Gas (Amendment) (Northern Ireland) Order 1984 (Hansard, 8 May 1984)

§ The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Lyell)
My Lords, I beg to move that the draft Gas (Northern Ireland) Order 1984 which was laid before your Lordships on 9th April be approved.
On 10th October last year, my right honourable friend the Northern Ireland Minister for Industry was able to announce an agreement with the Republic of Ireland for the supply of natural gas. The successful conclusion of these negotiations will help to ensure that a gas industry will continue in the Province for the foreseeable future. This decision has been welcomed by the Northern Ireland gas industry's existing domestic, commercial and industrial consumers. The availability of a natural gas supply will ensure that the Province can offer the same range of fuels as the rest of the United Kingdom while benefiting from the advantages in terms of price and service which competition brings. Similarly, it helps to ensure that Northern Ireland remains on equal terms with most of Western Europe as regards the range of energy supplies available to potential industrial investors.
It is against this background that the draft order has been brought before your Lordships. The proposed order is intended to enable gas undertakers compulsorily to acquire new rights over land. The order would also provide statutory authority for Government to assist financially in the reorganisation and development of the existing Northern Ireland gas industry. Your Lordships will see that Article 3 of the draft order seeks to strengthen the provisions of the Gas (Northern Ireland) Order 1977. Under Article 13 of that order gas undertakers have the right to lay underground pipes across land; and under Article 16 of the same order—that, of course, is the 1977 order—the undertakers may where necessary use powers of compulsory acquisition.
Article 3 of the legislation before your Lordships amends Article 16 of the 1977 order to include the powers to vest new rights over land. It is intended that this will make clear the scope of the earlier legislation in terms of the vesting of easements, such as rights of way. This article is primarily intended to provide the Northern Ireland Gas Company, which has been charged by the Government with the task of construc-ting the main pipeline, with essential statutory authority for the project.
Article 4 of the draft order is intended to place on a statutory basis financial assistance by Government to the Northern Ireland gas industry. At present, financial support to the industry is provided by the Department of Economic Development on a non-statutory basis. The proposed legislation would empower the department, subject to the approval of the Northern Ireland Department of Finance and Personnel, to provide financial help for the radical reorganisation and development required to allow the existing industry to take full advantage of the opportunities offered by the availability of natural gas. Neither article is likely to have additional financial or manpower implications.
873 Finally, I should tell your Lordships that the order was circulated in draft to all interested parties before it was laid, and all the comments that were made were of a minor nature. With that, I beg to move.

§ Lord Underhill
My Lords, in replying to the remarks of the noble Lord, Lord Lyell, I should like to welcome him to his new post. I am certain he will understand that my colleagues and I deeply regret the circumstances which have necessitated this change, and we wish his noble friend all the best for the future.
We welcome this order. In general, it enables the supply of natural gas from the Republic to be developed satisfactorily. We welcome that because at the moment Northern Ireland is the only part of the United Kingdom without a natural gas supply. Also, the fact that it is a co-operative effort with the Republic, with supplies coming from Kinsale, is a very encouraging development. Perhaps I should comment that in the discussion document on energy supplies which the Northern Ireland Office sent out we find that at the moment only 3 per cent. of the energy supplies in Northern Ireland are by gas; but I gather the department confidently expects that this can be raised to 11 per cent. once the natural gas pipeline and supplies are under way.
We are faced, are we not, with a situation in which the gas industry in Northern Ireland has a very bad image. Prices are high, and we have very small energy-supply undertakings. There are 13 of them, and they will require some co-ordination. Can the Minister say anything about prices? Looking at the Northern Ireland Economic Council's response to the Government discussion paper issued in October, I find: However, at the price levels which are anticipated, we believe that a strenuous marketing effort will be required to achieve the market penetration levels necessary to ensure the financial viability of the project". Later on—this is all on page 4—the response says: To minimise uncertainty in existing gas undertakings it is desirable that the Government should urgently set out the complete natural gas distribution network". I do not know whether the Minister is able to make any comments on that.
Can he explain further what Article 4 means? It says: The Department … may expend money for the purpose of maintaining and developing the gas industry in Northern Ireland and for promoting the reconstruction and reorganisation of that industry". Unless I heard the Minister wrongly, he said that this has no financial implications. If it has no financial implications, how are grants to be made?
The only other comment I would make is that we are providing a statutory base for financial assistance which the Minister said has not previously been given on a statutory basis; the department has given it on a non-statutory basis. Again, this shows the problems that we face in all legislation and matters concerning Northern Ireland. If this is the first time that mandatory powers have been given for the purpose of assisting the gas industry financially—and I am not saying that we should not give that assistance—it 874 seems wrong that this should be done by Article 4 of an order which we have just got to accept and that there are no conditions or other details laid down about it. Can the Minister say that all these matters will be dealt with satisfactorily and co-ordinated by the newly-formed Northern Ireland Gas Company, to which he referred? Can he give some indication how that is progressing? Otherwise, we welcome the order.

§ Lord Hampton
My Lords, I, too, welcome the noble Lord, Lord Lyell, in his new appointment and wish him success at a challenging time in Irish affairs. I also send good wishes to his noble friend Lord Mansfield.
There seems no reason whatever for not welcoming this order, which should help the supply of natural gas to Northern Ireland in a demonstration of co-operation with the Republic. The construction of the pipeline will give much-needed work in both the north and the south. It seems that landowners have largely been co-operative about compulsory routing over their land. Can the Minister say whether compensation has been disputed in many cases, and what procedure is available for resolving disagree-ment?

§ Lord Lyell
My Lords, first of all I should like to thank both noble Lords who have spoken for their very kind words, not just to myself but, above all, to my noble friend whose place I have taken this evening and, indeed, in the Northern Ireland Office. Certainly I shall see that my noble friend receives a full report of tonight's proceedings. I am sure that he will be very grateful for the kind words that have been spoken by the two noble Lords. Indeed, I should like to say how grateful we all are.
The noble Lord, Lord Underhill, gave the order a very kind welcome. The first point he raised was that of pricing. If I try to give the noble Lord a brief explanation of how the Government see the pricing of natural gas for consumers in Northern Ireland, he may perhaps be satisfied with my explanation. I am able to tell him that we hope and understand that natural gas tariffs are likely to be up to 25 per cent. below current average town gas prices in Northern Ireland.
The noble Lord was also curious to know about the market for gas. We understand that a six-fold increase in gas sales is being sought. As the noble Lord has pointed out, the percentage of gas which is used for energy purposes in Northern Ireland at the moment is quite small. We hope that the energy share of gas in Northern Ireland will increase from the figure of 3 per cent., which the noble Lord mentioned, to 11 per cent. by the turn of the century, which is only 16 years ahead—a mere drop in the lifetime of many of your Lordships. But this figure of 11 per cent. should be seen in comparison with the current level of 41 per cent. in the United Kingdom as a whole. We expect that the energy market in Northern Ireland will increase by approximately l½ per cent. per annum during the period of the contract, which is 22 years; so it is quite a long while. As a result of this, we do not foresee competing fuels suffering a fall in demand, let alone an absolute fall in demand. But we can see that potential growth in each market competing with gas may be reduced.
875 The noble Lord, Lord Underhill, asked about the financial implications of the order in Article 4. I am able to tell the noble Lord and your Lordships that the order provides simply that existing deficit support be given statutory authority. Indeed, I stressed—and I would stress it again to the noble Lord and to your Lordships—that no additional financial support is provided by Article 4. It is the existing deficit finance that has been given statutory authority. I hope that those remarks answer the queries which were raised by the noble Lord, Lord Underhill.
I am very grateful for the welcome which was given to the order and for the very kind words which were spoken by the noble Lord, Lord Hampton. Indeed I shall ensure that his kind words are passed on to my noble friend Lord Mansfield. The noble Lord asked about compensation. I am able to tell him that where land is compulsorily acquired, which it can be under Article 16 of what I would call the master order, and, also, if the noble Lord were to consult Article 13 of the 1977 order, he would see that there is existing statutory provision for payment of compensation to any persons from whom interests in lands are compulsorily acquired.
Of course, in statutory terms the rights of persons whose property is affected by vesting orders are translated into financial claims on the compensation fund. But arrangements are made to provide what we call "accommodation works" either in lieu or in part settlement of claims. In the case of the natural gas project, I am able to tell your Lordships that arrange-ments are being made for the restoration of farmland, in conjunction with the Commissioner of Valuation. I hope I have given your Lordships a brief outline of what we have in mind in relation to this order, and that I have been able to satisfy your Lordships.