Orders of the Day — Petroleum Royalties (Relief) Bill

Part of the debate – in the House of Commons at 6:04 pm on 2nd November 1983.

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Photo of Alistair Burt Alistair Burt , Bury North 6:04 pm, 2nd November 1983

I am grateful for the opportunity to address the House on a technical matter from a slightly different point of view. This is a technical Bill, and we have heard the technical points argued most ably by hon. Members on both sides of the House.

The principles underlying the Bill are clear and understandable and they will receive greater support from the public if they are understood in that way. I speak on the wider principles of the Bill rather than the technical aspects. The Bill encourages the extraction of oil, which will be of benefit to the community, industry generally and those industries which depend upon oil extraction and energy in particular. I should like to take two views—first, as a Member for an industrial constituency where energy is most important, and secondly, as a younger, newer Member of the House, where long-term energy interests are, I hope, coincidental with a personal lifespan.

My constituency has made paper its major industry. That industry is an extremely high user of energy and has been hard hit recently by rising energy costs. There are many reasons for this but a major cause was the oil crisis of the 1970s. It is my interest in energy prices and oil shortages that prompts me to speak. The hon. Member for Merthyr Tydfil and Rhymney (Mr. Rowlands) will recall the feeling of the House and the problems it had when dealing with the 1979 oil crisis to which he referred. I can comment upon what that oil crisis meant to industry in my area. The central purpose of the Bill is to encourage the extraction of oil and to try to prevent such a crisis recurring.

The oil crisis and resulting higher prices meant that the paper industry in Bury has been curtailed drastically. It has lost many men, and factories have closed. Therefore there are two points in the Bill of which I have taken note and in which I am interested. The first is the guarantee of security of supply. Recently the oil industry trends and energy demand have been notoriously difficult to predict.

My hon. Friend the Member for Exeter (Mr. Hannam) mentioned the increased demand for gas, which shows what can happen to even the best laid plans. Demand, which was expected to he stable, rocketed suddenly and there was a crisis. If that happens again supplies of the fuel may suddenly run out. Although it is difficult to predict what may happen to oil supplies, unless oil extraction is encouraged we face a shortage. I am persuaded by the Government's arguments on guaranteeing security of supply. There is no better way to prevent the discovery of oil than to make on those who might find it demands that discourage them from looking for it in the first place. The Bill's central aim is to encourage the companies to look for oil and to develop their finds. That will have benefits not only for industry in general and industries in my town but for the people in the onshore developments who supply the oil industry. Those particular interests have already been mentioned by several hon. Members, including the hon. Member for Orkney and Shetland (Mr. Wallace).

How are those interests to be preserved and how will the construction element of the onshore energy industry be encouraged if those who go out to look for the oil are not similarly encouraged? Disregarding the technical arguments that we have heard, the Bill's central principle, understandable to all, is that the Government are looking for a way to encourage those who want to extract oil for the benefit of all.

The second principle of the Bill which persuades me to support it is the Government's consideration in last year's review of the fiscal regime and its effect. The Government would have been irresponsible and would have failed in their duty if, having looked at the tax regime and decided that some areas that had been profitable to the oil companies were no longer so, they had not taken the steps contained in the Bill to rectify the problem. Last year's review pointed to difficulties and showed that oil companies would have been in serious trouble if they had tried to develop marginal fields. Areas of exploration would not have been touched. Again, mindful of the problems caused by the oil crisis, the Government acted correctly.

Governments may have ideals that are not always adhered to, but when a possible crisis point is identified they must act.

It is in my interest to take a long-term view. Governments who fail to have a long-term view are failing in their duty. In this case, the Government have identified a possible oil shortage which could cause another crisis, the effect of which might be to push the price of energy still higher at a cost of yet more jobs in my town. I commend the Government for taking the action that they have in order to avoid such a crisis. They have looked at what should be done and have acted. That is the point of government and it is eminently proved by the Bill.

It is not often that the people of Bury pay great attention to petroleum royalties and their consequences. They are not matters that are often on their minds. However, in this instance they have been constantly on the minds of some workers because of the problems that I have described. The difficulties created by an oil crisis are long lasting throughout the world. They debilitate industries that rely on a plentiful supply of energy at a price that is comparable with prices abroad.

If the Government, through the Bill, act to avert an oil shortage in Britain, to protect and encourage the oil industry and to encourage those who extract oil to use British equipment, they will have done a fine job. I am happy to support the Bill.