HL Deb 04 May 1982 vol 429 cc1080-104

House again in Committee on Clause 1.

5.7 p.m.

Lord Bishopston moved Amendment No. 2: Page 2, line 3, at end insert ("other than one which holds any interest in any licence granted under the 5th and 6th Rounds").

The noble Lord said: It may be for the convenience of the Committee if I speak to Amendment No. 4 at the same time. We have decided on a vote not to amend the Bill to require that no more than 49 per cent. of the shares of BNOC are sold, and that is a setback for public control. As I said earlier, this measure is concerned with privatisation, but, regardless of whether one believes in public ownership or in passing on our oil and gas assets to the private sector, if we are to privatise those assets, there should be adequate safeguards to ensure that the public interest prevails.

As Amendment No. 1 is not to be written into the Bill, it makes it even more essential that the safeguards of these amendments are included. We are concerned here with the fifth and sixth rounds and the participation agreements. The amendments have been tabled to ensure greater control of our national oil supplies, because the Bill weakens control of the participation oil. The Secretary of State said in another place on 19th January in his Second Reading speech that participation rights were unassailable, yet, without the control which we seek, we cannot be assured of that in every licence and every field.

In the first to fourth rounds there is a 51 per cent. participation right, and despite variations on licensing and sell-back, there was assurance of the right of public control. But what will happen when the public oil rights are privatised? Unless the Government insist, as our amendment seeks, that the new Britoil company signs a 100 per cent. participation agreement covering that aspect of the oil, there will be loss of control for BNOC.

There is another aspect, in that private companies which are British may be taken over, as in the case of the Brae field, where I understand Marathon has been taken over by United States Steel, a company which I also understand has made no contribution to North Sea oil development. This situation can apply when shares fall into foreign hands. It is a matter of other countries gaining not merely the benefit of our national oil supply, but also the control that they buy with it.

Participation rights were part of an agreement after negotiations in the 1970s. The two parts were, the right to control 51 per cent. of the oil and, secondly, rights governing information from the oil fields, voting representation, and so on. In the first four rounds there is in most cases, such as BP, Esso and Shell, a majority participation right with, in some instances, the right of sell-back. There is, I know, concern about what happens to the agreements on privatisation of equity interest. It has been estimated that as a result of participation agreements (described by the Secretary of State on Second Reading) regarding the 1st to 4th round licensing arrangements, 65,000 barrels a day will be lost, with the possibility of a large daily barrelage being lost due to the issue of the discount and credit arrangements relating to the licences for the earlier rounds.

The Secretary of State says that the Government would protect participation rights, but I should like to ask how they intend to do so with the 5th and 6th round licences. Such rights are underpinned not by participation, but by equity, it seems, as BNOC has a minimum of 51 per cent. equity holding in all the 5th round licences. Can the Minister tell us how, if the 51 per cent. equity interest in the 5th and 6th round licences is privatised, control of the oil associated with those equity interests will be assured?

Finally, will the Government say what arrangements have been made for the 5th and 6th round licences? Are they to switch from royalty in kind to royalty in cash? Will Britoil use oil as a part of our nation's oil supply, or will it be mainly a matter of commercial consideration being put first? I believe that these matters are of great importance in this measure, and it would be useful to know a little more about the Government's thinking in these respects. I beg to move.

Lord Tanlaw

From these Benches we wish to add our support to the noble Lord, Lord Bishopston. We do not wish to add any further questions to the rather long list that the noble Lord has put forward, since those questions cover the questions which we wish to ask. In particular, we are interested in the mechanism which the Government are to use for the participation agreements, and I hope the Government will explain whether in this instance there is to be used a different mechanism that has not been used previously'

5.14 p.m.

The Earl of Mansfield

The Government see no reason to exclude BNOC's 5th and 6th round licences, which are part of its upstream business, from the provisions of the Bill, for reasons that I shall come to in a few moments. The Government's intention is to retain participation trading wholly in the public sector under the experienced management of the corporation's trading arm; that is of course BNOC. Participation trading makes an important contribution to the security of our oil supplies and it is therefore entirely appropriate that it should remain a wholly public sector activity.

The participation agreements with other companies will remain with the trading arm of the corporation, untouched by the scheme, which is designed to split the corporation's assets, and therefore it will be unaffected by the disposal of Britoil. So those participation oil rights—which I should perhaps remind the noble Lord, Lord Bishopston, are quite different from royalties—will remain in place and will be unaffected by the Bill, and no new participation agreements with other companies are required to secure them.

I come now to the 5th and 6th rounds, bearing in mind that the object of the exercise is to leave the public sector neither better off, nor worse off, than it would have been had participation been operated for the 5th and 6th rounds in the same way as it has been for the first four rounds. I shall not go through the mechanism of those rounds unless the Committee wishes me to do so. My right honourable friend has determined that there is to be required a participation agreement as between Britoil and BNOC, and the terms of the agreement will be settled before the sale of shares in Britoil. So putting it in another way, it is the Government's intention that the agreement will be in place before Britoil is floated, and therefore there really is not any necessity for the amendment. I should perhaps say that the summary of the participation agreement will, in the usual way, be placed in the Libraries of both Houses. The agreement will not be unfair to Britoil, nor will it affect its profitability in any adverse way. In common with all other participation agreements, BNOC will have to purchase Britoil's participation oil at full market price.

The noble Lord, Lord Bishopston, made a comment on the Marathon takeover. He was not quite correct. United States Steel took over the parent of the Marathon companies which have interests in the Brae field. It was a US takeover of a US company. The participation agreement with Marathon subsidiaries is not affected. I have spoken fairly briefly on the amendment, which relates to an important matter, but I hope that what I have said will go some way towards reassuring the noble Lord. I can go into very considerable details about the security of oil supply, if I am asked about it, but so far as the argument has been developed to date, I hope that the noble Lord will be reassured and will see fit to withdraw the amendment.

Lord Bishopston

Before the noble Earl sits down—I do not want him to go into too much detail—but I should like to ask him whether he would be kind enough to say a little more about the security of oil supply.

The Earl of Mansfield

Yes, of course, I am pleased to do so. The case for the Government is that our supply arrangements will not be adversely affected by our plans to dispose of BNOC's oil-producing business. I say that for a variety of reasons. First, there is BNOC's access, under participation agreements, to up to 51 per cent. of current North Sea production. As I have said, participation oil makes an important contribution to United Kingdom security, and obviously we wish to see it continue. It is for that reason that the trading arm of BNOC and the participation agreements will remain in the public sector under state control and these arrangements will not be affected by privatisation.

Secondly, there is BNOC's ability, given time, to redirect to Britain some of the oil that it exports in normal times. But it should be remembered that in practice not all of BNOC's oil can be added immediately to our supplies in a time of sub-crisis. BNOC itself has to dispose of its availabilities on the best terms possible in normal market conditions, and that requires a future commitment of supplies. Naturally we have enjoined BNOC to remain as flexible as conditions permit, but if a crisis suddenly appeared—as we all know it could—BNOC would require time to disengage from its commitments so as to free oil for use at home.

Lord Balogh

Does the Minister realise that there is not a market for oil in the sense that he is speaking about markets? These are monopoly and oligopoly situations, and, of course, can be influenced now without any active role on the part of the producer. BNOC will be hanging in the air, not knowing what the situation is in fact, neither the cost situation nor the price situation. Therefore, we shall be exposed to great losses in capital.

The Earl of Mansfield

With respect, I do not think the noble Lord has addressed himself to the point I am trying to make, which is to answer the noble Lord, Lord Bishopston, when he asked me about security of supply. What I was trying to say was that in certain circumstances BNOC, given time, could redirect supplies if for some critical reason it was necessary to do so. If I may go on, it should also be remembered that—

Lord Molloy

On that point of supply, what is distressing many people is that the price which is being offered in privatisation is roughly 20 years' supply at a rate of two years; in other words, the Government intend to sell off over two years the total amount of oil that it would take BNOC and the gas side of it 20 years to produce.

The Earl of Mansfield

I think we must distinguish between the supply of oil and the participation agreements which will ensure, as I have tried to say, that it remains under public sector control. This is the physical aspect of the matter. The price at which the oil will be bought by BNOC is in no way going to change as a result of this Bill. Its duty, so to speak, and its liabilities will not change at all. The price of the shares in Britoil is a matter to which the Committee has not yet addressed itself. This is an entirely different matter, and has nothing to do with participation agreements and, as I have said, the actual supply of oil.

Lord Balogh

Surely the Minister completely forgets what I have said before, if he ever understood it; and that is that there is no market in the sense in which we were talking about markets, in the neo-classical school, and as there is no market—or, rather, there are many markets—we have seen this ludicrous situation at the petrol pumps. First it went down and then it went up. What certainty can come from that kind of signalling? It seems to me that the Government have completely misjudged the situation which is actually present in the market for oil.

The Earl of Mansfield

I am well aware that at the moment oil is apparently in over-supply, but the situation could very well change. Then, as I am trying to explain to the Committee, I do not believe that the matters to which the noble Lord has addressed himself are in fact the conditions which would apply in the state of some critical shortage, which I have been trying to illustrate; but perhaps I can get on.

The effect of this is that BNOC could not supply oil products direct to the United Kingdom consumers. What it can do is to make more UKCS crude available to United Kingdom refiners. For instance, during the shortage of 1978–79, BNOC was able to add to Britain's supplies only in so far as these refiners responded by increasing deliveries to United Kingdom consumers. They did not all do this. In some instances the extra oil from BNOC appears to have been merely added to a company's pool of oil and to have been shared between the various national affiliates of that company on a basis of "equal misery". The extra crude then made little, if any, contribution to United Kingdom availability. This experience indicated that further arrangements needed to be made to ensure that UKCS licensees took fully into account the legitimate interests of the United Kingdom as an oil producer and, indeed, as a net oil exporter.

Things have changed so far as this objective is concerned; and matters, I think the Committee would agree, have changed markedly for the better since the Government took office. Many refiners and producers have offered helpful contributions, recognising their special obligations to the United Kingdom market in supply difficulties which do not trigger our international obligations under the IEA sharing scheme.

To sum up the answer to the question asked by the noble Lord, Lord Bishopston, the security of oil supply is based on what I might call a tripod. Most directly relevant are the assurances which we have received from refiners who directly supply the British market using both North Sea and imported crude. Then there is the matter I have related of BNOC's ability to repatriate to Britain some of the oil it exports in normal times, although it is not possible for it to cover all our requirements. Finally, there is a welcome recognition among a number of producing companies with no direct refining interests in the United Kingdom of our special position as a major producer of crude oil.

Lord Bruce of Donington

I wonder whether the the noble Earl would be kind enough to clarify one point. He will observe that in Amendment No. 4, which my noble friend suggested should be taken together with Amendment No. 2, it is proposed that at the end of line 3 there should be inserted the words: The Oil Corporation shall not and shall secure that each other member of the group does not dispose of any shares of an equity oil subsidiary before participation agreements have been signed establishing all existing participation oil rights and the products from licences secured from the Corporation". As I understood the noble Earl, he sought to reassure the Committee that it was the intention of the Government to do exactly that thing, and that therefore the words were unnecessary.

In many ways this is a remarkable Bill. The rights that the Minister is given under the Bill are very detailed and specific, but the obligations that he has, the constraints within which he may operate, are not dealt with so comprehensively. If it is the Government's intention to do this, then what harm is there in having it enshrined in the Bill? There can be no harm. The noble Earl may say that under the arrangement which I take it has been agreed with the Stock Exchange (because it will perform a very useful function in normal commerce and flotation where we have this single special share provision) powers are given to the Secretary of State to do a whole series of things. I will not enlarge upon those at the moment because they do not arise directly under this clause, but he may do certain things.

In fact, in certain circumstances which are defined in the articles of association of Britoil he can vote, and his votes automatically add up to one more than all the other votes cast. That, presumably, is put in as some kind of assurance that the Secretary of State's power is absolute. But there is nothing in the Bill, and indeed nothing in the articles, which requires the Secretary of State or the special shareholder to in fact assert those rights—nothing at all. The right is there, but the obligation is not there.

It seems to me that we must have a little more assurance than that, more particularly in view of the fact that Amendment No. 1 as moved by my noble friend Lord Bishopston—the 49 per cent, one—was defeated. In that, it emerged that there is no particular reason why the Government should stand on any particular percentage of a state holding. They can alter that if they wish. This leaves the Committee in a most unsatisfactory position. True enough, we cannot secure the re-argument of Amendment No. 1, but if it be true that the Government intend to comply with the requirement set out in Amendment No. 4, then I think that most of your Lordships would agree that it ought to be enshrined in the Bill.

The Earl of Mansfield

I think that one must distinguish between the articles of association of the company, which give the Secretary of State very wide powers in the event of certain things happening—and we shall come to that, as the noble Lord has indicated, and will discuss those things in due course—and these safeguards written into the articles and the question of participation agreements and the supply of oil under them which I think is rather a different matter. What I have sought to do is to show the Committee that, as far as rounds 1 to 4 are concerned, there will be no difference as far as BNOC's participation oil is concerned; that is to say, the participation agreements will be totally unaffected.

We come therefore to rounds 5 and 6. What I told the Committee was, first, that there is to be a participation agreement between BNOC and Britoil which will be similar to other participation agreements between BNOC and the other licensee companies. Secondly, I said that the terms of the participation agreement will be settled before the sale of shares, that the agreement will be in place before Britoil is floated off and that a summary will be published and put in the Libraries of both Houses so that there can be scrutiny by Members of both Houses. Given that situation, one must ask oneself what would be the advantage of Amendment No. 4 to which the noble Lord, Lord Bruce of Doning on, addressed himself. Given what I have related to the Committee, I cannot see that there will be any advantage in it at all. There is no reason to bring up the existing participation oil agree- ments once more and renegotiate them and, as I have said, the position in rounds 5 and 6 will be fully protected.

Lord Bruce of Donington

May I press the noble Earl further on that? He said that the agreements would be prepared and would be placed in the Libraries for scrutiny. Scrutiny is a fine thing. What would happen if noble Lords dissented from the agreements that are going to be put into the Library? It is all very well to be informed after the event. We are concerned with establishing the position before the events occur. What does the noble Earl say to that?

The Earl of Mansfield

To that, I say pretty well what I have said before: that all this will happen before Britoil is floated off, and therefore there will be adequate time to look at the participation agreement between BNOC and Britoil and to take any action which commends itself to the noble Lord or to anybody else.

Lord Bishopston

I am grateful to the noble Earl for his partial clarification. I think this is a matter of some importance which has not been adequately satisfied. I think it would be useful if the Committee were to return to this matter at a later stage. With those comments, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.35 p.m.

Lord Bishopston moved Amendment No. 3: Page 2, line 3, at end insert ("(otherwise than to a non-EEC purchaser)").

The noble Lord said: This amendment is an important one because it is concerned with the area to which the sale of licences may go. Here, again, the defeat of Amendment No. 1 (which meant that the public sector aspect is now not ensured) make this amendment more necessary because we are concerned not only about the sale of oil assets but about who may purchase them and whether we can keep control either through keeping a majority shareholding (and, as I say, that has not been accepted) or through shares being held in Britain. The Government have said that they aim to give British people and employees of the undertakings a chance to own shares. The Government made great play of this and said this is a form of public ownership in the best sense of the phrase. The British people can buy the shares and the employees themselves can have some shareholding.

If that is so, the Government should first ensure that the shares and control do not fall into foreign hands. My noble friends and I feel that to say that shares shall not be sold to foreigners generally may be held to be discriminating against the EEC. Hence the amendment is tabled in terms which take account of that. But I am sure that the Committee and the country would agree that it is essential to ensure that British North Sea oil does not fall into the hands of the Community, much less foreign powers. The Community has an interest in oil, and particularly in the oil supplies which are so abundant in our waters, and, at the same time, regardless of our partnership in the Community I feel that many British people will be saying, "This is our oil and we should keep it". However, having accepted that it may be discriminatory to say that sales shall not be made to foreigners, including the EEC, the amendment is phrased to take account of that. At this time of international uncertainty, it is unthinkable that a great British asset so vital to our wellbeing in peace and other times should be lost from British public control. The present international situation surely must be heeded and the safeguards of this amendment should be written into the Bill. A few moments ago the Minister clarified a point that I made about the Marathon Company; but I am sure that this does not change the situation; for whoever owned the company, whether the company was British or not at the start, there is nothing within the measure to stop shares from being transferred to foreign powers.

This is an aspect where clarification is sought not only by the Committee but by the country if we are to ensure that our great assets remain within our control. I should certainly like the Minister to clarify much more some of these points because they are of great importance. Whether or not the articles of association cover this point is something which he might detail in his reply. With those words, I beg to move Amendment No. 3.

Lord Tanlaw

I wish to expand on what I said in my Second Reading intervention in support of the noble Lord, Lord Bishopston. I gave an example of possible Middle Eastern investment interests having adequate funds to purchase the complete 49 per cent. from the Government holding. Some noble Lords expressed surprise that this was possible. But it is possible in two contexts: one is that there may be a desire through political or social unrest in the Middle East to diversify the energy investments held by companies and individuals in that area. Furthermore, exactly the same reason could be given for the United States to diversify or secure its overseas oil sources by making a large investment of this kind.

The noble Earl may say that this is a totally unreal and theoretical situation. But may I put it to him that the Government shareholder is different from any other shareholder whom we normally meet on the Stock Exchange—that is, an individual shareholder or an investment trust. For instance, if an investment trust wishes to make a large purchase or makes a placing of some sort, it is fairly limited in the kind of deal which it can secure between purchaser and seller. When the Government are the shareholders not only do normal financial dealing arrangements apply but there are other agreements that could be made which could be extremely beneficial to both parties to which a normal shareholder would not have access. I wish to make this distinction throughout.

The Government as directors and the Government as shareholders are different. They are more powerful and they have different objectives in some cases than normal shareholders and directors in companies quoted on the Stock Exchange. Therefore, if I may extend this theoretical concept of the foreign purchaser a little further: suppose the Government wished to sell their 49 per cent. shareholding—and it is clearly indicated that they have the right and may wish to do that—the purchaser may wish to buy it and it may be part of some other arms deal. It may be part of some other inter-government deal that is amenable to fitting into the Government's foreign policy or overseas trading policy.

Therefore, I believe that it is not unreal to say that the Government, to give an example, if they wished to raise cash from the United States to pay for some of the assistance that they are getting at this time, might do a deal with the Americans of the kind which I have described. That may be suitable. In that case, the Government shareholding is acting over and beyond what a normal shareholder—even an institutional shareholder—would be able to do.

All that I am really asking the noble Earl to do is to give an assurance that the Government, when acting in their 49 per cent. shareholding capacity, will first of all say that they will not sell to any non-EEC company, individual or any other interest, as this amendment provides. In that case, I hope the Government will accept it. Alternatively, if the Government will not accept the amendment, will they give an undertaking that they will act as any other institutional shareholder will act in this way, and act responsibly in the sense that this is a national oil company and they will not sell their very large holding to any other national interest or any other overseas financial interest for any reason whatsoever?

5.45 p.m.

The Earl of Mansfield

This is another amendment which seeks to put a fetter on the way in which the shares of Britoil are sold. The noble Lord, Lord Bishopston, in the first breath when he came to move the amendment talked about the sale of licences. I am sure that that was a slip of the tongue. What we are talking about is the sale of shares effectively in Britoil once it is floated off.

I am bound to say—and I am not being facetious about this—that it is difficult to see the logic and rationale behind this amendment. If I may be facetious for a moment, it seems to say that some foreigners are beastly, but that some are more beastly than others. In other words, if this amendment were accepted it would be perfectly acceptable to sell the shares to the Italians—and indeed to the Spaniards if they have joined the EEC by then—but not apparently to the Americans, who some people would regard as our staunchest ally in a sea of troubles. I do not see the logic of this. I suspect that the reason for framing the amendment in this way is that the noble Lord and his colleagues know very well that if they had banned the sale of shares to all foreigners, one could have said immediately that that was totally contrary to the Treaty of Rome.

Having said that, I must return to the more serious side of this matter. We are determined to sell the shares. The reasons why the Government have made their mind up in this way are now well known. If one wanted to accept this amendment—if one were minded to accept it—in other words, if there was anything in preventing non-EEC nationals or companies from obtaining shares, then this amendment certainly would not achieve that because the non-EEC national or company could easily set up a company within the EEC to purchase Britoil shares. They could arrange for nominees who were EEC citizens to purchase and hold the Britoil shares on their behalf. They could invite or ask EEC nationals to buy the shares and then after that initial purchase dispose of their shares to non-EEC purchasers, in turn. Therefore, not only is the amendment impossible to police but it would be quite ineffective to try to achieve the objective which the noble Lord has put forward, even if such an objective were in any way advantageous.

There are also the questions of possible repercussions. Supposing an amendment like this were written into the Bill. Do noble Lords opposite really believe that non-EEC countries would sit back quietly while their citizens were prevented from, as it were, buying shares in the United Kingdom company and continue to let the United Kingdom residents and companies buy shares in their companies? We would be inviting retaliatory action by non-EEC Governments which could involve discrimination against the United Kingdom citizens in their own stock markets; or such retaliatory action could focus on Britoil which might find itself faced with hostile foreign governments right from the earliest days of its existence. For a nation which earns its money by international trading I suggest that this would be a very sorry way indeed for Britoil to start as a trading entity.

What I am saying amounts to this: control of the company and what it does is one thing and the Government's power to regulate the North Sea and the oil supplies is another thing; but ownership of shares is a third. In my remarks to the Committee on the first amendment I touched on the way in which the Government will be able to stop any move either adversely to affect the board and its policy or to prevent a takeover taking place. Of course, ownership is important and the Government are not unconcerned about it. That is why we want to achieve as wide a spread of ownership as possible, and I hope and believe that a large number of British people will participate as owners of shares in Britoil. That is one reason why we are examining the most effective way of achieving the very wide spread of ownership that we want. But the safeguards against control and anything untoward happening so far as company policy is concerned are covered in the articles of association, as I have illustrated to the Committee.

I should like to say a word about the assurances which the noble Lords, Lord Bishopston and Lord Tanlaw, have sought. So far as the North Sea is concerned, the Secretary of State for Energy has a wide regulatory power over the development of the North Sea. That is contained in legislation and in the petroleum licences. These remain wholly untouched by the privatisation of BNOC or the British Gas Corporation's oil assets. He has power to ensure that all developments are carried out in accordance with good oilfield practice, that the recovery of oil and gas is maximised and that wasteful or inefficient development is avoided. He can set production limits for oil and gas in accordance with the national interest.

No submarine pipelines may be laid in United Kingdom territorial waters or in designated areas without his authorisation. No drilling of exploration or development wells can take place without his approval; no development work may be carried out and no petroleum may be produced except with his consent or in accordance with a development programme which he has approved. All petroleum produced from offshore fields must be landed in the United Kingdom unless the Secretary of State permits otherwise, and there can be no gas flaring without his consent. So I hope the Committee will agree, from the safeguards I have just recited, that there is a régime, so far as the regulation of the North Sea and the oil underneath it is concerned, which is wholly independent of the ownership of the oil-producing business of BNOC and the future ownership of shares in Britoil. I suggest that, far from being inadequate, it is more than adequate to protect our vital national and strategic interests.

The noble Lord, Lord Tanlaw, in effect claimed that the Government is different from other shareholders and if there were to be a second-stage sale in the Government's minority share of 49 per cent. of Britoil, he made a number of suggestions as to what he would like to see happen. My right honourable friend has made it clear that the Government do not intend to control the company or to use their rights as a minority shareholder to intervene or influence the company's commercial decisions. As I said earlier, it is intended that this company shall behave in all respects as any other public company in the private sector. There are these two points then: first, the control of the company and its affairs; and, secondly, the control of the petroleum underneath the sea. I hope I have shown that there are perfectly adequate safeguards—in fact more than adequate safeguards—so far as the protection of both is concerned.

Lord Wynne-Jones

I wonder whether the noble Earl can help me a little. I realise, of course, that like most people who have to speak from his Bench on energy matters he is not himself specifically concerned with energy. In other words, it has to be taken up on the side, and we have noticed frequently that because of this the Government have been at a certain disadvantage in dealing with energy matters. But a general problem arises here, which is not just an energy problem. The noble Earl has been explaining that it is the intention of the Government in this Bill to make the actual working of the new company as private as possible, exactly like that of any other company—I think those are almost the words he used. At the same time, he is in a somewhat difficult position because he tries also to explain that the Government will have complete control, will be able to do everything they have done in the past, and that consequently the company cannot be a completely free company. In fact, it would be a very dangerous thing for a government of this country to set up such an entirely free and independent company by devolving the rights of the government and of the country itself.

So the noble Earl is in the very awkward position that, on the one hand, he has to explain the great advantages of this completely private and independent control—a control which the Government have no way of influencing, and should not have—while at the same time, mysteriously, the Government are able to control it. The Government have full control. What is the noble Earl trying to say? What is he trying to kid us in this Committee that we are doing? Is he trying to pretend to us that on the one hand we are setting up one of these wonderful examples of public enterprise made private, or something which will be so superior, and at the same time there will be full control over it by the Government?

Something is wrong in that argument. Where indeed is the nigger, if I may so put it, in this woodpile? What is he trying to tell us? Is he trying to say that actually national interests would not matter, or is he trying to tell us that a private company defends national interests rather better than at least this Government do? What is he trying to say? I find his arguments completely unconvincing, and they bear no relationship at all to the world in which we live. He is talking about things which are the pure fantasy of those minds which are determined at all costs to put private profit before everything else.

Lord Ross of Marnock

I wonder whether I can just say a word. It surprises me that the Government want to control or to have any participation at all in any of these oil companies, because, having got it—and this is one of the things that were supposed to satisfy us and still our fears—the Government go on to say (and I am quoting the actual words of the Minister) that they: do not intend to control the company at all". Then why not dispose of the whole lot? If he is satisfied with the safeguards that he has for the carrying out of the exploration and exploitation of the oil, in the rate of supply and the rest of it, that is surely the implication.

The one statement which the Minister made that was absolutely clear was, "We are determined to sell the shares". But then he is caught up with something else. Among the public at large there is a feeling that these shares and these companies are of some importance, because of the wealth produced. Other countries, which have recently participated in the North Sea, have made no bones at all about nationalisation. After all, it was a Tory Government which nationalised the bed of the North Sea, but they shirked the business of going on with the exploitation of the wealth there. They said, "It does not matter about that. "But to allay the feelings of the people, they said, "We will make as wide a spread of ownership as possible."

But the Minister proved that he cannot, as things stand, safeguard that position. We do not need even his word. All we have to do is to look and see what has happened to the disposals in other interests that have been made. They did not get a widespread take-up of shares, but within a few days there was a concentration of ownership, and the same will apply here. Why do they do it?

The great weakness of the Government's case is their desire to get widespread ownership. It is not at all like any other company. This is considered by the people of this country to be a considerable ownership of wealth by the nation. That is the widest spread of ownership you can possibly get, and it is being undercut by the Government's determination to sell the shares. That is where it begins and that is where it ends.

The Earl of Mansfield

The noble Lord, Lord Wynne-Jones, said that he was going to ask me a question. Eventually, it seemed to come down to where in the pile of wood is what, when I was at the Bar, used to be called the man of colour. I am not sure whether he really expects an answer, because the matters which he has raised in this debate go back to the ideological differences between one side of the House and the other. The noble Lord and his colleagues opposite do not want these shares to be sold, they do not believe in privatisation and they cannot accept that the company, Britoil, when it is floated and its shares are sold, will get on better and in a more effective way than heretofore. Therefore, nothing that I have said—and it matters not at all, so far as the geographical location of my ministerial office is concerned—will convince him one whit. Incidentally, may I greet the noble Lord, Lord Ross, on a non-Scottish Bill. What I have tried to do—

Lord Ross of Marnock

If the Minister will allow me to intervene, this is not a non-Scottish Bill. BNOC is sited in Scotland. It is very much a Scottish Bill, and his department has a lot to do with the whole organisation and with getting it going. The noble Earl knows that better than anybody else.

The Earl of Mansfield

Methinks that the noble Lord doth protest too much. The Bill did not go into the Scottish Standing Committee in another place, and the noble Lord knows that as well as I do. As I have tried to say, we have to distinguish between the shares and the oil which is produced, and which will be produced in the future. What I have tried to do is to show the formidable battery of means which the Secretary of State for Energy has at his disposal to see to it that nothing untoward happens, so far as the disposal of shares in Britoil and the future policy of the board thereafter are concerned. He has certain reserve powers, if there should be a takeover bid, or a bid for a block of shares which he thinks should be investigated and, possibly, blocked in the public interest. That is something which is contained in the articles of association and, no doubt, we shall come to it in considerable detail.

I have also tried to relate, comparatively shortly, in regard to the claims which have been made by opponents of this Bill that, in some way, by privatising BNOC the Government are prejudicing the supply of oil to this country or the destination of such oil, that all the checks and balances which exist at the moment will still be there. It is, I suggest, a formidable array and that taken with the special share which I have already discussed, should provide all the safeguards which Amendment No. 3 seeks to write into the Bill. The noble Lord, Lord Ross, asked: Why not sell all the shares at once"—

Lord Ross of Marnock

I did not say "at once".

The Earl of Mansfield

The noble Lord implied it. The sale of shares will proceed in an orderly manner and the amount of money raised will be consistent with the value of the assets which, in effect, are being sold. That is one reason why the Committee may agree that this method which has been adopted by the Government in respect of privatisation of this part of the public sector, is one which will achieve just that.

Lord Bishopston

We have had a useful debate on this amendment and the Minister has been pressed to clarify the situation. I am afraid that, in many ways, his reply did not come up to the expectations of the Committee, especially as the Government originally suggested—I made this point earlier—that the Bill gives opportunities for wider share ownership among the public and the employees. Some of the points made in the debate are of very great importance, particularly concerning the need to ensure that these assets are retained in British hands and under public control.

This is a matter to which the Committee may care to return at a later stage, but much will depend upon the Government's response to succeeding amendments, particularly the next amendment which I shall have pleasure in moving in a few moments, and which concerns the powers of the Secretary of State. Of course, in that respect the opportunity which both Houses may take could make it possible to put in some of the safeguards which were detailed in this amendment. As I said, this is a matter which should be returned to at a later stage but, in the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 4 not moved.]

6.9 p.m.

Lord Bishopston moved Amendment No. 5: Page 2, line 10, at end insert ("and pursuant to an affirmative resolution of each House of Parliament").

The noble Lord said: This amendment is of very great importance and, judging by the amount of feeling in the other place and, indeed, in the country among many organisations, there is real concern about the lack of accountability of the Secretary of State. I have refrained from repeating many of the arguments which were used in the earlier stage of the Bill and I do not intend to go into too much detail on this occasion, but that should not hide the importance which I attach to this amendment. It relates to Clause 1, page 2, line 10, and inserts the words on the Marshalled List.

It is important to look at Clause 1(2) which we seek to amend. Clause 1 relates to the oil corporation's powers of disposal. Subsection (2) says: The Oil Corporation shall not, and shall secure that each other member of the group does not, dispose of any shares of an equity oil subsidiary except with the consent of the Secretary of State and in accordance with any conditions specified in the instrument signifying his consent; and the Secretary of State shall not give any such consent except with the approval of the Treasury". The words of Amendment No. 5 which I am now seeking to insert would add the words "and pursuant to an affirmative resolution of each House of Parliament". This is of very great importance.

In Clause 1(2), reference is made to the Secretary of State giving consent with the approval of the Treasury. The words "the Secretary of State" appear many times throughout the Bill. During the recent weekend I had hoped to go through the Bill to detail exactly how many times the words "the Secretary of State" "are mentioned. If one looks at Clause 3, subsection (1) says: The Secretary of State may, after consultation with the Oil Corporation, give directions to the Corporation requiring it to exercise its powers …". Subsection (2) says: For the purpose of facilitating a disposal … the Secretary of State may by Order provide that, in its application to any equity oil subsidiary specified in the order,…". Subsection (3) says: Except in so far as the Secretary of State, after consultation with the Oil Corporation, otherwise directs …". Subsection (4) says: The Secretary of State may by order transfer to himself or a nominee of his any shares of a company…". And subsection (5) again mentions the Secretary of State. Although we are not debating Clause 31, this is a clause under which the Secretary of State can use extraordinary powers. Clause 31 says: … it shall be the duty of that Corporation (notwithstanding any duty imposed on it by or under any enactment) to comply with the directions of the Secretary of State. In other words, the Secretary of State can overrule powers being exercised by the BNOC in keeping with Parliament's demands. So the Secretary of State has power over Parliament. I am sure that Members of both Houses are extremely jealous of their powers and about the need for Ministers to come back to the House to say how they want to exercise the powers bestowed upon them by Parliament.

This amendment therefore concerns the vital aspect of accountability. That is what it is all about. In the last hour, we have had two Statements about the Falkland Islands. The Ministers have had to come back to both Houses and account for the stewardship of the powers vested in them. Here is an undertaking which, for various reasons, is being handed over to private enterprise, which is outside public control. The only link we shall have with the changed situation will be the one whereby the Secretary of State can intervene in any way he wishes—if he wishes to do so. I believe very strongly, and I am sure noble Lords will agree with me, that this is hardly good enough when you are talking not about something of a minor nature or of minor value but about something which, as I have said, is a great national asset upon which the industrial and domestic life and, indeed, the security of our country depends.

The amendment requires the Secretary of State to be accountable in the case of Clause 1, which covers the oil corporation's powers of disposal. It requires an affirmative resolution, not a negative resolution or, as the Bill puts it, no resolution whatsoever. The Secretary of State needs only to consult the Treasury. And that is the Government. It is the Secretary of State's fellow Minister, the Chancellor of the Exchequer. I am not sure that even that is involved. It refers to "the Treasury" which, apparently, means officials, unless the Chancellor or the Treasury Ministers wish to be involved. So the Secretary of State has a free hand.

The House has already agreed that it does not wish to put any limitations on the Minister regarding the majority shareholding to be held in the national interest. We have just debated an amendment concerning the sale, or non-sale, to non-EEC countries whereby some power can be taken away from the national scene. Under this clause, BNOC's trading corporation will presumably submit reports to Parliament, but I do not think that the clause says so. Even if it submits reports to Parliament, there is no assurance that those reports will be drawn to the attention of the House by means of debate. We all know that many public corporations and other bodies have, quite rightly, to submit reports to Parliament, but the pressures on Parliament are often such that there is no detailed look at the reports to see whether Parliament wishes to express any point of view whatsoever. So once the Bill is passed and becomes an Act of Parliament, we may hear no more about some of the matters which are concerning us today and which will be concerning us during the future stages of the Bill.

When control through privatisation is lost, many noble Lords on both sides will, I think, agree that it is even more essential that the Secretary of State should come to the House with his proposals for positive vetting and discussion and ascertain the views of the Members of both Houses. This is the minimum which we should require. The Bill gives to the Secretary of State massive powers, including the power to exercise them in any way which he thinks fit. Yet, this vitally concerns our national interest, especially in the case of this great resource. I believe it is essential that the Secretary of State should have to seek the approval not only of the Treasury but also of both Houses of Parliament in an affirmative resolution.

It might be said that a negative resolution would be good enough—in other words, that we may need only to debate it if we feel that it is necessary to do so. But we all know that hundreds of negative instruments are tabled throughout the year in both Houses. Many of them are unknown to the Members of both Houses. Very few of them are debated because of the pressure of time. We believe that this is a matter so important that the Secretary of State should have to come to both Houses and submit his recommendations, or his requests for power concerning policies he wishes to implement, in order that we can be aware of what is happening in these important circumstances.

Although the Minister has made play already on the articles of association—undoubtedly in the future we shall hear very much more about them—I wonder what the status of these articles happen to be, because they are not part of the Bill. Although the articles set out in very great detail how the British National Oil Corporation, the British Gas Corporation and others concerned with it, and indeed the Secretary of State himself, shall behave, they are not of any legislative value, apart from the legal requirements, such as they are in these circumstances.

I believe there is concern, and more than that, anger, among the public about the disposal of our assets. We had the case of Amersham International. I do not want to go into that case now because it may arise on a later amendment, but here was a case where the Government took action on the disposal of assets—not only of a very successful nationalised concern which has been leading the way with biotechnology, science and other technological advances, but one which has done so profitably as well. Amersham International was not only sold off—it was sold off in a way which caused the gravest concern and disquiet throughout the country. One has only to read the financial press and other newspapers to learn how those who have supported the Government on many of their policies have expressed their concern.

This situation could be repeated, not only with this particular measure but with other measures as well. In this amendment to Clause 1, we are saying that it is essential that both Houses of Parliament shall be aware of what is going on and that some of the concern and anxiety which we have expressed already might be lessened to some extent if we were sure that the Minister will come and tell us what he wants and why he wants it, and obtains the approval of both Houses. This is a most important amendment, and I believe it commands the support of Members on both sides of the House who believe in the essence of Parliament—which is, accountability.

6.23 p.m.

Lord Tanlaw

I entirely agree with the noble Lord, Lord Bishopston, that this amendment goes somewhat beyond this particular Bill to matters of principle about where the House should stand in relation to powers given to the Secretary of State. It is certainly the view on these Benches that the Secretary of State has in this instance over-armed himself with almost too many powers in some areas where it is quite unnecessary to do so. Yet he seems to have under-equipped himself in those areas in which, in the previous amendments, we believe protection is necessary.

The noble Earl said earlier that he was being facetious. I hope he will not think that I am being facetious as well when I ask him, what is the relationship between the Secretary of State and the Treasury? I ask him this because the present Secretary of State the right honourable gentleman in another place, came from the Treasury. This is basically a money Bill and the question one asks oneself is, who actually wrote this Bill? Did this Bill emanate from the Treasury or did it come from the Department of Energy?—because almost every clause is there to raise money; not to reorganise and restructure either the oil industry or the gas industry. This is one of our objections to this Bill. Will the noble Earl explain in more detail the relationship between the Secretary of State for Energy and the Treasury in respect of this particular Bill which is so special that it requires these extra powers? If these powers are not necessary, surely the noble Earl will find it quite easy to ask for matters to be brought back to Parliament for an Affirmative Resolution?

It is a very reasonable amendment requiring that the checks and balances about which the noble Earl has been speaking should come back to both Houses. After all, this company was given birth to by both Houses of Parliament and so why should it not return to Parliament when it reaches certain stages? Britoil would not exist were it not for the Houses of Parliament; it is not quite like any other ordinary company. Before we give this company its complete freedom—which it is empowered to have by selling off at what is called the Stage 2 sale of the balance of 49 per cent. of the shares—it should come back to Parliament.

The noble Earl's statement was extremely helpful in the way that he split up the different sections of the Bill. Just talking of the shares, the noble Earl said that the Stage 2 sale of 49 per cent. of the shares would not take place now, immediately, but after, one imagines a passage of time. This is a passage of time whereby Britoil would be in being with its new board and with its new shareholders. We will have had some time to see how it interprets its terms of reference and how it gets on as a commercial company.

The noble Earl was also very helpful in explaining that the two directors appointed by the Government are no more than "sleeping partners". He said, if I understood him correctly, that they would take no part in the executive decisions of this Bill. So will he please confirm that they will be non-executive directors and will therefore take no part in the policy of the company? I presume also that they will only be paid as non-exeucutive directors in this case.

When the time comes for the Stage 2 sale, suppose that people are not satisfied with the way the company is going. Suppose that it has become too "foreignised". Is it not right and proper that it should come back to Parliament to ask to sell the balance of 49 per cent., or indeed for Parliament to ask those directors to give an account of themselves as to how they have taken on the trusteeship of the taxpayers' shareholding during the passage of time during which the company has been in operation? Bearing in mind that Parliament gave birth to this company, I believe that when it reaches adolescence—to continue the analogy—and is selling off the 49 per cent. shareholding and becomes completely privately owned like any other company quoted on The Stock Exchange, then I do not see any harm in having it come back to Parliament. I am certain and would like to think that the company will have done very well and that it will get an Affirmative Resolution and consent—but why prevent that from happening?

I do not see any point in giving this power to the Secretary of State. This is one of many examples of the Secretary of State retaining this power. It implies that we are not allowed to have a look at how things are going or to decide what the next stage of the Government's capital-raising will be. I would like the noble Earl to explain very clearly the relationship between the Secretary of State and the Treasury and what in his view gives the Treasury greater power than either House of Parliament in how the second stage of this company, Britoil, should develop.

6.28 p.m.

Lord Ross of Marnock

I do not doubt that the noble Earl the Minister will reply that this is no way to run a company; that a company cannot wait to get the approval of Parliament every time it wants to sell shares, and that the whole operation has to be run like a normal company. My answer to that is that it is not the company that has to sell the shares but it is the British National Oil Corporation. Indeed, Parliament is being very generous in Clause 1(1) where it says in the Bill that the oil corporation shall have power to provide for the disposal, in such manner as it thinks fit, of any shares of an equity oil subsidiary". Then there were second thoughts about that and it was said that it was not as the oil corporation thought fit at all. In fact, if we really believe in this kind of legislation we should have taken those words out. It would have been more honest if we had taken those words out because it is not a matter of "if the corporation thinks fit" but as the Minister, with the approval of the Treasury, thinks fit. Who is going to get the blame if anything goes wrong? Are BNOC selling as they think fit?

It is not only the newspapers talking about how things have gone wrong in the disposal of shares; we have the Public Accounts Committee in the other place telling us what a mess they have made of it. The reason for this amendment is because we just do not trust the Government or the Secretary of State; they have made such a mess of it in the past that we say they should bring the thing here, I know it will come from the Minister that this could not be done.

A noble Lord

He is not listening.

Lord Ross of Marnock

Oh yes he is listening, do not worry. He is probably going to be listening for the whole of this Session judging by what is coming up from another place in the way of Scottish legislation. In any case, there we have the Lord Advocate listening to every word that falls from my lips. I know that he has probably got to leave us to look after the Moderator when it comes to the General Assembly of the Church of Scotland, but while we have him here we want him to bring his mind to this.

How can we trust a Government that says it is giving power to BNOC to do as they think fit and then in the next sentence says, "You will only do it with my consent and in giving my consent I can put in any direction, any conditions that I like". Parliament has no say in the matter. It may well be that the way this is drawn up could be impractical, but at any rate we want to know the principles on which they work. We may want to know from company to company how they are going to dispose of certain blocks of shares at one time or another. Parliament has a right to know. We have been told very little so far. Of course, we are only at the fifth amendment, and in pleading the fifth amendment I want to ask for more information. The best way to get it is through an instruction which is part of an order that has come to Parliament. Then we shall be able to discuss it. Then, if they get the approval of Parlaiment, they can do what they cannot do at the moment, they can blame Parliament. If they get the approval of Parliament it is far better than the approval of the Treasury. Although the Treasury is mentioned last in this subject, I can assure your Lordships that they will be the first, they will be the people doing the prodding and the Minister will have to follow their dictates. Then BNOC, which is of course in Glasgow, will have to do as it is told by its new masters, the Treasury and the Minister.

Lord Underhill

Although we are dealing with Clause 1, reference must be made to Clause 31, which provides that, wherever there is provision for an order under the Bill, it shall be by negative procedure—that is, for all the powers given to the Secretary of State. And the same clause makes clear that, where the Secretary of State gives a direction to both the oil and gas corporations, those directions must be carried out—no dubiety about it. Undoubtedly we shall be told by the noble Earl that Ministers will, of course, act reasonably. But, as we have said on other Bills, no matter how we might trust the present Secretary of State the power is there for any Secretary of State to give directions. If power for disposal is taken under Clause 2, which carries out the provision of Clause 1, and the BNOC decides on a scheme for disposal and the Secretary of State gives his consent, as needed, I understand that there will not be even a negative order. Therefore, Parliament will not have the opportunity under that provision to debate the matter at all.

I understand, reading the report of the Committee stage in another place, that the Minister concerned agreed that action under Clause 1 does not require a negative order. The amazing justification for that was because the other place had agreed on Second Reading to the principle of the Bill and therefore there is no need for the matter to be discussed again by Parliament. That seems to me a most amazing statement, and I do hope the noble Earl will not give that justification. As my noble friend Lord Bishopston has said, we shall undoubtedly be dealing with Amersham International later on, and not only Amersham International but Cable and Wireless and British Aerospace. When we realise what happened within a few days to those shares—and this will be coming up on a later amendment—then obviously not only Parliament but the ordinary man in the street will want to know the details of a scheme before it is actually introduced.

The last point I make is that the noble Earl did say that details of participation agreements would be made known before shares were sold. He said that details will be in the Library and will be able to be scrutinised. But, if the Minister agrees to the scheme that BNOC proposes, there is no negative instrument, and therefore there is no procedure to be discussed; although you can scrutinise them, you cannot discuss the matter. I hope the noble Earl will clear up that matter also.

Lord Beswick

I wonder whether I may ask the noble Earl whether he has read a letter in today's Times from Sir John Wood about the principles and the reasoning behind the reorganisation of British Airways. Would the noble Earl tell me whether he has read that letter; would he tell me if he understands what that letter says; and would he confirm to me that the essence of that letter is that one must define responsibility, that one must get in any industrial organisation a clear understanding as to where responsibility lies? I found that letter from Sir John Wood a very compelling and very persuasive letter. I do hope that if the noble Earl has not read it he will promise me that he will go and read it. Then I would ask him how can he reconcile what is being done in British Airways, aimed at establishing responsibility, with the wording of this Bill?

I agree absolutely with what has been said by my noble friend beside me. The corporation shall have power to provide for the disposal in, such manner as it thinks fit", but in the very next clause it can only do this if it has the consent of the Secretary of State; then two lines further down there are the words, except with the approval of the Treasury". Where is responsibility going to be in the administration of this organisation? Can the noble Earl really reconcile what is being done here with the principles being established in British Airways?

The Earl of Mansfield

May I deal first with the noble Lord, Lord Beswick? I am afraid I have not yet got beyond the Scotsman today, which is my first reading, but I will look at The Times, and, if I may, come back to the noble Lord, formally or informally, at a later stage of the Bill. The next matter which I must clear up is this: I think there is perhaps a misunderstanding, which became plain when the noble Lord, Lord Bishopston, and some other noble Lords started going down what I night call the Amersham International path, to which no doubt we shall return at a later stage. What we are here discussing in Clause 1(2). But I should tell the Committee that this is not the route which the Government are going to go down when it comes to privatising Britoil. The intention is that the shares in Britoil should first of all be transferred to the Secretary of State, using the powers in Clause 3(4), and then the Secretary of State will sell 51 per cent. of those shares to the public. We can discuss the motivation and the reasoning behind that on a later amendment, perhaps Amendment No. 7. Therefore, if the noble Lord thinks, even if this were written into the Bill, that he is going necessarily to have the supervision that he wants, I have to tell him that that is not the way in which the privatisation is going to take place. What the noble Lord and others want to do is to impose another layer of parliamentary control over the privatisation process. I think that that is really what he wants to do.

The noble Lord, Lord Tanlaw—to dispose of this preliminary point—I think made an allegation that there was an almost incestuous relationship between the Department of Energy and the Treasury over this matter, because he said in effect that my right honourable friend had been in the Treasury before he became Secretary of State for Energy. The original Bill which received a First Reading in the other place had the name of my right honourable friend Mr. David Howell on the back of it. It is a small point, but in fact the authorship is not quite what the noble Lord implied. Any noble Lord who has served in Government will know of the all-pervasive presence of the Treasury when it comes to all matters of finance, and that particularly includes departments such as the Department of Energy, and indeed my own. There is nothing in any way sinister about this.

The next point is that it follows from what I have said that, if and when—and I make no prognostication about this—there comes a time when any further sale of shares takes place, it would take place in the same way as this sale of shares is going to. That is to say, it will be a sale of shares which have been transferred to the Secretary of State. It will take place by that method. Therefore, one has to ask oneself what are the objectives that this amendment would try to achieve, whether the amendment is necessary or desirable and, indeed, whether it would achieve those objectives.

I have to say that the Government have gone to very considerable lengths to explain the way in which they intend to use the powers which are given to them in the Bill. That took place in the other place at very considerable length; we had a Second Reading debate in your Lordships' House which was reasonably full, and we are considering the Bill now, quite properly, at fair length.

The noble Lord, Lord Underhill, then said that there was the amazing statement that the Government said in effect in another place that the Bill had received the blessing of Parliament, that it had received, as it were, authorisation for what is intended to be done and, in effect, that there must be some sort of balance between executive action and parliamentary control and that, therefore, the Government must have the discretion to implement policies which have been debated and approved in Parliament. I suggest that that is a quite unremarkable statement. Yes, of course, if one is going to give directions to a corporation, as is contemplated in Clause 31, or if one is going to issue or make subsidiary legislation, then it has to receive the blessing and control of Parliament which is envisaged by Clause 31. However, Clause 31 is quite different from the particular clause that we are discussing in that it bears no relationship to it.

There is nothing extraordinary about this. If the noble Lord, Lord Underhill, looks at Section 16(2) of the 1975 Act, he will find there a similar duty to comply with the directions laid on BNOC. That Act was passed by the last Labour Government and there is no question of Affirmative Resolution for directions there. So this is not really the constitutional outrage which perhaps it is alleged to be. Of course, I stood at that Dispatch Box for a number of weary years when I came back from the European Parliament and made precisely this attack. I do not say this in any cynical way—or not too cynical a way—but it is the practice of all Oppositions to say that there must be super parliamentary control and it is the habit and practice of all Government's to say that there has to come a time when executive action has to take place without any further fetters.

I have made reference to the Petroleum and Submarine Pipe-Lines Act 1975. That established BNOC in the first place and gave the corporation wide-ranging powers. It was a major piece of legislation. There is no provision at all in Part I for references back to Parliament, with the single exception of the power to alter the corporation's borrowing limits where the Affirmative Resolution procedure was adopted, as it also will apply under this Bill.

Under the 1975 Act, the last Government acquired in 1976 the North Sea interests of Burmah and conveyed them to BNOC. This was a major acquisition instituted by Government. No reference back to Parliament took place in that event. So I have no doubt that, if the Government of the day had thought that Parliament should debate this matter, they would have provided time; but they did not think that it was right and did not do so. Then, in 1977 the last Government disposed, by sale, of 17 per cent. of the shares in BP to the private sector, which was an important disposal. There was no question of seeking prior parliamentary approval of the sale. The Government made all the arrangements and Parliament was informed when the sale went ahead. Again, there was no question of any resolution—let alone an Affirmative Resolution. I do not criticise the Government concerned; I merely use these illustrations by way of seeking to claim that there is nothing unusual or constitutionally improper about what it is that the Government seek to do.

If the powers in Clause 1 were to be exercised at some distant time in the future, then I think that the noble Lord, Lord Bishopston, and his amendment would have perhaps greater justification. But, as has been said on frequent occasions both in another place and in your Lordships' House, we are ready to press on with the sale of Britoil, or rather its shares, and the hope is that the shares will be sold by the end of the year. Therefore, what we are seeking to do in this Bill is nothing new. It has been done recently. There has been full parliamentary debate on Clause 1 and, as I tried to say, there has to come a time when Parliament has given its blessing to what it is that the Government seek to do and the executive thereafter must get on and do it as it thinks best. In that particular context, I must say to the Committee that I do not advise that this particular amendment should be accepted because, as I have said, it is unnecessary and I think undesirable.

Lord Beswick

Will the noble Earl help me on one point? I am trying very hard to understand the contradictions in the Bill. The noble Earl said that my noble friend Lord Underhill was wrong in thinking that Clause 31 has anything to do with the clause that we are now discussing. But Clause 31 says: it shall be the duty of that Corporation (notwithstanding any duty imposed on it by or under any enactment) to comply with the directions". Does that not mean that there is some overriding power in Clause 31 to do anything they choose as regards anything that is done under Clause 1?

The Earl of Mansfield

We shall come to it, but Clause 31 does not apply to this particular clause of the Bill.

Lord Bruce of Donington

I should like to ask the noble Earl just to clarify that point a little. Subsection (2) of the clause which we are discussing at line 8 says: … in the instrument signifying his consent". What instrument is this?—because, of course, Clause 31 says: (1) Any power conferred by this Act …shall be exercisable by statutory instrument". Clause 31(2) says, "Any statutory instrument" What kind of instrument is this which is provided for at line 8 in Clause 1(2)? Is it a statutory instrument? What kind of instrument is it that makes the noble Earl say that it is not covered by the provisions of Clause 31?

The Earl of Mansfield

This is a technical phrase to mean a piece of paper upon which the Secretary of State has signified his consent in writing.

Lord Underhill

In order to clairfy the matter, when I referred to Clause 31 I was not saying that it applied to Clause 1. I quoted Clause 31 as stating quite clearly that wherever an order is to be made under the Bill it shall be by the negative procedure. That is what I was emphasising. Then I went on to say that the Minister had made it quite clear that a negative order did not apply to Clause 1. It was that about which I was protesting; first, that all orders under the Bill are by negative procedure, which I thought was wrong—I thought that there should be a provision for affirmative resolutions; and, secondly, that it did not apply to Clause 1. I am not the brightest of individuals by any means; I was about to add that I was the poor lad who only left school at 14.

Lord Ross of Marnock

You were lucky!

Lord Underhill

The Minister explained that Clause 1 deals with the transfer of the shares from BNOC to the Secretary of State. That may be covered by later clauses, but I should be greatly obliged if the noble Earl would point out to me the actual words in Clause 1 which deal with what he says. Subsection (2) makes it quite clear that: The Oil Corporation shall not, and shall secure that each other member of the group does not, dispose of any shares of an equity oil subsidiary except with the consent…". It does not say "to the Secretary of State". Therefore, it may be dealt with in a subsequent clause. However, if my noble friend's amendment is carried, would that not help to achieve what many noble Lords in this Committee want to achieve?

The Earl of Mansfield

I think not, because Clause 1(2) stands on its own. As I tried to say, it is not the means by which we shall dispose of the shares in Britoil once they are floated off. That is what I have been trying to say to the Committee; that the amendment which has been proposed by the noble Lord, Lord Bishopston, would not achieve what he seeks to achieve—or at least I think what he seeks to achieve—particularly when he uses Amersham International to illustrate the point he is making, that there should have been greater control over the shares of that company.

Lord Bishopston

The Committee has shown its concern tonight for the need for greater accountability. There is nothing in Clause 1—certainly not in subsection (2)—which will satisfy us that there is due parliamentary accountability. The Minister has obviously given us plenty of information regarding other aspects, but the questions which concern the Committee tonight, and my noble friends in particular, certainly have not been answered. Unless the Government are prepared to say that they will look at this again at a later stage, I am afraid that I shall have to invite my friends to join me in the Lobby.

6.54 p.m.

On Question, Whether the said amendment (No. 5) shall be agreed to?

Their Lordships divided: Contents, 62; Not-Contents, 75.

Airedale, L. Brookes of Tremorfa, L.
Ardwick, L. Bruce of Donington, L.
Aylestone, L. Cledwyn of Penrhos, L.
Baker, L. Collison, L.
Balogh, L. David, B.
Bernstein, L. Davies of Leek, L.
Beswick, L. Davies of Penrhys, L.
Bishopston, L. Elwyn-Jones, L.
Bowden, L. Ewart-Biggs, B.
Fisher of Rednal, B. Mishcon, L.
Foot, L. Molloy, L.
Gaitskell, B. Noel-Baker, L.
Gladwyn, L. Oram, L.
Glenamara, L. Peart, L.
Gosford, E. Pitt of Hampstead, L.
Hampton, L. Plant, L.
Harris of Greenwich, L. Ross of Marnock, L.
Hooson, L. Shannon, E.
Howie of Troon, L. Stone, L.
Hunt, L. Strabolgi, L.
Jeger, B.[Teller] Tanlaw, L.
John-Mackie, L. Taylor of Mansfield, L.
Kilmarnock, L. Underhill, L.
Lawrence, L. Walston, L.
Lee of Newton, L. Wells-Pestell, L.
Llewelyn-Davies of Hastoe, B. [Teller] Whaddon, L.
White, B.
Lloyd of Kilgerran, L. Wigoder, L.
Loudoun, C. Winstanley, L.
McCarthy, L. Wootton of Abinger, B.
McNair, L. Wynne-Jones, L.
Milner of Leeds, L.
Airey of Abingdon, B. Lucas of Chilworth, L.
Allerton, L. Lyell, L.
Alport, L. McFadzean, L.
Avon, E. Mackay of Clashfern, L.
Bellwin, L. Macleod of Borve, B.
Beloff, L. Mancroft, L.
Belstead, L. Mansfield, E.
Bessborough, E. Margadale, L.
Brougham and Vaux, L. Marley, L.
Campbell of Alloway, L. Marshall of Leeds, L.
Colville of Culross, V. Mersey, V.
Cork and Orrery, E. Morris, L.
Cullen of Ashbourne, L. Mottistone, L.
Daventry, V. Murton of Lindisfarne, L.
Davidson, V. Northchurch, B.
Denham, L. Nugent of Guildford, L.
Dilhorne, V. O'Neill of the Maine, L.
Drumalbyn, L. Onslow, E.
Elliot of Harwood, B. Orkney, E.
Elton, L. Orr-Ewing, L.
Faithfull, B. Plummer of St Marylebone, L.
Ferrers, E. Portland, D.
Ferrier, L. Reigate, L.
Forester, L. Renton, L.
Fortescue, E. Romney, E.
Gisborough, L. St. Davids, V.
Glenarthur, L. Sandys, L. [Teller]
Gormanston, V. Selborne, E.
Grimston of Westbury, L. Skelmersdale, L.
Hailsham of Saint Marylebone, L. Stanley of Alderley, L.
Stodart of Leaston, L.
Harmar-Nicholls, L. Thomas of Swynnerton, L.
Henley, L. Trefgarne, L.
Hives, L. Trumpington, B.
Hornsby-Smith, B. Vaux of Harroden, L.
Inglewood, L. Vivian, L.
Lane-Fox, B. Ward of Witley, V.
Long, V. [Teller] Windlesham, L.

Resolved in the negative and amendment disagreed to accordingly.

Lord Denham

I think this is probably a convenient moment to break this Committee stage for dinner, and we shall resume this Bill at approximately a quarter past eight. I beg to move the House do now resume.

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

House resumed.