Orders of the Day — Clause 10. — (Pipe-Lines.)

– in the House of Commons at 12:00 am on 15th June 1966.

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Question proposed, That the Clause stand part of the Bill.

10.45 p.m.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I apologise for delaying the Committee at this hour, but there are some questions on this Clause which should be answered. I am delighted to see the Financial Secretary sitting beside the Chief Secretary on the Front Bench because the Financial Secretary took a leading part in the debates on the Pipe-lines Bill four years ago, when we used to argue about the meaning of the term "pipe-line" until 3 or 4 o'clock in the morning every Tuesday. The hon. and learned Gentleman is a great expert on this subject, and I know that, if the Chief Secretary cannot answer my questions, he will be able to get the information from his colleague.

I assume that the Clause is designed to cope with the recent discoveries of natural gas in the North Sea. It was something of a surprise to me when I went to visit one of the natural gas drilling rigs in the North Sea, during the Whitsun Recess, to find that one is obliged to take one's passport. It is a similar exercise to going into a foreign country, the Customs officer appearing at the helicopter terminal on one's return from the rig.

In passing, I must say that this seems an unnecessary procedure when the rigs do not have any bonded goods on board. I can see the point of it if cigarettes or drink are sold duty-free on them, but in most cases, I understand, the rigs have no bonded goods on board, cigarettes or liquor being sold at full prices. It is a waste of time and effort for Customs officers to have to be present when the personnel return from the rigs. However, that is by the way.

What we are concerned with here is the natural gas which may be imported into the United Kingdom by means of pipe-lines constructed from the drilling rigs to terminals on the East Coast of this country. The first question I would like to ask the Chief Secretary concerns the interpretation of subsection 3(a), which reads: for the purposes of the customs and excise Acts … goods imported by means of a pipeline shall be treated as imported at the time when they are brought within the limit of a port … That phrase comes from the Customs and Excise Act 1952 and the limits of a port are the limits which are defined by the Commissioners under the powers conferred upon them by that Act.

Photo of Dr Horace King Dr Horace King , Southampton, Itchen

I am finding difficulty in hearing the hon. Member.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I am sorry. I will speak up.

My question to the Chief Secretary is whether it is the Government's intention that the Commissioners will designate as a port any terminal area to which a pipeline may be brought from a natural gas rig operating in the North Sea, or, and this is the only alternative which I can see, are the oil companies, the rig operators going to be compelled to construct pipe-lines so that they terminate within the limits of existing ports?

If the latter is the case then this might be a very expensive procedure, because the discoveries of gas so far have not been located in close relationship to any existing port. In certain cases, it may be much more economical to bring the pipe-line ashore in a remote area outside of any existing port.

The second point is slightly more complicated, but the gallant Gentleman will remember that under the Pipe-lines Act a construction authorisation is necessary for any pipe-line longer than 10 miles. Anything less than that is a local pipeline. We have to start by asking whether pipe-line construction authorisation will be necessary in the case of a pipe-line which is constructed from a rig to a point an the shore when the length of pipeline which is on the land is less than 10 miles. Is it the total length of the pipeline which is the criterion or is it the length which is on the land? I have re-ead Section I and other sections of the Pipe-lines Act, 1962, with great care to;ee whether I could find the meaning of this phrase, but it is a matter of some doubt, which, the hon. Gentleman will see, is of importance.

If we have more than one rig which is feeding natural gas or petroleum products into a single pipe-line, then under Section 9 of the Pipe-lines Act the Minister has power to require the constructors of the pipe-line to build it of a size large enough to take the products of more than one user. One can see a certain situation arising if one looks at a map of strikes which have already been made in the North Sea.

There is, for example, the Phillips strike, which is immediately in line beyond B.P., on a perpendicular from the coast. We have the Gas Council strike, which is in a direct line, but further out than the Shell-Esso strike. There may be many cases where more than one oil company or groups of oil companies will use the same pipe-line coming on to the shore.

Under the provisions of Section 9 of the Pipe-lines Act, assuming that Section 1 applies so as to avoid wasteful duplication of the construction of pipe-lines, my question to the Chief Secretary is how is one to identify the separate products from each of the rigs as they cross the boundary mentioned in subsection 3 (a) of this Clause. That is when they come to be treated as imported, when they cross the limits of the port.

Through this one pipe-line we shall have, for example, the products of the Gas Council and the Phillips' rigs flowing simultaneously and for the purposes of this Clause it will be necessary for someone to distinguish them, and I do not quite see how that can be done, because, of course, the gas which is found under the North Sea will be practically pure methane, as far as one can judge, from whichever rig it comes. It seems to me that there may be some difficulty in discovering to which company the flow coming through the pipe-line belongs.

My third point is a quite trivial one, but I thought I had better mention it at this stage. In the definition of "owner" in subsection (10) we have the word "pipe-line" at the beginning, but later it refers to "line" without the prefix "pipe". I remember that in the Pipelines Act we were very careful not to use any other word but "pipe-line" and if the right hon. Gentleman will look at Sections 65 and 66 of the Act of 1962 he will find that the word "line" was not used; it was always "pipe-line". I do not suppose that there is any danger of ambiguity here, but, just in case, perhaps this point ought to be cleared up.

One other point on this definition. I should like the right hon. Gentleman to explain to me why this definition has to be made between the owner in the case of a pipe-line which is vested in the Crown and the owner in any other case, because if the right hon. Gentleman looks at the definition of "owner" in the Pipe-lines Act he will find that it means the person in whom the pipe-line is vested. Unless there is a factor which I have not been able to discover I cannot see why the same definition should not be used here.

Photo of Mr Geoffrey Hirst Mr Geoffrey Hirst , Shipley

Before the Minister replies, I should like to say a word because I am a little worried about subsection (6). I appreciate that it is not unreasonable that approval should be required for the use of pipe-lines, but it seems to me that the subsection goes a long way. When any Government Department or, for that matter, any inspired organisation, is given power to do something—in this case, vary the terms of their approval—"for reasonable cause", naturally I have a certain amount of "wind up".

The subsection says the Commissioners may for reasonable cause vary the terms of their approval, and (provided that they have given to the owner of the pipe-line not less than three months' notice of their intention so to do) revoke their approval. I should like the Government to give us reason for these very sweeping powers and particularly for the period of notice. I think that three months' notice in relation to this sort of undertaking is unreasonable.

I want to approach the matter reasonably. I have said it is obvious that some sort of approval in this sort of venture should be required. I do not dispute that, but if one is to ask for these very wide powers for approval they should be reasonable in the same sense as, no doubt, the Government would argue that the commissioners would not look at anything without reasonable cause. The word must have the same meaning in both contexts. I do not myself think it reasonable that approval should be required in so short a period as three months when possibly nothing has been done and only some rearrangement is required.

This provision does not appear to be necessary. The Government can possibly make out a case to show why it is necessary, but at the moment it is a little difficult to see, and I think we need some explanation of the point.

11.0 p.m.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

If I might, first, answer the point just raised by the hon. Member for Orpington (Mr. Lubbock), as I am sure he understands, this is replacing an earlier Section in the 1963 Act in order to give additional powers to meet the new circumstances to which the hon. Member for Shipley (Mr. Hirst) referred.

In the original Section, we had the same three months. We have had several years' experience of it, and we have received no complaints. We have no reason to believe that the three months is not adequate. The only circumstances that one can envisage would be a correspondence going on, the Customs saying, "We do not like the way you are running this, and we would like you to do so and so", a reply saying, "We are not prepared to do so and so", and a difficult correspondence becoming more difficult; so that, by the time the correspondence was terminated, everyone would know that a certain stage was being reached, and three months would be something unnecessarily long rather than unnecessarily short.

We have had no complaints at all. It is in the original Act, and we have no reason to believe it is inconvenient to anyone.

To answer the rather minor point cases confirmed and I agree there are ton about definition, we are taking over the precise words in the Finance Act, 1963. The Clause is based on a section in that Act, but it meets the new situation of the Continental Shelf and, as the hon. Gentleman said, it enables one to import from that point instead of merely from within the country.

If he will be good enough to look at Section 9(7), he will see "owner" defined in exactly the same way: … 'owner', in relation to a pipe-line, means … the person in whom the line is vested and, in the said excepted case, means the person operating the line. Then he asked me how one is to differentiate between the various owners from whom the gas is coming, using the common pipe-line. As the hon. Gentleman realises, under the Clause, the Customs has power to authorise the owner of the pipe-line. In the case which he envisages, the owner of the pipe-line would be a consortium representing the two or three parties who are importing the gas. That would be a convenient way of doing it. If they are to use the same pipe-line, they will have to make some arrangement between them. That arrangement can be called "the arrangement incorporated in a consortium". The consortium would be the owner. It would be responsible for the duty. It would divide the duty between its members, and it would work perfectly simply in that way.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

The Pipe-lines Act envisaged a situation in which one person is the owner of the line and has to convey the products of some other person. Under Section 9(2) of that Act, the Minister has power to impose such requirements as he thinks necessary for the purpose of securing to persons other than the owner of the line the right to have conveyed by the line the kinds of things specified in the authorisation. For example, B.P. might own the line, and it might convey products belonging to Phillips.

Photo of Mr Jack Diamond Mr Jack Diamond , Gloucester

I am sorry. I thought that the hon. Gentleman was asking me about a more difficult point than he is. If there is one owner, there is no problem at all. The one owner has to account for the duty on what is passing through the line, and he collects from anyone else whom he is allowing to send goods in that way.

Question put and agreed to.

Clause ordered to stand part of the Bill.

Photo of Mr Iain Macleod Mr Iain Macleod , Enfield West

I beg to move, That the Chairman do report Progress and ask leave to sit again. It looked at one time today as though we might possibly take a bite out of Clause 11 and have a discussion on betting and gaming, but the first day of a Finance Bill is always unpredictable.

We have had a number of excellent debates, and a number which left us quite insatislied, and to which we shall have to return on Report, but I suggest to the Chancellor that this is a natural break, and that as the betting and gaming Clause introduces a new tax, and a principle of treat importance, it might be an idea to call it a day at this stage and take up tomorrow Clause 11 and the subsequent Clauses relating to betting and gaming.

Photo of Mr James Callaghan Mr James Callaghan The Chancellor of the Exchequer, Member, Labour Party National Executive Committee

The right hon. Member for Enfield, West (Mr. Iain Macleod) has moved a Motion which has now been put to the Committee. I was about to do it myself, but I am delighted to be relieved of the task.

I thought that we would get to Clause 11, because when I opened my newspaper this morning I read that we would get that far. I found it very interesting.

I am a little disappointed that we have not started on Clause 11. I had hoped that we might start on it, but I think that there is a good deal to be said for starting on a new subject tomorrow instead of at five minutes past eleven tonight. I hope that we can make reason- able progress tomorrow, and in those circumstances I shall not resist the Motion.

Question put and agreed to.

Committee report Progress; to sit again Tomorrow.