§ Order for Second Reading read.
§ 4.8 p.m.
§ The Secretary of State for Energy (Mr. Anthony Wedgwood Benn)
I beg to move, That the Bill be now read a Second time.
This last year has been one of consolidation for the coal industry, following on the tripartite discussions between the Government, the National Coal Board and the unions, which led to the report of the coal industry examination. In the course of that examination the Government endorsed a big investment programme by the NCB, involving capital expenditure over the next 10 years of £1,400 million, and the NCB has been pressing ahead with the implementation of that programme.
The Government already have on the statute book part of their contribution to confirming their commitment to the industry, notably the Coal Industry Act 1975, which enabled us to pay £100 million to the NCB as a major contribution towards the cost of its compensation scheme for pneumoconiosis sufferers, a scheme which was agreed and arose directly out of the tripartite meetings. The 1975 Act also clarified the NCB's right to work coal, and restored the compulsory powers of the Opencast Coal Act 1958, measures which were essential if the NCB's "Plan for Coal" target of at least 135 million tons a year of output were to be met.
The Bill before the House today is a further step in the Government's honouring of the commitments made in last year's tripartite examination, but much remains to be done. This is an interim measure and we shall still need to consider whether further legislation should be introduced next year to provide a longer-term framework within which the commitments of the coal industry examination can continue to be carried out. In that connection, the Government, the NCB and the unions have decided to reconvene the tripartite discussions to review the progress in implementing the "Plan for Coal". We had our first 1059 meeting on Tuesday of this week, and we aim to meet again. As the sponsoring Minister, I can say that that provided a useful framework for discussion. I was pleased to hear Mr. Gormley say at that meeting that the atmosphere in the industry was better than it had been for a decade.
But while we shall be looking at the longer-term requirement, there is an urgent need to act now on important matters because, following the tripartite examination, the NCB and the NUM agreed on a new earnings-related pension scheme for miners. This was set up in April. It was recognised in the tripartite examination that the industry could not be expected to bear all the burden of the social costs arising from the past, and the Government undertook to relieve the Board of some of the cost of meeting the deficiency in the scheme in respect of existing pensions. That is what the Bill provides for.
At the same time, the steadily rising capital expenditure programme arising from the "Plan for Coal" meant that the Board's statutory borrowing limit, set when such a programme was or seemed to be unthinkable by the Conservative Government, was coming under pressure. The aim of the Board's "Plan for Coal" is to provide 42 million tons of new capacity by 1985—22 million tons by expanding existing capacity and 20 million tons from new pits.
The Board has set in hand about 60 major projects which will yield about 12 million tons of that new capacity, and its proposals for a major new mine at Selby, producing 10 million tons a year, have been the subject of a public inquiry. I understand that the inspector's report is expected shortly.
All this shows the Board's determination to secure the positive contribution that the coal industry examination envisaged that coal could make to the energy supply of the country. But the financing of this investment plan and the Board's need for further working capital to deal, amongst other things, with fluctuations in stock building, are already presenting the Board with considerable borrowing requirements.
Clause 1 of the Bill, by substantially increasing the statutory limit on the 1060 Board's borrowings, will enable the Board's investment programme to continue according to plan. However, these borrowings are already very close to the existing limit. Pending the enactment of the Bill and in order to prevent a breach of the limit which would otherwise first occur in December, the Treasury has agreed to make payments of up to £50 million in December and an additional £25 million in January from the contingencies fund, to be drawn in tranches as required—and, of course, it follows that the repayment of any sums so drawn will take place when the Bill is enacted.
Clause 2 deals with the mineworkers' pensions. The pension scheme was established in 1952, and for a small contribution paid a pension of 10 shillings a week. This pension was raised in successive stages to £3.60 in September 1974, and although the contributions had been raised they remained low at an average of 43p a week. The increased pensions were financed by creating a deficiency in the fund which was met by the Board, which made annual deficiency payments. The Government have also made deficiency payments totalling £25 million over the last three years.
Last April, the Board revised the scheme to bring it more into line with modern practice, and the new scheme was well received by the NUM. It applies to men who were serving mineworkers on or after 6th April 1975. The contributions from the members are a percentage of earnings and there is a matching contribution by the Board. A man will receive a pension of half his final wage at the end of 45 years' service. People who were in the fund before 6th April 1975 will receive their pensions on the basis of the scheme as it was then constituted.
Broadly, there are four categories of such people—workers who retired before 6th April 1975, widows and dependent children of men who died before that date, and the following, who will have the right to future pensions under the same rules, namely, widows and dependent children of men now in pension, and men who left the industry before April 1975 and have a right to a deferred pension to be paid at the age of 65.
In the coal industry examination, the Government recognised that the past contraction of the industry presented a financial problem for a viable pension 1061 scheme because of the consequent exceptional ratio of pensioners to contributing members, due to the age structure in the industry, which approaches one-to-one instead of the more normal one-to-five, coupled with the fact that pensioners can make no further contribution to the pension fund or contribute to the industry's performance.
In order to help the Board with this burden of the past, the Government undertook, subject to parliamentary approval, which I am seeking in this Bill, to assist in meeting the existing deficiency in the pension fund so far as it relates to beneficiaries and prospective beneficiaries under the pre-April 1975 rules.
There is no precise way of determining how much of the total deficiency in the fund is related to beneficiaries and prospective beneficiaries under the pre-April 1975 scheme, but in making a generous contribution of £250 million the Government have aimed to match the broad order of magnitude of this part of the deficiency. We propose to spread the payments forward over 20 years, during which most of the liabilities to the existing pensioners will be discharged. We are advised that this means a payment of £18 million a year.
§ Mr. Patrick Jenkin (Wanstead and Woodford)
The Secretary of State has gone only part of the way to clear up a considerable uncertainty in my mind as to how these payments were to be related to the liabilities under the new pension scheme. It was clear that the new scheme would have to be funded, and yet anyone who retires after April 1975 gets his half-pay pension out of it. Clearly, a substantial amount of payment under the Bill will go to the new scheme. How is this to be calculated? Will it be done on an actuarial basis? Will it be shown in the accounts?
§ Mr. Benn
The right hon. Gentleman is quite correct in putting a question of that kind. My hon. Friend the Under-Secretary of State, who has far more experience in this matter than I have, intends to deal with it in his reply, because we naturally expected that questions about it would be put. It is not possible to do a very precise actuarial calculation, as I pointed out a moment ago. What we have done is to make this contribution—which I think will be 1062 accepted as a generous one—on a broad estimate of what it would be right for us to contribute to a deficiency arising from the special problems involved.
§ Mr. T. H. H. Skeet (Bedford)
I understand that this is to cure the deficiency of the fund. Is there any inflation-proofing of the fund in the arrangement?
§ Mr. Benn
I do not want to pick the eyes of my hon. Friend's speech. We have taken account of the relevant factors. If the hon. Gentleman will allow me, I will confine myself to that and leave my hon. Friend to deal with the matter in detail. My hon. Friend, who has great experience in the industry and has worked very hard on this scheme, is surely entitled to amplify and describe in greater detail the arrangements made.
I am sure that the House will agree that the sum of £250 million, together with the £100 million that the Government had already contributed to the pneumoconiosis compensation scheme, is a most generous contribution towards solving the social problems connected with the immediate past of the coal industry. It is prudent to make provision for taking account of the effects of inflation, and there is the possibility that the rates of pension paid to pre-April 1975 pensioners and their dependents may from time to time need to be revised by negotiation between the Board and the union in the light of changes in the retail price index.
§ Mr. Skeetrose—
§ Mr. Benn
I hope that the hon. Member for Bedford (Mr. Skeet) will allow me to get on. If he had not interrupted, he might have heard me saying that I preferred not to anticipate important passages of what my hon. Friend the Under-Secretary of State intends to say in reply to the debate.
It is the Government's policy to phase out subsidies to the nationalised industries. In line with this the Government hope that the coal industry will be able to operate without the need for assistance, 1063 apart from the social grants. The Government recognise that circumstances may arise in which they will need to provide short-term support to the coal industry. Stocking aid is one way in which such assistance may be given. Section 7 of the 1973 Act enables me to make grants for that purpose.
A minor anomaly in these powers is that they do not extend to helping the National Coal Board with costs incurred when it delivers stocks to major customers for deferred payment. Such arrangements for the delivery of deferred stocks in excess of immediate requirements are desirable as they avoid the cost of double handling and keep coal moving away from the pit head. Clause 3 of the Bill will extend my powers to make grants towards the financing of such stocks sold but not paid for, although the use of this power, as with the powers under the existing provision in the 1973 Act, would need to be considered against the Board's overall financial position and the level of stocking undertaken by it.
I know other hon. Members wish to speak in the debate. There is other business in the House today. However, having outlined the main provisions of the Bill, I should not like to allow the Second Reading to pass without using this opportunity of reaffirming what all hon. Members who follow the fuel scene closely know. I emphasise the growing importance of coal in our energy scene and the importance of contributing, as far as we can in debates in the House, to a public understanding of the enormous value to this country of our reserves of coal and the skill and contribution made by those working in the mining industry—and the contribution they will be able to make, with the good will and support of the Government, to the future of our economy.
It is understandable, but a pity, that when we speak about energy the emphasis tends to rotate around oil. Although the mining industry is highly mechanised, its workers are highly skilled, and there are reserves that will run hundreds of years ahead. That is a vital national resource. The rate of coal exploration is now three times what it was 10 years ago. It will increase still further
§ Mr. Dennis Skinner (Bolsover)
Many Members of Parliament and those working in the industry place a great deal of faith in the Minister's words and actions. I am sure that his words today will be echoed around the coalfields. However, perhaps he should mention the question of securing markets. It is useless to explore, to dig for, and to stock coal without secure markets. Will my right hon. Friend indicate when the next two coal-fired power stations at Drax B and Burton B are to come on stream? Without those two power stations, much of what the Minister said will be irrelevant.
§ Mr. Benn
I suppose that I should take it as a tribute to my speech that the points raised by my hon. Friend are those to which I shall shortly address myself. A similar situation occurred a moment ago on the inflation aspects of the pensions scheme. I could brush off my hon. Friend by saying that this matter was associated with Selby and put the matter back on that basis.
I am building up to the point which I wish to make about coal in our economy. In presenting the Bill I hope to make clear the deep commitment of the Government to the tripartite examination and the part we have played in that. Here I come to the point made by my hon. Friend the Member for Bolsover (Mr. Skinner). It is not possible to consider the coal industry as if it had an isolated relationship with the Government of the day. Over the past six months I have brooded on the difficult problems of my new Department. I have thought about the proper approach to energy policy to meet this and other energy problems.
I mentioned earlier the tripartite discussions, which we have resumed, and which I hope will continue, to provide an opportunity for the Minister not only to meet—as I did two weeks ago—the executive of the National Union of Mine-workers and the Coal Board separately. That is sensible and proper. I want to meet them together and to find a forum in which the supply and demand for coal can be discussed. I do not know whether this is known, but I have begun the preliminary discussions for a meeting at which the Electricity Council, the CEGB, the National Coal Board and the unions might sit together and discuss the interrelationship between 1065 coal mining and the demand for coal in the generation of electricity.
That subject has long been a source of discussion, often by means of speeches made in public from one side or the other. I hope that those problems will be discussed in an atmosphere of mutual trust and confidence. That involves not only the ordering of new coal-fired stations. It involves an examination of the coal import position as well as the coal export possibilities, which we are exploring.
At the tripartite meeting both sides of the coal industry were concerned that there should be an exploration of the possibility of conversion from gas to coal burning. That is a sensible subject for examination. The meeting was concerned to see whether other matters might not be looked at again. If I refer to those matters, I do not commit myself. I merely report that those subjects were put on the agenda for consideration.
Those subjects included other markets for coal, including the domestic market. One of the problems is that houses are now built without flues. Therefore, the possibility of burning coal in those houses does not exist. Various other points were brought to my attention, including the question whether the conversion of fireplaces for burning coal might not be the subject of further examination by the Government. I hope that the House, in allowing me to make these points, will not think that I am making announcements about policy.
It is not meaningful in energy policy terms for a Minister to hold a self-contained discussion with the coal industry, the oil industry, or any other industry, without regard to the market possibilities which may exist for its products. I have discussed this problem tentatively with the miners and the electricity authorities. I have found that this concept of a broader look at the interrelationship between supply and demand makes sense to them. I hope that I shall enjoy a continuation of the good will which has so far been evident in these discussions.
The use of coal for petrochemical purposes and other downstream developments of that kind must also be borne in mind as we approach responsibly the task of developing, from our enormous resources of energy, a policy which will win support, 1066 make sense and give the maximum assurance of security of supplies for this country, the most economic provision possible of energy for our needs, to take advantage of our resources and to build upon our own indigenous resources so as to promote our industrial development.
It is sometimes easier to see our problems through the eyes of others. When the OPEC countries discovered the extent of their oil resources, they said that they wanted to build their own industrial society for themselves, using their oil revenues, so as to consolidate the increase in their standard of living. We are an old industrial society with formidable problems, which I shall not go into now. But we want to see strength in our indigenous resources that will allow us to re-industrialise and to build up our own strength. For that purpose my relations with the mining industry—an industry I am deeply proud to serve, not for the first time as Minister—will allow us to look at the matter in that way.
This is the first Bill that I have presented as Secretary of State for Energy. This is my first opportunity in that capacity to take part in a debate on coal, and I wish to pay tribute to those who work in the industry.
§ Mr. Tom Ellis (Wrexham)
I am interested in my right hon. Friend's comments, and I agree that we must not look at the subject of coal in isolation. He is aware that the EEC has proposals for a common Community energy policy. Indeed, there are two in existence, one somewhat optimistic and the other a little less so, but in each of which coal plays a significant part. Will my right hon. Friend say whether he believes that our energy policy should play its part in any common energy policy to be adopted by the Community?
§ Mr. Benn
If I were to be tempted to go into the wider areas thrown up by my hon. Friend, I might detain the House for too long, but let me make a comment in response to his intervention. As an Energy Minister who had before him proposals prepared by the Commission, I felt that at the beginning of any approach we should seek to arrive at an energy policy within the Community alongside our domestic energy policy. In discussing this subject on a wide-ranging basis, we 1067 should be sure that those policies conform to the interests not just of the United Kingdom but of all member countries.
Therefore, at the first meeting of the Energy Council I suggested that it would be sensible for Energy Ministers to be invited to put in papers relating to their own domestic policies so that we could identify overlapping interests. In that way we could secure firm foundations on which to build a European policy. Where there are divergencies, though not necessarily conflicting issues, further study will be required.
That is the response I took with me when I visited Paris, Rome, Bonn and Brussels in September and that approach was warmly received. Other member countries have put in their own proposals. An informal meeting—and I emphasise that it will be informal—will take place in Rome in December on energy matters, and I intend to pursue serious and sensitive multilateral discussion in respect of coal and electricity so that we can avoid rigidity in energy policy, whether at home or abroad, and can move forward on that basis to meet our various interests.
I do not wish to detain the House longer. I hope that the Bill will be supported by the Opposition. The Coal Industry Examination laid the foundations for the future and the continuing tripartite discussions and multilateral discussions will help to ensure that impetus will not be lost. The 1975 Act was the first fruit of that examination, and this measure is another that will help to preserve a flourishing coal industry. I commend the Bill to the House.
§ 4.34 p.m.
§ Mr. Patrick Jenkin (Wanstead and Woodford)
The House listened to the speech of the Secretary of State for Energy with attention, and we all enjoyed his brief reference to a previous incarnation when he was responsible for the coal industry and presided over its fortunes in some of the years before 1970.
We debated these matters on 24th July last year, and I shall not repeat my arguments put to the House on that occasion, but until a year or two ago we all shared some responsibility for the prolonged rundown of the coal industry. Therefore, in one sense, we can all join in welcoming the new circumstances providing for a 1068 rebirth of the coal industry. I hope that we shall all learn from the mistakes of the past.
The right hon. Gentleman suggested some form of joint examination in regard to the supply of coal and markets, and said that the electricity industries would be primarily involved. Two points arise from that observation. In a few weeks' time the Plowden Committee's Report is expected dealing with the reorganisation of the electricity industry. We must bear in mind the fact that it is not only the CEGB that is involved with the supply of fuels. Area or regional distribution boards are bound to take an interest in this matter because they have to supply their customers with electricity. Therefore, I hope that the right hon. Gentleman will not firm up the organisation too hard until he has considered the Plowden Report and formulated his reactions to it
§ Mr. Benn
Without prejudice to what may flow from the Plowden Report, I should like to tell the right hon. Gentleman that the discussions that are to take place informally before Christmas will include the Electricity Council. I am well aware that not only the CEGB is concerned in such a discussion but, in the ultimate, the consumers are as well.
§ Mr. Jenkin
I am grateful for the right hon. Gentleman's intervention and I am sure that the area board chairmen will be reassured by his words.
Second, we must bear in mind the fact that coal is not the only commodity that is involved in these energy considerations. There should be some way of representing the other suppliers of principal energy resources, notably the oil industry whether represented by BNOC or the private companies, or indeed both. There is a need for more regular interchanges rather than bilateral discussions with the Minister.
The heart of the Bill lies in its new borrowing powers. The right hon. Gentleman spoke of the need to draw on the Contingency Fund. As a former Treasury Minister, I suppose I should know the answer to the question that I am about to put to him, but I cannot recollect any case involving a nationalised industry that has exceeded its borrowing powers and then borrowed from the Contingency Fund. To judge by the Secretary of State's expression, I have no doubt that 1069 he is about to tell me that such a case occurred when I was Chief Secretary to the Treasury. These are perhaps details which Treasury officials do not necessarily bring to the attention of Ministers, but nobody on this side of the House will wish to leave the Secretary of State in an embarrassing situation any longer than is necessary on that score.
Debates on Bills relating to borrowing powers are traditional occasions for a wide-ranging discussion, and I hope that I shall be forgiven if I do not confine myself strictly to the Bill that is before the House.
It is timely that we should now be debating the subject of coal. Despite the new opportunities for coal, it is no secret that there are anxieties about the situation both inside and about the industry. The anxieties within the industry relate to whether the recent build-up of stocks heralds a new rash of pit closures, and a possible reverse in the £600 million expansion plans. Outside there are anxieties whether rises in coal costs in recent months and productivity difficulties might threaten to make coal uncompetitive in some markets. It is true to say that the atmosphere which a year or 18 months ago was almost euphoric, has now given way to a more realistic state of affairs in which some of the optimism has evaporated. People must recognise that the industry has ahead of it a fairly stiff task.
The coal industry faces a combination of industrial recession, inflation, soaring energy costs world-wide that in turn reflect on mining costs, as well as pressures to save energy via the Government's propaganda campaign; and it also faces problems as a result of reduced demand as an effect of higher prices. These matters all tend to create a new situation, and it is a situation to which the industry must adapt.
The final Report of the tripartite examination contained many wise words. The Report was published in November last year, almost exactly a year ago, and paragraph 10 contained a comment which I shall quote. After examining the future demand patterns of coal, the Report talks of theeven greater opportunities for coal—always providing that sufficient output can be achieved with assured continuity of supply at a cost 1070 which can meet the long run competition from other sources of energy.That was in November of last year. Yet by July of this year Sir Derek Ezra, Chairman of the National Coal Board, had this to say in the introduction to the Board's annual report:through last year's coal price increases, the competitive advantage over oil has been very largely eroded.I shall want to look at some of the detailed figures later on, but this is an indication of the measure of the change, even in the past year.
When we bear in mind that the Coal Board's profit on its mining activities, as opposed to its ancillary activities, was one-tenth of 1 per cent. of its turnover—almost exactly one penny a ton—and that that was struck after revenue subsidies of £68 million—something over 50p a ton—the House will realise that in spite of the sixfold increase in oil prices this is an industry which will have to work hard to fulfil the promise held out for it in the tripartite examination. It is therefore timely that we should have this debate about the industry to discuss some of its problems.
By a chance encounter yesterday—I hope that the Under-Secretary will forgive me for referring to this—I was introduced to a leading member of the Scottish National Union of Mineworkers. I mentioned that we would be discussing this Bill today. That gentleman said, "You will be agin' it, won't you?" I said, "No. On the contrary we shall be supporting it and giving it a fair wind." He said, "Ah. You have changed your mind." I said, "Of course not."
I want to put on record the view which I expressed 18 months ago during the Committee proceedings on the last borrowing powers Order—the view to which my party subscribed in its manifesto at the last election—namely that we wholeheartedly support the commitment to the "Plan for Coal". I remain convinced that this is an industry which has an esential rôle to play in the energy strategy both of the United Kingdom and of Europe. I welcome what was behind the question asked of the Secretary of State by his hon. Friend the Member for Wrexham (Mr. Ellis).
Our coal resources are huge—many times those of the oil resources so far discovered and, to hazard a guess, many 1071 times more than those ever likely to be discovered. We have a skilled and sophisticated mining industry. British mining equipment and techniques are marketed all over the world. Nuclear power, though vital to meet the growth in electricity demand—certainly up till the end of the century—and vital for the part it will play in conserving fossil fuels for suceeding generations, cannot possibly replace coal for many years to come. It is important that everybody should recognise that.
I would like to draw to the attention of the House what is the most recent analysis by the Goverment of the energy supply prospects for the next 15 years. It is necessary to dig for this information. It is in Annex C of the Memorandum submitted by the Department of Energy to the Energy Resources Sub-Committee of the Select Committee on Science and Technology last March. It is published on pages 188–213 of the Committee's First Report for 1974–75, House of Commons Paper 487.
The hon. Member for Bristol, North-East (Mr. Palmer), who was the Chairman of the Sub-Committee, is unfortunately not present today. Not the least valuable function of these Select Committees is the evidence which is made available for the first time.
Annex C is entitled:Energy Review 1974: Policy Framework and Forecasts.It is the result of a computer study intended to produce a whole range of forecasts based on a wide range of alternative assumptions about growth rates, energy prices, policy choices and so on. The heart of it is Table 1 on page 200 which sets out the ranges of supplies between 1972–73 and 1990 of the various energy sources.
The figures show that in 1972–73 128 million tons of coal were consumed. In 1975 the range was 119 million tons to 133 million tons. Regrettably, the figure will be nearer the lower end of that bracket. For 1980 the range is much wider, 107 million tons to 154 million tons. In 1990 the range moves from 77 million tons to 196 million tons at the top end.
A sample projection, which is stated clearly as being for illustrative purposes 1072 only—and I do not want to read more into it than is intended—appears on the next page and gives much more specific figures. In 1973 there is a figure of 131 million tons, in 1980 it is 130 million tons, in 1985, 135 million tons and in 1990, 150 million tons. These are much more specific examples because, as paragraph 9 says, they are based on the NCB's "Plan for Coal".
The first point to make is that all of this was based on a computer study carried out in the summer of 1974, nearly 18 months ago. If the Government were asked to produce a similar study now, would the figures be the same or would they have changed? We have had further substantial delays on nuclear plant and with North Sea oil. There are changes in oil prices and there is evidence of the effect of much higher prices for energy generally on the level of demand. I ask the Government whether they will consider publishing a 1975 survey—an up-dated version of Annex C.
Do the Government intend to publish regular annual reports of this nature? They are extremely helpful to those who seek to discover how Government thinking is moving and how we are fitting into a developing Government strategy for energy. The right hon. Gentleman is always preaching the virtues of open government. I can only commend to him the view that this would be a welcome move towards that. What Annex C shows is the continuing rise in opportunities for coal on many of the assumptions, provided that it remains competitive.
At this stage I wish to read a passage from the Government's evidence to the Sub-Committee which comes in paragraph 11, when it is said:If coal's present price advantage over oil were to be lost, there would of course be a substantial shift of demand away from coal; and if the threshold of competitiveness between oil and coal for power station fuelling (which requires coal to be significantly cheaper than oil) were to be breached, total coal demand could drop to 80–90 million tons.I think that is right. It undermines what the hon. Member for Bolsover (Mr. Skinner) was seeking to argue—that there should somehow be an assured demand for coal. I do not think that that is realistic if expressed simply in that way. It has to be on the basis of competitive pricing, about which I will say more later.
1073 At this stage what I seek to do is identify the Opposition with the commitment embodied in the "Plan for Coal" and the thinking behind Annex C, namely that the long-term future of coal is assured if the necessary conditions of cost and security can be met.
Another reason for long-term confidence in the future of coal—the right hon. Gentleman referred to this briefly—lies in developments in the utilisation of coal which are most exciting. There are not only improved combustion techniques, which is important enough, but also the upgrading of ordinary coal to metallurgical coke, the use of coal as a source of material for industry, gases, hydrocarbon liquids and solid materials ranging from rubberised sheeting and graphite electrodes to such sophisticated products as carbon fibres.
It is not too strong to say that the coal conversion industry is enjoying a rebirth. I listened to Dr. Pierre Rousseau's fascinating coal science lecture a month ago when he spoke of the new world-wide interest in coal processing. He pointed out that all the processes in use today are basically the same as those which were in use 30 years ago. They are based on the technology of 30 or 40 years ago—Fischer-Tropsch, the Lurgi process, and so on. There have been few major innovations in the last 30 years, although one has been made in this country—the development of the Lurgi process to produce synthetic natural gas, as in the plant at Westfield.
Today all that is changing. Some of my hon. Friends and I had the good fortune to visit Stoke Orchard, the coal research establishment, on Monday. I was greatly impressed with the range and quality of work being done there. Half of it is financed by the National Coal Board. A third of it is financed by the European Coal and Steel Community. I hope that I shall not be thought guilty of making a political point when I say that I hope that the Secretary of State will bring that to the attention of his committee, which is the successor to the Common Market safeguards campaign. The balance of the expenditure is met by industry, including, interestingly enough, the oil industry.
I should like to say a few words about the question of fluidised bed combustion.
1074 It is not too strong to say that the work at Stoke Orchard represents a major breakthrough. Only a week ago the 10-nation agreement of the International Energy Agency provided for international collaboration in developing coal technology with a major project of fluidised combustion for Britain. Mr. Leslie Grainger said:These agreements represent a great breakthrough in the advance of coal technology and also in international collaboration. It is the biggest-ever international programme involving coal producers and users and we are determined to see rapid progress in the technology of using coal as a real contribution to solving energy problems at competitive prices.That optimism is fully justified. There are three factors about fluidised combustion. It has a much higher thermal efficiency. It can raise the thermal efficiency of power stations from 30 per cent. to 40–42 per cent. which is significant in terms of fuel usage. It can give improved pollution control because the sulphur can be fixed into the limestone in the fiuidised bed. But, perhaps most significant—and this was something which I learned for the first time at Stoke Orchard—it largely eliminates the economies of scale in power-station building. One can achieve broadly the same measure of overall efficiency on a small power station as on a giant power station.
What does this hold out for the future development of coal-fired electricity? Surely it is that it will make small local stations just as viable in producing electricity as the giant stations, but with this critical advantage: the small local stations are most easily adapted for using the waste heat, for district heating schemes to supply neighbourhoods around the stations. It is exceedingly difficult to see how one can develop the effective use of waste heat in a 2,000 mW power station, but with a small 100 mW station it becomes feasible.
I should have thought that there was everything to be said for linking the development of fluidised bed technology with Dr. Marshall's study on the combined use of heat and electricity. I was a little surprised to learn that Stoke Orchard is not involved with Dr. Marshall's study; yet, with fluidised bed technology there is the opportunity of making a reality of something for which many of us, particularly my hon. Friend 1075 the Member for Derbyshire, South-East (Mr. Rost), have been arguing for some time.
§ Mr. Richard Kelley (Don Valley)
Does the right hon. Gentleman agree that the fluidised bed combusion system is being explored by an organisation which has nothing to do with the European Coal and Steel Community? Does he hope that the benefits which may accrue from the research and development taking place in this field will be open to a much wider range of organisations than the ECSC?
§ Mr. Jenkin
I think that I have pointed out that the £10 million project is being financed by the International Energy Agency. Perhaps that meets the hon. Gentleman's point
Another crucial process at Stoke Orchard is the super-critical gas extraction process. This is real "third generation" coal technology with a promise of a major leap forward in coal processing as a source of gaseous and liquefied hydrocarbons as raw materials for industry. We have been told that there is a project to build a pilot plant with ECSC help. We shall watch with interest how the project develops.
For all those reasons, it is right that we should look to the future of the industry with confidence and I hope that my words will be noted not only in Hobart House but also in Euston Road.
I wish however to emphasise the three cautionary provisos in the Final Report: the achievement of sufficient output; an assured continuity of supply; and at a cost which can meet long-run competition from other sources of energy. I should like to examine the prospects for the industry under those heads and to make a few comments on the Bill.
It is no secret that the level of productivity in the past five or six months has been a cause for concern. The latest issue of Energy Trends, which came out a couple of hours ago, shows that over the past five consecutive months output per manshift has been lower than it was in 1974. There has been some improvement in the last month and it is now only a few decimal points down on October 1974. But that is not all that satisfactory and I know that the Under- 1076 Secretary of State is paying careful attention to this matter. It was stated in the Final Report:We appreciate the technical and other difficulties, but the extra output from even a modest increase in the average machine-running time per shift would have a real impact on the fortunes of the industry".That accords exactly with what I have been told by mining engineers and miners at the coal face.
I hope that those who have worked in the industry will forgive me for saying this—and it is easy for people who have not worked in it to make these points—but I think that I recognise all the difficulties. Mining is arduous and uncomfortable work, and safety plainly must have a very high priority. But I find it difficult to believe that it is not possible to work out a proper incentive scheme based on the output either at each coalface or at each colliery. Such a scheme might well have the desired results mentioned in the Final Report.
Many of us regretted it when such a scheme did not find favour with the industry, because the national scheme has turned out to be very much second best, and there may be two or even three quarters when no bonus at all will be paid to the miners. I noticed that Mr. Scargill is still voicing opposition to a local scheme because, as he says, it would bebased on man against man and pit against pit".I say with respect to Mr. Scargill that there is no limit. It is a question not of sharing a finite cake but of giving people the incentive to get a little more machine time and to produce the coal which could transform the economics of the National Coal Board.
I hope that another attempt will be made to devise a scheme. I realise that this is a matter for the industry and not for the Department, but it will be helpful if the Under-Secretary of State can tell us what is going on.
I was interested in what the Secretary of State said about Selby. If work is to start in the spring, a decision on planning must be made in the next few weeks. There are other prospects. Coal has recently been discovered under the Forth. I gather that coal has been found at Cotgrave, in Nottinghamshire; and that a new thick seam of tophart coal has been 1077 found in the Belvoir Vale. The resources are immense, and they need to be developed.
I should like to make a point about the exploration industry. At the time of nationalisation, there were 27 coal exploration firms in business. Today there is only one British firm.
One knows the reasons for this, but perhaps the Government could urge the National Coal Board to look favourably at encouraging the one remaining British firm, which is now facing competition from foreign firms, especially Canadian and German firms. We really need a British capability in this field.
I hope that we shall get more information at some stage about the "Plan for Coal". It is all very broad and general at present. In the case of previous borrowing powers Orders or Acts we have had from the NCB a substantial body of information about the plan, the timing of the investment, and where the main projects are. It is a matter for regret, and unfair for the industry, that we are asked to consider this Bill without that sort of information before us. I hope something will be said on that fairly soon. But broadly we support the plan.
The second requirement of the Final Report was "assured continuity of supply". I have no doubt that Ministers, from the Secretary of State downwards, are losing no opportunity of stressing the damage to the confidence of customers if there are interruptions in supply. The unhappy events of 1971–72 and 1973–74 have cast a long shadow. One recognises the forces at work within the National Union of Mineworkers, just as they are at work within many other unions, and one can only hope that the wiser counsels will prevail.
I read with a little irony this report in the Daily Telegraph this morning:Moderate miners' leaders in Yorkshire said last night that any settlement with the junior doctors which contravened the Government's ani-inflation pay code would spark off a pay revolt throughout the coalfields.I do not want to hark backwards, but those are words which fall strangely from a union which demanded two years ago to be treated as a special case. The union said that its claim would not break the Pay Code at all. Instead, it brought down a Government by insisting on the demand for special treatment.
1078 The main difference today is that there is now an Opposition which is making it abundantly clear, as the Prime Minister acknowledged this afternoon, that it will offer no comfort or support to those who seek to break the pay policy. Would that it had been so two years ago.
The truth of the matter is thatludicrously excessive pay demands forced through by brute force can wreck the industry.Those words were said earlier this year, according to a Guardian report of 22nd May 1975, by the right hon. Gentleman the Secretary of State for Industry.
There are plenty of voices now arguing that we cannot risk being held to ransom again, and ought to get out of coal as quickly as possible. Nothing does more to undermine the efforts of those of us who stand out against that view, including Her Majesty's Opposition, than threats of industrial action being constantly bandied about. It can only destroy the faith of coal users. I hope this view will gain currency in the coalfields.
The talisman of our support is that we supported the pneumoconiosis scheme, and we support the pension fund scheme, where we have, since 1973, acted in support of the principle of support from the Exchequer.
My next point goes a little wider than the Bill but I hope that perhaps the Under-Secretary of State will comment on it in his reply. My hon. Friend the Member for Guildford (Mr. Howell) asked a Parliamentary Question on 11th November 1975, and from the Written Answer, reported in the Official Report at cols. 619–20, it appeared that in one year the nationalised industries' pension schemes were having to be helped to the tune of nearly a quarter of a billion pounds—£247.8 million. That is a staggering sum in a single year. It is the direct consequence of inflation, and my hon. Friends will want to know a little more about the Government's thinking on this business of subventioning nationalised industry pension schemes.
I turn now to costs, and this is the key question. At the time of the Pay Board's Report, coal was 3p per therm into power stations, and oil was between 6p and 7p per therm. The most recent figures I have received from the Central Electricity Generating Board show that fuel oil has gone 1079 up from 6p or 7p to 8.8p per therm, and coal from 3p to almost 7p per therm. Even those averages conceal the realities, because there is now a significant overlap between high-cost coal and low-cost oil.
Sir Derek Ezra made the point when he spoke to the National Union of Mine-workers' conference at Scarborough, and said thatThe average effective price advantage of coal over oil delivered to power stations has now been eroded from 44 per cent. to little more than 10 per cent. by a virtual doubling of the price of coal.That was in The Times of 9th July 1975.
There lies the nub of current anxieties. Oil will go up a bit as a result of the 10 per cent. OPEC price-hike. Coal will have to go up, probably in March, to meet the effects of the £6-per-week pay rise in January. But is it right that there should be further subsidies when the Government have said that they are trying to cut out subsidies? Here we have what is bound to be an extension of the stocking subsidy.
This again, as the Secretary of State made clear, came from the 1973 Act, but by extending the subsidy to coal at customer's premises, are we not risking substantially increasing the amount of the subsidy? The total figure for subsidies was £130 million in 1973–74 and £68.2 million in 1974–75. How much of this was for the coal stocking subsidy, and how much is the coal stocking subsidy expected to be in the current year? Perhaps the Under-Secretary will answer these questions when he winds up the debate.
The Secretary of State said that this was a "short-term fluctuation". I hope he is right. But it cannot be right at this stage that we should go back on the policy of eliminating revenue subsidies—other than, of course, the social costs which we all accept—from the nationalised industry pricing. Is there really need for subsidies of this kind? The public sector borrowing requirement is over £12 billion this year, and there is an obligation on all Departments to try to keep the calls on the public Exchequer as low as possible.
This is a short but very important Bill, and although the main provision is a substantial increase in borrowing, and therefore a new burden on the Exchequer, 1080 it is made pursuant to a policy for coal which has the full support of Her Majesty's Opposition. We shall want to examine the clauses in more detail in Committee, but I would not advise my hon. Friends to oppose the Second Reading tonight.
§ 5.7 p.m.
§ Mr. George Grant (Morpeth)
I broadly welcome this Bill. The two main objectives are to maintain the real value of the miners' pension fund and to facilitate the stocking of coal. Men who have 10 years' service in the industry as from 1st April 1976 will have a £1 a week increase, taking it to £4.60 a week. As a Member sponsored by the National Union of Mineworkers, I am confident that in this economic climate the union will also welcome the measures taken in the Bill.
I welcome the opportunity to discuss the mining industry within the context of the areas covered by the measures in the Bill. I agree with the right hon. Member for Wanstead and Woodford (Mr. Jenkin), the Opposition spokesman, when he says that there are anxieties in the mining industry, and that things are not just as cosy as my right hon. Friend the Secretary of State seemed to indicate in his speech.
I am not satisfied with the present policy of the National Coal Board, or, indeed, with that of my Government. I am sure that no Member of this House can feel satisfied that today the British miner is the only miner in the European Economic Community who does not retire at the age of 60 or lower. In the East European countries miners retire at 60, or in some cases at 55, with two-thirds of their wage as pension
The present miners' pension scheme is quite inadequate. Whenever I ask Parliamentary Questions about the reason why the British miner cannot retire at the age of 60 or even at 55 with an adequate pension, I am told that the substantial amount of money required would be too great and that the number of men involved would make such demands on the labour force that it would be quite impossible for the National Coal Board to accept it. I do not accept either of those premises. At the moment, about 5 per cent. of our male population is unemployed. I ask the House to look at 1081 the situation in this light. We have young men unemployed through no fault of their own but because they cannot get jobs. I ask the House to consider what they are being paid and whether it is they who should be put out to grass first. Should we virtually pension off young men capable of doing a job of work or men who have worked 50 years in the coalmining industry?
More often than not, miners approaching the age of 65 are literally crawling to work. They work in dust. They suffer from bronchitis, which does not qualify for industrial injuries benefits. Many are maimed as a result of having to lift heavy weights in cramped conditions. Their vertebrae and muscles are stretched beyond belief. As a result of crawling around to do their work, their legs cannot carry them. A situation of this kind is a disgrace to the British nation. It is scandalous that we are so far behind the rest of the industrialised world, and it is a state of affairs that should be put right.
I accept that there are difficulties, and I do not expect them to be dealt with overnight. But, as soon as the position becomes clearer, the Government should put it right. Miners' retirement should be phased so that progressively men can retire at 64, 63, and so on, with the ultimate aim being a retirement age of 55.
It is sometimes said that other industries would demand the same. I remind the House that today we have local government officers, police, civil servants and Officers of this House who retire at 60. Again I ask, who should be put out to grass first? These are the real issues, and I hope that the Government will think seriously about them.
If the mining industry were afforded this kind of treatment, this in itself would be a way to recruit men into the industry, where their value would be recognised. However, the worth of a man who works away from sunshine, exposed to geological hazards and doing a job with a high accident rate should be recognised by society.
The most important factor affecting recruitment is morale, and morale is very important in the mining industry, as it is in any industry.
I accept that stockpiling is necessary. But, having said that, I invite the House 1082 to consider what stockpiling means to men in the industry. Let us not forget that many of them have in the past 20 years seen their industry reduced from a work force of 600,000 to the present figure of 240,000. In my own county, manpower has been reduced from 50,000 to 10,000. Morale is important in the mining industry. However, in my opinion lack of communication has a great deal to do with the present state of morale. There is a lack of trust.
Recently, I visited my hon. Friend the Under-Secretary of State for Energy to seek his clarification of a report in the Newcastle Journal to the effect that some seven pits in Northumberland were to be closed in the next four years. In fairness to my hon. Friend, he tried to scotch the rumour. I was grateful for his statement that there was no truth in it and that the National Coal Board had made no such decisions. However, my promise has not proved to be good enough for the men of Northumberland, because they have been quite unable to clarify the position at their own collieries and to get assurances about the future.
In my opinion, joint consultation in the mining industry is a farce. We have a situation where the chairman of a joint consultative committee is a manager. From my own experience and from my discussions with colleagues it is clear that the system has not changed since I left the industry. The manager can tell the trade unions what he wants to tell them. But, in fairness to the colliery managers, it must be said that on many occasions they do not know the position themselves.
I have seen no evidence that consultation in the mining industry can be described in any way as workers' participation. I am sorry that my right hon. Friend the Secretary of State has left the Chamber, because I know that he has been a loud, clear advocate of workers' participation and rightly so.
I believe that this country has to look seriously at workers' participation. The old days have gone. We have to look at the current situation. We must get away from confrontation—the spirit of "they" and "us"—and get down to cooperation. If we cannot achieve better than we have in the mining industry by joint consultation, workers' participation—call it what we may—bearing in mind 1083 that 95 per cent. of the men are in one union, what chance have we in industries where there are 30 or 35 unions? I ask my hon. Friend to convey to the Secretary of State that I expect him to scrutinise the mining industry closely. If we cannot achieve more than we have so far, we have little chance of branching out into workers' participation, for which there is an urgent need.
§ The Under-Secretary of State for Energy (Mr. Alex Eadie)
My right hon. Friend has been compelled to leave the Chamber to attend to urgent Government business, and he intends no act of discourtesy. I am sure that he will pay great attention to what my hon. Friend is saying.
§ Mr. Grant
I am grateful to my hon. Friend. Before I leave consultation as it applies in the mining industry, I cannot help reflecting that in the early days of nationalisation the men employed as industrial relations officers more often than not had worked in the industry and had come up through the trade unions. Today, the policy of the National Coal Board is to recruit people with academic qualifications who have not had their hands dirtied in the industry. The industry suffers as a result.
In my view, the tripartite talks between the unions, the National Coal Board, and the Government made a lot of headway and achieved considerable sucecss. They sought to create a new framework for the industry. However, we have not taken one step forward in our search for a national energy policy.
How can we claim to have an energy policy when we have the ridiculous situation of coal being imported? I appreciate that certain grades of coal are needed for the chemical and steel industries because they are in short supply in this country. But I cannot accept that there is any need—nor has there been for many years—for the Central Electricity Generating Board to import coal for power stations. How can we claim to have an energy policy when we have the ridiculous situation of the Chairman of the Central Electricity Generating Board determining which fuel will be used in future power stations? If we are to achieve an energy policy, the 1084 Government must spell out more clearly which fuel will be used, and so on.
I understand that 12 power stations are under construction but that not one is coal-fired. In the planning process there are 20 power stations, not one of which is to be coal-fired. In addition, we have heard about a closure programme for coal-fired power stations.
When the miners hear about the development of Selby and other areas and projects which have been mentioned today—for example, the extension of opencast mining—what can they think but that these developments mean a further pit closure programme? That is not the way to maintain confidence in the industry. In October 1969 Drax B was announced as a coal-fired power station. We are still waiting for it.
We must have an energy policy to bring confidence not only in mining but in the whole of our energy industry. The Government must lay down firm guidelines if we are to achieve an energy policy. How can any Government or industrialist expect maximum production with these clouds of insecurity hanging over the people who work in the industry?
I repeat, we must seek to take the "them" and "us" out of the industry. We must get rid of confrontation. We must get down to co-operation. We must let the workers know what is happening and give them the opportunity to take responsibility within their industry.
The tripartite talks achieved some success. But, if the warnings which I have given today are ignored, the success achieved in the tripartite talks will soon be eroded.
§ 5.24 p.m.
§ Mr. T. H. H. Skeet (Bedford)
The hon. Member for Morpeth (Mr. Grant) has probably misconceived the purpose of Clause 2 of the Bill. It is not to maintain the standards of pensions, but, as the Secretary of State correctly portrayed, to deal with deficiencies in the superannuation fund. This provision was first made in the Coal Industry Act 1973 which the Conservative Government brought in to try to deal with the deficiencies. I accept that Section 5 of the 1973 Act is to be repealed and that the new provision will now take its place.
1085 In April 1975 the assets and liabilities of the fund were calculated. An actuarial deficiency of £250 million was found. From my researches I have discovered that the Government are reluctant to pay the fund a lump sum of this amount and propose that the payment should be made over 20 years. The discounted present value of £18 million a year for 20 years has been calculated to be the same as £250 million. In other words, £18 million a year for 20 years is worth the same amount to the fund as a lump sum of £250 million now.
It must be appreciated that this is to cure the deficiency. It is not intended to contribute towards the inflation-proofing of pensions, about which I asked the Secretary of State. However, there is a provision, subject to review, for increasing the £18 million a year, which can be done by Order in this House. But it will have to be on affirmative resolution of both Houses of Parliament and it will be subject to further debate. The matter would have to be reviewed carefully by hon. Members in this House and by their Lordships in the other place.
As I see it, there is no obligation on the mineworkers' pension fund to increase pensions fully in line with the cost of living. I hope that the Under-Secretary of State is listening.
§ Mr. Skeet
Will the hon. Gentleman confirm that, if the fund does not raise rates to compensate fully for rises in the cost of living, there will be no obligation on the Government to reimburse the fund fully for the extra expenditure incurred? If the miners were to be fully compensated for the degree of inflation—at its present rate of 26 per cent.—what would be the cost to the taxpayer, over and above the £250 million, which must be subscribed prior to 1994 to deal with the deficiency in the fund?
I must apologise to the Under-Secretary of State as I shall be abroad by the lime that he replies to the debate. I apologise in advance, but I shall certainly read with considerable interest what the hon. Gentleman may say on this important topic.
§ Mr. Skinner
Does the hon. Gentleman realise that he has got some cheek talk- 1086 ing about miners having inflation-proof pensions starting from the ridiculously low level of £3 when, in the next breath, he has the gall to say that when the answer comes from the Minister's mouth he will be abroad? It is time he understood that the miners, during the past few years, have been trying to get some of the benefits which they have not had in the past.
§ Mr. Skeet
I think that you, Mr. Deputy Speaker, would be one of the United Kingdom's best ambassadors, but not the hon. Member for Bolsover (Mr. Skinner).
In recent years, we have been disturbed at the low quantity of coal which has been exported. It seems absurd that we should import coal from West Germany at £40 per ton compared with £29 per ton from South Africa, £16 per ton from Australia, £24 per ton from the United States of America and £14 per ton from Poland when production costs in the United Kingdom are as low as £11.98 per ton on 1974–75 figures.
The Secretary of State spoke about an energy policy for Western Europe—indeed, for the EEC. Most of our export trade in coal, although tiny—we exported 1.8 million tons in 1974 valued at £20 million—has been to West Germany and France. We have exported coal for prices ranging between £12 and £18 per ton. That is very low. If we are to have a comprehensive energy policy, and as we are trying to persuade the Europeans to buy our oil, would it not be useful for the Secretary of State for Energy to go to Brussels to ascertain whether they will be interested in buying some of our coal at a suitable time when we have it available.
1087 The hon. Gentleman may care to listen. It may be a point of congratulation to the Board that it has joined International Continental Fuels Ltd. in which Commercial Union has taken an interest to engage in the distribution of international coal. In the coming year about 3 million tons of coal will be dealt with. This should be a money spinner for the Board and I hope that the Government will give further thought and encouragement to this matter.
Clause 3 deals with the financing of stocks. There has been considerable argument about this. This was started by the 1973 Act and is continued in the Bill. There has been the argument with the CEGB. It indicated that the ceiling above which the Board should finance stocks would be 12 million tons. The NCB responded at 15 million tons. A figure was eventually settled between them of 13.5 million.
It may be a satisfactory idea to consider having a State stockpile much on the lines of the United States strategic stockpile. This has in fact been recommended by the Federal Government in Germany—to have such a stockpile to avoid Ruhrhohle and other companies being involved in the necessity of laying aside a considerable sum of money for dealing with stocks which may be indispensable in future years. I recognise that one of the reasons for having stockpiles is labour troubles in the industry. We all earnestly hope that there may come a time when they are eliminated from the mines.
The main point of the Bill is to give the Government additional money to borrow. This is contained in Clause 1. I think that a modest sum has been provided. It will go into capital equipment, but when I see the size of the resources that are available to the United Kingdom I think that the moneys coming forward are very small indeed.
The total resources of economically workable coal in the United Kingdom in seams of at least 24 inches and at a depth of 4,000 feet work out at 97 billion tons. Coal economically worked at existing collieries, plus potential new mines and opencast, total only 4.3 billion tons. The result of this is rather curious. Thus, the amount of coal that has been developed in the United Kingdom is only 1088 4.4 per cent. of the total. At an annual production rate of 120 million tons—and that is a low figure—potential resources would last for 800 years to bring usage of this commodity up to 2785 AD.
The Board may possibly decide that it is satisfied with its existing programme, but I think that we ought to be satisfied a little more that what it is doing will result in more recoverable coal at competitive prices. I wrote to Mr. Mills of the NCB to find out what his new 10-year programme to 1985 involved. It is apparent that the programme referred to 15 new collieries, and we know most of them—at Royston, Selby, and so on—but he says that a feasibility study is going on at two places, Stafford and a site south of the Trent.
On the other hand, he says:The remaining 10 are areas in which drilling is in hand to determine whether sufficient coal is present to justify a feasibility study.Obviously this is a contingent liability and it might be in the future that the Board will not go ahead with all these schemes. Perhaps the Minister will clarify this matter.
Mr. Mills also mentioned—and it was referred to this afternoon by the Secretary of State—that 16 major investment projects will produce about 12 million tons additional capacity. I know that 60 per cent. of these are in the East Midlands and Yorkshire, and I welcome that. Only two are in Scotland, and, understandably, two are in Kent, with seven in South Wales.
Dealing next with the question of accessibility, I hope that the Minister will say a little more about the availability of reserves that are open to the Board.
§ Mr. Skeet
I know which page I have turned. The hon. Gentleman has no leaves to turn over so perhaps he will listen to what I have to say.
In an interesting article in Chemistry and Industry of 16th August 1975 mention was made of considerable coal supplies underlying the North Sea. The 1089 article says that in the southern sector of the North Sea there are seams between 6-ft and 12-ft and that this is the basis for the natural gas formations from which the British Gas Corporation is deriving considerable supplies. The authors indicate that there is a high probability of a large coal basin the western extremities of which are the Nottingham and East Midlands coalfields, while the eastern extremities are the Dutch, Belgian and German coalfields. If the Minister has any information that he can contribute on this matter I am certain that the House will be interested to have it, because it will mean that this country has even more resources available that may be developed in future years.
May I add two points about Selby? In answer to Questions, and today, the right hon. Gentleman said that the inspector's report has not been received. Bearing in mind that the Christmas Recess is nearly upon us, will the Minister have time to digest it, and will the planning procedure be put through to enable the first phase of Selby to be completed on time? It would be a great pity if the industry could not get 10 million tons by the early 'eighties and it is essential that this scheme should be continued as planned.
My other point is that in Committee upstairs, when dealing with another Bill, the Minister mentioned an interdepartmental working party. I understand that it has presented its report on mining subsidence. Is a statement to be made on the matter? Is the Minister prepared to make a statement on this tonight? I ask that because this will involve big problems for Selby, and one would like to know whether more emphasis is to be given to producing coal or whether emphasis is to be given to the payment of compensation as a way out of the problem. I mention this because while the Board apparently will safeguard Selby Abbey—a 900-year old church—nevertheless should the Board accept the view put forward by Selby Council it would mean that if pillars had to be maintained under a broader area, coal to the value of about £84 million would be lost. It would be helpful to know the Minister's intention.
May I prevail upon the Minister to make full use of opencast mining? I know that it is the Government's policy 1090 to increase this from 10 million tons to 15 million tons. It has been higher before, as it was in 1958, but I feel that it has three characteristics that are worthy of consideration. First, the coal is very much cheaper to produce. In the 21 years existence of the Opencast Coal Executive, 187 million tons of coal have been produced from opencast mines, leading to a net profit even after restoration of £146 million. This is a factor which the Board cannot ignore.
The other factor is the contribution to safety. In opencast mining people are not working underground, and therefore the risk of accidents is decreased. Owing to the shortage of anthracite, opencast mining is the key to the problem. If the Government are prepared to authorise more of these pits, perhaps the problem could be overcome. There is a shortage of this type of coal in the market, and as there are adequate resources in Wales and elsewhere, the Government would be wise to push further ahead with this form of development.
The future of the industry has been touched on briefly. I want to be brief so that other hon. Members can state their case. My right hon. Friend mentioned fluidised combustion systems, their compactness and heat transfer capability and the method of eliminating such things as sulphur and nitrous oxides. But one point that he did not mention was its great value in combined cycles, employing both gas and steam turbines. It can improve the generating efficiency of fossil fuel generating stations from the present 35 per cent. to well in excess of 40 per cent. I could emphasise this more realistically by saying that a 2,000 mW power station could save up to 500,000 tons of coal per year by using the combined cycle system.
There is also the prospect of liquefaction and of gasification of coal. On the latter I cannot do better than refer to the answer given by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) on 18th January 1974:It is too early to give a realistic estimate of production costs but on our present information they are likely to be considerably higher than those of North Sea gas."—[Official Report, 18th January 1974; Vol. 867, c. 186.]That is a very good estimate, so I do not think that we shall find much coal gasification coming in within the 10-year 1091 period, although I am optimistic about the development of fluidised combustion systems. Further liquefaction is not likely within this time scale. I would refer on this subject to an answer by my right hon. Friend in the very next column of Hansard.
Finally, and of more encouragement to the NCB, is its work in chemicals. Coal can be used in the production of aromatics such as benzine, toluene and xylene. This is some years on and it may participate in acetylene technology. This is a well-known technology which will probably be improved within 15 years. If there is any shortage of oil as it is consumed and used for transportation, we do have the eventual prospect of the coal industry coming into its own.
That is all that I have to say—
§ Mr. Skeet
I will. My interest is an interest in the energy situation of this country. I wish to see the best use made of its resources. I have said that before. It is only right that I should do so again.
I unreservedly support the Bill. Clause 1 is essential. There have been many borrowing requirements Bills in the past. We have proposed some to the House ourselves. There is some anxiety about Clause 2, which will be discussed in Committee, but generally it is designed to help the superannuation fund. I have covered Clause 3 already. I hope that the Bill will receive the endorsement of the House on its Second Reading.
§ 5.43 p.m.
§ Mr. Peter Hardy (Rother Valley)
I hope that the hon. Member for Bedford (Mr. Skeet) will acquit me of discourtesy if I say that I do not particularly feel that I should follow him in what he said. This is a debating chamber, not a place for conducting complex seminars. Nor should it be seen as a repository of information 1092 which may cause some people to imagine that the hon. Gentleman really is an expert on fuel matters. However, I shall be here to listen to my hon. Friend's winding-up speech and perhaps he could comment on one or two points that the hon. Member made.
As chairman of my party's Energy Group and a Member representing a large number of miners, I welcome the Bill and the speech of the Secretary of State. He clearly maintained the Government's acceptance that coal will continue to be important. That is to be welcomed, and it will certainly be greeted with interest in the coalfields of Britain.
I was particularly interested in my right hon. Friend's comments on the proposed consideration of the relationships between production and marketing. I hope that this will lead to arrangements which will ensure the adequate use of coal for electricity generation and that other outlets will be developed—perhaps not least the growth in our export capacity. Certainly, British coal should not be available for export when some of our partners in the EEC are buying coal which may be subsidised in a way which is contrary to the practice of the Community so far as the British industry is concerned.
On the whole, we may have the odd anxiety about the industry's position, but we should all be very pleased that the Government are determined that Britain will continue to have a vigorous coal industry. I believe that that industry and the communities which depend upon it will benefit immensely from the investment capacity which will be enhanced by these proposals.
I am glad that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) has returned. A large part of his speech showed a great improvement on the sort of speeches that we have too often heard from his party in the last five years. I cannot go back further than that. I do not mind—we should be churlish to object to—his comment that we need an increase in the amount of coal produced by our existing pits. That is a valid comment, given the vast increase in the reserves and capacities conferred on the National Coal Board since this Government took office. I hope that a greater quantity will be produced.
1093 However, the right hon. Gentleman spoiled an interesting speech by his references to the strikes of 1972 and 1974. It is a pity that he referred to them. It should be put plainly and clearly on the record that those disputes were tragic and regrettable but that they were also avoidable. They were unlooked-for and unwanted and I hope that we shall never see that situation occur again. I hope that the miners will never again be driven to the point at which loss of morale and comparative earning power brings them to the end of their tolerance. The Bill will certainly help to prevent that.
We hear a great deal about investment, and the Bill's main purpose is to increase investment in British industry—albeit in the public sector. One hopes that the private sector of British industry will soon start to generate capital and see to it that investment policies are pursued so that we can make the broad and proper advance that we need. The Bill will certainly help to maintain a high level of confidence in the industry. Britain is beginning to realise, as the miners have always realised, that coal is important. The Government's proposals today and the policies pursued in the last 18 months certainly reinforce that view, which the miners hold very strongly.
I make annual underground visits to the 11 collieries in my constituency in Rother Valley. In my visits this year to see the faces at Kilnhurst and Corton-wood collieries, the miners to whom I spoke make it clear that they continued to believe that their task is absolutely essential. Therefore, it is essential that the Government should maintain the policies that they have pursued. But I am very pleased that the Government have decided to maintain the tripartite consultations which have been an important feature of the coal industry since the Labour Government took office last year.
The Government deserve to be congratulated on that policy—not least the Under-Secretary, who I know has put a tremendous amount of work into it. That effort deserves to be rewarded. I know that he has had great co-operation from the leaders of the mining unions, not only the NUM, and also from the Board. I feel—many miners would agree—that the contribution of Sir Derek Ezra to rebuilding vitality and confidence in the 1094 NCB deserves the highest possible congratulations. I note that the miners, who are the fairest minded of men, have recognised this by the invitations to Sir Derek Ezra, as Chairman of the Board and the chief employer, to take part in union activities such as the Durham Miners' Gala, and—my hon. Friend the Member for Don Valley (Mr. Kelley) will confirm this—in the Yorkshire miners' summer school. I believe that Miss Vanessa Redgrave, the revolutionary actress, was also present at that summer school, but I cannot comment on how the two got on.
That is a good sign because an improvement in relationships is taking place in the industry. Despite the bitterness of the historic legacy in our coalfields, I believe that as a result of the efforts of those I have mentioned, not least my hon. Friend the Minister, we could well see—unless there is mischievous comment in the national Press and agitation for party political purposes from Conservative Members—the National Coal Board and the miners of Britain establishing a model in cordial industrial relationships, which is highly to be desired. We have seen developments along those lines and I have evidence of that cordiality developing in my constituency.
In addition to promoting investment capacity, securing the future and maintaining confidence, the Bill will also contribute towards ensuring that we have the necessary decent relationships in this essential industry.
§ 7.52 p.m.
§ Mr. David Crouch (Canterbury)
I do not want to labour the point that the Secretary of State is not present because we have been given the adequate explanation that he has been called away on public business, but his absence is a pity when one has prepared a speech for the ear of a particular Minister. My remarks tonight will reflect on the right hon. Gentleman not so much as criticism but as observation.
I take objection to the Bill, not so much for what it says as for what it does not say. The Bill comprises four clauses, the first of which says that the Government want to increase the borrowing power of one of the biggest nationalised industries by another £400 million, 1095 Clause 2 states that the Government want to make up the deficiencies of the miner's pension scheme by up to £18 million a year for the next 20 years. At least, Clause 2 gives a figure of £18 million and states what it is for, but we are not told about the borrowing requirement. The House is given a bald statement that the Government want more taxpayers' money for a nationalised industry and that the Secretary of State will come and tell hon. Members what it is all about. That is not good enough. The public want to know.
The Bill is a prospectus which is placed before Parliament. I am not against it and shall speak in favour of it. However, these days we have to change our ideas about how we face the problems of the nationalised industries and how we present the prospectus of the nationalised industries. It is not good enough for the Secretary of State to come to the House and leave a paper on the Table which indicates that much more money is wanted. We should know before hand what that money is for. We can make deductions.
We have debated Bills in the recent past—not so much Bills which contain specific sums of money as Bills about new and general legislation. One example is the Industry Act, which we debated for many months the last Session. During those debates it was spelled out exactly what was before Parliament. Study could therefore be made before hand, we could come to the debate prepared and not have to hang on the words of the Secretary of State when he explained something. Very often there was a White Paper, a Green Paper, a discussion paper or an explanation in the Bill, so we knew what we were in for.
I am not making a severe criticism, because what the right hon. Gentleman has done is in line with the current practice of successive administrations. I hope that following the Chequers meeting we shall turn over a new leaf when we deal with the nationalised industries. The Prime Minister was, rightly, very proud that both sides of industry sat together with the Government at that meeting, but it was not the first time that they had sat together. The NEDC, which was founded in 1962, institutionalised the 1096 bringing together of both sides of industry. Nevertheless, today the Prime Minister is proudly saying that both sides of industry are sitting together and that both the public and private sectors are getting together.
The Government's intention is to introduce planning agreements which should be put before industry and the public. They want industry to submit its plans to them and the people, and they want participation and greater consultation. The procedure on this Bill does not follow that admirable precept of involving us in this participation.
Clause 3 seeks to enable the Government to extend the purposes for which they give grants to the National Coal Board. This has been explained, and I am very glad that it has been explained. Last year those grants amounted to £68 million. I shall comment on them later. I can understand that the Government wish to have increased borrowing power.
When I came to the Chamber today I had prepared my speech. I heard the answers to my questions as the Secretary of State opened the debate. I wanted an assurance that the Board would use its new investment powers for economic development of the coal industry, which I support strongly, and not for what I regard as social purposes.
In every nationalised industry there should be a proper division between social purposes and economic and commercial development and opportunity. In the energy industry there is great commercial opportunity today, but in all nationalised industries we seek to separate the social obligation from the commercial operation. This afternoon the Secretary of State gave us this assurance and I am satisfied. I would have asked him why this was not stated in the Bill, because I wanted to be sure that the money was for the development of new coal resources.
I also wanted to know how much of this extra money would go into the Selby project and how much would go into existing pits. The right hon. Gentleman answered those points. Would it not have been better if we had known those answers before hand? Why do they have to be kept secret? The debate would have been more interesting and perhaps more hon. Members would have been 1097 present if we had known something of these expectations beforehand. We receive too few explanations of the objectives of the nationalised industries.
The Bill is a prospectus for business. Members of Parliament are the peoples' representatives. We have to judge how we value and view that prospectus with regard to the public's savings because those savings are the tax that we take from them. We are the custodians of the tax and it is for us to judge whether we should place those savings here or there, and whether we can tell the public that the prospectus is a sound investment and has our support. We are entitled to know, as also are the public.
Parliament is rather like a supervisory board of the nationalised industries. I had hoped that the Secretary of State would be present because these are matters that were discussed at length during our debates on the Industry Act. By all accounts the Secretary of State is a believer in participation. The hon. Member for Morpeth (Mr. Grant) has spoken strongly—and rightly so—about his belief in participation and his hopes that this will develop. He feared that it was not developing fast enough in the coal industry. However, the Secretary of State should recognise—I hope the Minister will inform him of this—that there is a natural desire by hon. Members to join him in his supervisory consultations on the coal industry. We do not want to interfere in the day-to-day management either of the Department or of the NCB. All that we want is to enter into a planning agreement with him.
I want to talk briefly of my attitude towards the nationalised industries. The Minister will know that I am not an anti-nationalised industry man. However, I am careful about what we do with the nationalised industries and to them; how far we support them and how far we encourage them to support themselves. I must confess that I am getting worried about the present Government's attitude towards the nationalised industries. My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) touched on this question. He, too, voiced this anxiety whether the Government were getting their priorities mixed and were forgetting some of their original 1098 intentions in regard to the nationalised industries.
Do the Government want to go on increasing the subsidy to the nationalised industries, or do they want gradually to stop subsidies? Today we are continuing in the old pattern of saying that we must give more and more money to this nationalised industry because it needs that money—because the auditors say that they are not satisfied with the accounts of last year, published in July this year, because there is a deficiency on the pension scheme. All right; that is acceptable. There is an appeal from the chairman that some action should be taken—presumably by the Government and the House eventually—to correct that deficiency in the accounts and to put some money in. But I had thought that the present Government had embarked on a policy of phasing out the subsidies to the nationalised industries and getting those industries, as far as possible, to stand on their own feet. This was the message that I got from the Chequers meeting.
In order to refresh my memory I brought to the Chamber a copy of the paper read by the Chancellor of the Exchequer at that Chequers meeting. It was appropriately called "An Approach to Industrial Strategy". It is very pertinent today. I should like to read what the Chancellor said in paragraph 3 of the foreword:The Government emphasises the importance of sustaining a private sector of industry which is vigorous, alert, responsible and profitable. It intends that the public sector should exhibit the same qualities.That is why, without consulting any of my party leaders, I went on a television programme on the same night and made a statement, together with the hon. Member for Birmingham, Ladywood (Mr. Walden) and the right hon. Member for Down, South (Mr. Powell). I said that I supported the objective that both the private sector and the public sector should be vigorous, alert and profitable.
In paragraph 7 of the Chancellor's main paper he says,Such a strategy must involve ensuring that industry, both public and private, is able to earn sufficient profits on its investment to spur managements to expand and to innovate and to provide them with the internal finance on which to base investment.1099 However, here today we are back in our old pattern of viewing the nationalised industries and saying that we must vote more money to them because they have not got enough, because the figures are wrong, because the accounts do not look right to the auditors, and so on. The Bill seems to me to have as its objective a need to pour money into the NCB partly because the auditors do not like what they see in last year's accounts and the need now, therefore, for the NCB to fund its social provisions—I am not arguing against that, but I am making the point that it is there—and partly because the Board does not earn enough to fund its stocks. We must turn over a new leaf here. The Board must be told to earn a bit more.
I was glad to hear the statistic that was read by my right hon. Friend this afternoon—that coal is now valued at 7p a therm by the electricity generating industry, rather than the 3p of the old days. I have thought for a long time that we were getting some things too cheaply in this country, and that one of them was energy. I am one Conservative Member who has constantly spoken out on the need for our mining industry to earn more money. Coal is a very valuable commodity. It is like gold—a commodity we should treasure. I support the Government intentions and objectives to expand this industry. However, we cannot expand it unless people are prepared to pay the price for it. I do not think that coal is too expensive today. I want to see more coal production, but I also want the Board to make more profits. I congratulate the Board. It has had quite a good year.
Let us be clear about the grants. We as a nation are big investors in the NCB already. Last year the Government grants totalled a little over £68 million. They are now to be increased by a further £18 million a year. I should not be surprised if we found in next year's accounts that the grants to the NCB are approaching £100 million. Therefore, let us have no illusions about this industry. We must get it back on to a proper footing. The Board will be entitled to a great many social grants that are possible under present Acts, regional grants and so on, but I should like to see the Board able to fund its own stocks. I 1100 should have liked to think that it could have even funded—because it was paying its way—the superannuation scheme.
I am glad that the coal industry is doing so much better. I am proud of it. I am very glad that our miners are digging so much more coal. Deep-mined coal last year was up by 18 million tons over the previous year, and the total output was up to 125 million tons, so we are well on our way to the target of 135 million tons.
I am glad, too, that the total operating profit was £34 million, as compared with a loss in the previous tragic year of £112 million.
Naturally, I am very pleased about what has been happening in Kent, that small coalfield in England which has for so long had rather a sad economic record. I am glad that it has shown much better results from three pits, producing 100,000 tons more coal last year, and making a profit from that effort of £½million, as compared with a loss of of over £2 million the year before.
The value of a ton of coal mined in Kent—this is important—has been doubled, and the profit per ton of Kentish coal is now nearly £2, as compared with a loss of £3 in the previous year. Therefore, the price of coal having risen, if the profits are there it means that high wages—they were high last year, relatively, although perhaps they are not so high now—are justified. We can pay them. But now so much more depends on the coal industry staying well in the black so that it can fund its investment, as the Chequers meeting said that it should. This is reflected very well in the 3p per therm that it used to be and the 7p per therm it is earning now.
Finally, I want to be a little nostalgic and go back seven years to something that happened in my constituency in 1968 when we closed Chislet colliery, which hurt me and a great many people. I wonder today, given the new economic background for all forms of energy, and particularly coal, whether Chislet, if it were working today, would not be a thriving and viable pit producing coal and making a profit from it, and employing more men. I wish that it was working. If the NCB, spurred on by the speeches made in this House—I wish that the Board was listening, but I hope 1101 that its members read Hansard—decided to reopen that highly modernised pit, Chislet, it could be sure of my support and I would be proud to call myself once again a typical miners' Member of Parliament.
§ 6.10 p.m.
§ Mr. Adam Hunter (Dunfermline)
There is unanimity amongst hon. Members present about the further borrowing powers to be granted to the National Coal Board, and I welcome that.
The Secretary of State assured us that the Government were interested in Britain's having a successful coal industry. The right hon. Member for Wanstead and Woodford (Mr. Jenkin) gave a similar assurance on behalf of the Conservatives. About 11 years ago the then Leader of the Opposition made a tour of several pits in England. He was accompanied by four Labour Members and four Conservative Members, among whom was the hon. Member for New Forest (Mr. McNair-Wilson). Since that day, those hon. Members have taken a continuing interest in the industry. Today marks the culmination of that interest with an assurance from the Conservatives that they are still interested in the long-term future of the industry.
Clause 1 is very important. It will put into effect the terms of a plan projected by the National Coal Board for the industry's investment. It follows the theme of a speech by my right hon. Friend the Prime Minister at the National Union of Mineworkers' conference in July of this year when he saidThe Government has done its part to ensure a strong and secure future for Britain's coal industry.I hope that this doubling of the borrowing limit is evidence of an intention to secure this aim and that this is a major step to ensure that the industry will be a successful contender in the energy market with other types of fuel.
The recently agreed increase by the Organisation of Petroleum Exporting Countries of 10 per cent. in the price of oil will alert every responsible person concerned with energy to the fact that the country as a whole appreciates the need for a strong coal industry. Already some of the investment visualised by the Coal Board has gone to help my constituency. Only a few weeks ago in the Longannetmine 1102 complex a new development was started at a cost of £3 million. I see from information received from the Coal Board today that a project costing £23 million for a pit in Yorkshire is under way. That augurs well for the industry.
Both sides of the House agree that new investment is necessary to ensure that the industry gets up-to-date equipment and machinery and the best technology and that it is used for the new projects that will be undertaken as a result of the increased investment in the industry. The extra money is required also to guarantee the maximum efficiency and productivity, not forgetting the safety and health of those working in the industry and mining the coal.
I was surprised by the seeming assumption by the hon. Member for Canterbury (Mr. Crouch) that all the borrowing would be made from the Government. I do not see that necessarily the borrowing must be made exclusively from the Government. It seems from the financial effects mentioned in the Bill that other organisations could lend money to the Board.
In accepting the Bill and welcoming the new borrowing limits I wish to ask my hon. Friend the Under-Secretary some questions.
First, where will the Board do its borrowing? My hon. Friend knows that borrowing involves repayment of capital and payment of interest charges, sometimes very high interest charges.
Secondly, what are the Board's plans in this connection? Will it borrow all the money from the Government? May it borrow from private sources? May it seek loans from foreign sources?
No matter what the answers to those questions are, may I ask my hon. Friend, thirdly, whether it would not be in the industry's interests and in the nation's long-term interests for substantial borrowing to be made from the Government at special interest rates? I understand that it is the Board's intention, with the support of the NUM, to ask the Government to lend it money at special interest rates. My hon. Friend will surely agree that heavy interest charges resulting from this borrowing would be a massive burden on the industry and would militate against the achievement of the desired aim of remaining competitive with other fuels.
1103 It must also be borne in mind that there is an assumption that new investment will mean greater production. My hon. Friend the Under-Secretary will be the first to agree that there is no point in increasing production without an assurance of markets for the coal produced.
Clause 3 seems to have been drafted to cover such a contingency. It illustrates a lack of confidence in the industry's finding markets in the near future and presupposes that markets will not be available. That is why the Government are prepared to allow money to be spent for huge stockpiling of coal in future.
Other Government action is necessary and it must run parallel with the investment prospects inherent in the implementation of Clause 1. The Government should also take an interest in the consumer. They should exhort coal consumers, large and small, to make some investment in coal-consuming plant and installations either in the domestic industry or in power stations. Power stations are the greatest consumer of coal. Last year they consumed 71 million tons. The Board's plan for the future is that power stations will consume much more coal.
Many coal-fired power stations have gone out of existence. The efficiency of many more of the older coal-fired power stations has been falling in comparison with power stations using oil and gas. Thus, if there are fewer coal-fired power stations and if other coal-fired power stations are working at reduced efficiency, less electricity will be generated and less coal will be used. The Government should step in and support every effort to build more coal-fired power stations, thus assuring the consumer that the price of coal compares favourably with the price of oil.
I wish to relate an experience somewhat in contrast with what the right hon. Member for Wanstead and Woodford said. I visited a paper mill in my constituency. I discovered in conversation with the manager that the management had decided to consider a change in the fuelling of the plant. At that time the mill was using coal, but because of high increases in coal prices, the management decided to make a study and find out whether it would be economic to change to another fuel.
1104 After a careful study had been made—and I saw all the relevant papers—it was proved conclusively that coal, despite the increase in price, still had the competitive edge over oil. I am sure that when the management realises that there is to be a 10 per cent. increase imposed by the OPEC countries in the price of oil, it will appreciate that it certainly has the right fuel policy for its mill. The Government can do a great deal to make industry in general realise that coal can serve its needs and at the same time be economic.
I welcome Clause 2 very much, although I am a little doubtful about one part of it. It would seem to me that the increase in the existing pension will produce a pension of only £4.60. Any further increase given to these pensioners later on, apart from those in the new scheme, will be based only on the cost of living, and I feel that this is wrong. Mine workers who have been employed in the industry for many years are entitled to a better pension than £4.60 a week. There are men who have retired from the industry after having worked for 51 years, and I do not think that anyone can say that such a pension is a generous recognition of their work.
I am pleased that the Secretary of State is to reimburse the Board for certain expenditure incurred in meeting deficiences in the scheme. I am even more pleased to see in this clause a commitment by the Secretary of State to increase the benefits beyond the present level. But I should like an undertaking from the Government that they will do their best to make sure that existing pensioners will get a better pension than £4.60 a week.
I come to Clause 3. I have listened to certain of my mining colleagues on the subject of the stockpiling of coal, about which we are very concerned. It was always assumed that only in part of Wales was there any concern about heavy stockpiling, but I have been assured by some of my colleagues that stockpiling is taking place in some of the Yorkshire pits. It is feared that one day there will be unemployment in the industry in Yorkshire. I sincerely hope that my hon. Friend the Under-Secretary of State can deal with that subject.
1105 During the referendum campaign, those who supported the proposition that we should remain in the Common Market said that to do so would be a great boon to British coal mining, because we should be enabled to get contracts for exporting coal to other EEC countries. I know that the Coal Board is trying to get contracts for exports to the EEC countries, and I should like to know whether any progress has been made in this direction. A solution to many of our problems in coal mining would be to increase our exports and, of course, to install more coal-fired power stations in this country.
§ 6.24 p.m.
§ Mr. John Hannam (Exeter)
; I welcome the speech made by the hon. Member for Dunfermline (Mr. Hunter) and particularly his acknowledgement of the fact that Opposition Members are among those who have a real interest in and support for the future prosperity of the coal industry.
It is interesting to observe that on an occasion when we are dealing with so vital a commodity as coal not one representative of the Scottish National Party has participated in the debate. Possibly those hon. Members feel that with coal there is not so much "up for grabs" as there is with oil. It is certainly notable that they have not spoken in a debate of vital concern to Scotland. I speak as a keen supporter of the coal industry. I believe that the future possibilities for the industry are immensely favourable. We have enough coal reserves in the United Kingdom not only to sustain increased home demand in the future, but to provide opportunities for sharply increased exports.
During the coal and energy debates in recent years I have consistently stressed the need to maintain the competitiveness of this indigenous fuel. I am concerned about the erosion of the price lead which coal has had over oil at our power stations, despite the vast increases in the price of oil, the price lead having declined from 44 per cent. to 10 per cent. It is, therefore, essential that we improve productivity to regain that price lead for coal, although I support the view of my hon. Friend the Member for Canterbury (Mr. Crouch) that we have had our 1106 energy too cheaply and that we must be prepared to pay a fair price for this fuel.
We have seen welcome increases in the numbers going into the mining industry in recent months. Unfortunately, that has been accompanied by a fall of about per cent. in productivity as against what was a declared need for an increase of per cent. I fully understand the reasons for what I believe to be a short-term decline in productivity. It is obvious that a great deal of training of new staff is taking place, and this must result in a temporary hold back in what I hope will be gained from increased productivity in the future. I think we must agree with Sir Derek Ezra, the Chairman of the National Coal Board, who said at the annual conference of the National Union of Mineworkers at Llandudno last year:If we are to remain competitive and go on providing real improvements in earnings, we must do it out of increased productivity.That must be the key objective.
Coal imports, which have increased rather dramatically recently, should be replaced by exports. We should be concentrating on building up an export business. Every extra ton of coal we produce saves the country between £25 and £30. Therefore, the challenge is obvious.
My hon. Friend the Member for Canterbury welcomed the fact that the Coal Board had gone back to a good profitable situation. If we get the stability of cost for which we hope, and if we get an upturn in world demand in the next year or two, the vast investment in the coal industry could produce substantial dividends not only for the country, but for the miners themselves. I understand—and I should like the Minister to confirm this—that in the next five years £100 million will be spent on research into mining exploration and general coal research such as liquefaction and other chemical processes.
In February and March of this year we were engaged in considering the Coal Industry Bill. That Bill embodied some of the recommendations of the tripartite inquiry into pensions provisions, pneumoconiosis compensation plus the opening up of opencast mining opportunities for the National Coal Board. I believe that these are all part of healthy progress towards the development of the industry.
1107 The prospect of the United Kingdom providing half of the coal in the European Community's production is very exciting, but again we have to accept that if we are to achieve that sort of target, we must concentrate on producing the right sorts of coal at the right prices. We have also to avoid large imports of fuel. This may mean that we shall have to adjust some of our techniques of coal consumption. Perhaps the Minister will develop that theme when he winds up the debate.
On 10th November I asked the Under-Secretary for figures of coal exports this year compared with those of previous years. He was not able to give me the exact details, but he assured the House that they were above average for the previous five years. I have since done some research, and the figures show that in 1974 we exported 1,499,000 tons. During the first nine months of this year we had already exported nearly as much. With exports of 1,432,000 tons up until September, there has been a substantial improvement, but the problem is that imports are increasing at a similar rate. Last year we imported 3,460,000 tons and in the first nine months of this year we had imported 3,481,000 tons.
Why are we getting these increases in imports at a time of falling demand? It does not seem to make sense. Is it because we are still suffering from a lack of certain coal-washing facilities, or have there been increases in industry's demands for certain types of coal? I hope that we can curtail these expensive imports, which seem to cost twice as much as we get for our exports.
§ Mr. Patrick Jenkin
Is my hon. Friend aware that in a reply given to me it was stated that we had imported 25,000 tons of anthracite from Vietnam last year and it was believed that this year's imports would be 50,000 tons? Does he think that this is a matter to be looked at?
§ Mr. Hannam
My right hon. Friend's intervention underlines the confusion. At a time of falling demand, we have substantial increases in the imports of certain types of fuel.
My right hon. Friend asked some relevant questions earlier about the 1108 advanced technologies in coal production that we hope to see introduced. I should like much more information presented to the House when we consider Bills such as this. When the Labour Government introduced the Coal Industry Bill of 1965, they said that such Bills should be accompanied by a White Paper so that hon. Members would know the exact details of the money they were being asked to approve. This approach would help us a great deal and I regret that we have not had the necessary advanced information to enable us to discuss this Bill in detail.
The Secretary of State referred to an overall examination of the coal-burning situation. I hope that he will keep the House informed of the Government's thinking in these matters. He referred to the increased use of coal-fired generating stations and the increased use of coal for domestic and industrial purposes. The whole House is in agreement with the general terms of the Bill and other measures to support the industry, and I hope that we can be taken into the Government's confidence when discussing various ideas and proposals. The 1965 Labour Government's policy of publishing a White Paper with the Coal Bill, ought to be adopted again.
We are being asked to agree to quite large subventions of money through increased borrowing powers and increased grants and pensions. The hyper-inflation that we have experienced in this country has been the main cause of this increase. The inflation-proofing of miners' pensions puts them in a very advantageous position and provides a healthy inducement for people to come into this important industry. However, I share some of the reservations of the hon. Member for Dunfermline about the treatment of older pensioners.
I support the Bill and every other effort to strengthen our coal industry. We can take advantage of the tremendous export possibilities of coal in future. The competitiveness with oil must be maintained and I hope that that objective will be shared by both the management and the workers in the industry.
§ 6.35 p.m.
§ Mr. John Cronin (Loughborough)
The hon. Member for Exeter (Mr. Hannam) made a very thoughtful and helpful 1109 speech, despite the interruption of his right hon. Friend the Member for Wan-stead and Woodford (Mr. Jenkin), and I share his concern about coal imports.
I have the privilege to represent the South Derbyshire and Leicestershire miners and in welcoming the Bill I am sure I have their full support. I think that they are among the most moderate and co-operative miners in Great Britain, though there may be other competitors suggested by other hon. Members.
The Bill is a continuation of the sympathetic attitude adopted by the Government towards the coal industry. The industry deserves a good deal of help from the Government, because the miners have been underpinning the Government's whole economic policy this year. They had a ballot and gave the lead in agreeing to the £6 a week limit on wage increases. The Government owe a tremendous debt to the moderation of the NUM.
Clause 2 authorises the Secretary of State to reimburse the National Coal Board for meeting deficiencies in the miners' pensions scheme. I understand that the sum involved is £250 million, though the Bill only mentions £18 million a year. I wonder whether this sum is adequate. The pension scheme is in considerable difficulties. It has a ratio of contributors to pensioners of about one to one compared with the average ratio in pension schemes of about six to one. I doubt whether £250 million will be adequate.
My information is that the outstanding deficiencies in the scheme total about £400 million. In referring to the new pension scheme introduced in April, the Secretary of State said that miners would receive half their average wages of their-last years after 45 years' work in the pits. This is a big improvement on the previous pension scheme, but it is far from generous. I do not know whether hon. Members realise what 45 years in the pits can be like. The majority of people who work for 45 years in the pits are not much good for any industrial work of a similar nature afterwards.
We ought to have a more generous pension scheme and I have some sympathy with my hon. Friend the Member for Morpeth (Mr. Grant) who indicated in 1110 very forthright terms that the scheme was still not adequate even after the improvements. I hope that the National Coal Board, the Government and the unions will get together to improve the scheme still further.
In the last Coal Industry Bill, we set aside £100 million to provide benefits for pneumoconiosis cases. It seems probable that this sum will not be adequate. The giving of that sum has prompted a good deal of research into the number of pneumoconiosis cases, and it is now quite clear that the numbers are very much higher than expected. It is clear that £100 million will not go very far. I hope that the Government will consider increasing the sum, although I accept that the giving of £100 million was a generous gesture. Not only have many cases come to light which were not known before, but many cases which were well known had been considered.
About 10,000 miners commuted their weekly benefits under the old Industrial Injuries Acts. Most were forced to do so because of their adverse circumstances, living in a part of the world where there was no other work, or because they were bringing up young families. There is a strong moral case for giving benefits to these miners. There is an equally strong case for helping the pre-1970 widows, and I hope that the Under-Secretary will consider that. There is also a good case for expanding the categories of industrial diseases for miners. It is high time that bronchitis suffered by miners was regarded as an industrial disease.
Clause 1 increases the borrowing powers to help increase production, as proposed by the NCB. It was heartening to hear that it is thinking in terms of an additional 42 million tons a year. That will make a tremendous difference to our economy, but the miners are entitled to ask "What is in it for us?" I am certain that the miners I represent wonder about this. They have behaved with great moderation on wage increases this year. It is essential that no one should exceed the £6 limit this year. However, I hope that when the economic climate justifies it, the Government will agree to miners having much higher wages. The United States and the Soviet Union, for example, pay miners very much more, and there miners have a higher standard of living.
T 1111 When I was in Australia recently I spoke to Mr. R. F. X. Connor, the Minister for Minerals and Energy, who is known as the "Strangler" because of his somewhat forthright views. He told me that in the Australian mining industry the average wage was AS 194, or £120, a week. He said that with production bonuses the face workers could expect to receive A$ 240, or over £150 a week. When we hear the NUM talking of a target for the future of £100 a week, we realise that it is not nearly as large a figure as it might seem at first.
I welcome the NCB's intention to increase production, but I hope it will pay some attention to the environment. Opencast work has caused very severe loss of amenities to the neighbouring population. I have particularly in mind the village of Heather in my constituency. It is a pretty little village with a twelfth-century church. But suddenly the NCB has commenced opencast working, and now it has become a place of noise and dirt, suffering from a severe loss of amenity. There is a case for paying some form of compensation to people who suffer such loss of amenity. It should be paid by the Coal Board, the local authority or by the Government directly.
Clause 3 empowers the Secretary of State to give grants towards the cost of stocking coal. This is clearly desirable, but it is not very psychologically helpful to the miners. Current large coal stocks appear to be a psychological stumbling block to productivity. It is desirable to have stocks for exports. They are window dressing for potential customers. But there is no doubt that coal stocks are interfering with productivity. The stocks will disappear rapidly if there is a long spell of cold weather, or if there is an increase in economic activity when the recession fades away, as we expect next year. There is here a failure of communication by the NCB, and possibly by the Government, in not reassuring miners that coal stocks do not mean they must produce less.
Miners have other anxieties, and several hon. Members have spoken of the pit closures of the past. These have, of course, done psychological damage. Miners are worried about the present recession, the 26 per cent. drop in the use of coal by industry and the 21 per cent.
1112 drop in the use of domestic coal. They also see pressure on all sides to save energy, which means that less coal is used. There is also the erosion of the competitive advantage of coal over oil.
It is important to reassure the miners that there will be a real increase in coal markets. It is no use having increased production without increased markets. It is all very well to say there is to be an increase of 42 million tons, but that has to be sold. There should be research into new uses for coal. The right hon. Member for Wanstead and Woodford made a useful contribution on the subject of additional uses for coal. More research should be done here. It is important that the NCB should take a more aggressive attitude in world markets. We should be selling more coal abroad, and we must pursue markets for exports.
The most immediate and simple thing for the Government to do is to start a programme of building more modern coal-fired power stations. There is a very strong case for that. As the programme stands there will be a rundown by the mid-1980s in coal consumed by power stations. It is therefore relatively urgent that more coal-fired power stations should be put into operation in the next two or three years, before the rundown in the mid-1980s.
It is important that miners should have clear ideas about the future of the coal industry. No doubt the Under-Secretary will reassure us tonight. I know that he commands great confidence among miners and that what he says tonight will be read with great interest. There is still no clear-cut energy policy for the next 20 years. Miners are prepared to continue their arduous, dangerous and nationally important work, but they want clear leadership and definite indications about the future of the industry which the Government must provide at the earliest opportunity.
§ 6.50 p.m.
§ Mr. Jim Lester (Beeston)
As one who has taken an interest in the mining industry for many years and who calls himself a miners' Member, having 5,000 miners living in the constituency, I give a general welcome to the Bill, which builds on the Conservative Act of 1973. We all recognise the need for a stable investment programme so that the new 1113 seams and deposits which are being discovered can be brought in in time to replace the shortfall that must inevitably come about as the others are worked out, and it is right that we should have a proper policy of financing stocking.
The point that I want to press is the European energy equation. Our coal industry is a vital part of it, and therefore it is reasonable that the strain on the British economy caused by this extension of public borrowing should be helped from that direction. As the hon. Member for Dunfermline (Mr. Hunter) said, the National Coal Board has power to borrow outside this country, and I believe that Europe is one of the areas to which it is entitled to look.
We cannot get the miner to get on with the first essential of any successful policy to do with coal, which is safely, efficiently and competitively to produce it at the lowest possible pithead price, unless he has an idea of the eventual use of his product, unless he knows where it is likely to go. For some years, we have talked about additional coal-fired power stations, but that idea must be related to demand. They cannot be built unless there is a clear demand.
The situation in this country, certainly in the medium term, is that demand for energy will not increase at anything like the pace that we originally imagined. But we could regularly export steam coal to Europe, where there is an existing demand and market. I was encouraged to hear what the Secretary of State said. Now is the time to think through a European strategy, from which we are in the best position to gain. The new stations being built in Europe can benefit us materially, and we should encourage their building. I hope that the Secretary of State will maintain the momentum of which he spoke, and that he will give that matter as high a priority as domestic use.
In spite of Clause 3, it will take years for miners to get out of the habit of stock-watching, whether at the pit or at power stations in the United Kingdom. Europe is an extra market which is important and immediate. It is a two-way movement. We have the security of investment, which can help out over national peaks and troughs, and at the same time we have a market which we 1114 can use quickly. That must only help attitudes, as the Minister knows. We recognise the amount of time that he has spent reassuring the coal industry and the amount of time he has spent below ground.
It is vital for the public that production figure should start to improve. The coal industry has been given a great deal of realistic and sensible help. It is important that it should now start to show the public that it is responding to that help. We know the reasons given for the present disappointing production—holidays, training new staff and so on. The industry must take to heart that much has been done and that we want to see the productivity figures start to improve.
I believe that productivity can be helped mainly by a revival of productivity agreements linked to local production. I appreciate that this is a difficult time to talk about such agreements, because we have an incomes policy which is likely to last for three or four years. We could use the time to try to work out a sensible local policy. I am sure that we shall not see the high production and high income that we want in the industry unless we can achieve that. I speak with the knowledge of the 1 million ton-plus pits in the Nottinghamshire field.
How are we to monitor our investment in research and the commercial application of its results? We have a great deal of knowledge in this area. We do not want to see it become yet another area in which British technology has a great deal to offer but in which we lose to other people because we do not apply it commercially quickly enough. Poland in particular has made great strides, and she is probably in front of everyone in the world in terms of future coal technology. The Americans are starting to invest huge sums in the future use of coal in their country. This is a time when the British industry has a great deal to offer in exporting the results of its research and so on.
In the coal industry there is always a long lead time between investment and plant. There is also a long lead in terms of people in the industry. As the industry's new pattern emerges, we cannot start soon enough to put to the miners the sort of changes that there will 1115 be over the next 10 to 15 years, and to help them understand the sort of industry in which they can expect to work over that period.
Attitudes will need to change as the new technologies come in. Getting the energy balance right is critical to this country's future. The Bill should help to ensure that coal plays a major part.
§ 6.57 p.m.
§ Mr. Peter Rees (Dover and Deal)
I must first apologise that other duties have prevented me from hearing the whole debate. None the less, I have heard a great part. It is particularly pleasing for me to follow my hon. Friend the Member for Beeston (Mr. Lester), because I, too, can claim the privilege of representing a coalmining seat.
The Secretary of State for Energy was at his blandest and most moderate today. I welcome the fact that he eschewed the note of self-congratulation that has sometimes marked speeches about the coal industry from the Government Benches. I also congratulate him on resisting the temptation to discourse at length on the splendours and miseries of this historic industry.
One naturally understands the factual basis for the Bill, and, with some reservations, I too welcome it. But I very much regret that the right hon. Gentleman has not shared with the House his thinking on the long-term structure of the industry and particularly of the National Coal Board. That matter is especially relevant to the coal industry in east Kent, where our coalfields are very much part of the local scene. They are an important source of employment for us. We are pleased that the quality of our coking coal has been recognised at last. On a more parochial note, we are gratified that Tilmanstone pit has been found to be the second tidiest, the second most elegant, in the country.
However, we are disturbed that the east Kent coalfield has lost its identity as a separate part of the National Coal Board, and has geen thrown in with the South Midlands area. I have no doubt that there are good, tidy, bureaucratic reasons for this. But we in East Kent will regret the loss of those on the headquarters staff 1116 who have made a great contribution over the years.
If I may coin a phrase, we shall in future feel ourselves a little out on a limb, part of a rather remote structure. This may well satisfy the Secretary of State, and even the Under-Secretary. It may satisfy the planners in Hobart House. I suggest to the Under-Secretary, however, that possibly it overlooks the personal needs and aspirations of those who work in East Kent.
I should like to think that the Secretary of State has moved a considerable distance from the views he held between 1964 and 1970. I should like to think that he, like, perhaps, the majority in the House, no longer thinks that the big is necessarily good or beautiful. The trend in future must be to consider how we can break up large structures—whether in the private or public sectors—into more manageable units, so that those who work in such units can feel a definite sense of identity with their industry.
I wish that the Secretary of State had told us what thought he and the National Coal Board had given to this problem. Over the years, I have had a certain reservation about the administrative qualities of the Secretary of State, but I am bound to say that I have never found him to be short of ideas. He is a fount of imaginative ideas. I do not agree with all of them. Has he allowed his imagination to play over the future of the National Coal Board in the same way as we know he has over the future of the private sector? We know that he believes in worker participation and I suppose that most of us on both sides of the House believe in this to a greater or lesser extent. No doubt during this Session we shall have the opportunity to debate precisely what form such participation should take.
What thought has the Secretary of State, or the Under-Secretary, given to the possibility of worker participation in the nationalised industries? Perhaps it should be in the Bill. Perhaps an amendment ought to be tabled. Will the Under-Secretary tell us about the plans for worker co-operatives in the coal industry? What about some form of equity participation?
1117 These are the matters we shall no doubt be debating in the forthcoming Session in respect of the private sector. The public sector is now larger and more remote, I suggest, than most industries in the private sector. We should be failing in our duty if we did not, even if only briefly on this occasion, debate the structure of the NCB and consider whether it could not be broken up into more manageable units, whether a greater sense of participation and identity could not be given to those who work in all nationalised industries.
Let us consider whether some form of equity capital cannot be given to those who work in the nationalised sector. Let us consider whether, perhaps, a share option scheme might be apropriate for the NCB or the British Steel Corporation. That suggestion might evoke an echo from the hon. Member for Bolsover (Mr. Skinner). We have to look ahead. We must not regard the form and structure with which the Board was endowed after the war as immutable. I shall await with keen interest the constructive comments which I have no doubt the Under-Secretary will be making.
There is one other point about which I must express some reservation. We are all in favour of those who work in the industry having a satisfactory pension at the end of their working lives. In the tempestuous days of 1972–74, when I was lucky enough to catch your eye, Mr. Speaker, during debates on the coal industry, I expressed the wish that the NUM had concentrated a little more on such benefits as a proper pension scheme rather than focusing all of its aspirations and enthusiasm on raising the basic wage. I recognise, and I recognised then, that there was a case for raising wages in the coal industry but possibly more consideration could have been given to pension schemes—to other fringe benefits that should have been available.
Now we hear that a worthwhile scheme has been introduced. It is to be properly funded and a contribution will have to be made by the State. There is, however, one point which deserves closer consideration and which has been raised by other hon. Members. I refer to the inflation-proofing which these pensions will enjoy. This point was finally elicited from the Secretary of State by my hon.
1118 Friend the Member for Bedford (Mr. Skeet)—the right hon. Gentleman had evidently not read on to the relevant passage in his speech when he was interrupted—that these pensions are to be inflation-proofed and there is to be a degree of comparability with the Civil Service. In general terms this is fine.
The country will want to know, however, whether it is right that employees in the public sector, which is increasing as the years go by, should be put on a quite different basis from employees in the private and the self-employed sectors. We are now becoming two nations—one with an inflation-proofed pension and one without. There is concern about this gap that is opening up. Comparability between the nationalised industries and the Civil Service may be fine, but what of those who cannot achieve that?
I am sure that the Under-Secretary would be the last person who would want to push through this House a policy, not necessarily applying only to the NCB, which would be divisive to this degree. This is not sufficient to lead me to vote against the Bill, but I hope that the Under-Secretary and his colleagues will pause for a moment to consider whether something more should be done for those in the private sector and for the self-employed so that they do not lag too far behind. Otherwise the envy that on certain occasions and in other spheres has been felt on the Labour Benches may be reflected on these Benches. By all means be fair, but let us be fair to all and not simply to one sector of the community.
Those are the only points I wish to make in this important debate. I hope that the Under-Secretary will respond with his usual generosity to the speeches that have been made by my hon. Friends. I hope that he will throw away the speech he has so evidently prepared and deal point by point with the issues that have been raised. These points are made with a genuine concern for the great industry whose future we are debating and which we wish to perpetuate and improve. I hope that the Under-Secretary of State will not say that this is just a money Bill, but will tell us that underlying it there has been deep, imaginative and constructive thought about the NCB and the future of those who work in it and for it.
§ 7.8 p.m.
§ Mr. Tom Ellis (Wrexham)
I must begin by apologising to the House for having missed part of this debate. This was due to important reasons connected with a vital document published by the Government today. I am glad to have caught your eye, Mr. Speaker, because, in common with most hon. Members who have spoken today, I warmly welcome the Bill. I do so primarily because it reflects the turn in the fortunes of the coal industry, with which I have long been connected: I was an employee in the industry for a number of years.
I am satisfied about this turn in the fortunes of coal which has become so clear since "Plan for Coal" was discussed and prepared in 1973. For the first time since 1959 we are as a country committed not simply to stabilising the industry but to expanding it. I regret that, as far as I can make out, we are the only Community country committed to spending money to increase the capacity of our coal industry. Commissioner Simenon has confirmed this for me.
We do not yet have a common energy policy. I referred to this briefly in an intervention in my right hon. Friend's speech. It is important that we succeed in getting such a policy. One thing that is clear in the Commission document on this subject is that there is an absolute determination to reduce our dependence as a Community upon non-indigenous petroleum products for our energy requirements.
I welcome the statement of my right hon. Friend the Secretary of State, and previously of the National Coal Board, about the intention to increase the capacity of the industry by 42 million tons by the mid-1980s. This follows from what I call not so much the Coal Board's plan as the coal industry's plan. An interesting point was made by Mr. Parker, the Director of the NCB's planning unit, in an article in the Board's quarterly magazine Coal and Energy. He said that the original plan for coal, the Coal Board's plan, when it was in the process of being formed, was examined by the coal industry tripartite examination and endorsed by it, and it became not simply the Coal Board's plan, but the coal industry's plan.
To that extent, it was a precursor of the planning agreements about which my 1120 right hon. Friend the Secretary of State has often spoken and which I hope will be extended not simply to large industries, such as the coal industry, but to all industries. It was a very good example in embryo of the sort of thing which, I am sure, my right hon. Friend had in mind.
Incidentally, I congratulate certain people who saw the light before the Yom Kippur war. They came round to an appreciation of the importance of coal in our economy, but they should have realised it long before, and I pay tribute to the one man above all others, Mr. Schumacher, the Board's economic director, who in 1960 and 1961 spelled out fairly conclusively the vital importance of retaining the existing capacity when the policy was to close many collieries that should not have been closed.
I am happy that for the first time for 15 years the National Coal Board's capital expenditure trend has turned upwards. The right hon. Member for Wanstead and Woodford (Mr. Jenkin) said that he was concerned about the lack of a substantial improvement in productivity. I share his concern. However, the energy industry as a whole, and not simply the coal industry, is inflexible. The provision in the Bill for stocking is to take account of the lack of short-term response to market trends within an industry such as the coal industry.
However, productivity is not simply tied up with the type of wage arrangement in an industry. There are other factors. Greater capital expenditure is one of them. One might say as a rough measure that whatever happens to the coal industry depends largely on the capital expenditure which was made 10 years before. Only within the last three or four years has the coal industry begun to invest capital on a reasonably substantial scale for the continuing pits. Therefore, only from now shall we see the development of increasing productivity on a scale that we all wish to see.
Stocking is tied up with the inflexible nature of the industry. Let me say in passing that I understand that there is provision in the European Coal and Steel Community arrangements for stocking 60 million tons. It will be helpful if my hon. Friend the Under-Secretary 1121 of State can say what proportion of the 60 million tons is in this country. There is no doubt that the provision to assist with meeting the cost of stocking will substantially help the coal industry.
I wish to make a point, not to the Minister, but to the National Coal Board, because it relates to a matter which concerns the industry. The Board's accountancy procedure for allocating costs of stocking should be examined. When a colliery stocks coal, the costs of the stocking are allocated to that colliery. This is an unfortunate arrangement and does not give an accurate assessment of the reality of the situation.
There is a colliery in my constituency that produces coal for the steel industry. It is a viable colliery, which has been making a profit, but in the past six months it has been stocking coal to the extent of 5,000 or 6,000 tons a week. If the stocking charge, allowing for transport, degradation, and picking up, is, say, £3 or £4 a ton, there is charge on the colliery of up to £20,000 a week. It is only because of industrial unrest at steel works in other parts that the demand for steel at the local works has increased and the colliery is selling the whole of its output. Overnight it has become a profitable colliery, whereas previously it was a loss-making colliery simply because of the Board's accountancy procedure.
I have two small points to make. First, I echo what the right hon. Member for Wanstead and Woodford said about the recent lack of performance. It is disconcerting that there is a fall in output of 15 million tons annually from the pits which have been in production continuously for the past 10 years or so and whose output had risen in the 1960s by 30 million tons. Their output increased in the 1960s as a result of investment made in the 1950s. Now, largely as a result of the lack of investment in the 1960s, their output performance is not as good as it was seven, eight or nine years ago. This is worrying and I therefore hope that substantial investment will take place and that the benefits will accrue fairly soon.
Secondly, it is vital that we reduce the real cost of producing coal. There is a distinct trend. In recent years the cost of production has risen, but it is 1122 more than an annual matter, leaving aside the 1972 disturbances. If the costs of a major primary commodity are increasing, in principle we are doomed to move from a primary to a tertiary economy. I am overstating the case, but this is the basic principle, and it gives cause for concern.
Whatever else happens, we must get the wage determinations right. The other cause of our troubles, apart from the lack of investment, was the failure of the Board, following its introduction in 1963 or 1964 of a centrally determined system for paying piece workers' wages, to ensure, despite the warnings of many people, including myself, that the wage rates were right. We therefore had the unfortunate business which occurred in 1972.
The hon. and learned Member for Dover and Deal (Mr. Rees) spoke about the coalfield in his area. I wish to make a plea for what one might call the coal outposts. The National Coal Board is interested in the Selbys of this country, but there are other areas, such as North Wales, where there are two collieries in which it is important that a coal presence should be retained. It would be a tragedy if we were to lose the skills of men in two collieries in an area which still has reserves of coal. I am glad that the Board has included the area in its drilling programme.
I hope that a certain amount of the investment which is being made in areas such as Selby will be diverted to areas such as mine if for no other reason than that the North Wales National Union of Mineworkers sends a moderate representative to the union's national executive. That would justify the maintenance of a coal presence in North Wales.
I warmly welcome the Bill, and I trust that the coal industry will go from strength to strength.
§ 7.20 p.m.
§ Mr. Patrick McNair-Wilson (New Forest)
When the hon. Member for Dunfermline (Mr. Hunter) told the House of the visit which he and I and my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) undertook, to see some of the mining operations in the East Midlands, in 1964, he also reminded me of the fact that it was 10 years ago almost to the day that I was 1123 standing at this very same Dispatch Box winding up for the Opposition in the debate on the 1965 Coal Industry Bill. That measure is relevant to the Bill we are discussing this evening.
The atmosphere in the House today is very different from then. Very few Members who have spoken this evening were present in the House in 1965, or, indeed, Members of it. The 1965 Act not only set very substantial borrowing targets for the industry but also produced some very violent surgery upon it. Those Members who were in the House at that time will remember the great bitterness and unhappiness which was quite naturally expressed by all Members from mining constituencies.
The debate today has been very different because the morale of the industry—which in 1965 was hitting rock bottom—is now rising. Of course, it is not perfect—nothing is—but the situation is very different today from what it was then. We had the energy crisis of 1973–74, and on both sides of the House we learned some bitter lessons, which have done us no harm but have perhaps taught us to regard this industry in a totally fresh light.
The year 1965 also saw the collapse of the production target of 200 million tons, upon which Lord Robens had built his whole concept of the industry. It is a remarkable story that we are here 10 years later talking about an industry with a fresh life in it and with an exciting future. Member after Member has drawn attention tonight to the new techniques now being employed in the industry.
My right hon. Friend went into some detail about the visit he and I undertook earlier this week to Stoke Orchard. The work being done there is very exciting, but none of us will forget that much of the work on using coal in various forms has been going on since the beginning of the century. My criticism of Stoke Orchard would be that we are not spending enough money on research. It is interesting to compare the amount of money invested in research in the nuclear industry in the last 10 years with what has happened in the coal industry. The Secretary of State will know—it is not his fault, and perhaps nobody's fault—that about 12 times the amount of money is spent on the frontier technologies of 1124 nuclear power as opposed to what is spent on the coal industry.
Nevertheless, having said that, I think we can look forward with some confidence to the future of the industry, and the Bill is yet another milestone on the road.
However, I must straight away tell the hon. Gentleman who is to wind up that we on this side are not entirely happy with the amount of information provided for us concerning the important clause dealing with the borrowing powers. I remind the House that when the original figure of £750 million was set up in 1965 we were supplied with the most detailed information about how that money was to be spent.
In the White Paper, Cmnd. 2805, "The Finances of the Coal Industry", we were given some very encouraging comments in 1965 on how borrowing was to take place in the future. Paragraph 18 reads:To avoid incurring fresh capita] debt in respect of its mining activities, the Board intends after the capital reconstruction to aim at generating from its own earnings the funds needed for future colliery investment.Those were rather brash comments. Nevertheless we are tonight looking at another £400 million to be added to that £750 million, taking us to an ultimate target of £1,400 million.
It is important that there should be a very clear indication how this money is to be used. When the Secretary of State tells us, as he did this afternoon, that we are having to fall back on the Contingencies Fund, things are obviously serious, and we shall have to probe this situation a good deal more clearly in Committee.
§ Mr. Benn
Following what the right hon. Member for Wanstead and Wood-ford (Mr. Jenkin) said about that, I consulted the advice I have, and I was not going to cite a previous case in his period at the Treasury, but the Contingencies Fund we are considering relates entirely to the timing of the Bill and must not be disconnected from the fact that the Session began late. I hope he will not read too much into that.
§ Mr. McNair-Wilson
I am most grateful to the right hon. Gentleman for clearing up that point. It is one that he raised himself.
1125 Referring again to the borrowing power of £750 million, it must be remembered that the bulk of that money in 1965 was for the writing off of capital debt. The reconstruction of the whole industry's finances accounted for over £500 million of the £750 million. Therefore this will have to be looked at with some care.
Let us look now at the areas of investment that are obviously likely to come to such borrowings as will be available in the industry. In 1965—I am using this bench mark because I think it is significant and not merely because I was involved with it—we were then, as now, being told that mechanical means were going to turn the corner for the industry completely.
It was in 1965 that one began to hear it said that the remotely operated long-wall face—ROLF—would transform mining in this country. It was genuinely believed that ROLF would completely transform the whole way of mining in this country. Indeed, people were talking quite confidently about four times the output per man shift as a result of using this equipment. I have seen it operating, as has my right hon. Friend and the hon. Member for Dunfermline.
In those days we regarded the future as based on mechanical methods. Once again today the Board is, perhaps, looking into the same crystal ball for its hope for the future. I should like to caution all of us to realise that at the end of the day it will be the people in the industry, and not the machines, who will produce the coal. Of course, new techniques will be valuable and everyone wants to see them developed all the time, but I recall that there were some who believed that at Bevercotes we could have a manless pit, and that dream is not within sight of becoming reality. It is essential, therefore, that we recognise that it is the people in the industry whose confidence we need to win.
§ Mr. Tom Ellis
I agree entirely with what the hon. Gentleman is saying, and emphasise that it could be stated as a general rule that the most successful coalfaces are the least supervised coalfaces.
§ Mr. McNair-Wilson
That makes the point exactly that I was endeavouring to promote, and I am grateful to the hon. Gentleman for that.
1126 However, since we are talking about this aspect, and the hon. Member has used the word "coalface", I might add that face lighting and other techniques which can be provided will obviously make their contribution, and we must not run away from the fact that we ought to be looking all the time towards the provision of new mechanical muscle to the arm of the miner.
We ought to recognise also that although our own industry has done so much to provide the mechanical techniques upon which we are now relying—such as powered supports, to take one example—there are other countries in Europe where different techniques are being considered. I am not trying to draw parallels between the motor cycle industry and the people who make powered supports, but the hon. Gentleman will know perfectly well that in Germany the caliper shield, a derivation of the powered support, is now becoming popular. In America it is being looked at seriously. It would be a tragedy if our own supply industry were unable to meet the requirements of the many export orders which, I am certain, are available to it.
The key to the success of this industry is its ability to compete effectively with other energy sources. When I say that I know that it will sound like striking a discordant note, but the fact is that the price rises since 1973 by the OPEC nations have provided a wonderful opportunity for the coal industry. The coal industry is still enjoying the opportunity provided by those price rises. If we can keep coal always that much more attractive than oil the markets of which Members have spoken tonight will be available to us.
A number of hon. Members, among them my hon. Friend the Member for Bedford (Mr. Skeet), my hon. Friend the Member for Exeter (Mr. Hannam), my hon. Friend the Member for Beeston (Mr. Lester) and my hon. Friend the Member for Canterbury (Mr. Crouch), have spoken of the need to export. I agree with them, but we have to be able to export at the right price. It is central to the success of the industry to be able to keep our prices thoroughly competitive with those of sources elsewhere. It is tragic that 30 per cent. of the coal imported by the EEC 1127 countries comes from behind the Iron Curtain. It cannot be right to have that situation, bearing in mind the problems of stocking in this country.
The scenario that we have to examine is, in the years ahead is nuclear power to provide the successful form of generation which some people have claimed? If it is, that will have a reflection on coal and coal production. If it is not, this coal industry of ours will become far more important than at any time since the war, because it will play a major part in electricity generation, since we cannot afford any longer to put oil into power stations unless we have to. It is that scenario and the future of the nuclear programme that will decide the success or failure of the coal industry in the future.
I do no more than mention the clause dealing with pensions. Obviously we shall have to look at it carefully in Committee. We had an earlier Bill, piloted by the Under-Secretary, dealing with the pneumonconiosis provisions, and it may be that we shall be able to return to these matters when we look at the pension scheme in this Bill.
I ask only one question on the subject. Is the figure of £250 million over 20 years the final figure, or are the Government prepared to meet any future deficiencies, which is what the NCB would like to see? If that is the final figure, it is one thing. If it is to be what might be described as a rolling programme with other deficiencies being taken account of, it could be very different.
All hon. Members taking part in the debate have referred to the clause dealing with stocks, and they have done so for one very good reason. It is that stocks in the industry today are at a very high level. They are not at a high level only in this country. They are at a very high level in other coal-producing countries. In West Germany, for example, stocks will be at a level of 80 million tons at the end of this year out of a total production of 92 million tons. In percentage terms that is considerably more than we have. The concern expressed by our own industry is mirrored by the concern of the German industry.
Perhaps the principal reason for stocks being so high is the fall in demand. The announcement by the Department of 1128 Energy earlier today about a 10 per cent. fall in coal demand for September must be, as the hon. Member for Dunfermline said, extremely worrying in the coalfields. These large stocks of coal are building up at a time when demand is falling, and the fear is that this may mean the end of jobs.
I shall not weary the House with any comments about exports, because my views on the subject are well known, but it is incredible that we should be spending considerable sums of money to take account of the stock position at a time when we are importing coal.
One striking feature which I saw at Stoke Orchard was the ability to make coke out of non-coking coal. By blending coals it is possible to make perfectly good metallurgical coke. Much of our imports is in coking coal, of which we have moderately small supplies. If the blast furnace route for the steel industry claims to be the future route rather than the direct reduction route using natural gas or whatever it may be, we shall need huge supplies of coking coal, and if the problem of the No. 3 blast furnace at Llanwern is solved it will be to the big blast furnaces that we shall look for output. If we can as a country make our own coke out of what in the past were regarded as non-coking coals, this will be a breakthrough of great importance. The Under-Secretary hinted at it in answer to a Question last week when one of my hon. Friends referred to the shortage of smokeless fuels and anthracite. The hon. Gentleman said that there were now available other fuels which would do the same job. If we can produce our coke from our own coal we ought to shout it from the rooftops. It is not only good for the steel industry. In terms of exports, too, it could be of great significance.
In the Yorkshire Post on Tuesday 18th November there was a report of an interview with Mr. Arthur Scargill, who said:The Government has asked us to give a year for Britain. Well, loyalty works both ways, and I would hope, if the Government means what it says, it will stop imports of coal immediately.'He also suggested that some of the coal being imported by the Central Electricity Generating Board is more expensive than coal that we ourselves could 1129 produce. If that is the case and we are committed to contracts to import coal which is more expensive than can be produced in this country, British miners have every reason to feel as angry as Mr. Scargill was in that interview. I hope that the Under-Secretary will be able to throw fresh light on the situation.
Productivity is a problem which has dogged the industry for many years, and it will not be solved by anything that we say here. Indeed, I am not sure that any of the words said by politicians are likely to be of help to those working in this industry. It may be that in all our debates in the past 10 years the words spoken here have done more harm than good.
The coal industry has embarked upon a new endeavour. It is looking for new coal on a scale on which it has not since the war and probably for the whole of the century. It is obvious that rich deposits exist. When we talk of 11-foot seams we talk of deposits very much akin to those on the American scale. With better pay and conditions and improved markets and opportunities, even if the politicians cannot get across the message about the confidence now existing, I hope that some form of communication within the industry can be set up to do so.
My one criticism of the structure of the industry today is that the average man who has spent his life in the industry probably feels not much nearer the centre of decision-making than he was when the industry was nationalised in 1947. We owe a duty to the industry to make sure that we improve this.
In 30 years the great discoveries of oil in the North Sea may be running out. In 30 years the coal industry will still only be nibbling at what may last for centuries. Since the war we have been engaged in pushing forward the frontiers of technology. I gave a comparison between the respective costs of nuclear research and development and coal research and development, and this could be carried into space flight, supersonic flight and the rest. All the studies, study groups and politicians have made terrible blunders. One has been to ignore the fact that coal—a solid hydrocarbon—can transform the nation's economy.
1130 Let us hope that this Bill, which the Opposition do not intend to oppose, marks yet another step to the recognition that this essential energy source is there for our use. Let us use it wisely, and, in so doing, let us give once again a feeling of confidence to those who work in the industry.
§ 7.40 p.m.
§ The Under-Secretary of State for Energy (Mr. Alex Eadie)
A debate on coal is always for me a particular pleasure. Add to that the privilege of having the last word on such an occasion, and my enjoyment is complete.
This debate has covered a lot of ground. Some of that ground, as has been pointed out, is familiar from past debates, but there is one fundamental difference; debates on coal these days are optimistic occasions, and today's debate has been no exception. I shall do my best in the time available to cover the most important points raised by hon. Members.
§ Mr. Skinner
My hon. Friend mentions optimism. I have been sitting here most of the afternoon. My hon. Friend knows of the loyalty of hon. Members in the miners' group. We allow some of our hon. Friends to get into the debate and we are prepared to sit back and say little or nothing on the basis that we share opportunities to speak. But I am a little disconcerted by constant references to optimism. I represent 900 miners who work at the Langwith Colliery, which is being threatened with closure in the next couple of years or less. The Board refuses to develop any new seams at that colliery, and that means that a village will be decimated.
None of this talk in Parliament about optimism is of any use to people threatened with redundancy or transfer yet again in the course of their working lives. I should like an answer to a simple question. Will my hon. Friend in some way demonstrate that Langwith Colliery, Seaham Harbour, Vane Tempest, and all the other collieries about which we are concerned, will be kept open? That is optimism. It would ease the minds of the miners if he were prepared to say that none of these closures would take place.
§ Mr. Deputy Speaker (Mr. Oscar Murton)
Order. The hon. Gentleman is 1131 entitled to make a speech at a later date, but not in an intervention.
§ Mr. Eadie
I hope that my hon. Friend will allow me to make my speech. In the course of my remarks I shall try to substantiate what I said about optimism. I assure my hon. Friend that those of us who took part in debates on the coal industry long before he entered the House were like undertakers. I suggest that we are no longer like undertakers. The point made by my hon. Friend is being dealt with and will be debated. Indeed, that point was raised by the National Union of Mineworkers, to which my hon. Friend and I belong.
I shall do my best to deal with all the points which have been made by hon. Members, but I hope that I shall be forgiven for giving most of my attention to what I should describe as the heart of the Bill, Clause 2, which, in my view, epitomises the Government's new deal for the coal industry.
Few people who have been connected with the coal industry as long as I have could fail to rejoice in the fact of an earnings-related pension scheme for miners. Not very long ago, the reward for a life's work underground was a flat pension of £1.50 a week. But we have come a long way in the past three years. I have reminded the House before that I spent more than a quarter of a century in the mining industry. The pension which I shall get when I retire will be about 8p or 10p a week. My wife and I have not yet made up our minds whether to take it weekly, monthly or quarterly.
This Government can take full credit for the earnings-related pension scheme. We set up the coal industry examination, from which emerged the National Coal Board and the union's agreement to work out an earnings-related scheme. The Government's commitment to help with the deficiency in the scheme in relation to existing pensioners must have been a major factor in ensuring that a satisfac- 1132 tory new scheme emerged. This Bill redeems that pledge.
The Government put their money where their mouth was on both pension provision and compensation for pneumoconiosis together with the Government's contribution of £100 million towards the NCB's pneumoconiosis compensation scheme, this Bill discharges a longstanding debt of the whole country to the industry and ensures that its future viability is not threatened by a burden of costs which should properly have been met years ago.
I do not think that I need add anything to what was said by my right hon. Friend the Secretary of State for Energy about the other provisions of the Bill, except that they are essential to the successful implementation of the strategy which we agreed with the industry in the tripartite examination.
I turn now to some specific points. Reference has been made to stocking aid. I would describe Clause 3 as efficient and sensible. Section 7 of the 1973 Act provides for aid to the National Coal Board in respect of stocks which it owns. Under the deferred payment schemes with the Coal Board, the electricity boards take ownership of stocks in excess of their current requirements, but do not pay for them until they are used. Therefore, those stocks do not qualify for aid under Section 7 of the 1973 Act.
Such a situation discourages the NCB from making use of deferred payment schemes, as stocks retained by the NCB and put down at the pithead would qualify for a grant. But stocking surplus coal with final consumers avoids double handling costs and keeps stocks moving away from the pithead. I think that the House will agree that that is sensible and the right thing to do.
Questions were asked about the pension scheme. The hon. Member for Bedford (Mr. Skeet), who, strangely told us that he would be abroad by this time, asked about inflation. There will be an annual review within the scheme which may take account of inflation. I hope that the hon. Gentleman will read that in Hansard when he returns from abroad. Other more detailed questions were asked about the scheme. Indeed, that was the main thread throughout the debate.
1133 During the course of the coal industry examination in 1974—two hon. Members who were present at those meetings are in the House at this moment—the Government recognised that the past contraction of the industry presented a financial problem for a viable pension scheme because of the exceptional ratio of pensioners to contributing members, coupled with the fact that pensioners can make no further contribution to the pension fund or to the industrys performance. I think that the House will appreciate the magnitude of the problem with which the Government have tried to deal within the Bill if I give some figures.
On 6th April 1975 there were 239,272 pensioners, 181,019 deferred pensioners and 255,839 contributing members. Accordingly, the Government undertook to relieve the Board of the burden of the past by contributing towards the existing deficiency in the pension fund. It was agreed that this should be the deficiency in the fund relating, first, to those mineworkers who retired before 6th April 1975 and the widows and dependent children of men who had died before that date and who were at that date in receipt of a pension under the scheme; secondly, subsequent widows and dependent children of such mineworkers; and, thirdly, those who left the industry before 6th April 1975 taking with them the right to a deferred pension under the scheme.
In view of the lack of precision inherent in the calculation of the deficiency relating to the pensioners of 6th April 1975, the Government decided on a contribution of about £250 million as representing a generous measure of assistance. It was decided that the payment should be spread over 20 years, and we were advised by the Government Actuary that it meant a payment of just under £18 million a year, which was necessary to take account of the interest lost by spreading the payment instead of paying a capital sum.
Reference was made during the debate to the problems of production and productivity, and it is right that I should give the figures to the House, because they provide some ground for optimism. Up to the first week in November, the Board's deep-mined output was 67.5 million tons for the financial year 1975–76. This compares 1134 with 67.9 million tons for a similar period last year. It is expected that total deep-mined output for 1975–76 will be about 114 million tons, which compares with an output of 114.6 million tons for 1974–75. Overall colliery productivity, up to the first week of November, was 44.1 cwt which is identical to the figure for the similar period last year.
However, after taking account of seasonal variations, one sees that there has been a welcome improvement in productivity recently compared with the summer months. There was admittedly a period when we were very concerned because there was a downturn in productivity, but I am happy to tell the House that there has been an upturn now, and I have a feeling that it will continue.
The right hon. Member for Wanstead and Woodford (Mr. Jenkin) referred to progress on the "Plan for Coal". I can tell him that the 60 major projects already approved by the Board will among them involve an expenditure of about £190 million, and this again means a tremendous financial commitment. These projects will provide 12 million of the additional 42 million tons capacity envisaged in the Plan for Coal. Two new drift mines are included. Selby on its own could provide another 10 million tons, but the inspector's report following the public inquiry into the Board's planning application for the Selby mine is still awaited. I hope that that answers the point.
I now come to the question of the importation of coal. My hon. Friend the Member for Dunfermline (Mr. Hunter) asked about coal-fired power stations and about coal imports, and I think that it will help if I give the figures. I apologise to the House for giving the figures for calendar years from 1971, but they are the only figures that I have. In 1971, imports were 4.58 million tonnes, and exports were 3.44 million tonnes. In 1972, the figures were 5.41 million and 2.25 million. In 1973, they were 1.91 million and 3.45 million. In 1974, imports amounted to 3.71 million tonnes, while exports totalled 3.83 million tonnes.
Mr. Patrick Jenkins
Can the hon. Gentleman explain why those figures for imports, which are for calendar years, are so different from the figures for imports given in Energy Trends circulated by his Department?
§ Mr. Eadie
I am giving the figures that I have been provided with in a background note, but I shall investigate that. I thought it only fair to give the import figures for coal, having been asked to do so. For 1975, the estimated figures are 5.5 million tonnes for imports and 4.10 million tonnes for exports.
There can be no question of imported coal ousting home production. Although imports are now marginally higher than they have been in recent years, they are expected to fall from the 1975 level as short-term commitments are completed. When we debated this matter last year, we said that there would be a shortage of coal. Contracts were therefore entered into for the importation of coal, and these contracts are now being completed. I assure my hon. Friend the Member for Dunfermline that these are short-term contracts and that they will be exhausted progressively. In addition, my right hon. Friend is considering coal imports and will, I am sure, report to the House if he considers it desirable to do so.
§ Mr. Gwilym Roberts (Cannock) rose—
§ Mr. Eadie
I know that, but, just the same, the hon. and learned Gentleman was not here for much of the time.
My hon. Friend the Member for Rother Valley (Mr. Hardy) made an interesting speech. I wish that he had done a little more research, because I found one facet of his speech rather fascinating. He said that Vanessa Redgrave and Derek Ezra had spoken at one of the schools in Yorkshire, but he did not tell us how they got on. I wish that he could have told us that.
The right hon. Member for Wanstead and Woodford said that he had met David 1136 Bolton, the vice-president of the Scottish miners. I am sure that Mr. Bolton will be interested to know that the right hon. Gentleman at least remembered him. I thought that the whole House was impressed with the fact that today the right hon. Gentleman became what my right hon. Friend would describe as technologically oriented, because he told us about his visit to Stoke Orchard and he described with great enthusiasm the fluidised bed combustion scheme.
If the right hon. Gentleman looks at the research and development part of the coal industry examination report, and I presided over the R and D Committee, he will see that that is precisely what we recommended as a worthwhile project. I am pleased to say that part of the recommendations of that committee have been carried out, and this is demonstrated by the fact that, in conjunction with the Board, we have established a project with the International Energy Agency.
One of the first things that I did as Under-Secretary was to visit Stoke Orchard. People there appreciated, after struggling for years on a shoestring, the fact that a representative of the Government had come to see what they were doing. I am grateful for the right hon. Gentleman's support. I agree that the subject of coal derivatives is an interesting one. When people run down this country's technology, they should remember that many of the systems evolved in this country are used in other countries—I have seen some for myself. At Stoke Orchard one sees the wonderful new things that can be done with coal. Given the proper approach, we can open up new markets for coal.
Fluidised bed combustion is an example not only of a new technique for using coal, but of a new opportunity for British industry in manufacturing equipment for this kind of engineering. One firm is already beginning to take advantage of this.
§ Mr. Patrick Jenkin
One point that I left out for reasons of time I should now like to put to the hon. Gentleman. Would he look into the complaint of the firm of Babcock and Wilcox that it is having great difficulty in getting from the NRDC the necessary agreements to enable it to develop, perhaps for export business, fluidised bed combustion plant?
§ Mr. Eadie
The right hon. Gentleman has been here long enough to know that the Department of Energy is not the Department of Industry. I do not want to be sidetracked, but I think that he will agree that at least one Energy Minister has tried to be helpful to Babcock and Wilcox over this type of plant. I am pleased that the Opposition are giving Dr. Joe Wilson, the Director of Stoke Orchard, their support. The research workers there were in the wilderness for many years. It is much more impressive coming from the right hon. Gentleman than coming from me that we have a fine research institution there, that we should make better use of it and invest more in research and development.
My hon. Friend the Member for Morpeth (Mr. Grant) showed his feeling and compassion for the mining industry. He said that after he and I had met and had been able to give some assurance to the miners in that area, although we issued a joint statement, no assurance came from the local management. I want to look into this. Our statement was factual. If there is any difficulty about the local management's not endorsing it, I shall certainly look into the matter.
§ Mr. George Grant
I was not saying that the local management was going against what we had jointly said, but that when it comes down to discussing the problems of individual collieries information is lacking. I was drawing attention to the lack of trust and communication and the failure of joint consultation.
§ Mr. Eadie
I shall certainly examine what my hon. Friend said. I just wanted to make it clear that the assurances we gave were based on fact and should have been endorsed in that coalfield.
The age of retirement in the mining industry is a subject to which the House will want to return. The Government have already made progress in matters connected with retirement, but I hope hon. Members will understand if I do not go into detail tonight.
In debating this short Bill, I hope that hon. Members have not lost sight of the overall strategy that the Government and the industry have worked out together. The Bill must be seen in perspective as part of a coherent whole. There are 1138 four major planks in our policy. First, we are determined that coal should be seen as the foundation of the country's energy policies, to ensure that we at least have stability. But, given the deplorable lack of investment over the years, even maintaining output at current levels will be a mammoth task. Hence "Plan for Coal", a major expenditure programme stretching 10 years ahead.
Secondly, we are determined that the short-term difficulties should not be allowed to blow the industry off this chosen path. That is why we give hope to the industry tonight. Thirdly, we want to see that the mineworker is accorded his rightful place in society and that a life of exposure to health risks and other dangers underground is properly rewarded when he leaves the industry, and to minimise the unpleasantness that miners still have to suffer day after day. Fourthly, we want to see the coal industry start this new era with no financial millstones from the past.
Taken together with the major decisions that we took in the tripartite examination and the provisions of the 1975 Coal Industry Act, a coherent picture emerges which measures up very well to those objectives.
§ Question put and agreed to.
§ Bill accordingly read a second time.
§ Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills.)