is, we should all be ready to use to the fullest extent whatever protection we have for our inshore fishermen when they get whatever advantage they do out of the system.
Personally I believe that though fishing does not perhaps provide all the food for our consumption that it did at one stage, it does provide an essential part of our diet. I believe also—though I have not touched on this point—that fish farming is a great thing for the future and that every encouragement should be given to it. I suggest to your Lordships that this is an area where we need to defend ourselves, our interests, and our association with the sea as fully and for as long as we possibly can.
4.6 p.m.
Lord BOOTHBY: My Lords, in both Houses of Parliament I have been closely associated with the fishing industry for very nearly 60 years, and I can truthfully say that in all those years I have never heard a better speech on the subject than that delivered by the noble Lord, Lord Walston, this afternoon. I thought
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also that his report and that of his committee was quite admirable in every respect. It covered almost every subject, and seemed to me to reach all the right conclusions.
I can be brief, since there is not much more to say, but for a moment I should like to touch on the background to this subject. The continental countries of Europe for many years, long before European union or the European Common Market were ever thought of, having fished out their own grounds, were anxious somehow or other to get into our grounds, and on one or two occasions they very nearly succeeded. The nearest they came to it was when we ourselves joined the EEC. Two or three days before we joined they passed a resolution giving all European countries the right to fish with trawlers, up to one another's beaches. If that proposal had gone through, our inshore fishing industry would have been ruined. My Lords, it did not go through. I played a small part in stopping it. I addressed meetings. I went on TV, where they photographed me eating fish and chips, and I met the armada of fishing boats that came up the Thames. I did my bit. But of course the main credit for putting a stop to that belongs to the noble Lord, Lord Campbell of Croy. He is the man who stopped it. He is the man who insisted upon the 12-mile limit, which has saved the British inshore fishing industry and which is still doing so.
I do not want to risk being accused of taking part in the election for the leadership of the Labour Party—I am not biased in any direction there—but I feel that at this point I ought also to pay a slight tribute to Mr. John Silkin, who, when he was Minister of Agriculture and Fisheries, put up a terrific fight in Brussels for the inshore fishing industry of this country when it was under sustained attack. Anyway, we won.
The forthcoming negotiations for a common European fisheries policy are of course critical. I would say at the outset that I could not agree more than I do with the Select Committee's report and with the noble Lord, Lord Walston, that a quota of 31 per cent. is far too small; 45 per cent. is the absolute minimum limit. That, we must insist upon, and can insist upon if we have the guts to do it. I see no reason to suppose—quite the contrary

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—that Mr. Peter Walker, the Minister for Agriculture, Fisheries and Food, has not the necessary guts. He just won a remarkable victory over lamb.
My Lords, there comes the question of limits. I agree that the 12-mile limit must remain absolute; but so far as breeding grounds are concerned, the limit has to be extended in certain areas beyond 12 miles if we are to conserve stocks—which is the key problem of the fishing industry at the present time. I have in mind particularly the Minch. We must retain in power any international agreement to extend our 12-mile limit to 80 miles, if necessary, in certain breeding areas which are considered by us vital to the future of our inshore fishing industry. As regards the restructuring scheme, again I agree with the Select Committee that it is essential and that it should be taken in hand forthwith by this country without consultation with any other, because there are lots of obsolete vessels trying to make a living and failing to do so, and others tied up and rotting at the quays. We must have a modern, up-to-date industry.
On the question of subsidies, I think we are all grateful to this Government and to the last Government for the subsidies that they have given—given on a very substantial scale by this Government—to the fishing industry to tide it over the recent period of severe crisis. Without it, the industry might have crashed. I myself do not think that subsidies are the answer in the long run. I do not want to see the inshore fishing industry subsist indefinitely on subsidies. It we take the necessary steps with regard to quotas and limits, I believe that it will become unnecessary to continue with subsidies. So far as protection of the fishing fleets is concerned. I have been into this matter carefully and I am quite satisfied, as I think was the Select Committee, that it is adequate. They are well covered both by naval craft and by aircraft.
In conclusion, I come to the question of France—really the difficulty, always the difficulty, in so many of these matters. As nations, we have never really liked each other. Why should we? We have fought each other, almost without cessation until this century, for the last five centuries. The French do not altogether
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approve of us and we do not altogether approve of them. The fact remains, however, that, with Greece and Rome, France and this country are the foundation stones of what we call Western civilisation, without which I think that life would not be worth living, if, indeed, it is worth living. I once asked Mr. Lloyd George which statesman of eminence he found it easiest to negotiate with. Rather to my surprise he replied, "Clemenceau". I asked, "Why?" He answered, "Because he was a rude but reasonable man". I think that that goes for the French as a nation. They are, of course, politely rude; but they can be very rude under their politesse. But underneath, and basic to it all, they are reasonable.
I spent ten days this summer at St. Malo. I found that the fishermen there understood perfectly well our problems. Why?—because their own problems are exactly the same. And what were they worrying about?—the enormous cost of modern fishing craft, particularly small trawlers, and the technical equipment which, as I think the noble Lord, Lord Cledwyn, said, can be dangerous. It is frightfully expensive. Secondly, the price of oil is worrying them very much. I told them, "You know, you will never get into our fishing grounds". They replied quite gaily, "No. But we should like to". I said, "I am going to do my best to keep you out"—and they laughed and were quite cheerful about it. They said that we could get on if we had some kind of common agreement about conservation; because another problem they, as well as we, were suffering from was a shortage of fish, and the consequent reluctance on the part of the public to buy. They are finding that in France just as we find it in this country.
My Lords, on the omissions from the report, I note only two. There is no very specific reference to the imports of cheap, subsidised, foreign fish into this country. It is glossed over. When I asked the noble Earl, Lord Ferrers, a few months ago whether he would take steps to check the imports of cheap, subsidised, foreign fish at a time of supreme crisis, he replied that he had no knowledge of it. I made certain enquiries in the industry and they said that there was no question but that subsidised fish was being imported in very substantial quantities, sometimes processed

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and sometimes in trawlers, and subsidised in devious ways—perhaps through a concealed subsidy on fuel. But that some of the foreign fishermen were being subsidised, there is no doubt. We must get agreement to put a stop to that. It is not fair to our own fishermen that they should be subject to competition from subsidised foreign fish.
The second omission is that there is no reference to the intermittent disparities between quayside prices in this country and prices in the shops. Something happens on the way from one to the other. I have known days in recent weeks and months when prices at the Peterhead quayside—and Peterhead is now the leading port in Scotland for white fish—bore no relation whatsoever to the prices at Billingsgate. I hope that the noble Lord the Minister when he comes to reply will say that the Government will at least have a look at this matter and see whether something can be done to close that gap, a gap which closes occasionally so that prices are sometimes in line, and then opens again.
Looking at the long-term future, we must face the fact that our long-distance fishing industry has gone. Hull, Grimsby, Fleetwood and Aberdeen itself—they are all finished. Aberdeen has nothing to be miserable about; because oil is not a bad substitute in the modern world for fish.
If we are firm in these negotiations that are to take place at Brussels, and if the Minister of Agriculture sticks to his role, I think that the inshore fishing industry of this country has a great future before it—I really do. Even the herring industry might recover. I think that the country would want that. The keyword of this, of course, as the report points out, is "conservation". I was very glad to find that the French fishermen fully realised that, and I believe all the fishermen realise that. That has to be worked out in Brussels.
All the people of this country have a great love for the fishing industry. Well they might! They do not forget that British sea power was based in the reign of Henry VIII upon the fishing fleets of East Anglia, fishing out of Yarmouth and Lowestoft. That was the basis of British sea power which gave rise to the British Empire. They have a great love
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of fishermen and a great love of the sea and all who sail on it. They know very well that in more than one war, notably in the last war, fishermen have rendered absolutely invaluable services to the nation in times of great peril—not least at Dunkirk and Scapa. Therefore, the whole country would rally solidly behind any effort that the Government make to ensure that whatever else happens, the inshore fishing industry of this country shall revive and prosper once again.
4.23 p.m.
Lord CAMPBELL of CROY: My Lords, I am very glad to follow the noble Lord, Lord Boothby. I thank him for his kind reference to me just now. He has always been very closely concerned with the affairs of the fishing industry, and of course will have known of those very difficult times in the early 1970s when I was the Minister most involved in trying to protect their interests.
The House is indebted to the noble Lord, Lord Walston, particularly for the skill and effort required in order to complete this report before the Summer Recess. That meant it had to be worked on very hard and at much greater speed than is normal. This is a crucial period. The Ministers of the EEC are engaged in negotiations and have set themselves the date of 1st January 1981 by which to reach a new fisheries policy. I would remind your Lordships that they do not in fact need to, because the present arrangements are due to continue for a further two years. The 10-year arrangement does not end until 1st January 1983, but I am one who was delighted when they announced after one of their meetings that they had set themselves the task of trying to reach agreement by January next.
It is certainly in the interests of the United Kingdom fishermen that the present uncertainty should be ended. To have completed the work on this report therefore early in August, and to have published it on 10th September, was the result of very effective chairmanship by the noble Lord, Lord Walston. I say this not having been a member of this sub-committee though I am a member of the Select Committee, the main committee; but I was asked to participate on the subject in all its meetings and delibera-

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tions, I think because of a familiarity with the fishing industry over some 30 years.
One merit of this report is that it has considered the situation in the light of world conditions and not just in the light of the European Economic Community. As the present vital negotiations are about the internal EEC arrangements, it is often overlooked that the serious state of many of the world's fishing industries is the result of events and trends outside the EEC. The report, as the chairman has indicated, draws attention to this in the case of our own industry. As witnesses attested, probably the most powerful factor has been the great reduction in the North American market. This is not just a matter of recession. Unfortunately, it appeared to start before the recession. It seems to indicate a change in taste and pattern there. This has caused very large quantities of fish which had previously been supplied to North America, to be on markets elsewhere in the world.
So far as the EEC countries are concerned, the situation has hardly changed from that before we entered the Community in 1973. The other member countries' fishermen cannot fish within 12 miles of our coast, except where there are special arrangements to fish up to within six miles—broadly the same as before 1973. So the situation is still virtually as it was in the late 1960s, owing to that standstill agreement of 10 years to which I have referred.
As our report brings out, another event which had a dramatic effect was the move to 200-mile fishing limits three years ago. That has led to a very severe reduction in our distant water fleet, having its effects, for example, on the ports of Hull and Grimsby, and especially arising from the denial of fishing to British fisherman off Iceland. It also affected the middle water boats, normally fishing off the Faroes and Norway for example, whose opportunities have been much reduced; and the ports of Aberdeen and Lowestoft have suffered as a result.
The majority of United Kingdom vessels which are still fishing have now to concentrate on home waters. Your Lordships may therefore conclude that this has had little effect upon the inshore fleet. But such a conclusion would be wrong.
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The consequent congestion in home waters, with large trawlers (where they are still in use) swamping traditional Seine-netters and other inshore boats, has had a damaging effect on the inshore fleet.
Other developments mentioned in the report are cheap imports; and conservation measures—for example, where herring is concerned. There have been bans at certain periods in certain areas in the North Sea. These have compelled inshore fishermen to remain in harbour or to consider whether it is worthwhile going out at all. Then, in turn, the smallest boats have been hurt by invasions of the larger inshore vessels. An example is in the Cornish mackerel fisheries.
On cheap imports, I must emphasise that, although no British fishermen are catching fish off the shores of Iceland now, the same amount of fish is still coming into this country from the fishing grounds around Iceland. The very large majority of these fish of course are now caught by Icelandic vessels. Almost all of it is still cod. That is the staple fish expected and sought by United Kingdom consumers. This is illustrated by the White Fish Authority's statement made only this month. During the past four years imports of fresh or chilled fish by weight have increased more than threefold. Imported frozen fillets—again not caught by British boats—have increased by over 50 per cent. during that period.
On price, the White Fish Authority have pointed out that the average price of cod fillets increased 6 per cent. between May 1979 and May 1980, a recent period of one year, and during that period the retail price index increased by 21·9 per cent. This of course may be helpful to consumers in the short term, but it is completely unrealistic against the stark rises in costs for the fishing fleets, especially in fuel.
Our distant water fleet has been decimated—as other speakers have described—as a result of the international acceptance of 200-mile limits. That fleet consisted of the large trawlers which before 1972 produced most of the fish by weight caught by British vessels. Despite that, the total number of United Kingdom fishermen over the past two years or so has remained about the same, and so the numbers in the industry as a whole fortunately have not been badly

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hit by that. This is not so of other fishing countries of the EEC, where considerable reductions have taken place, notably in France, during the last year or two; so the European fishing industries are experiencing painful changes as well as we.
I mentioned conservation. This is essential, but it has meant that British boats have been tied up and their crews unable to work. I also mentioned herring, but I have encouraging news here. That rare species—rare during the past three or four years—has been seen in greater number, and fishermen in the Clyde and off the Shetland Islands have reported larger quantities than they have seen for years. Therefore there is some impatience so far as they are concerned, because they want to start fishing again; but the scientists and the Government are perhaps wise to try to ensure that the good which apparently has already resulted from the measures so far taken is not jettisoned by fishing again too soon.
In this situation the Government recently injected two shots in the arm of the fishing industry—£3 million some months ago and £14 million in the summer. That was welcome, and justified in the circumstances I have described, where, for reasons quite beyond the fishermen's control, they could not work or earn. But it can only hold the position for a short time. Restructuring of the industry must be started and it must be started soon. We do not think, in the subcommittee, that this should await the conclusion of a new fisheries policy. At least four of the other fishing countries, including France and Germany, have already started their restructuring programmes, and it should be possible to make a start, very broadly knowing what is likely to be the result of the negotiations.
Here I should like to try to describe an unusual and perhaps a strange concept. Unlike manufacturing industry or agriculture, in the fishing industry success in increasing productivity can be fatal. An excess in efficiency can kill off the only resource of the industry. That is why we recommend in the report that there should be controlled entry into this industry. There is a place for the most modern and lethal catching vessels and gear—but within limits, my Lords. There is also a
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place for the simpler, more labour-intensive methods, especially in the remoter areas where some communities depend upon fishing. There is no reason why the two systems should not operate together in the fishing plans of the future. Within a future EEC policy, local fishing plans and regimes can play useful parts. They can all be compatible with each other, allowing flexibility for the larger vessels which may have to follow the movement of fish stocks. It is essential—and here I agree with previous speakers—that licensing should be one of the chief controls. The only system I have found, which fishermen really trust for controlling a system and disciplining it, is where a skipper who is caught in the wrong area at the wrong time cannot try to explain it away.
In our report we refer to purse-seine-net boats, because purse-seiners are an example of the kind of lethal fishing vessel which has recently come into existence. Such a vessel may cost from £1 million to £2 million, and with a crew of 12 to 15 men it is estimated that in one day it can catch the same amount as 150 men in several boats would catch in three weeks, using traditional methods in their smaller boats.
Depending on our prospects for the fishing industry—and these are still unclear—the Government may have to encourage investment. There is little at the moment because of the uncertainty. On the other hand, I think they may have to give incentives to encourage people to leave. This has been done in the past in agriculture. It is difficult to say at present which way it is likely to go, but the tax position hitherto has encouraged hardworking and successful fishermen to invest in building better and more efficient boats. Apart from anything else, this postpones their payment of tax—and who can blame them for that? So I say to the Treasury that there may be a case in the future for giving some relief if it is in the general interest that some fishermen should now stop further investment under the controlled entry scheme which is proposed.
Regional fishing plans, which I have mentioned, are of special concern to island groups in Britain and to remoter areas such as, for example, Devon and Cornwall and Northern Scotland. This

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is not alien to EEC thinking. The EEC Commission put forward a draft resolution with proposals for such plans as long ago as January 1978, but of course that resolution awaits the negotiation of a new fisheries policy. Recognising that that is so, I would nonetheless be grateful if the Minister who is to reply would make some comment on this. To my mind, such schemes could certainly fit within the new fisheries policy as it looks as though it will emerge from the negotiations.
On the negotiations now proceeding, I would end by offering these thoughts. This is the vital, remaining part of the new pattern for fishing in Europe. It will till in a blank which now exists. In the past three years the Russians, the Poles, the Spaniards, the Norwegians and others have had to leave the waters within the EEC and British limits. Following the 200-mile move in 1977, the United Kingdom, if we had not been a member of the EEC, would now control a very large portion of what is called "the EEC pond".
Lastly, there is no reason why the British fishing industry should not be thriving in 100 years' time, or even 200 years' time, long after off-shore oil has ended and after many industries of today have either disappeared or been changed beyond recognition. But that can only he so provided that fish stocks have not been wiped out in the meantime by careless conservation, or by lack of conservation, and provided that fishermen are not put out of business by a failure to recognise the significance of the present critical turning-point in our fishing industry's history.
4.40 p.m.
Viscount BROOK EBOROUGH: My Lords, I should like to say what an honour it is to me to follow my noble friend Lord Campbell, but his speech, and the speeches of other noble Lords, have had a very intimidating effect. The expertise of my noble friend Lord Campbell in this field has been demonstrated today in a way that we in the subcommittee saw only too clearly. I do not think I have ever heard a clearer exposition of the problems of the fishing industry than I have heard today.
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I should also like to congratulate the noble Lord, Lord Walston, on this report and to support my noble friend Lord Campbell in his tribute to the efforts which the noble Lord, Lord Walston, and the clerk made in producing this report at such speed. I do not think anything better demonstrates a deep knowledge of the fishing industry, than paragraph 68 on page xix, which describes the fishing industry as a "hunting activity". This puts the matter in the proper perspective and shows the problems and also the gains of this great industry.
This House is shown at its very best when we are discussing a report on which expert witnesses have been heard, and are making our comments upon it. When one talks to people in the EEC, one realises that the reports of the Select Committees are more widely read than any other reports which are produced by other Parliaments, and that makes one realise the value of this House.
I should like to make a small contribution to this debate. We have heard about the larger picture, the problems of the EEC and the problems of the United Kingdom, within the context of the EEC. But I should now like to bring the debate down to the rather smaller, but most important, context of the Northern Ireland fishing industry. Having talked to the fishermen of Northern Ireland, I am confident that, if our recommendations as a whole are put into effect, the Northern Ireland industry will be well pleased and will end up by being prosperous. However, I should like to emphasise one or two points which are of special importance to us.
Our industry is comparatively small—after all, we are only a small province—and consists of rather over 300 vessels, of which 145 are over 35 feet. The value of the fish landed last year was over £9 million, so it is a very efficient industry in terms of earnings. It employs 700 full-time and 300 part-time fishermen, but, over and beyond that—and this is very important. in view of the importance of the fishing industry in remote areas as a coherent part of a community—it employs in the processing industry three people for every one who is fishing. So it is against that background that I should like to speak.

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It has been mentioned before that it was an education to people, and it certainly was to me, to hear that the problems of the fishing industry are not basically because of the EEC. They are problems of long and short duration. I should like to refer to out report, because we mentioned the question of our control over our affairs had we not joined the EEC. I believe this to be very relevant when we are claiming 45 per cent. of the total catch.
In paragraph 37 we say:
"While the Committee recognize the need for a Community conservation policy, it is the case that if the United Kingdom were not a member of the European Community then other Member States would have no rights, other than those traditional rights which they hitherto enjoyed, to catch fish within United Kingdom fishing limits. This fact should not be ignored when quotas are allocated."
That is a most important fact, which my noble friend Lord Campbell emphasised, and I should like to re-emphasise it.
We in the Northern Ireland fishing industry are extremely involved in conservation, as is everybody else. Our herring fishing industry off the Isle of Man and the Mournes was nearly extinct, and, like my noble friend Lord Campbell, I am encouraged to hear that there is a large increase in the herring population in the Irish Sea. But I also believe it is right that the bans and the restrictions should still apply.
I should like to join the noble Lord, Lord Walston, in paying tribute to our enforcement service for fishery protection, but the problem about enforcement and conservation is that among fishermen there is a total distrust of other nations and of other fishing populations. We hear about the "foreigners" from Fraser-burgh and the other "foreigners" from the Irish Republic. They are all people from outside the area.
If this fishery policy is to succeed in the long run, we have to arrive at a position of absolute trust that enforcement will be absolute and fair. That means that we should never have to rely, or should never encourage people to rely, on one skipper reporting another skipper for failure to observe the rules, because nothing would create greater distrust. Therefore, although we question in the report whether any more money put into
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our fishery protection vessels would pay dividends, I believe that greater emphasis should be put on an increase in the fishery protection service.
At present, the fishermen of the Irish Republic and of Northern Ireland are aware that the fishery patrol vessel, which was trying to get up the Irish Sea to enforce the herring ban, has broken down, so who is to report people for breaking the law? So I believe that we should have sufficient resources to cover such an emergency, and to make sure that one skipper is never expected to report another. In the long run, nothing would be more disastrous.
Like my noble friend Lord Campbell, I should like to welcome the £14.1 million which was granted a few months ago. So far as we were concerned, it was fairly rough justice, but rough justice at once is better than absolute justice too late. The amount of subsidy which was paid to boats of 69.9 feet as opposed to those over 70 feet contained a considerable amount of injustice, because many of the boats which are below 70 feet are modern, of high horsepower and expensive from the point of view of both fuel and interest on the loans. They had a smaller cut of the £14.1 million than the larger vessels, but I am absolutely certain that, rough justice though it was, it was most welcome. But what ought to be emphasised is that, no matter what was given, it does not alter our view that the Government should announce that they are restructuring now and will not wait till later. My Lords, I welcome the report.
4.49 p.m.
Lord SAINSBURY: My Lords, like others before me, I should like to thank my noble friend Lord Walston for his skilful chairmanship of our committee. After his very clear and comprehensive introduction to this debate, and the speeches of noble Lords who have preceded me, it will be difficult to say anything new. There are, however, certain points that I should like to emphasise.
Before hearing the evidence I knew very little about the fishing industry. One of my earliest memories of the industry's problems was the first Lord Leverhulme's attempt to integrate everything from trawling to retailing. In 1918, Lord Leverhulme bought the Isle of Lewis.

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He wanted to organise and encourage the local fisheries. He realised that without a reliable marketing organisation to handle the island's catch, he would achieve very little. By 1922, in addition to the trawling companies and the wholesaling business, he had a large chain of retail fish shops. This organisation was called MacFisheries. In evidence we heard from one witness that, had Lord Leverhulme succeeded in persuading the fishermen from his own trawlers to sell direct to his company and not through quayside auctions, the structure of the fishing industry might be very different today.
Many of the conditions have altered since the 1920s, not least the existence of the EEC and our membership of it, but also the international aspects of the fishing industry. Of course, the challenge is different now from that of 60 years ago, but the importance of marketing has not altered. Marketing is so important because of the traditionally static nature of the demand for fish. The changing pattern of the retailing of fish is illustrated by the virtual disappearance of the fishmonger selling fresh fish from our high streets. Recently, Unilever announced that the last branch of the MacFisheries fish shops will have closed by the end of the year. This results in more and more fish being sold in a frozen, processed form through the frozen food departments of supermarkets and other stores.
The layman does not always realise that foods compete with each other. It is the price increase of fish relative to other protein foods that affects the demand for fish. To quote the findings of the national food survey, for every 1 per cent. rise in the price of fish, demand falls by nearly 1 per cent. In the case of eggs, however, a 1 per cent. increase in price has no effect on consumer demand. It is my express belief that with the right promotion and marketing techniques the consumption of fish could be increased. A stronger demand for fresh fish could contribute substantially to a healthier fishing industry.
I should now like to turn to the report itself and to some of the conclusions that were reached. When discussing this very emotive subject it is important to bear in mind that two separate issues are involved. In the first place, there is the immediate crisis of unemployment and financial
1970
hardship in our fishing fleets. Secondly, there is the need to protect and conserve the world's fish stocks. This is a responsibility that we share with every other fishing nation.
The main emphasis of our report is placed on the restructuring of the industry, which has already been referred to by most speakers. Simply stated, there are too many fishermen; too many vessels trawling too few fish. This dates from the extension of national coastal limits to 200 miles in the middle of the last decade. For Britain, as we all know, this led to the Icelandic cod war. The shrinkage of distant water fishing grounds has had serious repercussions on every traditional western fishing fleet. Greater importance has thus been given to inshore fishing and medium-sized vessels.
In the report we support the White Fish Authority's programme for contraction. There is an urgent need for a smaller, more modern fleet in which many vessels have multi-purpose capabilities. The fishing industry needs to reduce the effort and therefore the cost of catching a given tonne of fish. Restructuring will be the basis of cost-effective fishing. Efficiency depends on many factors. As indeed we heard from one witness, the greater efficiency of the Dutch was based on their manning levels, payment structure and vessel specialisation.
The present crisis has world-wide implications. The European dimension has aggravated the difficulties only because of the uncertainty caused by the long delay in arriving at an agreement on a common fisheries policy—a delay of many years. The restructuring of our industry must not await the final determination of the policy. As has been stated, we have already fallen behind Germany, Denmark and the Netherlands, where limited restructuring is under way.
The Government should delay no longer. The fisheries policy has to be complete by 1st January 1981. In view of this, the conservation measures agreed on last month are to be welcomed. The most contentious issues have still to be resolved: the sharing out of the Community's total allowable catch and the regulation of access by one Member State to the coastal waters of another. As your Lordships may read in our conclusions, the committee support the fishing

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industry's demand for 45 per cent. of the Community's total allowable catch of "cod equivalent" species. Although the latest Commission proposal is a slight advance on the previous suggested allocations it is still inadequate. The surplus fishing capacity of our fleets has had far-reaching social and economic effects on local fishing communities. We feel that such areas must be protected from the competition of more powerful trawlers from distant ports. We therefore believe that the common fisheries policy must provide for an exclusive access up to 12 miles and a preferential zone up to 50 miles.
Although we do not make specific reference to the level fixed by the price support system, we heard from one witness that the level was "totally unrealistic". I therefore welcome the Commission's recent acknowledgment that the withdrawal price system must be more flexible to allow for changing market conditions and regional variations.
Finally, I should like to turn to the matter of conservation. Fishing is one of the oldest pursuits of mankind, but still our understanding of the sea is limited. As our knowledge increases, so our perception of problems will change. We know, for example, that fish do not recognise national maritime boundaries. Their patterns of migration are such that they may breed in the waters of one nation and reach maturity in those of another. In the light of this it is nonsensical for countries to act as if they owned the fish in their own coastal waters.
Fish is a valuable protein-rich food. Our dependency on it will grow. In the short term there is a danger that world demand could exceed supply. We must not respond by over-fishing. It is fortunate that the International Council for the Exploration of the Sea is able to make scientific assessments of the total catches that should be allowed. It is these that must determine the fishing effort, and no other considerations. The world of the future must be able to benefit from the enormous maritime resources. To ensure this, initial sacrifices may have to be made. We must strike a balance between creating a healthy industry and preventing the depletion of stocks—no easy task, but one upon which so much depends.
5.3 p.m.
The Earl of CAITHNESS: My Lords, the whole subject of fisheries is an emotive one at the moment, and therefore the Committee's report is most timely. It has generally been accepted as a clear, concise and authoritative document containing a great deal of sense. As has already been said, much credit for it must go to the skill of our chairman, the noble Lord, Lord Walston, our specialist adviser and our clerk. I found that much of the evidence that we received did not accord with the impressions that I had formulated of the industry and that much of what I had heard, read and seen prior to starting work on the report was misleading, in particular that membership of the EEC was a cause of the industry's difficulties. I should like to say just a few words about the report, although much of it has already been covered.
The United Kingdom's fishing industry, especially the deep sea industry, is clearly in grave difficulties. But, my Lords, we must not forget that we are not alone in this problem. The Germans have cut back severely on the number of vessels at sea. In fact, their fleet has been reduced from 1,551 vessels in 1975 to 763 vessels in 1978. In France in 1975 there were about 34,000 fishermen, but now only some 23,000 remain. The problem that is faced is a European one and one that must be tackled in that light. Urgent action is required by the EEC, as well as by national governments, to reach a solution as the special transitional arrangements will soon cease. Furthermore, thought has to be given to the probability of having to accommodate Spain's large fleet, which in 1978 caught the equivalent of more than a quarter of the total Community catch in that year.
Agreement has to be reached on the total allowable catch and how this is allocated. Of course each country will seek as large a share of this as possible, but I believe that the United Kingdom has a special case in this instance. As has been said, Britain has about 60 per cent. of Community fish in her waters and it has been proposed that she should receive a quota of 31 per cent. It has been proved that some of these fish breed and spend part of their lives elsewhere, and thus it has been argued that, if they wanted to, the other member States could, by over-

1973
fishing their own waters, greatly restrict the amount of fish in British waters. I do not believe that this is either practical or realistic. Such a policy of over-fishing, similar to that carried out in the 'sixties and early' seventies by Russian and other foreign vessels, and from which we are still recovering, would be disastrous to the economics of those countries. On the recovery front we have heard of the recent good news with regard to herring—the "silver darlings" of the sea—and that is only to be welcomed. The case for Britain's receiving a substantial share of the Community's total allowable catch was clearly made in the evidence the committee received, and I, in company with every noble Lord who has spoken today, would urge the Government to stand firm and press the case for the United Kingdom to receive a 45 per cent. share instead of the proposed 31 per cent. A figure as low as that is clearly unacceptable.
In order to enforce catch restrictions vessel licensing is essential, together with efficient policing at ports. As the report stresses, any scheme must have the confidence of the fishermen themselves. This surely can be best achieved by a Community inspectorate and where
"policing at ports is carried out partly by Comminity inspectors drawn from member States other than that in which the particular port is situated".
The willingness and ability of member States to enforce regulations varies considerably and is therefore open to question.
I turn lastly to restructuring—a subject covered in full by my noble friend Lord Campbell of Croy. In view of the weight of evidence that was received, it would be quite wrong for this or any other Government to wait before implementing a restructuring policy. Although there should be an EEC policy on this matter, and indeed the Commission has put forward proposals, each member State should play its own part. We know that Germany, the Netherlands, France and Denmark have already introduced restructuring schemes of their own and to their own benefit. I hope that my noble friend the Minister will be able to advise the House of what positive steps the Government will take on this and the other recommendations put forward by the Committee. If the case was pressing when
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the Committee took evidence this summer, surely it can only be argued more strongly now.
5.9 p.m.
Baroness HORNSBY-SMITH: My Lords, it is always difficult to be "tail-end Charlie" on the list of Back Bench speakers; nevertheless, having a particular interest in the South-West, I felt that I must make my contribution to this debate. I should like to join with noble Lords in congratulating the noble Lord, Lord Walston, and his colleagues on the searching investigations and the very comprehensive report they have produced. My one hope is that it will reach the various fishing authorities, even down to the smaller ports—not necessarily the great national organisations. I also thank the noble Lord, Lord Walston, for his understanding when I bombarded him from time to time with letters pressing the case for the South-West and hoping that it would not be ignored—and indeed it has not been.
As the noble Lord, Lord Sainsbury, said, fishing is probably our oldest industry, starting long before the coal industry but receiving far less publicity and far less consideration for its increasing problems. Year after year—and I have been a director of a fishing harbour now for something like 18 or 19 years—we have seen increasing encroachment on waters traditionally fished by British trawlermen. Several speakers have mentioned the cod war and the imposition of the 200 miles limit by Iceland, and that has put very many trawlers out of business, and virtually some fishing ports out of business, and resulted in wholesale imports of foreign frozen fish which was previously supplied by our own fishermen.
My main concern, as I have said, is the position of the South-West, where we are rather fragmented, in that there is a fierce local pride. I believe the Committee were unable to get a joint organization to represent the various ports through Cornwall and Devon, because they all fiercely have their own little local organisation. Therefore, I do not believe that they speak with the force they might perhaps have if they represented the whole of that area or even the whole of the South-East and the South-West. There I have watched, over the years, catches

1975
dramatically reduced. Many of our trawlers are now laid up or are considered for sale; for the first time since I have been connected with the port we have trawlers up for sale because the owners are giving up fishing altogether.
Then about 10 years ago we had the foreign highly sophisticated factory ship appearing in our waters. They repeatedly invaded our fishing limits. The then control boats rarely caught up with them and they came within that limit, which was a mere 12 miles. One of these Eastern European boats, with its highly sensitive equipment, which when in the hands of an expert can define the species of the fish in the shoal beneath the boat, can haul in 50,100 times more in one night's fishing than the whole fleet at Sutton Harbour will probably pull in in a fortnight or even a month.
At that time when our fishing patrols were very inadequate we occasionally had a ship escorted in and its catch confiscated. I was there on one occasion, or a few hours after it happened. The fish were quite literally thrown on to the dockside. My Lords, have you ever tried to get rid of thousands of tons of slippery mackerel in a miniature hillock on the dockside. The local fishermen refused, quite understandably, to allow it to be sold or given away, as it would destroy their legitimate market. The Town Council fumed at the eyesore, in the middle of the tourist season, on the dockside, and the medical officer of health demanded its removal as a health hazard, as the weather was extremely warm. The very nearly frantic Queen's Habour Master had to 'phone all over the country to find a fishmeal producer who would take it away.
Since then, I will admit, the patrols have been strengthened, but now these factory ships operate in an easier way. They lay outside the 12-mile limit; they are supplied, occasionally by local boats, but in the main by the larger purse-seiners who because of their lost fishing grounds on the East coast have migrated down, or they migrate down for the season, particularly for the mackerel season. They make their catch; they then sell it direct to the factory ships. They have larger trawls, so they can take more than what
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the local fishermen consider their rightful catches, and they avoid the landing charges which are the main source of income of fishing harbours. By tradition berthing charges for inshore commercial fishing boats are incredibly low. When the fishermen have a good catch they recognise that then is the time to pay up on their landing charges. If I may give your Lordships one example, in Sutton Harbour the berthing charge for local inshore fishermen has been 50p per foot per annum, a mere £20 a year for a 40-foot fishing trawler. That would not begin to pay the maintenance of our fish market. A new canopy just put on has cost three times as much as total rents from the boats. So we do rely very much on our landing charges, and when catches, because of quotas, embargoes on certain species, seasonal catching, fluctuate, and they have been lower in recent years, it is even worse when the catches that are made in those waters do not come back through the local fishing ports.
Then we have the French. Anyone who has travelled through Normandy and Brittany will have seen the thousands of fishing boats round that coast. They frequently poach. I do not think there is a trawlerman in Sutton Harbour—they have repeatedly complained to me—who has not seen a French trawler beyond the 12-mile limit, but fishing with much smaller mesh nets than our fishermen use or according to law are allowed to use, and all the pressure, certainly the pressure from the French fishermen, is that the inshore limit should be cut to six miles instead of the basic 12 miles. The fishing line of the limit round the South-West is a nightmare. You have to study a map and the various lines for a long time before you can master it. It goes in and out, and there are concessions for certain types of fish for certain countries which bring them into a six-mile limit instead of a 12-mile limit. It is also a nightmare for the patrol boats. When they think someone is fishing within the 12-mile limit and they come alongside, all the fish that they are allowed to fish within that limit are in the top crates; they have to delve down to the underneath crates to see if they are fishing other than the species they are entitled to catch within the 12-mile limit. Therefore, it is essential that we have for these inshore fishermen a 12-mile limit if the industry is to survive.

1977
We are also deeply concerned about conservation and very conscious of it in the South-West. We have been infuriated by the abuses with small nets, not only by the French; we have even seen Spanish boats there. And indeed the factory ships, some of the more sophisticated ones, have a sort of vacuum process and suck up all sorts of species other than the ones for which they are fishing. By the time they have thrown out what they do not want they are dead. They may only keep the fish they are intending to fish, but with some of the processes in their ships they can destroy quite a lot of undeveloped fish. We welcome the licensing scheme, and here again I suppose local fervour and pride comes into it, because we feel very strongly that locally it is their territory. But we are concerned, as other noble Lords have said, about the enforcement of the quotas or of the regulations.
Like the noble Lord, Lord Cledwyn of Penrhos, I believe that there is no doubt that the spread of enforcement officers is greater here. This applies not only to fisheries, for if we examine any other regulations, whether they affect manufacturing or retailing, we find that whereas here we have enforcement officers in every town, in some European countries everything is centralised—indeed, complete harbours will have no enforcement officers, whether they be for other regulations or for fisheries. We have, possibly because we are an island country, a much wider spread of control as regards our fisheries. There is great concern that we will keep the rules, because we have the machinery to enforce them, and that others—as they have not done in regard to the size of nets and as they are not doing in some cases in regard to the size of quotas—will not honour them, and once again we shall be the sufferers.
We have the South-West White Fish Authority offices in our own fish market in Sutton Harbour. Although we have the most excellent relations with them and, indeed, they are deeply sympathetic and anxious that the case for the South-West should be put, there is no doubt that the controls certainly operate there and we are kept well and truly within the law.
We are convinced that, in relation to the South-West as against, say, Brittany and Normandy, the checks on quotas and
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landings are far more stringent in this country. Therefore, I particularly welcome the recommendation of the noble Lord, Lord Walston, that an alternate country should provide Community inspectors to be attached to the home ports, for only then—and this is very strenuously endorsed by the Plymouth Fishermen's Protection Society—will the regulations be genuinely enforced.
I am concerned, too, about abuse and I asked a Question about that some time ago. Indeed, despite the Minister's reassurance, I am concerned as to how we check the direct sales to factory ships. We cannot put a fisheries inspector on every boat, but if the boat comes in and pays landing charges, then the quantity of the catch, the quantity of the sale, will be registered and be evidence for income tax returns. But if late at night or during dusk someone hands over £10,000 worth of fish to a Russian ship, it will be only too ready to do a deal with him for £7,000, and probably the rest will be split between the two, and the £3,000 will not appear on the income tax return and everyone is happy. How we can check these enormous catches which are sold direct I do not know.
However, there is now a new racket. A foreign boat may have fished its quota and it will know that it has done so. It then contacts other trawlers, under a different flag, and buys direct from those trawlers, generally at a cut price, because again it escapes landing charges, and because that catch is registered to the trawler that caught it and another country, the one that buys it at sea and takes it back has technically not done anything illegal. So other countries can increase their quotas by buying at sea from a trawler that made the original catch.
In conclusion, the South-West would like an exclusive 12-mile limit and would like to eliminate the concessions to the six-mile limit to certain countries and certain species of fish which currently exist, because it feels that at present there is abuse and that it is entitled to the 12-mile limit. I wish that we could achieve that. The South-West is strongly for conservation, but generally fearful that any regulations and any quotas will be far more strictly enforced here than abroad. It is concerned that we should maintain what has been a great and traditional

1979
industry in the South-West for centuries. My Lords, I hope that the excellent report of the noble Lord, Lord Walston, and his committee will have the impact it deserves and that my noble friend and Government Ministers will fight as strenuously for our fishermen as they have for our farmers.
5.15 p.m.
Lord RAGLAN: My Lords, I did not put my name down to speak because I thought, and quite rightly, that everything I might wish to say would already be covered by the speech of my noble friend Lord Walston. But, I remembered when listening to the debate the precept of my noble friend Lord Champion who used to tell me that if something is worth saying once, it is very often worth saying twice. I want to reinforce what both the noble Baroness, Lady Hornsby-Smith, and my noble friend Lord Sainsbury, have been saying. However, first I should say that this report, in which I have had very little hand in writing, is, to my mind, extremely well written, very clear for such a complicated subject and not over-long. It is a model report of its kind and possibly the best report that the sub-committee has ever produced.
I wish to make a few comments about inshore fisheries. Sea-going fishermen are not used to conserving fish. Anglers are used to doing so and they put their catch back into the canal. However, seagoing fishermen are not used to doing that, but they are used to going here, there and everywhere to find their catch and many still feel that they ought to be allowed to go anywhere. Among those who take that view are the National Federation of Fishing Organisations. But the Fisheries Organisation Society, which is the one that represents small groups of inshore fishermen, thinks otherwise. That wants, as my noble friend Lord Sainsbury, said, an inshore fisheries régime—that is, some kind of exclusive or dominant preference as regards the first 12 miles (in sight of land) and perhaps some kind of preference as far as 50 miles.
My interest in this stems from four or five years ago when we debated this matter following a report by the committee. I, at that time, was pushing this very idea in the House. I thought that it might be
1980
worthwhile quoting to your Lordships, if your Lordships will allow me to do so, the words of Mr. Dobbie, representing the Fisheries Organisation Society, when he said, at page 74:
"There are more problems presented by nomadic United Kingdom boats than the normal presence of incoming boats from other EEC countries in inshore waters where the small boats have always lived together to some extent".
He also said:
"The fact that an incoming boat can come in and remove roughly 1 per cent. of the total annual catch makes a bit of a nonsense of trying to provide a quota for those areas."
He cites a vessel, unfortunately a Government sponsored vessel, which played mayhem with the market one week when it decided to pull into Newlyn and unload its catch there. Of course, it totally depressed the market and, as far as I can gather, that week the local fishermen were out of pocket.
I believe that some means or other must be devised to protect the inshore fishermen around our coasts. Mr. Dobbie put it in the following way:
"I would hope that there is a system of control that will allow them to carry on with their traditional methods of fishing without the fear of 'big brother' coming round the corner and scooping the pool. This can perhaps be achieved in two ways: one by providing a zone to which they have exclusive access, for which they have asked; and, secondly, by providing a licence which will enable them to fish on their own grounds and perhaps exclude the bigger boats from going there. There is an enormous number of small fishermen around the coast, and they provide a large amount of revenue to small communities. It is not a large amount in national terms but, if you were to take the fishing industry out of a port like Padstow, then there would be precious little left, and a lot of small ports do depend very much on the fishing industry".
I think that that about explains it. I hope that the Government will pursue this, bearing in mind Mr. Dobbie's criticism that the EEC is less inshore-fisherman-preference-minded than it used to be when it began formulating a fishing régime.
I should like to raise one other point about subsidies. The noble Lord, Lord Mottistone, said that he thought the subsidies as between EEC countries were about right. I cannot see the noble Lord in his place, but I think he meant that they were about on a par with one another. But it is certain that EEC countries must not compete against each other on subsidies.

1981
Fish is an extremely expensive commodity to catch in terms of fuel. We have learned that sometimes it takes one tonne of fuel to catch a tonne of fish, and when a tonne of fuel may cost upwards of £200 and you are getting £600 a tonne or less for your fish, it means that upwards of a third of your costs go in fuel alone. Therefore, fish is very costly. However, like the noble Lord, Lord Boothby, I hope that, after an initial restructuring, our Government, failing the EEC doing it, will try to encourage the fishing fleet to go to sea without looking to be kept afloat by subsidies. If the right régime is arrived at, I think it would follow that fishing would prosper without subsidies.
5.32 p.m.
Lord PEART: My Lords, first, I should like to congratulate my noble friend Lord Walston on his excellent report. He always produces excellent reports. I remember that last one on agriculture, and now he has excelled on this one because fishing and fishery policy is a difficult part of our economy, and it takes much care and patience to go through important documents. Therefore, I congratulate him. I should also like to congratulate my noble friend Lord Cledwyn of Penrhos, who will succeed my noble friend Lord Walston. Like me, my noble friend Lord Cledwyn was an Agriculture and Fisheries Minister, and I believe an outstanding one. I know that he will bring all his great gifts, knowledge and experience to bear in the Committee which I believe will carry on in the high standard that we expect of it. I wish him the very best.
This has been a rather long debate. I am winding up officially for the Opposition, but I do not think that today there has been any opposition. It has not been a party day, which is rather nice. There have been some good and unusual speeches. I shall cross swords with my old friend Bob Boothby, because I thought that he was too chauvinistic. It is all right to quote Lloyd George in his aid, but when I was in the Community—and I can remember when he was also at the Council of Europe—dealing with my French counterparts, I found them quite acceptable. They were reasonable men. If you put a reasonable argument before them, they dealt with it in the best sense. I do not believe that the French were trying
1982
to kick us around. It depends on your attitude. I think that on a fisheries policy we must reach agreement all round—that is essential. We must also always remember that it is not true to say that the Common Agricultural Policy is responsible for the state of the industry. I am glad that in another place the Minister, Mr. Buchanan-Smith, corrected one of his colleagues on this very matter. He said:
"I admit that our deep-sea fleet has suffered the most and that boats are tied up in ports and are rusting. However, that is not a product of the common fisheries policy. As Germany's deep-sea industry will acknowledge, it is the result of 200-mile fishing zones not within Europe but round other countries which are further away. That would have happened whether or not we were members of the EEC.
"The right honourable gentleman: We should not ignore that".
That again has been stressed today and I think that my noble friends Lord Cledwyn and Lord Walston raised this.
I believe that the conclusions of the report are important. I know that the noble Lord has not gone into detail today. We expect people who are participating in this debate to know what these conclusions are. I should like quickly to go through them. I deal now with paragraph 71:
"(i) The United Kingdom fishing industry, especially the deep-sea industry, is at present in grave difficulties."
Of course it is.
"This, however, is principally due to factors unrelated to the common fisheries policy, notably the loss of catching opportunities which resulted from the general adoption of 200-mile limits".
Then is goes on:
"(ii) The good management of Community fisheries stocks requires the fixing of scientifically based total allowable catches (TACs). TACs derived from the recommendations of the International Council for the Exploration of the Sea are likely to be as soundly based as is possible."
Then it goes on to say:
"(iii) The evidence that Community conservation measures are significantly jeopardized by the fishermen of other Member States breaking the rules is not convincing.
"(iv) The Commission's current proposal for the allocation of quotas among Member States does not do justice to the United Kingdom. Account should be taken of its resource contribution, and more account should be taken of its loss of catches from third-country waters. Given that around two-thirds of the Community's catch is taken from United Kingdom waters, a quota of 45 per cent.—rather than the 31 per cent. proposed—seems none too high, and the Committee

1983
urge the Government to press for a figure of at least this order in respect of quotas in Community and third-country waters."
I hope that the Minister who is to reply will give an assurance to the House this evening that that will be the policy of the Government in the Community, and that they will fight for a quota of 45 per cent. The conclusions go on to say:
"… the Committee urge the Government to press for a figure of at least this order in respect of quotas in Community and third-country waters.
"(v) The common fisheries policy should include provision for exclusive and referential access for local fishing communities to those inshore waters on which they are particularly dependent."
It goes on to say:
"(vi) There should be a derogation to national governments for proper control of inshore fishing. Sea Fisheries Committees may have a part to play in this control."
I am also glad that in point (vi) the Committee emphasises the importance of proper control of inshore fishing. It goes on:
"(vii) The United Kingdom's fishery protection services have "—
as the Committee states—
"an impressive record. Further expenditure on the services might not be cost-effective."
Like the noble Lord, Lord Mottistone, I have experience of participating in a short expedition with some of our ships which serve fisheries protection very well. We must not ignore that. They are important boats and play a major part in our maritime safeguards, which are so important. They have a long history which goes right back to Lord Nelson. I know that the noble Lord, Lord Boothby, also spoke historically about the role they have played over many years. They are important and have very fine men and well-trained officers. Some people sometimes assume that the fishery patrols are inferior to the Navy; that is not so. They are on a par with the Royal Navy and they have that same high standard. I could continue quoting the different suggestions that have been made. I hope that noble Lords who have not read the evidence will look at it carefully. However, there are other matters which have not been raised.
I have here a series of press notices which have come from the Ministry dealing with new conservation measures to protect South West mackerel. Mackerel was
1984
mentioned by the noble Baroness, Lady Hornsby-Smith. She was quite right there. There have been serious misgivings about the practice of small boats going short distances to large ships, some from the Soviet Union and other parts, and selling the fish in that way. This is a practice that for various other reasons will have to be condemned strongly. That is an important matter. I know the Ministry are well aware of this.
But one thing about fish is rather exciting in relation to the Ministry of Agriculture. They have decided to arrange for exploratory voyages for under-utilised species of fish. In the early part of last year four freezer trawlers sailed out from Falmouth to start a Government-sponsored assessment of the horse mackerel stocks in the South-Western approaches. The ships were under charter to the Ministry of Agriculture, and I understand they are still assessing the commercial potential of these stocks. This is the sort of thing that I know the Ministry and the department are anxious to develop. They have also given the industry a £1 million programme for fisheries exploration. This was announced in the Commons, and here is another example of where we are looking beyond just the narrow approaches to our shores. Let us remember that there has been considerable aid to our inshore fishing. The noble Lord, Lord Campbell of Croy, mentioned the FEOGA grants available for the construction or purchase of fishing vessels of under 80 feet in length and for the development of marine fish farming. Altogether out of that fund £2,700,000 was given to the fishing industry.
Then we have another scheme—the fish producers' organisation subsidy scheme—which gives aid to the fish producers' organisations in different parts of the country. I will not read them all out; they should be known to everyone who takes a special interest. The Government themselves have allocated £6·15 million for other fishing vessel projects. There have also been additions to this. I should rather like to see the industry succeeding on its own feet, but in view of the state of the industry, where there has been a considerable loss of manpower, as my noble friend Lord Cledwyn said, I believe it is at a crisis point and therefore it is important that we take strong action. Many noble Lords who are present in the

1985
House today are from areas where there are great fishing interests. Northern Ireland is one example. I know the fishing that goes on off Rathlin Island and in other parts of that area, and it is important to the local community. This is also the case in regard to fishing ports in Scotland, which were mentioned by the noble Baroness, Lady Elliot of Harwood.
We must recognise, of course, that in this present situation aid is important and must be used wisely. I still believe that we have a great part to play and I hope that in the Community we shall be able to work out many solutions which are Communitaire. I think of policing of the waters. We must have co-operation with all the countries that are concerned with fishing. I mention France and Spain, and other countries outside the Community. It is important that we have collective agreements. Noble Lords have had a long day and all I will say is this. I hope that we can approach fishing and fishing problems in the same way as we have conducted this debate today, without having any party wrangle and without blaming anybody but recognising that there is a problem and that our Ministers in the Community will do their very best to get all to which we are legally entitled.
5.44 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (The Earl of Mansfield): My Lords, I have listened with great interest to this very constructive and helpful debate. I am charged with giving the Government's response and I will do my best a little later to answer as many as possible of the points which have been raised both by the Select Committee's report and by the noble Lords who have spoken this afternoon. First, I should like to congratulate the noble Lord, Lord Walston, and the members of his Committee on their most useful report. They were clearly conscious of the quickening timetable of negotiations on a revision of the common fisheries policy and decided—I am sure rightly—that they would make a more timely contribution to public discussion if they completed their work rather more speedily than they would otherwise have wished to do. It is, nevertheless, if I may say so, a thorough and well-researched document. Its relative brevity, while in no way detracting
1986
from its value, is commendable and allows us to concentrate on the major issues.
Before I deal with the detailed points which have been raised, I am sure the House will want to know how the Government see progress in the negotiations for a common fisheries policy, what we are hoping to achieve and what we are doing in the meantime to help our hard-pressed fishing industry. As the Select Committee points out in paragraph 6 of its report, the negotiations were given a positive impetus by the declaration of the Council of Foreign Ministers of 30th May setting a target date of 1st January 1981 for agreement on the elements of an overall common fisheries policy. As noble Lords are aware, the present Government have always been conscious of the urgency of resolving the common fisheries policy both in order to allow the fishing industry to plan ahead with certainty and to safeguard the fish stocks from further deterioration. Since taking office, we have negotiated steadily and patiently with our partners in the European Community. The first real fruits came in January of this year when the Fisheries Council agreed for the first time a regulation setting down the total allowable catches for each fish stock for 1981. This regulation, to our great satisfaction, was firmly based on scientific advice—a point to which the Select Committee have rightly attached importance—and on the results of negotiations with third countries such as Norway. It was also backed up by a further regulation requiring member states to report their catches regularly to the Commission to ensure that the Community's share of the TACs is not exceeded.
Even more positive progress has followed the 30th May Declaration. As noble Lords know, the Fisheries Council agreed at its last meeting on 29th September to the adoption of a Community régime of technical conservation measures which has been under discussion sporadically since 1977. This regulation covers such matters as limits on mesh sizes, control of certain methods of fishing, minimum sizes of fish and by-catch restrictions. In particular it makes provision for a permanent Norway pout box. As noble Lords will know, this is a conservation measure which the United Kingdom first pioneered in 1977 in order to protect

1987
immature human consumption species in the North Sea, such as haddock and whiting, from the great damage being done to them by industrial fishing, mainly by the Danes, which is carried out with small mesh nets. I should be the first to concede that the modified box now provided for is a compromise. Indeed, following the judgment of the European Court on our earlier national measure it could not be otherwise. It will, nevertheless, be of immense conservation benefit and its future is now secured as a Community measure. I am sure noble Lords will welcome the fact that it has been possible to negotiate with the Danes a box which preserves very substantially the protection afforded by the earlier one.
The Council of Ministers has also discussed the central and important issues of access preference and of quotas—in other words, the division of the fish-cake among member states. Our aim on access preference remains—as the Select Committee quotes in paragraph 25 of its report—to obtain an adequate zone of exclusive access and preferential arrangements beyond this. I am sure the House will understand that the need for confidentiality precludes my going into further detail until the negotiations have developed further. I can, however, give a firm assurance that the Government are fully conscious of the fact that our coastal fishing communities need the right mix of exclusive and preferential access to those inshore waters on which they particularly depend. Certain of our European partners have so far shown some sympathy for our arguments relating to the 12-mile belt and the Commission's ideas certainly do not exclude the possibility of securing preferential access in important areas beyond that, whether through fishing plans or some other medium. However, all this remains to be negotiated, and the Government expect serious discussions to take place in the very near future.
On quotas, the Government's aim is to secure a satisfactory share of the fish stocks available to the Community taking into account a number of essential criteria. This share must have regard in particular to our traditional fishing patterns, to the great losses of fishing opportunities we have suffered off Iceland, Norway and Russia as a result of the extension of fishing
1988
limits, and also the vital needs of the fishing communities around our coast—particularly in Scotland and other areas highly dependent on fishing. These criteria were explicitly acknowledged in the declaration of 30th May, which left open the possibility of taking other criteria into account. In our view a further criterion our Community partners must recognise is that the major part of the fish available to the EEC comes from United Kingdom waters. I shall have a little more to say about this, in detail, later in my remarks.
The Government have noted the Select Committee's view that the United Kingdom should obtain quotas amounting to some 45 per cent. of the Community's catch. I shall have a little more to say about this. At this stage, what I would say to the House is that noble Lords will recognise that it is not the total quantity, or even the total percentage share, that really matters. It is a matter of getting the right mix of species that best suits the needs of our fishing industry. Noble Lords will not have forgotten that on an earlier occasion the Commission made an impressive improvement in our overall share by offering the United Kingdom a considerable tonnage of horse mackerel, which I fear could scarcely be regarded as a prime fish species! Equally, we could not expect to succeed in the negotiations by demanding shares of individual species that we did not have the capacity to catch.
The House can rest assured, nevertheless, that it has been made quite clear to the Commission and to other member states that the present proposals do not do justice to the United Kingdom's case. We are pressing many points in the negotiations on these proposals, including (as, again, the Select Committee have mentioned) the need to take more account of our losses in third country waters. We also believe that historic catches by member states of human consumption species which were used for reduction to fishmeal should be discounted in the calculations where these were in excess of a reasonable by-catch, and also that there is an essential need for more account to be taken of the interests of the dependent communities. I am hopeful that a detailed discussion of the Commission's proposals will take place at the next meeting of the Council of Fisheries Ministers next

1989
Tuesday, and that this will allow reasonable progress to be made on this crucially important issue.
I recognise the concern that many of your Lordships have that, despite the urgency with which the Government are pursuing a settlement, the economic difficulties of the fishing industry are such that it may not be in a position to benefit from the outcome of the negotiations. This is also a matter of great concern to the Government. In this connection I was glad to see that the Select Committee recognised that the principal cause of these difficulties, for the deep-sea fleet at any rate, was the general adoption internationally of 200-mile limits and the consequent loss of catching opportunities. The fact that this move coincided roughly with our entry into the European Communities has, I fear, given rise to the canard that it was because of our entry into the Community that our fishing industry came to its present pass. There is no doubt in my mind that it was the loss of traditional fishing grounds which was the greatest single blow to the fishing industry in this country.
However, there have been other causes of economic difficulty. The cost of fuel, which forms a high proportion of a vessel's operating costs, has increased dramatically over the past two years or so. Current high interest rates have also meant that those fishermen who have loans on their boats are having to find much larger sums in repayment. Against these escalating costs must be set the relatively depressed state of the market for fish. Prices have not risen in line with inflation, although we still have the highest quayside prices in the Community. Market factors of course affect the inshore fleet just as much as the deep-sea fleet. The most vulnerable boats are clearly those with the highest debts and with high energy costs, but many of these are among the more modern and advanced boats in the fleet.
As noble Lords are aware, in recognition of these growing economic difficulties the Government have introduced two separate schemes of aid for the fishing industry this year—and I am glad that tribute was paid by the noble Lord, Lord Peart. In the spring we announced that £3 million of aid was to be made available —£2 million through the fish producers'
1990
organisations and £1 million on exploratory voyages. This sum was devoted to the industry on a United Kingdom basis. In August, in response to a further approach which the industry made to us, we announced an additional £14·1 million of aid, this to be disbursed directly to individual boat owners on the basis of boat size provided that the boat was still actively engaged in fishing. These aid schemes were intended to support the industry until a common fisheries policy settlement is agreed, and I submit they are a very real earnest of the Government's concern for the future wellbeing of the industry. Once a CFP settlement has been reached, the industry will be able to plan for the future on a more rational basis against a more settled background. I believe that such a period of relative stability would be of the greatest benefit to the industry, and I am confident that a good future lies ahead for the fleet.
Part of any common fisheries policy settlement will be a common policy on restructuring. We are currently looking at the Commission's proposals, and we expect that these, too, will be discussed at next week's council meeting. Noble Lords will understand if I do not develop here our negotiating line on this aspect of the talks, but I can certainly say that the Government have given a general welcome to the proposals subject to reserves on certain detailed issues. The Commission propose that 351 million units of account (some £217 million) should be made available over the next five years. The Commission also propose to monitor closely national aids following a common fisheries policy, and we for our part will welcome the cessation of national aid, which distorts competition.
On enforcement, I note that in the Select Committee's view there is no convincing evidence that Community conservation measures are significantly jeopardised by the misdemeanours of the fishermen of other member states. There is, of course, a traditional wealth of anecdote to support the theory of widespread cheating by "others". How much of this is true remains to be seen. It might be unwise, however, to attach too much credence to the view that it is only the citizens of other countries who break the rules. In their franker moments some of our fishermen would admit that they are not above at least "bending" them!

1991
But there is no doubt at all that illegal fishing can be a serious problem for all member states. Now that a conservation régime has been agreed, and given that an enforcement régime will form part of the final settlement, I hope that effective Community-wide control can be achieved. The Government have always believed that member states should enforce fishing legislation in their own waters, and we are glad that this view has now prevailed. We are committed to maintaining an effective enforcement presence, and I can say to your Lordships that personally, I have been most impressed on the visits which I have made by the standard of enforcement achieved around our shores by the fishery protection vessels of my own department, the Department of Agriculture and Fisheries for Scotland and the Royal Navy, as well as by the Royal Air Force Nimrods.
My Lords, a great many individual points were made by noble Lords and Ladies who have made themselves most expert in this field. It would be time-consuming and, I suspect, tedious if I went into too many of the points. I will look at the Official Report, however, and if I do miss out points of substance then I will write to the noble Lord in question.
I was very glad that not only the noble Lord, Lord Walston, but other noble Lords recognised that the decline of fish stocks—although it coincides in time with our accession to the Community—is in fact a result of other factors. Many of the difficulties of our fishermen, both inshore and distant water, are due to the loss of fishing opportunities following the extension of other countries' fishery limits. Having said that, the absence of an agreed CFP is not helping the situation, and we shall certainly continue working towards one.
One important matter which I should like to deal with concerns the need, mentioned in the report and by a number of noble Lords, for restructuring measures and proposals, which I think noble Lords feel should be brought forward by the Government now rather than for them to await Community measures once a common fisheries policy has been agreed. There is an obvious attraction in what noble Lords have said about the need to
1992
retailor the fleet to meet the new conditions which the fishermen will expect to operate, and we will look carefully at the committee's recommendation on this point. I believe, however, that there is merit in awaiting the settlement of the CFP, which we hope will not be long delayed. It would be wise to do that before giving a stimulus to large-scale investment, before the Government is in a position to decide the basis of the level of aid needed. It will be important for the industry to know what fishing opportunities will be open to it, what aid it can expect from the Community and what the conditions of such aid will be before the industry embarks on any major reinvestment on what will be an expensive exercise, involving the industry's and much taxpayers' money.
I have already commented on that part of the report and on what noble Lords have said claiming that we should get a higher percentage of stocks than that which the Commission has so far proposed. I have already said that I think that it is the mix that is important. What we should really go for, and indeed what we must get, is a fair and equitable share of the stocks which are important to us. We have impressed upon the Community that, in addition to the criteria which the Commission have been using in making their quota proposals, such as compensation for third country losses and preferences for Hague areas, we look to them to have regard to the fact that some 60 per cent. of the Community's fish resource is caught in waters under our jurisdiction.
The noble Lord, Lord Walston, spoke about the control of local inshore fisheries. It has always been part of the United Kingdom's case that the special difficulties of communities heavily dependent on fishing must be provided for in the final settlement. Indeed, the Commission's own thinking runs very much along these lines. I do not think that it follows from this that the communities should be responsible for conservation measures—that is something which must be done on the basis of whole stock areas—but it is right that they should have a significant degree of preference in near waters to enable them to obtain a proper livelihood.
My noble friend Lady Elliot alleged, in effect, that our partners in the Community,

1993
or at any rate some of them, were more generous in their subsidy of their countries' fishing vessels than we were. There is no proof that she is right about this. It is a matter which we have been investigating with great attention over the months. Comparisons of aid levels are notoriously difficult. The level of United Kingdom aids, for instance, this year is running at about £37 million. Doing the best we can, comparing unlike with unlike, we do not think that our level of aid is out of line with that of other countries. Noble Lords will be aware from what I have said that we have just devoted another sum of rather more than £14 million to the industry. I assure my noble friend that we think we are as reasonably generous as other countries.
My noble friend Lord Mottistone raised the point about soles and the North Sea. I admit that, on the quantities which he raised, it is difficult to see the justification for the Commission's proposal, but I understand that the comparison however strange, was unfortunately founded on the primary basis of the Commission's calculations of the quotas which derive from the historical catches of each member State during a base period. So if I say that there is method in the Commission's madness I hope I shall not be taken as being unduly offensive. The negotiations still continue of course.
The noble Lord, Lord Boothby, raised some points with which I would like to deal. The first concerned the extension of fishing limits in the Minch. The noble Lord will be happy to know that, so far as the Minch is concerned, this area is beyond the base lines. The base line is drawn from a 12 mile belt which is beyond the Outer Hebrides. There is no question of the Minch being, as it were, outside the 12-mile limit or any part of it. I should also assure the noble Lord that the Government have consistently pressed not only for an exclusive fishery within 12 miles but also for areas of preferential access in the proper places beyond this 12-mile limit. This continues to be our objective.
Lord CAMPBELL of CROY: My Lords, I wonder whether my noble friend might give way on that. My understanding is that the Minch is inside the base lines. Even if there were a one-mile
1994
fishing limit it would not count. It is completely protected because it is within our base lines and therefore not subject to any limit at all. No foreign vessels can fish within the Minch without our permission.
The Earl of MANSFIELD: That is so, and they do not. The base line is drawn beyond the Hebrides, which are themselves farther west than the Minch. The other matter which the noble Lord, Lord Boothby, raised was the apparent disparity between quayside and consumer prices. I should answer this because there has been widespread disquiet about it. The information which I have indicates that the well-publicised low quayside prices have on the whole been for fish of a size and quality which would not be acceptable to the consumer. Good quality fish has maintained a reasonable level. The noble Lord will be aware, and, if he is not, I am quite sure that the noble Lord, Lord Sainsbury, could tell him, that there are considerable additional costs between the quayside and the consumer and these tend to increase rather than to decrease. It is no part of my duty to answer for the noble Lord, Lord Sainsbury, but I can say that in the rather long chain which exists between the quayside and the consumer there is no evidence that at any stage any link in the chain is making what I might call an unjustified profit.
My noble friend Lord Campbell of Croy and other noble Lords expressed concern over some modern fishing methods, and I can well understand the concern at the apparently vast quantities of fish which can be caught by vessels such as pursers, but we should not make the mistake of confusing efficiency with destructive methods of fishing. I accept at once that methods such as purse-seining need to be closely controlled, but I do not think there is of necessity an argument from what the noble Lord said for banning such methods. Such modern methods, and indeed the technology which goes with them, have posed problems from the socioeconomic point of view, but, as I have said, I think that is an argument for close watch and control but not for banning.
In the public interest I think I should also answer my noble friend's point about the recovery of herring stocks, because the herring, or rather the lack of them,

1995
are being watched with considerable anxiety by the whole industry. I share the satisfaction of my noble friend Lord Campbell that there are indications, in some areas at any rate, that the main herring stocks may be beginning to recover. We must be very cautious indeed about a species such as the herring, which tends to shoal in large quantities even when the stock overall may not in any significant way be any larger than it has been before, and for that reason the scientists have been extremely slow, but I think wise, in counselling us not to reopen the stocks for fishing too quickly. We all hope that before long these stocks will once again provide the valuable fishing opportunities which have previously sustained the industry, but it would be wrong of me to hold out very much hope for the next few years.
I assure my noble friend Lord Brooke-borough that fisheries Ministers have been, and will continue to be, full of zeal to protect the needs of the Northern Ireland industry and the particular difficulty which flows from the fact that the Republic of Ireland's interests tend to overlap and to some extent conflict with those of the Province. The areas adjacent to the Irish Sea raise some complex issues but, as I said, we are mindful of the needs of the fishermen of Northern Ireland and will see to it that they are protected.
Other points have been made, but in view of the lateness of the hour I will answer them, as need be, in correspondence. I congratulate and thank all those who have taken part in the debate. It has provided plenty of food for thought for the Government and it has above all provided us with an opportunity to discuss the report which I am sure has made a valuable and indeed important contribution to our knowledge of an industry to which we all owe a great deal and which we all acknowledge to be extremely important.
6.15 p.m.
Lord WALSTON: My Lords, as other speakers have said, this has been a good and useful debate and I am crateful to all those who have taken part. I am particularly happy that the topic proved sufficiently interesting to tempt my old and noble friend Lord Boothby to break
1996
his self-imposed silence and once more speak about a subject which is so close to his heart; it was very good to hear him. While it is invidious to single out speakers, I also wish to thank the noble Lord, Lord Campbell of Croy, not only for his speech, which was full of wisdom and knowledge, but for the great help he gave to the subcommittee, of which, as he said, he was not in fact a member. I am sure that the praises which have been lavished on the report would have been less effusive had it not been for the help we received from Lord Campbell.
The only other speech I will mention—I hope other noble Lords will not mind my doing so—was the contribution of the noble Earl, Lord Caithness, because he, although speaking late in the debate, raised a point which others including myself had insufficiently emphasised, and that was the European dimension of this subject. We are perhaps inclined in all our reports, and particularly in something as emotive as fisheries, to look on the matter solely from the United Kingdom point of view. It is good to be reminded, as he reminded us, that we must look on this in a completely European, a Community, context. There must be a sharing of resources. All we hope is that the sharing will be just and equitable. He was also right to remind us of something which, had we had more time in our report, we should have entered into, and that is the effect of enlargement, which undoubtedly will have a considerable impact on any common fisheries policy which emerges.
The noble Earl, Lord Mansfield, went to great pains, for which we are grateful, to answer many of the points which were raised in the debate, and in general his comments were encouraging to us. Certainly I can find no fault with his words concerning the quota which we are attempting to get for our own fishermen. I hope he will not think me unduly critical if I say that I should have preferred it had those words had a little more fire and conviction in them and had the table been thumped a little harder. Maybe he felt there was no need to do that here; I hope he or his colleagues will do it when they come to the place where the negotiations occur.
The only point where I would express a slight disappointment with his remarks is that one hoped he would have given

1997
rather more urgency to the question of restructuring. Our fear is that if no thought is given and no steps taken to restructure our fleet until the whole of the common fisheries policy has been settled, many months and possibly even a year will elapse before anything emerges, to the detriment of our fleet here, while other countries are able to move ahead. I urge him to give thought now to that, so that, even without announcing any actual proposals, when agreement is reached, we hope early next year, the Government will be prepared with a plan which can come straight out and be put and be implemented immediately, so that we do not lag behind.
I am, as I say, most grateful to all noble Lords who have taken part. I am particularly grateful for the kind words—a form of obituary almost, I thought—which many noble Lords spoke concerning myself, I can assure them that the work of the chairman of the sub-committee has been light and easy, owing largely to the composition of the sub-committee, and I can only echo what others have said concerning the noble Lord, Lord Cledwyn of Penrhos. It is a great honour to me to be succeeded by someone of his experience and distinction, and I am sure that the sub-committee under his guidance will flourish.
On Question, Motion agreed to.

GAS PRICES AND MANUFACTURING INDUSTRY
6.19 p.m.
Lord IRVING of DARTFORD Lord IRVING of DARTFORD rose to ask Her Majesty's Government whether they are aware of the effect of gas prices on manufacturing industry and what steps they propose to take to deal with this matter.
The noble Lord said: My Lords, I beg leave to ask the Unstarred Question standing on the Order Paper in my name. When I intervened in the Gas Bill debate in July I was talking about the paper and board industry, with which I happen to be associated, about the chemical industry, whose association had been an outspoken critic of the British Gas Corporation, and the National Federation of Clay Using Industries, whose director had been in touch with me; but since then
1998
there has taken place what has been described as "an energy revolt", in which nearly 20 industries have joined in supporting the case that British gas prices are higher than those of their competitors and constitute a serious threat to their ability to compete in foreign markets.
Among these are: British Steel, the independent iron and steel producers, Staffordshire potteries, the cement manufacturers, the manmade fibre companies, the brewers, the food manufacturers, the lead producers, the glass manufacturers, the aluminium companies, the non-ferrous metal concerns, pet food manufacturers, the drop forge and stampers, the plastic manufacturers, the motor manufacturers, the textile industry and the radio manufacturers. This is indeed a formidable list and a very large chunk of the whole of British manufacturing industry.
There is, I think, a feeling of what I can only describe as anger among lndustrialists that in a world recession, in addition to the burden of very high interest rates and an overvalued pound, they should have their competitive position further weakended by over-priced gas. This is especially hard to hear in view of the enormous resources we have in the North Sea and the fact that the British Gas Corporation is the most profitable of all the publicly owned corporations and will have a surplus this year of something like £680 million.
Industrialists are not asking to receive special treatment but that they should not be put under a penalty by being charged higher prices for gas than their competitors. Representatives of the Chemical Industries Association, the paper and board industry, the British ceramics industry and the clay user's industry, writing to the Financial Times not very long ago, said this:
"Specific United Kingdom and Continental prices in the hands of the Minister, and much of which has been discussed with his officials, confirm that without any question the United Kingdom contract prices established in 1980 for comparable supplies are at considerably higher levels than apply on the Continent."
The Minister—and I am speaking of Mr. Lamont, one of the Energy Ministers—claimed that such differences as do exist are not of great significance to industrial costs or competition, that they are transient, and that the average price per therm is 22p. However, industry

1999
believes that to talk of averages is thoroughly misleading. Before such comparisons can be made we must be sure we are comparing like with like and an average is influenced by whether we are referring to short or long term contracts. In this connection the ICI contract for 900 million therms which will continue for some 15 years beyond 1984 and which is nearly half of the total industrial gas used by industry, the sum of which is 2,200 million therms, has been described by the noble Lord, Lord Kearton, as being used to pull down the average so as to make it seem not too bad. The price can be affected by whether the supply is firm or interruptible—in other words, whether it can be cut off at short notice. The Minister also mixes those industries which do not use more than about 1 per cent. with those which use gas intensively, and there are a large number of those: the paper and board industry, with an energy percentage of about 15 per cent. of total costs; chemicals, 25 per cent.; steel in converting raw materials into liquid steel as much as 20 to 25 per cent.; and there are others.
The National Federation of Clay Using Industries has said that the only fair basis is to compare contracts on a basis of firm supplies. The chemical industry has made a survey of its members and the detailed information confirms the case that British Gas for firm supply is more expensive than in Europe. In the Netherlands and France it was 17·8p per therm, in Italy it was 19·5p, but in Britain it was 26·33p per therm. For interrupted supplies it was 24p, still higher than the Minister's average of 22p.
The food manufacturers say that the average price for new and renewed firm contracts this year is 27p per therm, 5p more than that stated by the Minister. They also found that the most recent increase for the vast majority of the respondents to its survey was well over 30 per cent., with some companies suffering increases of between 60 and 70 per cent. The food manufacturers use about 7 to 8 per cent. of the total industrial gas used in this country and their gas costs in certain parts of industry, in dehydration, were about 15 per cent. of total costs. They say that interruptible supply contracts form a high proportion of the
2000
British Gas Corporation contracts. That survey found the price for new and renewed contracts for the first half of the year again to be more than the Minister's 22p, and in a letter to the Financial Times dated 16th August the Printing Industries Federation warned that printers who had recently suffered 80 to 90 per cent. rises in gas contract prices were now faced with
"further significant and in some areas unquantified increases".
Even without the latest price increases, British printers were paying more for gas than domestic consumers or their European competitors, and twice as much as American printers. Then they made a statement which I think many will have sympathy with:
"The folly of imposing the penalty of a strong currency on manufacturing industry, competing at home and overseas against foreign suppliers, while denying it the benefit of economic costs from a bounteous supply of energy, is clear for all to see in unemployment figures".
The managing director of JLK Industries, writing in the Financial Times, said that his contract price up to April 1979 was 17·70p per therm. However he moved some three miles away to new premises and the price charged in April 1980 was 37·76p per therm, an increase of 113 per cent. He was assured that this was entirely in line with the corporation's policy of equating gas prices to those of oil.
According to the Daily Telegraph of 12th August this year, the National Association of Drop Forgers and Stampers have warned the Government that:
"jobs were at risk unless there was a clamp down on increases in contract prices to companies whose future was threatened by high energy prices".
Higher gas prices would further reduce competitiveness in home and export markets.
The noble Lord, Lord Kearton, said after the European Petrochemical Association Conference in Monte Carlo:
"The monopolistic British Gas Corporation is crucifying some of its North Sea suppliers by forcing them to sell at absurd prices. The price of gas to industry was higher in the United Kingdom than in the rest of Europe".
The National Utility Service, a group which analyses and advises on industries' costs, monitoring contracts on 550,000 sites in

2001
eight countries, has shown that on contracts signed since 1st September this year British industry paid an average price which was 18 per cent. more than in Germany, 47 per cent. more than in France and twice the level in the United States of America. The average price of industrial gas in the United Kingdom was 23·90p per therm, while the United States average was only 13·1 pence per therm, and The Times commented:
"The Survey adds to the claims made by industry that British gas prices are giving competitors abroad an unfair advantage in the cost of producing the product".
There is another study, a comprehensive study, by the EEC in Brussels on the prices of natural gas to all categories of consumers, which, although hitherto unpublished, is available to Government departments. It is of very recent date, and it makes a respectable intellectual attempt to compare like with like, breaking down industrial users into seven main categories and even ironing out currency disparities by use of an index of standard purchasing power. The study supports industry's case. It shows energy-intensive industrial users worse off in terms of current gas contracts than any of our main competitors.
Turning away from the surveys, another problem facing British industrialists is that in general the longest-term contract that can be secured from the British Gas Corporation is for one year. It is not long ago since the period was five years. As a result, there are no discounts for particular processes, nor for volume. In other countries these discounts can be as high as 20 per cent. A further problem is that, despite efforts to find out, it is still unclear what formula, or what considerations, the British Gas Corporation uses to determine the contract price, and one paper company that I know has three separate contract prices, the dearest being three times that of the lowest.
The price of gas is to rise between 21 per cent, and 54 per cent. in the coming year, whereas it was already 67 per cent. to 112 per cent. more than in West Germany three months ago. Perhaps the Minister will now understand why in the light of all this evidence—and there is a great deal more—industry feels so strongly that the burden is intolerable. If the Minister remains unconvinced, it is important
2002
that the monitoring process that the noble Earl, Lord Gowrie, promised me that he would undertake should be carried out speedily and effectively. It is important that the facts be ascertained in such a way as to end the argument.
I should like to ask the Minister to tell us what arrangements have been made to ensure that both the CBI and the departmental monitoring processes are properly related, that the objectives are the same, and that the conclusions are capable of being compared. I would ask him to tell us how long it is to be continued before a conclusion can be reached. However, in view of the critical nature of what we are doing, and the view expressed by Mr. Lamont that if differentials do exist, they are nevertheless transient, I hope that the Minister will accept that there should be some kind of moratorium until the monitoring process is concluded, and that if the case the industrialists make is substantiated, some further moratorium will be conceded until our competitors' energy prices catch up with ours.
No one can believe that if the differences are as great as industrialists say, the catching-up process is a short-term matter. In the United States—and I think that this is beyond argument—gas prices are only half those in Britain, and it is inconceivable that this difference could disappear in under five years. If no moratorium is accepted, then British industrialists are consigned to living and working with a penalty which is the difference between being competitive or not competitive and between being profitable or disappearing and causing many workers to lose their jobs. I hope that the Government will be able to take early action.
6.33 p.m.
Lord ROCHESTER: My Lords, I have, so to speak, been promoted in the batting order only because my noble friend Lady Seear has at short notice been unavoidably prevented from being present, and through me she offers her apologies to your Lordships. I am sure that the whole House will be most grateful to the noble Lord, Lord Irving of Dartford, for having raised this Question of such great concern to British manufacturing industry, and grateful to him, too, for the very cogent case that he has put before us.

2003
I should like to widen the scope of the Question a little by referring in particular to the tax on fuel oil in this country. That tax is relevant to this discussion because fuel oil sets the standard against British Gas Corporation prices. In the United Kingdom this tax is the highest of its kind in Europe, and because gas is priced with reference to oil, our continental gas users also have an advantage. I am advised that the rate of fuel oil tax in this country now is £6.84 per tonne, and that at equivalent sterling rates, in Germany it is £3.82, in Belgium £1.57, and in France nothing at all.
This tax was introduced into the United Kingdom to help the coal industries in 1961 when the ex-refinery price of fuel oil was £6.60 a tonne, and coal at the pithead was £4.30, each the equivalent of exactly £1.63 per therm. At the same cost, therefore, oil was the more attractive fuel. Since then oil has been priced very much higher than coal, so the tax is no longer needed for its original purpose. I understand that today oil ex-refinery is priced at 20p per therm, as against coal at the pithead at 10.2p, but the tax on oil is 1.7p per therm.
As the noble Lord, Lord Irving of Dartford, has said, a number of our most vital industries are dependent on oil. They are now subject to intense competition from Europe, and more particularly, from the United States of America. After the progressive rise in the sterling/dollar exchange rate over the last two or three years, these industries are short of cash and as recent events have shown all too clearly—and this point was well brought out by the noble Lord, Lord Irving—they are having to contract, and in some cases they are having to close altogether, with disastrous effects on employment. If the present relative exchange rate remains as it is, or rises even further, more of these firms will go under.
The strength of sterling derives largely from the United Kingdom's favourable fuel situation, but the damage being caused by the high value of the pound is not compensated for by any advantage on fuel price. On the contrary, compared with our American and European competitors, we are at a disadvantage both on coal, which is heavily subsidised in Western
2004
Germany, France and Belgium, and on oil. I feel a little like Alice in Wonderland when I see the one great benefit that we enjoy over our international competitors in relatively cheap energy resources being withheld from British manufacturing industry.
When two weeks ago the noble Lord, Lord Irving of Dartford, asked the Starred Question which in a sense provided the prelude to this debate, I in turn asked the noble Earl, Lord Gowrie, whether he would concede that the Government's current energy pricing policies accounted at least partly for so many of our best companies finding it increasingly difficult to compete against countries in which energy was less costly. The noble Earl replied that the evidence available was that the averages of cost between this country and our competitors were about the same. The noble Lord, Lord Irving, has made reference to the same point.
However, the noble Earl later acknowledged that the British gas industry was making a large profit which devolved to the nation. My noble friend Lord Mackie of Benshie then asked whether that profit might not more usefully be employed by manufacturing industry than by the nation at large. The reply was that that would be so if the Secretary of State for Energy were convinced that British industry was in an adverse competitive position, but that was not his view. Now I know of one of the most basic industries in the United Kingdom which is dependent on oil. Competitiveness in that industry in relation to the United States has changed from a position in which seven years ago the industry was highly profitable to one in which today it is unprofitable, yet over that period there has been no significant relative change between the two countries in either technology or productivity.
One step that the Government could take to mitigate the adverse effect of energy prices on that industry would be altogether to do away with the tax on fuel oil. Unlike, for example, a general reduction in interest rates, or the imposition of import controls, such a move need in no way prejudice the Government's present overall economic policies, nor invite retaliation from abroad. But, if that were done, it would give encouragement that is desperately needed by two crucial factors of British industry. I

2005
asked the Minister to say when he comes to reply whether the Government will give this suggestion urgent consideration.
6.40 p.m.
Lord GISBOROUGH: My Lords, there appears to be a significant shortfall in gas supplies which is already apparent from the number of new supplies sought for and refused. It is likely to become apparent in the event of a very severe winter, when priority gas to domestic consumers will be likely to mean cuts in supplies to industrial users. The present recession clearly limits growth in demand, but when it ends it is reasonable to assume that there will be a more serious shortfall in gas supply as demand increases. Availability of adequate supplies to industry over the period 1980 to 1984 poses further doubt, and it will be particularly unfortunate if these are restricted at the time when the domestic economy and industrial activity recover. But short supply brings high prices; so, above all, there is a necessity to bring forward more North Sea supplies.
Maintenance of long-term supplies of gas will depend on supplies from outside the United Kingdom North Sea to the extent of some 20 per cent., but, essentially, on new discoveries in the North Sea. Regarding imports, it would be interesting to know whether a cross-Channel pipeline is being seriously considered to export gas to or to import gas from as far as Algeria, as has been suggested. For the preponderance of our gas unexploited reserves exist in the southern North Sea, but these additional supplies are not likely to become available without a more favourable and more flexible contractual and statutory position than at present. Smaller offshore fields of around 100 million therms are there, but uneconomical to exploit unless close to existing facilities and focal points of onshore demand. There are also fields of gas of unacceptable quality which, given the incentive to do so, might be exploited as industrial gas. This present and future shortfall is, of course, a factor in the artificial increases in the price of gas, and while in the long term and during industrial prosperity fuel should be highly priced to prolong the days of our independent supply, right now and on top of the other problems the high price of gas is creating a lot of concern to industry.
2006
The price of gas relative to other fuels, and taking into account supply, demand and the interests of suppliers and consumers, has become seriously distorted. The price paid for industrial fuel gas in the United Kingdom has further worsened during the years in comparison with prices paid for gas in Europe by competing industry. This has been compounded for British industry by some of the other economic disadvantages, such as interest rates and the value of sterling, which, at least, are curing the economy even if they are hard to live with. In no way does one want to see any compromise on interest rates until that cure is complete. But it is surely within the capability of the Government, without interfering with their economic policy, to remedy promptly or remove these distortions of prices and to ease the burden of gas prices at least until other economic factors become easier. After all, in recession it is unlikely that gas demand and shortfall will become pronounced and prolonged; and the price can be raised when the upturn is eventually upon us. The price of gas is linked to fuel oil on the Continent, as opposed to distillate in the United Kingdom; and, because of the greater price of the latter, so our gas prices are greater in this country. Further, even fuel oil is more expensive in the United Kingdom, possibly due to the availability of the Rotterdam spot market—though this can work two ways. In addition to that extra cost to our industry, the Continentals pay VAT (which can be recovered) on their fuel while we pay excise that has to be absorbed.
I should like to consider as an example the paper and board industry which has been mentioned and which is trying to compete with imports. After yesterday's Question we all know how the Fort William mill is closing and timber is being sent abroad to be returned here as paper. With energy representing some 15 per cent. of manufacturing costs—I heard somebody mention 50 per cent., but I have the figure of 15 per cent.—the price of fuel is vital and critical. Yet, in the United Kingdom the price of non-interruptible gas is more than half as much again as in France and more than one-third higher than in Germany (the highest-priced after the United Kingdom) but we shall no doubt he hearing that the frequency and timing of price rises make

2007
pure comparisons less easy and exact than they might appear.
We price ourselves on trading freely without barriers; yet other countries effectively subsidise their industries to compete with us by underpricing their energy. This is particularly the case across the Atlantic, where little success has yet been achieved in pricing energy to world prices. In addition, and in the particular case of board and paper, there is also the almost-free supply of timber. It is difficult for our industry to compete with foreign industry when that industry is effectively subsidised on its energy costs. That is not to say that our industry should be spoonfed to keep ailing plants going by cheap gas, but it is another thing, surely, for their gas to be more expensive than for their competitors and for them to be penalised thereby. It is difficult for our manufacturers to understand why some of the benefits of the North Sea cannot be passed to them, particularly in these difficult times, to help keep some of them in business and to reduce the resultant unemployment costs. That is not to say that those benefits should be large enough to allow manufacturers to sit back and to award large pay rises and destroy the economic efforts of the Government.
Industry now wants to end the price distortion between fuels caused by fiscal measures. Secondly, further price increases should be strictly limited so long as wage awards continue to be under control and until the end of the recession, when industry is no longer weighed down by the high interest rates and can leap forward, lean and keen, and able to pay high energy prices.
6.47 p.m.
Lord WYNNE-JONES: My Lords, my noble friend Lord Irving and the other two noble Lords who have spoken have both given clear examples of the problems raised in industry as a result of the high price of gas and of oil. We have discussed this problem before in this House with various Ministers, not one of whom unfortunately has been attached to the Department of Energy. Consequently, we keep on being faced with noble Lords who make excellent speeches from their briefs but who, unfortunately, are unable
2008
to give us the really first-hand information that we should like to have. This has been mentioned before in this House and it is serious that we do not have someone from the Department of Energy in this House.
With regard to this particular issue, the matter becomes especially important because I think that either the Department of Energy is failing to understand the difference between fuel and energy or is failing to put it across to the Treasury and to Ministers in general. There was a time when we had a Department of Fuel. I think it became a Department of Fuel and Energy; now it is a Department of Energy. It is clear—and I have little doubt that this is well understood in the Department of Energy—that fuel and energy are not interchangeable terms and that to talk about pricing fuels and energy on one basis is absolutely ridiculous. It makes no sense at all, technically or scientifically, to have such a uniform pricing policy.
May I give an illustration which is perhaps a reductio ad absurdum, but it illustrates the point if one takes the elementary substance, carbon. Carbon exists in nature in the form of diamonds and of graphite. It exists as coal, which is very largely carbon. To a lesser extent petroleum is carbon, and to a still lesser extent is gas carbon. If we take the material coke, prepared from coal or from oil, it is very largely carbon. The importance and significance of these different substances cannot be judged by their thermal equivalent; their thermal equivalent is virtually the same per unit mass; there is not much difference.
Is anyone going to say that one should price coal as though it were diamonds, merely because they are both the elementary material, carbon? It is obviously the particular use and the scarcity that matters and not whether they have the same thermal equivalent. Yet we have been told repeatedly that it is now policy to price fuels according to their thermal equivalent—in fact, further: price energy according to its thermal equivalent. That becomes even more ludicrous because energy is in different forms.
What we think of as energy is the most valuable form of energy; that is, energy capable of producing work. Electricity is

2009
therefore the most valuable form of energy. One can have low grade energy. One can have that with a fire made of wood. But it was not until the time of James Watt that it was realised that a certain amount of valuable energy could be obtained from that heat by putting a kettle or a boiler over the fire and producing a steam engine. But even the steam engine is only a few per cent. efficient under those conditions. It requires highly relined technology before one can make it really valuable from the point of view of producing useful energy.
However, we are told that it is the thermal equivalent that matters, This is absurd. It means that we are dealing in a non-technical pre-industrial revolution age if we talk about it in that way. We ought to realise that there are various forms of energy—some of them extremely valuable and others not so valuable—which can be useful in a number of ways.
It is in particular when we come to materials, fuels—not yet energy—like oil and gas that we are faced with one of the most valuable uses from an industrial point of view, and that is the chemical feedstock. This has been referred to by my noble friend Lord Irving of Dartford. The chemical feedstock is not something that can be supplied from nuclear energy; it is not something that can be supplied from electricity. The chemical feedstock is uniquely something that contains carbon and hydrogen. We have chemical feedstocks in petroleum, gas and coal. There are also certain other forms where we get chemical feedstock.
If we treat this as energy in the sense that the term is unfortunately used in Government policy, then we are misunderstanding the whole nature of the problem. We should not dream of treating the matter in this frivolous and senseless way. We should understand what we are trying to do. Industry is being run on this energy. I have mentioned the chemical industry because I am a chemist. I must also point out that there are other industries where heat becomes important, not just in the way of running a few engines in the place; the total amount of energy taken up in many a factory is relatively small. Energy in the sense that I am talking about is that doing useful work. Quite a lot is wasted in the form of heat, I admit. When talking about
2010
useful work, I may add that even an engineering works does not use up such an enormous amount of energy. But there are certain industries where the heat is really a raw material.
If one takes, for example, the cement or pottery industry, or any of the industries concerned with drying materials, the heat which has to be supplied may amount to 20 per cent., 30 per cent., 40 per cent. or 50 per cent. of the total cost of the product. In other words, it is really a raw material and it should not be regarded as lighting or heating or something like that, something which costs perhaps 2 per cent. or 3 per cent. of the total value of the product. It is an important element in it. If an average is taken over the whole of industry a nonsensical result is reached, as usually happens when taking an average.
It is important to appreciate that we are dealing in this matter of the pricing of gas and oil with something which is an essential ingredient of certain industries to such an extent that a rise of 10 per cent. in the cost of that particular material may put the business virtually out of operation. That is why my noble friend has raised an extremely important Question. We ought to ask the Government to take this matter very seriously and try to answer the points that have been raised, because the future of a lot of our industries is at stake.
6.57 p.m.
Lord ENERGLYN: My Lords, I am very pleased to follow the noble Lord, Lord Wynne-Jones. He is a distinguished chemist who has devoted his life to the study of fuels. Following his theme, and with great deference, I should like to present to Her Majesty's Government the suggestion that, without being supercritical, they should get into their minds clear modules of what the noble Lord has just been trying to describe: the difference between fuel and energy. Energy is taken out of fuels but first we must understand the fuels with which we are dealing.
Therefore I do not apologise for suggesting to your Lordships that I might give a brief picture, as accurately as I possibly can in a few words, why we have natural gas in and below the sea. Some of it does escape into the sea. I do so

2011
because—and I am not standing in their defence—the gas board must be haunted by the geological uncertainties of the future of their subterranean gasometers.
First of all, I should like to make it clear to your Lordships that when we are talking about a natural gasometer we are not talking about vast, empty spaces or spaces full of gas; we are talking about rocks which have been pressurised and have cracked. These cracks are intercommunicating and into them oil and gas have seeped.
If we look at the pattern of the gas in relation to the various grades of light, medium and heavy oils in the North Sea, they follow a pattern northwards. The further North one goes, the heavier the oil becomes. Your Lordships may have noticed the dramatic eruption of a volcano in Iceland. They get them often and this is no accident. Iceland is close unto the "hot-rod" that runs down through the Atlantic—the mid-Atlantic ridge—which 200 million years ago separated two vast areas of the crust and let in the sea to form the Atlantic. The eruption of this volcano tells you vividly that the molten interior is not far below the surface of the sea around Iceland. The heat from this has distilled the disseminated organic matter in the sediments southwards into this couvette that we call the North Sea. So therefore it is not surprising that the lighter fraction of distillation has travelled further south, and it is also not surprising that we find the first major sources of gas in the neighbourhood of Holland.
In saying that, I should like to emphasise that these deposits which have been rendered there geo-thermally are held there until you pierce them and make a hole. The moment you pierce them you are developing a rapidly wasting asset. Any failure in the inter-communicating system of cracks and that hole ceases to supply; and it is beyond the wit of man to forecast how long a hole will survive. Therefore, you find that it is advantageous, perhaps politically, at some stage to say, "We have 20 years of gas supplies". But, frankly, I forecast that the certainty of getting the quantity of gas that we are achieving at the moment will scarcely last for more than 10 years, and the experts of the Gas Board know this. Therefore,
2012
they are trying to budget forward as best they can. That is no defence, but it is a fact.
Then, leaving the origin behind, you come to the quality of this gas. This gas, as the noble Lord, Lord Wynne-Jones, pointed out with clarity, is a gas which is better used as a chemical feedstock than as a source of heat. That is his great point: you want to keep clear in your mind what you are going to use this fuel for—is it to produce energy or to produce chemicals? I would suggest, listening to the noble Lord, Lord Rochester, that if the chemical industry had a monopoly over the use of natural gas, they could produce petrochemicals that would stand any competition in the world.
So we turn now to the utilisation of gas. It is a well-known fact that if you mix oil and water you can improve the calorific value of the oil when it is used as a source of thermal energy. Your Lordships should, I think, also be reminded of the brilliant concept of Frank Whittle, when he visualised the jet engine. I was fortunate enough to meet him, many years ago, when he and Houbrecht were working out the thermodynamics of the jet engine, and his original picture was like an artist looking at a steam turbine and saying: "If you put that steam turbine in the air you've got a super aeroplane, which is far better than one driven by a propeller".
We have lost sight of this fundamental point, but in 1939 a gas turbine generator was erected in Switzerland with great success, and there are gas turbine generators generating electricity in America. It is perhaps just an accident of economics—I do not know—but if you take the time-scale and cost-scale of generators (that is, now we are producing energy from something) and if you produce that energy by using gas, then you can build a turbine generator in four to six months, whereas it takes you something between four and five years to build a solid or liquid fuel power station, and something like 10 years for a nuclear power station, for the same quantity of electricial output.
That brings me to a very interesting reflection upon the validity of nationalisation, because here we have in this country an experiment which was at the beginning a very logical one—to nationalise things

2013
like electricity, the railways, the coal and the gas. But in doing so we endowed them with commercial incentives, and we kept them autonomous; and so we do not find any discussions going on on major decisions between the National Coal Board, the Gas Board and the Central Electricity Generating Board. I find on investigation, for instance, that no such discussions took place when the Gas Board decided to supply Britain with natural gas and to abolish town gas. We have to go back to this, because our gas supplies in the North Sea could be cut off quite dramatically and we shall be back again dependent upon coal.
However, that has happened and what it illustrates is this. At no point, at a very important juncture in our commercial history, did any discussion take place, so far as I can find out, between the chairman of the Gas Board and the chairman of the National Coal Board—because what the chairman of the Gas Board was doing was cutting the ground from underneath the coal industry.
From that, I should like to go on to suggest to your Lordships, and particularly to Her Majesty's Government!I have made this suggestion before but the previous Government were not prepared to listen—a practical proposition. It is now, as the noble Lord, Lord Wynne-Jones, has pointed out, absolutely essential to get clear in your minds what materials you are going to use to produce energy. Do not get them mixed up, as he says. In order to do so, you must have complete discussions and communications between our major producers of materials, the producers of energy and the consumers of energy.
I have before suggested that we should have an energy board, the members of which would be the chairmen of our nationalised industries, and that the board should be chaired by the Minister. In this board they could between them decide on the cost of units of energy. The opponents of this will be the trade unions because at the moment they can deal independently with these autonomous units of nationalised productivity. On the other side, the opponents will be the civil servants, who are carrying out the duplicating activities of trying to link together these major nationalised organisations.
2014
However, if the Government would look at this quite seriously they would see immediately the profitability of putting together a board composed of people who have to carry out the functions of their particular industry, with the managing director, as it were, being the Minister. Then all kinds of problems will be smoothed out. Although today it may be cheaper to produce units of energy from gas, tomorrow it may be cheaper to produce them from coal, water or emulsions.
By the way, I have not mentioned emulsions. There is a big revolution going on in the mixing of coal and water to simulate diesel oil. Here we have a big problem. Do we simply say: take that liquid fuel and pump it into what are now oil-fired power stations? I ask your Lordships to remember that all that these power stations are doing is boiling water, and you cannot turn them off at any time you like. That is why appeals are made to us to use current at off-peak periods. But if you had a turbine generator using these liquid fuels, you could switch it on and off as you required it. That is the great boon that you have with hydro-electric power.
We should seriously look at making this integration possible, because we have our backs to the industrial wall. If we can reduce the cost of units of energy and become competitive at the same time, then we can utilise to the full the valuable raw materials which we have at our disposal. Therefore, I again suggest to the Minister that a board should be formed with the chairmen of our nationalised industries and, most important, that that board should be chaired by the Minister. Then decisions on a national basis could come from that board, without the wrangling and the political bias that may be existent at any one period of time.
7.12 p.m.
Lord MACKIE of BENSHIE: My Lords, I am sure that the whole House is very grateful to the noble Lord, Lord Irving of Dartford, and I must congratulate him on his speech. I have never heard the facts so well assembled and so well presented, and it occurred to me that the Minister would do well to give in right away. That was followed by excellent speeches all round, and I am afraid that I shall now lower the tone of the debate

2015
considerably because I must declare an interest. I am chairman and a substantial shareholder in a small glass-making firm and I am being hit in my pocket extremely badly by the Government's policy.
The Government built us a factory which we rent from them, and we were pushing on and expanding exports. They told us that it would be a splendid thing to use gas, so we used gas, and they put up the price by 50 per cent. every year. I know that we shall overcome this. Energy is a large percentage of the cost of glass manufacture, but we shall overcome the problem. But I have friends in the textile industry who are fighting very hard. They are very efficient and have put in a lot of capital investment, but they are being "knocked hell out of" by Americans who get their raw materials at half-price. So they are suffering and losing markets, and their people are placed on short-time.
I do not think the Government need worry about the money sloshing about and upsetting the pockets of industry. If they read a few company reports, they will surely find that industry is not flush with money and, in fact, is in a jolly bad way and needs no artificial Government obstacle put in its way, which is exactly what this is. I should like the Minister to tell us what the devil they are going to do with this money.
The Gas Board is making several hundred million pounds and it will be a thousand million pounds or so next year, and the Government say that they want the Gas Board to provide capital for their expansion out of their profits. My goodness!, if there was a private monopoly trying to charge the public enough to fund all expansion out of profits, there would be an outcry that you would hear from here to Glasgow. This Government must surely believe that a nationalised industry can go to the market and raise money. It certainly can raise money if it is showing that kind of profit and there is no need to penalise the rest of industry.
Perhaps the Government feel that if they get hold of this money they will stop the money supply from rising, which is the kind of thing that they are manic about. I suggest to them—with enormous respect, of course—that they concentrate more on keeping public sector pay rises
2016
down to a reasonable level. That might do more for the eventual economy of the country. If they want another method of raising money, why do they not put more tax on whisky—I adore the stuff—cigarettes and so on? They had not the courage to do it in the Budget, but they should be thinking hard about it now, and it would do far less harm to the Government's reputation than taxing the gas which heats the homes of pensioners.
So I say to the Government and to the Minister—who I hope is a sensible man—that, far from waiting, as the noble Lord, Lord Gisborough, suggested, till other countries catch up in price, it would be sensible and good for our industry if they started lowering the prices now.
7.16 p.m.
The Earl of LAUDERDALE: My Lords, the noble Lord, Lord Mackie of Benshie, and I have repeatedly lowered the tone in debates with one another over the years, but I hope now to do a little better. First, one must thank the noble Lord, Lord Irving, for raising the matter and putting the industrial consumers' point of view so cogently. I want to raise a few general points from the supply angle.
First, a relatively low gas price discourages the coal industry and discourages its development along the lines for which the noble Lord, Lord Energlyn, was asking. Secondly, a relatively low gas price encourages flaring and waste—something which I thought the Liberals were particularly anxious about in their general approach to environmental problems.
Next, while it is absolutely right, as the noble Lord, Lord Wynne-Jones, pointed out, to decry and deplore the pretended principle of pricing energy by thermal equivalents—and I am so glad that he emphasised that; I would have done it myself—it raises a further point, which is that, broadly speaking, the capital cost of bringing gas to the consumer is a good deal more than the capital cost of bringing oil. What surprises me is that there is now a general attack on the Government's industrial policy, which is under pressure from industries feeling themselves savagely mistreated, when there had been, it seemed, something like an emergent consensus policy on gas pricing.

2017
The White Paper of 1967 (Cmnd. 3437), published under the auspices of the Government of the other side, and that of 1978 (Cmnd. 7131), both said that nationalised industry prices should reflect long-range marginal costs. In simple language, that is the replacement cost. Moreover, on 18th July last year the Price Commission, so dear to the other side, so gravely and so sentimentally lamented when it was disposed of, endorsed this principle with specific reference to gas. The Price Commission also felt that the cost of Norwegian imports reasonably reflected the long-range marginal costs. When one refers to Norwegian imports one is referring to imports from the Frigg gas field.
Lord WYNNE-JONES: My Lords, the noble Earl referred to the long-range marginal cost, but surely that cost is infinite. The gas supply runs out; there will not be any gas. What is the range about which the noble Earl is talking?
The Earl of LAUDERDALE: My Lords, the noble Lord is quite right. As Nye Bevan once said, "In the long run we are all dead". But the long-range marginal cost was a term used by these two commissions, and I take it to mean within the foreseeable future. Whether that means 50 years or 30 years I do not know and I do not think that this is the time to argue it.
I have an interest to declare regarding Norwegian imports. I am a director of the Elf Aquitaine company holding a 51 per cent. interest in the Frigg gas field, which in turn provides about 30 per cent. of the gas now consumed in the United Kingdom. I must also reassure your Lordships that I do not know, for it is a very special trade secret and I have not asked my office to brief me on this, exactly what is the price that is paid. It is a very secret formula. I have not been let into the secret and I have not asked. However, the general belief in the industry at large is that the price paid for that gas is related to crude oil prices and that it might well be somewhere between 15p and 20p per therm. Whether or not that is so I do not know, but that is the common belief in the industry.
What is also commonly believed in the industry is that the British Gas Corpora-
2018
tion have needed to offer to the Norwegian company Statoil, with a view to getting them to put their gas from the Statfjord field into the proposed gas gathering pipeline, a price at least as much as, indeed rather more than, has already been negotiated for the Frigg gas. So if the common report of 15p to 20p per therm is somewhere near right for Frigg gas, then the British Gas Corporation have had to offer more than that to the Norwegians to get them to consider putting the Statfjord gas on the Norwegian side of the median line into the proposed gas gathering pipeline when it is built.
Not only is that the case but the British Gas Corporation have only now been able to encourage further development of the North Sea's southern gas fields by offering very greatly increased prices—perhaps not less than five times as much—between five and 10 times as much, it is believed—as they originally negotiated at 2p per therm. My point is that we simply shall not get the gas unless we are ready to pay for it. Furthermore, whatever our coal reserves are, and however well they could be developed if this and the present Government's successor put their backs into it—something which I know is dear to noble Lords on both sides of the House—we cannot be certain that these things will happen. We are fairly confident that there is a lot of gas about and it is in our national interest to get it. But there is great competition for it from the Europeans. There is a French-German consortium which is offering the Norwegians considerably more, it is suspected, than the British Gas Corporation have been able to offer for the Statfjord gas.
Last year the British Gas Corporation supplied something like 1.6 trillion cubic feet to consumers in this country. This was in a year of acknowledged depression, when production went down. It was nothing like enough, for a queue of potential consumers was waiting to be connected if enough gas had been available. On the most optimistic assessments now current, it seems that the Norwegian reserves, apart from the new 31/2 field, may be of the order of 25 trillion cubic feet. It may well be that the total British reserves are about the same again, about 26 trillion cubic feet. If they amount, in the latter case, to a British supply of

2019
about 20 years and to a supply of rather more than 30 years in Norway, that will be fine. But, as the noble Lord, Lord Energlyn, pointed out so cogently from his vast knowledge as a geologist, these kinds of reserves predictions have very little practical meaning. There may be all sorts of accidents underground which will falsify the forecasts. Therefore there is absolutely no reason to be complacent because so much gas has been found in place. There is no reason to be complacent that, it having been found in place, it will necessarily be delivered. It is also clear that the British Gas Corporation can hardly be expected to offer a really competitive purchasing price for these resources, competitive with Europe, unless a proper replacement cost price is paid for it at home. Now I shall be lowering the tone of the debate between myself and the noble Lord, Lord Mackie of Benshie, who referred to the huge profits of the British Gas Corporation. Last year, that operating profit was just over 5 per cent. on net assets, at current replacement cost. In the coming year BGC will be paying corporation tax because, at last, after many years of loss, they will be making a profit. Not only will they have to pay corporation tax but from now on they will have to pay a price which meets a levy on the gas which they buy; a levy which will be equivalent to PRT. That, too, will enter into their calculations. One may say, why raise a levy on the gas? Surely noble Lords on this side of the House who have defended for long enough the interests of the oil companies should stick up for them now and oppose the levy? The effect of the levy on gas is to shift North Sea benefits from the consumer to the taxpayer.
These are general observations. All I should like to do in conclusion is to add my word of support to the proposal of the noble Lord, Lord Energlyn, that the Government should be invited to consider some sort of energy board, including the chairmen of all the energy producing corporations—the noble Lord did not mention nuclear power but no doubt it was in his mind—chaired by the Minister.
Another point worth making is this. It was asked by the other side whether or not it is the case that the Secretary of State for Energy is bullied by the Treasury. We all know that in every Government all
2020
spending departments are bullied by the Treasury. It is in our interests to support the Secretary of State for Energy in standing up to the Treasury but may I add, with the greatest respect to my noble friend—he has heard this from me before—that it would be much easier if he were himself in the Department of Energy and not merely an erudite, accomplished, and plausible spokesman for a department to which he does not have the access that some of us would wish.
7.29 p.m.
Lord HARMAR-NICHOLLS: My Lords, as so often happens—I have seen it happen on many occasions during the last 30 years in Parliament—the way this debate has been handled has been excellent and the record will be valuable to people who want to know the fundamentals behind the problem of energy production and distribution. However, because of the way the debate has developed we may be spoiling what I imagine the noble Lord, Lord Irving of Dartford, had in mind. The one thing which a Minister at the Dispatch Box welcomes is a wide-ranging debate—technically based, if possible—for it gives him an excuse to fob off the Question which has been asked. If ever there were an occasion when the material was there for my noble friend to fob off the real Question, this is it. But I know the Minister does not want to do that. Nevertheless, I should like to draw your Lordships' attention to the Question which the noble Lord, Lord Irving of Dartford, has asked. There is nothing erudite or very complicated about it. It is very clear, and it is this:
"To ask Her Majesty's Government whether they are aware of the effect of gas prices on manufacturing industry…"
Are they aware of it? I want a clear answer to that. I have a feeling that they must be, but with some of the things that have happened they may not be. So quite apart from the great research that the noble Lord, Lord Energlyn, and the noble Lord, Lord Wynne-Jones, did for us I should like to keep to that very practical point. Perhaps later on we can have a debate, not on an Unstarred Question but a full-scale debate on this vital question of energy production, and then we could have the recommendations made by the two noble Lords examined and eventually, I hope, acted upon.

2021
The only reason that I intervened was to say that whether or not Her Majesty's Government are aware of the disastrous effects that gas prices and energy prices in general are having on our industrial competitiveness, Europe is very well aware of it. I am a Member of the European Parliament and I wanted to bring the voice of Europe back to your Lordships' House. I was sitting on one of the European Committees only this week where the point was raised of the unfair competition we are having to face in textiles (as the noble Lord, Lord Mackie, said), in steel and in the motor-car industry because of the alleged subsidising of energy costs in America.
Our colleagues in Europe are perhaps in a worse position than we are to withstand these subsidised oppositions—if indeed they are subsidised and there are good grounds for thinking that they are. We are perhaps in a stronger position than they are, but they cannot understand why we, who have an opportunity within our own fiscal powers to do something about it without in any way infringing any of the international agreements on tariffs and trade, do not in fact do it.
If America is subsidising energy it is doing so because its industry is in trouble (as are so many others) and it wants to help it to get out of the trouble by subsidising the energy costs. In subsidising it is really in breach of international laws and that is very sad, and in strict purist terms we ought to oppose it. We can achieve the same thing here without being in infringement of any of the international obligations into which we have entered in the past. Our partners in Europe—and indeed our competitors—cannot understand why, it being in our power to give this help to our industries at a time when it is wanted more than at any other time, we do not do so.
I agree with my noble friend Lord Gisborough, that one can see a reason for maintaining the interest rates because it is part of a battle against the whole inflationary problems which are besetting every industry. One sees that, but there is no such explanation for artifically keeping up the price of gas more than it need be. If the suggestion is that if we gave the advantage that gas has over the other forms
2022
of energy at the moment it would cause a rush from one source of raw materials to another and thus upset the actual investment wastefully, I would say that if ever there was a time when we ought to make a short-term decision to meet a short-term problem which is really great and which can strangle us, now is the time to do it.
I would urge my noble friend. I am sorry, it is a presumption to tell the Minister how he ought to prepare his speech, but I hope he will give a short-term answer to the Question put by the noble Lord, Lord Irving; namely, are the Government aware of the damage being done and what are they going to do about it? Let us have the answer to that, and having done that he could perhaps give the reaction of the Government to the very wise recommendations for the medium and long term that have come from the noble Lord, Lord Energlyn, and the noble Lord, Lord Wynne-Jones.
7.35 p.m.
Lord STRABOLGI: My Lords, I think we must be grateful to the noble Lord, Lord Harmar-Nicholls, for bringing your Lordships' House back to the subject of this debate and reminding us of the clear question which my noble friend Lord Irving of Dartford has raised. It has been a most interesting debate which has ranged far and wide, but this is a particular Question which needs answering and I hope that the noble Lord, Lord Strathcona and Mount Royal, whose presence here we welcome, will be able to answer it as fully as possible. I am sure we are grateful to my noble friend for raising this matter. It is a most important one, as the noble Lord, Lord Rochester, has said. As my noble friend Lord Wynne-Jones said, the future of much of our industry depends on it and is at stake.
I understand, as has been said, that the British Gas Corporation plan to raise contract gas prices for industrial customers by up to 54 per cent. in the coming year. This will mean that British industry's annual gas bill will rise by at least £490 million. I understand also that the corporation do not need the money. In fact, I am advised that they were against such steep price increases. The corporation is expected to make a profit of about

2023
£600 million in the current financial year, and indeed that could be doubled next year to an eventual profit of £1 billion.
Like the noble Lord, Lord Mackie of Benshie, I must ask the Government what they are intending to do with this money. This steep rise in gas prices is particularly hard on industry. Perhaps the decision to raise gas prices was taken on conservation grounds, but there are other ways of preserving our gas than by price alone and while the Government are preserving our gas they are allowing much of British industry to be destroyed.
Yesterday The Times reported that British businessmen are feeling squeezed beyond endurance and it is reported that the chairman of the London Chamber of Commerce and Industry has written to the Prime Minister to say that industry was not just squealing because it was in superficial pain but because it was in mortal peril. It is not surprising that the Government have now got almost the whole of British industry, both individual companies and their organisations, such as the CBI, ranged against them. The Chemical Industries Association, for example, recently described the Government's gas pricing policy as—and here I quote,
"Paradoxical and totally unacceptable in the light of this country's exceptionally favourable energy situation".
According to the figures released recently, United Kingdom chemical companies are paying between 67 per cent. and 112 per cent. more for gas than their competitors in West Germany. That is about £300 million a year more, and they are paying more, too, for gas than their competitors in France, Italy and the Netherlands. One reason for this, as the noble Lord, Lord Rochester, said, is that in Europe gas prices to industrial consumers are linked to those of fuel oil, which is cheaper, while British contract gas prices are linked to heating gas oil, which is more expensive. The result of all this, coupled with the Government's disastrous financial and pricing policy, is that there are increasing redundancies and ever-rising unemployment. This is particularly bad in the energy intensive industries, such as the chemical and steel industries and, as my noble friend and
2024
other noble Lords have said, among manufacturers of clay, paper and board and ceramics, which are all big gas users.
Strong complaints have also been made by the National Association of Drop Forgers and Stampers, the Food Manufacturers' Federation, the British Printing Federation and, above all, by the CBI. A further example of an industry which has been particularly hard hit because it is energy intensive is the glass industry, and here, like the noble Lord, Lord Mackie, I must declare an interest. The glass industry is a heavy industrial user of oil and gas. The energy costs make it increasingly difficult for the industry to compete with European manufacturers and have led to the situation where imports of glass containers alone in 1979 totalled £36 million.
The Glass Manufacturers' Federation estimates that energy costs now amount to 21.· per cent. of total manufacturing costs, an unacceptably high ratio, which is a contributory factor in the redundancies in the glass industry, which so far this year have amounted to 3,500. It is, therefore, hardly surprising that the Glass Manufacturers' Federation is now joining other heavy industrial users represented by the CBI in an attempt to persuade the Government to review the whole of their energy pricing policy.
I should like to endorse everything the noble Lord, Lord Mackie of Benshie, said from the Liberal Front Bench. It is surely a tragic paradox that the energy intensive industrial user in Britain is far worse off than his EEC competitor, as the noble Lord, Lord Harmar-Nicholls, implied, although in Britain we have greater indigenous resources than in any other EEC country. As my noble friend Lord Kaldor pointed out recently, this country should be able to take advantage of this happy circumstance by selling more cheaply those things for which gas is an important element of production. The Government, for some strange reason, call this a subsidy. But, my Lords, how can it be a subsidy when the gas industry is selling gas at a price which is greater than the cost and making an enormous profit as a result? Perhaps the noble Lord, Lord Strathcona, will tell us something of the Government philosophy.

2025
The Government's decision must be seen in the whole context of their muddled and disastrous economic and social policy, which is resulting in ever-increasing bankruptcies and ever-rising unemployment. The figures for unemployment released yesterday show the biggest increase since the war at around two million, or 7·8 per cent. of the workforce, and the upward trend seems to be accelerating. The monthly increase has now risen from about 35,000 in the early part of this year to 90,000 during the summer and to 108,000 now. At this rate we can expect three million unemployed by next summer. The increase has been so steep that the capacity of the Government computers used for paying social security benefits may not be able to cope with it much longer; as these computers cannot deal with more than 2¾ million claims consideration is being given to the installation of a new computer. My Lords, what a fearful commentary on the accelerating unemployment figures! What an indictment of this Government's record after only 18 months in office!
The whole country is seething with discontent. We could face a very serious situation if the Government continue down the present road and if they refuse to swallow their stubborn pride and to admit that they are wrong. This, at least, they owe to those who elected them with such high hopes only 18 months ago. The disillusionment is now almost universal. A change of policy will be necessary if there is not to be serious social unrest and what Mr. Healey called yesterday an overpowering revolt from all sections of the people.
7.46 p.m.
The MINISTER of STATE, MINISTRY of DEFENCE (Lord Strathcona and Mount Royal): My Lords, I have to express a slight regret that the noble Lord who has just sat down chose to go off into a general attack on Government policy, when up until then I thought we had had rather a restrained and well-informed debate on the subject which the noble Lord, Lord Irving of Dartford, introduced so efficiently. May I just begin by dealing with some of the general matters. I, too, regret that I am not speaking as a Minister in the Department;
2026
regret that we do not have a Minister in the Department in this House. This is something I have expressed before when I was in Opposition, and for a brief time we did have a Minister, in the last Government.
I will indeed follow the advice of the noble Lord, Lord Harmar-Nicholls, and I shall have to resist the temptation, in the course of this debate, to make it a general energy debate, as almost any debate on an energy subject in this House tends to become. The noble Lord, Lord Energlyn, was urging us to introduce another Quango, which is not one of our favourite things in this Government; but I hear what he says, and I do indeed know that there is some considerable support for those who believe that some kind of an energy council would have a valuable part to play. The noble Lord also told me something I did not know. I had always regarded it as a chemical axiom that oil and water do not mix, but apparently I am out of date to that extent, and I am grateful to him for the information.
What I shall try to do this evening, without, I hope, going to inordinate length, is to explain the Government's philosophy and at least explain their attitude to some of the facts produced. A great many figures have been bandied around and it is difficult to deal with them specifically as they crop up. It almost embarrasses me to say this because it is so blindingly obvious, but it is a fact that over the past decade the world has moved from an era of cheap energy to one of expensive energy and it is continuing to get more expensive. It is important that we should recognise this and that we cannot escape the consequences of it. Oil prices first surged ahead in 1973/4, and this process was repeated last year. As has been said several times, natural gas prices and oil prices are inevitably closely linked. In the vast majority of uses the two fuels are interchangeable. So in any freely operating market the gas prices are bound to move upwards in the wake of rising oil prices, though the lag between the movement of one and the other tends to vary from country to country.
It is against that background that I should like to deal with some of the

2027
specific points that have been raised. The noble Lord, Lord Irving, asked whether Her Majesty's Government were aware of the effects of the gas prices on manufacturing industry, and the noble Lord, Lord Harmar-Nicholls, very properly said, "Don't you dare go off into any other avenues without addressing that particular problem". I have no difficulty at all, as anybody who has read the newspapers this morning would have no difficulty at all, in confirming that the Government have had many representations on this subject. There is no doubt that we are aware.
There is slightly more doubt as to whether we are in agreement with some of the figures and some of the deductions that are made from them, but certainly it is undeniable that gas costs have risen sharply over the last 18 months or so, and, not unnaturally, industry has protested. I do not know whether what I take to be something of an orchestrated campaign in the newspapers today had any relation to the imminence of this debate this evening, but I do not have that kind of nasty mind in any case. I think we ought to have a look and see what is happening. This is very important. The British Gas Corporation has a longstanding policy of selling gas to industry at a price broadly related to that of the competing oil products.
The noble Lord, Lord Wynne-Jones, got into what I thought was possibly something of a tautological argument as regards this. The Government have repeatedly denied that economic pricing means thermal parity pricing. In the case of gas, the British Gas Council is aiming to charge a market clearing price, and in time of shortage that is bound to be determined by the price of alternative products. To charge less would stimulate demand which could not be met. That point was also raised by my noble friend Lord Gisborough. In passing I should like to say to him—and I think that it was he who asked about this—that I am not aware of intentions to examine a cross-Channel pipeline, but I shall write to him if I am wrong in saying that that is not happening.
I was also most particularly grateful to my noble friend Lord Lauderdale
2028
for the support that he gave to the Government's policy of supporting the Gas Corporation in its policy as I have just stated it. That point arose again and again in the debate, and I must say to the noble Lord, Lord Strabolgi, that this Government have done no more than endorse the BGC's policy and, indeed, that is what the previous Government did. I do not think that we should be carried away by some of the figures. To say that there is a 54 per cent. increase is misleading and possibly an exaggeration. I am not trying to question figures but the problem here is what we deduce from them.
As I have said, the industrial pricing policy is the BGC's policy. The Government endorsed it, but they did not force that policy upon it. I may add—and I shall probably return to this—that there has been increasing evidence recently from Germany that renewal prices there (and I stress "renewal" prices) are higher than BGC prices here. So again let me say that the Government have endorsed the BCG's policy as the best means of matching supply and demand. Indeed, it was the noble Lord, Lord Gisborough, who pointed out that there is a mis-match and that this is a delicate operation.
I suppose that I ought to declare a small interest in that my house is heated by domestic gas. However, if we consider the number of domestic consumers we will find that there was a very long waiting list, something of the order of 70,000 people a year ago, but that waiting list has been reduced to something like 30,000 in the last 12 months. However, there is still a waiting list of something of the order of 4,000 industrial consumers who are waiting for connection. So let us be quite clear that there is the danger, if we underprice, that we shall stimulate demand which cannot be met.
Lord MACKIE of BENSHIE: My Lords, surely in the case of a monopoly such as the Gas Board we can control demand at will? The noble Lord has just said that there is a waiting list but we can fulfil the waiting list or leave them waiting.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I think that the noble Lord is getting very dangerously near the

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position of finding that someone will say to him, "The gentlemen from Whitehall"—or wherever the BGC has its headquarters—"know best". Does he really want a rationing system?—because that is what we shall get if we get away from a pricing regulating system, or at least that is what we believe.
Lord WYNNE-JONES: My Lords, the point which I was trying to make had nothing to do with actual interference with pricing. I think that the Government have interfered, but that is not the point that I was making. I was making a rather wider point and if the noble Lord will forgive me for saying so, I first made it in your Lordships' House in 1967 in a debate in which I said, before natural gas was being widely used, that natural gas was such an important product that it ought to be used primarily in the chemical industry and in those places where there was no alternative. I am not blaming the present Government any more than I am blaming previous Governments. I am saying that it is the national policy which is wrong as regards this matter.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am grateful to the noble Lord. I can certainly agree with him to the extent that the BGC believes—and we support it—that gas should be used for premium purposes. The noble Lord would perhaps go a little further than the Government would go down that particular road. I was saying that we believe that the price mechanism is the best way in the longer-term—and do not let us get into the question of how long we are talking about here—to keep supply and demand reasonably in balance, and, of course, we must prevent the profligate squandering of what all noble Lords have mentioned tonight is a finite resource, the production of which from the North Sea will peak in the middle 1980s, on the best advice that I can find.
I have already said that crude oil prices have more than doubled over the last 18 months and that oil products have followed. Therefore, gas prices have had to follow. But the British Gas Corporation has recognised the difficulties experienced by its customers in coping with
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substantially higher prices and has therefore tempered the gas price increases, particularly to those users who are tied into gas and who cannot readily switch between fuels. As a result, the present renewal rate for firm contracts is very significantly below the price of the alternative oil product; that is, gas/oil. One would hardly expect that such an eventuality could be popular with the industry and, for that matter, oil price increases are not welcome, but that goes for any manufacturing cost. However, I believe that we need to keep a sense of proportion and here again I refer to something that the noble Lord said when introducing the debate. For most sectors of industry not more than 5 per cent. of the total cost are energy costs, and gas costs are less than 1 per cent. That is not to deny that there are certain intensive industries where the gas costs can amount to appreciably and indeed very significantly more, and that depends on whether they are dependent on particular processes and the choice of gas which is used as the main fuel. The noble Lord referred to the paper and board industry and the Government are well aware of the situation in that regard. If they were not aware, then from here on the Government will be aware that it also applies to at least one part of the glass industry—a matter referred to by the noble Lord, Lord Mackie of Benshie.
Of course, any energy intensive industry will experience difficulty in a time of rapidly increasing energy prices, whatever fuel they use. We should remember that firms using gas will be doing slightly better in the United Kingdom than their competitors for whom oil is the main fuel. Therefore, any suggestion that gas prices should be held down would have to take account of the potentially unfair consequences for the very many firms who are largely reliant upon oil at the present time.
There have been suggestions in recent months that gas prices in Britain are substantially higher than those overseas, and those suggestions—they are a good deal more than suggestions—have been put forward this evening. We must be exceedingly careful about how we make comparisons of this sort. It cannot be denied that European gas prices generally are higher than those in the United States of America.

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Over very many years the Americans chose to regulate their oil and gas markets tightly. It is interesting to note that they are now engaged on the process of deregulation, and they are making slow progress. That part of their energy industry that is energy intensive indeed enjoys for the present a real competitive advantage. Those noble Lords who say, "Let us look at the American example and follow it", I would advise to ask the Americans themselves what view they have of their present energy policy and what changes they would wish to make to it now. I assure noble Lords that, if anything—and I say this to the noble Lord, Lord Harmar-Nicholls, and I do not wish to give offence to our American friends here—we should regard the American experience as a salutary warning of what can happen. I believe that my noble friend Lord Lauderdale explained very well the basic philosophy of the market forces.
Lord HARMAR-NICHOLLS: My Lords, I can see the noble Lord's point, but I was trying to say that it looks as though the Americans are prepared in the short-term to put their energy industry at risk in order to help their general industry during a period of acute recession. I believe that the recession is so acute and so real and the consequences can be so disastrous that we ought to think of doing the same, not forgetting the long-term, but putting it on one side in order to get over the short-term; otherwise we might not have a chance to develop later. That was my point.
Lord ENERGLYN: My Lords, I should like to follow the noble Lord, Lord Harmar-Nicholls, on that point. If I may say so, I resented the Minister's correlation of my energy board with a quango. As he knows, I am very anti-quango, so I should like to clear that point for the record. After all, the people whom I am suggesting as members of the board are paid-up officials, the chairmen of our nationalised industries. We do not have to pay them to attend the board. The point I really want to make is that it is only such a board that can achieve what the noble Lord, Lord Harmar-Nicholls, is suggesting; that within Britain we have a price structure—I agree that the only
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way to control it is by a price structure—so if you can produce thermal energy by using this, that or the other across-the-board—and only these chairmen can do it—you will come out with a figure which is sensible and equable.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am grateful to the noble Lord and I am sorry that he felt insulted when I accused him of possibly postulating a quango. But we must be very careful—I shall leave it like that—in following the American example on close regulation of energy prices. I hear what my noble friend Lord Harmar-Nicholls says, and I am sure that the Government are highly sympathetic to what he is suggesting. However, I must say to him that certainly looking at the long-term we must regard America as a frightening example of a situation into which we can get and from which they are finding great difficulty in extracting themselves. Therefore, I am saying that generally we should not wish to follow the American example.
Matching the prices to our competitors in the European Community is different. It is widely alleged that our prices are higher than those on the Continent and that this is putting our industry at a competitive disadvantage. We believe that valid international comparisons of gas prices are very difficult for a number of perfectly respectable reasons. Although oil and gas prices are linked, the link is inevitably an elastic one. Indeed, the gas market is one of the least transparent markets, and it is subject to one of the longest lags of all the energy markets. These lags vary from country to country. They depend upon the constraints, the institutions and the commercial practices of the country. I am not saying this to obscure the issues, but I am saying that if you take a photograph of the situation at any one time you can get a highly misleading picture of what is, in fact, happening if you look at it over a slightly longer term. For that reason, and that reason alone, I totally agree with the noble Lord, Lord Irving of Dartford, that one of the things that are necessary is for the Government and industry to try to establish some means of agreeing the facts. We can argue like mad about what they prove,

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but it is silly to argue about facts which ought to be ascertainable.
This, I think, leads us back into the argument (and again the noble Lord was very fair about this): do not let us get seduced into muddling up the new or renewed contracts against the average prices which are being paid. This is particularly true in this country where the Gas Corporation has the practice of negotiating one-year fixed contracts. Of course, there are some long-term, old, long-standing low-priced fixed contracts. One noble Lord referred to the alarming increase that had taken place, and I suspect that that may have been one of the cases where a long contract was running out.
The most recent data are those compiled for January this year by the Statistical Office of the European Communities. My noble friend Lord Gowrie has provided this in answer to a Question from the noble Lord, Lord Jacques, on 8th August; and in a slightly more extensive form by means of an Answer in another place on 31st July. I believe that these replies, including the detailed qualifying footnotes will repay careful reading. I believe that the picture is clear. In January, which is the most recent date for which comparative figures are available, the average price paid by British industry for gas—even omitting old, cheap contracts, to which I have already referred—was not out of line with the prices paid in the generality of other European Community countries. I have already said that there are indications that in Germany new gas prices are higher. I freely admit that it is hard to square that statement with some of the statements that have been made this evening. I shall simply say that that is what the Government believe the situation to be, and they look forward to exploring why other people may disagree with them.
There are some other points that should be made. The recently-published comparisons have spoken about renewal prices as compared with average prices. These variations can be greater in Britain because of the annual fixed-price contract system that we have operated. I am well aware that in practice the range of prices paid around an average price can be quite wide, and it is not much comfort to the owner of a firm to be told that the average price was that much if he is
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paying more, particularly if his competitor on the Continent is, lie is convinced, paying less. I realise that. I think it is also worth making the point that prices in Britain have risen since last January, when the comparison of average prices that I mentioned was made. But there is evidence that the rises on the Continent have been even more substantial and that the position is currently changing quite quickly.
Noble Lords may have seen that there have been announcements in the press that both the Dutch and the Algerians have succeeded in negotiating markedly higher prices for their exports of gas, and of course these will be working their way through the system and getting to the final consumers in coming months. I think it was the noble Earl, Lord Lauderdale, who made the point—it refers to the question of gas profits—that the new prices to be paid for new gas from places like Statfjord will be markedly higher than the prices we have been enjoying in the past. I hope noble Lords will not think that I am trying to go in for a sort of statistical gobbledegook. I am not, but I am saying that it is quite difficult to make these comparisons. I have no doubt that the industry has been very skilful in picking out what it considers to be glaring examples. I have an idea that we could quote other examples back to it, but that would be a fairly unproductive dialogue. What we have to try to do is see what the comparative prices look like.
Noble Lords referred to the profits being made by the Gas Corporation—£425 million last year. These are used to finance the very substantial British Gas capital programme which is around £4,000 million over the next four years. That is aimed at strengthening the gas transmission, distribution and storage system and bringing ashore some of the expensive additional supplies to which reference was made. It is worth pointing out that some of these profits arise from the historically cheap gas which has been available from the southern North Sea, supplies of which are now beginning to decline.
Having said that I was going to take not more than 15 minutes, I have run for nearly half an hour, and I apologise to the House. We are committed to restoring the health of the wealth-creating private

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sector, in spite of everything the noble Lord, Lord Strabolgi, says. But as part of this process we believe we must recognise the economic realities. One of those realities, regrettably, is that energy prices are rising faster than prices generally. We believe this is bound to continue, given the underlying imbalance between the world's demands for energy at current price levels and the limited supply. So industry has got to make its dispositions in the light of the certain prospect of a rising trend in real energy prices.
I can repeat again to the noble Lord, Lord Harmar-Nicholls, that the Government are well aware of all the problems being experienced by the industry. The noble Lord asked me whether the Government would introduce a moratorium on prices. I have to say to him that, living in the Ministry of Defence, the word "moratorium" is a somewhat emotive word to me at this particular juncture. I have explained to him that it is the Gas Corporation who fix the prices. However, I think I should say to him that I hear what he says and certainly it is something that I will pass on to my right honourable friend the Secretary of State in another place. We are continuing to analyse and monitor the situation with great care. We look forward to hearing from the CBI and we genuinely wish to enter into a dialogue with them to explore the difficulties and what might he done about them. But it would be wrong of me to say that there is any prospect of ushering in an era of cheap energy, much as I regret it.
Lord ROCHESTER: My Lords, before the noble Lord sits down, while I appreciate the difficulty he is in, I wonder if he would be kind enough to address himself to the specific question I asked him, which he will recall related to the incidence of the fuel oil tax. I realise that it is a somewhat limited point in relation to the wide area the debate has covered. It may be that he will not be able to say very much now, and that he might write to me. I would, however, appreciate some response.
Lord STRATHCONA and MOUNT ROYAL: My Lords, I am glad the noble Lord reminded me. In my wish to try to
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curtail these remarks I am afraid I omitted it. The fact is that the tax on fuel oil is a matter for the Chancellor of the Exchequer. Certainly I will write to him and find out what the position is, but I think I am right in saying that at the moment the tax represents less than 10 per cent, of the cost and it is declining in real terms.