Oil and Gas (Enterprise) Bill

HL Deb 14 June 1982 vol 431 cc456-512

2.51 p.m.

The Minister of State, Scottish Office (The Earl of Mansfield)

My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.—(The Earl of Mansfield.]

On Question, Motion agreed to.

Lord Skelmersdale moved Amendment No. 29A: Page 21, line 4, leave out from (" conveying ") to (" so ") in line 5 and insert (" quantities ").

The noble Lord said: My Lords, this is a purely drafting amendment. I beg to move.

On Question, amendment agreed to.

Lord Beswick moved Amendment No. 30:

Page 21, line 7, at end insert—

(" and shall, when such requirement will result in expenditure by the Corporation greater than it would otherwise have incurred—").

The noble Lord said: My Lords, I beg to move Amendment No. 30. This is a very simple amendment, and I should have thought a very reasonable one which ought to commend itself to the House as a whole. I am greatly encouraged by the enthusiastic way in which Members of the House are prepared to consider it. It seeks to ensure that where the corporation is directed to carry out works, such as to enlarge the capacity of a pipe-line following representations by another possible user of the facility, the corporation shall be recompensed. I put down a similar amendment in Committee. It was not accepted then, but my new version is designed to remove any reasonable objection which the Government may have had to the earlier wording. I now make it quite clear that the mandatory provision for payment shall apply only where extra costs have unavoidably been incurred.

I would ask the noble Minister who is to reply a straightforward and simple question. In what circumstances can it be conceived that the corporation should be directed to incur extra expenditure without compensation to defray those extra costs? If there are no such circumstances, I trust that the House will agree to the amendment. I beg to move.

Lord Skelmersdale

My Lords, the noble Lord, Lord Beswick, in moving this amendment, described it as a very simple one. In fact, I think it is, but the effects are not quite as simple as he would like us to believe. He also said that this amendment is very similar to one rejected in Committee. What he did not say was that it was rejected on a Division. The argument then and now revolves around reimbursement for the British Gas Corporation of additional costs arising as a result of a direction, and whether provision for reimbursement should be a permissive feature, as the Bill currently provides, or mandatory, as this amendment proposes.

My Lords, the Government accept that in the majority of cases a direction under Clause 15 will indeed specify that BGC should be reimbursed by the persons whose representations gave rise to the direction. However, we see good reason for a permissive formulation—this is the question the noble Lord asked—because we would not wish to close the door on the possibility that there might be a case, perhaps infrequently, for an increased capacity in spite of the fact that those making representations were individually not yet sufficiently certain of their plans to commit themselves to meeting the additional costs. The situation might arise where representations revealed several possible sources of private gas which might use the proposed pipe-line. Individually, each of these sources might be at an uncertain stage of development so that those concerned were not yet in a position to commit the funds involved in reimbursing BGC during construction. However, it might be apparent to the Secretary of State, looking at all the representations collectively, that the chances of at least one of the possible sources of private gas coming forward to use the BGC line were sufficiently strong as to justify the proposed pipe-line being constructed with increased capacity.

My Lords, such a situation will not arise frequently, but I hope you will agree that this position should be catered for in the Bill. Failure to do so could lead to duplicatory investment and avoidable disruption to land, in the construction of a second private pipe-line along the same route as that of the proposed BGC pipe-line. It is true that in such rare cases BGC would initially bear the cost of the increased capacity. However, that is a risk which is already borne by private companies who propose to build new pipelines under the Pipe-lines Act 1962, so we are being even-handed here: both BGC and its private sector competitors will be in a similar position. Furthermore, BGC will have the prospect of reimbursement later, where a private supplier comes forward to use the additional capacity provided and pays transportation charges for that use. The Government have made clear that there is no intention that access to BGC pipe-lines should be on other than commercial terms, and that there is no intention that BGC should subsidise the carriage of private suppliers' gas.

Finally, on the very rare occasions when the additional capacity is temporarily unused. during any interim period between the construction of the pipe-line and the coming forward of a private supplier to use the additional capacity, the gas corporation would be expected to make some use of the additional capacity itself, because the corporation would use its pipe-line capacity not only to transmit gas but also to store gas. so as to increase its ability to meet peak demand. My Lords, I hope that is a reasonable explanation in answer to the noble Lord's point.

Lord Beswick

My Lords, I have to say that it is a most unreasonable explanation; it is worse than any I could conceive of. It may be that I have misunderstood the noble Lord. What I understand him to be saying is that the Secretary of State will direct the corporation to increase the capacity of the pipe-line because there is a third party which wishes to put its gas through that same pipe-line, but he will not say that the third party shall pay, for some reason, because the third party has not the money or possibly is not in a position to use the pipe-line. The gas corporation, therefore, would have to incur this extra investment itself. This seems to be absolutely unreasonable. I would welcome any other views from noble Lords. I do not see any political point involved here; it seems to me a perfectly straightforward business proposition.

The noble Lord said that there are private companies which also have to lay down pipe-lines for one purpose or another, but who do not receive capital costs in advance from the potential user. Of course, that may be the case, but those private companies are not engaging in that investment by direction from the Secretary of State; they are doing it as a matter of business decision. I am talking about the British Gas Corporation which will be compelled by the Secretary of State to engage in works which they themselves do not want for the benefit of some third-party user, and yet the third party will not be asked to pay a proportion of the extra costs. I find that entirely unsatisfactory.

The Earl of Lauderdale

My Lords, is it not up to the British Gas Corporation to extract from the third party users a tariff which will, in fact, cover the costs? Surely that is what my noble friend said would be the case?

Lord Beswick

My Lords, I respect the noble Earl's judgment and knowledge of these matters, but that is not what the noble Lord the Minister said. The noble Lord the Minister said that it may well be that the third party may not want to use the pipe-line—that is what he said—and, therefore. there can be no question of recovering costs by the charge for using the gas.

Lord Tanlaw

My Lords, I should have thought—this is what I understood—that the British Gas Corporation were entitled to ask for a deposit or for front money before they undertook any such work. If the noble Lord is saying that they are not entitled to do so, then it is an extremely serious matter and goes against all the commercial relationships of companies as between the private and public sectors. I should have thought that this rather simple solution would overcome some of the difficulties that the Government appear to be having.

Lord Skelmersdale

My Lords, with the leave of the House, I should like to answer what has been said. As noble Lords will be aware, this clause makes such payments permissive and, if it seems reasonable to the Secretary of State, they will take place.

Lord Bishopston

My Lords I can understand the consternation of the House as regards this particular amendment. My noble friend was very brief in putting the position before the House and it seems to me that it is very simple. The amendment proposes that the Secretary of State shall only make provision for payment to the corporation where the corporation are required to undertake expenditure which they would not otherwise have incurred.

The Minister in his reply—so far as I was able to catch it and understand it—referred to certain risks being borne by the private sector. I should have thought that the private sector would have estimated or looked into very carefully the risks which they were going to undertake. As the Government's policy of privatisation is to provide competition with the prospect of better services and lower prices, then I should have thought that the private sector would have done their homework before they came forward with proposals. However, the Secretary of State can overrule on this matter and direct the gas corporation to do things perhaps they would not normally have done or might not otherwise have done, and there is no means of reinbursing them for the costs which they are facing as a result not of their own decisions but of those of the private sector.

This is not an argument as to whether or not we shall privatise; it is a question of whether, if we do so, there should be certain safeguards. The Bill very clearly lays down the powers of the Secretary of State to direct the gas corporation to provide pipe-lines or to share pipe-lines with the private sector. Therefore, he has the last word. I would not say that he is biased, but he is in favour of the private sector in particular, and one rather wonders on what basis he can give an impartial judgment as to what costs should be borne between the private and public sectors. However, as I have said, the amendment proposes that he shall make this provision to the corporation only where the corporation are required to spend money which they would not otherwise have wanted to spend.

It may well be that the private operators would recommend routes or changes in the system which may not be for the best or for the cheapest reasons. Nevertheless, the gas corporation have to co-operate and there is no means by which they can be reimbursed for the outlay. I should have thought that, on this issue, there was a very clear case for the corporation not only to be given the responsibilities which are laid on it by the Minister, but also to have some comeback as regards the extra costs which are involved. If the Government are envisaging a situation with the private sector coming in at the expense of the public sector, then that would put the British Gas Corporation at a very great disadvantage in relation to the private sector. I hope that the Minister will look again at his reply and see whether something can be done to bring about, as he calls it, a more even-handed approach.

3.6 p.m.

On Question, Whether the said amendment (No. 30) shall be agreed to?

Their Lordships divided: Contents, 53: Not-Contents, 82.

DIVISION NO. 1
CONTENTS
Airedale, L.	Jacques, L.
Amulree, L	.Jenkins of Putney, L.
Aylestone, L	Kennet, L.
Banks, L.	Kilmarnock, L.
Beswick, L.	Leatherland, L.
Birk, B.	Listowel, E.
Bishopston, L.	Lloyd of Kilgerran, L.
Blyton, L.	Lovell-Davis, L.
Boston of Faversham, L.	Maybray-King, L.
Briginshaw, L.	Mayhew, L.
Bruce of Donington, L.	Oram, L.
Burton of Coventry, B.	Peart, L.
Byers, L.	Phillips, B.
Caradon, L.	Seear, B.
Cledwyn of Penrhos, L.	Shaughnessy, L.
Collison, L.	Stewart of Alvechurch, B.
David, B.—[Teller].	Stewart of Fulham, L.
Davies of Penrhys, L.	Strabolgi, L.
Denington, B.	Tanlaw, L.
Donaldson of Kingsbridge, L.	Taylor of Mansfield, L.
Elwyn-Jones, L.	Wallace of Coslany, L.—[Teller].
Ewart-Biggs, B.
Fisher of Rednal, B.	Wigg, L.
Gaitskell, B.	Wigoder, L.
Grey, E.	Willis, L.
Hampton, L.	Wilson of Langside, L.
Irving of Dartford, L.	Wootton of Abinger, B.

NOT-CONTENTS
Adeane, L.	Gardner of Parkes, B.
Alexander of Tunis, E.	Glanusk, L.
Ampthill, L.	Glenarthur, L.
Avon, E.	Gormanston, V.
Balfour of Inchrye, L.	Grimston of Westbury, L
Belhaven and Stenton, L.	Hailsham of Saint Marylebone, L.
Bellwin, L.
Beloff, L.	Halsbury, E.
Buckinghamshire, E.	Harmar-Nicholls, L.
Chesham, L.	Hylton-Foster, B.
Clancarty, E.	Ilchester, E.
Clitheroe, L.	Killearn, L.
Clwyd, L.	Kilmany, L.
Colyton, L.	Lane-Fox, B.
Cork and Orrery, E.	Lauderdale, E.
Cottesloe, L.	Long, V.
Cullen of Ashbourne, L.	Lovat, L.
Daventry, V.	Luke, L.
Davidson, V.	Lyell, L.
De Freyne, L.	McFadzean, L.
Denham, L.—[Teller].	Mackay of Clashfern, L.
Digby, L.	Macleod of Borve, B.
Drumalbyn, L.	Mansfield, E.
Duncan-Sandys, L.	Margadale, L.
Effingham, E.	Merrivale, L.
Erne, E.	Mersey, V.
Ferrers, E.	Milverton, L.

Morris, L.	Sandys, L.—[Teller].
Mottistone, L.	Savile, L.
Norfolk, D.	Sharpes, B.
Nugent of Guildford, L.	Skelmersdale, L.
O'Hagan, L.	Somers, L.
Orr-Ewing, L.	Spens, L.
Platt of Writtle, B.	Strathcarron, L.
Porritt, L.	Thorneycroft, L.
Portland, D.	Trefgarne, L.
Powis, E.	Trumpington, B.
Rankeillour, L.	Vaux of Harrowden, L.
Renton, L.	Vivian, L.
St. Davids, V.	Wakefield of Kendal, L.
St. John of Bletso, L.	Young, B.
Saltoun, Ly.

Resolved in the negative, and amendment disagreed to accordingly.

3.14 p.m.

Lord Skelmersdale moved Amendment No. 31:

Page 21, line 42, at end insert— (" (7A) This section shall not apply as respects works for the completion of a pipe-line of which the construction was begun before the commencement date or, if the Secretary of State so directs in the case of any works, within three years of that date.").

The noble Lord said; My Lords, this amendment seeks to insert a transitional provision in Clause 15, in recognition of the fact that the gestation period for new pipe-lines may span several years and that as a result, when Clause 15 first comes into effect, some of the new pipe-lines on which the gas corporation is working will be at too advanced a stage for it to be practical to contemplate imposing an increase in capacity under the clause.

When the gas corporation first identifies a need for a new pipe-line, it embarks on a period of detailed planning. When that is sufficiently advanced, orders will be placed to procure the necessary pipe lengths and other equipment. After a further period, it will be possible to begin construction. Clearly if the capacity of the pipe-line is to be increased, the decision must be taken at a fairly early stage in the process.

On the day that Clause 15 comes into effect, the gas corporation will have a number of new pipe-line projects in hand, at various stages of advancement. In cases where construction has already commenced, there will be no scope in practice for an increase in capacity and the amendment therefore excludes such cases from the ambit of the clause. There may also be other cases where construction has not begun but the project is at too advanced a stage to incorporate an increase in capacity. Therefore, the amendment gives the Secretary of State discretion on a case-by-case basis to exempt projects from Clause 15 during the first three years of the clause's operation. I beg to move.

On Question, amendment agreed to.

Clause 16 [Increase of capacity etc. of pipe-lines belonging to Gas Corporation]:

3.15 p.m.

Lord Beswick moved Amendment No. 32: Page 22, line 20, leave out from (" after ") to (" give ") in line 21 and insert (" seeking the advice of the Corporation on the manner in which such modifications can best be carried out without prejudice to the safe and efficient operation of the pipeline and other pipe-lines associated therewith,").

The noble Lord said: My Lords, 1 beg to move Amendment No. 32. There has been a number of amendments in both Houses which, I think it can be said, are completely non-political, designed only to clarify or to improve, on a technical basis, existing provisions of the Bill. This amendment is typical of them. I would hope that it would be one that the House as a whole would look at objectively and take a decision on it accordingly.

The position, as I see it, is that in a common carrier transmission system, with private suppliers' gas conveyed through the British Gas Corporation's pipe-lines, it is accepted that there must be junctions through which the private suppliers' gas will move to their consumers. But, as I suggested during the Committee stage, there is concern about the location of junction points and the effect that this could have on the safety and the integrity of the whole system. This is not a concern dreamed up by me for some obscure motive, but I am satisfied that there is a legitimate professional basis for seeking the safeguard.

As at present drafted, the Bill leaves it to the Secretary of State to specify modifications, including their location. The Ministers will no doubt claim, as in Committee, that Clause 16(1) provides that the corporation be given an opportunity of being heard before the Secretary of State gives directions. But noble Lords will appreciate that this consultation takes place before the directions have been made, so that the corporation may not even know the details of modifications which the Secretary of State has in mind. Nothing in the Bill requires the Secretary of State to pay regard to the advice received from the corporation.

In another place on 11th March, at column 918, the Under-Secretary said: If the system leaks after the modifications have been carried out, it is clear that the sole responsibility must be with the British Gas Corporation ". We are thus expected to give the Secretary of State power to decide on modifications but with no responsibility for the system if, as a result of a modification, something goes wrong. Surely this cannot be right. Surely this is a position on which the House ought to seek some amendment.

In Committee the noble Lord, Lord Skelmersdale, said: Bearing in mind that the corporation will continue to have operational responsibility for their pipe-line system, it would be quite wrong for the Government to impose requirements on them to modify their system before adequate consultation and discussion had taken place with them as to what was entailed ". I agree with that. But I am trying to ensure that this includes and makes certain, by legal provisions, that "adequate consultation" does, in fact, take place.

When pressed further in Committee, the noble Lord, Lord Skelmersdale said: the Secretary of State will have regard to whatever views the corporation express at the hearing. How could it be otherwise? What would be the point of making statutory provision for the corporation to be heard if the Secretary of State could then go ahead in his own sweet way and ignore their views?"—[0fficial Report, 18/5/82; cols. 633–634.] On another occasion the same noble Lord asked, I thought somewhat rhetorically: did we think that the Secretary of State would fly in the face of safety considerations? I, personally, do not think that he would. Nor do I think that he would go "his own sweet way ", as the noble Lord delicately phrased it. But I am saying simply that, as there is such a reservoir of expertise in the corporation and as they must necessarily be responsible for the gas pipes after any modifications, the decision should be taken in the light of the advice of the corporation, and that should be in the Bill.

During Committee the noble Minister suggested, at column 645: Leaving a decision such as the siting of a connection between the two pipe-lines entirely in the hands of the corporation would be tantamount to asking the private supplier to sign a blank cheque ". I thought that this was one of the less happy contributions of the noble Lord, Lord Skelmersdale, to the debate. I hope, on reflection, he will withdraw that because he is impugning the good faith of the corporation. He is suggesting that they would make representations, or they would give advice, about the siting of a junction on the basis of some commercial advantage. I am absolutely certain, as a result of the inquiries I have made, that this is not the case.

In this amendment I am not suggesting that the BGC should decide on the junction location, only that the Secretary of State should seek their advice before giving directions, in order to ensure that we have a safe and efficient operation. As has been said repeatedly, the corporation would he held responsible for the safe operation of the pipe-line system, and it would seem, to me certainly and I hope to the House, elementary that decisions about construction should be taken only after the fullest consultation with the corporation. In that sense, I beg to move.

Lord Skelmersdale

My Lords, before I reply in full to these amendments, I should like to mention that we have not forgotten the discussion that we had in relation to two similar amendments at Committee stage. At the end of that discussion I promised to have another look at these amendments to see if they would add anything useful to the Bill, but made it clear that we could not promise any particular outcome. Since then we have carefully re-examined these suggestions, but have reached the same conclusion, that these amendments would serve no useful purpose. Moreover, for reasons I shall explain shortly, I think that the amendments suggested could jeopardise the purpose of Clause 16.

The reasons behind Clause 16, as your Lordships will know, are to allow the Secretary of State to direct the corporation to make certain modifications to their pipelines to facilitate access by a private supplier. I imagine that the motive behind these and the earlier amendments put down at Committee is to ensure that adequate consultation and discussion with the gas corporation has taken place and been taken account of before the Government impose any requirements on them to modify their system. This strikes me as being a perfectly proper and correct procedure, but I can reassure noble Lords opposite that, having re-examined the matter, we are of the firm opinion that this procedure is already assured in the Bill. Clause 16(1) makes it perfectly clear that the Secretary of State must, before giving a direction under the clause, give the gas corporation an opportunity to be heard. This obligation will necessarily include informing the corporation of the modify- cations he proposes to specify before actually issuing the direction. The procedure guaranteed by the Bill is not simply a formality; the gas corporation will have a full opportunity to put forward any genuine objections to the Secretary of State's proposals and these will of course include any objections on the grounds that the safe and efficient operation of the pipe-line would he prejudiced. The intention behind the first of the two amendments is therefore fully assured by the Bill.

I was not quite sure whether the noble Lord was speaking to both amendments, but if I may be permitted to continue and cover the other one I should be grateful. The second amendment provides that any directions concerning modifications to one of the gas corporation's pipe-lines that are made by the Secretary of State must be made in the light of the corporation's advice. I would first like to stress that the Secretary of State will always have regard to whatever views or objections are expressed by the corporation. Otherwise there would be no point whatsoever in making statutory provision for the gas corporation to be heard. Statements to the effect that the Secretary of State should have regard to such advice are therefore, as 1 indicated at Committee, superfluous. Having said that, the whole point of Clauses 15 to 17 is to allow appeals to the Secretary of State, where a private supplier believes that he has a case for being allowed access to the gas corporation's pipeline system and has failed to reach agreement to this effect with the corporation. While the Secretary of State must hear and have regard to advice offered by the corporation, it would render the appeals procedure pointless if his decision were constrained in the way suggested by the words "in the light of the corporation's advice

The noble Lord, Lord Beswick, also made mention of the possible leakage of the pipe-line due to the forced insertion of a junction or other works on the line, and suggested that this would be unfair when the gas corporation would have to pay for such a thing. I am aware that the Government have made it clear that the corporation will continue to be responsible for the operational safety of their pipe-line system and that they will, for example, be entirely responsible if the system leaks. But I do not feel that this is in the least way unfair. Modifications to the system, whether on their own behalf or on behalf of the private sector, and whether or not the work has been the subject of a direction, will be carried out by the corporation themselves. If there are technical deficiencies in the workmanship, of course the corporation will be responsible.

It would, however, be churlish of me to imply that the corporation does not maintain very high engineering standards indeed in all branches of its activities, and I should like to pay tribute to them in this respect. Going back to the amendments, while I cannot accept them I must emphasise once again to your Lordships that I am certain that the main concerns on this matter are already fully covered in the Bill. In the light of what I have said and the reconsideration that the Government have given to this matter as promised, I hope that the noble Lord will agree to withdraw.

The Earl of Lauderdale

My Lords, during the Committee stage I intervened on this, and I think I joined in suggesting that the Government should have another look at it. As they have had another look, so have I. So far as I can see we are asked to choose between, in the case of the amendment, the Secretary of State "seeking the advice of the Corporation", and the Secretary of State "giving to the Corporation an opportunity of being heard". I am not sure that there is such a big difference between the two. If it is a question of balance and the balance is tilted in favour of the Secretary of State and against the BGC, I can think of only one reason for that, which is that ever since this privatisation project was launched we have all listened in our various contexts to a good deal of pressure and propaganda by the BGC against the Bill.

The object of the Bill is to make it worthwhile for companies to explore for gas, and it is only worthwhile exploring for it if they can sell it. And it is only worthwhile selling it if they can get a decent commercial deal with BGC, as trustee for the common carrying pipe-line, to transmit it. That is the background to the Bill. There has been a campaign against it, and it seems to me that the very consequence of that campaign can only have been to tilt this delicate balance rather in favour of the Secretary of State and away from the BGC.

Frankly, having looked at the matter again, I do not see that there is a great issue here. The only thing that puzzles me was something said by the noble Lord, Lord Beswick. He suggested that the BGC may not have even all the details. I find that hard to understand. The BGC have advised the Government in the first place on a technical level. The BGC will have an opportunity of being heard in any event. To me it is quite inconceivable that at the end of it all the BGC should not have all the details they need. I hope that the House will give the Government the credit for having looked at this again, and will reject an amendment which, as I say, is very much a matter of a tiny balance one way or the other.

Lord Bruce of Donington

My Lords, it may well be, as the noble Earl says, that the purport of the amendments, as against the text of the Bill as drafted, is a delicate balance which can be poised one way or the other. The question is which way it should be poised. The noble Lord, Lord Skelmersdale, was at pains to say that Amendment No. 32 was already covered by undertakings given by the Government. The Minister knows perfectly well that such undertakings, even though they appear in Hansard, have no force in law. The only force in law is the statute itself.

The Earl of Lauderdale

My Lords, the noble Lord will recall that when the Petroleum and Submarine Pipe-lines Bill was passing through Parliament a few years ago, we asked the then Government for certain assurances, which we were given, although it must be said that they were not really observed in practise. If the noble Lord is saying that assurances are not worth the words used in giving them, he is really condemning his own party when in government. It is not fair to say that of the present Government who, so far as I am aware, have always honoured their assurances.

Lord Bruce of Donington

I was dealing with the question of legal construction, my Lords, and the noble Earl knows perfectly well that if these matters should ever be the subject of a court action—that is what all statutes have to stand up to—the interpretation of the measure comes under the interpretation of law legislation, which was only recently passed through this House. It is the text of the statute, rather than the illumination that is put on it by speeches made here or in another place, that is the operative factor. As the Minister pointed out, the Bill as drafted provides full opportunity for the corporation to be heard. The responsibility we seek to lay on the Government, in amplification of that, contains these important words in the amendment: …on the manner in which such modifications can best he carried out without prejudice to the safe and efficient operation of the pipe-line and other pipe-lines associated therewith ". It is conceivable that in certain circumstances the advice given to the Secretary of State by his civil servants, not all of whom will have had practical experience of this sort of work, together with pressure exercised on him by the private interests who the whole Bill serves, may be in opposition to the skilled and experienced advice that the corporation uniquely possesses. That conflict is easy to envisage. A prospective "intruder"—if I may use that word—into the pipe-line may want to go in at a certain point. He may succeed in convincing the Minister, either by his eloquence or by whatever pressure he can bring to bear, that he should have entry at a particular point. Who knows which way the mind of the Secretary of State will go, particularly the mind of the present Secretary of State, who has exhibited no particular friendliness, despite the dulcet words of the noble Earl, Lord Lauderdale, towards the corporation?

If the Government mean what they say, they should have no objection to the incorporation of the words in Amendment No. 32 which are honest, straightforward and would provide security for everybody. I repeat them: …on the manner in which such modifications can best be carried out without prejudice to the safe and efficient operation of the pipe-line and other pipe-lines associated therewith". Who best to judge, the Secretary of State and his civil service advisers, or the gas corporation? The amendment does not seek to impose a duty on the Minister; it is simply an obligation on him to consult as to the best way in which the modifications can be carried out with due regard to safety and the various other considerations. I should have thought that to all except the politically purblind the reasonableness of the amendment would commend itself immediately.

Similar considerations apply to Amendment No. 33. What is the use of advice being tendered to the Minister on the lines which would become obligatory under Amendment No. 32 (or even under the existing wording, "heard by the Minister") unless he is obligated to act in the light of what the corporation thinks? If not, even the existing wording will be worthless. If the Bill remains unamended, the Secretary of State, with due deferential politeness, may indeed agree to hear somebody, but the only obligation on him is to listen. One hopes he will listen attentively but, having heard, he has no obligation to take into account what has been said or to apply to the business of hearing any canons of judgment. Many noble Lords may think that unreasonable. I do not seek to impugn in any way, as the noble Earl seemed to suggest, the judgment of the Secretary of State, provided it operates within those constraints. I therefore hope, to use the Minister's words, that on reflection he will consider that in fairness to the corporation and the public at large, these would be reasonable amendments to incorporate.

Lord Robbins

My Lords, Amendment No. 32 seems to be completely innocuous. It may be said that it says explicitly what is elswhere implied in the Bill, and I see no objection to saying it explicitly. While I see no objection to Amendment No. 33, I can conceive that "in the light of the corporation's advice "may convey some obligation to take that advice. In my humble judgment, therefore, the correct course for the Government to adopt would be to accept No. 32 and reject No. 33.

Lord Beswick

My Lords, I am grateful for what the noble Lord, Lord Robbins, has just said. I must say that I am a little disappointed at what the noble Earl, Lord Lauderdale, said. After his intervention at the Committee stage, I thought that he was saying that we should have regard for technical matters and not for the cross-play of party politics. I was wholly in favour of what he said, and therefore I was a little disappointed and surprised that after considering what he said was a balance he came down in the way that he did. It is a question of balance—I quite agree with him. On the one hand, there is a general obligation on the part of the Secretary of State, in general terms, to give the corporation an opportunity of being heard about the matter. It is in completely general terms; the discussion might not be about the particular junction that has ultimately to be decided. The timing of the opportunity to be heard is not laid down in the words in the Bill.

On the other hand, the wording that I am suggesting states that there shall be the obligation to seek, the advice of the Corporation on the manner in which such modifications"— "such modifications", not in general terms — can best be carried out without prejudice to the safe and efficient operation of the pipe-line… That is what we are talking about— the safe and efficient operation of the pipe-line ". The noble Lord, Lord Skelmersdale, said that of course the corporation must be responsible; that after all it will carry out the work, and therefore it should be responsible. But the corporation might be carrying out work with which it disagrees. It might have to insert the junction at a point where it thinks— perhaps for geological reasons—it is inadvisable. To lay the obligation on the corporation without giving it the opportunity of having its advice considered in this particular case and in the particular manner proposed, is wrong. The great claim is made for the House of Lords—sometimes I think the claim is over-rated —that Members look at things objectively and make decisions on the basis of their own judgment, and I should like to think that the claim is justified by the vote that we have on the amendment.

3.43 p.m.

On Question, Whether the said amendment (No. 32) shall be agreed to?

Their Lordships divided: Contents, 64: Not-Contents, 85.

DIVISION NO. 2
CONTENTS
Airedale, L.	Ilchester, E.
Allen of Abbeydale, L.	Jacques, L.
Amherst, E.	John-Mackie, L.
Amulree, L.	Kennet, L.
Ardwick, L.	Kilmarnock, L.
Aylestone, L.	Leatherland, L.
Balogh, L.	Listowel, E.
Banks, L.	Lloyd of Hampstead, L.
Beswick, L.	Lloyd of Kilgerran, L.
Birk, B.	Lovell-Davis, L.
Bishopston, L.	Mackie of Benshie, L.
Blyton, L.	Maybray-King, L.
Boston of Faversham, L.	Mayhew, L.
Bruce of Donington, L.	Oram, L.
Burton of Coventry, B.	Peart, L.
Byers, L.	Phillips, B.
Caradon, L.	Robbins, L.
Chitnis, L.	Rochester, L.
Cledwyn of Penrhos, L.	Seear, B.
Clwyd, L.	Segal, L.
Collison, L.	Somers, L.
David, B.—[Teller].	Stewart of Alvechurch, B
Davies of Penrhys, L.	Stewart of Fulham, L.
Denington, B.	Strabolgi, L.
Donaldson of Kingsbridge, L.	Tanlaw, L.
Elwyn-Jones, L.	Taylor of Mansfield, L.
Ewart-Biggs, B.	Underhill, L.
Fisher of Rednal, B.	Wallace of Coslany, L.—[Teller].
Gaitskell, B.
Gore-Booth, L.	Wigoder, L.
Granville of Eye, L.	Wilson of Langside, L.
Hampton, L.	Wootton of Abinger, B.
Houghton of Sowerby, L.

NOT-CONTENTS
Adeane, L.	Hailsham of B.Saint Marylebone, L.
Airey of Abingdon,
Ampthill, L.	Halsbury, E.
Avon, E.	Harmar-Nicholls, L.
Balfour of Inchrye, L.	Hawke, L.
Belhaven and Stenton, L.	Killearn, L.
Bellwin, L.	Lane-Fox, B.
Beloff, L.	Lauderdale, E.
Belstead, L.	Long, V.
Buckinghamshire, E.	Lucas of Chilworth, L.
Chesham, L.	Luke, L.
Clitheroe, L.	Lyell, L.
Coleraine, L.	McFadzean, L.
Colyton, L.	Mackay of Clashfern, L.
Cork and Orrery, E.	Macleod of Borve, B.
Cottesloe, L.	Mansfield, E.
Cullen of Ashbourne, L.	Margadale, L.
Daventry, V.	Merrivale, L.
Davidson, V.	Mersey, V.
De Freyne, L.	Milverton, L.
Denham, L.—[Teller].	Morris, L.
Digby, L.	Mottistone, L.
Dilhorne, V.	Mowbray and Stourton, L
Drumalbyn, L.	Norfolk, D.
Ebbisham, L.	Nugent of Guildford, L.
Eccles, V.	O'Hagan, L.
Effingham, E.	Orr-Ewing, L.
Erne, E.	Platt of Writtle, B.
Ferrers, E.	Plummer of
Gardner of Parkes, B.	St. Marylebone, L.
Glanusk, L.	Porritt, L.
Glenarthur, L.	Portland, D.
Gormanston, V.	Powis, E.
Gray, L.	Rankeilloor, L.
Grimston of Westbury, L.	Renton, L.

St. Davids, V.	Trumpington, B.
Saltoun, Ly.	Vaux of Harrowden, L.
Sandys, L.—[Teller].	Vivian, L.
Savile, L.	Wakefield of Kendal, L
Sharpies, B.	Ward of Witley, V.
Skelmersdale, L.	Westbury, L.
Strathcarron, L.	Wynford, L.
Thorneycroft, L.	Young, B.
Trefgarne, L.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendments Nos. 33 and 34 not moved.]

Clause 17 [Acquisition of rights to use pipe-lines belonging to Gas Corporation]:

3.51p.m.

Lord Lovell-Davis moved Amendment No. 35:

Page 23, line 41, leave out sub-paragraph (iii) and insert— (" (iii) for securing that the charges made by the corporation for the conveyance of gas are determined on a fully commercial basis; ").

The noble Lord said: My Lords, I move this amendment confident in the expectation that the Government will find it wholly acceptable. After all, it is conceived as a result of the happy union of the words of the Minister, the noble Lord, Lord Skelmersdale, during Committee stage and the trusting nature of my noble friends and myself.

Clause 17 deals with outsiders who want to get the right to send their gas along pipe-lines belonging to the British Gas Corporation. One should not be put off by the opening paragraph, part of which has a sort of Groucho Marx ring to it. The main point is that, like so much of this heavy-handed, dictatorial Bill, the clause is all about directions which the Secretary of State may give British Gas to do this, that and the other thing; but it does not say very much about what they, British Gas, may charge for the use of their pipe-lines.

Among the arsenal of directions available to the Secretary of State is Clause 17(3)(a)(iii), which provides that such directions may specify the terms for regulating the charges for conveying gas through British Gas Corporation pipe-lines but gives no clue whatsoever to the basis on which those charges will be regulated. Luckily, however, the noble Lord, Lord Skelmersdale, obviously anticipated this impending dilemma, for during the discussions in Committee on Clause 15 he made two points quite clear: first, that it would be for British Gas to work out the tariffs for conveying private gas; and, secondly, that these tariffs would be fully commercial. The intention, he assured us, is that charges and tariffs specified in directions issued by the Secretary of State will be worked out on a fully commercial basis, and it will be the British Gas Corporation which does the working out. To emphasise the Government's intention the noble Lord added that, of course, they—British Gas—must make the decision on charging.

We are grateful to the noble Lord for stating the Government's intention, but since the clause as it is drafted makes neither of these points clear, our amendment is designed not only to make them crystal clear—a quality sought during the debate on Clause 15 by my noble friend Lord Ross of Marnock and the noble Lord, Lord Robbins—but also to help the Government by clarifying yet another of the provisions in the Bill which does not seem to express what the Government actually intend.

The amendment offers other advantages. We may not know precisely what the Minister means by "a fully commercial basis", but clearly the words mean that British Gas, as is the case with any other commercial undertaking, will fully recover the costs of providing the service, and, therefore, their own customers will not be expected to subsidise a service to the private sector. Equally, private suppliers can take comfort from the assurance that they will pay a commercial charge, and not one excessively inflated by British Gas.

As I say, my Lords, we have found Government encouragement for our efforts to be helpful. We therefore hope that our amendment may be favourably, not to say gratefully, received. I beg to move.

The Earl of Lauderdale

My Lords, I listened to the noble Lord, Lord Lovell-Davis, with my customary interest, because we have listened to one another in the past; but when he was arguing that consumers should have the satisfaction of knowing that they are being charged on a fully commercial basis. I could not believe my ears, because we have had protest after protest, and yet more protest, from the other side about gas prices being raised to a commercial level. But it is never too late to mend, and I, for one, welcome the noble Lord's conversion to the principle of a commercial approach.

However, he has not really said something else which I think he should have said, which is that the BGC should be required to disclose the basis on which they propose charges. This, of course, is a point which has been made in the industry, that if they are confronted with a reluctant BGC trying not to negotiate and putting up terms which are really quite impossible and which are really what you might call wrecking amendments, then the third party should have access to the BGC's figures for costs. Of course, this is not spelled out in the amendment; nor was it spelled out in the noble Lord's argument.

Nor does the amendment really say what the proposers mean by "a fully commercial basis ". The noble Lord said that in his view it meant that the capital costs of construction should be recovered over whatever period, though he did not say what period. Of course, that has been this Government's policy exactly with regard to gas prices generally, that the replacement cost is ultimately the cost which should be charged. That is something which noble Lords opposite have never really accepted. So I find this amendment interesting, tantalising and attractive, but surprising, coming from the quarter from which it does.

Lord Bruce of Donington

My Lords, the noble Earl, Lord Lauderdale, is not the only one who is astonished—and I must say that I shall address my remarks to your Lordships' House in what I consider to be the most economic amount of time consistent with making the point absolutely clear. The noble Earl himself has been known occasionally to be effusive, and not always to good effect.

If I may now refer to the noble Earl, he seems to be under some doubt as to what his own Minister meant. In point of fact all the amendment does is to crystallise in a few words what the noble Lord, Lord Skelmersdale, himself said at Committee stage. If the noble Earl was not here, then of course he needs further enlightenment; if he was here, all he is now saying is that he did not understand what his noble friend was saying, but in spite of the fact that he did not understand it he did not himself see fit to raise the point. This amendment is a perfectly reasonable one.

The noble Earl said that we on this side of the House had become suddenly converted to charging on a commercial basis. He added at the same time that we had been converted to the way in which Governments had in fact directed British Gas on what charges they should make. The noble Earl should be under no such illusion. The noble Earl knows perfectly well that the present Government have been known specifically to give directions to British Gas in raising charges far beyond the ordinary commercial basis in order that they themselves can have a special gas levy to pay into the Exchequer. The noble Earl knows that perfectly well. So within that context the word "regulation" when used in connection with the existing Secretary of State has a rather sinister connotation.

It is for this reason that my noble friends put down this amendment, to make quite sure that the Government honoured their obligations. The obligations were quite clearly stated by the noble Lord, Lord Skelmersdale, in Committee. Is he now going to seek to repudiate them by repudiating the wording of this amendment which follows precisely his own undertakings in this matter. If that is so, consideration of this Bill in detail in this House becomes a complete farce. It means that undertakings given by the Government as to their interpretation when it suits them can be abandoned and something else substituted. If that is so, the noble Lord's opposition to the clause immediately becomes obvious. If the noble Lord resists this amendment, then he can only do it on the basis of eating his own words. If the noble Lord wishes to do that, we shall be pleased to demonstrate to the public what he has done.

Lord Skelmersdale

My Lords, I get the impression that I was being damned before I uttered. Perhaps 1 could be allowed to utter and noble Lords will then have the opportunity to damn me. I recognise that this amendment reflects the Government's repeated assurances, which are firmly on the record, that it is no part of our proposals that the gas corporation should run the common carrier service on anything other than a commercial basis. While I have considerable sympathy with the noble Lord's reasons for moving this amendment, I am bound to say that it is not desirable that such a provision should he written into the Bill.

Noble Lords: Oh, oh!

Lord Skelmersdale

Gasps of horror, my Lords! I knew they would come. Furthermore, the objective of crystal clarity which the noble Lord, Lord Lovell-Davis, mentioned has resulted in Stygian darkness. The problem is one of interpretation. Calculations on pipe-line tariffs will inevitably be complex, involving a number of variables, and it will not be possible to have a sufficiently precise legal interpretation of the words "fully commercial" to decide whether or not the Secretary of State had complied with the criterion in the amendment. I must advise your Lordships that the amendment would render the clause almost unworkable.

I should perhaps also point out that the powers in Clause 17 are not a new invention but are based on similar provisions in Clause 23 of the Petroleum and Submarine Pipe-lines Act 1975, which I suspect that the noble Lord, Lord Lovell-Davis, had something to do with at the time. This governs access to other people's submarine pipe-lines. It is implicit in this, and indeed in all, legislation that the Secretary of State must use his powers reasonably for the purpose for which they are intended; and I can assure the House that there is no question of the Secretary of State using his powers to force the gas corporation to provide a subsidy for those who wish to use its pipe-lines. That would be totally alien to the principle we have aimed for in drafting the Bill, that competition between the gas corporation and the private sector should, wherever possible, be on equal terms. The Secretary of State, in setting any tariff, will therefore have full regard to the additional costs imposed on the BGC system as a result of carrying the private sector gas.

Lord Bishopston

My Lords, I am sorry to interrupt. I think the noble Lord mentioned charges being on an equal basis wherever possible. My noble friend Lord Bruce mentioned commerciality of the gas under BGC. As the noble Lord knows, the Government had many millions of pounds through the gas levy which has come from the charges imposed by the BGC. Does "commercial" mean including a levy or sub to the Government? Secondly, will the gas levy be applied not only to the BGC in future but also to the private operators as well if an even-handed approach is to prevail?

Lord Skelmersdale

My Lords. I was about to answer points when the noble Lord interrupted. First, I have been asked whether the gas corporation will disclose to all and sundry, and to the Secretary of State, their method of working out tariffs based on the private sector. I would hope so, but they would not under the Bill be obliged to. If they do not, however, they can hardly blame the Secretary of State if he comes down on the side of the applicant. As far as the gas levy is concerned, noble Lords will remember that in Committee--and I do not have the reference—I said that the private supplier would not be bound by the gas levy. The gas levy is applied solely to the corporation's purchases of PRT exempt gas under pre-1975 contracts. The corporation purchases a substantial proportion of its gas from untapped sources in the southern basin at prices which are very low in today's conditions, and as a result was making large windfall profits.

The purpose of the levy is to transfer the windfall gain to the Exchequer. It has no effect on prices since the Government's reduction of the financial target for the gas corporation has been altered to take account of the levy. I think there was a little hollow laughter from the noble Lord, Lord Bruce. I must point out that the last Labour Government adopted the same solution to the windfall profit enjoyed by the oil companies as a result of a radical change in the world oil market. It introduced PRT on oil and the newer gas supply. We introduced a levy on the older untapped gas supplies, so that I do not think there is a lot of cause for hollow laughter.

Lord Bishopston

My Lords, I am not arguing the merits of the levy. We want to know whether the levy will be paid only by the gas corporation in future and that there will be no levy paid by the private sector. This means that the gas corporation gas will not be competitive because nationalised gas will be much dearer than private sector gas, for they are paying a public subsidy to the Government. If that happens, I hope that the Government will not make comparisons about the high cost of gas board gas as compared with the private sector. Can the Minister clarify this situation?

Lord Skelmersdale

My Lords, that was going it a hit, I felt. The noble Lord asked whether the British Gas Corporation prices would be more expensive due to the levy. He knows full well that the gas which the gas corporation supplies to its consumers is from old, existing fields in the North Sea. This means that all the existing discoveries of gas are contracted for to the BGC and therefore new supplies of gas will have to come from new discoveries and it will not make any difference whether the discoveries are sold to the gas corporation or to the private sector; it will be the same gas.

Lord Bishopston

My Lords, then why levy on one and not on the other?

Lord Skelmersdale

My Lords, I was also asked about the Secretary of State's adjudication role. The effect of the existing sub-paragraph 3 would require the Secretary of State to adjudicate between the parties on the basis of sound commercial principles. He could not depend on other factors such as Government policy, social or philanthropic principles or anything else.

I started the discussion of this amendment by giving various assurances which are very much pertaining to it and on the unworkability of the amendment suggested. I hope the noble Lord, Lord Lovell-Davis, will agree in the circumstances that it is not appropriate for the Bill.

Lord Hawke

My Lords, are we not in full cry after rather a hare, the gas levy? I suggest that the matter we ought really to be debating is the practicability of having in a statute the words "fully commercial basis". Personally, I have great doubts about that. If any of your Lordships—and the noble Lord, Lord Bruce, being an accountant, will know this—have ever had any encounters with British Rail as to whether a branch line pays, they will know that all sorts of varying figures can be produced one way or another. I am perfectly certain that "on a fully commercial basis" would be subject to exactly the same kind of vagaries.

Lord Somers

My Lords, I am not, I am afraid, a fully trained politician, but the noble Lord, when he began his reply, said that this amendment was in line with the Government's own intentions of making the concern a fully commercial one. Can the noble Lord explain what is the basis of their unwillingness to write their own intentions into the Bill?

Lord Skelmersdale

My Lords, with the leave of the House, the answer is because it would not stand up in the courts.

Lord Lovell-Davis

My Lords, the Minister's reply has dealt a heavy blow to my touching faith in ministerial pronouncements. In listening to the noble Lord, Lord Skelmersdale, I cannot help reflecting, as the Red Indian said: "White man speak with forked tongue".

It seems to me that British Gas are put at a very considerable disadvantage compared to a commercial undertaking which is perfectly free to fix its own rates for the services that it provides. I cannot see why British Gas should be treated any differently from private companies in this situation. The Government are creating an intolerable situation where the Secretary of State can apparently simply instruct British Gas what they are to charge the private user.

In answer to the noble Earl, Lord Lauderdale, may I say that I am not laying down the basis on which "fully commercial" is to be judged; I am simply trying to get the Government to confirm what the Minister has said and to make their intentions clear in the Bill. It seems to me once again that the Government are concealing their true intention. 1 do not understand why the Minister cannot now accept what was said on 18th May during the Committee stage on this Bill. Nor do I see why our amendment would render the clause unworkable.

All in all, this is just another example of the inflexible approach that the Government are making to the privatisation of the British Gas Corporation. It raises the question of how much credence one can give to anything that is said by the Government about their intentions in regard to the use of the powers set out in this Bill. Far from there being, as the noble Lord, Lord Skelmersdale, said, no question of the Secretary of State using his powers unreasonably, I think that there is every question in the light of the Government's response to this amendment.

One can only have the gravest misgivings about the freedom of action which will be left to British Gas when this Bill becomes law. In my view, the Minister has given a totally unsatisfactory answer and as such it is of course wholly expected. However, I do not intend to press this amendment; so I beg leave to withdraw it.

Amendment, by leave, withdrawn.

4.14 p.m.

The Lord Advocate (Lord Mackay of Clashfern) moved Amendment No. 36: Before Clause 18, insert the following new clause:

("Amendment of enabling powers etc. 1934 c. 36.

.—(1) The Petroleum (Production) Act 1934 (in this Act referred to as "the 1934 Act") shall have effect, and be deemed always to have had effect, as if subsection (2) of section 1 (vesting of property in petroleum) were renumbered as subsection (4) of that section and for subsection (1) of that section there were substituted the following subsections—

1. "(1) The property in petroleum to which subsection (2) of this section applies at the commencement of this Act, so far as it is not already so vested, is hereby vested in His Majesty; and His Majesty shall at any time have the exclusive right of searching and boring for and getting petroleum to which that subsection applies at that time.
2. (2)Subject to subsection (3) of this section, this subsection applies at any time to petroleum which at that time exists in its natural condition in strata in Great Britain or beneath the territorial waters of the United Kingdom adjacent to Great Britain; and it so applies notwithstanding that the land in which any such petroleum so exists belongs to His Majesty or the Duchy of Cornwall, belongs to a government department or is held in trust for His Majesty for the purposes of a government department.
3. (3)Subsection (2) of this section does not apply to petroleum which at the commencement of this Act may be lawfully gotten under a licence in force under the Petroleum (Production) Act 1918, being a licence specified in the Scheulde to this Act, so long as that licence remains in force."

(2) The 1934 Act shall also have effect, and be deemed always to have had effect, as if in subsection (1) of section (2) (power to grant licences) after the word "shall" there were inserted the words "at any time" and at the end of that subsection there were added the words "to which subsection (2) of section 1 of this Act applies at that time".").

The noble and learned Lord said: My Lords, this Government amendment is intended to introduce a completely new clause in the Bill on a topic which has not hitherto engaged the attention of your Lordships in this connection. The topic is the precise scope of the Petroleum (Production) Act of 1934. This is the Act which vested ownership in the Crown of petroleum existing in its natural condition in the ground and which introduced the system of petroleum exploration and production licensing which is still in operation. Because of the novel and complex nature of the issue involved, I feel it proper to go through these matters at some length.

For many years it had been assumed that the 1934 Act applied not only to petroleum located within the land mass of Great Britain, but also to petroleum beneath the adjacent territorial sea. However, judgment in a case before the High Court in England given earlier this year established that the previously accepted interpretation that this Act had application to territorial waters was open to considerable doubt. The case in question was Earl of Lonsdale v. HM Attorney General, but I do not think I need go any further into the details of the decision. The essential point is that the Government feel that the case has raised sufficient doubts as to the ambit of the 1934 Act offshore to warrant their resolving this issue at the earliest opportunity, the more so since licences have from time to time been issued in respect of petroleum beneath territorial waters on the supposition that the Act permitted that to be done. Many of these licences are still current.

I should perhaps immediately make it clear that I am here referring only to territorial waters—the three-mile wide stretch of water adjacent to our coasts—and not to continental shelf waters, which extend outwards from the seaward limits of territorial waters and beneath which most of the offshore deposits of petroleum have so far been discovered. There is no doubt concerning the ability to issue licences in respect of petroleum beneath these latter waters. The empowering authority for this stems from a completely different statute, the Continental Shelf Act of 1964.

The first paragraph of the amendment, which proposes to substitute three new subsections to Section 1 of the 1934 Act for the existing subsection (1), expressly provides that the section is to apply to petroleum located beneath United Kingdom territorial waters adjacent to Great Britain. This provision is to be found in the first limb of the new subsection (2). Your Lordships might suppose from this that the provision would have the effect of divesting any petroleum beneath these waters which at the moment happens to be in private hands and of vesting it in the Crown. Noble Lords might go further to note that no compensation is being offered for the loss of this resource. No compensation was in fact payable in the case of the original vesting in 1934; but, quite apart fron this factor, I must make it clear that in the Government's view no such petroleum would be held in private hands. This is because any petroleum located beneath territorial waters of course forms part of the sea bed and subsoil, and ownership of these, save for special provisions, special grants, and so on, is vested in the Crown by prerogative right. Accordingly, no private interests should be dispossessed of petroleum as a consequence of this amendment. In particular, no instances have been found of a special grant by the Crown of petroleum in this situation which would be effective.

However, the fact that this petroleum is already vested in the Crown gives rise to another consideration which this amendment is designed to clarify. The principal effect of the 1934 Act was to impose a licensing system on petroleum vested in the Crown by the Act. What is slightly less certain is whether the licensing system extended also to petroleum already then vested in the Crown. This consideration assumes greater significance having regard to the point I made a moment ago that any petroleum beneath territorial waters must already have been vested in the Crown under the prerogative.

With all the petroleum in Crown ownership by one means or another, the point might be thought of trifling importance. But without the intervention of statute, different authorities would be responsible for the issue of licences on behalf of the Crown because of the different capacities in which the property is held. The revenues derived from the licences would similarly be payable into different public funds. It is in any event highly desirable that a unified regime is applied to all petroleum exploration and exploitation, the more so since petroleum, being a migratory substance, might be abstracted from beneath one area by means of a well sited in another area. It is, moreover, reasonably evident that in 1934 Parliament intended one Government department to have overall responsibility for licensing—at that time the Board of Trade, now for this purpose the Secretary of State for Energy.

My Lords, for these reasons the opportunity has been taken to make it quite clear that the Secretary of State's power to issue licences extends to petroleum however and whenever vested in the Crown. This is achieved by the second limb of the new subsection (2) to which I referred earlier, coupled with the proposed adjustments to Section 2 of the 1934 Act set out in the second paragraph of the amendment. These adjustments to Section 2 also ensure that the position of existing licences issued in respect of petroleum beneath territorial waters, which I dealt with earlier, is safeguarded. This is secured by making the provision retrospective in operation.

Some noble Lords may have noted that during the Report stage of the Social Security and Housing Benefits Bill in this House on 25th May my noble friend Lord Trefgarne had occasion to move a comparable amendment to counter the effect of the Lonsdale judgment and so ensure the application of past and present social security legislation to territorial waters. Your Lordships were pleased to pass that amendment then and I trust that you will feel able to approve the present amendment on this occasion. I beg to move.

Lord Bruce of Donington

My Lords, the noble and learned Lord has himself just given an illustration of precisely the principle we have been talking about on previous amendments. Here is an amendment that has been introduced to clarify the position. It had always been assumed that the petroleum did in fact belong to the Crown, and I have no doubt that, either here or in another place, assurances were given to that effect. But a more detailed examination, particularly after the case to which the noble and learned Lord referred has placed this in some dubiety and so the noble and learned Lord has brought forward this amendment. Incidentally, one might almost have expected it to have been in the original Bill or, at any rate, introduced in Committee, but here it is. This is an illustration of how wise it is to have these matters of dubiety incorporated into the Bill itself, regardless of information and assurances given by Ministers. We entirely support the amendment, but we hope that the noble and learned Lord will take strictly to heart the lessons of this—that it is desirable to have all these assumed things specially stated in legislation. For that reason, we shall not resist the amendment.

Lord Tanlaw

My Lords, we also are grateful to the noble and learned Lord for clarifying the Bill by the introduction of this clause, which we shall support. There is one small point, and I regret that I have not had time to study the Petroleum (Production) Act 1934 about this. Perhaps the noble and learned Lord could clarify one point; that is, the use of "petroleum" in this context, when the Bill itself refers to oil and gas. Is there any legal distinction between "petroleum" in the new clause and oil and gas? This is really a matter of education from my point of view, but I should be grateful if the noble and learned Lord could clarify that point.

Lord Mackay of Clashfern

My Lords, referring to the point raised by the noble Lord, Lord Bruce of Donington, I think I am able to distinguish between the kind of clarification for which he is asking in relation to earlier amendments and the kind of point which this amendment is designed to cover. It was fairly plain, I think, from what I said, that as long ago as 1934 and for many years thereafter people understood that the underlying law had the effect that the 1934 Act applied to territorial waters. Some 48 years later, it has now been shown that there is at least a doubt about that and it seems reasonable to legislate to take account of that alteration—perhaps "alteration" is not the right word—or the doubt which has subsequently emerged on the matter and to make the defination cope with that particular doubt.

Referring to the word "petroleum", raised by the noble Lord, Lord Tanlaw, it is of course intended to extend the 1934 Act but the definition of "petroleum" in that Act will remain as it now exists. It has the effect that the regimes for petroleum exploration will be exactly the same on both sides of the territorial waters limits, and therefore the definitions for the two purposes are the same.

On Question, amendment agreed to.

Clause 18 [Modification of model clauses in existing licences]:

Lord Mackay of Clashfern moved Amendment No. 37: Page 25, line 3, leave out from (" the ") to (" before ") in line 5 and insert (" 1934 Act ").

The noble and learned Lord said: My Lords, I beg to move this amendment. It is consequential upon the immediately preceding amendment.

On Question, amendment agreed to.

Clause 20 [Safety' zones around installations]:

Lord Mackay of Clashfern moved Amendment No. 38:

Page 26, line 25, leave out subsection (6) and insert— (" (6) Where the commission by any person of an offence under this section is due to the act or default of some other person, that other person, as well as the first-mentioned person, shall be guilty of that offence and shall be liable to be proceeded against and punished accordingly.").

The noble and learned Lord said: My Lords, this amendment is designed to render persons additional to the owner and master of an offending vessel liable to prosecution for infringements of safety zones. The amendment has been put forward following a successful prosecution under Section 2 of the 1964 Act, where penalties were imposed on the owner and on the master, although at the time of the infringement the master was below decks. The mate in charge of the wheel had been given clear instructions as to his course, which would have taken the vessel well clear of the safety zone in question. Thus, in this case the conviction of the master was due to the act or default of the mate, against whom because of the wording of the statutory offence, it was not possible to mount a prosecution. Our objective in proposing this amendment is essentially to add a further possible accused to the existing two possibilities and not to provide an alternative to one or other of those existing possibilities. We wish to make it quite clear that we regard the master as principally responsible for the navigation of his ship, whatever its size and crew arrangements happen to be. Your Lordships will, I trust, support the proposed amendment, which seeks to widen the scope of the application of the offence to ensure that if the infringement of the safety zone is caused by someone other than the owner or master, so that it is that other person who has caused the owner or master to be convicted, then that other person also should be liable to prosecution. It would obviously be a matter for decision on the part of the prosecuting authority, on the merits of individual cases, which of the potential accuseds was to be prosecuted. I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 39:

Page 26, line 39, at end insert— (" (7A) Proceedings for an offence under this section may he taken, and the offence may for all incidental purposes be treated as having been committed, in any place in the United Kingdom.").

The noble and learned Lord said: My Lords, this amendment is purely consequential. I beg to move.

On Question, amendment agreed to.

Clause 21 [Application of criminal law etc.]:

Lord Mackay of Clashfern moved Amendment No. 40: Page 27, line 32, leave out (" (6) and (7) ") and insert (" (7) and (7A) ").

The noble and learned Lord said: My Lords, this amendment is also consequential. I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 41: Page 27, line 37, leave out (" adjacent to ") and insert (" of")

The noble and learned Lord said: My Lords, this is a minor change which does not alter the effect of the clause. It has been introduced to make the wording the same as the reference to "territorial waters of the United Kingdom" in previous petroleum legislation: for example, Section 2(3) of the Gas Act 1972, Section 1(1) of the Mineral Exploration and Investment Grants Act 1972, and the new subsection (2) of the Petroleum (Production) Act 1934, introduced by the new clause to which your Lordships have been good enough to give effect in this Bill. 1 beg to move.

On Question, amendment agreed to.

Clause 22 [Application of civil law]:

4.30 p.m.

Lord Mackay of Clashfern moved Amendments Nos. 42 and 43:

Page 28, line 20, leave out from ("activity") to ("shall") in line 22 and insert ("mentioned in subsection (2) below "). Page 28, line 28, at end insert—

1. (" (a) activities connected with the exploration of, or the exploitation of the natural resources of, the shore or bed of waters to which this section applies or the subsoil beneath it; and
2. (b) without prejudice to the generality of paragraph (a) above, activities carried on from, by means of or on, or for purposes connected with, installations to which subsection (2A) below applies.

(2A) This subsection applies to any installation which is or has been maintained, or is intended to be established, for the carrying on of any of the following activities, namely—").

The noble and learned Lord said: My Lords, with your Lordships' permission, I should like to take the next two amendments, Nos. 42 and 43, together; at least, so far as the explanation of them is concerned. They are very closely linked and both serve to widen the scope of Clause 22. They also pave the way for a number of later amendments which I think I can fairly describe as consequential and may I mention them now. They are Nos. 44 to 51, 63 to 66 and 75. These are all either consequential or involve small drafting improvements, which arise from consideration of these main amendments, Nos. 42 and 43.

Clause 22 currently employs for the purposes of applying civil law precisely the same formulation to describe the activities to be covered as is used in Clause 23 for the purpose of applying the safety regime. Furthermore, like Clause 23, Clause 22 limits the activities to those carried on from or by means of installations. Clause 22 is designed primarily to replace Section 3(2) of the 1964 Act, which referred to acts or omissions in connection with the exploration of the seabed or subsoil or the exploitation of their natural resources ". It was decided to adopt the Clause 23 formulation for Clause 22, in order to introduce a greater degree of specificity, but it was not the policy intention to limit in real terms the scope for applying civil law. We believed that the present drafting introduced a change of form rather than of substance; in particular, given that the words "in connection with" which were capable of wide interpretation, were to be retained. However, on a critical re-examination of the drafting of Clause 22 doubt has been cast on whether this formulation is sufficiently widely drafted. Amendments Nos. 42 and 43 together seek to remove those doubts. The activities described in Clause 22 are needed both for the purpose of applying civil law and for applying employment, social security and patents legislation offshore.

Perhaps I may briefly indicate the main matters that have arisen by way of doubt. First, there is a doubt as to whether all actitivies carried on on the installations themselves are covered. While we believe that activities immediately concerned with the primary function of the installation—for example, drilling—are covered, it is doubtful whether ancillary activities such as the services provided by electricians, plumbers, painters, doctors and nurses, cooks and maintenance staff are covered, even though such activities would not exist were it not for the existence of the installation itself. We also need to ensure that activities such as those I have just described could be covered when an installation (such as a mobile drilling rig) is in transit, as well as when it is maintained on a station.

Secondly, there is a doubt as to whether activities taking place around installations when on station, as well as activities which may take place in the process of locating an installation on the seabed, are covered. Examples of activities which could well give rise to acts or omissions in such situations would be the unloading of equipment and stores from supply boats manoeuvring alongside installations, or the inspection of the seabed by divers in connection with the emplacement of an installation.

Thirdly, doubts have arisen about limiting the scope of the clause to mineral resources as opposed to natural resources. It was considered that, by introducing into the clause a specific reference to the exploitation or exploration of mineral resources and by adding to that the storage of gas, conveyance by pipe-line, and the provision of accommodation for installation workers, we would from the practical and operational viewpoint be able, through the Order in Council procedure, to make available the remedies of civil law in all circumstances where this was desirable.

As I said earlier, Clause 22 has two purposes. It enables civil law to be applied in relation to acts or omissions taking place in connection with certain activities, and those same activities are also to be used as the basis for applying employment, social security and patents legislation offshore. So that, in order to achieve these two objects and to remove the doubts to which I have referred, it was thought necessary to modify the clause in the way proposed in these two amendments. My Lords, I beg to move.

Lord Bishopston

My Lords, the House will appreciate the clarification which the Minister has given on these aspects and I feel that it will be very helpful to the industry. I presume that he has been in touch with the industry and also with the trade unions concerned in these matters. That kind of consultation is of course very helpful in producing the clarification which has come from it.

Lord Kilbracken

My Lords, may I make a point about the wording and punctuation of the second line in paragraph (b) of the proposed Amendment No. 43? The phrase, "by means of or on", is really quite confusing. I think it should read, "from, or by means of, or on,". The noble and learned Lord might like the draftsman to have a look at that.

Lord Mackay of Clashfern

My Lords, I am certainly happy to look at it again. Naturally, as the noble Lord is aware, it was not my original formulation, but it certainly seemed to cover the matters. But I shall certainly seek advice as to whether his suggestion might be regarded as an improvement.

On Question, amendments agreed to.

Lord Mackay of Clashfern moved Amendment No. 44: Page 28, line 38, after (" on ") insert (" or from ").

The noble and learned Lord said: My Lords, this amendment is designed to ensure that the activity of providing accommodation for the offshore workforce includes not only persons who work on installations, which are or have been maintained or are intended to be established for the specified activities, but also any workers who may use such installations as their base. Examples of such workers would be a diver based on the installation carrying out an inspection of the seabed in the vicinity of an installation or an infield helicopter pilot. I commend this amendment to your Lordships. Amendments in the same vein are being proposed to the parallel provisions in Clause 23 and in paragraphs 8 and 9(2) of Schedule 3. My Lords, I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 45: Page 28, line 41, leave out (" the foregoing provisions of ").

The noble and learned Lord said: My Lords, this is a minor drafting amendment. I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 46: Page 28, line 43, leave out (" (2) ") and insert (" (2A) ").

The noble and learned Lord said: My Lords, this also is a minor drafting amendment. I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment No. 47: Page 29, line 1, leave out (" paragraph (d)of ").

The noble and learned Lord said: My Lords, this also is consequential on Amendment 43 and, in particular, upon the introduction of the new subsection 2(A). Now that a reference to "installation" has been incorporated into subsection 2(A), it is necessary for the "disregard" in subsection (3) to apply to the whole of subsection 2(A) to ensure that installations used for activities not covered by subsection (2A), or moved outside waters to which the clause applies, do not continue to attract our civil law by virtue of the "has been maintained" formulation in subsection (2A). My Lords, I beg to move.

On Question, amendment agreed to.

Clause 23 [Extended meaning of "offshore installation"]:

Lord Mackay of Clashfern moved Amendment No. 48: Page 29, line 26, leave out (" or by means of ") and insert (", by means of or on ").

The noble and learned Lord said: My Lords, this is essentially a drafting improvement, inspired by the changes to Clause 22. It ensures that any of the activities in the proposed new Section 1(2) of the 1971 Act are subject to the 1971 Act safety regime, whether they are carried on from, by means of, or on installations. In most circumstances, the activity would of course be carried on from or by means of an installation, but the provision of accommodation is one activity which is carried on on an installation. My Lords, I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendments Nos. 49 and 50: Page 29, line 44, after (" on ") insert (" or from "). Page 30, line 4, leave out (" the foregoing provisions of ").

The noble and learned Lord said: My Lords, these are minor drafting amendments. I beg to move.

On Question, amendments agreed to.

Lord Tanlaw moved Amendment No. 50A: Leave out Clause 23.

The noble Lord said: My Lords, noble Lords will recall that this clause extends the meaning of "offshore installations". During the Committee stage amendments were put forward to clarify the clause and to make a distinction between an oil rig and an accommo— dation structure—or, as it is called, a Hotel. During the course of the Committee stage assurances were given by the noble and learned Lord that a sensible approach would be adopted, in that existing flotels which did not come under the clause would not be penalised in the sense that they would have to return to base to be modified at great expense in order to comply with the Bill. As has been said earlier this afternoon, assurances, even when given by such a person as the noble and learned Lord, do not unfortunately hold up in a court of law.

Subsequent to the Committee stage lawyers indicated, through the commercial interests involved in the North Sea, that perhaps existing flotels would be penalised. I believe a meeting has taken place with the oil industry and its representatives at quite a high level, at which further assurances were given by the Department of Energy that existing vessels will in no way be affected by the Bill. Therefore I am asking the noble and learned Lord whether the Government are prepared to make a distinction between an oil rig and a structure of the kind used to provide accommodation, or for lire fighting, and the other purposes which are included in the clause.

There is another point. If this distinction is recognised and the Bill becomes law but no further regulations are made to clarify these distinctions, what would happen if there were an accident or a tragedy—which there have been with this type of structure—and its position was not legally clarified? What would be the position of any claimants in law for injury or loss of life which occurred before new regulations were made? Or will the assurances (this I doubt very much, although I am not a lawyer) which have been given in your Lordships' House be sufficient to satisfy a court of law that the operators of these structures are in no way breaking the law simply because it happens to be in the interregnum period before new regulations are made which cover existing flotels? If new regulations are to be made, is the noble and learned Lord able to give an indication of whether any extra staff will be required in the Department of Energy to make such regulations? And if such extra staff are required, have they been included in the manpower estimates contained in the Explanatory Memorandum to the Bill and also in subsequent debates on the question which I have raised from these Benches?

Would the noble and learned Lord also refer to Clause 37(2) on page 39 of the Bill which says: This Act shall come into force on such a day as the Secretary of State may by order appoint, and different days may be so appointed for different provisions or different purposes ". These are known legally, I believe, as commencements. Some examples have already been given. They referred to the safety regulations for gas showrooms, about which there is to be further legislation. Therefore one assumes that no commencement would start for that part of the Bill.

The question I should like to ask the noble and learned Lord is whether this clause of the Bill will become operative at a different time and therefore at a later date from the time when the main part of the Bill becomes law. Can the noble and learned Lord say when the commencement of this clause will become operative, presumably in conjunction with new regula- tions referring to flotels, if and when they are made? Or is this Bill to become law with Clause 23 in it as it stands, in which case the noble and learned Lord will be very helpful if he can clarify the position of existing structures, or flotels, from a legal point of view. I beg to move.

Lord Bishopston

My Lords, I wrote to the noble and learned Lord the Lord Advocate to notify him that I intended to raise a number of questions on the amendment in the light of very recent discussions which I understand his department has had with the oil industry in order to clarify the situation which is of concern to those involved with marine regulations affecting flotels. I should very much like to be associated with the comments made by the noble Lord, Lord Tanlaw. Together, during the Committee stage. we raised some of the questions which we are now bringing back.

When the Committee considered the implications of Clause 23, which extends the meaning of "offshore installations", I drew attention to the difficulties which the Bill would create if it were left unamended. They related to the proposed applicability of regulations to flotels as for hydrocarbon bearing structures. Offshore safety is of major concern to everybody operating in the very demanding conditions of the North Sea. The North Sea investment totals billions of pounds, and operators quite rightly invest a large amount of that money in seeking to ensure the highest safety standards. They are naturally anxious to comply with the relevant laws and regulations. It is vital therefore that such rules should be tailored to suit the actual circumstances and that operators are able to comply with them—as they wish.

I should like to put one or two questions to the Minister. Do Her Majesty's Government accept that the industry cannot immediately, or even in the short term, meet the requirements of the Bill with regard to the certificates of fitness—the point which was taken up by the noble Lord, Lord Tanlaw? Secondly, do the Government accept that the existing regulations are inappropriate to fiotels? I believe that the noble and learned Lord admitted this when we debated Clause 23 in Committee, because the regulations are not only onerous and expensive to comply with but need also to be phased in if operators are not to be placed in breach of the regulations. I believe there was a hope that the Bill might be amended to cover that position. There may still be time for regulations to be used for that effect.

Finally, accepting that the industry and operators wish to co-operate to the maximum extent, as they always have, will the Government ensure full and continuing consultation with the trade unions, operators and all concerned? I believe that the industry was encouraged by the reply of the noble and learned Lord the Lord Advocate when we last debated this matter. Finally, the industry is appreciative of the clarification in the last debate and is also appreciative of the consultation which has taken place so far, and I feel sure that they would be helped and would welcome replies to the assurances which the noble Lord, Lord Tanlaw, and I are seeking on this occasion.

Lord Mackay of Clashfern

My Lords, the purpose of extending the safety regime to flotels, which is the main matter that the noble Lords have raised, is to ensure that Her Majesty's Government have the power to make proper regulations for the safety of these structures. It is agreed on all hands that it is absolutely vital, as the noble Lord, Lord Bishopston, said, in the hazardous regime of the North Sea—indeed, in any area where such work is going on—to give the highest consideration to the safety of those who operate these installations and to the safety of what is provided for their accommodation, in the shape of flotels. It is with these very important considerations in view that Clause 23 has, among other things, provided for the extension of the safety regime to flotels.

On the other hand, it is recognised by my right honourable friend the Secretary of State that there are already very important investments in the North Sea, and there are existing installations to which these provisions would apply. Accordingly, it is right that consideration should be given to the way in which these particular provisions are brought into effect. The first point I should like to make, as a general answer, is that, as the noble Lord, Lord Tanlaw, has pointed out, Clause 37 of the Bill, and in particular subsection (2) of that clause, provides that: This Act shall come into force on such day as the Secretary of State may by order appoint, and different days may be so appointed for different provisions or different purposes". Accordingly, it is open to the Secretary of State to bring into effect what one might call the main provisions of the Bill without bringing into effect the provisions of Clause 23 so far as they relate to flotels. It is being made clear to the industry that the position in relation to installations will be fully considered when considering whether to make the commencement of these provisions apply in relation to a particular date. That is the first point. Time is possible for further consultation and, also, to enable existing arrangements to be reviewed.

Secondly, it is possible for the Secretary of State to make an order which itself is made on a certain day but which comes into force later, giving even further notice. It is also possible for the Secretary of State, in terms of Section 7(4) of the 1971 Act, to give exemption either in relation to particular classes of installations, to descriptions of installations, or indeed in relation to particular installations. However, although the Secretary of State would not contemplate giving exemptions in order to reduce safety standards, he would certainly be prepared to consider exemption where in his view an existing installation, for example, attained the standard of safety which he regarded as necessary, although perhaps not in the precise manner which the regulations themselves would contemplate.

In respect of the existing regulations under the 1971 Act, there are a number of regulations—I believe six in all—which would be reasonably applicable to flotels when the section is brought into account. The only one I want to mention in particular in that connection is the Offshore Installations (Constructions and Survey) Regulations 1974 with the certificate of fitness provision. Apart from anything else, it takes some time to get the certificate. Even if one's installation is perfect, it requires time for it to be examined and for the certificate to be obtained. Obviously, the timing of bringing into effect regulations would allow for that particular point. Apart from that, there may be other detailed matters which could arise. I suggest that the powers to which I have referred would be adequate to deal with these within the overall safety context.

There are some other regulations—five in all, I believe—of the existing regime which would not immediately and automatically appear to be suitable for flotels, and consideration will have to be given to the precise formulation of regulations in that connection that might be necessary. 1 would like to make it clear that the Secretary of State will continue to consult both sides of industry as he has done in this connection—the unions as well as the employers—and will seek to use the powers that he has in order to phase in new regulations appropriately—but all against the context of ensuring to the maximum the safety of those who are involved in the operation.

The noble Lord, Lord Tanlaw, asked me what would happen if an accident occurred before the statute came into force. I think the situation would be that legal rights would be determined on the state of statute law at the date of the accident. As the noble Lord will know, Section 11 of the 1971 Act does make breaches of the statute or regulations actionable, and once the regulations apply—for example, to flotelsthen that would be relevant to the question of legal rights. On the question of administration, about which the noble Lord asked in pursuance of his concern about staff at the Ministry, I understand it is anticipated that no extra staff will be required to administer these provisions so far as they affect flotels. I hope that I have sufficiently answered questions which noble Lords have raised. I hope too that the amendment proposed will not be insisted upon because 1 am sure that it would not serve the purposes which the noble Lord seeks to achieve.

Lord Bishopston

My Lords, the proposer and indeed the industry will appreciate the comments and clarification given by the noble and learned Lord the Minister. There is no need for me to stress that the industry is very anxious that there shall be appropriate regulations and legislation suited to the particular aspects with which it is concerned. I feel sure that the industry is anxious that it shall have a reasonable amount of time to adapt its installations, to conform with the regulations—but certainly it does not wish to be in breach of any regulations, and hence the comments made by the noble Lord, Lord Tanlaw, and myself. We would thank the Minister for his reply and anticipate continuing close co-operation with the industry. With the leave of the House, I beg to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 27 [Interpretation of Part IV]:

Lord Mackay of Clashfern moved Amendments Nos. 51 and 52: Page 34, leave out lines 33 and 34. Clause 28, page 35, line 45, leave out (" meaning given by section 1(2) of ") and insert (" same meaning as in ").

The noble and learned Lord said: My Lords, both Amendment No. 51 and Amendment No. 52 are consequential upon matters which I sought to describe earlier. I beg to move.

On Question, amendments agreed to.

Clause 31 [Provisions as to regulations, orders, etc].:

[4.57 p.m.

Lord Lovell-Davis moved Amendment No. 53: Page 36, line 27, leave out from (" Act ") to (" shall ") in line 28.

The noble Lord said: My Lords, with your permission, I shall speak to both Amendment No. 53 and Amendment No. 54 because the first simply paves the way for the second. I make no apology for again bringing before your Lordships' House a matter which I believe it is fair to say causes great anxiety to many noble Lords, not only of this party but also of the Liberal Party and the Social Democratic Party as well—and I hope to Members of the Benches opposite, too.

When I raised this matter at Committee stage, my noble friend and I decided that a matter so crucially important as this merited wider consideration by your Lordships' House and, we hope, by the Government, so while we withdrew our amendment, at the same time I made it quite clear—and in this I believe I had the support of the noble Lords, Lord Wilson of Langside and Lord Tanlaw—that we were totally opposed to the clause as it stands; that we consider this a basic and dangerous flaw in the Bill; and that in all conscience we could not abandon our efforts to persuade the Government to think again.

We believe that to give the Secretary of State such enormous powers with so little accountability to Parliament on a matter of such vital importance to the whole country (and not simply to the Government of the day) runs counter to democratic principles, to parliamentary accountability, to the public interest and—as I mentioned at Committee stage—to the very promise extended to the electorate in the 1979 general election Conservative Party election manifesto, that Parliament and no other body "should stand at the centre of the nation's life and decisions".

Let us look once more at what this Bill permits the Secretary of State to do without any reference back to Parliament other than by negative resolution. Under Clauses 3(1) and 11(1) the Secretary of State can direct BNOC and the British Gas Corporation to dispose of their assets. Under Clauses 3(2), 11(2) and 11(4) the Secretary of State can by order, subject only to negative resolution, provide that the 1975 Act and the 1972 Act shall apply to a subsidiary with such modification as he may specify. The order or direction having been given, the corporations are then required to comply with it, as Clause 31 states, notwithstanding any duty imposed on [them] by or under any enactment ". I cannot help asking myself how your Lordships' House, which, as my noble friend Lord Beswick has pointed out, is so often defended by its Members as a Second Chamber in which Bills may be scrutinised and debated in a less partisan and more dispassionate atmosphere than in another place, can actually condone, much less positively support, the creation of powers which are clearly not in the public interest, remove parliamentary accountability and do the very thing the Government have pledged themselves not to do. It is not enough for the Government to say that they intend to use the powers selectively and only to fulfil the intentions they have so far declared. The fact is that this House is being asked to bring into existence powers which enable the Secretary of State to do what he likes when he likes. I believe the implications of this demand the most serious consideration by noble Lords on all sides of this House.

Is this Bill going to stand as a precedent which future Governments of different persuasions can invoke to frame legislation which will enable them to avoid parliamentary scrutiny and get their own way? If so, should we be party to enshrining these powers in the Bill?—because I do not believe any Secretary of State should be given the powers that this Bill contains. Our aim is simply to persuade the Government to accept this quite modest amendment embodying the proposition that Governments should make provision in the Bill for full and proper parliamentary scrutiny, particularly when it concerns privatisation measures which, by the present Secretary of State's own admission, are of a magnitude which is unprecedented.

When we last debated this clause on 18th May the noble Earl, Lord Mansfield, gave a number of reasons for rejecting the affirmative resolution procedure. I should like, with your Lordships' indulgence, to restate them. He said—and I am sure he will allow me to paraphrase his exact words—that orders cover a number of parts of the Bill and it would be inappropriate to make the affirmative procedure cover them all. Well, we have redrafted the amendment to meet that objection, so that one category, of Orders in Council under Clauses 21 and 22, which relate to the application of criminal and civil law, would not be subject to positive resolution. Since the other categories of order and direction involve extensive powers of the Secretary of State, we consider the amendment appropriate and that an extra degree of parliamentary scrutiny is required.

The noble Earl also pointed out, in answer to a question of mine, that the transfer of Britoil shares to the Secretary of State under Clause 3(4) has already been thoroughly debated in Parliament. Of course the amendment I am now moving makes no reference to Clause 3(4). I hope that in his reply the Minister will not again argue from the basis of Part 1 of the Bill, where he has said the Government's intentions are well known, because what the Government intend to do about British Gas under Part II is not all well known. We have tried to find out but we have received very few answers. If there is going to be a major reorganisation of the British Gas Corporation—and from what we already know there never has been such a reorganisation as is intended—there should be provision in the Bill to ensure that it is referred to Parliament for consideration.

Finally, the noble Earl referred to precedents for the negative resolution procedure under earlier Labour legislation, and to relevant sections of the British Telecommunications Act 1980 and the Transport Act 1981, which were not subject to negative, or indeed, in the latter case, any parliamentary procedure at all. I am not sure that invoking precedents greatly helps the Government's case. British Telecommunications disposals are hedged by safeguards, and under the Transport Act 1981 the disposal powers can be used only in relation to peripheral activities, such as hotels, and there is no possibility of privatising the main business.

In any case, the fact that there has been limited parliamentary scrutiny under earlier legislation does nothing to allay the fears we have about the Secretary of State's powers to implement the momentous decisions envisaged by this Bill, involving the disposal of huge national assets and affecting the essential business of two vast state corporations without proper reference to Parliament. I would hope that your Lordships share these fears, and that the Government might think again, even at this late stage and accept this precautionary amendment to the Bill. I beg to move.

Lord Bruce of Donington

My Lords, I hope that the noble Lord is going to give very careful consideration to the amendments that are being proposed by my noble friend Lord Beswick. As the noble Lord knows perfectly well, but the public at large may not know, the difference between the negative and affirmative procedures is that if the Government have to come to the House for an affirmative resolution it means that the instrument is brought before the House and must therefore be debated. If, on the other hand, there is adopted a negative procedure the onus lies exactly the opposite way; and with the mass of instruments coming before Parliament under the negative procedure the chances of them being thoroughly dealt with are much less than if the Government have to make time to bring forward these particular orders or directions for positive affirmation.

I would not want to repeat anything that my noble friend has said, but I wish in particular to draw to your Lordships' attention the powers of direction under Clauses 3(1) and 11(1) that have been made the subject of Amendment No. 54. The Secretary of State can, after consultation with the gas corporation, or alternatively with the oil corporation under Clause 3(1), give directions to the corporation requiring it to exercise its powers under Sections 9 and 10 in the case of the gas corporation, and under Sections 1 and 2 for the purposes of the BNOC section, (including the powers extended by section 2(1) above) for such purposes and in such manner as may be specified in the directions ". Those last words to which I have given emphasis are common to Clause 3(1) and Clause 11(1). These are very wide indeed. It would seem on the narrowest definition of the public interest that such directions ought to be subject to full parliamentary scrutiny and debate by the adoption of the affirmative procedure.

Throughout the Committee stage, and so far in the Report stage, the Government have given but scant attention to any of the suggestions that have been made from any part of the House. They have been quite inflexible. Presumably they think that their parliamentary majority in another place is permanent. However, I would remind the noble Lord that seven days is a long time in politics. I should have thought that, in the public interest as well as in the interests of open Government, it is desirable that the exercise of these powers in the hands of the Secretary of State ought to be subject to very close parliamentary scrunity and, indeed, to public debate.

Is the noble Lord afraid of public debate on some of the directions that will be given by the Secretary of State? Does he know what kind of directions they will be? Does he know what their consequences will be? Does he know whether they are small or large directions? I suspect that he does not know, and with the greatest possible respect to the noble Lord's sense of public duty, I should not think that from the political standpoint he cares very much either. All that he is concerned with is getting this very partisan Bill, couched in the most partisan terms, through with the least possible trouble and also with the insurance that any actions under it will be subjected to the minimum of parliamentary scrutiny in another place and the minimum of public debate. I do not think—and I am sure that many noble Lords will agree with me— that this is really the correct way to proceed.

If the Government have nothing to fear from public opinion on the validity and the desirability of such directions as the Secretary of State may in future give under the powers that will be given to him under the Bill; why are they not open and relaxed about it? Why do they not say: "Well, yes, we are quite content that all these matters will be brought before the House; that they will be subject to affirmative resolution ". In fact, the noble Lord might wax eloquent on the subject and say that they will be so reasonable that even though they did come forward for affirmative resolution, the House would probably pass them anyway because they will be so reasonable. That is an attitude that he could take. I ask the noble Lord that, on an important matter of this kind, he will see fit to accept the amendments.

Lord Wilson of Langside

My Lords, I, too, hope that as regards this matter the Government will show greater flexibility than they have so far shown. It occurs to me that it is over 50 years now since the Lord Chief Justice of England, no less, wrote what he himself described as a "little essay"—although many of us thought it was rather more than that—called The New Despotism, inspired as he was by what he called the "various influences" which placed a large and increasing field of departmental authority and activity beyond the reach of the ordinary law. That, of course, is what this amendment is all about.

I hope that the noble Earl will not do what he did or said the last time we were discussing this matter and accuse us of rhetoric and hyperbole. I have listened carefully to what the noble Lord, Lord Lovell-Davis, said in moving this amendment and I shall not repeat the provisions of the Bill to which he referred. But having regard to what he said and to what was said by the noble Lord, Lord Bruce of Donington, too, we have had so far really no effective answer on this question of parliamentary control. Indeed, I confess that I suspected that the noble Earl on the last occasion he replied to us—I hope I am not being unfair to him, and I hope that this is an unworthy suspicion—showed a little cynicism about this whole business when he referred to precedents and what Governments in the past have done, and in particular Labour Governments. We are not concerned with the kind of Westminster ritual square dance in this context. The issue is one of parliamentary control. If the Government do not have a better answer than they have so far shown, I trust that they will at least show some flexibility and appreciation of the principle which is at issue in this amendment.

Lord Campbell of Alloway

My Lords, I should like to apologise to your Lordships' House for having arrived late in this important debate. I should like to support the spirit of the amendment. The problem of sub-delegated legislation raises serious constitutional problems which affect individual liberty. I would hope that in all contexts very great consideration and care would be given by Her Majesty's Government as to whether it is used in circumstances which are not wholly essential.

Lord Tanlaw

My Lords, we support the spirit of the amendment. I believe that there are a number of loose ends which keep appearing as various amendments and various debates have taken place throughout our discussions on the Bill. I think that it was significant that in our recent debate on amendment No. 50A reference was made by the noble and learned Lord to the powers of the Secretary of State—that on different days he may appoint for different provisions and for different purposes different parts of the Bill. I should think that in particular in relation to the amendment of the noble Lord, Lord Lovell-Davis, some of these are very important commencements and it is only right that they should come back for Parliament to have at least a brief debate and discussion on them to see whether any factors have changed, before they are incorporated in the Bill, and that is apart from deep democratic principles which the spirit of this Bill seems to go against by giving so much power to the Secretary of State. So we shall continue to support—as we have done throughout the Bill—the spirit of this amendment.

The Earl of Mansfield

My Lords, these two amendments bring us back again to the question of parliamentary accountability. That is a subject which we have already debated in very considerable detail. It was, quite naturally, mentioned on Second Reading. It was discussed at length on all three days which we spent in Committee, and we discussed it in relation to Clauses 1 and 9 as well as Clause 31.

I appreciate that noble Lords have always been concerned that the executive is not—if I may use the phrase—getting away with too much. One has to strike a balance. If I may introduce a personal note, certainly in the 10 years this month since I made my maiden speech, whether one is in Government or in Opposition, the Government of the day are always concerned, first, to get through the various parliamentary stages, which can be complicated, which are required of any Bill, and, secondly, to make the best use of parliamentary time. Of course, the Opposition is quite properly concerned to thwart that process in whatever way it can.

In this particular matter I think that we must distinguish between the two limbs of the argument: first, that particularly in Part I of the Bill certain powers are taken which will not be subject to parliamentary procedure in the future. Of course, I can illustrate that by referring to Clause 3(1). Then we must distinguish that from the provisions in the latter part—in, for instance, Part II of the Bill—where there will be a negative resolution procedure, and I think it is a procedure which one cannot quite dismiss in the way in which noble Lords opposite have tried to do. But it is not to be subject to the affirmative procedure.

I shall, therefore, direct my remarks to both of these limbs of the argument and hope that I can convince, at any rate my noble friend Lord Campbell of Alloway —who I think comes into our deliberations on this matter fresh, and we welcome him—that what we are doing is by no means unprecedented and is perfectly proper in the parliamentary, the legal and the political sense. Of course, whatever I say will not convince the noble Lord, Lord Lovell-Davis, because at the beginning of his remarks he said that these powers are unprecedented and then in his conclusion he dismissed the precedents which I quoted last time. So I cannot win.

Lord Lovell-Davis

My Lords, perhaps the noble Earl will give way. If he will read my speech in Hansard tomorrow, he will see that I did not say that powers were absolutely unprecedented.

The Earl of Mansfield

My Lords, I do not know; the noble Lord was reading part of his speech and 1 do not know whether he was reading that bit. But I shall certainly look at Hansard and if that bit was not as I took it to be, I apologise in advance.

First, the amendments seek to make all the orders and all the directions in Clause 31(2), which apply to BNOC and to the British Gas Corporation, subject to the affirmative rather than to the negative resolution procedure. As 1 have said, in effect, they try to bring Clause 3(1) within the scope of Clause 31(2). I suggest that this would be quite without precedent in any similar legislation that we have been considering during this Parliament. I dare not use the word "privatisation", or I shall get what I might call another "Bruce definition"; it will be the first day in our consideration of this Bill that that has not happened. Nevertheless, we have not had any of this in previous privatisation legislation.

If it is said, as I think it is, that as regards Clause 3(1) it has not been made plain what the Government's plans are, all I can say is that, as a Government, we have gone to very great lengths—first, in another place, but much more especially in this place too—to explain in the greatest of detail the provisions which could be included in a direction under Clause 3(1). We have spent many hours discussing the effect that a direction could have; in other words, the requirement of BNOC to exercise its powers under Clauses 1 and 2, and a direction under Clause 3(1) could include that the corporation should make schemes under Clause 2 which split the assets between itself and Britoil; that Britoil will thereby be set up with a proper capital structure.

Another example would be that the corporation could be directed to establish an employees' share scheme under Clause 1(3). If it is alleged that the Government have not given proper thought to the anxieties which have been expressed in this House, I have to reject that criticism because, at all stages of this Bill in both Houses, the most earnest consideration has been given to everything that has been suggested. But I cannot see, and nobody from the other side of the House has yet explained, why a further layer of parliamentary scrutiny either could or should be added at that stage, still less how it is claimed that such a layer would be helpful. If the noble and learned Lord, Lord Wilson of Langside, wants to look for explanations, he does not have very far to look, because on the last occasion on the very seat next to him his noble friend Lord Taylor of Gryfe demolished, in a single sentence, the idea that Parliament, as it were, should consider and go over in enormous detail something so complex as articles of association.

So that then is the nub of the arguments as regards BNOC. I said on a previous occasion—and I stand by it—that where something has been, as it were, fully explained and inquired into by Parliament but which eventually will be the subject of executive action, there comes a point when the Government, after the talking has died down, has to say: "Now we shall govern"—because that is what Governments are for" and a further layer of parliamentary scrutiny would serve no useful purpose ".

Then we come to the British Gas Corporation side of the argument. Of course, there are fundamental differences between the two cases. In the first place, the powers of disposal in Clauses 9, 10 and 11 are of a different nature to those in respect of BNOC. In the case of BNOC the powers are specific in that they relate to equity oil subsidiaries and, as I have said, we have gone in very considerable detail into the way in which those powers will be used. But in the case of the gas corporation the powers are general. They will develop and will enlarge on existing general powers in the Gas Act 1972, and it is not possible to describe all the detailed circumstances in which the provisions may be employed. I can tell the House that some of the directions will be immensely technical and at the same time encompass a very small measure.

Therefore, bearing all that in mind, there is justification for saying—and the Government so recognise, and it is why the Bill has been drawn in the way it has—that directions and orders transferring shares should be by order, and that is to be provided by Clause 31(2) and is subject to the negative resolution procedure. Indeed, it applies to the existing power to give directions contained in the Gas Act 1972.

There is another point. There is a fundamental difference between the roles of BNOC and the British Gas Corporation. BNOC is a public corporation operating in an industry which is predominently private sector. The gas corporation is a nationalised industry charged with specific statutory duties in relation to the supply of gas. Because Parliament has placed these duties on the gas corporation, it is right that Parliament should have an opportunity to review measures which in theory could affect the implementation of the statutory duties of the corporation in relation to consumers of gas.

These arguments, I suggest, justify the way in which we have approached this matter. In other words, that directions to the gas corporation should be by way of order subject to the negative resolution procedure; but, as I have said, this does not apply to BNOC. Then we come to Clauses 3(2), 11(2) and 11(4), which are the other subject of the amendment. I believe that making them subject to the negative resolution procedure strikes the right balance between, as I have described, the power of the executive and control by Parliament. But this is a matter of policy, and we have discussed it before and we are discussing it now. I am afraid that, if it comes to disagreement, then we shall have to agree to disagree.

I have sought to show that, in so far as Parliament is concerned to inquire as to what is happening so far as the subject of an order is concerned, the negative procedure provides the opportunity for debate if either house wishes it. I do not think that one should overlook that and try to dismiss the negative procedure too lightly. In other pieces of legislation, for instance, it is of course right that the affirmative procedure should be adopted. One that immediately comes to mind is, for instance, the borrowing requirements of nationalised industries where Parliament must have a degree of scrutiny which is provided by that procedure. In the Petroleum and Submarine Pipelines Act 1975 new Section 6(3), which is set out in Clause 7 of this Bill, which covers changes in the borrowing limit of BNOC, continues to be subject to the affirmative resolution procedure. Paragraph 31 of Schedule 3 provides that the new Section 6(10) of the 1975 Act, which is also set out in Clause 7, is also subject to the affirmative resolution procedure.

The level of parliamentary scrutiny, I have to say to the House, is quite unremarkable in the sense that it compares with other legislation, particularly where it empowers the Government of the day to create state industries or acquire privately owned assets, or to dispose of state assets. I have quoted the powers taken by the last Labour Government in the Petroleum and Submarine Pipe-lines Act 1975. That Act created BNOC without any reference back to Parliament. It provided wide-ranging powers of direction which I would claim are as great, if not greater, than those in Clause 3(1) without any parliamentary procedure at all, and BNOC used them to acquire the considerable North Sea assets of Burmah. Then in the sale of BP shares in 1977 the last Government disposed of 17 per cent., I think it was, of the shares of BP without any prior parliamentary approval.

I do not say this in any sense of criticism of the last Government. I say it in the sense that it shows and illustrates a policy we are following which is well established, not by any means novel, and perfectly proper. Above all, it shows that where Parliament has debated and approved policy the Government of the day must be allowed a degree of executive discretion to implement it. The noble Lord disputed the British Telecommunications Act 1981, but I can take another example. Under the Transport Act 1981 directions by the Secretary of State concerning disposals are not subject to any parliamentary procedure, whereas under Clause 31 directions to the gas corporation are. There are also ample precedents for the negative resolution procedure in preference to the affirmative procedure, as even the most cursory examination of the statute book will show.

I remember the Employment Protection Act 1975 when I think I faced the noble Lord, Lord Bruce of Donington—with a degree of pleasure, may I say—for the first time across the Floor of the House. That Act, in Section 123, provided for all orders, rules or regulations under the Act to be subject to the negative procedure, and the negative procedure only. Then of course in the Aircraft and Shipbuilding Industries Act 1977 in Section 1 the orders there were exercisable by statutory instrument subject to the negative procedure alone. I appreciate what the noble and learned Lord, Lord Wilson of Langside, has described as possibly a rather sterile Westminster dance, if dances can ever be sterile. Nevertheless, what I say is that what we are doing in this Bill is amply precedented and is perfectly proper.

The noble Lord, Lord Bruce, questioned the phraseology at the end of Clause 3(1) and in particular the words for such purposes and in such manner as may be specified in the directions ". One has to keep a sense of proportion because the directions may relate only to the exercise of the corporation's powers in Clauses 1 and 2. They can only be used in connection with a disposal of shares in an equity oil subsidiary and the formulation of a scheme. I do not suppose that the noble Lord would suggest that we should have powers of direction over BNOC or, in effect, that the corporation should be free to do what they want without ministerial control.

The noble Lord asked if we were afraid of debate. I hope I have shown that we are not. We have had much debate over this matter—quite proper debate, I hasten to say—but I hope that, having considered the matter in the way that I have illustrated and in the manner which I have suggested, the House will come to the conclusion that what the Government arc doing is perfectly proper, and it will therefore reject this amendment, should it be called upon to do so in the Lobbies.

Lord Lovell-Davis

My Lords, as the noble Earl has said, we have debated this particular clause in great detail. It is true, but we seem to have had little effect upon the Government. The noble Earl has said that the Opposition are aiming to thwart the process. We are not aiming to thwart the process. What we are trying to do is to protect the public interest and ensure that Parliament may fully consider how the Secretary of State proposes to use the powers given to him by this Bill.

The noble Earl said that the Government have given proper thought to the anxieties that have been expressed. I can only say that those anxieties seem to have been completely overshadowed by the inflexible purpose of the Government. The noble Earl asks why a further layer should be added to provide proper scrutiny. The affirmative resolution has to be preferable to the negative resolution. The negative procedure, in our view, is not adequate, and we have obviously failed to make this clear to the Minister.

He spoke about British Gas, the general powers applying to it, and said it was not possible to describe all the ways in which the provisions might be deployed. There are huge and important areas left completely unexplained, providing all the more reason why the decisions of the Secretary of State, in implementing his powers, should be given proper parliamentary scrutiny.

I am grateful to the noble Lord, Lord Tanlaw, for again saying that our proposal has the support of his party. I hope noble Lords opposite took note of what their noble friend Lord Campbell of Alloway said. The noble and learned Lord, Lord Wilson of Langside. called for flexibility and said that such matters should not be placed beyond parliamentary scrutiny. That is the nub of the debate; a basic point of principle divides us. The directions which the Secretary of State may give under Clause 3(1) and Clause 11(1) are very wide indeed, as my noble friend, Lord Bruce, said, and should be subject to close scrutiny and public debate. He rightly asked whether the Government were afraid of openly debating their privatisation plans.

At all stages of the passage of the Bill through your Lordships' House we have fully rehearsed our objections to the clause as drafted. The same counter-arguments have again been deployed by the Government. We could go over the ground endlessly, but the difference of view is fundamental. The Minister made some gratuitous comments about the delivery of my speech. In reply, I would charge him with being repetitive; he said nothing new this afternoon and he even repeated himself regarding the Transport Act 1981 which, as I pointed out, covers only peripheral activities such as hotels, and there is no possibility of the privatisation of the main business. As I said, and as other Members of this and another House have said, the single most objectionable aspect of the Bill—which is, in its whole intent objectionable and against the interests of the nation—lies in the powers it proposes to give to the Secretary of State. I shall not withdraw the amendment this time, but ask the House to vote on it.

5.43 p.m.

On Question, Whether the said amendment (No. 53) shall be agreed to?

Their Lordships divided: Contents, 57; Not-Contents, 92.

DIVISION NO. 3
CONTENTS
Amherst, E	Kennet, L.
Ardwick, L.	Kilmarnock, L.
Aylestone, L.	Llewelyn-Davies of Hastoe, B
Balogh, L.	Beaumont of Whkley, L.
Longford, E.	Bernstein, L
Lovell-Davis, L.	Beswick, L.
Mackie of Benshie, L.	Bishopston, L.
Mayhew, L.	Boston of Faversham, L.
Mishcon, L.	Briginshaw, L.
Morris of Grasmere, L.	Bruce of Donington, L.
Ogmore, L.	Byers, L.
Oram, L.	Chitnis, L.
Rochester, L.	Cledwyn of Penrhos, L.
Seear, B.	Collison, L.
Simon, V.	David, B.
Stone, L.	Davies of Leek, L.
Strabolgi, L.	Donaldson of Kingsbridge, L.
Tanlaw, L,—[Teller].	Elwyn-Jones, L.
Taylor of Mansfield, L.	Ewart-Biggs, B.
Tordoff, L.	Fisher of Rednal, B.
Underhill, L.	George-Brown, L.
Wallace of Coslany, L.—[Teller].	Gosford, E.
	Houghton of Sowerby, L.
Wells-Pestell, L.	Howie of Troon, L.
Whaddon, L.	Hutchinson of White, B.
Lullington, L.	Willis, L.
Jacques, L.	Wilson of Langside, L.
Jeger, B.	Wootton of Abinger, B
John-Mackie, L.	Wynne-Jones, L.

NOT-CONTENTS
Abercorn, D.	McFadzean, L.
Ailesbury, M.	Mackay of Clashfern, L.
Airey of Abingdon, B.	Macleod of Borve, B.
Alexander of Tunis, E.	Mancroft, L.
Auckland, L.	Mansfield, E.
Avon, E.	Margadale, L.
Belhaven and Stenton, L.	Merrivale, L.
Bellwin, L.	Mersey, V.
Beloff, L.	Milverton, L.
Belstead, L.	Morris, L.
Bessborough, E.	Mottistone, L.
Boardman, L.	Mowbray and Stourton, L.
Caccia, L.	Norfolk, D.
Campbell of Allovvay, L.	Nugent of Guildford, L.
Chelwood, L.	O'Hagan, L.
Colville of Culross, V.	O'Neill of the Maine, L,
Craigavon, V.	Orkney, E.
Daventry, V.	Orr-Ewing, L.
Davidson, V.	Platt of Writtle, B.
Denham, L—[Teller].	Portland, D.
Dilhorne, V.	Rankcillour, L.
Eccles, V.	Romney, E.
Elliot of Harwood, B.	St. Aldwyn, E.
Elton, L.	St. Davids, V.
Faithfull, B.	St. John of Blctso, L.
Ferrers, E.	Saltoun, Ly.
Fraser of Kilmorack, L.	Sandys, L.—Teller].
Gainford, L.	Seebohm, L.
Gibson-Watt, L.	Sharpies, B.
Glanusk, L.	Skelmersdale, L.
Glenarthur, L.	Stamp, L.
Gowrie, E.	Swinfen, L.
Gridley, L.	Terrington, L.
Hailsham of Saint Marylebone, L.	Thomas of Swynnerton, L.
Thorneycroft, L.	Hawke, L.
Torphichen, L.	Hayter, L.
Trefgarne, L.	Holderness, L.
Trenchard, V.	Home of the Hirsel, L.
Trumpington, B.	Hornsby-Smith, B.
Vaux of Harrowden, L.	Hylton-Foster, B.
Vivian, L.	Killearn, L.
Wakeficld of Kendal, L.	Kinnaird, L.
Ward of Witley, V.	Lane-Fox, B.
Westbury, L.	Lauderdale, E.
Wynford, L.	Long, V.
Young, B.	Lyell, L.

Resolved in the negative, and amendment disagreed to accordingly.

[Amendment No. 54 not moved]

5.51 p.m.

Lord Beswick moved Amendment No. 55: Page 36, line 36, leave out (" (notwithstanding any duty imposed on it by or under any enactment) ").

The noble Lord said: My Lords, I beg to move Amendment No. 55. We have previously discussed the issues involved in the amendment and I do not propose to spend undue time upon it. What we must consider is whether the sweeping provisions, the blanket powers, given to the Secretary of State to direct things should be permitted despite the provisions of any other legislation. We must ask ourselves whether to give the powers is a good way to maintain the values of parliamentary democracy. I suggest that there is much room for doubt. There was much room for doubt before the last vote, and I think that following it the doubts will be even greater.

I consider it worth pointing out that the appetite of those responsible for this unfortunate Bill and for obtaining the powers appears to grow on what it feeds. The words that I propose to leave out—the words which at one time were also in other provisions of the Bill—are: notwithstanding any duty imposed on it by or under any enactment ". It is relevant to ponder over the fact that although that was their first way of going about things, the sponsors of the Bill were not satisfied with those powers, and in Clause 2, and again in Clause 10, they have since inserted those incredible words about powers to be granted—and I quote from Clauses 2 and 10: notwithstanding any rule of law and the provisions of any enactment ". I should have thought that anyone who really cares for parliamentary democracy would hesitate to insert such provocative words into a piece of legislation, and I suggest that at some point Parliament would be well advised to call a halt to this type of legislation. I know that precedents can be quoted, but as someone said in another context, precedents can broaden down to something quite different from the original expectations. It would seem that we arc in the process of piling precedent upon precedent and that we will reach a position that I do not believe any Parliament should be ready to accept. I believe that in this particular case the words "any enactment" might refer to the 1972 Act. That Act has since been amended, but parts of it remain in force, presumably because it was thought by the Government of the day, responsible for the amendments, that it was right that they should so remain. But is it now proper to say that the present Secretary of State, without any further amendment, should have the right to override any of those parts of the 1972 Act which remain?

There is another doubt about this sweeping power, this blanket provision. The powers to direct relate to the matters set out in, for example, Part II, Clause 9 of the Bill. Power is provided to dispose of, … any shares of a relevant subsidiary; …the whole or any part of the undertaking of, or any property, rights or liabilities of, a relevant subsidiary; or …any part of the undertaking of, or any property, rights or liabilities of, the Corporation. Those are the kind of powers to direct to which the provision relates; and there are powers despite what might be in any enactment.

In the enactment that we are considering the powers are ostensibly to be granted only—this was the spirit in which we considered the matter— Provided that such disposal shall not result in the impairment of essential services nor imperil supplies to or safety of consumers". The original powers were governed by that provision. But I now gather that the Secretary of State is asking for power to override any enactment, including, presumably, this enactment. I would ask the noble Lord, whom I understand to be a very distinguished lawyer, is that really what is intended? Can we really believe that powers are being sought to dispose of anything that the corporation might have, any liabilities that it might have, subject very properly in the first place to the provisions that I have mentioned, whereas now, as I read the Bill—and I have sought advice upon it—those provisions can be overridden by the words "any enactment". That cannot be right.

I would suggest that if powers are to be taken, they should be set out clearly in words that we can consider and study and possibly agree. That would be a much better way of conducting our parliamentary business, rather than the method which is now developing in the Bill of an all-embracing, overriding, and quite arrogant clause. I beg to move that the words referred to in the amendment be left out of the Bill.

Lord Elwyn-Jones

My Lords, 1 should like to support my noble friend in his moving of the amendment. One of the duties of Parliament is to see that the Executive is not given powers that it does not need or powers that override the law or any statutory provision. Clause 31(3) contains a very remarkable provision: Where the Secretary of State gives directions … it shall be the duty ", of the corporation—namely, the Oil Corporation or the Gas Corporation—to comply with the Secretary of State's commands notwithstanding any duty imposed on the corporation "by or under any enactment ". What a dilemma the unfortunate corporation is going to be put in! On the one hand, it has a statutory duty to do something, which it must comply with, in peril of an action for damages, or possibly even worse. What is it to do in the face of the dilemma of a statutory duty on the one hand and a direction, a mere direction, by the Secretary of State on the other hand, compelling it not to carry out its duties? We want some guidance and help on this, because on the face of it, it does not make sense. It is a classic attempted exercise of arbitrary power by the Secretary of State.

I wonder whether the noble Lord will give us some examples of the kind of enactment that it would be thought proper to set aside on the ipse dixit of the Secretary of State, that enactment imposing otherwise a duty. Can we have some illustrations of this? What is this hideous dilemma that the poor draftsman has been required to deal with and with which either the corporation or the Secretary of State will have to cope? This will not do. I submit that as it stands it is, I repeat, a classic example of an excess of power that is sought, placing these corporations in an intolerable position.

What motivates this? What is behind it? I would have thought that the Secretary of State already has an abundance of powers here; and, of course, we are full of suspicion in the light of the earlier discussion we had, when the noble Earl moved an amendment providing for the exercise of power, again by the Secretary of State, "notwithstanding any rule of law and the provisions of any enactment". With regard to that, at least, before the matter was taken to a Division the noble Lord undertook to refer the matter again to the parliamentary draftsman, and, of course, we wait with hope and impatience to hear what the outcome of that further lucubration in those advising the noble Lord may be. But this is in our view a flagrant attempt to exercise arbitrary power which any self-respecting legislature would rightly seek to resist.

Lord Wilson of Langside

My Lords, I rise with some hesitation to support this amendment for one reason only. I have seldom heard, if I may humbly say so, a case more effectively put than that put by the noble Lord, Lord Beswick, and the noble and learned Lord, Lord Elwyn-Jones. I hesitate only a little fearful lest anything I say might mar the impressive power of their advocacy.

Surely, my Lords, this provision simply will not do. The noble Earl, in replying to the debate on the last amendment, talked about the need for Governments having executive discretion. Surely none of us anywhere in this House would quarrel with that simple, uncomplicated proposition. But this is not a matter of a sensible executive discretion. This is giving legislative powers to a Secretary of State.

I would add only one last point on this matter, and that is on the question of precedent. I do not think that, when it comes to it, precedent is everything or necessarily all-important; but I shall be extremely surprised if the Minister can produce what might be described as a true precedent on all fours with this. I can think, of course, of many Acts of Parliament. I think, for example, of the Rating and Valuation Act 1925, which is mentioned at the outset in Lord Hewart's New Despotism—and I am sure the noble Earl, as an English barrister, must have some reverence for the views there expressed. That Act empowers the Secretary of State, in a rather curious provision, in the event of difficulties arising in the operation of the Act, to correct those difficulties by order.

I know, too, that our own Supreme Court in Scotland has power, in regulating its own procedures, to amend Acts of Parliament, and there may be many other examples of that kind. But these are far removed from this provision, so eloquently described by the noble and learned Lord, Lord Elwyn-Jones. I hope that if the Government do not indicate agreement with the views expressed, the House will support the amendment.

Lord Somers

My Lords, before the noble Earl replies, I wonder whether I may ask him to make one point clear. Would it be possible for the words "by or under any enactment" to be interpreted as referring to any future enactment, or is that merely imaginary on my part?

The Earl of Mansfield

My Lords, as noble Lords have said, these amendments relate to the duty of the BNOC and the British Gas Corporation to comply with directions given to them under Parts I and II of the Bill respectively, and I will deal with each of the corporations in turn. I want to say this by way of preface, and I say it with, I hope, the proper respect which the noble and learned Lord deserves: that directions under Clause 31(3) can be given only in certain circumstances; in other words, to the oil corporation under a provision of Part I and to the gas corporation under any provision of Part II. Therefore the directions which may be given are much more restricted in scope than might at first blush seem to be the case.

Following on from there, what I say to the House is that, therefore, the power of direction which is given to the Secretary of State in Clause 31(3) is by no means as far-reaching as has been represented, and really does not merit the description of "blanket" or "sweeping"—and I shall come to why not.

Let me deal first with BNOC. The scope of this power is confined solely to achieving the disposal of BNOC's oil-producing business. What we have done is to make plain that we arc seeking these powers, and what this power does is to implement them without technical impediments. BNOC, I remind the House, has no statutory duties which are comparable with a public utility. In Part I of the Petroleum and Submarine Pipe-lines Act 1975 there is a list of statutory powers which are given to the corporation, but nowhere is there a list of duties of the kind that one normally finds laid on a nationalised industry by statute. There is no duty to supply, for instance; there is no duty to break even taking one year with another; there is no duty to satisfy reasonable demands.

It is true to say that the corporation has certain duties—for instance, particularly so far as the preparation of accounts is concerned; but that is quite different from the kind of duty which is habitually laid by statute on a public utility. BNOC operates alongside private sector oil companies. Its customers are not obliged by statute to purchase the corporation's oil; nor is the corporation required by statute to supply particular customers. So that in the absence of such duties the powers under Clause 31(3) will not affect the public at large, and we are not taking or seeking to take powers which will affect or infringe civil rights or be a burden to the community.

What we are doing, if I may put it in this way, and why the provisions are needed, is simply to ensure that there are no conflicts of a technical nature between those duties which BNOC has, which largely refer to the corporation's relationship with the Secretary of State, and the power to direct disposals. We have said as a Government and made it clear that we wish to see BNOC's upstream business moved into the private sector. I appreciate that this is an unpalatable policy as far as noble Lords opposite are concerned, and we have to see that we have the proper powers to put that into effect. This relates both to BNOC and to the gas corporation. The duties of both corporations are set out in the Petroleum and Submarine Pipe-lines Act 1975 and the Gas Act 1972 respectively.

When the noble and learned Lord, Lord Elwyn-Jones, asked what is it that it is intended to cure by these provisions, I say to him that both these Acts contain provisions which could be argued to conflict with disposal directions of the sort envisaged. They could be advanced by the respective corporations to relieve them of their duty to comply with disposal directions given them by the Secretary of State. It is to cure those possible defects that this Part of the Bill is drafted in the way it is.

In the case of the British Gas Corporation, if I may anticipate the rest of my argument for a moment in relation to the corporation, it was the inadequacy of the present power to direct the gas corporation to carry out disposals under Section 7(2) of the Gas Act 1972 which already exists, on paper—at least, there the power is constrained by reference to the corporation's duties—which necessitated the taking of new powers to permit the disposal of the gas corporation's offshore oil assets. So, I hope that the House will appreciate that it is with these very limited objectives in mind that Clause 31(3) came to be drafted in the way that it is.

As far as the gas corporation is concerned, very

much the same applies as what I said in relation to BNOC. If it is said (and it has not been said yet) that there is something wrong or otiose about a requirement that the gas corporation complies with directions notwithstanding its statutory duties, I do not think that this stands up to close examination. There may be some degree of interaction between directions under Clause 11 and the corporation's statutory duties. Any interaction of that nature will be of a limited type, and I can assure your Lordships of the Government's intention to satisfy themselves that any direction to dispose of assets will not prevent the corporation from carrying out its obligation to supply gas to consumers within 25 yards of a gas corporation main whose requirements do not exceed 25,000 therms a year. I accept that there remains scope for a limited degree of interaction. I hope, having said that, that the House will agree that these amendments—and I appreciate that only Amendment No. 55 has been moved so far; but No. 56 is in many ways similar—are not very helpful.

Perhaps I can answer the point of the noble Lord, Lord Somers, now because it helps with the argument. The phrase "any other duties" applies to past enactments only; it cannot be read into the future. Clause 31 has been drafted to have, and it has, the great virtue of certainty. Various steps have to be taken so far as the gas corporation is concerned before particular directions are given. Once a direction is given, all concerned know that the direction represents a final determination which can he acted on in confidence and that the direction will not subsequently be thrown into doubt by reason of the other provisions which I have illustrated.

If either of the amendments were accepted, a direction could be given and no one would know whether or not it might be challenged subsequently in the courts because someone thought there was an argument that the direction might impede duties imposed by other statutes. This could leave all concerned in a state of undesirable uncertainty, unsure whether they could rely on directions in their future conduct. At worst, and this is the heart of the point, it could mean that the Secretary of State would be frustrated in achieving fundamental objectives which underline the Bill, not because those objectives are fundamental but because they are contained in other statutes.

There are two other points worth mentioning in relation to the application of Clause 31(3) to the gas corporation. First, the importance of the gas cororation's statutory duties lies in the fact that they have been approved by Parliament. When the Secretary of State gives the corporation a disposal direction under Clause 11, that direction is also subject to parliamentary scrutiny because Clause 31(2) provides that it may be annulled in pursuance of a resolution by the House. So, to say that a Clause 11 direction may interact with the gas corporation's statutory duties is, I would suggest, in a sense merely to recognise that Parliament is a sovereign body against which no one, not even the British Gas Corporation, can claim immutability for some previous provision.

Secondly, there is nothing novel in the concept that there may be interactions between statutory duties and directions. For instance, if one refers to the British Telecommunications Act 1981, one finds that British Telecom's duty as set out in Section 3 expressly recognises the possibility of interaction. The section begins: It shall be the duty of the Corporation (consistently with any directions given to it under the following provisions of this Part)"— and then it goes on. That is a wider approach than we are adopting in relation to the British Gas Corporation, and 1 might mention that the directions given to British Telecom are not subject to the negative resolution procedure as we envisage for Clause 11 directions in Clause 31(2), but are subject only to a requirement that copies should be laid before each House.

I understand that when one reads words like that in a clause one's suspicions are aroused. When one realises the very limited way in which, under the clause, these directions can be given, I hope that the House, and even the noble and learned Lord, Lord Wilson of Langside, will in turn realise that far from "not doing", as I think he put it, this is a very proper power and procedure and possibly the amendment may therefore be withdrawn.

Lord Mishcon

My Lords, when your Lordships' predecessors confronted King John and extracted Magna Charta, they had two grievances. The first was that he was an unconstitutional monarch, and the second, expressed very often as the historians know, was that he was a very lazy monarch. The last thing in the world of which I would want to accuse the noble Earl the Minister is consciously acting unconstitutionally and, up to now, I had hoped that of all the things one could say of him as a Minister it was not that he was a lazy Minister.

The Government in this case are responsible very dangerously in this clause for a bit of lazy legislation, and I will seek to say why. The noble Earl said very clearly that one should not be too worried about this clause. It gives the Secretary of State, within the purview of the Bill, very narrow powers in regard to ordering the disposal of assets which are going into the private sector. I will not indulge in any debate at all as to whether it is proper for any such scheme to be prepared—I am taking it for granted that of course it is. The Government are presenting this Bill. They have a majority. They have the right to present it democratically and to vote it through democratically am not on that point at all. I am taking it for granted that it is a very proper thing.

But to a lawyer, to somebody who respects our constitution, to put into any Bill that a Secretary of State, whether or not subject to a statutory instrument on the negative procedure—and I shall come back to that in a moment—can in his order ignore any enactment is a precedent that ought to make your Lordships shudder. It would have caused more than a shudder to those who confronted King John many centuries ago and obtained Magna Carta as a result.

It is all very well to talk in vague terms about the narrow province of the Secretary of State's directions which might in fact infringe some enactment. I am not indulging in a Gilbertian story or sentence when I say that there may be a prospectus which is ordered as part of a disposal to the public of certain assets. The Secretary of State may give directions in regard to any scheme, or whatever it may be, for disposal and to do so in a certain prospectus. I hope your Lordships will not think I am indulging in fantasy, but if the Secretary of State happens to give a direction not to disclose in the prospectus on the sale what is the obligation of a corporation to disclose under the Companies Act, what is the position of the corporation?

There is no point in saying that the Secretary of State would not do it. The Secretary of State may be advised by one counsel that it is not an infringement and the corporation may be advised by another that it is. The corporation have no right to act on their counsel's advice; they have to act on the direction of the Secretary of State. If the Minister answers me by saying that it has to be put in a statutory instrument which is subject to annulment, then I say this. The noble and learned Lord the Lord Chancellor once paid me this compliment—and it was kind of him. He told me that I was the only Member of your Lordships' House who had ventured to pray for the annulment of a statutory instrument within his own memory. The reason why he said that is that it is contrary to the tradition of this House to pray for the annulment of a statutory instrument. It is in this House that we arc privileged to have the most distinguished judges and the most distinguished lawyers who sit among us. One heard such a distinguished lawyer speak in this debate and he sits before me.

It would be contrary to the tradition of this House to petition for an annulment of such a statutory instrument. I said that King John was lazy and I hope that the noble Earl the Minister will not deserve that epithet. If there are technical points which may emerge and which may defeat the intention of the Secretary of State properly exercised under the Bill, should they not be carefully thought through? The noble Earl the Minister has just answered the noble Lord who put a very pertinent question. He said: "Are we dealing with past enactments or arc we to deal with future enactments?" The clear answer came: "This does not affect future enactments". That means that the noble Earl and his advisers can scrutinise past enactments. They do not have to forecast what further enactments there might be.

They take the trouble to scrutinise them and put down in the Bill those provisions which they feel may affect a direction and which must therefore not impair the direction of the Secretary of State. We will consider them, and we will decide whether it is proper that those exceptions should he made. I have no doubt that if they are set out, this reasonable House will decide that they are proper exceptions to be made. This is a blanket provision. It is so serious in regard to the whole constitution of this country and the whole responsibility upon this House as legislators that I beg of your Lordships, whatever your views may be on the principle of this Bill, about which I say nothing, and the purpose of this Bill—which I do not seek to oppose—whatever else you may think, not to allow these words to go through in this form and to vote for this amendment.

6.26 p.m.

Lord Beswick

My Lords, the noble Earl the Minister who replied, I understand, did not agree with the argument that I put forward. He tried to assure us that the powers which are inherent in the words I propose to leave out are very restricted in scope. I notice that the noble Earl spent a lot of time talking about the BNOC and its removed position from the ordinary household. These powers we are now discussing also relate to the British Gas Corporation. I quoted the actual matters involved. They could potentially affect every household in the country. They could affect very substantial sums of public assets. I think the Minister overdid this reassurance about the limitation of scope.

Moreover, I thought that the Minister to some extent gave his own game away when he said that one of the dangers of removing these words is that an action of the Secretary of State, one of his directives, might be challenged in the courts and it would be a bad thing if it was challenged in the courts. But I thought that this was what the courts were for. I thought that this was what the noble and learned Lord the Lord Chancellor was talking about the other day in the Royal Gallery when he spoke about our freedom being protected by the law. I thought he meant that; that if the Secretary of State of the day over-stretched himself, he could be challenged in the courts.

I shall not go much further than that. But may I put this to the noble Earl. I am concerned about these powers. They may be more restricted than they appear on the face it. I endeavoured to say that they are based upon precedents and precedence brought them down from precedent to precedent. We can get something completely different. I am concerned about this precedent, but I am even more concerned about its being used as a precedent in the future.

I am not a prophet, but I am prepared to say that one day there will be a successor to this Government. They might well be a government with whose views I am not entirely in agreement, but I can will imagine that when it comes to renationalisation, if they look at the way this has been done, it would be a very speedy process—if an unsatisfactory one—to use this kind of legislation. It may even be, I suggest, that when it comes to dealing with the House of Lords it could be a very speedy business if they say they will have no further powers notwithstanding any other legislation or, as in Clause 2, or Clause 10, "notwithstanding any rule of law". What convenient form of words these could be in any future case. I think they are mistaken. The attitude behind the whole Bill is bad. It is arrogant; and I think it is particlulary arrogant in this case. 1 hope the House will agree with the amendment which I now move.

6.31 p.m.

On Question, Whether the said amendment (No. 55) shall be agreed to?

Their Lordships divided: Contents, 55; Not-Contents, 84.

DIVISION NO. 4
CONTENTS
Amherst, E.	Bishopston, L.
Aylestone, L.	Boston of Faversham, L.
Banks, L.	Bruce of Donington, L.
Beaumont of Whitley, L.	Caccia, L.
Bernstein, L.	Chitnis, L.
Beswick, L.	Cledwyn of Penrhos, L.

Collison, L.	Peart, L.
David, B.	Ponsonby of Shulbrede, L.—[Teller].
Donaldson of Kingsbridge, L.
Elwyn-Jones, L.	Rochester, L.
Ewart-Biggs, B.	Seear, B.
Fisher of Rednal, B.	Seebohm, L.
Gosford, E.	Shannon, E.
Hatch of Lusby, L.	Sherfield, L.
Hayter, L.	Somers, L.
Jacques, L.	Stamp, L.
Jeger, B.	Stone, L.
Jenkins of Putney, L.	Tanlaw, L.
John-Mackie, L.	Taylor of Mansfield, L.
Kilmarnock, L.	Tordoff, L.
Llewelyn-Davies of Hastoe, B.	Underhill, L.
	Wallace of Coslany, L.—[Teller].
Lloyd of Kilgerran, L.
Longford, E.	Wells-Pestell, L.
Lovell-Davis, L.	Whaddon, L.
Mackie of Benshie,	L. White, B.
Mishcon, L.	Wilson of Langside, L.
Ogmore, L.	Wootton of Abinger, B.
Oram, L.	Wynne-Jones, L.

NOT-CONTENTS
Airey of Abingdon, B.	McFadzean, L.
Auckland, L.	Mackay of Clashfern, L.
Avon, E.	Macleod of Borve, B.
Belhaven and Stenton, L.	Mancroft, L.
Bellwin, L.	Mansfield, E.
Beloff, L.	Margadale, L.
Belstead, L.	Merrivale, L.
Bessborough, E.	Mersey, V.
Bethell, L.	Morris, L.
Campbell of Alloway, L.	Mottistone, L.
Campbell of Croy, L.	Mowbray and Stourton,
Chelwood, L.	Norfolk, D.
Coleraine, L.	Nugent of Guildford, L.
Colville of Culross, V.	O'Hagan, L.
Cork and Orrery, E.	O'Neill of the Maine, L.
Craigmyle, L.	Orkney, E.
Davidson, V.	Orr-Ewing, L.
De La Warr, E.	Pender, L.
Denham, L.—[Teller].	Platt of Writtle, B.
Dilhorne, V.	Portland, D.
Eccles, V.	Rankeillour, L.
Elliot of Harwood, B.	Renton, L.
Elton, L.	Romney, E.
Faithfull, B.	St. Davids, V.
Ferrers, E.	St. John of Bletso, L.
Fraser of Kilmorack, L.	Saltoun, Ly.
Gainford, L.	Sandys, L.—[Teller].
Gibson-Watt, L.	Sharpies, B.
Glanusk, L.	Skelmersdale, L.
Glenarthur, L.	Soames, L.
Gridley, L.	Swinfen, L.
Grimston of Westbury, L.	Thomas of Swynnerton, L
Holderness, L.	Torphichen, L.
Home of the Hirsel, L.	Trefgarne, L.
Hornsby-Smith, B.	Trenchard, V.
Hylton-Foster, B.	Trumpington, B.
Killearn, L.	Vaux of Harrowden, L.
Lane-Fox, B.	Vivian, L.
Lauderdale, E.	Ward of Witley, V.
Long, V.	Westbury, L.
Lucas of Chilworth, L.	Wynford, L.
Lyell, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

6.38 p.m.

Lord Beswick moved Amendment No. 56: Page 36, line 36, leave out (" (notwithstanding any duty imposed on it by or under any enactment) ") and insert (" provided that the aforesaid directions do not impede or prevent the Corporation from carrying out duties imposed on it by any other enactment ").

The noble Lord said: My Lords, I beg to move Amendment No. 56. In the light of the decision which your Lordships have taken on the last amendment, I do not propose to argue this at length. I would ask the noble Minister whether he would not find it more possible to accept this amendment rather than No. 55. I propose to leave out the words, ('(notwithstanding any duty imposed on it by or under any enactment)')", and insert (`provided that the aforesaid directions do not impede or prevent the Corporation from carrying out duties imposed on it by any other enactment')". I wonder whether it has been possible for the Government to devise any answer to that? If so, perhaps they would be good enough to let us know their thinking. I beg to move.

The Earl of Mansfield

My Lords, I do not want to traverse all the paths we encountered in the last amendment. I have to tell the House that although the wording of this particular amendment is rather different from Amendment No. 55, none of the considerations to which I invited the House to have regard are in any way different from this amendment as they are from the other.

I hesitate to "mix it", if I may use a slang expression, so far as the construction of statutes is concerned, and particularly with the noble Lord, Lord Mishcon. I would only say that I do not agree with his construction of the way in which the Secretary of State could give a direction—a way which, for instance, might be contrary to the Companies Act in the way which he illustrated. Such a direction would be ultra vires in itself because he is not given the power to make such a direction. Having said that, I can only ask the noble Lord, Lord Beswick, to have regard to the arguments which we have all used in the last hour or so and, possibly, to withdraw his amendment for the reasons which I have stated.

Lord Beswick

I think the only conclusion that the House can draw is that there is no satisfactory answer to the amendment.

The Deputy Speaker (Baroness Wootton of Abinger)

My Lords, the Question is that Amendment No. 56 be agreed to? As any as are of that opinion say "Content"? To the contrary "Not-Content". I think the "Contents" have it. Clear the Bar.

Tellers for the "Contents" have not been appointed pursuant to Standing Order No. 50. A Division therefore cannot take place and I declare that the "Not-Contents" have it.

My Lords, Amendment No. 57 relates to Clause 35 and not Clause 34, as printed.

Clause 35 [General interpretation]:

6.47 p.m.

Lord Skelmersdale moved Amendment No. 57:

Page 39, line 9, at end insert— (""securities" includes shares, debentures, debenture stock, bonds and other securities of the company concerned, whether or not constituting a charge on the assets of the company;").

The noble Lord said: My Lords, as the Deputy Speaker has said, I regret that there is a misprint in the Marshalled List and the amendment refers to Clause 35. Noble Lords will recall that the amendments which we proposed to Clause 2 and 10—that is, Nos. 5 to 12 and 16 to 23 respectively, in last weeks Marshalled List—introduced the term "securities" into the Bill. This amendment defines this term and adds it to the other definitions given in the clause. My Lords, I beg to move.

On Question, amendment agreed to. In the schedules:

Schedules 1 [Provisions as to transfers of property, rights and liabilities]:

Lord Mackay of Clashfern moved Amendment No. 58: Page 40, line 8, leave out (" specified ") and insert (" prescribed ").

The noble and learned Lord said: My Lords, this is a minor drafting amendment. I beg to move.

On Question, amendment agreed to.

Lord Mackay of Clashfern moved Amendment Nos. 59 to 61 en bloc:

Page 41, line 40, leave out from beginning to (" contract ") in line 45 and insert (" a transfer to which this Schedule applies is a transfer of all property, rights and liabilities comprised in a prescribed part of the transferor's undertaking and it falls to be determined whether the rights and liabilities transferred include rights and liabilities under a particular contract of employment. (2) Rights and liabilities under the "). Page 42, line 3, leave out (" any particular ") and insert (" the ").

line 6, leave out sub-paragraphs (4) and (5).

The noble and learned Lord said: My Lords, with your Lordships' leave, I should like to take Amendments Nos. 59 to 61 en bloc. These amendments are necessary to take account of the Transfer of Undertakings (Protection of Employment) Regulations 1981 which came into force in full on 1st May, 1982. The regulations contain detailed provisions governing employees' rights where a business is transferred, which have now made some of the provisions in paragraph 3 of Schedule 1 unnecessary.

The amendments serve two purposes. First, Amendments Nos. 59 and 60 more closely define the rights and liabilities under contracts of employment to which paragraph 3 applies. They make clear that it applies to rights and liabilities under a particular contract of employment which is transferred together with a prescribed part of BNOC's or BGC's business. Secondly, Amendment No. 61 deletes sub-paragraphs (4) and (5). At present, these paragraphs provide for any disputes over the content of jobs offered to transferred employees to be referred to the industrial tribunals and, if necessary, to the Employment Appeal Tribunal. The regulations, however, separately provide for such disputes to be resolved through the normal industrial relations machinery and specific provision in this Bill is therefore no longer needed. My Lords, I beg to move.

The Deputy Speaker

My Lords, it is the usual custom, if three amendments are proposed en bloc, that the first should be put separately unless they are corn-completely identical. I therefore put Amendment No. 59.

On Question, Amendment No. 59 agreed to.

On Question, Amendments Nos. 60 and 61 agreed to.

Schedule 3 [Minor and consequential amendments]:

6.50 p.m.

Lord Skelmersdale moved Amendment No. 62: Page 53, line 46, at end insert—

("The General Rate Act 1967

4A.—(1) In subsection (3) of section 33 of the General Rate Act 1967 (British Gas Corporation) for the words from "the Corporation", in the first place where they occur, to the end of paragraph (c) there shall be substituted the following para-graphs—

1. " (a) the Corporation—
2. (i) supplied gas to consumers in that area; or
3. (ii)manufactured gas in that area; or
4. (iii)produced gas in that area by the application to gas purchased by them of any process not consisting only of purification, or of blending with other gases, or of both purification and such blending; or

(b) private suppliers (within the meaning of section 33A of this Act) supplied to consumers in that area gas which had been conveyed (whether within or outside that area) by pipe-lines belonging to the Corporation,".

(2) In subsection (7) of that section for the words "includes gas in a liquid state "there shall be substituted the words "has the same meaning as in Part I of the Gas Act 1972 ".

4B. After that section there shall be inserted the following section— Other suppliers of gas.

33A.—(1) The Secretary of State may by order provide that, in such suppliers cases and subject to such exceptions and modifications as may be prescribed of gas. by the order, section 33 of and Part 11 of Schedule 6 to this Act shall apply to premises occupied by private suppliers for or in connection with the supply of gas through pipes to consumers' premises.

(2)In this section—

• ' gas' has the same meaning as in Part III of the Gas Act 1972;
• ' private supplier ' means a person authorised by a consent given under section 29 of that Act, or by section 29A of that Act, to supply gas through pipes to consumers' premises.

(3)Any statutory instrument containing an order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.".").

The noble Lord said: My Lords, with this amendment I suggest it would be for the convenience of the House also to consider Amendments Nos. 72 to 74. The amendments confer enabling powers to amend rating law in so far as it relates to property occupied in connection with the supply of gas. At present, the British Gas Corporation is in effect the sole supplier of gas in Great Britain, but this Bill of course introduces scope for private companies to supply gas and to make use of BGC gas pipe-lines. In this new situation, the present rating law could give rise to anomalies and distortions. The amendments therefore empower the relevant Secretaries of State, those for the Environment and Scotland, to avoid such consequences by adjusting rating arrangements by order, as appropriate in the light of developments.

The amendments appear rather complex, but I hope I can explain fairly briefly the thinking which underlines them. At present, private sector pipe-lines are rated according to normal principles of valuation, while BGC pipe-lines are exempt from these arrangements and are rated instead on the basis of statutory formulae. These formulae adjust BGC's total rateable value each year in the light of the number of therms supplied by the corporation. The total rateable value is then distributed among local authorities according to a number of criteria. These criteria vary in detail between England and Wales on the one hand and Scotland on the other, but a major common element is the number of therms supplied by the corporation within each rating area.

With the advent of private suppliers, these arrangements could produce anomalies and distort competition between the BGC and other suppliers. For example, if a private supplier were able to use BGC pipe-lines exclusively in providing a supply, he would bear no rate liability, because he would occupy no rateable property. That would give him an unfair competitive advantage over BGC, and would have the arbitrary consequence that rate income to local authorities would vary depending on whether a supply was provided by BGC or by a private supplier using BGC pipes. The amendment to the General Rate Act 1967 therefore permits the Secretary of State to take a necessary preparatory step for the making of an order under the Local Government Act to the effect that the distribution of BGC's rateable value according to the prescribed formula should take into account therms of gas supplied by private suppliers using BGC pipelines, as well as therms supplied by BGC. The corporation would, of course, pass on the additional costs to the private supplier by including an appropriate element in the transportation charge levied for use of its pipe-line.

Similarly, it may be desirable to take account in the BGC rating formula of private gas supplies carried partly in BGC pipe-lines and partly in private pipelines connected to the corporation's system. However, one would then need to guard against the private supplier incurring a double rate burden, because his gas was taken into account in the BGC formula. Paragraph 4B of the amendment to the General Rate Act therefore permits private pipe-lines connected to the BGC system to be exempted from normal rating, so that private suppliers and the corporation are both in the same position.

Finally, there is the case of private pipe-lines which are not connected to the BGC system, and which, under present law, would be rated according to normal principles. If the valuations arrived at in the event result in a rate liability either markedly higher or markedly lower than would be incurred by the corporation in providing a similar supply, this too could distort competition between the corporation and private suppliers. The amendment to the Local Government Act 1974 therefore also permits formula rating to be applied to private pipe-lines used in connection with the supply of gas but not connected to the BGC system. The amendment to the Local Government (Scotland) Act 1975—Amendment No. 74—permits similar steps to be taken in Scotland. The amendment to the words "gaseous form"—Amendment No. 72—is a minor drafting improvement.

I hope that this brief explanation is sufficient to demonstrate that these amendments confer a flexibility which will permit the relevant Secretary of State to ensure equality of treatment between the corporation and private suppliers—indeed, to achieve that evenhandedness which a number of noble Lords have advocated at earlier stages of the Bill's consideration, and which I myself have. I beg to move.

Lord Bishopston

My Lords, we are grateful to the noble Lord for his explanation of this amendment. I should like to ask him two questions. The General Rate Act concerns local authorities and valuation. Can the Minister say a little more about the basis of valuation assessments for public or BGC pipe-lines and apparatus? With regard to the assessment of private pipe-lines, one can imagine the problem which will arise where the BGC pipes are conveying gas from the private sector. There will be a very close integration of the two and one wonders how the valuation of the two will be brought about. Secondly, may I ask what consultation has taken place with the local authority associations and others so far as the Government's intentions over the rating and valuation assessments are concerned.

Lord Lloyd of Kilgerran

My Lords, I, too, am very grateful to the noble Lord for his explanation of these amendments. In his explanation the noble Lord twice used the phrase "distorting competition", or "distortion of competition". The phrase is very common in the Rome Treaty in relation to competition law, in particular in Articles 85 and 86. May I ask the noble Lord whether he was using that phrase in the EEC context? Or can he give an assurance to the House that no problems relating to EEC enactments will arise? On a previous occasion I asked a question in general terms about the scope of some of these enactments and I was assured by the noble Earl, Lord Mansfield, that there was no question of any EEC matters arising. However, the phrases "distorting competition" and "distortion of competition" raise again my fears that perhaps this is a matter which the Minister has not quite appreciated.

Lord Skelmersdale

My Lords, "distortion of trade - is the actual EEC wording, and it seems that it has gone into parliamentary folklore. When I used just now the phrase "distortion of competition"—the noble Lord pointed out that I used it twice—it was in connection with straight distortion of competition between the British Gas Corporation on the one hand and potential private suppliers on the other. There are no EEC implications.

Lord Lloyd of Kilgerran

My Lords, I thank the noble Lord.

Lord Skelmersdale

On the specific and technical, questions regarding rates which the noble Lord, Lord Bishopston, asked, I am afraid that at the moment I do not have the answers. If I may be allowed to write to him, because the questions are somewhat technical, apart from anything else I shall make sure that I get my answers right. I hope that covers the points which the noble Lord raised.

Lord Bishopston

My only other question was about consultations.

Lord Skelmersdale

I cannot envisage that there would not be consultations, especially with my right honourable friends the Secretaries of State for the Environment and for Scotland. If there are not to be consultations, I shall let the noble Lord know in the same letter.

On Question, amendment agreed to.

Lord Skelmersdale moved Amendment No. 63: Page 54, line 17, after (" on ") insert (" or from ").

The noble Lord said: My Lords, this is consequential. I beg to move.

On Question, amendment agreed to.

Lord Skelmersdale moved Amendment No. 64: Page 54, line 39, leave out (" or by means of ") and insert (", by means of or on ").

The noble Lord said: My Lords, this amendment is consequential upon Amendment No. 48. I beg to move.

On Question, amendment agreed to.

Lord Skelmersdale moved Amendment No. 65: Page 54, line 48, after (" on ") insert (" or from ").

The noble Lord said: My Lords, this amendment again is consequential, this time upon Amendments Nos. 44 and 49. I beg to move.

On Question, amendment agreed to.

Lord Skelmersdale moved Amendment No. 66: Page 55, line 3, leave out (" the foregoing provisions of ").

The noble Lord said: My Lords, this amendment is consequential upon Amendments Nos. 45 and 50 and makes no change to the effect of the paragraph. I beg to move.

On Question, amendment agreed to.

Lord Sandys

My Lords, as my noble friend the Chief Whip announced earlier this afternoon that we would have an intermission at 7 o'clock, with the agreement of your Lordships I beg to move that further consideration of this Bill on Report be now adjourned until 7.40 p.m.

Moved accordingly, and, on Question, Motion agreed to.

[The Sitting was suspended from 7.1 p.m. until 7.40 p.m.]