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Mr. Bercow: My hon. Friend is patiently taking the House through what passes for the logic of the Government in proposing the orders. We understand ministerial fetishes so far as orders are concerned, but would my hon. Friend be good enough, at this relatively early hour, to advise me what he regards as the improvement in the last order by comparison with the first?
Mr. Gibb: My hon. Friend raises a good point. The difference between the later and earlier orders is that the documents attached to them got thicker.
Lord Sainsbury went on to say:
- we took the view that the arrangements should be non-statutory and handled on the ground by local authorities and the police . . . Guidance was placed on government websites . . .--[Official Report, House of Lords, 7 November 2000; Vol. 618, c. 1436.]
This issue is about the rule of law. To exercise powers--or, rather, not to exercise powers--through so-called guidance is surely an abrogation of that duty by the Government. My hon. Friend the Member for Altrincham and Sale, West (Mr. Brady) gave an example of the difficulties that that causes at a constituency level. Would it not have been right to have issued such guidance through the proper exercise of a statutory instrument rather than through this curious vehicle?
From my experience as a constituency Member of Parliament during the crisis, the emergency planning officers in my area were rather perplexed by the absence of any explicit powers. They were given the duty to decide who should be allowed fuel and, with the police, were expected to enforce that on the ground. Had the crisis continued, the situation on the forecourts could have
become ugly, yet the enforcement officers had no legal powers to deal with matters and allocate fuel. What was the Minister's reasoning for that approach?Another curious non-parliamentary document is the memorandum of understanding drawn up between the oil industry, road hauliers, the police, the Government and trade unions. Paragraph 6 says
- the UK Government, the Scottish Executive and the Cabinet of the National Assembly for Wales are willing to consider exercising their powers to permit certain flexibilities and temporary changes in the application of regulations . . .
Finally, will the right hon. Lady explain the Government's intentions on training the military and requisitioning private sector articulated fuel tankers? Do the Government intend to take powers under section 2 of the Emergency Powers Act 1920, as she said might be the case in her written answer to my hon. Friend the Member for Chingford and Woodford Green (Mr. Duncan Smith), if the fuel protests that we see today escalate?
New Labour in office is an interesting, if depressing, phenomenon. The Labour party was swept to office because people believed that new Labour had learned the key economic lessons espoused by the Conservatives over the previous 18 years. The truth is that they learned the key economic lessons of the problems that we faced in the past, but they have not understood those lessons, or how to apply the principles inherent in those lessons to future problems and to new circumstances.
Britain's main economic problem today--and it is a serious one--is our failure as a nation to benefit from productivity gains arising out of the new economy.
Mr. Beard: What has productivity to do with the order?
Mr. Gibb: I shall come to that in a moment. The United States has had five years of such gains. Britain, by contrast, has seen its productivity improvement rates fall from 2.4 per cent. on average to just 1.4 per cent. over the past three years, compared with the United States figure of 2.7 per cent.
Mr. Deputy Speaker: Order. The hon. Gentleman is again straying well wide of the mark. Can he please come back to the order?
Mr. Gibb: Thank you, Mr. Deputy Speaker.
Productivity is one of Britain's key problems. We can see from the order that the Government are dealing with the symptoms of the problem, not the real problem. We need the Government to deal less with the symptoms of the problem, as epitomised by the order, and to deal instead with the deep-rooted economic problems facing the country.
10.54 pm
Dr. Vincent Cable (Twickenham): My colleagues and I, and particularly my hon. Friend the Member for Southwark, North and Bermondsey (Mr. Hughes) in his response to the Home Secretary last week, have made it clear from the outset that we fully supported the Government's efforts to assume whatever powers were necessary to prevent massive disruption of emergency supplies and the economy. If it was right in principle to have powers to prevent Arthur Scargill's flying pickets from disrupting emergency supplies and the national economy, it is surely right that right-wing Arthur Scargills who are not bound by trade union legislation should be constrained in a comparable way. There must, of course, be a right to protest, and we defend it, but what has happened has been well in excess of what is acceptable.
In many ways, the order is probably academic. Its purpose has already been achieved. The combination of the threat of these powers and the ability and willingness of the police to act professionally to enforce the law over the past few days has effectively meant the crumbling of the protest movement to the point at which it is no longer a serious threat. Introducing the order is probably largely superfluous, although there may be contingencies under which problems could recur.
I shall devote most of my speech to the Minister's remark that we have learned a lot over the past two months. As we look back over the initial crisis, we can ask why the distribution system unravelled so rapidly and disastrously. If the emergency powers are designed to counter the problems that caused that, we should ask how they arose in the first place.
I used to work in the oil industry, although I have rather lost contact with it now. The origins of the problem lie in the fact that the mental picture that most of us have long had of the industry no longer applies. The old picture is of a command and control system and of oil that flowed from pumps in the ground to petrol pumps through integrated companies in an orderly fashion that ensured security of supply. That model has completely broken down. The distribution sector is now extremely competitive, comprising three quite different types of company. The first type is the big oil companies and some small and medium-sized companies, which still operate in the traditional way. Secondly, Tesco and Sainsbury's in many ways dominate oil distribution. Thirdly, independent companies compete with each other. It is a cut-throat and competitive industry in which margins are small.
There has, consequently, been tremendous pressure within the industry to cut costs and, arguably, corners. That has happened in two main ways. First, the industry runs on low stock levels. As in most industries, there is tremendous pressure to have minimum stock because stocks are costly. Inventories are run down to the lowest level possible, and that meant that the industry was exposed to disruption when, for the first time in its existence, it was seriously threatened. Secondly, to cut costs, the industry sub-contracted its tankerage operations, which meant that it did not have the power to instruct drivers to carry loads. Drivers were bound by contracts and penalty clauses, but they were not employees and no one could control them.
A further important factor, which has not been publicly discussed, is the health and safety culture of the industry. Since the Piper Alpha disaster and a series of others,
such as the Exxon Valdez, there has been a proper preoccupation with health and safety. Everyone in the oil industry is aware that every tanker, on road or on sea, is a mobile incendiary bomb. Enormous care must be taken. I do not know whether the arguments advanced in the emergency about health and safety were excuses or were reasonable, but that was one factor advanced by the industry to explain why so little could be done to get tankers on the road.Having offered an analysis of the problem, I must turn to the action that the Government have taken. I shall only ask questions about that; I do not know the answers. If a memorandum of understanding exists with the industry, how far is it binding on all parts of the industry? I can understand how it is possible to have a memorandum of understanding with, say, BP, but it is less clear how a meaningful memorandum that is binding on large numbers of independent companies or supermarket chains can exist.
If there is a health and safety concern, how will that be met in emergency conditions? If an Army driver is driving a commandeered truck in an emergency and an explosion occurs, who has liability for such a disaster? Is it the company or the Government? Who is responsible for maintaining the health and safety standards that the industry believed to be a major constraint on its operations?
If the crisis has revealed a chronic stock shortage, have the Government decided what the proper level of stock should be? Presumably, there is a figure for the stocks of petrol or crude oil that we need to hold within our national boundaries for a week, a month or three months. An analysis must have been made, and it would be useful to be given some information about that. How far does the industry fall short in the provision of adequate security of supply through stocks? Who will pay for that? Under whose instructions will such stocks be provided? All those questions arise from our experience of the crisis. Can we learn from that for the long term?
In effect, the order updates a previous order made in 1976, when conditions were different. That measure incorporated substantial elements of price control. Is it intended that if the emergency powers were to be activated price control would apply, or is that a historic legacy from the previous measure? Is it an active provision under the emergency powers? How would price control powers be utilised?
We are all aware of the obvious problems of price control; for example, there would be a practical problem if the Government decided that in order to prevent profiteering in an emergency, the price of an oil product should be fixed, but as the operating company would be buying and selling crude oil in a volatile market, who would carry the risk associated with such price-controlled transactions? Is price control part of the package? Is it intended to be used actively?
Under the order, price control applies to natural gas. However, the price of natural gas is already controlled by a regulator. Do the powers supersede those of the regulator? To what extent are those powers over price control relevant to the action that the Government propose?
I was forcibly struck by the fact that suppliers anywhere in the world would be subject to the order. I do not understand what that means currently, although I can
understand what it might have meant in 1976. At that time, BP was still a mainly nationalised British company. Under emergency powers, for example, BP's activities in Alaska would have been governed according to British priorities. However, as that is no longer the case, it is difficult to understand how such powers could be applied extraterritorially, as would seem to be the intention. What is the meaning of the statement that supplies anywhere in the world should be subject to the order? What is its contemporary relevance?We fully support the general principle that the emergency powers should be used to prevent the disruption of emergency supplies and of the national economy.
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