asked the Secretary of State for Foreign and Commonwealth Affairs if, in the light of recent events in Vietnam, he will now recognise the Provisional Revolutionary Government.

My best information is that representatives of the South Vietnamese liberation forces are in contact with President Minh and his Prime Minister. I should prefer not to anticipate the outcome of these discussions. I am keeping the matter under urgent review.

Does my right hon. Friend agree that if we are to have anything to do with South Vietnam in future we shall have to recognise the Provisional Revolutionary Government? Would it not be better to take immediate steps towards recognition of that Government rather than cling to the remnants of a completely outdated and now failed American policy in Vietnam?

In the circumstances I have described it is not yet clear what the successor Government in South Vietnam will be. It may be that later in the day this will become clear. I am watching the situation carefully.

Today the curtain has come down on a generation of war in Vietnam. Three thoughts are uppermost in our minds. The first is one of sympathy for those whose country and whose lives have been ravaged by war. The second is one of regret that the parties concerned were not able to achieve a political rather than a military solution to their problems. Finally, we feel relief that at last it is all over. We shall want to make what contributions we can towards binding up the wounds of this long and bloody war.

As the Minister has fairly said, what has happened in Vietnam is clearly of the greatest importance and could well be a turning point in the history of Asia, if not of the world. May I, therefore, with your inulgence Mr. Speaker, ask the Minister three questions?

First, does the right hon. Gentleman agree that the Communist conquests of Vietnam and Cambodia represent a breach of the spirit and, indeed, the letter of the Paris Agreement and, as such, are a defeat for the rule of law and for the whole concept of peaceful negotiations as a way of settling disputes?

Secondly, will the Minister of State tell us what residual obligations still lie upon the British Government in respect of South-East Asia—to Vietnam under the Paris Agreement, to Thailand under SEATO, and to Malaysia and Singapore?

Thirdly, will the right hon. Gentleman accept, as Conservative Members accept, that no defeat for America can possibly be regarded as a victory for peace and freedom anywhere? Will he, therefore, use his influence to keep the United States, as far as they are willing, committed to the defence of the free world, including Europe?

I agree with that part of the hon. Gentleman's supplementary question in which he referred to the gravity of the events. I shall not at present try to apportion blame for the events of these months and years. More than one party has been in breach of the Paris Agreement.

Her Majesty's Government's residual obligations in respect of Vietnam under the 1954 Geneva Agreements have been overtaken by the new international agreement, and the International Conference on Vietnam in 1973. The most important international obligation imposed on us is to refrain from any action which is at variance with the provisions of the Pads Agreement between the parties to the Vietnam conflict.

The hon. Gentleman referred to the effects of the Vietnam situation on the United States, and that country's rôle in the world. On 10th April President Ford told the Joint Session of Congress that events in South-East Asia must be kept in their proper perspective, that no potential adversary should believe in a slackening of the nation's will, and that America's destiny had never been more closely linked with that of Western Europe. Those are wise words, and I share those beliefs. I do not go along with those who want to use the Vietnam situation to weaken America's relations with Britain, with Europe and with others.

Does my right hon. Friend agree that although when Tory Members were in Government they rushed with unseemly haste to recognise what the junta did in Chile, at this stage they refuse to pursue an honourable course on this matter? Does he further agree that the rape of Vietnam by the dropping of napalm on children by those who recently said that they wanted to help orphans and the ravaging of a small nation by the most massive bombardment that has ever occurred in the history of mankind was one of the most disgraceful episodes that has ever happened and, therefore, that immediate recognition of the Provisional Revolutionary Government would be acceptance of a political reality and could only advance the cause of all mankind?

There have been terrible events in Vietnam. My hon. Friend has referred to some of them. Terrible actions have been carried out by both sides. We should not have our eyes blinkered to some of the horrors which have been committed by both sides in this terrible war. Today we should be looking to the future, conscious of the end of a ghastly period in the history of that part of the world. I do not think that it helps to rush into judgments and recriminations.

Although at the appropriate time Her Majesty's Government will no doubt follow the traditional British practice that recognition of a foreign regime depends not on the test of moral approval but on the test of capacity to exercise jurisdiction, will the right hon. Gentleman nevertheless make it clear to the Provisional Revolutionary Government or any would-be Government that friendship and moral approval can be acquired only by humane conduct and a liberal and democratic attitude?

The judgments that we shall have to take in deciding—as we have to decide, I expect, very quickly—on the question of a successor Government, will be made on the traditional criteria. I doubt whether our first action in doing so will be to preach any sermons.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on his efforts to secure the transfer to the United Kingdom of the assets of United Kingdom citizens expelled from Uganda in 1972.

We continue to press the Ugandan Government on this matter, and will seek an early opportunity to renew our discussions.

Will the hon. Lady keep in mind that nothing will do more to encourage the Ugandan Asians who are now working and making a useful contribution to life in this country than a real hope of getting some of their assets out at last? Will the Government now pursue this matter with more energy and urgency than hitherto?

As the hon. Gentleman is aware, officials went to Uganda last year for discussions. Our acting high commissioner saw the President as recently as 18th April. We have no reason to believe that the door is closed. I take the hon. Gentleman's point that people who have come here from Uganda are very anxious, but I can assure him that we are not dragging our feet.

Will the hon. Lady nevertheless bear in mind the fact that there is an impression abroad that in pressing the claims in Uganda, Tanzania and Zaire this Government are some what less than anxious to protect the rights of our nationals?

I am sure that the hon. Gentleman would not in any way contribute to such an impression if it exists abroad, but would always say, as I am saying how, that in all these countries we are doing everything in our power to put pressure on the Governments to get the matters settled. It is a matter of fact that some Governments have made it clear that they intend to settle but they are not able to settle at this moment.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about his recent discussions with the Foreign Minister of Israel.

I have nothing to add to the reply given by my right hon. Friend the Lord President in the House yesterday.

Does my right hon. Friend recognise that the State of Israel stands ready to make territorial concessions in return for peace and secure frontiers, and to that extent is prepared to see a resumption of the Kissinger initiative or to go to a reconvened Geneva conference? Does he recognise also that because Britain will have its own oil potential many people in Israel believe that Britain does not necessarily have to take exactly the same line as other European countries?

It is important that the Government of Israel should be prepared to be involved with other countries in a new round of negotiations, which I hope Dr. Kissinger will feel able to resume in one form or another. I believe that there is an extremely important rôle for the United States in the next stages of negotiations. It may very well be that those negotiations would be in preparation for a Geneva conference. The Government recognise that there is a rôle for a reconvened Geneva conference, but preparation is absolutely essential. The United Kingdom is prepared to play whatever part may be most useful. Suggestions were made to us of individual unilateral initiatives. I do not think they would help, but there may come a time when there will be a rôle for Britain, either as part of a broader initiative or in any other way that may be suggested to us.

When the Foreign Secretary was in Dublin, did he discuss with his EEC colleagues the possibility of a European initiative in the Middle East which would have as one of its main aims the formulation of a realistic approach by Israel towards the Palestinians and the creation of a dialogue between the Israelis and the Palestinians, without which there will never be lasting settlement in the Middle East?

Without necessarily disagreeing with the hon. Gentleman's concluding remarks, I should say that we have discussed this matter with our European partners, including the discussion in which my right hon. Friend took part in Dublin, but our conclusion is that we cannot at this moment see a useful initiative which members of the EEC could take.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on developments in British policy towards States and territories in Southern Africa.

asked the Secretary of State for Foreign and Commonwealth Affairs if Her Majesty's Government raised the question of the situation in Southern Africa at the Commonwealth Conference.

There has been no change in the policies which my right hon. Friend announced on 4th December. We shall continue to make a full and constructive contribution towards a peaceful solution of the region's problem. Problems in Southern Africa are a central issue at today's meeting of Common wealth Prime Ministers in Kingston.

I welcome the efforts being made by Her Majesty's Government, in line with the South African and other African Governments, to bring about détente in Southern Africa, but may I take it from the right hon. Gentleman's reply that the Secretary of State for Foreign and Commonwealth Affairs will be taking advantage of the Common wealth Conference to try to persuade African nationalists and leaders of African States there to do their best to end the terrorism in Rhodesia which is spoiling the atmosphere for a settlement?

Previously in the House I have recorded the Government's appreciation of the rôle of the three African presidents and also of the rôle of South Africa in helping to bring about a détente. There are important discussions going on in Kingston. My right hon. Friend yesterday had meetings with the Foreign Ministers of Tanzania, Botswana and Zambia. From these discussions and the discussion which will take place with Bishop Muzorewa we hope that progress can be made.

In the light of the Security Council's resolution on Namibia in December, what representations have Her Majesty's Government made to the Government of South Africa? Can my right hon. Friend throw some light on the deliberations in the Security Council on the question whether Namibia is to be welcomed into membership? As the African leaders are in Kingston, what proposals will the Government make to Commonwealth leaders to bring the illegal régime in Rhodesia to an end at the earliest possible moment?

Together with France and the United States, we made known our views about Namibia to the South African Government on 22nd April. This underlines the importance that we attach to an early solution of the problem. Our position is and has always been that South Africa should grant Namibia self-determination and independence, and should do so soon. These views have been fairly stated by the three Governments to the Government of South Africa.

It was made clear by my right hon. Friend in discussions which we had with SWAPO representatives that if at the appropriate stage Namibia were to apply for membership of the Commonwealth we would wish to support that application.

Rhodesia is probably the central issue at Kingston today. We shall have to see what sort of initiative comes from the Commonwealth Conference, and whether there are particular initiatives that can be taken by Her Majesty's Government in the light of the changing situation.

Is the Minister aware of the suggestion that once Mozambique becomes independent in June it may desire to impose full sanctions against Rhodesia and will expect the Commonwealth countries, and Britain in particular, to support such a move? Will the hon. Gentleman say what will be the British Government's attitude to such a suggestion, and whether they will provide funds for the imposition of sanctions if Mozambique requests that course?

The Provisional Government of Mozambique have said that decisions on this question will be taken after independence in June. Meanwhile, there is every reason to believe that Mozambique will support efforts to bring about a peaceful solution to the Rhodesia problem. This has been discussed by my right hon. Friend in Kingston, and the Government will certainly play their part in any effort to assist Mozambique in this respect.

In the light of the supplementary question put by the hon. Member for Epping Forest (Mr. Biggs-Davison), is it not the Government's view that the indigenous peoples of Rhodesia are pursuing a civil war against an illegal Government now based in Salisbury? Is it not completely tendentious to use the term "terrorists" to describe nationalists who are fighting for their future freedom?

The most helpful comment I can make is that it is an illegal régime, but attempts are being made to try to create a changed situation. We should give every assistance we can to those who have the burden of responsibility of changing policies that have been ruthlessly adhered to up to this time. It is important for the House that this should be done, because the House has the responsibility, eventually, for granting independence to Rhodesia, and for that purpose there will have to be a constitutional conference. We should do everything we can to promote such a conference.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on the latest progress of the Conference on Security and Co-operation in Europe.

Useful progress continues to be made in Geneva. Positive and constructive work is being done on the Declaration of Principles and on confidence-building measures. I hope that this will soon again be the case in Basket III, where progress has recently been rather slow.

Will the right hon. Gentleman confirm that in spite of the hopes—in which we all concurred—expressed by his right hon. Friend on 9th April about further concessions, since that date no concessions have been made by the Soviet Union on confidence-building measures or on the freer flow of people and information across frontiers? At the NATO summit next month, will the Government seek to get from all members agreement that unless the Soviet Union gives concessions of substance there will not be an early CSCE summit?

We shall not make much progress on the CSCE if we continue to talk of it in terms of concessions, which are related in people's minds to victories and defeats. I subscribe to the view expressed by the hon. Gentleman that progress has to be made on all the baskets and that we have to have a genuine agreement of substance rather than a bogus one. If that happens, as I think it will, there will be a summit, but a summit is less likely if we talk about concessions.

While avoiding talking about defeats and concessions, will my right hon. Friend say what will be the minimum requirements of the Government on Basket III—the proposals for the free exchange of ideas and information—before Her Majesty's Government will be prepared to think that the security conference will be a success?

It is not possible to stipulate minimum requirements, because in this last negotiating position, if we are not careful, minimum requirements will become maximum achievements. There fore, we have to continue to make what progress we can, a good deal having been made on the reunification of families and marriages but a good deal still being needed on the freer flow of information. Our first intention is to pursue all these objectives, make what progress we can and then, in a few months' time, decide whether that progress justifies a summit.

Will the right hon. Gentleman confirm that there is close co-operation between members of the EEC in the negotiations now proceeding, as he will remember that in July 1973, at the first stage of the negotiation, co-operation between members of the EEC and the British Government was very close and it is important that that should continue throughout all stages of this conference?

These matters are invariably discussed in the political cooperation meetings of the EEC, and I expect that they will be discussed at the next political co-operation meeting in Dublin in 10 days' time.

asked the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with the United Nations High Commissioner for Namibia and the leaders of SWAPO.

We keep in touch with leaders of SWAPO and, as my right hon. Friend the Minister for Overseas Development announced on 28th April, we are giving them educational aid. Mr. McBride last called on me on 17th April.

Is my hon. Friend aware that I very much welcome the statement made a few minutes ago by her hon. Friend the Minister of State that the United States, France and the United Kingdom have made representations to the South African Government on Namibia? What representations have been made about the intimidation and victimisation of the Ovambo people in Namibia during the recent elections, and what further initiative do the Government propose to take if South Africa does not comply with the deadline of 31st May set by the Security Council for giving up the administration of Namibia?

In reply to the first part of the supplementary question, SWAPO gave me a detailed memorandum alleging certain restrictions and making other allegations about what took place at the time of the elections. I am still studying that memorandum and I am not in a position to say which of those allegations are true and which are false, but the memorandum is a very detailed one. I am not in a position to comment on what is likely to happen if South Africa does not observe the deadline until the deadline has been reached and the position is or is not changed. As my hon. Friend said, pressures are being put on South Africa to meet the deadline.

Will the Minister confirm that Namibia consists of a number of potentially hostile groupings, the one thing that unites them being the fear of domination by the Ovambo, who represent nearly 50 per cent. of the population, and that SWAPO is Ovambo-based and should not therefore be regarded as the voice of united Namibia?

I have always been and remain prepared to meet any people who claim that they are speaking for minorities or any other groupings in Namibia. I constantly meet the leaders of SWAPO and am always prepared to do so, but I do not regard any particular grouping as sole representatives of the Namibian people. I do not hold the view that the people are split in the way the hon. Gentleman described.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will pay an official visit to the Middle East.

My right hon. Friend has no plans to do so at present.

Is the Minister aware that the Foreign and Commonwealth Secretary is the only Foreign Minister of a major Western country not to have taken the trouble to visit any country in the Middle East either in 1974 or in 1975? Will the Minister try to stir his right hon. Friend out of this diplomatic lethargy, or are we to understand from the Minister's answer to Question No. 3 that the British Government have no intention of making a contribution towards peace making in the Middle East, other than their increasingly doubtful rôle of leaving it entirely to Dr. Kissinger?

I certainly would not accept the last part of the hon. Gentleman's question. Her Majesty's Government keep very closely in touch with all the States in the area, not only by diplomatic means but by visits in one direction and another. We have made important representations. I do not accept the hon. Gentleman's conclusions. He will know that my right hon. Friend made a visit to the Middle East only a very short time before he came to office. He has said in the House that he would be prepared to go on a personal visit to the Middle East if it seemed to him, and those with whom he would be in touch, that such a visit would be a helpful initiative. It is not the wish of my right hon. Friend to stand on the sidelines, but there is no point in Britain's seeking to take an initiative unless we can see that it will produce positive results.

Although that is an acceptable position to take, will my right hon. Friend bear in mind that matters such as the reconvening of the Geneva Conference are for the Secretary-General of the United Nations?

The question of the Geneva Conference is not a matter for Her Majesty's Government. It has been suggested to us by the Egyptian Government that it would be helpful if the British Government were to take part in the Geneva Conference. We have said that we would seriously consider doing so if all the parties to the Geneva Conference, and their joint chairmen, were to invite us. I agree with my hon. Friend that it is not a matter for a British decision, but Britain is prepared to play its rôle in assisting to bring about a peaceful solution.

asked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement on the latest negotiations over Cyprus.

Her Majesty's Government welcomed the resumption of the intercommunal talks in Vienna on 28th April, in the presence of the United Nations Secretary-General. We are encouraged by the initial reports of progress in the talks.

Bearing in mind Britain's special obligation towards Cyprus, is it not curious that the British Government have not been taking a more active part in the series of talks? What pressure are the British Government putting on Turkey to hand back Famagusta—a move which would make a big improvement, overnight, in the refugee situation?

I think that the British Government have a series of obligations. Some of them concern our legal status in Cypriot matters and others concern reality. Our obligation to reality requires us not to become involved in attempts to set up a conference, and the like. Such attempts might begin with a fanfare of trumpets and a great deal of Press publicity, but might end in failure. Her Majesty's Government have believed since the Second Geneva Conference, that the best prospect of progress and peace in Cyprus is through intercommunal talks. We have done a great deal to get those talks going again. I think we can claim with some justification that we played a substantial part in bringing together the parties on 28th April. I believe that our obligation to reality requires us to hope for, and to promote, the successful outcome of the talks, rather than to mount the initiative on our own.

If that is the case, does my right hon. Friend not recollect the decision, taken by the Government which he represents, to support Dr. Luns and the NATO nations in their decision to replace the armaments prevented from going to Turkey by the United States' embargo on arms to Turkey? Is he now saying that although it is the Government's intention to allow the Denktash-Clerides talks to get under way without interference from the British Government, it is now our policy to replace the arms embargo operated by the United States by supplying arms ourselves to Turkey through NATO?

First, I am not saying that it is the Government's policy to allow the Denktash-Clerides talks to get under way; it is Government policy to encourage and promote them, which is a very different matter. As far as the arms embargo is concerned, I hope that I am in order in saying that my hon. Friend has tabled a Written Question today about what he describes as NATO policy of replacing arms which have been withheld as a result of American policy. His assumptions about NATO are entirely wrong. Our attitude towards arms to Turkey is clear. We have two obligations. The first obligation is the preservation of the situation in Cyprus as it should be rather than as it is, and the promotion of a peaceful solution to the Cyprus tragedy. Our second obligation is towards Turkey as a member of NATO. The Government will examine the merits of both propositions in an endeavour to meet both obligations.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the constitutional conference on the Seychelles.

Good progress was made but differences remained over an independence constitution. In the circumstances, I could not recommend new elections, nor that Her Majesty's Government should impose a solution. But Her Majesty's Government have agreed the next steps, including a coalition Government, an Electoral Review Commission, and a timetable for independence, subject to parliamentary approval, by 30th June 1976. A White Paper will be published soon.

Will the hon. Lady outline the political timetable that she has in mind leading up to independence? Will she say what discussions have taken place about the defence of the islands after that date?

At present we envisage that the coalition Government will be formed in June and that the interim constitution will be introduced in September. The Electoral Review Commission is to be asked to report to my right hon. Friend in December in time for the renewed constitutional conference that will probably take place in January. On the question of matters of defence, those discussions will take place the next time the whole matter is discussed.

asked the Secretary of State for Foreign and Commonwealth Affairs what changes in the attitude of international passport conferences there have been concerning the use by a wife or widow of a joint passport unilaterally.

None, Sir. It has been internationally agreed practice since 1926 that the head of a family may travel alone with a family passport but that it may not be used by his wife. Widows may hold a passport as head of a family, but they are advised not to travel with their former husband's passport.

Nevertheless, does not my hon. Friend agree that in this year particularly, it being International Women's Year, this is certainly an anomaly? Will Her Majesty's Government do something about the matter by taking the initiative?

I certainly agree with my hon. Friend, but this is an anomaly in all years and not only this year. We consulted a number of Governments about a joint passport which might be used by either party when travelling alone. We found some support but by no means complete support. In the absence of any greater support in dealing with these issues we do not consider that there would be very much point in calling a conference, but we have the matter very much in mind.

Does my hon. Friend not accept that support would come from Englishwomen, Scotswomen and Welsh women? Does she agree that this is precisely the sort of anomalous situation that suggests that a husband is a person in his own right but a wife is not?

I think that all the women in the House are very much women in their own right, with or without husbands. I totally support what my hon. Friend has said. This is not a restriction that the British Government have any part in, and we would like to see it changed. However, we do not have the necessary co-operation. I think that any persons speaking on International Women's Year, be they male or female, would do well to draw attention to this matter.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will ask the Tanzanian Government to expedite payment of blocked moneys due to United Kingdom citizens and compensation for nationalised British assets.

We are in frequent contact with the Tanzanian authorities, through our High Commission in Dar-es-Salaam, on both these matters. We welcome recent signs of progress on some aspects of the problem.

Until there are more signs of progress, in the sense that the moneys which are due to British citizens are actually paid to them, would it not be a good idea if we began to tighten our hold a little on the moneys which we pay to Tanzania in the form of aid at the expense of citizens who cannot get their money?

First, the money has not been paid at the expense of citizens who cannot get their money. Some compensation payments have been made—[Interruption.] I said that the money has not been paid at the expense of those people who cannot get their money. If Conservative Members will let me finish they will see what I am getting at. It is, after all, International Women's Year.

Some compensation payments have been made over the past year totalling about £400,000. The Tanzanian authorities recently made offers to a number of British farmers whose properties were nationalised in 1973. We understand that agreements have been reached with some companies on compensation payments. I can only repeat what I said on the last occasion on the question of aid, namely, that Tanzania is in very great economic difficulties, and if the payment of this compensation rests on Tanzania's economy being viable it would clearly be a self-defeating policy, if we want to get our compensation, to withdraw some of the aid which is assisting the country in its progress.

asked the Secretary of State for Foreign and Common wealth Affairs whether he will make a further statement about British relations with Portugal in the light of political developments since he answered on 9th April 1975.

The political developments that have taken place in Portugal since 9th April have not altered our relations with that country. They remain excellent.

I accept the Minister's difficulties in commenting on the internal affairs of another country, but does he agree that the elections were a victory for the moderate forces, particularly for Dr. Soares, who has been so encouraged by the Foreign Secretary and all those who are interested in the development of Portugal? Will the right hon. Gentleman go further and express the hope that the Armed Forces Movement will find some form of accommodation for all those who have popular support in the country?

I subscribe to the proposition that the elections in Portugal, the turn-out and the result are a victory for moderation in Portugal. Therefore, they were greatly encouraging to those who want to see a policy of moderation spreading throughout Western Europe and flourishing there. The Armed Forces Movement has a special rôle in Portugal—a rôle conditioned by the fact that Portugal has been without democratic institutions for the last 50 years. I have no doubt that a combination of the AFM on the one side and the political parties which stood in the election last week on the other will bring Portugal to a democratic solution of its problems—a solution which will be remarkably successful if they take account of the difficulties which they have experienced in the last half century.

Should not the House congratulate the moderate party of the Centre Left on its victory and also congratulate the Armed Forces Movement on holding free elections after 48 years of dictatorship in Portugal? Will the Minister now make clear to the Government in Lisbon that Her Majesty's Government will wish to welcome Portugal to the Council of Europe as soon as a Parliament is elected in the same free manner as a constituent assembly?

I have already had the privilege, in a ministerial meeting at the Council of Europe, of saying how much Her Majesty's Government would welcome Portugal's inclusion in that body as soon as the election of a Parliament makes it possible. I am sure that the demonstration of friendship and understanding by the Community, as well as more material aid policies, are what the West should do to support Portugal. Her Majesty's Government will continue to support those policies.

Will the Minister confirm that Portugal will be eligible for membership of the EEC if and when it becomes genuinely democratic?

Portugal will be eligible for membership of the EEC when—and only when—it becomes a democratic country in the full sense of the word. The House will recall that Portugal has already applied to the EEC for a special arrangement, which is more than an association agreement but a little short of full membership. Her Majesty's Government, like the Netherlands Government, are anxious to promote the EEC-Portuguese co-operation which the Armed Forces Movement in Portugal wanted to bring about.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about the most recent meeting of the Foreign Ministers of the EEC.

asked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about his latest meeting with the Foreign Ministers of the EEC countries.

The last occasion when Foreign Ministers of the EEC met was the Council of Ministers in Luxembourg on 14th-15th April. The Ministers discussed subjects referred to in the statement of Community business which I made on 27th March.

From the Minister's discussions with our partners, how does he rate the chances of the recently-published proposal that if there were a "No" result in the referendum we would be able, by 1st January, to negotiate a free trade agreement with the Community which would allow our goods free access into the Community without our accepting limitations on our sovereignty—limitations which have been accepted by Norway, Sweden and other EFTA countries?

I made a speech on Friday in which I said that the speed with which we concluded a free trade agreement with the Community if we were to leave that organisation would depend wholly on the price we were prepared to pay for that speed. If we were prepared to leave the Community quickly, we might be forced to do so without the relationship to the EEC which would be necessary for our continued trading success. Looking at this morning's newspapers, I think that perhaps my remarks five days ago were a somewhat optimistic prophecy about our prospects. I see that industry in Belgium has said that a Britain outside the EEC should not have a free trade agreement with the Community. That is the sort of problem we would be bound to meet if we rejected EEC membership and then asked to enjoy the benefits without incurring any of the payments.

When my right hon. Friend refers to the trading success, will he say whether, in view of the adverse balance of trade, the EEC is not more likely to miss us than we are to miss it?

I take the view that we are likely to miss each other—in other words, that we have something to contribute to the EEC and that it has a great deal to offer us. One of the things its members have to offer us is a trading base which is better inside the EEC than if we were to leave. My right hon. Friend no doubt will recall that our deficit in the EEC has multiplied fivefold, whereas our deficit with North America and the Commonwealth has multiplied 13-fold and 15-fold. I have no doubt that had our trading pattern in the last three years not changed in the way it has begun to change. Our deficit with those countries would have been greater.

Even if the other eight members of the Community were prepared to conclude a free trade agreement in the event of our departure from the EEC, does not the Minister think that it would have to include food as well as industrial materials?

It would have to include a number of matters. It would almost certainly include food. What is certain is that if we were to conclude a free trade agreement with the Community, it would be on the pattern of agreements entered into by Norway, Sweden, Austria and Switzerland, and would involve our acceptance of the Community's commercial policy. In other words, if we were outside the Community we would have to accept commercial policies without being able to influence them as we would if we were a partner within that body and participating in the Council of Ministers.

In the light of the last answer, does my right hon. Friend recognise that there is no comparison between our position and that of Norway and the other countries he mentioned, since we are by far the largest customer in the Community? Is he aware of the fact that industrial traders do not normally spit in the eye of their best customer—[An HON. MEMBER: "Ignorance!"] Would the hon. Gentleman who said "Ignorance" bear in mind that last year we sold £800 million in manufactured goods and bought goods worth £1,700 million and will he also bear in mind that last year we took 350,000 tons of butter from the Community? What on earth will the Community do with that butter and with the Volkswagens, Fiats and Renaults if the Community does not give us a free trade agreement?

I have never doubted—indeed, I have always said—that if we were to leave the Community we would be able to negotiate a free trade agreement of some sort. My concern relates to the price that we should have to pay for such an agreement. There is no doubt that a part of that price would involve acceptance of a common commercial policy—a policy which at present applies to all countries with free trade arrangements with the Community. That is the minimum price we should have to pay. To think otherwise is to fly in the face of reality.

asked the Secretary of State for Foreign and Commonwealth Affairs when he next expects to meet the Foreign Ministers of the EEC in the non Council series of meetings of Foreign Ministers similar to those held at Schloss Gymnich and Dublin.

Informal meetings of this kind are arranged when the Foreign Ministers think that it would be useful to have a general exchange of views. There are no plans at present for a further meeting.

Whilst it is a diplomatic convention for meetings between Foreign Ministers of sovereign States to be held in confidence, does not the existence of this series of meetings between members of the EEC, as distinct from normal meetings of Foreign Ministers, suggest that the foreign policy of the EEC is being hammered out as a distinct policy and that therefore we have lost a good deal, if not all, of our sovereignty in this respect?

I have never been able to understand my hon. Friend's confusion between loss of sovereignty and co-operation. It has always seemed to me that the countries of Western Europe had a great deal to gain by coming together and discussing, without commitment or sanctions, their common policies on a variety of issues. If my hon. Friend looks at the record over the past two years, he will see that there have been a number of occasions when the Community has not agreed on what its common policy should be, and when member countries have taken their individual paths. Frankly, I regret that. I think that Britain's voice is more likely to be held in authority in the world and listened to with respect if we speak within the Community according to a common Community policy. Long may that continue.

Does the right hon. Gentleman agree that the whole point about sovereignty is that it is not something we hoard or admire, like the Crown jewels; it is something used to protect and promote the best interests of the country. We are far more likely to be able to use that sovereignty within the Community to achieve our best purposes than by going outside and simply trying to admire it like somebody's cast off cloak.

I agree with that, although I do not altogether like the image. Nor did I like the image when the right hon. Member for Sidcup (Mr. Heath) used it in the House a fortnight ago. The point is this: the Lomé Agreement was a matter of co-operation between the countries of the EEC, which might be regarded by some of my hon. Friends as a reduction in British sovereignty. That reduction in sovereignty—if it was that—achieved benefits for the developing Commonwealth countries which could not have been obtained by Britain operating as an individual sovereign Power. I am prepared to make concessions on sovereignty to achieve that kind of success.

asked the Secretary of State for Foreign and Commonwealth Affairs what representations he has received from underdeveloped countries about the possible effect on them of the Common Market renegotiations.

None, Sir. However, my hon. Friend will have noted public statements by representatives of many developing countries welcoming particular aspects of the renegotiation package.

Does my right hon. Friend consider it unworthy of the Marketeers to boast about the Common Market aid schemes to under-developed countries? If we take a close look at that scheme and go through the list of countries which receive preferential treatment and the associated countries, we find that there is no mention of three of the poorest countries in the Commonwealth—India, Bangladesh and Sri Lanka.

I hope that my hon. Friend was in the House when I answered a Question a moment ago. I said that as well as the extraordinary benefits available through the Lomé Convention, agreements of one sort or another had been negotiated and were being negotiated with the countries of Asia. I have no doubt that that process will continue, and more successfully, if Britain remains in the Community.

Will the Minister also extend what he says to cover the field of the generalised preference schemes? Although we have been of considerable help in generating better generalised preference schemes in Europe, there is no doubt that alone we would not by any means be able to offer to those same countries the facilities offered by the Community.

Not only do I share the views of the right hon. Gentleman: I believe that a Select Committee of the House of Commons said that the most important sort of aid and assistance to developing countries was free access to developing markets. The general preference schemes offer that benefit to the Asian Commonwealth countries as well as those countries involved in the Lomé Convention. That is a considerable boon

asked the Secretary of State for Foreign and Commonwealth Affairs if he is satisfied with progress towards a common energy policy within the European Community.

Progress towards a common energy policy has to date been satisfactory. The Community has adopted a general strategy, which has yet to be discussed in detail, aimed at reducing dependence on imported fuels, Britain will of course retain her control over exploration for, and exploitation of, North Sea oil.

As the Secretary of State for Energy is opposed to the Government's European policies—he has revealed that by his lack of co-operation in Europe on energy matters—who will be responsible for pushing forward the Government's policies on energy in Europe?

I had hoped, vainly, that the hon. Gentleman would rise above that sort of point. The position is clear. The Government's attitude to Europe has been specified, and will be specified more clearly and increasingly loudly during the next five weeks. If the Energy Council meets during those weeks I hope that my right hon. Friend the Secretary of State for Energy will attend it. I have no doubt that if he does he will articulate the Government's policy not only clearly but honourably. That satisfies me.

Is my right hon. Friend prepared to submerge our sovereignty with regard to the control of North Sea oil and gas within the ambit of a European organisation?

Of course not. That is why my initial answer ended in this way. I shall read it again since my hon. Friend clearly missed it. I said:

asked the Secretary of State for Foreign and Common wealth Affairs whether he will make a statement on the attitude of Great Britain and the European Community towards proposals for a world conference on energy and other industrial raw materials.

There are many established international agencies where producers and developing countries discuss such matters. The hon. Member will be aware of the discussions now taking place with the Commonwealth Prime Ministers on the initiative of my right hon. Friend the Prime Minister.

Yes. We have not yet seen the Prime Minister's plans. Therefore, it is impossible to comment on them. Does not the Minister of State agree that the failure of the recent talks in Paris was a serious setback to all those who hoped for co-operation between the industrial countries and the raw material producers? Does he foresee those talks being respected? Does he believe that in the summer there is scope for the kind of major international conference, either on oil or on oil and all other raw materials, for which everybody hoped before the recent conference began?

I do not believe that the preparatory meeting in Paris was a failure. That meeting was intended to discuss energy matters and not raw materials questions in general—which is why I did not refer to that in my first answer.

The reason for the breakdown after many days of discussion was a dispute between the participants on the question whether it should be related only to energy matters, or widened. I continue to hold the view that energy, and energy alone, should be discussed in that forum. But I believe that the exploratory discussions held in Paris made some pro- gress. They provide the framework for future discussions. I hope that such a meeting can be resuscitated in the not too far distant future.

Does my right hon. Friend appreciate that in his answer to the previous Question on energy he seemed to be reasonably categoric about the control from this country of the exploitation and exploration of the North Sea oil and gas energy resources? Will he answer the question whether he can give a complete and categoric guarantee that the total benefits resulting from the exploration and exploitation of North Sea oil and gas will accrue to the United Kingdom and not to any of the other Common Market countries?

I hope that I was not reasonably categoric about exploration and exploitation; I hope that I was totally categoric in saying that matters remain in the hands of the British Parliament and Government.

The answer to the question relating to benefits from oil follows from what I said previously. The important elements of policy remain with the Government and this House. If the Government choose to concentrate the benefits on Britain, that remains the Government's right.

Does the right hon. Gentleman accept that at some future time we shall need the help of other countries to keep the price of North Sea oil above the cost of production?

I accept that in many matters concerning energy policy the day may come when we need to make agreements which will involve compromises with other countries. When that time comes, this House, Parliament and Government will be able to make those decisions unfettered by any requirements placed on them by Brussels.

Why does the Minister think that it is to our advantage to pool our sovereignty in so many areas but not in that of energy?

There are many answers to the sovereignty question. This is the basic answer: we pool sovereignty in a number of areas when by doing so we become not less powerful but more so—not less free but more so. That is my view of the sovereignty argument over recent months. As regards energy, there are special problems affecting the British economy and people which are understood and appreciated by our partners in Europe. Their understanding is a contribution towards the preservation of the right of sovereignty.

Does the right hon. Gentleman agree that it is reasonable and proper for countries in the Middle East to sell their oil at the best price they can get for it, in the same way as food-producing countries sell their produce for the best prices they can get? If the right hon. Gentleman accepts that proposition, is it not obvious that there is no more likelihood of there being so-called cheap food in the world than of there being cheap oil in the future?

I agree with that so much that it causes me considerable pain to say that that is another question.

asked the Secretary of State for Foreign and Commonwealth Affairs why Britsh passport holders were refused assistance by the British Embassy in Saigon in leaving South Vietnam during the evacuation of British Embassy staff; and if he will make a statement.

Our embassy in Saigon did all it could to assist holders of British passports registered with the embassy to leave on the special flights arranged for the British community and embassy staff on 7th and 24th April. The embassy gave all the assistance it properly could.

Without prejudging the reports which have come to this country and without accepting them as fact, will my right hon. Friend never theless agree that there is room for concern? Does he appreciate that the report of John Pilger, a correspondent of considerable repute and standing, gives rise to considerable concern? Will my right hon. Friend look further into that report and indicate that, if the conduct of the ambassador is as reported, it should be dealt with, and dealt with swiftly? I reiterate, however, that I am not prejudging the situation, because not too much reliance can be placed on newspaper reports at this stage.

I have no reason to believe that there is any basis for criticism. My information is that only one or two members of the British community remained behind for want of the necessary exit documentation, which was a matter for the Vietnamese authorities. To have delayed the evacuation of the rest would possibly have jeopardised the safety of the others.

Plenty of notice was given. The British community was first advised to leave Saigon in a warning notice delivered by messenger on 1st and 2nd April to all those registered with the embassy. A final warning was delivered to remaining members of the community on 6th April. Repeated oral warnings to leave were given between 7th and 24th April.

Does the Minister of State recognise that there are still in Saigon many Vietnamese who wish to leave and who have connections with this country? Will the right hon. Gentleman make representations through Hanoi, now that it controls South Vietnam, that these Vietnamese should be allowed to leave, and will he ensure that some of the aid earmarked for Vietnam is spent in support of those refugees from Vietnam who have left and who have connections with this country?

It is not so much a matter for us as for the people who wish to come to this country. If there are Vietnamese who want to come to Britain as refugees, I have no doubt that my right hon. Friend the Home Secretary, as he said, will look very sympathetically at any applications.

As for aid, the hon. Gentleman knows, as the House does, that a substantial amount of aid has already been made available to Vietnam. It was announced by my right hon. Friend the Minister of Overseas Development that roughly £1 million was available for relief work in all parts of Indo-China. I might add that on behalf of the European Community Her Majesty's Chargé d' Affaires in Hanoi informed the Democratic Republic of Vietnam on 24th April that the Community had decided to take immediate action to provide relief for the victims of the Vietnamese war. This includes substantial quantities of powdered milk, rice and sugar, as well as medical supplies. Costs of transport will also be met. The aid will be distributed through the International Red Cross and the United Nations High Commission for Refugees.

In view of all that has happened and is happening in Saigon, would not it be correct and decent for Her Majesty's Government to express sympathy to the Americans for what has happened to their efforts there and to express recognition of the moral right of what the Americans have tried to do throughout their time there?

I saw a statement which was made yesterday, I think, by Dr. Kissinger, and perhaps I might quote from it. He said that one lesson to be drawn from the Indo-China experience was that the United States must be

"… very careful in the commitments we make but that we should scrupulously honour those commitments we do make … I believe the experience can make us more mature in the commitments we undertake and more determined to maintain those we have."

I believe that that was a very balanced judgment by Dr. Kissinger.

rose—

Order. This Question relates to the safety of individuals and not to the general situation.

Will my right hon. Friend assure the House that, once peace is finally restored, the British embassy will be reopened, and will he undertake to examine the possibility of recognising the PRG and see to it that the British embassy assists in every possible way in the reunification of Vietnam?

The closure of the embassy was clearly, and was announced to be, only a temporary measure. The ambassador is in Singapore at present. As soon as possible, it will be the intention to reopen the embassy. As I said in answer to the original Question, the Government are looking carefully at the changing situation in Saigon, and the question of recognition is uppermost in our mind.

In view of the rapidly changing situation in Vietnam, I hope that I shall be forgiven for extending the Question slightly by asking the right hon. Gentleman to say how he has responded to the request from the South Vietnamese ambassador in London and his staff for asylum here and to express the wish that he will behave in a tolerant and hospitable fashion to that unfortunate gentleman?

I have not seen that application. However, as I said earlier, and as my right hon. Friend the Home Secretary has said, if anyone applies for refuge in this country it will be very surprising and not in accordance with our principles if we do not look very sympathetically at such an application.

With your permission, Mr. Speaker, I will make a statement about business to be taken in the Council of Ministers of the European Community during May. The monthly forecast for May was deposited yesterday.

At present three meetings of the Council of Ministers are proposed for May. Foreign Ministers will meet on 5th May, Finance Ministers on 20th May, and Agriculture Ministers on 26th and 27th May. Dates for Council meetings of Energy and Research and Development Ministers are still under consideration. It is not yet known whether they will take place in May.

At the Foreign Affairs Council, Ministers will resume their consideration of a Commission report on negotiations with the Maghreb, and on raw materials in relation to developing countries. They are also likely to review prospects for an international conference on energy, and to have a first discussion on preparations for the next meeting of EEC Heads of Government. The President of the Council may report on his contacts with the Assembly over the classification of the supplementary budget for the Regional Development Fund.

The agenda for the Finance Ministers Council has not been finalised; but Ministers are expected to discuss, among other things, the economic situation in the Community and prepartions for the June meeting of the IMF Interim Committee in Paris.

Agriculture Ministers are likely to deal with sugar imports from ACP countries, the proposed revision of the basic wine regulations and various veterinary matters.

I am grateful to the right hon. Gentleman for that statement about an important series of meetings. Since the House is to go into Recess on 23rd May and a number of those meetings will take place either immediately before or during the Recess at a time when the referendum campaign will be reaching its culmination, what arrangements are to be made by the Government to make objective statements about what is achieved, especially at the Agriculture Ministers' meeting and, of course, at the Finance Ministers' meeting because of their obvious repercussions on the very large question which will then be in debate across the country?

May I put one specific matter to the right hon. Gentleman? In view of the fact that the Foreign Ministers are to consider raw materials—a subject which is already under discussion among the Commonwealth Heads of Government in Kingston—will the right hon. Gentleman make some arrangement to keep the House rather better informed on this important topic, which affects commodity agreements on raw materials all round the world?

As regards raw materials, I think that there is already the opportunity for the House to be better informed and, indeed, to express its opinion, since the Scrutiny Committee examined this issue on 8th April and thought it a proper subject for debate. I have no doubt that my right hon. Friend the Leader of the House will be announcing when that debate will take place.

On the more general issue of keeping the House notified, I think that we must behave in the next five weeks as we do in any parliamentary period, including those covering Recesses. There will be the usual processes for scrutiny. Where appropriate, papers will go to the Scrutiny Committee. Statements will be made when it is thought right. At the end of each Council meeting—and the relevant one is the Agriculture Ministers' meeting on 26th and 27th May—the Minister in charge will hold some sort of Press conference at the conclusion of the meeting. The hon. Gentleman asked me to ensure a continuation of objective measures. We shall behave as always by being scrupulous to the needs of objectivity.

Will my right hon. Friend ask the Ministers to discuss regulation 836/1 of 1975, which is a regulation from the Commission requesting member States not to sign the United Nations Convention on a code of conduct for liner conferences? As this deals, among other things, with the carriage of goods from the Third World and as, according to my right hon. Friend, the EEC is so concerned, will he find out why this is and report to the House?

My hon. Friend will recall, partly because of his assiduity in these matters, that it is never my policy to comment on documents, whose numbers are so obscure that I am not sure of their contents before being required to reply. I will look at document 836/1 of 1975 and give my hon. Friend an answer later.

How do we stand over fishing limits and quotas, which were to be discussed in April? Are those matters to be discussed in May, particularly with the Danes?

My information is that fishing limits and quotas and all those matters which relate to EEC fishing policy, in conjunction with the Law of the Sea Conference, will not be discussed on 26th and 27th May. They were discussed at the last Agriculture Ministers' meeting on the initiative of the British Government, as I told the right hon. Gentleman. Discussions at other official levels are now continuing. I assure the right hon. Gentleman that we are conscious of the need to solve the problem in a way which is acceptable to the British fishing industry. I promise him that we shall continue to try to do that.

Regarding the veterinary items which will be on the agenda of the proposed meeting of Agriculture Ministers, may I ask whether it is the right hon. Gentleman's hope and expectation that at that meeting his right hon. Friend the Minister of Agriculture, Fisheries and Food will be able to resolve the present difficulties whereby the French are effectively preventing any exports of British cattle and sheep livestock?

This is the sort of matter which will be discussed under that heading. The Community has a number of health regulations governing the exportation and importation of livestock which we hope to resolve at that meeting. It is impossible within the rules on my statement and wrong in terms of order for me to describe our hopes and prospects for the meeting. However, the hon. Gentleman is right to say that a resolution of the problem of health circumstances on the importation and exportation of livestock is what will then be discussed.

Will my right hon. Friend confirm reports that at the next meeting Ministers concerned with development will discuss the possible allocation over the next five years of £380 million to India and other Commonwealth countries? Will he also deny allegations that the next meeting is being held up by Her Majesty's Government?

I can confirm the first of my hon. Friend's questions with the greatest ease and pleasure. That is the subject which is next to be discussed. If it is discussed successfully, substantial Community funds will go to the Asian Third World.

I can be equally categoric about the second question. There is no suggestion, and no Community capital suggests, that this meeting is being held up by Her Majesty's Government. Suggestions that I read in the newspapers at the weekend that the meeting was being specifically held up by my right hon. Friend the Minister of Overseas Development are wrong. I very much regret that that suggestion has been put about.

When the Minister looks at the instrument on liner conferences, will he particularly look at that part which has such a beneficial effect on employment in our own shipping industry? Will he also tell the House at what time the Agriculture Ministers will be resuming their discussions on the stocktaking paper prepared by the Commission?

I take note of the right hon. Gentleman's point on liner conferences, which was perhaps a point not so much of business as of clarification.

It was thought that Ministers might resume their examination of the stocktaking paper in May. But it now seems appropriate, if we are to have a successful pursuit of the objective of that policy, that it should be examined for a little longer by experts of one kind and another. That will continue in May, and it is possible, though not certain, that the Ministers will return to it the following month.

Regarding regional development, will the Minister inform the House when the Common Market will honour the commitment to establish a regional fund of £1,500 million?

It will establish that commitment, as was always intended, at the end of the year. The last problem, which was how the fund should be designated in Community law between obligatory and non-obligatory expenditure, has, I understand, been resolved, and the decisions taken at the Paris summit before Christmas can be implemented. I agree that the Community has been a long time implementing its Regional fund. I hope that it can be implemented quickly, that it will expand, and that Britain will continue to benefit from it for many years to come.

Is my right hon. Friend aware that I welcome his assurance that the United Kingdom Government are not holding up the discussions on aid and trade with India and other countries? Will he explain what is delaying the discussions? I understand that they were supposed to begin on 20th March.

I think it is the normal processes of requiring nine, if I may use the word non-contentiously, sovereign Governments to come together to make an agreement which involves some of those countries paying substantial sums to a mutually agreed goal. A great deal of preparation and consultation are necessary if the Community is not to ride roughshod over individual member States. The normal processes are now going on.

If the Agriculture Ministers are not to discuss fishing at the meeting in May, will the right hon. Gentleman ensure that an early date is fixed so that the matter can be discussed with the results of what the officials are now talking about, because delay in coming to a conclusion on the fishing interests is of supreme danger to us?

I understand the point very well. In practical terms I could argue, though I do not, that we could delay the solution of the problem until the end of the decade since Britain has a derogation from the Community fishing policy until 1980. I do not make that point, because the hon. Gentleman is right to point out that the fishing industry is entitled to a good deal more security than it feels at the moment. That requires us to solve the problem appreciably before the end of the derogation. We shall do that as quickly as we can.

On the regional fund, to which my right hon. Friend referred, I was under the impression that the figure had been fixed at £150 million for the next three years. My right hon. Friend referred to £1,500 million. Will the figure of £1,500 million apply, or am I right in assuming that for the time being the figure is £150 million over the next three years, of which Britain will probably get £20 million a year?

I hope that I did not refer to the higher figure. I did not intend to do so. Reassuring voices behind me tell me that I did not. If I am wrong and I did refer to that figure, then it was a mistake. The smaller figure will apply.

Does the right hon. Gentleman appreciate how much we agree with the statement, which gives this House the greater degree of sovereignty that we all expect? During the referendum campaign, if any wild rumours are established which are incorrect, will he take the opportunity of correcting them in the Press if the House is not in session?

I promise the hon. Gentleman that I shall do my best to correct wild rumours. But he must understand that objectivity is not indivisible in these matters. Some of my hon. Friends and others outside this House may believe that my corrections are wilder than the rumours that I am trying to correct.

I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration; namely,

"the imminent closure of the Empress cotton spinning mill in Ince"

I submit that the imminence of the closure is specific. It is important because, as the last cotton spinning mill in my constituency and in the Wigan area, its closure would mean that the workers' skills would be lost, as there is nowhere else for them to go, and they will be thrown on the scrap heap of mounting unemployment in an area which already has unemployment well above the national average. The loss to the area generally will be most damaging.

It is urgent because only an announcement that at long last the Government will take immediate action on textile imports can save this mill and prevent its closure. At the end of this week, the statutory notices to workers will be issued unless such an announcement is made. Nothing could be more urgent than this. For all these reasons, I beg to ask leave to move the Adjournment of the House.

I am obliged to the hon. Member for Ince (Mr. McGuire) for his courtesy in having let me know yesterday of his intention to raise this matter today. I have listened carefully to what he has said. He has also written to me on the matter.

I accept at once the importance and urgency of the case as he has put it, and it is not for me to pronounce on the facts. I have to make a procedural decision as to whether or not I think it proper to disrupt business already arranged in a very full programme to permit a debate on this matter.

I am directed by the Standing Order not to give the reasons for my decision.

In spite of that, I have from time to time referred to general considerations which I have to take into account. If I were to accept this application, however well-founded it may be, where would I ever draw the line? Nevertheless, for many obvious reasons, I take this matter very seriously. If the hon. Gentleman will consult me privately, that might be helpful; I might be able to suggest ways in which the matter could be further ventilated in the House.

So I am afraid the answer to this particular application must be "No".

I beg to move, That the Bill be now read a Second time.

This is a historic week for Britain and the British people.

A disastrous week.

This is the week which will see the start of the passage through Parliament of measures which will place in the hands of the British people control of the last two basic resources the use and deployment of which are not answerable to the British people and their Parliament.

In a speech at Oxford in the October General Election last year, my right hon. Friend the Prime Minister spoke about these two resources:

"God gave the land to the people, he gave the seas to the people and the treasures beneath the seas. There is no record that when God made the firmament and the seas he ordained that the profits from the wealth beneath the seas should accrue in full to private investors or rich multinational oil companies."

Yesterday, the House gave a Second Reading to the Community Land Bill which deals with the first of these resources. Today, we ask the House to give a Second Reading to this Bill, one of the most important ever to be brought before Parliament—

Nonsense.

It is a Bill which helps to fulfil our manifesto pledge—

Rubbish.

I hope that I shall not be the object of continual barracking, particularly by the hon. Member for Bedford (Mr. Skeet). I like him a great deal, but such barracking gets a little tiring. I hope to speak for about half an hour, so I hope that he will wait to express his abuse until he makes his own speech.

The Bill helps to fulfil our manifesto pledge to

"Take majority participation in all future oil licences and negotiate to achieve majority State participation in existing licences. Set up a British National Oil Corporation … Take new powers to control the pace of depletion, pipelines, exploration and development".

The discovery of oil in quantity on our Continental Shelf is one of the most important events in our economic life since the Industrial Revolution. By 1980 the annual saving to our balance of payments, and the annual increase in Exchequer revenue, will both be running at thousands of millions of pounds a year. There will be unprecedented new opportunities for our offshore supplying industry. Our production in the 1980s will be 100 million to 150 million tons of oil a year.

At this level of production we shall be producing all the oil we need for our own use. We shall be producing it on the same scale as the present production of Kuwait, Libya, Iraq and Nigeria. We shall become one of the world's leading producers.

But the arrangements we inherited from the Tory Government gave the British people totally inadequate control of their oil, and a totally inadequate share of the benefits flowing from it. The purpose of the Bill is to ensure that the British people will exercise their due rights over their oil in a proper and mutually acceptable relationship with the oil companies.

The first offshore licences were issued in 1964. The first discovery of gas was made in 1965, and during the following few years further big discoveries were made. These finds were all of gas.

All gas for use as a fuel had to be offered for sale to the nationalised gas industry at reasonable prices. In this way we could ensure that a fair share of the profits came to the nation.

In 1969 the Ekofisk oilfield in the Norwegian sector was discovered, and in 1970 Forties was discovered in the British sector.

I am grateful to the right hon. Gentleman for giving way so early in his speech. When he said that the arrangements for gas were devised to ensure that the British nation benefited properly, it would have been fair to add that the arrangements were made under legislation passed by a Conservative Government.

I acknowledge that. In those circumstances I know that when I come to the more controversial section about the British National Oil Corporation and participation, the right hon. Gentleman will agree with it, because some of those proposals are comparable to what was done under the Conservatives.

As I was saying, the first oil was the Forties oil, discovered in the British sector in 1970. It was clear at that time that the North Sea was a major oil province. But what happened then? In 1971–72, the Tory Government issued a big new round of licences. The emphasis in this round was on the areas in the northern North Sea which had recently been shown to have oil potential, and most of them were in fact licensed in this round.

But in this new round of licences there was no change in the terms on which the licences were offered. They were virtually the same as those fixed when the North Sea was an unproven area, generally thought to contain only gas.

This was first brought to light by the Public Accounts Committee in 1972. Much of the credit for the fine report of that Committee belongs to my right hon. Friend the Chancellor of the Duchy of Lancaster and my right hon. Friend the Paymaster-General. I am sure that both my right hon. Friends acknowledge, as I do that my noble Friend the Minister of State for Energy is not without credit himself in this context. As the Public Accounts Committee showed, not only were the terms unchanged but the Tory Government did not even consider changing them.

Then, having let the horse out of the stable, the Government decided to inspect the stable door. Once the licences had been issued, in early 1972 a review of licensing policy began. But by the time that Government left office, two years later, no conclusions whatever had been reached—two years of inexcusable delay and uncertainty.

This Labour Government were returned to office determined to put that right—and with a mandate to put it right, the mandate we are fulfilling in this Bill, together with the Oil Taxation Bill, which is awaiting Royal Assent. Four months after we took office we announced our policy in the White Paper of 11th July last year, "United Kingdom Off-shore Oil and Gas Policy".

Those proposals came under three headings: first, Government take; secondly, special measures to assist Scotland, Wales and the English regions in need of development; thirdly, the real core of our proposals, Government control and participation.

The major part of our fiscal proposals was incorporated in the Oil Taxation Bill, which was introduced into the House in November. The remaining part is in the current Finance Bill.

As part of our policy to assist Scotland, Wales and the regions, my Department's Offshore Supplies Office has been moved to Glasgow, 40,000 jobs have been created in Scotland, with more to come, and recently my right hon. Friends the Secretaries of State for Scotland and Wales published their proposals for Scottish and Welsh Development Agencies.

Now the legal framework for State participation and control is embodied in the Bill. Together with the Petroleum Revenue Tax and ring fence, the Bill completes our proposals for offshore oil. All concerned—our own Parliament, together, with the oil companies—can now go ahead in full knowledge of the Government's plans and intentions.

The Bill's objective is to ensure that the British people derive maximum benefit from their offshore oil and gas resources. It provides the means for public participation, makes possible greater public control, and provides powers to facilitate development.

First I should like to say something about participation. The oil offshore is already the property of the nation. Lord Home, as he once was and now is again, nationalised it in 1964 during his period as Sir Alec. But as soon as the oil is produced by a licensee, it becomes his property, and the nation has no further title to it. Except for the United States, every major oil-producing and gas-producing nation in the world has taken participation in the producing industry. I am not referring only to the OPEC countries, but also to Norway. Canada, Australia, New Zealand, and all the EEC members with substantial oil and gas production or prospects—France, Italy, Holland, Ireland and Denmark.

Only last month groups including most of the international majors accepted licences for Greenland—a much more expensive and risky area than the North Sea—on extremely tough participation terms. The House may also have read only this morning that the Irish Government have just announced tough new terms, including provision for 50 per cent. participation.

Is it not fair to say that in that list many of the countries have not abrogated the existing terms under the existing licences? Why is the Minister seeking to do it here?

Because most of those Governments had already made provisions, the sort of provisions that should have been made before the fourth licensing round. France, Italy, Holland and New Zealand participate in finds already made. Their provisions are comparable to the provisions that we are making.

The Opposition's bluster against State participation is only synthetic. The right hon. Member for Sidcup (Mr. Heath) made this clear in a speech in the House 13 months ago, when, as Leader of the Opposition, he declared that he regarded carried interest for existing licences as a major option and added that a Government could do what they liked with future licences. If the Opposition Front Bench seek to repudiate their former leader on this issue, as they have on so many others, they can hardly repudiate, just yet at any rate, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), who, a year ago to the day, admitted in a burst of candour in Oslo that

"the last Conservative Government had by no means ruled out" participation.

I do not yet know the views on the subject of the right hon. Lady the present Leader of the Opposition. It is a hard choice for her. If she agrees with her right hon. Friend the Member for Wan-stead and Woodford she has the unpalatable task of agreeing also with the right hon. Member for Sidcup.

We believe that participation, is the best way of ensuring that the nation shares fully in the benefits of North Sea oil. Participation gives the nation a direct title to the oil produced. It creates a partnership between the people of this country and the oil companies. Further, only through participation can the nation acquire its own direct knowledge of, and capability in, oil and gas production.

As a result, our policies will be much better informed than were those of the Tory Government. The Public Accounts Committee Report pointed out how the previous Government had misunderstood the profits and costs of oil production. It went so far as to say that Government calculations were "misleading". By sharing risks and responsibilities with the oil companies, we shall be able to understand their problems better as well.

But, of course, our policy does not consist only of participation. When the British National Oil Corporation is fully established, it will be able to hold licences as sole licensee. For commercial fields on such licences, all net revenues will come to the nation, not the 70 per cent. in the case of royalties and tax alone.

The establishment of a complete capability under national control will reduce our dependence on the oil companies. We value their expertise. They have been pioneers in one of the most difficult projects ever known, requiring immense technical skill and great individual personal courage on the part of the men who work in some of the most dangerous and inhospitable waters on earth. We want to continue to attract their expertise, and to work in partnership with it. But no other major producer outside the United States has thought it wise to be completely dependent on the oil companies, and all over the world the companies have accepted that.

Participation has yet another advantage. It provides the framework in which the State can help licensees to raise the very heavy costs of development. A field of Forties size starting now would cost about £1,000 million to develop. The sums required are colossal. The Tory Government in their last licensing round let in some small licensees—with no special contribution to make—who would be out of their depth in a children's paddling pool.

But costs of development are now so high that only the biggest companies can expect not to meet difficulties in raising money. This is not because the North Sea is no longer profitable—far from it—but because they have to borrow the money, and any prudent lender is bound to compare their resources with the scale of their borrowings.

The development of offshore oil requires resources on such a massive scale that it is difficult for the private sector alone to provide them. That is why I am sure that if the Conservatives had remained in office they, too, would have had to put into practice their readiness to consider participation to which I have referred. Indeed, what else could they have done if they had been in office and licensees had come to them, as they have come to us, for help in raising money? Would they have provided the money, with no compensating stake for the British people, who really provide the money?

The Bill provides the means for participation by setting up the BNOC. But it does not by itself bring about participation in future licences. This will be laid down in the conditions under which future licences are awarded. For existing licences it will be achieved through free and voluntary negotiation.

A number of major oil companies have shown readiness to discuss our participation proposals. In this connection, the House will wish to know that during the last few days the chairman of British Petroleum has told me that his company is prepared to enter into discussions with the Government with a view to agreeing terms for majority State participation in BP's North Sea oil holdings. Deminex has agreed in principle, and we shall have 51 per cent. of Burmah's stake in Ninian and Thistle. I am glad to be able to inform the House that two further companies, Tricentrol and Blackfriars Oil Company, have accepted the principle of participation in their shares of the Thistle and Argyll fields, and Blackfriars accepts it for any further commercial finds it makes. The benefits to be secured through participation agreements and future licences will be held by BNOC on behalf of the people.

Before the right hon. Gentleman leaves the subject of financing, which he appears to be about to do, will he draw a specific line between the rather misleading figures he gives the House? He has spoken of a cost of £1,000 million for the exploitation. The cost of exploration is not in the same league. Once discoveries have been made, the raising of capital is nothing like as difficult as the right hon. Gentleman is trying to imply.

I have not left the subject of financing. I shall be returning to it shortly, and some of the points the hon. Gentleman mentioned will be dealt with then. I entirely agree with him that there is a great difference between development expenditure and exploration expenditure, but our proposals in the Bill will help both types of expenditure to a great extent. We shall look extremely critically at the proposals that come before us if some of the licensees ask for our help.

I have been describing some of the functions of the British National Oil Corporation. I can tell the House that its headquarters will be in Glasgow. If the House gives the Bill a Second Reading tonight, I hope in due course to nominate an organising committee, including a chairman and chief executive.

The House will understand that pending passage of the Bill it may be necessary for my Department to enter into commitments on behalf of the corporation. Any expenditure incurred after Second Reading as a result of such commitments, and the costs of the organising committee, will be met in the first instance from the Contingencies Fund and will be recovered from the corporation in due course.

I want to make it clear that BNOC will not be the means by which the Government exercise control over private licensees. It will be the Government who continue to issue licences, and to administer all the licence controls, both those in existing licences and those added to them by the Bill as well as those laid down for new licences. For its part, BNOC will hold licences issued by the Secretary of State and will be subject to licence controls like a private sector licensee.

The BNOC's job will be different and distinct. It will hold the Government's participation interest in production licences, in partnership with private sector companies. In these cases it will, of course, act commercially. Its future partners need have no fear that it will try to force the consortium to act contrary to ordinary commercial criteria.

But BNOC may also become sole licensee and operator in some future licences. In this rôle it will not necessarily act commercially. It might be in the national interest, for example, for it to explore and locate reserves and yet not develop them. Therefore, the BNOC can play an important and unique rôle, and one of a non-commercial character.

Again, BNOC will be available to give the Government advice on oil matters generally and to perform other services for them, normally on repayment. It can, for example, be asked to take over management of the Government's pipeline and storage system, which is maintained for defence purposes. It could act for the Government in any future barter deals such as that arranged with Iran in 1973, although I want to make it clear that none is at present in prospect.

Oil is of enormous importance in modern life. It is impossible to predict the uses to which a public sector body with expertise and knowledge about it might, in the national interest, be put. The BNOC will have powers to go into oil refining and distribution, with the consent of the Secretary of State.

It will take time to acquire the necessary resources and expertise and its clear priority must be to establish itself in oil production. But, subject to Government approval, it will have maximum flexibility to make use of the oil and the knowledge of the oil industry which it will have gained from participation in production. When it extends into refining and distribution it will, of course, do so on a commercial basis. It will not be used to compete unfairly with private sector companies.

The BNOC, then, will have a mixture of functions. In some—the holding of production licences with private sector partners, and in downstream activities—it will act commercially. In others—exploration to establish the size of our reserves, the performance of services to the Government—it will act in effect as an agent of the Government. Its actions will be of enormous importance to this country and the sums of money flowing through its accounts will be vast. Assuming 51 per cent. participation in all oilfields, its gross revenue in 1980 could amount to between £2,000 million and £3,000 million.

Its circumstances are unique and it will therefore have a structure unlike that of any existing nationalised industry. In particular, we want it to have a specially close and intimate contact with the Government. The Bill therefore provides for the appointment of two official members, for the issue to the corporation of specific and general directions, and for the payment of its revenues into a National Oil Account under the Government's control, from which its needs will be met.

The right hon. Gentleman said a moment ago that the BNOC will not trade unfairly against existing companies. Can he explain why, therefore, this nationalised oil company is to be exempted from petroleum revenue tax?

I dare say that this subject will attract a good deal of attention when the Bill goes into Committee because I have received comments on the matter already. I can assure the hon. Member that there is nothing unusual in this arrangement. If it were a device to put the BNOC into a better position vis-à-vis the other companies, it would be a very clumsy and ham-fisted way of going about that. There is no secrecy attached to the National Oil Account. It would he under the control of the Government, subject to the scrutiny of the Public Accounts Committee, audited by the Comptroller and Auditor-General, and, if necessary, debated in this House. The hon. Gentleman therefore need have no fears about the National Oil Account or the way in which it will operate under these controls.

I have already said that the first purpose of the Bill is to provide for public participation and that the second is for greater public control. Parts II and III of the Bill are designed to bring about greater public control of the oil industry. The controls which we inherited are hopelessly inadequate at the moment.

The first part of the Bill seems to describe very sensibly a fairly standard classic public corporation. There is no provision, for instance, for 50 per cent. of workers' participation as favoured by my right hon. Friend the Secretary of State for Industry. Is this accidental or deliberate?

The BNOC will have workers' representatives on it in the same way as other public corporations that fall under my responsibility. My hon. Friend will have seen that overall responsibility for worker participation in the public sector, as well as in the private sector, is being considered by my right hon. Friend the Secretary of State for Employment. I know, of course, that my hon. Friend put his question only to be extremely helpful, and I take it in that spirit.

As I was saying, the present controls are totally inadequate and I should like to go into detail to show how. At present there is no control over the rate of depletion in the national interest. Even Opposition Members recognised in their proposals before the last election that such control was essential, but those proposals—suggesting a cumbersome body which would have been powerless to achieve the objectives set for it—were inadequate when it came to depletion.

At present there is no requirement for continuing exploration. A licence may last for 46 years. Exploration programmes are required for the first six years. A licensee then surrenders half the territory—he chooses which half—but on the area he keeps he need do no more exploration for the remaining 40 years.

At present there is no control over the ownership of the licensees. The ownership of the licensee company can determine its technical competence and its financial standing, and yet we have no control over it through the licences. Under the terms we inherited, the Government could give a licence to a company owned and operated by one person or group A and then find that it had been turned into a company owned and operated by quite another person or group B who may be of a different nationality—and all this could be done without the Government's knowledge.

At present there is no effective control over dealings in the profits or production from licences. Much of these dealings are, of course, entirely legitimate and we would not wish to prevent them. But at the moment there is nothing to stop a smart operator, with no interest in actually producing oil or gas, from getting a quick profit, and such profits can be shifted outside the United Kingdom corporation tax net.

At present there is no control over the development of pipelines to avoid proliferation, and to minimise damage and inconvenience to other interests and the risk of pollution. Nor is there any control at present over the safety of pipelines and those working on the laying of pipelines in these dangerous conditions. There is no means of preventing the North Sea from becoming, in the graphic phrase of the oil industry, like an "upturned plate of spaghetti". The Bill closes all these gaps. It is astounding that they have not been closed before.

There is another important new control contained in Part IV. It will ensure that national policy on oil is taken properly into account in decisions on refinery construction. To obtain maximum benefit from the exploitation of North Sea oil we need to have the right sort of refining capacity, in terms of both quantity and sophistication.

Refinery projects are, of course, subject to the usual planning procedures, and will continue to be. The main purpose of these procedures is to assess the implications of the project in terms of land use and the local environment. But in a field as important as this, it is right that there should be a separate evaluation of the oil policy considerations. Part IV will assist the planning authorities in their task, whilst in no way infringing on their prerogatives. It will be possible for projects which are clearly undesirable from the national point of view to be turned down at an early stage.

The powers to facilitate North Sea development are contained in Clause 42. This clause makes it possible to give oil companies guarantees of up to £600 million, or make them loans of up to £50 million, where it is desirable to maintain development. We shall use these powers only in special cases where need is demonstrated. Where we do use them, we shall require proper terms for taking on a share of the risk. And we shall normally insist on acceptance of participation as a condition of giving the financial help.

In accordance with normal practice, we shall, in exceptional cases, and where it is necessary to avoid delays in development, be prepared to give loans or guarantees up to the limits in the Bill once the House has approved it in principle by giving it a Second Reading.

The main purpose of this Bill is to give the British people rights over their own oil, and to do it while retaining the interest and resources of the oil companies. Everything in the Bill is directed towards achieving this balance. On the one hand, we have sought to put right the results of the unregulated scramble for our resources which the previous Government allowed. On the other, we seek continued investment here by the companies on terms which recognise the interest of the British people in their own oil.

We are trying to get a reasonable reconciliation of all interests which will last. I am sure that the oil industry recognises that the anarchy which we inherited could not be allowed to continue and that it will be willing to accept our offer of a durable partnership with the British people. Our oil resources are a precious asset which must be explored, exploited and at the same time husbanded to meet the nation's needs. We must be prepared to implement a sensible and prudent depletion policy.

Exploration today is going on at a record rate, confounding the doom-laden pronouncements of Tory right hon. Gentlemen opposite. Despite the slippages of which I warned a year ago, exploitation is going ahead satisfactorily. Huge resources are being committed daily. This year oil will start to flow bringing to fruition the first stages of this great enterprise. This Bill will ensure that all these activities are conducted not for the benefit of a few but in the interests of all the people of all of Britain. This is a practical Bill, a patriotic Bill, a Socialist Bill. I commend it to the House.

The truest words in the Minister's speech were uttered at the end of it when he said that this was a Socialist Bill. In my speech I shall show how damaging the Bill will be if it goes through in this form—damaging to the interests of the people of this country.

The right hon. Gentleman devoted a considerable part of his speech to some wide-ranging personal and political abuse. I do not propose to follow his example but rather to talk about the Bill. There was one part of his speech which took my breath away. It came when he said that the oil industry could now go forward "in full knowledge of the Government's plans and intentions". All I can tell the right hon. Gentleman is that from my discussions with the industry—and I do not suppose I have had as many as he or the Treasury—it seems that the industry is in a state of complete confusion about the Government's intentions.

Last January Government policy was stood on its head. We learned from the Chancellor of the Duchy of Lancaster that participation would take some novel form in which the companies would have the same profit earnings as they would have had if they had not surrendered 51 per cent. of the oil. I do not know what the right hon. Gentleman's view of this is. He seems to live in a cocoon of complacency which entirely divorces him from what is going on in the real world of the oil industry.

The Chairman of BP may have told him that he is prepared to negotiate for 51 per cent. participation, but he told me and a number of my hon. Friends that he had not the slightest idea what the Government's offer means. No doubt he will talk to the Government, but he has yet to know what is the Government offer. That goes for every other company that has engaged in these participation talks. I have not found one company which has had any offer of any sort made to it in writing. Of talks there have been quite a lot, but there has not been one single word in writing about what arangements are to be made, what the terms of the participation are to be, and how the companies will participate, becoming partners of the Government. No doubt we can explore these details in Committee.

It is nonsense for the Government to continue pretending that the programmes are going forward with full confidence and momentum, which was the case a year ago. The Under-Secretary is often touring the country—he is left to pick up all the dirty work—telling people that the number of drilling rigs in the North Sea is more in 1974 than it was the year before. I will put to him and to his right hon. Friend the truth of the matter from a senior managing director of British Petroleum, Mr. "Monty" Pennell, who is quoted in the Financial Times earlier this month rebutting politicians' claims that:

"the companies are bluffing when they talk of reducing exploration drilling in the North Sea."

He suggested that:

"the actual rate of drilling could fall by as much as 60 per cent. in the next year. 'Politicians who look to the current rate of drillling', he asserts, 'appear not to understand that rig activity today results from decisions taken a couple of years or more ago and that decisions taken over the past few months will largely determine the rig activity next year'."

If the Minister takes the trouble to ask his hon. Friend the Member for Dudley, West (Dr. Phipps), he will be told that today, as opposed to a year ago, any company can hire a drill rig for the asking at any time. The drillings are very nearly a drug on the market. I hope that we shall hear no more about confidence in the industry being unimpaired. The Government have thrown the industry into chaos. This was done first with the petroleum taxation Bill. We got most of that put right, and now we have this Bill. The Government must face up to the consequences.

As for the canard that the Government inherited anarchy—that is a ridiculous statement. They inherited an industry which has grown from nothing to a point at which we can become self-sufficient in oil by 1980. It is the most remarkable story of exploration, discovery and development in offshore oil that the world has even seen. To describe that situation as anarchy is comparable to the famous remarks by Mr. Attlee when he described the position found by his Government in 1945 as the "mess of centuries". That is what the right hon. Gentleman makes of the triumphs and achievements of the North Sea.

I turn to the Bill and the British National Oil Corporation, together with the proposals for the 51 per cent. participation. We are told t hat these are necessary to ensure a proper return to the Exchequer and proper control over investment, production, depletion and so on. The Secretary of State merely repeated what he has said before. What is abundantly clear is that Part I whatever else it does has nothing to do with such factors. It is irrelevant to participation and control.

We know, because we have been told by the Chancellor of the Duchy, that the Government are not looking for any further increased financial return from participation. He told this to the oil companies in the Carlyle Hotel in New York in January. At the beginning of February he was quoted in The Times as saying that—

"the key point that had to be appreciated was that the British Government had no intention of adding to their take from the North Sea through participation plans designed to give the Government majority control over the oil resources. He believed that the only way the Government should obtain revenue from the North Sea oil was by means of the new oil tax and through corporation taxes."

I wonder whether the Secretary of State ever talks to the Chancellor of the Duchy. We had a great deal more about the need for participation to raise revenue. I am content to rely on what the Chancellor of the Duchy says.

Would the right hon. Gentleman not accept that that statement referred specifically to licences already given out and not to future licences?

With respect, it does not do anything of the sort. It is a statement exactly as I quoted it; there is nothing about being confined to existing licences.

The Secretary of State said last November:

"There is the question of making sure that the British people get a proper share and that cannot be done by taxation."—[Official Report, 25th November 1974; Vol. 881, c. 5.]

He has been flatly contradicted by the Chancellor of the Duchy of Lancaster. We have had the Oil Taxation Bill. The Opposition agreed that it was proper to increase taxation. We did not vote against that Bill, as we were committed to introduce taxation when we were in office. The statement by my then right hon. Friend, now Lord Barber, as long ago as March 1973 made that abundantly clear. We argued for an excess profits tax. Happily, we were able to change the Bill into a form in which Lord Balogh was able to say in the House of Lords,

"In fact, of course, this tax represents an excess profit tax".—[Official Report, House of Lords, 10th April 1975; Vol. 359, c. 205.]

We won, and we shall win again on this Bill.

As I shall show later when I deal with the National Oil Account, so far from adding money for the benefit of the British people, the Bill extracts it from the taxpayer and uses it for the Socialist purposes of the right hon. Gentleman.

I come to the second alleged reason, which is that the Bill is necessary for control of production and depletion. As the right hon. Gentleman made clear, the Bill shows that participation and the BNOC have nothing whatever to do with the control of production and depletion. Those powers are contained in Part II of the Bill and in Schedules 2 and 3. The BNOC and participation are in Part I.

The controls exist entirely independently of the BNOC; they bear no relation whatever to participation. The BNOC has no rôle, and the Secretary of State was good enough to make that clear. The powers stem from the model clauses in the Bill that are imported into the licences. They are administered not by the BNOC but by the Secretary of State, and they are enforced by penalties. When the Secretary of State said

"… we can have an effective depletion policy only on the basis of public participation".—[Official Report, 25th November 1974; Vol. 881, c. 5.]

he was again talking complete rubbish. The Bill makes it clear that what she said then was totally untrue.

If the reasons are neither revenues nor controls, what are they? The Secretary of State gave us the answer today. The Government have a political commitment. That is what it comes down to. In other words, majority State participation is no more than the ugly unacceptable face of Socialism.

But if they are committed to some form of State corporation, what form should it take? There are two broad possibilities. Either the Government could take on the rôle of an investment banker, or one could have a new nationalised State oil company. The former rôle would be like an investment holding company—passive, watchful, steering, monitoring and supervising, but not itself climbing down into the arena. Such a body would advise. It could sponsor research and it could invest selectively if the Treasury had spare resources to enable it to do so. However, it would leave the active exploration and development of the oilfields to the industry which understands the work and knows how to do it. Such a body might have fairly loose terms of reference. It could be a departmental agency—an extension of the Department of Energy. Its powers would, rightly, be heavily circumscribed.

The alternative rôle, and the other possibility, is the active, entrepreneurial body which would aim to compete fairly with existing companies. It would be subject to similar rules to those for the rest of the industry. It would pay taxes like the rest of the industry. It would have a good deal of commercial freedom. It would look to the Exchequer for its capital. And it would be answerable to the House of Commons for its results.

I suppose that is perfectly possible though I am bound to say that the recent cry of despair that we heard from Sir Monty Finniston about trying to run such a corporation in the steel industry does not inspire much confidence that it would work in the oil industry.

As it is, the BNOC tries to be both. The result is a hopelessly confused mishmash of vague objectives, sweeping powers, fiscal privileges and stultifying ministerial constraints.

The Bill gives to those who are to run the BNOC no clear purpose. It sets no objectives. It establishes no commercial criteria. It makes the BNOC a privileged body by exempting it from PRT. It retains for the Minister not only strategic control but detailed control over the day-to-day operation of the company. The BNOC may not actually be part of the Department of Energy, but from the outset it is to be tethered hand and foot to the Ministers and officials in the Department.

I shall give some illustrations of this. There are 70 specific examples of minis- terial controls and powers in the Bill, but I shall take just three.

When the right hon. Gentleman said on going out of office that the Conservative Government had not ruled out participation, which of the two alternative forms of BNOC did he have in mind at that time?

When I said that, I mentioned "carried interest", which is not necessarily quite the same thing. I believed that it was a possible alternative to taxation. Now that we have the tax we see no reason for participation.

The BNOC is, apparently, to have no responsibility whatever for its own finances. Instead, it has to transfer all its revenues to the National Oil Account, itself under the control of the Secretary of State. Clause 40(2)(a) is astonishing It says:

"There shall be paid into the Account… (a) all sums received by the Corporation from any source or standing to the credit of the Corporation in any bank account."

There is an exemption for petty cash, so I suppose it will be allowed to buy the matches for the boardroom table. It is not allowed to incur serious expenditure, because under subsection (3) of that clause it may pay

"such sums as the Secretary of State considers are needed to enable the Corporation and any relevant subsidiary to defray expenditure properly chargeable to revenue or capital account."

The whole of the operating expenses have to have the sanction of the Secretary of State. So the BNOC has no financial autonomy whatever. The Secretary of State retains complete command of the purse strings.

It has no managerial autonomy either, because the Secretary of State, in addition to settling general lines of conduct for the undertaking and having the usual power to give general directions, can give this body specific directions of any kind whatsoever. Clause 4(1), which sets out that power, must be one of the most sweeping assumptions of dictatorial power by any Government in this country outside wartime. The Bill reaches a point of complete absurdity, as was stated in the Financial Times in its somewhat critical leader of 10th April. It said:

"Now it turns out that the Minister is not prepared to trust his own creature; the Minister can himself give directions not only to the National Oil Company itself, but to the operating companies in which it has a controlling interest. The robot cannot even be trusted to transmit its master's messages."

The third point is perhaps the most astonishing of all. The whole thing can be hidden from the gaze of Parliament and the public under a cloak of secrecy. Not only are the directives to be secret—the chairman is not even to have the right of publishing ministerial directives for self-protection, which is bad enough—but in one of the most astonishing clauses ever to find its way into a Bill, Clause 10(2) empowers the Secretary of State to direct the BNOC to prepare its accounts in such a way as to hide whether it is making a profit or a loss.

I find this absolutely breathtaking. In the context of the Government's Industry Bill, which imposes rules of disclosure upon the private sector going far beyond anything that has gone before, it is not only breathtaking; it is shocking. It must be changed.

The National Oil Account is to have huge resources. The Secretary of State has power to hand them all over to the BNOC up to the limit, and he has power to tell the BNOC exactly what to spend them on. Then he has power to conceal the whole thing from the gaze of public and Parliament. I cannot believe that for one moment the Secretary of State thinks that he is going to get away with it. He is sometimes accused of assuming the mantle of a modern oil sheikh, but here he looks like a sort of 18th century Middle Eastern despot, with BNOC as his pampered, privileged eunuch.

One goes on—who is the Secretary of State going to get to serve on such a body? One may well ask. The right hon. Gentleman, who is not above being frank on occasions, gave an interview to the Daily Telegraph last July which resulted in this report:

"He agrees that there will be difficulties in recruiting management to build up BNOC but I would hope we can talk to British Petroleum about co-operation'."

The Secretary of State has talked to British Petroleum. He knows just how much co-operation he will get there.

But there is another clue. Two civil servants are to be on the board of BNOC. But we have had ministers' verdict of putting civil servants in charge of running commercial operations, and it was given admirably by the Minister of State, Department of Energy—Lord Balogh. In an article he wrote in the Daily Mail just before the February General Election he said this:

"The Civil Service has in no way shown itself fit to supervise the admirably run multinationals a relatively easy job. I shudder to think what might be the result if they took over the running of the operation."

Who else will they get? Who will they find who will swap the challenging disciplines of the private sector for this dreadful mess of pottage where he will be doing nothing but be, in the words of the Financial Times, the Secretary of State's robot?

I am told that the Government have been head hunting for some time and that they are now considering amending the terms of reference. It is not the terms of reference to the head hunters which need to be amended. It is the whole concept of BNOC as embodied in the Bill which must be radically changed.

The Government must decide. Is this to be an agency of the Government, a mere extension of the Department of Energy, or is it to be a genuine commercial enterprise? At present, it seems to be intended to be both, and it ends up by being neither.

We must come back to the reality of what this body will do. The dreadful thing is that this hairless wonder will be a majority partner of every operating enterprise in the North Sea. This is the body which must take part in every major investment decision to be taken in the development of offshore oilfields. Some of these oilfields require as many as 16 operating, technical and financial committees; and this body must be represented on all of them. No wonder the oil companies are fearful of the appalling bureaucratic delays this will set up. If the Bill means what it says—We must assume that it does—BNOC will have to go cap in hand to the Secretary of State for every penny it needs to spend. There are prodigious opportunities for delay and muddle.

It is also the body that the Minister can direct to invest in downstream activities—all the way from bitumen to plastic buttons, all the way from naphtha to nylon stockings. The House will have no say at all in these things. It will all rest with the Secretary of State. Like Petrobras in Brazil and ENI in Italy, BNOC could end up by becoming" a State within a State "and the creature of the Secretary of State.

But it is all unnecessary. There is no advantage to be gained for the British people by the existence of this corporation that cannot be gained by the taxation and licensing powers in the Bill.

It is a dreadful comment on the priorities of the Labour Party that it is prepared to risk the momentum of the exploration and development of North Sea oil by creating this faceless, flabby, purposeless BNOC.

I turn to the regulatory provisions—Parts II, III and IV—the licence terms, pipelines and refineries. Here, as the Secretary of State fairly said, the Opposition have some sympathy for the broad objectives of proper depletion control and orderly development policy. But we see serious and damaging defects in the methods chosen, in particular in relation to paragraphs 14, 15 and 16 of Schedule II, which are major new powers over exploration, appraisal and development, and which relate to depletion control.

As I say, we do not challenge that there must be effective powers, but this Bill departs from all previous European practice, in that these changes are retrospective and represent a unilateral abrogation of existing rights without compensation. The Netherlands, Denmark, Norway—none of those countries changed the terms of licences already issued. There the new legislation applies, with very minor exceptions, solely to future licences.

In Committee we shall want to test whether it is vital that existing licences should be subject to this retrospective provision. It should be recognised for what it is—a form of compulsory expropriation by the State just as any form of outright nationalisation.

On this matter international law is quite clear. This can be done only if it is accompanied by fair and adequate compensation. The Government's view on this principle was affirmed at the Sixth Special Session of the General Assembly of the United Nations only last winter. A draft put forward on behalf of the British Government and a number of other Community Governments, while acknowledging the right to expropriate, says that these rights

"shall be exercised in accordance with the applicable rules of international law, in particular with regard to the payment to the owners of prompt, adequate and effective compensation."

On 12th August my hon. Friend the Member for Blackpool, South (Mr. Blaker) asked the Secretary of State for Foreign and Commonwealth Affairs whether that draft—the amendment in question—represented the position of Her Majesty's Government. The Minister of State said "Yes, Sir". My hon. Friend asked:

"May we assume that that applies to North Sea oil licences?"—[Official Report, 12th March 1975; Vol. 887, c. 488.]

The Minister of State then went on to refer to participation.

It is not only participation. The abrogation of existing contractual rights is just as much expropriation as the acquisition of property. So, if the powers are to be exercised, compensation must be paid, and it is a matter of high principle which touches on the Government's whole honour and integrity.

The right hon. Gentleman has attacked the depletion provisions which are retrospective in the Bill. The retrospectivity is necessary because no depletion controls were put into the 1971 licences. Will he explain why the last Conservative Government took no powers of depletion control in the 1971 licensing round?

That matter was examined by the Public Accounts Committee. In Committee we shall want to examine the case for this in full, because it represents a very serious step indeed and it has done perhaps as much as anything to undermine the faith of foreign investors in the integrity of this country. Therefore, if it is to be done, let it be examined thoroughly, but, above all, it must be done for compensation.

If it is said that more effective depletion powers are needed, let it be made quite clear, as I made it clear last year, that compensation should be paid. I made a Press statement on 11th September. This report appeared in The Guardian on 12th September:

"Some compensation for this might well have to be paid by the Government, said Mr. Jenkin."

Does not my right hon. Friend agree that every oil company operating in the North Sea has made it crystal clear that it would be delighted to co-operate with the Government in a proper depletion policy and is more than willing so to do?

My hon. Friend is absolutely right. I have not spoken to every company engaged in this—there are a great many—but all those to whom I have spoken recognise that.

But the powers in the Bill and the discretion of the Secretary of State go a good deal further. Unilateral abrogation without compensation could have unfortunate repercussions on British investments overseas. British Petroleum has huge assets in Alaska and Ohio. Shell has a big stake in the Gulf of Mexico, California and elsewhere. I could quote many references to American opinion which I have read in the past year, but I will quote only one, from a distinguished Senator, Senator Dole of Kansas, who said this two months ago in a Press release:

"As I look at the billion of barrels of American oil which the British Petroleum Company is sitting on in Alaska, when I consider the holdings of the Shell Oil Company in the United States, it seems to me that these and similar holdings must be considered as the British programme to nationalise the petrol contracted for by American companies in Great Britain goes forward."

It is sheer nonsense for the right hon. Gentleman to say—as he said in the House the other day—that all this is totally irrelevant to anything that the Government are doing. This unilateral abrogation of rights has to be met by compensation. If a civilised, developed country abandons the principle pacta sunt servanda, the consequences could be extremely damaging for the credibility of the country.

As I suggested, the need for retrospectivity arises only because in 1971 no depletion powers were taken in the licences. Will the right hon. Gentleman tell the House why in 1971 the Conservative Government took no powers to control depletion?

As I say, that was examined. Officials were examined on that by the Public Accounts Committee. It is important that we should look forward to the future under the Bill. In 1971 if anybody had said that by 1980 this country would be in the position of having to exercise depletion control he would have been regarded as being very far sighted indeed.

It might be helpful to the debate to recall that the first ascertained commercially exploitable resources of North Sea oil were declared in the autumn of 1971.

I am grateful to my right hon. Friend. I hope that he may be able to catch Mr. Speaker's eye, because he speaks on these matters with great authority.

In addition to the question of principle there is also the practical application of the controls. Depletion control raises complex technical and economic issues. Claims for conservation may conflict with the economics of investment and there is room for real differences of opinion on geological and geophysical factors. It is essential that these issues should be argued out fairly in a properly constituted forum.

Here I come to another major defect in the Bill. Under the Bill, these important powers rest, almost unfettered, in the hands of the Secretary of State. There are limited rights to be heard and very limited rights of arbitration, but they do not apply to the most onerous of the obligations.

In this area other countries which have oil provinces and a long experience have found that the independent, impartial, regulatory authority has an important rôle to play. The Alberta Energy Resources Conservation Board is the best known and most widely respected body. Several of my hon. Friends and I made a study of the board when we were in Canada recently. The annual report of the board has just come out, and it contains this passage:

"Under the Alberta Statutes the Energy Resources Conservation Board is charged with certain energy resource management and environment management functions with regard to oil, gas, oil sands and so on. The functions include the appraisal of reserves, regulation of exploration and the development of pipelines and transmission lines, insurance, safety, prevention of waste"—

and so it goes on. The functions are performed by a properly constituted, impartial, regulatory authority before which all parties can make their case, which can be heard fairly by experts, and the issues decided. The same applies to the United States Interstate Oil Compact Commission.

I do not challenge that it is for the Goverment to determine the overall rate of depletion and the overall rate of production across the board, which will be governed by balance of payments objectives, objectives of repayment of debt and so on. But translating an overall policy decision into detailed directives on production, development and investment, field by field, company by company, where we are dealing with extremely complicated matters such as the development of secondary and tertiary recovery, and so on, calls for patient expert analysis, and the parties must be able to deploy their arguments before a highly qualified tribunal which can adjudicate on these issues.

Compared with the open and proven systems in Canada and the United States, the arrangements in the Bill are primitive, arbitrary and dictatorial. They put the companies entirely at the mercy of the Secretary of State's discretion, with virtually no redress against the abuse of power. This country must have a properly constituted regulatory authority on the same lines as the Alberta board and other boards.

The same goes for pipeline control. Here, too, there are often difficult technical and economic factors to consider. It should not just be left to the Secretary of State to decide who is to share which pipeline and how much he is to pay. There should be controls to ensure sizing, sharing, routing and so on, but they need to be impartially regulated, with proper compensation paid where appropriate. As it is, it all depends on the Minister's dictat, and that is wrong.

One asks what is the rôle of BNOC? The Secretary of State gave us some reassurance that the BNOC would have no rôle in this. But is that right? According to the Explanatory Memorandum, the Civil Service is to increase by no more than 10 to 15 to administer the controls under the Bill, whereas the Under-Secretary of State said recently in Glasgow that BNOC will have 800 headquarters people by 1980. Is it true that the Department will administer all the detailed controls, get all the returns and make all the decisions with only 10 or 15 extra people? I find that difficult to believe, and we shall need to probe it in Committee.

We shall move amendments in Committee, first, to establish the right of compensation for the abrogation of existing rights; secondly, to establish firm criteria on which depletion control must be based; and thirdly, to establish, as we said in our manifesto, a United Kingdom oil conservation authority to administer the regulatory functions which the Bill gives to the Secretary of State, and to act as a watchdog for the people.

Finally, I come to the financial provisions of the Bill which are perhaps most shocking of all. The National Oil Account is a very rum bird. It operates as BNOC's current account—revenues in, expenditures out. It is also the repository of all the royalty revenue that would otherwise flow to the Exchequer, the proceeds of sale of any royalty oil, the receipts by way of licence fees and other income.

There has been no official estimate of the royalty revenue, but one estimate that I have seen shows it rising to perhaps £755 million a year by 1980. In addition to the £900 million borrowing requirements that goes into the NOA, it will have a further £750 million a year by way of royalties.

It does not stop there. BNOC is free of PRT and, assuming that the Chancellor of the Duchy's offer means that there will be a buy-back provision for the 51 per cent. of oil the Government take, and that that goes back to the companies at a price which gives the companies the return post-corporation tax and PRT which they would have had, because BNOC is not liable to PRT, BNOC will make a substantial additional profit on that oil, post-corporation tax but free of PRT. My calculations suggest that there might be anything between £500 million and £750 million a year by 1980 flowing to the National Oil Account. So, in addition to the £900 million borrowing requirements under the Bill, there will be anything up to £1½ billion a year going into the NOA.

What the Labour Party has to realise—perhaps it does—is that not one penny of this is new money arising from the Bill. It is all revenue hitherto earmarked for the Treasury which is being siphoned off before it ever reaches the Treasury in order to provide the Secretary of State for Energy with the resources for investment through BNOC. Not one additional penny will reach the Exchequer as a result of this measure. On the contrary, anything up to a billion and a half pounds will be taken away from the Exchequer and siphoned off into the National Oil Account. In the context of our present economic situation, that is a very strange proposal.

Money which goes to the National Oil Account will not be available for normal Exchequer purposes—for example, for reducing the borrowing requirement, for repayment of debt, for investment in the social services or the Scottish and Welsh Development Agencies, or even, dare I mention it, for reductions in taxation. The Prime Minister said before the last General Election that the British people would see the results in either cheaper oil or lower taxation. In fact, they will see neither of those results—not a bit of it.

But the position is worse than that. I hope that the Secretary of State for Energy and the Paymaster-General are listening. I believe that these arguments are desperately important. The new money that will go to the National Oil Account will replace private investment which would otherwise have taken place. That private money will be freed for investment elsewhere. For instance, if the Government take a 51 per cent. holding in the Brent Oil Field, Esso and Shell will have to find that much less investment in the North Sea and will have that much more to invest elsewhere in oil development, for example, in the United States Outer Continental Shelf or off South Africa or Spain. That may seem a rum result, but that will happen.

But it goes further. Companies such as Esso and Shell have a high credit rating on the American bond market. In fact, Esso has a triple A rating. At present Esso can borrow more cheaply than the British Government. So we shall lose out as a result of exchanging private investment for public investment. We shall get the worst of all worlds. We siphon off revenue from the Exchequer and force up the Exchequer's borrowing requirement. We use the money to replace private investment, much of which could be financed more cheaply than Exchequer borrowing. At the same time we massively increase public expenditure. We do so just when the Chancellor of the Exchequer has at last begun to realise that many of his problems are caused by an excess of public expenditure. We cannot even have the excuse of loss of jobs that applies in the Leyland case.

These are the economics of bedlam. The Chancellor of the Exchequer is rightly worried about his £9 billion borrowing requirement this year yet his five-year forecast of public expenditure contains not one penny of the new public investment through BNOC. That investment might be as much as a billion and a half pounds a year. In fact, I do not expect that it will be as much as that because of lack of manpower. Not one penny of that investment is included in the five-year forecast. The Government could not put any figure on it, so they left it out.

Apart from the debilitating effect of all this on the pace of development in the North Sea, the effect of the Bill will be to put a further millstone around the neck of future Chancellors in their efforts to manage the United Kingdom economy and to balance their budgets.

All this must be changed. There must be proper financial disciplines established. Revenues earmarked for the Exchequer must go to the Exchequer and compete with other expenditure priorities. The BNOC must pay tax like any other oil company. The power of the Secretary of State to hypothecate revenue must be abolished. That must be done in a decent, open and democratic manner and not under the cloak of secrecy that the Bill provides.

This Bill is a total disaster. Its objectives are muddled and obscure. The institutions that it proposes are irrelevant or misconceived. The powers it confers on the Secretary of State are vast, wide ranging and abitrary. They offer little or no protection against dictatorial abuse. The financial provisions are an outrage. Huge revenues destined for the benefit of the Exchequer and for the benefit of the people will be siphoned off into wild Socialist schemes of nationalisation and expropriation. The retrospective, unilateral abrogation of agreements without compensation strikes yet again at the rule of law and may well put British assets overseas at risk.

Finally, the huge new public expediture commitments, which go far beyond the borrowing requirement, are not only largely unnecessary but will do grave damage to our economy. In short, it is a devastatingly bad Bill and we shall vote against it.

Yesterday I was given cause for sadness while reflecting on the political maturity of those occupying the Opposition benches. Yesterday morning, in Committee, I heard a Conservative Member say from the Front Bench in the Committee that the present Government were determined to bring pleasure to Hanoi and Moscow. Yesterday afternoon we heard a spokesman from the Opposition Dispatch Box condemn Government legislation. He suggested that it should be described as Communist. He was so extravagant in his comments that he tried to suggest that the only way to escape the tentacles of Marxism is to be cremated.

When the right hon. Member for Wanstead and Woodford (Mr. Jenkin) described the Bill's proposals as Socialist I thought we were having a little less of the silly extravagance that we so often hear. Unfortunately the right hon. Gentleman's speech had two defects. First, it was very long and, secondly, it was slavishly devoted to detail. The right hon. Gentleman never lifted his eyes so that he could see the wood from the trees. His metaphors were largely taken from the Middle East. We had references to messes of pottage, harems and eunuchs. T1r, right hon. Gentleman's assessment of the world situation seems to suggest that he understands the Middle East as pre-Mohammedan rather than post-OPEC. Sometimes one feels like commiserating with the Opposition rather than arguing with them.

The right hon. Gentleman did the House less than justice. He seems to be so devoted to detail in a finicky sort of way that he was rehearsing his Committee speeches and looking for tiny matters to criticise. He drew attention to provisions in Clause 10, but in his eagerness he forgot to inform the House that whilst the corporation may not have to draw massive attention to its profit or less during a short-fall it will have to keep proper accounts and records to be laid before Parliament.

If the right hon. Gentleman is saying that the provisions of the Bill have to be criticised because of the protective arrangements of a temporary character which my right hon. Friend may insist upon, he is also confessing that the serried ranks of the Opposition, with all the business experience which they proclaim, are unable to understand the balance sheets of public corporations.

I do not know whether the hon. Gentleman has read Clause 10(2). I am sorry that he criticises me for talking about the Bill. That is what I understood Second Reading was all about. Perhaps he will read the last four lines of Clause 10(2). They read that

"a notice … may provide that the statement of accounts to be prepared by the Corporation … shall not be required to show the Corporation's profit or loss."

That seems to make it clear that the profit and loss can be concealed. It is no use my hon. Friends being able to read a balance sheet if the figures are not there to be read. The figures will be hidden.

The right hon. Gentleman does his hon. Friends much less than justice. The accounts will have to be presented to Parliament. They will have to be subject to parliamentary scrutiny. If the right hon. Gentleman's hon. Friends cannot understand the balance sheet of a public corporation they are not fit to hold the company directorships which they hold in such abundance.

Is the hon. Gentleman really saying that the failure to understand the total profit and loss and reserve position of a banking institution, which is by statute entitled to reserve part of the facts so far as its public declarations are concerned, demonstrates the inadequate capacity of our business acumen? I should have thought that was wrong. What is proposed in the Bill is precisely analogous to the British National Oil Corporation.

I am delighted that the right hon. Gentleman is bringing me to my next point. Since the Industry Bill has been in Standing Committee we have been receiving repeated complaints that the Government are seeking to insist upon the disclosure of information. Many of us feel that those complaints are utterly overstated. That is illustrated by the attitude taken by my right hon. Friend. We know that the people who will be employed in auditing the accounts of the board will be properly qualified and reputable professional people.

The right hon. Member for Wanstead and Woodford, in seeking to condemn the Bill, did not use the word "Communist", but certainly suggested that it was a Bill of an extreme Socialistic character. He overlooked a number of points. His search for detail did not lead him to the thoroughness that would have been appropriate in such an undertaking.

For example, the duration of existing licences has not altered and that will provide no impediment to private sector progress. While PRT and certain stamp duties may not be payable, the proper accounts will have to be kept, and it will be obvious whether the corporation is acting in a competitive and financially healthy way. It would be ludicrous, and would lead to excessive expenditure to have an increase in bureaucracy merely to enable the corporation to pay PRT to the Treasury as a notional bookkeeping exercise.

The right hon. Gentleman seemed to overlook the fact that the oil account is a useful way of being able to show to the nation how its assets are being maintained. If the right hon. Gentleman is to be believed, his approach seemed to suggest that the Secretary of State for Energy will be keeping money from the North Sea in an old sock in Chesterfield. There is little likelihood that that will be the case—and I am not suggesting that the crime rate in Chesterfield is any higher than it is in Opposition constituencies. That is not the way in which the system should operate but it is right that we should keep the accounts in the way proposed by my right hon. Friend so that the nation can see how much more effective are the present Government's policies in regard to the North Sea than were the indolent policies pursued by the Conservative Government in the wasted years 1970–74.

I was particularly pleased that my right hon. Friend took a sensible attitude over pipelines. Far from any Communistic or totalitarian approach the present proposals will be most helpful because they will prevent monopolistic and restrictive practices by those who own and control pipelines around our shores. Perhaps even more important, it gives my right hon. Friend the capacity to act in a helpful way in regard to refinery programmes. He can make sure that the refinery programme will encourage the promotion of a viable petrochemical industry in Great Britain. The right hon. Gentleman did not comment on the fact that the petrochemical industry could be developed within the public and private sector, as an example of the mixed economy which could also be maintained off our shores.

I am pleased to welcome the Bill and to emphasise that it is not a revolutionary concept. The right hon. Gentleman did not refer to ENI in Italy, Erap in France, DSM in the Netherlands, the Algerian oil company, or to Statoil in Norway. Statoil has been operating for three years —and it is a great pity that the BNOC was not established three years ago.

It is true we may have missed some of the pitfalls experienced by a large number of other countries with national corporations, but many of those pitfalls have been due to lack of experience or too little control, the sort of control which my right hon. Friend will exercise over his child in its early and formative years. Some of these pitfalls have come about because of involvement in overseas divisions. The West German corporation went astray in its investments in Libya. I hope that that kind of mistake will not occur in BNOC. I shoulld emphasise that the Statoil concern in Norway has exercised a stimulating effect on the Norwegian economy. One hopes that the British National Oil Corporation will exercise a similar effect in this country.

I was pleased to see—some of my hon. Friends will not agree with me—that my right hon. Friend did not include British Petroleum as one of the organisations to be taken under the umbrella of the corporation. I believe that my right hon. Friend is right to ensure that BP remains independent, because its rôle as an international company could otherwise be embarrassed, if it were brought into the tight State control involved in an internal offshore oil division. I hope that BP will continue to exercise its world rôle to the benefit of this country and the many other regions in which it operates.

Given that sensible approach, I believe that the criticism offered by the right hon. Gentleman was tedious in its adherence to detail. Unfortunately, there are Opposition Members who are opposed to any intervention, whether by this means, or by the investment bank approach, or by the entrepreneurial approach urged by Opposition Members, although the right hon. Gentleman did not say which one he would choose, That is a pity, because it is up to an Opposition to offer concrete alternative proposals. Unfortunately, the right hon. Gentleman floated all sorts of ideas and failed to commit himself to any one of them. The Opposition should be honest enough to say whether they oppose this arrangement or any arrangement in which the nation's interest is superimposed on the offshore industry around Britain.

It is right that my right hon. Friend will be careful to ensure that experience in the private sector is not lost. I do not think it will be lost. My right hon. Friend is right to ensure that there will be vigour and vision in our policy. Certainly, inadequate vigour and little vision were displayed by the Opposition in the years in which they were in office, when so much advance could have been made and so much protection brought into the situation to the benefit of the British people.

There have been a number of minor anxieties, and I should like to ask the Minister who is to reply to comment on one or two of these points. I do not object to the takeover by BNOC of the National Coal Board's oil assets. The decision some years ago by a previous Labour Government to ensure public involvement was right, it was the correct page on which to start the story; but we know a little more now and are writing a new chapter, and BNOC should be in charge of the nation's oil resources. However, I am a little anxious about the British Gas Council's oil reserves which, it is suggested, could be left out of consideration by BNOC. I hope that my hon. Friend will be able to comment on that matter.

A further matter which needs to be cleared up relates to the legislation on health and safety at work. Happily, that legislation is now assisting land-based industry, but, unfortunately, it does not apply to offshore oil employees. I should like my hon. Friend to look at that matter. Perhaps he will give some reason why that legislation has been omitted from the provisions of this Bill.

I feel that the value of the Bill to the nation will be enormous. At the same time, there is a real danger of looking at the trees rather than at the wood. That was clear from the right hon. Gentleman's speech. We are in danger of allowing people to believe that, by some miracle, offshore oil will ultimately mean great affluence for the British people—indeed, unlimited affluence. Anybody who contributes to that idea is acting against the national interest. Offshore oil presents for Britain a breathing space. It provides us with a substantial opportunity and give us the capacity to face the problems of our trade deficits and our international imbalance and the indebtedness which we have incurred as a result of the weakness and misfortune of the Tory Party.

The Bill gives an opportunity to Wales, to Scotland and to England. As Scottish and Welsh oil is exhausted, we hope that we shall find oil off the English shores. That will allow us once more to subsidise the Scottish people as we have done since the days of Culloden. I am sorry at this stage of my remarks to see that the hon. Member for Dundee, East (Mr. Wilson) is the only member of the Scottish National Party present. I am sorry that he is on his own and neglected by his hon. Friends. I hope that in due course the proceeds from English oil will once more enable us to help the Scottish people.

The hon. Gentleman must have known that that point was sure to provoke me into action. Does he not agree with the point I have made before, that oil resources are likely to be found off the southern coast of England? Is it not fair that Scotland should rely upon the oil resources off its coast, just as England is entitled to rely upon resources off the coast of England? What would be wrong with that?

I did not give way to the hon. Gentleman to indulge in an argument with him. Since all his hon. Friends were absent I thought it right that he should have the opportunity to identify himself so that he could present his alibi to the Scottish people.

The economic problem is vast. Our trading indebtedness is serious. The offshore oil will allow us, temporarily at least, to take ourselves out of pawn. It gives us a breathing space. I am delighted with the Bill, which will strengthen and enhance that breathing space. It will help to promote Britain's new industrial capacity, which must be developed. I am delighted that my right hon. Friend is not seeking to serve the needs of the AAA companies which may be able to obtain money cheaper than the Government. Those companies will be able to obtain that cheap money since great profits will leave Britain. Therefore, people abroad are prepared to invest their money so that they can share in the profits, of which we seek to retain a large proportion in Britian. This vehicle will go a great deal of the way towards giving us that capacity. I commend the Bill. It is a Socialist Bill, which seems to me to be of service to Britain. I commend it to the House.

The hon. Member for Rother Valley (Mr. Hardy) echoed what was said by the Secretary of State. They sought to condemn the former Conservative Government for having failed to take action in a variety of ways, while the Secretary of State seeks to give birth to this new State hippopotamus. It would have been ridiculous in 1971 to do other than issue licences with a view to the earliest pos- sible prospecting of the North Sea. Anyone who imagines that the state of knowledge in 1971 was adequate to foresee the effective developments in the North Sea is mistaken. That should be fully realised. These charges are ridiculous beyond words. They demonstrate the fact that the Secretary of State understands very little of the nature of this industry.

I find that many industrialists complain that Ministers without previous knowledge of their activities are brought into Departments and are expected almost overnight, to master these extremely intricate problems. I contend that generally Ministers are very good at doing that. However, today's performance by the Secretary of State undermines my argument.

The right hon. Gentleman was responsible for giving away licences like detergent coupons. It was not I who first brought that to light. That was done by the Public Accounts Committee. the majority of whose members belonged to the Conservative Party.

That makes no difference. The state of knowledge at the time was totally inadequate to develop a different and more constraining form of licence. It is ridiculous in the aftermath to try to pretend otherwise.

Does not the right hon. Gentleman accept that depletion practices and depletion controls are a standard part of the legislation produced in respect of a good number of countries throughout the world who have no oil production but who are merely trying to encourage exploration? I can think of at least three countries, where my own company is involved, where such controls have been incorporated in legislation for the past six years.

My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) touched on that point. Oil companies having licences to prospect in the North Sea made it abundantly clear that some form of control of production would be totally within their understanding of the reasonable activities of Government when appropriate. The point as to when they are appropriate is important in a country which foresees production, because it should know the quantity with which it will have to cope. It is idle to make theoretical provisions for such matters. It is important to make practical provisions.

I must declare an interest. Although I am no longer a member of the oil industry, that is where I spent the greater part of my industrial life. That declaration of interest goes a little further. For a considerable number of years I worked in a company, 51 per cent. of whose partner firm was owned by the State, whereas 49 per cent. of the company which I represented was similarly owned. I hope that I have some practical experience of what State ownership is like. I gained experience at that time because the form of the company was the inverse of what the Secretary of State is now proposing, since ENI, the company involved, in Italy, was an enormous power which dominated the Government. That is the opposite of what the Secretary of State wishes—which is a tributary concern which he shall dominate.

My experience of the constraints and privileges which such a mixed form of company can bring led me to the conclusion that the system of such associations was basically inept because the uncertainties of the needs of the State, which were extraneous from those of the industry it sought to operate, acted constantly as an element of confusion. I fear that the same will occur in this case. It will be much accentuated because of the almost ridiculous level of power which the Secretary of State seeks to arrogate to himself.

Of the concerns of a State character which have been developed in one country after another, I have never known one which was able to develop a valid international capacity. It is interesting that not one such company—even ENI, which was the nearest to doing so—was able to develop an effective international capacity.

We are dealing with the oil industry, which is the most international of all industries. The principle of the multinational company is greatly criticised these days. Everybody can earn a cheap round of applause at the expense of the multinationals. The only time when multinational companies are praised is when they cause investments to be made, offer jobs, pay taxes, earn profits, or invest in developing countries. They are always condemned until the time when they appear in developing countries. At that moment, they are the most beneficent of arrivals. It is slightly misguided to persist in this terrible criticism of multinational companies, which on the whole contribute to the economies of this and other countries.

The oil industry is perhaps the prototype of the multinational concern, and for very good reasons. It deals with an extremely complex international situation. It deals with a multiplicity of different qualities and locations of crude oil, an extraordinary variety of tanker routes, great differentials, the location of refining capacities and the unending variety of demands of the market, the quality of products, the nature of the products and the constraints of the pricing systems which are developed.

As a result, by its very nature, the oil industry has to develop an international aspect to the control and operation of its problems. It is interesting to reflect that it was a British company, British Petroleum, which was the great pioneer in devising integral programmes for the worldwide operation of its extraordinary complex of activities in order best to advantage its consumers.

It is a dangerous proposition to imagine that in real terms an organisation—even a perfectly devised one of the kind that the Secretary of State seeks—can contribute validly to the efficacy of this industry. My experience is that it is not so. It serves nationalistic purposes at times. It serves other causes in any State which creates it. But I have never noticed such an organisation contributing to the efficiency of the industry, to the cheapness and quality of its products and to its service to its consumers. Therefore, I must dissociate myself from and condemn the purposes of this Bill, which is designed to establish just such an organisation in this country.

If we had had three or four years ago a British National Oil Corporation of the kind that the Secretary of State wants today, can anyone believe that it would have contributed to developments in the North Sea? Would it have produced a new fund of geological, technical or engineering skills? I wonder. It would surprise me to know from where such an organisation would get its fund of knowledge. Perhaps it would come from the Secretary of State himself, but I rather doubt it. In my view, it would have contributed nothing.

In all his condemnation of the past, what does the Secretary of State believe that such an organisation would have brought to our affairs? I register the thought that it would have brought literally nothing. I register the further thought that in the future, as envisaged by the Secretary of State, it will still bring nothing. It will prove continually to be an element of deterrent and of retrogression and not an element in the development of our industry. The only possible valid contribution that the right hon. Gentleman can find in it is a political one.

My right hon. Friend the Member for Wanstead and Woodford dealt fully with the financial considerations involved in the Bill, and apparently the Chancellor of the Duchy of Lancaster takes the view that, whatever may be the financial advantages in this great find, for the British people they should be ensured by other means. My right hon. Friend was right to point out that the requirement for the control of production and depletion was a matter which by any standards could be dealt without any BNOC. There is no evidence to support the belief that the BNOC will play any part in this operation.

I am sorry to discover that we are now involved in taking steps which unfortunately will cause still greater confusion in all these activities. That would not matter so much were it not for the fact that the proper development and administration of this enterprise is crucial to our affairs. I am very much afraid that the results of what is now proposed, coupled with the uncertainties which unfortunately have arisen in the past 12 months, will cost us dear in the years to come.

There is no question of making modest amendments to these proposals. In my view, they are intrinsically bad and should be rejected.