Oil and Gas (Enterprise) Bill

HL Deb 11 May 1982 vol 430 cc121-209

3 p.m.

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

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

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

On Question, Motion agreed to.

House in Committee accordingly.

[The LORD ABERDARE in the Chair.]

Clause 9 [Gas Corporation's powers of disposal]:

Baroness Fisher of Rednal moved Amendment No. 18A: Page 9, line 41, at end insert— (" Provided that such disposal shall not result in the impairment of essential services nor imperil supplies to or safety of consumers.").

The noble Baroness said: I beg to move the amendment standing in my name and those of my noble friends. Clause 9 takes power to fulfil the Government's intention, as announced by the Secretary of State on 19th October last year, to privatise the British Gas Corporation's offshore oil assets. If my reading of the clause is correct, the powers will also be capable of use for the disposal of the British Gas Corporation's showrooms, although I perfectly understand that the Government have announced that this would have to wait until new safety legislation has been passed.

In these clauses the Government are asking for very wide discretionary powers to be given to the Secretary of State, including the power to order the British Gas Corporation to dispose of any part of the corporation; but in my comments I shall concentrate on the gas showrooms. During the Second Reading debate my noble friend Lord Underhill spoke at length on the position of the gas showrooms and his remarks are in col. 513 of the Official Report, Tuesday, 20th April. Though my noble friend raised many points regarding the gas showrooms, in the Minister's winding-up speech I do not think my noble friend received one reply to any of the comments he made regarding the gas showrooms. No doubt later today my noble friend will be reiterating those points and hoping to get some answers.

I understand completely that the Monopolies Commission brought forth their findings on the sale of gas appliances, but I should be grateful if the Minister could give us some information regarding the soundings he had from consumer organisations, particularly from the gas consumer organisations and from organisations generally interested in consumer affairs regarding the closure of the gas showrooms. It would be interesting to know whether a public opinion poll was even considered to see what the gas customer really wished. I should like to tell your Lordships that the trade union movement organised a petition. It had widespread support. In fact, there were over 5 million signatures on it when it was presented, and those signatures were for the preservation of the gas showrooms for the services that they gave to the gas customer.

Like others of your Lordships in this Committee, I have the opportunity of speaking at many meetings and conferences and perhaps because one is a female one gets invited to more female than male groups—perhaps that is because we do not know the right kind of stories to tell to a male group. These meetings have enabled me to gain the views and opinions from many women's organisations—political, non-political, those which are attached to Churches and various institutes and those which are attached to no particular organisation. One of the most important points they emphasise is the advice that is given to them on the appliances which are sold. That advice goes into great detail regarding the suitability of the appliance for the purpose that is required, the advice that is given on running costs and the advice that is given on service arrangements. These things are important to the consumer when they are making what is in many instances quite an expensive purchase. Another thing which I have gathered from the opinions I have heard is that customers appreciate being able to browse and look round in the showroom and to come in again if necessary. They are not subjected to the high-pressure sales techniques we find in many organisations.

Another opinion I should like to draw to your Lordships' attention was one that was continually expressed; namely, the easy access for advice which was given at a very personal level. Noble Lords might not appreciate these points so very much because perhaps they are more skilful in the use of the telephone, but there are thousands and millions of people in this country who have not got that great skill of being able to use the telephone to the very best advantage when seeking information or making complaints. The very fact that thousands of people have not got that skill means that they get a real sense of satisfaction by going into the gas showroom, making their complaint and asking for advice. The very fact that they have spoken face-to-face with somebody gives them the satisfaction of a service which they very much appreciate.

This opinion was emphasised in meeting those persons in the older age groups. They really appreciated being able to, as they said, "Pop into the showroom", if they had any fears about the safety of an appliance. In many cases to the elderly it might be something quite simple—that the pilot light on the gas stove might not work correctly or the gas fire keeps on popping, and that causes them worry. There might be a vague smell of gas that causes them concern. What they did appreciate, and I hope the noble Minister appreciates it as well, was the personal contact with an understanding person who realised their fears. These fears to the elderly are real. It is something on which the Gas Board have really tried to be particularly helpful to them. I would go so far as to say that safety is paramount.

The confidence which the public now has in the BGC arises from the fact that the undertaking is publicly owned. There is always a greater expectation of safety from a statutory undertaking, and it is important that that confidence should be retained. Confidence arises mainly because the Government lay down rules and regulations in Acts of Parliament, and local authorities, as well as statutory undertakings themselves, take on board the paramount need for safety, and I do not think that the Government can seriously challenge the record of the Gas Board. In the present state of affairs, we have to be completely satisfied that the Government are cutting no corners regarding safety, and there must be no public anxiety.

If I may pose a question to the noble Earl the Minister to make quite sure that he understands our concern about gas showrooms, can he give us an assurance that gas prices will not rise significantly as a result of hiving-off the showrooms? There is an anxiety that, because of the lack of profit arising from the sale of appliances, gas prices will in future have to be increased in order to provide services. May I say to noble Lords on the Government Benches that, in trying to please some of their friends, they may be losing friends elsewhere.

I draw the attention of the noble Earl to the fact that many gas showrooms are in shopping precincts. The gas showroom, the electricity showroom, the building society office and the bank are what are called the prestige buildings, which are liked because they add stability. More often than not, those organisations will keep their shops up to a very high standard and will be continual tenants. Therefore, I imagine that noble Lords on the other side, and their friends in the property business, will be looking askance at the fact that in future gas showrooms may disappear from shopping precincts.

Would it be too much to ask the Minister to explain to the Committee how he expects that safety and the fitting of gas appliances will be safeguarded if the Government take away the services that are provided by the gas showrooms? Is it the intention of the Government to prevent the Gas Board from selling appliances? Will the Government say, quite categorically, that under this Bill the Gas Board cannot sell appliances in future? The important point is that, up to the present time, the consumer has been adequately safeguarded by the Gas Consumer Councils. But will the consumer organisations disappear when we go over to greater privatisation, and will consumers have no organisations to which they can make their complaints?

Finally, we are particularly concerned on this side that there will be a loss of jobs if gas showrooms are closed. The figures have been given on many occasions, and the figure of unemployment arising from the closing of gas showrooms is a very large one. But there is another aspect which concerns my noble friends and myself on this side of the Committee. There are many people employed in the manufacture of gas appliances, and we are concerned that the abolition of gas showrooms could have a serious effect on British manufacturers. There is no need for me to go into great detail this afternoon, about how very large and well-known firms have been seriously hit by competition in what we call the white goods trade; that is, the manufacture of fridges, freezers, washing machines and dryers. We know that considerable unemploy ment has arisen in that manufacturing area, and we are concerned that people who are employed in the manufacture of gas appliances could be similarly affected. I beg to move.

3.16 p.m.

Lord Miles

I shall come to the matter of the sale of showrooms towards the end of my five-minute oration. I suppose we should all agree that one of the primal aims of the present Government is to underscore the total failure of nationally owned and operated enterprise, and to emphasise that fact by restoring as much as possible of it to the private sector. So would it not be fair to ask what on earth can be the sense of transferring a highly successful nationalised enterprise—in this case of British Gas, one of the most successful examples of nationally owned and operated enterprises of all time—to the private sector, unless for the sake of some idée fixe or cherished dogma?

Am I not correct in believing that one of the Government's most precious objectives is to break the stranglehold, as they conceive it, of nationalisation in order to encourage market efficiency? But British Gas, in its nationalised form, has already shown all the marks of individual enterprise and market efficiency; the very foundation stones upon which wide areas of Government policy rest. It cannot, surely, be made more successful than it has been. It is run by one of the major figures in the energy field, a classic example of individual enterprise and initiative operating in the interests of the community at large.

Thus I submit that the Bill aims at cutting a particularly successful nationalised enterprise down to size, in order to maim and shackle it, not for the sake of common sense or justice, or for the general wellbeing, but for the sake of rigid dogma. This seems to me to be topsy-turvy version of the very tenets which the Government claim to embrace.

If I may personalise the matter, I would venture to put it thus. As a reward for inspiration, technical ability of the highest order, a true sense of adventure and total commitment to the work in hand, Sir Denis Rooke and his department are now to have part of their home pulled down around their ears. Would this not seem to resemble, in Sir Denis's case, a man who has built a fine house equipped with all modern conveniences, including a magnificent bathroom, but who, on going to relieve himself one morning, finds that the bathroom has been removed in the night because some well-intentioned zealot on a local authority —probably a vegetarian—believes that it not only saves water, but is healthier, more enjoyable and more morale-boosting to relieve oneself in the open air? As the great Marie Lloyd sang in one of her most touching and charmingly evocative songs: I sits among the cabbages and peas". I could also mention the uncertainties of the Bill in the matter of drafting—at least, in my submission. Disquieting phrases like "for the moment", "at the present time", and "liable to be modified" would seem to appear all too often, possibly foreshadowing deviations already settled upon but for the moment held under close wraps.

With your Lordships' leave, I will make one final, very brief and, I hope your Lordships will agree, rather moving plea. For many years it has been a first principle of British Gas to exhibit in their showrooms only domestic articles and equipment made in England. How many of us are old enough to remember those three cheerful words stamped on our toys and household goods—how they warmed the Christmas stocking! May we hope that this policy will be adhered to after the sell-off.

3.21 p.m.

Lord Underhill

It is good to listen to the fresh air from the noble Lord, Lord Miles, which indicates that this is not a party political amendment. If noble Lords will look at it, the amendment refers to the necessity not to dispose of any subsidiary of British Gas if it will imperil the position of the consumer, or imperil supplies, or imperil safety.

My noble friend Lady Fisher of Rednal referred to my remarks at Second Reading concerning the sale of gas showrooms. Before I deal briefly with the showroom position, may I refer to two other matters? The Government made clear at Second Reading in the other place that they have no plans at present—the important words are "at present"—to dispose of their interests in the British Gas gasfields, or to dispose of its transmission and distribution system. But the important words are "at present". The power is there. If the gasfields, as distinct from the oilfields where there is gas, were disposed of, British Gas would no longer have complete rights over the gas which it at present owns. It would have to compete in the market for supplies. I suggest that that cannot possibly be in the interest of consumers.

Having listened to the praise of British Gas by the noble Lord, Lord Miles, may I say that I hope all noble Lords have seen today's press statement by the corporation's chairman, Sir Denis Rooke, that there have been two further encouraging finds of gas off the Lancashire coast in the Irish Sea, made entirely by British Gas. It conducted the exploration. It would be a tragedy if the Government used their power to take over those gasfields from the gas industry. It would adversely affect the consumer.

I am certain that no noble Lord visualises that there will be more than one transmission or distribution system in one area. But if at some future date the Government did decide—remembering that the words "at present" are in the Bill—to dispose of any part of the system, then there would be a monopoly situation in that area, because nobody visualises two gas transmission systems running in parallel. In those circumstances, how would the interests of consumers be preserved? Under the Gas Act of 1972, British Gas is subject to the supervision of the Secretary of State and Parliament. How would similar control be obtained over a private company supplying gas in what would be a monopoly situation in a particular part of the country? There would seem to be no provision whatever in the Bill for such an eventuality.

May I say just a few words about the issue of showrooms. Many noble Lords—certainly on this side of the House, and I am certain that others will agree—believe that this will impair the services to the consumer and will raise issues of safety. I emphasise what I said at Second Reading: that both private and public gas undertakings were almost the sole suppliers of gas appliances long before nationalisation in 1949. It has always been a primary part of the business of the various gas undertakings. There is certainly no monopoly. Again I would emphasise the point that when the Monopolies Commission started its work there were only 500 private outlets, that by the time the commission issued its reports there were 1,000 private outlets and that by June of last year—a year after the commission's report—there were 2,000 outlets. There is therefore no monopoly situation for British Gas, which has only 900 showrooms.

My noble friend Lady Fisher of Rednal referred to the visits which ordinary consumers make to the showrooms. May I refer to out-of-production models? There are now 34 million domestic appliances in use, of which some 24 million are out-of-production models which have to be maintained with a degree of safety. People go to showrooms to discuss this matter and also to discuss with the corporation the question of spare parts. It must be recognised that the corporation maintains a massive spare parts section carrying no fewer than 125,000 items and, in all, some 2.5 million spares.

It is generally recognised that the corporation believes the safety aspect of its work with consumers to be as important as anything else. Despite the 2,000 private outlets, people still go, as my noble friend said, to the gas showrooms. They have confidence in them. They also go there for purposes other than to buy appliances. The corporation has made it clear that only 50 per cent. of showroom staff time is spent upon dealing with the sale of appliances. Some 50 million visits are made each year to the showrooms—a great public service—to buy appliances, to pay bills, to arrange for services and to seek advice on energy conservation. The corporation emphasises that no fewer than 8 million visits are made for the purpose of buying gas savings stamps, of which £34 million-worth are sold each year to visitors to the showrooms. When people go for that purpose to the showrooms they ask about other advice which they need in connection with their gas supply. The corporation now carries out each year, on average, some 50 million customer service jobs. Two million customers—I am one of them—have service contracts with the corporation. I have a service contract for my gas central heating. Over half a million visits are made to consumers by the corporation to check gas fires. Many of these visits are made as a result of contact with people at the gas showrooms.

May I repeat the question which my noble friend asked and which I asked at Second Reading? I said then that I should be very happy if the Government would make it clear that, even if they eventually decide —which we hope they will not—to proceed with the disposal of the gas showrooms, they will not carry out their statement that they will also call upon the corporation to cease any participation in retailing—something which the gas undertakings carried on for decades before nationalisation in 1949.

The closure of the showrooms would be against the interests of consumers and could affect safety. The Government recognise this. When the original statement was made, both in this House and in the other place, the Government overlooked the question of safety and had to come along later and say that they would not dispose of the showrooms until they had introduced safety legislation. That seems to me to be a cockeyed way of doing things. Therefore I hope that we may receive today a clear answer to the question: why are the Government deciding to go ahead with the sale of the showrooms? They were not told to do so by the Monopolies Commission. The Monopolies Commission put forward three options. It said that the Government should select two of these, and the Government decided to select the more restrictive one of the sale. The other question is: in the light of this, will the Government change their view on ensuring that the gas corporation does not take any part in retailing? That would seem to be hitting at the very principle of competition which the Government endeavour to put forward. If the Government do want to go ahead with the sale of the showrooms, which I believe would be a great pity, then they ought to permit the gas corporation still to take part in retailing in competition with private outlets.

3.30 p.m.

Lord Lee of Newton

My noble friend Lord Underhill has stressed that the Government agree that the gas corporation is a highly successful publicly-owned industry. Those of your Lordships with long memories will recall the days prior to nationalisation when the gas industry was rapidly moving downhill and would probably have ceased to exist at all in a year or two. In those days it depended entirely upon the carbonisation of coal, a most uneconomic process. It had literally hundreds of very small gasworks throughout the country which could not possibly be made a viable proposition. When the industry became nationalised it immediately began to modernise and make a whole of what had been its disparate parts. I will pay as great a tribute as I can to Sir Henry Jones, who was then chairman of the gas corporation, and to his colleagues for the fact that they accomplished at least two revolutions within the course of a few years.

The first was the changeover from carbonisation of coal to the use of the by-products of oil. It is easy to just say that, but it was really a huge and highly successful revolution in the production of gas in this country. That being so, why in heaven's name do the Government wish to continue with their destructive interference in what on any count is one of the most highly successful industries in Britain, either in the public or the private sector? When the changeover to the use of the by-products of oil had been completed —and, incidentally, that development encouraged other industries, as well—the gas corporation had what we called the ICI process in operation for only a short period of time when a further revolution came; instead of changing over from carbonising coal to using oil by-products, the industry stopped producing any gas at all. It had to change from being an industry which had always based itself on producing gas to one which simply distributed methane from the North Sea. Indeed, the corporation imported a certain amount of methane from Algeria as well.

That huge revolution took place in a comparatively short period of time. Indeed, during my days at the Ministry of Power in 1965–66, we did not even know for certain that we were going to get any gas from the North Sea. Sir Maurice Bridgeman, who was then chairman of BP, was good enough to send me almost daily bulletins on the subject and there was great excitement. At last we realised that we were going to have our own supply of gas and that it would make a huge difference to the terribly bad terms of trade and the adverse trade balance which were the curse of that particular period.

So it seems to me that, instead of the stupid interference which we read about in the clauses we are now seeking to amend, there is so much that should be done now for British industry. The Government have presided over a period in which a huge percentage of our manufacturing industry has gone to the wall. Yet, instead of trying to concentrate on renovating some of that, and in the process getting down the shocking levels of unemployment, the Government continue giving the Secretary of State more and more powers to interfere with one the the most highly successful industries in Britain. It is beyond description. It can be explained only by the fact that we have a Prime Minister who hates the thought of the public owning anything—especially anything that makes a profit. It seems to me that in many ways the interference which the gas industry has suffered, and having its prices forced higher than they need to be, which gives nationalisation a bad name (and, incidentally, helps the Government with their public sector borrowing requirement) is typical of the destruction we are now faced with. I challenge the Minister to go to the Dispatch Box and to give us any fundamental reason why there should be this gross interference with such an industry. Do the Government accept that it is a highly successful publicly-owned industry?

My noble friend mentioned the discovery made today off the Lancashire coast, where the chairman has been able to tell us two more strikes have been made. I remember cutting the Coal Board in on the Irish Sea. At that time, the only people who knew anything about drilling under water were BP. Shell did a bit, but they were not a wholly-owned British industry. One was almost sure that there were in fact oil deposits in the Irish Sea. Now we have further proof of the ability of the board to find the product—even though that is not easy, because it is still reckoned that only one hole out of 10 is successful. The gas corporation have done a remarkable job of work on any count by finding the stuff and getting it out, and doing so at an economic price—even though that price has been forced up by the Government, which is nothing to do with the gas industry. Let the Minister give one concrete reason for this stupid interference with a very successful industry—perhaps in the hope that it will not be quite so successful after the Government have engineered its downfall.

Lord Somers

I dislike nationalisation for its own sake as much as anybody, but there can be no doubt that in certain cases it is the only workable system. The Post Office, for example, has been a nationalised industry since the day of its inception. Can anybody imagine the Post Office chopped up into various individual enterprises?

Several Noble Lords

Yes!

Lord Somers

I am old enough to remember the days when electricity was in the hands of local authorities and I certainly would not like to go back to the days when there was no uniformity. Some current was AC and some current was DC; voltages were different, and there was no standardisation of fittings. There is no doubt that in some cases nationalisation is the most efficient thing. However much one may dislike it, one should not be blinded to the fact that sometimes it is the best thing.

Baroness Macleod of Borve

Unfortunately, I was unable to make my contribution at Second Reading, but I want to say one or two words about this clause. It is in the nature of your Lordshops' House, and I hope other noble Lords will agree, that we do not always have to agree with everything that is said, especially from my side of the House. So it is with a certain amount of trepidation that I agree with every single word that has been said from the other side of the House this afternoon. I speak with a certain amount of knowledge, in that I was appointed the first ever Gas Consumer Council chairman in 1971 and served in that capacity as an offshoot, perhaps, of British Gas or as part of it sometimes. We tried to make the safety of gas paramount in its supply to the whole of the country. It was a particularly fascinating five years.

Perhaps I may say how pleased I am sure British Gas will be to have heard the many tributes that have been paid in this Committee this afternoon to a particularly well organised authority. My five years were certainly enlightening, and I hope that under my not very expert chairmanship we did manage to bring to the notice of British Gas some of the things we felt should be put right, and at the same time that we represented all users of gas, whether in their homes or in industry.

But paramount above all was safety. All those of your Lordships who have dealt with gas, whether it be as a housewife cooking or in industry, will know what an explosive material this is. This is why I am afraid I am going to say that I am very unhappy about the diversification and perhaps the selling off of the showrooms, the place where British Gas, as knowledgeable people, can sell the appliances that are for sale in this country. I am quite certain that the Minister will tell us that every appliance will, as is the case now, have to pass the British Standards Institution. I remember many years ago, I think it was at a big Daily Mail exhibition, there were many appliances coming from all over the EEC to be used by gas consumers in our country, and to my absolute horror I found that one of the appliances had a wooden oven. That I am quite certain is not the sort of thing that could even happen or be put on sale here, but I should like to know and be completely assured that any appliance that is sold, either through the gas showroom or through the private sector, will have to pass the British Standards Institution.

I was particularly interested to hear from the noble Lord, Lord Underhill, figures of the many people who go to the showrooms. I am well aware that those figures are right, that there are many people who perhaps have been accustomed while paying their bills to having a rapport and friendship with the staff, and deed trust in the person selling these products to the consumer. I am very worried that the many private outlets, and there will of course be very many more if this is agreed upon in the fullness of time, will not have sufficient back-up services. We all know that the follow-up service is almost as important as the selling service, in that the cooking appliance must be properly fitted and must be properly serviced. 1 hope the Government will have more to say on this subject, because, unless that is followed up, I am certain from my own knowledge that we shall have many more explosions. It is no fault of the housewife, and certainly nothing over which she or anybody else has any control, but there are a great number of explosions. Unless appliances are properly fitted by qualified people who have been trained, we are going to be in trouble.

I shall look forward to hearing what the Minister has to say, especially on the subject, also raised by the noble Lord, Lord Underhill, of spare parts. To my knowledge, British Gas keeps spare parts for up to 15 years, and I cannot see that small undertakings will be able to keep those spare parts. I am sure that the Minister will be able to allay my fears, but I felt that in your Lordships' Committee this afternoon I ought to state them.

Lord Tanlaw

May we support the words of this amendment on the Marshalled List. I think some balance is required from these Benches to show that we are against the monopoly of British Gas in the showroom area, and we think it could be beneficial, indeed should be beneficial, to consumers once this has been de-monopolised. There are just two points that I would ask the noble Earl to confirm. I hope the Government will support the findings of the Monopolies and Mergers Commission in its 1980 Report Domestic Gas Appliances, where it indicated that the monopoly by the Gas Board was threatening the longer-term efficiency and viability of the gas appliance industry. I think anyone interested in employment should take those words quite seriously. I hope that the Government have something to say on this.

The other point is that one would hope that splitting off the showrooms would be beneficial. The cost of retail outlets for the Gas Board has, to my knowledge, never been properly costed and competition would ensure that the consumer at least had a choice and had the knowledge that the costing was the finest that competition could give. I agree with the noble Lord, Lord Underhill; I think it would be quite wrong to take away the right of British Gas to have its own showrooms and to go into the retail market; this would be an excellent thing. It is only because no one else can do so at the moment that we support the principle behind this Bill.

There is one other point. The noble Baroness in introducing her amendment mentioned the role of consumers. One point has always struck me. You can go into a gas appliance showroom and they are extremely good, but the one thing you cannot buy in a gas showroom is an electric cooker, and you cannot buy a gas cooker in an electricity showroom. Up and down the country these showrooms are on prime sites in every high street and in all the new shopping precincts. If the consumer is the person we are trying to look after, the consumer should have the choice to compare the two types of cooker side by side as regards price and efficiency. This is one other point that we would like to see brought in. Perhaps the noble Earl can tell us whether gas cookers will be allowed to be sold in electricity showrooms and vice versa once this Bill becomes law. I think that if that were the case there would be a great saving to both industries in the cutting down and sale of valuable property sites, leaving sites to be united to serve consumers on a competitive basis. Indeed, I think the consumer then has a better opportunity to decide whether to go for gas or electricity. At the moment, if the consumer goes to one showroom or the other, regrettably he is encouraged to go along one line or the other in buying appliances.

Lord Thorneycroft

I would like to say a word not about the theory but about the practical problem of buying a gas cooker, which is, after all, what this comes down to. I do not say I would attempt such a dangerous and difficult job myself, but I have recently witnessed my daughter attempting to do so. My daughter rings the gas showroom. She says, "I am the mother of two young children with no means of cooking in the house which I have just moved into. I wish to order a gas cooker. I would like to place an order and I can inform you of the type and mark and so forth". The gas showroom reply, "We will be delighted to place the order; will you please give it". My daughter says, "There is one thing; I am not prepared to place a firm order unless you can give me a guaranteed delivery, because I cannot sit here cooking over candles and the rest day after day. I wish to know at what time and date this cooker will be delivered and fixed". "I am sorry, Madam", say the gas showroom, "it is quite impossible for us to quote any delivery until we have a firm order placed". "But", my daughter says, "this is an impossible situation". "Madam", say the gas showroom, "you must remember we are a big corporation and we are completely computerised". "But can you not ask your computer what the date of delivery is?" "No", say the gas showroom, "we are quite unable to ask our computer to give, and our computer cannot give, a firm delivery date until we get a firm order for the cooker".

Lord Beswick

I should like—

Lord Thorneycroft

I am going to finish this. The noble Lord can well reply afterwards.

Lord Beswick

I do not want to reply: I want to ask a question.

Lord Thorneycroft

No, I am not going to give way to the noble Lord. I want to finish my story. I am not very fluent on gas cookers, so I do not want to be interrupted. My daughter is, therefore, put in a completely impossible position and so is the Gas Board. But she has her father standing by and a humble motor-car to escort her to the nearest private enterprise firm up the road where a gas cooker is procured, ordered, without any of the difficulties presented by this great corporation. I do not say that this is a reason for the Bill. No doubt there are many occasions when the Gas Board is extremely efficient. But there must be many people in the position of my daughter who are attempting to get a gas cooker urgently to produce meals for two children in a house which has no other form of cooking facilities. I must say that some of those girls will be very grateful for a measure of this character.

Lord Ross of Marnock

I am sure that the gas corporation will be agreeably pleased with the way in which this debate has gone, apart from the gripes and troubles of the noble Lord, Lord Thorneycroft, as regards his daughter trying to get a gas cooker and cases like that which are just a few out of millions. That argument is not very convincing to me, at least. I, too, bought a gas cooker in recent days and I had no trouble at all. I installed central heating just a few years ago and there was no trouble at all with the gas corporation. There are 14 million people using gas and using appliances that they bought very successfully from showrooms. There are 900 showrooms scattered throughout the country.

When it comes to the maintenance of this gas cooker that was bought privately by the daughter of the noble Lord, I wonder whether she will ring up the Gas Board or whether she will ring up the private retailer. I am perfectly sure that the private retailer has no replacement stocks. He will need to have a firm order. He will need to send to the manufacturer. He will need to wait, and once again we shall have the noble Lord, Lord Thorneycroft, coming here trying to joke away a very serious amendment.

Remembering that 14 million people are involved, what does the amendment seek to do? First, in the clause the gas corporation are given the power to dispose of any of their properties as they think fit. That is what it says in the clause, believe it or not. Of course, once we get to Clause 11 we find that there is some other power—they can only exercise this power under a direction and with the consent of the Secretary of State, and indeed the Secretary of State can give them a direction. I noticed that the noble Lord's daughter did not go to the Secretary of State, because he does not know; he probably knows as much about gas cookers as the noble Lord, Lord Thorneycroft. But he is going to order the gas corporation to dispose of any and all of its assets. There is no limitation. There is nothing that gives us assurance that all the services about which the noble Lord, Lord Miles, the noble Baroness opposite or the noble Baroness, Lady Fisher of Rednal, spoke will be retained. That is most important.

It is a simple amendment that I am sure every single noble Lord and Baroness in this Committee will agree with. It says that they shall not dispose of these assets if it might, result in the impairment of essential services". I want Lord Thorneycroft's daughter to be assured of her gas once she has got it, and so does the noble Lord. Is that not fair? It goes on, nor imperil supplies to or safety of consumers". I am sure that the noble Lord does not want his daughter suddenly to be blown up because of some defect either in the gas cooker or in relation to the general supply. That is what we ask in the amendment and in my view it is reasonable.

Your Lordships may say, "What has this to do with showrooms? "Showrooms are the point of contact between the gas corporation and its customers. It is from there that the whole servicing operation runs. It is from there that the advice is given by the gas corporation to the manufacturers as to some change that is needed, some development that is needed or, indeed, what the customer is asking for, so that they can go on with further research. Research is done by the manufacturers and the gas corporation and they come together. It is amazing that it says in the commission's report: There was no evidence from any witness, whether retailer, wholesaler, manufacturer or consumer organisation, that any of them had seriously contemplated or prepared for the loss of the British Gas Corporation from appliance retailing or installation or maintenance". There is not one of the 14 million customers who is aware of what danger there is in passing this clause without the amendment.

What will the manufacturers be faced with? At present they have a nationwide outlet in respect of their appliances. At present they work with the gas corporation, but that work will be destroyed. I have a very good memory. I see former colleagues of the House of Commons sitting opposite me. Do they. remember Brendan Bracken and the Gas Bill? We spent a whole session deciding whether we should spell "nationalisation" with an "s" or a "z". There is nobody up there, root and branch, opposing the gas corporation today. I think that the noble Lord who spoke from the Cross Benches is right. The gas corporation has proved itself and both parties should take pride in this. They should take pride that the people are relatively satisfied from the point of view of safety.

There is also the point of view of employment. The manufacturers are concerned. They do not know what will happen. I think that one of the commissioners said that this was a leap in the dark because there will need to be some new network set up. It will cost more, it will not be as effective, and meanwhile they will not know where they are. "A leap in the dark"—who is declaring that there should be darkness? It is not a case of, "Let there be light" but a case of the Government saying, "Let there be darkness". It is ordered, "Let there be anarchy. Let there be chaos".

There are 25,000 people whose employment is involved. They are people who are giving satisfaction to the public. The gas corporation takes on many engineers and apprentices every year—1,200. They will all go. We cannot take away their point of contact with manufacturers and customers and let people buy all sorts of unsafe equipment and then expect them to carry on the whole business of maintenance. It just will not happen. This obsession has driven them to something that is really quite irrational. I think that it is up to your Lordships today at least to accept this reasonable amendment: Provided that such disposal shall not result in the impairment of essential services nor imperil supplies to or safety of consumers". Nobody could not vote for that.

Baroness Hornsby-Smith

Before the noble Lord sits down perhaps he could explain, if everything he has said is true about the disaster likely to occur in the gas industry, how he accounts for the fact that people can buy electrical appliances on a competitive market and people are not blown up; they do not lose out through safety and by and large they have far more competitive and cheaper prices. Indeed, there are just as many homes with electrical appliances as there are with gas appliances.

Lord Ross of Marnock

As regards gas—and it is gas with which we are dealing here—the facts of safety are on record. One has only to compare the record of safety appliances and gas bodies in West Germany, Holland and Belgium with that of our gas corporation. Occasionally we ought to blow the trumpet for Britain. We have the finest gas industry in the whole world, and we have a Government determined to run it down.

4 p.m.

The Earl of Mansfield

I suppose it was inevitable that on this, the first amendment dealing with Part II of the Bill, we should go back to principles and matters which certainly were ventilated at very considerable length on Second Reading. Nevertheless, there are those who did not have the opportunity of explaining how they felt about this Bill to your Lordships. I dare say that by having the debate now we can perhaps at least save a lengthy debate on clause stand part, which might have been more appropriate.

No one would gainsay that the gas industry is of very great importance to the nation. We are very fortunate; we possess substantial reserves of natural gas. It has become a major source of heat for the home, for industry and for commerce and, of course, there is the petro-chemical industry, which has not so far been mentioned, but gas provides it with an essential feedstock.

However, it is idle to say that all is well in the gas industry. It is dominated by the British Gas Corporation. I do not want anyone to think that I am attacking that body; it has a record and achievements of which it can be proud. But it enjoys a position of great privilege in the scheme of things. It has special rights in the purchase of gas and it owns the onshore gas transmission and distribution pipeline network; it is exempt from the provisions of the Pipe-lines Act 1962, which applies to private sector onshore pipelines. So the British Gas Corporation has not only an effective monopoly in the purchase and supply of gas by pipe, but it also has major interests in the production of gas, and—this is the first time that this has been mentioned this afternoon—it also has major interests in the production of oil. That, of course, is something for which the Bill provides.

Much has been said today about the retail provision and also the maintenance of gas appliances. That has attracted criticism from the Monopolies and Mergers' Commission, which is something which, as the noble Lord, Lord Ross, has said, is a fact among many. But the particular position of privilege, which the British Gas Corporation enjoys has given rise to increasing problems and anomalies. We see no reason—there is no reason, in fact—why a business which is for the production and distribution of gas should be involved in the production of oil. The history of the development of the North Sea, particularly as regards oil, is one of successful private enterprise and that, therefore, is the reason which prompted the Government to suggest—and the House of Commons has now endorsed that suggestion in the form of this Bill—that the BGC's offshore oil business should be transferred to the private sector. Clauses 9 to 11, which we shall soon be discussing, in fact bring that about.

The monopolistic position of the corporation has produced disquiet among those who produce gas, or who want to, and also among consumers. The producers see little incentive to explore for and develop gas reserves, and I hope I need not to tell the Committee of the monopolistic attitude of the Gas Corporation with its take-it-or-leave-it price offer for the gas which is produced out of the North Sea. At worst a producer of gas may get no offer, not even a take-it-or-leave-it one, from the BGC if it has decided to take gas from elsewhere first. So is it a surprise that the companies are unwilling to lay out as much money or enough money for exploration? At the same time, gas consumers—particularly industrialists—face difficulty. They cannot always obtain the supplies that they require, and this particularly affects industrial and commercial consumers of gas in large quantities.

Therefore, by way of summary, the Government want to bring enterprise and competition into the British gas market. The sale of the corporation's offshore oil assets will put them in the hands of the private sector, where they will be used to better effect. The removal of the monopoly purchase rights will provide incentives to explore for gas, and the break-up of the BGC sales monopoly will enable the market to flourish. This will be good for the producers, the consumers, the suppliers, the customers and, indeed, the nation.

That encapsulates the philosophy behind this Bill. Of course, I respect enormously what the noble Lord, Lord Miles, has said, which was good Second Reading material. But I think that it is as idle to pretend that all is well within the industry—even in the retailing part and the provision of appliances and the servicing of them—as it is idle to pretend that the industry is in a total mess. It was when the noble Lord, Lord Miles, caused us to smile with some of his allusions that he made me think of that splendid song by Flanders and Swann which we all enjoyed when I was a little younger, which starts off: T'was on the Monday morning the gas man came to call". Many a strolling player has enjoyed singing and made a good deal of money out of that song. It is obvious to anyone who looks at the television consumer programmes—which, with the invention of the video machine, even Ministers can look at at idle moments—that one of the providers of goods and services which is most frequently criticised is that pertaining to gas. The Government consider that the fresh wind of competition should blow about it. I think that I have said enough as regards philosophy.

What is behind this amendment is in two parts. First, there is the philosophical argument which the noble Lord, Lord Underhill, deployed. I understand, if noble Lords opposite do not like any encroachment upon a nationalised industry, that it is something which they do not like, and I respect that. Then we come to the much more detailed consideration in a way concerning gas showrooms, the manufacture and supply of appliances, the jobs of those who carry out those functions, the safety aspects and so on. I do not intend to say too much about this amendment as such, because it is not over-happily drafted and it certainly would not achieve what the noble Baroness and the other co-signatories to it want it to achieve. I shall say no more about that, because I do not believe in taking technical points.

First, I want to go, in the second of the headings of argument, to the question of safety. The safety of supplies, both public and private, is of course dealt with in Clause 14, and we can discuss that later. So far as gas supplies are concerned, the powers are perfectly adequate to ensure the safety of consumers in that respect. The other matter which we have dealt with is the disposal powers which would enable the Government to implement the policy objective which was reached following the Monopolies and Mergers Commission report. It is worthwhile reminding ourselves that the findings in effect were that the BGC's gas appliance retailing monopoly has acted against the public interest, and that it is desirable that there should be competition and that the BGC's dominance of the gas appliance market should be broken.

I want to make it clear that it was no part of the Government's decision that the corporation should cease their servicing and installation activities. That, I think, is the first point which should be made. Secondly, the Government have made a clear commitment that safety standards would be maintained before any changes to implement the commission's finding were made. It has also been said that such legislation would be complex. It is highly unlikely that time will be found for it in this Session of Parliament.

I should say a word about the proposals for showrooms disposal. What I have said shows that any action which the Government intend to take, in effect to give effect to the recommendation of the MMC report, would be accompanied by measures to maintain standards of safety. Noble Lords I think expressed appreciation for the BGC and its gas showrooms and the way in which it retails gas appliances. Of course, other activities take place in gas showrooms in the sense that people can come there to pay their bills, and they can come there, I think the word was, to browse. I should have thought that that would be more likely to take place in a bookshop rather than in a gas showroom, but nevertheless I suppose it could go on. They can also, of course, obtain advice and assistance.

It is the fact that the BGC will maintain its customer services such as installation and servicing. It would also be desirable for the corporation, in effect, to maintain some type of consumer contact points where people can go to obtain advice and also to pay their bills, I suppose. It is the intention of the Government to encourage the corporation to maintain these contact points. The matter was raised that the manufacturers of appliances will suffer gravely if the BGC are no longer in fact to maintain these gas showrooms up and down the High Streets, but I think there is a danger of overstating the position there. As my noble friend said, one can buy electrical appliances all over the country in many different types of showroom with a vast choice, and the fact remains that whatever happens to the BGC and its sales outlets people will still no doubt want to buy gas appliances, they will still continue to be made, and I think it is idle to say that there will be of necessity adverse employment repercussions if in fact the BGC withdraws from the retail selling of gas appliances.

I was asked a number of questions. The noble Baroness, Lady Fisher of Rednal, asked me how services to customers will be safeguarded. I think I have answered her. First, by legislation on safety standards, and, secondly, by the fact that nobody is suggesting that the services part of the BGC's activities should in any way be curtailed. She then asked if the Consumer Council, or any other consumer bodies, had been consulted. The National Gas Consumers' Council and the Consumers' Association both responded to the Government's invitation to comment on the report on the Monopolies and Mergers Commission. Both recognised that the problems identified by the MMC were real ones and that the Government would have to tackle them. Since the decision which is embodied in this Bill has been announced, neither has made written representations, but I understand that there have been meetings with Ministers and officials, and various views have been put forward particularly by the National Gas Consumers' Council.

I was asked whether gas appliances will have to conform to BSI standards. Of course such conformity is voluntary at present, and it will remain so. The Government intend to make regulations as soon as possible under the Energy Conservation Act 1981, which will require certain appliances to conform with EEC standards. The noble Lord, Lord Underhill, asked two questions. I really cannot answer his first question. We have not got nearly far enough down the road to say precisely what the British Gas Corporation will, or will not, do if and when the decision is taken so far as gas showrooms are concerned. I think I answered him, when he asked why go ahead, in what I have said.

May I finally come back to the amendment. I should say that the Government have no plans at present to privatise the BGC's transmission system, or its distribution system, or its customer services, as I have said. What we want to do is to increase the level of activity in the gas industry so that in addition to the services and supplies provided by the BGC there are services and supplies provided by others, and the efficiency of both is spurred on by competition. I take the point that safety considerations are paramount in this, but I hope that I have reassured my noble friend Lady Macleod that we have this very much in mind, and that legislation will see to it that in fact the person who buys a gas cooker can be just as confident as the person who buys an electric cooker that he or she is going to cook in safety.

The whole point of the gas supply provisions in the Bill is that they should be in the best interests of the consumers themselves, and also in the best interests of the gas industry and the nation. I hope that I have gone some way, at any rate, to dispel the worries which have been shown by Members of the Committee this afternoon. It may even be that the noble Baroness, on reflection, will see fit to withdraw her amendment.

Lord Hawke

May we be told who will train the army of gas fitters? Presumably the finance for that is provided at present by the profit on the sale of appliances. It would seem that there will be nobody in a big enough position to train all the necessary fitters.

The Earl of Mansfield

My noble friend seems to forget that there appear to be armies of trained gas fitters about now. Presumably the appliances will need to be installed, and maintained thereafter, and I can see no reason why the trained fitters who at present exist should not perform that task; and in the same way as electricians are trained, so will future gas fitters be trained.

Lord Beswick

The Minister said the Government intended to maintain what he called "contact points" if the gas showrooms are sold off. May I ask him to enlarge on that? By "contact points" does he mean that they will be in the High Street in the way they are now, convenient but very expensive? If so, over what other services will the costs, of rental and so on, be spread? Will it not be a very expensive operation to maintain the places there simply as contact points? 1 agree such places will be absolutely necessary, especially if some housewives buy houses only to find they must cook over candles. It would therefore be useful to be able to go to a contact point, so perhaps the noble Earl will explain just what is the Government's policy on the matter.

Lord Ross of Marnock

To provide better candles?

The Earl of Mansfield

I did not say the Government would maintain consumer contact points but that they would encourage the corporation to maintain them. Frankly, one does not need a highly expensive showroom in the middle of a city centre to collect people's cash for gas bills and provide advice to would-be customers. I foresee the gas corporation making local arrangements according to patterns of population and the consumption of gas which most commends itself to the corporation in any particular locality.

Lord Lloyd of Kilgerran

I thought the Minister's speech, to which I listened with attention, supported the general theme of the amendment. I do not propose to make a Second Reading speech, but I must comment on that part of the noble Earl's remarks when he referred to the safety of the consumer being paramount. I have some difficulty in understanding his objection to the amendment, having regard to the structure of the Bill. The noble Earl said that Clause 14, which deals with safety regulations, applied to safety in a limited area and did not apply to safety in relation to the ordinary domestic consumer who was purchasing appliances.

The Minister will correct me if I am wrong, but understood him to go on to say that when the Bill was passed, or at a later stage, the Government would introduce another measure dealing with safety regulations. It seems therefore that, regarding that aspect of the safety of the consumer being paramount, there is a lacuna in the Bill which the amendment would fill. The Minister did not make a real attack on the amendment, particularly bearing in mind the emphasis he placed on the safety of the consumer being paramount.

The Earl of Mansfield

When I said the safety of consumers was paramount, it was in the context of that part of the argument to which I was addressing myself. I first went into what I might call the Second Reading part of the argument; then I went on to the question of safety of supplies which, as I said, is dealt with in Clause 14 (that has nothing to do with showrooms and the provision of retail appliances on sale); and then I returned to the amendment. If the noble Lord looks at Clause 9, he will see that it is peculiarly inappropriate that an enjoinment—dare I say a meaningless enjoinment?—should be tacked on to a provision dealing with the shares of a relevant subsidiary. As I said, it would be inappropriate. The Government must bring in legislation before there is any disposal of this part of the corporation's activity, and I am sure the noble Lord agrees that it is undesirable to write unnecessary provisions into a statute in any circumstances, particularly if, as I said, that provision is vague in its application.

Lord Lloyd of Kilgerran

I am grateful to the Minister for that explanation and I hesitate to ask him to look at Clause 9 in more detail, but I would presume to draw his attention to the scope of that clause, particularly the last words of subsection (1)(c). The powers of disposal concern not only shares, to which the noble Earl referred, but also, any property, rights or liabilities of, the Corporation". I should have thought it was inevitable when dealing with the disposal of property of the corporation, that the question of liability and safety would be intimately connected with the products which the gas showrooms may be selling and of which the gas corporation may be disposing. The Government should at least reconsider the purpose of the amendment, otherwise from a practical and realistic point of view there will remain a lacuna in the Bill in relation to the inherent safety of the consumer; and that, to use a phrase often used these days, is paramount, as the noble Earl said.

Baroness Fisher of Rednal

I thank all noble Lords who have taken part in debating the amendment, and all those who have spoken have done so from a great deal of experience, with the exception of one noble Lord who freely admitted that he did not know anything about gas stoves and gas cookers. I was particularly impressed by the observations of the noble Lord, Lord Miles, my noble friend Lord Ross and those who emphasised the employment situation. Lord Miles took pride in the fact that the gas showrooms sold only British appliances; "Made in England" was something to be proud of, he said, and in another context we expect noble Lords opposite to express great fervour about the "British made "symbol.

That emphasis by the noble Lord, Lord Miles, on items being made in Britain is something I would tack on at the end of the arguments, I would adduce in favour of the amendment. That should be explained to those who say how easy it is to buy appliances from electrical stores. Of all the electrical goods in the retail shops today, not many have a "Made in England" stamp on them. The "white goods" trade in this country—household names like Hoover and so on—has really felt the draught from the importation of foreign goods. I should have thought that in terms of maintaining employment Conservative Members would think seriously before deciding to abolish the selling of gas appliances in gas showrooms.

I was very grateful for the observations of the noble Baroness, Lady Macleod of Borve. She has extensive knowledge of the subject, and as we saw again this afternoon, her experience is the result of her service as the first chairman of the National Gas Consumers' Council. I do not think that we should disregard the view of someone who has served in such a position, and who has known not only the wishes of the consumer, but also how the consumer's point of view can be put to the manufacturer and to the corporation itself. We should not gloss over the points that the noble Baroness, Lady Macleod, made this afternoon, in particular those about products—and I hope that the Minister listened carefully to what she said. She considered that some products which she had seen during her chairmanship were not up to the standards of safety which we should like to think would be paramount, to use the term mentioned by a noble Lord.

With regard to the monopoly question, I think that my noble friend Lord Underhill showed quite clearly that figures indicate there is no suggestion that the gas showrooms and British Gas are in a monopoly position in selling gas appliances. My noble friend gave figures which showed that that was not true. The important point here—and it applies to the question of safety—is that, if one is to purchase an appliance, one must be able to have spare parts. This is imperative. The situation is exactly the same when one buys a car. The back-up service for spares is important. Many criticisms have been made of our cars in Europe because we could not supply spares, which are paramount. My noble friend Lord Underhill gave figures which showed how the consumer could rely upon British Gas to provide spares. Let us hope that the noble Lord who made a purchase from a private enterprise shop will be able to get spares the day after his daughter rings up.

With regard to the question of competition between electricity and gas, I think it has always been maintained that the electricity boards and the gas industry should be in competition one with the other. It was important that the consumer should have a choice. At one stage solid fuel also came into great prominence, so that the consumer could benefit from competition between the various utilities.

I would point out that the showrooms are not simply retail outlets for appliances. They offer a local contact for consumers; I think that all noble Lords who have spoken have said that. If the showrooms are disposed of, services will have to be provided by some other means. As was asked by a noble Lord on this side of the Committee, what does it mean to have a consumer contact point? Is it to be a spot in the city market, open every Saturday afternoon? Is that what one calls a consumer contact point? I have never seen one. I do not know whether the noble Baroness, Lady Macleod, when she was the chairman of the National Gas Consumers' Council, ever considered what was a consumer contact point. It sounds more like an electricity term than a gas term. The Minister knows what it is. Most likely at a later date he will be able to tell us whether it will be painted red, white and blue, or green, or yellow, so that we shall know where it is when he has built it, or when he has told the gas corporation where to build it.

To me it seems absolutely pointless to break up a well-established organisation which is known to the consumer and is accepted by him as giving excellent service, merely to replace it with something else, at quite considerable expense. I propose that we divide the Committee on this issue.

4.35 p.m.

On Question, Whether the said amendment (No. 18A) shall be agreed to?

Their Lordships divided: Contents, 114; Not-Contents, 99.

DIVISION NO. 1
CONTENTS
Addison, V.	John-Mackie, L.
Airedale, L.	Kaldor, L.
Ampthill, L.	Kearton, L.
Amulree, L.	Kennet, L.
Ardwick, L.	Kilmany, L.
Auckland, L.	Kinloss, Ly.
Aylestone, L.	Kinnaird, L.
Bacon, B.	Leatherland, L.
Banks, L.	Lee of Newton, L.
Beaumont of Whitley, L.	Listowel, E.
Beswick, L.	Llewelyn-Davies of Hastoe, B.
Bishopston, L.
Blease, L.	Lloyd of Kilgerran, L.
Blyton, L.	Longford, E.
Boothby, L.	Loudoun, C.
Boston of Faversham, L.	Lovell-Davis, L.
Briginshaw, L.	McGregor of Durris, L.
Brockway, L.	Mackie of Benshie, L.
Bruce of Donington, L.	Macieod of Borve, B.
Byers, L.	McNair, L.
Caradon, L.	Mancroft, L.
Chitnis, L.	Mar, C.
Cledwyn of Penrhos, L.	Mayhew, L.
Collison, L.	Melchett, L.
Cross, V.	Milverton, L.
Crowther-Hunt, L.	Molloy, L.
Darling of Hillsborough, L.	Nugent of Guildford, L.
David, B.—[Teller.]	Oram, L.
Davies of Leek, L.	Parry, L.
Donnet of Balgay, L.	Peart, L.
Eccles, V.	Phillips, B.
Effingham, E.	Ponsonby of Shulbrede, L
Elwyn-Jones, L.	Porritt, L.
Evans of Claughton, L.	Rochester, L.
Faithfull, B.	Ross of Marnock, L.
Fisher of Rednal, B.	Sainsbury, L.
Foot, L.	St. Just, L.
Gaitskell, B.	Seebohm, L.
Gardiner, L.	Sefton of Garston, L.
George-Brown, L.	Somers, L.
Glenamara, L.	Stamp, L.
Gosford, E.	Stedman, B.
Hampton, L.	Stewart of Alvechurch, B.
Hanworth, V.	Stewart of Fulham, L.
Hawke, L.	Stone, L.
Hayter, L.	Strabolgi, L.
Hooson, L.	Strathcarron, L.
Houghton of Sowerby, L.	Strauss, L.
Howie of Troon, L.	Tanlaw, L.
Ilchester, E.	Taylor of Gryfe, L.
Jeger, B.	Taylor of Mansfield, L.
Jenkins of Putney, L.	Underhill, L.

Vaux of Harrowden, L.	Whaddon, L.
Wakefield of Kendal, L.	White, B.
Wallace of Coslany, L.—[Teller.]	Wigoder, L.
	Willoughby de Broke, L.
Walston, L.	Woolton, E.
Wells-Pestell, L.	Wootton of Abinger, B.

NOT-CONTENTS
Ailesbury, M.	Kemsley, V.
Airey of Abingdon, B.	Kinnoull, E.
Alexander of Tunis, E.	Kinross, L.
Allerton, L.	Lane-Fox, B.
Alport, L.	Lauderdale, E.
Avon, E.	Long, V.
Balerno, L.	Lucas of Chilworth, L.
Belhaven and Stenton, L.	Lyell, L.
Bellwin, L.	McFadzean, L.
Beloff, L.	Mackay of Clashfern, L.
Berkeley, B.	Mansfield, E.
Bessborough, E.	Margadale, L.
Blake, L.	Marley, L.
Campbell of Croy, L.	Massereene and Ferrard, V.
Cathcart, E.	Melville, V.
Chelwood, L.	Mersey, V.
Cork and Orrery, E.	Montgomery of Alamein, V.
Craigton, L.
Crawford and Balcarres, E.	Morris, L.
Crawshaw, L.	Mottistone, L.
Cullen of Ashbourne, L.	Mowbray and Stourton, L.
Dacre of Glanton, L.	Murton of Lindisfarne, L.
Daventry, V.	Northchurch, B.
Davidson, V.	Orkney, E.
De Freyne, L.	Orr-Ewing, L.
De La Warr, E.	Pender, L.
Denham, L.—[Teller.]	Rankeillour, L.
Dilhorne, V.	Rochdale, V.
Drumalbyn, L.	Romney, E.
Ebbisham, L.	St. Aldwyn, E.
Ellenborough, L.	St. Davids, V.
Elliot of Harwood, B.	Salisbury, M.
Elton, L.	Sandford, L.
Enniskillen, E.	Sandys, L.—[Teller.]
Ferrers, E.	Savile, L.
Fortescue, E.	Selborne, E.
Fraser of Kilmorack, L.	Sharples, B.
Gainford, L.	Sherfield, L.
Gisborough, L.	Skelmersdale, L.
Glenkinglas, L.	Spens, L.
Gridley, L.	Swinfen, L.
Grimston of Westbury, L.	Teviot, L.
Hailsham of Saint Marylebone, L.	Thomas of Swynnerton, L.
	Thorneycroft, L.
Halsbury, E.	Tranmire, L.
Harvey of Prestbury, L.	Trefgarne, L.
Henley, L.	Trenchard, V.
Holderness, L.	Trumpington, B.
Home of the Hirsel, L.	Vivian, L.
Hornsby-Smith, B.	Young, B.
Hylton-Foster, B.

Resolved in the affirmative, and amendment agreed to accordingly.

4.45 p.m.

Baroness Llewelyn-Davies of Hastoe

I wonder whether I may ask the Government Front Bench, after such a resounding defeat in respect of one of the basic clauses of the whole Bill, what their intentions are about the rest of the Bill?

The Earl of Mansfield

I am sure the Opposition, quite understandably, rejoice at such crumbs of victory as fall their way, and I have no wish to spoil the noble Baroness's fun; but at a private and convenient place outside this Chamber she may like to explain to me what this amendment meant and what its effect will be in the totality of the Bill, and I will then tell her the Government's intentions.

Lord Bishopston moved Amendment No. 19: Page 9, line 41, at end insert— (" ( ) Powers under subsection (1) above shall not apply to the disposal of any interests in a licence granted under the Petroleum (Production) Act 1934 as applied by section 1(3) of the Continental Shelf Act 1964 insofar as it relates to a right to get natural gas.").

The noble Lord said: I beg to move Amendment No. 19, which, after the resounding victory on the last amendment, would seem almost mundane; but surely it makes it imperative that the Government should review the basic policy of this Bill, which is concerned with privatisation—and not only with privatisation, but with the complete upheaval of a great public enterprise which has proved itself over many years as being one of the most successful enterprises, either public or private, in this country. It is no good the Minister shrugging off this real victory —and we do not look at it in terms of scoring a point over the Government; we are concerned about the basic essentials of this Bill. We are concerned about the principles of the Bill, and the Committee is far from satisfied that the Government have thought through some of the essential problems which their policy is creating.

Indeed, the Minister has already said that we should leave the Bill as it is and accept the Government's assurance that at some stage in the future they will come along and fill in some of the answers to the questions which the Committee has posed. So this is not a party matter between the two sides: it is a matter of real concern about the future of this great enterprise; it is about the uprooting of teams of dedicated staff who have been working together over many years, to the satisfaction of the public.

As I said on Second Reading, we are not concerned with an enterprise which has failed the nation, an enterprise which has made such monumental losses that something must be done about it; because the first thing the Minister himself said in moving the Second Reading of this Bill was that it was the Government's intention to lessen the area of public ownership. That is a matter between us, maybe; but the country is concerned about the effects of what the Government are going to do. It is also concerned, as we have been this afternoon, about the absence of any assurances in regard to some of the questions which have been asked; and, although I do not want to be personal, I thought that the Minister himself was somewhat unenthusiastic, or, rather, too technical, in replying to the points which had been made.

Of course, this amendment to Clause 9 concerns the gas corporation's powers of disposal. Clause 9(1) gives the gas corporation power to provide for the disposal in such manner as it thinks fit of any shares of a relevant subsidiary; and, of course, the amendment which is tabled would make some changes. I would remind the Minister that under the Gas Act 1972, introduced by the Heath Government of that time—not an Act introduced by a Socialist doctrinaire Government, but one enacted by Mr. Heath's Conservative Administration of 1972—one of the British Gas Corporation's statutory powers, as laid down in Section 2(2)(a), is: to search and bore for and get natural gas"; and, as we know, in the course of searching for natural gas it may well be that oil will be found. The then Conservative Government very sensibly included in Section 2(2)(b) the power: to bore for and get petroleum found in the form of crude oil in the course of searching, boring for or getting natural gas", and to treat any petroleum in such a way as to be able to sell it if it turned up.

The corporation has interests in a number of offshore licences where gas as well as oil has been found, or where there are strong grounds for believing commercial quantities of gas to be present. Even if one accepts the case for requiring the corporation to dispose of its oil interests, there can be no justificaton for insisting on the disposal of its gas interests and then leaving the corporation to compete with others for the purchase of that gas.

During the Second Reading in another place the honourable member for Bedford, Mr. Skeet, speaking from the Government Benches, suggested that the corporation should have an option on any gas to which it would at present be entitled by virtue of its share in a licence. He tabled a very similar amendment to the one to which I am speaking at the Committee stage here. During the debate he referred to several oilfields in which BGC had an interest—including Beryl A and B and North-West Hutton. He said. They are classically oilfields, but there is a little gas associated with them. Of course, as oilfields, they should be disposed of, but a right should be vested in British Gas to buy the gas. It is in the business of finding and distributing gas, and, if it has discovered gas in association with oil, it should not lose the right… I think that equity could be reached if the Minister says he will give the matter his earnest consideration to see whether anything can be done to assist BGC, which, after all, has been given the task to look for and get natural gas". That quotation is from cols. 680 and 681 of the afternoon session in another place on Tuesday, 2nd March. The Minister, in replying, gave an assurance that there were no present plans to privatise BGC's gasfield interests but said that if fields like Beryl A and B, Montrose, Fulmar, Hutton and North-West Hutton were left outside the scope of the Government's intentions, there would be nothing left to privatise.

The fact is that the proposal in this amendment is not that the oil interest should not be privatised but that, after the oil interests have been disposed of, BGC should retain ownership of any gas produced. This would go some way towards ensuring that BGC was left with some rights to match its obligations. It seems that the Government have no plans to amend the Conservative Government's 1972 Gas Act. If Section 2 is not amended by this Bill—and it does not seem to be—there seems to be some inconsistency. If it is not the Government's intention, their policy is in keeping with the Tory Minister for Industry in 1972 when he said, on 27th January 1972 (in col. 1643) that: the Corporation may find crude oil in the course of looking for natural gas. If it does so, it will have the power to sell it". the Minister may know that it is difficult to make a distinction between exploration and development programmes as they are not easily distinguishable.

I believe that the proposed amendment would not, as the Government may assume, exclude from disposal all oilfields with associated gas. It refers only to an interest in a licence in so far as it relates to gas. The suggestion is that when an interest in a licence is disposed of the corporation should retain its interest in any gas produced from the licence and take possession of its share of the gas on payment of the appropriate proportion of exploration and development costs attributable to the gas. The corporation would thus get the gas at cost, which seems proper since it risked money in the first place to find and develop it. In the light of the Committee's view on the last amendment, that they are dissatisfied with not only the subject of amendment that we discussed but the general attitude of the Government in relation to the policy they are pursuing, the Government might give a favourable reply to this amendment. I beg to move.

Lord Tanlaw moved Amendment No. 19A as an amendment to Amendment No. 19: Line 4, leave out ("insofar as it relates to a right to get natural gas").

The noble Lord said: I beg to move Amendment No. 19A. It would be for the convenience of the Committee that these two amendments are looked at together. Although the wording appears to be somewhat similar, the principles are somewhat wider in the amendment that I put down. I should like to support the noble Lord, Lord Bishopston, in saying that the principle behind this amendment is an important one to establish from the Government. In the debate on a previous amendment we heard the noble Earl express the Government policy that this Bill is to increase competition and not to decrease it. Also, we wish to know how this principle can be applied when the private oil companies are being asked to take over the board's oil interests whereas the gas board is not allowed to continue to maintain its oil operations.

We have made our approach from these Benches in the hope that it is the Secretary of State's position to be even-handed to both the public and the private sector interests contained in the Bill, whether it be oil or gas. Once this principle is broken, I think it very much weakens the main incentive for the Government to launch the Bill as it stands. There may be a reason for this. It has been mentioned earlier in Committee and Second Reading that the Government's intention is not one of principle but simply to raise money. If that is so, the noble Earl would be helpful if he expressed it. If he says that that is not the main intention of this Bill but that it is to increase competition, I cannot see how he can object to Amendment No. 19A (which is my amendment) to allow British Gas to continue with its exploitation of oil, and at the same time, with Lord Bishopston's amendment, he should allow the Gas Board the right to exploit the gas in its oil wells.

It is on this matter of principle that we put forward this amendment. I believe that, in some ways, it would strengthen the Bill and strengthen the Government's hands in getting the Bill through Parliament if they appear to remain even-handed in their approach and even-handed in their arguments in support of the very major changes that this Bill brings about. I beg to move.

Lord Beswick

Can we he clear about one point? The noble Lord who has just spoken stated that the purpose of the Bill, as declared by the Government, is to increase competition. He says that this is the principle. I wonder whether the noble Earl will confirm when he replies that that is so. Surely there is no principle in just increasing competition for its own sake. It may be useful for another principle to increase competition and it may be useful to have competition as an instrument to another end. But just to increase competition in itself surely cannot be to the national advantage. I thought that the purpose of this Bill was—I am not quite sure where the Government stated the purpose—to ensure that we have economically-produced energy from oil or from natural gas in quantities suitable for our national needs and at the lowest possible prices. Competition may conceivably help in some cases, but I cannot think that it is a basic factor that should override everything else.

If we are thinking in terms of getting natural gas in quantities appropriate to our national needs and at as economical a price as possible, I should have thought that we should be encouraging the British Gas Corporation. After all, they have had more experience in this field than most other agencies or companies around. They have proved themselves successful. Unless this amendment is accepted, they will be discouraged. Will the noble Earl tell us how the British Gas Corporation can be expected to go out and explore for further natural gas deposits if, having done so, they are going to lose the right to develop them further for their own purpose? That cannot be an encouragement. That cannot be an efficient way of running our national economy.

I hope that the noble Earl, when he considers this amendment, will see that basically it is in the best interests of our nation. The British Gas Corporation, if they find a field, if they are able to discover more supplies of oil, should be enabled to keep that supply in order to distribute the oil among their own customers. Unless that is so, unless that is done, I can see that the corporation will be completely frustrated and we shall lose one very valuable agency for the development of our national energy resources.

5.2 p.m.

The Earl of Mansfield

The noble Lord, Lord Beswick, comes back to the central question which he has asked on a number of occasions: what is the point of this Bill? I see that I said on Second Reading that the sale of the corporation's offshore assets will put them in the hands of the private sector, where they will be used to better effect.

On studying that remark, I agree with myself wholeheartedly. It will increase competition, apparently a motive with which the noble Lord is inclined to disagree—even to quarrel. In the first part of my remarks on the last amendment, where I went back to Second Reading considerations, I tried to show how the gas industry in this country is in need of change so far as its structure is concerned, and we consider that this is the best way of going about that matter.

If I may come now to Lord Tanlaw's amendment, may I say that the Government have made it absolutely plain that they intend to use the provisions in Clauses 9 to 11 to bring about the disposal of the British Gas Corporation's interests in offshore oilfields. The effect of this amendment would be to prevent the BGC from using its powers under Clause 9(1) to dispose of any offshore licence interests, including the interests in offshore oilfields in respect of which, as I have said, we have announced that we intend to use or make use of provisions in Clauses 9 to 11. If this amendment were accepted as an amendment to Lord Bishopston's amendment, it would effectively prohibit the disposal of any interests in offshore licences. It would not wreck the Bill but it would go a long way towards wrecking the intention of this Part of the Bill.

I have said before that there is absolutely no reason why the gas corporation need be involved in the production of oil. The history of the development of our oil resources is one of successful private enterprise. What the noble Lord seeks to do is basically against the whole concept and policy of this Part of the Bill. I say shortly but categorically that we reject that.

Then I come to Lord Bishopston's amendment. It may be convenient if I talk to it in the same speech and almost in the same breath as I did to Lord Tanlaw's amendment; then we can see where we get to. I repeat that the powers are to be used—in the first instance at any rate—to dispose of BGC's offshore oil assets. We also, as we discussed a few moments ago, intend to deal with the problem which was identified last year by the Monopolies and Mergers Commission, although there are no specific plans to use these powers.

If I may put this in parenthesis: the disposals in relation to gas would be much more complicated than in relation to oil. It is for that reason that any scheme —and there will no doubt be a series of schemes—would be complex and extremely wide-ranging. It is for that reason that plans have not so far been drawn up; and it is one of the reasons why—and I was going to answer a point of Lord Underhill, but he is not in his place—this Part of the Bill is subject to Clause 31 and not to Clauses 1, 2 and 3 which we talked about last week.

Nevertheless, as a matter of general principle, the Government consider it right that powers should exist to implement any future disposal proposals; the present powers of disposal and direction in Sections 6(1) and 7(2) of the 1972 Act have not excluded specific types of asset from disposal, and neither should the new powers contained in the Bill. So we have there a point of principle which makes one incline against the amendment.

I come to the point of associated gas. Wherever there is an oilfield there is also associated gas produced. An amendment of the type which we are discussing now might rule out any future disposal of interests in gas fields. It also might prevent the disposal of those very oilfields which the Government have made clear all along are the first target of the powers simply because, like all oilfields, they produce some associated gas. That too would defeat a fundamental purpose of the Bill.

I repeat assurances which have been made before: at present there are no plans for the BGC's interests in gasfields to be privatised. We have a general belief that in principle disposal powers should be available generally to facilitate future disposals as well as those envisaged at the time. Secondly, the practical point that I have referred to—that is to say, the associated gas which is a concomitant part of oilfields—is one which makes one reject this particular amendment.

Perhaps with that explanation—because in their different ways these amendments do go to the heart of the Bill—the noble Lords may see fit to withdraw them.

Lord Beswick

The noble Lord did not answer my question. I wonder whether he would be good enough to think again and give a further answer to it. If the British Gas Corporation, finding gas, are required under the Bill to dispose—if the noble Earl will give me some idea when he is likely to finish his other conversation, I shall continue with my question.

The Earl of Mansfield

If the noble Lord will allow me, one is perfectly able to listen to the noble Lord's tautologous points and also confer with colleagues at the same time.

Lord Beswick

I am so glad to hear that. I personally find it impossible to conduct two conversations at the same time. I was asking whether the noble Earl can tell me, if the British Gas Corporation in their search for oil are required under the Bill to dispose of those gas interests, it will encourage or discourage them? If it discourages them, are we not reducing competition instead of encouraging it?

The Earl of Mansfield

The noble Lord, with great courtesy, merely puts a point which, if I may say so, he has been making at quarter-hourly intervals throughout the consideration of this Bill. But to answer his point—if in the future, taking this Bill as it stands and with no privatisation of the gas, the gas corporation discovers an oilfield, it would be privatised—the gas would be bought by the gas corporation in the way in which it will buy gas in the future: by offering for it. If I may say so, I do not think the matter is quite so simplistic as the noble Lord infers. The gas corporation will not be inhibited in its future exploration by these forms of considerations.

Lord Bishopston

I listened carefully to what the Minister said, and I had the idea that he rather suggested—he will correct me if I am wrong—that there was some doubt about the Government's intention to privatise gas in the North Sea. He will undoubtedly have the words before him, but—

The Earl of Mansfield

Do not let there be any doubt about this: what I have said is that, as it stands at present, the Government have no intention of privatising the British Gas Corporation so far as its pure gas interests are concerned.

Lord Bishopston

That is useful information, but as recently as March, when the Standing Committee in another place were looking at this particular aspect, the Minister said, in column 685 on 2nd March—and I quote: Several options are being examined in detail and until work is completed it would be premature of me to conclude which route would be preferable". Later in the same column he is reported as saying: No final decisions have been made on the method of privatisation of BGC's oil assets". If the Minister is able to say—and undoubtedly it would not be unreasonable for him to do so—that this matter is still under consideration by the Government, I may be inclined to seek leave to withdraw the amendment, with the possibility of raising the matter at a later stage.

Lord Tanlaw

If it is correct that I may speak now on my amendment, I wish just to return to this one simple point of why this amendment was ever put down. It was not intended as a wrecking amendment, attempting to stab the Bill in the heart, so to speak; it was merely intended to raise the issue that British Gas are operating in competition efficiently and successfully in the oil business and are being penalised—I think unfairly—if this aspect is taken away from their business, whereas the oil companies who are at present in competition with British Gas operating these fields are allowed access to British Gas interests or to act as competitors to British Gas. Therefore, although I am afraid I disagree with the principles put forward by the noble Earl the Minister, if he advises me that this amendment is a wrecking amendment in the sense that the Bill would be destroyed by it, which was not the intention, I would perhaps wish to come back to this matter when we reach Clause 31. I beg leave to withdraw the amendment.

Amendment, to the amendment, by leave, withdrawn.

Lord Skelmersdale

We may have got into some slight muddle at this point. The amendment to the amendment has been withdrawn, but I know that the noble Lord, Lord Bishopston, would like to have an answer from my noble friend in reply to his point before deciding on what action to take on Amendment No. 19.

The Earl of Mansfield

May I say that I am not in any state of muddle at all. I do not want to be unkind to my noble friend, but I had hoped that the noble Lord, Lord Bishopston, having reflected on my recent words of wisdom, would not think that they needed to be embroidered any further. But, of course, I shall be very happy to do so.

Let us go back to the matter of the privatisation of the oilfields, which I think is what the noble Lord really wants to know about. As I tried to say earlier, we have not made any final decisions about privatisation of the gas corporation's oil assets, and still less about the methods which would be adopted to do that. It is for that reason—and it is, I anticipate, a step-by-step approach that will depend to some extent on the factors affecting each particular field—that this part of the Bill has been drafted in a slightly different way, and that the checks and balances, as the noble Lord, Lord Tanlaw, inferred when he referred to Clause 31, have been put in.

Lord Bishopston

In view of the Minister's reply, which rather suggests some fluidity in the oil and gas business, and in view of the possibilities of what might be in the pipe-line, I seek leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.18 p.m.

Lord Strabolgi moved Amendment No. 20: Page 10, line 7, at end insert ("and after the laying of an order before Parliament together with an accompanying memorandum setting out the terms on which the disposal is to be made.").

The noble Lord said: I beg to move Amendment No. 20. As your Lordships are aware, Clause 9(2) requires the Secretary of State's consent and the approval of the Treasury to the disposal by the corporation under Clause 9(1) of shares in the relevant subsidiary. The Secretary of State's consent, though, is not subject to any parliamentary procedure—not, I may say, for the first time among the legislation proposed by this Government during this Parliament. Thus, if the corporation proposed to dispose of particular aspects and to that end transferred them to a subsidiary, the shares of the subsidiary could be disposed of simply with the consent of the Secretary of State and without any reference to Parliament. Moreover, under Clause 11 the Secretary of State could presumably direct the corporation to set up a subsidiary and transfer certain assets to it. The direction would have to be given by order, but there seems to be no requirement that the order should specify what is to be done with the shares. Alternatively, he could direct the corporation to prepare a scheme under Clause 10 which he could approve, subject to such modifications as he thought fit. Again, the direction would have to be given by order but need not deal with the subsequent disposal of shares. Parliament therefore might have no opportunity to scrutinise the terms of disposal. The purpose of the amendment is to ensure that the Secretary of State cannot consent to a disposal without the authority of Parliament and that Parliament, without approving an order, will have an opportunity to study the terms.

The Memorandum and Articles of Association with Britoil are now available and indicate how the Government propose to exercise control over the ownership and direction of Britoil, but they give no indication of the terms on which shares may be disposed of. What is needed, I submit, is a full prospectus which can be studied by Parliament and is subject to parliamentary approval. In the case of both Britoil and British Gas, the disposal of valuable national assets is at stake and previous ventures into privatisation do not inspire confidence that the Government can be left to carry out these disposals without detailed scrutiny of their proposals before the event. I need hardly remind your Lordships of the great row there was over the disposal of Amersham and the incompetent way in which it was handled. Indeed, there has been recent criticism by the all-party Public Accounts Committee—surely the oldest and most powerful of all the Select Committees of another place—of the disposal of British Aerospace, Cable and Wireless and Amersham, which adds force to the argument. All that this amendment seeks to do is to ensure that Parliament has control over these disposals. I beg to move.

Earl De La Warr

I find this to be a very strong amendment, and it is much stronger than anything that was moved in an earlier part of the Bill. It is not so much so of the first part of the amendment, but of the second part, which reads: together with an accompanying memorandum setting out the terms on which the disposal is to be made". I was very surprised to hear the noble Lord use the word "prospectus", because, with great respect to him, this imposes upon Parliament a duty which it is quite incompetent to perform. We are not a committee of bankers and we are not competent to fix a proper price on a certain day. This is a highly technical affair and I am very surprised that the noble Lord should be asking Parliament to embark on a new venture of this type.

We all know about Amersham, and noble Lords may wish to draw other companies in aid; but so far as Amersham is concerned I am sure that the lesson is well learned. It did go wrong, but I think we can leave it to the Minister to act by executive action, with professional advice, to make sure that this kind of thing does not happen again. But I really make a plea that the noble Lord will not impose a duty of this kind on Parliament, because we are not here to perform that task.

Lord Lovell-Davis

I would take issue with the noble Earl who has just spoken. It seems to me that this is a matter which was very extensively covered in the Second Reading debate, and there was a great deal of disquiet over the whole of your Lordships' House about it. It seems to me astonishing that any noble Lord who has pledged himself to less Government should be prepared to troop through the Lobby against such an amendment, in support of an extension of any Secretary of State's powers. What is meant by "the Secretary of State's powers"? It seems to me that it means major decisions made behind governmental—and that means departmental—doors, which need not be put forward at all for any parliamentary scrutiny, as my noble friend Lord Strabolgi has said. We are talking about the disposal of public assets—and massive ones at that—and I believe that this amendment is vital to safeguard the public interest, and to ensure that we reserve our right to know what is happening behind those doors.

5.22 p.m.

The Earl of Mansfield

This is a matter which exercised another place at some length. I say that only because I had rather expected the noble Lord, Lord Strabolgi, to say that the Government undertook to review the matter. He might have asked what had been the result of that review, because my honourable friend Mr. Mellor, at column 717 of the Official Report for Standing Committee E said: It is not the habit of Governments, before they have made a decision on an important and commercially sensitive matter, to lay before committees or any other bodies, a whole host of background material relating to the precise form that those decisions will take … but because the question has been pursued as it has … it will be looked at… But I do not hold out much hope". I say that because I want to assure the noble Lord that the matter has been looked at, without any different conclusions being reached.

If one considers the noble Lord's amendment for a moment, what he seeks to do—and we discussed a very similar amendment in relation to the first three clauses of the Bill— is to insert an additional layer of parliament tary scrutiny and inquiry into the disposal process, if I may so describe it, which would be disposing of the shares in a wholly-owned subsidiary of the BGC. We consider that the Bill already secures adequate opportunity for Parliament to obtain information about disposals initiated by the Secretary of State, by virtue of the provision in Clause 31(2), which—and I appreciate this—imposes what I might call the negative resolution procedure. That shall apply to directions under Clause 11(1), or orders transferring shares to the Secretary of State under Clause 11(4).

So that in either of those two instances, either where there is a direction on the BGC to dispose of shares in a wholly-owned subsidiary, or where there is an order transferring shares to the Secretary of State for subsequent disposal under Clause 11(4), Clause 31 comes into play. I should point out that, if there is a disposal which is initiated by the corporation itself of a wholly-owned subsidiary, then that remains an internal matter for the corporation and I cannot see any reason why Parliament should be informed as to that.

I come back to initiatives on the part of the Secretary of State. When Clause 31 has to be invoked—in other words, the negative resolution procedure—that provides the opportunity for Parliament to discover, as it were, the details of the disposal. It provides Parliament with an opportunity to ask about the terms on which the disposal is to be made, and about any other item of interest. That, surely, is the time for discussion and not before. The giving of a consent under Clause 9(2) will be merely a consequence of the action initiated by the direction, and it would be superfluous for Parliament again to be informed with details of the terms of the disposal. The information would be no more than old news because, by definition, the discussion on the direction would already have taken place.

I hope that I do not have to repeat the remarks which I made a week ago on the potentially adverse effect that publication of the details might have on an offer, which, as we debated last week, would very much depend on fairly rapid judgments being proferred, and advice being offered by those who advise the Secretary of State at any particular time. But I conclude by saying that there is no precedent for the principle of this amendment in the 1972 Act, which gives the BGC powers, and, where it limits them, does so by requiring a consent or approval from the Secretary of State, but without any requirement to lay instruments or orders before Parliament. So I have to say to the noble Lord that, just as the amendment was inappropriate in so far as the disposal of shares in an oil subsidiary was concerned, the same applies to gas.

Lord Strabolgi

I am grateful to the noble Earl for his explanation. But this is really a question of principle and of the accountability of Parliament, as my noble friend Lord Lovell-Davis has said. I agree with the noble Earl, Lord De La Warr, that the disposal of Amersham was a disaster and it would have been better to be wiser before the event, rather than after. The noble Earl, Lord Mansfield, seems to think that Parliament is probably not competent to judge these matters, but particularly in the other place there are the Select Committees, including the powerful Public Accounts Committee, which go into these matters in considerable depth. It would be better if they had had a chance to look at it before rather than after the event. So this is a question of principle—the accountability of Parliament and the Secretary of State's accountability to Parliament. For this reason, I feel bound to press the amendment.

5.30 p.m.

On Question, Whether the said amendment (No. 20) shall be agreed to?

Their Lordships divided: Contents, 73; Not-Contents, 103.

DIVISION NO. 2
CONTENTS
Airedale L.	Kennet, L.
Amulree L.	Leatherland, L.
Aylestone L.	Lee of Newton, L.
Balogh L.	Listowel, E.
Banks L.	Llewelyn-Davies of Hastoe, B.
Beaumont of Whitley L.
Beswick L.	Lloyd of Kilgerran, L.
Bishopston L.	Longford, E.
Blease L.	Lovell-Davis, L.
Blyton L.	Mackie of Benshie, L.
Boothby, L.	McNair, L.
Boston of Faversham, L.	Molloy, L.
Briginshaw, L.	Ogmore, L.
Brockway, L.	Oram, L.
Bruce of Donington, L.	Parry, L.
Byers, L.	Peart, L.
Chitnis, L.	Phillips, B.
Cledwyn of Penrhos, L.	Ponsonby of Shulbrede, L.—[Teller.]
Collison, L.
Darling of Hillsborough, L.	Rochester, L.
David, B.— [Teller.]	Ross of Marnock, L.
Davies of Leek, L.	Seear, B.
Donaldson of Kingsbridge, L.	Stedman, B.
	Stewart of Alvechurch, B.
Elwyn-Jones, L.	Stewart of Fulham, L.
Evans of Claughton, L.	Stone, L.
Fisher of Rednal, B.	Strabolgi, L.
Gladwyn, L.	Tanlaw, L.
Glenamara, L.	Taylor of Mansfield, L.
Hampton, L.	Tordoff, L.
Hanworth, V.	Underhill, L.
Harris of Greenwich, L.	Wallace of Coslany, L.
Houghton of Sowerby, L.	Walston, L.
Jeger, B.	Wells-Pestell, L.
Jenkins of Putney, L.	Whaddon, L.
John-Mackie, L.	White, B.
Kaldor, L.	Wigoder, L.
Kearton, L.	Wootton of Abinger, B.

NOT-CONTENTS
Allerton, L.	Cullen of Ashbourne, L.
Alport, L.	Dacre of Glanton, L.
Auckland, L.	Daventry, V.
Avon, E.	Davidson, V.
Balerno, L.	De La Warr, E.
Belhaven and Stenton, L.	Denham, L.—[Teller.]
Bellwin, L.	Dilhorne, V.
Beloff, L.	Drumalbyn, L.
Bessborough, E.	Ebbisham, L.
Blake, L.	Eccles, V.
Boardman, L.	Ellenborough, L.
Cathcart, E.	Elliot of Harwood, B.
Chelwood, L.	Elton, L.
Cork and Orrery, E.	Enniskillen, E.
Cottesloe, L.	Faithfull, B.
Craigavon, V.	Ferrers, E.
Cross, V.	Fortescue, E.

Gisborough, L.	Mersey, V.
Glenkinglas, L.	Mills, V.
Greenway, L.	Milverton, L.
Gridley, L.	Montgomery of Alamein, V.
Grimston of Westbury, L.	Mottistone, L.
Hailsham of Saint Marylebone, L.	Murton of Lindisfarne, L.
	Northchurch, B.
Halsbury, E.	Nugent of Guildford, L.
Hawke, L.	Orr-Ewing, L.
Henley, L.	Pender, L.
Holderness, L.	Rankeillour, L.
Hornsby-Smith, B.	Rochdale, V.
Hylton-Foster, B.	Romney, E.
Ilchester, E.	St. Aldwyn, E.
Inglewood, L.	St. Just, L.
Kemsley, V.	Sandys, L.—[Teller.]
Kilmany, L.	Savile, L.
Kinnoull, E.	Selborne, E.
Kinross, L.	Sharples, B.
Lauderdale, E.	Skelmersdale, L.
Lindsey and Abingdon, E.	Spens, L.
Long, V.	Stanley of Alderley, L.
Lucas of Chilworth, L.	Swinfen, L.
Luke, L.	Terrington, L.
Lyell, L.	Teviot, L.
McFadzean, L.	Thorneycroft, L.
McFarlane of Llandaff, B.	Tranmire, L.
Mackay of Clashfern, L.	Trefgarne, L.
Macleod of Borve, B.	Trumpington, B.
Mancroft, L.	Tweedsmuir, L.
Mansfield, E.	Vaux of Harrowden, L
Mar, C.	Vivian, L.
Margadale, L.	Wakefield of Kendal, L.
Marley, L.	Willoughby de Broke, L.
Massereene and Ferrard, V.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

Clause 9, as amended, agreed to.

Clause 10 [Provisions supplementary to section 9]:

5.39 p.m.

Lord Bishopston moved Amendment No. 21: Page 11, line 27 leave out from first ("provisions") to ("as") in line 28.

The noble Lord said: I beg to move Amendment No. 21. As your Lordships know, Clause 10 contains provisions which are supplementary to those contained in Clause 9. The amendment seeks to delete the words in the brackets. The Committee will know that we are still discussing the powers of disposal of the British Gas Corporation. The wide terms of reference gave powers to the corporation, in conjunction with the Secretary of State, to change the contractual relationships between the corporation and other North Sea partners. The words in the brackets affect—I think some would say undermine—the laws of contract.

Clause 10 confers powers on the corporation. In fact, this clause is very much like the earlier clause with respect to BNOC. Under Clauses 3 and 11, the Secretary of State can direct the corporations to exercise their powers in such a manner as he may specify, whatever that may mean. Thus, the third party contracts could be amended against the wishes of the third party, by either the corporations or the Secretary of State if these words remain in the Bill. If I can give an example, an offshore operating agreement involving BNOC could be modified without the agreement of the other parties or a scientific research company undertaking research work for one of the corporations during which it must show confidential knowhow not protected by patents or the applications of patents, et cetera, to the corporations. It might not be willing to enter into such a contract with a commercial company because this could lead to the loss of part of the scientific base of the company. However, the effect of the Bill is to allow the corporation or the Secretary of State to force such a situation on the company.

Clause 10(4) will permit the BGC, regardless of what the Secretary of State says, to construe the contract as meaning a private company rather than the BGC. It seems to me that privatisation could affect a subsidiary which becomes a private company. The relationship which existed between the BGC and a non-competitor and a contractor could become an agreement between a private enterprise and another partner, possibly in conflict with the partner concerned. After privatisation takes place, it seems that there is some doubt about the position of agreements. I would ask: What is the position of agreements entered into with the corporation and not a private concern? If there are disputes about the interpretation of the contracts, how can matters be settled, possibly without going to the courts? Unless the Ministry gives some clarification during the passage of this measure, various questions which I have posed need an answer, and clarification is essential if the BGC and others who may be in the relationship with it are to know where they stand. With those words, I beg to move Amendment No. 21.

5.42 p.m.

The Earl of Mansfield

This amendment would remove the clarification that ensures that a scheme transferring assets from BGC or a wholly-owned subsidiary to a relevant subsidiary can include supplementary provisions relating to the interpretation of licences, agreements and other documents. Perhaps I should explain the purpose and why these words appear in the Bill.

Subsection (2) of Clause 10 creates the power to make a scheme or schemes, transferring assets of the corporation or a wholly-owned subsidiary to other wholly-owned subsidiaries with a view to disposal of the assets by the means described in paragraphs (a) and (b). Subsection (3) says that the scheme may provide that rights and liabilities specified in the scheme shall be enforceable by or against both or either of the transferor or the transferee and that the scheme may create new rights and liabilities between these two parties. In the case of BCC's offshore oil interests and probably in the case of other interests too, the rights and liabilities mentioned in subsection (2) and paragraph (a) of subsection (3) are at present to be found in licences or agreements to which BGC is a party. Where any of those rights and liabilities are transferred by means of the scheme to a subsidiary, it will be necessary for those licences and agreements to be read as if the transferee was the party thereto in place of BGC. This might be achieved by applying paragraph 8(2) of Schedule 1 to the interpretation of such licences and agreements on and after the transfer date or by setting out the textual adjustments to the documents in the scheme itself. This would be done under the powers contained in lines 26 to 29 and those adjustments would be prefaced by a formula to the effect that on and after the transfer date certain documents are to be read "as if" certain adjustments to their text were made. In the Government's view it is entirely reasonable that BGC should be able to adopt this approach in the scheme if it appears to them to be necessary or expedient to secure the effective enforcement of those rights and liabilities from the transfer date.

I appreciate that at first blush the passage may appear to give one party a unilateral right to amend agreements and other documents. I would reassure the noble Lord by pointing out that lines 26 to 29 contain the safeguards that any amending provisions in the scheme may only be supplementary, incidental or consequential to the transfer of assets effected by the scheme, and they may only be included if BGC considers them to be necessary or expedient. In addition, there are further safeguards in subsection (2) that a scheme may only be made for the purpose of facilitating a disposal of shares in a relevant subsidiary and in subsection (5) that a scheme cannot come into force until it has been approved by the Secretary of State. The Department of Energy will ensure that these safeguards are sufficient to keep the provisions of a scheme within the limits prescribed by the legislation. I hope that what I have said satisfies the noble Lord, Lord Bishopston, on this point.

5.46 p.m.

Lord Lloyd of Kilgerran

I wonder if the noble Earl the Minister will agree with me that the word "rights" will include what is somewhat pompously known as intellectual property rights—that is to say, rights in relation to patents, trademarks, know-how, copyright and designs. The noble Lord, Lord Bishopston, did make mention of patent rights and as I understand it, no answer was given to that specific point by the noble Earl. I am not complaining because he probably included patent rights in his general statement. But these intellectual property rights are of tremendous value to organisations which own them. Can the noble Earl the Minister give an assurance that there is adequate protection to the British Gas Corporation in the scope of this Bill if the corporation themselves have acquired as a result intellectual property rights which they do not wish to dispose of? These rights can be of great value internationally and can be exploited abroad. Therefore, when they are considering the transfer of rights, will the Government fully consider safeguarding intellectual property rights?

The Earl of Mansfield

"Rights" in this case undoubtedly include patent rights or any other form of right; but, of course, as between the transferor and the transferee. So, broadly speaking, what the Secretary of State would want to achieve in such an eventuality is that the third party would be left in a neutral position so far as the transferor or transferee was concerned. I hope that satisfied the noble Lord.

Lord Lloyd of Kilgerran

I thank the noble Earl for his reply but it does not quite cover the scope of my anxiety about the ownership of intellectual property rights in this connection, in view of their potential value. Perhaps it was unkind of me to ask a question on a technical matter at this stage without giving notice to the noble Earl. I will leave it until another occasion to raise this particular point.

The Earl of Mansfield

Perhaps I will shorten the labours of the House by saying that I will communicate with the noble Lord, Lord Lloyd of Kilgerran, so far as any broadening or amplification of what I have said may be necessary.

Lord Lloyd of Kilgerran

Again, I am very grateful to the noble Earl.

Lord Bishopston

If I may join the Alliance temporarily in order to get a copy of the letter from the noble Earl, that would be helpful. But I must say that I am still at a loss to understand the reply given by the Minister. He may have some advantage over me in that respect but it seems to me that unilateral action here is hardly justified because it puts at least one party at a severe disadvantage in relation to the others. Although the Minister may say that the provisions to which I have made reference may not be used in the way in which we anticipate, one wonders why the words are necessary in the Bill. I rather feel this is a matter to which we might return later on, and I would seek leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 agreed to.

Clause 11 [Powers of Secretary of State as respects disposals by Gas Corporation]:

[Amendments Nos. 22 and 23 not moved.]

5.51 p.m.

Lord Bruce of Donington moved Amendment No. 24: Page 12 line 23, at end insert— ("Provided that the Corporation shall be entitled to retain an amount representing the net book value of the property and rights disposed of together with any tax or other residual liabilities or where the disposal consists of shares in a relevant subsidiary, such a proportion of that amount as is represented by the proportion of shares disposed of and any costs arising from the disposal.").

The noble Lord said: I beg to move Amendment No. 24, and, with the permission of the Committee, take Amendment No. 25 with it. These amendments are indeed very modest amendments, as I shall seek to show. They are, moreover, consistent with what is generally known in respectable financial commercial and industrial circles as ordinary commercial probity. To that I shall return.

Clause 11, your Lordships will recall, gives the Secretary of State power to require the board, under Section 9, to obey his directions in regard to the disdisposal of "any shares of a relevant subsidiary", of "the whole or any part of the undertaking of, or any property, rights or liabilities of, a relevant subsidiary", or (c)"any part of the undertaking of, or any property, rights or liabilities of, the Corporation."

These as we have already said are enormous powers; we did indeed reiterate it on Second Reading and I feel quite sure the point has been made again today, although for other reasons I was not able to be here for the early part of the debate; therefore, I will not seek to elaborate further upon it. They do give the Secretary of State enormous powers. The assets of the corporation and its undertaking including its subsidiaries are, of course, extremely valuable.

Indeed, if I may refer your Lordships to the latest accounts—I have an additional copy here for the Minister if he feels it necessary to be taken through any points—the total net assets of the undertaking consolidated amount to some £10,000 million. This is a very large sum. Of course, the right to sell off essential services has been rather restricted so far in your Lordships' House by the passing, against the Government, of an earlier amendment. Nevertheless, the amount of assets in the undertaking as a whole and its subsidiaries that can be sold off at the direction of the Secretary of State represent a very formidable sum indeed.

So far the publicity attending the reason for the sell off of certain subsidiaries or parts of British Gas has been based on the supposition that if certain assets, or parts of an undertaking, or indeed the whole of a subsidiary undertaking, were transferred to private enterprise then the consumer would be far better off, the economy generally would be healthier, it would promote competition, in short, it would satisfy all those favourite nostrums, political nostrums though they are, of the Conservative Party. Be that as it may. The Conservative Party are entitled to have their own philosophy about the benefits of private enterprise, just as we on our side have our right to say that on the whole we prefer the mixed economy but with the commanding heights of the economy susceptible to more planned and co-operative control in the interests of the community at large. These are arguments which are quite proper to go across the political spectrum and these are the arguments that so far have been adduced.

But there are other reasons as well. Your Lordships may be aware—I hope I do not tax your memories or your reading glasses too much—that in the course of the Second Reading debate I did indicate that the very term "privatisation" meant robbery; indeed, as I pointed out from the English dictionary, the word "private" itself means to rob. So we come to a part of the Bill which has not received very much publicity at all. Even though the theory of the party opposite is vindicated—the parts of the undertaking are sold off to private enterprise, and thereafter there is nothing much to do except to wait for the results of the beneficial competition—the other part is there.

The untutored observer might think that, however regrettable it was for the undertakings to be sold off to various private enterprise concerns, the corporation would not suffer very much anyway because of course it would receive the money for which the assets were sold. But under this Bill such is not the case. The corporation is going to be required by the Secretary of State to sell off its assets or parts of them, or subsidiaries or parts of them, but who gets the money? Not the Gas Corporation, but the state. In other words, the real reason—aside from the establishment— of a rather threadbare theory of competition, to which the Party opposite is addicted—is of course to grab the money which arises from the sale of the assets. There are good precedents for this. The party opposite have done it already, in the last two years, when they imposed a compulsory levy on British Gas and forced them to pay over into the Consolidated Fund sums out of their profits, in addition to normal taxation, in relief of general revenue. Of course, what they are going to do is this. They are going to sell these assets, with the powers contained in this particular section, and the proceeds, which may be £100 million, £200 million, £300 million, £1,000 million, are not going to British Gas but straight into the Consolidated Fund.

I pause at this point to remind your Lordships that the party opposite is reckoned to be a party of businessmen, men addicted to the pursuit of enterprise on high business principles, and we hear very often the terms "good housekeeping" and "good management". It never has been good management in my book to use the proceeds of capital realisation to spend as current income; it never has been. If the party opposite has any other ideas on that I would be glad to hear them. The answer, of course, is that this Bill is indeed intended to private, indeed to rob, the corporation.

All these amendments seek to do is to say that when an asset is sold, or when a subsidiary is sold, then in effect the gas corporation shall be reimbursed to the extent of the value at which these assets stand in their own books. In that we are being extremely moderate because we could have put down an amendment, with which your Lordships in all parts of the Committee would undoubtedly have agreed, that the whole proceeds of the sale should be paid to British Gas itself, although perhaps confidence in that is not so good since the disastrous Amersham and other realisations which, of course, cost the Government £21 million in terms of the completely unnecessary underwriting commissions that they paid. No, all we are saying is that the books of British Gas should be left exactly as before; that instead of the assets—which the powers under this Bill enable the Secretary of State to sell—the moneys or the proceeds should be paid into British Gas only to the extent of their book value.

For the life of me I do not know what arguments the Secretary of State will have against that. Speaking in another place the right honourable gentleman did agree with his usual modest disposition, with which all of your Lordships are well acquainted, that there would be refunded to the gas corporation the actual costs which it incurred in the course of the operation. It is almost as though a generous burglar, having robbed a house of all its silver, in a fit of remorse said that he would then send a postal order to the person from whom the goods had been stolen to the approximate cost of the jemmy which he had used in order to get into the building. It is not a very attractive proposition.

What will happen to British Gas on the assumption that the Government take the proceeds, less probably the small amount of costs that are incurred? What will be the effect on British Gas? The first question that I should like to ask the noble Lord is as follows. How does he propose that this matter should be dealt with in the books of British Gas? I have a copy of the accounts here with me. He quite clearly cannot write off the proceeds of sale against capital liabilities. He might write it off against the current cost reserve because the accounts are prepared on a current cost accounting basis. Or he might write it off against retained profits. How will he do it?

The whole supposition is that the assets having been sold, the reason why the Government are taking the money is that they think—and I repeat "they think"—British Gas will not have any need of it. Who are they to say what British Gas will need? Are they going to set themselves up as civil servants, lawyers or accountants for that matter and to say, "Well, on our estimation it will not need the money anyway"? Who are they to say that in any event the gas corporation will still have its activities, its ordinary commercial activities to carry on?—and carry them on it has done very well indeed. I have heard no complaint from the Government as to the profitability of British Gas. I have heard no criticism of its accounts. If the Government are prepared to criticise the accounts then I am quite willing to provide a copy and to go through them with the noble Earl, if necessary in public. There has been no complaint at all.

Let us say that British Gas wants to develop its existing services and needs capital for that purpose. Surely it is entitled to look on the reserves that it has and more particularly its liquid reserves because it is not only a question of balance sheet reserves which may be tied up in fixed assets and in other assets of that kind; it is a question of the liquid cash that is available. Let us assume the unlikely event of this Government continuing in office after the next election —I must say that that is a remote possibility on their existing showing—and let us assume that British Gas, continuing its prosperous activities, wants to make further capital investment in the activities which remain to it unless, of course, the Government so want to cripple it that it cannot expand at all and is all the time under the diktat of the right honourable gentleman the Secretary of State for Energy.

Surely all reasonable counsel would suggest—and I think that I would carry the views of most industrialists and most businessmen with me—that if it does realise its assets either voluntarily or compulsorily it should be entitled to the use of the proceeds. Who knows that British Gas may not need the proceeds for expansion under the dynamic leadership of its existing executive chairman? If it had not got liquid funds, what would happen? Being a nationalised industry and being under a Government who hate and barely disguise their hate of all nationalised industries, the Gas Board—because its borrowing under the insane monetary doctrine is covered within the public sector borrowing requirement—would have to go cap in hand to the Government to borrow money that the Government had already robbed it of. This does not make sense and it does not make for commercial probity. The noble Earl opposite and his right honourable friends in another place ought to be thoroughly ashamed of this Bill which in any case is a rotten Bill and which, as I have indicated, seeks to rob.

We have put forward a suggestion here which says that the corporation shall have its book value and no more. I assume that the books have been accurately kept because there is an unqualified certificate by its accountants. This is the minimum decency that the Government can show to the corporation and I commend the amendments to the Committee. I beg to move.

The Earl of Mansfield

I am obliged to the noble Lord at any rate for speaking to both of his amendments at once because that is logical as well as timesaving. The effect of both Amendments Nos. 24 and 25 is to give the corporation a firm right to retain part of the proceeds of any disposal of assets. That part of the proceeds to be retained by the corporation should— the amendments suggest—be at least sufficient to cover first, any cost incurred by the corporation in the course of the disposal; secondly, residual tax liabilities remaining with the corporation; and thirdly, that "book value" at which the assets disposed of are entered into the corporation's balance sheet.

I shall say right away that there is agreement so far as the first two points are concerned. The Government accept that the corporation should be reimbursed for costs incurred in the course of a disposal or residual tax liabilities remaining after disposal. In fact, Clause 11 already provides scope for such reimbursement.

Clause 11(3) begins with the words: If and to the extent that making it plain that the Secretary of State has discretion to direct BGC to pay him only part of the proceeds. Clause 11(5) makes it clear that the Secretary of State may pay consideration for shares transferred to him under subsection (4)—the payment of a consideration would he the mechanism for reimbursing the corporation in this case. We have approached the question in this way because while many cases will be clear, there may be grey areas where it is not entirely obvious whether or not a particular cost or tax liability should be regarded as arising from the disposal, and our approach permits the Secretary of State to determine any such uncertainties.

Then the noble Lord came to what I might call the accountant's point which, as he is a distinguished accountant, no doubt causes him less anguish than me, for I am not an accountant in any sense, distinguished or otherwise. In fact, the noble Lord was asking me how the payment of the proceeds will be shown in the accounts of the corporation. I think that that is what it came down to. In other words, how should the corporation treat the proceeds of a disposal in its accounts? The first point is that it is for the corporation to draw up its accounts, and I imagine that it will make some form of charge to the profit and loss account in order to bring its balance sheet into balance after a disposal of proceeds to the Consolidated Fund. If that is what is done, I cannot see that it is so dreadful.

Lord Bruce of Donington

I am grateful to the noble Earl for permitting me to clarify the position. After the sale has taken place an asset will have disappeared from the balance sheet of the gas corporation. Instead of having a subsidiary there, there will no longer be a subsidiary there; instead of having some other assets there which have been part of the disposal, there will be no assets there any more. The question that I was putting to the noble Lord was how he would write off that on the other side of his balance sheet? I was not concerned with the actual disposal of cash itself but with how the corporation itself would deal with the position, or how the Government propose that it would deal with it.

The Earl of Mansfield

The easy answer is to say that that is a matter for the corporation and its auditors. I do not think that I can go beyond that because I am not armed with that information—I will be perfectly frank with the noble Lord, and he is a distinguished accountant. The real nub of the noble Lord's argument is what he is saying when he says, in effect, that the proceeds of sale—at least so far as part of them are concerned—should remain within the corporation. The purpose of a disposal of assets under Clauses 9, 10 or 11 will be to give effect to our general policies as to the proper role of the private and public sectors. If we require a disposal, we are, in effect, saying that this is an activity which does not need to be undertaken by the public sector, and we are taking the opportunity of reducing the role of the public sector. I think that that was implicit in the noble Lord's remarks. Of course, he did not welcome that at all, and I perfectly understand his point. But assuming that that is the policy and that it is a policy that is put into effect, what argument can there be for the corporation retaining the same volume of financial resources when, in fact, the scope of its activities is being reduced?

Then the noble Lord asked me about the financial affairs of the corporation. The responsibility as regards any nationalised corporation rests with the sponsoring department, and the British Gas Corporation is no different from any other nationalised industry. The corporation draws up investment plans and submits them to the Government of the day for approval. As much as possible the investments are funded internally. If these funds are not sufficient, then there is a borrowing from the National Loans Fund. It is clear that there is no connection between the funds that the corporation needs for the part of its business which it will continue to operate, and the funds received from a disposal of a part of the business in which it is no longer to be involved. In exactly the same way as we have discussed other disposals, I submit that it is proper that after deduction of any appropriate costs and liabilities—such as tax—the proceeds of a disposal sale should pass to the Exchequer, to be available for allocation to best advantage over the economy as a whole.

The noble Lord takes the point that the Government can use the proceeds of disposal by way of the Consolidated Fund to this or that effect, which may or may not commend itself to the noble Lord. But that is, of course, what happens to all taxation and all sums which are received into the Consolidated Fund. It arises from capital taxation on individuals: their accumulated savings go into the Consolidated Fund; it also arises in the case of taxation of income and, for instance, the gas levy; and it also arises from a sale, such as in this instance. So there is nothing unremarkable about it. As I have said, there will be cases where it is right for the corporation to be reimbursed for the costs of a disposal or for some residual liabilities, and this the Bill caters for. But I do not think that the noble Lord has made out any case for the retention by the corporation of the book value of an asset disposed of. He is saying, if his amendment is accepted, that the corporation would have large sums of money in its account. As I have said, in accordance with normal practice and policy, it is much better that these should be put to good use elsewhere. So what is the logic, I ask myself, of reducing the public sector but at the same time keeping its resources at a constant level? With that quasi-philosophical thought I rest my argument.

Lord Ross of Marnock

Surely these assets did not suddenly appear out of thin air. The gas corporation had to spend money out of its general funds creating these assets. Is it not quite wrong that it has simply to be sold and then the asset is deleted and the money taken by the Consolidated Fund? I wonder what people interested in local authority matters and housing policy would have had to say if, apart from local authorities having to sell off houses—and that is virtually the position—they were told that the money from those disposals would not go to the local authority but would go to the Consolidated Fund. With all due respect, there is a relevance here in the analogy. It may well be that the Government will argue that it means that loan consents for the building of other houses will not be required, but it is still a matter for the local authority to determine how the money will be spent. It was actually out of the resources of the gas corporation that these assets were created. We have no objection to the Government taking the profits. The Minister asks: What will they use this money on? Who has provided all this money, anyway? It has been the consumer. Could not they use this money to do some research and development to the advantage of the consumer? Could not they use it to provide the daughter of the noble Lord, Lord Thorneycroft, with cheaper gas? His interest in his daughter and her gas appliance, and in buying candles to keep her going really means that he should be interested in the cost of the gas. There would be a great deal of argument as to what priority one gives to this matter or another matter in relation to the continuing work of the gas corporation.

I do not think it is good enough for a Minister to say "This is only an accountancy matter; I am not an accountant; someone else can answer that", and throw it back to my noble friend, who is a distinguished accountant. I do not know whether or not he is a distinguished accountant, but the Minister has certainly proclaimed his own argument. I would think that anyone interested in the whole question of annual reports will be concerned about what will happen to this asset. There are other people who will not be satisfied with them saying that they can show it as they like or get rid of it as they like. This is not good enough. It underlines the case that the Government are making. They are not wanting to achieve privatisation but they are going to take the money from the gas corporation, who have been ordered to dispose of these assets to the private interests. They are going a hit far on that, and I hope that my noble friend will press this amendment.

Lord Tanlaw

Can the noble Earl clarify one point for us on these Benches? If, like in any normal company, there is a disposal of assets, this must of course decrease the borrowing power of that company. I do not know whether this applies to the British Gas Corporation but can the noble Earl the Minister give an assurance that, if the future financial policy of the corporation is such that it requires money, the disposal of these assets will not in any way decrease their bor- rowing potential? Indeed, could their borrowing powers be matched by the assets which they have disposed of?

If in fact they wish to raise money in the future and they do not have these assets to bring in the extra income, there is little alternative but to raise the price of domestic gas, which is now under this Bill the responsibility of British Gas Corporation. Can the noble Earl say that if this amendment is rejected it will in no way affect the price of British Gas, simply because it is their only way of raising funds because they no longer have the assets on which to earn the income for future expansion?

The Countess of Mar

May I ask the noble Lord, Lord Tanlaw, what he proposes should happen if the proceeds from a sale of either shares or property do not meet the net book value of the Gas Board? Is the money to come from the taxpayers?

The Earl of Mansfield

I am very much obliged for that last intervention. I thought that I had covered the points which the noble Lord, Lord Tanlaw, had raised. The intention is that the gas corporation in the future will be treated exactly the same as any other nationalised industry. Therefore, its financial regime will not be changed by virtue of the selling off of part of these assets.

I wonder whether I may answer some of the points that the noble Lord, Lord Ross, made. If I may say so, it really is rather muddled to confuse the activities of the gas corporation and the local authorities. As the noble Lord quite rightly said, the money in the first instance came out of the pockets of the taxpayer; now on privatisation the money, less deductions, so to speak, is going to go back into the pockets of the taxpayer, into the Consolidated Fund.

So far as local authorities are concerned, on the sale of council houses the local authorities are not entitled to reduce the rates, if we go on the analogy of Lord Thorneycroft's daughter. What they are empowered to do, and what they are already doing, at least in the part of the world that I know a little about—to wit, Scotland—is to build more council houses, and that surely is desirable. There is not in this instance any comparison between the sale of council houses and the sale of the gas corporation's assets.

Lord Bruce of Donington

I must correct the noble Earl in one respect. As he knows, of course, the original capital of the corporation did not come out of the funds of the taxpayer. If he looks at note No. 12 on the balance sheet, he will find out exactly where the money came from. It came by the subscription to gilts, and all the rest of it, with which he is quite familiar. If there was to be any realisation of assets and the corporation was allowed to keep the proceeds of the enforced sale of its assets, the prudent way would be to reduce some of its debts. That is the obvious way of doing it. If you sell an asset for which you no longer have any use and you still want to retain the credit rating for the company, if you cannot use it immediately on things like research and development, which have been referred to by the noble Lord, Lord Ross, you apply it to the reduction of debt. This is of course the ordinary, prudent way of going about things. I will not make an appeal to the noble Lord, Lord Thorneycroft, who has had a most distinguished career as a chairman and director of many companies, but I am quite sure that he would concur in the ordinary business treatment of the items to which I have referred.

It would not be kind to continue this matter further with the noble Earl opposite. Indeed, it would be a waste of time, because, quite clearly, the main part of the Government have not the remotest idea what they are doing anyway. All they are really concerned with is to get some money into the Consolidated Fund. Whether they do it by selling cruisers to countries that possibly may not always have the friendliest of relationships with us, or however they do it, they do not really mind. They have to get their hands on the money. This, presumably, is so that they can give some extra tax relief, usually to those in the upper income groups, in the next Budget almost immediately before the next election. This is clearly what is going to happen.

No, it would be unkind to pursue the matter further. I hope that, on reflection, the noble Earl will, when he reads through the accounts and the reports of the Gas Corporation—which I take it he must have read already, so I assume it means a re-reading—agree that what I have said is absolutely accurate, and that my own version of what the Government are doing is perfectly correct. I will not prolong the hearing any longer. I ask my noble friends in all parts of the Committee to support the two amendments.

6.27 p.m.

On Question, Whether the said amendmend (No. 24) shall be agreed to?

Their Lordships divided: Contents, 59; Not-Contents, 92.

DIVISION NO. 3
CONTENTS
Aylestone, L.	Kennet, L.
Balogh, L.	Kilmarnock, L.
Banks, L.	Lee of Newton, L.
Beswick, L.	Llewelyn-Davies of Hastoe, B.—[Teller.]
Birk, B.
Bishopston, L.—[Teller.]	Lloyd of Kilgerran, L.
Blease, L.	Lovell-Davis, L.
Blyton, L.	McNair, L.
Boston of Faversham, L.	Molloy, L.
Briginshaw, L.	Oram, L.
Brockway, L.	Parry, L.
Bruce of Donington, L.	Peart, L.
Cledwyn of Penrhos, L.	Phillips, B.
Collison, L.	Rochester, L.
Darling of Hillsborough, L.	Ross of Marnock, L.
David, B.	Seear, B.
Davies of Leek, L.	Stedman, B.
Elwyn-Jones, L.	Stewart of Alvechurch, B.
Evans of Claughton, L.	Stewart of Fulham, L.
Fisher of Rednal, B.	Stone, L.
George-Brown, L.	Strabolgi, L.
Hampton, L.	Tanlaw, L.
Hanworth, V.	Taylor of Mansfield, L.
Harris of Greenwich, L.	Tordoff, L.
Hooson, L.	Underhill, L.
Houghton of Sowerby, L.	Wallace of Coslany, L.
Jeger, B.	Wells-Pestell, L.
Jenkins of Putney, L.	Whaddon, L.
John-Mackie, L.	White, B.
Kaldor, L.	Wigoder, L.

NOT-CONTENTS
Allerton, L.	Lindsey and Abingdon, E.
Alport, L.	Long, V.—[Teller.]
Avon, E.	Lucas of Chilworth, L.
Belhaven and Stenton, L.	Lyell, L.
Beloff, L.	McFadzean, L.
Bessborough, E.	Mackay of Clashfern, L.
Blake, L.	Macleod of Borve, B.
Boardman, L.	Mansfield, E.
Brougham and Vaux, L.	Mar, C.
Caccia, L.	Margadale, L.
Caithness, E.	Marley, L.
Campbell of Alloway, L.	Merrivale, L.
Cathcart, E.	Mersey, V.
Chelwood, L.	Milverton, L.
Cork and Orrery, E.	Montgomery of Alamein, V.
Craigavon, V.	Morris, L.
Craigmyle, L.	Mottistone, L.
Cross, V.	Murton of Lindisfarne, L.
Cullen of Ashbourne, L.	Napier and Ettrick, L.
Daventry, V.	Nugent of Guildford, L.
Davidson, V.	Orkney, E.
De La Warr, E.	Orr-Ewing, L.
Denham, L.	Rankeillour, L.
Dilhorne, V.	Rochdale, V.
Drumalbyn, L.	Romney, E.
Eccles, V.	St. Aldwyn, E.
Ellenborough, L.	St. Just, L.
Elliot of Harwood, B.	Sandford, L.
Elton, L.	Sandys, L.—[Teller.]
Enniskillen, E.	Savile, L.
Faithfull, B.	Shannon, E.
Ferrers, E.	Sharples, B.
Fortescue, E.	Skelmersdale, L.
Gisborough, L.	Spens, L.
Greenway, L.	Stanley of Alderley, L.
Grimston of Westbury, L.	Terrington, L.
Hailsham of Saint Marylebone, L.	Teviot, L.
	Thorneycroft, L.
Halsbury, E.	Tranmire, L.
Henley, L.	Trefgarne, L.
Hunt of Fawley, L.	Trenchard, V.
Hylton-Foster, B.	Vaux of Harrowden, L.
Kemsley, V.	Vivian, L.
Kilmany, L.	Wakefield of Kendal, L.
Kinnoull, E.	Willoughby de Broke, L.
Kinross, L.	Young, B.
Lauderdale, E.

Resolved in the negative, and amendment disagreed to accordingly.

6.35 p.m.

Lord Bruce of Donington moved Amendment No. 24A: Page 12, line 30, at end insert— ("The Secretary of State may also by Order provide for the disposal of any such shares.").

The noble Lord said: I shall not detain the Committee on this. I wish merely to afford the Minister an opportunity to indicate how he proposes to bring these transactions under the control of the other place. The procedure provides for an annulment of any order under Clause 31(2), and I should like the noble Earl to say what procedure will be followed so that we may keep the transactions completely under supervision and know exactly what is happening.

The Earl of Mansfield

As the noble Lord, Lord Bruce, correctly said, Clause 31(2), to which we shall come, provides that orders made under Clause 11(4) shall be made a statutory instrument subject to the negative resolution procedure, and that will provide for a proper degree of parliamentary scrutiny by both Houses. Before the Secretary of State transfers shares to himself by order under the clause, there will be the negative resolution procedure. Thereafter, the Secretary of State disposes of the shares in the way which will be appropriate to the particular instance involved. But the whole matter will have already been discussed, as I said, when the shares are transferred to him, and any further discussion which the amendment envisages would duplicate that on the earlier order; and the disposal would be delayed during the 40-day period in which the order might be annulled and that might prejudice the disposal. I hope I have helped the noble Lord factually, although I am well aware that he would like as many layers of parliamentary scrutiny as could possibly be written into the Bill, and my words, therefore, may not be very welcome to him.

Lord Bruce of Donington

The point involved here is not one for an accountant such as myself but for a distinguished lawyer such as himself. The Bill as drafted makes the transfer of shares to him subject to the negative procedure, unless your Lordships decide, as I hope you will, that it should be the affirmative procedure. On the face of it, however, it does not appear that the subsequent disposal by the Minister of the shares that have been transferred to him—which transfer was subject to an order and therefore to some control—is also covered by the order. Perhaps the Minister will consider the matter and at a later stage confirm that both the transfer to him and the disposal by him of the shares to which the clause refers are subject to the control to which I have referred.

The Earl of Mansfield

I am obliged to the noble Lord. Certainly the transfer to the Secretary of State is subject to the negative procedure. With regard to the eventual disposal by the Secretary of State, I shall consider the point, and we can always return to it at a later stage of the Bill, if necessary.

Lord Ross of Marnock

The whole point is that Parliament and the public are concerned about the ultimate disposal of the shares, what will be the terms, who will get the shares, and what control there is. This is the point where public interest is liveliest. This is the kind of thing that the Public Accounts Committee has been concerned about. This is the very point at which we must have some parliamentary control. We are grateful to the Minister for saying that he will look at the matter again, and I think my noble friend has achieved something by getting that undertaking from the Minister.

Lord Bruce of Donington

I am obliged to the noble Earl for what he has indicated, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 25 not moved.]

On Question, Whether Clause 11 shall stand part of the Bill?

6.42 p.m.

Lord Bishopston

I should like to say a few words on the Question that the clause shall stand part because, as we know, Clause 11 concerns the powers of the Secretary of State as respects disposals by the gas corporation. This is a particularly important clause because it allows the Secretary of State to direct the British Gas Corporation to make use of its powers under Clauses 9 and 10, and so we are here debating also the aspects of those two earlier clauses. We made some progress regarding Clause 9 a few moments ago, and we have since had one or two assurances, but that does not go as far as we would wish. As we have noted, Clause 9 allows the BGC to sell off its shares, subsidiaries, and other assets, subject to the approval of the Secretary of State and the Treasury. I rather like the word "allows" in that context, because one rather feels that the corporation has no option, that it might consider not to do so. But the Secretary of State is looming in the background with his friends from the Treasury. The provision covers a wide range of assets and interests some of which have been the subject of debate, and of controversy, both today and earlier.

Clause 10 permits the British Gas Corporation to establish subsidiaries and to transfer assets between subsidiaries in order to sell them off, and so consideration of whether Clause 11 shall stand part is surely the occasion for us to "recap" on the implications of the powers granted to the Secretary of State to direct the BGC to use its powers under the two clauses to which I have referred.

Ostensibly, the Bill is about the need for competition, so we are told, but in reality it is, as the Minister has already assured us, about contracting the public sector. I am not saying that contraction of the public sector might not have merit in some instance, but when one decides that that shall be the main objective, and one then has to "bodge" up the changes in order to achieve that objective, that is surely putting the thing the wrong way round. What the Minister should have said on Second Reading was that he was concerned that the British Gas Corporation, efficient as it was, and as well liked as it is, could yet be improved by certain changes which the Government had in mind. That might have fooled no one, but at least it might have given a far better reason for the measure at all.

A few moments ago my noble friend Lord Bruce of Donington said that the Bill is really about a subsidy to the Chancellor of the Exchequer. It is rather interesting to note that in almost every clause of the Bill the policy of the Gas Corporation shall be subject to approval by the Secretary of State and the Treasury. It amounts almost to a kind of collusion: that the Secretary of State and the Treasury agree to a certain policy, which ends up with the Treasury putting its hand out and collecting the "swag" from the sale. One wonders whether the Treasury is really an independent authority in this process. It seems almost indecent that the Treasury shall be brought in in tandem with the Secretary of State in an enterprise which ends up with the Treasury obtaining the proceeds of the sale.

There is no doubt at all that if obtaining money is another objective, besides the objective of contracting the public sector, it is being done at the expense of the corporation. What kind of organisation will the Gas Corporation be after all the assets have been sold off, after it has been instructed to provide pipelines for the private sector on the basis that, if there is any dispute about the rent, the Secretary of State shall be the judge on appeal about the rent that shall be paid? The whole thing gives dictatorial powers to the Secretary of State, and despite the pressures that we have applied and the amendments that we have tabled urging that the Secretary of State shall be accountable and shall come to the House with affirmative orders, we have been out-voted. Even parliamentary accountability, which is so dear to all of us as parliamentarians, seems to be thrown aside as being of no importance whatsover.

My noble friends and I believe in a mixed economy. We believe in public enterprise in so far as we accept that there are many occasions when national assets are best owned by, and national responsibilities are best carried out by, a public body, answerable to Parliament —that is what democracy is about—but there are occasions when matters are not of such great consequence and can be left to the private sector. So far we have had the British Gas Corporation and private enterprise working together quite amicably, with, as was shown by the result of the first vote today, the whole country being satisfied that the BGC has been exercising its obligations in a most responsible way.

In case anyone thinks that I am unduly biased politically, I need only remind the Committee that the BGC is an independent, statutory body, set up by Act of Parliament in 1972 by a Conservative Government. I would not accuse the Conservatives of being doctrinaire when they did that, but they seem to have changed their attitude since. In 1972 the Government envisaged the BGC as an integrated corporation, dealing with all aspects of the gas business: exploration, research, development, production, transmission, distribution, the retailing of appliances, servicing, and, most of all, safety. All those aspects are now at risk under Clause 11, taking into account, as it does, the implications of Clauses 9 and 10.

We believe that after the Bill has been through both Houses, the Gas Corporation should be in a position to compete fairly and reasonably with the private sector in the interests of the public good. It must be given fair terms. It must not be shackled by restrictions and by the Secretary of State and the Treasury working together, without coming to Parliament to tell us what is happening. In the Bill the situation is far from satisfactory. This is not just a party view; up and down the country people of all persuasions realise that the Government have burnt their fingers, because while in some cases there might be sympathy for the belief that publicly-owned industries need a review, or an overhaul, because they are not efficient or because they might not be profitable, here the Gas Corporation meets every test.

As I said earlier, this is really a Treasury Bill, like a whole list of Bills that we have had, such as the forestry Bill, under which the Forestry Commission has to "flog" the forests and hand some money to the Chancellor, who year after year will come along saying, "How about more money?" This will happen to a number of enterprises, but when it happens to a great energy and power enterprise of so much strategic importance to the community it can be a tragedy indeed; not least, of course, in these very uncertain times, when we are told, quite rightly, that the public interest demands the take-over of private assets and facilities at very short notice.

Yet here we are, still proceeding with this measure; and we believe that Clause 11 is one of the most important clauses in the Bill. It certainly has the shortcomings of many other clauses, in so far as it does not come up to the proper standards of accountability and is going to decimate the British Gas Corporation, which has been created over two decades now with a record of serving the public interest. It has done so profitably; it has been in the lead technically; it has provided service to the public at minimum cost; and, of course, it has also provided something like over a billion pounds in money to the Treasury under the heading of a gas levy. This gas levy has two advantages for the Government: it brings money to the Treasury, so that in a year or two, as we run up, to the election, there will be cuts in income tax, which will be to their credit; and, of course, at the same time we shall be reminded that, like many other nationalised industries, the gas enterprise, BNOC and so on, have been increasing their charges (albeit not at the request, but at the demand and on the insistence of the Government) to pay the levy.

So we are faced here in this clause with the basic ingredients of fragmentation, of uncertainty and so on; and those employed by the corporation who have been working as a team in all sectors—the legal side, the financial side, the technical and scientific side and the servicing side—all that is to be smashed and uncertainty will prevail. Even though the Minister says what he said in relation to the sale of gas showrooms, and so on, whatever assurances have been given there is the uncertainty until something comes to Parliament—and even on that we still have to be assured about the safety aspects. So we are pressing on with legislation with some assurances that something will be done somehow later on in order to give the answers to the questions which we have all been posing from time to time.

I believe that this recap on this clause is one which may provide the Government with an opportunity to give us assurances about some of our misgivings. I am only sorry that they have decided to make such changes and to cause such uncertainty at this time in the case of one of the best organised, most efficient and most accountable public enterprises in the country.

Lord Davies of Leek

Before we let this clause go, it is one of the most fundamental clauses and I think we should realise that Clause 11 provides two alternative methods for the Minister or the Secretary of State to achieve the removal from the corporation of any subsidiary. He can do that. It is one of the things on which we have attacked it. We have attacked it on three fronts. We have ordered it and its oil interests to sell off some of their most valuable assets. I do not want to delay your Lordships after 7 o'clock, after the time for dinner, so do not let anybody get worried—I shall finish. But I think we should get it across that the assets can be bought by the Minister. Granted, there is a formula for the corporation to be reimbursed for transferred corporation taxes, et cetera, but I am not concerned with the verbiage; what I am concerned with is the reality.

The reality is that when we come to the end of the day and the successful passing of this Bill through your Lordships' House there is a danger that some oil companies may prefer to sell their gas or oil, even at higher prices, to continental customers. That fact has not been emphasised enough. You can sell battleships to potential enemies, but let me be fair; you do not know who is going to be your next enemy. But if you can sell battleships all over the world there will be an argument one day. "We must sell this oil in the market in which we will get the highest price". In my estimation, the strategic importance of this rich national asset is in a deadly way being thrown into the hands of people over whom, in the last analysis, we shall have no control.

This Government may well rue the day. Always remember that, historically, a Government who start a war (or get into one; never mind whether they started it or not) at the end are not there. We must always remember that, here, one of the most important defence materials (it is one of the most important in the world, and God knows why they are doing this) is being sold off to private enterprise over which, whatever the Government of the day may say, be it a Labour Government or the SDP in the future, they will not have the control that they desire. Consequently, I think that before we pass this into law or let it go through this Committee, those words of mine should be highlighted.

Lord Ross of Marnock

As has been said this is an important Bill, and I will ask just one or two points very quickly. After all, the dinner hour is fairly flexible, I believe. This clause concerns the powers of the Secretary of State. In this clause he is mentioned no fewer than 12 times. In the first instance, The Secretary of State may, after consultation with the Gas Corporation, give directions to the Corporation … ". He has to produce an order in respect of that. My first question is: Will that order make clear whether he is acting with the agreement or against the wishes of the corporation? That is my first question.

Secondly, we come to subsection (4), where it says: The Secretary of State may by order transfer to himself … ". The ultimate disposal is with the Secretary of State. Can we be given any indication as to whether there is any limit to the time between the taking over of the shares and the ultimate disposal of the shares? As I read it, he can hold on to them for years and years, and nobody will know anything at all about it until some other order is—well, there is no other order that can be produced at the present time; that is something the Minister is going to look at. But I am concerned about how long he can hold on to them, having taken them over, without having any firm plans for disposal.

Then I want to come to subsection (5), which says: If an order under subsection (4) above so provides"— that is the subsection allowing the Secretary of State to transfer them to himself— the Secretary of State shall pay to the transferor"— that is, the British Gas Corporation— such sum by way of consideration for the shares… ". It is not by way of consideration for the actual cost of transfer, but consideration for the shares. I am interested in the values; I am interested in the words. If that means anything, it should be a sum related to the value of the shares.

The other point is this. It says, as may be specified in the order". This is a get-out for the Secretary of State. Why should that not be mandatory instead of discretionary? The sum changing hands there as consideration for the shares ought really to be specified, and not left in a discretionary way.

Lord Beswick

A little while ago the noble Earl was complaining that I had got up more than once to ask very much the same question. I apologise to him in one way, if he thought I was repeating myself, but I think that what he was really getting at is that the same mischief that the Government are trying to perpetrate occurs so often through this Bill that one has to react in much the same way in further, later parts of the Bill. So it is when I come to consider Clause 11 as a whole. What I have been concerned about here, very largely, is the motivation of people within the British Gas Corporation. That is fundamental. Indeed, I think it is fundamental in any case, whether one is considering a football team, a political party or an industry. Unless you get the motivation of people within the organisation you will not get results, you will not get success. It often depends upon leadership and it often depends upon whether there is something over and above the organisation which can frustrate its efforts. Whatever may be the cause of generating enthusiasm or of frustrating that enthusiasm, you will not succeed unless you get motivation from the bottom.

My criticism against this Bill and against much of what the Government are doing is that they are killing any initiative, any enthusiasm and any sense of pride in these different organisations. My noble friend Lord Ross of Marnock referred to the number of times in Clause 11 when reference is made to the power to give directions. He did not mention them all. Subsection (1) says: the Secretary of State may give directions"; subsection (2) says: the Secretary of State may by order provide"; subsection (3) says: If … the Secretary of State … so directs"; subsection (4) says: The Secretary of State may by order", and so it goes on; except at the end in subsection (7) where it says that he may not do any of these things, unless the Treasury agrees.

What sort of a way is this to run an industry? You want the ability to have decisions taken in industry. Most of the noble Earl's noble friends when they get out into their own businesses will have cottoned on to the fact that—I was about to say "delights"—the real secret of success is decentralisation. Unless you can decentralise authority down the line and allow people to get on with the business, you will not have success. Here they are doing the opposite. At every stage they are frustrating the decision-making down below. Therefore, I think that we ought to have another attempt to stop this by voting against this Bill.

I make one other point. My noble friend Lord Bishopston said that he thought that all this was in the interests of the Treasury. I think that he is too naive; he is too innocent; he underestimates the capacity of this Government to do mischief and to make mistakes. I advise him to look at the record in the report made last week by the Public Accounts Committee. There he will have the same Treasury and the same Government selling assets. In one company, they sold off £303 million of public assets which the public Exchequer had previously owned. They sold the lot. It did not go into the public purse. At the end of that exercise how much better off were they? According to the Public Accounts Committee, they were £12 million worse off.

I remember Aneurin Bevan once saying what a famous Government they then had. In a country built on coal and surrounded by fish, the Government of the day contrived to create a shortage of both. Here we have an even more wonderful Government. They can actually dispose of £303 million of public assets and get minus £12 million at the end of it. I would not be so sure, if I were my noble friend Lord Bishopston, that all this was going to result in a lot of money going into the public purse. There is a lot of opportunity for making mistakes. Because I do not believe that any industry in any country can operate if this sort of mentality is confusing and frustrating them, I think we ought to vote against this clause.

7.4 p.m.

On Question, Whether Clause 11 shall stand part of the Bill?

Their Lordships divided: Contents, 83; Not-Contents, 54.

DIVISION NO. 4
CONTENTS
Airey of Abingdon, B.	Greenway, L.
Alport, L.	Grimston of Westbury, L.
Ampthill, L.	Henley, L.
Avon, E.	Hunt of Fawley, L.
Belhaven and Stenton, L.	Hylton-Foster, B.
Beloff, L.	Kemsley, V.
Belstead, L.	Kilmany, L.
Bessborough, E.	Kinross, L.
Blake, L.	Lane-Fox, B.
Brougham and Vaux, L.	Lindsey and Abingdon, E.
Caccia, L.	Long, V.
Caithness, E.	Loudoun, C.
Campbell of Alloway, L.	Lyell, L.
Cathcart, E.	McFadzean, L.
Chelwood, L.	Mackay of Clashfern, L.
Cork and Orrery, E.	Macleod of Borve, B.
Craigavon, V.	Mansfield, E.
Craigmyle, L.	Mar, C.
Crawshaw, L.	Margadale, L.
Cross, V.	Marley, L.
Davidson, V.	Merrivale, L.
Denham, L.—[Teller.]	Mersey, V.
Dilhorne, V.	Montgomery of Alamein, V.
Drumalbyn, L.	Morris, L.
Duncan-Sandys, L.	Mottistone, L.
Eccles, V.	Murton of Lindisfarne, L.
Ellenborough, L.	Orkney, E.
Elliot of Harwood, B.	Rankeillour, L.
Elton, L.	Rochdale, V.
Enniskillen, E.	Romney, E.
Faithfull, B.	St. Aldwyn, E.
Ferrers, E.	St. Just, L.
Fortescue, E.	Sandys, L.—[Teller.]
Gardner of Parkes, B.	Savile, L.
Gisborough, L.	Sharples, B.

Skelmersdale, L.	Trefgarne, L.
Spens, L.	Trenchard, V.
Stanley of Alderley, L.	Vaux of Harrowden, L.
Strathcarron, L.	Vivian, L.
Teviot, L.	Wakefield of Kendal, L.
Thorneycroft, L.	Young, B.
Tranmire, L.

NOT-CONTENTS
Airedale, L.	Llewelyn-Davies of Hastoe, B.
Aylestone, L.
Balogh, L.	Lloyd of Kilgerran, L.
Banks, L.	Lovell-Davis, L.
Bernstein, L.	McNair, L.
Beswick, L.	Milner of Leeds, L.
Birk, B.	Mishcon, L.
Bishopston, L.	Parry, L.
Blease, L.	Peart, L.
Boston of Faversham, L.	Phillips, B.
Broadbridge, L.	Pitt of Hampstead, L.
Brockway, L.	Rochester, L.
Bruce of Donington, L.	Ross of Marnock, L.
Cledwyn of Penrhos L.	Seear, B.
Collison L.	Stewart of Alvechurch, B.
David, B.—[Teller.]	Stewart of Fulham, L.
Davies of Leek, L.	Stone, L.
Evans of Claughton, L.	Strabolgi, L.
Ewart-Biggs, B.	Tanlaw, L.
Fisher of Rednal, B.	Taylor of Mansfield, L.
Hampton, L.	Tordoff, L.
Harris of Greenwich, L.	Underhill, L.
Hooson, L.	Wallace of Coslany, L.—[Teller.]
Houghton of Sowerby, L.
Jeger, B.	Wells-Pestell, L.
John-Mackie, L.	Whaddon, L.
Kaldor, L.	White, B.
Kinloss, Ly.	Wigoder, L.

Resolved in the affirmative and Motion agreed to accordingly.

7.12 p.m.

Lord Skelmersdale

This would seem an appropriate moment to adjourn for dinner. I suggest that the Committee reassembles at eight o'clock if that suits the convenience of the Opposition.

Lord Strabolgi

Before the Motion is put, may I ask whether the Government Chief Whip will consider letting the Committee have until 8.15? We on the Front Bench were not consulted about this. I think that it is as much in the interests of the noble Earl, Lord Mansfield, who has been working very hard—as we all have—since three o'clock without a break. I know when we were in Government we would usually give a Committee a break of an hour for dinner. I should like to put that to the noble Lord, Lord Denham, who is a most reasonable man. We should have a reasonable time in which to have our dinner.

Lord Denham

I very much want to get to the end of Part III of the Bill tonight. It is not very far ahead. If we can do that, then I should be very happy that the Committee should have an hour for dinner, which is the wish of the noble Lord.

Lord Strabolgi

I cannot guarantee what noble Lords in Committee will decide to do or say after dinner, or to guarantee that we can finish Part III. That depends on what noble Lords may wish to say. As the noble Lord knows full well, the Committee makes it own decisions about these matters. I do not think that this invalidates my request.

Lord Denham

My Lords, I would never ask for a definite commitment. All I am asking is for best endeavours. With that prospect in mind, I ask the Committee to resume at 8.15.

The Deputy Chairman of Committees (Lord Alport)

The Committee stands adjourned until 8.15.

[The Sitting was suspended from 7.14 until 8.15 p.m.]

House again in Committee.

Clause 12 [Supply of gas by other persons]:

Lord Strabolgi moved Amendment No. 26: Page 13, line 29, leave out sub-paragraph (a) and insert— ("(a) subject to conditions and in the case of a supply of 25,000 therms a year or less to any premises such conditions shall specify the period during which the supply must be continued and include provision for the Secretary of State to establish a selling price where he has reason to believe that the price being charged by the supplier is unreasonable.").

The noble Lord said: I beg to move Amendment No. 26. After this break we now move to Clause 12, which is rather ominously headed "Supply of gas by other persons"—that is, by persons other than the British Gas Corporation. The two new sections in this clause replace Section 29 of the Gas Act 1972. The broad effect of these sections is to create three categories of consumer. At the top end, if I may so describe it, the large consumer is defined as anyone taking over a million therms a year who will be free to buy gas from the supplier of his choice. Between a third and a half of industrial and commercial gas supplies falls into this category. At the bottom end, the British Gas Corporation will continue to be the sole supplier of gas to premises less than 25 yards from the BGC gas main or, unless the Corporation does not object, to another supplier. The bulk of domestic gas falls into this category. Between these two categories, consumers may purchase gas from a supplier other than BGC but only with the consent of the Secretary of State. Such consent will normally be given, provided safety arrangements are satisfactory.

The effect of these arrangements is to match BGC's monopoly to its statutory obligation to supply on request. British Gas will still have a monopoly supply for the domestic gas market within 25 yards of the main and will have a duty to maintain that supply. Since there is the ability to disconnect interruptible supplies, it is these interruptible customers who could be prime targets for private suppliers. The Bill does not concern itself with the problem if the BGC is unable to maintain sufficient interruptible customers to guarantee a gas supply to those customers that it has a duty to supply.

The purpose of this amendment is to protect the small consumer, mainly domestic and small commercial, which should appeal to the Government, who having been provided with a private supply—no doubt on attractive terms as a result of all this competition and free enterprise—and having incurred the expense of installing gas-burning equipment, could then be faced with escalating charges or a discontinuance of the supply. No doubt the Government's answer will be that adequate protection will be provided by competition and market forces. But there will be no real competition in these circumstances, and how can there be when you are dealing with a commodity like gas and gas pipes? Once the supply has been laid on the consumer is captive and the supplier will effectively have a monopoly. There will be no competing supply system, nor an alternative supplier. There cannot be two competing gas distribution networks. In fact the Government are trying to apply something which is really not applicable or even suitable for this industry, but this is something they refuse to see in their myopic insistence on privatisation.

Quite apart from the disruption caused by laying two lots of pipes, the cost would be prohibitive and it is no answer that gas will still have to compete with other fuels. The consumer cannot switch to an alternative fuel without incurring the heavy expense of changing his installation. The British gas consumer has the protection afforded by the 1972 Act and the supervision of the corporation by Parliament, the Government and the Consumers' Council. The consumer receiving a private supply has no such protection—none at all—unless conditions on the lines indicated in the amendment are attached to the consent. I submit that it is necessary to retain power not only to fix a price but also to stipulate a period, which should surely be not less than 12 or 15 years, during which the supply must be continued: otherwise, a supplier who was not satisfied with the price established might threaten to discontinue the supply. People might even go out of business. It should be noted that the amendment, while affording some protection, would by no means provide the comprehensive control which other countries have found necessary when gas supply is in private hands. For example, even in the United States—the land of free enterprise—utilities are tightly regulated by state regulatory commissions who have developed detailed codes of practice. The Bill enables the Secretary of State to attach conditions to his consent, but he can also give his consent unconditionally. It is silent on the matters to be covered by these conditions. Unless they are so framed as to enable him to maintain continuing control, the consumer is exposed to exploitation—but, apparently, in the eyes of the Government, exploitation by private enterprise does not matter—and, if private supplies were made on a large scale, some regulatory authority would need to be established. I beg to move.

The Lord Advocate (Lord Mackay of Clashfern)

This amendment seeks to do three things and I should like to comment on each of these in turn. First, the amendment would require the Secretary of State to impose conditions in every consent for the supply of gas under the new Section 29 of the Gas Act 1972, which is set out in Clause 12 of the Bill. The Secretary of State would not be able to give an unconditional consent in any circumstances. I suggest it is pretty obvious that this must be a rather arbitrary and, indeed, rather meaningless requirement, because all one would have to do to meet it would be to make a condition which was not in any way necessary. There may be cases where conditions are required and others where they are not required. The usual practice which the Bill follows, therefore, is to permit conditions but not to require them in every case. Indeed, the then Labour Government followed that practice when they legislated on the supply and use of gas, as can be seen from Section 10 of the Energy Act 1976. Therefore, I suggest to your Lordships that merely to impose a requirement to lay down conditions is of no assistance by itself.

I should like to make it clear, as my right honourable friend has done in another place, that the purpose of the consent procedure is to permit an additional check on the safety arrangements proposed in the case of the intermediate group, which was described by the noble Lord in moving the amendment. However, no one can say that conditions will be necessary or appropriate in all classes of circumstances. The 2 million therms a year limit, below which consent is required, is inevitably somewhat arbitrary and where, for example, there is a large industrial concern with its own engineers, and its premises are inspected by the Health and Safety Executive, it is by no means obvious that conditions suddenly become necessary because the premises happen to consume slightly below 2 million therms a year, rather than slightly above that figure.

Also, where there is a case for constraining a consent in some way, conditions are not the only or necessarily the best approach; there is also the possibility of giving consent for a specified period only. In some particularly complex or changing circumstances, however carefully one drafts conditions, it may be difficult to be absolutely certain that every possible future contingency has been catered for. In such a case, the better approach may be to grant a consent, as I said, for a limited period. I hope that in the light of what I have said, your Lordships will agree that the Bill is right to contemplate the possibility of unconditional consents.

The second effect of the amendment is to require that consents to supply premises with no more than 25,000 therms a year should specify a period in which the supply is to be continued. In our view, to make this a condition would be rather ineffective in practice. It is all very well requiring that a supply be continued, but what if it is not? The effect on safety is, of course, a matter that would be taken into account in any case, and my right honourable friend, in considering whether to grant a consent, would have that aspect of the matter in view. So that we would say that the question of the period for which the supply is to last is a matter for arrangement between the person taking the supply and the person offering it.

The third effect of the amendment is to require that consents for the supply of gas to premises taking no more than 25,000 therms a year should empower the Secretary of State to regulate the price charged to the consumer, where he considers the price charged by the private supplier to be unreasonable. This raises a fairly fundamental point about Clause 12. The purpose of the clause is to introduce scope for competition in the supply of gas in all areas, other than those where the British Gas Corporation continues to have a monopoly of supply, and that of course is justified by the special circumstances of its statutory obligation to supply on request.

Competition will ensure that suppliers have to pitch their price at realistic levels in order to attract customers, while a customer who feels that the price he is being charged may be too high will have the opportunity to seek supplies of gas elsewhere, or even to change his source of energy. No useful purpose would be served by a provision empowering the Secretary of State to regulate prices. Market forces will, by themselves, lead to the most competitive prices and the most efficient modes of supply. That would be a matter primarily for arrangement under the contract by which the supply would be initiated, and would continue to affect the terms of the supply for so long as that contract lasted. I hope that in the light of those explanations the noble Lord will feel able to withdraw this amendment.

Lord Strabolgi

I am grateful to the noble and learned Lord for his explanation but, for all his skill, he has not made out a convincing case. It is not his fault—I accept that at once. The difficulty is that, in trying to privatise a fuel such as gas, the Government are trying to privatise something which is not suitable for privatisation. Therefore, they are getting themselves into difficulties, as has become clear under this clause, when there are different suppliers, with safety and everything else involved. This is an important matter and it is one that we shall have to press.

8.28 p.m.

On Question, Whether the said amendment (No. 26) shall be agreed to?

Their Lordships divided: Contents, 33; Not-Contents, 57.

DIVISION NO. 5
CONTENTS
Airedale, L.	Lovell-Davis, L.
Aylestone, L.	McNair, L.
Balogh, L.	Milner of Leeds, L.
Beswick, L.	Parry, L.
Birk, B.	Peart, L.
Bishopston, L.—[Teller.]	Phillips, B.
Blease, L.	Pitt of Hampstead, L.
Cledwyn of Penrhos, L.	Ross of Marnock, L.
Collison, L.	Seear, B.
David, B.	Segal, L.
Hampton, L.	Stone, L.
Houghton of Sowerby, L.	Strabolgi, L.
Irving of Dartford, L.	Tanlaw, L.
Jenkins of Putney, L.	Underhill, L.—[Teller.]
John-Mackie, L.	White, B.
Kaldor, L.	Wigoder, L.
Llewelyn-Davies of Hastoe, B.

NOT-CONTENTS
Airey of Abingdon, B.	Cullen of Ashbourne, L.
Ampthill, L.	Denham, L.—[Teller.]
Avon, E.	Ellenborough, L.
Bellhaven and Stenton, L.	Elliot of Harwood, B.
Beloff, L.	Elton, L.
Belstead, L.	Enniskillen, E.
Bessborough, E.	Faithfull, B.
Brougham and Vaux, L.	Ferrers, E.
Campbell of Alloway, L.	Fortescue, E.
Cork and Orrery, E.	Gainford, L.
Craigavon, V.	Gisborough, L.
Crathorne, L.	Greenway, L.
Crawshaw, L.	Grimston of Westbury, L.

Hylton-Foster, B.	Mountevans, L.
Kemsley, V.	Murton of Lindisfarne, L.
Kilmany, L.	Rankeillour, L.
Long, V.	Rochdale, V.
Loudoun, C.	St. Just, L.
Lyell, L.	Sandys, L.—[Teller.]
McFadzean, L.	Sharpies, B.
Mackay of Clashfern, L.	Skelmersdale, L.
Macleod of Borve, B.	Stanley of Alderley, L.
Mansfield, E.	Strathcarron, L.
Margadale, L.	Swansea, L.
Marley, L.	Thorneycroft, L.
Marshall of Leeds, L.	Tranmire, L.
Merrivale, L.	Vaux of Harrowden, L.
Mersey, V.	Young, B.
Montgomery of Alamein, V.

Resolved in the negative, and amendment disagreed to accordingly.

8.36 p.m.

Lord Strabolgi moved Amendment No. 27: Page 13, line 29, leave out from ("conditions") to end of line 32 and insert ("but will only be given with reference to particular cases and provided that he is satisfied that adequate arrangements for safety have been made.").

The noble Lord said: I beg to move Amendment No. 27 and, with your Lordships' permission, I should like to speak also to Amendment No. 28.

The Bill as drafted permits the Secretary of State to give consent for supplies between 25,000 and 2 million therms a year, either with reference to particular cases or by orders of general application. During the Second Reading debate in another place, the Secretary of State made it quite clear that before giving consent he would need to be satisfied that the safety arrangements proposed were adequate. During the later Committee stage he said that the gas standards branch of the Department of Energy would look at each case and advise him—a perfectly reasonable thing to say. Later he went on to say that the important point is that before consent is given the gas standards branch will check to ensure that an emergency service will be part of the safety provision being made by the potential supplier and that this will be an essential precondition for the giving of consent.

We find it difficult to understand how, if consents are given by orders of general application, this detailed examination of the safety arrangements in each particular case could possibly be carried out. Debates in another place showed that the Government are envisaging that under these provisions some private supplies may go to domestic consumers in remote villages. Safety arrangements in such cases cannot be enshrined in commercial contracts and must be fully scrutinised by the gas standards branch experts.

The Government recognise the importance of providing for safety with regard to these smaller supplies. The Under-Secretary said: However, we recognise the considerations for smaller supplies may well be different from those for the larger supplies. That is why for smaller supplies we have insisted that before such supplies are undertaken the Government should have an opportunity to check that the proposed safety arrangements are satisfactory. Where the safety arrangements are considered unsatisfactory, it is clearly apparent on the face of the Bill that the Secretary of State will not give his consent". This was at col. 822. I think we are entitled to ask how it is proposed that this careful scrutiny will be carried out when consents are given by orders of general application. I think it was the noble Lord, Lord Tan-law, who said at Second Reading that the Government must show more clearly than they have to date how they see the safety factor being maintained effectively under the Bill.

We on this side have repeatedly stated that we are opposed to giving wide-ranging powers to the Secretary of State. Provision for consent by orders of general application is surely yet another example of this. Apart from the safety aspects to which I have already referred, there is, for example, nothing to prevent the Secretary of State, by issuing orders of general application, from effectively lowering the rate beyond which no consent is required. In other words, having made a concession and raised this limit from 1 million to 2 million therms a year, the Secretary of State could, without reference to Parliament, change the limit, if he wished, to any rate he liked.

I must press the noble Earl for an assurance that it is not the intention to use orders of general application in this way. This is a probing amendment. I beg to move.

Lord Tanlaw

These Benches will be most interested to hear the noble and learned Lord's reply. I hope that his reply will be in some detail as to what are the safety regulations in terms of manpower, equipment and specification, if any. It is sometimes very difficult in a Bill of this kind, when we move into the technical area of safety regulations, to know what these really mean. Perhaps the noble and learned Lord can reassure us on this side of the Committee, and all those who have some doubts, that the technical side, which is covered under the very broad spectrum of safety, will be looked after adequately. There are limits to what we can do with our knowledge in terms of the technical aspects of gas supply and applications.

Lord Mackay of Clashfern

I am grateful to the noble Lord, Lord Strabolgi, for taking two amendments together, and I would like to do the same. In my submission, there can be no question that what is here proposed in Clause 12 is in any way breaking new ground. When the then Labour Government sponsored what is now the Energy Act 1976, their provisions on the supply and use of gas included, in Section 10, the possibility of giving consent by means of orders of general application. We are merely following that precedent. The ability to give consent by general order is nothing more than a sensible administrative provision which can be employed where there are a number of precisely similar cases, in order to avoid the need for repetitious paperwork in issuing individual consents for each case.

My right honourable friend the Secretary of State has made it plain—and the noble Lord quoted him to that effect—that the purpose of insisting on consent in the intermediate range is for the securing of safety. Therefore, he would give an order of general application only if he is satisfied that in all the cases which that order could cover the safety requirements necessary for the supply to be allowed are adequately met. I would suggest that the consent by general order is nothing more than the removal of unnecessary duplication or repetition.

Turning to the question raised by the noble Lord, Lord Tanlaw, the basic provision for safety regulations will be under Clause 14, which is the general provision to that effect. It is intended to extend the present powers to make safety regulations, so that regulations may apply to private suppliers as well as to the British Gas Corporation. The safety regulations will apply to all supplies irrespective of size. In other words, they will apply both to supplies which require consent because they do not exceed 2 million therms a year and to supplies which are exempt from the consent requirement because they do exceed 2 million therms a year. The purpose of the consent requirement is to introduce an additional check so that the Secretary of State can satisfy himself that, in the circumstances covered by either the particular consent or the order of general application, these requirements are in fact being met.

Accordingly, I think that I can assure the noble Lord, Lord Tanlaw, that the matter of safety is very prominent in the Government's mind, and basic statutory provisions for safety in Clause 14 are there to be seen. In the light of these explanations, I hope that the noble Lord, Lord Strabolgi, will feel able to withdraw his amendment.

Lord Ross of Marnock

Much of all this depends on the ability of the gas standards branch of the department. Can the noble and learned Lord tell me how many people are employed there at the present time? Apart from what the noble and learned Lord says about the general order application being a hit of an administrative convenience, it will still require detailed examination of every particular case. That is what the Minister said. Have the Government the manpower to do that? Are they going to get the manpower to do that? If so, where are they going to get that manpower, and what will it cost? Before we can accept that everything is all right in relation to safety, we must have from the Government reliable proof that we can be confident that what the Minister states will in fact be carried out. This is far too important a matter just to be written off with words of administrative convenience. That phrase could be considered a matter of parliamentary convenience, just to get over this particular point. The Minister has said that the examination will be done by the gas standards branch of the Department of Energy. How many people are employed there?

Lord Mackay of Clashfern

My information is that the number of people employed in the department's gas standards branch is in the order of 100.

Lord Ross of Marnock

Is that all?

Lord Mackay of Clashfern

I have endeavoured to outline the nature of the work that will be required, and the assurance that the Secretary of State has given is that he will not grant a consent unless the investigations which he initiates show that the consent may be safely given. The general application of the regulations is the first line of defence that applies generally, whether consent is required or not. In the intermediate cases where consent is required, he will have carried out this additional check which I have described. I do not know that the question of the numbers involved in actually carrying out these checks is one that goes a great distance one way or the other. The quality of the checks depends on a large number of things apart from the number of people involved. What the Secretary of State is undertaking is that proper checks will be made before he gives his consent.

Lord Ross of Marnock

What worries me is that the possibility of consent is a nationwide matter. There are 100 people covering the whole of Great Britain, but how many of them will be in Scotland? I doubt whether the number would run into double figures. The Minister wants to convince me that all these safety precautions are going to be adequately taken, but I doubt very much that the department can do this to the satisfaction of the House. We are not being given very much chance to probe this matter much further. It is an important matter because the safety of lives is concerned, as is the safety of the industry as well. Does the noble and learned Lord have figures for the number of people working in Scotland? Am I wrong in thinking that there are probably no more than 10 people for the whole of Scotland?

Lord Mackay of Clashfern

At the present moment, of course, this provision is not in operation; so it is hardly possible to say how many people are working on this particular task at the present time. With regard to the question of—dare I use the word?—devolution of resources, this will depend on where the consents are required. The point is that the Secretary of State has given an assurance (which I suggest your Lordships can rely upon) that he will not give his consent until a check has been carried out.

Let us assume for the sake of argument that the number of people employed in the gas standards branch is somewhat on the small side. I am not suggesting that is so for the moment, but let us make that assumption for the sake of argument. All that would happen would be that the Secretary of State would not be able to give the consent until the work had been done. I must say I do not see the logic of the approach which the noble Lord is taking. But I do see the necessity for the Secretary of State making a check before he gives his consent, and that is what he says he will do and has assured Parliament he will do, as the noble Lord, Lord Strabolgi, read at the outset.

Lord Strabolgi

It is some comfort to have the reassurances of the Government as described by the noble Lord, but, as my noble friend Lord Ross has said, this just shows the difficulty the Government will have when they try to bring in these safety practices, because as we have said again and again their great mistake has been that they have given carte blanche to privatise everything they can, and once they come to gas it is not suitable for privatisation at all, particularly the supply of gas. It may be there is a case, I do not know, for showrooms, as the noble Lord, Lord Thorneycroft, described earlier today, but there is no case, in our submission, for privatising the supply of a very dangerous and difficult commodity such as gas. This is the difficulty the Government have now got themselves into and which they will find becomes increasingly difficult as the practices laid down in the Bill are brought into effect.

As I say, we are grateful for the reassurances. It is easy to give assurances on paper. We will have to see how they work out in practice and we hope they will work out, because we do not want any dangers, we do not want any accidents and loss of life. We hope they will work out; I hope that sincerely. We are grateful to the noble Lord. This was a probing amendment and we shall consider carefully what he says before we consider what to do next. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 28 not moved.]

Lord Mackay of Clashfern moved Amendment No. 29: Page 14, line 4, leave out ("used by") and insert ("the use of").

The noble and learned Lord said: Amendment No. 29 is a drafting amendment. I beg to move.

On Question, amendment agreed to.

Lord Beswick moved Amendment No. 30: Page 14, line 29, at end insert— ("or (c) that he has reason to believe that the gas is required by persons entitled to demand a supply or the continuation thereof under paragraph 2 of Schedule 4 to the 1972 Act").

The noble Lord said: I beg to move Amendment No. 30, page 14, line 29, to insert the words on the Marshalled List. I think the noble Lord will agree this is a reasonable amendment. I hope very much he is going to be able to accept it. It does in fact extend the consent procedure to supplies above 2 million therms and it extends them in the event of the gas corporation being unable to meet its statutory obligations. Hitherto the British Gas Corporation have had clearly defined responsibilities to consumers and equally they have had very wide opportunities to enable them to discharge those responsibilities. But the present Bill has the effect—I hesitate to say the intent—of curbing the opportunities without making sensible and fair provision for limiting their obligations and responsibilities. This amendment is designed to deal with just such a case as that.

There might, for example, be a case where the British Gas Corporation under the 1972 Act has an obligation to supply gas in the quantities with which this section deals, but because of the future possibility of limited opportunity to obtain supplies—and we had a discussion earlier about the possibility of the gas corporation being frustrated by earlier parts of the Bill—if they are unable to obtain supplies the consumer might well be better served by one of the new entrepreneurs in the industry, in which case this amendment would bring the particular case within the consent procedure.

As I understand the Government's position, they might well claim that the corporation might be faced with difficulties in meeting its obligations but if that is so, they may well say, if the corporation pays the right price in the market place it will have no difficulty in securing adequate gas supplies. I wonder whether it is possible to say that with any degree of certainty. There are not an infinite number of gas fields in the North Sea, and the oil companies will now have more options open to them. The oil companies can sell gas direct to large customers; they can attempt to export the gas. They might certainly sell gas back to the corporation but in that case the corporation would be compelled to buy to discharge its obligations and it is going to be a captive customer.

But apart from that last possibility is it really realistic to assume, even if the corporation were prepared to pay the highest price to obtain the gas from the oil companies, that the oil companies would sell the corporation the gas? These are very large multinational corporations with interests in many countries as well as the United Kingdom. They may see strategic marketing advantages in breaking into the United Kingdom gas market, even if it involves some initial reduction in profit, and this would permit the export of more oil, which of course is easier to transport than gas.

It is in this situation possible to see why there is concern about the corporation not being able to guarantee supplies in this new situation created by the Bill. It would, therefore, seem reasonable to say that they are not necessarily held to obligations which were accepted in quite different circumstances. Their fears may be unfounded, in which case the provision in the Bill would never be used. But if their fears proved to be only too well founded I do think this amendment is a reasonable one, and I hope the Government will be able to accept it. I beg to move.

Lord Mackay of Clashfern

This amendment seeks to give the British Gas Corporation a privileged position in securing access to gas supplies, by empowering the Secretary of State to require that other suppliers apply for consents to supply if he has reason to believe that the gas is required by consumers within the area of the British Gas Corporation's statutory obligation to supply, even although the private supplier would not in general be obliged to require consent because his proposed supply exceeded 2 million therms a year. The noble Lord, Lord Beswick, in putting forward this amendment has argued that this is a necessary special privilege to the British Gas Corporation. We cannot accept that argument. We must not forget that even under present legislation British Gas Corporation has no assurance of obtaining gas supplies or even of a right to bid for supplies. At present the Corporation has certain statutory purchasing privileges under Sections 8 and 9 of the Energy Act 1976 but these in no way guarantee that licensees will agree to develop their gas reserves. In fact, the present law has had the opposite effect and one of the Government's primary objectives in this Bill is to provide renewed incentive for exploration and development of gas resources. Indeed I think the noble Lord tacitly accepted this point, at least to some extent, in what he said.

A further point is that even where licensees do produce their gas the corporation's present privileges are not comprehensive. The corporation has a monopoly in the supply of gas by pipe for non-industrial purposes and has purchasing privileges where it is proposed to supply gas for industrial fuel purposes. But it has no purchasing privileges where it is proposed to supply gas for industrial non-fuel purposes, such as use of gas as a petrochemical feedstock, nor in relation to use of gas by the licensees who produce it. Also, one must not overlook that imported gas accounts for over 20 per cent. of British Gas Corporation supplies, and the British Gas Corporation of course, has no special privilege when it comes to bidding for supplies of imported gas.

Naturally, the British Gas Corporation will need supplies to meet demand from those within its statutory obligation. But it will be able to obtain the gas it requires by bidding at the right price in the market. To match its statutory obligation to supply, the British Gas Corporation will have a large guaranteed market—namely, consumers whose premises fall within the British Gas Corporation's statutory obligation to supply on request. This gives them a strong position in the market. I would invite the Committee not to accept this amendment.

Lord Beswick

I remember an occasion when another noble Minister, a former chairman or certainly a director of the Tottenham Hotspur Football Club, the late Lord Morrison, stood at that Dispatch Box arid made a very persuasive speech, but then found that he had got the wrong brief and was speaking to the wrong amendment. I was wondering whether the noble Lord had the wrong amendment in this case. I am talking not about special privileges, but about a case where there are special obligations now resting upon the BGC. Those special obligations were incurred in a situation completely different from the situation which this Bill is intended to create. I am suggesting that in those cases it is quite unfair to require those obligations of necessity to be undertaken. I am suggesting that in those cases there should be the possibility, on the part of the Secretary of State, to allow another entrepreneur to be the supplier because he is in a better position to supply the gas. I find the noble and learned Minister's explanation quite unsatisfactory and I shall have to press the amendment.

Lord Mackay of Clashfern

I just want to assure the noble Lord that I understand precisely the amendment that he has moved and that my reply is intended to meet it and, of course, in my opinion it certainly does so very adequately.

9.3 p.m.

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

There Lordships divided: Contents, 33; Not-Contents 58.

DIVISION NO. 6
CONTENTS
Balogh, L.	Lovell-Davis, L.
Beswick, L.	Mackie of Benshie, L.
Birk, B.	Milner of Leeds, L.
Bishopston, L.	Noel-Baker, L.
Blease, L.—[Teller.]	Parry, L.
Cledwyn of Penrhos, L.	Peart, L.
Collison, L.	Phillips, B.
David, B.—[Teller.]	Pitt of Hampstead, L.
Davies of Leek, L.	Ross of Marnock, L.
Glenamara, L.	Seear, B.
Houghton of Sowerby, L.	Stone, L.
Irving of Dartford, L.	Strabolgi, L.
Jenkins of Putney, L.	Tanlaw, L.
John-Mackie, L.	Underhill, L.
Kaldor, L.	White, B.
Llewelyn-Davies of Hastoe, B.	Wigoder, L.
	Winterbottom, L.

NOT-CONTENTS
Airey of Abingdon, B.	Long, V.
Ampthill, L.	Loudoun, C.
Avon, E.	Lyell, L.
Belhaven and Stenton, L.	McFadzean, L.
Beloff, L.	Mackay of Clashfern, L.
Belstead, L.	Macleod of Borve, B.
Bessborough, E.	Mansfield, E.
Brougham and Vaux, L.	Margadale, L.
Campbell of Alloway, L.	Marley, L.
Cork and Orrery, E.	Marshall of Leeds, L.
Craigavon, V.	Merrivale, L.
Crathorne L.	Mersey, V.
Crawshaw, L.	Montgomery of Alamein, V.
Cullen of Ashbourne, L.	Mottistone, L.
Denham, L.—[Teller.]	Murton of Lindisfarne, L.
Ellenborough, L.	Rankeillour, L.
Elton, L.	Rochdale, V.
Enniskillen, E.	St. Just, L.
Faithfull, B.	Sandys, L.—[Teller.]
Ferrers, E.	Sharples, B.
Fortescue, E.	Skelmersdale, L.
Gainford, L.	Strathcarron, L.
Gisborough, L.	Swansea, L.
Greenway, L.	Thorneycroft, L.
Grimston of Westbury, L.	Tranmire, L.
Holderness, L.	Trumpington, B.
Hylton-Foster, B.	Vaux of Harrowden, L.
Kemsley, V.	Vivian, L.
Kilmany, L.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

9.10 p.m.

Lord Beswick moved Amendment No. 31: Page 15, after line 4, at end insert— ("(2A) Notwithstanding the provisions of subsection (1) and (2) above, the Secretary of State may, by order, provide that consent will be required for all gas to be supplied through pipes in Great Britain except gas supplied by or to the Corporation. (2B) An order under subsection (2A) above may be made at any time but only where it appears to the Secretary of State to be desirable in order to ensure the efficient use of gas and the effective conservation of natural gas resources.").

The noble Lord said: I beg to move Amendment No. 31 on the Marshalled List. One of the very real concerns about this Bill, which there appears to be a certain urge to hurry through, is that it will mean the abandonment of the current depletion strategy. I am quite sure that noble Lords opposite and the noble and learned Lord, who I hope will reply, will understand that this is a very real concern. Hitherto there has been agreement on both sides of the House that a depletion strategy is required, and it has been a conservationist strategy. The objective has been to reserve gas for high quality uses for as long as possible and, as I say, between successive Governments and with the gas corporation over many years this has been held to be the right policy to follow.

The amendment which I am now moving is a long stop which would allow the Government to exercise a depletion policy if it appeared that gas was being wasted, or if it was being used up too quickly. The amendment itself is modelled on provisions in the Energy Act 1976, which provide the Secretary of State with permanent and reserve powers for energy conservation and control. I believe that there was very considerable discussion on the depletion issue in the Commons, and it would seem that the Government there argued that safeguards in the Bill cannot be justified for a number of reasons.

In the first place they claim that they have sufficient powers under the provisions of the 1975 Act. I certainly believe that there are powers in the 1975 Act and they could be used to control the rate of depletion, but only within certain broad limits. This really is no substitute for control at the market end, and it will be difficult, if not impossible, to apply such a control, as provided in the 1975 Act, in those cases where gas is found in association with oil.

The Government admit that these powers cannot control the use of gas in the marketplace. The corporation itself has tried to direct the gas into certain uses where gas is most highly valued and to restrict the use of gas for steam-raising purposes. The Government say that there are powers under the Energy Act 1976 to prevent the use of gas in power stations, but this essentially misses the point, as there are not many other steam-raising uses where coal is a perfectly adequate fuel, and in those cases the control cannot be exercised. The Government also assert that market forces will direct the gas into those uses where it is highly valued, but I doubt whether in 1982 we can seriously argue that market forces will ensure that the national interest over the long term will be followed. If we are to be governed by market forces it will be the short-term profit not the long-term national interest which will be the decisive factor.

The further Government case, as I under stand it, is that the Bill will result in a lot more exploration and that a lot more gas will be found and brought ashore. I am sure that all of us hope that there will be a lot more gas to be found, but there is absolutely no guarantee of that. Price, if we are talking about the market, will have some effect, but more important than price will be geological factors. The Government cannot alter the geology of the North Sea. There have been cases where even Ministers of the present Government have been compelled to say that they have no complete control, and that they can make no absolutely certain prophecy as to what might be forthcoming from the North Sea.

I see that on 23rd July 1980 Mr. David Howell, a Government Minister, referring to oil certainly, said: There are of course major uncertainties about future levels of North Sea production and UK consumption, and there cannot", he said, be any rigid plan". He was referring to oil, but the same doubts must arise over the exploitation of the gas resources. This amendment does not seek to alter the intention of the Bill. The provision may well never be used, but I suggest that it is a valuable safeguard when the energy future is so uncertain and unpredictable. I beg to move.

Lord Tanlaw

I wish to support the noble Lord, Lord Beswick, in this amendment. I raised this on Second Reading. We from these Benches were also concerned about a depletion policy. Perhaps when the noble and learned Lord replies he will throw some more light on what actually are the reserves. I understand that there is even some possible doubt that the figures given in the Brown Book may have to be revised or altered. Some suggest they may have to be revised upwards, in which case then we at least know a little more where we stand.

As the noble Lord, Lord Beswick, has said, it is impossible to operate a policy of any kind, depletion or otherwise, unless reasonable assessments are made of what reserves of gas we actually have in the North Sea and its environs. Whatever decisions we take about a depletion policy must be based on greater knowledge than we have of the geology around our coasts and the potential that is there, or alternatively that may not be there. There is all the difference in the world between having a policy for gas for 25 years and for 50 years, and these are the kind of parameters people are talking about today. At this stage I am rather bewildered as to what our gas reserves are, whether they are for 25 years or for 50 years.

I want to raise one other point for clarification. This refers to steam-raising. And the other point I raised at Second Reading, namely, the use of poorer quality gas by private suppliers to assist coal-fired power stations in load matching during peak demand. When he replies, perhaps the noble and learned Lord will give some confirmation that this will be within the EEC regulations of gas-fired power stations for use for this purpose.

Lord Mackay of Clashfern

I expect your Lordships will not be very surprised if I say that the Government do not agree with this amendment—and I am talking, just to be sure about it, about Amendment No. 31. The Government have made it abundantly clear that the fundamental purpose of Clause 12 is to permit private suppliers to compete with the British Gas Corporation in the supply of gas in Great Britain. We believe that this is an area which, subject to proper safeguards, is one in which private suppliers have a part to play and in which the economic development of the country will be assisted by their playing their proper part.

The British Gas Corporation's monopoly of supply is to continue only where justified by the special circumstances of the corporation's statutory obligation to supply gas on request; that is, in respect of premises within 25 yards of a British Gas Corporation main and consuming no more than 25,000 therms a year. In all other areas our intention is that there should be scope for competition, and that that competition should not be fettered by bureaucratic Government interventions. There is no case, in our view, for saying that, in order to ensure efficient use, the Secretary of State should have power to apply the consent procedure in respect of supplies to larger consumers; those taking over 2 million therms a year. It is claimed that circumstances may arise where it would be desirable that the Secretary of State's consent should be required in all cases, so as to ensure that gas is not wasted in less efficient applications. I understood that to be the noble Lord's basic argument. This claim appears to be based on the impression that there are "premium uses" for gas the identification of which is revealed by some mystical process only to some central planners in BGC or in the Department of Energy. The plain fact is that the more efficient, or premium, uses of gas will represent the higher value markets. Gas will command a higher price in such markets, so sellers of gas will naturally aim their commodity at these markets. Market forces will be much more effective than Government intervention in identifying the best uses for gas and channelling gas to those uses. We envisage that the consent requirement should be concerned solely with safety, on the basis which I have explained. Much the same argument applies to claims that it may be necessary to apply the consent requirement to all cases in order to ensure conservation of gas resources and control the rate of depletion. The Secretary of State already has powers in relation to the depletion of our offshore oil and gas reserves, and these powers are unaffected by the Bill. These powers, as the noble Lord mentioned, arise under the terms of clauses in the production licences which require that a licensee may not develop a field without first obtaining the approval of the Secretary of State to a development programme. The Secretary of State may reject a development programme on the ground that the proposed production rates are, in his opinion, not in the national interest; or he may approve a programme, but at the same time serve a limitation notice permitting him subsequently to vary the production rates proposed in the programme. This is control of rate of flow essentially at the source, and in our view it is the correct machinery for depletion policy. As I said, the general depletion policy at source, in our view, is adequate; market forces will produce a much surer guide to the use of the gas which is brought ashore.

The consent requirement in Clause 12 is there to permit safety checks and for no other reason. It is therefore right that, as the Bill now provides, the consent requirement should apply only to those supplies where there is need for a double-check on safety. There is no case, in our view, for suggesting, as the amendment does, that the Secretary of State should have power merely by making an order to go back to the old ways, intervening in each and every supply, hindering commercial agreements on the basis of misguided policies in areas much better left to the market. We have no intention of using the consent procedure for any purpose other than safety, and I strongly advise the Committee to reject the amendment.

The noble Lord, Lord Tanlaw, suggested that we would need to know more about reserves to make an adequate depletion policy. Obviously, the more information one can get about the reserves the better, and there is nothing in the clause, or indeed in the amendment, that bears much on that matter. As for the reserve figures, the latest Brown Book contains the best published figures; obviously the work of estimating goes on through the year, but it is updated on the occasion of each Brown Book publication. In our view, it is not possible to prepare a plan for the use of gas at the centre which will produce economical results so far as its uses are concerned. Central planning always imposes rigidity, and, in our view, in this area, subject to the overall depletion control that I have mentioned, market forces arc much better at responding to changing circumstances.

The situation regarding interruptable gas supplies to power stations is that there are cases when an interruptible supply of gas to power stations may assist the security of gas supplies and in the process offer a useful supplementary fuel for electricity generation. The Central Electricity Generating Board currently has two power stations capable of burning either coal or gas. Proposals for further schemes of this kind would be viewed on their merits under Section 14 of the Energy Act 1976. Nothing in this Bill would hinder such schemes. Indeed, the Bill will assist by providing a choice of gas supplier where in the past the only possible supplier has been the British Gas Corporation.

There is of course an additional cost in constructing a power station so as to be able to burn coal and gas rather than coal alone, and those undertaking the generation would consider case by case whether the additional flexibility gain justified the additional expense. I hope that in the light of those explanations the noble Lord will feel able to withdraw the amendment, but if he does not, I hope that the Committee will not accept it.

Lord Ross of Marnock

We hear some strange words now. We hear the objection of the Lord Advocate to bureaucratic intervention. But this whole Bill is bureaucratic intervention, intervention in something that has been giving a perfectly good and desirable service from a consumer's point of view—the British Gas Corporation. Suddenly "bureaucratic intervention" becomes a dirty phrase. To what are we applying this intervention?

The Government have discovered that premium use of gas is now nonsense, and yet for 15 years Governments of both parties, and Ministers of Energy, have proclaimed the need for conservation and have satisfactorily applied the phrase "premium use of gas". But now it does not matter; we must have competition. Does it never strike the Lord Advocate that competition can be wasteful, can lead to wasteful use of gas? I ask the Committee to remember that we are considering here a completely new situation, where there is a greater freedom from governmental intervention in respect of the purposes for which gas will be used.

No doubt those who find gas will be able to export it; it will not even come to this country. Why is it going elsewhere? If the noble and learned Lord looks at what has happened to gas finds by other nations, even in the North Sea, he will find that there has been a wasteful use of gas and a sudden, dramatic depletion, so that it is no longer there. I ask the Committee to remember who and what are dependent on gas. There are 14 million households dependent on it. There is industry dependent on it. It is the lifeblood of major industries in this country, and surely the power proposed in the amendment is one that the Government should gladly take. We have been fighting against the Government taking powers, but now we are offering a power. The Government should have the power to intervene where necessary in the national interest. As my noble friend Lord Beswick said, the power might never be used.

Gas is a finite resource; we may find it, or we may not find it. It is much more likely that with competition there will be much more widespread use of it. The danger of quick depletion becomes greater than ever. It is not good enough to say that we shall leave it to price, with so many essential industries, and the comfort, and indeed the lives, of our population dependent on it.

If the Government are wise, they can curtail the debate considerably and save another Division by accepting the amendment. The power might never be used. The chances are that with this kind of Government it never will be used, since evidently the interests of certain exploiters and would-be suppliers of gas are placed very much higher than the interests of the nation and of consumers, industrial and domestic.

Lord Beswick

I was a little disappointed in the noble and learned Lord's reply in so far as, as my noble friend Lord Ross says, he did not say that he would consider the points in this amendment and see whether there was any way in which he could meet them. However, I was grateful for the explanation he gave, and I shall look forward to reading with great care what he had to say, to see whether I can get any more satisfaction from his words.

I am bound to say, however, that I agree with my noble friend Lord Ross in that I, too, was a little surprised when I heard that the Government's intention was to avoid bureaucratic intervention, especially as we have just passed a clause, five of the seven subsections of which give powers of one kind or another to one lot of bureaucrats and the seventh subsection of which gives power to another lot of bureaucrats to check the decisions or the interventions of the first lot of bureaucrats. I therefore find it difficult to accept that the Government are so very strongly motivated by this desire to avoid bureaucratic intervention.

But more important is this question of whether we can expect market forces to give us the kind of energy strategy which I am quite certain we really believe the country needs. It is conceivable that the market forces may well bring forth more supplies of gas in the short-term and for certain purposes, but in order to have a finite supply controlled properly as to extraction and use, I cannot think that we ought to leave it to market forces. The reply really was unsatisfactory. I shall myself look very carefully at what has been said, and it may be that we ought to return to this point again at Report stage; but for the time being I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12, as amended, agreed to.

Clause 13 [Standards of quality]:

9.33 p.m.

Lord Tanlaw moved Amendment No. 31A: Page 15, line 22, after ("Corporation") insert ("and with such other persons and organisations as he considers appropriate").

The noble Lord said: I beg to move the amendment shown on the Marshalled List as Amendment No. 31A, and with the leave of the Committee, and with the indication of the noble Lord opposite, I would also speak to Nos. 31B and 31C, as I believe they are connected. As this Bill goes on we see that part of its duty is to increase supplies of gas to industry from private suppliers. We are broadly in agreement with this aspect of the Bill. We actually welcome it. But those of us who have had representations from industry know that, although they are quite pleased with this original step forward, as they see it, the chemical industry, in particular, is worried that although the Government have taken one step forward they are taking one step backwards in Clause 13; because industry, too, is worried about the Secretary of State's powers, in this case his powers to prescribe standards.

I think that here is another party outside politics, if you like, also worried, as we on these Benches are, about the Secretary of State's excessive powers as contained in the Bill as it stands, and how he intends to use them. The question asked in Amendment No. 31A is who the Secretary of State should consult; and Amendment No. 31B concerns the Secretary of State's right to prescribe conditions on the supply of gas from a private supplier to a private customer through non-BGC pipelines.

Dealing with the first amendment in my name, I should like to see some consultation by the Secretary of State on the standards of quality of gas supplied, either by the corporation or by private suppliers, being put on the same basis. It would be as a benefit to industry for consultations on the standards and quality of gas from both private and BGC suppliers to be on the same footing. I do not want to weary the Committee, but this is the same point we have been making in regard to other parts of the Bill: that the Government start should be even-handed towards the private and public sectors of industry—in this case, British Gas. We get worried when the Government appear to have two sets of approaches. I think it takes a lot of structure away from the Bill as to where the Government think they are going. That is outside the scope of this amendment.

At the moment, such consultation rarely takes place and the industry has to be grateful for what it gets—which is the view taken. Such consultation could lead to policy, price, volume and priorities where, historically and currently, British Gas has not been all that co-operative with industry and, on some occasions, has been acting in what has been described as a cavalier fashion towards industry. I do not think that this is helpful for the economy and the country. I feel that this amendment would go some way towards alleviating this worry from the industry and encouraging British Gas to open itself up a little more than previously.

On the second part of the amendment, the supply of gas direct from the private supplier through non-BGC pipelines does not need to be of the same standard as those provided by British Gas. The uses quite often are different. The safety aspects of this provision are covered elsewhere in the Bill, so that I will not dwell on that aspect at this time. British Gas has to supply many outlets from the same pipeline, including domestic central heating, gas cookers, as well as industrial plant. Apart from safety considerations, this gas must be of the same calorific value, if only to comply with the recommendations of the manufacturers of domestic appliances.

When gas is transmitted through a private pipeline to an industrial consumer, the industrial consumer may have more flexible equipment than the domestic consumers and therefore the gas need not be of such a uniform character. The industry have had discussions with several potential suppliers of gas from currently undeveloped sources. It is envisaged that gas could be supplied as part of a package of oil products. This type of gas would be variable. Currently, gas of different qualities carried in separate pipelines is an established practice in other countries such as the Netherlands and the USA.

We cannot envisage the need for the Secretary of State to regulate standards of pressure and purity of gas transmitted by private pipelines and by direct suppliers. We on these Benches believe that the term "supply" covers the position well without taking anything from the Bill, and it gives some incentive to industry to support this Bill more fully. I beg to move.

Lord Skelmersdale

We now arrive at that part of the Bill which makes amendment to the Gas Act 1972 so as to control the position of non-BGC gas, agreed to in principle in Clause 12 which we have been discussing. The first of the noble Lord's amendments seeks to extend the consultation requirements in the new Section 29B(1) so as to cover not only British Gas but also such organisations and persons as the Secretary of State considers appropriate. From what he was saying I can understand exactly what he is worried about. I hope by my remarks to dispel those particular worries.

When one looks at the new Section 29B(2) one sees that consultation is required to such persons and organisations as the Secretary of State considers appropriate. That wording is wide enough to cover not only the private suppliers whose supplies would be affected by standards prescribed under new Section 29B(2), but also the British Gas Corporation. The standards currently prescribed for BGC supplies serve two functions: safety and consumer protection, both points which have worried the Committee considerably this afternoon.

Clearly, standards relevant to safety must apply to all supplies, whether BGC or private. But standards serving a consumer protection purpose reflect BGC's monopoly position and the fact that many of its customers are private individuals who are in no position, for example, to test the gas they receive for uniformity of calorific value. Consumer protection standards may not always be appropriate in the case of private supplies.

For example, a supply of a specific calorific value or chemical mixture may be permitted for a specific purpose. Were this to go down, for example, a BGC gas main, this could very well make the gas in the BGC main impure, and nobody would want this to be done. There are these two different arrangements in Clause 13.

Going on to the other two amendments, the noble Lord, Lord Tanlaw, in spite of his careful exposition, rather confused me. Amendment No. 31B proposes to delete "pressure and purity" and substitute "supply". I could not understand whether in his mind—if not perhaps in his drafting—the word "supply" meant exactly the same as "pressure and purity". Perhaps we will come to that when the noble Lord replies. The present drafting of the Bill states clearly that such standards are to be prescribed. I submit that this clarity is absolutely vital in the drafting of such a provision as this.

The standards of pressure and purity prescribed for private gas supplies need not in every case be identical to those prescribed for BGC supplies. Section 45(3) of the Gas Act 1972 already provides for flexibility in the making of regulations. Obviously, where private gas uses BGC pipelines, then the private gas must be compatible with BGC gas. We shall be discussing that point when we come to Clause 17 and Amendment No. 36. Where a private supplier builds his own pipeline, there should be room for flexibility without in any way prejudicing public interest. For example, a private supplier whose gas contained a higher proportion of impurities than would be acceptable in the BGC system might build his own pipeline specifically suited to such gas.

There is no intention to obstruct such an arrangement. Indeed, an advantage of this Bill is that by opening the door to private suppliers it will permit the development and supply of what might generally be termed "nonstandard" gas by parties whose facilities have been specifically designed or adapted for the transmission of such gas. At present, such gas may be left undeveloped because of the great expense of suiting it for the BGC system.

The third of the noble Lord's amendments would delete the Secretary of State's power to prescribe standards of uniformity for calorific value and other standards with respect to the properties, condition and composition of gas supplied by private suppliers.

The important point here is that the gas must be suitable for the purpose for which it is supplied. It must also be suitable for the transmission line along which it goes.

Perhaps I may conclude by reminding the noble Lord that, before prescribing any standards for private supplies, the Secretary of State will consult as required in Clause 13—that is, the new Section 29B (2) of the 1972 Act; which is incorporated in Clause 13 of this Bill. I would emphasise that there is no intention to place unnecessary constraints on the ability of private suppliers and their customers to agree on or arrange for a supply of gas of different specifications from those employed by BGC. Such arrangements could be a wholly desirable way of putting to good use gas which might otherwise remain in the ground. But I cannot encourage your Lordships to support these amendments which might in the future be found to have prevented securing the wider public interest in standards of gas supply. In the light of my comments, I hope that the noble Lord may feel that the Bill goes quite a long way towards allaying the fears which he has expressed this evening.

Lord Tanlaw

While thanking the noble Lord very much for his reply to the three amendments, I hope to be able to clarify one or two points which he has raised with me in order to be of assistance. Before giving my view on these amendments, however, I should like to express the difficulty that we have, not only from these Benches but that we all have when dealing with what are broadly called "technical amendments".

There are no matters of principle here, except of course the powers of the Secretary of State. Therefore, when one takes on a brief from an industry which has suggested amendments along these lines, one does it with caution. I believe there is a case—concerning amendments of this kind of an entirely non-political nature—for those who wish to speak on them to get special briefing from civil servants in the Department of Energy before we go into a Committee stage like this.

I believe I know what I have in mind in these amendments but, not being a technical gas man, they are limited by technical restraints. On the first part of Amendment No. 31A, I believe there is a strong case for greater consultation with all parties involved, because why is it that the industry is not particularly happy with the Bill as it stands? As I understand it, this Bill is meant to assist industry, and particularly the chemical industry, when the recession lifts, to become more competitive and effective in its pricing. That can be brought about only by having agreed long-term supplies of gas at a reasonable price; and if the industry is not happy with the Bill as it stands, it worries me in case this Bill is not going to assist the British economy and it is not going to assist the competitiveness of the British chemical industry.

That leads me to the second point. The noble Lord asked me on No. 31B what was the difference between pressure and purity and supply? As I understand it, the term "supply" would be much more general and there would not be any specific difficulties in different kinds of gas going down a private pipeline. I understand that this is simply a practical thing, so there will not be too great an interference from the Secretary of State or from any other party about the type of gas that is going down a private pipeline. It seems to me this is a very simple amendment which might need more consultation than it has hitherto received, with the industry itself. We cannot help the noble Lord from these Benches; but I get the feeling that more and wider consultation is necessary.

When we come to Amendment No. 31C, again I am worried that the industry is worried that British Gas is going to obstruct the passage of perfectly normal variable gases that go down exactly similar lines in other parts of the world but not in Great Britain. So far as I am aware, there are no problems with this. The industry says that there are no problems, and all I can do is to believe them. But the industry is worried with the Bill as it stands at the moment and so the argument is not really political. These are non-political amendments. It seems to me that it would be helpful if the noble Lord, although he has already been helpful, would indicate to me that greater consultation has to be undertaken with the industry before this Bill becomes law, so that it will not affect the competitiveness or effectiveness of industry as a whole and, in particular, the chemical industry.

Lord Skelmersdale

If the noble Lord will allow me to say so, there has been considerable consultation with the chemical industry and with the association which represents it. The trouble is that the association started off before the Committee stage of this Bill in another place. They were then replied to, but they did virtually nothing between that time and this. But we will certainly seek to explain about such worries as they have had. Indeed, when they get around to reading the Hansard report of today's debate, what I said to the noble Lord will apply equally to them. But it takes two to tango and the department certainly is not to blame on this issue.

Lord Tanlaw

I thank the noble Lord again for that helpful comment and, with those encouraging words about further consultation, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 31B and 31C not moved.]

Clause 13 agreed to.

Clause 14 [Safety regulations]:

9.52 p.m.

Lord Underhill moved Amendment No. 32: Page 17, line 14, at end insert ("and specifying the arrangements to be made by the supplier to deal with any situation likely to cause danger to the public.")

The noble Lord said: During our debates today on various amendments, there has been considerable stress laid on the safety aspect, and Clause 14 is of particular importance as it deals with safety regulations and the safety of the public. Clause 14 is based on Section 31 of the 1972 Act, which deals with safety regulations to protect the public where gas is supplied by the corporation. The section sets out the powers of the corporation's officers to enter premises to examine and, where necessary, to disconnect gas fittings. I think it will be generally agreed that the regulations have worked out very satisfactorily, and also that British Gas has very high standards as regards safety.

The clause seeks to extend the provisions of Section 31 to the private supply of gas. It makes the regulations apply both to the British Gas Corporation and to the private suppliers of gas, and extends the powers of entry to officers authorised by the Secretary of State. The clause does not state who are the authorised officers, but during the Committee stage in another place the Under-Secretary of State made clear that they would be members of the gas standards branch of the Department of Energy and, on an earlier amendment, the noble and learned Lord the Lord Advocate confirmed that that is the position.

But, during that debate in another place, doubt was expressed about the additional staff which the gas standards branch would need in order to carry out these new duties, and my noble friend Lord Ross, who asked about the number of staff at present in that branch, was told that at the moment the figure is around 100. There is concern that there could be incidents arising from the private supply of gas in those areas where there arc no gas standards officers. In the debate in the other place, the Under-Secretary of State claimed that most of the private supply would go to industrial customers and that adequate safety arrangements would he covered in the contracts. He admitted, however—and I quote from column 851 of the Official Report of the Committee stage in the other place—that: The private sector could make peripheral supplies available to domestic customers".

It may be that, for industrial supplies, safety arrangements could be included in the contracts. But the Bill does not specify that this shall be done and, as we have stressed from these Benches from time to time on recent Bills that have come before your Lordships, a statement made by a Minister has no force in law and, in a matter affecting the safety of the public, there must be no room whatever for any doubt. That is why the amendment seeks to require the safety regulations to specify the safety arrangements which the supplier must make.

In the case of private supplies to domestic consumers, even though, in the words of the Under-Secretary, these may be only peripheral, the position in our view is potentially much more dangerous, because there are no individual contracts in which safety arrangements could be agreed. In an emergency, the remote village or housing estate being supplied privately could be far from the nearest gas standards officer, a point which was made by my noble friend Lord Ross of Marnock on another amendment.

Because of the difficulty of ensuring the safety of domestic customers when gas is supplied privately, it would be preferable for the Bill to limit private supplies of gas to industrial consumers only. It may be, however, that the Government could not accept that position. Then the protection of the public must receive top priority, and an amendment along the lines which I am moving would appear to be absolutely essential. This amendment is a safety provision, and contains so much commonsense that I hope the Government will either accept it or, if they do not like its wording, give an undertaking to bring forward an amendment of their own to cover this important point. I beg to move.

Lord Skehnersdale

I accept that the noble Lord, Lord Underhill, has very real fears about safety. Before we finish Part II of the Bill, I hope I shall go some way at least towards allaying those fears, because the Government recognise that, in the mind of the public, safety is of the utmost importance. I cannot stress this too clearly.

Before I turn to the amendment itself, it may be helpful if I explain the reasoning behind the provision in Clause 14 that it would affect. Section 31 of the Gas Act 1972 already allows the Secretary of State to make regulations for the protection of the public from personal injury, fire, explosion or other dangers arising from the transmission or distribution of gas by the corporation, or from the use of gas supplied by the corporation. Clause 14, in re-enacting Section 31, extends these provisions so that they cover private supplies of gas through pipes as well as gas supplied by the BGC. The amendment would specifically empower the Secretary of State, in making such a regulation, to specify the arrangements that the supplier should make to deal with any situation that was likely to endanger the public.

The provision in the new Section 31(1) of the Gas Act 1972 would, as it is presently drafted, allow general regulations to be made as to how a supplier should deal with a situation that was likely to cause danger to the public. In general terms, then, the noble Lord's suggestion is already covered.

I am satisfied that the powers in the new Section 31 of the Gas Act 1972 go wide enough to set sufficiently stringent general standards of safety; indeed, these are the powers that have been with us for a number of years in respect of BGC's supplies. The provisions governing the safety of BGC's supplies are therefore completely unchanged. In the case of private supplies that fall outside BGC's monopoly and are for less than 2 million therms a year, the Secretary of State's consent will be required. This gives the Government an opportunity to double-check that the safety arrangements proposed are adequate and that suitable pro- visions have been made in the event of an emergency. For users of above 2 million therms a year, private supplies will be undertaken primarily by oil companies with considerable experience in handling dangerous substances of many types, including—this is important—gas. Their customers will in turn be substantial concerns who will be capable of insisting that supply and safety arrangements are adequate, even if they are not themselves expert in handling gas. In these cases, given that regulations made under Section 31 will apply in the case of every supply, I do not think that such a double-check is necessary.

Bearing in mind all these provisions we have incorporated into the Bill to ensure safety, I do not think that a further measure would be necessary or, indeed, appropriate. I hope that noble Lords will take it from what I have said that we take the question of safety very seriously indeed and that the measures we are proposing are adequate to ensure this.

Lord Underhill

I am very disappointed with the Minister's reply because in effect he has given no reply to the two major points I raised when moving this amendment. My first point was, what will be the position where there may be no gas standards branch office in the area? Nobody has any idea of the number of persons who may have to be appointed. We know at present, in respect of supplies by the corporation, that there will always be a person employed by the corporation near at hand, but that may not be the situation with supplies to outlying areas. That point has not been dealt with.

My second point concerned the possible danger where there are private supplies to domestic consumers in isolated areas. This point has not been dealt with at all. If the Government are concerned—as I believe they are—with safety, as are all members of the Committee, they can accept this amendment because it has no party political attachments. It is a simple amendment on safety. If only the Government will say that they see a point to what the amendment suggests and will take a look at it, then we would not press the matter further. But in the absence of such a statement on safety in the reply made by the Minister, we shall have to ask the House to decide upon it by a Division.

Lord Skelmersdale

I thought that in virtually every sentence I uttered the word "safety" was included, so for the noble Lord to assert that I dismiss safety out of hand is really not very fair. I accept the criticism made by the noble Lord, Lord Underhill, that I did not answer the questions he put. I must apologise to the noble Lord for not doing so.

The noble Lord's first worry was about where gas standards branch offices are situated. Quite honestly, I do not believe that that is an appropriate question in the circumstances, because I think that the noble Lord misunderstands the purposes of the gas standards branch. The gas standards branch is there to supervise for the Secretary of State the general position of safety. As such, although there will be frequent inspections, it is, generally speaking, a "desk job". The noble Lord, Lord Ross of Marnock, has commented several times on the fact that there are only 100 people employed in the gas standards branch. I can certainly tell him that if it proves necessary in the light of experience, this number will be adjusted either up or down as the circumstances dictate.

Lord Ross of Marnock

We are most grateful to the noble Lord the Minister for this information; he has been very helpful. But does he have the information I asked for, about the number of people in Scotland? Was I right in thinking that the number is about 10?

Lord Skelmersdale

I do not have the precise number for Scotland, but I can tell the noble Lord, Lord Ross of Marnock, that the number of people in Scotland is included in the figure of 100 at the gas standards branch. The noble Lord can make of that what he wishes, but that was the information he asked for.

With that intervention, I have rather forgotten the second point raised by the noble Lord, Lord Underhill, but perhaps he may like to remind me so that I can give him a reply.

Lord Underhill

My second point concerned private supplies to domestic consumers in outlying areas.

Lord Skelmersdale

It will be a very rare occurrence, if indeed it is ever allowed to happen, that private suppliers will be allowed to supply the domestic market. The only time that I can think of when such an occasion might arise will be when the principal supply is to a factory and the factory has, in effect, tied cottages around it. Perhaps the term "tied cottages" is an emotive one and I should not have used it; I mean, cottages which have been built to house employees of the factory in question. In those circumstances, I can understand the Secretary of State giving his consent to the supply of gas to both the factory and the outlying cottages. But as a general rule, I cannot see that private supplies to private consumers on this small scale will be either necessary or desirable.

Lord Lovell-Davis

If the Minister would give way, he is repeating what Ministers have said in another place and what I believe has already been said here, that they have no intention of privatising transmission and distribution. The fact remains that we are discussing the Bill as it stands, and we are talking about the powers that can be used, and they exist. I would like to repeat what my noble friends have asked: What is there in the Bill which lays down the safety requirements that should be in the Bill?—because we are talking about the powers this Bill gives to supply. It is not good enough for a Minister to talk about this possibly happening only where there are tied cottages. It can happen in other situations as well.

Lord Skelmersdale

The Bill provides the Secretary of State with powers to make statutory arrangements for the safety matters as far as gas supply is concerned. Noble Lords on that side, who have all got much more experience of government than I have, would surely not expect the Bill go go into detail of what in effect would be subordinate legislation at this stage in parliamentary discussion.

Lord Underhill

I appreciate that the noble Lord the Minister is doing his best to reply to the points raised. But really, when the Committee is told that the members of gas standards branch are at a desk job, how does that fit in with the statement, made quite clearly, that these will be the authorised officers given power, under the proposals of the Government in this clause, to have entry? Theirs cannot be a desk job if they have powers of entry. If it be a desk job we are in a very serious situation and our amendment becomes even more important. The Minister says that the position of private suppliers may be a rare occurrence; I have quoted from the Minister's own statement in the other place in Committee, where he said these may be only peripheral. If it is only one private consumer who could be in danger, surely we must have adequate safety regulations.

The other point that we discussed in the amendment is this. Even though we talk about the possibility of having contracts for the industrial consumer, there is nothing in the Bill which lays this down. A statement by a Minister is not sufficient in law for that. Frankly, this is such an important issue of safety that, in the light of the replies given, I must press the amendment.

10.8 p.m.

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

Their Lordships divided: Contents, 19; Not-Contents, 42.

DIVISION NO. 7
CONTENTS
Balogh, L.	Peart, L.
Beswick, L.	Pitt of Hampstead, L.
Birk, B.	Ponsonby of Shulbrede, L.—[Teller.]
Bishopston, L—[Teller.]
Blease, L.	Ross of Marnock, L.
Cledwyn of Penrhos, L.	Stone, L.
Irving of Dartford, L.	Strabolgi, L.
Llewelyn-Davies of Hastoe, B.	Tanlaw, L.
	Underhill, L.
Lovell-Davis, L.	White, B.
Mackie of Benshie, L.

NOT-CONTENTS
Airey of Abingdon, B.	Loudoun, C.
Ampthill, L.	Lyell, L.
Avon, E.	Mackay of Clashfern, L.
Belstcad, L.	Macleod of Borve, B.
Brougham and Vaux, L.	Margadale, L.
Cork and Orrery, E.	Marley, L.
Craigmyle, L.	Marshall of Leeds, L.
Cullen of Ashbourne, L.	Merrivale, L.
Denham, L.—[Teller.]	Montgomery of Alamein, V.
Elliot of Harwood, B.	Mottistone, L.
Elton, L.	Murton of Lindisfarne, L.
Enniskillen, E.	Rankeillour, L.
Faithfull, B.	Rochdale, V.
Ferrers, E.	St. Just, L.
Gisborough, L.	Sandys, L.—[Teller.]
Greenway, L.	Skelmersdale, L.
Grimston of Westbury, L.	Strathcarron, L.
Holderness, L.	Thorneycroft, L.
Hylton-Foster, B.	Trumpington, B.
Kemsley, V.	Vivian, L.
Long, V.	Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

10.15 p.m.

Lord Tanlaw moved Amendment No. 32A: Page 19, line 41, at end insert— ("(10) Where the relevant authority is the Secretary of State there shall be paid out of moneys provided by Parliament to persons appointed to carry out the functions referred to in subsection (2) above and any other functions arising from regulations made under subsection (1) above such remuneration and such allowances as may be determined by the Secretary of State with the approval of the Treasury and, where appropriate, such pensions as may be so determined may be paid out of money provided by Parliament to, or in respect of, those persons. (11) Every person who is a supplier during any period, not being the Corporation, shall pay to the Secretary of State such proportion as the Secretary of State may determine of—

1. (a) any sums paid by him under subsection (10) above in respect of that period, and
2. (b) such part of his other expenses as he may, with the consent of the Treasury, determine to be attributable to his functions under this section,

and any liability under this subsection to pay to the Secretary of State sums on account of pensions (whether paid by him under subsection (10) above or otherwise) shall, if the Secretary of State so determines, be satisfied by way of contributions calculated, at such rate as may be determined by the Treasury, by reference to remuneration.").

The noble Lord said: I beg to move Amendment No. 32A, which shows the two new subsections, as shown in the Marshalled List. I think the time has come when we must get the pneumatic drills out, start to dig up the road and pull back the woodwork, to find out just how many extra people are required to deal with these safety regulations on which so much discussion and so many views have been given tonight.

Under Clause 13 in the Bill, which introduces a new Section 29B of the 1972 Act, as the Committee is aware, the Secretary of State may prescribe standards for gas supplied through pipes and may appoint competent and impartial persons to carry out tests to ensure that these standards are complied with. Under subsection (5) of new Section 29B, these persons are to be remunerated out of money provided by Parliament. Under subsection (6) the costs are recovered from the suppliers of gas.

These provisions have been taken from Section 26 of the 1972 Act, which of course will be repealed by this Bill. The tests are currently carried out at the department's gas standards branch and the costs are recovered from British Gas. Presumably in future a proportion of these costs will be recovered from other suppliers, depending on the amount of gas which they supply.

Under Clause 14 the Secretary of State may make safety regulations, and the Minister has made great play with the fact that he will satisfy himself that safety arrangements are satisfactory before giving consent to any private supply. There will, therefore, be a need for staff who are competent to decide whether the arrangements made by a would-be supplier are, in fact, satisfactory. Moreover, under subsection (2) the relevant authority may authorise persons to enter premises, examine and test appliances and, where necessary, seal off any fitting or part of the gas supply system. Presumably further staff will need to be appointed for this purpose.

The relevant authority in the case of supplies made by British Gas will be the corporation. Hitherto the corporation will have undertaken these tasks at its own expense, but in the case of the private supplies the relevant authority is the Secretary of State. Yet no provision is made in Clause 14, as it is in Clause 13, for the meeting of costs of employment of these extra staff. These amendments would require the same arrangements to be made—the recovery of costs incurred in respect of private supplies—as are made under Clause 13. If this is not done, the costs will fall upon the taxpayer. Moreover, British Gas will be required to meet the costs in respect of its own supplies, a requirement from which the private supplier will be excused.

Once again I am asking the Government to show that they are even-handed in their approach to both sides of industry. When the noble Lord replies I hope that he will merely confirm this and agree with, if not the wording, then the principle behind these amendments. This amendment would also provide an opportunity for questioning the Government on the actual number of staff they expect to be necessary to exercise this very proper supervision of safety arrangements and, of course, to deal with emergencies. The British Gas organisation of course covers the whole country for the moment, and there are well-established arrangements for dealing with an emergency wherever it may arise. No one has complained at all about the degree of efficiency that the corporation has in this area.

The Department of Energy is not the gas corporation, and it does not have locally based officers, so far as I am aware, who are competent to carry out these tasks. They would either have to appoint them or increase the staff of the gas standards branch at Leicester to undertake the additional work. It was clear from the answer given to the noble Lord, Lord Underhill, that the staff at Leicester do not apparently get their boots very dirty. I am sure that this is untrue, but they are obviously desk-bound rather than the activists who go out into the field to check the safety of installations.

If this latter course were chosen there would inevitably be long delays before officers based at Leicester could reach premises at which the emergency had arisen, and travelling costs would be heavy, especially to Scotland. It is of course possible that the Secretary of State might have in mind that officers of British Gas might be appointed to carry out these functions. But, if so, it would certainly be expected that the Secretary of State would meet the costs, and he would need to recover these costs from the suppliers. I hope in his reply the noble and learned Lord will clarify this point, which is important to the private suppliers of the industry.

I want to go back to the question of staff numbers. It has been raised before. The only mention of staff numbers is on page vii in the Memorandum, which says: The administration of clauses 12 to 17 will initially require 8–10 staff in the Department of Energy, and might eventually require a total of 40–50 staff". Are these numbers, first, above the 100 staff already mentioned, or do the 100 staff members already mentioned have nothing to do with these clauses of the Bill?

It seems quite clear that these numbers not only include the staff required for safety and quality control referred to above, but they are also the staff to cover the submission of pipeline plans by British Gas to the Secretary of State under Clause 15, and the staff to deal with applications for consent under Clause 12, and appeals to the Secretary of State under Clauses 16 and 17. Overall, it would seem that the figures quoted are extremely low if it is assumed that the Bill achieves the Secretary of State's objective of a substantial private sector involvement in the supply of gas.

I think that the answer which the noble and learned Lord would give to this question will give everyone in this Committee some indication as to how seriously the Government take themselves and their own Bill, because so far as I can see even the maximum number of 50 staff would appear to be quite inadequate to service the safety aspects of this Bill, and indeed to service the private element of this Bill at all. It may be very interesting—not just to me personally but to the Committee—to know how the Government arrived at this figure of 40 to 50. What calculations did they make to come to these figures? Was it that they were trying to use the low field, to use racing parlance, to make sure that it was not going to increase the administrative overheads of the Bill, and hope they get away with it? If this was the low field what is the high field? There are a number of questions which, although it appears to be a rather specialised amendment and one that has important principles involved in it, are of much wider application as to the Government's attitude as a whole in making this Bill positive and active after it is made law. I beg to move.

Lord Bishopston

I shall be brief, although it worries some of us that we should be discussing certain important provisions late at night, with pressure—if that is the word to use in relation to gas—to make even greater progress, and we are tending to curtail some important discussion. In supporting the noble Lord, Lord Tanlaw, I would remind the Minister that the amendment is important because it is concerned, as others have been, with safety and with the question: who exercises it, who is to be responsible for it and who is to pay for it; and the Government have given little in the way of a clear idea of who is to do what.

The best authority for safety is the BGC, and if private enterprise is to be involved in the making of profit from the sale of appliances and so on, there is no reason why it should not also take some responsibility for safety. However, the public would, I am sure, like an assurance that the BGC will be undertaking that role, with adequate remuneration of course. If the BGC is to be responsible, proper arrangements must be made so that we all know where we are. There must be legal clarity about rights and responsibilities and, as I say, there must be adequate remuneration for the BGC for their part in it. Despite the pressure to make progress, the Minister must clarify the plans so that the corporation and the public have the assurances they seek.

Lord Skelmersdale

I accept the closing remarks of the noble Lord, Lord Bishopston, that we must all know where we are, and I shall seek to give the noble Lord, Lord Tanlaw, the assurance for which he asked; namely, that there is an even-handed approach to safety, depending on whether one is talking about the safety of the BGC, the safety of the private supplier, the safety of the purchaser or, indeed, the safety of the gas standards branch, and I shall come to all of that shortly.

The broad picture is that there are two levels of safety coverage when an incident occurs involving gas. Looking at the first level—that is, the coverage provided by the supplier of gas—the BGC is at present given rights of entry to deal with potential dangers by virtue of regulations under Section 31 of the Gas Act 1972. Where a private supplier seeks the Secretary of State's consent to supply gas under Clause 12, the gas standards branch will advise the Secretary of State as to the adequacy of the proposed safety arrangements, and one of the points checked will be that the arrangements include a contractual right of entry for emergency personnel provided by the private supplier, so that potential dangers arising from private supplies are covered in a similar fashion to those arising from BGC supplies. I would imagine that in practice the contractual rights of entry would, where appropriate, follow the broad pattern of the rights given to BGC; for example, that the rights would be exercisable in certain circumstances only, and that where the rights were exercised in respect of premises temporarily unoccupied, there would be an obligation to leave the premises as effectively secured against trespassers as they had been prior to the entry.

The second level of coverage is the overall monitoring and investigation by the Department of Energy in the person, if I may put it that way, of the gas standards branch. In the case of gas supplied by BGC, the gas standards branch will continue the monitoring and investigation role it currently fulfils. In the case of gas supplied by other persons, the gas standards branch will have two roles. It will undertake monitoring and investigation, as it does in respect of BGC supplies, but in addition it will have rights of entry under Clause 14 for the prevention of dangers arising from privately supplied gas. The gas standards branch will not be undertaking routine inspections of all private gas supplies; the day-to-day emergency work will be provided by the private supplier, and perhaps that answers one of the worries of the noble Lord, Lord Tanlaw. The provision of statutory rights of entry for the gas standards branch is rather an expression of the public interest in gas safety and a way of ensuring that there is an official means of giving effect to that public interest, if a problem should ever arise which for some unforeseen reason it appears may not be satisfactorily dealt with by the arrangements between a private supplier and his customers.

This residual role of the gas standards branch is in no sense comparable to the day-to-day safety cover provided by the British Gas Corporation. In the case of private supplies, the day-to-day dealing with incidents will be undertaken by personnel provided by the private supplier. Therefore the financial effects will be of a lower order of magnitude than would be the case if it were proposed that the Secretary of State's officers in the gas standards branch should undertake the day-to-day work on incidents involving gas. There will, of course, be some cost as a result of the residual role to be adopted by the gas standards branch in relation to incidents arising from private gas supplies, but it will not be significant in terms of the respective overheads of BGC and private suppliers. The purpose of providing a residual role for the gas standards branch is not to relieve private suppliers of any of the emergency responsibilities currently borne by BGC; on the contrary, we shall expect private suppliers to be equally as diligent as the British Gas Corporation in the provision of emergency cover. The role for the gas standards branch is merely a long stop to give expression to the public interest where private bodies are engaged in an activity of public concern.

The gas standards branch does not now charge BGC for the monitoring and investigation that is undertaken in respect of incidents involving BGC supplies, nor do we believe that it should charge private suppliers for the role that it will adopt in relation to them—the evenhanded approach. I can understand that the noble Lord has drawn on the drafting of Clause 13 in proposing this amendment, but that is a rather different case. Special provision is made there because persons are employed, often on a part-time basis, solely to undertake gas testing. In the context of Clause 14, however, we are talking of full-time civil servants whose work in relation to private supplies will be part of their duties within the gas standards branch. I have addressed the amendment at some length, but both noble Lords had stressed to me how important it was in their minds, and so I hope that my remarks are allowable, even at this late hour.

Both noble Lords were also worried about staff numbers. They referred to the explanatory memorandum and asked about the reference to the eight to 10 staff rising perhaps to 40 to 50. The reference by the noble Lord, Lord Tanlaw, to the penultimate paragraph of the memorandum would realistically be answered like this. The eight to 10 staff do indeed cover the department's requirements for all Part II purposes, including staff required to monitor common carrier work in Clauses 15 to 17.

Possibly one to three staff out of the eight to 10 will be for the gas standards branch in the first instance. But as I told the noble Lord, Lord Ross of Marnock, just now, we will need to amend those figures in the light of experience; there will be, for example, the question of how many consents are required. We cannot envisage there being more than the maximum figures stated in the explanatory memorandum. But if we are wrong, we shall have to look at this again, and in the light of experience very naturally we shall have to change it.

Lord Underhill

The noble Lord said that the work will be carried out by a person appointed by the private supplier. Can he explain, not only to myself but to other noble Lords, where that is in the Bill, or will it be covered by regulations? It has not been referred to previously. In the other place the Minister said that the personnel would be members of the gas standards branch. If these people are to be employed and paid by the private suppliers, surely that ought to be written into the Bill. If it is in the Bill, then I must apologise, and hope that the noble Lord will explain it to me.

Lord Skelmersdale

No, indeed, it is not in the Bill. As I was trying to explain, the point is that we are talking about two sets of individuals, in essence doing two different jobs. We are talking about the gas standards branch and the increase in officials that will be needed there. We are also talking about the day-to-day emergency cover, which currently for the monopoly BGC supplies is provided by BGC personnel. But in the future the cover will be provided not only by the BGC for its supplies, but also by the private sector company for its supplies. In other words, each will look after its own. The noble Lord says it is not in the Bill. Of course it is not in the Bill. This is one of the details which, as I said on a previous amendment, really do not get into Bills. But I have sought to explain to noble Lords opposite exactly what will be the position. I am not able at this moment to put my hand on my heart and say that this will be done by regulation, but I can assure noble Lords that it will be done before the Secretary of State gives his consent, where that is appropriate.

Lord Ross of Marnock

I think the Committee should be grateful to the noble Lord, Lord Tanlaw, for having raised this important issue—and there should be no complaint about the length of time we take over it. In fact, I think the real complaint is that at such an hour we should he dealing with a matter of such importance. Because we should remember that what we are dealing with is protecting people from personal injury, fire, explosion or other dangers arising from the transmission or distribution of gas through pipes … ". The situation at the moment is one about which we can be reasonably happy from the experience of the past and our confidence in the skill of the British Gas Corporation; but here we have a new element, and that new element is going to create expense—very considerable expense indeed—for the Department of Energy.

The noble Lord said that we do not need to write certain things into Bills. But eventually we do, especially under this Government. It used to be that people could apply for planning permission quite freely, but now an application for planning permission is supposed, over a period, to meet the cost to the planning authority of the work that is involved for them; so there are now charges there. This goes a little wider than this particular clause, but we are already told that these very hard-pressed men—I suggest that at the most there will be 10 in Scotland—are going to have more work placed on them. They have the job now, according to the Minister. They have two roles, the role of monitoring and the role of checking, which requires the powers of entrance. It means that there is going to be further expense. It is no good saying that you are treating them as one and the same. This is entirely different; this is new. This is something we have not had before. So the whole question of expense arises—and this is from a Government which are so concerned.

On the figures given in the Financial Memorandum I reckon that we are going to have an extra 1¼ men in Scotland to deal with this. You see, we have not so devolved the Department of Energy that we have the Secretary of State. Not even the Lord Advocate can intervene to any great extent in relation to this, but he can advise the Government about the law in respect of the activities of these people in Scotland. There are some questions I should like to ask about that later, particularly in relation to penalties and so on; but, once again, we are faced with this business of time.

I am not happy at all. We are setting up this new organisation, and we are subjecting the Department of Energy, and certainly the gas standards branch, to so much more work which has to be paid for by the public. It should be paid for by this new venture, these new unknowns who are coming in, to whom we are going to dispose of the assets of the gas corporation.

This is a selling Bill. I think it was one of my colleagues here who suggested that the present Government would sell their grannies—and then the rider was added, "Aye, but only with the consent of the Treasury". When it comes to this, we are looking at the question not only of safety but of who is going to pay for it. I think they are entitled to pay through the Department of Energy—and I think this is part of the amendment we have before us—for the services of those who presently are not doing this work because the work does not exist; they are only doing it in respect of the British Gas Corporation, and that is something which has been established over a long period. In fact, the British Gas Corporation also does a considerable amount of work for the British Standards Institute. So you have this excellent and efficient organisation which is going to be destroyed. I do not know how the Government justify this to themselves.

Lord Skelmersdale

I must get to the bottom of this. The noble Lord, Lord Ross, says that the officials of the gas standards branch should be paid. He is presumably referring to their being paid by the private sector for the work that they do for them. We on these Benches have been encouraged to have an evenhanded approach. Are we to charge British Gas for the same service? If not, I cannot see the force of the noble Lord's argument.

Lord Ross of Marnock

I am not concerned about an even-handed approach. I do not want the private people in at all. I think that it is wasteful and destructive of an efficient organisation.

Lord Tanlaw

I am grateful for the noble Lord's reply. I think it has been helpful. On costs, I am assuming that they are recoverable and open to negotiation between the parties concerned. I interpret his answer in that way. He says that he does not want to put it in the Bill because it is too minor an affair. I think costs are not minor affairs. If I understand aright, the costs are negotiable and recoverable from the proper parties. I like to feel that that answer is quite helpful.

So far as the numbers of the extra staff involved are concerned. I wonder whether the Minister realises that this amendment is attempting to be helpful. I believe that I am doing a disservice to the Government and to the Bill by withdrawing it. I intend to withdraw both amendments and to come back at Report stage on this important aspect if no further information is available. The reason I want to withdraw the amendment—because the Government are not being helpful about it—is that I believe the Secretary of State and the noble Lord are possibly having one "put over" by the Department of Energy. I am trying to be helpful in a polite way, as is the form in this Committee. If he brushes this aside (which he is fully entitled to do) I believe that, as the Bill stands without this amendment and the protections in it, the department could make a nonsense of this Bill by slowing down every application. They have not got enough staff. They could put every kind of block in the way of private applications.

The noble Lord, Lord Ross, will have no worries if this amendment is not accepted, because I shall withdraw it. This prevents the private suppliers from having a quick application accepted because there will he no staff to do all the checks and balances that are required and the Government, because they are trying to cut back on Government stock, will not allow them to increase it. This is the Government's problem and not the Opposition's problem. I was trying to be helpful. The Chief Whip opposite wishes me to wind up. I will do so. I will withdraw the amendment and, in so doing, I believe that the Government will be left with more problems than if they had accepted the amendments or said they would do something about them. I beg leave to withdraw the amendment.

Lord Bishopston

Various questions were asked by me and by the noble Lord regarding staff and safety which have not been answered. I presume we can return to this at a later stage.

Amendment, by leave, withdrawn.

Clause 14 agreed to.

House resumed.