Control of Liquid Fuel Bill

– in the House of Commons at 12:00 am on 6th July 1967.

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Order for Second Reading read.

10.2 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 is a very short enabling Bill, but I think that it is probably of some interest to the House.

The purpose of the Bill is to give the Government temporary powers to enable them, should they so decide, to control the supply, acquisition and consumption of liquid fuel in this country. These powers are being taken only in case a situation arises as a result of which we need to use them. I emphasise that it is not my intention to do so at present, although I am taking all appropriate preparatory measures on the principle that it is better to prepare for an emergency that never occurs than to be caught unprepared should one develop.

Hon. Members are aware that there is an enormous amount of work going on at present, both by the Government and the oil companies, to minimise the effects of the Middle East crisis. These steps should ensure that if the flaw of oil cannot be fully restored in the near future the resultant shortfall will be reduced as far as possible. We have adequate stocks at present, since commercial stocks, for a long time before this crisis, have been maintained at a very high level and the Government—although I am not open to any questions on this—also maintain their own stocks.

Therefore, although there is no immediate cause for alarm, some damage to our stock position is somewhat unavoidable, and in my view, and probably in the view of hon. Members on both sides of the House, it would be irresponsible not to take steps to guard against this possibility. It is for this reason, and to ensure fairness in the distribution of oil if the supply becomes short, that the Government need the powers in the Bill. At present, we have no such powers.

When petrol rationing and other restrictions on oil use were required during the Suez crisis the Government were able to act under the Defence Regulations. Those Regulations have long since been revoked. There are no similar standing powers which have taken their place. Given that there would probably be agreement on the principle, the only alternative to the Bill would be to resort to emergency powers under the Emergency Powers Act, 1920. In my view, this would be highly inappropriate and extraordinarily inconvenient. It would require the proclamation of an emergency and the powers would have to be renewed by the recall of Parliament in August, September and October—a course of action which it seemed to me would possibly be unpopular on both sides of the House.

It therefore seemed that a Bill of this type was the simplest and most effective means to provide a statutory basis for the operation of petrol rationing and other restrictions, if occasion requires, in Great Britain and Northern Ireland. I think that it is important to get it clear that the Bill does not of itself impose any restrictions whatsoever. It is an enabling Bill and simply enables me as Minister of Power to do so by means of Orders regulating or prohibiting the supply, acquisition and consumption of liquid fuel. These Orders may relate to liquid fuel generally or to particular liquid fuels, and to their use for all purposes or for particular purposes.

The Bill also enables me to give directions to refiners or suppliers of liquid fuel about the persons whom they may or may not supply; and it stipulates that liquid fuel supplied under a direction, and only under a direction, must be sold at a reasonable price. It may be necessary to require undertakings to keep records or to furnish information connected with their use of liquid fuel. The Bill empowers me to give directions or make Orders or serve notices for this purpose. If motor fuel, motor spirit and derv needed to be rationed, it would obviously be desirable to ensure the most efficient use of the available goods vehicles. The Bill accordingly empowers the Minister of Transport to relax certain restrictions under the Road Traffic Act, 1960, on the carriage of goods for hire or reward or for own account in the event of rationing.

It is necessary for the Bill to provide for the following matters: a Parliamentary procedure for the handling of Orders made under the Bill; the service of notices and other documents; the persons to whom the Bill applies; the making of full statements and the furnishing of false documents to be an offence; officers of corporations to be guilty of offences where the corporation has committed an offence with their consent or because of their interest; and duly authorised Government officials to be empowered to require undertakings to produce documents and, in certain circumstances, to obtain a warrant authorising the entry and search of premises.

All these matters are dealt with by applying the relevant provisions of the Emergency Laws (Re-Enactments and Repeals) Act, 1964. Contraventions of Orders, directions or requirements under the Bill and obstruction of persons exercising powers under it will be offences, as will be attempts and acts preparatory to the commission of offences. The penalty for any offence will be up to three months' imprisonment or a fine of £100 or both.

The Bill provides specifically for the reimbursement of expenditure which would be incurred by the Postmaster-General and the local authorities in the event of petrol rationing. It is intended that the basic ration books should, as was done at the time of Suez, be issued by post offices and by local taxation officers. Under the Bill, I would be responsible for the costs of the former and the Minister of Transport for those of the latter. Subject to that, it is proposed that expenditure by Government Departments would be met from moneys provided by Parliament.

It is not possible at this stage to make a worth-while estimate of the expenditure which is likely to be incurred under the Bill. Obviously, the whole of the expenditure would depend upon whether and for how long petrol rationing is needed. Petrol rationing cannot be operated without large numbers of staff. It is worth saying on the question of large numbers of staff that at the time of Suez, with 4 million cars on the road, we needed to recruit 1,800 staff to operate the scheme. Today there are on the road, not 4 million cars, but 10 million. There is, however, no evidence that the increase in the staff needed to operate the scheme would be in direct arithmetical ratio. The total of the expenditure would, therefore, depend upon whether rationing was necessary and, if it were, for how long it continued.

The Bill is designed to expire at the end of June, 1968. This firm limit is in accordance with the essentially temporary nature of the Bill. Rationing or any other restrictions may well not be needed. Even if they are, I certainly hope, as, I am sure, does everybody else, that they will not be needed for as long as the Bill is expressed to last. To name a much earlier date for the expiry of the Bill could, however, in certain circumstances make for certain administrative difficulties.

To sum up, therefore, the Bill is a purely precautionary and temporary enabling Measure. It does not bring petrol rationing or any other restrictions that may be necessary in the use of oil any nearer. That would require the making of Orders under the Bill. I repeat, the Government have not yet decided that any restrictions will be necessary. Plans and preparations—I have said this publicly—have been pressed ahead ever since the flow of oil to this country was first interrupted. in my view, common sense required that, particularly as petrol rationing cannot be introduced at the drop of a hat but is a very big administrative exercise. It entails a considerable operation in terms of staff, accommodation, supplies of coupons and the time required to issue coupons to the public.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

Yes, but if the hon. Member is making a request for a special supply I could not accommodate him.

Only when the Bill has become law will it be possible to translate the plans and preparations which are in train into actual rationing—if rationing should ever be called for. I look forward, as do all hon. Members, to the end of this unfortunate crisis. This is a temporary situation, but I think that the House will agree that it would be a dereliction of duty not to take these first initial preparatory steps in case of need. No one will be happier than myself and the remainder of the House if the Bill is doomed never to be operated.

10.12 p.m.

Photo of Sir Keith Joseph Sir Keith Joseph , Leeds North East

We are grateful to the Minister for his explanation of the main features of the Bill. Of course we deplore the circumstances which have given rise to the need for any Bill of this sort, but we agree that the Government are right to take preparatory steps and, in general, we do not propose to question the principles of the Bill.

But rationing can be justified, I am sure the Minister agrees, only when a necessary commodity is in such short supply that essential users may be squeezed out either by price or by pre-emption by other users. The first question, therefore, which we put to the Government is whether there is freedom for the oil industry to maintain supplies to the full demand of the market. I do not press the Minister to go into figures, but are the oil companies free to bring in as much oil as they think the market demands—free in respect of foreign currency either to pay for the tankers or to buy oil from North or South American sources in place of Middle Eastern sources? The economics of oil supply is a very esoteric subject and I do not pretend to be a master of it, but if foreign currency is involved in maintaining our supplies, will the Government tell us whether the oil companies are free to serve the market fully?

Secondly, has the Minister had, or is he having, or will he be having, preparatory talks with representatives of private users of fuel of all sorts, industrial users of fuel of all sorts, and utility users of fuel of all sorts, including the health service and similar services, in order to establish up-to-date criteria for the fair and sensible allocation of fuel if it should become in short supply? We do not expect details at this stage, but there may be a few detailed questions which we shall put in Committee. We should like to know whether those talks with all the representative bodies are going on and whether the Minister will be fully informed of those needs which are wholly dependent on oil.

There is one detailed question connected with the drafting of the Bill which is sufficiently important for me to ask the Parliamentary Secretary to try to help us. It arises on Clause 1(3). The Minister referred to it. It is the subsection in which the Minister has power to direct a refiner or supplier of liquid fuel to supply to a particular user a particular quantity. Will the Parliamentary Secretary to give us some idea of the kind of circumstance against which this is meant to safeguard?

Fourthly, while we realise that the situation is changing the whole while, can the Minister give us an idea of the safe period, so to speak, before which he does not anticipate having to introduce rationing? Is the moment of decision about rationing several weeks away, at the earliest, or does not the right hon. Gentleman even have, because of the constantly fluctuating situation, that vague an impression about the timing? I assure him that any news about the timing he can give us will be of interest to the House and the country.

These are the four questions which I wish to ask at this stage. My hon. Friends may have further questions to put and, naturally, we reserve our right to go into the Bill in greater detail in Committee.

10.14 p.m.

Photo of Mr Derek Page Mr Derek Page , King's Lynn

While I appreciate the need for the Bill, there are a few points which need clearing up. For example, what effect will rationing have on rural areas? The steady rundown of public transport in areas such as Norfolk has already placed a great burden on many people. There is now increasing reliance on private motor cars and the rundown of public transport, coupled with this fact, makes the prospect of rationing particularly worrying for people who now rely on their own vehicles.

More and more families now depend on their own cars, even to the extent of having moved away from areas of industry. They are, therefore, dependent on their own vehicles not just for their convenience but for their absolute living.

I trust that the Minister will have power to make differential allowances of fuel. However, a number of railway lines in Norfolk are, we suspect, on the verge of closure orders. It would seem highly inappropriate for decisions about these lines to go ahead at this stage.

Certainly no decision should be made for closing them until the question of fuel supplies for road transport is absolutely clear. Will my right hon. Friend consult the Minister of Transport and suggest that decisions on these lines should be deferred in the present situation?

10.15 p.m.

Photo of Mr Ronald Russell Mr Ronald Russell , Wembley South

Like the hon. Member for King's Lynn (Mr. Derek Page), I will not detain the House for long. The Minister mentioned that at the time of Suez the Government required 1,800 additional staff to cope with fuel rationing. Although he said that he did not think that this would go in arithmetical progression, has he calculated the additional number of staff that will be needed, and from where they will be obtained? I appreciate that there is a large number of people unemployed at present, but are they suitable for this work? If not, is there any chance of using part-time workers? Many retired civil servants—for example, school teachers—might be suitable for this sort of work.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

It might he convenient if I answer the hon. Gentleman's question now. It is difficult to say precisely how many people we will need, but we will probably require about 2,500. I agree that it is difficult to find them at present, but we are relying—and it looks as if this will work very well—on assistance from other Government Departments. However, it is clear that we will need to have part-time staff as well.

Photo of Mr Ronald Russell Mr Ronald Russell , Wembley South

I am grateful to the right hon. Gentleman for that answer.

Can he say what has been the cost of printing the ration books? As we hope that this will be a complete waste of money, is he ensuring that when these books are printed—if they are not already printed—they will be capable of being used on a future occasion, should another awkward situation arise? We do not want to see money being wasted and I trust that it will be possible for these evil things to be kept in case they are needed on a future occasion. We do not want to be obliged to print new ones every time a possible crisis arises.

10.18 p.m.

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

The House will share the hope of the Minister that this is one piece of legislation that will never be used. Further to my right hon. Friend's full statement tonight, can he say whether the organisation of fuel supplies will be a joint responsibility of the Ministry and the major oil companies on the lines of the Petroleum Board during the last war —a rather loose organisation in which the oil companies did most of the supplying? If so, can he guarantee that there will be a place for the new oil companies that have come forward since the end of the last war—Total, Jet, Agip, and others?

Does he visualise the continuation of graded petrols, or has his Ministry gone so far as to talk of "pool" petrol again? Is he aware of a temptation that already exists, and of which I have personal knowledge, of people saying, "Let us get some petrol on one side, either in cans or drums or any handy place"? That is a very real danger. Would my right hon. Friend consider again the undesirability of this Bill lapsing after 12 months? He gave one reason why it should but if rationing is to be introduced by an Order later, what is the objection to having the Bill on the Statute Book? I hope that I am wrong, but I do not believe that this is the last time we shall have difficulties over oil supplies from overseas.

10.21 p.m.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I must immediately declare an interest in that I have some connection with oil companies. While this is a brief Bill, it is a very powerful one. I am quite certain that the oil companies wish to do everything possible to co-operate with the Minister in ensuring that oil supplies are properly administered in the event of any shortage. Those companies have already shown complete willingness to co-operate with the right hon. Gentleman in the present situation of shortage in the oil industry.

I should like to ask the Minister a few questions. This is a general Bill, and I can assure him that no one wishes to be critical. We realise that there must be some weaknesses and misunderstandings in any legislation that is brought forward quickly, so I again stress that I am not being critical in asking my questions.

In referring to liquid fuel in the Bill, has the Ministry decided what it means by that term? Does the Minister believe that the Bill gives him powers to decide what is and what is not a liquid fuel? For instance, L.P.G. can be liquid at some time, or can be gaseous, as Propane, at other times.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

I am grateful to the hon. Member for mentioning that point as it is important in relation to certain groups. Naphtha, for example, would not be covered by the Bill, as it is not legally a liquid fuel. The point is that the suppliers and users of naphtha are so relatively few that it is easier to deal with that aspect administratively. The point the hon. Member mentioned is one that we encouraged rather abruptly, but it can be dealt with administratively, because, as I say, naphtha is dealt with by only a very small number of companies.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

I thank the Minister for intervening to give me that information.

What about lubricating oil? It is not normally thought of as a fuel, but if there were a shortage over a lengthy period the Government might rightly want powers to control it.

The Minister has rightly taken powers to direct the supply of fuel whether from refineries or other sources in order that the public interest may be protected. If a refinery or a company supplying fuel has an adequate amount of fuel to cover its normal contractual obligations but, having been directed by the Government to use its supplies in the best interests of the nation, finds that it cannot fulfil its contracts, what is that company's position?

Normally, I am informed this would not fall under a force majeure decision whereby the contract would be void; this is because the supplies were in the possession of the company. Obviously, companies wish to co-operate with the Government. I hope that the Government will try to ensure that the companies should not suffer legally because they are carrying out the objects of the Bill. This is a rather technical legal point but the matter is not made clear in the Bill. I hope that the Minister will turn his mind to it.

Another problem arises under Clause 1. Some oil companies have a strong desire to fulfil contracts whatever the cost, particularly long-term contracts given to certain firms or public authorities. They pride themselves upon being able to live up to these contracts and would be willing because normal sources of supply have been lost to go perhaps to Venezuela or America to provide supplies. They could then meet the contracts at considerably greater cost than that envisaged when the original contracts were made.

If the Minister then used his power to direct the supply to other sources which I believe he should have, I suggest that the company should be able to be reimbursed, not necessarily with the initial price but the additional price which it had paid to obtain to fulfil the contracts. This is an involved point, but it is an important one because this would encourage oil companies to ensure that the maximum amount of liquid fuel was here to meet the emergency. This is not the foreign exchange point which was made by my right hon. Friend but it is an additional pricing point.

I greatly admire the hon. Member for King's Lynn (Mr. Derek Page), who somehow was able to bring in rail closures in this debate. I immediately wish to follow that approach, for the Exeter-Exmouth line should not be closed, but I realise to pursue this point in this debate would be ruled out of order by you, Mr. Speaker.

Because of the extensive powers given by the Bill, there are two other things I wish to ask. If it were necessary to prolong the operation of the Bill more than Clause 8 suggests, "from 30th June, 1968, or as Parliament should otherwise determine", how does the Minister envisage this being done? I am not certain what is in his mind, and the Bill does not spell this out. Secondly, under Clause 5 there is reference to the negative Resolution procedure. I do not wish to exaggerate the powers given to the Minister; they are considerable. They are powers which normally the Opposition would object to most strongly as they give carte blanche to any Government in peacetime.

I am sure that the Minister would agree that this would be the right stand for the Opposition to take in normal circumstances, but this is a particular case and we do not object. However, as the powers are so considerable, would the Minister consider that this should be done by affirmative Resolution rather than the negative procedure?

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

I hesitate to interrupt the hon. Member, but this is a point which he could make in Committee.

Photo of Sir Peter Emery Sir Peter Emery , Honiton

Thank you, Mr. Speaker. I shall not continue on that line.

Because of the extensiveness of these powers, the Minister will realise that if this could be done with the co-operation of both sides of the House which is evident in this Second Reading debate, he would be benefiting the Government and showing the possibility of greater co-operation with the industry. I do not like to welcome a Bill of this nature, but I recognise that the right hon. Gentleman has to bring it forward. Obviously, the suppliers, their customers and the Government want to ensure that available supplies will be dealt with fairly, and the Bill sets out the procedure which can ensure that this is done.

Mr. Sydney Bdwell:

In Clause 1(4) there is reference to persons paying such price in respect of the fuel as may be reasonable. May the House have the assurance from the Minister that he will act vigorously should there be an element of profiteering? Also, can he give us a little information of the criteria he would use to determine what would be a reasonable price?

10.31 p.m.

Photo of Mr Richard Marsh Mr Richard Marsh , Greenwich

I do not want any misconception to get abroad about this matter. The Bill contains no general price control powers. The only provision relating to prices is Clause 1(4), to which my hon. Friend has referred, which gives me power to demand a reasonable price only where I am directing a supplier to supply to a particular user. It is very doubtful whether price control powers could be imported into the Bill as drawn. Certainly, if there were widespread profiteering—which I would doubt, but in those circumstances —the Government have very real powers of control over the actual supplier of oil.

10.32 p.m.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

I shall try to answer, so far as I can, some of the specific questions which were put to my right hon. Friend. First of all, there were the points which were put by the right hon. Member for Leeds, North-East (Sir K. Joseph). He asked whether there is freedom for the oil companies to bring in as much oil as actually required. The answer to that is that there are no restrictions on the oil companies in this connection.

The right hon. Gentleman asked whether there had been consultations with users of oil as regards a future fair allocation of supplies should rationing need to be introduced. The answer to that is that there have been discussions with the C.B.I., with the Health Service, various Government Departments, and the motoring organisations, and these, of course, will continue as may be necessary as we proceed.

The right hon. Gentleman asked about the kind of circumstances in which Clause 1(3) might be operative. There could be a variety of circumstances. For illustration, suppose a hospital began to run snort of supplies it might well be necessary—it would be necessary—for the Minister, in the circumstances operating under this Bill to direct that such an organisation should receive supplies from the appropriate quarter. There could be other similar circumstances.

The right hon. Gentleman finally asked whether we had any idea in mind as to the timing of rationing, whether it would be a matter of weeks, or what. The answer I have to give to that—I use my words carefully—is that there are no immediate intentions to introduce rationing, and there is no actual timing in mind at present.

Then my hon. Friend the Member for King's Lynn (Mr. Derek Page) made a particular point about the railway situation in his part of the country. We will undertake to draw this point to the attention of the Minister of Transport.

The hon. Member for Wembley, South (Sir R. Russell) asked about the cost of ration books. I do not know the answer. It is not a considerable sum. He urged us to keep these in stock now that we have them, in case a similar situation arose in future. The answer to that is that a previous stock was maintained, which assisted in the long-stop operation, and we will, of course, continue to keep a certain supply in stock.

My hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) asked whether we should not set up a petroleum board, such as we had during the war. There is no such thought in mind. The powers in the Bill will rest entirely with the Government, but the companies are co-operating and we do not feel that the circumstances would require a repetition of the wartime control.

My hon. Friend went on to ask whether we would be introducing pool petrol, as was the case immediately after the war, I should point out that the technical advances which have taken place in this industry since then obviate the need for such a technique of supply.

The only observation that I would make on my hon. Friend's query about people buying up supplies is that hoarding would only make life more difficult for the industry and for the community at large. Certainly, nothing should be said or done which would encourage anything of this kind being undertaken either by industry or private consumers.

The hon. Member for Honiton (Mr. Emery) raised a number of mainly technical points, one or two of which can be dealt with in Committee. On the question of the direction of supply, we can certainly look at the question of force majeure, if it requires to be looked at, in Committee, but, as I understand the position under Clause 1(3) a direction issued by the Minister would take account of this particular point.

As far as lubricants are concerned, this is a question of fact, and I do not intend to try to define the particular point of fact that the hon. Gentleman was putting. Lubricants are lubricating oils, and if there should be any quarrel about it I think that this is a matter for the technicians.

We were asked, if there should be a need for an extension of the Bill, what technique would we operate? We have got a year, if and when the Bill goes through, to consider how we might operate should there be such an unfortunate necessity.

I think that the rest of the points that the hon. Gentleman raised were Committee points. I believe that I have dealt with all the matters which have been raised so far as they need to be answered this evening.

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

Could the hon. Gentleman state the position with regard to 1.p.g.— liquified petroleum gas? In reply to a question by my hon. Friend the Member for Honiton (Mr. Emery) he stated that naphtha was not within the Bill because clearly, it is not a fuel; it is a chemical feed stock. But liquified petroleum gases are a fuel; the bulk of them are used as a fuel. It will be helpful to the trade to know whether these will be comprised within the restrictions or not.

Photo of Mr Reginald Freeson Mr Reginald Freeson , Willesden East

Yes, they would be. Naphtha is not a fuel and, in any case, it can be handled, as my right hon. Friend said, simply by administrative action, since there are only about eight sources of use in the country. But l.p.g. would, in fact, be covered.

Question put and agreed to.

Bill read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Ioan L. Evans.]

Committee Tomorrow.