§ Order for Second Reading read.
§ 4.35 p.m.
§ The Minister for Industry (Mr. Tom Boardman)
I beg to move, That the Bill be now read a Second time.
The Government's proposals for assisting the coal industry were outlined by my right hon. Friend in his statement to the House on 11th December. The purpose of the present Bill is to translate those proposals into reality.
The aim is to give the coal industry the opportunity to re-establish its financial viability in order that it can provide a secure and competitively priced primary fuel, making its full contribution towards meeting the growing energy demands both within the United Kingdom and overseas.
Obviously, as similar debates here have amply shown, one cannot consider the position of the coal industry in isolation from energy trends and prospects generally. I believe it would therefore help the House if I were to begin by setting the scene in which coal problems have to be considered and indicating the Government's approach to energy policy formulation.
One thing that has been shown clearly in recent years is the way in which the energy scene and prospects can change dramatically—in the world at large as well as in this country—in a relatively short time. For example, in this period, the OPEC Governments have united to increase the revenues which they derive from oil lying within their territories, and have also pressed for participation in its production—a development which is eventually likely to have far-reaching implications for the whole process of oil production and distribution. At the same time, concern has been growing about the adequacy of oil reserves to meet rapidly-growing world demand, and the likely transformation of the USA into a major oil importer over the next few years has given added emphasis to this. I am not one who takes an alarmist view, but the longer-term prospects call for very careful assessment, on a global basis.
1598 Other major changes over recent years have already been well ventilated in the House. North Sea oil, with the promise of some 75 million tons a year by 1980 from the United Kingdom sector, is obviously a tremendously valuable development for this country. It will by no means fulfil all our energy demands but clearly has profound implications for the whole alignment of our energy policy thinking. Nuclear power now provides some 3 per cent. of the energy demand in this country and in the longer term will make an increasingly important contribution to our energy demand. The statement made by my right hon. Friend on 8th August pointed the way that we intend to follow on this. But until we are well into the 1980's it will not have any major impact on our need for fossil fuels.
North Sea gas will provide us for many years ahead with a fuel that has special advantages, particularly on environmental grounds. The work of getting the gas rapidly introduced into this country has made great progress. But there is inevitably some doubt about the ultimate level of reserves and the price to be paid for any future discoveries.
There has also been the drama and change caused by last winter's coal strike with the long-term effect it has had on costs and demand.
In considering the problems of individual fuels in this country for up to 15 years ahead, it becomes essential to set the national picture in the context of broader international prospects. This is one of the reasons why this country instigated the idea of a European initiative on energy at the EEC Summit in October, detailed work on which is now developing in Brussels.
We can be certain that our energy demands will increase. They rose from under 300 million tons coal equivalent in 1966 to 323 million tons coal equivalent in 1971 and could be well over 400 million tons by 1980. But the heart of energy policy problems is the role that the individual fuels from different sources will each play in helping to meet the total demand. It is the balance between competing fuels that determines how well the national objectives—in terms of energy costs, security of supply, balance of payments, efficiency and environmental considerations—are served.
1599 But precisely because the key elements in the energy picture fluctuate as I have described, it is notoriously difficult to forecast with any precision the prospect for each individual fuel. That is not surprising. The consumer exercises his choice by reference to price, quality, availability and so on. The Government have nevertheless been intensely involved, over the past two and a half years, in improving the methodology and content of the assessments which my Department makes of future energy prospects. We have also given much thought to the best means of informing the House about these.
I know some hon. Members would wish to have the Government's views set out in a White Paper. But against the background I have described, I am sure that the House recognises the dangers of rushing in with such a document. Over the last two years, a White Paper would have run the risk of becoming quite substantially out-of-date soon after publication; and it could not have given adequate consideration to the movements in the world scene which other Governments, like ourselves, are only now becoming able to analyse and evaluate.
Moreover, this Government very firmly believe that energy policies are not something to which one should momentously give birth at intervals of some years, like a baby elephant, which I understand is nine years in gestation. The pace of change, in this country and abroad, is such that very regular review is needed. It is foolish, and could be extremely costly, to adopt fixed positions prematurely or foreclose options unnecessarily.
This debate gives me an opportunity to tell the House of the key developments that we have under review, and also to hear the views of hon. Members on this important subject; and I have no doubt further occasions will arise in the months ahead. I can also assure hon. Members that we will continue to bear in mind the desirability of keeping the House fully informed about this complex and important sector of economic activity. I can give no guarantee today about how and when this might be done; but I have tried to expose the problem as fairly as I can, and I can promise to keep the point very much in mind.
§ Mr. Eric Ogden (Liverpool, West Derby)
If the Government are not prepared to consider a White Paper, is it in the hon. Gentleman's mind or in the Government's mind to give any information about the so-called Rothschild Report, on which a great deal of what he is saying this afternoon was based?
§ Mr. Boardman
As I have said, I will keep all these matters in mind so that I can keep the House informed of what is an important subject. I want to explain why it is now premature to introduce what many hon. Members like to see, for many reasons—namely, a White Paper. It is with that matter that I have been endeavouring to deal.
So much for the background against which we have reviewed the future of the coal industry. On the one hand it is faced with severe competition from other fuels. On the other hand it has the opportunity to match that competition in an expanding market and to obtain for itself a future which will bring security and fair rewards to those who are engaged in it.
I now turn to the immediate problems of the National Coal Board. The NCB lost £157 million last year and is expected to lose about £100 million this year. An important cause of the losses this year and last is attributable to the miners' strike in January and February, the overtime ban which preceded it and the wage settlement which followed it. Certainly no industry in which labour costs account for almost half its total costs could expect to come through such an experience unharmed unless the demand for its produce was very strong indeed. That has not been the case with coal.
For some years there has been a decline in the market for coal. In 1950 coal accounted for about 90 per cent. of total energy demand. By 1971 its share of a bigger market had shrunk to 43 per cent. The gas and transport markets which bought 40 million tons in 1955 have virtually disappeared. Domestic consumption has roughly halved and industrial use decreased by some 60 per cent. In all, demand fell from about 230 million tons in the mid-1950s to 156 million tons in 1970 and 141 million tons in 1971.
1601 I shall return to coal's long-term future in a moment, but the immediate question we had to consider was whether it was right to allow that decline to go on unchecked or, indeed, whether the country could have afforded the flight away from coal which would have been the probable result of letting events take their course.
Before deciding to put the present proposals before Parliament, the Government naturally considered the alternative of letting the industry find its own level without any more aid than is provided for in existing legislation. But we rejected that course as one which would have led to intolerable consequences both on social grounds and because it would have imposed an unacceptable danger to the security of the country's supplies of energy. It would have been out of the question to have allowed the large-scale unemployment which would have resulted, especially before our policy for helping the regions which now face difficulties has had enough time to show its full effects.
What might be called the strategic implications were no less in our minds. Here we must look beyond the coal industry to the prospects to which I have referred for energy as a whole.
In his statement on 11th December my right hon. Friend referred to the uncertainty about the future availability and the price of energy throughout the world. The Government must make a judgment about the balance of risks and costs of alternative courses. In making that judgment, the Government must have in mind the virtually irreversible nature of pit closures, and the cost of sinking new pits. It must also weigh the effect on our balance of payments of the use of different fuels. At present we believe that it would be foolish to allow an over-rapid contraction of the coal industry.
The immediate achievement of financial viability would require a massive and sudden contraction. However well that contraction were managed—and it would he a massive task—it would leave the country both with an energy gap in Me very short term and unacceptably vulnerable to energy shortages in the longer term.
These are the main reasons why we have ruled out the possibility—
§ Mr. Alex Eadie (Midlothian)
Will the hon. Gentleman confirm—we have heard rumours about this—that the Government were concerned about the vulnerability of oil and gas rigs in the North Sea should this country be involved in a conflict? Was that an additional argument or reason when the Government were considering the coal industry?
§ Mr. Boardman
We must take into account all the factors regarding the security and price of alternative fuels. That is being taken into account. Such factors give rise, as the hon. Gentleman knows, to many uncertainties. These are the main reasons why we have ruled out the possibility of letting the market for coal find its own commercial level in the short term—the social consequences and the need to provide a measure of insurance for our future supplies of energy. At this point of time, therefore, the choice we face is not whether it should be made available but on what scale.
§ Dame Irene Ward (Tynemouth)
In all this interesting submission which my hon. Friend is making, can he tell us whether the Conservative Government started examining all this when they took office, because it must have taken a lot of examination for them to have reversed their whole policy?
§ Mr. Boardman
My hon. Friend is right. We started examining it as soon as we took office, but a great number of uncertainties are still not resolved. For example, no one can say with assurance what oil there will be in the North Sea, or what will be the security of supply from the Middle East. I can confirm that a full examination has been going on, is going on and will continue, but it does not enable us at this point to pitch with any assurance the figures we can expect and put to the House as to the balance in which our energy demands are likely to be met as between alternative fuels.
I shall be dealing later with the limits of aid proposed in the Bill. They are, of course, maxima, but even if the total sum were to be made available there is going to be some contraction of the industry. Some pits will close because their reserves are exhausted. For the other collieries. I welcome the initiative of the National Coal Board and the unions in setting up 1603 the joint review of pit performance, and I have no intention of pre-judging its outcome. But I should be misleading the House if I did not make it clear that, with losses of well over £100 million a year, a number of pits must be so grossly uneconomic that closure must be inevitable, and there are other pits which which will have to improve their performance enormously if they are to remain open.
There will undoubtedly be some contraction and there will be redundancies. In short, our proposals will avoid contraction on a scale which would have been unacceptable on social grounds and would have left us dangerously underinsured against a world shortage of energy. They give the industry the opportunity to put itself in order and its size in the future will depend on the effectiveness with which it tackles this task. The range of output in three years' time is substantial. I would project that it would be upwards of 120 million tons, but how much upwards will be determined by the response of the industry.
§ Mr. Roy Mason (Barnsley)
From the hon. Gentleman's investigations, can he give any indication of what he expects the manpower to be in the industry by the end of the decade?
§ Mr. Boardman
That is up to the industry. The whole philosophy of the Bill is designed to give the industry an opportunity to compete and to secure and provide employment for those who produce coal. The Bill gives the industry the opportunity to get itself into that posture during the period in which the aid will be available.
I turn now to the Bill. The provisions can be grouped into four parts. The first two clauses deal with the Board's capital reconstruction and its borrowing powers. Clauses 3 to 5 provide for payments of a social nature. Clauses 6 to 9 will contribute directly towards meeting the operating costs of the Board. Clause 10 provides for an increase in the membership of the Board.
The effect of Clause 1 will be to allow the Board to start its next financial year with a clean slate. Its accumulated deficit on revenue account up to next March will be in the region of £200 million. 1604 With some minor exceptions, the £275 million allowed for a write-down of capital assets is based on a professional assessment of the reduced earning power of the Board's mineral rights, collieries and the houses associated with them. It does not cover the assets of the Board's ancillary activities, and I shall explain later how these will be dealt with.
The writing-off of £475 million of debts owing to the National Loans Fund will save the Board about £45 million a year in interest and depreciation charges. Of this the annual cost to the taxpayer in interest forgone will be some £28 million. All this debt will be written-off with effect from the end of this financial year.
Some of the provisions of Clause 2 are consequential on Clause 1. I refer to the new borrowing limit of £550 million and the new deficit limit of £50 million. The 1946 Act required that the Board should, taking one year with another, break even. The need to break even, after taking account of grants, will be one of the main financial disciplines on the Board. The Board will be expected to achieve this objective. It will, of course, be striving to avoid deficit in future, but the possibility cannot be excluded and, in the circumstances, we have decided to revert to the limits laid down in the Coal Industry Act 1967, but to retain the provision of the 1971 Act to increase these if it should prove absolutely necessary.
§ Mr. Bruce-Gardyne (South Angus)
My hon. Friend refers to financial disciplines. Can he tell us whether and when due financial targets are to be re-established for the Board and when we can expect to have them met?
§ Mr. Boardman
The Board, in preparing its forward plan in the light of reconstruction, will still have the financial objective of breaking even one year with another, and we shall on each occasion before deciding the grants which will be paid to it for the following year carry out a full review of how the Board is operating the industry, what its estimates are and whether it is asserting the appropriate financial disciplines in the exercise.
§ Mr. J. Enoch Powell (Wolverhampton, South-West)
When my hon. Friend refers to breaking even, one assumes that this is after taking account of the interest payments on written-down capital. If so, 1605 what is the amount of these interest payments, approximately year by year, which are being written down?
§ Mr. Boardman
I am afraid that I cannot give my right hon. Friend that figure now. Perhaps my hon. Friend the Under-Secretary of State will be able to do so later.
The other main purpose of Clause 2 is to clarify, amend and extend the borrowing powers of the Board and its subsidiaries. I will not detain the House on the details of the Clause, which can be gone into in Committee.
Clauses 3 and 4 extend existing powers to make grants towards social costs and to make redundancy payments. The expenditure which qualifies as social costs is defined in Section 3 of the Coal Industry Act 1965. In brief, they are costs arising from contraction and redeployment, such as payments under the Redundancy Payments Act, compensation for loss of superannuation prospects, and resettlement and removal expenses. The Government's contribution is to be kept at its current level of 50 per cent. and not to decline to one-third next year as the 1971 Act provided.
The amount of expenditure under Clause 4 will depend on the future size of the industry and especially on the number of redundancies. I shall be having discussions with the Board and with the unions on these proposals for improvements in redundancy terms. The new terms will need the approval of the House and I shall be putting proposals forward when my discussions are completed. The cost to the Exchequer will, of course, be partially offset by savings on social security benefits which would otherwise be payable. There is no provision in the Bill for the continued payment of premature pensions, since Section 4 of the 1967 Act already authorises this.
Clause 5 allows the Government to contribute towards the cost of an increase in the miners pensions. At £1.50 a week, this is very small and its real value has declined over the years. The unions have asked the Board to agree an increase to £2.50 a week, and the claim is to be discussed, as will be the level of contribution to be made by those not yet retired. The limit of £25 million on our contributions is again a maximum, for the period to March, 1976.
1606 I want to deal next with the four clauses—Clauses 6 to 9—which will help to meet the Board's operating costs as opposed to its various kinds of social expenditure. Clause 6 revives a power in the 1967 Act to pay for the costs of extra coalburn. This is a contingency measure, since the need to enable a safe margin of supplies in future may give rise to some over-supply in the shorter term. I cannot yet say how much extra coal the generating boards will burn, and there is therefore no question of giving a cost estimate yet. This will depend on the electricity industry's demand for what might be called its basic or unsupported burn, and this in turn will depend on the availability and relative price of other fuels, particularly oil.
A major difference between the 1967 provision and that in the Bill is that this time the grant will be paid to the National Coal Board itself, the real beneficiary, and not to the electricity generating boards. I am discussing with the National Coal Board and the generating boards what arrangements would be acceptable to all concerned and will report the outcome to the House in due course.
§ Mr. Adam Butler (Bosworth)
On a point of clarification. Is the sum to which my hon. Friend has referred appropriate only for extra coal burn or may it also be used for maintaining the present level of coal consumption by the electricity generating boards?
§ Mr. Boardman
First, it is necessary to arrive at the amount of coal that would be burned by the Central Electricity Generating Board with a choice of fuels if there were no adjustment in the normal market price. The subsidy will be payable on the additional burn above that quantity.
Clause 7 is another contingency measure which will enable us to contribute towards the Board's stocking costs. This could be an alternative to extra burn and certainly use of the two powers will have to be considered together. It was, of course, a matter of judgment what level of stocks should be financed in this way. Certainly we want to see stocks build up as a precaution against interruption in the supply of other fuels. But, even so, there must be a limit to the amount of stocking we should encourage. 1607 On the other hand, there is a minimum level of stocks which the Board should hold out of commercial prudence. We therefore intend to help with the cost of stocks above about one-twelfth of deep-mined output, but not of stocks above 30 million tonnes.
Clause 8 permits grants to producers of coking coal supplied for use in the iron and steel industry. Without subsidies our output of this essential material would inevitably decline, and we need to insure against a recurrence of the recent situation of world shortage. ECSC rules have for a number of years allowed such subsidies to he given by member States. These rules are currently under consideration within the Community, and we shall play our full part in those discussions.
The provision for a regional grant in Clause 9 reflects the importance of the NCB as an employer in the regions. Out of a total of some 266,000 miners, 114,000 work in development areas and a further 130,000 in other assisted areas. There are 27,000 miners' jobs in Scotland, 37,000 in Wales, and a further 43,000 in the North-East. Altogether three-quarters of all miners work in special development, or intermediate areas, and a further 15 per cent. are employed at pits in a derelict land clearance area. These figures speak for themselves. They speak louder still if it is remembered how many collieries are located in isolated villages, with no means of livelihood other than mining, and that over the past decade assisted areas have lost some 230,000 jobs in the coal mining industry. A further massive and rapid rundown in the coal industry would compound the regional problems which already exist.
Of course, not all the money will be spent in the regions—colliery equipment might come from elsewhere—and some of the benefits will accrue to the Board as a whole. But the purpose of this grant will be to enable the Board to moderate contraction in the regions and to give the industry a breathing space in which to re-establish itself and achieve viability. While I shall certainly not intervene in its running of the industry or seek in any way to usurp its responsibilities for such matters as pit closures, it will be responsible to us for the broad implementation of Government policy and for spending 1608 to good effect the grants in association with it.
Clause 10 will enable us to increase the part-time members of the Board by three. This will raise the maximum number of Board members, apart from the Chairmen, from 11 to 14.
The Board is faced with the need to contain its costs, improve its productivity, extend its markets, and further the good industrial relations which now exist and to manage the new regime for its ancillary activities, which I shall shortly mention. Above all, of course, comes the need to return to viability.
Of course, these skills can be found within the Board and its employees, but, given the complexity of the issues which must now be tackled, the size of the undertaking and its impact on the national economy, it would be short-sighted to deny the Beard the opportunity to take advantage of the particular skills of anyone who can assist in these tasks.
I must again stress that the total grants provided for in the Bill are maxima and that the amount for any individual year will be fixed in advance of the year to which they relate in the light of the industry's circumstances, performance and prospects. This particularly applies to grants relating to all the Board's operating costs. The grants are not, therefore, open-ended in any way. On the contrary, it will be the responsibility of the Board so to conduct its business as to ensure that it breaks even, after taking account of what it will receive from the Government. The fact that the Board will be receiving these grants must not be allowed to reduce its responsibility for running the industry. It will be accountable for what it does, and it is our firm intention that we should in no way hamper it in the task that it and the men have set themselves of re-establishing viability. But of course we shall want to know how the public's money is being spent and be satisfied that the Board's policies are compatible with the Government's strategy.
I should now like to deal with a number of points which do not arise directly on the Bill, but upon which it is only right the House should know the position.
First comes the question of alternative employment for men who leave or find 1609 that the traditional avenue of employment in the coal industry is not open to them. Most such people will be in areas where unemployment is already above average. I can assure the House that the Government will use all their available powers, including those in the Industry Act and its provisions for regional development grants and for selective assistance, to encourage the creation of new jobs. This drive should be the more effective because of the recent expansion of Government training and retraining facilities. I am consulting the Board and the unions to ensure that the best use is made of the resources available to the industry and to the Government in our efforts to find alternative employment in such cases.
I now turn to a different subject—the future organisation of the National Coal Board's ancillary activities. The House will remember that the Coal Industry Act 1971 authorised a review of these activities. None of these activities has a direct relationship with the Board's primary duty of producing coal. They fall, broadly speaking, into two groups: those concerned with coal distribution and those concerned with North Sea gas and the processing of coal or its by-products.
The utility of some of these activities to the Board has been challenged. Following our review, the Board has agreed with me on a reorganisation which will allow it to concentrate on its main activities. This reorganisation, which the Board will be implementing as soon as it can, will enable any new financial requirements of the ancillary activities to be met from the private sector, which I believe is the right source.
In order to make private sector participation possible, these ancillary activities will be organised as separate subsidiary companies, some of which will be wholly-owned in the first instance, which will be grouped under two holding companies. All these companies will be registered under the Companies Act. One holding company will become responsible for what are now the activities of the Coal Products Division, including North Sea gas; the other for the miscellaneous group of activities mainly concerned with fuel distribution. The board of each holding company will include outside 1610 directors. The assets will initially be transferred at book value, but the board will carry out a full revaluation of the assets of each holding company, taking professional advice as necessary.
The constitution of both the subsidiary companies and the holding companies will be such that private participation will he possible, and it is there that these concerns will look for the finance which will be required to carry on their work. But my consent will be required for the raising of new capital by a wholly-owned subsidiary. I believe that this is a proper and sensible arrangement.
§ Mr. Peter Hardy (Rother Valley)
I do not wish to argue the principle of the matter. Will the hon. Gentleman make it clear that he will resist any reduction in the public stake in North Sea oil and gas ventures in which the National Coal Board is involved in view of the vast profits, perhaps unforeseen, which the Government are allowing foreign companies to make?
§ Mr. Boardman
I do not propose in this debate to discuss the question of North Sea oil and gas. I am talking only about the organisation that will arise, and I am making it clear that this will be in a separate company. I am making it clear, too, that the financing of the private companies and ancillary activities should come from the private sector.
§ Mr. Dennis Skinner (Bolsover)
There are differences of opinion about the way in which these ancillary activities are to be organised. Nevertheless, in view of all the public furore over the last 12 months about National Coal Board personnel being involved in industries supplying goods to the board will the hon. Gentleman issue a directive that no one in the higher echelons of the National Coal Board management may have shares in these ancillary suppliers?
§ Mr. Boardman
I do not think that it would be right to act on allegations in the Press which have not been proved and which are the subject of investigation. I am sure that the National Coal Board will ensure that the proper standards and disciplines are applied when there is a conflict of interest between the responsibility of members to the board and their personal outside interests.
1611 The board has told me that it has decided, on commercial grounds, to withdraw completely from some of its activities.
§ Mr. Boardman
For example, the board has already disposed of interests in computerised hotel reservations and concrete products, and, as I told the House on 19th October, it is the board's policy to sell its brickworks. It is also urgently reviewing its land and property holdings with a view to the rapid disposal of any not required for its commercial activities.
Another point upon which I should touch is the small, independently owned mines. The House will remember that on 6th March the then Secretary of State for Trade and Industry said that the Government would give sympathetic consideration to the difficulties which these mines faced. They were undoubtedly hit hard by the miners' strike last year and the fact that they had to pay the increased wages which resulted from it. I am glad to be able to tell the House that at my request the board has agreed to reduce the royalties which the licencees pay. In addition, licensed mines will qualify to the same extent as National Coal Board pits for the coking coal subsidy under Clause 8 and their workers will benefit from any improvements in redundancy terms.
Finally, I come to the total bill which the nation will have to pay. Of course, it is a very large one, but the total is not in itself a fair indication of the cost to the nation. If the coal industry were allowed to collapse we should be facing enormous expenditure on unemployment and other such benefits. Moreover, our import bill would be increased because we would need to replace present supplies of indigenous fuel.
I have already made it plain that in each case the figures are maxima. The exact amount to be paid each year will depend upon the progress of events and the way in which the industry is responding to the challenge before it, for such massive support from public funds can be justified only by a strenuous and 1612 whole-hearted response from those in the industry themselves to make every effort that they can to improve coal's competitive position.
The House will know that before we put our proposals forward I asked both sides of the industry to let me know what steps they were prepared to take to this end. This led to an unprecedented cooperative exercise by management and the unions in working out proposals of their own which I have discussed fully with them. As a result, both sides have expressed a determination to hold—and if possible extend—markets, to increase productivity and to contain costs. I am glad to note that output per man shift has set a new record in each of the last three weeks. The unions are also pledged to try to settle differences by discussion and negotiation, or by arbitration, and to avoid industrial action if at all possible. I welcome this new spirit of co-operation. Of course, we shall have to see what happens, but I am convinced that the great majority of the men in the industry want to see it succeed.
I am sure that the whole House will join me in wishing that the industry's response will be as adequate as I expect and that it will not be too long before we can look forward to seeing a coal industry capable of competing fairly and fully with all comers.
§ 5.15 p.m.
§ Mr. Eric G. Varley (Chesterfield)
This is the last Bill to come before the House in 1972, and to hon. Members on this side of the House there could not be a better way to conclude the celebrations for the National Coal Board's jubilee year. Nicely timed for Christmas, Parliament is playing Santa Claus to the coal-mining industry. So, apart from a few quavering protests that we can expect from honourable ghosts of Christmas past on the back benches opposite—I am sorry that the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) is not here—we can settle down to a cosy Second Reading debate. It is nearly all sweetness and light, and I think that, thanks partly to Clause 6, for some considerable time to come that light will be generated by coal-fired electricity.
It was not always like this. It was not like this 10 months ago. It was not like 1613 this when the hon. Member for Harborough (Mr. Farr) tabled his motion on a Friday afternoon castigating the coal-miners. There were some threats and dire warning about the folly of the miners in destroying their own industry. We were warned that pits would be closed, that they had been suicidally sacrificed, and that it was all the result of the strike. But when one looks at what has happened—and I think that the Minister was honest in acknowledging this—one finds that not one pit has been closed purely as a result of the physical effects of the strike.
There were prognostications from some informed commentators, including that all-wise and all-knowing journal the Economist, that the industry was more or less a write-off, and that prophecy has proved to be equally stupid. I wonder what is in the mind of the Daily Telegraph leader writer today when he looks back on what he wrote on 26th February 1972:the contraction of the British coal industry must be accelerated, even if this means more trouble with the miners. A featherbedded industry producing 140 million tons of coal each year is an expensive luxury which this country can afford no longer".I also wonder what the Sunday Times now thinks, because on 20th February 1972 it had the headline "Farewell, King Coal"—the King is dead, long live the King.
Things improved, and most of those dire warnings have proved to be nonsense. Mr. Ezra, to his credit, decided that he had to start to rebuild his bridges with the miners. A plan was worked out to bring new life and new hope to the coal industry and this Bill, involving as it does hundreds of millions of pounds, is right and is a credit to those in the industry. The Government for their part seem to have learned their lesson. As far as I can make out—although we shall want to examine the matter closely—there is no more of the extreme talk about hiving-off.
Certainly the Eden-Ridley axis has been broken, and we shall want to look at the situation in Committee. We ought to call this Coal Industry Bill the Consensus Bill to distinguish it from the 1971 Confrontation Bill. This Bill helpfully sets out rules regulating some of the borrowing powers of the National Coal Board's subsidiary companies. We shall 1614 want to look at that closely and study the words of the hon. Gentleman today.
We heard, for example, that only this week the Coal Board is to set up two holding companies—I think that the Minister described them as being for non-coalmining activities—which will have a very fruitful future. Certainly a fruitful future is envisaged for them.
Matters proceeded constructively, and last August we were all set for a statement from the Government setting out their approval for a new plan for the future of the coal industry. On the Opposition side of the House, we know that the plan was ready by 7th August. The Department of Trade and Industry and the National Coal Board, as we understand it, had agreed the terms of that statement, and this was widely known throughout the industry. This is only speculation, but the plan was ready, we think, in August, and we think that a suitably meek Government back bencher had been selected for the honour of tabling a planted Question.
But then at the last minute the Prime Minister stepped in. He probably recalled his own categorical statement made to the House on 17th November 1970, when in answer to a Question he said:The Government are not prepared to increase subsidies for nationalised industries."—[OFFICIAL REPORT, 17th November 1970; Vol. 806, c. 1034.]Perhaps he was the last person in the country who still believed those words. At any rate, he chewed them over very slowly and it took him another four months to swallow them. Meanwhile, back went the coal plan into the melting pot, and then the face-saving tripartite talks were called. After four months of toil and trouble, the Prime Minister's firm stand was vindicated. Precisely the same plan was produced in December as had been vetoed in August—with one small amendment. The estimated cost to the Government between those two dates rose from £700 million to £1,200 million. Of this, we think that £90 million should be debited to the Prime Minister's personal account, because this was the direct cost of the coal strike brought about by his confrontation policies, the old confrontation policies which he will no doubt nostalgically remember as he 1615 warms his hands over his coal fire at Chequers this Christmas.
So although it is a little late, the Bill is very welcome. It would be presumptuous of me to attempt to improve upon the explanation and outline of the Bill which we have heard from the Minister, briefed as he has been by officials and civil servants who have lived with the draft of the Bill for so many months. Nor can I improve on the very sound reasons the Minister advanced, none of which I would fault, in presenting the Bill. That does not mean that the Opposition regard it as the last word in perfection. In Committee we shall want to do our best to see whether we can improve it. No doubt we shall have the help of Conservative hon. Members; perhaps the help of the hon. Member for Bedford (Mr. Skeet), who helped us on the last occasion on which we had a Coal Industry Bill in Committee.
For example, we are not exactly satisfied with Clause 3, which empowers the Government to make grants at a rate not exceeding 50 per cent. to meet expenditure on specified items arising from manpower redeployment and contraction.
The Money Resolution is drawn fairly tightly on this and perhaps the Government might have another look at that and submit an amended money resolution at some stage. We certainly prefer the recommendation at point 7 of the 10-point plan of the National Coal Board and the unions, which called upon the Government and the European Coal and Steel Community to meet social costs in full. We shall want to be kept fully informed about the formula to be worked out to compensate the two electricity generating boards for extra coal burned. In Committee, we might even have a go at putting right Clause 7 of the 1971 Act.
With this Bill we now have an opportunity of setting the coal industry on a path of co-operation and progress, with the National Coal Board and the unions working more closely together than ever before. We welcome the decision of the Coal Board to open its books to the unions. We welcome the agreement to set up a joint policy advisory committee. We welcome the indication by Mr. Ezra that he sees no reason why miners' representatives should not come on to the 1616 board. Perhaps the Minister could make use of the powers he is taking in Clause 10 to help this along. We do not know about that. The Minister has not explained that. Perhaps the Minister who is to wind up the debate will say much more about how he sees the additional board membership and the places to be taken up.
The miners, for their part, have shown how much they can contribute. As I think the Minister said, productivity over the last few weeks has reached an all-time record. Only the other day Mr. Ezra said that the industry is operating at the highest level of efficiency it has ever achieved. We can compare this achievement with that of coal industries in other European countries which are already State-aided as much as or far more than our National Coal Board will be when the Bill is passed. They are crying out for still more aid.
Even in today's Press reports there are heartrending pictures of the plight of the West German industry which, as the House knows, is our biggest competitor in Western Europe. The power stations in North Germany are able to buy British coal much more cheaply than coal mined in the Ruhr, even though German coal is at present much more heavily subsidised, and even though last year, before the strike and before the overtime ban, coal was being produced at a profit in this country while in the Ruhr it was being mined at a deficit. The productivity of our coalminers far outstrips that of those in any of the coal industries in Western Europe.
The Government have belatedly, but at any rate sensibly, recognised the National Coal Board's contribution to that productivity and to things like regional employment. As the Minister said, about 76 per cent. of coal is mined in assisted areas and another 16 per cent. in derelict land clearance areas. So, even more belatedly, we think, the Government and Conservative hon. Members have awakened to the coal industry's unique and indispensable contribution to energy needs. The Government, I think, are now even accepting the need to have realistic pricing policies. I commend the Secretary of State for having taken on board the fact, as he put it so well on the day of his statement:that fuels which appear to be expensive at present may prove to be rather cheaper 1617 in years to come."—[OFFICIAL REPORT, 11th December, 1972; Vol. 848, c. 35.]He is right. It was equally well put only last month in the National Westminster Bank Quarterly Review by Mr. Derek Ezra, when he said:While part of Europe's coal production is uncompetitive with oil and other fuels today, it seems likely that it will be much more competitive by the 1980s.The Secretary of State has acknowledged this on numerous occasions, the latest of those being on 11th December. Speaking about trends developing in worldwide energy demand which make it vital to conserve our basic resources, he said:Some major European countries and the United States are aware of the impending problerns."—[OFFICIAL REPORT, 11th December, 1972; Vol. 848, c. 35.]That was in answer to my hon. Friend the Member for Midlothian (Mr. Eadie).
There are problems. Nuclear power, the potentialities of which we all wish to see realised, is coming along extremely slowly. Dungeness "B" power station is already four years behind schedule and is likely to cost more than double the original estimate of between £80 million and £90 million.
Supplies of natural gas, a clean and useful fuel, are of limited duration. Only last week, Mr. John Licence the Gas Council's chief economist, warned that it would cost more and that it would be a great mistake to use this excellent domestic fuel for raising steam in power stations. I hope that the Government will reject the misguided idea put forward in the latest Annual Report of the Central Electricity Generating Board that it should have more North Sea gas. Oil from the Middle East is of course plentiful, but it is going up in price all the time. The oil-producing countries of the Middle East are determined—
§ Mr. T. H. H. Skeet (Bedford)
Is the hon. Gentleman not aware, in this age of environmental considerations, that coal which comes from Yorkshire has a sulphur content of 2 per cent.? He is arguing that natural gas, which has no sulphur content, should be used in place of this coal in power stations.
That is a fair point. We want to know much more about the potentialities of natural gas in the North 1618 Sea. But it is undeniable that the Government are not enthusiastic about allowing the CEGB to have it. Nor is the Gas Council. They are both right. Until we know much more about natural gas, it is right that it should be restricted. We think coal is an admirable fuel for steam raising in power stations.
Returning to oil in the Middle East, it is true that it is plentiful, but it is rising in price all the time. The oil-producing countries of the Middle East are determined to extract as much revenue as they can from their oil resources. I only wish that the British Government would take a leaf out of that book in their approach to royalties in the North Sea. Perhaps they should emulate what the oil sheiks are doing through OPEC on this matter.
So the price of Middle East oil is steadily rising, and it is certain to be driven up further in satisfying the needs of the United States, which is about to become a net importer of oil on an astronomical scale. The dimensions of the United States energy crisis, which will have an impact on the rest of the developed nations, can be gauged by the estimate that the US adverse balance of payments for oil alone could rise from just over two billion dollars today to about 30 billion dollars in little more than ten years.
It is no wonder that President Nixon's adviser on supplies of strategic minerals in The Observer only the other day, 17th December, was reported as saying, in connection with the United States energy prices, that energy… is going to replace the cold war as perhaps the most urgent problem America faces in the years ahead … our society, our position n the world, our very way of life, its quality and goals, are dependent on how well we meet this challenge.So it is no wonder that America is aiming to double its coal output by 1985 and to recruit and train up to 50,000 additional mineworkers by 1975.
It is no wonder either that the Consultative Committee of the European Coal and Steel Community has been urging Britain and her future EEC partners to promote their coal mining industries in order to avoid an over-dependence, as they put it, on non-member countries for energy requirements.
1619 Nor is it any wonder that Lord Rothschild, the Government's multipurpose guided missile, has been set to work to develop what the Secretary of State now calls a total energy policy. We want to be kept fully informed about Lord Rothschild's progress and certainly of any detailed conclusions that he reaches in his study.
All those who confidently tell us that all our energy requirements are about to be solved by North Sea oil should remember that this latest and extremely welcome addition to our energy resources is unlikely to be with us until 1974, and then only very slowly. It will be several more years before we have ample quantities of North Sea oil. It, too, is of limited duration so far as we know. It is very hard and expensive to get—quite as expensive as Middle East oil. It was pointed out only this week by the North East Scotland Development Authority that Britain will never be self-sufficient in oil.
It is against that background that Sir David Barran, when Chairman of Shell, made a great deal of sense earlier this year when he urged the Government to encourage… mining all the coal which can be got out of the ground economically.Of course, the word "economically" must be interpreted in the light of the Secretary of State's new and enlightened approach on this matter.
It is estimated that accessible reserves of economically workable coal amount to 4,000 million tons and that unproven reserves of virgin coal may contain a further 12,000 million tons. So, for Britain, coal is not just a second best. In some respects, it is our lifeline.
The Government have recognised this by bringing forward the Bill and in our discussions they should provide further encouragement for the industry by announcing that Drax B power station will be coal-fired. They should not necessarily say that it is something for the CEGB to decide; the Government must take the initiative. If this were announced, it would encourage the National Coal Board to sink a new pit in North Yorkshire, somewhere around Selby, drawing further on our coal reserves and producing more job opportunities. Such an 1620 announcement would make plain the Government's recognition that expanding coal production is not an adjunct to social policy, not a kind of underground soup kitchen, as the Economist will probably tell us at the weekend, but an essential strategic resource, precious to this country's future.
We welcome this Bill and, if it proves to be necessary, we will vote for it—[Laughter.] If there is any trouble on the opposite side of the House, we are always prepared, on a matter of this sort, to come to the aid of the Government. We do this because we on this side of the House are the party who represent the coalminers of this country. We are certainly pleased that we are present today at King Coal's coronation.
§ 5.38 p.m.
§ Mr. Peter Rees (Dover)
This is indeed an annus mirabilis. We end 1972 with the hon. Member for Chesterfield (Mr. Varley) pledging his support for the Government in this highly important measure. I can only say to the Minister—I hope that I will be forgiven for lapsing into bad Latin—"Timeo danos". I would be extremely suspicious of any Bill which commanded the whole-hearted support of both the NUM and hon. Members opposite.
This is an annus mirabilis for many reasons. Those who might have had good reason to expect to bask in the sun of this Government's approval have been turned away into the shade. Forestry, for instance, may now be denied dedication grants. The apple growers of East Kent have viewed with dismay the increase in the quotas for foreign apples. They, alas, have not benefited from the Christmas benevolence of the Government whom they supported so valiantly at the polls.
On the other hand, those who have regarded themselves in the past as the undying opponents of this Government now find themselves the unexpected beneficiaries of lavish generosity. Indeed, it must be unexpected, to judge from the cries of delight which we have heard from the benches opposite.
Having the privilege to represent Dover and Deal, I of course welcome certain aspects of the Bill. I hope that the future of the three pits in my constituency will be underwritten for many 1621 years ahead by the generosity of my hon. Friend. It would be churlish of me not to pay tribute to him for this. There is a steady demand for coking coal which can be produced by those pits and I hope that they will supply that demand for many years to come.
I do not pretend to understand the working of Clause 8 in detail or to know exactly how the Minister proposes to secure the supply of coking coal, but I cannot but feel that my pits will be beneficiaries of his unexampled generosity. 1 therefore welcome the Bill for that reason. I think, as the leaders of the National Union of Mineworkers in my part of the world have stated in the Press, that it will do wonders for the morale of those who work in the pits in East Kent. I think it will give the lie to those cynics who say that a pit gives of its best only when it is under a jeopardy notice. I hope that with this unexampled generosity from the Government they will give of their best and that we shall have a dramatic increase in production.
Beyond my constituency interest I welcome what my hon. Friend said about the peripheral activities of the National Coal Board. I have never felt that the National Coal Board, unlike any other commercial entity, should be debarred from extending its activities into what I call peripheral activities. Provided that there is some logical commercial link between the two, it is fair that it should extend its considerable expertise into other fields.
I have always advocated that there should be an opportunity for private capital to participate. Therefore, I welcome my hon. Friend's imaginative proposals which I am sure will command support on this side of the House. This injection of private capital—the alliance of private and public capital—I am sure, will be fruitful, and both sides of the industry will profit from it.
I also welcome my hon. Friend's proposal—or perhaps it is Mr. Ezra's proposal—that the National Coal Board should divest itself of unnecessary assets and land. My hon. Friend has not condescended to quantify how much money he feels may be raised in this manner. It is important that we should know in broad terms what kind of sums could be made available. This must in a sense 1622 condition our approach to the Bill. If the National Coal Board has assets worth £200 million or £300 million of which it cannot make proper use, it may be that there will not be the need for these massive sums. We hope that the huge figures mentioned will be maxima, and we hope also that the National Coal Board, by prudent husbanding of its own resources, will be able to capitalise itself.
If I welcome the Bill for those two reasons, that does not mean that I am required to abdicate my critical faculties. If my hon. Friend will allow me to say so, he and the hon. Member for Chesterfield, who I regret has left the Chamber for the moment, were long on analysis but very short on detailed exposition of the solutions which they propose for the coal industry. There was a curious gap in their reasoning. We accept the analysis which perhaps has led my hon. Friend to the conclusions which he has put to us. We recognise that the country should never be dependent on one type of fuel alone. We do not want to become dependent on the oil-producing countries of the Mediterranean or the Persian Gulf. This must be common ground between all sensible thinking people in this country.
But my hon. Friend has not deployed in any detail—and with wisdom, perhaps, he has not promised us a White Paper on fuel—or made any forecasts on how far we shall be dependent in the 1980s on foreign sources of fuel. However, accepting his analysis, to what is this Bill directed? Are we to judge it as a social or a commercial measure? The Bill could perhaps be commended on both grounds, but if I, as a relatively new Member of the House, may be permitted a criticism of most post-war Governments, it is that we have never been given very clear criteria with which to judge this type of measure. Are we to accept this Bill on the ground that the coal industry needs a massive injection of capital to mechanise itself, to bring itself up to date and make itself competitive with the industries of Germany or the United States of America? Or is this a social measure to cushion the inevitable rundown of the manpower needed to produce the coal which we need? Which is it? I should have preferred a much clearer statement of my hon. Friend's approach to the Bill. I am left in some doubt.
1623 My hon. Friend said that the Government decided that they could not face a rundown in the short term of the appropriate level of the industry. What is the right level? I will not talk about a decline of the coal industry; we are talking about a slimming down process—perhaps even a rejuvenation. Over what period is this process to run? Are we really only talking about a massive social subsidy to the National Coal Board to mitigate the social consequences of the diminution of its demands on labour? If it is that, could we hear a great deal more about the type of rundown that is expected? Could we be permitted to debate a detailed plan?
It was made clear in my right hon. Friend's statement of 11th December that the National Coal Board and the National Union of Mineworkers were considering this problem together. I am delighted to hear that the gap that had opened between them in February last year has closed. If it is closed, what kind of plans are they working out together?
If this is a commercial measure, what kind of plans are they working out together for more advanced mechanisation in the pits? Shall we see more sophisticated cutters? Have plans been worked out for reducing the number of men needed for this kind of machinery? All these questions are left very much unanswered by my hon. Friend, and it is only right that we should pose them.
It may be said that these are detailed matters that must be left to the National Coal Board. I have the greatest respect for Mr. Ezra and his colleagues. Against considerable odds they have run a massive industry with substantial inherited difficulties. But I should like to know, if not from my hon. Friend at least from the Coal Board, what kind of plans they would like us to consider. If one pauses to think, one realises that no private industry could have written off half its share capital and then gone to the market to raise £500 million, without putting forward far more detailed plans than we have been given today.
I repeat the question: is this a commercial or a social measure? If it is a commercial measure, how long will it be before the National Coal Board expects to be able to compete on level terms with 1624 any coal industry across the world? I am sure most hon. Members want this. I have always wanted the coal industry to be a commercial industry, commercially viable, paying commercial wages. What has bedevilled the coal industry is this. It has been treated for far too long by Governments of both political complexions as a kind of social vehicle, and as a result we have never had a clear commercial look at it. It has not been in a position to pay commercial wages. I hope that with this massive injection of capital, with the strike of last February long behind it, this will set the industry on its feet. This is only a pious hope on my part. I have not got the facts and projections which I would like to have if I had to justify this measure outside the House.
I have listened with interest and sympathy to my hon. Friend. I am aware of his commercial acumen. We are very fortunate to have in charge of the destinies of the Coal Board someone with such commercial experience. I therefore give my hon. Friend the benefit of the doubt. All the same, if we are to have meaningful debates on the coal industry, we cannot shelter behind the fiction that these are details which must be left to the National Coal Board. If this is the true position, it is a damning indictment of all nationalised industry because it is not under proper control by the legislature which is ultimately responsible for financing it.
I hope that I have not been unduly carping at this season of goodwill. As the hon. Member for Chesterfield said, whatever else happens to my hon. Friend in what I hope will be a long and distinguished career. he has secured a niche for himself as the Santa Claus of the coal industry.
I end on a more serious note. I have heard it said all too often, both inside and outside the House, that the country owes something special to the coal industry. It may do, and I am sure that Labour Members will make the point. We all know the industry's history. We do not have to have worked with our hands at the pit face to know about the past. A mere lawyer knows a little about the conditions in which coal is mined. But if the country has owed a special debt to the industry, I hope that hon. Members on both sides will recognise that 1625 if the Bill becomes law the Government, a Conservative Government, will have discharged that debt.
§ 5.51 p.m.
§ Mr. Alan Fitch (Wigan)
I hope that the hon. and learned Member for Dover (Mr. Peter Rees) will forgive me if I do not follow the line of his interesting remarks.
I hope that I am right in thinking that the Bill means the realisation by the Government, after much prodding by the National Union of Mineworkers and the National Coal Board, that it is in the national interest that the industry should not be allowed to contract any more. I hope, too, that it is not just a matter of maintaining the stains quo, but that the industry will expand and that the Bill is the first step towards that end.
There is a growing realisation in both Russia and America, and we hope in the EEC, that if a fuel crisis is to be avoided the production of coal must be increased. Those of us with experience in the industry have been pressing for a long time that coal production should be increased to avoid the probable shortage of this fuel in the 1980s. I make no apology for repeating the statement that we are precariously dependent on oil from abroad to meet half our energy needs. There is no need for that when we have more than a century's reserves of coal at the present rate of production. Why rely so heavily on imported oil, a burden on our balance of payments, which may be under pressure again very soon, when there is no balance of payments problem in the mining of coal?
An interesting document, one of the best on the subject of energy, was published recently by the NUM. In the document, entitled "National Energy Policy", the union gives a grave warning of a potential energy crisis by 1980 and calls for a radical reshaping of the Government's energy policy to avoid the crisis. It says:What is not profitable now may be profitable in 1985.In other words, it is right that the industry should be subsidised now in the interests of the country in the future.
My hon. Friend the Member for Chesterfield (Mr. Varley) drew attention to a report in last Sunday's Observer 1626 by its American correspondent, who wrote:America is approaching Christmas, uneasy about whether she has gathered enough winter fuel.We are not particularly interested in the short-term lack of fuel of the American economy, but the writer said something very important. He quoted a statement by President Nixon's fuel adviser that the shortage of fuel was likely to take priority even over the cold war. That suggests that the American Government are treating very seriously the possibility of a fuel shortage in the next decade, and in particular a coal shortage. We must do the same.
Of particular interest in the Bill is the reduction of the NCB's outstanding liabilities, as outlined in Clause I. This is long overdue. The burden of debt and the interest thereon which is resting on the shoulders of the NCB is grossly out of proportion to its assets. This has been particularly so since 1965, when the pit closure programme was accelerated and became very considerable. It led to a reduction of assets without a relatively corresponding decrease in debt. One thing that the clause does is to redress the balance.
The industry deserves Government help for many reasons, if for no other than that it has made great and successful efforts to improve itself. Figures have been given by both the Minister and my hon. Friend the Member for Chesterfield. We have had new productivity records, the highest for 20 months. Coal sales arc rising, for the first time for two years. Stocks have been built up to a pre-strike position. As the Chairman of the Board, Mr. Derek Ezra, has said:These major achievements in productivity and sales are real proof of the determination, co-operation and involvement of the industry's team of 300,000 people to ensure that coal remains a competitive fuel and a big business in Britain.Another promising aspect of the industry is the recent development of even closer co-operation between the union and the Board, resulting in a newly-formed Joint Policy Advisory Committee. I hope that the Press, which all too often gives false impressions of the negative attitude of the trade union movement in general, will this time highlight what is 1627 going on in the coal industry, and particularly the contribution being made by the NUM.
The Advisory Committee has recently sponsored a joint sales drive. In the past few weeks 3,500 sales leads for heating installations passed on by employees—members of the NUM, among others—have resulted in an increase in business. Of those sales leads, 500 have come from my own area of Lancashire.
I hope that I shall be forgiven if I become parochial now and say something about the North-West coalfield, where we have difficult geological conditions. There are difficult geological conditions in many other coalfields, but in the North-West they are particularly difficult. However, we also have some great assets. First, we are very close to the consumer. Secondly, the coal is generally of very good quality. Thirdly, we have a tradition of good coal preparation, so that customers have an assurance of quality and efficiency.
The Minister gave some indication that talks were proceeding with the National Union of Mineworkers over an improved redundancy payment scheme. This is overdue. At present there are 12,000 men in the industry over the age of 55 who are in receipt of redundancy pay. The present scheme provides payments of 90 per cent. of a man's average earnings for up to three years. At the time it was negotiated it was accepted as a good arrangement. Since then more attractive schemes have been brought into being, for instance for the dockers and the railwaymen. I hope that in these negotiations the Government will take such factors into account.
One thing that pleases me about the Bill is that there are to be regional grants. This is important for an area such as Lancashire which is in an intermediate area. As the coalmining industry is labour-intensive rather than capital-intensive it is important that employment in areas such as Lancashire should be maintained.
Clause 10 deals with an increase in membership of the Board. It would be interesting to know why the Board is to be increased and what sort of people the Government have in mind. I hope that the additional two or three members will 1628 be drawn from people with trade union experience. It is rather difficult to know what is behind the Government's thinking in increasing the membership.
I turn to the European Coal and Steel Community. We obviously cannot discuss a Bill such as this and ignore the Community. It is right that in producing such a Bill as this the Government should have borne the Community in mind. The President of the NUM, Mr. Gormley, in his presidential address to our annual conference last July, pointed out that the British steel and coal industries would automatically become members of the Community as from 1st January 1973. They were the only two industries to be directly affected from that date. It was therefore in the interests of miners that they should be represented and I welcome the fact that both of our leading officials, the President and the Secretary, have been asked by the union to sit on the powerful European Coal and Steel Community Consultative Committee. By doing so they will be able to act in a way that will be of benefit to members of the union.
We should consider to what extent the Common Market countries subsidise their coal industries. I want to go into a little more detail on this than some other hon. Members have done. On a per ton basis, the German coal industry received a subsidy of 65p for each ton produced in 1971 and about 80 p per ton this year. By comparison the French industry obtained £2.55 per ton in 1971 and £2.35 per ton this year while the Belgian industry received £3 a ton in 1971 and £2.72 this year. The Dutch received just over £2 last year and £2.35 in 1972.
§ Mr. Fitch
I have reached that conclusion. The subsidy on German coal, where production is highest, is the least.
I understand that the Dutch Government confirmed in October last year that all Dutch mines will close by 1975. The Belgian, French and German Governments remain determined to maintain 1629 their coal industry. Speaking of Europe generally—and I do not intend to be controversial because this is not a controversial matter—Europe needs a well-organised long-term energy plan that places the coal industry in a well-defined role. We must all of us, when we enter the Community, work towards that end.
The Community makes grants towards the social costs of manpower deployment and to deal with any contraction in the industry. These grants are payable to Governments who pass them on to the industries concerned. Is it the intention of the Government that this will happen here, that any payments made by the European Coal and Steel Community to the Government will be passed on to the British coal industry? The Minister commented on Clause 4 and said that the minimum grant for stocking will be one-twelfth of annual production. That is in line with Community pressures.
After food and water, energy is the most essential ingredient of modern living. No industrial country can afford to take risks here. The Government have done the right thing in heeding the warning of all sections of the mining industry to take seriously the fact that the world energy market will need an expanding coal industry if a serious fuel famine is to be avoided in a decade's time.
§ 6.7 p.m.
§ Mr. Geoffrey Stewart-Smith (Belper)
At last a Government have arrived who manifestly have confidence in the coal mining industry. Not only have they got confidence in it but they have given it the resources to do its job. Some on these benches have been saying or implying that the Government have gone too far.
§ Mr. Stewart-Smith
I take exactly the opposite view. I do not believe that the Government have gone far enough.
§ Mr. Stewart-Smith
I do not want to see the output of the mining industry remain at its present level and I urge the Government to use all the power at their command to press the Coal Board to increase the total tonnage. What I am saying may appear to be revolutionary, especially among those who habitually 1630 regard the mining industry as being irrevocably committed to decline.
Both the United States and the Soviet Union not only intend to increase production but have actually done so. There is an upturn in their production. They both have massive quantities of indigenous oil at their command which we have not. The United States output used to be 590 million tons in 1970. It is planning to raise it to 1,171 million tons by 1985. That is America, with all its great reserves of power.
In recommending such a course I am motivated entirely by the strategic self-interest of this nation. I feel strongly that the Government must face the fact that we are heading for an extremely unpleasant international energy shortage. Oil used to be a buyer's market. The hon. Member far Chesterfield (Mr. Varley) implied that there is a lot of oil about. In fact it is becoming a seller's market, and I believe that oil will inevitably lose its competitive advantage which it has at the moment over coal, and much more quickly than is generally expected.
§ Mr. Skeet
Is my hon. Friend aware that there is enough uranium in the world to provide energy for a population three to four times the existing size, and that within a mile of the earth's crust there are 2½ trillion tons of uranium available? How can he possibly argue that there will be a shortage of world energy?
§ Mr. Stewart-Smith
Let me continue my argument and make my points. It will take some time before that uranium set in the earth's crust is actually made available in terms of power for British industry. There will be some period which we shall have to bridge.
§ Mr. Stewart-Smith
Yes; and I will come to exactly how efficiently nuclear energy power can be provided.
In a report produced by the NUM and the NCB, "Coal and Energy Policy in Europe", it is revealed that the United States, Western Europe and Japan will 1631 be increasingly large importers of oil in the years which lie immediately ahead. United States output is estimated to be capable of only maintaining its present level at the moment. Although the hon. Member for Chesterfield touched on this generally he did not stress sufficiently the urgency of the situation. It is expected that the United States oil requirement will double in 15 years.
My hon. Friend the Member for the Cities of London and Westminster (Mr. Tugendhat) who was with me on the Financial Times, wrote in that paper on 25th October 1972 of United States oil imports:By 1980 its oil imports could be running at the rate of 12 million barrels a day; that is the same as Western Europe's total present day consumption.Furthermore, in the Petroleum Times of 28th July 1972 John McLean, chairman of Continental Oil, stated:Imports are projected to more than quadruple, reaching a level of about 15 million barrels a day in 1985, a quantity equal to the entire output of the Middle East at the present rates of production.That is the scale of the problem we are facing. The United States will have to compete not only with Western Europe but with Japan for the available oil from the producer countries. Another aspect of this which worries me is that United States companies, from their natural patriotism, may switch from supplying Europe to supplying their own home market and may be encouraged to do so by financial inducements.
The seriousness of the situation is most stressed by the fact that Western Europe will double its requirement for oil by the mid-1980's. This is bound to cause irresistible pressure for the price of oil to go up more steeply than is anticipated.
I want to take issue with the NUM-NCB report "Coal and Energy Policy in Europe" because the authors have overlooked yet another important factor in this argument. The Soviet Union and the Soviet bloc will themselves be large oil buyers in future as well. According to an estimate made in January 1971 by the Deputy-Minister of Oil in the Soviet Union, the Soviet bloc countries might be net importers of oil by 1980 to the extent of between 10 million and 30 million tons a year. Since that estimate was 1632 given the position regarding their requirement has deteriorated due to a substantial increase in their domestic vehicle production. Soviet oil imports from the Middle East are running now at 5 million tons, and the revised estimate for 1980 is a requirement of some 110 million tons of oil.
In view of what I have said it seems to me to be sheer lunacy for the Government not to do everything in their power to expand—actually to expand—British coal production. This nation simply cannot allow itself to be dependent on insecure foreign oil imports, the cost of which is bound now to go up for the reasons I have stated.
§ Mr. Stewart-Smith
The point I am trying to make is that if in the immediate future the price of oil is to go up coal will regain its competitive position, and we must be in a position to exploit this and not allow the industry to stagnate.
I feel intensely that we must exploit these reserves of latent energy which we have in our country and under our own control. The Government must ensure security of supplies of power to industry, otherwise industry will be paralysed. As is generally known, there are 100 years' worth of coal under our very feet. We all of us know in our constituencies where there are large reserves and where they should be exploited. I hope that the National Coal Board will put in hand feasibility studies for future expansion where these reserves lie and where they can be exploited.
Those of us here in this House who have the miners' interests at heart have to make decisions to make sure that the coal which is mined is sold. To take up the point made by my hon. Friend the Member for Bedford (Mr. Skeet), if we cannot sell the coal there is no point in extracting it.
§ Mr. Stewart-Smith
It is, of course, the National Coal Board which pays the miners' wages, but the money is paid to 1633 the board by the customers, mainly the power stations and the generating industry, but ultimately by industry, and the men who work in the coal industry are paid by the consumer. Because the forecasts of Britain's energy requirements are so large I believe that, despite North Sea oil and gas, we shall need all the coal we can get for our own internal requirements.
Some people maintain that we shall not need coal because of the imminent arival of massive amounts of nuclear power. I would simply point to the National Union of Mineworkers' report, "National Energy Policy", in which it stated that:The contribution of energy from nuclear power stations has fallen over recent years …. In 1969, 10.5 million tons of coal equivalent were produced. This fell to 9.4 million tons of coal equivalent in 1970, with 9.7 million tons of coal equivalent in 1971.So despite all the high-sounding promises we have had and the massive amounts of capital put into the nuclear power industry, it is not delivering the goods. It may be that it will, and I hope it will, but they are not here yet and they are not imminent.
So I am quite certain that there is room for both more nuclear power and more coal, not just in an expanding British economy and for our expanding industry, but because I believe that the long-term major outlet for British coal lies in the industry of Western Europe, particularly in the industry of Germany.
That contention is in many ways endorsed by the report of the NUM and NCB, "Coal and Energy Policy in Europe", because they say:Here the British coal industry which produces mainly steam-raising coals can play a particularly important part. Over the last decade, in spite of many difficulties, the cost of British coal has remained stable in real terms. Given the right policy framework a similar performance can be achieved in future. This, together with escalating oil prices later in the decade, could transform the relative economic position of indigenous steam-raising coal.It is access to this European market which is vital for the industry, and the miners' true friends should have been working for this for the miners' benefit.
It is worth recalling what decisions the NUM-sponsored Members on the benches opposite made in this vital matter. Did they decide to do what was 1634 best for the miners or what was best for the Labour Party? Where was their loyalty? Where was their vision of the future. How far-seeing were they? They seem to have shown the intellectual horizons of a mole. On that historic night of 28th October 1971, 17 NUM-sponsored Members voted like sheep against entry into Europe. Only one voted in favour, the right hon. Member for Barnsley (Mr. Mason), and he was roasted by the unions for doing so.
Miners naturally look to us to assure their future. It is we who have given them preferential access to this vital market. It is thanks to the Conservative Party and forward-seeing and courageous Labour Members of Parliament that this situation has arisen. The Labour Party in this vital respect has shown itself to have operated against the miners' interests and allowed dogma to triumph over the miners' well-being. Let the miners ponder that and they will see where their true friends are—on this side of the House.
Naturally I congratulate the Government on the scale of their generosity and vision—£1,000 million is beyond the wildest dreams of many people in the industry. The British miners will know that when the Labour Government were in power they slaughtered the industry, Now that a Conservative Government are in power, £1,000 million has been made available. I have already had intimated to me genuine gratitude at this state of affairs.
There is a feeling that there should be improvements in severance pay. Why should dockers be pampered and miners treated so harshly? I join hon. Gentlemen on the Opposition side in pressing my hon. Friend the Minister to use his influence with the National Coal Board to take specific anticipatory measures now, so that we can be in a position to exploit future opportunities. It would be an enormous boost for the industry if the Government gave instructions for Drax B to be a coal-fired power station. That would he an enormous psychological advantage to the industry.
I should like to see the export facilities for handling coal on the East Coast at Immingham improved and expanded. I should like feasibility studies to be put in hand to see where it is possible for new shafts to be sunk to extract coal in those 1635 areas towards the east where the coal could go straight from the pit into barges to go to Western Europe.
What is to me more heartening than the actual amount of hard cash is this extraordinary new attitude towards the creation of wealth in the industry. The senseless self-destruction of strikes and the sterile stoking of long-dead class war have given way to a much more practical realisation that all those who win their livelihoods in the industry stand to gain much more by mutual co-operation. I pay special tribute to the leaders of the National Union of Mineworkers for their co-operation with the NCB and the Government. I enter a plea that their representation on the board should be increased. One hopes that future confrontations over levels of pay can be avoided by methods of arbitration being agreed and honoured, and I suspect that this will happen.
I hope that the Bill will be seen as a new deal for miners and that the package will include generous improvements in the scandalously low pensions. These have been outlined, they are long overdue, but they are nevertheless very welcome.
I also hope that the Government will give further consideration to compensation for victims of pneumoconiosis and that they will bring in regulations to control that disease and other bronchial diseases which are such a scourge of the industry. I have been to the Bretby Mining Research Establishment in my constituency and I have seen the work that is being done there. The sooner the results of that work are applied, the better.
I am certain that the miners will respond to this magnificent gesture and that they will increase their productivity directly by reducing absenteeism—
§ Mr. Stewart-Smith
They will reduce it and they can reduce it in the industry —it is something they can do directly. I am sure that they will co-operate in running the most modern machinery to its optimum with the greatest efficiency. Now, quite literally, the future of the industry is in the hands of the miners 1636 and they are no longer crushed by the burden of inherited debt.
I end by making a final plea. To guide those of us in the House who are interested in energy and mining problems, will the Government—if not in a White Paper, in an annual statement—give us an indication of their thinking and future plans to ensure the provision of sufficient energy to British industry?
§ 6.25 p.m.
§ Mr. Dennis Skinner (Bolsover)
I will first take up two or three points which have been raised in the debate, starting with the hon. Member for Belper (Mr. Stewart-Smith). He spoke about absenteeism in the mining industry. From a purely technical point of view there has been a fairly substantial reduction in absenteeism both before the strike and since. In the year preceding the strike the absenteeism rate went down from about 17½ per cent. to 16 per cent. In the months following the strike the absenteeism rate fell once again.
§ Mr. Skinner
I do not want to argue the toss with the hon. Gentleman. He gets it wrong on most occasions. The absenteeism figures in the last two weeks for which figures are available show a reduction from about 16 per cent. to 15 per cent., roughly speaking. We must also take into account that at this time last year an overtime ban was in operation which restricted the earnings of the men at the pit. One could argue from a purely economic point of view that they were more likely to be at work this time last year than now.
Is it not time for Members of Parliament of all people to raise the question of absenteeism? No Liberal Member is present. Where are the hon. Member for Rochdale (Mr. Cyril Smith), and the newly elected pavement-mender, the hon. Member for Sutton and Cheam (Mr. Tope) and the rest? It is high time we stopped talking about absenteeism in relation to miners. We do not talk about it in relation to dockers, bankers, doctors, junior executives or anyone else. Members of Parliament should keep their traps shut. I will not talk in more specific terms about the hon. Member for Derbyshire. South-East (Mr. Rost), but he is not 1637 here as often as some other people. I will leave it as broad as that. I am sorry, I mean the hon. Member for Belper. I excuse the hon. Member for Derbyshire, South-East, who spends a considerable amount of time here asking whether the steel works at Stanton are to be closed.
The hon. Member for Belper was anxious to tell us that because I and some of my colleagues—an overwhelming majority of the mining group—decided to vote against entry into the Common Market, we have not been in a position to influence the Government on the Bill. I have never heard anything so ridiculous. One of the disadvantages we face in relation to the Bill is not that we are not going into the Market as we wished but that we are going in. We are concerned that coal should be imported from third countries only because we are going into the Common Market. If a sympathetic Government wanted to stop coal coming from Europe or from third countries nobody could stop them, but because we are to join the Common Market we are now told what a wonderful thing it will be that we are not able to take such a course. Therefore, the Common Market will not help us in that respect.
Mr. Derek Ezra, Chairman of the Coal Board, went on record earlier in the year as saying that 7 million tons of coal would be sold to the Common Market, but we have recently questioned him about this matter and he has not had a great deal to say about it.
My hon. Friend the Member for Wigan (Mr. Fitch) said that members of the national executive committee of the National Union of Mineworkers would be serving on the committees of the European Coal and Steel Community. I would point out to my hon. Friend that they have been going to those meetings as observers ever since 1954. They will now have a practical rôle to play. The distinction which has to be drawn is that whereas on the one hand Gormley and Daly, or their two substitutes, will be able to play a role in Europe since they will have something to say and will take part in decisions, the Labour Party is in a very different position in deciding not to send people to take part in the European Parliament. This is obvious to anybody who examines the situation. The European Assembly will have no power, but Gormley and Daly will become in- 1638 volved in some of the real decision-making, and that is a quite different matter.
I should like to examine why we have this Bill before us in its present form. Many of my colleagues, and even some people in the union, have welcomed the Bill in toto and have given the impression that it was almost a present from Santa Claus in 1972. But it has not been brought before the House as a co-operative effort on the part of the Government, the Coal Board and the NUM. The Bill has been brought to the House mainly because of what happened last winter.
I have looked at the historical background, and to see the matter in true perspective, it is necessary to go back to the period before the General Election. In 1965 there was a write-off of £437 million, but by 1970 it became apparent to many people that there was a necessity for a further write-off. My right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever), who was then the Minister in charge of the coal industry, made it quite clear that if a Labour Government were returned at the 1970 election there would be an immediate write-off. Lawrence Daly also said at several union conferences that a Labour victory in the 1970 election would have led to a subsequent write-off, and certain other things were promised too. But Labour's victory did not take place, and we had to have a strike to settle the matter.
If the Tory Government, having examined the situation—and presumably they had examined the prospects ever since they were elected on 18th June 1970—had wanted to treat the National Coal Board and the union on a completely non-political basis, they could have done so in the provisions of the 1971 Coal Industry Bill. But they did not do so. In fact they did the opposite. One can only conclude that they took the view that, despite the fact that a write-off was necessary, they would follow their lame duck policy and send the National Coal Board to the wall like every other lame duck.
The miners did not strike only on the question of wages. They struck because they felt strongly about the general malaise in the industry. Following the strike the Government then came to this House for authority to pay the bill—but they paid the bill only for that 1639 financial year, namely a sum of £100 million. However, the situation necessitated payments over a number of years. The Government decided to spread the payment over succeeding years, and that is why we have this Bill before us today. The Government were pushed into taking action because the NUM made it quite clear that its members were not prepared to tolerate the situation. This is not unlike the Upper Clyde Shipbuilders situation. Initially the Government made it clear that they would not bail out UCS but eventually, as we all know, they bailed it out.
The Bill is being brought before the House to enable the industry to survive. The Government could have taken another role, and certain Conservative Members would have been happy to have seen the Government adopt a different approach. Such an approach would have led the board to put up prices substantially. It would have meant that coal consumption would be even more greatly reduced. It would have resulted in a greater number of pit closures and many miners being thrown out of work. It would have added to the unemployment total, which is still around the 800,000 mark. The Government would not have been the most popular people in the country. Therefore they took the other course, because they did not want to see a similar situation arising in a few years' time.
It will be appreciated that from a purely technical point of view a write-off was necessary. Coal consumption had fallen by 40 million tons since 1965 when the last write-off occurred—a drop of 22 per cent.—and a write-off was bound to take place. In 1965 when the earlier reconstruction took place nobody foresaw that natural gas would replace coal to the extent that it did. It was obvious that any self-respecting Government would have to take a new look at the situation. It must also he remembered that after 1965 interest rates rose substantially. Before 1965 the National Coal Board borrowed money at interest rates ranging from 7 to 10 per cent. This meant that a write-off of £37 million in 1965 became meaningless within five years. The amount of money having to be paid back at the end of the six-year period was such that it was more than it was before 1640 1965. In other words, in six years the whole of the amount written off had gone.
The same is true of depreciation. With an industry which was that much smaller the depreciation costs on the board per ton of coal mined were a great deal higher. In fact they were about 27p. During that period it must be acknowledged that even though we had a Labour Government more than 230 pits were closed. In an industry which has 230 pits fewer, that kind of capital debt cannot be hung round its neck when it is so much smaller. From those purely technical financing points of view any decent Government would have to take account of the situation. It is not a tragedy that the strike had to tell right hon. and hon. Gentlemen on the Government side to do it. The fact is that it needed a strike to tell the present Government that they had to change the capital reconstruction of the industry.
All I have said hitherto has been concerned with the writing-off of book debts. That is really what it is, apart from some of the financial assistance which has been given in various other ways. However, the write-down is a write-off of book debts. My right hon. and hon. Friends and I are concerned not merely with the write-off of book debts. What worries us is the write-off of human debts. There are literally hundreds and thousands of people who have worked in the industry all their lives, some for more than 50 years, and they will not get a penny piece out of this apart from the increase in their pensions. To some of them it means that when supplementary benefit is taken into account even that addition will be meaningless. Although they have been part and parcel of the industry which has had this large debt written off, the Bill means nothing to them.
That is why I suggest to the Minister that when he discusses the possibility of allowing concessionary coal for all those made redundant after the announcement of the Bill last Monday, he ought also to consider in conjunction with the unions and the National Coal Board the possibility of giving concessionary coal to those made redundant after the 1967 Bill who at present are not getting a cobble of coal although many of them worked in the industry for more than 40 years. That is one of the human debts which we should take into account.
1641 The same argument applies to the three-year related scheme which affected miners who were made redundant in the late 1960s. They have now gone through the three-year scheme and are on supplementary benefit. In my view they should retain this kind of severance pay until they reach 65 or unless they are fortunate enough to get other jobs meanwhile. I hope that we shall consider this point in Committee.
I want now to make two or three brief points about imported coal. We have heard mention of this already but it is necessary to stress that when we pay £70 million or £80 million for imported coal we ought to be considering ways and means of cutting back on coal imports.
On the general question of consumption, the Minister should bear in mind that it is no use asking for a general welcome for his Bill if it means that he will not be able to persuade the Central Electricity Generating Board to acquire new coal-fired stations. It does not matter what happens if the level of consumption does not increase, or if it decreases because the CEGB, our main customer, is not taking more coal. That is a matter of great importance to miners who are concerned for their future.
Then there is the fuel tax. I hope we shall not see any kind of back-door method whereby it is said "We have the Coal Bill through now. Everyone is happy. Presumably all the coal miners are pleased. Now we shall attempt to reduce the fuel tax on oil". If that occurs most of the advantages will have been lost.
Finally the Minister talked about pit closures. Whether he was trying to appease his hon. Friends behind him I am not sure. With a Bill of this kind, naturally he could not afford to make it appear that everything was being handed out on a plate. But the hon. Gentleman seemed to inject into his speech a note of "If you are not careful, we shall be shutting some pits". In other words he was implying that if the proposals which came from the NUM and the National Coal Board did not suit him and the Prime Minister, especially the Prime Minister—he wants to get his own back one day, though I do not think he will succeed now—that would be just too bad for the coal industry. If that 1642 is the Minister's attitude, he should say so.
I can assure the Government that if there is any attempt to do what I described on Monday as rolling back the carpet, the miners know the way to victory. They know where the path is and where it leads. Right hon. and hon. Gentlemen on the Government side should be careful about making threatening remarks. Other people can threaten too. That is why we have all the cooperation that we have now between the NUM and the National Coal Board. Yes, there is co-operation, but it is at a different level. It is not like the cooperation that we had between 1947 and 1972, certainly in the later years. It is co-operation. But it is different co-operation.
The NUM executive, its officials and branch officials at local level and the whole membership are not in the driver's seat. They are in a different seat now. They are able to say "On this sort of co-operative level we are equal to you. If you are not prepared to accede to the relatively minor requests that we make from time to time in respect of wages, we shall demonstrate in the only way possible. In that way we shall manage to get these requests agreed to not only by the National Coal Board but by any future Government."
§ 6.48 p.m.
§ Mr. Adam Butler (Bosworth)
This debate began with the hon. Member for Chesterfield (Mr. Varley) speaking in an atmosphere of cosiness, sweetness and light. It came as no surprise to me when the hon. Member for Bolsover (Mr. Skinner) brought in an aura of depression—
§ Mr. Butler
The hon. Gentleman's speech was depressing because of the total disregard for financial responsibility from within the industry that he appeared to attribute to it. I also found acute depression in the fact that he looked upon our entry into the Common Market as the source of greater imports. Whatever the hon. Gentleman may say, Mr. Derek Ezra whom I saw last week is confident that our coal industry can take advantage of the Common Market.
§ Mr. Butler
The final depressing feature of the hon. Gentleman's speech was his closing threat—the sting in the tail—
§ Mr. Butler
I believe that the industry is prepared to go forward in a sense of co-operation. If the threats which the hon. Gentleman made in his speech are carried through, that co-operation will evaporate. I only hope that his views are not typical of the industry as a whole.
When my right hon. Friend the Secretary of State announced his proposals for the Bill, I welcomed them. I did so for strategic reasons but with the proviso that there should be a healthy and viable industry as a result of the proposals. That proviso is one of elastic proportion. It is impossible to be certain that the Government are taking the right steps in the proposed expenditures outlined in the Bill. But I think that they are being thoroughly realistic in accepting the existing situation. My hon. Friend the Minister is also right in his basic approach. With all the uncertainties about the supply and origin of energy fuels over the next decade or more, it would be wrong to allow the rapid rate of rundown in the coal industry which purely financial and economic considerations undoubtedly dictate.
I make no comment about the past, except that I hope that half the lessons have been learned and will be acted upon. There is no possibility that the industry could be put in a condition in which it could generate the cash which is necessary to meet the £475 million for writing off capital debts and the operating deficit of the last two years. That is impossible unless the industry is sold to the Japanese buyers who are believed to be in the market. But if Japan is looking for coal mines, that is a good reason for us to hang on to them.
Despite its inflationary effects, a greater amount of the cost of the wage claim settlement should have been recovered through the price of coal. The board should have raised the price of coal by 10 per cent. There is something salutary about a simple cause-and-effect relationship. As it is, the taxpayer, whether he 1644 uses coal or not, is being asked to foot the bill. The running of a nationalised industry at a loss is in part at least inflationary, and that is the situation before it is agreed to write off the loss. But will the industry ever be viable?
§ Mr. John Mendelson (Penistone)
The hon. Gentleman is making a propaganda point. It is a simple fact that for the last 15 years, under various Governments, coal and steel have been the base of our export record. It was a sensible policy to hold the prices of coal and steel at a reasonable level so that we could be competitive in the price of our manufactured exports. If the hon. Gentleman overlooks that, he overlooks the whole basis of the calculation.
§ Mr. Butler
The industry's present financial target is only to break even. A high degree of subsidy is envisaged if it performs according to target. But it would have put a little more realism into the situation if 10 per cent. had been put on the price of coal. That would have equated more or less with the cost of the wage claim of £90 million.
I was asking whether the industry will ever become viable, or whether there will be a sufficient degree of viability, taking into account in the short term the important social costs of maintaining employment in the regions and moderating the contraction, and in the longer period the national interests and strategic advantages of an indigenous source of fuel.
As my hon. Friend the Minister and other hon. Members have said, the industry will undoubtedly be operating in a highly competitive arena. There is no need to point that out to the board or the unions. What is needed in that arena is highly efficient administration and financial management by the board, and by the industry as a whole high production and productivity from labour and machines.
What hope is there of achieving that? The most recent accounts, those for 1971–72, show a disproportionate rise in the costs of colliery operations. I am talking about the non-productive costs—not the cost per ton, but the total costs. When I see that salaries and related expenses and overheads and services have risen in a year by 30 cent., I begin to get worried. Even in the sundry expenses column there is an additional 1645 £2 million. There is £1 million in the bad debt column. I hope that that arose not from the CEGB but from some market which was improperly examined before the coal was sold.
I am not nit-picking, because it is reasonable to raise these points. They do nothing to dispel the worry which so many of us have on this side of the House that it is difficult, if not impossible, to apply the disciplines and attitudes of good financial management within a public enterprise.
I am cheered by the confidence exuded by the chairman of the board and, more practically, by the reports of the trimming of administrative costs now taking place. I find it encouraging to hear the Minister's reference to the new company structure. On the other hand, as I replied to the hon. Member for Penistone (Mr. John Mendelson), I find it disquieting that the financial targets are still those of breaking even and that the expenditure envisages in the Bill excludes any provision for the expansion of the industry or the sinking of new pits.
Viability also depends on the performance of the men in the industry. Reference has been made to the new record productivity in terms of average output per man shift. That is greatly to be welcomed. But I understand that the board is looking for increases in productivity of about 5 per cent. a year, which is of the order of 2 cwt. to 3 cwt. per man shift. I question whether that is possible against a background of a high degree of mechanisation, which must make such increases more difficult. In some pits the change from piece rate to time rate has reduced productivity, particularly in the making of approach roads for the highly successful retreat mining process.
Productivity will depend largely on the miners. I urge the board and the unions to agree as soon as possible on colliery productivity bonus schemes. I understand that the union is prepared to consider an industry scheme. But there is no incentive in an industry scheme as such. If the type of arrangement which was recommended by Wilberforce is to be effective, it must be introduced on a colliery basis.
§ Mr. Alexander Wilson (Hamilton)
Is the hon. Gentleman aware that the men do not want incentive schemes on a 1646 colliery basis? If the hon. Gentleman looks at the accident figures when piecework schemes operated, he will see that the accident rate was tremendous. It was only when we reverted on mechanised face lines to a day rate basis that the accident rate decreased. I ask the hon. Gentleman to make some research and find out how much he is prepared to give in the interests of safety.
§ Mr. Butler
I thank the hon. Gentleman for that intervention, because I can make it clear that I am in no way suggesting a return to a piece-rate system. But I am convinced, as he must be, that the responsibility of the workers at the face, or anywhere else underground or overground, is such that a bonus scheme of, say, 5 or 10 per cent. on earnings will not be such as to make them work in an unsafe way. The hon. Member knows it better than I do, but I have been down pits in my constituency and I know that they can get another half cut or another cut a shift. That is what would reduce the cost of coal and make the industry more viable.
The productivity of the industry depends on the miners. Indeed the future of the industry depends on the miners and the relationship of the unions with the board. There is obvious and welcome progress in the setting up of point policy consultation. I do not know who is in the driving seat. I know that the union is not. I am sorry to see that the hon. Member for Bolsover is displaying absenteeism from the Chamber, because the threat that he gave us about driving seats was totally unnecessary. I believe that joint representation in policy-making will be developed and that it will be of benefit. We are told that the union has accepted the principle that increased wages will come out of increased productivity. What firm assurances, if any, have we had on this subject?
These matters I have been talking about are under the control of the industry, but the assumption of viability in the future depends on external factors as well and on the extent of supply and on the costs of other fuels. Without a subsidy, coal cannot now compete whilst uneconomic pits are in operation. I have been looking at the costs of electricity generation, which is the main use for coal. I have figures supplied by the 1647 Chairman of the Central Electricity Generating Board. I compared for 1971 the eight latest coal-fired stations with the three latest oil-fired stations and seven Magnox nuclear power stations. The cost per unit of electricity sent out in 1971 from coal-fired stations was 5 per cent. higher than that from oil-fired stations. Indeed, if one takes away the heavy oil tax, the cost was 20 per cent. higher. Costs have changed since then, but they have not changed more greatly in respect of oil than coal. We are assured that the costs of oil will now rise more rapidly. Will they rise sufficiently to close the gap?
The costs of nuclear power generation are even more interesting. I have excluded from the seven Magnox stations Hinckley Point A, which was in only partial operation at the time. Again in 1971, including capital charges and a shorter write-off than for oil-fired or coal-fired stations, the generation costs from nuclear power were equal to those of oil, with its tax burdens, and therefore 5 per cent. less than coal.
This at least is a pointer to the future. While one recognises all the difficulties of deciding between different reactors—a decision which is made more critical and more difficult by the enormous capital cost involved—we must confidently look to and press on towards nuclear power for our main electricity generation in the future.
It is difficult to put a figure on this, but if the capital cost of a nuclear power station is about £250 million to £300 million—and we compare that with the cost of expanding the coal industry, through the opening of new pits which would be required—then at a cost of £20 million for opening a deep pit, with 1 million tons per annum in full production, it can be seen that the cost of a nuclear power station would be about the same as sinking new pits to produce as little as 12 million to 15 million tons of coal per annum. The expenditure I would go for would be towards the nuclear power stations.
I have raised a large number of questions. I have given no firm answers to them. I believe that most hon. Members cannot give such answers, nor indeed can my hon. Friend the Minister for Industry. That is really in the end the justi- 1648 fication for the Government's decision. As I see it the Government are saying "Let us hang on to what we know we have and can control. The imponderables are too many for us to be able to draw up an energy policy." My hon. Friend has confirmed this, because he will rot produce the White Paper which we all want. The Government are saying that the imponderables are too many for them to draw up an energy policy for the next two decades and that it is not possible to state categorically what size the coal industry should be in the 1980s. They are saying "We recognise, however, that the prospects for an energy crisis in the 1980s are real, and for this reason the rate of contraction of the coal industry must not be allowed to accelerate as it otherwise would".
In my view the proposals in the Bill are not, in the words of the hon. Member for Chesterfield, "feather-bedding" the industry. I believe that they are just sufficient to allow a period for decision—the decision by the coal industry as a whole, whether it is prepared and able to put itself in a position where it can compete with other sources of fuel after discounting the national interest factor. The proposals also allow time for the Government to assess the energy picture and for at least a partial clarification of the development of the world energy scene to emerge. I welcome the Government's judgment in this matter and I ask the industry to respond to what is essentially an act of faith.
§ 7.8 p.m.
§ Mr. Peter Hardy (Rother Valley)
The hon. Member for Bosworth (Mr. Adam Butler) will forgive me if I do not follow some of his points immediately, I also received a letter from the Central Electricity Generating Board and at least the figures for nuclear and coal-fired stations coincide.
I believe that the Bill should be given a modest welcome, since it will allow Britain to retain a substantial coal industry during the next few years. I hope that the Minister, and his successors during the 1970s, will refrain from taking steps which will allow the National Coal Board rapidly to expand production, as I believe, like many of my colleagues, that expansion will become necessary. The Government are fortunate in that they can act in time. Some countries 1649 have lost that capacity. In Western Europe the oil strategy has withered the coal industry. Only West Germany has any substantial mining ability in the European Economic Community, and it provides two-thirds or more of the Community's coal. The Community relies excessively on imported fuels, whether oil or coal.
We have had arguments about whether we should enter the Common Market. One of the aspects which worries me about British entry is that we are compelled to buy dear food and turn away from our traditional and cheaper suppliers. There is no guarantee either that the 20 million to 25 million tons of coal imports which the present Common Market uses will be taken from the British coalfields in future.
I think that the countries of the Community will prefer to take the coal from the State subsidised coalmines of Eastern Europe rather than from the most efficient deep-mined coal industry in the world, namely, that run by the National Coal Board. If we have to purchase their dear food, however, it is reasonable for the Government to begin to insist that Europe should take an increasing share of the reasonably priced coal which the National Coal Board produces. But if we arc to persist with 120 million or 130 million tons of production, we may not have the ability to export in five or 10 years' time.
The Minister gave a figure of 400 million tons of coal equivalent as the energy requirement for Britain in 1980, and it may well be that the figure in 1985 will be 500 million tons of coal equivalent, even allowing for a comparatively modest rate of growth in energy demand. If coal's share of that 500 million tons of coal equivalent is only 25 per cent., that will be equal to the sum total of the extractive capacity which the present Minister seems to suggest as reasonable. But if coal's share shrinks to only one-third, we shall need for our own requirements not 130 million tons but about 160 million or even 170 million tons, without any account being taken of either decisions or, indeed, ability to export.
Obviously there are complaints from the Conservative Party about the cost of the Bill, but one thing that has not been said from the benches opposite is that, although Conservative Members are 1650 uneasy about the subsidy to the National Coal Board—
§ Mr. Hardy
Many of them have already expressed that sort of view. Perhaps the hon. Member for Canterbury (Mr. Crouch) is an exception. [Interruption.] I will say merely that some hon. Members opposite may well be anxious about the cost of the subsidy. However, not one of them has so far mentioned that the amounts involved in subsidy for this part of the public sector are dwarfed by the profits which the Conservative Party is happily allowing to accrue to foreign investors from their over-rapid development of North Sea oil.
The North Sea oil developments have been described in recent days as a bonanza for Britain, as Britain's last chance for economic greatness. We ought not to under-value the immense importance of our offshore oil, but if we are to make the wisest use of that oil we ought not to start rapidly extracting it at a time when world oil prices are much lower than they are likely to be before very long. In these circumstances a more cautious approach to the extraction of North Sea oil and a greater reliance on the National Coal Board would be economically wise. A policy of careful husbandry would be more appropriate than the Gaderene rush that we have seen in recent months.
Our lack of information and the lack of public debate about a fuel policy is regrettable. We have learned much from the American experience, and this is of direct relevance for us.
§ Mr. Hardy
The hon. Gentleman says that, but I think he will agree that American self-sufficiency has now ended and that 11 billion barrels a day or thereabouts before 1990 will be required from the oilfields which supply Western Europe, and the increased competition there will inevitably mean a rapid increase in the price of oil which will affect not only the United States but Western Europe and Japan as well.
§ Mr. Skeet
The hon. Gentleman is overlooking the fact that the United Kingdom's situation is entirely different from that of the United States, because 1651 from the Cape to the North Sea there are 55 trillion cubic feet of gas, and there can be ample supplies of oil to the extent that, in the early 1980s, there will probably be 3 million barrels a day available to the United Kingdom.
§ Mr. Hardy
The hon. Gentlman may say that our situation is different from that in America, but it is worth remembering that 10 or 15 years ago American experts would have taken the same view and talked about their immense reserves of gas and oil in the United States, but now they are coming up against the critical situation of shortage and it could well be—one can only guess—that America's experience during the past 15 years will be reflected and reproduced in the experience which Britain will encounter during a similar period.
The hon. Member for Bedford (Mr. Skeet) mentioned gas. We ought to start thinking about gas supplies a good deal more carefully than we have done so far. At present customers are beguiled by the seagulls in the summer sun which they see in television advertisements. Sales of gas have been enormous. It is reckoned a success story for skilled advertising people. But if gas is used at the increasing rate currently experienced for power generation and for heavy industrial purposes, it is possible that the customer now installing new domestic equipment in response to the advertisements will find that the gas reserves have diminished before that equipment has worn out. This is further evidence of the need for careful and thorough public debate about the development of a fuel policy.
The need for a fuel policy is shown most clearly in relation to nuclear power. Hopes were high in 1967 when Magnox appeared to be the first of what would be a massively successful line of nuclear power generators. Pits closed by the score. Then corrosion was found, and we now know that Magnox will never again run at full capacity. Then we had the AGR stations. My hon. Friend the Member for Chesterfield (Mr. Varley) referred to Dungeness B, a serious disaster, albeit a quiet one, which resulted in the AGR stage of nuclear power development being vastly more expensive than was expected, just as Magnox was 1652 vastly less productive than was planned. Thus, after years of vast expenditure, nuclear power has been a considerable disappointment and had a greater failure of performance than was ever dreamed of.
When we now find, after all that expenditure, that the Central Electricity Generating Board's figures show that nuclear and modern coal-fired stations provided since 1962 supply electricity at exactly the same cost, we have good cause to worry, since considerable expenditure—much greater for nuclear power than for coal—was incurred before the year 1962 and did not enter into the calculations, just as—the hon. Member for Bosworth referred to this—the performance of the Hinckley Point A station was excluded from the individual cost ranges provided by the CEGB.
Since these are CEGB figures, and the CEGB is not known to be an organisation particularly in love with coal, we have profound reason to take a more suspicious look at the future of nuclear power in Britain.
There is another aspect of the matter which should be considered. The problem of nuclear waste was referred to in the Government's publication "Nuisance or Nemesis". It is a serious problem. At present we are putting this waste into stout stainless steel tanks covered with concrete, and we hope for the best. As we provide for more and more nuclear generation, so there will be more and more of these stout tanks accumulated. But some of the substances produced have an enormously long life. I am no scientist. but a scientist tells me that plutonium has a half-life—that is, a life in which it is capable of genocidal destruction—of 25,000 years.
If we are to accumulate substances like that and put them into these stout and sturdy tanks, we must remember at the same time that those tanks will have to stay around a great deal longer than we shall, and man's history over the last 24,000 or 25,000 years does not give great cause for confidence in a future stability during which more of these dangerous radioactive wastes will have to be dealt with.
For that reason I think it important for mankind to avoid excessive reliance 1653 on nuclear generation. One certain means of insuring against that is by providing for a vigorous and continuingly capable coal industry. I believe that the present Bill will allow that defence to be built up, and I believe that it will contribute to improving morale in the mining industry.
Hon. Members have referred to the superb technological record of the National Coal Board. The work has changed tremendously, as those hon. Members who worked in the industry know well. It is very different from the days when my father was a collier, just before nationalisation. The industry is different from the days when my grandfather worked in it. When I was a small boy and went to see him after he had been seriously injured in the pit, I recall his saying that coal should be wrapped up in silver paper and sold by ounces. Only a few years ago we thought that that scale of production might be possible—that we would be producing it in tiny quantities for specialist purposes. But the fact is that the world will he short of fuel, and coal will be needed in considerable quantities.
If we are to produce that coal, morale is important. I believe that Mr. Ezra and the leaders of the National Union of Mineworkers are to be commended, in 1972, after bitter experience, for embarking upon a policy which will see the technological record equalled by the establishment of superb industrial relations which could contribute so much to the economic and social well-being of the mining areas.
We must realise that since we need a lot of coal we shall need men to mine it. Those men will have to be recruited in future not because there is nothing else for them to do, but because there are rewards and opportunities which induce them to work in the pits. This is absolutely vital. Unless this is accented the Bill will not be as successful as it should be. For this reason the further provision of concessionary coal, better sickness arrangements and the improved pension scheme to which my hon. Friends have referred are extremely important. If we accept these things, it is clear that areas like mine, which have served the country so successfully in the past, though not always with sufficiently fair and adequate 1654 rewards, will be able to look to a happier future in which the rewards and returns will be a good deal better than in the past. As the Bill takes us just a little way along that happier road, I hope that hon. Gentleman on the Government side will not be so blind as to oppose it and that it will receive its Second Reading.
§ 7.22 p.m.
§ Mr. J. Enoch Powell (Wolverhampton, South-West)
I do not know whether 1 shall or shall not disappoint the hon. Member for Rother Valley (Mr. Hardy); but before coming to the part of the Bill to which he referred I want to mention other elements.
The Bill contains three distinct elements, of which the motives and the justifications are distinct and which fall to be judged upon different grounds. They are, respectively, the reorganisation of the capital structure of the industry, the provision for the payments which are broadly designated as social and, thirdly, the payments which are designed to make it possible, while breaking even after subsidy, to extract more coal than could otherwise be disposed of. I will take them in that order, and briefly, because I know that many hon. Members wish to take part in the debate.
First, the capital reconstruction. This seems to me wholly sensible and desirable. After all, the only objective reality is the working surplus, if any—or the working deficit—which the Coal Board makes year by year. This can be allocated as we please; but it is entirely a matter of accountancy—a movement or rearrangement of mirrors—whether we regard it as a deficit or surplus on a larger capital or on a smaller capital.
Even the new capital structure will still be arbitrary in the same sense as the old capital structure was arbitrary. Still, it is not so far from reality; it is less purely historical; and therefore it should be welcomed. Of course, nobody should make the crude mistake of supposing that this write-off in any sense represents public expenditure. It is merely an accounting rearrangement which has regard to what has happened in the past and has no economic significance whatsoever for the present or the future. To that extent I welcome the rationalisation which this Bill brings about.
1655 Secondly, there are the social provisions. There could be differences of opinion upon details; but I should think that in principle there could be no quarrel with the intention behind those provisions. After all, any large undertaking—and one far less in size than the National Coal Board—if facing the prospects of reorganisation and contraction which, on any assumption, the National Coal Board is facing, would, if it were a good and wise employer, seek to improve pension and redundancy arrangements and would, if it could, seek to make some of the additional and fringe payments which will alleviate the impact and the consequences of closures. So, broadly speaking, the second element in the Bill seems to me entirely acceptable and, indeed, admirable.
I am afraid that my judgment on the third part is the reverse. The third part of the Bill purports, on economic grounds, to provide a subsidy which will retain in production pits which otherwise would be uneconomic and working at a loss, a loss of which the size is approximately measured by the size of the subsidy.
The economic ground which is urged for doing this is that by and by the price structure of the sources of energy will be different from what it is today, and will be more favourable to coal and less favourable to its competitors. Therefore, the argument runs, it is a good and sensible investment, as it were, to pay these sums now to cover present losses in order to be able to produce profitably when the price structure of the sources of fuel has altered.
§ Mr. Powell
I agree with the hon. Gentleman if his negative means that that is not the true justification. I will come to the true justification presently. But I am sure he will not disagree that the argument which I have just paraphrased was put forward by not only my hon. Friend but my right hon. Friend the Secretary of State and has been widely canvassed in this context. I think we ought to look at it.
One thing that is morally certain about any expectations which we form about the demand for, and the supply of, the sources of energy in future is that shall be wildly and hopelessly wrong. I 1656 recall—I will cite no more examples than these—the expectations in the early 1950s—the days of the Ridley Committee and the rest—that all the coal that could possibly be dug, however expensive, could be consumed. I think that even 300 million tons a year for 20 years ahead was mentioned as a prospective requirement. All the wisest people had got down to their sums and worked this out. Well, that passed. It more or less went out, if I remember rightly, with "nutty slack" in about 1955 or 1956.
Then, in the early 1960s, one of the undisputed orthodoxies of future planning for the provision of energy was that the gas industry was a goner: the euthanasia of the gas industry was one of the centrepieces of the fuel element in the National Plan—admittedly out of date before it was published—as late as 1965. Yet now we are arguing about how many trillions of barrels-worth are to be pushed through the gas industry, energy provided in the form of gas from a source which was barely suspected—certainly not fully recognised—only five or seven years ago.
Now, we are no wiser than those who went before us. True, we know now what they did not know then; but we know no more about the future than they knew.
§ Mr. Powell
No. If the hon. Gentleman will be patient he will find that I shall come to a different conclusion from that.
Whatever changes are to come about in the future pattern of energy demand and provision will be reflected in price. That is accepted on all hands. So if it be true that the relative demand for coal is to rise, that will in due course reflect itself, like the rest of the unforeseeable future, in continuing changes in the pattern of prices.
The proposition of those who rely upon forecast in a field in which a fore cast has never been right, has never been right, has never been approximately right—
§ Mr. Powell
I ask the hon. Gentleman please to be patient with me for a moment: I shall not detain the House for long. Those who say that they are banking upon this forecast working out are assuming—let me put it in precise terms for illustration—that they know, or have formed an estimate, what the price of coal will be, relative to other sources of energy, at some particular future date.
Even if that were to be so—and all probability is against their being anywhere near right—it would be necessary to discount that assumed future price backwards to the present. I do not know what rate of interest one ought to use for discounting the profit to be made in 1978, 1980 or the early 1980s. Eight per cent. per annum? I dare say we should hardly think ourselves realistic if we chose a lower figure than that. Yet one would have to look forward to the profits of Midas in the 1980s for it to be economic, at that rate of interest, and upon those prospects, and at that distance of time, to invest money now in the business of making a loss during the intervening years. On the economic, accounting and financial arguments which are advanced, no investor in his right mind would look at such a proposition. He would not put a penny into it.
Of course—and here is where 1 rejoin the hon. Gentleman the Member for Midlothian (Mr. Eadie)—the economic argument is merely a facade. My hon. Friend really recognised it as such, because he knew that his White Paper, whenever he could get it out, would carry no more assurance than the White Paper which he very ingenuously said would have been too risky to produce at any time in the last two years. The real reason concealed behind that facade is social—the desire to avoid the dislocation, the hardship, the loss involved in a rapid reduction of the coal industry to whatever may be the size at which its output competes in price with rival sources of energy.
I want to face that challenge head on. This subsidy, this £125 million a year, means something more than the mere expenditure of public money; and it is right that the House should face the reality of which that figure is a symbol. It represents the deliberate waste of £125 million—indeed, much more than £125 million—worth of human effort. I say 1658 "much more" because the loss is measured not just by the amount of the subsidy: it is measured by the absence of profit above the break-even point, and also by the forgoing of whatever these assets and resources could have created in alternative applications. When we say that the Bill is enacting that for three years at least £125 million worth of human effort a year shall deliberately be wasted, that is a gross understatement: the true waste will be much greater.
I pose to myself the human question in these terms; for the issue is not one of humanity or inhumanity, nor is it one of concern or unconcern. The question is how best to fulfil the requirements of humanity and the requirements of concern, and I say—
§ Mr. Boardman
I recognise the doubt which my right hon. Friend casts upon the accuracy of forecasts—a doubt that is widely shared—but is he not falling into his own trap in forecasting that up to 1980, or even beyond, there will be an adequacy of sources of energy within this country and we can therefore safely go ahead without ensuring a continuation of supplies? Forecasts can go both ways.
§ Mr. Powell
I am doing no such thing. I am saying that one has to behave like any other person who is risking his money. He would look at the present and foreseeable pattern of prices and take his decision on that. Nobody seriously thinks that anyone who was risking his own money would invest it in continuing to make a loss on the marginal pits of this country.
I return to the dilemma which faces the House: it is how the demands of humanity and concern are best met. The object is shared; we differ only about the methods. It is my belief that to use public money and the power of the State deliberately to continue the employment of considerable numbers of men in operations which in themselves, as well as indirectly, are a gross waste of their effort and of the resources used, is not the best way to limit or soften the inevitable blows of economic change, whatever economic change is going to be.
On the contrary, I say that if we defy the economic forces, by using subsidy and State power to do so, then, when these eventually have to be faced—when, 1659 in the event, we have to capitulate, as the National Coal Board has had to capitulate year by year to the economic facts—the impact will be more sudden and more cruel than it would have been if we had been ready to face those facts from the outset.
I therefore put my money, almost literally—
§ Mr. Powell
This that I put my money on is not a gamble. I put my money, and I am prepared to put my vote, upon spending money in order not only to lighten the direct impact of economic change, as element two of the Bill does, but into whatever it may be which will facilitate and speed up the transfer of labour and effort from the marginal elements of the mining industry to other applications.
My last word is to agree, and to agree heartily, with the last words of the hon. Member for Rother Valley. He said—and I am sure he is right, and I rejoice that he is right—that in future we shall not get men into mining because it is the only thing for them to do. He said, and he was right, that we shall have to bid for men in competition with the other jobs that they can do. Let us spend money, if we wish to do so, in making those other jobs more readily available and the change to them easier to make. Let us do that, and we shall both be facing economic reality, instead of turning our backs on it, and also performing our duty, which is that of humanity and concern for those whom we represent.
§ 7.39 p.m.
§ Mr. Albert Roberts (Normanton)
I agree with the analysis of the right hon. Member for Wolverhampton, South-West (Mr. Powell), except on one point. He referred to the prophecies of the early 1950s and 1960s about the future of the coal industry. One thing that must be borne in mind is that with oil and gas the tap can be turned on or off. With coal, once the industry is run down it is very difficult to get it back on its feet.
My hon. Friend the Member for Chesterfield (Mr. Varley) talked about Santa Claus and referred to King Coal 1660 and his abdication. To me it is not a question of appearing in the guise of Santa Claus when dealing with the Bill. It is a question of facing realities.
About 16 years and seven months have passed since we debated a similar Bill concerning £1,000 million. I have been a Member of the House for 21 years. The right hon. Member for Sutton Coldfield (Mr. Geoffrey Lloyd) has been present in the Chamber this afternoon. He was a Minister for Fuel and Power at one time. Digressing a little, I am sorry that the hon. Member for Worcestershire, South (Sir G. Nabarro) is not present, owing to indisposition, because he always plays a lively part in coal industry debates. I well remember his pamphlet "Ten Steps to Power". Through the years we have had all these prophecies. I well remember scientists saying that we should have the last conventional power station in 1965. I remember the talk about nuclear energy and what would happen. Generally, the public seem to be in favour of running down the coal industry.
Let us return to the debate which took place 16 years and seven months ago, when the then Minister, Mr. Aubrey Jones, said:I suppose that if one were to conduct a Gallup Poll of public opinion on the coal industry one would find that, according to most people, the coal industry is one on which we are now very dependent but in a few years' time—well, the atomic age will be near and then coal can be despatched to the limbo of forgotten things."—[OFFICIAL REPORT, 10th May, 1956; Vol. 552, c. 1424.]The Daily Mail has said:Why spend all this money on the coal industry. We must continue to see that the atomic energy programme is the one on which more money should be spent. Let us forget about the coal industry.The hon. and learned Member for Dover (Mr. Peter Rees) asked the Secretary of State whether the reason for the Bill was commercial or social. But we are facing realities, and it is no use pretending that we are benevolent. We are facing a fact of life, and that is that something has to be done. In the words of the late Nye Bevan, we are gambling with our future on oil and gas to a certain extent, and this island is floating on the indigenous fuel, coal.
Over the years the coal industry has to some extent been denigrated by some of 1661 the pundits writing in the national Press. But now is the day of reckoning. We have to appreciate what coal is. I was glad that my hon. Friend the Member for Chesterfield referred to King Coal. It was a forcible abdication. We are now inviting him to be King once more.
When speaking of coal production and what it is all about, we must bear in mind that in 1955 we had 704,000 workpeople in the mining industry. Today we have 208.000 in the industry. In 1955 the output per manshift was 1.23 tons. It has been said today that the record stands at nearly 5 tons per manshift, which is a remarkable thing even when one bears in mind the capital which has gone into the industry. It compares more than favourably with other industries.
My hon. Friend the Member for Bolsover (Mr. Skinner) is always hurt when reference is made to absenteeism. He has a great respect for miners. But let us be fair. When all is said and done, we all regret the lamentable strike of last February. Nevertheless, since 1926—I was involved in the 1926 strike—no other industry has been more stable in applying common sense than the coal industry. To some extent there has always been a very reasonable understanding between those in the industry and the National Coal Board.
When the pits were nationalised in 1946 we thought that all our troubles would be gone. I have had many years experience in the mines under private ownership. The mine workers gained a tremendous amount under nationalisation, but even on that there have been misunderstandings.
I want to see the industry progress as it should progress. I do not want this afternoon to say, "We are giving the industry another chance by giving it this money. It must find its own level", and so on. Apart from being economic, it is a reality.
The question of energy is very important. Let us take Japan as an example. Japan's energy problem is almost insoluble. In a speech made in America by the Chairman of the National Coal Board, it was said that within the next decade Japan's annual energy consumption will be equivalent to 800 million tons of coal.
1662 We should also bear in mind that if the demand for energy in a country such as Japan increases at that rate, the increase in Western Europe will be similar. One thing we have not considered is that some countries today are just starting to go through an industrial revolution. The emerging countries will have something to say about this. They will need energy, and they will make the demands. So is it not as well, whatever the cost may be, that we keep our industry lively, quite apart from its being viable? When speaking about economic pits or uneconomic pits, we should remember that in a period of two years, or even less, an uneconomic pit can be made very economic. It all depends on what the industry is prepared to pay.
There should be cheap energy, but not at the expense of cheap miners. The price of energy will be stablised at a reasonable level. This can be brought about by full co-operation and by understanding between the various other energy-producing industries. In every coal industry debate which I have heard during my 21 years as a Member of the House, we have always talked about a concerted energy policy. But even now I am not sure whether we shall get it. To where are we heading? There must be some understanding.
The right hon. Member for Wolverhampton, South-West mentioned some of the energy-producing industries. It is true that the gas industry was moribund 10 or 12 years ago. It was in the same condition in the United States. But now the demand for energy has brought it into our economic calculations. All these industries are playing their part. What I want to see is a balanced policy, because whatever we say here today, by tomorrow there will be less oil, natural gas and coal. All of those industries are contracting industries. Therefore, it is essential to have a balanced industry as far as possible.
The 1967 White Paper based its policy on cheap oil, competitive supplies of oil and cheap nuclear energy. But we have realised now, particularly with our entry of the Common Market, that what we need is co-operation. Despite what some of my hon. Friends think, this must come. Nuclear energy will be viable at some time. I would not prophesy when—it may be 30 or 40 years ahead. Millions of pounds have been poured into that 1663 industry and we have had no decent return from goading it on. There were prophecies in the 1950s and 1960s that it would soon have parity with coal, but they have all proved wrong.
But although nuclear energy may be viable within the next 20 or 30 years, we must never neglect coal. It is no good just making forecasts. I realise as much as anyone the importance of this industry. The level of the debate today is almost comparable with what was said in the 1950s and 1960s. If we keep our sights on this industry, it will be rewarding for the country and worth the money that is being poured into it. Nuclear energy is very expensive and if we are to achieve anything, the Western Powers must co-operate.
I am pleased that we are having this debate. One could spend a long time eulogising this industry and what it has meant to the country. Far too many who have been ready to denigrate it are now realising that mistakes have been made.
What about recruitment? It is all very well to assume that young boys will just walk into the industry, but, in Barnsley for instance, not one colliery is working, and recruitment ground has been lost. This applies to other areas in my constituency. I should like the Coal Board to have a scheme for a bonus which could be paid to these young men when they reach 21, 22 or 23. Inducements are given to young boys in other industries. Mining is a precarious industry which needs intelligent young men, and they must have some inducement. When they got this bonus, they would have been trained in mechanisation and in handling machines at the coal face. We can mechanise as much as we like, but without young blood the industry cannot prosper. I hope that these points will be borne in mind.
I do not accept what the Secretary of State said. At present, 75 or more ships go around the Cape every day and there are coaling ships lurking in those waters. For our security, it is essential to keep this industry in a fit condition, so that it can meet a large percentage of our energy demands.
We should also remember how demands are made upon us for Middle East oil. If we can show them that we can stand up in the negotiations, if we can 1664 conserve our North Sea oil and gas as far as possible, if we could have a balanced programme of energy, I am convinced that the coal industry will have the confidence it requires, the miners will be ready to give a return, and the country will reap the advantage.
§ 7.56 p.m.
§ Mr. Patrick Cormack (Cannock)
The hon. Member for Normanton (Mr. Albert Roberts) always speaks a great deal of sound common sense. I hope that he will forgive me if I do not follow everything he said, although his last remarks tempted me to do so.
This Bill, to which I give a welcome, although a slightly qualified one, raises more problems than it solves. This was illustrated by the speech of my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), who posed the central dilemma—how does the State use its resources to discharge its responsibilities? Is the best way to use £125 million a year to keep the coal industry in being, or is that money better spent providing different opportunities, encouraging new industry to these areas, often deprived, and where people would be most affected?
I thought that my right hon. Friend posed the right question, but I disagreed with his conclusions for many reasons, some of which were touched on by the hon. Member for Normanton. I see the Bill as recognising the place of a great industry and its problems and the social responsibilities which fall upon any Government, whatever their political complexion, when faced with a crisis in a nationalised industry.
The main justification for this measure is a strategic one. The hon. Member for Normanton spoke a great deal of sense here. If one thinks of the world demand for energy and realises that the forecasts—I hate to use the word "forecast" after what my right hon. Friend the Member for Wolverhampton, South-West said—are that, by the end of this century, the State of California alone will be using as much energy as the whole United States uses now, one sees that we cannot lightly sacrifice an indigenous fuel.
I can be critical of the way in which this Bill has been produced, and the events of the last year. We are, for example, paying too high a price because of the mishandling of the miners' strike. Hon. 1665 Members on both sides know that I was consistently critical of the way in which my right hon. and hon. Friends handled that strike. I am also critical because I do not believe that this is an adequate and complete substitute for a proper fuel policy. This does not mean that one has to produce a national plan and particularise to the last degree, but we should try to anticipate a little more than we have done.
To me, the besetting sin of this country, not only in this field but in many others, is that we tend to react and not to anticipate. Always, we make ourselves prisoners of certain circumstances that other people have created. We should do a little intelligent anticipation when thinking of the fuel and energy needs of this country in the next two or three decades.
Looking at the Bill, perhaps the most important issue it raises is the relationship of the Government to nationalised industries and the degree of answerability which the Government have in this House for those industries. We are here, by any standards, expending a vast sum of money. My hon. and learned Friend the Member for Dover (Mr. Peter Rees) touched on this point earlier when he spoke of the degree of mechanisation in the pits and the sophistication which he hoped the National Coal Board would continue to bring into its operations. But how answerable would my right hon. Friend be for what the National Coal Board is doing here?
I do not wish to repeat a speech which I made about two years ago in this Chamber, but I should like to refer to an issue that I raised then and which is illustrative of this problem. Two years ago I raised the question of the double-ended pick for mechanical coal cutters. I was ridiculed for doing so. I am glad that the hon. Member for Ince (Mr. McGuire) is to reply for the Opposition because he knows more about this issue than I do. Here we had an invention, a development, which, in the opinion of many experts of great eminence, could have brought great benefit to this industry. For a whole series of reasons—the hon. Gentleman knows them better than I—this invention was never taken up by the Coal Board. I think he will agree that a satisfactory reason for the Coal Board not using it was never given. I believe he tried for several years to get a satis- 1666 factory trial or an explanation of the refusal by the Coal Board to hold such a trial. Other hon. Members on both sides of the House tried. We were all fobbed off by Ministers in both Governments. They said it was a problem for the Coal Board. Very well, it was a problem for the Coal Board; but the invention was being used successfully in similar conditions in other countries. Why was it not being properly tried here? The hon. Member for Ince did not succeed in his endeavours, and when I took the matter up I did not succeed in mine.
§ Mr. Michael McGuire (Ince)
To get the record straight, I am fully aware what the hon. Gentleman is talking about, but I never personally took this matter to a Minister to try to obtain satisfaction for the man who invented the double-ended pick.
§ Mr. Cormack
I am sorry if I misinterpreted the hon. Gentleman's activities. He certainly took a great interest in this invention and he took it up at a high level. I raised it in the House and the Minister replied saying that he could do nothing about it. However, I do not want to expand on this issue. It is nevertheless illustrative of the problem of the answerability of the Government for the activities of this industry, an industry which is taking up vast sums of public money, quite rightly, an industry of great strategic, social and historical importance. But it is a nationalised industry.
Nobody in this House would suggest that it should be denationalised.
§ Mr. Cormack
I am sorry. I defer to my right hon. Friend the Member for Wolverhampton, South-West. Very few Members would say that the industry should be denationalised. But, accepting that it is nationalised, my constituents are constantly amazed when I tell them that nationalised industries are not answerable for their activities to this House. I hope my right hon. Friend will give some thought to this point during the recess and that when the Bill is debated in Committee it might be possible to produce suggested solutions to this continuing problem.
For the moment I welcome the Bill because I feel that there is now a chance 1667 that the coal industry will cease to be a political football, which it has been during the last year or so. I very much hope that the National Union of Mineworkers will respond to what I believe is a realistic and proper gesture on the part of the Government. I hope also that there will be no more pushing of extortionate unrealistic wage claims, which can only bring confusion and danger to the industry—an industry which everyone who has spoken in this debate has recognised as being important and crucial to this country.
§ 8.5 p.m.
§ Mr. Alexander Wilson (Hamilton)
May I for a moment follow the hon. Member for Cannock (Mr. Cormack). I could give an answer to his plea for a response from the National Union of Mineworkers. I was a miner not so long ago, and I can tell the hon. Gentleman that the miners have never been found wanting when pleas have been made to them if in turn they have been given fair treatment.
I hope that in Committee the Minister will spell out exactly what the Bill will mean to the people engaged in the industry. Only by the continued co-operation, which has been so magnificent, by the National Union of Mineworkers, the National Coal Board and everybody connected with the industry can the productivity figures be boosted so that we can look forward to coal having a bigger share in the energy market.
I was delighted to hear the right hon. Member for Wolverhampton, South-West (Mr. Powell) mention the human problem. If I interpreted his remarks correctly, he would not mind seeing uneconomic pits closed and the miners put to more remunerative work. I agree wholeheartedly with the right hon. Gentleman, but—and it is a very big "but"—we have had this argument for years and years from successive Governments, from innumerable politicians and from trade unionists. To anybody who has lived and worked most of his life in a mining village this is mere pie in the sky. In fact, pits have been closed and huge areas have become derelict with no appreciable difference in the employment prospects of the people in those areas. Therefore, while I agree with the views expressed 1668 by the right hon. Gentleman, I must emphasise that miners and their families can no longer accept vague promises, a multitude of platitudes, before the closure of the pits. We want alterative industries before the pits are closed.
This Bill to a certain extent seems unreal to me. My hon. Friend the Member for Chesterfield (Mr. Varley) and other speakers have mentioned the Christmas spirit contained in the Bill and it has been suggested that the debate should follow those lines. I may be a little cynical, but I think that if the Bill is considered in the context of the present season, it is as though the ugly sisters were showering gifts on poor little Cinderella. I hope that the House will never cease to enjoy the acrobatics of some Conservative Members. They are becoming a regular feature of several major reconstructions of our basic industries. Every hon. Member knows where the somersaults have taken place, and most of us know why.
The last people in the House who should be surprised at the change of policy on the coal mining industry is the miners' group. Over the past decade every member of the group has advocated the same policy of self-sufficiency and underwriting as the Government are now being forced to undertake. They are being forced to take cognisance of the dangerous situation developing not only in Britain but all over the world which makes the Bill necessary.
Those of us who are ex-miners—I almost said "non-academics", but I content myself with saying that—have been continually telling successive Governments that their estimates for energy requirements were based on an unsound philosophy, and that they had set their eyes on the wrong targets. Nuclear energy was put forward as a lusty infant feeding on large lumps of public money and promising to get up and walk within two or three weeks, two or three months or two or three years, only for us to find that in the end the infant was continually collapsing at the legs and could not even attempt to rise. Nuclear energy was to spell the doom of coal in this country, a forecast in the best Millbank tradition, again proved wrong.
It was the miners' group who warned successive Governments that the Nasserisation of the Arab world would mean 1669 dearer oil imports, with resulting balance of trade difficulties and so on, from sources which would become increasingly difficult and less reliable. It has always been politically stupid to base the energy policy for Britain on the idea that the oil market would remain static over the years. World oil markets do not remain static, any more than any other market does, as we are discovering to our cost.
On 11th December the Secretary of State for Trade and Industry said:There is real uncertainty about future prices of fuels and an increasing awareness throughout the world of a danger of a shortage of energy "—[OFFICIAL REPORT, 11th December 1972.]In the Evening Standard of the same date there was a report by Alan Massam that:One of Britain's leading long-range planning experts believes the country is fast moving into an energy crisis'.His thesis rests on the growing fear in the United States that the demand for power derived from oil will outstrip supply in the next two or three years.I believe that is one of the main reasons for the Government's deciding that they must underwrite some of the losses of the National Coal Board. We of the miners' group and other hon. Members on this side did not need computers to come to that conclusion. It was just a little bit of ordinary political commonsense, and we have been stating it for many years.
There have been the other stories, continually changing and contradicting themselves, of the great bonanza beneath the bellies of the fish in the North Sea. It was to provide vast wealth beyond the dreams of man. Gas and oil would flow into our land cheaply and plentifully for everyone. Because of this magnificent find, everyone would be warm and happy—except the miner, who would be on the dole. Because of this belief, a few more pits were closed. But it did not happen just like that. We find that what is coming from the sea is neither cheap nor plentiful. The story has turned rather sour.
It was not the powerful scientific machine at Millbank that forecast what would happen; it was the miner and his representatives, who have been consistent in their demand that the coal industry should be made viable and strong and that the men and women who depend on it should have a fair deal. Now the day 1670 of reckoning has come. I hope that the House will take a little more notice of what the miners' group is saying today than it did in days gone by.
No one welcomes the financial provisions of the Bill more than I do, but I want to know to what use the finance will be put. Does the NCB intend to get down to the hard, basic fact that mines are no use, and never will be, without miners? The Board must provide a good basic pension. It must make provision for the men who will need to retire through redundancy or for age reasons. The Government are making available the necessary finance and machinery to do just that.
There is a simple, dominating fact in any expansion of the industry—I talk about expansion and not contraction. That is the need to take care of the miners. Then they, with their proven co-operation over the past 12 months since the strike, will lead the way to a stronger industry. The idea that coal is a dying asset, that millers are of diminishing importance, must be reversed finally as from today.
When I talk about the miner, I talk about his wife and family. There is provision in the Bill for improving housing conditions, for improving the environmental conditions of the mining villages, for making life more tolerable by modern standards for the miner and his wife who live in those villages, for giving the miner at least an equal opportunity along with other sections of modern society. A miner's wife in a mining village has to deal with the same dirt, dust and smoke as her husband may have to deal with underground.
I want extra provision for the isolated mining villages. When we talk about the mining industry we should not look back too much. We must look to the future. Some of this money must he earmarked for the miner, the man who has perhaps given 40 or 50 years to the industry, who has often risen at three o'clock or four o'clock in the morning and walked miles to his work on the surface and has then walked miles underground before he even began work. He has to work in the most hazardous, arduous and filthy conditions met by any member of society. We must restore to these men the faith in their own industry. We must give them back the dignity to which they are 1671 entitled. The crying need for miners in the future must be recognised.
I plead with the Government to use their good offices with the Coal Board, as we will as miners' representatives, to get rid of this derisory alms money of £1.50 per week paid out after 30, 40 or 50 years of service to the industry—to be increased under the Bill to the magnificent sum of £2.50. This may be the subject of negotiation between the miners' union and the Board but I do not accept that the Government do not have some say in how the money should be spent. They must sanction its expenditure. I suggest that they look at the pension schemes, not above any of the other provisions but at least with special consideration, and ask whether £2.50 a week is enough for a man who has given service in those conditions.
There are thousands of men lying maimed physically and otherwise, men who cannot draw breath as a result of pneumoconiosis, emphysema and bronchitis. I am sure that the men in the industry will respond as they always have done to fair treatment and fair play from whatever direction it may come. Let us use this money to right the wrongs inflicted on the industry and the miners by successive Governments—more so by Conservative Governments.
Pits were closed because we were losing approximately £1 per ton. Now we need coal because of the world shortage of fuel. On a pure cost basis it will take millions of pounds to reopen those pits and get at the seams. It will take further millions to make new sinkings. Would it not have been better to have kept those pits open at a slight loss, balancing the budget with the economic pits or Government subsidies?
All of this happened because no one would listen to the story being told from the Labour side of the House and from some hon. Members opposite over the years. No one would listen to the men whose feet were on the ground. Instead Governments preferred to listen to men whose heads were in the clouds. I hope that the Government will take the opportunity in this Bill of not only considering the whole coal industry but of considering the establishment of a fuel energy authority.
1672 I am not pleading for a Scottish fuel energy authority or an English authority. I am pleading for a fuel authority for this country so that those who are in charge of the nation and the indigenous fuels which belong to the people can exploit, explore and conserve those fuels for the benefit of the country and those who work in the industry. The Government have lost out, as have other Governments, in not attempting to create a truly integrated fuel policy. I hope that they will not waste any more time but that in Committee they will consider the propostion I have put forward for the creation of a national energy authority for the benefit of us all.
§ 8.21 p.m.
§ Mr. David Crouch (Canterbury)
The hon. Member for Hamilton (Mr. Alexander Wilson) has made an earnest plea that the miners should not be forgotten as we consider this generous and complex Bill. He ended with a plea for the establishment of a fuel energy authority. That is not something of which I had thought but the emergence of the Bill and the problems and questions it raises about the shape of our fuel economy make me wonder whether these matters do not deserve a separate Minister as they used to have. I say this with the greatest respect to my hon. Friend the Minister for Industry. From this great Department of Trade and Industry there should be one part taken out and give the separate identity of power and energy for the reasons mentioned by my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell). He said that we are not sure of the future. It requires continuous study and thought.
I look upon the Bill as a necessary injection of capital into a vital industry. We are the last country outside Russia and Poland with the chance of maintaining a coal industry of reasonable size. Not even the United States, Australia or France can today enlarge their coal industry, much as they would like to, by the injection of capital because they can no longer recruit the skilled manpower to restart the industry. The Bill recognises not so much the economic vialibility, because it deals with an industry which will with any luck just break even. It is not promising us more. It is saying that we must hold on to things 1673 as they are. We must hold on to the skilled manpower and the essential source of energy, because once it has gone it has gone for ever.
I should like to speak briefly about two aspects of the Bill. There is the social responsibility aspect, which my right hon. Friend the Member for Wolverhampton, South-West has properly accepted. I say "properly" but I do not make that remark impertinently. I mean my right hon. Friend made it properly to the House and to the country ad reminded us that we should accept this social responsibility. It is always present in a contracting industry and in an industry where we have still to see greater efficiency. In seeking greater efficiency we must plan for more redeployment of labour, more use of redeployed manpower. This is what the social provisions of the Bill are about—the redundancy payments, compensation for early retirement, rehousing, resettlement and so on, and of course the miners' pension.
All these are very real problems which I know myself because I come from the Kent coalfield. It is a very real problem for a man when he is given early retirement. Retirement at 55 is quite shattering for a person, having his working life cut off a long time before he expected it to be and, perhaps, as is often the case, with very little opportunity of obtaining another job. This has been a great problem which the coal mining industry has had to face over the last 20 years of cataclysmic change. It has faced it with remarkable flexibility, fortitude and courage as the hon. Member for Hamilton has shown.
While not wanting to detain the House I wish to refer to the other side of the Bill, the aspect of operating subsidies, of which there has been criticism. I calculate that the social responsibility aspect of the Bill will involve us in some £200 million over the next five years. Running subsidies will be about £600 million to £650 million over the next five years. They cover four main areas. The one for pithead stocks I agree with. I am glad to see that we are prepared to go up to the figure of 30 million tons again.
Assistance in the provision of coking coal is a natural necessity which has arisen out of our use of natural gas and the smaller quantities of coke produced, 1674 and we have to encourage production of British coke rather than import coke. This will help the steel industry as well. So some assistance from the Government here through the National Coal Board is necessary.
The problem of regional employment, however, is worth some further thought. The expenditure under the Bill is limited up to March 1976. Regional employment is a problem; it is a problem in all industries and it is a problem we have to face. It is proposed that the Government are to subsidise it for a limited period in a way which I think wise on both social and economic grounds. Here I would differ from my right hon. Friend the Member for Wolverhampton, South-West who has questioned this. It is questionable, but I would refer the House to a report of the Select Committee on Nationalised Industries four years ago when the Committee looked very closely indeed at this question and the problems which arise when coal mines are considered for closure in special development areas and assisted areas.
That report, published in 1968, on page 114, paragraph xiv.64, gave the conclusion of the Committee on this question in these words, that the Committeeare not suggesting that the premium"—or subsidy—if there were to be one, should be designed to prevent the closure of collieries making losses on the present scale. The result of the premium would be to encourage production which is marginally uneconomic in terms of accounting costs. Its justification would be that it would tend to divert coal mining activity from areas with a low rate of unemployment to areas with a high rate of unemployment …That is the nub of the problem.
This temporary arrangement—and a generous one—must be used to help us with our regional problems where we are faced with the decision whether to keep an uneconomic pit open. I hope that the Government would consider the use of this subsidy to do what is said in that report of four years ago, namely, to keep the marginal pits open where there is a high rate of unemployment and little opportunity of redeployment rather than have a blanket provision of such subsidy, because there will be some marginal pits in areas where there is opportunity for redeployment to other jobs. It is most important that there should be liaison 1675 between all the Government Departments concerned with development and further employment opportunities in an area.
On the question of the power stations and coalburn, I calculate the amount at about £100 million up to 1976. I ask the Minister, will it work? I am not trying to crab it. I believe that it will, but I ask the question because it must be asked. Hon. Members who are familiar with the mining industry know that if a jeopardy notice is put on a mine, productivity will immediately rise and absenteeism will come down. Any threat to a mine increases production. Will any subsidy or extra confidence which is given have the reverse effect? I do not think so, but the question has to be asked. Is there not a danger that the market—or at least the price—may seem to be too assured and that this may have a detrimental effect on efficiency and output? It is a fine difference, and it is important that the Government should make the coalburn subsidy understood by the miners and all those who work in the industry.
It is not so much a question of giving the miners a fixed-tonnage market but rather that they still have to achieve that market by efficiency, and if they can do that they can be assured of getting it plus a bit extra which is the coalburn subsidy. There is a degree of sophistication and difficulty about the concept which needs careful explanation and communication.
The National Coal Board has never been slow in communicating its intentions. One of the secrets of the success of the contraction of the coal industry since the war—if the contraction of an industry can be called a success—has been its remarkably good communication from management to men. There has been an understanding of where the industry was going. The industry is remarkable for its dedication, for its willingness to succeed and for its lack of industrial strife and trouble under tremendous pressures.
I make reference in passing to the good industrial relations which the miners have chalked up for themselves, which is second to none, even including the cost to the industry of the disastrous strike a year ago. We can and should trust the 1676 miners, now above all. The Government are prepared to invest a great deal of money in the industry, and it is an investment in men and management, not in target figures. Everything depends on the men's acceptance of a preparedness to work to the Bill. They have earned our respect and trust by their past performance and they will earn it again.
On the question of whether one can or should trust the miners, I quote from page 12 of Lord Robens' book "Ten Year Stint" which deals with the contraction of the industry:That this fantastic reduction in manpower and closure of 406 pits was achieved without losing a ton of coal in industrial disputes for that reason … is a tribute to the unions and management in the coal fields throughout the United Kingdom.… Without the understanding and co-operation of the unions and of the men themselves, this task could never have been accomplished.It is important to remember that there are people who say that the Government are being generous and will give £1,200 million to the coal industry over the next three to five years but that this could all be wrecked if the miners put forward another big wage claim. Of course the miners will come forward for an adjustment in their wage structure at a time of inflation; this is to be expected. The National Coal Board is already prepared to expect such an adjustment. This applies to all industries. But we need not think that miners will try to wreck the great opportunity which the Government are now prepared to give them.
I welcome the realism behind the Bill. I hope that it will prove to be more than just a short-term medication to get the industry on its feet for another three to five years. This is the sort of imaginative treatment for which the industry has waited for years. Perhaps those in it would like to have been treated in this way 10 years ago and perhaps also they would not wish to have seen the industry contract as much as it has done. But it is all water under the bridge. The Government's move into this industry will set it on its feet again as one of the power bases of British industry.
There are many Jonahs who seem to enjoy the prospect of seeing things go wrong so long as it proves that their political dogma is right. I do not take that view. We live in changing times and it is difficult to change one views, 1677 and sometimes even more difficult to eat one's words. I have no intention of going down with all hands with "Rule Britannia" ringing in my ears. I would rather change the tune if I thought that it would save the ship.
I take my hat off to my right hon. Friend the Secretary of State and my hon. Friend the Minister for Industry for being brave enough to come forward with this imaginative and generous step and for showing their trust in the industry. The Government will look foolish if that trust is seen to be misplaced. I do not think that will happen.
I believe that there are too many Tories around—this does not apply to any of my hon. Friends who are present at the moment—who have their tails between their legs. We have no right to appear either depressed or lacking in confidence. We were elected to govern, we expected to succeed and we shall succeed. But we must show that we can do so.
The Secretary of State and the Minister for Industry have shown their confidence in the coal industry by bringing forward the Bill. I believe that they are right to do so. We are lucky to have confident and competent men like Derek Ezra and his team at the National Coal Board to implement the Bill. We are also lucky to have Joe Gormley in the National Union of Mineworkers—and even Lawrence Daly believes in working his union constitutionally, which is a valuable asset.
I have no pessimism about the Bill or the problems in the coal industry. Pessimism will get us nowhere. The only hope for Britain is to show a great deal of optimism about the prospects in this industry. If we can show our confidence, we stand a chance of breeding even more confidence which is vital for those who work in the industry. We must breathe a new life into the industry—an industry which has been told too often in the past that it is on the verge of death. By our words here and by our determination we can help to build this industry into the strongest and most efficient source of power in Britain and, of course, in Europe as well.
§ 8.45 p.m.
§ Mr. John Cronin (Loughborough)
As usual the hon. Member for Canterbury (Mr. Crouch) made a very interesting 1678 speech. I was greatly attracted by his idea that there should be a Minister for Mines, though one cannot help thinking of the truism that it depends who the Minister is and what policies are adopted.
The hon. Member for Canterbury referred to these proposals as being generous, as did a number of his hon. Friends. But the Government would have been failing in their duty if they had not brought in the Bill at this stage. Indeed it could well have been brought in much earlier. Everything on which money is to be spent under the Bill is vital to the wellbeing of the country's economy. In his lucid speech, the Minister said that if the coal industry were allowed to contract, in view of the tendency for oil to become scarcer, to have greater demands and to go up in price, there would be a danger to the country's economy in depending too much on other fuels besides coal. The Minister also referred to the social costs which the Government have had to pay. These are two compelling reasons why any responsible Government would have had to introduce a Bill like this one. There is no question of generosity. The Bill will ensure that in terms of its fuel policy the country's economy stays on an even keel for the time being.
Reference has been made to the money which is being spent on the subsidies for coking coal. This has been done by the Common Market countries for years. It is no startling act of generosity on the part of the Government. This capital reconstruction was overdue years ago.
Finally the Minister referred to the effects of the miners' strike as being a very important reason for the National Coal Board deficit of £157 million last year and £100 million this year. But who was responsible for the strike? No one but the Government. Certainly it was the most unnecessary strike ever to have occurred in any of our large industries.
I suggest that the Bill is not overgenerous. It is an essential business-like Bill which is dictated by economic necessity. My hon. Friend the Member for Chesterfield (Mr. Varley) said that the Minister appeared in the guise of Santa Claus. Under the robes of Santa Claus and with the accountants in the Department of Trade and Industry whispering in 1679 his ears, the Minister although a likeable person is looking at us with the cold eyes of Scrooge. Let us have no illusions.
I represent on this side of the House the South Derbyshire and Leicestershire miners. The first question that they will ask me when I return to my constituency is, "What is there in this Bill for us? What do we get out of it?" It is a debatable question. Most of what the miners will get out of it depends on negotiation with the National Coal Board. If the NCB were an ordinary employer we should be happier about it. But the board does not negotiate with the miners. It does exactly what the Government tell it to do.
I should like a reassurance from the Minister that the Government will not continue to interfere with negotiations and induce the NCB against its will to try to diminish the miners' standard of living, as happened before the coal strike. There is no doubt that the standard of living of our miners should be raised higher. Miners in the United States and the Soviet Union have a much higher standard of living than do miners here. Bearing in mind how indispensable coal is to our economy, how co-operative the miners are, how skilled they are and what arduous and dangerous conditions they work in, one cannot help feeling that they ought to have the highest standard of living of any industrial workers.
My hon. Friend the Member for Hamilton (Mr. Alexander Wilson) spoke about miners' pensions. I understand that the Minister said that pensions will go up from the present £1.50 a week to £2.50 a week. But is it not the case that if the pension goes up to £2.50 the increase will be reduced immediately by the loss of supplementary benefit? I do not feel that the miners will do well out of that. In any event, a pension scheme bringing in a pension of £2.50 a week for miners is derisory. It is unworthy of the House to talk about that in seriousness as a desirable benefit.
§ Mr. Boardman
I merely referred to the increase which the NUM asked for during discussion as being £2.50.
§ Mr. Cronin
I now turn to Clause 3, which authorises the Government to give a grant of 50 per cent. in respect of ex- 1680 penditure incurred by the Board on redundancy payments, loss of superannuation and employment prospects, removal and re-settlement expenses, the provision of housing and the maintenance of certain welfare activities.
I cannot understand why the Government cannot pay all the costs of such matters. The provision of housing, welfare activities and removal and resettlement expenses are normally dealt with at the public's expense. They are not usually the province of employers. The other payments are all for circumstances brought about by acts of Government policy. There is a strong case for the Government making a 100 per cent. contribution rather than one of 50 per cent. towards the policies referred to in Clause 3.
On 10th January of this year the National Union of Mineworkers would have begun its negotiations with the National Coal Board, but last Friday a remarkable letter was written by the Prime Minister. He wrote to Lord Cooper, the General Secretary of the General and Municipal Workers Union and to Mr. Hetherington, the Chairman of the Gas Council. The Prime Minister said:Until such time as the Government is able to announce guidelines, negotiations, whether in the public or private sectors, should not be carried to the point of offers of improved remuneration.
§ Mr. Boardman
The letter which the hon. Gentleman has quoted was written by the Prime Minister to Lord Cooper and only to Lord Cooper in response to a letter from Lord Cooper.
§ Mr. Cronin
I am happy to accept that correction as long as we both agree that the letter was sent by the Prime Minister. However, I should like all hon. Members to consider the effect of the letter on the morale of the coal industry. The miners expected their claim to be discussed on 10th January so that when the freeze is over there would be some basis on which to base their wage claim. But the Prime Minister's letter interdicts that expectation.
Will the Minister tell us whether the Prime Minister's letter has the force of law? I cannot recollect any legislation which has been passed in this House which gives the Prime Minister the right 1681 to order the Board to stop negotiating. Will the Board negotiate on 10th January or will the Prime Minister's letter be accepted as being something in the nature of a law?
I rarely find myself in agreement with the right hon. Member for Wolverhampton, South-West (Mr. Powell), but when he spoke of the arrogant illegality of the Prime Minister's order—given to the general secretary of a union with no authority from this House—I was right on his side. He expressed the situation with a clarity which we must all applaud. Perhaps the Minister will tell us whether there are to be negotiations between the National Coal Board and the NUM on 10th January. Or are we, with the Prime Minister's temporary assumption of dictatorial powers, to have a cessation of such negotations?
I propose to truncate my speech because other hon. Members wish to speak, but I must make the point that all of us, on both sides of the House, are disappointed that the Minister is not in a position to give us some idea of the Government's policy for future coal production and levels of employment. One appreciates that there are difficulties in giving such figures but we should bear in mind that both the United States and the Soviet Union have enormously increased coal production and are continuing to do so. There is no reason why we, too, should not increase our coal production, thereby making ourselves more and more independent of foreign fuels and able to run our economy at our own pleasure and as effectively and as efficiently as we want.
We have a very fine coal industry. It we can only get the Government to understand what should be done to help it, it will make a tremendous success of itself and the miners in the process will be able to unleash to the full all their skills and help this country go forward.
§ 8.58 p.m.
§ Mr. Richard Body (Holland with Boston)
As there is still a queue of hon. Members who seek to catch your eye, Mr. Speaker, my brevity will be compounded by discourtesy to the hon. Member for Loughborough (Mr. Cronin) in that I shall not follow the points he made. But I am sure that he will understand. I speak not on behalf of the miners—I have no 1682 right to do so—but I believe that I speak for many members of the general public who have the right to answers to certain questions.
One of the most renowned take-over kings of the post-war era—someone who knows a great deal about making a business profitable—is reputed to have been guided by one slogan—"Maximise your assets". It seems to me that since its inception the National Coal Board has not only failed to do that but has also gobbled up over a period of years the assets of a large number of industrial companies. It has not been alone in this. All the nationalised industries have done it. A study a few years ago showed that no fewer than 1,000 industrial companies had their assets controlled by nationalised industries. The return on the capital of Thomas Cook and Son was estimated to be only 1 per cent., yet there was a queue of firms willing to take over and run Cook's with borrowed capital—borrowed at an interest rate far in excess of 1 per cent.
How many industrial companies are henceforth to be controlled by the National Coal Board? One sees from the Board's accounts that it still has a very large number. At one time it was known that it controlled 71 industrial companies. How many of them are to be released? My hon. Friend the Minister for Industry, having gone at a gentle trot, suddenly broke into an uncontrolled canter so that I missed the number he quoted, and I wonder how far the Board is to go in this respect. What criterion is being adopted? Why are some being disposed of and others not? I am sure that, if the Bill had been introduced in 1970 or 1971, almost all of them would have been disposed of; but, then, 1972 is not exactly a vintage year for Toryism.
Some of us still adhere to the view that the Government should hold the ring, and they cannot justly guide and arbitrate over others if they themselves have a major share in the commercial enterprises of this country. Being no longer a disinterested party, they cannot be regarded as an impartial arbitrator or an independent tribunal. They become, in a word, judge in their own cause.
I am sorry that it has been suggested that the Bill is in harmony with, and 1683 is consistent with, the policies of the European Communities. I think that that may be true only superficially, because they have not in Europe the same touching faith in public ownership. Public ownership has been introduced there not to suffocate competition but as a stimulus towards it, and that is not the hall-mark of this Bill.
My second doubt—again, I shall put it as briefly as I can—is that the Bill is inflationary. In so far as it provides a running subsidy—my hon. Friend the Member for Canterbury (Mr Crouch) calculated it as about £600 million over the course of its effective life—the Bill is wholly inflationary. There is a simple old-fashioned question: Where is the money coming from? Let us not be naîve. We shall not increase taxation for the support of the coal industry. On Budget day, we shall not hear the Chancellor of the Exchequer announce woefully that the rate of value added tax will have to be 12½ per cent. instead of 10 per cent. in order to support the coal industry in accordance with the present Bill. Nor need we pretend that, by some vigorous growth in the gross domestic product, we shall be able to do it for nothing.
Let us be honest with ourselves. This added support will be met from—dreadful euphemism—the net borrowing requirement. Rightly or wrongly, we have reduced taxation in recent years. Yet at the same time we have increased expenditure year after year. Expenditure now exceeds revenue by thousands of million of pounds. The excess is on a scale we have never known before, and this year it will come to about £4,000 million.
This money, we know, is "borrowed." I put the word in inverted commas because it is not borrowed in the true and honest meaning of the word. It is obtained by increasing the number of Treasury bills in circulation and by other methods which all add to the money stock. In blunt terms, the Government will pay for this support to the coal industry by printing more money. The Bill will have the effect of making it necessary to add to the borrowing by adding to the money supply.
It is right, of course, to increase the stock of money if the real wealth of the 1684 country expands equally. But if we increase the money in circulation without increasing the real wealth of the nation, there is inevitably more money in circulation to exchange for the same amount of wealth. That is inflation, and that, I regret to say, is what the Bill seems to do.
§ 9.4 p.m.
§ Mr. Adam Hunter (Dunfermline, Burghs)
I will shorten my speech by cutting out all the preliminaries and simply saying that I welcome the Bill. I understand that only one of my hon Friends remaining wishes to speak and I hope, Mr. Deputy Speaker, that he catches your eye, because I shall take only a few minutes.
I should have liked to deal with the clauses dealing with concessionary coal, redundancy payments and pensions. However, I will leave them out and start with Clause 6 which deals with the Secretary of State being given power to make payments to the National Coal Board to meet the cost of extra coal burn by the electricity generating boards. I hope that will encourage the use of coal for electricity generating purposes.
This is particularly good for Scotland. In 1971–72 55 per cent. of all fuels used in Scotland for generating electricity was coal—5,793,000 tons. If the Scottish coal industry production is to be maintained at its present level the South of Scotland Electricity Board must re-think its philosophy on coal burning in power stations.
It was disturbing to read the SSEB Report for 1971–72 being critical of the security of the supply of coal. This part of the report emanated from the Electricity Board's experience of the miners' strike earlier this year—the first national strike in the mining industry for 46 years. The way that the SSEB has reacted to this breakdown in industrial relations is deplorable. One would think that miners, who have been the most patient and loyal section of workers in the country for almost five decades, are ready to down tools on the slightest pretext.
After all, the electricity industry has not been without its own industrial disputes. Two years ago its relations with its workers were at a low ebb and resulted in supplies to electricity users being cut for a number of weeks—and 1685 only a few months ago there was the threat of similar action. Happily, this was resolved before consumers were inconvenienced again. There was no outcry by the public and no rush away from the use of electricity for heating purposes. The mass of the people understand and appreciate that all work people have the right to defend their interests when their standard of life is threatened by inflation or anything else. But not the SSEB. The miners' dispute seems to have given it the ammunition that it wanted further to denounce the uneconomic price of coal required for power stations.
The general theme of the Bill shows a growing awareness by the Government that coal still has a very important part to play as one of our indigenous fuels. I sincerely hope that this is not simply a holding operation to try to get over some difficulty about the supply of fuel in recent years.
The miners' group in this House, with others, has always maintained that coal would again come into its own. This view has the support of mineral experts and those who have studied energy needs and trends. We have always argued for an integrated fuel or energy policy.
The provisions in the Bill will help the coal industry in general throughout the country's coalfields, but the benefits may be spread a little unevenly. The Scottish coalfield has been in the doldrums for a few years. The NUM and the Scottish Area Board, before the Bill was introduced, had joint consultations and a policy of full co-operation to increase production was agreed. This augurs well for the future.
I now feel that, with the prospects of North Sea oil in the years to come, Scotland should have an energy policy of some kind. Something must be done in this direction to take away uncertainty regarding the future of the industry in Scotland, and some reasonable assurance should be given by the Government that the assistance contained in the Bill will extend to Scotland as a region. For too long we have been working under the grim shadow of uncertainty.
Last week at Question Time I suggested that the Secretary of State for Scotland should be making a close study 1686 of the rôle that coal should play in Scotland in the years ahead.
I am being parochial because we in Scotland have not the opportunity to put forward our ideas regarding coal and its future. I am sorry if I am taking up the Under-Secretary's time, but I sincerely hope that he will bring to the notice of the Secretary of State for Scotland some of the points which I have mentioned, and in particular that an energy policy should be considered in a Scottish context.
Nine months ago I received a reply to a Question to the effect that it would cost £2.1 million to convert Portabello power station from coal to oil-burning and that the conversion would take nine months to complete. No decision has been taken on this conversion so far, and I feel that to sanction it would be a waste of money, in addition to being a major body blow to the coal industry in Scotland.
The Bill holds out some hope for coal in Scotland—I grant that. It will be recognised as a possible step forward to the time when coal will get its rightful share, as an indigenous fuel, in the generating of electricity in Britain as a whole.
§ 9.5 p.m.
§ Dr. Edmund Marshall (Goole)
I am grateful to my hon. Friend the Member for Dunfermline Burghs (Mr. Adam Hunter) for making time available for me to contribute briefly to the debate.
During the debate there has emerged a three-fold analysis of the need for the Bill. We have looked at the strategic aspects of the need for indigenous fuel development, we have looked at the social aspects of the Bill, and we have looked at the long-term economic need for a viable coal industry.
I think that perhaps the greatest doubt has been cast on the economic side of the question, but I suggest that there is one emphasis which has not been put so far, and that is that a massive financial injection of this nature is necessary to enable the coal industry to work on a more economic basis; to enable it to shift its main producing centres from so many of the older collieries to new deep collieries which can themselves maintain economic production.
1687 It is clear to me that by 1977 it will be impossible to maintain anything like our present levels of manpower and employment in the industry without sinking large new pits, and I am particularly glad that Clause 9 makes special mention of the need for help to assisted areas. This is particularly relevant in view of the need for new collieries.
Close to my constituency in the West Riding of Yorkshire there are vast, untapped reserves of coal in workable, thick seams, all of it in one of the intermediate areas of the country, and it seems to me that in that North Yorkshire area of the National Coal Board there is a great opportunity to switch production from some of the older collieries which will be worked out in the west of the coalfield and develop new pits on the east side.
The National Coal Board has not yet pinpointed where it would like to see new pits sunk, and there has been a lot of scaremongering on this issue in the town of Selby. The Board has not said that it wants to mine under Selby. That is probably the last thing that it has it in mind to do. All that the Board has said is that it wishes to develop new collieries to the east of the existing workings which are at the pits of Ledston Luck in the constituency of the hon. Member for Barkston Ash (Mr. Alison) and to the east of the workings of Kellingley colliery in my constituency. There has been a lot of irresponsible talk about the dangers to Selby Abbey and the port works at Selby.
Without this kind of development we cannot hope that the industry will become economic in itself, and it is on this very ground that the injection of capital and the Christmas spirit and generosity portrayed by the Government are welcome.
§ 9.14 p.m.
§ Mr. Michael McGuire (Ince)
The first message that I have for the Minister is that I too welcome the Bill and I do not intend to vote against it. My welcome is tempered by the fact that it could not have come on a worse day for me because, as will be obvious from my appearance and probably my voice, I am suffering from a very bad cold. More importantly, however, in the life of North Country Members of Parliament 1688 this is a time when we like to visit our constituencies. I have had to cancel many enjoyable Christmas parties today. I used to work with an old miner who said that he had missed many a good "do" through not being invited. I was invited to all those functions but had to decline the invitations. They are very good for the grass roots.
As my hon. Friend the Member for Chesterfield (Mr. Varley) said, the Bill could easily have come a couple of months ago. If it had done so I should not have been winding-up for the Opposition. That is an honour I much value. It has been given to me not because someone has recognised talent which had been hidden until now but simply because I am the chairman of the miners' parliamentary group.
When the Secretary of State made his statement to the House on 11th December he mentioned several important matters, but for me the most important thing he mentioned was this:There is real uncertainty about future prices of fuels and an increasing awareness throughout the world of the danger of a shortage of energy. We in the United Kingdom must ensure that our national energy assets are wisely used."—[OFFICIAL REPORT, 11th December 1972; Vol. 848, c. 31.]The Secretary of State mentioned the uncertainty of prices and the dangers of a world energy shortage, and these facts are accepted by all informed commentators and recognised experts on this subject. I hope to develop that theme later.
As the Minister for Industry did not make the matter quite clear, my first question to the Under-Secretary when he replies is this. Is the Bill merely a holding operation to prevent more unemployment in areas of already high unemployment or is it the beginning of a proper, carefully thought-out national energy policy on a resource-cost basis? The Minister for Trade, when questioned by Mr. Ian Smart of the "Analysis" programme team, said that his thinking—which must be the Government's thinking—was on a resource-cost basis and that we could not leave this to market forces. If it is merely a holding operation to prevent more unemployment, I welcome that, but I hope that it is the start of a real energy policy because if 1689 we do not take this opportunity we shall lose the opportunity to tackle this problem and go a long way to solving it.
The Prime Minister's statement on the communiqué following the meeting of Heads of State, in which an energy policy was mentioned, was not developed too much, but obviously there must be a plan for this. That statement, the statement of the Secretary of State on 11th December and the Bill kicked into touch what had up to then been the only policy statement we had had, and that was the 1967 White Paper which, the miner's parliamentary group argued, as we did when in Government, was a totally fallacious document and out of date from almost the moment it was introduced.
I remind the House that we never had a debate on that White Paper. We were due to have a debate for one day on the White Paper and for one day on the Bill. Unfortunately—I shall not go into the reasons—we did not debate it.
What was wrong about the 1967 White Paper was that it started from entirely the wrong angle. It left to coal the crumbs after each of the other three fuels had been allocated their parcels. Instead, it should have seen how much coal this country could mine economically in the wider sense and then allocated to the other three fuels what was necessary. That was one of the reasons we argued against it.
This time the Government have a breathing space. If they study the energy policy document of the NUM—we have produced one in the past, but not as detailed as this—which asks for a modest increase, about 10 million tons, in present coal production, and if they study the joint NCB-union document, they will find the basis for a wise energy policy.
All the industrialised countries consume between them about 90 per cent. of the present energy supply and the other 75 per cent. of mankind consumes the other 10 per cent. As my hon. Friend the Member for Normanton (Mr. Albert Roberts) said, the 75 per cent. will not always stay in that position. What will happen when they want a larger share? All countries are bothered about this. America is seriously worried. If we do not take the opportunity, future generations will condemn us.
1690 The widest possible debate should take place on energy policy thinking. The Government are not a long way off presenting a document. We believe that their think tank, headed by Lord Rothschild, their capability unit—I hope that it is not their incapability unit which will bring it forward; we know that they have one or two of those—is working on this. We had a leak on this from Mr. Chapman Pincher a few months ago which concentrated some minds.
If the Government bring forward an energy policy, the attitude of the miners, their representatives and the NCB will have been vindicated. It will be all for the public good. We should have these wider debates so that people can see that the insurance for the future—that is what the Bill is about—will be money wisely spent.
The hon. Member for Belper (Mr. Stewart-Smith) said forcibly that the Bill should point the way to a substantially increased coal production. I was puzzled when the Minister mentioned a figure which the 1967 White Paper gave as the figure that we would be reaching in about two or three years—namely, a deep-mined production of about 120 million tons.
§ Mr. Tom Boardman
I would only ask the hon. Gentleman to read tomorrow what I said. I will not take time by repeating it now, but he has misunderstood.
§ Mr. McGuire
This is one time when I am delighted to have misunderstood the Minister. The whole background of the Bill is that, since we have a total production now of about 140 million tons, of which about 130 million tons are deep-mined, there is bound to be a substantial increase in coalburn, in power stations for instance. Mr. Hawkins, who the miners' parliamentary group met a few weeks ago, says that he will be able to take 10 million to 15 million extra tons without any trouble if the price is right. If Clauses 6, 7, 8 and 9 of the Bill give us the necessary take-off to make the price attractive to him—and surely this is part of the nature of the Bill, which mentions increased coal sales—the present production is bound to increase. I should have thought that one of the main purposes of the Bill was to consolidate and improve on our present coal production.
1691 I want to touch on a point that I made earlier, namely the world energy supply shortage. I wish to quote from the National Westminster Bank Quarterly Review of May 1972. It says on page 13:If the trends of the 1960s continue, between three and four and a half times as much energy will be used in the world as a whole in the year 2000 as in 1970. Short of some as yet unknown source of energy being discovered, 60 to 70 per cent. of the increase must be met by fossil fuels. … The resulting faster rate of pit closures will leave the usable supplies of coal in the ground so that alternative sources of energy will be required. This move might not be to the disadvantage of the miners themselves since it could result in a streamlined industry supporting fewer but better-paid workers, as has happened in the United States. But for the long-term energy situation it could be disastrous.It then deals with the oil supply problem, the question of the oil-producing countries and the OPEC policies.
These countries are not going to stand still. Their economies are so low that they control the rate; they can put it down or up. We cannot harm their economies. People say that these countries have got to sell it. But they have very low-geared economies, and that is not necessary. They will demand more and more money. The United States will be a keen importer and therefore the price will inevitably go up. People will then say "We can meet this situation by an expansion of the nuclear programme."
The miners have been accused of being Luddites and of not wanting a nuclear programme. In fact, nowhere do we see that attitude in the industry. The miners believe that they must keep in the forefront of such technological developments. But there are dangers. The full facts of nuclear energy have never been disclosed. People go to extreme lengths to try to prove that it is comparable with coal or even cheaper.
I want to quote from the Second Report from the Committee of Public Accounts, for the Session 1971–72. My right hon. Friend the Member for Manchester, Cheetham (Mr. Harold Lever), with his keen brain, was questioning two civil servants who were making the case for nuclear power as being economical. My quotation is from question 179 on page 127. My right hon. Friend said: 1692I am not making any wrong assumption, it follows inevitably from the evidence I have heard. I will state it for the last time in an effort to be shot down if I have got it wrong; if nobody does so I shall assume I am right. Sir John"—that was Sir John Hill, a civil servant—has said that so far we have not been able to generate electricity more cheaply by nuclear means than by conventional means. When asked about the AGR he has said that in the first stage of the AGR provision of electricity will again be on a competitive basis with non-nuclear fuels. At a later stage, which is not approximately before us, there will be advantages in competitiveness, but until that later and, shall I say, happier stage is reached, it will be true to say that we will not have had cheaper electricity provided by reason of the nuclear development. It seems to me to follow from what Sir John said. … Have I got it right?Sir John replied in the affirmative.
That disposes of any arguments that nuclear power has in any way been competitive. When we met the CEGB we found that its most profitable station, running fiat-out every day, was Ratcliffe-on-Soar. We have always said that the coal-fired station situated in its proper place will outstrip any nuclear power station, and that when we compare like with like we find that the two are not in the same class. That is confirmed by the CEGB.
I hope that nobody will have the impression that I want to knock the CEGB. That is not my intention. I recognise its problems. It does not want to be a captive customer to coal in a way which disadvantages it in relation to its competitors. If the Minister can reassure us on coalburn I believe that we can have a happy relationship with the NCB and CEGB which will result in an increased coalburn.
Some Conservative Members seemed to think that the Government were giving money away like a mad millionaire. But the Government are still way behind the German attitude on coal-burning stations. If there is any logic in the Bill, one result of it will be that Drax B and West Burton will be commissioned, which will in turn mean that a new pit will be sunk. That will show that the Government mean business. It will give heart to the industry and galvanise it. But if we gave subsidies on the West German scale, Drax B would receive £170 million over 10 years.
1693 I turn to Clause 3 concerning social costs. Will the Minister confirm that the Government intend to pass on to the NCB grants towards the social costs of manpower redeployment and contraction received from the European Coal and Steel Community?
Clause 4 concerns the redundancy payment schemes. Will the Minister report on the progress achieved in negotiating with the unions better redundancy payments? We do not consider that the present scheme is anything like good enough. I hope that the Minister can give us an assurance on the matter. He has already answered the question I had intended to put on pensions but I was very disappointed by his answer.
In Clause 6 the Bill refers to the sale of coal to the generating Boards. What is really needed is to promote the burn of coal.
I had prepared a question on stocking costs, but the Minister has already answered it saying that stocks will be roughly one-twelfth of production, which will mean about 12 million tons.
The hon. Member for Cannock (Mr. Cormack) included me in a list of people who had done their best to promote the invention of a double-ended pick. I explained that I was foolish enough to think that by my oratory I could persuade Lord Robens to give that pick a fair trial. That was never given. I said to Lord Robens that I would debate the efficacy of this pick anywhere and that I would win the debate. It was reprehensible of the board to behave in the way it did. If we can do anything together I am willing to do it.
The Bill will help to arrest the decline of a great industry which in the past was the foundation for our industrial greatness and which will be just as necessary for our future prosperity. It will most certainly act as a bastion in the future and prevent us from being held to ransom in the energy supply market.
§ 9.36 p.m.
§ The Under-Secretary of State for Trade and Industry (Mr. Peter Emery)
I am sure that everyone would want me to congratulate the hon. Member for Ince (Mr. McGuire) upon his first speech from the Opposition Dispatch Box. I do not think it is extending the Christmas spirit if I wish him a long and distinguished 1694 career, preferably from that Box. He will always be welcome while he continues to address the House in the manner he has done tonight.
I pay tribute to the miners and the other men who work down the pits. I am a little surprised that this aspect has been slightly neglected. They have one of the most unpleasant jobs possible. The House ought to pay tribute to their work. In a debate of this nature it is also right that the Government should pay tribute to the National Coal Board and its Chairman. He had a difficult task in taking over when he did, helping to regalvanise the industry and facing the problems which it had in the early part of this year.
The background to this debate is the Government's approach to the nationalised industries. These are a vast national asset which must be made to work sensibly, efficiently and adequately. This is for the benefit of the nation as a whole and for the benefit of employees of the industry, in this case the miners, and the industry's customers. The substantial financial provisions for the coal industry proposed in the Bill underline the Government's determination to ensure that the optimum use is made of the major national asset we have in coal.
Taken together with the other nationalised industries coming within the Department's responsibilities, the coal industry makes up about 8 per cent. of the gross national product and employs about 1 million people—about 4 per cent. of the national industrial labour force. These industries are a vital factor in the economy of the nation as a whole. It is interesting to note that about 90 per cent. of the manpower in the coal industry is employed in assisted areas and other areas where there is a need to provide some sort of assistance to encourage employment.
I need not emphasise that the nationalised fuel industries are essential to our central policies. Their efficiency has important significance for the costs of manufacturing industry as a whole. Thus it is a major concern of the Government to ensure that the whole structure of the nationalised industries is one of maximum efficiency and that it is established on a sound financial basis. This is an objective to which any Government of any political complexion must subscribe, and 1695 it is certainly my approach to the job which I have to do in the Department.
In summing up the debate, which anybody would say has been extensive and most useful, I think I might twit the hon. Member for Chesterfield (Mr. Varley). He was talking about sweetness and light. This is, perhaps, a different sweetness and light from that we saw when the 1967 White Paper was not debated and there were the problems which then went on between the mining group and other Members of the party opposite when they were in Government. That would make interesting reading, but it could not be termed sweetness and light in anybody's imagination.
An interesting thing which I should like to answer directly was the accusation made by the hon. Member for Chesterfield that the Government purposely held up on 7th August publication of the statement on coal and the publication of the Bill. I think it important that the House, and, indeed, the country, should understand that the Government thought that before reaching decisions affecting the industry's future, decisions which are complicated, as we have heard today, and of a radical nature, the industry itself should be consulted. My hon. Friend the Minister for iIndustry wrote specifically to each of the unions and to the management asking how they would propose to deal with the problems which the industry was facing. Further, there was so much taxpayers' money at stake that it would have been irresponsible not to have made sure first that all in the industry would play their full part in re-establishing a successful atmosphere and a successful industry as a whole. That is what has been going on since the correspondence was started and in the joint meetings which have been held.
I turn specifically to a point made by the hon. Member for Wigan (Mr. Fitch) who talked about consultations between the National Coal Board and the National Union of Mineworkers. It was right and proper that we should consult not only the National Union of Mineworkers but all in the mining industry who have been participating. The BACM and NACODS all played their part. A considerable step forward has been taken. The trade unions, with the management, have come together to ensure that the 1696 industry is able to take the major steps forward which this Bill would allow.
The hon. Member for Chesterfield also suggested that the Government somehow changed their mind about the importance of the coal industry. He said that when referring to the 1971 Act. I have read the Second Reading speeches of my right hon. Friend who is now the Minister of Posts and Telecommunications and my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley), and I assert that it is quite wrong to suggest—and it would be quite wrong if it were to be allowed to go unanswered—that there has been a change of atmosphere or that at any time there has been an alteration in the Government's approach to this matter. At no time have we suggested that the coal industry had other than a major rôle to play in the energy policy of this country.
I turn to certain other points which have been raised. Firstly, there was the point about the ECSC payments which could be made under the Bill. That was raised by the hon. Member for Ince and also by the hon. Member for Wigan. They asked whether these would be passed on to the industry. The answer is, yes, they would be, and the balancing factor would be made up by the allowances which are provided for in the Bill.
My hon. Friend the Member for Belper (Mr. Stewart-Smith), the hon. Member for Bolsover (Mr. Skinner) and others have asked about Drax B and the new coal-fired power statons. If Drax B were to be ordered tomorrow it would not operate before 1978 at the earliest. Our present programme of coal support is intended to alleviate the immediate problems of the next three years and to put coal production on a sound and economic basis. Drax B would not help in that. It is for the CEGB to choose the fuels for new stations, and the decision on both the price and the security of competing fuels is the managerial responsibility of the CEGB. The present assistance to the coal industry gives it the opportunity of improving its competitive position. The Chairman of the CEGB, Mr. Arthur Hawkins, who has been referred to frequently in the debate, said that if the price were right the board could take 75 million tons of coal a year or more. That is a higher level than any so far achieved by the CEGB.
§ Mr. Edwin Wainwright (Deanne Valley)
The Minister is saying that Drax B will not operate for another six years, but what is to prevent it from being a coal and oil or a coal and gas dual-fired station?
§ Mr. Emery
Nothing prevents it, but I am not here to decide that at this moment. An application would have to be made by the Chairman of the CEGB. It is his responsibility to ensure that this matter is dealt with properly.
My right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell) welcomed two-thirds of the Bill and criticised one-third of it. He also asked what was the amount of interest on the capital as written down. The breakdown of the net benefit of £45 million from the capital reconstruction would be allocated to interest savings of £28 million and depreciation of £17 million.
§ Mr. Powell
I think that there has been a misunderstanding. I did not ask for the breakdown of the £45 million which is being excused. I asked for the expected payment on the capital as now written down—the future written-down capital.
§ Mr. Emery
I think I can give my right hon. Friend the answer, but I should like to confirm it in writing. I think that next year it is £20 million, the year after £24 million and the year after that £27 million.
In propounding his argument on the third part of the Bill my right hon. Friend referred to a "deliberate waste of human effort". I reject that fairly and squarely and I will say why. Without the assistance given under this part of the Bill there would have to be major closures of mines. If my hon. Friend were to ask those miners whether they would rather be on supplementary benefits and looking for a job or working in the industry, they would not consider being employed a waste of human effort.
When considering whether this money might be more economically used if immediately we were to create new jobs for redundant miners, my right hon. Friend must surely know that all the efforts of Governments, of whatever political complexion, will not create new jobs simply by providing assistance. Such 1698 money could not be used for the immediate re-employment of people who might be made redundant if we were not providing for the payments in the Bill.
Furthermore, when weighing the economic factors we must bear in mind that if coal were not being mined—and this point touches the question of human waste which was mentioned by my right hon. Friend the Member for Wolverhampton, South-West—the Government would have to provide foreign currency out of the balance of payments to import the oil which would be necessary to replace that coal. This would not be helpful to the economy from a foreign exchange point of view.
My hon. and learned Friend the Member for Dover (Mr. Peter Rees) asked whether this was a social or commercial measure. [An HON. MEMBER: "He has gone."] I would say to my hon. and learned Friend, although I see that he is not present to hear me say this, that it is both. I cannot understand why he thought it necessary to ask that question. I see that my hon. and learned Friend has now returned. Perhaps he will read my remarks in HANSARD tomorrow.
My hon. Friend the Member for Bosworth (Mr. Adam Butler) asked about the breakdown of the writing-down of assets. The figure of £275 million slightly under-states the full extent by which the relevant assets are over-valued. The figures are as follows: collieries £230 million; associated activities £30 million; houses £18 million; minerals £52 million. This is a total of £330 million. Against this we have to set off about £56 million already written off in the board's published accounts representing provisions made after the 1965 write-off. Therefore the figure has been rounded off to a net sum of £275 million.
The hon. Member for Dunfermline Burghs (Mr. Adam Hunter) asked me a question about Scotland, and I was also asked one or two questions by the hon. Member for Goole (Dr. Marshall). There may have been other points put to me which I have not been able to answer in this reply because of pressure of time, and I shall be delighted to reply to those matters by correspondence.
I was asked by a number of hon. Members about financial disciplines. My hon. Friend the Minister for Industry in 1699 his opening speech made clear that the board would be expected to break even after receipt of grant and to work towards viability. The responsibility for determining the precise amounts of assistance will be with the Government and, in considering the redundant mine workers payment scheme which arises under the 1967 Act, with Parliament. Those amounts will be determined in accordance with criteria laid down by the Government and they will have to be used for the specific purposes which have been set out. These will be determined annually.
I want also to refer to a point raised by my hon. Friend the Member for Belper in a very well-informed speech about the aspect of safety and health. We all know too well what a hazardous industry mining is. But we can tell ourselves with some confidence that it has been getting safer. The fall in the number of accidents is not merely a reflection of the fall in the number of those employed. The fatal accident rate has been cut by half in the 10 years from 1962 to 1971 and there has been a substantial reduction in the rate for all reportable accidents. However, complacency in this matter is the worst enemy. I wonder how many people in this House or outside it realise that more than one man a week has been killed this year mining coal. We still have a very long way to go before anyone can be satisfied about the safety record.
One specific hazard of mining causes the Government and me personally special concern. It is the scourge of pneumoconiosis. We know that this distressing disease is caused by airborne respirable dust and that the more coal produced on a shift the greater the dust. In this as in other hazards we have made very considerable progress, and the prevalence of pnueumoconiosis in Britain is lower than in any other major coal-producing country. But we are still a very long way from eradicating the disease and because of its long-term nature it could be with us for many years even if all our mines were closed tomorrow. We have the legacy of the past 40 years or more to overcome.
I am convinced that radical perhaps even stern measures, which in their new approach will have to overcome past 1700 prejudices, are necessary. They are needed if we are to have any hope of making acceptable progress towards the eradication of this disease. We have the knowledge on which to base regulations for the control of its cause. The House may like to know that I have put comprehensive proposals to the National Coal Board and the trade unions and I am happy to say that on the whole both sides have expressed their wholehearted support for the principles upon which these regulations are based. There are still matters of detail to be worked out and for them we shall rely largely on the advice of the industry. The NCB, the trade unions and the Government are determined to make a joint effort and to make that effort work. I believe that we are taking a radical step of the greatest importance, and my hon. Friend the Minister for Industry and I are giving this considerable priority in dealing with the general problems of the industry.
The purpose of this Bill is to wipe the slate clean and to provide the industry with a fresh start. We welcome the spirit of co-operation shown by the NCB and the unions in tackling the problems. But the future now rests with them. They must translate their intentions into actions and themselves create a viable industry. The Government money necessary to tide them over the next few years could be very large, but I must emphasise as my hon. Friend did in his opening speech that the figures included in the Bill are maximum figures. The future of the industry depends on its competitiveness which in turn depends on how successfully the industry is containing costs.
The current wage agreement between the NCB and the National Union of Mineworkers runs until the end of February. At its annual conference the NUM passed resolutions on wages. But no claim has yet been submitted and no negotiations have started. I must make it clear that it is no part of the purpose of the Bill to finance increases in wages. The ability of the coal industry to support steadily rising real wages for miners necessarily must depend upon continuing improvements in productivity and on other economies.
§ Question put and agreed to.
§ Bill accordingly read a Second time.1701
§ Bill committed to a Standing Committee, pursuant to Standing Order No. 40 (Committal of Bills).