§ 3.4 p.m.
§ The Question was as follows:
§ To ask Her Majesty's Government whether they consider that they have made effective use of the surplus earnings from North Sea oil.
The Chancellor of the Duchy of Lancaster and Minister for the Arts (The Earl of Gowrie)Yes, my Lords. North Sea revenues have helped to reduce 226 Government borrowing and so contributed to the reduction in inflation and the achievement of sustainable growth in output. In addition, a considerable part of the public sector's overseas debts have been repaid and overseas assets—valuable in the longer term—have been built up.
§ Lord EzraMy Lords, is the noble Earl aware that most of the countries of the world which have benefited from surplus oil earnings, including those in the developed regions, have devoted a large part of those earnings to expanding their infrastructure and their industrial capability? Does he not believe that there is a strong case for pursuing such a policy in Britain today?
The Earl of GowrieMy Lords, it is precisely because the Government recognise that that they have been doing exactly what the noble Lord suggests.
Lord Campbell of CroyMy Lords, is my noble friend aware that oil is likely to be produced from the British Continental Shelf for at least another 40 years, provided that incentives remain, although the annual rate of production will be declining after the 1980s? Will the Government continue, with these revenues coming in, to give priority to the health and personal social services as proposed in the White Paper on Public Expenditure which was published yesterday?
The Earl of GowrieMy Lords, my noble friend is, indeed, right and that is the case. North Sea oil will be a very important part of our economy for a long time to come. It enables us to get on with the job of making major structural changes in our domestic economy while preserving our welfare services.
§ Lord Stoddart of SwindonMy Lords, does the noble Earl agree that during the past five years £80 billion from this country has been invested abroad to provide jobs in other countries, while unemployment in this country has soared to 3¼ million? Did he note on Monday a report from the OECD showing that among the other industrialised countries this country had the lowest rate of investment not only in industry, but in infrastructure as well? When, for the sake of the British people, who seem to be the only ones not benefiting long-term from North Sea oil, are the Government going to alter their policy and invest in Britain?
The Earl of GowrieMy Lords, I can think of no single thing that the Government have done since their period of office that I personally approve of more than the freeing of exchange controls, as was urged on us by a Minister in the previous Government, the noble Lord, Lord Lever, a predecessor of mine as Chancellor of the Duchy of Lancaster. The fact is that we have been turning one valuable asset into another by taking up positions in other countries. Britain has been a global economy since the reign of the first Elizabeth, and this is essential to the future of our children and, indeed, to employment in this country.
§ Viscount TrenchardMy Lords, does my noble friend agree that we should thank the Almighty, or the oil companies, for the fact that North Sea oil came on stream when it did, when the country, after two 227 decades of fool's paradise, was near bankrupt? Does he further agree that the Government should be congratulated on spending some of the money that they were able to make available on increasing incentives, through tax reductions, to re-create wealth and to do that in support of small and growing businesses on which future wealth will depend, and on spending unprecedented sums on training for industry as competitive conditions require it today?
The Earl of GowrieMy Lords, while welcoming very warmly indeed my noble friend's supplementary question, I rather suspect that he may be anticipating his speech in the forthcoming debate; and I imagine that we shall be returning to this topic quite shortly.
§ Lord DiamondMy Lords, does the noble Earl's first Answer mean anything more than the simple fact that the Government have been using the proceeds of a most valuable national asset to meet current expenditure? When will the Government cease this preposterous practice of selling off the family silver to pay for the groceries?
The Earl of GowrieNo, my Lords; it means nothing of the kind because, as the noble Lord is well aware, Government spending in capital terms has not been falling.
§ Lord KaldorMy Lords, is the noble Lord aware that, just as North Sea oil—
§ Lord KaldorMy Lords, is the noble Lord aware that the fact that North Sea oil came on stream at the very time when the new Conservative Government brought in restrictionist measures, most of them in the monetary and fiscal field, made it very difficult for our partners in the European Community to pay for oil except by driving up the value of the pound to a point which was very detrimental to British industry? If, instead, they had expanded the economy in that time, it would have been possible for us to use the North Sea oil money to build up our manufacturing structure, infrastructure and so on.
The Earl of GowrieMy Lords, I am sorry that for a brief moment the noble Lord, Lord Kaldor, was, I think, in danger of turning into an overseas asset! I am aware, and indeed most of the House are aware, of the interesting letter which the noble Lord wrote to The Times on this subject this morning. The fact of the matter is that the British economy is now growing and expanding and North Sea oil is a very substantial contributor to that fact.
§ Lord RochesterMy Lords, will the Government consider using some of the earnings from North Sea oil in ways which might enable energy-intensive industries like the chemical industry to benefit the country by adding value to oil production?
The Earl of GowrieMy Lords, that is an interesting suggestion in terms of conserving energy and getting 228 better value for money out of our assets, and I will indeed consider it.
§ Lord JacquesMy Lords, is the Minister aware that, in spite of the wealth we have from the North Sea, our expenditure on the infrastructure compares very unfavourably with the other members of OECD?
Lord Bruce of DoningtonMy Lords, if the noble Earl is not aware of it, will he kindly do the House the honour of reading Working Report No. 17 published by OECD 10 days ago, which gives the figures which even he ought to be able to understand?
The Earl of GowrieMy Lords, I have read it and I suspect that my comprehension is a great deal more precise than the noble Lord's.