HL Deb 04 May 1982 vol 429 cc1051-64

3 p.m.

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

My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.

Moved, That the House do now resolve itself into Committee.—(The Earl of Mansfield.)

On Question, Motion agreed to.

House in Committee accordingly.

[The EARL OF LISTOWEL in the Chair.]

Clause 1 [Oil Corporation's powers of disposal]:

Lord Bishopston moved Amendment No. 1: Page 2, line 2, after ("shares") insert ("not exceeding in value 49 per cent. of the total").

The noble Lord said: I beg to move the amendment standing in my name and in the names of my noble friend and the noble Lord, Lord Tanlaw. This is a very important and controversial Bill and is the legislative background for the privatisation of much of the BNOC and some of the British Gas Corporation. The oil-producing business of BNOC is to be transferred to a subsidiary called Britoil, and 51 per cent. of the shares are to be sold to the public. The Bill is an important one because it concerns a very significant aspect of our national resources—energy assets—and the Committee will want to proceed responsibly and constructively to look at some of the provisions within it.

In some ways Amendments Nos. 1 to 5 are all very much concerned with the control of the assets, with whether they shall be in the hands of the nation, as we believe they must be, or whether they shall be privatised and fragmented. This is an important measure, but in some respects it has little, or very little, to do with the enhancing of Britain's fuel and power policy, as one will conclude from the Minister's Second Reading speech. I believe that this is another Treasury Bill first and foremost, and it is designed to raise several thousands of millions of pounds to finance the PSBR. Having looked in detail at the clauses, one is bound to consider that any policy in relation to energy and power is a by-product of that particular aim, and this is of course a most disgraceful state of affairs.

In this regard it is like several other measures which have come before your Lordships in recent times. I have in mind the Forestry Bill, the aim of which was to enable the Chancellor of the Exchequer to take some money from the Forestry Commission's till when he needs some cash in order to cut taxation in other directions. The three objectives which the Minister mentioned on Second Reading made it clear that the Government wanted to cut down the public sector.

With the present international situation, which will of course make increasing demands on the Treasury, the Government might say that this measure is now even more important, but surely it is foolish to sell off capital assets at this time. The Government have given several reasons for their folly. As the Minister said on Second Reading, the Bill will be a major step forward in reducing the size of the public sector. The Minister said that the Bill's provisions concern the future wellbeing and development of vital energy resources. How true that is. But I am not sure that that is the main feature or object of the Bill itself. I noticed that the Minister said—and I quote—that the Bill's provisions "concern" the wellbeing of resources, and that can anticipate the effect being good or otherwise; the Minister did not say that the Bill was essential to the development of our energy resources.

I believe that the timing is bad. With our country involved in conflict, there has never been a time in recent years when we have had greater need of a comprehensive fuel and power policy, under national control. One may well ask: Is this the time to fragment this great industry, so essential in times of war and peace, and to let it go out of public control and into private hands? Many of us would say that in a time of emergency it should be accepted that the national interest justifies the overriding of private interest and makes essential the co-ordination of our resources, including vital oil and energy resources. Today we are beginning to discuss the fragmentation of vital national resources, and we are considering how they can be split, disposed of, and handed over with few conditions or restrictions, to the private sector for purposes of private profitability, at public expense.

In the measure the Secretary of State, whose name appears countless times on every page, is given draconian powers, many of them unspecified. It is the intention of some of the amendments tabled by my noble friends, myself and other noble Lords to probe the Government on these aspects, to find out what they have in mind, and to see whether the Secretary of State's powers can be restricted and, most importantly, to ensure that the Secretary of State should be answerable to Parliament for the powers that he wants under the Bill.

I am surprised that at the beginning of the Committee proceedings the Minister did not rise to state that in view of the emergency situation, when all our vital resources must be under public control, the Government are prepared to withdraw the Bill. That would be logical at a time when we are commandeering ships such as the "Canberra" and the "Queen Elizabeth" and other transport facilities and resources.

There seems to be very little justification, or indeed enthusiasm, for this measure. However, it is before the Committee, and the amendment that I am moving is of great importance because it involves a deciding factor as to who shall have control of this resource and how the control shall be exercised. As I say, our energy resources are vital in time of war, but are no less vital in time of peace, and we just do not know what the future holds. The Government are to sell off a majority interest in oil; not just a minor part of it. Indeed, disposals of up to 100 per cent. have been mentioned from time to time. Through the amendment the Committee will have the opportunity to say that if the Government must sell, if they are so determined to go ahead, the minor part of the shareholding shall be sold, and overall public control shall be retained. That is so vital to the public interest at this particular time.

The Government might reply that in a matter of control they can take a majority shareholding. Much has been made of this point as a means of enabling the Secretary of State to fly in and rescue the undertaking if the Government feel, or he feels, that things are not what they ought to be. One wonders whether the proposal to take this magic shareholding will meet with the Stock Exchange rules, and whether, despite the assurances given by Her Majesty's Government, the shareholding which the Minister may use is adequate to do what is required in every situation.

Indeed, the Minister said on Second Reading: Once 51 per cent. of the shares have been sold, Britoil will become a normal private sector company. The residual Government shareholding will not be used by Government to intervene in the company's commercial decisions".—[Official Report, 20/4/82; col. 468.] The Minister went on to say that there were safeguards against unacceptable changes in control. He said that they had been carefully drawn up "as reserved powers only"; and, of course, this is another factor which makes one doubt whether the Minister has adequate powers in any situation. He said that otherwise they would remain dormant. So this magic share may not be quite as powerful as one would hope.

On Second Reading in another place on 19th January, the Secretary of State said (col. 169): No industrial corporation should be owned and controlled by the State unless there is a positive and specific reason for such an arrangement. That is manifestly not so here".

We are not talking about a small undertaking of a minor or peripheral nature, but about one of the nation's major resources. The case for public ownership is not a doctrinaire one. Indeed, as my noble friend Lord Beswick pointed out in his detailed and convincing speech in the debate on The Public Sector: Privatisation and Efficiency in your Lordships' House on 21st April, public ownership has been advocated and carried through by leading Conservatives, and I do not need to remind your Lordships of who they were—BOAC, by Sir Kingsley Wood; the gas undertakings, championed by Geoffrey Heyworth, chairman of Unilever; coal, 32 years after Bonar Law urged that it be done; and, of course, Rolls-Royce aero engines and British Leyland were failing the nation not as public enterprises but as private enterprises, which made their public control essential in the national interest. So all Governments have recognised the importance of control of these great national assets.

Now the Government state time after time that private enterprise spells efficiency and profits while public ownership means inefficiency and losses. One can ask: is the case for the Government's policy based on such a claim? The answer clearly is "No", because, on Second Reading and on other occasions during debates in the other place, the Ministers have claimed that there has been a considerable success with the opening of new oilfields and with the workings of the corporation. Indeed, the Minister says that there was a considerable achievement in developing vital oil and gas resources.

The announcement was made by the Secretary of State for Energy on 19th October last year that 51 per cent. of the shares in oil production and the exploration side were to be sold to private interests, and one would have thought that, instead of there having been a considerable achievement, as the Minister put it recently, the publicly-owned oil and gas assets had failed the nation, that enormous losses had been made and that production had fallen, and, instead of being self-sufficient in oil, we were having to buy on world markets. Of course, we all know that that is far from being the case. BNOC's oil interests are thought to be worth over £12,000 million and rank only after Shell, Esso and BP in the list of companies operating in the North Sea; and in 1980 the pre-tax profits were over.£300 million.

The Secretary of State and the Minister of State in your Lordships' House have given no adequate assurances about the Government's ability to safeguard the public interest when selling off the majority of shares, and, in moving this amendment, I urge noble Lords to support us because this is a matter of great national importance. With a Government holding of, say, 10 per cent.—there could be any small figure you can think of—it means that the company and, of course, the Government themselves have no control of this asset. As I say, the Bill gives the Secretary of State massive powers without recourse to Parliament, and, unless there are safeguards written into the Bill that no more than 49 per cent. is to be sold, then Parliament has no control of an asset at a time when we should be seeing how we can tighten up in the national interest instead of allowing the industry to be fragmented in the private interest, whatever the public interest may be.

There are of course a number of other amendments on the Marshalled List which we shall be moving in order to deal with the sale of foreign assets and the size of assets which may be sold to particular people and companies, but I believe that this amendment, which is aimed to restrict the power of the private sector and to ensure that the public sector has the power, is absolutely essential in a Bill such as this, whatever views one may take as to whether the industry should be kept under public ownership or privatised. I beg to move.

Lord Tanlaw

In supporting the noble Lord, Lord Bishopston, in this amendment I should like to begin by saying that, as the noble Earl the Minister is aware, there was no Liberal representation during the Committee stage in another place. Therefore, I thought it would be for the convenience of those taking part in the Committee stage in your Lordships' House that I should add my name to a number of the amendments set down by the noble Lord, Lord Bishopston, and that that would assist in terms of efficiency of business. I hope that that will be appreciated.

Our support of this amendment is based not so much on concern over the possible takeover of Britoil as expressed by the noble Lord, Lord Bishopston. We on these Benches are fairly satisfied, as I said on Second Reading, that the golden shareholding, so called, is quite an efficient although quite an original blocking device, and can protect Britoil from any unwelcome predators or, indeed, unsuitable directors. But the reason for putting this amendment down is one which I do not think was discussed at all during the Committee stage in another place. The concern that we have is: what is the Government's intention by way of the future policy of Britoil? As has been said by the noble Lord, Lord Bishopston, the primary objective of Her Majesty's Government is to raise capital, and in principle we see no particular objection to that side. But, if the Government are not to retain a 49 per cent. holding and not to retain two directors on the board, as they have indicated so far, then they are saying, as I understand it, that the Britoil board is perfectly free to carry out any policy that it wishes.

I think that that perhaps may need a bit of explanation, because, if it is the intention of the Government to sell off the 49 per cent., which they have every right to do under the Bill as it will stand if this amendment is not accepted, that therefore means that the national element—that is, the Government's shareholding—will be gone, and the company will be free to carry on like any other multinational oil company. Therefore, the question I ask is: is it the intention of Britoil to be a national or a multinational oil company? I believe that this point has not been made clear, because we have not seen—I certainly have not seen—the prospectus of Britoil, and we do not know what are its aims and objectives. I believe that the future shareholders of Britoil will support it, perhaps mainly for patriotic reasons, others for purely fiscal reasons, but on the basis that Britoil is to be a national oil company. They have plenty of choice of other multinational oil companies which are already on the stock market—such as BP and Shell—in whom they perhaps already have shareholdings.

The importance of the 49 per cent. is directly linked to how the Government intend to use their directors to represent this 49 per cent. on the board. If they are merely to sit there—as I, perhaps unfairly, indicated during my intervention in the Second Reading debate—then I do not think they should be there at all. If they are there to take part in future policy-making, then it is important that the Government explain to the Committee and to future shareholders exactly where the company is going. I think that it is fair to mention a statement made by the current chairman of BNOC about the future of Britoil. He saw it as expanding in a global manner, becoming a global oil company with investments abroad. He made also a criticism of the taxation of British oil companies operating out of Britain.

If it is the intention to reinvest the profits overseas and become a multinational oil company, then I believe that this is rather against what was the intention of the Government in floating it. I see the 49 per cent. shareholding as a vital one to ensure for all shareholders and all taxpayers that Britoil looks after developing and exploiting British assets and resources in the North Sea first and foremost. At Second Reading, I said that there are commercial and political risks of taking shareholders' money abroad under a British national oil company and investing it in somebody else's national oil company or helping somebody else's national oil company exploit their resources. There may be commercial arguments and fair commercial risks in this and there may be greater rewards. But those Governments or the host Governments under which Britoil may be operating overseas might fall, might change their policy or might confiscate or acquire. Those are straightforward commercial risks; I do not pretend otherwise. But is this the role for Britoil? BP and Shell and other multinationals take these sort of risks every day. They put their money abroad and take the profits and losses. But is this going to be the future role of Britoil? I think that a lot of people will wonder about this before putting their money into it.

The Government shareholding of 49 per cent. is not there to be kept as a sort of piggy bank for the Treasury, or to be sold off in perhaps two or three years' time as another means to raise another tranche of capital. We see it as a vital part in protecting the Britishness of Britoil. I believe that this is the main function of the Government directors and that that is the main importance of the 49 per cent. which the noble Lord, Lord Bishopston, in his and my amendment is asking the Government to reconsider. I have looked through the stacks of papers on the Committee stage of this Bill in the other place and it is difficult to sift the dross from the chaff and to appreciate what is being said in this area.

I stand to be corrected, but I think that there is nothing said of what will be the future policy of the Government. Who will devise it? If the Government answer is that it is a public company, it is like any other oil company and can decide policies which best suits it or what it believes to be its shareholders, in terms of investment and of purchasing equipment from abroad or from British companies. It is fair enough to say that, but I ask: What is this 49 per cent. there for? Is it just to sit there and watch the company become non-British, or is it there to protect the Britishness of Britoil? That is what I believe most people imagine Britoil to be as a company; and they will put their money in it on that basis.

I want to put three main questions. Are the Government directors of Britoil going to give clear guidance in future investment policy to maximise the exploration and exploitation of British oil assets in the North Sea? Will they encourage Britoil to support British industry and purchase British equipment? Will they ensure that the head office, the registered office, of Britoil remains in Glasgow? I add that last point because if the role of Britoil becomes more multinational than national, the temptation will be to move the office to London where all the multinationals have their offices, in order to keep in touch with the rest of the world—something which they should be doing, anyway.

There is a further point. If the profits from Britoil from overseas investment exceed those from the United Kingdom, there will be a further temptation, if we can take at its face value the chairman's recent statement, to increase the return for shareholders; and they might even be able to move the head office offshore and it will become a non-British company, just as any other company can be entitled to do. And many other oil companies are known for this fact because of taxation problems in their host countries. What I said at Second Reading was that if the privatisation of BNOC is to mean foreignisation—and foreignisation in this case would not mean take-over by some sheik's Government but will mean investment overseas and turn Britoil from a national oil company into a multinational oil company—then I hope the Government will consider this point and expand on it in their reply, in order that we make a very clear decision about where the future of Britoil is to go based on the terms of this amendment.

Lord Underhill

For the reasons given by the last two speakers, I support the amendment moved by my noble friend. Reference has been made to the Government's retaining of 49 per cent. of the shares. The clause as drafted makes clear that the Government would have power to dispose of 100 per cent. of the shareholding. Admittedly, the Secretary of State has stated that there is no intention at present of going beyond 51 per cent.; but the power is there to dispose of the complete 100 per cent. shareholding; and as we have said so often in this House, what is important is not what is said about a Bill but what is written in the Bill. The power is there.

I think that the noble Lord, Lord Tanlaw, put some pertinent questions to the Minister. I would repeat what I said on Second Reading. Why should Britain of all countries be the one industrialised country that considers it unnecessary to have a state-held oil company? Again, on the Second Reading debate and during the debate on the Government's public ownership policy, it was said on this issue that there is nothing in the Conservative Party election address that gives them a mandate to dispose of the holding in our national oil company. I wonder what the electors would feel if they believed when they voted at the last election that they were in effect voting to dispose of this valuable asset which, for the reasons given by the two noble Lords, is essential to this country.

Looking through the Committee stage in another place, points were raised about the possibility of a controlling interest being sold to one or two individuals, and also to the question of shares being sold overseas. The Government, I understand, made it clear that the minority of shares that they held could be put into the position of having a majority decision. I must come back to what I said at the outset. Apart from the peculiar nature of that statement, the Government would have power to dispose of 100 per cent. How then would the Government be able to influence any decision by a minority holding from carrying the effect of a majority holding decision? They would have no holding at all if they decided, as the Bill provides, to get rid of the whole 100 per cent. Even if they held 20 per cent. or 15 per cent. the same position would obtain. Therefore, I believe that the Government have explanations and answers to give to the important questions which have been raised.

They should also refer to this very important issue that, notwithstanding what the Minister has said about disposing of only 51 per cent.—which we oppose in any case—there is provision in the Bill enabling the Government to dispose of 100 per cent. of the shares unless there is an amendment. The amendment is not proposing that we should limit the Government to a minority shareholding, but they should retain at least 51 per cent. for all the important national reasons which have been given.

Lord Davies of Leek

I want to take this opportunity briefly to support completely both the speakers. The reason is now more obvious than ever: by doing this the nation is selling its inheritance and no party, whatever its politics, should have the right to pass this oil so insecurely to other nations. The British public and the British nation must not think that it will be above sanctions. I can visualise, if we go on as we are going, that sanctions could be applied against this nation. If that oil is in the hands of other nationals, then the very oil that is ours in the North Sea could not reach this country when sanctions are applied. It is no good anybody laughing about it; we already have a relevant situation as a result of the Argentinian battleship having gone down.

In history we had exactly the same situation. In Palmerstonian days, in 1872 the "Alabama" was a naval vessel which was attacked. America afterwards brought this matter to international law. We lost the case in jurisprudence and had to compensate the American nation. That was in the days of Palmerston. Whether the modern lady who is ruling thinks she is Palmerston, I do not know; but I am pointing out that a nation without vision perishes. The party opposite, having done this to the oil industry, itself lacks vision and I hope that noble Lords on the other side, if this amendment is taken to a vote, will have the courage patriotically to see that the oil is kept British.

3.33 p.m.

The Earl of Mansfield

The noble Lord, Lord Bishopston, and indeed the noble Lord, Lord Tanlaw, carried out a review of the Bill which goes considerably further than the amendment. I do not blame either of them for that because it is quite a good idea to get some of these matters out of the way for the consideration of the Bill later on. When the noble Lord, Lord Bishopston, suggested that the Bill might be withdrawn because of the state which obtains in the South Atlantic, I was a little troubled, but luckily he caught my eye and he gave a great grin as he was saying it. I realised that obviously he was meant to be taken seriously, but not too seriously.

May I say to him and the noble Lord, Lord Davies of Leek, that the powers available to deal with emergency situations in relation to fuel supplies in this country are in no way affected by this Bill. It has absolutely nothing to do with it. Even if it did, we are not at war with Argentina. The operations which have been conducted in the South Atlantic are based on our own right to defend our own people in that part of the world, and Article 51 of the United Nations Charter covers that. I reject that if that is meant to be a serious criticism of this Bill and the Government's conduct.

Lord Balogh

Does the noble Lord the Minister realise that this precise point arose under Mr. Heath's Government? The instructions of the Government to the oil companies were completely disregarded.

The Earl of Mansfield

I have great respect for the noble Lord, Lord Balogh. I am sure that he will agree, on reading through the Bill, that it has absolutely nothing to do with emergency powers. The cleavage between this side of the Committee and those opposite is complete because on this side we believe, as I said on Second Reading, that there are compulsive arguments in favour of denationalisation in the interests of the country, in the interests of the oil industry, in the interests of this company and of those who work in it.

I am not going to weary the Committee with a restatement of all the arguments for denationalisation which have been put forward in this Bill, and in relation to other Bills. We have also had the familiar argument which I encountered in the Forestry Bill: that this is a rape of the nation's assets. I see the noble Baroness, Lady Jeger, is in her place. I am not going to go down that road again. There is a fundamental difference of view between the two sides of the Committee and I hope that each side will respect the view of the other. I realise that those opposite would prefer us not to sell any shares in this particular corporation or, failing that, they would like the new company—that is to say, Britoil—to be kept under public sector control. I have to state that this is not the view of the Government. Unless there are powerful and indeed compelling arguments to the contrary, we believe that industry should be free to develop in the natural environment of the market place. We believe that such competition leads to efficiency and innovation, and enterprise leads to success. There is nothing squalid about this at all. It is a view which we happen to take of how the economy can be best advanced.

I think I should come now perhaps a little nearer to the amendment. If it were accepted, it would be a major constraint on the Government's powers to sell Britoil, the subsidiary which is to be set up to take over the corporation's oil producing business. If the amendment were accepted, we would be unable to achieve our objective of selling 51 per cent. of the shares in the company.

May I say for the benefit of the noble Lord, Lord Underhill, that he is quite right, the Bill is silent as to proportions of shares which can be sold. But I hope to show that, whatever decision is taken by this or subsequent Governments, the consideration which really the Committee should consider in this matter—that is to say, the future wellbeing of the national interest, the company's interest, and the supply of oilcan be perfectly well safeguarded under the Bill as it now stands. It does not need this kind of slightly simplistic amendment—and I hope I am not being offensive in so describing it—to preserve the position.

A majority shareholding, that is to say a holding of 51 per cent., is not needed to ensure the continued independence of Britoil. Some members of the Committee may have seen the draft articles of the company which are available. They have been available for some weeks. They contain certain safeguards which can be used to secure it against unacceptable changes in control, whether these take the form of attempts to control its board or the composition of the board or to take over a majority of the voting shares in the company.

These are very important safeguards. They are attached to a single special share which will be held by the Government. I can assure the Committee that we have every intention of retaining this share. Indeed, I cannot conceive of any Government ever contemplating getting rid of it. Therefore, on the narrow ground of wishing to preserve Britoil's independence, there is really no case for this amendment.

Then one turns to the single large shareholder argument, which was mentioned by the noble Lord, Lord Tanlaw, in his interesting speech on Second Reading. We do not see that this amendment is necessary to protect the company against such a shareholder. Ownership is of course closely related to control, and this is a point which I think will possibly arise in subsequent amendments, so it may be helpful if I set out the arguments at this stage. I anticipate that we shall go rather further into the articles of association later.

The first point is that for anyone who wishes to build up a large shareholding in Britoil it would entail a major exercise involving an enormous investment of capital. Obviously I cannot put a figure on it, but it would involve hundreds of millions of pounds. That would be the sum involved, not to try to take control but simply to build up a large shareholding.

Secondly, it is hard to conceive of any shareholder embarking on such a project without wishing to have some say in the running of the company and becoming involved in an attempt to control the board and indeed its composition. That would trigger the safeguards in the articles, and we believe that those safeguards will act as a powerful deterrent. The noble Lord, Lord Bishopston—I am sure he will not mind my saying this—was slightly dismissive of what he called "only reserve powers"; but he should not be misled by that phrase. The safeguards would be triggered if there was an attempt to control the board or its composition, and therefore there is no question about their adequacy.

Apart from that, there are other ordinary provisions which anybody trying to build up a large shareholding would come up against; and I can mention three. First, there are the powers of the Government to make a reference to the Monopolies and Mergers Commission under the Fair Trading Act 1973. There are provisions in the code which would be triggered if any shareholder or shareholders acting together obtained more than 30 per cent. of the voting shares in Britoil. There are the conditions attached to petroleum production licences, which contain important provisions dealing with changes in control of a licensee. These may be brought into play where a party gains control of 33⅓ per cent. of the shares of a licensee. Quite apart from the safeguards in the articles, one is therefore driven to the position that anybody who wanted to set up a large shareholding in this company would face formidable obstacles and that would be made all the more difficult by the Government's declared intention of achieving a wide spread of ownership. So I think that one must retain a sense of perspective. No other privatisation measure passed by this Parliament has contained any such restrictions as are proposed in this amendment.

I have been asked a number of questions. I think the basic misunderstanding on the part of the noble Lord, Lord Tanlaw, if I can say this nicely to him, is that he fails to appreciate that when the Government say they are going to put Britoil in the same position as any other company of a similar standing in the private sector, the Government mean precisely what they say. Therefore, the future policy of the company will vest in the shareholders and in its board. If a course to invest in this or that undertaking commends itself to the board, then the board will be free to pursue its objectives just as the board of any other company. There is nothing mysterious, as I said to the noble Lord, Lord Underhill, about the 49 per cent.—

Lord Tanlaw

I am grateful to the noble Earl for giving way. If, in any other company on the Stock Exchange, a block shareholding of 49 per cent. is represented by two directors on the board, those two directors are expected to take part in the policy of the company. Is the noble Earl saying that this is the case with the Government's 49 per cent. of the shareholding, or is he not?

The Earl of Mansfield

I tried to say to the noble Lord earlier that there is nothing sacred about the 49 per cent. to start with. Any director will naturally take part in the deliberations and affairs of the board in precisely the same way as any other director. They are not going to be bound by some unspoken policy or indeed by a policy that is laid down. I think that is the answer to his question.

The noble Lord asked me about the head office and whether it is likely to stay in Glasgow. I can see no reason why the head office should not remain in Scotland. Before I entered the Government, I was a director of a very large insurance company which has stoutly maintained its head office in Scotland although—here I do not suppose I am releasing any confidences —two-thirds of its profits are in fact generated outside the United Kingdom and only a very small proportion in Scotland.

Then I was asked by the noble Lord, Lord Underhill, really going to the question of continuity of supplies of oil, why it is not necessary—I will put the question in this way—for this country, as compared with others, to have a state oil company with all that that implies. I must remind him of the various checks and balances in the issuing of licences and in the participation agreements which are made and have been made up to now in each round of licensing. There is no question of this country, as it were, being cut off because of a national emergency or at any other time from its supply of oil at proper prices. I hope that will also go some way towards assuaging the feelings of the noble Lord, Lord Davies of Leek. The Government have made their objectives perfectly plain. They have made clear their intention of acting responsibly in relation to Britoil and the continuing shareholding in the company. I am sure that it will not come as a surprise to the noble Lord, Lord Bishopston, who moved this amendment, and indeed to his noble friends opposite, that I cannot recommend the Committee to accept it.

Lord Beswick

I listened very carefully to what the noble Earl had to say, and I did not hear him say anything at all about the effect of this Bill, without any limitation such as is proposed in the clause, on those people who work for the corporation. What feeling are they going to have if they work a little harder, if their decisions are a little cleverer and if their success is that much greater, for are we not going to have the situation where the corporation is told to sell off even more?

There is known in industry the state where men have the feeling of working themselves out of a job. Here we are going to have exactly that feeling. The better they administer the company, the more certain it is that parts will be sold off, unless there is some limitation. Could the noble Earl please tell us whether any consideration at all was given to the feelings of those people who work in the corporation when they decided not to place a limit on the shares that could be sold? May I ask the noble Earl whether he is going to answer the question?

The Earl of Mansfield

I do not know whether the noble Lord, Lord Beswick, was in his place, but at the beginning of my remarks I said that the Government were quite convinced that this measure would enhance the interests of those who work in the corporation, and I stand by that. I do not see, merely because the ownership of the shares—or a proportion of them—is transferred from the public sector to shareholders, that the company is not given, as we say, every opportunity to expand, to maximise its profits, to pay the greatest salaries that it can and, generally, to have regard for the wellbeing and prosperity of its employees, in exactly the same way as I have no doubt it will for its shareholders.

Lord Balogh

Distributing the shares among small shareholders will not secure democratic control. On the contrary, it will be an oligarchy controlled by nobody.

Lord Bishopston

I believe that the Committee has listened carefully to the reply of the Minister on this very important amendment, which is on one of the most important matters that we shall be discussing during the passage of this Bill. I was serious when I said at the start of my speech that, in view of the international situation, I thought the Government might have been considering whether this was the time to fragment and hand out to private control vital national assets, which, in the public interest, should be under public control. I listened fairly, as I hope one always does, to see whether the Minister could assure the Committee that in the Bill, or in the articles of association, there was anything which would give the kind of guarantees and assurances which the Committee has been seeking this afternoon. But the noble Earl was unable to convince the Committee on this matter, which is of great national interest.

It is not a question of whether the Committee or individual noble Lords agree with public enterprise or private enterprise. The Government have chosen this particular time, when events internationally are what they are, to say that this is a matter which should still go ahead. There are other amendments down about assets falling under the control of foreign powers, and other important amendments, too. I am sure that the Minister has not convinced the Committee on this matter, and I urge my noble friends, and others who care for the national interest, to press this matter in view of the lack of assurances.

3.53 p.m.

On Question, Whether the said amendment (No. 1) shall be agreed to?

Their Lordships divided: Contents, 84; Not-Contents, 125.

Airedale, L. Jenkins of Putney, L.
Amherst, E. John-Mackie, L.
Amulree, L. Kennet, L.
Ardwick, L. Kilmarnock, L.
Aylestone, L. Leatherland, L.
Baker, L. Lee of Newton, L.
Balogh, L. Listowel, E.
Banks, L. Llewelyn-Davies of Hastoe, B.—[Teller.]
Barrington, V.
Beaumont of Whitley, L. McNair, L.
Beswick, L. Mishcon, L.
Bishopston, L. Molloy, L.
Blyton, L. Northfield, L.
Boston of Faversham, L. Oram, L.
Bowden, L. Paget of Northampton, L.
Brockway, L. Parry, L.
Brooks of Tremorfa, L. Peart, L.
Bruce of Donington, L. Ponsonby of Shulbrede, L.—[Teller.]
Byers, L.
Caradon, L. Reilly, L.
Cledwyn of Penrhos, L. Sainsbury, L.
Collison, L. Sefton of Garston, L.
Cooper of Stockton Heath, L. Shackleton, L.
David, B. Shinwell, L.
Davies of Leek, L. Simon, V.
Davies of Penrhys, L. Stedman, B.
Elwyn-Jones, L. Stewart of Alvechurch, B.
Ewart-Biggs, B. Stewart of Fulham, L.
Fisher of Rednal, B. Stone, L.
Gaitskell, B. Strabolgi, L.
George-Brown, L. Tanlaw, L.
Gladwyn, L. Taylor of Gryfe, L.
Glenamara, L. Taylor of Mansfield, L.
Gosford, E. Tordoff, L.
Gregson, L. Underhill, L.
Grey, E. Walston, L.
Hampton, L. Wedderburn of Charlton, L.
Hanworth, V. Wells-Pestell, L.
Harris of Greenwich, L. Whaddon, L.
Houghton of Sowerby, L. Wigoder, L.
Hunt, L. Willis, L.
Irving of Dartford, L. Wilson of Langside, L.
Jeger, B. Wootton of Abinger, B.
Airey of Abingdon, B. Dilhorne, V.
Alexander of Tunis, E. Drumalbyn, L.
Alport, L. Dudley, B.
Ampthill, L. Dudley, E.
Annan, L. Dundee, E.
Auckland, L. Eccles, V.
Avon, E. Effingham, E.
Balfour of Inchrye, L. Ellenborough, L.
Belhaven and Stenton, L. Elliot of Harwood, B.
Bellwin, L. Elton, L.
Beloff, L. Ely, M.
Belstead, L. Faithfull, B.
Bessborough, E. Ferrers, E.
Boardman, L. Ferrier, L.
Bolton, L. Forester, L.
Buxton of Alsa, L. Fortescue, E.
Caccia, L. Fraser of Kilmorack, L.
Campbell of Alloway, L. Gardner of Parkes, B.
Chelwood, L. Gisborough, L.
Clitheroe, L. Glenkinglas, L.
Cork and Orrery, E. Gormanston, V.
Cottesloe, L. Gridley, L.
Cromartie, E. Grimston of Westbury, L.
Cullen of Ashbourne, L. Hailsham of Saint Marylebone, L.
Daventry, V.
Davidson, V. Halsbury, E.
De Freyne, L. Hampden, V.
De La Warr, E. Hankey, L.
Denham, L.—[Teller.] Hawke, L.
Hayter, L. Portland, D.
Hill of Luton, L. Radnor, E.
Hill-Norton, L. Renton, L.
Hives, L. Robbins, L.
Home of the Hirsel, L. Romney, E.
Hylton-Foster, B. Rugby, L.
Ilchester, E. St. Aldwyn, E.
Killearn, L. St. Davids, V.
Kinnaird, L. St. Helens, L.
Lane-Fox, B. Sandford, L.
Lloyd-George of Dwyfor, E. Sandys, L.—[Teller.]
Seebohm, L.
Long, V. Selborne, E.
Lothian, M. Sherfield, L.
Loudoun, C. Sidmouth, V.
Lyell, L. Skelmersdale, L.
McFadzean, L. Smith, L.
Mackay of Clashfern, L. Somers, L.
Macleod of Borve, B. Spens, L.
Mancroft, L. Stodart of Leaston, L.
Mansfield, E. Strathspey, L.
Mar, C. Swansea, L.
Margadale, L. Terrington, L.
Marley, L. Tranmire, L.
Massereene and Ferrard, V. Trefgarne, L.
Melville, V. Trenchard, V.
Merrivale, L. Trumpington, B.
Mersey, V. Tryon, L.
Milverton, L. Vaux of Harrowden, L.
Morris, L. Vivian, L.
Mowbray and Stourton, L. Ward of Witley, V.
Murton of Lindisfarne, L. Westbury, L.
Newall, L. Windlesham, L.
Orr-Ewing, L. Young, B.
Porritt, L.

Resolved in the negative, and amendment disagreed to accordingly.

Lord Skelmersdale

I think that this might be an appropriate time to take the Statements. I therefore beg to move that the House do now resume.

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

House resumed.