Orders of the Day — National Coal Board (Additional Powers) Bill

– in the House of Commons at 12:00 am on 1st November 1966.

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Order for Second Reading read.

4.10 p.m.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

I beg to move, That the Bill be now read a Second time.

This short Bill is intended for a limited and specific purpose. It is non-controversial, at least I hope so. It is a very simple little Bill, designed purely to enable the National Coal Board to participate in the search for oil and gas on our part of the Continental Shelf and in territorial waters.

When my predecessor announced in November, 1965, that applications would be invited for further production licences, he said that in awarding such licences he would take account of any proposals which might be made for facilitating participation by public enterprises in the development and exploitation of the resources on the Continental Shelf. I do not think that any Member of the House would find anything wrong in the public sector of industry being involved in this great new exercise.

Two companies, Gulf Oil (Great Britain) Ltd. and Allied Chemical (Great Britain) Ltd., subsequently gave the Coal Board options to participate in any licences that might be granted to them, and these companies were, in fact, among those granted licences. Unfortunately—and this is the problem with which the House is dealing today—these options cannot be taken up under the Board's existing powers. Therefore, to enable the Board to participate in this way, the statutory powers have to be extended to enable it to undertake activities connected with the getting of petroleum.

No one is in any doubt at all that the prime purpose of the Coal Board is to get coal and the Board has assured me that there is no doubt at all that such activities would in no way prejudice its primary concern with the coal industry. As I hope to show, it will in some ways assist the Board. There is no need to emphasise the great importance to this country of indigenous natural gas. It is already clear from the studies that we have made that even in the short term the benefits to the balance of payments position will be very considerable. Obviously, we have to exploit every possible opportunity of easing the strain on our economic position, and low-cost fuel supplies can contribute significantly to efficient low-cost production. All these questions are receiving particular attention in the fuel policy review in which the Ministry is currently engaged.

Here I would like to repeat what I have said about natural gas. It is neither a threat nor an alternative to the coal mining industry. For as far ahead as anyone can see, not for social reasons, but hard economic reasons, this country will need all the coal that it can produce at economic prices. I regard this new venture, which the enactment of the Bill will make possible, as one which may well benefit the Board by enabling it to participate in a new dynamic industry. It will also benefit the general development of that industry by public participation. There is no reason at all why this part of the public sector should not be enabled to become involved in this exercise.

The right to explore and exploit petroleum in the United Kingdom and part of the Continental Shelf is vested in the Crown. The Government decided to license both private and nationalised industry to get petroleum on terms that were considered advantageous to the national economy. I do not think that we always completely realise how highly speculative petroleum exploration is. Governments or public enterprises cannot spread their risks world-wide, like the big oil companies. Nor would they have, at the outset at any rate, the initial expertise to press ahead rapidly with developments.

Increasing participation by public enterprises in fresh licences, as was done in the second round of licences in November, 1965, is one way of increasing the level of public participation without taking on board the disadvantages which would occur if the State were to attempt to do the job entirely by itself.

It seems incredible to recall that when my right hon. Friend made his statement in November, 1965, we were still talking only about the possibility of commercial finds of oil or gas at some time in the future. At that time no one was certain whether there were any supplies of oil or gas in commercial quantities to be discovered. Everyone hoped that there would be, but no one could say what the position was. This did not stop a lot of people speaking and writing about it.

Perhaps I may use this opportunity to bring the House up to date on developments in the North Sea so far. As the House will recall about 41,500 square miles of the British sector of the Continental Shelf were allocated in 1964–65 to 25 companies in groups who have now committed themselves to spending a minimum of £110 million in initial exploration work. Although exploratory drilling began less than two years ago, 14 of the licensed companies or groups have drilled or are now drilling. Eight mobile rigs and two fixed platforms are at present in use; 25 wells have been completed and 10 are being drilled.

There have been disappointments and there have been about 20 wells which have not produced gas in commercial quantities. I sometimes think that it would be a good idea if we paid as much attention to those which do not produce this great bonanza as we do to the minority who are lucky.

I am pleased to say that six potentially commercial gas-fields have so far been discovered, ranging from 15 miles northeast of the Norfolk to about 80 miles east of the Humber, and that the first underwater pipeline has been completed to the British Petroleum Company's field, the first to be found.

It is worth saying that no one anywhere in the world has exploited resources of this type as rapidly as all sections of British industry have done. It is a remarkable achievement that we have gone so far in such a relatively short time.

Photo of Mr John Peyton Mr John Peyton , Yeovil

In dealing with this point, would the Minister recognise that an enormous amount of work has been done by officials in his Department who, in a very short time, have got this operation going, and who have never had a proper share of the credit? Although this is, in some measure, a success story, I do not understand how he is using it to justify the intervention of the Coal Board.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

On the last point, there is much more yet to come. On the hon. Gentleman's first point, after the discussions that we have had elsewhere in this House, it is a pleasure to say that I agree, for the first time for the last two weeks, with every word that he has uttered.

An enormous amount of work has been involved on the part of the unheralded and unsung "bunch" who are responsible for so many of the successful things for which politicians take credit. None the less, although it is a success story, there are qualifications which one has to make. Licensees have started work, not surprisingly, on what appeared to them to be the most promising structures. All the same, the results to date are very satisfactory.

It is not possible, as yet, to give any estimate of the reserves of the fields. We need to sink many more appraisal wells to establish the full extent of the gas-bearing formations. I am confident that supplies of natural gas will be available on shore by the end of next year, at the rate of about 200 million cu. ft. a day and will build up to at least 1,000 million cu. ft. per day by 1970. This figure is a minimum estimate and could be significantly higher, particularly if further discoveries are made.

There are physical limitations on development, particularly the need to lay undersea pipelines. This may prevent a more rapid build-up even if more gas turns out to be available. But I am keeping the assumptions for planning purposes constantly under review as the work proceeds. It would be quite absurd to get fixed in specific attitudes to this exercise when there is still so much to be learned and so much more information to obtain.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

I have a constituency interest on the question of the pipelines. Do I understand that there is difficulty in providing a sufficient quantity of pipelines quickly?

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

There are specific physical difficulties in laying the pipelines. The North Sea is a difficult place in which to lay underwater pipelines. Much depends on the weather and the time of the year as to how easy it is to lay pipes of this type and size. The figure which I quoted, 1,000 million cu. ft. a day, as the figure which may be, and almost certainly will be, available by 1970 is approximately equal to the whole of the present supply of town gas. It is roughly equivalent in heat value to about 13 million tons of coal a year.

The House will appreciate that the two compames which have given options to the Board are anxious to go ahead with their plans. The extent to which the Board will be likely to participate in the licences and contribute towards the cost has a very important bearing on the formation of the licencees' plans. It is, therefore, understandable that these companies and the Board wish to enter upon discussions to decide on the implementation of the options at the earliest possible date, and the enactment of the Bill will put the Board in a position to embark on these discussions.

I have considered very carefully the extent of the powers to be given to the Board for this purpose. On the one hand, the Board must have the powers which it needs legitimately to operate on a basis of reasonable equality with its partners if it is to obtain proper value for the investment which it will be making. Consequently, it will need powers to operate in partnership or on its own and power to sell or supply its share of any petroleum found, including connected activities such as transporting, storing and treatment for removing impurities before sale. It also needs to be able to operate in relation to any international agreements for the joint exploitation of fields extending across the international boundaries of the Continental Shelf if only to ensure that it gets its full share of the petroleum in the areas where it is licensed.

I have, however, decided that I should not seek to give the Board powers to engage in wider activities concerned with petroleum refining and distribution and petro-chemical manufacturing. If, later, it appeared that any such activities could be carried on by the Board with advantage to the national interest, the Government will come to the House again with further proposals.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

Would my right hon. Friend say whether the Coal Board wishes to have those powers?

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

It has made no representations to me on this matter.

What we want to do in the first instance is to see where we get with this exercise and to see what advantages there are. We must recognise that the prime purpose of the Coal Board is to produce coal. It is a very difficult industry with many problems. If a case were made that it was in the national interest that the Coal Board should engage in these other activities, of course the Government would be under an obligation to come to the House and ask for those powers and would expect the House to provide them.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

Is the Minister aware that it has been expressed as a legal opinion in a number of circles that the Bill, if it were passed in its present form, would give the Coal Board power to engage in oil refining, petro-chemical manufacture and such activities? Would the Minister be prepared to accept an Amendment in Committee which would make it absolutely clear that the Bill has only the limited intention which the Minister said the Government intend that it should have?

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

Nobody would press for additional powers unless it were felt that there was a case for the Coal Board having such powers in the national interest. I cannot understand why the hon. Gentleman gets so instinctively upset at the prospect of the Coal Board getting involved in this matter. My advice is that the Bill does not carry the interpretation which the hon. Gentleman has stated. Far be it from me as a layman to start interpreting what lawyers mean when they get loose on these things.

We are not seeking to give the Board power to engage in activities concerned with petrol refining and distribution and petro-chemical manufacturing. At the moment, we are dealing with the specific question of options which exist, the Board having a desire to become involved in this activity. In the meantime, the Board will be able to use any petroleum got from the Continental Shelf, either by itself or by other licensees, in works and installations operated by the Board under the powers contained in the Coal Industry Nationalisation Act, 1946. In the case of gas, it will be governed by Section 9 of the Continental Shelf Act. I hear complaints that the nationalised industries should not be treated any better than the private sector. I find it difficult to understand why they should be treated worse.

I have a further point to make on the powers conferred under the Bill. It would be appropriate to apply to the Board the same restrictions on activities outside Great Britain as apply to activities under the Coal Industry Acts. Thus, any gas or oil got under these powers may be treated and disposed of only at well-head or in Great Britain unless I make an order authorising it to be done elsewhere.

The activities of the Board under the Bill will be conducted within the general framework of regulations governing all other operators in the United Kingdom part of the Continental Shelf. In addition, the Board will operate under the general provisions applicable to its activities under the Coal Industry Acts—for example, as regards financial accountability. That is a point which comes to mind. No estimates can be made at present about the amount of expenditure likely to be incurred by the Board. The expenditure is not likely to be heavy during the exploration stage, but if oil or gas were found major expenditure on pipelines, storage and treatment facilities would be required. In that case, the Board would be drawing gas, and this would be helping to pay for it.

The Board cannot start substantive discussions on finance with its prospective partners until it is able to commit itself legally. Moreover, I cannot say how far it will wish to confine itself to the options at present available. It is not restricted under the Bill in this respect. The extent of forward expenditure will be settled in consultation with me from time to time under the general provisions of the Coal Industry Nationalisation Act. In the early stages I would expect the Board to be able to finance its share of costs well within its existing borrowing powers. Depending on the extent to which the Board takes up its present options and the pace of development, it has told me that it does not envisage expenditure on exploration in the first few years of much more than about £6 million.

In explaining the effect of the Bill, I have tried to show that I propose to give the Board all the powers it needs to make the venture a success. I cannot prophesy, and neither can the Board, whether it will find oil or gas in commercial quantities. I would, however, commend the Bill to the House as one which will give a major nationalised industry a stake in a new indigenous fuel.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

No one in the House disputes the value of North Sea gas and oil to our national economy; that is not in question. But would the Minister devote at least a small part of his speech to demonstrating to the House that the Coal Board is likely to be able to win this gas and oil more efficiently and more cheaply than the 25 private enterprise oil companies and the consortia between them which are already in action? What makes the right hon. Gentleman believe that the Coal Board is a better instrument for doing that?

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

With respect, the hon. Member for Worcestershire, South (Sir G. Nabarro) misunderstands the argument. This is not an alternative to any of the 25 companies. It is merely giving the Coal Board the same rights as have been given to the oil companies.

If I may pursue the point one stage further, it is also a fact that the best evidence of the contribution which the Coal Board can make is provided by the offer of options by major oil companies, who want the Coal Board's expertise with them.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

If the right hon. Gentleman sticks to that point of view, surely, in logic, he should allow the major oil companies to undertake the digging of coal, which they are not allowed to do at the moment.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

If any of the major oil companies expressed a desire to dig for coal, we should certainly look at that with an open mind in an effort to be reasonable.

On this particular case, one really has to give some weight to the fact that this is not just a question of the Coal Board seeking to expand its empire because it wants to get involved in all sorts of activities. It is a major source of indigenous fuel, and it is a way of increasing the rate of exploration which is impor- tant. It is not an alternative. It is putting in a new element, increasing the rate of exploration in the North Sea. The main point is that this is a case where experienced oil companies are inviting the Coal Board to take up options with them for no other reason than that they think the Board has a contribution to make. They are at least as good at judging the contribution which can be made in the North Sea as anyone in this House.

Photo of Mr John Peyton Mr John Peyton , Yeovil

Does the right hon. Gentleman not think that the eagerness of some of the oil companies to hitch on to the Coal Board springs not from a great admiration of the Board's expertise in something which it has never done, but from a desire to associate themselves with the favourable position in the mind of the Government which the Coal Board, as a nationalised industry, undoubtedly occupies?

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

I do not think that they are as Machiavellian or as naïve as that. I think that it is because it is in everyone's interest that the rate of exploration in the North Sea should be as rapid and as intensive as possible.

Here we have an organisation which has a great deal of expertise in drilling and in associated fields of activity. It is important that the public sector should have as big an interest as possible in these indigenous resources. If a position arises where, for commercial reasons, commercial companies who are expert in this field of activities are prepared to work with the Coal Board, in view of the fact that the oil companies want its assistance and contribution, the Board wants their contribution, and the nation wants as heavy and as rapid an exploitation of the North Sea as it can get, what sort of blind prejudice is it which wants to stop them? They have a contribution to make. They can make that contribution.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I wonder whether the Minister can help the House, because it may be that hon. Members are not aware of the extent to which the Coal Board is engaged already in drilling in the shallow waters round the Continental Shelf. Could he give the House any figures to indicate the extent of its interest? Could he also tell us what other companies which are not at present engaged in oil exploration, such as I.C.I. and Rio Tinto, are in partnership with the oil companies in the North Sea?

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

I will answer the hon. Gentleman's first point later in the day, if I may. It is a fact that the Coal Board is engaged in a number of activities associated with explorations of the type which he mentions.

On the Gentleman's second point, he is quite right in saying that there are a number of companies heavily engaged in the North Sea because of their petrochemical interests, because of their interests as consumers and, in this case, because of their interest in fuel. This is not just a one type of organisation exercise. There are a number of organisations there, and there is no reason why the Coal Board should not be involved.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

Is my right hon. Friend aware that at this year's national conference of the National Union of Mineworkers, at Scarborough, we welcomed the finds of gas in the North Sea, contrary to the general feeling that the union is restrictionist and Luddite in its philosophy? Is he also aware that the conference expressed great anxiety that this sort of indigenous resource should be left exclusively to private enterprise?

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

Yes, I know of the discussion which went on, and the intention is that it shall not be left exclusively to private enterprise. One of the things which we are doing is to provide for a further degree of public participation here, as was the intention from the beginning. It could prove to be a very expensive business for any group which was not in a position to spread the risk in activities elsewhere in the world. Within the Labour Party at the moment, discussions are going on on the whole question. I know of the resolution to which my hon. Friend refers.

In conclusion, the Bill is one that will give a major nationalised industry a stake in a new indigenous source of fuel. It will increase the extent of public participation in a new and important industry. It will enable the exploration in the North Sea to be increased in its intensity because of another addition to those who are exploring. For all those reasons, I commend the Bill to the House.

4.35 p.m.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

We associate ourselves with the right hon. Gentleman's remarks about the importance of indigenous supplies of fuel and the welcome that he gave to the success that has already, apparently, attended the efforts in the North Sea.

I am bound to say, however, that I have not become convinced either by what he said today or by what I have read of other arguments in the past, that this extension of power is in the public interest. I can see that it is in the interests of the Coal Board and those of two American companies.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I do not even accept that one. But it is not self-evident that those interests and the national interest are the same thing. Certainly the Minister has not directed his arguments in any way to show us how the national interest is concerned, as opposed to those others.

The whole concept of nationalisation is one of the fundamental political philosophies which divide this House, so that it is probably not surprising that I should approach the matter from a somewhat different standpoint from that of the right hon. Gentleman.

Whatever the pros and cons of the optimum size of any industrial undertaking, which was a matter that we discussed a few weeks ago when considering the Industrial Reorganisation Corporation Bill, there cannot be any suggestion that the National Coal Board is too small. It is a positive boast of the Board that, outside the Civil Service, it is the largest employer of labour in the world second only to General Motors. It is its boast that it is the third largest concern outside the United States in terms of assets—[Interruption.] I am merely repeating what the Coal Board says. Perhaps the right hon. Gentleman will reserve his remarks for later. And it is the third largest concern outside the United States in terms of sales.

That, by any standards, represents a fairly large concentration of economic power. Because it is also a monopoly, it is power divorced from the checks and balances of the market which operate in the field of private enterprise. Those are checks and balances for which—with all respect to the efforts of the Select Committee on Nationalised Industries and with a considerable admiration for its work—those efforts are no substitute.

Because it is a nationalised industry, it is, quite inevitably, tied up with politics. I therefore make no apology for starting this exercise from the proposition that when one is confronted by a vast complex of politico-economic power of this nature, it is for those who wish to extend the power to justify it, and not the other way round, and in my view that onus has not been discharged. Indeed, all the arguments that we have heard this afternoon, those I have read in the Press, statements by Coal Board officials and those obtained from people who have more technical knowledge than we have, point the other way.

The first argument advanced by the Minister's predecessor when he made his statement on 24th October was that the exercise of these powers would increase British participation in the North Sea. Of course they will. So will any other British investment, but that does not constitute an argument for bringing in the Coal Board.

As I read Section 2 of the Petroleum Act, 1934, which is incorporated in the Continental Shelf Act, it is fairly clear that power is vested in the Minister to grant licences to such other persons as he thinks fit. If the Minister thinks that there is an imbalance between foreign and British capital, there would appear to be plenty of ways in which to readjust that imbalance other than by bringing in the Coal Board.

In any case, if, for example, British Petroleum, which, after all, has the immense advantage that the Government not only get a predominant share of its profits, but a fat tax contribution as well, feels that it is unable to extend its participation, why the Coal Board rather than the Gas Council?

When all is said and done, the nationalisation Acts of the 1945–50 Government were based on nationalisation by function, and, as far as I can understand, if the Minister's assurances are to be accepted at their face value, and I am sure they are, this is also the basis of the current Steel Bill. Just as the Coal Board was set up to take over the coal industry, and must be presumed to have recruited a staff who knew about coal, the Gas Council was set up to take over the gas industry, and presumably knows about gas. Are we really to be told that these two American companies, Gulf Oil, which I believe has 35 blocks, and Allied Chemicals, would not have been equally attracted by an offer from the Gas Council had one been made? After all, there is no greater difficulty in extending the borrowing powers of the Gas Council for this purpose, than there is in extending the borrowing powers of the Coal Board.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

I fail to follow the logic of the hon. Gentleman's argument. He is basing it on function. He is aware that the gas industry is fully experienced in the distribution of gas. If one takes the hon. Gentleman's argument at its face value, the gas industry has no experience of drilling in the North Sea, any more than I.C.I., or Rio Tinto, or a host of other organisations.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

It is concerned with the manufacture of gas, with the economics of natural gas versus manufactured gas, and with the economics of natural gas extraction. It has the same sort of tie-up with American firms as is proposed for the Coal Board, so I do not think that the Minister's argument is relevant.

Perhaps I might put the alternative question: were these licences granted to those two American companies in any way dependent on these companies granting an option to the Coal Board?

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

Mr. Marsh indicated dissent.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

The Minister shakes his head, and I accept that there was not. If that is so, we have to believe that the Coal Board has an attraction for these companies which the Gas Council has not.

Is it the case that the Gas Council, which really must have greater expertise in the matter of gas, which is faced with an increasing demand for gas, confronted with the enormous potential which is opening up for it in the exploration which we have been discussing, decided that its participation of 6 per cent. was just about as far as it was prudent to go? If that is the answer, and if the conclusion to be drawn from that is that the Gas Council feels that it is wiser from its point of view to rely for any other gas which it may wish to use as suppliers in the United Kingdom on private exploration—and on its privileged position under the Petroleum Act and the Continental Shelf Act which I believe to be perfectly justified—it is a little difficult to justify an almost equal participation—5 per cent.—by the National Coal Board. Despite the Minister's reiteration of the fact that gas is not a substitute for, or a threat to coal, which of course we accept, in the medium term, at any rate in the long-term, the likelihood is a fall in demand for the products of the Coal Board, and not only coal, but the various derivatives of coal, for various economic reasons.

The Coal Board is an organisation faced, too, with vast problems of uneconomic pits, of the redeployment to which that will give rise, and, moreover, a pretty depressing series of annual accounts, culminating in 1965–66 in the largest deficit of its 20 years' existence. It does not appear, on the face of it, that it is a sensible operation for the Board to go into further activities to this sort of tune, even if it is accepted that it should go in at all.

I think that it is self-evident, on the other hand, that the Coal Board has more than enough on its plate without branching into these fields for which it was never designed, and in which even this Government's passion for nationalisation must surely be satisfied by the existence of the Gas Council, and which, when all is said and done, ought to be facing, and ought to be encouraged to be facing, as exciting and as worthwhile a future as confronts any industry in this land in present circumstances.

It is not my purpose to denigrate the Coal Board.

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

The hon. Gentleman is doing his best.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

When I start, I can do much better than that. Goodness knows the Coal Board is faced with the most enormous problems, as I am sure the Minister agrees. Whatever the prospects may be for coal in future, in some areas it must be faced that those problems are bound to be problems of contraction, of closing pits, and of all the immensely difficult problems—redundancy, retraining, trying to move miners from one mining area to another, and so on—which go along with that problem. There is also the problem of getting acceptance of vastly advanced mechanised methods of extraction such as those at Bevercotes which have not, despite the announcement in the Press this morning, been a roaring success in labour relations, or in the utilisation of capital.

Surely it is fairly clear that in many respects problems of restriction can be immensely more difficult to solve than problems facing an industry where the main emphasis is on expansion with its enormous effect on morale because of the opportunities that that engenders. I think that there is a strong presumption that the Coal Board has enough on its plate, and certainly the Minister has done nothing this afternoon to explain why it should feel that it has the energy in hand to branch out in this way.

Then there is the argument, which is most frequently used by the Chairman of the Coal Board, that one of the purposes of the Board should be to diversify, and that the whole object of that diversification, whether in this sphere or in others, is to protect the Board's investment in the mines. Certainly it was a relief in this connection, in view of the representations that I have no doubt many of us have had in the House, to hear that, at any rate, there was a virtual guarantee that this did not mean diverting money from the pits, and that it was intended to see that the pits had all the capital and modern equipment they require.

It is argued that diversification is something good in itself—I feel that that is the view of the hon. Member for Bristol, Central (Mr. Palmer) who said "Hear, hear "just now—because it conforms to modern business practice, particularly among the larger organisations, and because it is practised by private enterprise it is argued that it is right and proper that nationalised industries should not only be free to do the same but should be encouraged to do so. Again, as the Chairman of the National Coal Board has put it, The whole object of our diversification is to defend this vast investment back at the pits. We are not branching out into any business which does not clearly serve this end. That is something which wants studying. He goes on to refute any suggestion that this is backdoor nationalisation, and says: That is wrong, and we could not do it, for nationalisation is Parliament's job. That, too, is a relevant sentence in relation to the rest of the argument.

But there are at least three vital distinctions between this sort of diversification and that which is practised by private enterprise, and tends to be associated in the mind of the public with such great companies as I.CI., Unilever, Hawker-Siddeley and the like. These are important and, indeed, vital differences. The first is the question of commercial checks and balances. A private firm intent upon a merger or partnership with another firm—a take-over or acquisition of a substantial interest, whatever it may be—will be subject to the market. If new capital has to be raised the terms on which it can be raised will reflect the market's assessment of the soundness of the project. Even if no new capital is to be raised the terms of the take-over or transaction will reflect the market's assessment.

There can be no such check in the case of a nationalised industry with substantial borrowing powers guaranteed by Parliament and with the advantages of a monopoly supplier of raw materials in regard to some of the firms with which it is associated, or a monopoly purchaser of products with regard to others. When an institution of that nature makes the first approach it is ludicrous to pretend that the same checks and balances exist as operate in the private field.

This is particularly so when the National Coal Board itself—and it says this in its Report—is able to borrow at less than the market rate in order to lend at either the market rate or still a little below it. That puts it in a wholly different position from any private undertaking. Secondly, and following upon this, is the question of publicity. There tends to be, for one reason or another, very much less publicity when the National Coal Board acquires a major shareholding in a private company. Few people will have failed to notice that at the moment Burmah Oil is likely to acquire Castrol. I have no doubt that many will soon forget it. What most will bear in mind is that Castrol has changed hands and is no longer an independent company, but how many people have the faintest idea that the Whittlesea Central Brick Company, or J. H. Sankey are virtually the National Coal Board, with a 90 per cent. and 60 per cent. shareholding respectively, under another name?

They can find out by buying a copy of the annual accounts, but even there there is no record of such firms as Thompson and Lee, of Bexleyheath, J. W. Rains, of Birmingham, or Henry Hawkins, and other firms acquired by the National Coal Board and absorbed into one or other of its subsidiaries, still trading under their own names. Nor will we find any mention of the more recent acquisition by J. H. Sankey of Bradleys. How many people would guess that the Coal Board owns 198 fully-paid shares in a firm called Farmway Ltd., formerly Northern Farmers Trading Association? If they did they would be a lot luckier than I have been in finding anything else, other than the bare facts in either the report or the accounts.

But in the case of more substantial holdings, even where the Board's interest is less than a majority holding, if the remaining shares are held by private individuals or a collection of private individuals and companies, as opposed to a single shareholding, it is clear that the voting effectiveness of the Board's block of shares will be very much greater than is proportionate to the actual size of its holding.

The Board has a 50 per cent. share in a firm called Coal Services (Sheffield) Ltd. and a 40 per cent. share in the British Anthracite Company Ltd., a relatively new acquisition, in respect of which one will find remarkably little in either the Report or the Accounts. It is obvious that in those cases a block of shares of that kind, although not technically a majority holding, in fact gives the Board control.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

The hon. Gentleman is making a lot of this. He might point out that he is talking in one case of a company in respect of which the total investment of the Board is £2,550. It does not add up to much.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

Where the Board has a holding which is not quite a majority holding—and I took the example referred to by the right hon. Gentleman because it is one of the 50–50 cases—with Staveley Chemicals it is a much larger sum with a much greater potential. But I took that as an example because I thought it important if we read what the Chairman of the Coal Board has said over and over again; it is to the effect that this is a partnership with private enterprise, but it becomes somewhat of a nonsense when it is clear that the real control lies with the Coal Board and not private enterprise.

I want to quote what the Financial Times says about the reason for the expansion into private enterprise. It says: The National Coal Board recognises that coal is bound to come under increasing pressure from other fuels and that it cannot expect to be given special protection indefinitely. It therefore wants to find investments in other fields which help it to meet the new challenges. It believes that this can best be done by following two lines of approach simultaneously. One is to carry the attack into the enemy's camp by going into fuel distribution, and buying up builders' merchants, the people who install central heating systems. The other is to follow the example of the oil companies and to diversify into those industries where its main product is already playing an important role. The ones it has principally in mind are chemicals, bricks and building materials. We should pause to ask ourselves where this argument leads us. Let us take the Sankey acquisition. This was a partnership entered into last year with a 60–40 percentage holding, to sell solid fuel appliances and to act as heating consultants and builders' merchants. No doubt on the face of it these are suitable activities and probably very useful ones in relation to boosting the use of coal, but if we consider the building merchants' side of the situation we learn that Bradleys' pre-cast concrete includes light-weight walling partition blocks and artificial stone, and that the Board counters any critics that it is using public money to expand into fields unrelated to coal by pointing out that suitably processed colliery shales can be used as light-weight aggregate in the manufacture of pre-cast concrete shapes.

It is important to know what proportion of coal products or by-products used by Bradleys or handled by other building merchant subsidiaries is regarded as justifying this sort of exercise. If these colliery shales are competitive in both price and quality they will find a market without it being necessary to acquire enterprises covering the whole range of building materials. But the National Coal Board goes further than this. Its representatives are reported as saying that it regards these activities, along with its brick-making activities, as leading naturally to factory-made buildings, so the next departure will clearly be into industrial building.

If one accepts that justification, one must ask where on earth this will stop. There seem to me and to most of my hon. Friends very good reasons for stopping somewhere—and not too far along this road at that. One of those reasons, of course, is the one I have mentioned, that it cannot be fair competition when the National Coal Board, despite its heavy losses on profit and loss account, is so much better placed as a borrower, particularly under present conditions, than even the most successful medium-sized company can be today.

I must admit that I doubt whether any company, even one of our largest companies, could borrow even the sort of figure which the right hon. Gentleman mentioned—I doubt whether it would borrow enough to buy a postage stamp—if it had just written off £450 million on top of a consistent annual loss. Surely it cannot be the intention of Parliament that the National Coal Board should operate, as it clearly has been operating in effect—though admittedly on a limited scale—as a lending institution at cut rates.

However, the whole concept of protecting existing investment by this or any other means is surely a very dangerous one on which to justify any argument. There comes a time, in older industries and the more out-dated processes, or when there are economic changes, when protecting investment in private industry can be the fastest possible road to ruin. We all know this and it becomes very easily an exercise in pouring good money after bad. Any private firm which had undertaken an investment of the Bever-cotes nature without first ensuring a cooperative labour force would almost certainly have gone out of business.

This would be even more certainly the case for any firm which had attempted to go on producing from many of the collieries in the coal fields which for many years have failed to show a surplus at all. I have some admiration for the efforts of the Coal Board to phase its closures and cushion the social effects, but there is a limit to the period over which such phasing can be carried out without placing a wholly uneconomic burden on the economy.

Summary B in the Accounts sets out the deficiencies and surpluses of the various areas and one cannot maintain that it makes anything but depressing reading. With the exception of one or two years in one or two cases, the Scottish, the Northumberland and Durham, the North-West, the South-West and the Kent coal fields, practically speaking, never show a surplus at all. Surely, this fact in itself further supports my contention that the National Coal Board has enough on its plate without branching out elsewhere.

My final reason for rejecting the idea of diversification for protection of investment is of a quite different nature. In the original Coal Industry Nationalisation Act, 1946, Section 1(1) set out—I am sure that the Minister will agree with this summary—that the function of the Coal Board, briefly, was to get coal and to make it available in reasonable quantities. Subsection (2) set out some fairly wide ancillary powers.

Perhaps they are best summed up in subsection (d). which says that they are among other things: producing or manufacturing any goods or utilities which are of a kind required by the Board for or in connection with the working and getting of coal or any other of their activities, or which can advantageously be produced or manufactured by the Board by reason of their having materials or facilities for the production or manufacture thereof …". These are wide terms, but they are tied very closely to Section 1(1), in other words, to the basic function of getting coal and making it available.

When we come to the powers given in this Bill, we are going right outside that basic function. We ought to ask—as the Minister has given no indication of the purpose of the Coal Board's participation and whether it is merely to form a follow-up for the Gas Board and provide more gas for the main system of the Gas Board—to what purposes will they put the gas, if and when it is found? This must bring us to a consideration of another subsidiary, namely, Staveley Chemicals Limited.

The Minister may reply that, of course, it is entirely open to the Coal Board whether it sells to this subsidiary or not, but the likelihood is, as this firm has been set up to deal with these substances as a chemical factory that it will go to Staveley Chemicals Limited, another of Lord Robens's private enterprise partnerships which is not perhaps a very happy augury—since the other partner is Stewarts & Lloyds—bearing in mind the terms of the Iron and Steel Bill. The real point here is that when one examines the memorandum of association of this company, one finds that it has already taken far wider powers than anything available to the Coal Board itself.

Let me quote one or two of the provisions. They are: To manufacture, prepare and sell chemicals and chemical products and to treat, refine, process and deal in all such substances and to buy, sell, export, import and deal in all substances, apparatus and things capable of being used in such business….To manufacture, buy, sell, improve, repair, alter, prepare for market, treat, and deal in all kinds of plant, machinery, implements, tools, utensils, apparatus, hardware."— etc. Finally: To carry on any other businesses whether manufacturing or otherwise, which may seem to the company to be useful in relation to the requirements of its activities.

These are perfectly ordinary provisions, I agree, of an ordinary memorandum of association of an ordinary chemical company, but, whatever the strict legalities of this may be, this, in effect, clearly brings the Coal Board, already—long before this Bill—into spheres in which Parliament clearly denied it the powers to go itself.

Nothing could be more precise than Section 1 of the Coal Industry Nationalisation Act. If we could return to that precision in some current legislation, things would be much easier. I therefore suggest that the Coal Board is already extending its powers almost certainly beyond what Parliament intended and almost certainly, indirectly—although I am not suggesting any illegality—a great deal further than it could possibly have gone itself but for these devices of the subsidiary company and the partnership.

We must ask whether this sort of operation, if this gas is to go to Staveley Chemicals, makes sense in terms of economics. As I understand it, the natural gas from the North Sea contains a high proportion of methane and is therefore suitable only for the production of ammonia, the alcohols and, if sufficiently cheap as compared with naphtha, of acetylene. For economic reasons connected with the gas industry, benzine derived from coal is, I understand, losing its place to benzine derived from petroleum. Whether or not this gas is to be used at Staveley, it would seem abundantly clear that the processes carried out at Staveley will become increasingly divorced from anything to do with coal.

For that reason, if for that reason alone, if it is not to be so used, we should be told so quite definitely and categorically. If we are told "No", we should also be given the Government's arguments for inserting what is, in effect, the spearhead of nationalisation into the oil industry. If it is to be so used, this Bill will have the effect of introducing a substantial element of nationalisation into the chemical industry. I am sure that even the Minister would agree that this Bill is not the vehicle for that purpose.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

I am sorry to interrupt the hon. Gentleman, but he asked some specific questions about the use of this gas. The position is that the Coal Board will be affected in this in exactly the same way as anyone else by the provisions of the Measure, and will therefore, in the first place, have to offer for sale to the Gas Council any gas it obtains. If it wants to use the gas for itself, as the National Coal Board, this it can do. If it wants to use it for a subsidiary, that would not be regarded as being itself within the meaning of the Measure and the Board would, therefore, have to get the Minister's permission, without having the slightest idea of how much natural gas there is. The Minister's permission would be needed if it were to be used by a subsidiary company, and it is likely that there will be much more gas than can be used by one organisation like that.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

I do not want to bring in the Attorney-General for the second time today, but if the Minister looks at Section 9 of the Continental Shelf Act he will see in the latter part of subsection (3) that the Minister has power of consent … but shall give his consent "— "shall", not "may": under this section to the supply or use of any gas if satisfied that it is for the purposes mentioned in that subsection. The subsection there referred to is subsection (4), which mentions the purpose of petro-chemicals. If the Act does not mean what it appears to mean, we can probably flog the matter out in Committee, but on the face of it it looks as though, if the National Coal Board wants to use the gas for any other purposes than the Gas Council it has a perfect right to do so and, although it has to go through the formality of getting the Minister's consent, the Minister "shall" give his consent.

If it is the Government's policy to introduce a substantial element of nationalisation into the oil industry or the chemical industry—and it is clear that Staveley Chemicals will be wholly a nationalised chemical company in any case—they should come before the House and direct their arguments to the advantages of that course. With due respect to the Minister, the Government have not so far directed their arguments even to the proposition whether that in this Bill the national interest coincides with the Coal Board's interest. The presumption is that it probably does not, and the arguments point that way as well.

By any standards, the Coal Board has very ample powers. It has more than enough on its plate. Is is evident that through these subsidiaries its powers are substantially increasing, and far from their being increased further they ought to be diminished. I recommend my hon. Friends to oppose the Bill.

5.14 p.m.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

I looked forward—and I say this with very great friendliness to the hon. Member for Gloucestershire, South (Mr. Corfield), because he represents a constituency near mine—to an interesting speech from him dealing with the general principles of the Bill, but instead he seemed to run himself into the sands, and took us on a somewhat tedious tour of the portfolio investments of the National Coal Board.

Unlike the hon. Gentleman, I welcome the Bill. From some little experience of the nationalised fuel industries, I can say with confidence that in them all research and development is at a very high level, technically and otherwise. I am confident that the Coal Board, if given the opportunity the Bill gives it, can add much to the pioneering work now being undertaken in the North Sea.

I am also glad that my right hon. Friend is showing some signs of removing some of the legislative chains that have been placed around the nationalised industries, and I will therefore touch on the point made by the hon. Gentleman about the fuel and power industries being divided functionally by the nationalisation. That is true, but most of those Acts were passed in the period 1945–50, and there is bound to be change and evolution in the industry with new technical methods and technological developments. It is quite natural, with technological changes and advances and with one process going out and new processes coming, that the organisation of nationalised industry like the organisation of private industry must adjust itself.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

If that is so, and if that is the purpose of the Bill, the hon. Member must admit that the Minister's argument might have been directed to the point that it could be better done by the Coal Board than by the gas industry, and he did not.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

The hon. Gentleman is suggesting that this job could well be done by the gas industry. I do not know whether he is in favour of the gas industry doing it—he did not say so—but that does not invalidate my point. There must be a division of function, but that division must change and develop from time to time. If there was weakness—and there were weaknesses—in the nationalisation Acts, it was that often no allowance was made in their structure for evolution and change. It is, therefore, all too common, when a change is essential for nationalised industry to ask Parliament for new legislative powers. It would have been far better if the nationalisation Acts had been much more broadly drawn so that, with the need for technical change, the organisation and interest of the industry could also be changed administratively.

I therefore feel that the Opposition's objection to the Bill on the grounds that it changes a division of function which may have been relevant 20 years ago is, to say the least, doctrinaire. The hon. Gentleman was quite right to sense that I am in favour of the diversification of the activities of nationalised industry. Private industry makes its changes according to technical innovations and it necessarily follows that nationalised industry must do the same.

It is not unknown to the House that I am an electrical engineer, and have been brought up to look on the gas industry with somewhat mixed feelings, as is traditional among electrical people. But we must all agree that the progress of that industry in recent years has been remarkable. It has been able to win its way to prosperity almost by pulling itself up by its bootstraps, but because that industry is now forging ahead, and sells manufactured gas—a point with which I hope the Parliamentary Secretary will deal—it does not necessarily mean that it should have monopoly rights in the exploitation and distribution of natural gas.

The industry must obviously have its share and in the nature of things it will probably have the lion's share, but it does not follow that because the gas industry is selling household gas and gas to industry that it will all the time be the only right industry to handle the wholesale or retail disposal of natural gas.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

Why not? Will the hon. Member forgive me——

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

Yes. I shall forgive the hon. Member and allow him to say a lot of things in a few moments. Natural gas, like coal, oil and nuclear fission, is a source of primary energy. It should be available to all the fuel and power industries of the country and not confined to one particular channel.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

Of course the gas industry is in an unique position. The gas industry, through its boards, has to supervise, for reasons of safety, the installation of all gas appliances. It would be technically impossible for two bodies competing with one another to distribute gas supplies—coal gas on the one hand and gas derived, after processing, from the North Sea on the other hand. That is why it is desirable for the Gas Council and the gas boards to deal with this matter.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

If the hon. Member will bear with me a little longer, I think I shall cover the point he thinks he is making.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

The hon. Member had forgotten it.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

No, I have not forgotten it. In the discovery and exploitation of natural gas in the North Sea we are operating under a mixed system, a system where private industry and public industry can apply for licences and in this case a licence may be granted to the Coal Board. But I am a little doubtful whether private enterprise should be there at all but I will come to that in a moment.

Again I stress, and I hope the hon. Member for Worcestershire, South (Sir G. Nabarro) will listen to what I say, that there is no absolute reason why the Gas Council should have the monopoly distribution rights. It has them at the moment, but it is not necessarily correct that it should continue to have them.

In the electricity supply industry we have the almost comic situation that the Minister has sent the Electricity Council to ask its gas rival if it can please have some natural gas to burn in electricity power stations. This is a very curious position. Here is a new source of primary energy which the electricity industry wants to be made available to burn in the power stations. So that electrity consumers should have advantage from it. There is evidence to show that if we allow for the large conversion which the gas industry needs in order to make natural gas available to consumers, the electricity industry can make better immediate use of the natural gas than can the Gas Council.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

That is no argument at all. The oil companies supply oil to the electricity boards for burning in power stations. Why should the gas industry not also supply natural gas to the Electricity Council on American lines?

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

That would not be a satisfactory arrangement, because both are retail distributors competing with one another. I ask the hon. Member to bear with me a little longer. I have been more patient with him than he deserves. Of course he is perfectly right to say that in the United States there is a great deal of natural gas burned in power stations; also, in spite of the great development of natural gas in the United States, electricity has shown equally good progress. It has kept perfectly in proportion.

I argue that if we had a truly coordinated fuel policy, which the country needs——

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

—and I am still hoping for great things from my right hon. Friend——

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

The hon. Member will wait for a long time.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

—we should avoid some of the contradictions which are now arising and which I think the development of natural gas will aggravate rather than lessen.

A national fuel policy means different things to different people. Many people think that it means protecting their own favourite fuel, but to me a national fuel policy means that the Ministry should look at the energy-use pattern of the country as a whole and try to develop and adjust that pattern to the maximum national advantage. I do not think the Ministry will get it absolutely right at every stage. Of course it will not, but it should try to get it as right as possible. I have to say, and I say with some regret, that at the moment although there is opportunity for reform the fuel industries of the country are rather less co-ordinated than they were when the Government took office.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

Hear, hear. Worse every day.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

Some extraordinary things are happening in relation to natural gas. Not only has the Minister told the gas and electricity industries to fight it out between themselves over the use of natural gas, but the Treausry, I understand, has approved expenditure of some millions of pounds for capital development of British Petroleum in the natural gas field. The Treasury has quite an interest in the financial affairs of British Petroleum. As my right hon. Friend knows, B.P. is pioneering natural gas discovery in the North Sea so that it may ask the Gas Council the highest possible price for its sale to them.

We have the extraordinary situation in which the Treasury is making cash resources available, or approving the availability of cash resources, to British Petroleum so that British Petroleum can differ with the Gas Council about the price of natural gas for sale to the consumer. Until some of these contradictions are smoothed out by my right hon. Friend's Department, we cannot say that we are moving very fast towards anything like a co-ordinated fuel and power policy.

What is required is a Natural Gas Corporation, a publicly-owned body which would make itself responsible generally for the resale of natural gas to all fuel users, whether the manufactured gas industry, the electricity supply industry, or private industry. It is not the kind of solution, I appreciate, which is likely to make much of an appeal to right hon. Gentlemen opposite, because it means virtually the nationalisation of natural gas, and eventually it would lead to the elimination of private interests there altogether. I would not object to that. I was a little disappointed that my right hon. Friend said earlier that this was a risky field for public enterprise, that public enterprise had not the financial resources provided all over the world that the oil companies have; that public enterprise is all right in relation to things that are established, but when it comes to pioneering work it is not so good.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

Since my hon. Friend is quoting me, I should like to correct him. My argument was not in line with what he has been saying. It was that for anybody, private or public, to engage in oil exploration in one narrow field is a highly dangerous and risky business commercially. Whether private or public, one must be able to deal with the risk throughout the world.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

I think we can all at least see the possible strength of that argument. Nevertheless, the development of nuclear energy in this country, was also a highly risky business yet it was public enterprise which through the Atomic Energy Authority and the Central Electricity Generating Board brought the country right ahead of the rest of the world.

It does not necessarily follow that because a new technique is risky and financially speculative public enterprise cannot successfully innovate. As the years pass we may find that we are not getting as a nation the full benefits from natural gas exploration and exploitation of the North Sea. We may find instead that, because of our caution and timidity, we have brought in private enterprise quite unnecessarily.

I suggest that we could have a new Natural Gas Corporation which would be a wholesaler to the fuel industries and which would employ private companies as contractors, in the same way as the National Coal Board, electricity authorities, and gas authorities employ private companies as contractors; but the beneficial ownership and the financial advantage would come directly to the nation rather than passing through the intermediary of private enterprise.

I much welcome the Bill. It is a step forward. It gives the Coal Board an opportunity which the Coal Board deserves and it injects a measure of public enterprise into the field of natural gas. However, I would urge my right hon. Friend to be bolder and reverse some of the policies which were initiated in the first place by hon. Gentlemen on the other side of the House when they were sitting on the Government benches. I should like to see, in the matter of fuel and power policy, a break with bipartisanship. I should like to see us making our own policies. Let us remember that fuel and power is a sector in which public enterprise has been outstandingly successful. I am sure that what we have already done for coal and what we have done for electricity, what we have done for manufactured gas, what we are proposing to do now for the steel industry, all within the span of my right hon. Friend's Ministry, could equally be done, if we had the will, for natural gas.

5.35 p.m.

Photo of Mr John Peyton Mr John Peyton , Yeovil

As I understand the main argument which we are concerned with in the Bill, it is whether or not the Coal Board should be involved in the operations in the North Sea. After I have dealt briefly with the speech of the hon. Member for Bristol, Central (Mr. Palmer), I shall return to that argument.

The hon. Member fired in the direction of my hon. Friend, the Member for Gloucestershire, South (Mr. Corfield) some pompously acid remarks and then conducted a private argument with the hon. Member for Worcestershire, South (Sir G. Nabarro), which, of course, he lost. He then allowed himself to go to that happy hunting ground of every electrical engineer, of damning the gas industry. They really do love this. Any antipathy which is alleged to come from hon. Members on this side of the House against nationalised industries is as nothing compared with the bitter hatred with which these electricians regard the gas industry. The hon. Member wishes to rub them out of existence. Decency forbade him from unveiling the full extent of his malice towards the gas industry, but he was trying to prosecute the argument of his colleagues in the electrical industry for a really good lion's share of North Sea gas—which, I might add, I am not sure they ought to have. However, I do not wish to follow him in that argument at this moment.

The hon. Member went off on an impassioned plea for a fuel policy. I pay tribute to the Minister and to the Colonial Secretary who is having such an unhappy time in Gibraltar at the moment. They have been very very brave in this. They have denied everything they said before and they have not yielded themselves to the temptation of producing a fuel policy which would be out-of-date before the ink was dry on the paper, and which would probably have been written—and this is not the worst thing that could be said about it—at the dictation of the Chairman of the National Coal Board.

Another inhibition, which the hon. Gentleman is perhaps not aware of, upon the Minister in formulating a fuel policy is that he is wasting the time of Standing Committee D in nationalising the steel industry, and taking his eye off these important problems.

When the Parliamentary Secretary winds up the debate I hope he will give the House his plans regarding the Committee stage of the Bill. Am I right in assuming that it will be taken on the Floor of the House? If it is not, it seems to me that the congestion which will face the right hon. Gentleman and his hon. Friends will be something very terrible indeed.

I should like to come now to the right hon. Gentleman's speech. He is developing a certain skill at alleging the unlikely. He said blandly that the Bill was a non-controversial one, when it is very far from being so. Had it been possible for this Bill to have been a non-controversial one, the right hon. Gentleman dashed those early hopes on the head by the inadequacy of his own arguments. He appears to be pushing this Bill through. There is no question of it being a non-controversial Measure.

His speech reminded me of the urgent need that there is for some kind of policy statement. I do not mean a detailed fuel policy, which to my mind is almost impossible, but we must have a policy statement in the fairly near future giving the Government's views on some of the really important problems which are arising from the North Sea project. I should like to know the right hon. Gentleman's views on whether or not the North Sea gas should be purchased by the Gas Council on a cost-plus basis. It sounds fine to make that suggestion, but I think it is wholly unworkable and impracticable. I am looking forward to an early opportunity of listening to the right hon. Gentleman expounding his views on the very difficult problems involved.

So back to the Bill. I believe that it is a bad Bill. It is also obscure. We do not know, and we are certainly not at all clear from what the Minister said today, what the Bill entitles the Coal Board to do. We look forward to probing this in detail in Committee, though our optimism and our experience do not lead us to believe that all our questions will be satisfactorily answered. Nevertheless, we shall press on.

The Bill is also very badly timed. It comes before the House on the very day that the Coal Board has hoisted the white flag in surrender to Luddite influences of Bevercotes Colliery. I have a great deal of sympathy with coalminers. I do not think that anybody should forget that theirs is a life apart, that they face immense dangers in their everyday work, and that their livelihoods are earned in a way different from that in which those of the rest of us are earned. They are entitled to, but do not always receive, a wide measure of public understanding.

That having been said, I repeat what I said not long ago in the House, namely, that, if the coal industry is to step into the fuel world of tomorrow, as opposed to lingering in that of yesterday, it must establish working seven days a week round the clock. I am not for a moment suggesting that individual miners should have their hours lengthened or anything of that kind. I am merely saying that we cannot afford to have heavy investment in pits, not only at Bevercotes, but at many others, without those pits being worked so that we get the full use of the enormous capital investment that is put into them.

Photo of Mr Don Concannon Mr Don Concannon , Mansfield

How many times has the hon. Gentleman worked seven days a week?

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

Would not that argument of full utilisation of expensive capital machinery apply, not only to the fuel industry, but to practically every other industry?

Photo of Mr John Peyton Mr John Peyton , Yeovil

Of course. This is exactly what happens in the steel industry, in oil refining, and in other industries. I am sure that the hon. Gentleman is as interested as I am in obtaining for the coal industry a sound and secure future. This is in the national interest. But he must face the fact that the coal industry cannot begin to compete, unless it uses its assets to the full.

I heard the hon. Member for Mansfield (Mr. Concannon) just now asking, from a seated position, how I would like to work seven days a week. I had just previously to that said that that is not what I am asking for. All I am asking for is that the very expensive machinery and equipment involved should be used round the clock for seven days a week. This does not involve a seven-day week for any one man. I should have thought that it was not necessary for me to explain that in detail but, in view of the hon. Gentleman's remarks, I have done so.

I believe that the morale of the coal industry is a matter of vital national concern. The electricity industry is, and to a large extent will be for a quarter of a century ahead, a hostage of the coal industry. If the morale of the industry should crack, if the industry is not seen to offer a reasonable livelihood and decent working conditions to men who are prepared to go underground, the country will suffer an industrial and economic disaster of major dimensions by being deprived of coal which is desperately needed. It must be remembered always that the coal industry in its profitable, good areas must compete for labour resources with the industry of the Midlands, and that is not always easy.

One does not nag unduly, but at the moment the Coal Board cannot boast a very proud record. Production is not at all what it ought to be. Costs are high. Its markets are falling away. The future of coal in the economy is far from being assured.

In these circumstances I do not believe that the Board ought to divert one iota of its effort or energies from the business of its own industry—coal. Its business is to get coal and to look after the complex organisation which is required to do so. If we in the House were miners, what would our reactions be on being told that our employer, the only employer available to us, was now to interest himself in another business and was to go off and look for oil, a rival fuel? We would feel that at least the minds and energies of the Board were being applied in the wrong directions.

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

This happens to vast numbers of employees when their employers decide to branch out in a new field of technology.

Photo of Mr John Peyton Mr John Peyton , Yeovil

It may be so, but not a direct rival of this kind. The Board has a very large monopoly in coal. At the moment it faces a considerable crisis. Within the last 12 months it has had to come to Parliament for an immense measure of financial assistance. In such circumstances it is wholly wrong that it should be permitted to divide its attentions and energies and go off in another and wholly new uncharted direction. I hope very much that before Parliament accepts the Bill we shall think again as to whether the investment which will be necessary is in any way justified.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

The hon. Gentleman, having been a Minister at the Ministry of Power, will realise that one of the greatest problems facing the coal industry is a shortage of craftsmen in the pits. I represent an area where some pits may close in the next 10 to 15 years, and I know that it is very hard to recruit such craftsmen. If the Board could give some kind of undertaking that there would be training, for instance, for craftsmen in the North Sea gas industry, this would have a good effect on recruiting, certainly in my area.

Photo of Mr John Peyton Mr John Peyton , Yeovil

The hon. Gentleman is entitled to his opinion. I do not doubt that there is some justification for what he says. The point I am concerned with is that the effect upon the morale and the confidence of miners when they see the Board setting off in a wholly different direction will not be good. Moreover, I believe that the problems now facing the coal industry are so vast, complicated and difficult that all the energies and abilities of the Board will be required if they are to be mastered.

If the Board is to be allowed to engage in North Sea drilling, why not also the electricity industry, which has at least as strong a claim? I am surprised that the hon. Member for Bristol, Central did not make this case. The electricity industry is bidding to be at any rate a user of North Sea gas. That being so, it has a much stronger claim to be allowed to engage in drilling.

Another complication which the Minister did not deal with, at any rate not adequately, is the attitude of the gas industry. Although the hon. Member for Bristol, Central expressed something of the views of the electricity industry, those of the gas industry have not been heard on this point. Is it intended that the Coal Board, having secured a quantity of North Sea gas, in company with some oil company, shall sell it to the Gas Council or shall sell it in competition with the Gas Council?

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

The Minister did say—I do not know whether the hon. Gentleman was in the Chamber—that the National Coal Board was bound by Section 9 of the Continental Shelf Act, 1964, which provides that it has to sell to the Gas Council unless it wants to use it itself for manufacture.

Photo of Mr John Peyton Mr John Peyton , Yeovil

I think that I did hear that, but the hon. Gentleman does not speak with quite the same authority as the Minister though he speaks with more clarity on this subject. I want to know what is the point of giving the coal industry power in the Bill to sell gas if it is intended that that power should be effectively limited under the Continental Shelf Act. I should very much like this to be cleared up, because I suspect that this legislation bears some of the stamp of haste and lack of consideration which we have come to regard as a normal hall-mark of the legislative children of the present Administration. We know that the Coal Board has done some off-shore drilling, but I do not believe that it has any experience in submarine drilling to be put by the side of the oil companies. I shall be interested to hear if it has.

I end by repeating what I said before, namely, this is a bad Bill. It is ill-timed and obscure. I do not believe that the Government have put forward even a shadow of a case to justify the obviously large additional expenditure to which the country may be committed by granting it to an industry which has already had an enormous measure of subvention, nor do I believe that there is any justification for showing this great encouragement to the mining industry, but rather the reverse. I think that the reaction of miners—certainly it would be mine if I were one—would be that it would tend to take the eye of the industry right off the ball.

5.52 p.m.

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

I first declare an interest in the Bill as an ex-employee of the National Coal Board. I say this for two reasons. First, only those who have worked in the industry know not only the harsh conditions in it but the industrial efficiency of the Board's management. Those of us who have had to argue with the management from time to time for a halfpenny a ton know that it does not waste a halfpenny of the nation's money, and this is only one example.

My second reason for declaring my interest is that I wish to answer some of the points raised by the hon. Member for Yeovil (Mr. Peyton). The hon. Gentleman made a very effective speech, particularly if one happened to agree with his basic philosophy. But when he asks what will be the miners' views when they learn about this, as though it had been a deep dark secret that we are asking for powers for the Coal Board to go into North Sea gas, the answer is that that reaction is already on record. This move was welcomed by the National Union of Mineworkers at our national conference. We are in favour of diversification, and do not see it as a threat to the basic industry of the National Coal Board.

Miners may from time to time welcome sympathy, but neither my colleagues in the House or in the coal fields ask for it. We are asking, and are entitled to ask, for understanding of the problems of the coalfields and that they should be treated in a realistic manner.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

The hon. Member may have made a slip of the tongue in referring to "we". Was he referring to "we" as the N.U.M.?

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

I think that I said "we" on a number of occasions. I think that the "we" to which the hon. Gentleman refers came when I said that we in the National Union of Mineworkers have no objection to the National Coal Board going into this new venture. We may have concern on details of how it will go in and why, but we have no objections on the principle, and this has been on record since the union's conference at Scarborough this year.

I welcome the Bill for two reasons. It is very short and my favourite word for speeches is "short". I shall try to be as brief as is the Bill. The hon. Member for Gloucestershire, South (Mr. Corfield) made the best of a bad case but gave away his main argument when he spoke of the basic differences in philosophy between the two sides of the House. When we talk about nationalised industries and the policy of nationalisation, they are against nationalisation in practice as well as in principle. We on this side of the House are in favour of nationalisation in principle and in practice but we do not make the corollary that because we are in favour of nationalisation we should therefore bar private enterprise. When one looks at the map of the North Sea one sees a Technicolor area of 25 private enterprise concerns and two public enterprises. The complaint of some of my hon. Friends is that we have not nationalised enough. We are not afraid of competition. Why should hon. Gentlemen opposite be afraid of it?

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Would the hon. Gentleman also agree with the Minister that there would be a case for allowing private interests to enter into digging coal? They are not at present allowed to do so. If the hon. Gentleman would welcome competition, may we now have his agreement?

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

As far as I know, no one from the private enterprise sector has suggested that they come back into coal mining. If it was a question of how much coal could be dug by hon. Gentlemen opposite compared with hon. Gentlemen on this side we would have no objection.

It is often overlooked that for many years there has been a large number of small private mines still in operation and still playing an effective part. No one has yet suggested it, but if Shell, Gulf or B.P. want to do it, let them put in their applications and they will be considered on their merits. On this basic question of competition we face the great divide. The Conservative manifesto says at page 4: … our new policies for competition will inject fresh vitality into British industry, … Why should they be so terrified of a slight amount of competition to private enterprise from the National Coal Board? After all, the energy market is large enough and it is expanding tremendously.

An estimate of coal equivalent in millions of tons shows that at present the National Coal Board provides 175 million tons of coal equivalent, and the total energy requirements of the country are roughly 300 million tons. It is anticipated that the total output of coal will continue more or less steadily at 175 million—it may go up to 200 million or down to 160 million—but the actual needs will grow. Therefore, while coal now has about 60 per cent. of the market, by the 1980s its percentage share of the market will be down to some 44 per cent., although total production will have remained about the same. Other fuels will be providing about 450 million tons of coal equivalent. There is no question of the country's energy needs shrinking. There is massive scope. Of the 25 concession companies, two are nationalised concerns. Apart from the Gas Council, the National Coal Board has some interest, in alliance with Allied Chemical and Gulf Oil.

Gulf Oil has concessions not only in the North Sea but also in the Irish Sea. The Minister may be able to tell me whether the National Coal Board also has an interest in the Irish Sea concessions, which are at present let under licence to the Gulf Oil Company. There are five areas under Gulf Oil extending from South Barrow to off the Mersey Estuary. There is an obvious link here for the National Coal Board with its interests in the north-west, that vital part of the coalfields near one of the largest concentrations of industry and one of the greatest freight and passenger ports in the country. The link between the Irish Sea gas that I hope we shall have and the industrial conurbations seems obvious to me.

The geological structures which run across the Pennines seem to lend force to the case that, if there are coal, natural gas and oil on one side of the island, we should expect them on the other side, too. I sometimes think that not enough emphasis is being given to exploration in the Irish Sea as compared with exploration in the North Sea.

There have been references to the powers of the National Coal Board to engage in petroleum refining and distribution or the manufacture of petrochemicals. In recent years, there has been quite a large break-through in the extraction of petrol from coal. The National Coal Board has coal, and it has research facilities for the study and development of the extraction of petrol from coal. These are highly competitive processes. Why should there not be an expansion in this sphere?

The case we put is that the National Coal Board is as entitled as anyone to have the facilities and is as good as anyone to take part in this venture. It is the largest single employer of labour in the country, it operates on a national basis, and it has a national organisation. It has national training facilities and a national research organisation as well. It has national manufacturing plant and a national distribution organisation. No private enterprise concern in the country—or, at least, very few—could offer similar facilities.

The National Coal Board has the size, the plant, the capital, the basis, the technical knowledge in the fuel and power industry and the potential for diversification. Hon. Members opposite who referred to diversification spoke in very qualified and strict terms of the kind of diversification they had in mind. But they practise it in their own private enterprises. Anyone with a copy of "Parliamentary Profiles" knows of the strange ways in which diversification works in their own enterprises. Why should they object when the National Coal Board wants to diversify?

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

Will my hon. Friend agree that training could perfectly easily be geared for certain types of craftsmen—in the company of so many of my mining hon. Friends I hesitate to specify which—on a dual basis both for the North Sea industries, which I know something about, and for the mining industry?

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

Certainly, I agree. Not enough credit is given to the National Coal Board for the work it has done in training. The individual training facilities it gives equal at least the national Government's facilities in industrial training. Its research facilities, the way it has used day-release courses and the work of the mining colleges are as fine as anything in the world and much to be commended. The skill and facilities are available, and, as I say, not enough credit is given for them.

It has been said that the National Coal Board is not subject to the checks and controls of the market. I suspect that many National Coal Board people would like to return to the lack of checks and controls under private enterprise. Certainly, the scrutiny through the House of Commons of its activities is something which the Coal Board would like to avoid from time to time.

It is technical knowledge which the Coal Board has to offer to the two companies which have taken up the offer in gas exploration. The Coal Board has been drilling holes for a long time. Some of the holes have been very deep. Most of them have been on land, but by no means all. In July of this year, the Observer—this should have been available to hon. Members opposite—reported that: The National Coal Board's sea boring tower has drilled 18 boreholes in the North Sea during the past eight years, each about 2,000 ft. deep and costing £69,000. Operations proved that at least 550 million tons of workable coal lie off the Durham coast, adding assets worth £2,500 million to Britain's natural resources". The depth of exploration for oil and natural gas will be much greater than this, but the Coal Board has already drilled many times on land to equivalent depths such as it would require to drill under the sea. It is not quite the same thing, of course. No one suggests that it will be as easy to drill a hole of that depth at sea as it is on land but, given the organisation within the Coal Board such as I have tried to describe and its experience in drilling holes, including under the sea, it seems logical that the Board extend further and drill deeper. I should like to see the Coal Board extend its operations in that way with its own drillings.

Photo of Mr Claude Lancaster Mr Claude Lancaster , South Fylde

I take it that the hon. Gentleman is not implying that the National Coal Board carried out the research for the North Sea. It did nothing of the kind.

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

I intended no such suggestion, and I hope that I did not make it. I was saying that we have here an organisation on a national basis with the facilities I have described. One of its main jobs has been the drilling of holes into the earth's crust either on land or under the sea. Why should not the Coal Board go further out and deeper? It seems logical extension of present activities. I do not underestimate the difficulties of drilling at sea. It is one thing to drill on land or off-shore for coal and it is another to work further out to sea, but this, surely, is just a logical development on the Coal Board's work.

My hon. Friend the Member for Bristol, Central (Mr. Palmer) spoke of a national fuel policy. I suggest to my hon. Friend that the basis for arrangements to cover the nation's fuel and energy needs has been with us for quite a long time. The creation of separate boards for gas, coal, electricity and atomic energy may have been the best way of going about things at the time, but we ought now to look at the system afresh and consider whether it is an artificial and merely bookkeeping system. I do not suggest another national board to look after one source of fuel and energy, another Gas Council, so to speak, but why should not we have a national fuel and energy board or corporation? We could then get away from the stupid and rather misleading business of saying that a gas board has made a profit and the Coal Board has made a loss. Of course, there would still be separate operating units and separate responsibilities—there would still be responsibility to Parliament—but it is time that we looked at the question within a wider context.

Photo of Mr John Peyton Mr John Peyton , Yeovil

The hon. Gentleman is now advancing a most dangerous doctrine. The possibilities for smokescreens in the accounts of the nationalised industries are endless, and they have been enormously exploited already by the National Coal Board. The result will be terrible if we squeeze the whole lot together.

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

On the last occasion when we had a debate on this subject, the hon. Gentleman described me as an extinct volcano. If I am now, in his eyes, putting up a smokescreen of dangerous doctrine, I do not apologise for a moment. All I am asking is that the Minister should look into the question. The Government should consider whether it would be not only more efficient but more honest to have a national fuel and power board or corporation to operate within the framework which we have now.

I welcome the Bill. I shall give it every support in all its stages, and I hope that the House will do the same.

6.8 p.m.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

The hon. Member for Liverpool, West Derby (Mr. Ogden) ended by saying that he welcomed the Bill. My speech will be the antithesis of his I deplore the Bill. It is unnecessary. It is expensive. It is bad business. It is doctrinaire. It ought never to have been conceived and it will be opposed by my right hon. and hon. Friends and myself by every legitimate means at our disposal.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

Did I hear my hon. Friend say "A Guillotine"? Not yet, I hope.

With the exception of 20 months' interregnum when I was not in the House, I have spoken in every coal debate since 1950. It is significant in this coal debate how few coal mining Members are sitting on the benches opposite. What a remarkable lack of competition there is within the Labour Party to speak on their sacred cow, the coal industry. In contradistinction, my hon. Friends and I are falling over ourselves to speak about the coal industry, for we had to grapple with its hopelessly bad structure, with its insolvent finances and with its innumerable deficiencies throughout our 13 years of office, I summarise this in a few short sentences.

I am sorry that the Minister is not in his place. I hope that he will not accuse me—I quote him—of "blind prejudice" in what I am going to say about the National Coal Board. But I quote facts only from his own publications. First, one of his predecessors brought to the House the White Paper on the Finances of the Coal Industry, dated November, 1965, Cmnd. 2805. It is significant to quote from paragraph 2, dealing with the reconstruction of the National Coal Board's capital: It was announced on 1st July that the Government proposed to write off about £400 million of the National Coal Board's debt. This decision was based on a recognition of the consequences of the contraction of the market for coal in recent years and the likelihood of further contraction. Rubbish! Nothing of the kind! There was a cumulative loss of £400 million as a result of the mismanagement of the coal industry under an inadequate structure from the date of vesting in 1947 until 1965. It was the taxpayers' bill, the price of political nostrums on nationalisation which a majority of 200 Labour Members of this House foisted on an unsuspecting nation after the General Election of 1945.

So foolish were some of the electorate at that election that they even thought that, when coal was nationalised, they would get their household coal free of cost. So stupid were some of the electorate in 1945 that they thought when the railways were nationalised, they would travel on "puff-puff trains" without buying a ticket. [Interruption.] This is not my standard anti-nationalisation speech. I have quoted from the Socialist Government's White Paper. They wrote off £400 million.

Let us also look at manpower. A few years ago, in the early 1950s, the coal industry had 713,000 men; it now has just above 400,000. The industry is contracting fast. About 10 years ago, it was mining 223 million tons of coal, including a modicum of opencast but mostly deep mined. This has now dropped to 170 million tons and is still going down. This year it might be 175 million tons. It depends on the labour market. As a result of unemployment in the West Midlands and elsewhere—I do not call it redeployment but prefer the homely term unemployment—men may be driven from the motor factories and soon back to the pits and that will lift output.

I quote also from the out-of-date but not disclaimed document, the National Plan, the source of my figures showing that the output of coal will go down to 170 million tons. Output goes down and prices continuously rise. In the last full year, the industry made a loss of £24·8 million and it is voracious of capital. If there is a second sacred cow to hon. Members opposite it is the word "investment". They seem to think that all investment is good investment. On the contrary, it is the quality of investment which matters, and the profitability, or the earned income from investment. These are the true arbiters—not a string of bald investment figures as in the case of all nationalised industries, with the Treasury providing the money, irrespective of the capability or the efficiency or the application of the investment. Even the Parliamentary Secretary recognises the respectability of that plea.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I am glad to see him nodding assent. Let us study the National Coal Board's investment. I will quote from one more of the Government's White Papers, called Public Expenditure, Planning and Control, issued in November, 1964, Cmnd. 2915. I have said that the Board is voracious. I will show how voracious. The White Paper said that, in 1964–65, the National Coal Board would call for £90 million; in 1965–66 for £90 million; in 1966–67 for £93 million; and by 1969–70, at 1965 values, for £85 million.

All of that money, I claim, should be devoted to the pits and on opencast sites to raise the productivity of the coal mining industry, which is the proper purpose of having the National Coal Board if one accepts the nostrum of nationalisation at all. It is a misguided purpose, in my judgment, to apply that capital to questing for oil in the North Sea. That is no part of the terms of reference or the purpose of the National Coal Board.

No doubt hon. Members oppposite will seek to argue that the money applied to North Sea activities for gas and oil is nothing to do with the N.C.B. investment to which I have referred but I draw their attention to the Explanatory Memorandum of the Bill, paragraph 3 of which states: Any borrowings required by the National Coal Board in the exercise of these powers will be governed by the Coal Industry Act 1965 and may be borrowed from the Exchequer, subject to the overall limit on all the Board's borrowings in the 1965 Act not being exceeded. The limit on overall borrowings in the 1965 Act is £700 million, which may be increased to £750 million by an Order made by the Minister and approved by the House of Commons. It is therefore evident that every £1 million diverted by the Board to questing for oil in the North Sea is to be deducted from the sums of money available for the legitimate deep mining and opencast coal mining purposes.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

I am sorry to interrupt the hon. Gentleman but this is not the case. He would surely agree that, where there is scope for profitable investment by public enterprise, the money should be found to carry out that investment. My right hon. Friend said that there would be no cut-back in investment by the National Coal Board in order to leave scope for the North Sea exploration.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I did not say that there would be. The hon. Gentleman has not been listening. I repeat that any money diverted to questing for oil in the North Sea will have to come out of moneys of the Board within the Provisions of paragraph 3 of the Explanatory Memorandum of, the Bill. Any money going to North Sea quests will lead to the Board's coming back to this House for renewal of its power to borrow, or to increase its power to borrow, at an earlier date than otherwise would be necessary.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

Dr. Bray indicated dissent.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

It is no good the hon. Gentleman shaking his head. I must be right about this. What is more, I am right about it. There cannot be any reasonable doubt about it.

It is my fundamental objection that seeking oil is no part of the Board's busi- ness. I respect the hon. Member for West Derby as an ex-employee of the Board but, as an outsider looking in, I am much more perspicacious in my financial assessments of the Board's affairs. He is, to use a hackneyed term, a retained servant of the industry. He speaks for the miners.

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

Why should he not?

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

There is no reason why not, but I am a much less prejudiced person than he is.

Photo of Mr John Peyton Mr John Peyton , Yeovil

Will my hon. Friend delve into his considerable commercial knowledge? Unfortunately, he was not with us when we passed the 1965 Act and we are glad that he is back. May I ask him what would happen to a private enterprise concern that borrowed vast sums of money for one purpose and then used them for another?

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

Of course it might well be in Queer Street, but most private enterprise companies have the yardstick of profitability and unless they earn reasonable profits, they are out of business in a very short time. That is not so with the Coal Board. It goes on with what I call the accumulation of losses year after year, and waits for the day when the Labour Party is returned to power so that its coal-mining lobby can go to Westminster and write off the accumulated losses, "Bob's your uncle, we will get rid of them in the stroke of the pen", which is exactly what has happened.

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

The hon. Gentleman seems to assume that those of us who have worked in the industry have some great love for it, as though the Coal Board was some sort of father-figure. It is rather the opposite. Once one has worked for the Coal Board, one hates its guts. One can only do that.

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

This is most interesting, but we are on the Second Reading of a Bill with very definite powers and we must keep to the Bill.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I am deeply grateful to you, Mr. Speaker. I always endeavour when we are debating a Coal Bill to display my lively interest in the affairs of colliers and the pits. I have a very real affection for all those who work in the pits doing a hazardous, dirty, arduous and unpleasant job. What I am talking about is the coal industry and how to make it pay, and I do not believe that it will be made to pay by taking money out of it to quest for oil in the North Sea.

As the Minister said, there are about 4,500 square miles in the North Sea which are being explored for oil and 25 groups and consortia available for this huge operation. They are doing rather well. They are doing much better than the National Plan, published 15 months ago, envisaged that they would. The National Plan postulated that there would be only a modest result from these activities, but in the short space of 12 months very large reserves of gas have been discovered and, even more important, oil deposits have been located both under land and sea, all of which transforms Britain's economic prospects during the next few years.

My objection to the Bill and the reason why I shall go into the Lobby against it with such alacrity is simple. I say why devote public money to the speculative enterprise of questing for oil in the North Sea when there is already abundant capital available from all of the 25 private enterprise oil companies and their consortia to do this very thing? The Minister made no pretence of answering that question. The hon. Member for West Derby, who casts such covetous eyes on behalf of these magnificent discoveries, says that we should let the Coal Board jump on the band-wagon and participate in the profits. This has nothing to do with the Coal Board's activities. You might as well ask, Mr. Speaker, why not let British European Airways make an investment in North Sea gas and oil exploration. It would be just about as sensible.

Companies succeed in the harsh field of commercial competition when they specialise and concentrate on the activities for which they have the expertise, the knowledge, the training and the staff. The Coal Board has none of these things and is never likely to have any of these things. The hon. Member for Midlothian (Mr. Eadie) made a ridiculous intervention——

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

He asked why the Coal Board should not put its research facilities on to oil. That was nonsense. The Coal Board's researches are not necessarily applicable to this highly specialised activity of exploring for oil and natural gas. Did I misquote the hon. Gentleman?

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

The hon. Gentleman is confused and is attributing to me the remarks of one of my hon. Friends. I was dealing with training and on the limited subject of training the hon. Mem for Yeovil (Mr. Peyton) thought that the suggestion was fairly sensible.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

That was not the interpretation which I put upon it, but if the hon. Gentleman wants an example of misplaced and expensive researching he has only to go to the consequences of the Clean Air Act, 1956. That was passed through the House with unanimous acclaim in all quarters of the House, but its success rested on one fundamental, namely the National Coal Board producing adequate supplies of solid, smokeless fuel. Stoke Orchard Research Station of the National Coal Board has been working on this problem for ten years. More than seven years ago it announced its "Bronowski bullets." They are not yet on the market in adequate quantities. Solid smokeless fuel is enormously expensive. Tens of millions of pounds have been poured into this form of research and it has largely been a failure. Yet hon. Members opposite want the Coal Board to go into the oil business about which it knows absolutely nothing.

I conclude by returning to the intervention of the hon. Member for Midlothian. He talked about the miners resolving at their conference how keen they were to get into oil. It is not the miners but the Labour Party which is seeking to get into oil. Hon. Gentlemen opposite cannot nationalise the oil companies.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

The hon. Gentleman once again displays his abysmal ignorance of industrial matters. Hon. Gentlemen opposite cannot nationalise the oil companies, because all the oil companies are international concerns and are owned in many countries. But the Labour Party wants to nationalise North Sea gas. [HON. MEMBERS: "Hear, hear."] I am getting some confirmation from the benches opposite.

I did not use my Press ticket this year to go to the Labour Party Conference. Next year I will consider doing that, so that I can hear some of these nostrums expounded at close quarters and report my views on them. At the Labour Party Conference this year, Mr. Sidney Ford, President of the National Union of Mine-workers, moved a resolution for the National Executive Committee of the Labour Party to examine and report on the public ownership of North Sea gas, as a part of our indigenous fuel resources. That resolution was unanimously carried. Today the Minister of Power is obediently carrying out the dictates of his financial masters.

This Bill is as bad as Clause 2 of the Iron and Steel Bill which gives the new Corporation almost unlimited powers over a very wide range of miscellaneous British industry, to convert private firms into public ownership. This Bill is the epitome of the creeping paralysis of nationalisation. For that reason I oppose it, but with none of the blind prejudice of which the Minister so wrongly accused my hon. Friends and myself earlier this afternoon.

6.30 p.m.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

I shall not be able to use all of the words in favour of public ownership which were used by the hon. Member for Worcestershire, South (Sir G. Nabarro) in his opposition to nationalisation. I wish to intimate why I shall be supporting the Government in this Measure. The hon. Member for Worcestershire, South said that he did not have a Press card for the Labour Party Conference this year and sought, to some extent, to misconstrue my intervention. He did not have a Press card for the Mineworker's Conference either, since I was there and did not see him.

In my intervention, I said that miners were often accused of having a Luddite philosophy; that they were restrictionist in their outlook. I pointed out that at their conference the miners welcomed the find of natural gas but, quite reasonably, questioned why it should be left to private enterprise to exploit the bonanzas arising from this discovery. Quite properly, the miners said that they felt that the nation should have some share in this.

The Opposition have used this debate as an opportunity to attack nationalisation and public ownership. They ought to have said so at the outset and not made the miners the target for their attack. It has been argued that the National Coal Board and the miners have failed the nation and, because of their inefficiency, should not be allowed to participate in the explorations taking place in the North Sea. If the rest of the country had achieved the same rise in productivity as the miners have done, then there would not be an economic crisis of the size that we are now suffering from.

As a former miner, I resent the implications that have been made by the Opposition. They have inferred that the industrial relations of the Board are not what they should be as a consequence of the Bevercotes dispute. Does the hon. Gentleman who made this accusation know when there last was a national strike in the mining industry? The miners' industrial relations system is the envy of this country and an example to all of how industrial relations and conciliation machinery should operate.

I hope that the next time hon. Gentlemen take part in a debate of this nature and wish to attack the miners and the National Coal Board they will do their homework and find out the facts, and not try to deceive people by making such unfounded attacks.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Would the hon. Gentleman say to whom he is referring and whom he alleges has attacked the miners and the National Coal Board, because I am not quite clear?

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

It was the spokesman from the Front Bench. I asked if he would give way when he referred to Bevercotes and industrial relations.

Photo of Mr John Eden Mr John Eden , Bournemouth West

I should make it quite clear that my hon. Friend the Member for Gloucestershire, South (Mr. Corfield), in his reference to Bevercotes, clearly deplored the fact that this valuable investment was not operating to its fullest capacity. This was the aspect to which he referred. He made no overt or covert attack upon the men engaged in the industry.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

I have listened to the whole of this debate. The record will prove what I am saying. I am sorry to have to say that that is not the impression that I received, and I imagine that it was not the impression received by some of my hon. Friends.

Photo of Mr Don Concannon Mr Don Concannon , Mansfield

I am sure that it was the hon. Gentleman the Member for Yeovil (Mr. Peyton) who made this assertion.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I made a note of what the hon. Member for Yeovil (Mr. Peyton) said. He spoke of the National Coal Board having hoisted the white flag of surrender to Luddite influences at Bever-cotes.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

I may have to apologise to the hon. Gentleman the Member for Gloucestershire, South (Mr. Corfield), but it was said during the debate. Another point related to the fitness of the National Coal Board to operate its machinery. It was said that an organisation should be able to obtain the fullest possible utilisation of machinery. Hon. Members opposite are showing an appalling ignorance of the workings of the mining industry, because at present there is full utilisation of most machines in the industry.

In my own area, we are working machines throughout the shifts, for 18 to 20 hours a day. This fully refutes any accusation that the Coal Board is incompetent and cannot utilise its machinery fully. It may be argued that we have not had full utilisation of machinery at Bevercotes, but it was implied that this was typical of the National Coal Board's approach to mechanisation.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I understand—and this might help the hon. Member—that the trouble about Bevercotes is that the workers who would work there are prepared to work on the seven-day system which the Coal Board wants but that the area management of the union is not prepared to agree to this.

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

We cannot discuss this case in detail. We are debating the Second Reading of a Bill.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

The hon. Gentleman has just come in and cannot know what has transpired.

We have been talking about the fitness of the Coal Board to participate in exploration. There has been talk about the Coal Board selling gas. But the Board already sells gas to industry. It therefore has some experience in the sale of gas and is fit to participate in exploration. There has been talk about boring. It is well known that the Coal Board had boring rigs in the sea. For many years people in the County of Fife where I live have know for some considerable time that the Coal Board was boring very deeply on the Forth.

The inference has been made that the Coal Board is so inefficient that if we allow it to participate in this operation it will be very bad for the nation and the Coal Board. I do not know what standards of efficiency some hon. Members opposite apply. We talk about the cost of the production of coal and the finances of the Coal Board. But I point out to hon. Members who want to compare private enterprise and public enterprise that the miners resent the fact that it costs more to distribute coal than to produce coal, and this under private enterprise.

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

That may or may not be true, but it is outwith the scope of the debate.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

I know that the hon. Member for Worcestershire, South objects to the fact that I should point out some of the inefficiencies of private enterprise.

When we talk about finance and the financial operations of the Board, it is well for hon. Members opposite to remember that when the mines were nationalised and the compensation terms were agreed the miners believed that there was an over-generous allocation of compensation.

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

Order. I am sorry to interrupt the hon. Gentleman again, but we cannot discuss the history of the nationalisation of the coal industry. This is a Bill about a specific object, as the hon. Gentleman knows.

Photo of Mr Alexander Eadie Mr Alexander Eadie , Midlothian

I must accept your Ruling, Mr. Speaker, but there has been discussion about the finances and losses of the Coal Board. My point is that the reason for the state of the balance sheet is that compensation was paid to coal owners in the belief that the pits would have a long life. But the expectancy of long life did not materialise and the pits had to be closed. But the private owners got their compensation.

I am thinking of the New Rothes colliery in Fife where compensation was paid on the basis of expected profits. This was a project started by private enterprise. From the day that the pit started not a penny profit was made. The pit lost quite a considerable amount of money—millions in fact. But the owners received their money on the basis of expected profits. I cannot develop this argument because, as you have pointed out, Mr. Speaker, I should be out of order. It ill behoves hon. Members opposite to talk about the finance of the Coal Board. We could run rings round them if they wanted to examine the finances of the Coal Board.

I hope that hon. Members will go into the Division Lobby in support of the Government on this Bill.

6.47 p.m.

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash

I thought that the hon. Member for Midlothian (Mr. Eadie) was a little wild in the accusations which he levelled at the Opposition in respect of alleged attacks on the miners. However, I should like to reassure him that the opposition which I feel to the Bill has nothing to do with the miners. The real problem which we are facing is concerned not so much with the miners but with management.

The hon. Member for Midlothian was right to focus attention on some of the financial operations and activities and records of the Coal Board. This I believe is the issue with which we have to come to grips. There has been a lot of irrelevant talk today on the broad philosophy of whether we are right to oppose alleged competition between private enterprise and a nationalised industry and whether the National Union of Mine-workers, as the hon. Member for Liverpool, West Derby (Mr. Ogden) suggested, was right to talk about wanting to enter the promised land of natural gas.

This is a sort of cloud-cuckoo-land. It reminds me of the days when the Government of Ghana, under Dr. Nkrumah, debated whether Ghana should have a steel industry. It was a lovely idea. But the question was: could they afford it? Can the Coal Board, desirable though it may be to go into natural gas, afford in terms of hard cash, a speculative project, as the Minister said, prospect and undertaking? I wish to address myself to that question.

We have been fortunate in the last six or nine months in having quite a lot of detailed information on the finances of the coal industry. My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) has already referred at some length to an important White Paper on this matter called The Finances of the Coal Industry. It is the facts contained in this which gives rise to the misgivings about the whole of this venture.

The Financial Memorandum to the Bill refers to the borrowing limit for the National Coal Board up to 1971. The financial limit for borrowing, we understand, is £700 million to be increased by order to £750 million—that is, a limit on borrowing of £750 million up to 1971. five years ahead.

I would remind the House that, out of that figure of £750 million which is the limit up to 1971, there is already a sum of £545 million eaten up in the form of reconstructed debt. What the Coal Board can borrow between now and 1971, even if it comes to this House by Order, is £750 million, less the £545 million reconstructed debt already eaten up, leaving a total borrowing scope, according to the provisions of the Financial Memorandum, of £200 million odd between now and 1971. There is the £155 million without Order, and then the extra £50 million, bringing it up to £205 million odd, if they get the Order from this House. That is £200 million which the Coal Board have powers now to borrow in the next five years.

I wish to draw the attention of the House to the extent to which that has already been committed in advance to undertakings which are entirely separate from these speculative enterprises, undertakings and commitments in respect of North Sea gas. Since they both referred to the borowing aspects, let the Minister and the Parliamentary Secretary remind themselves for a moment of paragraph 18 of the White Paper and the extent to which these sums are already committed. We have £75 million set aside already for ancillary activities, other than North Sea exploration, such as the Bronowski bullet to which reference has already been made is part of that. I will come to that in a moment, if I may. Then there is provision for possible deficits, and that gives us £30 million for the years 1965 to 1971. In the first year, £25 million has been taken out of that because of the deficit this year. Then there are various other items, such as contingencies, and borrowings to allow for seasonal movements in working capital. The fact is that before we get anywhere near the speculative £6 million, the whole of the borrowing powers have already been absorbed.

One of the features which disturb us is that the Minister has come to the House asking us to rewrite a far-reaching and basic reorganisation of the coal industry's finances which were undertaken partly as a result of the White Paper and the Coal Industry Act, as recently as November 1965. Apparently this idea has only just floated through. It has only just occurred to them. Apparently it was not even considered when we discussed the revised borrowing powers under the Coal Industry Act.

In the £200 million-odd available between now and 1971, there is no room for all the activities which the Board has to undertake, or the ancillary activities, provision for possible deficit, the floating debt, etc.

In a short intervention, the Parliamentary Secretary made a quite reasonable point. He said that if it is possible to find an opening for investment which promises to be profitable, why not accept the principle of raising the money even if it becomes necessary to exceed the borrowing powers, and invest in the hope of a profitable return. That is where we feel anxiety, because it is in the field of diversification that the Board has already gone so far astray. Let the Government remind themselves of some of the problems that they face in the very field of diversification to which substantial capital sums are committed already.

Here I would make special reference to the whole question of smokeless fuel. That is something which is crucial and central to the future prospects of the coal industry. The provision for developing smokeless fuels is one of those specific items which are already meant to be covered by the limit on borrowing powers mentioned in the Memorandum. The £200 million-odd which we have in hand has to bear the burden of the "Bronowski bullet" and the whole of the diversification in what are called ancillary activities. Smokeless fuel is a key priority in this sector which is immeasurably more important than exploration for natural gas by the Coal Board.

Everyone knows that there will be a severe decrease in the consumption of coal by the Central Electricity Generating Board. That is one way in which the use of coal will be diminished. We know that the steel industry has increased its fuel productivity enormously, so that it will be using less coal.

One promising opening for the coal industry is smokeless fuel for domestic appliances, which are becoming increasingly important as smoke control zones extend over the country. It is in that area that the Coal Board have made a hopeless botch of things. It is no exaggeration to say that the smokeless fuel to which my hon. Friend the Member for Worcestershire, South has already referred—the "Bronowski bullet"—has been a scandalous performance. How the National Coal Board can seriously come to the House and ask us to support projects for going into natural gas when it cannot even make solid smokeless fuel, let alone gaseous smokeless fuel, is an insult to the House.

We must remind ourselves of the history of the "Bronowski bullet"——

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

We must not pursue the "Bronowski bullet" in detail on this Bill. The hon. Gentleman must link what he has to say to the argument about the Bill itself.

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash

In that case, Mr. Speaker, I shall have to refer to it in outline, if not in detail.

This sector of diversification into new activities includes diversification into smokeless fuel. Here the story is a terrible tale of mismanagement and failure to operate a productive plant after exploring the process in a pilot plant.

It is not without significance that the Chairman of the National Coal Board, Lord Robens, told the Select Committee on Nationalised Industries at the end of last year that smokeless fuel, and particularly this "Homefire" brand from the Coventry plant, would be being produced at the rate of 650,000 tons, and he said that it would be produced at that rate in the year 1965. After some cross-examination by the members of the Select Committee, he agreed that it might be five or six months later before the smokeless fuel began to be turned out of the "Homefire" plant at Coventry in any quantity.

Having regard to the fact that five or six months takes one from the end of December to about the end of the Coal Board's financial year, 1965–66, I had a look at its Annual Report. There, it says: At the end of the year, the large new commercial plant at Coventry for the production of 'Homefire' was being prepared for commissioning. That was at the end of March, 1966. My information is that at the present time, nearly twelve months after Lord Robens told the Select Committee that "Homefire "would be produced at the rate of 65,000 tons a year, the Coal Board is just managing to squeeze 400 tons a week out of a plant which was designed at a cost of £10 million, and as part of an investment which is to stretch up into the region of £40 or £50 million, after six years of alleged research at Birch Coppice on a pilot plant.

That is scandalously hopeless and inadequate. How can the Coal Board seriously come here and ask us to raise money at the rate of £6 million, £7 million or even £10 million for the exploration of natural gas, when it cannot even produce solid fuel out of its own researches, and expect us to feel any confidence in its idea of going into North Sea gas?

That is how we view it, not on philosophical grounds of competition with private enterprise, but purely on the basis of the incompetence of the Coal Board in managing its own proper sector and its failure to turn to a profit the existing capital with which the nation has already supplied it.

When one looks at the record of the Coal Board in existing diversification plans—"Homefire" is an example—and then one considers that Lord Robens has told us that he wants to develop Immingham as a deep-water port, is it on the cards that that can be done within the available £200 million between now and 1971? When one looks at Bever- cotes and all the other sectors which are properly within the Coal Board's purview of operation, is the enormous capital outlay that would be involved in the provision of a deep berth at Immingham for shipping coal to the Continent on the cards? Now we have natural gas, Is it really possible to believe that it will come within the terms of the Financial Memorandum, pressing up in this the first year against the limit set for 1971?

Photo of Mr David Marquand Mr David Marquand , Ashfield

The hon. Gentleman has been talking about the inefficiency of the Coal Board. Can he explain why, if the Board is so incredibly inefficient, so manifestly unsuited to engage in this activity, private companies are so anxious to co-operate with it?

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash

One reason is that the Minister is asking us to fork out 6 million honest golden sovereigns per annum to go into the kitty. This is a very tempting bait. There is not need to argue this on philosophical or general grounds. The truth is that there is not enough money in the kitty for the Coal Board to do this, or there should not be. It cannot profitably manage its existing investments.

We feel that the real reason why the Coal Board has gone into the natural gas business is that it wants to be with it. It wants to try to restore morale. I agree that the coal industry has had a lot of hard knocks, and Lord Robens was right when he referred to morale as a key factor in the future of the coal industry.

This industry had its target systematically reduced by the encroachment of the oil and gas industries. This is, of course, demoralising, and if the Board can hitch its wagon to the new rising star of gas, this may be desirable, but it is not a good enough reason for doing so. There must be solid financial reasons for such a move. The Board should learn from the gas industry, which for many years was its client. It became browned off with its status, and it is now enjoying its independence.

The Coal Board has a promising future if it concentrates on operations which are properly its own, and not attempt to get with it, by getting into a sector about which it knows nothing. It should concentrate on developing its own investments, particularly in smokeless fuels.

7.2 p.m.

Photo of Mr David Marquand Mr David Marquand , Ashfield

I had not intended to intervene in this debate, but I have been so astonished by some of the arguments advanced from the benches opposite that I feel bound to intervene shortly.

I believed, in my innocence, when I became a Member of this House, that the party opposite stood for the principles of capitalism and private enterprise. However, during this debate I have found that the argument is not between a modern view of capitalism on the one hand, and deep-dyed doctrinaire Socialism on the other. The kind of philosophy which is being propounded from the benches opposite during this debate is a Neanderthal concept of capitalism, which has nothing in common with the sort of mixed economy which exists all over the Western world. The logic upon which the opposition to this Bill is based is as follows: First, the Opposition seem to be asserting that nationalised industries must never engage in growth sectors of the economy. Nationalised industries must never be profitable. They do not say that in so many words but this is implicit in many of the arguments which have been advanced.

Another vein running through the argument is that nationalised industries should not compete with private enterprise, that there is something wrong, unfair, and wicked about the fact that nationalised industries should dare to come forward and compete with private enterprise.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

That is entirely false. For 13 years between 1951 and 1964 Conservative Governments conscientiously and deliberately left 20 per cent. of the long distance road haulage industry publicly owned and nationalised, and 80 per cent. in the private sector to compete with it. The reason for that was to provide competition, and nothing else.

Photo of Mr David Marquand Mr David Marquand , Ashfield

I am glad to hear that, but if that holds good for road haulage, I do not see why it does not hold good for the North Sea. Hon. Gentlemen opposite cannot have it both ways. I am not saying that all hon. Gentlemen opposite think that the nationalised industries should not compete with private enterprise, but I am saying that this is one of the threads running through the speeches to which I have listened.

The third, and I think the main, reason why hon. Gentlemen opposite are opposed to the Bill is that they allege that there is something uniquely bad about the Coal Board, that it is somehow uniquely unsuitable for the Board to intervene in the North Sea project because of its bad record in various ways. They allege that the Board's record in labour relations is particularly bad, and that this disqualifies it from entering into this project.

The hon. Member for Worcestershire, South (Sir G. Nabarro) dilated at great length on the great losses which had been made by the Board, and appeared to suggest that this in some ways disqualified it from entering into this field. I should like to make two brief pertinent points on what he said.

During the last nine or ten years the number of men employed in the mining industry has declined from about 700,000 to about 400,000. No other major industry can point to a similar contraction, and this has been achieved without any major industrial dispute. It has been achieved with great skill, great humanity, great care, and sensitive co-operation between the Board and the N.U.M. It is idiotic and completely unjustified to suggest that the Board has a bad record of labour relations. The fact is that it has a superlatively good one, and if private enterprise had a record anything like as good, the state of the British economy would have been a good deal healthier than it has been for the last 15 years.

I propose to deal now with the more important point—the allegation that the losses made by the Board in some way disqualify it from entering into this business. It is not possible or sensible to run an energy policy solely in terms of short-term profitability. All kinds of other considerations must come into it. Strategic considerations must come in, so must social considerations. These are bound to weigh in the balance a good deal. It is a difficult and delicate job to say how much they should weigh in the balance as against pure profit in a book-keeping sense.

Rightly or wrongly, successive Governments have given the Coal Board a social task to fulfil. This has prevented it from behaving as private industry would behave in similar circumstances. It has prevented the Board from making the profits which it would have made if it did not have to fulfil social tasks. If, in the early 'fifties, the coal industry had been operated according to the criteria adopted by private enterprise industry, it could have charged enormously high prices for coal. It would have been very profitable indeed, but, because of social and economic considerations, in my view quite rightly applied by the Government at that time, it was not able to do so. This is why it was not profitable in those years.

The situation is somewhat different now. As a result of Government policy the Board is having to maintain a large number of uneconomic pits, uneconomic in the short-term sense, partly for social reasons, and partly because for strategic and political reasons it would be wrong to run down the coal industry below the 170 million ton figure. This means that the Board is having to bear an unprofitable burden. It is necessary and right that it should, but it is then quite absurd for hon. Members to beat the Board over the head because it is "losing money". Of course it is losing money. It is right and necessary that it should be losing money in this sense, at certain times in its history—not always, but at certain periods. It is not the Board's fault that it does this.

The final reason for objecting to the N.C.B.'s entry into the North Sea gas arrangement, upon which the hon. Member for Gloucestershire, South (Mr. Corfield) seemed to spend a great deal of time, was diversification. He said that it was wrong for my hon. Friends to cheer diversification as though it were a sort of tin god. I agree. I do not think that diversification is good in itself. But by the same token it is rather ridiculous to object in principle to the idea that a nationalised industry should engage in diversification in the way that the Board has done and, if the Bill is passed, will do in this new field as well.

If the Board were a private company, faced with the problems and difficulties that it faces as a nationalised industry, it would be diversifying its activities at this moment. This would be the common sense thing to do. I agree that the diversification investment which the Board makes has to be made on extremely tough, hard-headed and unsentimental economic grounds. The National Board for Prices and Incomes in its report some months ago on coal prices suggested that when the Board made investment plans in the diversification field it should aim at a return on capital of about 20 per cent. It said that that figure could not be applied in all circumstances but that the assumptions must be solid, hard, clear, tough and unsentimental economic assumptions. That is entirely right. To object to diversification when the Board seeks to take part in the North Sea gas projects on the principle that it is wrong for nationalised industry to do this is simply doctrinaire prejudice.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

Mr. Corfield indicated dissent.

Photo of Mr David Marquand Mr David Marquand , Ashfield

I am glad that the hon. Member for Gloucestershire, South, disagrees.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

If the hon. Member will do me the courtesy of reading the report of my speech he will see that I did not say that it was wrong as such. I argued that it was bringing the Board into unfair competition with private enterprise.

Photo of Mr David Marquand Mr David Marquand , Ashfield

When private companies compete with each other it is fair competition, but when a nationalised industry competes with private companies it is, for some miraculous reason, unfair. We might pose the riddle: when is competition unfair? When it is done by public enterprise, owned by our people, with the result that benefits will accrue to the people instead of to a narrow section of shareholders. This is an extravagant definition of the word "fair".

I said that I did not want to make a long intervention; I will conclude by saying that we have listened to an extraordinary farrago of ideological prejudice in the course of the debate. In the final moments before I resume my seat I want to make one other point. The Board, in becoming involved in the North Sea gas project, will bring nearer the day when we have one overall board or corporation to deal with fuel policy. In the short time I have had a direct connection with a mining constituency I have been led to the conclusion that if the present situation continues the danger that we shall have to face is the danger not of too much coal but of too little.

We are now having in the mining industry a massive drain of manpower from the pits. This has been brought about largely because of the shocks to morale caused, first, by competition with oil and more recently by the rather exaggerated stories that have gone around about the bonanza to be found in the North Sea.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

If I am fortunate enough to catch Mr. Speaker's eye I shall not speak ideologically, but I would point out that it is because of my regard for morale in the coal industry that I do not want the Board to go into North Sea exploration, because of the effect that this will have on the miners. They will be apprehensive of the future of hewing coal if the Board sees a future in gas.

Photo of Mr David Marquand Mr David Marquand , Ashfield

As the hon. Member for Midlothian (Mr. Eadie) pointed out, the mine workers at their conference this summer said that they welcomed the discovery of North Sea gas and, further, that they thought that this should not be left to private enterprise. On both legs of that argument it seems quite clear that, far from causing the morale of the mine workers to suffer, the news that the coal industry was becoming involved in this field should lead to an improvement in the morale of the mineworkers.

Unless we have a comprehensive fuel policy which will define the place of gas, coal and oil for a long time ahead we shall face a crisis of confidence in the mining industry which will be extremely damaging to the economy of this country, not least on balance of payments grounds. Therefore, if we are to have a comprehensive national fuel policy it is logical that we ought to have a comprehensive national board covering all the fuel industries. I hope that the move of the Board into the North Sea project will be a step in this direction. I commend this possibility to my hon. Friend. It is an additional reason why I hope the Bill receives a crushing majority in the Lobbies tonight.

7.16 p.m.

Photo of Mr Claude Lancaster Mr Claude Lancaster , South Fylde

I apologise to the House for not having been present for the opening part of the debate, for reasons with which I know the Parliamentary Secretary will sympathise. I must take up the debate without having heard the earlier speeches. The hon. Member for Ashfield (Mr. Marquand) seemed to think that all my hon. Friends were opposed to diversification on principle. I can assure him that some of us are not. We may be opposed to the practical effects of diversification in certain directions but we do not oppose it in principle.

I can tell the hon. Member that in the days when I was concerned with the coal industry we were often tempted to try our hands at other things, but, if we were wise, on the whole we did not do so. I can give all sorts of examples of projects that we thought about, such as maintenance shops, which have now been set up. We discovered that in the long run we could not operate them as effectively as the manufacturers of machinery, and we dropped them. We became interested in the manufacture and installation of appliances—boilers and the like—but on the whole we found that it was not wise to do this. In my experience, the coal industry did only two sensible things in this direction. It was necessary that it should farm the land adjoining pits, for a number of reasons which I know that hon. Members interested in the industry will recognise. It was seldom done profitably. It was only to avoid the problems of subsidence and tip fires which were otherwise likely to arise. Coal owners often went in for land sales. That was a quite reasonable thing to do. It was in their interests and the interests of the consumer. But to go beyond that was not very wise. Coal owners, as the Coal Board has done, occasionally became interested in research. If they were wise, they dropped it. It was a highly specialised type of industry. Why I and other people are opposed to the Bill is because, at this moment, it is intended to go into this very highly specialised field.

I must declare an interest in this matter. Ever since nationalisation, I have been interested in geology. I belong to the firm which has done all the North Sea explorations for the Coal Board, so I know something about that subject. It was a very technical job, but it had nothing like the speculative nature of the present proposal. The geological survey told us that there were coal seams both in the Forth and down the East Coast of Sunderland and Durham, and it was only a question of proving the actual quality and quantity of the coal there.

This was undertaken over a period of 12 years—three years in the Forth and nine years in the North Sea. It is some satisfaction to say that every bore proved to be satisfactory and we discovered about 2,500 million tons of additional reserves. However, this was done not by the Coal Board—it was not competent to do it, nor would it claim to be—but by a firm which specialised in that work.

The Coal Board could take a real interest because not only were its people geologically fairly experienced, but it was a type of job which they understood. They knew something about the strata because it was not all that different in the North Sea from what it was on land. They knew about the coal when it was eventually found, but they never claimed that they should do the research, and wisely they did not undertake it.

Now, however, the Board is anticipating going into something far more involved. It is taking on something which the Minister said is speculative. He was right to say so. I returned two days ago from the Trucial States, where oil is being produced in greater quantities than probably anywhere else in the world. It may surprise hon. Members to know that, even in that area, where there is an abundance of oil, a great deal of it not very deep, only one bore in ten comes off. Research is immensely speculative and very expensive.

Now we are moving into the North Sea with these intentions. Up to date, the results in the North Sea have been highly satisfactory. As against the statistics of one bore hole in 10, one in four has turned out to be successful. I have talked to the oil industry about this and when I spoke this morning to two or three of the biggest people operating in the North Sea, they told me that they did not expect that this rate of success could continue. They may be wrong, but they are, after all, people with vast experience. That means, in effect, that the Coal Board will, at this stage, go into an undertaking which has a very large element of speculation and risk capital.

I wonder whether we are justified in saying that we are prepared to undertake a matter which involves such an element of risk capital. I do not want to go back over the failures of the Coal Board. It has had successes and failures and on the whole its failures have occurred when it has attempted to do things which it is not necessarily equipped to do very well. Hon. Members have talked about Bronowski bullets or the Lurgi process or the Collins Miner, in which it experimented, but which it was not well equipped to do. Some things it can do, but it was not equipped to do that.

To go into the North Sea and start exploration for gas or oil is highly speculative. The only result is that it will be a sleeping partner with whatever concern it goes in with. It will not undertake this itself. It is not fitted for it. It has not the geological knowledge. It has never done this type of research.

We had an example in the last Parliament when, on behalf of the Gas Council, the Minister asked us to agree to a fairly simple Bill about the storage of gas. That involved a good deal of geological knowledge, which the Gas Council did not have, yet it asked that the Bill be brought before the House. Of course, the Bill is abortive. It will never be put into effect and the Council has had to acknowledge that the proper means of storage of gas is quite different from the one which it suggested in that Bill——

Photo of Mr Arthur Palmer Mr Arthur Palmer , Bristol Central

Why does the hon. Gentleman think then, if this is so risky, that so many oil companies, both British and foreign, are apparently anxious to take these risks? Surely they have great knowledge and they must feel that there is "something in it". I therefore cannot follow the hon. Gentleman's argument about the risk.

Photo of Mr Claude Lancaster Mr Claude Lancaster , South Fylde

I did not say that. Naturally, the oil companies want to take their chance in exploring the new field which may have gas, or oil, or both. They have large accumulated reserves, with which they can do it and an abundance of experience in that type of research. What I am saying is that there is nothing wrong in diversification as such, but what I claim to be altogether wrong is for the Coal Board to attempt to enter a field in which it has not the specialised knowledge. If it does so enter, it can hope to do it only in combination with existing oil companies and it will be only a sleeping partner. It will not do the research: it has not the knowledge, technique or experience. That means that the House of Commons is being asked to vote money to enable the Board to be a sleeping partner in a type of research in which they would be the first to admit that it has not the knowledge or experience or technique and that therefore the element of speculation should be the greater.

It is a very large speculation for the oil companies but it would be a far larger one for the National Coal Board or anybody else to go in with an oil company, knowing that they could not contribute to the research, that that must be done by another party and that they will have to put their capital into that——

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

Before the hon. Gentleman leaves that point about development, although he did not use the word "spectacular", he did mention the failures of the Board in research. Who would he think should have shouldered the responsibility, as the Coal Board did, of developing the smokeless fuel, seeing that that was a charge laid upon the Board by the Government in the Clean Air Act? Who would be better qualified to have carried out that research?

Photo of Mr Claude Lancaster Mr Claude Lancaster , South Fylde

In its thinking about smokeless fuel, I believe that the Coal Board was wrong in its primary approach. If the hon. Member wants me to get down to technicalities, I would say that the actual approach of the work of Birch Coppice from which Coventry developed and which originated at Stoke Orchard was from a chemical aspect. If it had been approached from the aspect of project engineering there were companies capable of doing this type of work which might have been successful. I never thought that Birch Coppice would come off and it failed for technical reasons.

I do not say that the Coal Board was not entitled to produce smokeless fuel, but in that particular aspect it would have been much wiser to employ people who were expert in that matter and it might have got some results. It tried to do it itself and it failed. It is no use to take on techniques of which one has no experience and the technique of research in oil and natural gas is so specialised and is one for which the Coal Board has never claimed to have either the knowledge or the experience.

The only result is that it would go in as a sleeping partner with some oil companies, perhaps one or two or perhaps only one. It would not only be an element of speculation which the oil company would have to take on but, being a sleeping partner, it could in no sense affect what was happening.

As a result, the House is now being asked to provide—as it would have to provide in due course—money to the Coal Board to take part in an endeavour to find natural gas or oil in the North Sea. Possibly it might be successful and possibly it might be completely unsuccessful and at that moment we would have voted additional money for something which the Board is not capable of doing itself.

This is not a wise thing to do. I hope that more oil and gas will be found—that will redound to the interests of this country if the oil people find it. If, in due course, the Gas Council is sufficiently geologically versed to find it, well and good, but do not ask me or anyone else with experience of geology to say that it is wise at this moment for us to vote moneys so that the Coal Board can take part in something of this highly speculative nature.

I do not believe that the proposal is sound, and I for one, and, I believe, all my right hon. and hon. Friends, are opposed to it for these practical reasons. We are not opposed to the principle of diversification—diversification is often good—but diversification into a sphere in which the Board has no real technical knowledge, of which it has not the experience, and which, in any case, is highly speculative, must be wrong. For that reason, my hon. and right hon. Friends and myself will vote against the Bill.

7.32 p.m.

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

Like every hon. Member on this side who has spoken today, I welcome the Bill. Hon. Members opposite, while talking about natural gas, have generated a lot of natural gas in trying to prove that this new public enterprise is absolutely divorced from the proper function of the National Coal Board. That is not so. A pamphlet produced by an oil company, referring to getting a licence to drill for this North Sea gas, says in paragraph 7, page 6: Two conditions established by the Government when inviting applications for licences are of special interest. Account was taken of each applicant's contribution, actual or potential, to the country's fuel economy. And particular attention was paid to applicants' abilities and resources … It is the Board's duty to meet the major part of the nation's need for fuel and power, and the Board has very successfully discharged that duty. Paragraph 7 of the pamphlet lays down some of the criteria to be applied when these licences are granted, and the Board is prudently protecting its own and the nation's interests. This is a growing and a profitable field. Why should not the Board engage in an enterprise that will be profitable but will not carry any of the dangers associated with deep-mined coal?

The Board's record in securing the nation's maximum fuel requirement at any one time has been one of spectacular success, and the attitude of the men in the industry towards this new development, as outlined by my hon. Friends the Members for Liverpool, West Derby (Mr. Ogden) and for Midlothian (Mr. Eadie), has been very enlightened. To refer to a phrase that has been bandied about in this debate, the men are not looking at this development with a Luddite eye. They realise that vast changes are taking place in the production of energy. Hon. Members opposite say that to engage in this work is outside the province of the original intentions of the 1946 Nationalisation Act. I should like to ask them this question. If the situation then had been what it is now, does any of them think that the Board would have been restricted exclusively to deep-mined coal, and would not have been allowed to widen its base in its own and the nation's interest? There is no doubt about the answer. The Board is acting very wisely and sensibly.

Much play has been made of the Board's finances, and its terrific and appalling losses. The hon. Member for Worcestershire, South (Sir G. Nabarro) dwelt on that aspect probably more than anyone else. Paragraph 3 in page 4 of the Board's Report shows that its carried-forward debt was almost the total accumulated deficit that was forced on it in the nation's interest by the importation of foreign coal. The sum of £90 million represents a loss of £79 million, plus the accumulated interest, which the Board has carried forward for more than 15 years. No other industry has been forced to carry such a burden. There is no parallel in the private sector of forcing on to an industry a loss that was not its own in the first place.

The fact is that at that time the Board was just getting into its stride in developing and increasing production. The nation needed more coal than the Board could then provide or had planned for, so the industry was saddled with this debt mainly because the coal produced in Britain was cheaper than the imported coal. The debt is not a reflection of the Board's inefficiency but rather of its efficiency. The trouble was that the Board had not got into its stride, private enterprise had left it with a very poor record of coal production, and the nation needed more coal than the Board could then provide. That is the history of that £90 million.

The Board's written-off capital of £450 million, of which a good deal of play has also been made, came about quite naturally because successive Governments, both Labour and Tory, had compelled the Board—when natural gas and oil were well out of the question—to plan for a target of about 253 million tons. Miner M.P.s will well remember the acclaim we gave to the plan of Dr. Idris Jones which would have meant that we would now have had a maximum production of about 260 million tons. The Board had already been saddled with a large debt for which it was not responsible and it had planned under the direction of Tory Governments as well as Labour, so let no one say that bad management was the trouble. The Board was doing the job that Governments had told it to do, and the necessary capital investment withered away because of the finding of new sources of fuel.

People think that the Board has a monopoly, and can tell any industry what amount of coal it will have. The Board cannot do that. Production is now down to 175 million tons compared with a planned 260 million tons. The gas industry takes from the Coal Board between 9 million and 10 million tons less than was planned for. It is a record of contraction largely because a Tory Government was in power for 13 years, and it was the Government of the hon. Member for Gloucestershire, South (Mr. Corfield). I do not know what the hon. Member did then, but with the benefit now of hindsight he will probably say that he told them they were wrong.

The Board was saddled with a debt of about £79 million which accumulated with interest charges to £84 million or £85 million—a most unfortunate debt which the Board could not be expected to discharge but which had been foisted on it. But the Board has taken on other quite justifiable debts. I refer to the subsidence costs it has to meet annually. This is largely a legacy of the bad mining days. That is not to say that subsidence does not occur now under good mining practice, but it is now more controlled. It is allowed for and planned for by methods of total caving as against the old method of pack extraction which created more problems that now have to be faced. The Board was rightly saddled with that debt. I am not advocating that it should not have to pay, and that people finding their houses crumbling about their ears should have no one to resort to. I believe that is a very proper legacy which the Coal Board is carrying.

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

Order. I hesitate to interrupt the hon. Member, but he must link what he is saying with the Bill.

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

I accept your Ruling, Mr. Speaker. I only add that many of these points about the finances of the Board were introduced by hon. Members opposite and if I have erred it has been in trying to put them on a proper footing.

The point was made that the Coal Board should not go into this new venture because private companies are not allowed to go into the production of coal. I remind hon. Members that prior to 1947 all the coal of this country was provided by private enterprise. The hon. and gallant Member for South Fylde (Colonel Lancaster) was a coal owner. I am not saying that he was a bad coal owner, but no one can dispute that the history of privately-owned participation in the British coalfields has a record written in blood, sweat, tears, toil and man's inhumanity to man. If anyone were foolish enough seriously to advocate as the solution for some of the problems of the Coal Board, which is sticking to its own midden, that of allowing private enterprise to come into the industry, my friends who have worked in the mines, especially those who work in the pits now, would soon give the answer. Private enterprise failed lamentably in coal production——

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

The hon. Member must come to the Bill.

Photo of Mr Michael McGuire Mr Michael McGuire , Ince

One of the best reasons why the Coal Board should go into this new venture is not only that it should broaden its base like any good company—and very prudently it is doing that—but that it would be one of the best guarantees for the nation, for the price to the nation will be very reasonable. There will be great price stability. The Coal Board's price record is magnificent, one which I believe has not been equalled by any company, private or otherwise. For four and a half years it has held pithead prices stable. Part of the accumulated loss of £24 million it now has is directly attributable to the fact that our Government prevented the Board from increasing the price of coal and it had to incur this loss. If it had been allowed to put up that price it would have been so much the better off. This is one of the main reasons why the Coal Board is rightly getting into the new energy fields and rightly broadening its base. This will be in the best interests of the nation and of the Coal Board, and I therefore welcome the Bill.

7.44 p.m.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

We have gone over a lot of ancient history this evening. Much has been said which does not appear to bear directly on the Bill. I do not think the shortcomings of the private owners in the pre-nationalisation period ought to affect our consideration of this Bill. I would rather look at it from the point of view of the public interest in 1966.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I think the hon. Member should not have said "Hear, hear", because he will disagree with the rest of my speech. In the public interest the Bill should be supported for a reason which has not been mentioned today. That is, that the exploitation of natural gas in the North Sea should go ahead as rapidly as possible in the interest of a cheapest possible fuel policy for the benefit of consumers, commercial, industrial and residential. The Minister will recall that I have been quite critical of him in the past for his cautiousness and timidity in making forecasts of the scale in which natural gas will become available. I was grateful to him for the few pieces of information he gave this afternoon, although I cannot say that I was at all excited by them.

I think the use of 13 million tons of coal equivalent by 1970 is a very small target. I hope it will be exceeded by at least 100 per cent. and that the investment by the National Coal Board will help to accelerate this development and bring it on as rapidly as possible. That is my main reason for supporting the Bill. The money involved is very small. If I may get out of the way one point made earlier, I think by the hon. Member for Worcestershire, South (Sir G. Nabarro), he said he was afraid that the National Coal Board would exceed its borrowing powers of £700 million at a much earlier date than otherwise it would have done. Then the Coal Board would have to come to Parliament and ask for legislation to increase the limit of its borrowing powers thus unnecessarily taking up the time of the House. The Minister said that only £6½ million would be invested by the Coal Board in this enterprise. [Interruption.] I am sorry if I misheard him.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

In order to put the record right, I should point out that the £6 million would be provided over a period of years purely for exploration.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

That is an absolute fleabite in comparison with the total borrowing powers of the Board of £700 million which can be increased by Order to £750 million. It is neither here nor there and the money is to be spent over a period of years. There is not much to get excited about there. The hon. Member for Worcestershire, South was on a bad point if this was one of his main reasons for opposing the Bill.

Apart from one remark made by the hon. Member for Gloucestershire, South (Mr. Corfield), there seems no principle dividing the two sides of the House. He said that we were dealing with the fundamental political philosophies which divide the House but that has been denied by every one of his hon. Friends who have spoken in the debate since. They have said that they have no objection in principle to public participa- tion in North Sea exploration. How could they, when they have not objected to the Gas Council participating in one of the groups—and participating successfully—in the North Sea exploration?

The argument that public enterprise should not be involved was not put forward seriously except by the hon. Member for Gloucestershire, South. Hon. Members in the Opposition have had to turn attention to the National Coal Board in particular and think of reasons why, while it is quite satisfactory for the Gas Council to participate, there are reasons why the National Coal Board should not participate. They spoke first about diversification, but I shall read a small statement of an Act the name of which I shall mention after I have read it. It says: Subject to the limit in subsection (3) of this section, each of the Boards may borrow … for acquiring an undertaking or part of an undertaking … for subscribing for or acquiring securities of a body corporate, otherwise than by way of investment … That sounds like the most dangerous Socialism, but the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) on the Opposition back benches has identified it correctly. It is from the Transport Act, 1962. I cannot see why, if the Tory Party accepts the principle of diversification as it did in Acts passed under its régime——

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

I thank the hon. Member for giving way. I do not think he was in the House at that time, but I may be wrong. Those of us on the Standing Committee were exceedingly uneasy about the powers which a Conservative Minister was then taking.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

As a matter of fact, I was in the House at that time. I even took part in the Second Reading debate on the Transport Act, 1962. My memory may not be as good as that of the hon. Gentleman, but I cannot remember, in the Second Reading debate, any howls of anguish being raised from the Conservative benches. The hon. Member may be quite right in saying that it was touched on in Committee, but I was not on that Committee.

I return to the suitability of the Coal Board to embark on an enterprise of this kind. I have an interesting quotation to read to the House. I was nervous that another Member might find it before me. The quotation is from a speech of the hon. Member for Yeovil (Mr. Peyton). … the Board is now branching out … I should like hon. Members to pay attention to this quotation— … and I commend it on its enterprise in doing so—for, example, into the exploration for natural gas in the North Sea in co-operation with the Gulf Oil Company of America, and the Allied Oil Company of America."—[OFFICIAL REPORT, 2nd December, 1965; Vol. 721, c. 1656.] I am astonished that the hon. Member for Yeovil should this afternoon say precisely the opposite. I know that the Tories say one thing in one place and another thing in another place, but for them to say different things in the same place within a period of one year is going too far. I am sorry to be nasty to the hon. Member for Yeovil in his absence, because he was unusually polite to me this evening when I intervened—I might almost say unprecedentedly polite. However, I think he should read his previous speeches before speaking on a subject like this, and should carefully ensure that he says the same thing on successive occasions.

There does not seem to be any validity in the argument of the Conservatives that the National Coal Board should not engage in this enterprise, while it is perfectly all right for the Gas Council to do so.

Photo of Mr Michael Alison Mr Michael Alison , Barkston Ash

I am a little uneasy about the borrowing power limit, which is the crucial point of the hon. Gentleman's argument. He has not appreciated that of the £750 million, very nearly £600 million has been used, and the rest has been set aside for other enterprises which the Board is engaged in.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I have left the borrowing powers limit argument. I was saying that the amount which the Minister expected would be spent by the National Coal Board of between £6 million and £6½ million over a period of years, was extremely small in relation to the borrowing powers of the Board and in relation to the scope and potential of North Sea gas, where I should like to have seen much more spent.

I had left that point and was dealing with the question of the fitness of the National Coal Board to engage in operations of this kind, whether it should be allowed to diversify on something which hon. Members have claimed is outside its field of expertise.

May I refer to the speech of the hon. and gallant Member for South Fylde (Colonel Lancaster), who used to be a coal owner, and who said he had been engaged in contracting drilling operations on behalf of the National Coal Board? He said it did not have the expertise to do the sort of operation which oil companies were doing further out. None of those groups which is engaged in prospecting in the North Sea does the drilling. The hon. and gallant Gentleman, if he is so expert in the Middle East and the North Sea and other areas where oil is being sought, should be the first to appreciate that. If hon. Members could go on one of those drilling platforms in the North Sea, as I did recently, they would be told that the platform was operated by a company which specialises in drilling operations. There are very few people on the staff of the prospecting group living on the platform while the drilling operations are going on. There is a geologist, and there may be one or two other highly qualified technical staff who are there permanently, but nearly all the people who are engaged in the actual drilling operations themselves are not members of the prospecting firms but of a special contractor who is engaged for the operation.

If the National Coal Board were to go in with Gulf Oil or any other firm drilling in the North Sea, this is exactly what it would do. It would engage a company like the hon. and gallant Gentleman's which has skill in drilling holes in relatively deep water, and it would not be necessary for the Board to acquire the expertise of actual drilling. This, again, is not a good argument.

I intervened during the course of the Minister's speech to point out that some of the other firms at present engaged in North Sea drilling operations might equally be claimed not to have this expertise. There is Rio Tinto, which is an extremely famous mining company. As far as I am aware, this company has never undertaken any drilling operations for gas or oil in deep waters. There is also I.C.I., whose expertise is again not in this field. I did not notice that hon. Members objected to either Rio Tinto or I.C.I. participating in these operations. I think the hon. Member for Worcestershire, South has just said they would make good money.

Photo of Sir Gerald Nabarro Sir Gerald Nabarro , Worcestershire South

I did not say that. I said that Rio Tinto, I.C.I. and the remainder do not use public moneys voted by this House for that purpose, and that it was therefore an entirely different consideration.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

But they are hoping to make a great deal more money as a result of their operations in the North Sea. That is the point. The hon. Member cannot have it both ways. They say that those companies that are drilling in the North Sea are doing well and making nice profits, and that the Board is engaged in an operation which is diminishing, because the demand for coal is running down. They say, "We are not going to let them embark on something which might prove profitable for them and which will help the Board restore its fortunes." That is an attitude which hon Members on the Conservative benches have adopted towards the Bill, and is one that I do not like. I think it is quite legitimate for the National Coal Board to embark on diversification operations to restore its fortunes and prosperity.

One Conservative Member—I cannot recall who it was—said that Lord Robens was quite right when he said that morale was a key factor in the Coal Board. I endorse that view. Nothing could restore the morale of the Board more than putting its operations on a highly profitable basis. I was talking recently to an employee of B.O.A.C and I was told that it made a fantastic difference to the morale of the Corporation when it did well and when it beat the Americans in the North Atlantic with its VC10s. If we can put the Board on a really profitable basis, people will want to become miners. Lord Robens will then have the people he needs for the profitable pits. This would assist the operations of the Board as well as restoring the whole of the industry into making profitable earnings.

Photo of Sir Douglas Glover Sir Douglas Glover , Ormskirk

I am grateful to the hon. Member for giving way. I cannot see how this is going to improve the condition of the individual miner. Simply because the Board is making money out of the North Sea operations, it will not recruit more miners or increase production of coal. If anything, it will reduce it.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

No. People always want to join a successful enterprise. They do not want to join something that is running down and losing money. If the hon. Gentleman gives it a moment's thought, he will appreciate that. Is a young man starting on his career more likely to go into the coal mines or the gas industry? He sees that the gas industry is expanding and that the coal industry is not, and therefore if the money is quite good in the coal mines compared with that in the gas industry, he is likely to look at the relative security of the two enterprises and is much more likely, I would suggest, to choose gas than coal at the present time.

The hon. Member for Bristol, Central (Mr. Palmer) raised a point which was pursued in more detail by the hon. Member for Liverpool, West Derby (Mr. Ogden). That was the need for a national fuel policy. The hon. Member for West Derby followed this by querying whether it was necessary to have separate boards in charge of the gas industry, the electricity industry, the coal industry, and so on. I was extremely interested to hear the hon. Gentleman make this point, because I raised this question in an article I wrote in The Guardian on 26th June, which perhaps the Minister saw.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

The hon. Gentleman sent me a copy of it.

Photo of Mr Eric Lubbock Mr Eric Lubbock , Orpington

I think I did that at the time. I asked whether the separation of these industries into different compartments was conducive to the efficiency of the whole operation. Today's debate has made me think that I was correct in asking that question, because so much of the argument has centred on the different responsibilities of the Gas Council and the National Coal Board and whether one should be entirely responsible for the North Sea operation or whether both should have a share in it.

This question would not have arisen if we had had a national energy board in charge of all these operations, with a number of subsidiaries separately responsible for each of them and with area energy boards—here I go a little further than the hon. Member for West Derby—in charge of selling the products of the national energy board to consumers.

Competition between the gas and electricity boards has been harmful to the consumer rather than the reverse. This applies on a national and on a local scale. It may be that we are coming to an era when thought could be given to this question by the Government. Perhaps the Minister would care to touch on it in winding up, as it has been raised by many hon. Members. [An HON. MEMBER: "It would be out of order."] I do not think it would be. I think that it would be in order, since so many hon. Members have dealt with the difference in responsibility between the Gas Council and the National Coal Board. So at least the Minister could go so far as to say something about that, even if he could not bring in the question of the electricity boards as well.

For the reasons I have given, and particularly because I think that it is important to set about the expansion of our prospecting operations in the North Sea and to bring North Sea gas into the homes of consumers and into factories as rapidly as possible, I recommend my right hon. and hon. Friends to support the Bill.

8.3 p.m.

Photo of Mr Edwin Wainwright Mr Edwin Wainwright , Dearne Valley

I apologise to the House for not being present when the debate began, but I was elsewhere doing some useful work. When on entering the Chamber I heard some hon. Members expressing their opinion as to why the National Coal Board should not explore for gas in the North Sea, I decided that I would participate in the debate. Even if the Board were £1,000 million in the black, the Tory Party would still oppose this small Bill. I expected the Bill to go through on the nod.

No one who believes that it is essential that the nation should have control of its power supplies for the benefit of the community as a whole would object to a small Bill such as this. Some of us have long memories about what happened to the mining industry under private enterprise. It was so unsuccessful, it brought in its wake so much misery, and its financial circumstances were so straitened, that it was a good thing that the State took over the mines, for the sake of the country and of those who worked in and about them.

The Board now seeks to borrow £750 million, £6½ million of which is to be used for boring in the North Sea. It is said that the Board is not entitled to do so. Criticism is levelled at the Board because, in the opinion of some hon. Members opposite, it has not been viable. We must ask why hon. Members opposite did not denationalise the mining industry when they were in power. They could not do so, because they knew that private enterprise could not run the mines. I am certain that private enterprise cannot run another industry which is now to be nationalised.

Hon. Members speak sneeringly of the use of public money, but it is to be used to obtain a source of power which is essential to the country as a whole. What about the public money being used in the private sector, the benefits of which go into the pockets of shareholders? Hon. Members opposite make no criticism about that. That can be allowed, so long as the Government will provide the money and so long as any profits that arise can go into the pockets of shareholders.

I was surprised to hear some statements by hon. Members opposite. I did not believe that people could make such statements against an industry which is better than any coalmining industry in the world, with the exception of the American mining industry, where entirely different conditions prevail because of the different geological circumstances.

If the Board is entitled to supply fuel to the nation at the dictates of the Government, the Government should be entitled to tell the Board that it can seek other sources of fuel which private enterprise is now seeking. I remind the House of what happened about the private sector of this industry under the Conservative Government and of the indecent haste with which the Tories gave permission for boring to take place under the North Sea just before they were defeated at the polls in 1964.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

Does the hon. Gentleman seriously contend that, if the noble Lord, Lord Erroll of Hale, who was then Minister of Power, had not granted the licences in September 1964 but had taken the advice of the right hon. Member of Hamilton (Mr. Tom Fraser) and had delayed until after the election, we should now have been contemplating substantial supplies of natural gas coming ashore less than two years later?

Photo of Mr Edwin Wainwright Mr Edwin Wainwright , Dearne Valley

The hon. Gentleman should have waited before intervening. Before the Bill went through Parliament the rigs were being towed out into the North Sea. The licences were issued at that time to ensure that a subsequent Administration would be debarred from issuing further licences to companies on behalf of the State because of the compensation which would have to be paid. That was the main reason why the Tory Government rushed it through. I remember that at that time it had already been proved that there were great sources of gas on the Continent, and some gentleman knew that there was a great probability of gas being found in the North Sea. I would have preferred the North Sea to be prospected on behalf of the nation and owned by it than that it should be prospected by companies many of which were formed with foreign money.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

We should still be waiting for it to be done.

Photo of Mr Edwin Wainwright Mr Edwin Wainwright , Dearne Valley

It would not have been waiting to be done. Hon. Members opposite always have the impression that anything run by and on behalf of the State must be a failure. But during 13 years of Tory rule there was never an attempt to denationalise the industries at present nationalised. I must not get out of order, but this is an important point, because the Tories' opposition makes us believe that it is like a red rag to them if anything is to work on behalf of the nation and not private enterprise. Undoubtedly they would not dare to denationalise them, because the nationalised industries are those that are used as public services, where it is more important that the community shall be served.

This applies to gas and electricity, and it also applied to coal, because until 1956 coal was in short supply here, and the Coal Board had to pay for the difference in the price of the coal that was imported. Would private enterprise have done that? No. It takes public money to benefit itself. A lot of money spent on research goes to the benefit of private enterprise, and right hon. and hon. Members opposite never express appreciation of this, because they are happy to receive the benefits that can be derived and to know that their friends on the Stock Exchange will derive some benefit. [Interruption.] If the hon. Member wants to interrupt on taxation I would say something to him about taxation and also mention a new wealth tax, but I should be out of order. I apologise, Mr. Deputy Speaker, for even trying to stray upon that line.

It is true that labour relations within the Coal Board have not been as good as we should have liked, but they are far better than in any nation on the Continent. Labour relations here are better than in almost any other nation throughout the world. Let us not forget that the workmen are not always at fault in labour relations; many times the managerial side is at fault. It may be asked why labour relations should be brought into this, and said that the boring in the North Sea is far away from labour relations in the coal mining industry. It is obvious that every single point that could be seized upon by right hon. and hon. Gentlemen opposite has been used on this issue.

I hope that the Bill will go through easily. If it is said that it will result in unfair competition let me give hon. Members opposite a reminder on that subject. Unfortunately, the coal mining industry has not the money, without borrowing, to bore for oil and gas in the North Sea. It has chemical plants attached to the pits. Every steel plant that was erected also had a chemical plant put up beside it. and so had Colvilles with £500 million that the nation lent at very reasonable interest rates. I am not sure what they were, but they were so low that it was very difficult to get information about them. Those chemical plants used the coke that was produced to supply its steel industry.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

Would the hon. Gentleman agree that the whole concept of an integrated steel plant is to use the by-products and to use the various gases from the coking plant for its own requirements—furnace requirements or otherwise? A steel plant is an integrated unit.

Photo of Mr Edwin Wainwright Mr Edwin Wainwright , Dearne Valley

Hon. Gentlemen opposite always seem to jump in too soon. When steel was in total demand the steel plants took the coke from their own plants and also from the Coal Board plants. When steel was in less demand they said that they did not want the Coal Board's coke. It was used as a buffer. The hon. Member for Worcestershire, South (Sir G. Nabarro) spoke of about 20 per cent. of road haulage being kept under nationalisation. That was an attempt to have it as a buffer to bolster up private enterprise and use it only when it was necessary. [AN HON. MEMBER: "That is public competition."] That is not public competition. It was not arranged for that, but, thank goodness, it was allowed and it did compete with private industry and paid dividends to the State.

I hope that there will be success for the Coal Board in the North Sea and that it will be allowed to bore on land and will be successful. The Government should have started this project two years ago. I know that the apology will be that we have done as much as we could in two years. There should have been a consortium of the nationalised industries and we should have had a fuel policy. We should now have been in a far better position to supply the cheap fuel that is so necessary to make us viable and more competitive with our overseas competitors if we had had a fuel policy enveloping the fuels that are required in industry from the various sources.

I was rather shocked that the Opposition dared to oppose the Bill. That shows they are opposed to anything that can be utilised on behalf of the nation and that they think more about the private individual than the country as a whole. The Bill should have had their blessing and not their opposition.

8.19 p.m.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

I preface my observations on the Bill with two items. First, the welcome news that the Minister of Power expects a daily output of 1,000 million cubic feet of gas and hopes that we shall have 13 million tons a year of coal equivalent by 1970. But I support the view of the hon. Member for Orpington (Mr. Lubbock), who suggested that it might go further than that.

The other item of news I mention concerns Bevercotes. Remembering the arguments that we have already had, I ask myself whether the National Coal Board is like a prehistoric dinosaur, be- coming so inflexible and so large that it may find it difficult to survive. Could it be that, because of its size, the Coal Board has been unable to handle a very delicate situation which, if successfully handled, could ensure great benefit in the future from automated pits? There has been a good deal of comment in the Press. I mention only what the Daily Telegraph has to say today: Having failed to convince the miners, it has little to gain by surrendering to them. My hon. Friend the Member for Yeovil (Mr. Peyton) was much more emphatic.

These two items concentrate our minds on the two questions we must consider, one, the availability of natural gas, the other, what the National Coal Board is in business to do. At first sight, the Bill appears fairly harmless. The basic provision is in Clause 1 (1,a)— to search and bore for and get petroleum within the meaning of the said Act of 1934 in the sea bed and subsoil of the territorial waters of the United Kingdom adjacent to Great Britain. This by itself seems harmless enough, but, obviously, there are two issues here. First, to what extent should the National Coal Board or, for that matter, any other industry diversify and to what extent should it concentrate and streamline its activities? The trend is for private industry now not so much towards devoting its attention to diversification as to concentrating its energies on a smaller front in order to be more efficient and competitive. The second question is to what extent this critical decision is based on Socialist political dogma and to what extent it is based on sound reasoning. The nation wants an answer to both these questions.

Over the centuries, the complaint has been that we have had one law for the rich and one for the poor. Today, we politicians ought to ask whether we now have one set of laws and conditions for the private sector and another for the public sector. Legislation over the past two years is making it more and more difficult for the private sector to operate, while, on the other hand, conditions are becoming more and more liberal for the public sector. Unless the public sector is subjected to the financial disciplines we want to see, it will be the taxpayer who pays in the end.

I shall now make three quotations from a recent debate. The first is: None the less, when all that argument has gone through, this remains. There are, first, some traditional arguments for the larger concerns which are still valid. For example, the industry which is so reorganised has to remove unnecessary variety in the range of products. I emphasise those latter words. The second is: There is, further, the wide range of general arguments showing the risks of allowing an industry to continue unrationalised and stressing the importance of securing an industry's optimum structure."—[OFFICIAL REPORT, 19th October, 1966; Vol. 734, c. 218–9.] Here is the third statement: Nobody could deny that British industry … could not really survive, even in a modified form, in a world where our competitors built up a different type of organisation based upon concentration, specialisation of the economy and long runs."—[OFFICIAL REPORT. 19th October, 1966; Vol. 734, c. 347] The first two quotations come from the speech of the First Secretary of State in moving the Second Reading of the Industrial Reorganisation Corporation Bill, and the third came from the Minister of Technology in winding up. Thus, less than two weeks ago, we had a debate in the House in which arguments were put to justify the rationalisation of industry.

In that debate, I went into considerable detail on the subject of the private sector, saying that the Socialist Party, its leaders as well as its back benchers, had turned completely head over heals in the last four years. It is now saying that rationalisation and mergers are good."—[OFFICIAL REPORT, 19th October, 1966; Vol. 734, c. 271.] I went on to point out that the Conservative Party had always acknowledged that mergers were desirable and that modern British professional management in particular had been aware of the advantages of rationalisation and concentration. Two weeks ago, therefore, in the context of that Bill and with the private sector in mind, I agreed with the Government to a certain extent, accepting that there was need for greater concentration so that management would concentrate its energies rather than diversify them.

What do we have before us now?—a Bill proposing that the National Coal Board should do exactly the opposite. In the debate two weeks ago, management criteria were brought into the discussion. Why is it that the same management criteria, which are brought forth with such knowledge by hon. Members opposite who know so much about the private sector, do not apply to the public sector as well? We opposed the Industrial Reorganisation Corporation Bill because we regarded it as wrong and the wrong means to achieve rationalisation. Now we have a new Bill before us which, though I do not stretch the analogy too far, it is proposed to make into another law not for the rich, as I said, but for the nationalised industries.

The Coal Board is to be given power to diversify. Is it wise on economic grounds for an industry to diversify into an activity in which it has no practical experience, and in which, as my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) pointed out, it is going into the field against others whose competence is of international repute? In private industry, one does not embark on a venture in a field which has already been covered by people who have expertise and know-how unless one is certain that one's new expertise and "know-how" is better than the expertise already at work.

Is it the suggestion that, with public funds behind it, a nationalised industry need not think of this? Is a management which has been trained in the art of gaining coal from the soil, in the techniques of mining coal, bringing it to the surface, preparing it and transporting it, likely to compete efficiently with those already expert in drilling and exploration? Will not this be yet another example of a public sink down which the taxpayer's money will be poured?

Photo of Mr Eric Ogden Mr Eric Ogden , Liverpool, West Derby

Did not the hon. Gentleman hear what the hon. Member for Orpington (Mr. Lubbock) had to say with reference to the Rio Tinto Mining Company? If it is right for Rio Tinto to go in, why should not the National Coal Board do so? Are not the special facilities which are on hire to the highest bidder, the drill operators and the rig operators, open for sub-contract to the National Coal Board in the same way as to the other 23 concerns in the North Sea?

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

The hon. Gentleman has jumped in too soon. The criterion there is that the shareholders of Rio Tinto or any other such organisation have confidence in their board to take the right decisions. Is the National Coal Board management likely to give an adequate return on capital employed? We have had the example of the "Bronowski bullet". It is eventual return on capital employed which matters. If we are to have these lectures from hon. Members opposite in debate after debate, with all the talk about the need for the private sector to meet its targets, the same criteria ought to be applied to the public sector.

To what extent is it reasonable to suppose that the Bill is the result of political as against economic motives? We oppose the Industrial Reorganisation Corporation Bill because we suspected that there are political motives as well as sound economic arguments for rationalisation. Hon. Members opposite have spoken about the advisability of taking into public ownership all operations pertaining to natural gas and oil. Admittedly, the Gas Council is already involved, and there are many other examples. But because time is short and other hon. Members wish to speak I shall not reiterate all the different statements in Labour Party documents of the last five years indicating the general intention to take various activities into public ownership or to nationalise them.

In large organisations in the private and public sectors, there is empire building. There is naturally a degree of protectionism. It is human nature. Hon. Members opposite have criticised the private sector for this. Modern managements condemn it as well. But it is also characteristic of nationalised and publicly owned industries. However, there is competition in the private sector, and if that organisation becomes top-heavy it faces bankruptcy unless it streamlines itself. Are we satisfied that, in the public sector, we achieve the same objective through the Select Committee on Nationalised Industries? It is this kind of issue on which we should satisfy ourselves when money is to be put into a project, because we want a satisfactory return for it.

What is the National Coal Board in business for? Is it to supply energy? If it is, why does it not supply electricity or go into nuclear power production? Is it there to mine and distribute coal? Is it to enter the petrol chemical business? [An HON. MEMBER: "It is already there."] Yes—and managements of large concerns diversified in many activities are asking what is the main purpose of their business and concentrating their energies on that main purpose.

Is the Board asking the same questions? Is the Minister? I hope that the Parliamentary Secretary will provide an answer to the questions. We have had references to the Staveley-Stewart and Lloyds venture in which cyclohexane and benzine for P.V.C. and nylon are contemplated. Is the N.C.B. the best type of organisation to venture into vertical integration of this type? Many arguments have been put forward—including those by Lord Robens—that the Board must have the same opportunity to diversify as the private sector. But, as my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) said, the Board is not subject to the same financial yardsticks as the private sector.

When it puts out a proposal, the private sector must make certain that there is adequate return on capital or otherwise it will not obtain the capital. If the N.C.B. were to go to the market solely on this venture, who would back it? Because it does not go to the market, we do not have that criterion by which to judge its decisions.

Under what conditions would I as a Conservative back bencher justify diversification? It is a large subject in itself. Many people working for the National Coal Board, from Lord Robens downwards, have asked me "Under what conditions can we diversify?" My immediate answer is when there is sufficient private capital to make an organisation such as the N.C.B. responsible to yardsticks to which it is not applicable now. There are vast losses to consider at the present time. Thus, on political grounds, because of dogmatic statements by the Socialist Party, I am suspicious. I am also suspicious on economic grounds not least because of the Explanatory Memorandum: No estimate, however, can be made at the present time as to the effect of the Bill on progress towards that borrowing limit. I am suspicious because I do not believe that public participation without economic yardsticks leads to fair competition. I am not certain that we know what the N.C.B. will do with the natural gas and oil when they are discovered, if in fact they are found. I am not certain that the cost of extraction and exploration and drilling will justify the expenditure of public money.

Unless the Parliamentary Secretary can give a much better explanation than we have yet had, I shall urge my hon. Friends to oppose the Bill, not on political grounds, although there are political grounds for opposing it, but on economic grounds, because we do not have a guarantee that economic yardsticks will be applied.

8.35 p.m.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I was rather surprised by the remark of the hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) that there seemed to be one law for State enterprise and one for private. It was during the last 15 years under Conservative Administrations that we had Amendments to Acts relating to the electricity industry and the transport industry and others by which powers were removed from them, but not from private enterprise. The powers to manufacture were taken from the electricity industry, although they were powers possessed by the old public utilities in the days of private enterprise.

When the grid system was set up long before the war and after the war when electricity boards were created, the power to manufacture was possessed, and it was during Conservative Administrations that it was decided that electricity boards should not have the breadth of commercial operation which private limited liability companies had. It was, therefore, the hon. Gentleman's Government which decided to have one law for private enterprise and one for State enterprise.

This is a Bill to give to the Coal Board the sort of wide powers for the general extraction of fuel which would be given to a limited liability company, such as Rio Tinto or Shell or B.P., by its articles of association.

Photo of Mr John Osborn Mr John Osborn , Sheffield, Hallam

I forgot whether the hon. Gentleman was present when my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) was explaining the extent to which in the early days the industry carried on its own maintenance and manufacture of equipment. My hon. and gallant Friend said that before the industry was nationalised the coal owners learned that it was much better to have equipment provided by experts. The hon. Gentleman has taken my argument out of context. Quite apart from the political scene, industry nowadays has found that it is better not to make specialised equipment but to have it made by experts.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I do not quarrel with that proposition, but this is a Bill to give certain powers to a great extractive industry. We are not asking it to manufacture something, haulage machinery or drilling machinery. It is probably true that the National Coal Board could buy equipment of that kind more efficiently from producers who specialise. We are saying that an extractive industry such as is run by the National Coal Board, which is almost wholly concerned with the extraction of fuel, mostly in the form of coal, although it is engaged in some light carbonisation of coal, producing petroleum spirit and coke and various fertilisers, and the manufacture of bricks, should have powers of the sort provided by the Bill.

Coal is getting scarce. One cannot keep extracting coal from the earth; there is a point when it becomes uneconomic to do so. This is the one job that the Board has to do. The hon. Gentleman opened his remarks by asking, had we created a dinosaur in the Coal Board? He said that it was inflexible, and if one thinks in terms of an extraction industry, limited to the extraction of coal, then the Board will become a dinosaur because supplies of coal will diminish and will become economic to mine in terms of natural gas and petroleum spirit. What the hon. Gentleman wants to do is to preserve the Board as a dinosaur, because he wishes it to die.

This Bill seems to enable the Coal Board to move out of the age of the dinosaur and become a more lively creature, able to extract fuel other than coal for the country's use. It can extract natural gas and oil. The hon. Gentleman talked about Rio Tinto and the Coal Board not having the expertise. I am surprised at him using that sort of language. One of his hon. Friends said in a Committee of this House, dealing with another piece of legislation, that there were some directors who knew where their industrial plants were.

The truth is that the duty of a board is not to have expert knowledge in any particular technique in which the company is engaged. Its duty is to use its natural intelligence and experience to search out and employ the experts to organise its activities. Limited as my experience is, most of the directors whom I have met as an engineer have either been chartered accountants, representatives of insurance companies or banks.

In the old days, there were very few technical directors on many of the boards of our large industries. They simply sent for their technicians, questioned and examined them. I have told stories in this House, ten or fifteen years ago, about directors posing some very funny questions to technicians. I will not repeat them because they are in HANSARD, if one looks up the copies for 1950, 1951, 1952 and 1953. There were stories about directors who were clever accountants and excellent financiers but knew nothing about engineering techniques or metallurgy and chemical engineering.

I am certain that many of the directors of our large companies are not experts in the particular field of operations in which their company is engaged. I am not condemning them for this. The argument of the hon. Gentleman that the Coal Board should not indulge in this because members of the Board are not experts in drilling is wrong. I do not suppose that the directors of Shell-Mex and B.P. Ltd. are experts in off-shore drilling, but there are plenty of experts to be employed.

I do not see why the Coal Board should not be given power to employ drillers to search for oil and natural gas. I would go some way with the hon. Gentleman if the Board were to have a monopoly of this power. It is always worth a long discussion to decide whether we should give absolute monopoly powers to anyone over all the ranges of fuel that the country needs. But we are not asking for that. We are bringing the Coal Board into this field of fuel extraction, and I think that is the right thing to do.

I have heard it said many times by Conservative Ministers of Fuel and by back bench Members of my party that one of the most desirable aims of any Government should be to try to get a cohesive national fuel policy. We have this great industry concerned with the extraction of coal. We have to use coal as a source of power. We have to generate electricity by the use of coal. We have oil, and now we shall have natural gas. We have the conversion of coal into coal gas. The House is amply justified in giving the Coal Board the right to enter into all the fields of fuel extraction.

I have not heard anyone today complain that the Coal Board gives licences to private individuals to mine coal. It is not only the Coal Board which extracts coal in this country. There are also private mining companies which received licences from the Coal Board. The Coal Board has been given power by Parliament to grant licences to private individuals to mine coal. There are three private mines in my constituency licensed by the Coal Board. I see no reason why the Coal Board should not be given the right to go in for other fuel extraction such as oil and natural gas.

I commend my right hon. Friend in introducing this Measure and giving the Coal Board, not different rights from anybody else, but the same rights and opportunities to extract fuel as we give to many other individuals and which is given by the Coal Board itself and by the State to the Standard Oil Co. of America, Shell-B.P., and other organisations concerned with the extraction of fuel. The more forces we bring to bear in exploring the natural resources of our country and the shelf round our country, the better for the country. I commend the Bill to the House.

8.47 p.m.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

The hon. Member for Dunbartonshire, East (Mr. Bence) is adept at discussing a Bill which he has not had a great deal of time to study and in adding greatly to a debate the whole of which, perhaps, he has not been able to hear. I congratulate him on his performance tonight. It was ingenious, unobtrusive and unobjectionable. I shall refer later to some of the points which he made.

The Minister did not come clean during his speech. My hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) asked him specifically whether he would write into the Bill an undertaking that the Bill was not to allow the Coal Board to go into the chemical industry and the oil industry through setting up refineries. But the Minister dodged the question. The only assumption which one can make from that interchange is that it is the Government's overt intention to allow the Coal Board to wander into any aspect of the chemical industry or oil industry that it wishes through the door of this Bill. I shall therefore address my remarks to the un-desirability of this loose attitude to what are and what are not the functions of a nationalised industry.

The least futile of our nationalised industries are those which provide physical services such as roads, telephones, railways and pipelines where obviously it is very expensive and not sensible to duplicate networks by having competitive networks as one would have in a private enterprise system. The Americans have great difficulty in this because they find that they have to apportion areas to each company. By far the best defence of nationalisation can come in industries such as that.

When one goes to the productive industries which do not have networks or services such as the coal industry, the case becomes immensely weaker. I will not deploy the case against nationalisation at the moment, but I believe that the most stupid thing that we can do is to have industries in which certain elements and parts are privately owned, with others publicly owned. I have a deep rooted objection to the practice on economic as well as political grounds which I should like to elaborate for a few minutes.

Nationalised monopolies may be efficient or inefficient, but their effect on the economy as a whole is limited. What the Bill seems to do is to give the Coal Board power to enter fields of activity that it is not already engaged in and extend its empire into several different industries where it will be able to set up subsidiaries to operate in competition with individual firms.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

I wonder if the hon. Gentleman would support the run-down and disposal of Admiralty shipyards.

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Where military matters are concerned, the considerations are quite different. However, I would support the run-down of the National Coal Board's brickworks, for the reasons which I am about to give.

A nationalised industry has an unlimited supply of cheap capital in comparison with firms with which it is competing. It can make up losses which it accrues because, in the end, the taxpayer has to keep it afloat. We cannot say, "Very well. The Coal Board is bankrupt. We will wind it up and liquidate it because it cannot pay its debts." In that way, a nationalised concern can drag down the market price in an industry and cause serious economic distress to its competitors, at the same time making up any loss from the taxpayer. It is the ability to do that which makes it a fundamentally wrong economic concept to have nationalised industries competing with private ones.

An organisation as big as the Coal Board has many divisions, with a turnover running into hundreds or thousands of millions of £s. It can easily hide any losses that it may make in the North Sea in some other part of its finances. My hon. Friends have mentioned that point from many different aspects.

It will operate from a protected monopoly position to enter the exploration world, the coal derivatives world, the oil world or the chemical world through the various subsidiaries which my hon. Friend the Member for Gloucestershire, South (Mr. Corfield) mentioned so carefully and ably this afternoon, and can do great damage to competition.

True competition is a very delicate plant. If we failed in the Tory Party in some measure in those 13 years, I believe that it was because we did not pay enough attention to competition, because we did not make it bite, because it was not entirely fair, and because we did not remove the impediments to competition to the degree that we should have done. It cannot be made to work if rings and rackets flourish. It cannot be made to work if there are some rules for some competitors and other rules for other competitors.

What is more, it must be enforceable. If there are to be failures due to people going out of business through the working of the competitive system, they have to go out of business and not be subsidised by the taxpayer bringing them back to a level where they can start again, and go back into the market. It is the failure to apply those principles rigidly and strictly which in part is perhaps responsible for the difficulties of the last 13 years and in great measure will be responsible for our further economic decline under right hon. and hon. Gentlemen opposite.

I believe that we may sometimes need competition on a worldwide scale. It seems to me that it would be reasonable to reduce national protective tariffs and barriers to make competition worldwide, and this might well be what the Coal Board would like to see done. It is my experience that wherever one goes in the world, and whenever kind friends say what is wrong with the British economy, they say that we are not competing, neither in the public sector, nor in the private sector, properly, fairly, or honestly, and any Bill, however small and futile, as this one is, which detracts from the true, fair, ability to compete is a bad Bill, and is not worth the time which the House spends considering it.

If the Coal Board wishes to compete, if it wishes to enter into competition with private enterprise in all these different fields, let it compete properly. Remove the ban on the import of foreign coal. Why should the Board sit in a protective little market here all on its own? Remove the protective tax on fuel oil, and let the Board compete with fuel oil. This is what competition is about.

If this industry wants to compete, I am telling it what it has to do to start to compete in its own field. Let it allow private enterprise to dig coal. It is no good the hon. Member for Dunbartonshire, East saying that there are three private mines in his constituency on licence from the Coal Board. Who ever heard of a company licensing its competitors? The moment a competitor becomes tiresome, its licence is rescinded, and the hon. Gentleman knows that. It was a spurious and bogus point, although I congratulate the hon. Gentleman on having thought of any point at all.

Let us allow some big civil engineering contractors to go into the Coal Board's area and start opencast mining a couple of million tons at a time and do the job properly. We will then see whether the industry wants to stand up to competition on its own. This is the logical conclusion of the Bill. If the Government want the Coal Board to go chasing after oil and gas in the North Sea, let us allow oil companies and contractors to go into the coal fields and show the Coal Board how to do its job. These people would be happy to do it.

Photo of Mr Cyril Bence Mr Cyril Bence , Dunbartonshire East

Nobody applies.—[Interruption.]

Photo of Hon. Nicholas Ridley Hon. Nicholas Ridley , Cirencester and Tewkesbury

Mr. Deputy Speaker, I should be grateful for your protection. I can hardly hear myself speak because of the speeches being made by hon. Gentlemen opposite from seated positions.

Lastly—and this is a very important point—if the Coal Board is going to diversify, let it keep separate accounts, and let it allocate to each of its activities what it has spent on management, on training, on all sorts of extraneous expenditure, on interest on capital, and let it show its profits on each activity.

The Board's accounts are a disgrace, because they do not tell us what we want to know. The Board fudges together all its diversified activities without any key as to which is profitable and which is not, and at the end of the accounts it says, "By the way, we have also spent £93 million on common services such as management, training, administration, and so on." This is not good enough. The Board may give a detailed account later on, but it does not do it in the main part of its Report. We must have a clear division between each branch of the Coal Board to show which part of it is dealing with which diversified activity.

If the Board is to go in with the chemical industry, or with the oil industry, it is fair to ask it to raise the capital to do this on the same terms as private enterprise raises its capital. Let the Board go into the market and pay the market rate for its capital. Why should I subsidise the Board out of the tax which I pay on my income to enable it to do this job in the North Sea? Hon. Gentlemen opposite want the Board to do this. They have all spoken in favour of the Bill, but they have not said why I should subsidise the Board. I shall have to do this through the interest rate because the Government will lend the Board cheap capital. If we are to have competition, I am against it. I do not think that it is fair competition between private and public enterprise, because I believe that the ultimate sanction is not there. But if we are to have this competition at least let the Government insist upon the various parts of the Coal Board declaring proper accounts, working by the same parameters as do their private competitors.

Listening to some of the speeches made by hon. Members opposite—especially that of the hon. Member for Dearne Valley (Mr. Edwin Wainwright)—one could quite easily form the conclusion that the party opposite is against private enterprise in a rather round and offensive way. On many occasions hon. Members opposite have said that my hon. Friends and I are against nationalised industries. I wish that once and for all it could be cleared up that we are not against the nationalised industries as they stand; nor are hon. Members opposite against private enterprise as it exists. We may have our battles as long as we like about the desirability or otherwise of nationalising or denationalising, but this must not be regarded, as the hon. Member for Midlothian (Mr. Eadie) tried to suggest, as meaning that we in some way resent, denigrate or attack the people who are employed in the nationalised industries and the magnificent work that they do. One can be anti-nationalisation and still try to make it work, and one can be anti-private enterprise and still hope that it will succeed where it exists. This element in our debate has not been very helpful.

Hon. Members opposite have been very much on the defensive about nationalisation. They have to support it, and they have to march uncritically through the Lobbies in its support without having had the chance to look at the structures and organisations logically and to consider the matters that we have been discussing. We must find rules which, more than hitherto, introduce into the nationalised industries a proper financial discipline, and cause them to compete fairly and to raise their capital and present their accounts on similar terms as those which exist in respect of other industries.

It would have been much more constructive if some hon. Members opposite had turned their attention to the way in which nationalised industries could be caused to compete fairly with private industry. When my Government were in power they did a great deal, with the financial target, the definition of commercial interests and many other worthwhile reforms, to lead nationalised industry in the right direction. Suddenly this has all seemed to go. The Coal Board is going into the supply of building materials, oil, gas from the North Sea, and all the rest of it. It is wrong to have such a sloppy discipline.

The morale of those who work in nationalised industries is very important. For all my strong criticism of nationalised industries I should be the last to say that the people in those industries are in any way inferior to the people working in any other industrial set-up, private or public. But the way to ruin the morale of the people working in the nationalised industries is to place them in a position in which they do not compete fairly. It is stupid to say to the Coal Board, "You can have all this advantage, and if you fail you will not go bankrupt." The effect that that has on the morale of the staff—the managers and the men, right down through the organisation—is to make them feel that in some way they are different from the people who work in competitive private industry. The worst contribution that we can make in this respect is to allow the Coal Board or any other nationalised industry to compete on unfair terms with private industry.

There would have been many better ways for the Government to use this day. We have all had our holiday chopped by three weeks, and I am distressed and depressed to come back from the Recess to find that what I am being asked to do is spend three or four days, with the Committee stage, Report stage, Second and Third Readings, on passing this little bit of drivel. It is doctrinaire, political nonsense. No thought has been put into it and no arguments advanced for it. It is to me as irrelevant and irresponsible and unnecessary a Measure as the Government could have brought forward at this time. I hope very much that it is defeated.

9.5 p.m.

Photo of Mr John Eden Mr John Eden , Bournemouth West

Echoing the closing sentiments of my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), I should like to begin my speech by saying that, when the Government come to the House to ask it to agree to an extension of the powers of a nationalised industry and in that way to vote it more money, we should get far more justification than we were given by the Minister of Power when he moved the Second Reading.

His speech was extremely thin. He gave no indication of the future planning by the National Coal Board. He did his best to sketch over what are clearly the controversial aspects of the Bill, so apparently, as to try to avoid any sort of scrutiny or discussion. Those of us who are members of the Committee discussing the Iron and Steel Bill know that this is not the first time that the Minister has treated proceedings of the House to that sort of scarce and scanty attention.

My hon. Friends have made it abundantly clear that we object to this proposal on commercial and economic grounds and that we are highly suspicious of it on political grounds. It is right that many of my hon. Friends should have started by having a somewhat critical look, inevitably, at the Coal Board's existing operations. If we are to be asked to approve an extension of what a nationalised body is already doing, we are justified in having—I believe that we are required to have—a careful look at the manner in which its present obligations are being discharged.

The National Coal Board is confronted with a number of very substantial problems at the moment, and none of us has attempted to minimise the size of the tasks with which it is faced. None of us on this side—I say this quite clearly, lest at any later stage in my speech my remarks become misconstrued—in any way detracts from the very deep, human considerations involved in what the Coal Board is currently trying to do in progressively closing down the uneconomic pits. It has a tremendous job here in the redeployment and, in many cases, retraining of the men it employs.

It has also a tremendous task in trying to ensure the proper employment of the capital investment. Some of my hon. Friends were taken to task for their reference to Bevercotes. My hon. Friend the Member for Yeovil (Mr. Peyton), in his usual colourful and effective language, described our sentiments on this point. I would just add to what has already been said on this subject by in viting the Board, and Lord Robens in particular, to recognise that the best way of protecting the investment at the coal face is to make sure that the investment it already has there earns money and is fully employed. My hon. Friend the Member for Barkston Ash (Mr. Alison) developed another aspect touched on by others of my hon. Friends—the Board's attempts to develop supplies of smokeless fuel. Reference has already been made to the enormous capital expenditure involved in the Immingham port development scheme.

The point of drawing attention to this aspect of the Board's existing operations and obligations is not to denigrate the Board, not to pinpoint, highlight and accentuate or in any way exaggerate any failings or weaknesses, but simply to underline the fact that it already has more than enough to cope with and that it is unnecessary for it now to turn to wholly new fields for investment and exploration. Further, we are considering the request of an industry to extend its operations into a highly speculative enterprise when the industry in its own sphere has already over many years of trading incurred a very substantial deficit. The House was recently asked to approve the writing-off of £415 million because the industry is still uneconomic.

I do not think that this is the time for the Board to embark on new ventures, and particularly a venture of such a highly speculative nature as this, for which it was never designed, and for which it is wholly unsuited. The Board exists to get and distribute coal in the most efficient manner possible and it has a long way to go before it achieves even the standard of efficiency in this respect mentioned by some hon. Members opposite.

A great deal of comment has been made on the extent to which the Board is diversified. In considering this aspect I read, as no doubt other hon. Members did, an article by Richard Bailey in the August issue of the Westminster Bank Review I have the highest regard for Richard Bailey though I did not agree with much of his article. He said that in any discussion of the future of a particular nationalised industry … it is difficult to separate the economic grain from the political chaff. I do not think that political chaff is the right description for some of the political objections I have to the bringing forward of this Bill, but I hope, first of all, to look at such elements of economic grain as can be found.

The first lies in the argument that, as the Board has already diversified extensively and substantially, there is no real fundamental reason why it should not go further, as is asked for in this Bill. In parenthesis, I briefly declare an interest which is already known to some hon. Members. I am engaged with a company whose concern is to assist in the diversification and merging of industrial companies.

As is well known to hon. Members, the Board is already substantially involved in brickmaking, concrete, flooring, damp courses, in the making of heaters, in tar products, in pitch polymers and other aspects of the chemical industry. It is a substantial and wide-ranging list of activities, but far and away the major part of what is already being done is the logical extension of its primary function of the mining, processing and marketing of coal. This was clearly anticipated in the terms of the original nationalisation Act. I thought my hon. Friend the Member for Sheffield, Hallam (Mr. J. H. Osborn) argued on this aspect very thoroughly. We have to make up our minds, and hon. Members opposite have to answer for themselves the question, are we now contemplating the creation of a new giant industrial holding company the interests of which will go far outside the primary purposes for which the coal industry was originally nationalised?

There are advantages in industrial holding companies, but these advantages exist only where there is present an abundance of skilled management talent. I think it important to emphasise that point. It is no good widely diversifying operations unless we can be certain that we have the proper structure, the proper management talent, to handle the diverse interests embraced. This test of diversification must apply equally to the National Coal Board.

I carry this a stage further. It more than any other of the public industries, dependent to a substantial extent as it is upon taxpayers' money, must subject its diversification proposals to the pretty rigid test of whether any new scheme or venture assists in its primary function. If not, I agree very much with the sentiments expressed in an article in the Economist on 22nd January this year that if this cannot be shown it is using up scarce resources of capital and manpower.

On this point I question the interventions of a number of hon. Members opposite who spoke most feelingly from their experience as members of the National Union of Mineworkers and as men who have been engaged in this great industry. I cannot see how this new departure into a totally different field from that in which it is currently engaged and for which it was primarily established will, to use Lord Robens' words, assist in the protection of the investment at the coal face. In other words, I do not see how it will help the miners themselves.

My hon. Friend the Member for Gloucestershire, South (Mr. Corfield) referred to the position of Staveley Chemicals. I think this raises wider questions than other aspects of the Board's existing diversification. Staveley Chemicals has been set up in order primarily to manufacture P.V.C., but, as my hon. Friend made clear, in the articles of association it can go into the full range of the chemical industry.

I wonder if the Parliamentary Secretary who is to reply to the debate will make clear that it will not be in order, should this Bill be passed into law, for the National Coal Board to use its supplies of natural gas—assuming it gets those supplies—for the purposes of the operations of Staveley Chemicals. I should like to have this spelled out because I think it is basic to our whole approach. Further than that, am I right in saying that, if at the outset this appears to be the case, it will not be so entitled under the terms of the Bill? In other words, if subsequently it wished to do so, it would not be a case of it merely going to the right hon. Gentleman for him to promote a further Measure before the House to give it powers to use its natural gas in that regard?

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

The position is that the Coal Board would be in exactly the same position as anybody else in this field. It will be able to use the natural gas for its own purposes. If it wants to use it outside its own purposes—and "outside" would include associated companies as distinct from the Board or its immediate environs—then it will have to get the permission of the Minister. There will be no further legislation. That is exactly the same position as everybody else is in.

Photo of Mr John Eden Mr John Eden , Bournemouth West

To get the permission of the Minister—and I am grateful to the right hon. Gentleman for making it clear in what he has just said—they will virtually have the right to use this natural gas for the purpose of the Staveley Chemicals operation. My hon. Friends and I have been fully justified in having the degree of suspicion which we had when this Measure was first brought before the House.

There is the further point on this aspect of diversification, which was touched on by my hon. Friend the Member for Gloucestershire, South. When the subsidiary companies of the diversified companies in which the National Coal Board has an interest start trading in a number of other fields, the line of control becomes fogged and fudged indeed. This House must be aware of what, in fact, it is doing. It has always sought to have some measure of control over the operations of nationalised industries, and quite properly, because a very substantial degree of public money is involved; and if we are not the guardians of the public purse in this House, then we are nothing at all.

Yet here we are apparently being invited to give an open cheque for the operations of a number of companies, albeit one square removed but none the less directly associated with the nationalised industries, in this instance with the National Coal Board, which we would find difficult indeed to cross-examine or to comment upon in this House. This applies not only to Staveley Chemicals but also to the operations of the British Anthracite Company and its subsidiaries. The point of financial control is very important indeed, and unless we watch it it will become virtually impossible to hon. Members in this House.

If it is argued, as has been suggested, that association with private enterprise, in the manner in which the National Coal Board is to join forces with the two American companies, will ensure that checks against ill-considered investment will be established, then this is no argument at all in defence of the proposition. It is, in fact, an argument against the further extension of public ownership.

If the National Coal Board is to diversify in this way, then to what tests are these purchases to be subjected? Other companies now currently engaged in this work are Rio Tinto and I.C.I. and within the operations of those companies there are frequent opportunities for checking the commercial viability of the operations on which they are engaged or on which they contemplate embarking. There are in the Bill no new provisions for financial control. In what way, for example, will the element of cross-subsidisation be identified? If the Board finds itself engaged in a highly profitable venture in one sphere, is it not right that we should know to what extent it is using these proceeds to subsidise the unprofitable elements in other spheres, the sum total of which may result in its calling again upon the public purse for further support?

Apparently the basic mood in the Government's mind and in that of the Board is to protect the investment at the coalface. The Minister has said that the extent to which this will take place will involve the expenditure of a £6 million stake over a matter of years in the preliminary search which will be done primarily by the two experienced American companies.

My hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) brought out a point which requires very careful answer by the Parliamentary Secretary. Here the Board is contemplating going into a highly speculative field as a sleeping partner. We are being invited to endorse in the House a form of diversification which will not give the principal party with which we are concerned any control whatsoever over the investment that takes place as a result of it.

This is a most improper use of public funds. It is certainly the most improper way of diversifying the activities of the Board. If the Board is so keen to enter a speculative adventure of this nature, at the very least it should be made to go to the market to obtain risk capital at the real market cost. Other companies engaged in this operation have to do that.

We have had a lot of new loose talk from right hon. and hon. Members opposite about the public interest. I do not think that any of them have ever properly defined what they mean by the public interest or the national interest. If they mean the interest of the Board, let them say so and let them recognise, as we do, that we are being invited to assist the Board in competing on special terms, on terms substantially to its advantage against others who have to turn to the market at much higher rates for their capital requirements.

If the nationalised industries are to compete with private enterprise in this way, they must both share in the same disciplines of the capital market. I understand that before long we are to have a Companies Bill. I hope that that Bill will encourage fuller disclosure by companies of all kinds. I suspect that it will. I know that that will be welcomed.

I also hope that the Government will demand fuller disclosure from the nationalised industries. We want to know much more of the plans of the Board. We want to know in respect of the Bill much more about the estimates upon which this investment is being made. We want to know much more about what information and assumptions the Board has got and has adopted to justify a further departure into a new field of this kind.

I must admit that I am always highly suspicious when right hon. and hon. Members opposite suddently start proclaiming the virtues of competition. As my hon. Friend the Member for Cirencester and Tewkesbury properly made clear, this is not competition. Competition, to be justified as such, has to be manifestly fair and has to be contested on equal terms. There is no element of fairness in the competition now being proposed by the Board.

I argue on economic and on commercial grounds that no case whatsoever has been made out for the proposition that the future of the coal industry is dependent upon its having a stake in the natural gas operations. The natural gas developments are vastly exciting. They are bringing new resources of fuel to this country which must have a tremendously important impact upon the whole of our economy——

Photo of Mr John Eden Mr John Eden , Bournemouth West

And potentially profitable, and I hope that the hon. Gentleman views the profit with a great deal of favour, because the one thing we want to avoid——

Photo of Mr Russell Kerr Mr Russell Kerr , Feltham

Is all the profit going to private pockets and not the people?

Photo of Mr John Eden Mr John Eden , Bournemouth West

—is the sort of running losses that have been incurred by the National Coal Board, of which the cumulative amount since 1946 is over £115 million. As a taxpayer—and I suspect that this even goes for the hon. Gentleman—I would much rather see substantial profits being earned than losses of that order. That is one other reason why I am somewhat dubious about the wisdom of inviting the National Coal Board to join in this great and exiting new adventure.

The one thing that must be clear is that with this new discovery of natural gas the Government should be going out of their way to ensure that this country benefits as quickly as possible by the dispersal of fuel at the cheapest possible price. This is where I would think the national interests come in. It will not help the national interest in terms of speeding up the development of this new discovery to have the National Coal Board in. Or is the Minister saying that Gulf Oil and Allied Chemicals would not have been allowed to get a licence had they not agreed to participation by the National Coal Board?

The presence of the National Coal Board cannot help in speeding up the process. It certainly will not necessarily secure that we get the fuel at the cheapest prices, for I do not believe that with this enterprise at its present stage of development it is right that we should encourage the incursion into this adventure of an industry whose primary purpose must be to protect its investment in a competing product. The Coal Board has a great deal to do in its own sphere. It is in that sphere that the promise for its future must lie and it should concentrate on that.

I promised that before sitting down I would touch on what Richard Bailey called the political chaff, and it is important that we should have this in mind when considering this proposal. It should not be allowed to stand on its own. This is not an isolated proposition for the extension of public ownership brought forward by the Government, which has clearly marked out the direction in which it is moving. The very wide powers sought in the Iron and Steel Bill, the proposal to extend in research into new science-based industries, the threat they have already made about the aircraft industry, and the iniquitous proposals debated earlier in the week for the Land Commission, all clearly show that the Government have scant regard for the rights of ownership. This further extension of public ownership, however thinly veiled, would have no support from this side of the House, still less when, as now, the Government cannot even justify it on economic or commercial grounds. For those reasons we shall vote against the Second Reading of the Bill.

9.30 a.m.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

This very modest Bill has given rise to an interesting debate because it is the first full day's debate we have had since the North Sea gas discoveries were made earlier in the year. It is therefore natural that the debate should have ranged widely and I shall do my best to reply to the many questions raised from both sides of the House. Before I reply to particular points we should remind ourselves again, as my right hon. Friend reminded us at the beginning of the debate, of the very limited purposes of the Bill in simply enabling the National Coal Board to participate in the North Sea venture.

The Bill arose in the first place out of a wish to increase the British interest in North Sea exploration. The importance of the British interest was admitted by the hon. Member for Gloucestershire, South (Mr. Corfield) when he opened for the Opposition. But the first round of licences issued by right hon. Members opposite gave only 30 per cent. of the area to British operators. In the German part of the North Sea, by comparison, 42 per cent. went to German operators.

Inheriting that position, my right hon. Friend's predecessor——

Photo of Mr John Peyton Mr John Peyton , Yeovil

It was made perfectly clear by the Parliamentary Secretary's right hon. and hon. Friends at one time that they were at liberty to tear up any arrangements made by the previous Administration. Why did the Minister not do so?

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

For the reason to which I am just coming. Inheriting the position as we did, the wish to increase the British stake was, naturally, constrained by the fact that the first round licensees had the built-in advantages of having North Sea experience and equipment on the spot. That we were able to raise the British share in the second round—37 per cent. of the options in the second round went to British licensed operators—was a very considerable achievement.

Some of my hon. Friends say that 37 per cent. is good but would not 100 per cent. be rather better? First, one has to bear in mind the experience of overseas companies in offshore exploration and development. No one who has been out to a rig or one of the barges can doubt the contribution which overseas operators are making in the North Sea. This experience is valuable and, undoubtedly, without the help of overseas operators North Sea exploration could not have proceeded at the pace it has or at the pace at which it will continue to go. Second, the inward flow of investment in the North Sea exploration is appreciable, and it is welcome particularly at this time.

But these factors are no reason for going overboard quite to the extent that hon. and right hon. Members opposite did in giving Britain a smaller share than a country like Germany, with its far more limited experience of oil operations, was prepared to claim for itself. We have to keep the British stake and the national interest constantly in mind in the North Sea venture as a whole.

The other reason—I say this quite frankly—for enabling the National Coal Board to join in North Sea exploration is to increase the participation of public enterprise. There is the obvious point that, if profits are to be made by dispensation of the State out of resources which belong to the Crown, the community as a whole should share in them. To a considerable extent, this is secured by royalties and taxation, but if we were to increase royalties there would come a point at which private companies would find it more profitable to explore elsewhere. The more practical arrangement is to increase direct State participation.

This can be done in a number of ways, as hon. Members on both sides have pointed out. The Gas Council is a major partner in one of the groups which has already found gas under the North Sea. B.P. in which the Government is a majority shareholder is an operator in its own right. But there is a strong objective case for having the National Coal Board as a third channel for public participation.

The hon. Member for Yeovil (Mr. Peyton) asked what the National Coal Board had to contribute. It is the industrial enterprise in this country which has the greatest accumulation of geological experience of all. The hon. and gallant Member for South Fylde (Colonel Lancaster) pointed out, quite reasonably, that its experience, though in a related activity, is in an activity not directly relevant to oil and gas exploration. He spoke of the National Coal Board, therefore, as a sleeping partner. I prefer to describe it as a waking partner, which, through its familiarity with geology in general and the problems of mining, is in a better position than any other enterprise to learn the tremendous amount there is to be learned about oil and gas exploration.

Secondly, sophisticated though these techniques of exploration may be—and they become more sophisticated every year—it is still very much an art, with different schools of thought and different practices in every separate oil company. Hunch and experience play a tremendous part in the prosecution of exploration, and the Gas Council, by its participation with Amaco has access to one version of the art. The N.C.B., by joining with other partners, will have access to other versions of the art and the State, the public interest as a whole, will therefore have access to a substantially wider range of experience.

If petroleum exploration is an uncertain practice, carrying great risks, then it is also plainly in the interests of the State to put our national eggs in more than one basket. There is, of course, certainly a limit on how far risks should be spread between the different agencies. Each must be able to sustain an adequate programme of exploration. But it can hardly be argued that spreading the risks only to the N.C.B. is to spread them too far.

Even with N.C.B. participation, however, it remains true that a very large part of the rôle of the State in North Sea exploration is to provide the framework under which operators in the North Sea can go ahead as a whole, smoothly and expeditiously. In the carrying out of the responsibility for providing this framework, the hon. Member for Yeovil, who has had experience at the Ministry, has already paid tribute to the very skilled service provided by the officials of the Department.

As the operations move into another phase of exploration and of actual exploitation, so too experience of the operators' point of view will be extremely valuable to those of us in the Government who are concerned with the framework of the operations as a whole. I have in mind not only an appreciation of the costs involved, which is important enough, but also an understanding of the many technical problems, from the need for special quality pipes to ensuring the safety and security of supplies. For example, have hon. Members considered all the implications when a substantial part of the country's total gas supply is coming through a single pipe buried in the sea bed? Experience of all these technical matters is something of which we plainly need a great deal of practical know-how.

The hon. Member for Gloucestershire, South asked whether the N.C.B. was not too big already to undertake a further operation. I wonder whether he has looked up the size of Shell and whether that size leads him to discourage Shell's explorations in the North Sea.

Photo of Mr Frederick Corfield Mr Frederick Corfield , Gloucestershire South

What I said was that it could not be argued that the N.C.B. is too small—which is rather different.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

I am grateful to the hon. Gentleman for his support in the proposition that the N.C.B. is capable of further development in view of its present scale. But there is the fact that the economies of scale need to be looked at carefully. Is the venture of one particular explorer adequate on its own? Does it have to be related to activities on a worldwide basis, and so on?

There is no point in the State incurring a double lot of overheads if it can do it with one. If there were major economies of scale it would be wildly inefficient to be operating with no less than 25 different licencees, but there is nowhere the overlapping which might have appeared. Much of the work is done by hiring contractors and their equipment. Some rigs are owned by operators while others are hired. Tugs and tenders serve all operators. There is only one pipe-laying contractor operating in the North Sea and he also operates cranes used for placing fixed drilling platforms. In exploration, gravity and seismic surveys are carried out by specialist firms and the results sold to operators, as the hon. and gallant Member for South Fylde has already pointed out.

Drilling logs are exchanged on what the operators are pleased to call a "hole-for-hole" basis and, of course, the Ministry of Power itself receives copies of those drilling logs. The rôle of the operator and of the licensee, therefore, is to back its judgment in undertaking a drilling programme and, if it is lucky in finding the capital, to exploit any discovery. Different operators will do different amounts of work themselves, but there is no diseconomy of scale in further operators entering the field. Doing so will not reduce the efficiency of existing operators and nor is there any reason to suppose that the Coal Board will be a less efficient licensee than any others who are in the field already.

Many hon. Members on both sides of the House have spoken about the main responsibility of the Coal Board and have regretted that, with its tremendous problems, which have been appreciated on both sides of the House, the Board should be entering on an altogether different field. If my right hon. Friend had had any doubts at all about the attention which the Coal Board was giving to its major problems, if he had felt in any way that the Bill would distract its attention from those problems, the Bill would not have been introduced.

As the House knows, the Coal Board is being radically re-shaped. Production is being concentrated in efficient pits and worked out and high cost pits are being closed. There are tremendous social changes with which the Board is constantly preoccupied and this process of redeployment in which the coal industry has been long engaged, not just recently, is carried out in very close consultation with the unions at all levels, which again needs a tremendous lot of attention from management.

My hon. Friend the Member for Ash-field (Mr. Marquand) drew attention to the fact that it is the patient attention to detail, to the journeys to work and to individual prospects and the earnings of individual miners and the housing needs of families, which means so much to the individual, and all of it is being carefully attended to by Coal Board officials. It is because this process is being carried out so painstakingly and successfully that unemployment in the coalmining areas, particularly in the regions which are experiencing the fastest rates of closure, has remained less than the average of unemployment for the community as a whole. This is a remarkable tribute to the good sense and skill of unions and management in the Coal Board. We want this record to be maintained, but it does not lead us to believe that the Coal Board is incapable of undertaking further activity which is in the national interest. The Government, of course, are giving substantial support to this redeployment and will continue to do so.

It is not only the change of pits being worked which is going ahead, but there are also changes in the structure of the Coal Board itself—the reduction in the number of levels of control from five to three, with all the movements of staff and the change in areas of responsibility which that means. On top of all that, it is the firm belief of all those dealing with the Coal Board that, far from seeking an escape in the Bill, the Board is using its available experience to the best national advantage by venturing into this new activity.

Photo of Mr Claude Lancaster Mr Claude Lancaster , South Fylde

The Parliamentary Secretary is making a most reasonable speech, but I want to ask one question. The National Coal Board has very wisely already concluded that it is not an expert in research. It does not do its own research or geological surveys and it has not done research in the North Sea. Having acknowledged that it is not an expert in this subject, why at this moment should it go into a much more sophisticated and far more technical activity and assume that it will make a success of it?

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

I do not accept that the Coal Board has no experts in research. On the contrary, we have a very distinguished scientific member of the Coal Board, recently appointed, who is attending to a very interesting research programme. If the hon. Member is referring specifically to geological research——

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

—then they are too. The Coal Board has a very worthwhile programme. The Board is organised, not only in its research activities, as between engineering, mining, geology and so on, but each of its several activities is separately accountable under separate management. For example, the brickworks executive and the open-cast executive are independent organisations, entirely separate from the Divisions of the Coal Board.

This operation in the North Sea is being undertaken as another such independent operation in the interests of the nation. Hon. Members have referred to the tremendous importance, which I accept, of the confidence of the industry in its own future. This point was made by my hon. Friends the Members for Liverpool, West Derby (Mr. Ogden) and Midlothian (Mr. Eadie) and supported by the hon. Member for Yeovil. The N.U.M. is on record as saying that it has no objection to Coal Board participation in North Sea exploration, and there is also the evidence that the Coal Board is taking this on as a judgment of its own commercial interest.

In the grass roots of the industry, where the confidence issues finally operate, in the decisions of individual miners as to whether to stay in the industry, the first reaction to the North Sea discoveries was of uncertainty. Miners did not know what their future was to be. Everyone accepts that the discoveries are in the interests of the nation, and when people realise the physical limitations on the build-up of gas supplies they feel that it is a pressing problem for the coal industry, certainly to adapt to, but not one that it is incapable of adapting to in time.

My right hon. Friend has repeatedly said that for as far ahead as we can see there will be a continuing major demand for coal at an economic price. This does not exclude us from keeping a close watch on the situation, and the fuel policy review is undertaken to phase in natural gas in a way which will cause the least possible hardship in the mining industry.

A number of hon. Members have referred to the financial considerations. We feel that if it is worth while undertaking a particular project, after a full analysis of the costs and the profitability, then that project should be undertaken, and should not be limited by the general financial position of the organisation concerned. The fact that private industry does not operate on this basis is one of the causes of the difficulty which we face in prospect for the whole economy in that the reason why private firms are not planning as much investment now as they have done in the past is that they have not the cash to do so.

It is not because there is a lack of profitable projects available. In these circumstances the strongest stabilising influence in investment is, once again, the maintenance of public investments, properly undertaken, in the best interests of the nation.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

I should like to put two questions to the hon. Gentleman in the light of what he has been saying. Unless it be the view of the Government that the State should diversify and enter into nationalisation projects in almost every field of activity, then the onus is on the Government to show that this is a reasonable form of activity for a nationalised industry to engage in. Will the hon. Gentleman answer these two questions—[HON. MEMBERS: "Speech."]

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

Interventions must be brief at this stage.

Photo of Mr Anthony Barber Mr Anthony Barber , Altrincham and Sale

Then I will make it one question. What complaint has the Parliamentary Secretary got about the free enterprise North Sea gas operations, and why is the Coal Board going into the business?

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

The right hon. Member has not been listening to the debate.

On the general question of diversification, we apply the same standards of fair competition in this as we apply in all other activities, whether nationalised industries or Government agencies, participating in competition with private enterprise. Hon. Members have mentioned chemical manufacturers, in particular, as fearing the impact of nationalised industry diversification. I have made some inquiries. The first reaction of an eminent leader of the chemical industry was to ask, "What diversification?". My second inquiry led to a proposal for a joint public-private enterprise to scale a project for an attack on export markets. Hon. Members opposite are seeing lions under the bed when they talk about fears of diversification of the nationalised industries.

The C.B.I. has set out what it considers to be fair terms for competition from the nationalised industries. These are adhered to and observed not only in the Bill but in the present practice of the Coal Board in its other diversified activities.

On the specific question of the publicity about diversified activities, when the Coal Board undertakes the new diversified activities to which the hon. Member for Gloucestershire, South referred, all the Coal Board projects undertaken in association with private companies are announced in the Press at the time as well as being clearly included in its accounts. It is certainly the practice of this Government to expect the nationalised industries, in undertaking commercial activities in competition with private industry, to look for a comparable rate of return secured in the industry in which it is to operate.

We have had an interesting debate. Perhaps we have not had a very constructive debate. The hon. Member for Worcestershire, South Sir G. Nabarro) asks why we use public money when private money is available.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

Why is private money available—because it is profitable to investors. I cannot understand the attitude of hon. Members opposite. They oppose public enterprise because they say that it is unprofitable, yet do not allow it to engage in potentially profitable activity. They ban public enterprise because it has been charged with responsibility for declining industries, yet resist its application to expanding industries. So far as the processes of Government are concerned, their attitude is irrelevant. But, as a public example, their attitude to these great industries is—and I repeat it, despite what they have said—irresponsible.

Photo of Dr Jeremy Bray Dr Jeremy Bray , Middlesbrough West

Occasionally we hear an enlightened speech from hon. Members opposite. We had two this afternoon.

The Bill will increase the resources available for North Sea exploration. It will make good use of the experience of the Coal Board without distracting from its main responsibilities in coal. It will increase the British share of North Sea exploration and the potential profits which will come to the community as a whole through public enterprise. I commend it to the House.

Photo of Mr Patrick Jenkin Mr Patrick Jenkin , Wanstead and Woodford

We have listened to a deplorable defence——

Photo of Mr George Lawson Mr George Lawson , Motherwell

Mr. George Lawson (Lord Commissioner of the Treasury) rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put: —

The House divided: Ayes 236, Noes 155.

Division No. 193.]AYES[9.59 p.m.
Abse, LeoBaxter, WilliamBoyden, James
Albu, AustenBeaney, AlanBraddock, Mrs. E. M.
Allaun, Frank (Salford, E.)Bence, CyrilBray, Dr. Jeremy
Alldritt, WalterBennett, James (G'gow, Bridgeton)Brooks, Edwin
Allen, ScholefieldBessell, PeterBrown, Hugh D. (G'gow, Provan)
Anderson, DonaldBidwell, SydneyBrown, Bob (N'c'tle-upon-Tyne, W)
Archer PeterBinns, JohnBrown, R. W. (Shoreditch & F'bury)
Armstrong, ErnestBishop, E. S.Buchan, Norman
Atkins, Ronald (Preston, N.)Blackburn, F.Buchanan, Richard (G'gow, Sp'burn)
Atkinson, Norman (Tottenham)Blenkinsop, ArthurButler, Herbert (Hackney, C.)
Bagier, Gordon A. T.Boardman, H.Cant, R. B.
Barnes, MichaelBooth, AlbertCoe, Denis
Barnett, JoelBoston, TerenceConcannon, J. D.
Corbet Mrs. FredaHowarth, Robert (Bolton, E.)Oswald, Thomas
Craddock, George (Bradford, S.)Howell, Denis (Small Heath)Owen, Dr. David (Plymouth, S'tn)
Crawshaw, RichardHowie, W.Owen, Will (Morpeth)
Crossman, Rt. Hn. RichardHughes, Emrys (Aryshire, S.)Page, Derek (King's Lynn)
Cullen, Mrs. AiceHughes, Roy (Newport)Palmer, Arthur
Dalyell, TamHunter, AdamPardoe, John
Davidson, Arthur (Accrington)Hynd, JohnPark, Trevor
Davidson, James (Aberdeenshire, W.)Jackson, Peter M. (High Peak)Parker, John (Dagenham)
Davies, Dr. Ernest (Stretford)Jeger, Mrs. Lena (H'b'n&St. P'cras, S.)Parkyn, Brian (Bedford)
Davies, Harold (Leek)Jenkins, Hugh (Putney)Pavitt, Laurence
Davies, Ifor (Gower)Johnson, Carol (Lewisham, S.)Pearson, Arthur (Pontypridd)
Davies, Robert (Cambridge)Johnson, James (K'ston-on-Hull, w.)Pentland, Norman
de Freitas, Sir GeoffreyJohnston, Russell (Inverness)Perry, Ernest G. (Battersea, S.)
Dempsey, JamesJones, Dan (Burnley)Perry, George H. (Nottingham, S.)
Dewar, DonaldJones, J. Idwal (Wrexham)Prentice, Rt. Hn. R. E.
Diamond, Rt. Hn. JohnKelley, RichardPrice, Christopher (Perry Barr)
Doig, PeterKenyon, CliffordPrice, Thomas (Westhoughton)
Dunn, James A.Kerr, Mrs. Anne (R'ter & Chatham)Price, William (Rugby)
Dunnett, JackKerr, Dr. David (W'worth, Central)Probert, Arthur
Dunwoody, Mrs. Gwyneth (Exeter)Kerr, Russell (Feltham)Rankin, John
Dunwoody, Dr. John (F'th & C'b'e)Lawson, GeorgeRedhead, Edward
Eadie, AlexLeadbitter, TedRees, Merlyn
Edwards, Rt. Hn. Ness (Caerphilly)Lee, John (Reading)Rhodes, Geoffrey
Ellis, JohnLewis, Arthur (W. Ham, N.)Roberts, Albert (Normanton)
Ensor, DavidLewis, Ron (Carlisle)Robertson, John (Paisley)
Evans, Albert (Islington, S. W.)Lipton, MarcusRogers, George (Kensington, N.)
Evans, Gwynfor (C'marthen)Lomas, KennethRose, Paul
Evans, Ioan L. (Birm'h'm, Yardley)Loughlin, CharlesRoss, Rt. Hn. William
Faulds, AndrewLuard, EvanRowland, Christopher (Meriden)
Fernyhough, E.Lubbock, EricRowlands, E. (Cardiff, N.)
Finch, HaroldLyon, Alexander W. (York)Sheldon, Robert
Fitch, Alan (Wigan)Lyons, Edward (Bradford, E.)Shore, Peter (Stepney)
Floud, BernardMcBride, NeilSilkin, Rt. Hn. John (Deptford)
Foley, MauriceMcCann, JohnSilkin, Hn. S. C. (Dulwich)
Foot, Michael (Ebbw Vale)MacDermot, NiallSilverman, Julius (Aston)
Ford, BenMacDonald, A. H.Slater, Joseph
Forrester, JohnMcGuire, MichaelSnow, Julian
Fowler, GerryMcKay, Mrs. MargaretSpriggs, Leslie
Fraser, John (Norwood)Mackenzie, Alasdair (Ross&Crom'ty)Steel, David (Roxburgh)
Fraser, Rt. Hn. Tom (Hamilton)Mackenzie, Gregor (Rutherglen)Steele, Thomas (Dunbartonshire, W.)
Galpern, Sir MyerMackintosh, John P.Summerskill, Hn. Dr. Shirley
Gardner, TonyMaclennan, RobertThomas, George (Cardiff, W.)
Garrett, W. E.McMillan, Tom (Glasgow, C.)Thornton, Ernest
Garrow, AlexMcNamara, J. KevinThorpe, Jeremy
Ginsburg, DavidMacPherson, MalcolmTinn, James
Gourlay, HarryMahon, Peter (Preston, S.)Tuck, Raphael
Gray, Dr. Hugh (Yarmouth)Mahon, Simon (Bootle)Varley, Eric G.
Gregory, ArnoldManuel, ArchieWainwright, Edwin (Dearne Valley)
Grey, Charles (Durham)Mapp, CrarlesWainwright, Richard (Colne Valley)
Griffiths, David (Rother Valiey)Marquand, DavidWalker, Harold (Doncaster)
Griffiths, Rt. Hn. James (Llanelly)Marsh, Rt. Hn. RichardWatkins, David (Consett)
Hale, Leslie (Oldham, W.)Mason, RoyWatkins, Tudor (Brecon & Radnor)
Hamilton, James (Bothwell)Mellish, RobertWeitzman, David
Hamilton, William (Fife, W.)Mendelson, J, J.Wellbeloved, James
Hamling, WilliamMillan, BruceWhitaker, Ben
Hannan, WilliamMiller, Dr. M. S.Wilkins, W. A.
Harrison, Walter (Wakefield)Milne, Edward (Blyth)Williams, Alan Lee (Hornchurch)
Haseldine, NormanMitchell, R. C. (S'th'pton, Test)Williams, Clifford (Abertillery)
Heffer, Eric S.Morris, Alfred (Wythenshawe)Williams, Mrs. Shirley (Hitchin)
Henig, StanleyMorris, John (Aberavon)Willis, George (Edinburgh, E.)
Herbison, Rt. Hn. MargaretNeal, HaroldWinterbottom, R. E.
Hilton, W. S.Norwood, ChristopherWoodburn, Rt. Hn. A.
Hooley, FrankOakes, CordonYates, Victor
Hooson, EmylnOgden, Eric
Homer, JohnO'Malley, BrianTELLERS FOR THE AYES:
Houghton, Rt. Hn. DouglasOrbach, MauriceMr. Charles R. Morris and
Howarth, Harry (Wellingborough)Orme, StanleyMr. Harper.
NOES
Alison, Michael (Barkston Ash)Braine, BernardCorfield, F. V.
Allason, James (Kernel Hempstead)Brewis, JohnCostain, A. P.
Astor, JohnBrinton, Sir TattonCraddock, Sir Beresford (Spelthorne)
Awdry, DanielByran, PaulCrowder, F. P.
Baker, W. H. K.Buchanan-Smith, Alick (Angus, N.&M)Cunningham, Sir Knox
Balniel, LordBuck, Antony (Colchester)Dalkeith, Earl of
Barber, Rt. Hn. AnthonyCampbell, GordonDance, James
Batsford, BrianCarlisle, MarkDean, Paul (Somerset, N.)
Bell, RonaldCarr, Rt. Hn. RobertDeedes, Rt. Hn. W. F. (Ashford)
Berry, Hn. AnthonyChannon, H. P. G.Dodds-Parker, Douglas
Biffen, JohnChichester-Clark, R.Doughty, Charles
Biggs-Davison, JohnClark, HenryEden, Sir John
Black, Sir CyrilClegg, WalterElliot, Capt. Walter (Carshalton)
Blaker, PeterCooke, RobertErrington, Sir Eric
Bossom, Sir CliveCooper-Key, Sir NeillEyre, Reginald
Farr, JohnKing, Evelyn (Dorset, S.)Pounder, Rafton
Fortescue, TimKirk, PeterPowell, Rt. Hn. J. Enoch
Foster, Sir JohnKnight, Mrs. JillPrice, David (Eastleigh)
Gilmour, Ian (Norfolk, C.)Lancaster, Col. C. G.Rees-Davies, W. R.
Gilmour, Sir John (Fife, E.)Langford-Holt, Sir JohnRenton, Rt. Hn. Sir David
Glover, Sir DouglasLewis, Kenneth (Rutland)Ridley, Hn. Nicholas
Glyn, Sir RichardLloyd, Rt. Hn. Geoffrey (Sut'nC'dfield)Rippon, Rt. Hn. Geoffrey
Goodhart, PhilipLoveys, W. H.Roots, William
Goodhew, VictorMcAdden, Sir StephenRossi, Hugh (Hornsey)
Grant, AnthonyMacArthur, IanRussell, Sir Ronald
Grant-Ferris, R.Maclean, Sir FitzroyScott, Nicholas
Gresham Cooke, R.Maginnis, John E.Sharples, Richard
Grieve, PercyMaude, AngusShaw, Michael (Sc'b'gh & Whitby)
Griffiths, Eldon (Bury St. Edmunds)Mawby, RaySinclair, Sir George
Hall, John (Wycombe)Maxwell-Hyslop, R. J.Smith, John
Hall-Davis, A. G. F.Maydon, Lt.-Cmdr. S. L. C.Stoddart-Scott, Col. Sir M. (Ripon)
Harris, Reader (Heston)Mills, Peter (Torrington)Summers, Sir Spencer
Harrison, Brian (Maldon)Mills, Stratton (Belfast, N.)Taylor, Sir Charles (Eastbourne)
Harrison, Col. Sir Harwood (Eye)Mitchell, David (Basingstoke)Taylor, Edward M. (G'gow, Cathcart)
Harvey, Sir Arthur VereMonro, HectorTemple, John M.
Hastings, StephenMore, JasperThatcher, Mrs. Margaret
Heald, Rt. Hn. Sir LionelMorrison, Charles (Devizes)Turton, Rt. Hn. R. H.
Heath, Rt. Hn. EdwardMott-Radclyffe, Sir Charlesvan Straubenzee, W. R.
Heseltine, MichaelMunro-Lucas-Tooth, Sir HughWalker, Peter (Worcester)
Higgins, Terence L.Murton, OscarWall, Patrick
Hiley, JosephNabarro, Sir GeraldWebster, David
Hill, J. E. B.Nicholls, Sir HarmarWells, John (Maidstone)
Hobson, Rt. Hn. Sir JohnNoble, Rt. Hn. MichaelWhitelaw, William
Holland, PhilipOnslow, CranleyWills Sir Gerald (Bridgwater)
Hordern, PeterOsborn, John (Hallam)Wilson, Geoffrey (Truro)
Hunt, JohnOsborne, Sir Cyril (Louth)Wolrige-Gordon, Patrick
Hutchison, Michael ClarkPage, Graham (Crosby)Wood, Rt. Hn. Richard
Jenkin, Patrick (Woodford)Page, John (Harrow, W.)Worsley, Marcus
Jennings, J. C. (Burton)Pearson, Sir Frank (Clitheroe)Younger, Hn, George
Johnson Smith, G. (E. Grinstead)Percival, Ian
Jopling, MichaelPeyton, JohnTELLERS FOR THE NOES:
Joseph, Rt. Hn. Sir KeithPike, Miss MervynMr. Pym and Mr. R. W. Elliott.
Kimball, MarcusPink, R. Bonner

Question put accordingly, That the Bill be now read a Second time: —

The House divided: Ayes 233, Noes 151.

Division No. 194.]AYES[10.10 p.m.
Abse, LeoCraddock, George (Bradford, S.)Gardner, Tony
Albu, AustenCrawshaw, RichardGarrett, W. E.
Allaun, Frank (Salford, E.)Crossman, Rt. Hn. RichardCarrow, Alex
Alldritt, WalterCullen, Mrs. AliceGinsberg, David
Allen, ScholefieldDalyell, TamGourlay, Harry
Anderson, DonaldDavidson, Arthur (Accrington)Gray, Dr. Hugh (Yarmouth)
Archer, PeterDavidson, James (Aberdeenshire, W.)Gregory, Arnold
Armstrong, ErnestDavies, Dr. Ernest (Stretford)Grey, Charles (Durham)
Atkins, Ronald (Preston, N.)Davies, Harold (Leek)Griffiths, David (Rother Valley)
Atkinson, Norman (Tottenham)Davies, Ifor (Gower)Griffiths, Rt. Hn. James (Llanelly)
Bagier, Gordon A. T.Davies, Robert (Cambridge)Hale, Leslie (Oldham, W.)
Barnes, Michaelde Freitas, Sir GeoffreyHamilton, James (Bothwell)
Barnett, JoelDempsey, JamesHamilton, William (Fife, W.)
Baxter, WilliamDewar, DonaldHamling, William
Beaney, AlanDiamond, Rt. Hn. JohnHannan, William
Bence, CyrilDoig, PeterHarrison, Walter (Wakefield)
Bennett, James (G'gow, Bridgeton)Dunn, James A.Haseldine, Norman
Bessell, PeterDunnett, JackHeffer, Eric S.
Bidwell, SydneyDunwoody, Mrs. Gwyneth (Exeter)Henig, Stanley
Binns, JohnDunwoody, Dr. John (F'th & C'b'e)Herbison, Rt. Hn. Margaret
Bishop, E. S.Eadie, AlexHilton, W. S.
Blackburn, F.Edwards, Rt. Hn. Ness (Caerphilly)Hooley, Frank
Blenkinsop, ArthurEllis, JohnHooson, Emlyn
Boardman, H.Ensor, DavidHomer, John
Booth, AlbertEvans, Albert (Islington, S. W.)Houghton, Rt. Hn. Douglas
Boston, TerenceEvans, Gwynfor (C'marthen)Howarth, Harry (Wellingborough)
Boyden, JamesEvans, Ioan L. (Birm'h'm, Yardley)Howarth, Robert (Bolton, E.)
Braddock, Mrs. E. M.Faulds, AndrewHowell, Denis (Small Heath)
Bray, Dr. JeremyFernyhough, E.Howie, W.
Brooks, EdwinFinch, HaroldHughes, Emrys (Ayrshire, S.)
Brown, Hugh D, (G'gow, Provan)Fitch, Alan (Wigan)Hughes, Roy (Newport)
Brown, Bob (N'c'tle-upon-Tyno, W.)Floud, BernardHunter, Adam
Brown, R. W. (Shoreditch & F'bury)Foley, MauriceHynd, John
Buchan, NormanFoot, Michael (Ebbw Vale)Jackson, Peter M. (High Peak)
Buchanan, Richard (G'gow, Sp'burn)Ford, BenJeger, Mrs. Lena (H'b'n&St. P'cras, S.)
Butler, Herbert (Hackney, C.)Forrester, JohnJenkins, Hugh (Putney)
Cant, R. B.Fowler, GerryJohnson, Carol (Lewisham, S.)
Coe, DenisFraser, John (Norwood)Johnson, James (K'ston-on-Hull. W.)
Concannon, J. DFraser, Rt. Hn. Tom (Hamilton)Johnston, Russell (Inverness)
Corbet, Mrs. FredaGalpern, Sir MeyerJones, Dan (Burnley)
Jones, J. Idwal (Wrexham)Millan, BruceRose, Paul
Kelley, RichardMiller, Dr. M. S.Ross, Rt. Hn. William
Kenyon, CliffordMilne, Edward (Blyth)Rowland, Christopher (Meriden)
Kerr, Mrs. Anne (R'ter & Chatham)Mitchell, R. C. (S'th'pton, Test)Rowlands, E. (Cardiff, N.)
Kerr, Dr. David (W'worth, Central)Morris, Alfred (Wythenshawe)Sheldon, Robert
Kerr, Russell (Feltham)Morris, John (Aberavon)Shore, Peter (Stepney)
Lawson, GeorgeNeal, HaroldSilkin, Rt. Hn. John (Deptford)
Lee, John (Reading)Norwood, ChristopherSilkin, Hn. S. C. (Dulwich)
Lewis, Arthur (W. Ham, N.)Oakes, GordonSilverman, Julius (Aston)
Lewis, Ron (Carlisle)Ogden, EricSlater, Joseph
Lipton, MarcusO'Malley, BrianSnow, Julian
Lomas, KennethOrbach, MauriceSpriggs, Leslie
Loughlin, CharlesOrme, StanleySteel, David (Roxburgh)
Luard, EvanOswald, ThomasSteele, Thomas (Dunbartonshire, W.)
Lubbock, EricOwen, Dr. David (Plymouth, S'tn)Thomas, George (Cardiff, W.)
Lyon, Alexander W. (York)Owen, Will (Morpeth)Thornton, Ernest
Lyons, Edward (Bradford, E.)Page, Derek (King's Lynn)Thorpe, Jeremy
McBride, NeilPalmer, ArthurTinn, James
McCann, JohnPardoe, JohnVarley, Eric G.
MacDermot, NiallPark, TrevorWainwright, Edwin (Dearne Valley)
Macdonald, A. H.Parker, John (Dagenham)Wainwright, Richard (Colne Valley)
McGuire, MichaelParkyn, Brian (Bedford)Walker, Harold (Doncaster)
McKay, Mrs. MargaretPavitt, LaurenceWatkins, David (Consett)
Mackenzie, Alasdair (Ross&Crom'ty)Pearson, Arthur (Pontypridd)Watkins, Tudor (Brecon & Radnor)
Mackenzie, Gregor (Rutherglen)Pentland, NormanWeitzman, David
Mackintosh, John P.Perry, Ernest G. (Battersea, S.)Wellbeloved, James
Maclennan, RobertPerry, George H. (Nottingham, S.)Whitaker, Ben
McMillan, Tom (Glasgow, C.)Prentice, Rt. Hn. R. E.Wilkins, W. A.
McNamara, J. KevinPrice, Christopher (Perry Barr)Williams, Alan Lee (Hornchurch)
MacPherson, MalcolmPrice, Thomas (Westhoughton)Williams, Clifford (Abertillery)
Mahon, Peter (Preston, S.)Price, William (Rugby)Williams, Mrs. Shirley (Hitchin)
Mahon, Simon (Bootle)Probert, ArthurWillis, George (Edinburgh, E.)
Manuel, ArchieRankin, JohnWinterbottom, R. E.
Mapp, CharlesRedhead, EdwardWoodburn, Rt. Hn. A.
Marquand, DavidRees, MerlynYates, Victor
Marsh, Rt. Hn. RichardRhodes, Geoffrey
Mason, RoyRoberts, Albert (Normanton)TELLERS FOR THE AYES:
Mellish, RobertRobertson, John (Paisley)Mr. Charles R. Morris and
Mendelson, J. J.Rogers, George (Kensington, N.)Mr. Harper.
NOES
Alison, Michael (Barkston Ash)Eyre, ReginaldLangford-Holt, Sir John
Allason, James (Hemel Hempstead)Farr, JohnLewis, Kenneth (Rutland)
Astor, JohnFortescue, TimLoveys, W. H.
Awdry, DanielFoster, Sir JohnMcAdden, Sir Stephen
Baker, W. H. K.Gilmour, Ian (Norfolk, C.)MacArthur, Ian
Balniel, LordGilmour, Sir John (Fife, E.)Maclean, Sir Fitzroy
Barber, Rt. Hn. AnthonyGlover, Sir DouglasMaginnis, John E.
Batsford, BrianGlyn, Sir RichardMaude, Angus
Bell, RonaldGoodhart, PhilipMawby, Ray
Berry, Hn. AnthonyGoodhew, VictorMaxwell-Hyslop, R. J.
Biffen, JohnGrant, AnthonyMaydon, Lt.-Cmdr. S. L. C.
Biggs-Davison, JohnGrant-Ferris, R.Mills, Peter (Torrington)
Black, Sir CyrilGresham Cooke, R.Mills, Stratton (Belfast, N.)
Blaker, PeterGrieve, PercyMitchell, David (Basingstoke)
Bossom, Sir CliveGriffiths, Eldon (Bury St. Edmunds)Monro, Hector
Brame, BernardHall, John (Wycombe)More, Jasper
Brewis, JohnHall-Davis, A. G. F.Morrison, Charles (Devizes)
Brinton, Sir TattonHarris, Reader (Heston)Mott-Radcliffe, Sir Charles
Bryan, PaulHarrison, Brian (Maldon)Munro-Lucas-Tooth, Sir Hugh
Buchanan-Smith, Alick (Angus, N&M)Harrison, Col. Sir Harwood (Eye)Murton, Oscar
Buck, Antony (Colchester)Harvey, Sir Arthur VereNabarro, Sir Gerald
Campbell, GordonHastings, StephenNicholls, Sir Harmar
Carlisle, MarkHeald, Rt. Hn. Sir LionelNoble, Rt. Hn. Michael
Carr, Rt. Hn. RobertHeath, Rt. Hn. EdwardOnslow, Cranley
Channon, H. P. G.Heseltine, MichaelOsborn, John (Hallam)
Chichester-Clark, R.Higgins, Terrence L.Osborne, Sir Cyril (Louth)
Clark, HenryHiley, JosephPage, Graham (Crosby)
Clegg, WalterHill, J. E. B.Page, John (Harrow, W.)
Cooke, RobertHobson, Rt. Hn. Sir JohnPearson, Sir Frank (Clitheroe)
Cooper-Key, Sir NeillHolland, PhilipPercival, Ian
Corfield, F. V.Hordern, PeterPeyton, John
Costain, A. P.Hunt, JohnPike, Miss Mervyn
Craddock, Sir Beresford (Spelthorne)Hutchison, Michael ClarkPink, R. Bonner
Crowder, F. P.Jenkin, Patrick (Woodford)Pounder, Rafton
Cunningham, Sir KnoxJennings, J. C. (Burton)Powell, Rt. Hn. J. Enoch
Dalkeith, Earl ofJohnson Smith, G. (E. Grintstead)Price, David (Eastleigh)
Dance, JamesJopling, MichaelRees-Davies, W. R.
Dean, Paul (Somerset, N.)Joseph, Rt. Hn. Sir KeithRenton, Rt. Hn. Sir David
Deedes, Rt. Hn. W. F. (Ashford)Kimball, MarcusRidley, Hn. Nicholas
Dodds-Parker, DouglasKing, Evelyn (Dorset, S.)Rippon, Rt. Hn. Geoffrey
Doughty, CharlesKirk, PeterRoots, William
Eden, Sir JohnKnight, Mrs. JillScott, Nicholas
Elliot, Capt. Walter (Carshalton)Lancaster, Col. C. C.Sharples, Richard
Shaw, Michael (Sc'b'gh & Whitby)Turton, Rt. Hn. R. H.Wilson, Geoffrey (Truro)
Sinclair, Sir Georgevan Straubenzee, W. R.Wolrige-Gordon, Patrick
Smith, JohnWalker, Peter (Worcester)Wood, Rt. Hn. Richard
Stoddart-Scott, Col. Sir M. (Ripon)Wall, PatrickWorsley, Marcus
Summers, Sir SpencerWebster, DavidYounger, Hn. George
Taylor, Sir Charles (Eastbourne)Wells, John (Maidstone)
Taylor, Edward M.(G'gow, Cathcart)Whitelaw, WilliamTELLERS FOR THE NOES:
Temple, John M.Wills, Sir Gerald (Bridgwater)Mr. Pym and Mr. R. W. Elliott.
Thatcher, Mrs. Margaret

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).