Extension of borrowing powers of Gas Council and Area Gas Boards
Before I call Amendment No. 1, perhaps I should indicate that, as a result of representations made to me, I think that it would be convenient if we discussed with Amendment No. 1 Amendments Nos. 2, 3 and 5, with a view, after a general debate on all four, to there being Divisions, if required, on Amendments Nos. 1, 2 and 3.
Sir Gerald Nabarro (Worcestershire, South)
I beg to move Amendment No. 1, in page 1, line 11, leave out ‘£1,600’ and insert ‘£1,400’.
I welcome your suggestion, Sir Eric, of the amalgamation of the debate on this Amendment with that on Amendments No. 2, in page 1, line 11, leave out from ‘million’ to end of line 12; No. 3, in page 1, line 12, leave out ‘£2,400’ and insert ‘£1,800’; and No. 5, in page 1, line 16, after ‘House’, insert:
‘and no such draft shall be so laid before 1st January, 1971’.
I welcome it because the arguments to be adduced, which are largely financial, are in many respects similar on the first Amendment and many subsequent ones.
We are concerned primarily in Amendment No. 1 with the large-scale discovery of natural gas beneath the North Sea and the capital moneys required for adequate and economic development of this metallurgical phenomenon as early as possible. It was Sir Henry Jones, the Chairman of the Gas Council, who alluded to the find a few months ago as being “on a Texan scale” . I prefer the terminology of my hon. Friend the Member for Yeovil (Mr. Peyton) a few days after, “It is the best bit of luck which we have had in Britain this century” .
Indeed it is, but my purpose is to try to bring to our consideration of the [column 456]massive issues concerned rationality in regard to the voting of sums for orderly and expeditious development of the find.
The trouble with the Labour Party is that it believes as a matter of philosophical dedication, that all investment by a public board is good investment. Thus, any attempt by a Conservative Member, in recent years on Opposition benches, to qualify or to circumscribe or to rationalise investment by public boards or, indeed, to bring a closer scrutiny to the financial affairs of public boards is regarded as an act hostile to Socialism. This, of course, is quite wrong. We on this side have proclaimed at the last four General Elections that we will not seek the denationalisation of the coal, gas or electricity industries, for various reasons which I will not go into today.
Having accepted that these public services should remain in State ownership, it is, of course, the responsibility of my right hon. and hon. Friends and myself to ensure that they are voted adequate sums for the capital investment programme sanctioned from time to time by this House after due regard to two fundamental considerations—first, that the maximum sum in capital investment for each Board should be derived from its own resources, which would come mostly, for the gas industry, from its depreciation funds; and, second, that they conform to the requirements of the White Paper on the financial objectives of nationalised industries and return, taking year with year, the proper surplus or profit on the net assets employed in the industry.
Those are the two disciplinary requirements to which I hope both sides subscribe and which both will support this afternoon. It is idle to suggest in current circumstances that it is the very magnitude of the sums of money delineated in the Bill which terrify many of my hon. Friends and myself. The first Amendment on the Notice Paper seeks to reduce the sum of money voted in Clause 1 of the Bill from £1,600 million to £1,400 million. The effect would be that the House would vote money for the gas industry for a less lengthy period forward on capital account than would be the case if the terms of the Bill as it stands were implemented.
None can deny that these are huge sums of money, and I make a passing [column 457]reference, as analogy only, to a tiny sum of money when put beside the sums we are discussing which has caused in the party opposite the biggest political upheaval since 1951, namely, the proposal to reimpose prescription charges. All the Government will get out of that is £25 million, after all the exemptions that were discussed on the day before the House rose for the Whitsuntide Recess.
Here we are proposing, in the words of the Minister, three consecutive tranches, from £1,200 million, the present limit of borrowing for the gas industry, up to £1,600 million, being the first tranche; from £1,600 million up to £2,000 million being the second tranche; and from £2,000 million up to £2,400 million, being the third tranche, all to be occupied within a period which the Minister does not know—he has no crystal ball and neither have I—all to be occupied and taken up within a period of three to four years.
These huge sums of money are expected to go through the House without dissent. The Minister was the person who suggested that there should be no dissent on Second Reading. In the peroration of his speech he appealed to my hon. Friend the Member for Finchley (Mrs. Thatcher) not to have a vote on Second Reading. I interjected, lucidly and pointedly, “Not a hope, not while I am around” ,—even if I had to carry my hon. Friend the Member for Finchley into the Lobby with me! That would be a very desirable thing to do; much better than for her to carry me into the Lobby. It is the very magnitude of the sum of money entailed, the habits and the records of nationalised industries in the expenditure of funds and the utter wastage of which they are so often guilty that cause my hon. Friends and myself to have considerable trepidations as to how this sum of money is to be spent.
I seek to reduce the sum of money. Instead of letting it run on to £1,600 million in the first tranche, I would have it go only to £1,400 million because of the nation's economic circumstances. The effect would be not to curtail the expenditure month by month, or the commitments of the gas industry, but to cause the industry to come back to the House for a further authorisation and sanction about 12 months from now instead of [column 458]about 18 months from now. So the effect of the Amendment is to bring the industry, through the Minister, back to the House six months earlier than would otherwise be the case.
I have a very good reason for saying all this. It would be a thousand pities if the new incumbent to the office of Minister of Power gave the impression that he wished to set down one policy for nationalised industries and another policy for private industry in the present difficult economic and financial circumstances of the nation. He should apply the same financial desiderata to capital investment by the State boards which are within his paternal control as Minister that we as business men would apply to private commercial profit-earning enterprises.
Lieut.-Colonel Sir Walter Bromley-Davenport (Knutsford)
As my hon. Friend is on this point, the great trouble is that the nationalised industries are not run by anybody who has any business experience whatsoever. They cannot be turned off the board by irate shareholders. They could not care less whether they make a loss or a profit. Is not that the great trouble?
Sir G. Nabarro
That is one of the troubles. The Tory Government over 13 years had very great difficulty in trying to turn the State enterprises into commercial concerns. I doubt whether we shall ever be able to do it, since if they make a big loss, at the end of the road they are always in a position to come to Parliament and write it off.
My hon. Friend is correct in what he says. He will recall that in 1965 the former incumbent of the office of Minister of Power, one of seven during the last seven years, wrote off £415 million of accumulated losses of the National Coal Board. It is no good the hon. Gentleman on the Front Bench opposite vigorously nodding dissent. It is all on the record and is a matter of history; £415 million of accumulated losses was written off.
I have talked about financial desiderata in judging the wisdom or otherwise of this investment by the Gas Board. I give the House the desirable considerations for this investment this afternoon. The first is that, by making this important and large investment how [column 459]much will be saved in terms of imports? It is no good the right hon. Gentleman side-stepping this issue. The case for development of North Sea gas is simply that it is indigenous fuel being developed by British capital, money subscribed by the British taxpayer, and it is intended to save money on imports.
How much will be saved? I want this quantified, nothing less. If the right hon. Gentleman comes to the House and says that he wants the limit of borrowing by the Gas Board to be put up from £1,200 million to £1,600 million, an increase of £400 million, I say to the right hon. Gentleman, how much will he save in the aggregation on imported fuel by making this capital investment of £400 million? If he cannot answer me, I shall vote against him.
Mr. Eric Lubbock (Orpington)
The hon. Member will find a good deal of information on this point in the evidence given by Sir Henry Jones to Sub-Committee B of the Select Committee on Nationalised Industries, where it will be seen that over this period the quantity of Algerian gas to be imported remains constant, because it is a long-term contract, but the amount of oil declines from 4.7 million tons in the period 1967–68 to 2.5 million tons in the period 1972–73, which represents a very substantial saving in foreign exchange.
Sir G. Nabarro
That is not relevant to my argument. I am asking the Minister to provide me with figures. Why should I do his work for him? He has several thousand bureaucrats to work it out for him; let them do the work on their slide rules and provide the answer which I ask for this afternoon. How much will he save in imports by the first tranche of £400 million in capital investment?
Second, by this investment on the part of the Gas Board, what increase in productivity in manufacturing industry in Britain does he expect to attract during the period of five years following the investment? That was part of the Prime Minister's statement on 16th January last. The purport of that statement was that all public expenditure would in future be viewed hypercritically in order to ensure two things: first, that the investment brought about a saving in im [column 460]ports; and second, that it led to an increase in productivity. Let us have the figures today from the Minister in the context of this investment.
Third, will this investment contribute to devaluation of sterling being made to work? I want Ministerial assurances on that. After all, we in the Tory Party did not devalue sterling. We were not responsible for it. That calamity was brought about by the crass and gross financial squandermania of the present Government. If there is not to be a second devaluation of sterling, it is important that these huge sums of money which we are being asked to vote today for additional investment in nationalised industry should conform to the financial desiderata of the Prime Minister's statement on 16th January and that ample assurances should be given by the Minister today that they will halt the drift towards a second devaluation of sterling.
The fourth and last is a very important matter. I am sorry that my hon. Friend the Member for Horsham (Mr. Hordern) is not in his place. I felt sorry for the Minister of Power on Second Reading. He had occupied his office for only a few days, and he does not know much about fuel policy economics. He had not started to move the furniture round in his Ministry—
The Minister of Power (Mr. R. J. Gunter)
I still have not moved any.
Sir G. Nabarro
I am sorry if the right hon. Gentleman has not moved any of the furniture round in his Ministry. Such action is badly needed. The Ministry is very slack and slow on the ball. I commend to the right hon. Gentleman today that he should have the most careful regard to what my hon. Friend wrote in The Times yesterday. The article is headed:
“Peter Hordern, M.P., argues that Britain's fuel policy is misguided. Instead of cutting costs by gearing to new and economic power sources—as our competitors do—we continue to bolster coal” .
That is exactly what we are doing in the Bill.
Sir G. Nabarro
Does the hon. Member for Orpington (Mr. Lubbock) wish to intervene?[column 461]
I said that that is what we are doing in the Bill. The whole purpose of it is so that we can convert to cheaper sources of power. One has only to look at the figures of coal consumption.
Mr. David Webster (Weston-super-Mare)
On a point of order, Mr. Deputy Speaker. We cannot quite hear this private conversation.
Order. It would help if hon. Members would address their remarks to the Chair.
Sir G. Nabarro
Sir Eric, I was about to ask your permission to be allowed to intervene in the disputation going on below me. If the hon. Member for Orpington will allow me to continue, I may be able to dispel his fears by quoting from this most apposite contribution from my hon. Friend the Member for Horsham about the importance of natural gas and the capital investment required for it, which is what we are discussing today.
I want to draw the opening passage to the attention of the Minister, if he has not already read it, because he ought to give us his comments on it. My hon. Friend wrote:
“The Government's plan for power (Cmd. 3438) has still to be debated in the House.”
Mr. Edward M. Taylor (Glasgow, Cathcart)
Sir G. Nabarro
My hon. Friend continues:
“It is a well-constructed plan and a sophisticated document. The sums all add up, but it is wrong. This is because its assumptions are wrong, either because of ignorance of what is happening in other countries, or because the political consequences of providing cheap power are unacceptable to the Government—or perhaps both. In essence the problem is that discovery of natural gas in the North Sea, the development of nuclear energy and the continuing supply of cheap oil have together transformed the prospects of providing cheap energy. But they have also transformed the prospects for the coal industry in an adverse direction. The Government has therefore attempted to reach a compromise between what it considers to be a practical or acceptable level of run-down in the coal industry and its duty to provide the cheapest possible energy. It has had to lay heavy burdens on the electricity industry and penalise the oil industry to get more coal burned so that there are not too many [column 462]redundant miners. But it has taken its pattern for the run-down of the coal industry from the existing trend. It has failed to grasp that what is required is the provision of Government Retraining Centres on an unprecedented scale. … The Government rightly claim that the national considerations that need to be taken into account include security of supply, the efficient use of resources, the balance of payments, and the economic, social and human consequences of changes in the supply pattern. … But it really is impossible to justify a policy of keeping one-quarter of the available supply of natural gas under the sea in 1970 in order that the coal industry should be allowed to sell more coal to the C.E.G.B. Yet this is the Government's policy.”
That is a very grave allegation. It amounts to the Ministry being accused of deliberately retarding the development of natural gas from the North Sea so as to keep obsolescent coal mines open longer than is commercially justified. That is the charge against the right hon. Gentleman. I hope that he will answer it, because I shall not vote for his Bill until he does.
The hon. Gentleman would not vote for it in any case.
Sir G. Nabarro
The right hon. Gentleman does me a great injustice. I might trim it, but I would not vote against it.
As my hon. Friend the Member for Yeovil has said, natural gas is the greatest bit of luck that we have had this century, and I am all for developing it as rapidly as possible. However, I want these four financial desiderata to be obeyed.
The symposium for the Minister is, first, how much is the economy in imports by this huge investment? Second, how much do we increase productivity in manufacturing industry by making this huge investment in the Bill? Third, will this huge investment in the Bill make progress towards preventing a second devaluation of sterling and, therefore, contributing to national solvency? Fourth, will it contribute to cheap fuel policies, which I regard as indispensible to the future success of our economy?
With those few short words, I commend the Amendment to the Committee. I hope that the Minister will sit throughout this debate and not absent himself as he did on Second Reading. I hope, too, that he will answer the four points that I have put to him specifically and in [column 463]terms which we are all capable of understanding and applying to the huge financial sums set down in the Bill.
Mrs. Margaret Thatcher (Finchley)
I wish to support my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) and others of my right hon. and hon. Friends who have put down similar Amendments to this Clause.
Perhaps I might put the arguments in this way, and I deal first with the general economic arguments to which my hon. Friend addressed a number of his comments.
Whatever we said on Second Reading on this Measure about reducing the amount of borrowing available has been more than abundantly justified by subsequest events. The very day after the debate in which we proposed to reduce the borrowing powers, we learned of a new squeeze in the private sector. It was a squeeze which will not affect the public sector, but which will affect the whole of private sector investment and may affect exports as well. In future, credit for exports has to be within the ceiling on the new squeeze. If we allow the Clause to go through unamended, it means that export and private sector finance will have to take second and third places to nationalised industry finance.
Following that sequence we learned in the first week of June of yet other economic difficulties. There was another £600 million drawn from the International Monetary Fund on top of the £600 million we already owed. All of that had to be repaid by 1971. It is purely a coincidence that we have borrowed precisely the amount which this Bill proposes to spend. I cannot put it more strongly than saying that we are now proposing in this Bill to spend money which we have not got, so there are very strong economic circumstances for looking critically at the amount spent in the nationalised sector and for cutting it down as far as possible.
My second point is that I want to ask R. Gunterthe Minister about the arrangement of the investment programme. During his Second Reading speech he pointed out that the programme could be held up at any time; “checked” was the word [column 464]he used. Having looked carefully at the investment programme, it appears to me to be planned on the basis that the Gas Council assumes the full amount will be forthcoming, and it has not planned it in independent stages each of which could be checked at a definite time. It looks from the programme as if it will be coming back later and saying, “Unless you give us the extra amount, we have planned the programme in such a way that the earlier expenditure will be abortive.”
A programme can be planned in two different ways, either in five independent terms each of which stands on its own or in one move and each year is an instalment in attaining the objective. We are entitled to ask for an assurance that this programme has been planned in independent stages and could be held up at any year without detriment to the amount of investment which has already been made. If that is not so, the Minister's argument that this programme could be checked falls to the ground.
Obviously, the Gas Council would ask for as much investment as possible. It is the Minister's job to see that all contingencies are planned for. I am familiar with the fact that no one seems to worry very much when the amount of expenditure is increased.
My third point is: has the Minister gone further with deciding the target return from the gas industry after this year? My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) pointed out that as the targets return is not known, the price is not known and the consumption cannot be forecast with accuracy, we are, therefore, planning very much in the dark. The price factor will largely influence the demand.
My fourth point is that the Minister, in the White Paper on Fuel Policy and in the Bill, has said that gas should be introduced as rapidly as possible into the economy. This could be done without risking a penny of the taxpayers' money. I noted in an article in the annual review of the Financial Times of 3rd July last year, that Sir Henry Jones pointed out that in addition to the home demand there is a likelihood of new consumption in industry and commerce which could mean that well over half the natural gas available will be sold there. [column 465]
According to that, well over half the natural gas could go straight to industry and commerce without the extensive conversion of domestic appliances and it could be got to industry by other means than through the Gas Council. All the Minister would need to do would be to give his consent under Section 9(2) of the Continental Shelf Act for exploring companies to sell to industry. Then, not a penny of taxpayers' money would be at risk. In fact, the gas could be introduced into the economy comparatively rapidly, and, also, there would not need to be any change in legislation.
My fifth point is the rate at which this amount of investment would mean using up the amount of gas in the North Sea. It is alleged that it will last for 25 to 30 years. The first 15 of that 30 years will be taken up by writing off modern plant which is being adjudged prematurely obsolete. We are, therefore, in a position of having a 30-year programme, at the end of which time it will be used up. There is not much incentive for additional exploration at the moment.
During the next 15 years it will used up, and at the end of the time what will be the use of this tremendous amount of investment we are making? Either we go back to town gas or buy Algerian or gas with foreign exchange, so as to use the investment the Minister is proposing. So we go back to nuclear power or coal. We are indulging in colossal expenditure for 15 years, and during the second 15 years we shall be making further capital expenditure to use a different kind of fuel or planning to import.
My sixth point is a general economic one. As part of our argument is that the nationalised industry sector must be carefully scrutinised, is the Minister planning to cut down nationalised industry expenditure by an amount equivalent to the rate at which this is increasing?
My final point is the one about scrutiny of the amount of money actually agreed to be spent in any one year. R. FreesonThe Parliamentary Secretary and other hon. Members adduced during Second Reading the argument that this is only an order for borrowing powers, and that at any time we could debate the specific amount of expenditure in any one year by debating [column 466]the National Loans Fund. That is not true. Under this very Bill, in the next Clauses, the Minister is proposing to give powers to borrow in foreign currency.
Such borrowing could be within a limit, but such borrowings would never be debated in the House of Commons under the Minister's own Bill. Money borrowed in foreign currency does not enter into the National Loans Fund Account. Whatever limit we allow for the borrowing we have no further Parliamentary control over it. The whole lot could be raised overseas. It would have to have Treasury approval, but that does not have to come before the House. There are good reasons connected with issues why it should not.
The entire amount could be used for a single company going through the National Loans Fund and without our having an opportunity to look at the investment programme on which it is based. This is a new change. I ask the Minister for certain assurances. We feel strongly that in the present economic situation we should in fact commit only the smaller amount and even with that permission I want a definite assurance that the investment programme is arranged in independent stages.
The hon. Lady knows my view on this question—I expressed it on Second Reading—which is that the Floor of the House of Commons is not the best place to debate in detail any nationalised industry, and the gas industry, in particular.
Having re-read the Second Reading debate, I am even more reinforced in my conclusion. No one said a thing about the details of the investment plan of the gas industry, or whether the £1,200 million proposed was the right kind of figure, or what information should be appropriate to enable the House to come to a better judgment on this question, so I would suggest that the hon. Lady ought to have considered whether it would not be better for us, as Members of the House of Commons, to press for more work to be done in the Select Committee on Nationalised Industries and to read some of their Reports.
I say to the hon. Gentleman the Member for South Worcestershire (Sir G. Nabarro) that he did not appear, to have [column 467]done his homework as carefully as he normally does. When he was asking the Minister questions about the possible savings in balance of payments as a result of the introduction of natural gas in particular and the investment programme in general he did not appear to have any knowledge of Table II, on page 22 of Minutes of Evidence, where Sir Henry Jones gave figures of the consumption of various kinds of fuel.
I did not have time in an intervention to ask the hon. Gentleman to imagine what would have happened if we had not discovered natural gas in the North Sea. It is obvious that we would have converted from solid fuel to oil energy in the next 10 years, until the rundown was practically complete in 1973, with the result that nothing but oil was being used for the manufacture of gas because of the substantial difference in cost between the two sources.
The saving is, therefore, larger than appears from the figures I gave in my intervention. They show a halving in the consumption of oil between 1967–68 and 1972–73 because not only would oil have had to be used for this element of production, but one must take into account the coal displaced by natural gas over this period. I would have thought, therefore, that the saving in terms of balance of payments, which must be substantial, should not be difficult to calculate if the hon. Gentleman makes certain assumptions about what will happen to the price of oil over this period.
Sir G. Nabarro
I am not prepared to make assumptions in a matter of this kind, which is highly technical. Neither am I prepared to base my calculations on methane derived from Algeria, which is an entirely different matter and which is not to be confused or compared with North Sea natural gas. There is no comparison or analogy between the two.
In any event, there is a fundamental Parliamentary principle involved and I commend to the hon. Gentleman that it is the Minister of the Crown responsible, the Minister of Power, who will do my calculations for me, if he wishes to satisfy me, using his several thousand bureaucrats for the purpose, and will make his pronunciamento publicly in this House in response to my questions.[column 468]
The hon. Gentleman tempts me to say that the Minister of Power does not have enough bureaucrats dealing with gas in his Department because frequently, when one makes inquiries of him about natural gas and other matters connected with the Gas Council, the right hon. Gentleman refers one to the Chairman of the Gas Council. He does the same when one questions him on matters concerning the N.C.B. and the C.E.G.B. Constantly one is referred to the chairmen of those organisations.
One is left to suspect—I will not go into the matter further because it is not germane to the topic under discussion—that the Minister does not have adequate resources in his Department to evaluate the recommendations made to him by Sir Henry Jones or the leaders of the other nationalised industries about their capital expenditure programmes. We must, therefore, look at the figures which were provided by Sir Henry Jones to the Select Committee on Nationalised Industries. I would be surprised if the Minister said at the end of this discussion that Sir Henry 's figures were wrong.
Sir G. Nabarro
He had better.
Not only would we not have had this halving of the consumption of oil over the six-year period to which I referred if it had not been for the introduction of natural gas, but oil consumption would have increased until the whole of the gas produced, from 13.8 million tons of coal in 1967–68, was manufactured from oil sources.
The hon. Member for Worcestershire, South went on to say that I must make a distinction between Algerian gas and the gas which we are getting from the North Sea. I agree that, from the point of view of our balance of payments, this is an important factor, but there is absolutely nothing that we can do about it. He will appreciate that we have entered into long-term contracts with the Algerians for the supply of 373 million therms during the period while this Measure will be effective. Thus, much as one might regret having made these long-term arrangements, they have been made—and they were made at a time when these enormous resources available in the North Sea were hidden from us. [column 469]
There are, however, certain advantages. One is that Algerian gas is imported in liquid form and, for this reason, we have constructed large storage tanks which enable us to keep a reserve supply of gas to cover fluctuations in demand. This would probably have been necessary in any event. I understand that we are now to build in Scotland a plant for the liquification of natural gas and that it will be taken there via a trunk pipeline.
This plant and the storage facilities associated with it will mean that a day's supply for the whole of Scotland will be available to cushion fluctuations in demand. Natural gas must be liquefied to be stored. The advantage of Algerian gas is that it is imported in liquid form.
Has the hon. Gentleman made his own calculation of the foreign exchange cost of natural gas, bearing in mind the amount of overseas capital needed and the royalties which must be paid on each cubic foot delivered?
I have not made those calculations.
Sir G. Nabarro
The hon. Gentleman should.
I do not think that they can be made until we know the price which will be paid for the rest of the supply from the North Sea. We have been given so far only the price for Philips, which is only a small element in the total amount discovered so far.
The hon. Member for Worcestershire, South then asked what improvements in productivity one could expect from the £1,200 million investment. The hon. Gentleman should study the memorandum given by Sir Henry Jones to the Select Committee on Nationalised Industries. In the evidence which Sir Henry subsequently gave, he said, in answer to, for example, question 180, that there would be a rundown in manpower over the next six years from 124,000 people to 114,000—this at a time when the production of gas by the Gas Council is increasing at a very rapid rate.
Here we have probably one of the most outstanding examples of improved productivity in industry in the United Kingdom, an example even more spectacular than the improvement in the coal industry, to which the hon. Gentleman and I [column 470]often refer in debates on that subject. The industry is to be congratulated for giving such a magnificent example to the rest of industry.
The hon. Gentleman then wanted to know about the effects of the Gas Council's policies on the changeover to cheaper sources of power. He referred to an article by the hon. Member for Horsham (Mr. Hordern), in The Times, in which he stated that since the discovery of natural gas and the advent of nuclear power the situation had been transformed and that the figures in the White Paper on energy policy needed to be revised.
I do not know whether the hon. Gentleman thinks that by 1975 gas could account for more than 15 per cent. of the total energy used in this country. If he does, then he is demanding an investment larger than £2,400 million and I am surprised, if that is his view, that he has not tabled Amendments designed to alter the investment figure.
I doubt whether our economy is able to absorb natural gas at a more rapid rate and the trunk pipeline system has been installed with this capacity in mind. The conversion of domestic gas consumption appliances has been decided on by the Gas Council with the 15 per cent. figure in mind—the White Paper figure—and the discussions now proceeding with big private industrial users takes the figure of 15 per cent. as a starting point.
The hon. Lady the Member for Finchley (Mrs. Thatcher) said on Second Reading that she did not think that the total figure of natural gas that had been given would be available and that Sir Henry Jones had said that there would be only 3,000 m.c.f.d. and not 4,000 m.c.f.d., which will be equivalent to 15 per cent. of our total energy resources by 1975. I do not agree with the hon. Lady.
I quoted from page 20 of the very Report which the hon. Gentleman admonished my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) for not having read.
If the hon. Lady quotes one part of the Report, perhaps she will read on. She will find that Sir Henry said that, if the final total available from the North Sea was only the same as the assured resources that are there at present—that is, 3,000 million cubic foot a day—[column 471]it would be a most unusual field geologically. I am not quoting exactly, but that was the sense of Sir Henry 's observations. Experience elsewhere in the world where natural gas has been discovered—in the Middle East, in Nigeria, in the Mexican Gulf—does not lead to the conclusion that once a certain point has been reached that is all that the resources are and no more will be discovered.
This applies even if, as some suspect, the exploration of the North Sea gas is conducted at a much less intensive rate in the future than it has been over the past few years. I do not think there is any doubt that this 4,000 million cubic feet a day will be available by 1975. If one is to advocate an even faster introduction, that might be taking a risk. I am pointing out that the hon. Member for Worcestershire, South and the hon. Lady the Member for Finchley seem to be of different minds on this subject.
There are two detailed questions that I want the Minister to deal with. First, although we know what the target figures are for the introduction of natural gas from Sir Henry Jones 's memorandum, we do not know how this is divided up. Can the Minister tell us how much Shell/Esso gas will be introduced into the system in the year 1968–69? I understand that the installation is ready and that the Shell/Esso gas will be coming ashore in the next few weeks, although the price has not been settled yet.
It seems a little unsatisfactory that the gas from the Shell/Esso well will be used in our system at a time when the discussions on price are still proceeding. I do not know what the company thinks about this. Is not this rather blackmailing the company, in the sense that the gas will already have been consumed and the company may be forced to take a price which it does not think is fair? Some people in the oil industry to whom I have spoken think that the company is in a very difficult bargaining position, having made this investment, with the gas now coming ashore, and with no finality in these negotiations.
I am not saying that I would agree entirely with that view, because I do not know what considerations have been in the minds of the bargainers. It appears that Phillips has reached what [column 472]it considers to be a reasonable conclusion at the figure of 2.87d. per therm, and I am surprised that the Shell/Esso contract, which involves a much greater quantity of gas, which gas was discovered considerably before the Phillips' strike, still has not reached finality.
Next, how much does the Minister think will have to be paid to the area gas boards this year in respect of coal which they use instead of some alternative source of fuel? This could affect the amount which has to be borrowed, because, if the Minister does not make a payment which covers the whole of the difference in cost arising from the use of coal instead of the most economic source, that would increase the deficit of the area gas boards—the gas industry as a whole—and it would, therefore, mean that it would have to borrow more money, to cover the difference.
As an aside, it is rather odd that under Section 6 of the Coal Industry Act, 1967 the payments in respect of coal used as an alternative to a more economic source of fuel have to be made to the area gas boards and not to the Gas Council. I am not sure how the Minister intends to deal with this matter. I realise that we cannot discuss it on this Amendment. I would like to know whether the figure of 8.6 million tons of coal for 1968–69, given in Sir Henry Jones 's evidence to the Select Committee on Nationalised Industries, still stands, or whether, as a result of discussions between the Gas Council and the National Coal Board, it has now been decided to use some other figure; and, if so, how the negotiations are proceeding between the Ministry, the N.C.B. and the Gas Council on what recompense there should be to the industry for the additional solid fuel it intends to use.
I shall not support the Amendment, because, as I said at the beginning of my speech, I consider that this is the wrong place to argue it. I want the answers to these detailed questions and many others besides, with which I will not weary the Committee. The Minister know that I have been writing to his Department—in fact, I have been pestering it—for some months on many of these and other questions which seem to me to be of some importance. I do not think that we can pursue this across the Floor of the Chamber and expect to arrive at a proper conclusion which will be beneficial [column 473]to the gas industry, to consumers, both industrial and domestic, and to the economy at large.
Mr. John Peyton (Yeovil)
I do not share the view which the hon. Member for Orpington (Mr. Lubbock) expressed towards the end of his speech. I believe that these matters should be aired i the House of Commons. The fact that not as many Members as one would wish take an interest in them is not the fault of the forum. It is the fault of individual Members. As I have often remarked, I do not think that the Government benches ever look nicer than when they are completely naked, as they are at the moment, save for the Treasury Bench, which is never good-looking, anyway.
I am obliged to my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro), who referred to some words I used some time ago—namely, that the North Sea strike was the greatest bit of luck Britain had had for some time. I do not want to use too strong words this afternoon. I want on a personal note to remind the Committee that I have been in the Ministry of Power and I have a great regard for the work done by that Ministry. I also know a little of the Gas Council. I know Sir Henry Jones personally. No one has a greater regard than I do for the immense work that he has done for the gas industry and, indeed, for Britain's economy. I hope that anything that I say will be understood in that context.
I am obliged to go back over the years to 1964 when the prospects of there being gas under the North Sea first became worthy of serious consideration. I recall that the Conservative Government, who were at that time very much on their last legs in point of time, pushed through a licensing procedure which was both fair and quick. A subsequent Administration, despite the rather silly remarks made by the right hon. Member for Belper (Mr. George Brown), saw fit to sustain the arrangements we had made.
I believe that Ministers tend to take personal credit for things for which they are not always personally responsible. The effort made on that occasion in the national interest was very largely to the credit of Sir Matthew Stevenson, who has now left the Department. His real determination to get this thing moving was [column 474]impressive. The fact that all the licensees or would-be licensees made very similar complaints afterwards was adequate proof that nobody had been treated unfairly—in fact, rather the contrary.
Let us come up to date and look at the present position in the North Sea. Whereas a year ago there were 13 mobile rigs engaged on exploration, there are now only five. The Minister must give his own reasons for this. I shall give mine. No price has been fixed so no one knows what return will come from the investment. When I say that no price has been fixed, I exclude the temporary arrangement made with B.P. for a limited quantity and the arrangement with Philips, but I have no knowledge of Philips' intentions. Are they continuing to drill in the North Sea, or have they had their lot?
Were Philips told by the Gas Council that if they agreed to that price no one would get a better one, despite the fact that Philips were nearer the shore than anyone else? I suspect that the Minister will not be able to answer off the cuff, but I should like him to look into the matter. Even oil companies are entitled to fair treatment. I hold no brief for any of them. I have not sought their advice and certainly have not been instructed by them in any way. I visited a rig in the North Sea at the beginning of this week. I am expressing my own opinions and saying what I believe is fair and right in the interests of the country as a whole.
Every day that passes increases the dependence of the gas industry on North Sea gas. The best prospects have been already worked over. It is an absolute certainty that as work progresses from now on there will be more dry holes, and therefore higher costs. It stands to reason that oil companies will always go to the best prospects first, so from now on there will be more dry holes and very much higher costs as drilling conditions become more difficult. It is fairly clear that next winter the Gas Council will already be making substantial use of gas from the North Sea. It is clear that they, incidentally, will be taking gas from the Le Mans field, from Shell-Esso, gas for which as yet no price has been fixed.
Consider the position of the companies. They could not say, “We will hold the country to ransom and turn off [column 475] the taps because they have not fixed a price.” The Gas Council is making the most of this, but others are learning the lesson. A very large number of American companies have no obligation to invest in the British side of the North Sea. They can do it in any of the seven seas and there is the Dutch side as an easy and ready alternative. That is precisely what they will do. I remind the Minister that last year there were 13 mobile rigs in the North Sea and this year there are only five. The business of exploration has dramatically slowed down.
When dealing with this new national asset and seeing this dragging of feet, on one aspect of the matter one is bound to ask who is responsible. I yield to no one in my regard for Sir Henry Jones, but I think that in this matter he and the Gas Council have been pursuing a most ill-judged policy. They are probably to be excused on the ground that they have been subjected to heavy Government pressure. If that is not so, I should like it to be denied.
I turn from Sir Henry Jones to the former Minister of Power who is now Minister of Transport. I say without qualification that, although all Ministers have their faults, he was an excellent Minister of Power. He showed great intelligence and courage. His one failure was not to stand up to some of the more noisy and undesirable elements in his party who objected to a fair deal being done which would have encouraged this vital exploration effort. It would be very unfair to extend that to the present Minister, who has only just come into a new and difficult Department, but I ask him to use all his undoubted influence in the Government to see that this matter is settled fairly and with speed. If he said that that is his purpose, I should be content, but it is being very commonly and widely said that the decisive influence here has been not in his Department but in the Prime Minister's office and a great deal of influence has flowed from Dr. Balogh.
Sir G. Nabarro
I do not wish to remind either myself or the Committee of that. My charge today—I want to be quite [column 476]specific—is that there is something which amounts to a dereliction of duty which springs from shallow prejudice. If the Minister thinks that this charge is wrong, of course I shall listen with care to his denial, but I say that the Gas Council has been pursuing a wrong policy and the Government, in particular the Prime Minister—if he has been advised as I have suggested, both he and Dr. Balogh—have been responsible for a grossly mistaken policy.
If this goes on we shall be left at the end of the day, I fear, in the humiliating position of having started the exploration effort in the North Sea but having faltered and failed. Then we shall find that the Dutch, who started years after we did, will be supplying us, supplying us moreover at their price, a price dictated largely by our necessity. We must remember that the Gas Council is not now erecting ordinary production plants. There is obviously a limit to the imports which can be had from Algeria. We shall be in the very humiliating position of having to buy from Dutch sources gas which we could well have had from our own doorstep and having also had the benefit of capital investment in the meantime.
I hope that I have not spoken too strongly. I believe that with this faltering—I should like to think it is only faltering and not a cowardly yielding to political pressure of the silliest kind—these monkeys of the Tribune have been having an influence totally disproportionate to their importance. I hope very much that the new Minister in the next few weeks will use all his influence to make sure that before all effort falls away in exploring the deeps of the North Sea a sensible and fair price is fixed in order that this very vital effort can go forward unimpeded by shallow prejudice and ignorance.
I know the right hon. Gentleman is in some difficulty because many of his supporters take a jaundiced view. One has only to see one of those rigs in the North Sea and the magnificent effort made there to come to the conclusion that the Government are the more culpable in their dithering and not having had the guts to make sure that a sensible and fair arrangement was made so that, as a nation, we could be certain that, whatever the extent of the asset under the [column 477]North Sea is, it will be discovered in the shortest possible time, whereas Government policy seems to be achieving the opposite result.
“We are only at the start of the development of the North Sea gas fields and the uncertainties are too great for it yet to be possible to settle the long-term strategy on gas absorption.”
That is a direct quotation from the White Paper on Fuel Policy.
My hon. Friend the Member for Yeovil (Mr. Peyton) spoke of one major uncertainty which makes us very anxious. I pay tribute to him for the considerable part he played as Parliamentary Secretary in the Department in laying the foundation of what might well have been a very successful fuel policy to obtain the benefits we could have had from this indigenous fuel. I was horrified to hear of the reduction in the number of drilling rigs in the North Sea. This is very dangerous and should be brought to the attention of the House immediately.
Two other causes of acute uncertainty about the whole of the industry are mentioned in paragraph 14 of the White Paper. I shall not weary the Committee by reading it because hon. Members can do so perfectly well themselves. In view of these uncertainties this seems a fine time to come to the House for a mere £1,200 million. We need to watch the situation very closely.
I am a member of the Select Committee on Nationalised Industries. The hon. Member for Orpington (Mr. Lubbock) has quoted at great length various sections of the evidence given to it. I should not like to quote them, as I do not think that they should be quoted at length until the Committee has reported and reached its conclusions. I hope that for a change it will have a little time devoted to it on the Floor of the House. That is another reason why we should not leap into giving all this money at this time, and why all four Amendments should be accepted.
I hope that the Minister, as a reasonable man, will go some way towards accepting them. This is no time to ask for £1,200 million borrowing over the next few years, particularly in view of what the Chancellor of the Exchequer [column 478]has recently said about the need to cut down in the private sector and the need for acute scrutiny of public investments, and his statements to the I.M.F. about limiting the borrowing for each year to £1,000 million.
I hope that the hon. Gentleman was not suggesting that the House should not be able to use the figures given to the Select Committee. I thought that the whole point of publishing the minutes of evidence and the memoranda submitted by the witnesses was that we could get all that information much earlier instead of waiting for the final Report to be produced.
But it is still good, if we are to have Select Committees at all, to hear their conclusions and then debate them. This is another reason why perhaps some of the money should be given now but the bulk of it with-held until the Committee has reported. Otherwise, what is the purpose of setting up all the Select Committees?
Like my hon. Friend the Member for Worcester (Mr. Peter Walker), I spent a good deal of time on the Standing Committee considering the Transport Bill and I spent a good deal of time on the Select Committee and it was very rare for me to be allowed on the Floor of the House. No doubt my colleagues are delighted, but one likes to know that one's labour is not in vain.
There is much speculation about what the length of life of natural gas will be. As a former rapporteur to the Council of Europe, I used to go to Holland, and I tried to find out their estimate of the life of natural gas. There is not only the question of its absorption rate into industry and private consumption but the question of the time when it will be overtaken by another form of fuel, when the fast breeder reactors bring the price per therm to a competitive rate and atomic energy will take the main base load of the major fuel-using industries.
If we are to have a wholesale expansion of natural gas into every regional board and into the premium as well as the industrial sector, one wonders whether it is right to compel people to go in for this type of modernisation when we must have a tremendous write-off for premature obsolescence of existing [column 479]plant, and before long the possible write-off of the new plant because of obsolescence through nuclear power. One wonders whether it might be better to concentrate on industries in regions nearer Bacton and the North-East.
Surely, private industry would have a pilot scheme? There should be pilot schemes and then we could consider a proper Borrowing Powers Bill on the evidence obtained from their progress.
In 1965 the existing borrowing power was £600 million, with the right to increase it to £650 million. It has been raised to £900 million with a maximum of £1,200 million, and now this is to be doubled.
We are aware of the very exciting possibilities which, as my hon. Friend the Member for Yeovil said, might be thrown away. But I also know, having taken an interest in the industry, that there has frequently been mis-estimating of fuel programmes, and I have always admired my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) when he has talked about this. It is very difficult to estimate, and one cannot but sympathise with those who have to do it, but I do not think that we need put all our eggs in one basket, because we have so much evidence of the mistakes that can be made. Caution is sensible at this time.
The money can be raised through the National Loans Fund. The Government were not particularly keen to go for genuine loans for the national industries. It can also be raised by inflation or taxation. Those are the three main possibilities, and my reckoning is that it will be done by taxation.
This brings me to a point which we should take most seriously as Members of the House of Commons. In the constitutional development of the country the House has taken to itself complete control of finance. The hon. Member for Orpington said that he did not think that this was the place to talk about the detail of the finance.
“The finance of the country is ultimately associated with the liberty of the country. It is a powerful leverage by which English liberty has been gradually acquired … If the House of Commons by any possibility lose the power of the control of the grants of public money, depend upon it, your very liberty will be worth very little in comparison. That [column 480]powerful leverage has been what is commonly known as the power of the purse—the control of the House of Commons over public expenditure.” That was said in 1891 by William Ewart Gladstone.
Who was the Chairman of the Gas Council in those days?
When the hon. Gentleman has something serious to contribute I shall try to answer him.
Since 1911, when the House got to itself complete control of the Parliamentary granting of money, we have been more lax about our Estimates. We never thoroughly debate the Estimates that are voted. The hon. Member for Yeovil has felt very strongly on this subject. We have this year, for the first time since Ramsay MacDonald, sent a Finance Bill to a Standing Committee, a shameful thing.
The point is that this is the first time since Ramsay MacDonald that a Finance Bill has been guillotined. Never before has it been sent upstairs.
The Temporary Chairman (Mr. Arthur Probert)
Order. I hope that the hon. Member and others will not pursue the question of the Finance Bill being taken upstairs in Committee.
No, Mr. Probert, but we are talking about citizens' money in the context of the House of Commons being too lax in the granting of money and in debating estimates and, on the floor of the House, the granting of taxation of citizens. Our case is that we are being too lax in this case as well in granting hundreds of millions of £s without there being a proper pilot scheme. There are very strong reasons why the Amendment should be accepted.
Colonel C. G. Lancaster (South Fylde)
I draw attention once again to the difficulty in which the Select Committee on Nationalised Industries, of which I am Chairman, finds itself. I listened with interest to what the hon. Member for Orpington (Mr. Lubbock) said. He paid us the compliment of having read the evidence of the Gas Council to the Committee, but it was only one of the witnesses and we cannot at this stage give any information about what the National [column 481]Coal Board, the Electricity Council or the steel industry had to say.
We eventually have to come to a conclusion as to what is wise in regard to investment and the general degree in which the North Sea gas field should be exploited and until we have come to that conclusion I question whether the Ministry is altogether justified, or justified at all, in asking for these very large sums of money.
My hon. Friend the Member for Weston-super-Mare (Mr. Webster) has gone over the position emphatically and fairly. He said that we should withhold the amount being asked for because, if for no other reasons—of which there are plenty—the Select Committee has not yet come to a conclusion. It is, indeed, a very valid reason for asking the Minister to think about the matter again and to recognise that the Amendments are, in the circumstances, fair and just.
We are not justified in giving these very large sums of money, although they may in due course be merited, until the position has been more formalised than it is. The right hon. Gentleman has said that he is a newcomer to his office and has not had time to consider these matters in great detail. Yet he has been burdened by the Government with a situation in which he must come to the House with not an unsupported case but one which has by no means been proved and ask for very large sums of money. If for no other reason I hope that he will wait until the autumn, when the Select Committee will have reported to the House. He may then find himself abundantly justified in asking for all he needs, but until then he would be wise to accept the Amendments.
These are not wrecking Amendments. They have not been put down because we do not want to see exploitation of North Sea gas at the earliest moment and the benefits of cheap power to the country. But we must prove to ourselves that, in all cases, it will be cheap power, particularly in the bulk supply market. This is one of the most intricate and difficult of the decisions we have to come to. But we have had our hands tied behind our backs and are being asked to do something now which I think is not justified in the present circumstances. In these circumstances, I ask the right hon. Gentleman to accept the Amendment.[column 482]
Mr. Nigel Birch (Flint, West)
I want to say something about an aspect touched upon by my hon. Friend the Member for Weston-super-Mare (Mr. Webster). This Bill represents a great enlargement of the public sector. There was an interesting article in The Times Business News by Peter Jay. He is very nice—a good young man—but, if a Yiddish word is permissible, he is a schlemeil if ever there was one, which means a not altogether wise man.
The point that was missed under nationalisation was the difficulty of financing. It was simply assumed that the nationalised industries or the Government—in fact the Government do the borrowing for the nationalised industries—could sell such stock as they wanted to the public and that the public would buy almost unlimited quantities of gilt-edged securities.
We know rather better now. When nationalisation started War Loan was 108; now it is 47½ or rather less and sinking. People will not buy this stock. Therefore, when the Government are doing this sort of thing, they must realise the immense burden they are putting on the people by enlarging the public sector because, if people will not buy the stock, the money has to be raised by taxation or inflation. Indeed, for a number of years it has been done by both.
Therefore, the Government should be doubly careful about committing themselves to raising colossal sums of money without being absolutely certain that they are right when they know that the only way by which inflation can be avoided is by increasing taxation to meet the bills.
This is a point which has not been hoisted in on the benches opposite. Look at the nonsense about further nationalisation in transport and the proposals for the docks! I do not think that the Secretary of State for Employment and Productivity has hoisted the point in. She is a girl who likes to screech in the morning and to go on screeching throughout the day, but she has not an intellectual grasp of the situation. As the years go by, now that the bond market has been effectively destroyed by the Government, the burden on the taxpayer for these things will be increasingly insufferable and intolerable.[column 483]
Mr. David Lane (Cambridge)
I wish to speak mainly to Amendments No. 2 and No. 3. Having re-read the Second Reading debate, I hope that the Minister and the Parliamentary Secretary will take the Committee more into their confidence than they did then. The right hon. Gentleman was clear on the mechanics but less informative on the underlying prospects of the industry, and the hon. Gentleman was even less informative. I am sorry that the hon. Gentleman has gone out for a moment.
Sir G. Nabarro
Do not worry about him. He is insignificant.
That may help to put into perspective what the Parliamentary Secretary said in replying on Second Reading. He said something which many of us resented, in criticising us for an unreasonable attitude towards the Gas Council. He referred to carping criticism. I hope he will accept that I, like my hon. Friends, am full of admiration for what has been done and the speed with which both the Gas Council and the exploring companies have taken advantage of this bit of British luck. But that does not disqualify us from questioning what the Government are proposing. We are justified in pressing for a much earlier opportunity of a thorough discussion of the prospects of the gas industry than the Bill would provide. We ask this because of the number of unanswered questions still before us.
I want to support what has been said about the Select Committee on Nationalised Industries. We all want to know what it will say about gas prospects, so we should have the first possible opportunity thereafter of debating the matter thoroughly. We should get this opportunity with this Amendment. We should not get it if the Bill goes through unamended.
There is also the question of the market for gas. We heard little about it from the Government on Second Reading. It is relevant again to the question of the granting of large sums for further investment. What is to be the balance, on the latest judgment, between the industrial and the domestic market?
Just before Whitsun we had an announcement by the President of the Board of Trade about the new plans for a smelter on the North-East Coast. I hope that we shall be told this afternoon a little more about the power implications involved. We [column 484]pressed the Government about this on earlier occasions and got nowhere. But there are plain implications in this smelter project for the question of coal pricing, for the electricity industry's policy in its future fuelling of power stations, and for the extent to which the electricity industry now wants to take natural gas. I hope that we shall hear more about that this afternoon.
Linked with that unanswered question is the question of the speed with which gas selling prices to consumers may be reduced. We know what the White Paper said about cheap fuel, rather cautiously. On Tuesday, 11th June, 1968, my own constituency's evening paper had a banner headline.
“Board pledge 1d. therm reduction on natural gas.”
“Gas consumers in Cambridge and the county will get a reduction of 1d. a therm when they start using natural gas, the chairman of the Eastern Gas Board announced last night.”
Yesterday in The Times, there was also this full-page advertisement by the Gas Council:
“High Speed Tortoise! … Following so soon after recent price increases (largely because of exceptional factors wholly outside our control), any claims that they are going to be lowered may seem difficult to understand. But the industry aims to more than triple sales by the mid 1970s and this cannot be done unless our prices, already competitive, become even more so.
This cold economic fact alone should give our customers a warm assurance of our determination to get our prices down.”
That is all very fine. The Minister was rightly more cautious about price prospects in his Second Reading speech. I hope that he can tell us this afternoon something about his present assessment of price trends.
I now want to mention two points of detail. One concerns storage. We are asked to provide for possibly as much as £546 million in four years for expenditure by the Gas Council on transmission and storage. The booklet issued recently by the Council mentions its plans for storage. I will quote from this booklet in asking another question of the Minister.
“Four frozen ground storage units for liquid natural gas are being provided at the Canvey Island terminal and above ground storage is being provided at Ambergate. Plans are also [column 485] being considered for additional storage at strategic points in the country.”
Can the Minister tell us any more about this today? These are not only costly projects, but they are of great local interest in many parts of the country.
There is another point of detail concerning the transmission system. I happened to be at Bacton for a short time during the recess. I noticed that already one and a half masts are erected for radio control of the gas being brought from the North Sea to the shore. We know from announcements that have been made that the Gas Council has chosen radio control rather than land line for the inward distribution system. I should like to be assured this afternoon, or at least in correspondence, because there has been some doubt about it, whether the G.P.O. is in agreement with the Gas Council about the use of microwave systems for this purpose.
The main unanswered question that we come back to is the financial one and the method of raising the money which will be required. Little was said in the Gas Council booklet, and still less by the Minister in his speech on Second Reading, about the degree of self-financing that the Gas Council expects. As has been said, there is also great uncertainty about the future financial target for the Gas Council. A target has not yet been set. Until we know what it is we are wrong to agree with the total sum asked for by the Minister today. In view of this and many other unanswered questions, it would be wrong to grant the Government more than the minimum, limited extra borrowing power.
One of the great lessons of the last few years in many fields of expenditure has been the need for much tighter year-by-year control of public expenditure. I know what was said on Second Reading about the careful scrutiny that goes on in the Minister's Department with regard to the gas industry and many other industries. We come back to the question of Parliamentary scrutiny. It is no good the Minister saying that we will have another Order in a couple of years and another one a year after that. This is an inadequate opportunity for the House to consider these large sums of money.
Here I will quote what Mr. Peter Jay said this morning in an article entitled, [column 486] “Can Jenkins galvanise the planners?” I hope the Minister has seen this article. Mr. Jay ends up by discussing the need for more careful and more expert assessment of public expenditure plans:
“The only hope of making these choices both rational and democratic—even in the parliamentary sense—is for Parliament to participate in them at roughly the same level of sophistication as they are handled in Whitehall.”
For these and many other reasons I warmly support the Amendment.
First, I thank the hon. Member for Yeovil (Mr. Peyton) for the tribute he paid—which I thought corrected the unfortunate phraseology of the hon. Member for Worcestershire, South (Sir G. Nabarro)—to the Chairman of the Gas Council and also to the civil servants at the Ministry of Power. It is easy to spit out the word “bureaucrats” and to talk about thousands of them. As the hon. Member for Finchley (Mrs. Thatcher) knows, we have not got thousands at the Ministry of Power—only just over one thousand. Therefore, there is no need to talk in those terms. I repeat, I am grateful for the tributes that were paid by the hon. Member for Yeovil.
Turning to the general theme before coming to the specific questions which have been asked, the hon. Member for Worcestershire, South said that he was terrified by the large amounts of money that were involved. I know circumstances are different and that the sums of money involved are large by any standards, but I would remind the Opposition that these sums are not unprecedented in nationalised industries. Under the Conservative Administration's Electricity and Gas Act of 1963, the borrowing powers of the Electricity Council were raised from £2,300 million to £4,400 million with an interim limit of £3,300 million. Therefore, we should get the matter in perspective, whatever be our views about the uncertainties.
Stressed throughout the debate, and legitimately so, have been the uncertainties about future development, marketing and many other aspects. I share those uncertainties, but I thought that I had recognised them by the decision to fix an interim limit at a comparatively low figure which will ensure that the industry's [column 487]affairs and future borrowings come before the House in less than two years' hence, instead of the customary two and a half to three years. Therefore, within two years at least we shall again be discussing these matters.
I entirely agree about the necessity for control by this House of large sums of public money. I agree with the right hon. Member for Flint, West (Mr. Birch) that perhaps over the years control by this House has slipped. We should have more control. I am not disputing that we want more control. I would go anywhere with anybody in pursuing economy in the use of large sums of public money for nationalised industries, and for their use in the most efficient way. I suggest that it is not efficiency, and it is not economy, to fail to make available the resources <??>ich are required for the speedy utilisation of a valuable natural resource which we all know can make a great saving in the energy costs of British industry and in foreign exchange.
I have noticed a difference of opinion among certain hon. Gentleman opposite. The hon. Member for Yeovil stressed the urgency of getting on with the job. He stressed the urgency of maintaining the exploration. He maintained that we should get on with the settling of prices on which so much depends.
The exploration is being carried out at no cost to the Gas Council. Secondly, I am not in any way arguing against these Amendments. If they are carried, they will give the Minister another opportunity to assure me that the anxieties which I have expressed today are unfounded, and he will be able to come back in a few months' time and say that instead of five mobile rigs there are 10, and we shall be pleased.
That is a different matter. The tenor of the hon. Gentleman's remarks was that there was an urgency about the exercise. I therefore could not understand the hon. and gallant Member for South Fylde (Colonel Lancaster) suggesting that we should wait until the autumn comes and then make a decision on some aspects of the proposals. I am not suggesting that there is a difference of opinion between those two hon. Members, but I suggest that there is a difference of approach. [column 488]
The House has many opportunities of informing itself of what is going on in the gas industry. I am sure that the hon. Member for Worcestershire, South is a most diligent reader of the Gas Council's Annual Report, the reports from the area gas boards, the reports of the Select Committee, and all other documents relating to the industry. There is sufficient scope for hon. Members to probe various aspects of the industry's policy.
I propose, now, to deal with a matter mentioned by the hon. Member for Weston-super-Mare (Mr. Webster) and by the right hon. Member for Flint, West. One of the problems of managing nationalised industries is that they are often inhibited by the amount of public scrutiny to which they are subjected. This is far more true of them than it is of the Chairman of I.C.I. who, on many occasions, is kept away from the public gaze. We accept the need for this scrutiny of nationalised industries, and I do not want anybody to withdraw his request that this process should continue, but let us not forget that it may well be an inhibiting factor in attracting the best men to these industries.
It has twice been said today that dealing with the matter by Order is a perfunctory method of tackling the problem. I ask the House to remember that, somehow or other, we managed to debate the 1967 Gas (Borrowing Powers) Order for about six hours. That is not a perfunctory way of dealing with an Order. I have more faith than apparently some hon. Gentlemen have in their end of the usual channels. I feel sure that they will have no difficulty in ensuring that a Gas Borrowing Order, an Electricity Borrowing Order, or any other Order is properly considered by the House.
In putting forward a Bill dealing with borrowing powers over a five-year period in respect of what everybody agrees is one of the most exciting adventures into which the country can enter, the Government are following the practice of the Conservative Administration who quite rightly recognised that there was a need for nationalised industries to consider themselves as major commercial undertakings, and to do what normal commercial undertakings do, namely, plan ahead for at least this length of time. [column 489]
During the Second Reading debate reference was made to the amount entered for contingencies, but the issue has not been raised today. I think that management specialists today accept the view that forward estimates must always be regarded as subject to a reasonable margin of error. As I understand it, that is how modern industry conducts itself. In fact, the other day in “Studies in Management, No. 2” , published by Allen and Unwin, I read the comments of a gentleman about corporate planning. He said that “all forecasts were inaccurate to a greater or lesser extent and that one thing which was certain was that a person responsible for corporate planning in industry must never claim that his forecasts are accurate—he should know better.”
We thought, and so did the Gas Council, that it was desirable to have an element of contingency planning. That did not imply for one moment that the money had automatically to be used. The inclusion of an amount for contingency planning is not imprudent. It conforms with modern thinking in industry. It does not mean that there is anything automatic about it. When the Minister asks for approval for the draft Statutory Order which seeks to raise the interim amount, he will justify whatever figure he introduces, making due allowance for uncertainties. He will put forward the figure which he considers necessary for the next three years. If it amounts to less than £800 million, a smaller amount will be proposed. In 1966 the Electricity (Borrowing Powers) Order raised the figure to £4,100 million even though the Conservative Administration had laid down that the maximum could be £4,400 million.
I insisted on this low interim figure because, by doing so, the matter will have to come before the House in less than two years, when the whole issue can be scrutinised. Therefore, notwithstanding the admitted uncertainties of the gas industry, the amount of North Sea gas which will eventually become available, the markets obtainable at the beach price which the Gas Council will have to pay, the way in which peak loads will be met, and so on, there is at least something to be said for the fact that certain crucial decisions have been taken. [column 490]
It is already clear that 3,000 million cubic feet a day of natural gas is available, and that remunerative markets for at least that quantity can be developed. I am glad that the hon. Member for Yeovil agrees with me. It has been decided that the greatest gain to the economy will be obtained by a policy of rapid absorption into industry, with most of the gas going to the premium market, with bulk sales being resorted to as necessary. It has also been decided that despite the cost of converting consumers' appliances, it is more economic to supply the natural gas direct to the consumer than to convert it to the present town gas.
The oil companies are going ahead with their part of the operation. I am sure that at this stage, when delicate negotiations are taking place, nobody would expect me to speculate about why there are now five rigs instead of 15. It was understood that there would be a diminishing number. It means perhaps that exploration is drying up a little, but I hope it will not. Nevertheless, the oil companies are laying their pipelines and building their shore installations necessary to bring gas to the Council's pipelines.
Does not the right hon. Gentleman really accept that there is danger here in that the oil companies are, as they are obliged to, building their installations and laying pipelines but they are increasingly at the mercy of a Government and a Gas Council which seems to be cashing in on the position without any scruple whatsoever? If no fair price is reached in the near future the Minister can take it that others all over the world will not come here.
I take the point the hon. Gentleman is making, but I would be reluctant to believe that the oil companies of the world are at the mercy of anybody. I would rather say that at the state of play at the present time they can drive as hard a bargain as anybody else.
Sir G. Nabarro
If the hon. Gentleman will wait a moment.
Sir G. Nabarro
We are in Committee, Mr. Probert. The right hon. Gentleman went right through a Second Reading speech refusing to give way. Would [column 491]he now relate what he has just said to the fact that price agreement has only been reached in respect of less than 10 per cent. of the 4,000 million cubic feet per diem which is the optimum we need five years from now? And as price negotiation has been going on for three years, when does the Minister hope, first, to stop blaming his predecessors and, second, to achieve some finality in more than what is a derisory area of price agreement—I repeat less than 10 per cent.?
It is a great pity the hon. Gentleman is so rude. Had he let me finish the sentence I was going to sit down.
Sir G. Nabarro
It was a very long sentence.
The hon. Gentleman did not know. He did not wait for me to finish. I do not understand him. I was prepared to give way. I knew we were in Committee. And when have I blamed my predecessors?
Sir G. Nabarro
I have not spoken for very long, so how could I blame them all day? Negotiations have been going on, perhaps for too long, but they are continuing. The arguments are still raging and I can only say that I hope a satisfactory conclusion will be reached ere long. There are many opinions as to whether the figure of 2.87 pence was right or whether it was too high, but that was the agreement come to, and all I can say, particularly to the hon. Member for Yeovil (Mr. Peyton), is that I hope they will be concluded as soon as possible.
The Gas Council's borrowings average undoubtedly will have exceeded £1,600 million by early 1970–71 and will almost certainly have exceeded £1,800 million by early 1971–72; and further expenditure and borrowing will be needed if the gas already discovered is to be made available to consumers in the early 1970s. Unless it is intended not to take up the gas available and not to use it in the most economic fashion and at the most economic rate, it will merely lead to waste of Parliamentary time to reduce the final borrowing limit to the sums mentioned in these Amendments. I do urge the House to consider that very carefully. [column 492]
Having dealt with what I thought was the general theme, apart from the usual remarks of the the hon. Member for Worcestershire, South (Sir G. Nabarro) about the House being dedicated to the proposition that all investment in nationalised industry is good—and I do not think he said very much else except to ask a more pertinent question: what did we hope to get?—I will move on. The argument is that the total benefit of conversion to natural gas at a present value of £1,400 million will average something over £100 million a year for 30 years, which is, of course, a substantial saving.
Sir G. Nabarro
The right hon. Gentleman really must not laugh these things off. The amount of £100 million a year over 30 years is the value of the natural gas. That is not the question I have asked him. I pointed out to him carefully, and I repeated it, that the gravamen of the Prime Minister's statement on 16th January last was that revised Government policy rested most largely on import saving. My first question was: what import saving will be created by this massive investment? Is he answering, £100 million of import saving per annum for 30 years? Is that his answer?
Sir G. Nabarro
Hurry up with the Civil Service!
It is not the Civil Service. That is just where the hon. Gentleman is wrong. I was referring not to the Civil Service but to “Gas Goes Natural” , on page 15 of which the hon. Gentleman will find the figures I gave.
Perhaps I may say a few words to the hon. Member for Finchley on one point which emerged in which I myself have always been interested: if at the end of 30 years, perchance, the natural gas has been exhausted, have we not wasted all this money on trunk pipelines? As a transport man I do not believe that in any case.
I believe the finest asset this country could have, whether for natural gas or anything else, would be a system of underground pipelines. I am sure the hon. Lady will know that in America and elsewhere they are widely used for moving coal, grain, cereals and other things, so that it is not a wasted asset in that sense. But in any case, I want to tell her when [column 493]she speaks about the year by year, stage by stage development, on which I am not quite sure I followed her, that one simply could not have an uncontrolled programme. It is a rolling programme. At the end of each year the assessment is made and if further major considerations have to be made we can alter our programme. But it is quite impossible for me to tell her that there would be this compartmentalised 12-month by 12-month approach. As I have said, it is a rolling programme.
I am not quite sure whether the phrase “rolling programme” really helps. Having looked at the programme, I suspect it has been arranged so that if the fourth and fifth years of the programme are not carried out, that is to say if the Minister does not get the extra borrowing powers that will render the expenditure in the first, second and third years largely abortive. There would have been another way of doing this; rather than putting pipelines everywhere across the country, these could have been introduced separately into certain areas, not introducing them into every area at the same time. The hon. Gentleman said that the programme could be checked. I would refer him to the Official Report of the 22nd May, 1968, at column 545. What did he mean?
The programme can always be checked year by year. There is the assessment every year, and of course gas is flowing into the grid and the marketing projections in the various areas of a country will be considered in relation to whether or not and how fast they are to be developed. That is the check about which I was thinking.
I was asked by the hon. Member for Orpington (Mr. Lubbock) about the present position on the various gas banks. The actual gas discovered is over 3,000 million cubic feet daily or the equivalent of 36 million tons of coal a year. Of this, up to 250 million cubic feet comes from West Sole, where B.P. is operating, 600 million cubic feet will eventually come from the Hewett field (Phillips-Arpet), 1,600 million to 1,800 million cubic feet from Leman Bank (Shell-Esso) and the Indefatigible field will give the remainder. There have also been to other discoveries on the Continental shelf—[column 494]
What is the figure for the Yorkshire field?
I could not give it off-hand, but I will certainly see that the hon. Member gets it. The gas paid for already, that is, from B.P., is on a three-year price of 5d. per therm for the first 100 m.c.f.d. At Hewett, Phillips have a half share on a 25-year contract at 2.87d. per therm and Arpet are likely to accept the same terms.
The hon. Member for Yeovil—I am sorry that he is absent—raised the question of licences, and rightly said that it was an act of faith and good conduct when the Conservative Administration issued those licences and we in 1965 renewed them. We held to the terms and conditions and the exploration's success was very good to the spring of 1967, although it has not been so good since. It has been a little disappointing, which accounts for the difference between the 13 and the 5 rigs. Those are the facts for which the hon. Member asked.
The questions which remained unanswered are detailed, because we are in an area of uncertainty. I still say that, with the safeguards embodied in the Bill, within two years, possibly within 18 months, there must be a further debate upon progress when we have had the Report of the Select Committee and further information on prices. It is right and proper that we should allow the Gas Council to develop its plans over five years, but at the same time we must ensure that the checks are laid upon it in the manner which I have described.
Would the right hon. Gentleman be so kind as to deal with my question about the consumption of coal by the area gas boards in the current financial year? The figure given is 8.6 million tons, in Sir Henry Jones' minutes of evidence. Does that still apply? How are the negotiations going on for the payment to be made by the Minister to the Gas Council under the Coal Industry Act, 1967, for the difference in cost between coal and the alternative sources of fuel?
I have not a quantitative figure in my hand, nor do I know the precise state of negotiations, but I will let the hon. Gentleman know.[column 495]
Sir G. Nabarro
Before the Minister sits down, will he—[Interruption.] It is no good his wearily rubbing his eyes. He has given me an answer which is totally misleading and is seeking to purport to represent that it is an answer to a specific question which I put to him.
I will repeat the question. If we make the massive investment for which he is calling in the Bill, what will be the benefit to our national economy in import saving—I repeat, in import saving? I hope that he understands those simple words. Good, the Civil Service have now provided him with an answer. He supinely referred me to a document called “Gas Goes Natural” , which I have here, and to page 15, and he quoted me these figures:
“This gives a total benefit at present value of £1,400 million which is equivalent to an average annual saving of £120 million for 30 years.”
What he actually said was £100 million annually for 30 years. That is the calculated saving in operational and capital costs in the United Kingdom of the gas industry. It is not the economy in imports: it is not an import saving.
I now give the right hon. Gentleman a further opportunity to answer my straightforward and unequivocal question, arising from the Prime Minister's statement on 16th January. If we are voting the massive investment for which he is asking——
The Temporary Chairman
Order. The hon. Gentleman is making a speech and not an intervention.
Sir G. Nabarro
Yes, Mr. Probert, but we are in Committee——
The Temporary Chairman
Order. I was not aware that I had called the hon. Gentleman to make a speech.
Sir G. Nabarro
I prefixed my remarks with the words, “before the Minister sits down” , but I will wind up with just one sentence. What will be the import saving if we vote the massive sums in the Bill? I hope that I shall now get a reply as unequivocal as the question which I put.
I will not imitate the hon. Gentleman in rudeness. I did not [column 496]sit down wearily. I had something in my eye, and that is why I wiped my eye. I do not know why the hon. Member is in this place: he would make a fortune at the Palladium, I am sure.
I will now give the answer. I will be short and precise, and I have no intention of answering it again——
Sir G. Nabarro
The right hon. Gentleman is arrogant.
No, you are: that is the trouble.
Sir G. Nabarro
On a point of order. The Minister has just called you arrogant, Mr. Irving. Would you ask him to withdraw at once?
No, I referred to the hon. Member for Worcestershire, South (Sir G. Nabarro) as arrogant.
The import savings were expected to be £50 million——
Sir G. Nabarro
For God's sake wait a minute.—£50 million in 1970, and will rise to £100 million in 1975 on the best assumptions. The precise figure depends on the assumptions made, but £100 million a year is a good guide in the period after the build-up. That is supplied by the Civil Service, and I am grateful for it.
Mr. Peter Emery (Honiton)
I should like to bring the Committee back to the Amendments, which, it is clear, contain three different types. One is to reduce the immediate borrowing power of the Gas Council, the second is to limit the amount over the five years and the third is to limit the amount or scale of the borrowing power over these periods. I will try to deal particularly with these three elements.
I must begin with one fair comment. That is that I am more than surprised, as I am sure is the Minister himself, that there has been not one speech from the Government's back benches on this matter. No interest has been shown there—although some of them are present now—when we are discussing the spending of £1,200 million. I think that that is a disgraceful state of affairs——
I am a connoisseur of borrowing powers Bills and attend [column 497]regularly on these occasions. One of the reasons that I like them is that no members of the Government ever attend the debates or take part.
Mr. Arthur Palmer (Bristol, Central)
I hope the hon. Gentleman will not over-look the fact that I spoke at considerable length on Second Reading.
I know only too well the interest of the hon. Gentleman in fuel matters, and my remarks were not directed at him. That is the last thing that I would want to do. This does go some way to explain to me the argument of the Minister that it is not necessary to exercise Parliamentary control on the expenditure of vast sums of money other than by Statutory Instrument. This is the difference between this side of the House and the Government. The Government believe that Parliamentary control will be exercised on the increased borrowing of £800 million if it is done by Statutory Instrument. Everybody knows that this will amount to a 90 minute debate and nothing more. This is inadequate, and that is why basically our Amendments are in the right sense. We are seeking to ensure that there will be greater Parliamentary control of Government expenditure, especially on vast capital sums.
My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) made it quite clear that hon. Members, whilst criticising the expenditure, were not suggesting that we were against a cheap fuel policy. This was reinforced by my hon. Friend the Member for Yeovil (Mr. Peyton) who wanted greater speed in the exploitation of natural gas. The price paid by the Government to the companies should give them a fair return for ensuring continued exploration in the North Sea, and also provide a reasonable price to both the large-scale consumer and the ordinary housewife. Too often the housewife and the smaller consumer are forgotten. I must, as I have done before, declare an interest in these matters, which I hope allows me to speak with some authority.
The hon. Member for Orpington (Mr. Lubbock) seemed not to care that the House was the right place for discussing financial matters. My hon. Friend the Member for Weston-super-Mare (Mr. Webster) dealt more than adequately with this point. It is a terrifying situation for [column 498]the Whip of the Liberal Party in a speech on borrowing powers to suggest that it would be much better if the investigation of the expenditure of these vast sums of money was not dealt with on the Floor of the House. This would be untraditional and would neither benefit Parliament or democracy.
My hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) gave a very good, limited speech, and his words should be reckoned with, since he was the Chairman of the Committee dealing with this matter. He suggested that it would be more in the interests of efficiency and economy if the Amendments were accepted for the time being until the views of the other power industries had been properly considered and adjudicated on and the report of the Select Committee is available.
I do not know whether the basis of what I am saying is true or not, but it is being suggested by many opponents of gas that this borrowing powers Bill is being thrust through the House as early as possible, as the longer it is delayed the stronger will be the arguments for spending money in other industries in the nationalised sector of fuel and power. The argument of my hon. Friend the Member for North Fylde is relevant to this. When the report from the Select Committee is available we could come to a judgment, and our Amendments would allow the Government to deal with that point quite fairly.
My right hon. Friend the Member for Flint, West (Mr. Birch) raised the point, which has been dealt with on Second Reading but not during this debate, that this money will be raised by taxation. Questions have been asked of the Government as to how they intended to do it. There is no doubt in my mind, and no doubt in the mind of the right hon. Member for Flint, West, that this money will be raised by taxation. The British public might pay a little more attention if they realised that this sum would be added to the spending power of the Government, and that they were to be called upon to provide the sum of £1,200 million over the next five years.
I am concerned by the arguments that have been put forward both on Second Reading and today. First, they are based on a very doubtful and false piece [column 499]of logic and, second, we do not yet have full information. The arguments are based on the suggestion that the fuel oil tax will remain at 2.2d. per gallon. If that were altered, all the prognostications and statistics outlined for forward planning in the White Paper fall to the ground. I cannot say whether we on this side necessarily agree with that, but if that tax were reduced the economies of scale and the cost factors for the fuel industry would be altered. I know that the hon. Gentleman would not wish to mislead the House, but to be quite so certain in the presentation of the statistics of forward estimating is misleading, since at all times it has to be put in parenthesis that these statistics are subject to the fuel tax remaining at its present level.
We are asked to make this judgment when we still do not know what total cost factors will be involved. We have one price, but until we have the price for all the fuels there will still be this enigma and question mark. It is reasonable and proper that the expansion should not be delayed, but it should go forward as a rolling programme that could be checked. These are not my words; they are the words of the Minister. I agree with him, but we want the check to come from the Floor of the House and for the industry to have, as in the case of most large industries, only the first bite to start with.
I am also concerned that in the judgments which are being made the Government adopt an entirely different approach on spending and investment programmes for public industry and for private industry. I believe that there should be a single standard, and that it should be the one applied to private industry.
If the right hon. Gentleman gave his wife £1,200 million, she would spend money much more rapidly than she does now. If we approve this vast sum for Gas Council borrowing in one single Bill, I believe that it will result in a greater freedom of spending than would be the case if the Council had to come back to this House more frequently. There would be more economy of spending if the amounts in the rolling programme were given only every two years or so. That is why, basically, it is wrong to approve a Borrowing Powers Bill such as this. [column 500]
In our Amendments, we seek to reduce the overall amount from £2,400 million to £1,800 million, but that will not stop the industry going forward. We do not say, “You will limit your programme and stop your expansion.” We say, “You must have your programme so prepared that you realise that you have not got final spending approval for the latter part of it.” There is nothing unusual about that in small businesses or in industry generally, and that is the sort of financial stringency which we ask the Government to apply to the nationalised gas industry.
The Parliamentary Secretary to the Ministry of Power (Mr. Reginald Freeson)
If the hon. Gentleman and his right hon. and hon. Friends feel so strongly about this, perhaps he will tell the House why in the Electricity and Gas Act, 1963, they sought powers which resulted in roughly twice the level of borrowing for the Electricity Council as that proposed in this Bill for the Gas Council. The figures were £2,300 million being raised to £4,400 million.
The hon. Gentleman's mathematics are obviously not good. Let me give him a lesson in adding two and two together. If one increases £1,200 million to £2,400 million, that is an increase of 100 per cent.——
What is this, then?
We propose a 50 per cent. increase. If the hon. Gentleman does not know the difference between 50 per cent. and 100 per cent., it is about time that he returned to the back benches.
Sir G. Nabarro
As I was present during the debates in 1963, moving restrictive measures from the Government benches, would not my hon. Friend point out to the Parliament Secretary that in those days our economy was highly expansive, utterly solvent and we were paying our way, and there were no restrictions on finance at home or abroad. Today, on the other hand, we are living in a siege economy, and such squandermania on the part of nationalised industry is neither propitious nor justified.
I think that we have dealt with that point long and far enough to have made it clear that the Government's argument falls to the ground. However, it allows me to underline the fact [column 501]that we are allowing an increase of one-third in the overall borrowing powers and a total increase of 100 per cent., unless the Bill is amended. We feel that that is too much. Whatever may have been done in the past, even if it were right then, is not right in the present economic situation.
How many people realise that the amount involved in the Bill is something over £20 a head for every man, woman, child, and old age pensioner in the country? That is the situation which this House has to present to the country to make people realise how much is involved.
When one considers the overall factors, I would remind the House of these words. On 26th March, 1966, it was said that, as a condition of solving our economic problems,
“… public expenditure, equally with private expenditure, shall not be allowed to exceed the resources that we can make available from our expanding production.”
I only wish that those words were being put into effect. But it is typical of the Government to say one thing and do another. Those words are taken from a speech by the Prime Minister.
If in this Bill we were suggesting that the present level of production and productivity was allowing this sort of investment, it would mean that very little would be left for other investment either in the public sector or the private sector of industry, and that is known only too well. [column 502]
No private firm would approve of an investment programme of this character without much more information. We have only some very rough figures. They are £1,221 million in fixed assets, £276 million in conversions, £44 million in loans, and £53 million in the financing of expanding turnover. No board of directors or finance sub-committee would approve the type of expenditure that the Government and the Gas Council expect us to make on those overall round figures.
The one achievement resulting from this debate may be that when nationalised industries ask for more borrowing powers we may have more information about the way in which tens upon tens of millions of £s are proposed to be spent. The figures exist. They could easily be incorporated in a memorandum to a Borrowing Powers Bill. That would allow Parliament to inspect the figures to a much greater degree than we are able at the moment.
We would like to see a reduction in the total level granted, because we believe that, in the present economic circumstances, there ought to be greater economy from the Government. That is not evident at the moment, and I would urge my hon. Friends to support me in the Division Lobby on this matter.
Question put, That the Amendment be made:—
The Committee divided: Ayes 105, Noes 141.