Skip to main content

North Sea Oil

Volume 886: debated on Wednesday 19 February 1975

The text on this page has been created from Hansard archive content, it may contain typographical errors.

The following Question stood upon the Order Paper:


To ask the Chancellor of the Duchy of Lancaster whether he will make a statement about his recent discussions with the leaders of the main United States oil companies.

May I ask the leave of the House to answer Question No. 45?

I have explained to the leaders of both the British and the foreign oil companies that we are seeking to participate in commercial oilfields in the North Sea, on terms which will be fair to the companies and to the British people. The British people's fair share of the profits will be secured by taxation and existing royalties. What we are now seeking is to give the British people the title to a share of the oil itself on terms which are fair. We are now considering with each company how this objective might be achieved in its particular case.

I should like to indicate briefly to you, Mr. Speaker, and to the House more particularly that the Prime Minister—[HON. MEMBERS: "Question."] I will get round to that. This is the first—

Order. If this is a point or order I will hear the hon. Member later—

—but I should prefer that he first asked his supplementary question. I will hear his point of order later. I must ask him first to put his supplementary question.

It spoils the effect, but that does not matter.

I am pleased to see my right hon. Friend here after he has visited so many countries. Is my right hon. Friend aware that consistently in this House in the period prior to the October election it was said that we would be wanting about £4,000 million, that would otherwise be taken in profits by the oil companies, for the benefit of the British taxpayer? How can that be consistent with his oftrepeated remarks in America and elsewhere to the US oil barons that he was out there to protect their interests as well? Does he, in his rather lofty position, understand that the Labour movement is showing tremendously deep concern about what is happening regarding activities on the energy front and, in particular, about the way in which he has been negotiating with the American oil companies and other companies involved in the North Sea?

First, I should like my hon. Friend to know that I appreciate his comments on my absence. I am sure that if he were absent more frequently he might be as well received. I am not clear about whose election speech my hon. Friend was referring to when he gave those interesting figures. It was certainly not mine.

I do not think any member of the Front Bench would have committed himself—and he certainly would not have been wise to commit himself—to particular figures about the nation's share of the North Sea revenue. That share will be decided by the rate of petroleum revenue tax. There is no limit to that rate other than the limits placed by fairness and wisdom. That rate is at the disposal of the House and is not a question of participation. The participation proposals will, I think, be welcomed by my hon. Friend in that we are seeking to ensure a title for the British people to the oil itself.

The share of the profits is quite another matter which can and will be dealt with by the PRT without limit other than the limits of fairness and wisdom.

Is the right hon. Gentleman aware that we all recognise the great importance of the future ownership of the oil but that there is great and growing concern that an excessive preoccupation with the sharing of the oil is slowing down the speed at which it will become available?

Far from slowing down the getting of the oil, our participation proposals will speed it up because in many cases where participants are not able to find the funds the Government are involved in giving the necessary financial help. That is speeding up the contribution of some of the lagging members of syndicates who cannot move because of the shortage of funds—shortages which the Government are in many cases invited to make good.

I invite the hon. Member in this context to reflect upon the situation with Burmah Oil, which was a member of a syndicate. Without the Government's intervention by way of participation, the whole syndicate might have been held up indefinitely.

It will be widely understood that my right hon. Friend has to make a careful judgment as to what would ensure the further large-scale participation of the oil companies for the good of the new oilfields and the people of Britain. On the other hand, there is the question whether a propaganda campaign is not at present in progress in which some of the oil companies are deliberately exaggerating the difficulties. Will my right hon. Friend assure the House that he will be very watchful that the Government do not fall for any such exaggerations?

I am not aware of any specific campaign. There has been a reaction to the proposal by my right hon. Friend to impose petroleum revenue tax, but taxes are normally not received with cries of enthusiasm by those who are to participate in the contribution to them. One must allow for a certain pardonable vigour with which taxes are received. I am not aware of any campaign. Indeed, I have had very amicable discussions with the oil companies. I found them most responsive and understanding to the need to gratify the purposes of the British people in respect of the title to a share of the oil. We are proceeding to discuss this very problem.

Did the Chancellor of the Duchy say to any oil company in regard to existing licences that unless it was prepared to accede to a 51 per cent. Government stake he would use legislative pressure to gain it?

I made it absolutely plain to the oil companies, first, that the Government would scrupulously honour all their contractual and commercial obligations. Secondly, I made clear that if they did not feel able to participate on the terms I outlined, or if they preferred not to participate at all, I had no statutory powers. I had to tell them that it was very possible that if they did not feel free to participate, the Cabinet would be free—the hon. Member for Bedford (Mr. Skeet) does not need to lean forward in his seat as if to leap upon me. I told them that the Cabinet might feel obliged, if it were unable to satisfy its objectives, which seem to us fair and reasonable and not incompatible with the interests of the oil companies, by voluntary agreement with them, to nationalise—

The hon. Member should permit me to answer the question. I was saying that the Cabinet might feel obliged to nationalise that proportion of the licences that it thought right to nationalize, I made it absolutely plain, however, that if the Government did so—and I could not say whether they would or would not—there would be full and fair compensation as we have always provided on such occasions. There was no blackmail—merely an indication of a legitimate objective which I hope we may achieve voluntarily but which, if we do not, we would achieve only on terms of complete propriety and respect for our obligations.

I was amazed to hear my right hon. Friend say that he was not aware of the campaign by and for the oil companies. On this important question of the fuel and energy resources of Britain will my right hon. Friend listen to the back benchers who had perforce to serve on the Oil Taxation Bill Standing Committee and who are now trying to tell him of the campaigns and pressures by the oil companies in the interest of profit. We in the Labour Party are concerned that the oil resources of this country should be conserved for the people of Britain in the first instance. My right hon. Friend should listen to his hon. Friends who served on that Committee.

I am never obliged to listen to oil companies but I am always obliged to take into account what is said by my right hon. and hon. Friends. It will be for the House to decide what the rate of PRT will be, for it is that rate which will determine what is an appropriate division of the fruits of the North Sea between those who have brought their capital, know-how and effort to bear and the British people to whom the North Sea belongs.

Did the right hon. Gentleman explain to the oil industry in New York what conceivable purpose there is in trying to get 51 per cent. participation if the Government are not looking for any additional revenue from participation, and if, as will be the case, they are to take express statutory powers to control the development, destination and rate of depletion of the oil? What is in it for the taxpayer?

We want 51 per cent. participation in order to achieve for the British people the title to a great part of the oil itself and so that it may be at the disposal of the British National Oil Corporation for such national purposes as we think desirable and for such developments of the corporation as well appear appropriate when the oil is flowing.

Order. I would like to call everyone who wishes to ask a question on this topic, but it is a matter for debate and we must move on to the next business.

On a point of order, Mr. Speaker. You will recall that I raised some time ago the question of the appearance here of my right hon. Friend the Chancellor of the Duchy of Lancaster. Today his presence has been welcomed and he has answered at least one Question, but the matter has not been satisfactorily or completely resolved. I do not expect my right hon. Friend to be here as often as I am, but I expect him to be present to answer Questions not on an ad hoc basis but according to a system which is similar in content, perhaps if not in time, to that of many other Ministers who have to present themselves at that Dispatch Box. We want a properly regulated system in which the Chancellor, with his new-found responsibilities, as described in a Written Answer to me today by my right hon. Friend the Prime Minister, is to answer on a proper and regular basis.

Further to that point of order, Mr. Speaker. Perhaps I may be permitted to point out, or to invite you to point out, that this is a matter for my right hon. Friend the Prime Minister and that it is not a decision for me. However, it follows automatically from the Written Answer referred to by my hon. Friend the Member for Bolsover that I shall be available to Members who desire to question me on my duties.

I was about to say that for once—and not necessarily for the last time—I had sympathy for the point of view expressed by the hon. Member for Bolsover—

So far as my rulings are concerned, I can manage without the hon. Member's. As the Chancellor of the Duchy has pointed out, this is a matter of ministerial responsibility. It is not a matter for the Chair but one which must be arranged by the Head of the Government, the Leader of the House and the usual channels. It is not a matter for me.

Further to that point of order, Mr. Speaker. Are you saying that if the Prime Minister decided that his Ministers should not answer Questions, the House would have no power over them?

There is already a power of transfer of the right to answer, over which the Chair has no control. It is perfectly possible, for example, for the Secretary of State for Energy to say, if a Question is addressed to him, that he has asked the Chancellor of the Duchy to reply, and the latter, in replying, would say, "By leave, I will answer this Question," or "I have been asked to answer this Question." That is a practice over which the Chair has absolutely no control.