North Sea Oil

– in the House of Commons at 12:00 am on 30th March 1973.

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11.4 a.m.

Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire

I beg to move, That this House draws attention to the contribution of United Kingdom industry to meeting the requirements of companies operating on the United Kingdom Continental Shelf; is concerned at the Government's failure adequately to respond to the International Management and Engineering Groups report or to appreciate the environmental impact of North Sea oil; and requests the publication of a White Paper on all aspects of the subject. Initially I must apologise to the House in advance for the fact that I shall take rather longer than my usual stint of 10 minutes. This is a wide and interesting topic.

I begin this debate, as I have done others on similar topics, by commending to the House the skill and courage of the men and women—especially the men, if I can avoid the anti-sex strictures of my hon. Friend the Member for Fife, West (Mr. William Hamilton)—who play their part in the extractive fuel industries. The comfort that we enjoy from energy sources is dearly won by the coal miners, as the case this week of the Lofthouse Colliery amply illustrates, and by the men working on the drilling platforms and, in the future, on the production rigs for oil and, at present, on the production rigs for gas. As my mining friends tell me, coal is too valuable to be burned. So, too, one might question the profligate use and waste of fuel oil and other raw materials. What has taken millions of years to create we squander in a generation.

My comments will be divided into three sections. First I shall deal with the assessment of reserves, yields, taxation and other revenue. Secondly I shall deal with the broad issues of the supply of equipment on the lines of the IMEG report. Thirdly I shall deal with land use and the environment. Taking first the reserves in and yields from the North Sea, the Government still stick rigidly to the 75 million tons per annum yield from the North Sea by 1980 on the basis of their present estimates. They admit that this often does not take into account the 1972 drilling programme, and therefore I should expect the figures to be updated substantially. The IMEG report produced figures, albeit on a longer time scale to 1985, of 150 million tons per annum. If one takes the typical figure of production costs of £1,000 per daily barrel and relates it to the £300 million per annum expenditure in the period 1973 to 1985, this confirms IMEG's suggested yield. I should be grateful if the Under-Secretary of State for Trade and Industry would comment on that.

The Government seem to be firm, even arrogant, in their use of the figure in relation to the industry's requirements of £300 million a year in terms of the supply of equipment. They are extremely reluctant to accept anything which indicates that they should update the figures of yields from the North Sea. I have quoted elsewhere the views of Professor Odell, who suggests that the whole North Sea might yield 600 million tons' by the 1990s. Other eminent geologists to whom I have spoken have not been in sharp conflict with that expectation.

As a member of the Public Accounts Committee, this is the first time that I have raised this topic of revenues in the House. But before doing so and before commenting on the 1972–73 Report of the PAC on North Sea oil and gas, it is fitting that I spend a little time giving some details of the background.

My right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever) is missed by us all. His services are needed by the House and by my party. It is, however, a significant commentary on the depth of talent in the House and in my party that my right hon. Friend the Member for Birkenhead (Mr. Dell) proved a more than satisfactory substitute for my right hon. Friend the Member for Cheetham as Chairman of the Public Accounts Committee.

The analysis by the PAC of the background to the fourth round of licences is available, and we shall have to debate the Committee's report in full at some stage. While I am critical of the Government's handling of the fourth round of licences, I appreciate the difficulties which the generally accepted policy of rapid exploitation placed upon the Government and upon industry.

The Opposition seem to be stricken with a conscience, not unrelated to our own omissions, which casts all the blame on the benches opposite. Whilst my party has no settled policy on the topic of oil, the general drift of the policy is to embrace this industry, as others, in the public sector. I do not shrink from public ownership, but it does not serve my party or the nation's well-being to cloak ill-conceived ideas of public ownership and control of these vital industries under a banner of a political slogan.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

Does the hon. Gentleman intend to take the oil companies into public ownership, or does he intend to take over the oil which cannot in fact be vested in the State?

Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire

If the hon. Gentleman will contain himself, I will explain what I mean. I may have been imprecise in the way I put it. As I say, I do not shrink from embracing industries, either individually or collectively, in the public sector, but that must be on the basis of a considered judgment. In this case, no considered judgment has been forthcoming. The policy adopted must give maximum benefit to the United Kingdom economy and the environment, and the devices adopted to this end must take cognisance of the fact that we are a major international trading nation.

A few weeks ago, when Lord Balogh was on a television programme dealing with the oil industry, the question of nationalisation of the oil industry was raised, and he commented: … in order to ward off really silly Left wing views we must show that we are exploiting this natural resource in the best way for the country and not for foreign shareholders ". I generally share that view.

How should this be done? First and most obviously, it should be done by having a better system of licensing which would involve graduated royalties moving from, say, 8 per cent, to 16 per cent, or more in the higher yielding fields. Roughly speaking, the yield from the BP Forties field should be giving the country in terms of royalty not 12½ per cent, but 16 per cent, or more.

Secondly, it should be done by giving the Government the right in terms of carried interest to buy into the production enterprises, after the oil has been discovered, by incorporating in the licences an agreement for public participation up to at least 50 per cent.

Thirdly—as the Government now seem to be proposing—it should be done by persuading the oil companies to introduce a system of accounting which separates the profits made from the North Sea from other aspects of their activities, and thus make these profits appropriately subject to United Kingdom corporation tax.

Fourthly, the Government must have access to the licensees' costs. This was a recommendation of the PAC which seems to have been lost. These costs must be known if a proper evaluation of the return on capital is to be arrived at. I respect the views of Mr. Frank MacFadzean about a 15 per cent, discounted cash flow rate return on capital, but the Government should have access to the costs so that they can do the calculations.

In the main, these proposals will affect the future, but portions of the blocks now allocated are gone for 46 years. That time span is more than the typical life of an oil field, and from the nation's point of view in terms of adjusting these flows those portions are gone for good. To readjust the situation properly, urgent consideration should be given to imposing a quantity tax on North Sea oil, particularly from the bigger fields. The PAC has suggested a barrelage tax. I am more than apprehensive of the Government's attitude to these problems.

During the evidence to the PAC I questioned Sir Robert Marshall on aspects of the pricing policy in relation to BP oil from the Forties field which is due to come ashore in late 1974. I quote from the report of the evidence heard on 31st January 1973. I was told, in reply to Question No. 412: We are proposing very soon to start discussions on the basis of royalty calculations for oil. This obviously must be completed as soon as possible, but we have until the end of 1974 before we much reach agreement. I place the emphasis on " as soon as possible ".

The Minister for Industry told the House thise week: No negotiations are taking place at present."—[OFFICIAL REPORT, 26th March 1973; Vol 853, c 892.] In putting ray supplementary question my terms may have been loose, but I ask the Minister who will be responding whether we have started discussions with this company, and when the House will know what is happening. That is an important consideration in assessing the company's cost and the nation's return from the North Sea comprehensively, because the Forties field will determine the pattern of cost and pricing.

Photo of Mr Patrick Wolrige-Gordon Mr Patrick Wolrige-Gordon , Aberdeenshire East

Has the hon. Gentleman assessed the heavy taxation policy on companies involved in the North Sea and made any estimate of the possible effect of that policy on British investment—not necessarily oil company investment—in countries overseas?

Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire

I take the hon. Gentleman's point. It is akin to a claim made by Adrian Hamilton of the Financial Times. If we can increase our take only at the expense of the OPEC countries reducing theirs, I do not think that is valid.

There are two distinct aspects of the problem. We are moving to a situation, in terms of host nations and producing nations, when it may be better for us in the Western world to buy the oil FOB. I may be jumping ahead. That would have to be done gradually and in concert with other nations and other interests.

Photo of Mr Donald Stewart Mr Donald Stewart , Na h-Eileanan an Iar

I should like to hear the hon. Member's views on the wisdom or lack of wisdom of the speed of extraction decided on by the Government.

Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire

That is a good point, and at the conclusion of my remarks I will try to draw it in.

I turn now to refining. As at present envisaged, when the Forties field reaches its full capacity all its crude will not be refined in Scotland. However, BP has made clear its intentions to expand in Grangemouth, but no firm date has been given.

My hon. Friend the Member for Stirling and Falkirk Burghs (Mr. Ewing)—who would have been in his place today but for other engagements—and I have met the company and the Secretary of State for Scotland on this topic. The company's reasoning relates to the possibility of the expansion of oil refining capacity on the West Coast of Scotland upsetting the market and thus making non-viable, albeit in the short run, the Grangemouth project. That strikes me as extremely vague reasoning, and the Secretary of State for Scotland undertook, in consultation with the Department of Trade and Industry, to explore the company's intentions. I know that time has been short, but is the Minister able to say what progress has been made?

This matter is made more cogent by the arguments put forward in the report of the Hunterston Development Corporation which recommends the construction of "a fully integrated steelworks" at Hunterston and " a small market-oriented oil refinery". It is clear that there is developing a settled position in Scottish terms in relation to oil refining. Therefore, much of the company's argument is undermined, in Scottish terms.

I am grateful to note that the hon. Member for Essex, South-East (Sir Bernard Braine) is here today. I note that the Secretary of State for the Environment has given approval for a £45 million oil refinery at Canvey Island. Both the hon. Gentleman and I have taken part in an Adjournment debate which he initiated on the expansion of oil refinery capacity in the South-East, and he pointed out the evils of expanding oil refining capacity in this already congested area.

The Government are likely to coin a new word—I say this advisedly—Maplin-alia, and I define it as having regard to regional, economic and environmental problems in inverse proportion to the amount of public money spent on a project It is ludicrous to see the continued over-development in the South-East—and I am not mentioning the Channel Tunnel —on grounds of market dominance and market orientation, while at the same time valuable assets such as Hunterston remain underdeveloped or undeveloped; and, while the expansion of oil refining capacity takes place in the South-East, we await the confirmation of developments at Grangemouth. This is a ludricrous situation and cannot be justified by any arguments based on the Government's new policy.

Let us turn to the equipment supply industries. I have used the plural advisedly. The House should be reminded that the IMEG report was produced against a background of dissatisfaction with the United Kingdom's share of what is acknowledged to be an expanding market. The major IMEG recommendation was the creation of a petroleum supply industries board. Again I use the plural. This board would be of an independent character with its own financial resources. What are the arguments for this board? I admit that everyone is not convinced that IMEG got it right or undertook the most searching analysis.

What are the arguments for such a board? First, there is the manifest need to get into and increase our share of a £300 million per year market for the United Kingdom and a £1,300 million per annum world market. Secondly, this is new technology, not on a United Kingdom scale but on a world scale. The research and development necessary to break into it requires Government participation and governmental action. Thirdly, it is not one industry. We are talking about many industries. They have to be brought together not just by appointing someone who has expertise in petroleum. It is necessary to appoint a board of marauders, a board which will initiate development within industry and galvanise attention to what is happening. This is specialist and specialised in terms of finance. The old techniques, even by a a seemingly appropriate measure—one thinks of the Industry Act 1972—will not prove appropriate in this case.

The Government's case, however, is that they did not reject wholly the IMEG argument. They set up an offshore supply office, under Mr. Gibson, which would be linked to the Industrial Development Executive, plus a Scottish petroleum office and a branch of the petroleum division of the DTI in Glasgow. I hope one of the Ministers will tell us how many people these offices will employ in Scotland.

The Government's argument is that to set up a petroleum supply industries board would require legislation and that the powers of the Industry Act 1972 would be sufficient. I do not believe that the powers of the Industry Act are sufficient. The legislative case is, to say the least of it, doubtful. The Minister might recall how long it took this House to go through all the stages of the Industry Act. We went through it in a matter of weeks; and, while I cannot commit my colleagues, my right hon. Friend the Member for Bristol, South-East (Mr. Benn) is so enamoured of this measure that he thinks that with a future Labour Government we shall need to pass very few of these Bills in this connection. I speak for myself, and I do not commit my party, but I feel reasonably sure that any proposal to create a petroleum supply industries board on the basis of legislation would receive a favourable response from this side of the House. I do not think the legislative difficulties can be pleaded in aid by the Government.

The real case of the Government is that they and their advisers yielded to caution, except in their desire to underwrite high risk ventures. We were told when the Government responded to the IMEG report that they were willing to supply additional assistance when the ventures were of a high risk nature. Perhaps the Minister could tell us how many ventures coming forward have received this form of assistance.

Let me turn now to the subject of Mr. Gibson's appointment. I have met Mr. Gibson only once. We had a brief conversation. I do not know him, and I cannot assess his qualifications comprehensively, but I am extremely disappointed that in one of his first excursions into Scotland, when he spoke at East Kilbride last week, he did very little except moan about the relatively few members of the Scottish industrial community who came to see him. I thought this was the height of cheek. Do the Government think that infrequent visits by a London-based peripatetic will give industry in Scotland the know-how and confidence to get a higher share in the offshore market? When he comes to Scotland he ought to have the good manners to visit industry and not expect industry to go to see him.

If we really mean business, as a matter of urgency, on the basis of the IMEG proposals, a petroleum supply industries board should be set up in Scotland. The Government can argue from now till kingdom come that London is the financial capital of the world market, but it is not the supply industry capital of the world market. If the Government really mean business they will take this suggestion very seriously. I am surprised that Ministers who have the interests of the regions at heart say that they can satisfy the demands of this important industry by the methods that they have chosen to adopt.

I turn to the subject of liquefied natural gas carriers. I have raised this topic on innumerable occasions. One of the Ministers extended to me an invitation to discuss the matter with him, and I apologise for not having taken up that invitation. I shall do so. I want to know, on the basis of subsidies to be given to high technology—and nothing applies to high technology more than LNGs— what our future course of action is to be. Are we to await the Booz-Allen Report before we can get clarification? Are the Government going to sponsor design studies? I suggest that the Government should talk to the industry. They should go to a shipyard and at least get clarification on the feasibility of choosing a particular design of LNGs that can be built in the United Kingdom.

Last week I had the opportunity of attending the Offshore Scotland Exhibition in Aberdeen. The organisers, NESDA, are due for immense credit for their imagination and enterprise. I am sure Ministers will respond to it.

In my view, some of the best exhibits we saw did not come from Scottish industry or, for that matter, from British industry. I thought that the best stand was provided by the Marathon Company now at Clydebank thanks to Dannie McGarvey. It was a wonderful exhibition stand. Next to that was the concerted block of stands under the auspices of the Canadian Government's industrial section. It was an indication of the international nature of the oil industry that one talked at that group of stands to a young man on the Lockheed stand, an Indian who had been educated in Scotland—that makes him a good engineer —who was now working in Vancouver, Canada.

The Canadian Government saw the opportunity to unite with Lockheed—and, in this case, Shell—to take a step into the future and to design equipment capable of being used for the production of oil under water to a depth, I am told, of 1,000 ft. We know that others are working in this technology—SEAL and Vickers, for example—but these projects in the United Kingdom require Government asistance and Government participation. The Canadian Government saw this and did it. Now that work will be going ahead into very deep water, both in this country and elsewhere, I want to know what the Government's intentions are.

What about United Kingdom companies? The Norwegians include a clause requiring that preference should be given to Norwegian bases, men, materials and supplies. If we cannot have that, may we have a fair bidding clause not only related to the prime contractor but going right down the list? How are the Government monitoring quarterly the expenditure of the companies? May we have more information about that?

Speaking at Aberdeen, Mr. Matthew Linning of British Petroleum said, with reference to the Forties field: we believe that about 65 per cent, of the goods and services required for the total development will be provided by British companies and British labour. I have a great respect for Mr. Linning's engineering ability, and I have no doubt that the Government will plead in aid such words as those. But they were chosen most carefully. Mr. Linning is an extremely cautious man, and he does not say that 65 per cent, of the goods will be British. He knows better.

I ask the Government—I pick on one company as an instance—whether they have any idea how much of the equipment and raw materials used by Highland Fabricators—that is, Brown and Root and Wimpey—are British. I know that the major company of that group, Brown and Root, boasts that its data processing for the payroll is done in Texas. I should have thought that the British Government, interested in support for the United Kingdom computer industry, could at least have seen the merit of making a telephone call to Brown and Root to say that we could do that sort of thing here. Criticism has already been levelled at this company for buying overseas relatively small items of equipment such as electric lamp bulbs.

Although the Government can produce statistics of job creation in such enterprises, there is no breakdown of the number of United Kingdom citizens employed in the higher echelons of management in these companies. I do not necessarily object to American management. American managers have done a good job in Scotland and elsewhere. But they do not have a monopoly of skills in the higher echelons.

I put my next question to the Undersecretary of State from the Scottish Office. What has happened to the Highlands and Islands Development Board's register called "Counter-drift"? How many Highlanders of high quality and skill have been approached to work in these production firms, and how many have been asked to return?

Criticism has been made of United Kingdom industry. I take on board the criticism of the nationalised sector. I think that the British Steel Corporation, because it has been involved in a major plan for restructuring and investment, is becoming somewhat monolithic and unresponsive to what is happening. I feel that that criticism ought to be taken on board by the corporation. It is a great pity that, having been able to secure the landlines contract, perhaps because of matters beyond its control and perhaps because of industrial disputes, it was not capable of fulfilling that contract and had to buy from overseas.

That brings me to the problem of labour relations. I am not convinced that the Government have taken the trade unions into their confidence in relation to the potentialities of this new and exciting industry. I appreciate that labour practices, particularly in the heavy structural engineering sectors, leave a great deal to be desired, but if one is to overcome these labour practices one must talk to the trade unions and the people involved.

I turn now to the question of the environment. The Scottish Daily Record, a newspaper which I usually enjoy because it has some excellent sports commentators, not because of its political erudition —though I enjoy very much its Sunday companion the Sunday Mail, in which my hon. Friend the Member for Fife, West regales us with what is wrong with the Labour Party and society in general—is this week running a competition called "Oil Shares" which invites people in Scotland to win a share of the oil boom. Readers are asked for their listing of priorities if they had the job of spending the millions of pounds which will flow from the coming of oil. These priorities seem to cover a reasonably desirable range. Significantly, however, one cannot in that competition vote for what must be the chief priority, namely, the protection and conservation of the environment.

I have argued that all the revenues from North Sea oil ought to be spent in Scotland until certain key indicators, such as the level of unemployment, the net migration rate, the job opportunity rate and so on, are at the United Kingdom level. One of my reasons for arguing that case is that I am most anxious to see sums devoted to the preservation and conservation of the unique qualities of the Scottish countryside and coastline—and not just for Scotland. It is not a narrow argument. It is an argument which recognises that in the Highlands of Scotland we have the last vestiges of wilderness—I use the word advisedly—left in the world, and it is important that they be preserved for generations to come.

Blessings are never unmixed. It happens that the landfalls near to the oil are in many cases in areas of high scenic beauty which require protection from this point of view. The Nature Conservancy has produced its prospectus for conservation within the Moray Firth and other organisations, such as the National Trust, have drawn attention to the inadequacies of the present planning procedures to cope with the impact of intense industrial development in remote areas.

I note that in his speech last week Mr. Linning—again I mention BP—drew attention to the sensitivity of that company to the environment issue and he said that, on discovering some rare red moss, the company was willing to divert the pipeline. That is an enlightened response but it comes as a result of the company being conscious of outside pressure. Companies do not do that sort of thing off their own bat.

I draw attention now to a clause in the Maplin Development Bill which was produced by the Select Committee. I do not want to embarrass anyone, but it was promoted chiefly by my hon. Friend the Member for York (Mr. Alexander W. Lyon), and I think that one might call it the "Lyon" clause. I believe that it is a unique clause, worthy of attention both in the House of Commons and elsewhere among all who are concerned for the protection of the environment. The side note to the clause is, Protection of flora and fauna". and it reads as follows: (1) It shall be the duty of the Maplin Development Authority, before beginning any work of reclamation authorised by this Act, to consult with the Nature Conservancy about the likely effect of the work on any flora or fauna.(2) For the purpose of assisting the Nature Conservancy in conserving any of the flora or fauna adversely affected, or likely to be so affected, by any work of reclamation authorised by this Act, the Maplin Development Authority shall pay to the Nature Conservancy such sums as the Secretary of State may, with the consent of the Treasury, approve. I am sure that a clause of that kind has not appeared in any other legislation passed by the House, and I urge the Ministers responsible—the Secretary of State for the Environment and the Secretary of State for Scotland—to see whether developers, either public or private, will take the intention of that clause to heart.

I am very conscious of what is happening—here I declare an interest as a member of the council of the National Trust—to areas such as Drambuie in Wester Ross. The National Trust is to hold a special meeting to discuss the impact of development in that area. The right hon. Member for Orkney and Shetland (Mr. Grimond) has on earlier occasions referred to the impact of this type of development on his constituency and it will obviously be a severe impact if it is not properly planned. Private speculators have moved in, and I bear them no ill will because that is the free play of private enterprise. Although I have been critical of those who choose to call Left-wing ideas silly, equally it would be a silly Right-wing idea if it were thought that one could solve the problem of land allocation in the Highlands and Islands, and particularly in Shetland and Orkney by the free play of the market. That is absurd.

The county council of Zetland has presented a Private Bill to the House. I know that the Government might be embarrassed if we asked for their views but it would be useful if the Minister gave some indication. I do not malign the companies. They are spawned by merchant bankers in Edinburgh, such as Noble-Grassart and Nordport and many others, and have bought land or acquired options for land around the Sullom Voe area. They have bought a little over 100 acres of land and have options on about 2,000 acres. The function of the county council is to bring the land into the public domain.

I support that intention but I do not necessarily support comprehensively the Bill. It is a large and complicated measure. The county council's general intention ought to have the support of the House, and we should be giving assistance in a more meaningful way to county councils similarly affected.

The community of Orkney and Shetland is in what I choose to call dynamic equilibrium. The basic industries are now, after long years, in a fairly healthy position, but they would be adversely affected by uncontrolled expansion by oil companies and other service industries. If it were uncontrolled the community would be faced with severe long-term consequences. It is not sufficient therefore for the Government to leave the county councils to sort out their problems on their own. Even the expenditure by the Zetland County Council of £70,000 for consultancy fees is a large item and I support wholly the National Trust view that there should be an overall planning programme for oil in Scotland, particularly in the Highlands-and Islands.

The Government should therefore produce a White Paper. We have pressed for it consistently over the last two years and argued the case that on planning grounds, on grounds of getting the maximum benefit to the United Kingdom and on the Government's assessment of the energy market, a White Paper is desirable.

I seem to have taken up much too much time and I shall not take up much more, but this matter has deep implications for the fuel policy. There are deep implications for us in terms of the totality of our environment. Perhaps I could take up here a point that was raised by the hon. Member for the Western Isles (Mr. Donald Stewart). We have to get a balance by moving at the requisite pace to exploit these resources and at the same time ensure that we do not spoil our environment. If we do not get the maximum benefit we shall not deserve to be a major industrial nation. On the other hand, if we do not protect our environment for future generations we shall not deserve to get the benefits.

11.45 a.m.

Photo of Mr Michael Noble Mr Michael Noble , Argyll

I congratulate the hon. Member for East Stirlingshire (Mr. Douglas) on his good fortune in getting his motion debated today and on his choice of subject. I enjoyed his speech, a good deal of which seemed extremely sensible and acceptable on both sides of the House, although there are obviously individual points which he felt were not totally acceptable even on his own side. Nobody who has had the opportunity as I have in the last year or two of travelling extensively round the world can fail to appreciate the very large change and changing position of oil in the economies of many countries.

This was perhaps most evident in the last year or so in America where the whole background of a great deal of the economy appears to many people at least to have changed overnight. The Americans are faced with a huge potential deficit in oil with no easy way of putting it right. We have also observed the use to which a large number of countries which are lucky enough to have oil have used it, and the speed with which they have joined together to push up the price and make oil a great deal more difficult to get, politically as well as economically. It has been an enormous piece of good fortune that we have been able to discover oil off our shores.

I add my congratulations on the skills of those who have been operating in the industry. Those who have had a chance of looking at some of the oil rigs and discussing the projects with the research people in the big oil companies cannot fail to realise not only the enormous technical difficulties which oil at such a depth must create if it is to be brought ashore. They would also be staggered by the complete confidence that these people have that, however difficult the problem might appear, with their resources and skills they will be able to solve it. I find it refreshing and stimulating to talk to people with this type of confidence in their industry and its future.

Of course the House and the people in Scotland would very much like the Government or someone else to be able to tell them where the oil will be found next and how much there will be. The hon. Member for East Stirlingshire quoted a number of figures. I do not believe that any of them are likely to be right because they are all pure "guestimates". I find in my part of Scotland, which the hon. Member called a wilderness, a continual desire to know whether oil will be found off the west coast, where it will be found if it is found and where it will be handled. All these problems, perhaps because of the excitement at this new form of development, because the oil is hundreds of feet below the sea and because it is something that cannot be seen or touched, have left people wondering what oil will do to their lives. There are enormous opportunities to us as a result of the discovery of oil, but many problems flow directly from this. I hope that one of my hon. Friends the Under-Secretaries, from either the Department of Trade and Industry or the Scottish Office, will be able to update for us the contribution which Scottish industry is making today.

Reference has been made to my nephew, Mr. Ian Noble, and to the way in which he has been pioneering a number of developments in Scotland. There have recently been considerable developments aimed at trying to bring Scottish industry into this operation. Too often we in Scotland are apt to demand a higher effort from our existing companies but forget that a great deal has already been achieved and that credit should be given where it is due.

One of the problems is the impact of the exploitation of North Sea oil on small communities. I feel strongly because of my constituency. It is not at present in the front line of this venture, but the right hon. Member for Orkney and Shetland (Mr. J. Grimond) will I am sure wish to speak about this. We have to look carefully at the problem as a whole. In almost any part of the Highlands people will leap at the prospect of 200 or 300 new jobs becoming available and be delighted—at first.

In some areas in the Highlands there are a large number of small industries, set up under the auspices of Governments of both parties, which are beginning to develop and become viable. Being small industries they have had to start modestly and then build up skills and gently create heir own success. The development of those small firms might be hindered or stopped completely by the impact of, say, an American firm arriving out of the blue with a new type of industry and the ability to pay almost anything to get labour. This could completely wreck the possibilities of these small firms and might stop them altogether.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

The right hon. Member, who is a former Secretary of State, has raised the matter of his nephew and that of small industries. I do not think it unfair to describe his nephew's activity as a Leverhulme-type of operation in the Western Highlands. If this is the kind of operation which is to be conducted, should not new rules be drawn up of candour with the State in defining the object of the operation? What degree of candour does the right hon. Gentleman, as a former Secretary of State, consider that those taking part in development operations should have with St. Andrew's House?

Photo of Mr Michael Noble Mr Michael Noble , Argyll

I am not quite sure of the point which the hon. Gentleman wishes to make. I am not talking about the developments in Skye. Rather am I referring to the reports which I read in the Financial Times about Seaforth Industries, in which a consortium of bright people in Scotland have banded together to get a number of companies moving faster in the oil industry. This was the only part of it that I was referring to. I do not know whether my nephew's success or failure in Skye is better or worse than Lord Leverhulme's activities.

There is a real danger that some of these new developments, being created very quickly, could have an impact on existing small industries which would be serious, their workpeople perhaps leaving them and considerable difficulty being caused for that reason.

In a way, this is comparable to what happened in a number of areas when the hydro-electric board moved in. There was a sudden demand for a large amount of labour and all firms in the area had to double or treble their rates or benefits if they were not to lose to those people. The board did a vast amount of good for the highlands, but each operation lasted for two, three, four or five years. I suspect that in many areas of this North Sea boom the immediate effect may be on that sort of time scale.

One hears talk of people proposing to build rigs who reckon on between five and 10 years as their maximum run. I hope, therefore, that when considering this problem my hon. Friends will bear in mind that they should not allow the siting of some of these new developments so that a whole range of small industries which could last for a good deal longer, might collapse.

I take just as much interest in the environment as anyone else. I shall not develop this theme, but we should be a little careful of some of the wilder environmentalists or we shall certainly not be able to do anything for the development of this important resource. I am much more worried about planning procedures and whether in Scotland, particularly in the Highlands and perhaps in the North-East too, those operating them are sufficiently skilled to manage the difficult problems involved.

I am not certain that I agree with the hon. Member for East Stirlingshire that we need a super-planning organisation for the whole of Scotland, but the Scottish Office must watch carefully to ensure that a number of local planning bodies which are perhaps competent to deal with an ordinary situation can deal with this one.

Lastly, and very importantly, the Scottish Office and the Department of Trade and Industry, in both of which I have had the honour to serve, should move closely together in many of these matters. My two hon. Friends are sitting side by side on the Front Bench and are obviously not feeling any pain. But one knows that, with big organisations like this, it is possible for a development to move so far along the channels in one Department that, by the time that the other is aware of it, it is too late to stop it. I am sure that my hon. Friends are aware of this problem and I hope that they are working closely together. Unless they do, we shall certainly get some decisions that are less than good.

11.58 a.m.

Photo of Mr Jo Grimond Mr Jo Grimond , Orkney and Shetland

I should like to add my thanks to the hon. Member for Clackmannan and East Stirlingshire (Mr. Douglas) for having raised this subject, which is of prime importance to the whole of Britain and particularly to my constituency.

I was also glad to hear the right hon. Member for Argyll (Mr. Noble) refer to the importance of the impact of oil on small communities, particularly in a situation in which, at least in the Shet-lands, we have seen in the last few years the growth of around 17 knitwear factories, 17 fish processing plants and a big expansion in the fishing itself. I also agree with what he said about the need to assist the authorities in the North of Scotland to plan for and meet a new situation.

I should like, first, to clear away three misconceptions. First, important though the discovery of oil is, it does not mean that we should bow down before the oil companies and their suppliers and worship them. When the Government say that they cannot administer their oil operations except from London, this is a sign that they are saying "We will go for what the oil companies want." If there is to be a real devolution to Scotland and the regions we have to decide where the decisions are made. Any real decentralisation must start with the decentralisation of decision-making. Top consideration must go to the people, particularly the people of the areas most immediately affected. They are entitled to the fullest information. Their wishes must be taken into account, and they are entitled to a fair share of the proceeds from the oil.

Secondly it is no good wishing the oil away. There is a tendency in some parts of the North of Scotland to say "We wish this thing had never been discovered. Why can't we put it back below the sea and leave it? " I believe that the Government were wrong to press ahead so fast with this development. I have often said that they made a great mistake here. They were wrong in the terms offered to the companies. I am certain that there should be a barrelage or some such levy. But everyone would agree that the oil will be raised somehow, sometime. If it is properly handled it can make a most valuable contribution to the economies of the communities affected.

Thirdly, the cry for nationalisation is a meaningless diversion. I was glad to hear the hon. Member for East Stirlingshire dissociating himself from it. The Labour Party never suggested this when is was in office. The Government have no organisation for carrying it out. Surely we have learned that although nationalisation may be a proper way of carrying on certain businesses it does not by itself solve the problems of industry. It would not by itself secure the protection of a local way of life and a local environment. In my constituency our immediate problem is more to do with the supply companies than with the oil companies, and they would not be nationalised.

Having disposed, I hope, of those misconceptions, I would like to get down to what I think should be done. We have to ask two questions. How are we to control the consequences of the discovery of oil, and how shall we see that the benefits go to the right people? The Government were too complacent in thinking that this could be dealt with by existing procedures. I was glad to hear the right hon. Member for Argyll, who has experience in these matters, making the same comment. It may be that the Government could have introduced measures which would have enabled adequate planning to take place. They did not do so. So in my constituency the Zetland County Council is promoting its own Bill. This is of interest far beyond the confines of Shetland.

The county council's reasons for doing this are, broadly, first to avoid widespread damage to the environment all over Shetland. It is an attempt to concentrate the main effects of the oil in certain areas. Further, the council wishes to ensure that it has adequate powers to deal with a new situation. Thirdly, it wishes a substantial share of the income arising from the oil to remain with the people of Shetland. I share that desire.

This Bill will come before the House in due course, and I do not intend to make a speech about it today. However, is is relevant to the present situation, and there are certain features of it which it would be of interest for the House to consider.

For the last two years or so many companies have shown an interest in Shetland and Orkney. Some have actually acquired sites or options: for instance, Nordport at Sullom, Hudsons at Sand-wick—where a harbour is being built— Hudsons at Carness in Orkney, Shell, BP and SEDCO at Lyness on Scapa Flow, and, in the harbour at Lerwick, the P and O Company and Olsens. These are big developments, and big industry has not hitherto been much in evidence in Shetland. It is coming. All of this has been known for a long time. But it is something new in our history.

I want to speak for a moment about Nordport, which has already been mentioned. There is nothing sinister about this company's proposals. There is nothing illegal or immoral in a company wishing to take part in oil operations. It is a Scottish company, and to that extent we welcome it. It is clear what it wants: it wants to make a profit. It wants to do so by taking over an area from which it will mount supply operations to the oil rigs. But I must confess that some of the methods by which it approaches this leave it subject to criticism. I mention only one. It was a mistake to announce that the lord lieutenant would be closely associated with it when that was untrue.

I give two bits of advice to companies. For God's sake let them come in openly and for God's sake let them send their principles. My constituency is overrun with both commission and public relations men. We are not as simple as we look. One man turned up in Orkney and, after threatening the most appalling damage, said "It's all right; when my company goes we will leave a marina behind and re-afforest the site." Trees have not grown effectively in Orkney since the Ice Age, but the oil supply companies intend to make them grow now!

Some of these incursions give the impression that there have been attempts to jump the gun. Things were done when people well knew that public authorities were deeply considering the matter and drawing up a Shetland plan, quite rightly and properly seeking greater control. We do not want a monopoly of one or two big companies. We may be open to partnership. It may well be that some of these companies could co-operate with the local authorities so long as they do do so openly and come with a full disclosure of what they are up to.

All of this shows the need for something like the Bill. The existing planning procedures were never intended to deal with such a situation. I will illustrate this in one or two ways. First of all, there will be enormous demands for services—for water, roads, housing and so on. Is it suggested that a small local authority such as Shetland should lay out all these services for the benefit of someone else who will take the profit, probably to Texas or somewhere? That would be most unfair.

Secondly, planning controls can only be extended to low-water mark. A great deal of what will go on will be below low-water mark. Further, it is essential to try to guarantee some justice as between one land-holder and another. Under existing controls it would be difficult, to say the least, to prevent one landowner getting a huge sum of money because his property is taken over while his neighbour, whose environment may be wrecked, will get little, if any, compensation because his property is not directly affected.

If the Bill goes through it will enable the county council to have some part in the development operations and to gain some part of the profit. There are features of the Bill which will demand close scrutiny. It is open to amendment. It can be argued that it extends too far into agricultural land or land upon which there is housing. It can be argued that the duration is too long. Some of the powers, such as dredging have aroused criticism. It is important that good compensation should be paid to people whose land may be acquired and who will have to find other accommodation and other means of livelihood. These are matters which can be discussed when the Bill goes before the examining committee.

It should be noted that there will be better compensation payable as a result of the Bill. Without the Bill compensation is payable at the agricultural level, whereas under it the compensation may be payable at the industrial level. A great deal of the land affected is crofting land. For the benefit of those who do not know this, a crofter is a tenant. It is widely believed that he has good security of tenure. This is not quite so good as it looks. A landlord can go to the Land Court and ask for a resumption of the land. If it is held to be in the interests of the croft, the estate or the public interest, the land court is bound to meet that request. The crofter cannot share in the full development value of the land because he is compensated at the agricultural rate. The landlord may sell it to a developer or big company but the crofter will not get much of the profit. This question must be looked into. What is the position under the Land Compensation Act, which did not originally apply to crofters? Does it now apply? If not, will the Government consider this point?

The fishermen in my constituency are worried about two things: first, that expert skippers may, so to speak, be bought by oil companies, which could put an end to a community like Skerries; secondly, that the sea traffic, let alone what takes place on the land, will severely interfere with the fishing grounds. Apart from the question of oil tankers, there will be many merchant ships in the area. The Government should apply their mind to this matter. They should consider very carefully the effect on fishing of building piers and the increase in sea traffic. Baltasound, in Unst, for instance, would welcome industrial development in certain parts, but it is a fishing harbour. There is a lot of housing in the area in connection with the Royal Air Force camp This presents a planning problem in which not only the local authorities but the Government should be interested.

There is the possibility of rig building, about which there is talk, in Orkney. The proposition is to build concrete rigs, each of which would be bigger than the Post Office Tower. One proposal is to dam a whole bay in Scapa Flow and then float out the rig by flooding the drained bay. If local aggregate were used for this purpose, it would mean the total demolition of a hill. I need not elaborate on the profound effect which this would have on the Orkney landscape and environment. It may be all very well at Nigg, where the landscape is very large, but it is a very different matter in a much smaller-scale landscape such as Orkney.

However, against that, we must set the extra employment which we would wel- come. Wages in my constituency are in some cases far below the national average and, not unnaturally, people are a little suspicious of well-meaning, middle-class people who go to the area only for holidays and are concerned about the environment but pay little attention to the money with which local people must feed their families. We must keep a balance and that is a tricky and difficult job.

There is no doubt that the discovery of oil may have a dramatic effect on our economy and way of life. Having tried all my political life to bring a greater variety of employment to Orkney and Shetland, I cannot say that I wholly regret it, but it has come at a time when Orkney and Shetland have seen some expansion in fishing, fish processing and knitwear. There is no large readily available pool of unemployment, which means bringing in people from outside. However, there is a lack of diversity of employment and a lack of employment for graduates, and so on. We still have depopulation. Oil definitely could have a credit side.

We are very distinct communities, with our own character. We differ not only from the Highlands but from the Lowlands. We are very lucky because we have preserved our community character, which is lacking in the modern world, and to which people are turning. We are getting a small counter-drift of our own, apart from what is done by the Highlands and Islands Development Board, and it would be a tragedy if that were ruined for what might be a very short-term advantage. We must not repeat the mistakes of the nineteenth century.

The Scottish Office still feels that its planning procedures are adequate. I have tried to show that I do not think that that is true, and my view is borne out by the promotion of the Bill by Shetland and the fact that Orkney and, I believe, Ross also find it necessary to promote Bills. Does the Scottish Office consider that the water board, which after years of promises is still not producing enough water, or water at all, in tiny communities like Eday, Stronsay and Vidlian, is an instrument which will provide the millions of gallons of water which may be demanded by some of the oil companies?

I urge the Government to set up a general planning commission—call it what one will—to keep an eye on what is going on all over the north of Scotland. Although welcome, the project of the political economy department of Aberdeen University is not sufficient. What is needed is a permanent commission which, first, will record the situation as it is. The hon. Member for Clackmannan and East Stirlingshire spoke of the National Trust. I was one-time secretary of the trust in Scotland. There are many interesting flora, fauna, buildings, and so on which may be lost for ever. The present situation should be recorded, and we should then give the people the best information available and an estimate of what may happen to their country. I cannot stress enough the importance of impartial information. We are continually taken by the arm by people with vested interests and told of the wonderful things which may happen. We are entitled to advice about what is likely to happen.

A fund should be set up in case there is widespread pollution, which is a serious concern. The Scottish Office should consider the opportunities for training. If we are to have a variety of employment we must train boys and girls for it. Housing is a problem about which the Scottish Office is doing its best, but it is by no means solved.

We shall be judged by the way in which we handle the situation. It goes far beyond dogma or the promotion of this or that selfish interest. There is the genuine possibility of raising the standard of life of people in the whole of the North of Scotland, which for so long has suffered poverty and neglect. But if we are to do that we must learn from the dreadful mistakes of the past and consider the subject from the point of view of the wealth and well-being of the community and not simply from the point of view of large international companies or of the profits which a few people can make.

12.17 p.m.

Photo of Bernard Braine Bernard Braine , Essex South East

I, too, congratulate the hon. Member for Clackmannan and East Stirlingshire (Mr. Douglas) not only on his good fortune in the ballot, which we all envy, and on his choice of subject, but on the thought-provoking and mode- rate way in which he addressed the House. Whatever view we may take of the problems of developing North Sea oil, there is no doubt that this new resource, properly handled, opens up immense possibilities for the future prosperity of our country. The House is greatly indebted to the hon. Gentleman for raising this subject.

This debate could not have been more timely for me. For reasons which I shall give, there is a pressing need for the White Paper requested by the hon. Member for Clackmannan and East Stirlingshire to consider the environmental impact of the growing domestic oil industry and particularly the factors which should govern the location of oil refineries and ancillary industries. We have heard some very interesting speches this morning, and I greatly enjoyed that of the right hon. Member for Orkney and Shetland (Mr. Grimond), but in general they have referred to the likely impact of future developments. I wish to relate what has been said and the general considerations which have been raised not to what may happen but to what has already happened in one corner of the country.

Yesterday the Secretary of State for the Environment announced that he was giving planning permission to United Refineries Limited to build an oil refinery on Canvey Island—the second to be authorised in the past 12 months—alongside a residential population of some 28,000 people, with another 49,000 people in neighbouring Benfleet. It was a bad decision not only for my constituents but in the context of the more general matters raised this morning. This is a complex matter, and I hope that the House will bear with me if I say something about the background.

In 1965 the then Labour Government gave planning permisison to United Refineries Ltd. to build a refinery on Canvey Island. That was supported by the local authority at the time, but not by the residential population, nor by me. Indeed, I raised the matter in the House. In the event, because of planning restrictions placed upon the development, the company did not go ahead.

Last year the present Government decided to grant planning permission to Occidental Refineries Ltd. to build a refinery on Canvey Island with a throughput capacity of 6 million tons. That, too, was bitterly opposed, this time by all the local authorities and also by me. Again, I raised the matter in the House. The interest of United Refineries Ltd. was revived and the company made a second planning application. That, too, was bitterly opposed by all the local authorities and by more than 15,000 people who petitioned the Secretary of State. When the local public inquiry was held the inspector who conducted it recommended that the application should be refused. The main reason for our opposition —this has great relevance to what we are talking about—is that there is already too great a concentration of industrial high fire risks in the Thames Estuary, especially, in the vicinity of Canvey Island, for the health and safety of residential population. All the local authorities in the area are agreed about that.

The matter did not end there. On 7th December 1972 I drew the attention of the House and of the Government to the totality of the effect of the piecemeal planning decisions being made by the Department of the Environment on the environment of tens of thousands of people who have made their homes on Thames-side and, in particular, in my constituency. Canvey Island, for example, is ringed by industrial high fire risks. There are oil wharves and oil storage tanks, and a methane storage plant which was the first of its kind to be established in this country. Now the island is to have two large refineries. Next door, in neighbouring Thurrock, there are already two huge refineries with the usual complexes of oil storage tanks and wharves. Over the last few years we have had numerous refinery fires in this area, tankers running aground and collisions in the river, and one incident in 1970 which literally set the Thames on fire. On that occasion a Port of London Authority spokesman was reported in the Evening Echo as saying: We have been very lucky. There has been nothing like this since the war. It went off like a bomb. There was a terrible risk involved with so much fuel around. He was talking of an area where 28,000 of my constituents have their homes. My hon. Friend knows that I have been continually prodding the Department of Trade and Industry to take action about the deteriorating standards of navigation, particularly of oil tankers, in the Thames.

Last year the local authorities in the Thames estuary—notably Southend Corporation and also the Canvey Island Urban District Council—pressed for a planning inquiry commission to consider the totality of the effect of oil refinery applications upon our environment. I was given the following answer by the Department of Environment: A planning inquiry commission can only be set up in the circumstances described in Section 48 of the Town and Country Planning Act 1971. Briefly there must be either considerations of national or regional importance which cannot be properly evaluated without a special inquiry or the technical and scientific aspects must be so unfamiliar a character that a proper determination could not be reached under the ordinary inquiry arrangements. The conclusion was that the national local public inquiry into the application to build a new refinery would suffice to consider such factors.

What happened? The inspector at the inquiry heard all the evidence and recommended that the application should be refused. The Secretary of State overruled his recommendation. So much for the way in which the Department of the Environment safeguards the interests of my constituents. Indeed, the value of the assurances which I have been given repeatedly by Front Bench spokesmen during the period of the last Labour Government and of this Government can be measured by yesterday's decision. It is clear that the Government, having now committed themselves to the Maplin project, which unhappily is also in my constituency, and which includes an oil port, do not wish to stand in the way of those who wish to build oil refineries where they want them and to make use of the proposed new port facilities.

That is planning turned upside down. The refinery approved yesterday is in the wrong place environmentally, as the Secretary of State's inspector clearly recognised. If the Department of the Environment lived up to its name it would understand that the existence of an oil port should not be an excuse to build more refineries. It might even question the location of the oil port itself and its size. It is no use my hon. Friend the Undersecretary of State saying that these matters have nothing to do with him. He is the spokesman of the Department of Trade and Industry, and his Department is directly concerned.

I accept, and so does probably every hon. Member, that there is a need for additional oil refining capacity. The great question—and it was one posed by the hon. Member for Clackmannan and East Stirlingshire—is the siting of this capacity. My hon. Friend and his Department are directly concerned with answering that question. The discovery of North Sea oil surely means that new refinery capacity should be developed as near as possible to the developing points from new fields and where new industrial growth points can be developed. That suggests to me the North-East coast of Scotland.

Of course, oil companies wish to develop their refining capacity close to existing markets for fuel. That is natural. That is why so many companies wish to develop in the South-East. However, if they were allowed to get away with that sort of development, future industrial development elsewhere would be preempted, and that would undermine regional policy, upon which I have always thought both sides of the House were agreed. My hon. Friend's Department is directly concerned to ensure that that does not happen.

What is the Department's record? It was the Board of Trade which in 1964 gave an IDC to the United Refineries to establish its refinery on Canvey Island. It was the Department of Trade and Industry which gave Occidental Refineries an IDC to establish its refinery on Canvey Island last year. It is the Department of Trade and Industry which is directly responsible for the build-up of refinery capacity in the Thames, and the bringing of tankers of half a million tons into the congested lanes of the English Channel. My hon. Friend has to do a great deal of explaining.

What are the principles governing the location of refineries? The only principle appears to be that there are no principles if one is to judge by the decision taken by the Secretary of State for the Environment yesterday. Why was a planning inquiry commission refused last year? Would such an inquiry have been embarrassing to the Department of Trade and Industry? Who is responsible in the Government for considering the totality of the effect of decisions taken by different Departments concerning the environment of human beings? For example, fire danger is the responsibility of the Home Office. Planning matters are for the Department of the Environment. The location of refineries and other industrial plants is the responsibility of the Department of Trade and Industry. But who is it who looks at the picture as a whole? Hon. Members should take the opportunity of this debate to insist on an answer being given to that question.

The Department of the Environment has now shown that it is quite incapable of weighing up a complex matter of this kind. I dread to think how the Maplin project, which is affecting the other end of my constituency, will—despite all the high-sounding assurances given by my right hon and learned Friend and his officials about environmental safeguards —in fact work out. I hope that my hon. Friend the Under-Secretary of State for Trade and Indus-try will be able to show that his Department is genuinely concerned about these matters. I look forward with great interest to hearing him.

Whatever my hon. Friend is likely to say, however, the lesson from our experience in South-East Essex is very clear— which is why I have chosen to say something about it in this debate—not only in respect of the impact of the developing oil industry upon the environment of our country but over a much wider field. It is that people at the grass roots have to be doubly vigilant against all Governments and all Ministers. From now on every single further encroachment on the hard-pressed environment of my constituency is going to be challenged by me, and I hope that in this I shall have support from hon. Members on both sides of the House.

12.31 p.m.

Photo of Mr John Mackie Mr John Mackie , Enfield East

The hon. Member for Essex, South-East (Sir Bernard Braine) has used the debate to raise constituency points but they were, of course, germane to the subject. I agree with what he said about the enormous complex to be built at Maplin. I believe that this is one of our major mistakes. The Government are to push into the south-east corner of the country this huge complex in an already overcrowded area, with all the traffic and other associated problems that go with it. I shall not argue the necessity for a third London airport, but to push it into the south-east corner of England is simply giving way to the lobbyists to an extent that we shall regret all our lives.

My hon. Friend the Member for East Stirlingshire (Mr. Douglas) is to be congratulated on initiating this debate. I also congratulate him on the way he did it. He covered a very wide range. I am mainly interested in the question of land and the environment, which was also dealt with by the right hon. Member for Orkney and Shetland (Mr. Grimond). My interest is that I was born and brought up in Aberdeenshire and I still have a home in the Montrose area. Both those areas are very much affected by the North Sea oil discovery. I want to reiterate what the right hon. Gentleman said. I am by no means against exploiting—in the proper meaning of the word—the oil in the North Sea for the benefit of the country, but we must be careful how we do it.

The discovery of oil in the North Sea struck the north-east of Scotland with little warning. Indeed, the country and that area in particular were not ready for it in any shape or form. Things are being done too quickly and inadvisedly in many cases. When any new mineral is discovered this sort of situation always arises, but one would have thought that we would have learned from the lessons of areas all over the world which were themselves not ready for such developments.

The right hon. Member for Orkney and Shetland asked why there was such a hurry. He asked whether there could not have been a little more planning before we rushed into this situation. He is right. He talked about his own local authority bringing in a Bill. This whole situation has placed the local authorities in the area in an extraordinary situation. Aberdeenshire is a large local authority but there are many small urban councils, like Montrose. They have had to take major decisions of great complexity.

I am not criticising those councils. They are manned by local public-spirited people who do a splendid job of work. But the fact is that this development in the North Sea is beyond anything that they have ever had to deal with. I think that some high-powered body should have been appointed—although I admit that it is easy to be wise after the event —if for nothing else than to advise those councils how to act. This would have helped although it would not, of course, have been the main solution.

Those councils are dealing with huge multinational companies offering to spend millions of pounds, figures that the councils never thought or dreamed of. Some of the companies are American and are unused in the United States to coming up against planning authorities or planning itself. They simply thought that they could please themselves. When they came up against our planning, there was an attitude that if Montrose, for example, did not accept it, Arbroath or Aberdeen or Peterhead would. An element of competition was created among many local areas, which was a bad thing.

Yet the temptation was very great. This is an area of high unemployment and the oil development sounded like a way out. Indeed it offers a solution to a tremendous extent and obviously it tempted local councils to give way. No doubt they would have thought better of it had it not been for the temptation to provide more employment quickly. In these circumstances, often little thought is given to the future.

I asked my hon. Friend the Member for East Stirlingshire how long he thought the oil would last and how long the building and supply of the rigs would go on. The right hon. Member for Argyll (Mr. Noble) said that the whole thing was a guess. That may be so. We know that oilfields all over the world are being exhausted in comparatively short periods —perhaps not in a lifetime but over a comparatively short space of time. We therefore have to look at our own situation very closely. The oil may not last for ever. My hon. Friend suggested that it might last 20 to 30 years but that the whole project might have a life of 40 to 50 years. That is really a comparatively short period.

I want to refer to what the development might do to districts I know particularly well. I understand that there is a huge erection—I am not sure what it is—at Dunnett Bay, south of John o'Groats. Dunnett Bay, is beautiful. When the erection is finished with, is it to be taken down or left to rust? Is there any legislation that insists that it be taken down? Again, in Aberdeen-shire there is a pipeline right through the middle of Loch of Strathbeg. This is an area where wild life flourished, particularly ducks and geese. During the war an aerodrome was built near the loch and we were assured that the noise would not disturb the wild life. Nevertheless these latest developments are worrying the naturalists.

At Cruden Bay, Aberdeenshire, the oil industry wants to put down an installation, coating the pipes with concrete. My brother, who is convenor of Aberdeen, wanted to see such an installation in action and was invited to the south-east of England where there is one. He said afterwards that it looked to him like a huge ugly scrapyard. When the Aberdeenshire County Council therefore insisted that trees be planted around the installation and something be done to hide it, the company was horrified that it should even have been asked to do it.

Montrose is a small seaport. It is a nice old town where the double estuary of the South Esk reaches the sea. I had heard that things were going on there but had not been to Montrose for some little time. However, I went home there two weeks ago and was horrified to find that P & O, which has a contract and permission from the local authority to supply four oil rigs—an operation requiring six ships needing deep waiter— has brought up a juggernaut of a dredger with a huge pump. Machinery is dredging up the channel of the South Esk and blowing the contents into one of the estuaries and filling it in. In this way many acres have been filled in.

When I say what had happened I could not believe my eyes. I met elderly fishermen in the area who, in the wonderful spring we have been having, were wondering what on earth had hit them. This pleasant estuary has become a sea of bare sand. The works go right out to the channel and the channel itself is being dug 9 ft. deep to take the deep-water ships.

I remember a time just after the war when I and others formed a company to try to claim back for agriculture over 2,000 acres of that area, but we were told that the effect of the tide not sweeping in and out would be to make conditions difficult for the fishing boats, which relied on a certain depth of water. Therefore, I wish to know what will happen in 30 or 40 years' time when the oil companies leave the area. Will the effect of the tide mean that the fishermen will be left with no channel in which to move? These are the sort of things we must consider, because at present they are not being taken sufficiently into account. I want to know whether the original conditions will be restored once the oil is exhausted.

I have some experience of what happens when companies move in in this way because I met this sort of problem when I fanned in Lincolnshire. I remember what happened to the area around Gainsborough when borings were made some 10 years ago. One can still see in the area the unsuccessful borings, as well as pumps and other pieces of equipment rusting away. That is what happened in North Lincolnshire. I do not want to see it happen in my home county.

How long will the oil last and what will be the effect in the whole area when it has finished? Up in the north-east of Scotland a great deal of house building and other development is taking place coinciding with the arrival of the oil companies. Facilities such as the supply of water, transport and all the rest were never afforded to the people in the area in earlier years. The activity that is taking place there now is quite amazing.

What will happen to all this? Are we building up a one-industry area? I hate to think of what will happen when the oil becomes exhausted. We all know what occurs to an area when the industry on which it has depended moves away.

The right hon. Member for Orkney and Shetland said that his council was thinking of promoting a Bill and I think he referred to action being taken in Ross and Cromarty. But surely a major national Bill is required to deal with the situation. We in Parliament are here to protect our constituents, but we also must have an eye to posterity. We shall regret it if we do not take action to see that the sort of points to which I have drawn attention are fully taken into account.

12.45 p.m.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

The hon. Member for Enfield, East (Mr. Mackie) is concerned about the absence of proper planning and this has been mentioned by other speakers in the debate. However, it surprised me that when Chevron wanted to put a refinery on the Clyde, the Government would not grant planning permission. I thought that decision wrong because that development would have been extremely advantageous to the area.

I should like to see a computer model made of the area covered by North Sea oil to fit in with the requirements of primary, secondary and tertiary industry and to include the infrastructure, the schools and so on, which is required. That would make good sense. We must try to avoid some of the mistakes of the nineteenth century when someone came along with a new idea, bought all the land in the vicinity and exploited it. We have now reached a point when we can cash in on some of these new ideas and build new estates and new businesses, some permanent and some temporary but with an eye to the future.

The hon. Member for Enfield, East asked how long the oil will last. Experts in the field say that with a success ratio of 1:10 the potential is likely to be about 31 billion barrels. Since 7 billion barrels have so far been found, over the next 14 or 15 years much more oil is likely to be recovered in good areas. A modern company is prepared to pay premium prices as we have seen from a recent auction. It is possible that in the early 1980s the oil companies could be deriving about 4 million barrels a day.

I turn to the question of licences and I agree that something should be done about the situation.

Photo of Mr John Mackie Mr John Mackie , Enfield East

May I intervene before the hon. Gentleman leaves the technical point? We often hear about so many million barrels a day, but do the figures give any idea about how long the oil will last?

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

No; the number of barrels relates to the yield per day. In the Middle East the yields run into millions of barrels a day. In the Forties field the yield will be around 400,000 barrels a day. However, those figures are not an indication of reserves.

I was saying that something should be done about the licences, and I agree that we should look at this matter closely before licences for further areas are granted. However, I would be against the idea that the whole of the North Sea should be nationalised. On the Continental Shelf oil cannot vest in the State. The international convention on which the system operates allows only the sovereign State that adjoins the area to exercise control over exploitation and recovery of oil, and therefore it can grant licences.

I feel that what should be done about licences is that the various working obligations should be intensified. We should draw out of the North Sea and other areas of the United Kingdom oil and natural gas at the most rapid rate we can. We should fully utilise it for the benefit of the nation. The ratio of foreign investment or participation shows that compared with other countries we are not much out of line when we bear in mind the expertise which can be attracted to the United Kingdom.

According to the Public Accounts Committee the first, second, third and fourth rounds have increased as follows: the total British interest amounts to 22·7 per cent., 33·6 per cent. and 36·5 per cent. and the area granted by discretion amounts to 34·7 per cent.—making an average of 32 per cent. That is reasonable, although it could be upped a little.

Let us look at the fields which have been discovered. The Brent field is partly British and partly American. The Cormorant field is partly British and partly American. The Beryl field is owned by the Mobil Oil Group with British Gas Corporation participation. The Piper field is run by Occidental and Maureen by Phillips, both American. The Forties field is run by BP—that is, United Kingdom. The Montrose field is run by Amoco and the Gas Council and is thus partly British. The Auk field is Shell, which is Anglo-Dutch. The Argyll field is partly American and partly British. Therefore, Britain is well and truly represented in these successful fields.

We are discussing a matter which involves oil technology and not coal technology, and there is no reason whatsoever for the National Coal Board to be investigating the Continental Shelf. What is more, I find little encouragement in the suggestion of carried interest as revealed in Norway to give the State the right to take up 40 per cent. participation. What use would this be? It would simply mean that money would flow into the Exchequer if profits were made. The Norwegian legislation provides for this, and there are other illustrations. For example, the Dutch State Mines have an investment in Gasunie. We should encourage those who have expertise to participate and keep the State and the taxpayer out of areas where there is likely to be a disproportionate risk. However, I should not be averse to the granting of initial and production bonuses on the discovery of a commercial field and rising royalties with different levels of production.

The hon. Member for East Stirlingshire (Mr. Douglas) could have referred to page 87 of the PAC Report, where the Department of Trade and Industry gives Norwegian ideas of the likely royalties for oil. We see 8 per cent. suggested for less than 40,000 barrels a day, 10 per cent. on 40,000 and above and 12 per cent. on 100,000 barrels a day, rising to 16 per cent. on 300,000 barrels a day. However, there should be no penalties on exploration since we want to get the work done and we want people in the field. The State should not interfere by putting its own people into the field or by taking a stake in the company concerned. It should see to it that the company pays the appropriate tax, and if there is a lift through royalties from increased production that will be a reasonable way of doing it.

In my view we should insist that while there may be a gentleman's arrangement with overseas companies which have local subsidiaries in the United Kingdom, they should look at British manufacturers and they should be encouraged to buy rigs and other appliances, and British firms should have a fair and full opportunity to compete for business. I accept the IMEG recommendations. Indeed, I go even further and say that companies should take British equipment wherever practicable. While it may be essential at present to buy rigs abroad, there is no reason why detailed equipment which is an integral part of them should not be bought in the United Kingdom. I have in mind compressors, pumps, associated pipework and turbines, all of which are produced in the United Kingdom. There is no justification for buying these abroad provided that two assumptions are complied with: first, that delivery dates are reasonable; and secondly, that prices are fair and competitive.

I should also like to see a provision in the licences providing for the forfeiture of a discovered field if it is not developed within a reasonable time. I do not anticipate any forfeitures coming about, but a provision of that kind would make the companies get a move on and see that fields were brought on stream if they were likely to be commercial. Companies must not be allowed to leave fields idle while they wait for exorbitant prices in the open market. We also need some arrangement by international negotiation about the division of fields which cross the median line.

I am in favour of the auction system, but I believe that this should be kept to proven areas. I am also in favour of higher rentals for certain acreage. I am in favour, too, of tighter controls on the assignment of share ownership of the companies involved.

The licensing system adopted by the Government in past years has worked remarkably well. Now that it has been proved that we have some useful fields in the North Sea, there ought to be some tightening up in the public interest. I am not for putting the State into it. The right way to go about it is to see that companies are given every encouragement to develop their oil resources and then to help the State by paying appropriate tax on them in due course.

I move on to equipment for the North Sea. It is the responsibility of the DTI to identify where British industry can contribute. I was told the other day that one of the companies involved went to a series of British firms only to find that they were not interested. Either they had not the capacity or they were not prepared to deliver on time. All that can be done about that is to increase capacity and show interest in areas which are likely to be productive for British manufacturers.

The IMEG report has identified the fast growing areas where money is likely to be made. They are in offshore drilling, pipe lining, the provision of rigs and supply vessels, the building and installation of production platforms, the supply of high quality pipe and the fabrication of modules. What is more, it is no good aiming solely at the United Kingdom market. British manufacturers have to take account of the world market.

The Government may have to be prepared to provide money under the Industry Act for research and development, because this is a field of high technology. I should like to see some substantial reinforcement of the Petroleum Division of the DTI in order to establish a bank of information on the North Sea and on other areas which could be useful in future work.

Moving on to the subject of drilling rigs—this is offshore drilling—it may surprise hon. Members to know that 50 exploration rigs are expected to operate in the North Sea in 1974. None of them will be operated by United Kingdom manufacturers, and only two or three of the earlier designs will be produced here. This is quite extraordinary when one bears in mind that 25 wells have to be drilled for every one major discovery and that, taking a field which is to be developed like the Forties, there are likely to be 100 development drillings in it. This is an area where substantial money will be made and obviously those who are in at the early stages will make substantial profits. About 24 barges will be required for 1974. None will be built in the United Kingdom and none will be operated by United Kingdom contractors. That is also a great misfortune.

We can see the way ahead here. We have particularly good enterprises like British Petroleum and the Royal Dutch Shell Group which is at least 40 per cent. British. There is no reason why they should not be encouraged to participate with a consortium in the establishment of a drilling capability in the United Kingdom. This possibility has been advanced in the IMEG report. The right way to do it, however, is to acquire experience and investment and not start de novo. If the Government think that they can set up a State corporation with a lot of money but without the necessary expertise, it will soon fold up.

Another idea I have in mind is this. I use the company's name only by way of illustration. A consortium could be brought together to buy a 51 per cent. interest in a well-known drilling contractor like Reading and Bates. We should then be well away, because the consortium would be able to get immediate drilling contracts in the North Sea. The consortium would also be able to do remarkably well in several extremely productive areas abroad where that company is operating. There are many major contractors who could be examined.

I regard field development as remarkably important, and here there could be prospects for the United Kingdom. The construction of production platforms is almost entirely in the hands of Americans, French and Italians. Well-known companies like Brown and Root, McDermott, Cleveland Bridge and others occupy this field. I am glad that Wimpey has now come in, in conjunction with Brown and Root, and the French company EPTM has joined up with Laing and that Red-path Dorman Long is to build a platform in the Auk field for Shell. That is on the construction side, but the installation of the platforms is almost wholly Dutch and American.

Production platforms account for 25 per cent. of total development expenditure, which means that handsome contracts are coming along. It is regrettable that we do not participate in them to any large extent.

Looking further ahead, pumps, engines and turbines account for 35 per cent. of the spending on the facilities. I am certain that we can contribute extensively here.

On supply vessels we have several important companies, one of which is Offshore Marine Ltd. which operates 26 supply vessels. They are either built or under construction. The P & O subsidiary, Sea Oil Services Ltd., will have another 12 by 1973. Much can be done for these companies which have ventured forth in the most difficult circumstances. One of the letters which has been written to the Department of Trade and Industry stresses the difficulties under which the companies operate and states: I understand that United States operators can borrow money at 5–6 per cent. and pay back over 12–20 years. Our 7 per cent. repayable over eight years bears unfavourably on that. These firms could be helped by providing a similar form of service.

Another way in which the Government could help would be by producing regulations for British supply ships, manning scales, qualification rulings and so on, which do not place us at a disadvantage with foreign flag vessels operating from the same ports and in the same waters. If the Government would do this, British companies would be placed in exactly the same position as all other companies.

If we are to maintain our lead in the industry, we need to work on the next generation of supply vessels and ensure that we are ready and able to give service to drilling rigs, platforms and offshore installations. The present returns on capital are not enough. There is insufficient money to allow anything to be put aside for research and development. That is a shocking admission. If companies are so heavily taxed that no provision can be made for research and development, they will find it extremely difficult to compete with foreign companies. It is our desire that they should be put in a competitive position.

It would also be useful if the British Steel Corporation could produce steel at competitive prices and keep to contracted delivery dates. When one remembers that Llanwern has trouble and that 3,000 workers have been laid off and 190,000 tons of steel has been lost, one realises that BSC cannot meet its delivery dates and other people have the opportunity to come in. If the British Steel Corporation could produce the right steel to the required specifications—as I believe it can—and if it had the necessary production capability, I should be pleased. I asked a man recently why he did not buy more steel from BSC. He said that he had a requirement for a certain quantity of pipe and that whereas Finsider of Taranto could turn out long lengths in a short period, it took BSC very much longer.

In the early days BSC tried to improve its steel chemically, whereas the right answer was to improve it by controlled rolling. That method has been adopted by the Italians for many years and, I believe, in Western Germany. That brings me to one of BSC's prime difficulties. Serving the Forties field two lines were required, a sea line and a land line, a sea line of 30 in. diameter and ¾ in. thickness and a land line 36 in. diameter ⅜ in. high-grade X65 steel. Both the BSC and the Japanese produce this pipe.

We should have been able to build the entire land line from where the pipeline enters the coast but unfortunately, be- cause of labour troubles at Llanwern, BSC had to withdraw 21·7 miles out of the 131-mile contract because it could not keep its delivery dates. It also had to buy from the United States piping at £120 per metric ton to maintain its production schedules. One does not maintain business on that basis, and I hope that in future BSC will try to correct this situation.

I have never known a time when Scotland, or indeed the whole of England, had greater opportunities. Scotland may wonder what will be the result of the report of the Royal Commission on the Constitution. If Scotland is given self-government it will have greater responsi-bities for anything that is off its coast. Assuming, however, that we go on as we are now, the benefits will be shared by all in the United Kingdom. North Sea oil is a low-sulphur oil of good gravity— it may be 37 degrees. We cannot use it all here because it does not suit the immediate mix for our market, but we can export it to Europe and elsewhere and this would be an extremely valuable contribution to our balance of payments.

If we are slow in getting in on the Continental Shelf because the other contractors have the expertise, we must ensure that we learn rapidly from our competitors. We have the Industry Act which can be used to get us into some experienced companies and enable us to share their expertise. Time is not entirely on our side but, as the fields are likely to be discovered, developed and utilised for many decades ahead, it is incumbent on the Government to take advantage of their opportunities now.

1.8 p.m.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

I pay tribute to my hon. Friend the Member for East Stirlingshire (Mr. Douglas) for initiating this debate. We have had about seven debates on North Sea oil in the past two years. Four have been Adjournment debates raised by back benchers. We have had one Consolidated Fund debate, again raised by a back bencher, one Scottish Estimates day when the Opposition suggested North Sea oil as the topic, and now we have a Private Member's motion. I cannot recall one occasion when we have debated North Sea oil on Government initiative. That illustrates the difficulty the Opposition have had in getting information about North Sea oil exploration and licensing and the use to which the revenues will be put.

All along the line we have had to squeeze every bit of information out of the Government. We have had to hunt the Government at Question Time and chase them late at night and on Fridays. Always we have done this from the point of view of getting information. We have had information in bits and pieces. We have had corrections made by the Government to previous estimates as to the amount of British participation in North Sea oil. What we have never had is any coherent strategy. We have never got beyond the Government saying "We want to exploit this new resource as fast as possible", generally because of the balance of payments position and because it will bring benefit to the United Kingdom.

We have asked all along the line for a White Paper. It is essential that all the questions which have to be asked should be answered in a positive way and not in bits and pieces. One cannot build up a coherent view of the future of North Sea oil if one has to try to add up all the little bits of information. What we got instead of a White Paper was "North Sea oil and gas, a report to Parliament" published by the Department of Trade and Industry in January 1973. Yet if one looks through all the newspaper articles, all the debates in the House, and all the discussions on North Sea oil, one never finds this pamphlet mentioned. It is beautiful and glossy and it contains nice colour pictures, but the information in it is virtually valueless. As a means whereby people can judge the effectiveness of Government action, it is a waste of time. That is why we think that in the first instance we ought to have a White Paper so that we can get a proper strategy mapped out.

We are all indebted to the Public Accounts Committee for confirming the suspicion in many minds that, despite the disclaimers and propaganda of the oil companies in the North Sea that they have not done as well out of North Sea oil, or will not do so, as some of the commentators say and as many of us have thought for a long time, they have in fact done extremely well and are likely to continue to do so. We are grateful to the Public Accounts Committee for the information that it has provided on this topic. That Committee has brought out the fact that unless the Government took rapid and urgent action we would lose out very badly in taxation from oil profits. This was pointed out by my hon. Friend the Member for Midlothian (Mr. Eadie) in the Estimates Committee on 5th December. He pointed out how very little is paid in taxation by companies already operating in this country because of the offsetting arrangements. Therefore, we must get full information, and I agree with my hon. Friend we must have access to the costs.

One can understand that the oil companies want to play things very close to the chest. They are in a fiercely competitive world and are anxious that their commercial propositions do not become widespread or known to their competitors. But the game of secrecy which goes on between the Government and the oil companies will do no good to the Scottish economy and certainly no good to the British economy as a whole.

We are concerned—this was borne out in recommendation 15 of the report of the Public Accounts Committee—that licences granted become valid without a break clause for 46 years. There is no provision for variation or renegotiation of the financial terms, however large the finds, or for obtaining a degree of Government participation. We must insist that there be an automatic review clause built into any future licences.

The timing of this is a matter for discussion. I would think that probably a quinquennial review is too frequent; it would not be realistic, but certainly the absolute maximum between reviews should not be more than 10 years. Within a decade there can be very great changes in the quality of the finds, in the number of finds and, indeed, in the profit margins of the companies. Therefore, this must be written into new licences, and we should look very closely to see how we can renegotiate existing licences.

I do not think this would necessarily involve any breach of faith. If the information which comes forward shows that the position is much better from the oil companies' point of view than they had initially thought, we are entitled to say to them "Let us have another look and see whether we have got the right balance." The Government are simply being buffeted by events from one position to another. They reacted to the Public Accounts Committee's report with the Chancellor of the Exchequer promising that there would be a review in the taxation position, but that review in the taxation position is a long way off. We do not know what he will do, except that he is going to review it. There is no idea from the Government precisely how they will tackle revenues, licensing or even taxation. We are told that the review is taking place, that the Government are urgently considering their future policy. But they are not giving us any idea of what will happen in the future.

If this is true anywhere, it is certainly true in refining capacity. We have no idea how many refineries the Government think can be established in Scotland, or in the United Kingdom as a whole, to maintain a viable refining industry. It was the hon. Member for Essex, South-East (Sir Bernard Braine) who said that there does not seem to be any criterion for the placing of oil refineries. The hon. Member for Bedford (Mr. Skeet), in a conversion to planning, said that we ought to look very carefully at how many refineries there should be and where they should be. This is absolutely true. There exists throughout Scotland and the whole of the United Kingdom a feeling that we ought to be very careful about how fast we extract oil from the North Sea. Speed of extraction is not necessarily the best either for Scotland or for the United Kingdom as a whole. It seems odd that when the Americans speak of a shortage of oil and of an energy gap we should be saying to the oil companies "Take it out as fast as you like." I disagree with the suggestion of the hon. Member for Bedford that there ought to be an intensification of extraction.

Photo of Mr Michael Noble Mr Michael Noble , Argyll

The hon. Gentleman will appreciate that there are two problems here. We have got this very difficult gap in the 1980s before we can hope for fast breeder reactors to come into operation. Does not the hon. Gentleman think that there is urgency to get some oil quickly? Once there are alternatives, one can, so to speak, spread back and conserve one's resources.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

I think the right hon. Gentleman has a point. Had the Government adopted an opposite policy and said "Let us discover oil and then cork up the wells and see how we develop", possibly a large number of political pundits —perhaps even I myself—would be saying "Get cracking because we want the benefits from it." I do not think this is a black and white argument, but I think we ought not simply to let things drift and let it rip out of all control instead of having some degree of control over it. What we are asking for is a reappraisal of the policy on whether or not there should be the most rapid extraction with no control in the future.

I want to say something about the environment and environmental hazards. I regard the environmental lobby sometimes with amusement and sometimes with frustration. I recollect that about 10 years ago in Aberdeen—I make no virtue of the fact that it was in Aberdeen— the then city treasurer said that the last thing he wanted in the city of Aberdeen —which, I might point out to those who do not know it, is a beautiful seaside place remarkably free from smog and pollution and has very great advantages—was heavy industry of the kind that sits in the Midlands, such as heavy chemicals, which would bring with it smog and pollution. Almost everybody, from the local trades council to the chamber of commerce and the employers' federation, heaped abuse on his head. He was accused of not having the interests of the city at heart. He was told that he was driving away industry and ruining the industrial future of the North-East. Yet if he had made the same remark today he would have been hailed as a prophet come to glory in his own land.

There is a cycle in public attitudes to these matters. The wheels turn half-circle, so to speak, and the view then comes uppermost in some people's minds that the hazards to the environment are in some cases more important than jobs. We must strike a careful balance between jobs and damage to the environment. The damage to the environment takes different forms. It does not necessarily mean that only the land is desecrated or destroyed. The importance of culture, too, must be borne in mind.

I draw attention here to a report in the Press and Journal of Tuesday this week: For an hour and a half the future of Inverness's Eden Court theatre project hung in the balance last night, after it was revealed that the cost of building the complex had rocketed to more than double the original estimate. The oil boom has created a backlash which has pushed the price up to £1,300,000."— originally, it had been £650,000— and last night Inverness Town Council learned that the Secretary of State was disappointed that the burgh's initial forecast had been so unrealistic.He could not authorise additional Government expenditure and suggested that the project be modified or postponed. To go ahead with the project, he said, would be to divert building workers from industrial projects. Here is a local authority trying to meet a need in the culture of Inverness and the surrounding area, but it is hit badly by building costs. Being faced with double the cost which it had originally accounted for, it finds that, far from receiving further assistance from the Secretary of State, it is told that it cannot have it and, in effect, ought to drop the project.

If local authorities are expected to find the money from all sorts of commercial developments and for the infrastructure— the hon. Member for Aberdeenshire, East (Mr. Wolrige-Gordon) mentioned this when we discussed the rate support grant —the Government ought not to stand back. If people are expected to provide all kinds of facilities for incoming industry out of the rates, the Government should not cavil at providing assistance for the building of a theatre project.

It does not end at a theatre project. There are signs that local authorities in that area are having difficulty in finding building contractors to contract for their work. Wage rates are rising. We are experiencing some wage drift. I do not object to wage drift. My argument has always been that the North of Scotland, the North-East, and even the Midlands of Scotland have generally been low-wage economy areas.

In my opinion, anything which stimulates an improvement in wage levels in that part of the country is to be welcomed. However, I enter this caveat. We must do something about controlling it; otherwise firms such as shipbuilders which have taken on orders in the light of existing prices will not be able to meet their wage bills and make a profit on those orders; or, if they do not pay the money, their workers will go elsewhere.

The protection of the environment raises many problems. I very much welcome the ideas of Shetland County Council. I am sorry that the right hon. Member for Orkney and Shetland (Mr. Grimond) is not here at the moment, because I wanted to comment on his observation that public ownership is, in a sense, irrelevant. I shall return to that later. All I say at this stage is that a great deal of what Shetland County Council wants to do in taking over ownership of the land and taking an interest in private companies so as to have access to profits, and so on, is public ownership in one form. If a local authority wishes to engage, even in a limited way, in public ownership, I do not see why the concept of public ownership in the broadest sense should be regarded as irrelevant. However, as I say, I shall come back to that.

My hon. Friend the Member for East Stirlingshire urged that if we could not adapt the Norwegian experience and policy to suit our needs—that is, if we could not insist on companies buying British—we should at least require a fair bidding clause. I wholeheartedly agree, though I acknowledge that if we insist on more participation and on more "buying British" we have to bear in mind what might happen elsewhere. Are we to regard our oil industry and our oil equipment industry as being purely British and not for export? We cannot say to companies operating off our shores that they must buy only British and then complain when companies operating elsewhere, off Canada, off South-East Asia and so on, insist that they must buy locally.

If we believe that there is an export future for our oil equipment industry we should demand fair bidding. The need for fair bidding is illustrated by what happened in Aberdeen recently. A company producing compressors found that compressors had been flown to Aberdeen all the way from America. Equivalent compressors could have been produced in Aberdeen, but the company did not even know of the project, and, in fact, it was not put out to tender. It is this sort of experience which makes one suspicious of foreign companies, and that is why we want a fair bidding clause.

I was interested in what the Minister for Industrial Development said to Robb Caledon, the shipyard in Dundee. He said that it ought to follow the first-class example of Hall Russell, an Aberdeen shipyard, which started to build an oil service vessel "on spec". He regarded this as an example of initiative which should be followed elsewhere. I agree. But if we are to have initiatives like that, the difficulties should be smoothed out and, more important, the Government should be prepared to back these firms with cash.

I shall not go through all the reasons why Hall Russell proceeded with its vessel or into the source of its financial backing. But it got financial backing. Perhaps other shipyards in a less happy state than Hall Russell might not be able to obtain financial backing from the market. The Government ought to be prepared to provide the financial backing, and if there are any difficulties in relation to investment grants and shipbuilding grants such difficulties should swiftly be removed.

I come now to another problem which I want the Government to investigate. I refer again to experience in Aberdeen, though I use it only for illustration, and I understand that the same is true elsewhere. There was concern in Aberdeen recently that a viable production industry was to be bought out by a company which needed not the production, not the machines, but just the space. The intention was to buy the company and close down the production side simply in order to secure the buildings. I cannot say whether that story is accurate. I say only that it worries me, and I think that such situations ought to be investigated and closely watched by the Government.

I come now to the question of the revenues and how they should be used. In the late 1950s and early 1960s we thought that the salvation of the Scottish economy lay in the electronics industry. Those of us who took that view—either in the House, as, for example, my hon. Friend the Member for Fife, West (Mr. William Hamilton), or outside, as I then was—waged a strong campaign to have the new electronics industry brought to Scotland. The white heat of the technological revolution was to be part of the answer to our problems. In the event, even in the electronics industry the tech- nological revolution has overtaken us, and we are losing that industry and losing jobs.

I am concerned to ensure that we do not have the same experience in relation to the oil industry. We are looking for permanent benefits. For too long, Scotland has had only transient benefits from industry. Far too often, we have been in the forefront in developing heavy industry, but then it has gone. The classic example is the coal industry. After the coal mines had been exploited, whole areas were left derelict and there were no alternative jobs. We cannot contemplate a recurrence of that experience in relation to the oil industry.

I want to see oil revenues used for the benefit of permanent industry, to bring new industries in and to bring in production industries which are independent of the oil industry. We know that this is a battle that Government Ministers will be compelled to sort out, and I hope that a Labour Government will have just such an opportunity. It is a battle essentially with the Treasury about hypothecated revenue. The Treasury does not like earmarking funds but it likes to take the money into its coffers and then share it out. In modern times we have to change a lot of our thinking. We must be radical and prepared to challenge the mandarins of the Treasury. Unless we do, the revenues emanating from North Sea oil will be used eventually to reduce the price of petrol and to give away tax concessions, but will not be used for what has been rightly termed "counter-drift".

I end by referring to the question of public ownership, which is relevant to the debate. My hon. Friend who opened the debate quoted a noble Lord in another place who used a particular phrase. I do not intend to argue with my hon. Friend today whether that was a just or bad phrase. We should not be diverted from the real point, which is about how we own and control industry in this country. I make no apologies for saying that I am an enthusiastic supporter of public ownership. I believe that public ownership is right and can bring great benefits to the people of this country.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

What does the hon. Member propose to take over? I asked this question earlier of an hon. Member who was obviously in favour of the status quo. Is it intended to take over the oil companies or to nationalise the oil in situ, or what?

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

I listened carefully to the hon. Member when he said that it was impossible to vest ownership of the oil in the State. I would need to consider that carefully, because it has always been my impression that ownership of the oil is vested in the State under the Continental Shelf Act. The hon. Member for Bedford (Mr. Skeet) is the first person I have ever heard deny that fact.

Photo of Mr Trevor Skeet Mr Trevor Skeet , Bedford

What about the oil beyond the three-mile limit?

Photo of Mr Laurance Reed Mr Laurance Reed , Bolton East

Oil and gas on the Continental Shelf are, and always have been, vested in the Crown, which is the State, and to talk of nationalisation is meaningless.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

May I merely explain that it has always been my impression that the oil under the Continental Shelf was vested in the State by the Continental Shelf Act and by an earlier Act, I think of 1937. So there is no quarrel between the two sides on this. The Secretary of State for Scotland, who "discovered", amongst other things, North Sea oil is an enthusiastic supporter of the fact that the oil is already nationalised. It belongs to the State now.

I do not see why public ownership should be regarded as the last resort. There is no reason why it should have been confined to the railways, which were on their last legs by the time they were nationalised. There was a lack of investment in the mines for many years before nationalisation. However, we have nationalised BEA and BOAC, which operate very efficiently and successfully. The nationalisation of Rolls-Royce was partly to save jobs and partly because there was a defence interest, but I do not see why that kind of public interest should not be transferred, simply if it is for the public good. If it is in the public good to nationalise, it should be done. However, I accept what my hon. Friend the Member for East Stirlingshire said in opening the debate, that the Labour side of the House had no settled policy but if public ownership was to be undertaken it should be after considered judgment. He has taken that view consistently for a long time. In the debate on North Sea oil and the Scottish economy he opened for the Opposition. In answer to a challenge from the Secretary of State for Scotland, my hon. Friend said I grasp the nettle which the Secretary of State held out at the end of his remarks: if considered judgment means that such exploitation should be through public enterprise then we would not hesitate to adopt this approach."—[OFFICIAL REPORT, Scottish Grand Committee; 5th December 1972, c. 18.] There is a great deal of unanimity amongst us on this. We have kept the options open and intend to use the best methods of obtaining the best possible use of the revenues, the best possible participation. For that reason we bear the principle of public ownership in mind. In the short term we can extend BP's operations in the Forties field. But in the medium and long term our aim is the taking into public ownership not just of the oil but of the oil companies in terms of exploration, exploitation and refining. Unless we are to repeat the mistakes of the past, we shall need a national hydrocarbon corporation to operate a fuel policy, we shall need an integrated fuel policy and we shall need an integrated industrial policy. All the lessons of the past two years show that there are problems cropping up here and there, problems of industry and environment, and problems of local authorities, and because they are handled by different Ministers in different Departments we are running into serious trouble.

The benefits from the discovery of North Sea oil can be great and widespread but unless they are controlled and planned and unless they are co-ordinated we shall lose the benefits. It might be fitting if I ended by quoting from the conclusion of my hon. Friend's pamphlet "A Way for Oil". He said: No one in the Labour Movement can claim to know all the answers to such a complex problem, but how we handle it in the 1970s will determine the judgment of history upon us. We have been given the chance to redress the industrial balance of over a hundred years, and to see if we can reconcile the competing claims of economic growth and protection of the environment. This seems to be what the debate on North Sea oil is about, but it also seems, in my view, to be relevant to Socialism and public ownership of North Sea oil.

I end by congratulating my hon. Friend on raising the topic and thanking those hon. Members who have taken part in the debate so far.

1.38 p.m.

Photo of Mr Anthony Grant Mr Anthony Grant , Harrow Central

I should like first to express my congratulations and gratitude to the hon. Member for East Stirlingshire (Mr. Douglas) on giving us this opportunity to debate such an important subject. I also congratulate him on the thoughtful way in which he introduced his speech. He was not afraid to utter sturdy independent views on matters on which all his colleagues do not agree with him. We are extremely grateful to him for that.

The subject which the hon. Member chose, of course, ranges very widely upon trade and industry matters generally and upon the environment. I shall confine myself to the matters of broad trade and industry effect, but my hon. Friend the Under-Secretary of State for Development, Scottish Office will, if he is fortunate enough to catch your eye, Mr. Speaker, deal with the many environmental matters which have been raised parlicularly in a Scottish context.

I must say one thing straight away on the environmental front in answer to the very trenchant speech of my hon. Friend the Member for Essex, South-East (Sir Bernard Braine), who has very courteously given me the reason why he has had to leave the Chamber rather suddenly, which I completely understand. He was extremely angry. He has always been vigilant in the interests of his constituents and always, rightly, becomes angry when he feels they are being unfairly treated. My hon. Friend will appreciate that responsibility for planning decisions lies with the Secretary of State for the Environment. It was the Secretary of State's decision. It would be wrong for me to go into the merits of that appeal.

My hon. Friend queried the rôle the Department of Trade and Industry had to play in this matter and wondered where overall responsibility lay for the environment. It is right that I should spell out clearly where the responsibility lies. The Department of Trade and Industry is responsible for the proper regional distribution of industry in this country. That has long been the position. We have control of the IDC policy, and we issue IDCs with that in mind. We also have certain pollution responsibilities over navigation. Perhaps he underestimated the work done with regard to oil and oil tankers. The subject is set out clearly on page 11 of the North Sea oil report which appeared last January.

Once a decision has been made on an industrial development certificate on regional industrial grounds by my Department, it is clearly the responsibility of the Department of the Environment and the Secretary of State for the Environment, who has the ultimate decision, to decide whether a particular decision or planning application is in the interests of the environment as a whole. My hon. Friend may rest assured that I shall draw his trenchant observations to the attention of the Department of the Environment.

I join the hon. Member for East Stirlingshire and some of my hon. Friends in paying tribute to the skill and courage of those engaged in this new and exciting industry. We are very fortunate in the type of people who are engaged in what is often a very hazardous operation requiring great skill and expertise.

I should like to assure my right hon. Friend the Member for Argyll (Mr. Noble), lest he should have any doubts since he has left the Department, that there is, and will be, continuing liaison of the closest nature between the Scottish Office and the Department of Trade and Industry. The fact that Ministers from the two Departments are present on the Front Bench to answer the debate illustrates this extremely well.

In that context I should like to assure the hon. Member for East Stirlingshire, who mentioned the BP refineries, that the Secretary of State for Scotland has conveyed the hon. Member's comments on this matter to the Secretary of State for Trade and Industry. We know very well now what his point is. We are keeping in touch with BP on its plans for refining development. So the hon. Member has not gone unheeded; this shows the liaison between the Departments.

As the Minister for Industry has already told the House, the Government are considering all the recommendations of the Public Accounts Committee's very important report, both fiscal and otherwise, in the context of a review of future licensing policy. That review started several months ago and is now nearing completion. Because it has not been completed, I cannot give any more information, but when it is completed, a statement will be made in Parliament.

I refute the suggestion which was made, in the nicest possible way, by the hon. Member for Aberdeen, North (Mr. Robert Hughes) that we are in some way anxious to conceal information. This is not the intention of the Department. We will be as forthcoming as we can.

One of the main recommendations in the PAC report concerned tax revenue from Continental Shelf operations.

Photo of Mr Donald Stewart Mr Donald Stewart , Na h-Eileanan an Iar

That was not the hon. Member's point; he was concentrating on the fact that the stable door has been bolted after the horse has gone.

Photo of Mr Anthony Grant Mr Anthony Grant , Harrow Central

That is completely wrong. As the Minister for Industry said, the horse has not even been born yet. Not a drop of oil has been extracted yet and none will be until next year, so it is wholly misleading to suggest that the horse has bolted. There is plenty of time to take action. My right hon. Friend the Chancellor of the Exchequer announced in his Budget Statement that he accepted the recommendation in relation to the set-off of losses made by oil companies from their trade in oil in other parts of the world.

Photo of Mr Anthony Fell Mr Anthony Fell , Yarmouth

My hon. Friend says that not a drop of oil has yet been drawn, but there has been an awful lot of gas. The principle is the same.

Photo of Mr Anthony Grant Mr Anthony Grant , Harrow Central

Indeed. I am trying to assure the House that it is completely wrong to suppose, as the hon. Member for Aberdeen, North has sought to suggest, that we are shutting the stable door after the horse has bolted. That is not true. We are perfectly able to take whatever action may be necessary to ensure that the community gets the best results from this great development.

The question of forecasting has been dealt with by my right hon. Friend the Member for Argyll. It is important not to indulge in what I would term "guesstimates". Some of the wildest forecasts float about from various sources. The official estimate of about 75 million tons in 1980, which was arrived at after careful thought, is now being reviewed hi the light of drilling results in 1972. The estimates contained substantial provision for further discoveries. The results of recent drilling have taken up some of the slack for which provision was made. I cannot speculate on the outcome of the review. We shall let the House know the result of the review as soon as possible.

There are difficulties about forecasting future production. This depends not only on the forecasting of reserves, which is fraught with difficulties, but on the rate of build-up to final production of those finds still to be evaluated—not just those to be found and proved this year but what is happening to production in those fields which are already being developed. By 1980 production from them could be over the peak and on a declining trend.

Forecasting is anything but an exact science. Only time will tell whether the Government or their critics are on target. Critics are answerable only to themselves but Governments have responsibilities at large and must be as accurate as possible, even if it means being rather more cautious than other people can afford.

Photo of Mr Robert Hughes Mr Robert Hughes , Aberdeen North

So far the critics have been proved right all along the line and the Government have been proved wrong.

Photo of Mr Anthony Grant Mr Anthony Grant , Harrow Central

Time alone will tell. The Government have other responsibilities here. There is another review taking place and we will let the House know the results of that as soon as possible.

I turn now to the International Management and Engineering Group report which is a fundamental part of this debate. When the report was received we considered carefully the principal recommendation that there should be a special agency created to sponsor and assist the development of an internationally competitive British supply and contracting capability. We took the view —I am not certain whether the hon. Member for Aberdeen, North agrees with this—that in a development of this nature speed was essential. It was vital to get things moving quickly. We therefore decided that the quickest and most effective way to act upon the recommendation was to create an Offshore Supplies Office within the Industrial Development Executive of the Department.

The possibility that this should take place on speed grounds was envisaged in the report. It did not take an absolutely dogmatic view on the setting up of a separate board which it recognised would be an involved process and would require legislation. We must not balk at that. With the best will in the world and the renowed tactiturnity of Scottish Labour Members, that would still have taken a substantial time.

The office that we have set up has all the advantages of working within the Industrial Development Executive and therefore does not involve overlapping and indecision. What is more, the substantial powers available under the Industry Act can be used to benefit the fast expansion and growth of our supply and contracting industries. I know that the hon. Member for East Stirlingshire was a member of the Committee which examined the Industry Act and he does not feel that it is the right vehicle to assist this activity. However, he completely underestimates the powers, some of them controversial I am quite prepared to accept, that we have under that Act.

It is true that we shall continue to give assistance only to projects which have a good prospect of commercial success. We would not in any way be justified in using public money for non-viable enterprises. It is certainly no benefit to anyone if we assist in the creation of jobs which are not soundly based. The powers in the Act are extremely wide. We have administrative rules for giving selective assistance but we can go outside these guidelines if necessary. Therefore we might be justified in giving assistance to a project which did not directly provide employment. This must depend on the circumstances of each case. We have the powers and they can be applied effectively.

The other point of criticism which I know is often raised by Opposition Members is the question of the location of the office we have set up.

Photo of Mr Dick Douglas Mr Dick Douglas , Clackmannan and East Stirlingshire

I made a specific point about the Government underwriting the high-risk venture. Is it the Minister's intention to comment on this?

Photo of Mr Anthony Grant Mr Anthony Grant , Harrow Central

It would be wrong for me to go beyond the most general observations because each case has to be looked at on its merits. I accept that there are some high risks. The point is that we already have the powers. It was important to get an office going linked with the IDE.

Photo of Mr Anthony Grant Mr Anthony Grant , Harrow Central

We will simply have to agree to differ about this. I contend that the powers we have are wide and flexible.

I move now to the question of the location of the office. The plain facts of life are that the key contacts of the office are situated in London, including principally the headquarters of the major oil companies. This is reality. A strong case could therefore be made for having the office located in London. This view overlooks the especial importance of offshore development to the Scottish economy. It is because those facts of life have been recognised that we decided that the most practical way of dealing with the problem was to locate the office in London but nevertheless to establish a new Scottish Petroleum Office through which the Offshore Supplies Office would discharge its responsibility in Scotland. It might be said that this is a compromise. In this way we will probably, from a practical point of view, obtain the greatest advantage not only for the United Kingdom as a whole but for Scotland in particular.

The objective of the Offshore Supplies Office is to assist British industry to expand its share of the supplies of equipment going to offshore developments and at the same time to establish a firm base from which industry can develop its sales to other areas of offshore exploration. The office is already functioning under Mr. Peter Gibson, its new director. I reject any criticism of Mr. Gibson. We are extremely fortunate to have secured the services of a man of such ability who I know will be extremely effective.

At present the staff of the office is small but it is expected to rise to about 30. The new director needs to assess the appropriate organisation to deal with the task he has been given, which is a substantial one. He has a management consultant to help him. I know that that will please the hon. Member for East Stirlingshire. We regard it as essential that a thorough organisational study should precede the selection of future staff. We set up the office to do a vital job and will spare no effort to see that it is well organised. Since the setting up of the office was announced in January the pressure on its small resources has been high. Inquiries by letter and telephone and personal callers are running at the rate of over 200 a week. That figure is rising. I must emphasise that while we are dealing with this high level of current work we are losing no time in studying the future organisational needs and the main recommendations in the IMEG report.

The hon. Member for East Stirlingshire asked me for more details on the quarterly returns, which is a fairly fundamental aspect. The Offshore Supplies Office is currently negotiating with the offshore oil operators the form of quarterly returns of equipment purchases which they have agreed to supply. From these returns and the ensuing discussion we shall learn about the areas where British goods are not being taken fully into account and also about those products which British industry is not yet properly equipped to make. In many instances we expect to learn about those cases in which a partnership between overseas investment and British skills can flourish. In other cases the oil companies' returns will show us whether the reason why British firms are not selling is either that the purchasing officers in the oil companies did not know about them or that the goods are not quite suitable for the job.

We accept that final purchasing decisions are for commercial judgment. We shall see that these decisions are taken in the full knowledge of British capability. Our firms must have a full and fair opportunity to compete. In pursuing the policy of ensuring that British industry is fully capable of grasping the immense offshore opportunities now open, the Industry Act will be of great benefit. The Scottish Industrial Development Board is already considering a number of projects as candidates for selective assistance. These include the North Sea oil companies.

We hear a great deal about the need for bodies concerned with North Sea oil to be located in Scotland, but people tend to forget the excellent work being done by the Scottish Industrial Development Office, which is the Department's arm in Scotland. We have strengthened the manning of the office, most notably by the appointment of the industrial director and of the Industrial Development Board —which includes people with a wide range of experience of the problems and potentialities of Scottish industry—and we have given them a significant measure of devolved authority in administering financial assistance under the Industry Act.

I understand that people in Scotland —and I visit Scotland quite frequently— are very impressed with the work of the office and of the regional director and the industrial director. There are 150 offshore supply establishments which have set up in Aberdeen to service and supply rigs and employ nearly 2,000 men. Another 200 existing establishments in Aberdeen are involved in the offshore supplies business in varying degrees. The impact of oil development on the Scottish economy is being felt in the supporting and service industries. Two thousand five hundred jobs have been created directly and the figure is likely to rise to about 8,000 in the next two years.

The Scottish Industrial Development Office has been playing a vital rôle in keeping industry informed about the progress of oil exploration and development and in pointing firms towards sources of technical information and advising them on how to go about meeting the needs of the market and indicating which oil companies and contractors are potential customers. There has been a steady stream of inquiries from over 100 firms in the past year, and not only from firms in Scotland. We have not simply been responding to inquiries. We have, in the positive sense, been actively drawing the attention of firms to the opportunities available. Considerable activity, energy and enthusiasm has been shown by the Government and their officers in this respect.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

That may all be very virtuous, but what about the supply of risk capital to the smaller firms in terms of development grants? Before parading too much virtue—and I give the Department a lot of credit—this problem must be faced.

Photo of Mr Anthony Grant Mr Anthony Grant , Harrow Central

The hon. Gentleman will not be surprised when, as the Minister with special responsibility for small firms, I say that I am most anxious, as was 1MEG, that the interests of small firms particularly should be safeguarded and that they should be able to participate in this venture. But I stress that the financial incentives, selective assistance and financial measures which derive from the Industry Act are as applicable to small firms as they are to the large corporations; there is no discrimination in that sense. I shall ensure that small firms get a fair crack of the whip.

I turn to the question of the publication of a White Paper. A full report to Parliament on North Sea oil and gas was made in January. It was the glossy paper to which the hon. Member for Aberdeen, North referred. It provided a substantial amount of information, much more information than we usually obtain from a White Paper. What is more, a similar report will be made to Parliament each year. We are now conducting a review of licensing policy for the North Sea, and it is only sensible to await the outcome of it before making a further statement. The Offshore Supplies Office will be brought up to full strength as soon as possible. At the moment the scene is one of rapid change, and the Government's view is that the time is not opportune for the issue of a White Paper. We and the public are in possession of a vast amount of information.

There has been reference to the Norwegian situation. It is important that we should not become too obsessed by the situation in Norway, which is very different from the situation in this country. Norway will produce far more oil than it needs. Its balance of payments situation is entirely different from ours. We should not make too many analogies with the Norwegian situation. Nevertheless, to refer to the practice of the inclusion of a fair opportunity clause for Norwegian goods and services, the Government have stated, as one of the objectives of the current review of licensing policy that British industry will be given a full and fair opportunity to compete for North Sea business.

The current level of activity on North Sea work in the Department, both at headquarters and in Scotland, and in the regional offices, is setting the scene and pace for our new organisation. The objects of our policy are threefold: first. the continuing rapid exploration of the North Sea; secondly, a fair return to the nation as a whole from the exploitation of a national resource; and thirdly, a fair opportunity for British firms to compete for orders for goods and services for the North Sea. Those are clear and precise objectives which the Government propose to follow.

I must be a little rude to the hon. Member for Aberdeen, North—which is the last thing I would want to do personally because he is one of the most courteous hon. Members—in his capacity as the official Opposition spokesman on this subject. We have heard a great deal about what is wrong with the Government's policy, but, when one asks what the official Opposition propose to do about one of the most exciting new opportunities for Scotland and Britain as a whole for many years, the answer can be given in one word—"nationalisation". What the official Opposition have not explained is how they intend the taxpayer to fund the capital cost of such a venture. How do they propose to compensate the American and other foreign firms which have been developing the resources? Do they believe that the United States Government should perhaps impose comparable terms on BP and Alaska as the official Opposition would impose on Esso in the North Sea?

Those are some of the questions which the Opposition need to answer if they are to gain credibility as an alternative Government. How their proposals can bring the necessary confidence and dynamism to this venture is beyond belief. The only gratifying point is that it is official Opposition policy and is not shared by what might be termed the "provos". The hon. Member for Fife, West (Mr. William Hamilton) bravely said in the House on 16th March: I do not go along with nationalisation, which is nonsense … ".—[OFFICIAL REPORT, 16th March 1973; Vol. 852, c. 1731.] Bully for him! The hon. Member for East Stirlingshire—and I congratulate him, not just because I agree with him but because he has shown a great deal of sturdy independence and courage— has said point blank that the proposal to nationalise the resources of the North Sea is a stupid Left-wing idea.

The hon. Member for Aberdeen, North referred to the very interesting pamphlet entitled "A Way For Oil" which the hon. Member for East Stirlingshire wrote. It was rather heavy going, but I went through it last night. I confine myself to dealing with its conclusion. The hon. Member for Aberdeen, North read words from it from which I do not dissent, but he did not read the last sentence in the conclusion, which states: Dogmatism is not likely to produce the correct climate to solve the problems for the benefit of the people whom we seek to serve". That is the best message that can be given to the official Opposition. Those are wise words.

A dynamic course is being charted and we are confident that, given a fair chance to compete, which we are determined to ensure, British industry will rise to the challenge of this new and exciting market.

2.10 p.m.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

I do not retract for one moment from what I have said on other occasions and from what the Under-Secretary of State has represented. I have yet to think of a way in which multi-national companies can be nationalised. That is one of the dilemmas which we face and which all Governments of this country will face. That is one of the principal reasons for my active support of British entry into the Common Market—namely, to use the political institutions of a much bigger unit better to control multi-national business combines. If multi-national companies are engaged in the oil industry we must have a political counterpart. The Common Market is the best answer that we have which is readily available. However, that is a matter which we can debate on future occasions. Indeed, we have debated it at length in the House and elsewhere.

I wish to deal with the effects of the new resource on the environment. The temperate document which my hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. Douglas) has produced is the only document that I have seen, apart from that produced by the Church of Scotland, which devotes a chapter to the environment. No hon. Member has studied the multiplicity of problems associated with the exploitation of this resource more than my hon. Friend. I say that in no way patronisingly. In his chapter on the environment he refers to the beauty and culture of the Scottish Highlands. My hon. Friend the Member for Aberdeen, North (Mr. Robert Hughes) also referred to culture.

In all our debates on the economy we tend to attach undue importance to growth problems. We are concerned about how much more we shall produce each year. The gross national product is the calf we are all supposed to worship. I have been increasingly conscious of and anxious about the need to consider not only what we produce but the possible damage which we might inflict on the quality of life since our party conference in Dunoon. It is not sufficient to get more pound notes into our pockets if by so doing we destroy our environment.

The problems which now face Scotland and which will increasingly face Wales and the rest of the coast of England— we do not know what will be found off Argyllshire and below the Celtic Sea— and the extent to which they will affect the way of life of people who, generally speaking, are in the peripheral areas of the British Isles, and who lead a rather peaceful and rural life, have not been considered fully.

I am not sure that the happiness of the people in such areas depends on their wages. It is often stated as if it were by definition a disadvantage to have a lower income than somebody else. It is not necessarily the case that people with lower incomes are leading a poorer life than those with high incomes. When I see evidence of the rat-race in London, and even to some extent in this House, I wonder whether we are better off and whether our lives are richer than those of the people who live in the Orkneys, the Shetlands and the Western Isles. I am greatly worried about what is taking place in Orkney and Shetland. There is a great danger that local, simple—I do not use that word in a derogatory sense —and gentle people will be outwitted and out-manoeuvred by the "mafias" from Edinburgh and Texas.

I have been presented with a chart, which is like a family tree, showing a multiplicity of investment firms which are battening on to Orkney and Shetland and trying to get control of land. There is a conspiracy called Nordport. The document is rather like the Royal Family's genealogy. The companies are all interlocked and interwoven. They are all out for one thing. Their object is not to benefit the natives of the Orkney and Shetland Isles but to get cash into their pockets, to get control of the land and to use the resources for their own good. The very name "Nordport" was stolen from the county council.

I do not want to attribute any base motives to anyone in particular. I shall refrain from using or abusing my privilege in this House to lay charges at the door of any individual who has moved in smartly to cash in on the prospect of making a quick buck.

There are vast changes taking place in land use and in the landscape in the North of Scotland. Such changes are inevitable. It is no good, as the right hon. Member for Orkney and Shetland (Mr. Grimond) said, to wish them away. We must ensure that there is no repetition of what happened after the first Industrial Resolution. I represent an area which will be scarred for ever as a result of the dereliction of duty of Governments who allowed, for example, private coalowners to get away literally with murder. The recent disaster in Yorkshire emphasises the price which we are still paying. Those men were drowned in sludge and filth that came from mines that had been sunk by private owners and had never been charted. That happened more than 100 years ago.

In my constituency there are large tracts of land which appear to be perfect for industrial development but because they are dangerous—we do not know how big the holes are underneath—and because surface seams have been exploited by private owners and then left, these areas cannot be developed. If we are not careful we are in great danger of having that kind of pollution and that kind of dereliction left behind long after the Texas and Edinburgh "mafias" have disappeared.

The dangers of pollution of this kind— financial as well as other kinds—are extremely great. I was talking to an oil man the other day about the great danger of these enormous tankers in our northern waters. He assured me that the oil companies have great expertise. He pointed out that, after all, one of these tankers could cost £20 million or £30 million and, therefore, they would not want to risk them in these turbulent waters with high winds, narrow channels and so on. But the "Torrey Canyon" disaster was a salutary experience for us all, and that danger could be multiplied ten-fold in the waters off the North of Scotland. There is also the problem of leakage and seepage, as the right hon. Member for Orkney and Shetland has pointed out on many occasions. I do not think that sufficient research has been done into this and related aspects.

We can pay too great a price for the too speedy exploitation of this resource. I accept that there was great temptation in the early days, when the balance of payments problem was much more acute than it is now—although it has grown and is growing more acute again under the present Government. But it is nevertheless not as acute as it was in the early years of oil exploitation, and, therefore, I hope that the Government will look again at the time schedule. If development is slowed up, this could add to the cost in financial terms, but the price will be well worth paying if it increases the protection and safety of our environment.

In the long term, I believe that the natural beauty of the area is of far greater importance than the tempting shorter-term financial and economic gains. Unfortunately, however, the forces at work are very unevenly balanced. Again I must refer to the speech of the right hon. Member for Orkney and Shetland, who knows the problems much better than I do. During the Easter Recess some of us are going on a fact-finding mission to his constituency—not, I should explain, in a nasty party political sense.

Photo of Mr Jo Grimond Mr Jo Grimond , Orkney and Shetland

I hope the hon. Gentleman will stay with me and will see how things should be done.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

I had better consult my constituency party before accepting the right hon. Gentleman's kind invitation, for which I am much obliged.

As I was saying, the balance of forces in the argument is very uneven. On the one side we have the Nature Conservancy—nice, gentle, civilised people—the Scottish Society for the Protection of Birds and the perhaps unsophisticated local authorities—again, gentle, simple-minded, nice folk. On the other side are the vastly wealthy professional oil companies, which know their way around. It is an unequal battle, and I am very frightened that the simple-minded folk will be outwitted by the oil companies. I say no more than that. I want to express my concern that this might conceivably happen or be happening.

The Scottish Office is, of course, concerned. Indeed, it is on this little list, because at the top we see that the Tory Party is linked to the situation right through Ivory and Sime to Nordport. So the Tory Party has some kind of tenuous financial interest. I will show the Under-Secretary of State for Development, Scottish Office this document before he replies. Then I shall be interested in his comments.

I have heard rumours—I say no more than that—of, for instance, a liaison committee. Indeed, it is really more than a rumour, because it has been publicised. It is that the Zetland County Council has a liaison committee which meets secretly with the representatives of the oil companies. I do not attribute any base motives to the Zetland County Council for having that kind of committee, although I think it a great mistake to have a committee liaising with the oil companies, with no minutes kept, no one outside knowing what they have been talking about, what decisions are being made and what is motivating those decisions. This kind of secrecy engenders all kinds of suspicion—although not in people like me, of course. I have been supplied with the names of four county council representatives—officials and elected representatives—who happen to be on that committee. I shall not repeat them. But perhaps there is nothing sinister in it.

I think that it is general knowledge, too, that the Zetland County Council met on 20th February to appoint Rothschild's as its merchant bankers, although the Bank of Scotland had been its bankers for many years. I am told that the Bank of Scotland is also an investor in Nordport. It is here sure enough—the Bank of Scotland is connected with Nordport. Of course, Nordport has changed its name at various times—from Adrin House Property Company to North Sea Assets Property Company to the Shetland Land Bank. It is difficult to keep track of these things. Nordport, of course, has traceable links with Onshore Investments, which in turn has links with Ivory and Sime and Edward Bates. Rothschild's is apparently anti-Edward Bates and Ivory and Sime and is pro-Shell.

I put all this in interrogatory form. 1 am not making accusations. I am asking the Scottish Office to look very carefully at the financial ramifications of what is taking place in the relatively small community represented by the right hon. Member for Orkney and Shetland.

Photo of Mr Jo Grimond Mr Jo Grimond , Orkney and Shetland

I am not intervening in any hostile way. I think it a good thing that we should have as much information as we can about all the people concerned. The hon. Gentleman takes a very romantic view of the Shetland local authorities, which I am glad to hear, but I am not sure that they are quite as simple as he makes out. I want to make it clear that I know that Nordport has many ramifications, but so do many companies. British Assets Trust, for example, is reputable and has been around for a long time. Everyone knows its connections with Ivory and Sime and so on. This does not invalidate what the hon. Gentleman is saying but these are not sinister concerns.

I am not defending Nordport. Nor am I briefed by the county council. But I should point out that, in consulting new bankers, the county council was sensibly taking advice, since Rothschild's is a different kind of banking concern from the Bank of Scotland. The local authorities should have advice from environmentalists, people who know the oil industry and bankers. I do not think that it is simply a matter of changing bankers. The local authority is taking advice from a merchant bank on aspects of oil development.

Photo of Mr Willie Hamilton Mr Willie Hamilton , Fife West

I accept that, although 1 have here a copy of a confidential document showing that this decision was added to the agenda of the county council at its meeting called for Tuesday 20th February. The letter went out on 16th February, giving only four days' notice that this important decision would be taken about the change of bankers. In a venture of this size, everything ought to be done in the open. That is all I am saying. There may be no sinister implications. The oil expert I talked to the other day said that of course the probable reason for Zetland County Council changing bankers was that it was important in this new situation for it to have a merchant banker which was reputable and had great knowledge of such problems, rather than the Bank of Scotland. I make no great point of it, and I would not accuse the right hon. Member for Orkney and Shetland of being naive and innocent in these matters. He has been around a long while, and so have I. It is reasonable to record these suspicions, and I think that I am voicing the suspicions of those on the spot—and I have talked to people on the spot.

Let me give one or two further examples. I record them to indicate come of the suspicions which can exist at local level. The ex-director of the Royal Society for the Protection of Birds in Scotland is now alleged to be working for Land Use Consultants, which is the environmental adviser to Nordport and Onshore Investments. There may be nothing in that. It may be quite proper for a person who is expert on bird protection to be a consultant or adviser. All I am saying is that that man has now become the employee of a company which is engaged in rather questionable activities in Orkney and Shetland.

I give one other example. One of the directors of Land Use Consultants is a former chairman of the Nature Conservancy. He is alleged to have said that current developments are no threat to the environment, although previously he had been a front-runner in the environment protection lobby. I simply make that bald statement and leave it at that.

I want the Minister to spell out to the satisfaction of the House that everything possible is being done to make sure that the quality of life of the ordinary people, particularly in the North of Scotland, is not in any way permanently damaged—I appreciate that there will be some temporary damage—by this exciting new development. I do not think the hon. Gentleman will be able to give an assurance, but he can make appropriate noises. This is all I can reasonably ask of a Tory Government. If he can assure the House that the Government will intervene if they see any kind of abuse involving exploitation either of land or of oil which may damage the long-term interests of people who will have to live in those areas when the oil has been extracted, this debate will have been worth while.

2.34 p.m.

Photo of Mr Patrick Wolrige-Gordon Mr Patrick Wolrige-Gordon , Aberdeenshire East

The hon. Member for Fife, West (Mr. William Hamilton) has exploited most of his prejudices in his normal, effective and interesting fashion, albeit in a somewhat interrogatory manner. I thought that it was particularly distinguished on his part to be able to involve the Crown in the Edinburgh "mafia" whose paper he was discussing, as though that document had all the authority of a White Paper, although I have not seen it.

I agree with the hon. Gentleman about the degree of risk of pollution of the environment. I accept that the oil companies maintain that they are spending so much money on anti-pollution that a failure would be so expensive that it could not happen. That is wishful thinking and at the moment we are operating at the extent of known technology. Accidents always happen and they are always possible. I hope that the Minister will say that the Scottish Office has at its disposal or is gathering all round the coast machinery to deal with any possible tragic accident which may happen so that pollution will not occur or will be kept to the absolute minimum.

The issue which concerns the House today on the subject of North Sea oil relates to the Government's handling of its policy. I want to deal with this aspect. I do not make any charge about taxation policy. That was obviously possible by way of amendment until oil began to flow from the North Sea, and the oil companies were aware of its necessity. The Chancellor of the Exchequer altered the situation in the Budget, and I wish him well in his review and his discussion with the oil companies. The charge that I make relates to the last round of oil licences and calls into question the whole principle of speed.

Because of its truth for America, we seem to have become hypnotised into thinking in such depressed terms about our energy shortage in the 1980s that we have turned a source of which we knew nothing six years ago into an indispensable crutch. I hope that as a result of all the work that is going on in New Palace Yard oil will not be discovered. If that happened, we should have to set up a Big Ben protection group.

The Government make a good case on the figures, but rationalisation of a mistake is one of the great British arts— like our cooking. I want to get away from from this measured and stately panic. Until it is extracted the oil in the North Sea will stay there, just like un-extracted coal, and for all time. And it will always be of use and may become more valuable, not less.

With their devotion to speed, the Government remind me of the celebrated young lady from Riga. I would prefer to see them in the costume of the tiger. I want to see them in charge and prepared to make haste—certainly, but to make haste more slowly. More haste, less speed. In the interest of our civilisation, we must resist this abject devotion to the god of growth and we must be in charge of things, not at the mercy of them.

I wondered whether it was some EEC threat to our mineral resources which had galvanised this headlong rush. I hope I can be persuaded of that, but I do not expect to be. Did not Germany recently win a reallocation of mineral resources on the Continental Shelf from Holland and Denmark? If that is so, clearly national interest is still preeminent and that excuse falls.

Neverthless, speed has been the motto. Even on planning decisions —and I shall say more about planning later—my right hon. Friend the Secretary of State has parried every criticism by pointing to the speed of his decision. Unfortunately, he and others of my right hon. and hon. Friends may have been riding in the front of a Rolls with the Royce left far behind. Has it all been as speedy as they would like us to think?

The IMEG report came out and recommended the establishment of a petroleum supply industries board. How speedily the Government act. The Offshore Supplies Office is established in the Department of Trade and Industry; Mr. Gibson is appointed and we are told that it is discharging its responsibilities through a new Scottish Petroleum Office in Glasgow. Recently I asked to visit that office. I must advise my hon. Friends not yet to join me in that duty. It is like looking for the Bastille in Paris or for the original site of the Garden of Eden. It does not at this moment exist.

The effect of this incompetence in Scotland is very damaging. Even worse is the failure to recognise this incompetence. I have much sympathy with my hon. Friend the Under-Secretary of State for Development in this matter. He has to convince himself as well as Scotland that, despite this attitude, it is still in our best interests not to retain administrative control over the industrial side of oil development as we have on the planning aspects.

I have not been convinced by the argument of my hon. Friend the Undersecretary of State for Trade and Industry about putting part of the department in London anyway. Why not put the whole department in Scotland for a start? We talk about devolution and about the decentralisation of the Civil Service out of London. It is one of the most fashionable and trendy things in which to be involved at the moment. North Sea oil is an industry located off the Scottish coast. Oil has not yet been found off the English coast. If it is, we shall readily put a branch office in London or wherever else it is wanted, and we shall have our manager already appointed.

A United Kingdom means mutual aid. It also means recognising the natural aspirations of natural developments. We already have the headquaters of fishing administration in Scotland because fishing is an industry of vital importance pre-eminently to Scotland and proportionately much more important than in England. Forestry is moving the same way; all Government services, though proportionate, of course, the same, but not yet oil.

As my final point on the petroleum office, I express the hope that it has teeth and that it can gain the technical information on specifications and so on that is necessary to enable Scottish firms to compete. Recently I heard a gentleman who was seeking to serve the North Sea oil industry with supply boats say that if he did so under the British flag he could not compete and that he was contemplating giving himself some other flag. I thought that that was a very damaging comment. I realise that we have given up the British Empire and the "Rule Britannia" idea, but not to have sufficient control in our own territorial waters to enable British boats to compete fairly is too much for me. I hope that the board will see to that kind of difficulty, especially as it affects the position of supply boats.

Generally the question of supply boats seems to typify the difficulty of British involvement in the offshore oil industry at the moment. I realise that probably there are faults on all sides, but I think that we have to be tough in order to ensure that competition is fair. Surely recent events and experience in aerospace have made that plain.

A lot of good things have been done. I agree fully with what my right hon. Friend the Member for Argyll (Mr. Noble) said about the excellent work being done in increasing amounts by British industry to involve itself and participate in this industry. I welcome especially the announcement this week of Sidlaw Industries' subsidiary forming a joint United Kingdom company with BASCO International, a United States oil tool manufacturer, to make, repair and rent oil drilling tools for the North Sea operation. That is one direction in which we should go because we have to become good at this industry. Underwater exploitation and exploration is as important to the future of mankind as any other modern technology and perhaps more important than most. We have the opportunity to get into the forefront of it.

I turn to the subject of planning. I appreciate the Government's position here. I know that local people through their local planning committees have full control over everything which happens or is proposed to happen in the area. I do not want to disturb that. But I do not go along with the somewhat condescending attitude here that the local planning people are quite unable to deal with the sophistication and skill of those with whom they are involved. I was surprised not to hear the hon. Member for Enfield, East (Mr. Mackie) leap to the defence of his brother who is convener of the Aberdeen County Council, very much involved with all the issues and dealing with them very successfully. I endorse the view that local people should have a chance to play their full part and make decisions on these important points.

My main impression of the oil scene generally at the moment is that we always arrive on the ball just after the other side has kicked the next goal. We have to be there in advance. A great deal is said, but we do not have any guidance yet from the Government about the best strategy for land and seashore use in the development of North Sea resources.

My right hon. Friend the Secretary of State for Scotland commissioned a study very wisely in collaboration with the Countryside Commission and the Nature Conservancy to examine the environmental impact of North Sea oil and gas development. That study which related to the coast has not yet produced any report. It has managed to gather all existing information on the areas of coast known to be at risk and it is examining this data further. If I were my right hon. Friend I should be hammering for advice now for the country as a whole on the best strategic use of the coastline as a whole to give an overall view of how to harmonise industrial and environmental considerations as much as possible. I would not go firm on it, of course. All these matters must be left finally to the local interests bearing in mind the nature of discoveries and so on. But not to have any clarification of the general picture even yet is too slow.

To be specific again, we do not know the strategy for land use in the development of a place like Peterhead which is directly and most urgently involved in the development of the industry. I appreciate that this is not the direct responsibility of the Government, but it is a good example to indicate the present difficulty. It is generally agreed on the basis of known development that Peter-head will have an additional population of some 8,000 people over 10 years. That is a perfectly possible operation to do extremely well. But in view of the present pressure on all available resources locally already, at some point soon we shall need to be shown how efficiently the administration can cope. I know that the administration thinks that it can cope perfectly well, but until now many people have thought that it cannot and we do not yet have the plans, the bricks and the statistical information to refute that opinion.

Let me take just one example. The community service centre is planned for the present population gradually to increase to 17,500 people by 1986. Ought not that to be planned now for 23,000 people by 1986?

All this means great pressure on the rates. What provision do the Government feel that they and the different commercial interests coming to the north of Scotland should make in this connection to the north of Scotland? On housing, for example, a firm employing incoming workers should undertake a real responsibility for the living conditions of those men and their families. We have moved a long way from old-fashioned capitalism in recent years. But still many firms and even the Government in their investment capacity are not eager to want to make social provision. I believe that that would be a very great mistake and that a great opportunity to develop the north of Scotland in the right way would be lost.

I end with a few words about training. We have a chance to get into a highly skilled business and we want to be very good at it. To meet this need, a number of independent moves are taking place. Aberdeen University is proposing a chair for petroleum. Heriot-Watt has its institute of offshore engineering. One of the oil companies has instituted a training school for newcomers to the industry in Aberdeen. Robert Gordon's has produced a one-year post-diploma course in offshore engineering, and the Government provide substantial grants for individual men and women who want training experience. Should not this activity be co-ordinated by the Offshore Supplies Office?

Secondly, may we have a special Government training centre in Aberdeen or at least in the North-East to train men in all industrial courses relevant to the area? Aberdeen is now a major development area and the nearest Government training centre is in Dunfermline.

2.50 p.m.

Photo of Mr Donald Stewart Mr Donald Stewart , Na h-Eileanan an Iar

I trust the hon. Member for Aberdeen-shire, East (Mr. Wolrige-Gordon) will forgive me for not following his remarks. I missed part of his speech, and the part that I heard mainly concerned his constituency, of which I have little knowledge.

I join in the tributes which have been paid to the hon. Member for East Stirlingshire (Mr. Douglas) for initiating the debate. I recognise and respect the work he has done to make himself fully informed on all aspects of North Sea oil, but I do not intend to follow his comments on the technological, engineering and high finance aspects.

Despite what the Minister said, it is unmistakable that the Government have made a poor bargain with the oil companies. It is not sufficient to say that the oil has not started to flow. That is true , but the Minister surely does not mean that the Government intend to renege on agreements already made. Some oil companies have referred to the Norwegians as Arabs with blue eyes, but I have not heard that insult applied to the British Government. They have not been so tough as the Arab States in making oil agreements.

The hon. Member for Fife, West (Mr. William Hamilton) referred to the balance of payments. I suspect that it is the balance of payments position that has led the Government into deciding that the extraction of the oil shall take place at such a high speed. Common sense and prudence might have dictated a rather slower rate. We know that the oil is there and we know that it is becoming increasingly valuable. Nothing would have been lost by a slower rate of progress. Unfortunately, both Tory and Labour Governments govern from week to week off the cuff. They see a difficult balance of payments position one week and North Sea oil the next week. If they can meet the bill this week, they do not worry about the bill that will be presented next week

I was pleased to hear the hon. Member for East Stirlingshire say that he was not in favour of the nationalisation of oil. Nationalisation is not a theoretical dogma for me. There are some situations in which nationalisation is rational and others in which it is lunatic, as it is with oil in the Scottish sector of the North Sea, even supposing that it is possible to nationalise multi-national companies.

I was sorry to hear the hon. Member say on two occasions that he was not dealing with this issue in a narrow, Scottish sense. North Sea oil is a Scottish dimension. The major finds are in what the Government have described as the Scottish sector of the North Sea. No one would suggest presenting the so-called Scottish budget of the middle 1960s from which it appears that Scotland is a poor country. That concept never had any validity, and the oil finds make it ludicrously out of date and inaccurate. A country with all this wealth cannot be allowed to deteriorate.

The description of the Highlands as a "wilderness" is correct. The country is largely unspoiled. There are areas in which one can walk from the early morning until the evening without meeting a soul. It would be a tragedy if, after having been neglected for so long, these areas were spoiled by developments. I am not against development, but I am against it being done at breakneck speed without regard for the environment. Only now are pit beams that were produced 150 years ago being removed from the central belt. Unless an authority is appointed to control development, there is a danger that the generation after ours will curse the day that oil was ever discovered in Scottish waters.

The hon. Member for Fife, West referred to the simple people in the Northern and Western Isles, and I know that he meant that adjective in a kindly way. I agree that the absence of a high wage packet does not necessarily mean a depressed way of life. I would fight for the right of the people in my constituency—which has the highest unemployment in Britain—to have a wage packet equal to everyone else's, but I see the people living reasonably civilised lives in pleasant surroundings which could be destroyed by oil developments which would not greatly benefit them.

Two minor water schemes on Harris are held up by the Scottish Office because the grant required is slightly more than the normal grant. The Secretary of State has been sympathetic on similar occasions. It is ridiculous that these two schemes, which are peanuts in financial terms, should be held up when Scotland has this enormous oil wealth.

The hon. Member for Aberdeenshire, East referred to Scottish local authorities in the North-East being rated for developments arising from oil, and that matter was also referred to by the hon. Member for Aberdeen, North (Mr. Robert Hughes). The Government should give the authorities substantial assistance to overcome their rate deficiencies.

Despite what I have said, I am not unduly concerned about the prospects. Political developments are likely to come in Scotland which will enable the Scottish people to have far better control over what happens. Until that time comes, it is essential for the Scottish Office to take a better grip, to see that the returns are put back into the Scottish economy and to ensure that the Scottish countryside is not irreparably ruined.

2.58 p.m.

Photo of Mr Laurance Reed Mr Laurance Reed , Bolton East

When I entered Parliament, less than three years ago, no commercial oil had been found on the British Continental Shelf. It was hard going to persuade parliamentary colleagues that the seabed and its resources were a subject worthy of their attention. At best, the matter seemed to have been regarded as something for the future and removed from life at Westminster.

The future has happened, and, with oil fields now being announced at the rate of one every three months, attitudes have changed. But I must say that I still have doubts whether Parliament has yet grasped the true significance of these offshore assets. Perhaps those doubts are sustained by the fact that we still have not yet had a debate on this question in either Government or Opposition time. But for the energy of back-bench Members like the hon. Member for Clackmannan and East Stirlingshire (Mr. Douglas) and but for the Scottish Grand Committee and the Public Accounts Committee, there would have been no discussion about this essential and important development.

The PAC was critical of the Government's licensing policy. In reading Press comment upon it, it occurred to me how easy it is to be wise after the event. When the North Sea hunt began it was never certain that oil and gas would be found. The climatic and physical conditions were extremely severe, and existing techniques had to be stretched and new technology evolved. This was a high risk/high cost venture.

We must not forget that the oil business is a worldwide business and that the availability of capital and, above all, skilled manpower is limited. Talk of the kind that we now have from some quarters might easily in 1964 or even later have persuaded the oil business to place its bets elsewhere, and the whole North Sea activity could then have been postponed for a decade or more.

The central aim of the DTI's licensing policy has been to secure the most thorough and rapid exploration and development of hydrocarbons on the Shelf. In 1970 I had certain doubts about this policy. I went to see Mr. Angus Beckett, who was then head of the Petroleum Division. It was he who persuaded me that the policy was right. That strategy has paid dividends, not just for speculators, because no oil has come ashore yet, but for this country as a whole. We have succeeded in locating assets worth £50,000 million over the lifetime of the fields, at today's prices, yielding a revenue to the Exchequer in 1980 or thereabouts in excess of £300 million, benefiting the balance of payments to the tune of £500 million a year, and generating employment and growth in Scotland and other regions.

All of this has been accomplished in less than eight years, without any risk whatsoever to the British taxpayer and at a time which is remarkably propitious because of the current and growing world energy imbalance. Many of our international competitors will be extremely embarrassed for 10 or 15 years until nuclear generators come into their own. But Britain, because of the policy pursued and the speed at which it was pursued by the DTI, will be either completely or very near to being self-sufficient. Certainly, with our coal we can say that we shall be self-sufficient in energy. This is one of the greatest success stories in our history. We owe a debt of gratitude to the small group of people in the DTI and its predecessor who masterminded this accomplishment.

But, having said that, now that the true wealth of our Continental Shelf has been revealed, now that the risk is less and now that the cost in relation to profit is smaller, I now believe it is right to change the rules, and I welcome the decision made by the Chancellor in the Budget.

Where Whitehall can, I think, be faulted is in its failure, or slowness, to recognise and to grasp what I call the main chance in this business. This is not being wise after the event, for there have been bodies, such as the Society for Underwater Technology and the Underwater Engineering Group, which have consistently urged successive Governments to invest in ocean engineering.

Until recently those efforts met with a negative response. To give them their due, the last Government set up the Committee on Marine Technology. But it had no teeth, no money and no executive powers. It was purely advisory. As a result, the bulk of the technology used to exploit our own assets on our Shelf is of foreign manufacture and design, much of it produced under programmes established by foreign Governments to help forward their own industries.

One of the jobs which I have outside the House is to serve as a director of what is known as the Association Européenne Océanique—called "Eurocean" for the convenience of Englishmen. It was set up by some important oceanographers and hydrographers a few years ago to foster European collaboration in ocean engineering at an industrial level. Some important companies are involved, including Pechiney of France, Fiat of Italy and Philips of Holland. At present, there are, I believe, all told, 26 European companies involved. Just two are British. That, I am afraid, is a measure of the reluctance of British industry to get its feet wet and take the plunge.

IMEG has produced some positive proposals for action, and the Government have accepted them in part. But it is singularly unfortunate that the terms of reference for that study were so narrowly drawn, being confined to oil and gas. The ocean business is not primarily about how to extract oil and gas from the sea bed. It is about how to do engineering in a liquid environment as distinct from a dry environment. That distinction is important, because what is now going on in the North Sea is only the beginning of something much bigger.

We are involved in the conquest of an environment, the environment called ocean space. That conquest is not being undertaken in order that we may indulge in some prestigious technological Olympics like the space race. It is not being undertaken simply because the oceans are there, like Mount Everest. It is being undertaken for an essentially practical reason; that is, to open up 140 million square miles—as against the 100,000 we have in the North Sea—of underwater territory, which represents 70 per cent, of the earth's surface.

We know that the oceans are the depository of a wealth and variety of minerals. We know also that, with the hunger there is for natural resources now in the world, faced as we are even today with dislocation of demand and supply, industry will increasingly turn to the sea bed to meet its needs.

There is no time for me to describe the full wealth which exists in the oceans. If anyone is interested, there is a document prepared by the United Nations called "The Mineral Resources of the Sea". But to demonstrate the potential and what is at stake, I shall give an example. Littering the ocean floor, in great abundance, there are manganese nodules. I know of four companies—one Japanese, one German and two American —which have not only designed but are now testing the necessary prototype mining systems to win this resource.

The reserves of metals in this nodule form, calculated on the current world consumption rate, are as follows: manganese, enough to last 400,000 years, as against 97 years on land; copper, enough to last 6,000 years, as against 36 years on land; zinc, enough for 1,000 years and 23 years on land; nickel, enough for 150,000 years, and 150 years on land; lead, enough for 1,000 years, and 26 years on land.

Those are the magnitudes of which we are talking, and that is the ultimate prize. The main chance of North Sea oil lies in using the opportunity created by its exploitation to develop a strong ocean-based industry in Britain which will in time allow us to move off the Shelf into deeper waters.

Who will own all this mineral wealth is a question for the United Nations Conference on the Law of the Sea next year. But that need not detain us now. What matters is the technology. If we have the hardware, we can sell it to whoever owns the wealth. If we have know-how as well, the chances are that we shall win the contracts to exploit the resources.

How do we grasp this opportunity? I believe that we have now to do as the Americans have done in setting up the National Oceanic and Atmospheric Agency and as the French have done in setting up a Centre National pour I'Exploitation des Océans. We, too, must establish a single independent agency to manage our offshore estate and to spearhead our entry into this form of marine science. We need an alliance and a compact between brains, skill, money, universities, industry and Government.

I think all the resources of our offshore estate should be vested in such an agency, but the actual exploitation of those assets should be left to private and public enterprise competing on level terms for the award of licences for production and for exploration. I believe that that agency should be allowed to retain a percentage of the development value of the Shelf to enable it to fund its tasks and operations.

The agency should have certain responsibilities. First, it should broaden the education and training in marine science and enlarge our pool of qualified manpower through grants and awards to selected universities and institutes. Secondly, it should promote and coordinate research into all aspects of the marine environment and its resources by supporting oceanographic studies in existing establishments. Thirdly, it should assist the United Kingdom industry to establish a total underwater engineering capability through loans and contracts for specific projects where the risks are so great or the profits so long deferred as to discourage business enterprise. Fourthly, it should develop and maintain services in support of offshore activities, including weather and environmental prediction, surveying, rescue and salvage operations. Fifthly, it should promulgate and enforce regulations for the safety of men and equipment and to control pollution and other environmental hazards. Sixthly, it should establish a data handling centre, to collect, store and disseminate information, and an underwater evaluation centre to test equipment and train personnel. Finally it should build and operate a fleet of vessels to fulfil its policing functions and to explore and appraise mineral resources of long-term value.

We should need something as far-reaching and imaginative as this to seize the main chance of North Sea oil. It will not come our way again, and as things stand now there is a danger that we shall lose it.

3.15 p.m.

Photo of Mr Tam Dalyell Mr Tam Dalyell , West Lothian

There is nothing sweeter in politics than to be the crank who is finally proved right. I hand it to the hon. Member for Bolton, East (Mr. Laurance Reed) who, after I had asked my first parliamentary Question about the seabed of Mr. Harold Macmillan when he was Prime Minister, sent me a small booklet that he had written. At that time we felt like co-cranks, because very few people believed in the importance of seabed exploration. So I find it difficult to follow the hon. Member, who has made a serious contribution to this discussion.

I also followed the hon. Member last week in another place, when we were both contributors to the seminar of Professor John Erikson in the Heriot-Watt University on North Sea exploration and technology. I am surprised that the hon. Member did not raise one issue which was raised at that seminar by Admiral Lucey and himself. To quote from the hon. Member's paper, The protection of pipelines and underwater storage units is another nightmare. How do you patrol 150 miles of pipeline in up to 300 feet of water, in an environment hostile to man, with visibility down to a few yards, encompassed by high seas which are open to all nations to navigate by surface or submarine transport? There must be a discussion with the Royal Navy of its responsibilities here rather than in the Indian Ocean, where in my view we have no responsibility.

On 22nd March I wrote a fairly detailed letter to the Scottish Under-Secretary of State on the three subjects that I wish to raise with him. The first is the position of Heriot-Watt which, by inference, the hon. Member for Bolton, East was talking about. The second is relations with the Ministry of Defence, particularly concerning the British underwater tests and evaluation centre to be placed at Raasay and the research station at Alverstoke. The third is the question of land.

At Heriot-Watt Professor Tom Patten has established the nucleus of an offshore engineering institute. Briefly, its function is eightfold. First, it is to be a centre which will be equipped to collate and disseminate information and expertise. Second, it is a point of contact with American and other universities. Third, it will arrange symposia, conferences, exhibitions and special courses essential to the new technologies. Fourth, it will give advice on solutions to immediate problems of the ancillary industries, which in my view is very important. Fifth, there will be highly qualified staff to conduct major research projects for the primary industry and for the Government. Sixth, the aim will be to stimulate courses within the university to meet the new needs. Seventh, there will be supporting studies on the economic, environmental, planning, legal and management aspects of offshore engineering. Finally it will act as a centre where new problems can be properly discussed, particularly new problems affecting those small firms about whose development capital the Minister and I are very concerned.

All this sounds fine, but who is financing it? It is being financed, to its credit, by the Wolfson Foundation. As I said in my letter, I find it extremely unsatisfactory, as indeed do Gordon Nicoll of Heriot-Watt, Duncan Cameron of Heriot-Watt, Tom Patten of Heriot-Watt and the whole Unilink organisation run by Arthur Gardiner—I am speaking authorised by them to do so—that a private agency should have found the money and that the Government have not matched it.

I should be obliged if the Minister could give some assurance that the Heriot-Watt enterprise will be matched pound for pound by Government funds. As so often happens in British government, it is exceedingly unsatisfactory that, whenever there are interdepartmental responsibilities, a question is shoved off from the Scottish Office to the University Grants Committee to the Department of Education and Science and back to the Department of Trade and Industry. Heriot-Watt is someone's responsibility and it must stick somewhere in the Government machine.

Is there a national fund, and where is it in the Government machine? This is of considerable importance to my constituents and to those of my hon. Friend the Member for Midlothian (Mr. Eadie) at the Ripley site which we share.

The second issue is the question of the vast expertise residing in the Ministry of Defence. I will not a this debate by arguing the merits or demerits of the BUTEC scheme at Raasay and the torpedo testing there. If we are to have such establishments, if we are to pay for Alver-stoke and the deep-sea diving establishment, if we are to pay for the enormous establishment at Portland which I visited recently, then for heaven's sake let us see that this expertise is available to the civilian operators.

I have discussed with the oil companies and the academics the kind of role such establishments can play. Professor Patten says that it could be invaluable. It would do a good deal to liven up what are often sleepy units in these establishments. I raised this with the Under-Secretary of State for Defence for the Royal Navy on 30th November 1972. Then he said: Certainly the depths involved make this a unique site which is essential for its present purposes. I shall bear very much in mind the points which my hon. Friend made … "— [OFFICIAL REPORT, 30th November, 1972; Vol. 847, c. 596.] The points that had been made concerned the use of Government establishments. There is considerable residual expertise. We are mad to pay for all of this yet not use it.

On the authority of Tom Patten I also mention the question of the transfer of technology and the use of the Nautical Construction and Research Establishment at Dunfermline and the National Engineering Laboratory at East Kilbride. What the experts say is that there is a "suitable interface". Having raised this five times in the last four months I hope that if I do not get a reply today I will at least get a letter.

I turn to the question of the acquisition of land which could be used as a springboard for oil exploitation. Last year in the house of the Rev. Norman Swan, the Minister of Carriden, Bo'ness, my friend and constituent, then writing his joint report with Dr. Francis for the Church of Scotland, outlined to me the concern of the Church about the effect of North Sea oil development on communities in the North. My first reaction was that while I was deeply interested in what Dr. Swan said, this concerned the constituency of the right hon. Member for Orkney and Shetland (Mr. Grimond) and I could not interfere. This evoked a reaction of polite contempt from Dr. Swan's student son. What he said was "All you politicians—dog will never eat dog".

That able young man then persuaded me that it was my moral duty as a Scottish Member of Parliament to get to know the facts. The Swan-Francis Report on the social effects of oil pollution is required reading for everyone concerned with North Sea oil. I know that my hon. Friends the Members for East Stirlingshire (Mr. Douglas) and Fife, West (Mr. William Hamilton) have mentioned it already. Anyone who asks what all the fuss is about should study a copy of this report. It makes the case. I will not quote from it because it ought to be well known to all who are interested in this matter.

Here are serious and objective people who have identified a real problem. Having been forced by Swan junior to interest myself in these matters, I went to some friends in the oil companies in January. There the feeling ranged from gentle annoyance that so much of the coast had been acquired by connected interests to some people in senior positions expressing sheer consternation and fury that the oil companies were, to use their own words, in danger of being blackmailed. The Government must not underrate the anger of many people in the oil companies at what has been allowed to happen. The attitude of some of them is "We are not Croesus and we do the work".

What they and many of my hon. Friends and I want to know is this: what physical good will be done by those who have acquired the land? What service, other than get a fat rake-off from us and our ancillary industries, will they perform? It is a question of function. It may be that those who have acquired the land are performing a function and are providing valuable expertise; I have an open mind and I am willing to be persuaded. But they have a moral obligation to open their operations to the public magnifying glass. To be specific, they have a moral obligation to open their quarterly accounts to Government scrutiny.

I agree with the Under-Secretary of State that the public are in possession of a great deal of information about offshore activities. But they are not in possession of much information about inshore activities. I wish to pay tribute to a remarkable young man who, I gather, will be the opponent of the right hon. Member for Orkney and Shetland at the next election, namely, Mr. Jonathan Wills, who has made a serious and objective in-depth study of the reality of how a number of interested finance houses are interlinked.

The finance houses have not made a very auspicious start, and I ask them a question which was implied in the speech of the right hon. Member for Orkney and Shetland: "Why have you been so underhand in the way in which you have gone about acquiring the land?". What I find odious—and I speak for others— is that the connection between the companies which acquired the land was not revealed by the front men who did it.

I wish to make a personal point. Quite properly and courteously, I was approached indirectly by the firm of Ivory and Sime, which said that it would like to have a discussion on a private basis about what it was doing. For the first time in nearly 11 years' membership of the House I refused to meet the people concerned, and I should like to explain why.

There are two possibilities: either the companies have nothing to hide and they have a case of which they can be proud, in which event they should have no qualms about presenting it to the British people, and they can be assured of a full and objective Press, or the companies and finance houses cannot persuade us that they are providing a worthwhile contribution to the work of North Sea development, in which event they should be exposed for the parasites that they are. It is one or the other—either they can be proud of what they are doing or we should know what they are up to.

We must grant to Ivory and Sime, Edward Bates and others that in the past Scottish investment trusts have been criticised for investing money outside Scotland and now they are doing it in Scotland. That may be to their credit But I say to Ivory and Sime, Mr. James Gammell of Edward Bates and Company, Noble Grossart and Company, North Sea Assets Trust, Atlantic Assets Trust, British Assets Trust, Mount Saint Bernard Trust, Mr. Charles Fraser of Onshore Investments Limited, Mr. Ian Caldwell of Nordport, Shetland Land-bank, particularly to Sir James McKay of Cromarty Firth Development Company, Peterhead and Fraserburgh Estates, John Foulerton and Company and others: "Do not be shy; tell us in full what you are doing to provide a service and we shall listen."

They must explain precisely what they are doing and open themselves to scrutiny. Perhaps if they will not take it from a Socialist, they might take it from St. Thomas Aquinas. I shall not bore the House with the sinna theologica at any great length. There were some pointed remarks by St. Thomas about the destruction of national life. That is one of the things with which the debate has been concerned. Have the Government thought about the efforts of a sincere and distinguished civil servant who joined the Highlands and Islands Development Board, Sir James McKay, who went so soon to a combine like the Cromarty Firth Development Company? [An HON. MEMBER: "He is not the only one."] The question of ethics arises, Sir James having gone so quickly from public service to a private organisation. My hon. Friend the Member for Renfrew, West (Mr. Buchan) has a Question about that on Monday. I am not a man for personal vendettas, but I think that people are entitled to know everything and that everything should be seen to be above board.

Landowners should contemplate their family history. My version and the version of my hon. Friend the Member for Fife, West may be a little different, but for many centuries the Camerons of Lochiel were clan heads on account of their function of protection. There were rights and obligations between clan chiefs and their tenants and supporters. Then for 150 years there was an aristocratic ideal of service. That idea is outdated and part of history. The landowners were often people with a sense of duty as they interpreted duty. At no time in Scottish history until the present day has it been suggested that the clan chiefs should sell their estates for large personal gain. Their land, in a moral sense, has been held in trust for the community and in that sense some of the present holders of title would do well not to part from that tradition. It is extremely questionable how the landowners obtained their land in the first place. Perhaps it will be better not to go into the details now.

What knowledge have the Government of current land acquisition? I was interested in the speech made by the hon. Member for Western Isles (Mr. Donald Stewart). We must ask whether sufficient is being done in the Western Isles and on the west coast in anticipaton of oil development in the Minch and in the Celtic Sea.

I interrupted the right hon. Member for Argyll (Mr. Noble) to ask him about his nephew, late of Noble Grossart. The impression has been given that some latter-day Lord Leverhulme will bring work and prosperity to the islands. That may be estimable, and his intentions, for all I know, may be honourable in the extreme, but the Scottish people should be allowed to make it clear that significantly enhanced land values should accrue to the community and not least to the community of the islands rather than to an entrepreneur. Therefore, we have a right to know all the details of the enhanced land values on, in my view, a quarterly basis.

I have a word to say to the City—to the top men of Burmah Oil, Stenhouse Holdings, London Merchant Securities and, not least, Rothschild's. I say to them that they cannot shrug their shoulders when it comes to the crunch and say, when anything goes wrong, "No one told us". If the great merchant houses are to finance developments of this kind, the personal attention of the top men is required to see that it is done properly. The excuse "No one told us " simply will not do.

What a Labour Government might do is one thing. I think at this stage it is reasonable to ask a Conservative Government to do something that they could sensibly do, particularly as they want some kind of package deal with the trade unions. I would like to see a conference set up. To it would be invited all the parties involved in this acquisition of land.

First, the conference should establish on the agenda precisely how much has been acquired. Does the Scottish Office know how much land has been acquired by interconnected land acquisition interests? Secondly, there should be a discussion at the conference of precisely how the land was acquired. My understanding is that various people who have sold land had no idea that they were selling it to the same company as their neighbours. I echo the point made by the right hon. Member for Orkney and Shetland, adding that it is not only in Orkney and Shetland that this has gone on. We would like a full inquiry into the methods by which people were persuaded to sell their land.

Thirdly, the Scottish people deserve to know openly and precisely what are the financial links in order to confirm or deny the table used by my hon. Friend the Member for Fife, West. It may be that there should be a departmental inquiry to ask the landowners whether they will make public the buying price of the land and the notional enhanced value at annual or quarterly intervals. In fact, we want a full disclosure of what they are up to. We want a full statement of how much land has been acquired in the area of Peterhead, the Cromarty Firth, Shetland and elsewhere, in anticipation of oil developments in the Celtic Sea.

If these companies, without providing any real service or work, go ahead, it behoves the Government to say to them "This is not on in the social contract, on which any modern society must depend". When people are making a lot of money in this kind of dealing, what are hon. Members to say when they go to hospitals and talk to hospital workers earning under £20 a week? If this is thought to be a society in which some people can make massive sums for doing not very much in particular in the way of functions or service, it will be no news to the Government that they will not get any kind of package with the trade unions. The Under-Secretary of State may frown, but this debate is all about how the cake is divided and how a society like ours should be run.

I had the good fortune this morning to have a two-hour breakfast with Mr. David Packard, head of Hewlett-Packard and a former Under-Secretary of State for Defence under President Nixon. He is now a board member of the Standard Oil Company of California. There may be all sorts of disagreements between us on other matters of policy, but he told me "Take note of California's experience ". He pointed out that 15 or 20 years ago the Los Angeles area was a mess and now it is less of a mess because the oil companies and the State had had to pay a very great deal of money to make it ecologically acceptable and to make the oil extraction organisation fit in with the economy and ecology of California. The Americans can do it, but we in this country cannot because we cannot afford that amount of money. Therefore, we must get it right the first time round. We must not make mistakes because we cannot afford to do so.

This debate seeks to make sure that the wealth of North Sea oil and Celtic Sea oil accrues to the community and, secondly, to see that Scotland does not make the same mistakes as have many other oil producing countries to their cost.

3.41 p.m.

Photo of Mr George Younger Mr George Younger , Ayr

I thought I would have plenty of time in which to make my reply. I am now running short of time. I hope the House will forgive me if I speak fast, but I have many important things to say. If I do not succeed in answering every question which has been put to me, I hope that hon. Members will forgive me and will allow me to write to them afterwards.

I do not underestimate the scale of the problems that we face in respect of North Sea oil, and I am delighted that at long last we have been able to discuss an economic subject against a background of success and expansion, instead of its having the all-too-familiar ring of many Scottish debates—namely, declining industries and unemployment. Therefore this debate has been most welcome.

This subject has brought an entirely new set of problems. Who would have thought two or three years ago that we would now be discussing anxiously the problem of boom conditions in Scotland because of pressure on land, jobs and resources. I repeat that I do not underestimate the situation. We have a tremendous responsibility to see that this industrial revolution does not leave the scars which the previous industrial revolution left in Scotland, and, indeed, those scars are still with us today.

The point appears to have been slightly missed by some hon. Members who have contributed to this debate. I do not believe that the most important aspect of this subject is concerned with the question of who is developing what. The most important aspect is whether the public, the Government, local authorities and representatives of the people at all levels, have control over what is happening or whether we do not.

I have detected among hon. Members on both sides of the House anxiety that we may not have full control over what is going on. In my view, it is vitally important that we should have control. I appreciate that we are in a swiftly moving situation and that we must watch carefully all the time to see that we have adequate control.

I want briefly to spell out areas in which we have control over what is going on. I can go a long way to reassure hon. Members' anxieties. Whatever are the problems, there is no problem that people will come from nowhere and set up industries, installations or buildings in our areas without our having said that they can do so. We have a planning system which is adaptable and which has within its control what is and what is not allowed.

I see our rôle in central Government as twofold. First, it is to see that local planning authorities—which are the duly-elected representatives of the people of Scotland—understand that they have the powers and are encouraged to use them. Secondly, the Government should provide authorities with the information and expertise which they require about the needs of the oil industry, types of industry and so on. The job of the Scottish Office and its planning department is to see that such information is available and that it can be given to people on request. The machinery is well known to hon. Members. We must not forget that each planning authority must draw up a development plan—a plan which in future will be referred to as a structure plan. Each planning authority has that job to do. It takes authorities time to do it, and some are in a better slate of preparedness than others. But there is a positive step which each authority has to take.

If developers go to an authority seeking permission for developments which are not in accordance with the planning authority's development plan, the authority has the right to amend its development plan, which then has to be approved by the Secretary of State. Any planning authority can say " No. That is not within our development plan. We shall turn it down." If it is within the development plan and the authority thinks that it is a suitable development, it can give its approval. We all deal with matters of this kind in our constituencies every day. But it needs emphasising that that is a positive form of absolute control. If any local authority permits undertakings, installations, factories or developments which it does not agree should come into its area, it has itself to blame. Local authorities have this control, and I want to encourage them to use it.

Of course, it is necessary for them to have the maximum information before such decisions are taken, and local planning authorities have every right to demand the fullest information that they can get. They also have the right to come to the Scottish Development Department to ask for technical advice about whether installations are needed and what are the criteria upon which they should make their decisions.

Many local authorities are doing this job remarkably well. It is invidious to draw names out of a hat. But Ross and Cromarty, which is a very small authority with tremendous pressures upon it, has responded extremely well to its tasks. It has imposed a moratorium on further development while it assesses the picture and makes its decisions. I commend it as a good example of the proper use of planning powers.

The right hon. Member for Orkney and Shetland (Mr. Grimond) referred to his own county council, which is presented with tremendously difficult environmental problems every day. There, too, the response has been very sensible and broadminded to those new responsibilities. The county council is now proposing to seek a Private Bill to enable it to have more powers. I am afraid that it is not proper for me, representing my right hon. Friend the Secretary of State, to make any comment on that, but I have seen the Convener of Shetland County Council and offered him every possible help in the form of technical advice from the Department. He has had all the advice that he wants, and I have been glad to help in this way.

We are dealing with a mobile, developing and dynamic situation. We have to think hard about whether it is a situation in which we can draw up some glorious overall plan and say "At last we have a plan. Now we can settle back and watch it being implemented." In my view we cannot do that, because every week there are new discoveries, new developments and shifts and changes in the types of industry which want to come and in the places to which they wish to come. It is a constantly changing situation. It does not call for a firm and broad blueprint. It calls for a flexible system in a development plan covering all areas of Scotland in the context of which, requests and planning applications can all be considered according to an overall plan and according to the structure plans and the development plans which the local authorities have drawn up, and we have to look at each proposal on its merits and decide.

It is never the case in any system that everyone will agree with all decisions. There are bound to be some decisions with which some people will strongly disagree. I ask hon. Members to consider whether it would be any easier if we had one central planning committee or authority as has been suggested today. How would any local planning authority react? Would it appreciate a centrally organised body saying that it had decided that the area should have two oil platform construction sites? Would the local planning authority agree to it, and would the proposal be welcomed? Would it be right for such a body to make decisions instead of those decisions being made by the elected people in the area? We have to address ourselves to these questions.

The present system, flexible as it is, has two great advantages. First, it leaves the power of decision to the elected people on the spot who know the area and have power under the planning Acts to decide what shall come and what shall not come to the area. Secondly, it brings in the overall interest of the Government of the day in the form of the Secretary of State's overall approval of development plans, alterations to development plans, and so on.

Photo of Mr John Mackie Mr John Mackie , Enfield East

Supposing it is proposed that a waterway should go through a local authority area? There are occasions when local authorities do not have the say.

Photo of Mr George Younger Mr George Younger , Ayr

That is where central Government, which is chosen by the people, has a rôle to play. With respect to the hon. Gentleman, that is an interesting but irrelevant point.

I am asking the House to consider whether it is better for decisions to be made by a central body, which is not directly elected by the people in the area, or by local planning authorities, which are doing a good job and should be applauded for what they are doing.

Questions have been asked about the infrastructure. That is one of the prime responsibilities of the Scottish Office. Concern has been expressed about the availability of water and about communications. The IMEG report made specific recommendations about infrastructure. We have responded quickly with a great deal of money for better communications. We are virtually rebuilding the A9, and we are doing major improvements on the A94 to Aberdeen. There are also a number of harbour activities which I have not time to outline but which have been helped and brought forward by the direct action of my right hon. Friend and other Ministers involved.

I point to the big housing programme that has been specially laid on for the Moray Firth area. The building of 2,200 houses is being undertaken by the Scottish Special Housing Association in the North-East and Moray Firth areas, principally for the oil industry. I can announce today further approval for a 50 per cent, grant to the Ross and Cromarty County Council for the improvement of nearly seven miles of road leading to Nigg Bay, at an estimated cost of £713.000. This road will serve the major construction site at Nigg Bay where oil platforms are being assembled for use in the North Sea.

The hon. Member for West Lothian (Mr. Dalyell) courteously wrote to me asking three questions which I will endeavour to answer. In view of the limited time, I ask his permission to write to him about one of those questions, but I will do my utmost to answer the other two. I take his point about Heriot-Watt University. Since he wrote to me, his friend Professor Patten has written to me and asked me to speak to him about it, and I am looking forward to doing so.

The hon. Gentleman said that this is a matter that must be placed at the door of some Department or another. It clearly and firmly must be at the door of the University Grants Committee. That is why the Committee is there—to allocate funds throughout universities in Britain. I may be wrong, but I understand that the university has not applied to the UGC for money for this purpose. If that is so, it might consider doing so, although I cannot pre-judge any decision that the UGC might make.

The second question the hon. Gentleman asked was whether we were trying to make use of the expertise of the Ministry of Defence, especially underwater expertise. I reassure him. My right hon. Friend the Secretary of State for Trade and Industry and his hon. Friends in the Ministry of Defence are in close contact precisely on that point. They realise that there is technological information available in the various organisations, some of which the hon. Gentleman mentioned. We are tapping such expertise as there is in the Ministry of Defence and shall continue to do so. I will write to the hon. Gentleman with a little more information on this to fill out the answer to some of the questions he asked.

This has been a most interesting debate, and we are greatly indebted to the hon. Member for East Stirlingshire (Mr. Douglas) who made an outstandingly interesting speech. I agree with a great deal of what he said, although I cannot accept all his views. We have also heard from various people, from St. Thomas Aquinas to the hon. Member for Fife, West (Mr. William Hamilton), who gave us his usual top-grade entertainment with his description of the Edinburgh "mafia", which I must read in the OFFICIAL REPORT. It fascinates me. It worries me a little, in view of what the hon. Gentleman has said today, and if I should happen to meet one of the chairmen of the oil companies in the street and say " Good morning " to him I must make certain that the hon. Gentleman does not see me or it will be said that I have a 50 per cent, participation in the company.

As I say, this has been a most interesting debate. We by no means underestimate the importance of the challenge facing us in Scotland in order that this development may go ahead quickly, while protecting our environment. I am sure we can do this. I intend to do all I can to make sure that we do not repeat mistakes of the past, so that Scotland can move into a new period of prosperity, exploiting this new resource, while at the same time keeping the greatest asset that we have had for so many centuries— one of the most attractive areas in the world—until the end of time. I intend to ensure, with the aid of the planning departments, that this is carried out. It is a great challenge, and I am sure that we can bring great benefit to Scotland from it.

3.57 p.m.

Photo of Mr Anthony Fell Mr Anthony Fell , Yarmouth

I thank my hon. Friend for his kindness in allowing me some time in which to make a speech. The hon. Member for Yarmouth is the only Member in the House who has a constituency which is connected with that part of the area which we have been discussing and which is called the southern North Sea. Therefore, perhaps it is a good thing that he should be allowed two minutes in which to speak. I shall use those two minutes to ask my hon. Friend the Undersecretary of State for Trade and Industry a question on which I am sure he can help me.

Before doing so, however, I congratulate my hon. Friend the Under-Secretary of State for Development, Scottish Office —perhaps it is because I was born in his constituency of Ayr—on his kindness to me and on escaping the opprobrium which attaches on Fridays to speakers who come to talk out a debate.

May I ask my hon. Friend the Undersecretary of State for Trade and Industry about his earlier remark? He said that small firms will get a fair crack of the whip. He said it with such emphasis and conviction that I am certain that the small firms in Yarmouth will take him at his word. They did not have much success earlier when we had violent unemployment problems because of difficult circumstances. However, I am sure they will now.

The chief worry is that some of the smaller firms which are supplying the gas and oil industries do not have sufficient capital to meet the ever-expanding requirements of the industries. Can he give me any further assurance that this matter will be looked into, particularly with Yarmouth in mind, so that something can be done about it?

Photo of Mr Anthony Fell Mr Anthony Fell , Yarmouth

I was trying to repay the compliment, Mr. Deputy Speaker, which my hon. Friend the Under-Secretary of State for Development, Scottish Office paid to me, by allowing my hon. Friend the Under-Secretary of State for Trade and Industry to talk the debate out, which I thought was only fair. Would you not allow my hon. Friend to give me a word, or indeed to intervene? I am quite willing that he should intervene.

Photo of Mr Anthony Grant Mr Anthony Grant , Harrow Central

If this is an intervention, as I understand it is, rather than a second speech, perhaps I could say this. We have in our Department a special section dealing with small firms. If any of my hon. Friend's small firms have any particular difficulties in the way of capital, he may well find that we can give them some useful advice. In addition, I am setting up small firm centres in the future which will be useful.

Photo of Mr Anthony Fell Mr Anthony Fell , Yarmouth

I am grateful to my hon. Friend, because that is what is said in the IMEG report anyway. I am sure my hon. Friend will find the money to help these firms with their capital shortage problems.

It being Four o'clock, the debate stood adjourned.