Robert Hudson – 1948 Speech on Oil Supplies

Below is the text of the speech made by Robert Hudson, the then Conservative MP for Southport, in the House of Commons on 11 May 1948.

As I said in the Second Reading Debate on the Petrol Bill last week, we thought that as discussion on the Bill was bound to be very narrow it would be for the convenience of hon. Members on all sides if we put down the Vote of the Ministry of Fuel and Power on as early a Supply Day as convenient; to enable us to discuss both the questions of policy connected with petroleum and petroleum products and also the administration of the Department. I will cover certain aspects and other points will be illustrated by my hon. Friends.

I will deal first with the record of the Ministry regarding fuel oil and, in particular, the conversion from coal to oil. Their record in this respect is typical. It is a history of panic, followed by order, counter order and disorder. The Committee will remember that in August, 1946, industrialists were asked to convert from coal firing to oil firing. As an inducement a rebate of 1d. per gallon on fuel oil was offered. This rebate was confirmed in the Finance Bill, 1947. The pressure by the Government on industrialists increased during 1946 and 1947 and was accentuated during the panic which arose out of what we always regarded as the unnecessary fuel crisis of 1947. The conversion involved the firms concerned in heavy capital outlay which was bound to increase costs of production. It also involved considerable quantities of steel and considerable engineering manpower, both of which we have been told on numerous occasions are short and constitute bottlenecks. The Government were warned by practical persons of experience of the difficulties ahead. They were told that there was a shortage of tankage and oil storage in the country and that other similar shortages were bound to cause difficulties and result in delay.

It is quite clear—and it should have been clear at the time—that a policy of this kind was justified only if it was certain that adequate supplies of oil would be available for running those oil firing installations after conversion had taken pace. The pressure to convert continued until the middle of 1947, but difficulties in the supply of oil began to multiply and industries failed entirely to get any adequate guidance from the Government. They could get no assurance that, if they converted, supplies of fuel would be made available. No definite guidance was given to industries, even in the speech of the Minister shortly before Christmas 1947; yet, as the Committee will remember, by that time the basic ration had already been abolished for several weeks on the plea of the shortage of dollars. Apparently what was done by the Government was to order a survey, but we have had no indication, of course, of the instructions given to the Government officials who conducted that survey. What is quite clear is that in more than one case the impression was given to the industrial concern that the difficulties in the supply of oil were likely to prove only temporary.

No clear lead has even yet been given by the Government, and the situation today is that some firms have installed conversion machinery and have no fuel, others have installed conversion machinery and can get fuel, some are still going ahead with conversions and others are now reconverting back to coal with the approval of the Ministry. No one has any idea what the Government’s policy is on this matter, and it is quite clear that uncertainty of this nature is bound to do industrial harm and hamper our efforts to increase the export trade. I hope, therefore, that the Government will give us a clear statement in the reply to be given to this Debate. What we should like to know, and what the country is entitled to know, is what is the estimate of the availability of fuel oil today, next year and the following year.

As illustrating the lack of certainty which prevails, I would only remind the Committee that the original estimate was 2 million tons of fuel oil to 3 million tons of coal, that the figure rose to 2½ million tons when the Government panicked in the winter of 1947, and that since then estimates as high as 5 million tons or even 6 million tons have gained currency. Which of these figures is correct, and is there any prospect of any firm commitment to supply oil? What policy do the Government recommend should be followed in the case of the three classes of firms concerned—that is the firm which has already completed conversion, the firm which is still engaged in conversion and the firm which is planning to convert? We should be glad of some information from the Government on that.

What is the excuse put forward by the Government for the shortage of oil in this country? It is that there has been a great increase in world consumption, and more particularly in consumption in the United States. It is quite true that the increase in consumption in the United States in the two recent years was equivalent to the total consumption in this country. It is equally true today that the total consumption in the United States is at least as great today as the total world consumption before the war. We admit that, but the question we are entitled to ask, and it is the question which the Government have never really attempted to answer, is why was this increase not foreseen. The Parliamentary Secretary, in answer to a Question on 6th April, said that despite the big increase per head in the United States the percentage increase in this country was even greater. That did not happen from one day to another. The Government must have seen that an increased percentage of consumption was taking place in this country, and it was only reasonable to presume therefore that a similar condition would prevail in the United States. What is the use of planning in these circumstances?

We are told that the increased consumption in the United States could not have been foreseen, but if rumour is to be believed many Ministers today have attached to them personal economists, and if rumour is again to be believed the unfortunate civil servants of many Departments spend a great deal of their time trying to pursuade the economic “boyfriends” of Ministers that their information and views are not as well-founded as they think. Assuming that there is some reason for the existence of these “boy friends,” surely it is to foresee the type of increase which has, in fact, taken place in the United States? Two deductions can inevitably be drawn from the history of the last two months. Firstly, that in oil, as in so many other cases, the Government are far more concerned in trying to explain what are their difficulties than in devising solutions to these difficulties. Secondly, that in pre-war days people in private enterprise who made such a gross error in calculating and forecasting, as has obviously been made by this present Government, would have lost their jobs in a very short time.

At the risk of introducing some old controversies, I should now like to say a word or two about the basic petrol ration. We on this side have never believed that the abolition of the basic ration was necessary. We believe that the decision was taken in a panic, and we believe that as a result of what has happened since the Government now realise they made a serious mistake. We regret, that while trying somewhat to relieve that mistake by the institution of a standard ration, they have accompanied it with a scheme which inflicts gross injustices on holders of E and S coupons. The abolition of the basic ration was justified by the Government at the time on the grounds that we were short of dollars.

We all agree that dollar expenditure, in the circumstances in which we find ourselves, has to be reduced as far as possible, but, having said that, it still remains true that within the global figure of dollar expenditure we have to decide how many dollars should be allocated to this that and the other import, and in deciding what is the amount of dollars to be allocated to any particular import we have to balance the advantages and the disadvantages, both to the individual and to the national economy as a whole. We believe that if such factors are taken into account as loss of tourist trade, damage to the hotel industry, the inflationary effect of the loss of revenue, the expense involved in setting up the machinery for supplementary rationing, the inconvenience to the public and the unfair discrimination which has resulted as between the one user and the other, the balance lies rather towards disadvantage than to advantage.

The Government have made a great deal of play about the black market and the influence of the black market on the consumption of petrol in this country. I believe, in view of such figures as have been published, that that argument is nothing more nor less than a smokescreen. Because taking the figures of the Russell Vick Report, if I interpret them aright, the result is as follows: it was estimated that when the basic ration was in existence about 160,000 tons of petrol a year went into the black market, and it is now estimated that in spite of the abolition of basic petrol there is still a leakage in the order of 100,000 tons.

That would appear to mean that people who had basic petrol were using something of the order of 60,000 tons of petrol from the black market. The total basic ration was 800,000 tons. I suggest that 60,000 in relation to 800,000 tons was not such a figure as to justify the abolition of the basic ration and the inconvenience to which the community has consequently been put. What the Government ought to have done, if they believed that the black market was really serious, was to introduce measures such as we have been discussing during the past week; not now and not last January, but 18 months ago. Then they would have secured, if the figures are correct, a considerable reduction of dollar expenditure.

Our complaint is that the administration of the issue of supplementary coupons is rigid and unimaginative. I do not wish to delay the Committee by quoting a number of incidents, particularly as I have no doubt that hon. Members on every side of the House will be able to give instances which have come to their notice in their constituencies. I should like, however, to cite two cases. The first is that of a war widow with a semi-invalid mother, a father who is ill and not likely to recover, and a small child. In order to try, in the reduced family circumstances, to eke out her widow’s pension this lady decided to start again in the profession of architect in which she had been employed before the war. She began to practice from her own home. She could not afford to buy a car herself. Her mother has a car and a microscopic allowance of petrol. The lady asked for a small allowance in order that she might save time in the journeys she had to take in her professional capacity. She was told that there were adequate public services and that there was no ground for granting her application. Hon. Members will readily realise that she is able to devote only three hours a day on the average to her profession. The rest of her time is naturally fully taken up looking after her mother, father, and child. If she had to rely upon the public services her journeys would take two hours per day out of the three that she can devote to her profession, leaving her one hour a day. In fairness to the Minister I am bound to say that in a large proportion of the cases which I have brought to his personal attention he has been able, after having the cases investigated, to see his way to some extent to meet the request, and that this is a case in point.

I wanted to cite this case and I wanted to be sure of my facts, but the actual letters had been sent to the Ministry. I sent my secretary round to the Ministry yesterday to ask whether I might have the letters back because I wanted to use the case in my speech today. My secretary was told that if she waited a short while she could have them back. She waited, and eventually she received the letters together with a further letter signed by the right hon. Gentleman, granting the lady a small allowance, for which I am most grateful to the right hon. Gentleman. Not having a “police state” mind I am quite sure that this was purely a coincidence, and a happy conjuncture which caused the letter from the right hon. Gentleman to be just ready to be signed by him so that it might be delivered with such promptitude to my secretary. The only reflection which has occurred to me has been that when the Bill which we were discussing yesterday becomes law, and if ever the right hon. Gentleman is accused of having red petrol in his car, that defence may not be the sort that would be accepted by a hardhearted magistrate.

The other case is that of the assistant to a county architect. He has to travel about the country, as will be readily understood. He has to travel to see about maternity homes, hospitals and similar institutions. One of his disabled colleagues has a small car. The county authorities authorised the architect to apply for a small allowance of petrol to enable him to run his friend’s car upon official business. The application was turned down. So important were the duties of this architect regarded by the county authorities that they gave the architect permission to hire a taxi for the use of him and his assistant on their necessary journeys.

I will give the House particulars of what has happened. A typical journey I am told is about 64 miles a day. If the architect had been given petrol the total cost to the county would have been 13s. 5d. per day. The total charges for the taxi for the same day amounted to £2 0s. 11d. The car that the architect would have used is an 8-horsepower and would have used very little petrol. The taxi is 12-horsepower, using much more petrol. We have been told of the need for conserving manpower. If the architect had been given a modest allowance of petrol he would have left the car wherever he was and there would have been no waste of manpower. In fact, the taxi man has had to wait, and has in fact waited for 4¾ hours a day. The net result of this admirable administration by the right hon. Gentleman’s Department, is that the county has had to pay at least twice as much, much more petrol has been used, and the taxi man’s time has been wasted hanging about all day. That is the sort of administration which the right hon. Gentleman has produced and to which we object.

I will turn now to the new scheme announced by the right hon. Gentleman in April. As we understand the matter, owners of E and S coupons will have no ration in future for their unfettered use, or rather the amount will be deducted from the total of their E and S coupons. The right hon. Gentleman is in a dilemma. He either assumes that the holders of E and S coupons have been breaking the law up to now and have been using their petrol for their own purposes, in which case his action encourages them, ex post facto; or else he assumes that they have not been breaking the law and have used their petrol for proper purposes, in which case he is inflicting grave injustice upon them by reducing their E and S coupons. No wonder they are angry.

The same thing applies to members of public bodies like rural district and county councils, hospital committees and so on. They all find that because they have been patriotic in the past by licensing their cars and using them on public business with their E and S coupons, they are to be deprived of the amount of petrol for their own unfettered use which their neighbours are to get. The right hon. Gentleman made a plaintive complaint the other day that nobody loved him. Surely the right hon. Gentleman can realise that practically every motorist—a large number of the public are motorists—believes that these regulations, restrictions and rationings are neither necessary nor reasonable and that the administration of them is unduly harsh. It is only reasonable that the right hon. Gentleman is not as popular as he apparently thinks he ought to be.

What about the future? What is to be the position in three or four years time, because that is equally as important as is the position today, and what are the Government doing about the future? Are we to have panic measures such as we have seen in each of the last three years during each of the years of the remainder of the Government’s life. In a speech on 8th April the right hon. Gentleman prophesied that there was to be a world shortage of petroleum, which he attributed to three factors. He said firstly, that the United States demand is growing; secondly, that there is and is going to be a shortage of tankers; and thirdly, that there is a shortage of refining capacity. What are the Government doing about each of these three factors? I am bound to say that their record so far on each of them is pretty lamentable.

It is often asked, in this connection, why, when we produce so much oil from sterling sources, we have to go to dollar sources; why do we have to buy American or dollar oil when production from companies under British control is far greater than our annual consumption in this country? The Lord Chancellor gave some figures the other day. He said that petrol production from British controlled companies amounted to 8 million tons a year. He gave the consumption for the United Kingdom as being 3,800,000 tons, that of the sterling area 5,600,000 tons, and foreign trade consumption as 2,900,000 tons, making a consumption of 12,300,000 tons, as against a production of 8 million tons, and he said that we had to provide the balance from dollar sources.

Those figures are very impressive. We should like to know this afternoon, as I am sure the British public would like to know, whether they are justified. Is the present scale of supplies which we make available to sterling countries and others outside the sterling area justified today? Is it right that so much petrol should go to other countries at our expense, when in England the basic ration has been abolished to the ordinary everyday motorist. Take the the item of 2,900,000 tons for foreign trade. I understand that it is made up as follows: for hard currency countries, 1,600,000, to soft currency countries, such as France, 450,000 tons; and to semi-hard countries—perhaps the Minister or Under-Secretary, in replying, will be able to explain what this rather nice phrase “semi-hard currency countries” means—850,000 tons.

The fact remains that there are very few countries, so far as I can discover, to which petrol is going at our expense, where restrictions are anything like severe as they are here. In Australia the basic ration is from six to 14 gallons a month, in Eire from eight to 12 gallons. In Denmark, one of the countries concerned, I believe that no rationing system exists, nor is there a rationing system in Belgium and Luxembourg. One certainly does not exist in Egypt and Ceylon. It is quite true that it is desirable in our present circumstances to export as much as we possibly can, and to reduce the dollar expenditure to the maximum possible extent. But we in this Committee are entitled to question the desirability of continuing, at a time when British motorists are so drastically restricted, to provide suplies of petrol to countries who pay for them very largely merely by running down their sterling balances. I query very much indeed whether the Government have adequately investigated this problem, and have done all that they can to see that if we are to provide petrol at our expense, the consumers in the country to which the petrol is provided should be subjected to something like the same restrictions as those to which we are subject in this country.

I turn to the Middle East. Can we have any estimate from the Government—I presume that they have made one—of the effect of the recent troubles in Palestine on Haifa, for example? I understand that the Haifa refinery was turning out something of the order of 4 million tons a year—a quantity equal to five times the basic ration in England—and that it is being closed down. What is to happen to that refinery, and to the new pipe line? We shall also be glad to know, and I think we are entitled to the information, what is the forecast by the Government of the effect of E.R.P. and the Marshall Plan? Are the American Government to continue to provide us in this country with petrol and oil products in order to enable us to continue to export those products to other countries?

Finally, I come to the question of refineries. The right hon. Gentleman referred to the shortage of refinery capacity as one of the limiting factors in the next few years. What are the Government doing about refineries? There are two main developments. There is the big refinery at Abadan, the biggest in the world, which requires continual enlargement. There are plans on foot for the erection of some four new refineries in this country. Oil, and especially refined oil, is one of the best methods of obtaining dollars in hard currency that this country can possibly have. Therefore, we on this side of the House believe that the increase of refinery capacity in this country and in Abadan should be given top priority. We should like to know whether there is truth in the rumours we hear that both the planning and the construction of these new refineries and the extension at Abadan are being held up by shortages of steel. If that be the case, as I believe, we should like to know what quantities of steel are involved, and by how much does the present allocation of steel to these items fall short of what the oil companies regard as reasonable in order to make good our position over the next three or four years?

The Government have hitherto refused to issue any figures of our steel allocation. The Ministry of Fuel and Power gave us a coal budget with estimates of the allocation of coal to different industries, the domestic demand, etc. This was extremely valuable and not only helped us in this House to get a better idea of the matter but also helped the country at large. Will the Government do the same thing in regard to steel, and if not why not? We are told that steel is the main bottleneck and yet we are refused any information. We believe that refinery priority should be right at the top of the steel allocation list. When we look around we see not far from here Government buildings being erected which must take appreciable quantities of steel. The country cannot in those circumstances believe the Government’s views about steel shortages.

I have said enough to show that the Government record to date so far as oil and oil products are concerned is one of failure. I do not blame the present Minister for the whole of that. After all, he inherited a pretty mess from his predecessor. There is no doubt that coal under nationalisation has a heavy load of responsibility to bear for our present difficulties in regard to oil. By its failure to produce plentiful supplies of coal for domestic industry in the winter of 1946 and the spring of 1947 it intensified at the most inopportune moment possible the home and industrial demand for oil supplies, and by its failure to expand our export trade on anything like an adequate scale, it seriously aggravated a difficult foreign exchange situation. Too late now the man mainly responsible has publicly confessed the failure of his plans. The present Minister, however, must bear a large share of the responsibility for the fumblings and failures of his own term of office. In the light of that miserable record he need not be surprised that he is not loved by all.