§ Order for Second Reading read.3.43 pm
§ The Under-Secretary of State for Energy (Mr. John Moore)
I beg to move, That the Bill be now read a Second time.
This is the second Bill providing for Government financial support to the coal industry that we have seen in this Parliament. The first provided for support on the basis of a financial objective of returning to profit on an historic cost basis after interest and social grants from 1983–84 onwards. The House could legitimately wonder why another Bill is needed so soon.
The House and the British public will also want to know the basic purpose behind our continuing commitment of large sums of money to the coal industry and how far the industry has progressed in fulfilling the objectives of its 10-year programme in "Plan for Coal". This debate provides art opportunity, first, to set out the reasoning behind our commitment to the coal industry, and, secondly, to put on the record just how this Government see the future for the coal industry in the light of developments since 1974.
The "Plan for Coal", begun in 1974, was an ambitious 10-year programme for the expansion of the coal industry, to meet an expected growth in demand for energy and coal. The need to diversify our sources of energy supply, to make the optimum use of indigenous resources and to conserve energy, is as clear today as ever. Western leaders recognised that at the Venice summit in 1980. But neither the world, nor the coal industry's own performance, has matched the expectations of 1974; and the coal industry must live in the real world—that is quite plain—adjusting its plans and programmes, and adapting itself to stay competitive in a changing energy scene.
Successive Governments have made available the funds for a massive 10-year programme of investment in the coal industry, totalling £3 billion since 1974. But the "Plan for Coal" assumed, first, steady growth in demand for coal, justifying an output target of 135 million tonnes in 1985; secondly, continually rising oil prices, improving coal's competitive position; thirdly, a 4 per cent. per annum improvement in the coal industry's productivity; and, fourthly, the progressive restructuring of capacity to attain this improvement and regulate overall output. Those were the four key platforms of the "Plan for Coal".
I shall not yield to the temptation to make partisan points—the coal industry's future development and the very large amounts of money involved demand serious and objective analysis. The facts as opposed to the plans are, first, United Kingdom demand for energy and coal has fallen since 1972–73. In 1980–81 total National Coal Board sales were 117.7 million tonnes of coal. Secondly, since 1979 oil prices have not risen as steeply as was feared, while the NCB has not achieved hoped-for cost savings. Thirdly, output per man-shift in 1980–81 was still below its 1972–73 level and has only exceeded that level in recent months. Fourthly, the coal industry is producing more coal than the market wants.
That means that the time scale of change has shifted against the industry, delaying progress to competitiveness 132 and viability. It means that the taxpayer has continued to commit large sums of money for investment which is only now beginning to show the results which were looked for in improved efficiency. It was therefore right—and inevitable—that the industry and the Government should reappraise the industry's plans and its progress.
I want to analyse a little further the changes that have occurred in the energy market since the Coal Industry Act 1980 was presented to the House, because those changes have had a direct impact on the coal industry.
Recession has been a world-wide phenomenon, and the effect has been felt in reduced demand for energy. Energy demand in the world as a whole outside the Comecon countries was less in 1980 than in 1979. In the United Kingdom, total energy demand fell by 9 per cent. in the period from 1979–80 to the third quarter of 1981. That change in climate affects both short and longer term plans for the industry. My Department's provisional estimate of total United Kingdom energy demand last year—the whole of 1981—is 316 million tonnes of coal equivalent, compared with the 400 million tonnes which was the bottom of the range suggested by the NCB in 1974, when the "Plan for Coal" was being devised. That illustrates the enormity of the change in energy demand in that six-year period.
The National Coal Board, like the rest of our energy market, has felt these effects on demand for coal. Since 1979–80 after a drop of 7.6 million tonnes in 1980–81, total sales of coal are getting back to their 1979–80 level. But these figures mask a setback in the home market, in particular in the crucial industrial market, which fell by nearly a quarter in two years. The board has been able to make good that drop in home sales only by vigorous and enterprising action to increase exports.
In the industrial market, the recession has made manufacturers less ready to switch from oil-fired to coal-fired boilers, hence reducing the number of new customers for coal. It is for that reason that my right hon. and learned Friend the Chancellor of the Exchequer announced a pump priming scheme for grants to assist boiler conversion in his spring Budget last year. So far, applications for grants of some £17 million have been received. No doubt, there will be further discussion on this later in the debate. In the electricity coal market, the board has been hit by the general depression in demand for electricity, down 3½ per cent. from a year ago. Despite a cut in oil consumption by the Central Electricity Generating Board of over 30 per cent. this year, coal consumption has also fallen modestly. All these factors have led to the NCB going badly off course in the last two to three years. Domestic sales have fallen, those lost being replaced only by exports which yield a lower net value at pithead, and total turnover has fallen well short of what was expected.
Despite this, all is not gloom, and the men and management deserve our support for their recent achievements, because in terms of productivity the board has kept to the targets set out in the 1979–80 financial strategy. First, output per man-shift has risen from 2.24 in 1978–79, to 2.32 last year and the indications are that it will rise by a further 3½ per cent. this year. That is excellent. Secondly, absenteeism is falling sharply. In 1979–80 it was 17.1 per cent. This was reduced to 12.4 per cent. in 1980–81, and this year it is currently running at around 11 per cent., with absenteeism at a 40-year record 133 low. Thirdly, output has been rising. In 1978–79 it was 121–5 million tonnes. This year it will be around 124 million tonnes.
This improvement has been made, of course, without adverse effects on the standards of safety. Before saying any more about these, I must say something about last Wednesday's gas ignition at Cardowan colliery. I went to Cardowan myself on Friday and also visited many of the injured in the local hospitals. I know that I speak for the whole House when I say that no praise that I give could be too high for the courage of the men whom I met or the heroism shown by all those involved. It is clear that high tribute is due to all concerned in dealing with the incident. The emergency procedures were swiftly and effectively implemented and they stood up to the demanding test. The men and officials underground responded immediately by going to the aid of their colleagues. There is no doubt that the quick actions of the officials and men in the immediate vicinity of the incident was a major factor in the success of the rescue. Others made themselves available for rescue work. Management organised and co-ordinated all the rescue services.
Within minutes of the incident, full-time rescue brigades men were on the scene to go underground and add their expertise. Later they were supported by the part-time safety brigades men normally employed at neighbouring collieries. Because of the skill and courage of the underground rescuers working in very difficult conditions, ably supported by those on the surface, first casualties came out of the pit just over an hour and the last 2½ hours after the ignition. A number of the injured had to be brought from the face to the surface by stretcher. All at the colliery deserve the utmost praise for the speed and efficiency with which all the rescue efforts were brought into operation.
I must also record full praise for the public services. All the necessary services were available when the first casualties arrived at the surface. At the receiving hospitals, the efforts of doctors, nurses and the supporting ancillary staff were vital to the quick relief of suffering. The efforts shown by those who took part directly or indirectly in the events of last Wednesday were in the highest traditions of the mining industry and the public services.
Last week's Cardowan incident, however, must be seen in the context of an improving safety position. When my hon. and learned Friend the Under-Secretary of State for Employment informed the House of it last week, he said that the number of mining fatalities in 1981 was a record low. I can now give the figures. There were 35 fatalities in 1981, compared with 42 in 1980 and 46 in 1979. The previous record low was 40 in 1977. I am sure that all hon. Members will agree that 35 deaths is, of course, 35 too many, but I think that the House will agree that progress is being made in this vital area of safety.
Returning to the question of productivity, the recent improvements, however, must be seen against the background of disappointing performance for some years. As I have said before, in 1980–81 output per man shift was still below the level which had been achieved in 1972–73 and only exceeded that level in very recent months. Recent improvement is an achievement, but it must not lead to complacency. The board must ensure that productivity gains are sustained and built upon in the years ahead.
134 The effect of productivity gains on the board's finances has been more than offset by the sharp drop in sales, and coal stocks are still rising. At the end of March 1979, undistributed stocks were 12.1 million tonnes. At the end of this financial year, they are likely to be nearly 24 million tonnes. This increase in stocks has to be financed, and has resulted in large increases in the board's needs for working capital, with the inevitable effect on the NCB's interest charges, which are likely to be more than £360 million this year.
The factors that I have outlined here had a considerable impact on the NCB's operating position. In its 1979–80 financial strategy, the board had planned to be close to break-even on its mining operations this year, after taking account of social grants. Unfortunately, this has not been achieved, and operating and deficit grants for 1981–82 will be needed to make good a loss of over £4 per tonne. Adjusting the original projections made in 1979–80 for subsequent inflation, it is clear that, while costs are close to planned levels, revenues are well down. This decrease in revenues reflects both the softening of home demand and the lower revenues per tonne achieved from export sales. Thus, although the board has been able to keep its costs in line with its plan and the men and management are to be congratulated on that, it has not been able to reduce them to a level consistent with the revenues that it is receiving.
Overall, these facts make up a worrying picture. Despite commendable efforts to increase efficiency, the coal industry is producing more coal than its customers want, even though it is producing less than the target which it set itself in 1974, and at too high a price. These trends must be reversed if the industry is to achieve its full potential.
I have said a good deal about what has changed since 1974 and, in particular, since 1979–80. One thing that certainly has not changed is the Government's belief that our coal industry can have a secure and prosperous future. Coal is still our greatest single natural resource and our estimates of reserves—equivalent to about three centuries at our current rate of consumption—have not changed. Neither has our long-term analysis of coal's potential changed. We still believe that coal will have a central place in our longer term energy picture and that our coal industry has a good prospect of being able to expand its existing markets and to win new markets on its own commercial merits.
§ Mr. T. H. H. Skeet (Bedford)
The Minister referred to a diminished domestic market and a lower return on export sales. In view of that, does he intend to adapt the long-term plan to deal with reality?
§ Mr. Moore
My hon. Friend has anticipated the next part of my speech dealing with the potential of the industry. If he will bear with me, I shall cover that point.
Neither has the Government's commitment to support the coal industry changed. We have undertaken this commitment because we want the industry to succeed and to make its full potential contribution to our economy. The expenditure involved in this commitment is massive. A few illustrations will bring the point home. The total of grants to the NCB this financial year will be some £550 million, 10 times as much as only five years ago, under the Labour Government.
That is the equivalent of a subsidy of about £5 for each tonne of deep-mined coal. Looked at another way, it works 135 out at a subsidy of £27 from each household. These grants, in turn, make up only half the board's total external financing, which will be more than £1,100 million this year—a massive figure, and the highest for any of our nationalised industries. It is these figures, and the Government's continuing commitment, which, as announced to the House on 16 June, require the Bill.
I believe that it is important—this deals with the point raised by my hon. Friend the Member for Bedford (Mr. Skeet)—to put on the record why the Government, and in particular why this Government, are willing to commit these massive sums to the coal industry. It is because our belief in coal's bright future is genuine. It is not a belief based on sentiment. In an energy-hungry world, coal's value grows and grows. Unlike nuclear power, which is a one-use fuel—it can be used only for electricity generation—coal is a multi-use fuel. It is the dominant source for electricity generation—some 80 per cent. of Britain's electricity at present comes from coal—and this relative dominance will continue. But coal's potential goes way beyond this: its future lies in its use as fuel for industry, as petrochemical feedstock, as substitute natural gas, and in the longer term, potentially as a source of liquefied petroleum.
In order to realise this potential, and to achieve these new markets, coal must be competitive. That means that it must produce the fuel the customers want at a price they are willing to pay. The new markets—industrial, domestic, foreign— where coal could hope to increase its role are not monopoly markets. To win them, coal must show itself to be more efficient, more reliable and more attractively priced than the other fuels that are competing for these markets. We believe that coal can do it, and that is why the Government are willing to commit this large amount of money.
The coal industry as a whole has shown, most dramatically recently, that it understands that its future depends on coal being efficient, reliable and economic. This is moss: encouraging. But the industry faces many problems, some of which I have already outlined. In addition to the internal challenges to contain costs, increase production and win new markets, the industry faces great uncertainties in terms of economic developments in our own country and in the world at large. The Government feel it right, therefore, to continue to support the industry as it works out its strategies to deal with these problems and uncertainties. The long-term objective remains an independent, self-sufficient coal industry. The Bill, therefore, proposes an increase in the NCB's borrowing powers to give it access to the funds it needs to continue operations and capital investment, and enables the Secretary of State to continue providing deficit grants to support it until the end of 1983–84.
I now turn to the specific provisions of the Bill. Clause 1 provides for an increase in the borrowing powers of the National Coal Board and its wholly owned subsidiaries from the present limit of £4,200 million to a new limit of £4,500 million, which may be increased by order to £5,000 million.
Clause 2 extends the period in respect of which I can pay deficit grant to the National Coal Board until the end of 1983–84. It also increases the total limit on deficit and other operating grants from the present £590 million to £1,000 million, which may be increased by order to £1,750 million. This increase was foreshadowed by my right hon. Friend the Member for Guildford (Mr. Howell) in his 136 statement on 16 June last year. The increase is necessary both to cover the increase in grant in respect of the present financial year which he announced, and to provide for continuing support in the next two years.
The second part of the Bill, clauses 3 and 4, deal with social grants. As the House knows, successive Governments have supported and extended the principle of paying social grants to ensure that the inevitable process of change in the industry does not result in hardship for the individuals affected. The 1980 Act, as the House will remember, provided for financial support for a much improved system of allowances to be paid by the NCB to men transferred from one pit to another and for the extension of the redundant mineworkers payment scheme to workers at coking plants. Clauses 3 and 4 of the Bill reflect the latest improvements.
In March last year, we brought an order before the House, that made substantial improvements in the redundant mineworkers payments scheme for persons made redundant on or after 11 March 1981. In particular, the duration of weekly benefit at a rate equal to about two-thirds of previous pay was extended from three years to five years, and there were substantial increases in the lump sums.
At the same time, the National Coal Board, with the Government's agreement, undertook to fund the cost of allowing all RMPS beneficiaries down to the age of 50 instead of 55 to receive their pensions before the normal retiring age. The board is also prepared to fund the cost of paying pensions calculated on the basis of up to five added years of service. This increased level of pension would continue for life and would be reflected in the other benefits of the pension schemes.
The Government already have powers under section 4 of the Coal Industry Act 1967 to reimburse the board for the full cost of providing pensions to RMPS beneficiaries before the normal retiring age. However, these powers do not cover reimbursement of the cost of payment of pension at an increased level continuing after the normal retiring age. Clause 3 gives the necessary powers in respect of persons who are both eligible for the RMPS and made redundant on or after 11 March when the improved redundancy terms were introduced.
I expect the payments made to finance increased pensions after the normal retiring age to come to perhaps about £3 million or £4 million a year, about half of which could have been reimbursed to the board under existing powers. But it is clearly right that we should be able to reimburse such expenditure by the NCB in full. The system will be an extension of that for the 1967 Act.
Clause 4 also stems from the improvement in redundancy terms. It increases the limits on payments of grants to the board in respect of its "relevant expenditure" under section 6 of the 1977 Act, an on payments under section 7 of the 1977 Act, of which the most important involve the redundant mineworkers' payments scheme. The relatively modest increase reflects the cost of the improved terms, and also the fact that their introduction has led to an upsurge in the level of redundancies over the last year.
The House will note that the period over which payments may be made is not extended by this Bill. This does not mean that there is any intention to terminate payments of social grants under the RMPS in 1984. I have already said that we shall need further legislation before March 1984, and this legislation will include provision for 137 extension of the social grant and redundancy payments provisions. I made these points in Committee on the 1980 Bill, as those hon. Members who attended the Committee will remember, and they are as true now as they were then.
The House will see that the sums of money involved in this Bill are considerable. They are a clear expression of the Government's commitment to the coal industry and our confidence that it can work out a strategy which will enable it to achieve its full potential contribution to the economy and so win the secure and prosperous future which it deserves. In the last resort, however, this is not something on which any Government can decide. We can encourage, we can support, but it is the industry—and that means all those who work in it—that will decide on its future. The choice before them is what it always was. They can choose an industry that is steadily building up its economic strength, expanding its market, and offering more job opportunities in the future; or they can choose an industry that is dependent on subsidies from the taxpayer, and that is steadily pricing itself out of markets and so condemning itself to stagnation and decline with all that this implies for the futures of those who work in it. Government support can only postpone this choice, as other examples show, both in the public and private sectors. It cannot be avoided altogether.
Happily, there is every sign that the industry has chosen the wiser course. This choice, of course, cannot be made once and for all. It must be carried through into action, and renewed each time the industry comes to a crucial decision. But the Government are confident that the industry will continue to choose the path towards prosperity. We are confident of the eventual success of the efforts of the industry. It is because of this confidence that I commend the Bill to the House.
§ 4.9 pm
§ Mr. Alex Eadie (Midlothian)
The whole House will welcome the Under-Secretary of State's very full speech in introducing the Bill. It gives us, in examining the provisions of the Bill, an opportunity to consider how the Government see the general strategy for the coal industry.
The Minister said that production of coal had increased from 121.5 million tonnes in 1978–79 and this year would reach 124 million. I hope that he will concede that the industry has achieved that with a reduction in manpower. It is important that the House and the country is made aware of that.
Towards the end of his speech the hon. Gentlemen spoke about the miners' choice. I think that I can say on behalf of all my hon. Friends that the miners want a modern technological industry that can produce the goods that the country wants, but they have always argued that the neglect of a decade and a half cannot be remedied in five or six years, and that there must be investment in the industry to achieve the required production at the cost that the Minister suggested.
I should like to illustrate what that means and how we are to pay for the past neglect. I am sure that the hon. Gentleman has a reference in his brief to Selby, that jewel of the United Kingdom industry. By 1988 or 1989 we hope to have about 10 million tonnes of coal a year from Selby. That necessitates investment today of £2 million to £3 million a week in the project. Investment is the key to providing the industry that the miners and the nation want.
138 I am glad that the Minister gave a commitment on behalf of the Government to plan for coal production and more investment. We shall want to examine what he said. I hope that the plan will not contain some of the reservations that are sometimes hinted at.
We welcome the provisions to increase the board's borrowing limit from £4,200 million to £4,500 million, with a possible increase to £5,000 million by order. We also welcome the extension of the period during which the Government will pay deficit grant to the board to include 1983–84. The Bill also raises the limit on deficit and operating grants from £590 million to £1,000 million, with a possible increase to £1,750 million by order.
I was tempted to intervene in the hon. Gentleman's speech to deal with aspects of the Coal Industry Act 1980, but we can return to that. Many people believe that that Act is as dead as the dodo. We shall return to that matter later.
The Under-Secretary was right to say that the Bill deals with massive figures. We shall have to see more of the detail of the new limits on the social grant payments and payments to redundant miners. However, that is a matter for Committee.
The Minister's speech was important, partly because it may relate to the last Bill dealing with our proud coal industry in the present Parliament's lifetime.
I am sure that some of my hon. Friends were puzzled about what constitutes a subsidy. I was alarmed by some of the hon. Gentleman's terminology, which is associated with the Prime Minister. We—particularly those of us in the parliamentary miners group—regard it as highly inaccurate on the question of grants and subsidies to the board. The Prime Minister said on 4 November 1981, in the debate on the Loyal Address:This year the positive return of the British Gas Corporation is about £400 million. That is more than swallowed up by the subsidy to the National Coal Board of £1,000 million—and that is only one such subsidy to a nationalised industry."—[Official Report. 4 November 1981: Vol. 12, c. 24.]The whole House knows—everybody bar the Prime Minister seems to know—that that is incorrect. Grants to the board in 1981–82 are likely to be about £570 million. The external financing limit for 1981–82 is £1,117 million. The plain fact is that most of the money in the EFL is required for capital investment. I illustrated that in relation to Selby, where the capital investment for 1981–82 is about £2 million to £3 million per week.
Borrowings for capital investment are made mostly from the national loans fund, and they bear the rate of interest currently charged for new loans. We read in the newspapers this morning that there was indignation throughout the financial world that American interest rates had risen to 16½ per cent. The going rate that the industry and those associated with it must pay is 16½ per cent. Therefore, it is monstrous to describe as a subsidy borrowings which are designed to deal with energy requirements many years ahead and on which interest is charged. It is not appropriate for that even to be hinted at. It is deception not only of hon. Members but of the general public. When the hon. Gentleman spoke of subsidy I wondered whether he was invoking Thatcher's law.
We have had to put the position on the record time and time again, and it must go on the record once more. Britain has the lowest production costs and the lowest level of Government grants among the European Community coal industries. Production costs per tonne, including interest 139 payments and depreciation, were as follows in 1980: Belgium, £6l; France, £45; and West Germany, £44. In the financial year 1980–81 the comparable figure in Britain was £35.
The other industries receive much larger Government grants. I have the figures for 1979 and 1980, when they were Belgium, £175 million in 1979 and £176 million in 1980; France, £283 million in 1979, £275 million in 1980. I heard an hon. Gentleman shout "West Germany". The figures for West Germany are £1,176 million in 1979 and £1,152 million in 1980; the United Kingdom, £189 million in 1979 and £175 million in 1980. It may please some hon. Gentlemen to know that that has been reduced a bit.
Coming to the price per tonne—and this has to go on the record—in 1980 in Belgium it was £27.8 per tonne, in France £15.2 per tonne, in West Germany £12.2 per tonne and in the United Kingdom £1.4 per tonne. I hope, therefore, that we shall not hear any more of this rubbish about the massive subsidy to the coal industry. We have put it on the record once and for all.
Now let me deal with the rather objective analysis which the hon. Gentleman tried to give and which we shall want to examine in Committee. The Prime Minister is responsible to some extent for creating this confusion. I want to make three points in dealing with the board's present financing structure. For the convenience of the House I put it in this form. The board is financed entirely by loan capital, the only exception being a marginal amount of leasing finance. Secondly, the loan capital comprises, first, funded advances from the national loans fund; secondly, temporary—that is, unfunded—advances from the national loans fund; and, thirdly, overseas loans.
As the Minister and the House are well aware, the Coal Industry Acts require that the board's sterling borrowings shall he from Government sources, except, first, that with the consent of the Secretary of State it may borrow temporarily in sterling from other sources, and, secondly, that with the consent of the Secretary of State and the approval of the Treasury it may borrow in sterling from EEC source
From 1977 to 1978 the repayment arrangements for the new NLF loans were varied and the board was given an option, which it has exercised in full, to take up to 20 per cent. of the new loans required in each year as loans repayable in equal instalments of principal over the ensuing five years. That change, as the Minister knows, followed the White Paper on the nationalised industries, Cmnd. 7131 of March 1978, paragraph 9 of which, in particular, is relevant. The balance of new NLF loans continues to be repayable over 15 years and in both cases the interest cost is fixed at the commencement of the borrowing and the board has no choice but to accept the rates at that time, which then apply throughout the lifetime of the borrowing.
It is unfortunate that during this debate, because of the inaccurate description of the finances of the Coal Board, I have had to spend some time trying to deal with that aspect when there are other important aspects which the hon. Gentleman raised. None is more important than safety. I think that I speak on behalf of my hon. Friends when I refe:- to safety and to the Minister's reference to his visit to the Cardowan colliery. The hon. Gentleman's action was typical of the way in which he has acted since he has occupied his present office. He has always responded to the calls of the mining industry. I endorse, to some extent, what he said and express my own and my 140 hon. Friends' appreciation of his decision at the weekend to go to Cardowan colliery and visit the injured men in hospital.
I confirm what the Minister said about the discipline of the management and the men. It is the wish of all of us that the men will make a full recovery. I think that the discipline that was shown is something that must be put on the record. As I have said, both the management and the men showed discipline, and the unions were excellent in the sense that they were the leaders at that time of temporary crisis in the colliery. I am pleased that the colliery is still working and that the men are in the bowels of the earth at this time doing their daily chores.
We must emphasise, too, that the rescuers were magnificent. Everybody must admire the speed with which the full-time rescue men raced from the station, how quickly they were underground doing that 2½ mile walk, and how quickly they had the safety stations manned. No praise for them can be too high. I have been asked to say, indeed I want to say, that we appreciate the work of both the full-time and the part-time rescue men.
It would be wrong not to mention also the magnificent part played by the police. Men's lives were at stake, but the police made sure that there was open access to the colliery and to the hospitals. If time was of the essence in some of the cases, the action of the police saved lives. I therefore want it to go on the record that we appreciate the speed with which the nurses, the staff and the rescuers responded. It did credit to the area and to the whole of the mining industry.
The hon. Gentleman gave us safety figures. I have somewhat similar figures before me, and I endorse what he said. Although the safety record is good, that does not mean that we should brook any complacency. Miners everywhere—even while we are here in the House now—are working in a hostile environment, and the only way to get good safety records is by eternal vigilance.
The Minister mentioned productivity in the industry. He gave some heartening figures, because they are encouraging for industry. I cannot recollect whether the Minister gave this figure, but it is a good one to put on the record. In the 43 weeks of 1981–82, despite the appalling weather, productivity has been running at about 3.5 per cent. above that for the previous year. I think that that is also important, because it gives some of the other areas heart to know that 10 of the coal-producing areas are doing better this year than they were doing last year. Scotland is one such area. The productivity figures are an illustration of how investment pays off. That fact must have struck the Minister when he gave the House that information.
I come now to the delay in the Vale of Belvoir project, which is becoming a national scandal. The Minister mentioned investment. We understand how much is involved. I am not exaggerating when I say that it is a national scandal. The NCB has spent more than £2 million on the planning inquiry and consultants' fees. I hope that the House is concerned about the delay.
The board's application was made in August 1978. The project comprises three mines. The public inquiry ended on 2 May 1980. I believe that the inspector's report was submitted shortly before the end of 1980. Since then the board and the local miners have been waiting for the Secretary of State's decision.
I was greatly honoured a fortnight ago to take part in a weekend school in Gateshead. I met Jack Jones, the area 141 secretary. As well as feeling angry and frustrated, he is wondering what the Government are playing at. The project is similar to that at Selby. It will not be a coal mine; it will be a gold mine for the area. It is time that something happened. I understand why Jack Jones is concerned. A number of collieries in the area will become exhausted in the next 10 years. All the Nottinghamshire and Leicestershire coalfields are expected to be exhausted during that time.
It is vital to provide fresh capacity for the men to transfer to. The greatest asset that this country has is its skilled manpower. In Nottinghamshire and Leicestershire we have highly skilled manpower. It would be a national scandal, to dissipate and fritter it away. With 3 million unemployed it is extraordinary that, because of the Secretary of State's indecision, about 3,000 jobs at the pits and associated with building the mines and securing them once and for all are left hanging in the air.
The Secretary of State for the Environment prides himself on adopting a businesslike approach to planning applications. It is significant that, since the election, Nottinghamshire county council favours the project. We want the Minister to give his decision. We cannot accept that it is a decision for the Department of the Environment. Government is based on collective decisions and responsibility. I hope that when the Minister winds up the debate he will tell us about the Vale of Belvoir.
§ Mr. Michael Latham (Melton)
The hon. Gentleman is putting one side of the argument. Thousands of people in the Vale of Belvoir are utterly opposed to the project. They have raised substantial sums of money to contest the public inquiry. I am prepared to wait and see what the decision is. The hon. Gentleman should not pretend that the argument is all one way.
§ Mr. Eadie
The hon. Gentleman represented the other side when I was a Minister. In a democracy minorities should be respected, but they should not ride roughshod over the majority. The vast majority of people in the area want the project to go ahead. Work and wages are their priority. There are two views, but I believe that I am putting the majority view.
§ Mr. Eadie
The hon. Gentleman should not write my speech for me, but if I catch your eye later, Mr. Speaker, I may be able to satisfy him.
My last point concerns coal liquefaction. In the debate yesterday, after describing what role he believed nuclear power should play in our energy requirements, the Secretary of State said:It will enable the fossil fuels to be used increasingly as a feedstock for the petrochemical industry."—[Official Report , February 1982; Vol. 17 c. 22.]Is that statement an incentive to make a decision on the process of extracting oil from coal? The lack of progress is causing concern. The matter was raised last week at the miners' parliamentary group meeting. We may hear echoes of it during the debate.
The history of the matter has been related previously in the life of this Parliament. I signed an agreement with the 142 National Coal Board in 1978. We agreed to £20 million for two schemes. In our debates on the coal industry in this Parliament we have always been told that Government funding would be no less generous than that of the previous Government. To date that has not been so.
The Government feel that there should be an element of private funding in the scheme. We understand that feeling and do not quarrel with it. However, I regret having to say to the House that the appointment of the new chief scientist to the Department of Energy seems to have contributed to the delay. We resent the fact that his comments on coal liquefaction have been political rather than scientific. That must stop. It damages not only the Department's image but our world-wide prestige in coal technology, where we play a leading part.
We are grateful to my hon. Friend the Member for Morpeth (Mr. Grant) for putting down a parliamentary question on 25 January, but we were angered by the answer. The Under-Secretary of State made it clear that the NCB had been compelled to drop a process because of a lack of funds. The tests are to carry on until the spring. The Minister said:A three-month proving run…on the board's small-scale integrated plant showed that acceptable catalyst life can be obtained, but certain aspects of the LSE process required further investigation."—[.Official Report, 25 January 1982; Vol. 16, c. 236.]He went on to say that further developments would occur in the spring. We want an assurance from the Minister now that there will be no attempt to sabotage the oil-from-coal schemes, that progress will be made and that the interminable delays will come to an end.
I end as I began. The Bill is important for the industry. The Minister's statement is important. We welcome the funding, but we shall examine other aspects of the Bill in Committee.
§ Mr. Patrick McNair-Wilson (New Forest)
It gives me particular pleasure to congratulate my hon. Friend the Under-Secretary of State on the best speech on the coal industry that I have heard since I became a Member of the House in 1964. I have heard a few speeches from both sides of the House on the industry, but my hon. Friend's speech was incomparably the most realistic.
The hon. Member for Midlothian (Mr. Eadie) talked about the need for further investment, the need to liquefy coal and so on. All those matters relate to cost. With oil prices possibly falling in the short term, does it make sense to pour money into liquefying coal? It is not a new process. Practically none of the processes relating to the coal industry is new. The Germans ran their wartime economy on liquefied coal. It is a question whether one does it when the cost is right. At present it is not right.
§ Mr. McNair-Wilson
I am talking not about pilot schemes but about going commercial with the British coal industry. That is what is desperately needed. Stoke Orchard has been liquefying coal for years in a laboratory experiment.
The hon. Gentleman makes the mistake which is frequently made of assuming that all one has to think of when investing in nationalised industries is pouring in 143 money. There are people called taxpayers. We have a duty carefully to husband their money. Investment by itself is not enough. That was a point that my hon. Friend made clearly.
I also congratulate my right hon. Friend the Leader of the House on the remarks that he made last night. They were widely reported. Again, they strike a note of realism. It does no service to the people in the coal industry to pretend that all is rosy for them now or in the future. Everyone interested in the industry knows that that is not the case.
The hon. Member for Midlothian said that this may be the last coal borrowing powers Bill before the next General Election. I should like to think so, but, whether it is or not, I wish to take the opportunity to express the great debt which I believe that we all owe to the chairman of the NCB, who may not be in office at the time of the next General Election. Sir Derek Ezra has done a wonderful job in difficult circumstances and over many years. In case we do not have a further opportunity to debate the industry before he leaves in the summer, I wish to record my debt of gratitude to him for all that he has done.
The Bill is part of a continuing story of colossal underpinning of one of Britain's great nationalised industries. It may be that such underpinning should at some point give way to a total restructuring of the industry's finances. Perhaps we should look to a Bill similar to that for the British Steel Corporation, which will not only remove historical debts but provide opportunities for private investment. I do not know that it is sensible financially to run the industry as it has historically been run and in the way proposed in the Bill. I prefer this Bill to the one which we discussed in 1980. I did not hesitate to express my misgivings about the belief that the industry would be able to break even against the tide of a recession.
The industry faces two grave problems. The first is of over-production and the second of poor sales prospects. The hon. Member for Midlothian is an expert on these matters, but he fell into the trap of painting a glittering future for coal. In the longer term it probably has a great future, but will it be the British coal industry? The world is full of coal which does not require deep mining technique to win it. It can be scraped off the surface at a fraction of the cost at which the British industry will ever be able to get it. We should recognise that there is colossal competition. We shall be successful in winning a place for the British coal industry only if we can sell the products so hardly won by those working in it.
My hon. Friend and the hon. Gentleman both mentioned the current stock position. By the end of the financial year it will be about 24 million tonnes. Last week in a parliamentary answer my hon. Friend also told me that the cost of stocking coal, as opposed to selling it, is about £6 to £7 per tonne and that there is an additional cost to maintain the stocks, not to mention the payment of interest. If we multiply 24 million by £10, we can see that we are talking about substantial sums merely to keep the coal in stock.
As hon. Members who are experts on the industry will know, when we try to recover the coal from stock we do not get back as much as we put in because of the degradation. mess and so on. We must therefore ask ourselves whether it is sensible to produce coal at that rate when we cannot sell it.
§ Mr. McNair-Wilson
My hon. Friend is right. In commercial jargon, we are almost giving it away, which is tragic. The export opportunities have arisen largely because of the problems that the Polish people sadly are suffering. As I explained earlier, the world is full of cheap coal. To increase our export figures we are having to sell the product at a substantial loss. There was a time, in the 1960s, when we were exporting about 13 million tonnes a year. Now, unfortunately, we are nowhere near that figure even though, as my hon. Friend suggested, we are having to sell coal at such a low price.
These colossal stocks of coal—and we are talking only about coal owned by the NCB and not the distributed stock—are a monument to the wonderful work of the miners and their productivity, and all credit to them, but if this were a private business, no one would stock a product on this scale—coal costs up to £10 a tonne to stock—without some hope of selling.
One of the problems facing us is that the electricity industry, which bums 80 per cent. coal as part of its fuel mix, is facing a grave downturn in its demand. In the first nine months of 1981 the EEC countries saw a downturn in the production of electricity, with the one shining exception of France, which with substantial nuclear and hydro generation showed a substantial increase in its electricity production.
§ Mr. Peter Hardy (Rother Valley)
The hon. Gentleman is making an important point. Would he not consider it helpful to both the coal and the electricity industries if industries such as the special steels industry in South Yorkshire could buy its electricity at the same price not only as that of the French steel industry but of the German and Italian as well? They would save several million pounds a year and it would perhaps lead to a higher level of coal consumption.
§ Mr. McNair-Wilson
The hon. Gentleman has raised a relevant point to which I was coming.
One of the reasons why the figures for the sale of electricity are so low is that our costs to customers are so high. With the exception again of the French, we find ourselves at the top of the league. The hon. Gentleman is right to talk about the problems of the special steels industry, but I would widen it to the whole of the steelmaking industry. I have never failed, and will not do so now, to declare my interest in the industry. I am associated with a company that makes melting electrodes.
The cost differential between producing the product in Sheffield against the cost of a similar plant in Calais is almost 75 per cent. There is no question about that. With respect to my right hon. and learned Friend the Chancellor of the Exchequer, his last Budget, with some apparent help in solving the problem, was useless for our company, which is spending £4 million a year on electricity. It was able to take advantage of the reductions only on the basis of an interruptible tariff with only 10 to 15 minutes' notice of disconnection. That would destroy not only the product but the machines making the product.
Perhaps my right hon. Friend the Secretary of State can tell us either today or at some future time why the Government have been unable to tackle the question of proper differentials for industry in electricity charges. Is it that by statute the electricity industry cannot differentiate between customers on continuous supply? It may be that legislation is needed to change that.
145 It is nonsense to ask the process business to accept reductions in cost on the basis of possibly having the whole supply switched off. I hope that the CBI, and everybody else, is convinced of the unfair competition that British industry is facing from its Continental competitors. Something can be done even if it means changing the law.
The coal industry is relevant to this question because it is the principal supplier of fuel to the CEGB. Surely the NCB and CEGB can sit round the table to see whether something can be done to reduce prices so that the mountains of coal may be reduced. That would also benefit ordinary consumers by reducing the price of their electricity. When there is colossal over-production of coal which cannot be sold but electricity prices are climbing it does not make sense to my constituents or to those of other hon. Members.
The second side of the downturn is the industrial one. I have for a long time been concerned that we need to improve coal sales. After the CEGB, the second biggest market for coal is the domestic market. It used to be the steel industry, but it does not have enough demand at the moment. Industry is unwilling to invest for a number of reasons which I shall examine in a moment. Unfortunately, in spite of the figures given by my hon. Friend, the inducements to convert from oil to coal have been a failure. There may be £17 million worth of orders taken up, but the scheme is still a failure. I have pressed my hon. Friend on several occasions to extend the scheme to include conversion from gas to coal, which would be another leg of the argument.
Perhaps more even important than that, we should try to establish, perhaps through the NCB, what I call an energy package for industry. The first part of that must be about price. I hope that my hon. Friend will take on board that if he has any schemes such as the two I have mentioned—conversion from oil to coal and from gas to coal—he should consider talking to his friends in the National Coal Board to see whether it would be possible to have some form of guaranteed price for the consumer during the period of the repayment for the new boiler plant. Many people are frightened to invest in a new boiler plant when there might be a sudden, terrific price hike which would mean that the sums involved would not be worth looking at. In the first two years, if there were some guarantee of price holding, it would make an attractive package.
Secondly, there has to be a guarantee of availability of supply. Many industrial consumers, particularly the small ones, do not have the land available to stock large supplies of coal. Therefore, my hon. Friend should urge his friends in the NCB or in the distributive trade to make stocking facilities available for businesses so that coal can be readily available when required.
I have another suggestion that my hon. Friend might consider—the wider use of containers for the movement of coal. That does not merely mean the small containers of 20 tonnes of steam coal in a steel container. I am thinking of a container which can be loaded with coal, latched on to the factory wall and used as a bunker from which coal can be taken for use in the plant, with another container further down the wall taking away the ash. That would help in one of the major problems for coal-fired plant, the mess and the difficulties of handling.
146 There should be further containerisation and new means of containerisation to see whether sales of coal can be made to the ordinary, small businesses such as the greenhouse operators in my constituency. There has been some container work done by the NCB in the past—to Ireland, for example—but it needs to be dome on a more dramatic and innovative scale, with containers as the in situ bunker and to take away the ash.
Could my hon. Friend tell us what has happened to the DOE inquiry about chimneys for houses? Almost since I can remember—and I have been in the House since 1961 we have been asking about building regulations which insist that local authority houses should have a chimney. If the DOE is still sitting upon the report, it is time that it was made public to see what the view is.
My third point is difficult but important. Both my hon. Friend and the hon. Member for Midlothian talked about the tragedy of the Cardowan colliery. As we know, that colliery had been earmarked for early closure. I do not want to rake up the ashes of the closure programme, but it is important to realise that the future of this industry depends on the work force working in the best conditions available. That means mining standing up rather than lying on one's side in water. We must therefore, be realistic in the interests of the people in the industry, and we should ensure that those conditions are fulfilled as soon as possible. Perhaps my hon. Friend will say something about closures and new coal faces when he replies.
What progress is being made on underground gasification? Although I may quarrel with the hon. Member for Midlothian over liquefaction, I ultimately want to see an industry in which people do not have to go underground and burrow about like moles. We should be able to get the calories out of the coal without digging it out, and I know that some work is proceeding on this.
In the mid-1960s, Lord Robens told us that a coal industry producing less than 200 million tonnes a year was doomed to a bleak future. Sadly, we are already far below that figure. I am not certain whether it would have been wise to have tied the industry to any sales target figure. We must free the industry and give it a chance to do the best that it can.
The points that I have raised are not meant to be carping or to denigrate those working in the industry. On the contrary, we should be realistic about the industry and realise that it faces a grave problem in the short and medium terms. By disguising the truth, we are doing a disservice to those in the industry. That is why I welcome the opportunity to take part in the debate.
§ 5.5 pm
§ Mr. Jack Dormand (Easington)
I am tempted to devote the whole of my speech to answering the points made by the hon. Member for New Forest (Mr. McNair-Wilson), but in the first instance I shall confine myself to what he said about stocks. Later, I shall refer to his remarks about coal liquefaction.
There is not the slighest doubt that the logic of the hon. Gentleman's argument about stocks is that we ought to be closing pits. That is a non-starter at present for a number of reasons, not least because Conservative Members almost daily refer to an upturn in the economy. Surely it is better to be prepared, and that should be taken into account, especially in a coal-consuming economy such as 147 ours. Nor should we forget the export markets that are now opening up. 1: am glad that the Minister referred to those and complimented the NCB.
The very nature of the coal industry means that we simply cannot close pits. Another factor is unemployment. Indeed, that is perhaps the essential difference between Labour and Conservative Members. We adopt a Socialist approach. We say not that the economic factor is unimportant, rather that it is not the most important.
The most important thing that can be said about the Bill is that, unlike many of their other policies, the Government are facing reality. We well remember the measure introduced two years ago. Indeed, the Minister introduced it with the usual bright-eyed boyish enthusiasm that we have come to respect so much. That required the NCB to break even by 1983–84 without any subsidy.
At the time, the Under-Secretary said:The task will be demanding, but I am confident that the industry can achieve it".We said that would not be possible and argued that the Government were living in cloud cuckoo land. Last year's events proved that we were right, and futher proof is contained in the Bill.
In view of the remarks so far made by Conservative Members, I am still concerned about the Government's attitude towards competitiveness in the coal industry. We all agree that this industry, like all others, should be efficient, but are the NCB and the miners supposed to compete with the open-cast production of Australia, the United States and South Africa where, for obvious reasons, a tonne of coal cost as little as £3 to £4 to produce? The cost of producing a tonne of coal in Britain is about £35. Britain is considered to have one of the most efficient coal industries in the world, but we cannot begin to compete with such low-cost production. That fact must be recognised.
I presume the hon. Member for New Forest would not argue that, because of that kind of competition, we ought to close our pits and rely on wholesale imports. That would be the craziest act any Government could undertake, particularly in an island such as ours with such large coal reserves.
I shall not repeat the figures given by my hon. Friend the Member for Midlothian (Mr. Eadie) about subsidies in the EEC. They were given to me in answer to a parliamentary question. I do not disguise the fact that they are not a straight comparison, because they include social costs and so on. It is fairly obvious that there is such a huge discrepancy between the subsidies given in Britain and those given in the four EEC countries mentioned by my hon. Friend the Member for Midlothian that other EEC countries do receive much greater help than the British coal industry. That important point must be borne in mind whenever Conservative Members talk in parrot-like fashion about the need to be competitive.
§ Mr. Skeet
I agree that it is impossible to compete with Australia where there is much open-cast production. If the NCB is trying to be competitive, and if output per man-shift is below 1.5 tonnes, or even 1 tonne, does the hon. Gentleman agree that closure would be right on the basis that such a pit would not be economic?
I do not agree at all, and I shall develop that point later. In fact, I have touched on it in reply to the hon. Member for New Forest.
148 It is incumbent on the Government to do everything possible to encourage the greater use of coal. We welcome the initiative taken last year by the Chancellor, who provided £50 million for certain types of firms changing from oil-fired to coal-fired boilers. I think I am right in saying that £17 million is now being allocated. That is important, because the amount allocated by the Chancellor in his Budget was £50 million, and that was almost a year ago. That is an important feature, which we welcomed at the time. However, the Government have much more to do.
When the Minister last spoke in such a debate, he said that 1,000 inquiries had been received. Presumably, more inquiries have now been received. The real question, however, is: how many have been taken up? It would be interesting to have that figure either now, or at the end of the debate. I suspect that fewer firms than expected have changed to coal-fired boilers. I reiterate what I have told the Minister before—that the scheme is much too restrictive. It should be widened to include any company, local authority, or organisation that wants to convert to coal. That is certainly not the case now. In addition, the date should be extended beyond March 1983.
The Government should do much more to publicise the scheme. At the same time, they should increase the 25 per cent. grant now available. I do not need to tell the Minister that many firms, both large and small, are having difficulty—particularly in these days of financial stringency—in finding the other 75 per cent. of the cost. The way that the Government handle this scheme will be seen as a test of their seriousness in wanting to help the coal industry through encouraging the greater use of coal.
Clause 4 sets a new limit of £200 million for grants in connection with pit closures under section 6 of the Coal Industry Act 1977. The Minister does not need me to remind him that the miners' greatest worry is the threat to close their pits. The miners will be suspicious about the increase in grants for pit closures for two reasons. First, they have good reason to distrust Tory Governments. The record shows that the Conservative Party does not go out of its way to preserve pits. The most recent example was in February 1981 when there was a so-called hit list of 20 pits which would have been closed had it not been for the determined opposition of the miners at that time.
Secondly, there are sometimes genuine misjudgments about the closure of pits, despite the technical knowledge of mining engineers, managers, and so on. In my constituency, a pit that I know well was scheduled for closure. It was kept open because of the opposition of some miners, and two years later it broke its own production record twice. Many people at that time thought that the decision to close that pit was correct. I am sure that hon. Members on both sides of the House can quote similar examples from their constituencies.
§ Mr. Michael Welsh (Don Valley)
Miners do not want pits to close, yet we accept that some pits, such as Leicester, must be closed. The biggest worry is that the miners in those pits will not have the satisfaction of working in efficient collieries unless the Vale of Belvoir bears fruit. Is that not vital for the miners in that area and for Britain if we are to have an efficient mining industry?
§ Mr. Dormand
My hon. Friend has made an important point. He has spent a lifetime in the pits, and he could not 149 have expressed himself more eloquently or more forcefully. I hope that the Minister will take notice of what he said.
Pits should not be closed on economic grounds. The hon. Member for New Forest referred, in rather disparaging terms, to the golden age of coal. However that age, which is mentioned in so many forecasts, has yet to come. In my view, it would be crazy to reduce our coal producing capacity on those grounds alone.
I hope that the Government have taken note of the report published by the CEPCEO, the association of coal producers in the EEC. It states that western Europe cannot allow itself to remain under the serious threat of an energy shortage which would place its economic well-being gravely at risk. Some of us are not that enthusiastic about our membership of the EEC. However, Britain is a member and we must consider such important points. The report's advice is that the Community should free itself from that danger by ensuring the institution of a new coal economy.
That view reinforces the decisions made at the Venice conference, to which the Government are committed. Therefore, I hope that there will be no equivocation. Pit closures would have a disastrous effect on unemployment in all coal mining areas, including mine. With unemployment in Easington at 17 per cent., and even higher in some surrounding areas, the Government and the National Coal Board should not even begin to think of closures while there is still coal to be mined.
The Minister will not be surprised to hear me return to the subject of coal liquefaction. I disagree strongly with the remarks made by the hon. Member for New Forest. I frequently refer to this point in the House and in correspondence. I have accused the Government of being pusillanimous and, in view of the lack of specific reference to it in the Bill, I repeat that accusation.
As my hon. Friend the Member for Midlothian said, the Government were slow to provide finances for the Point of Ayr project. I wonder whether they would have done anything, if there had not been pressure from several quarters. Their financial contribution is far too small for such an important project. On 27 July 1981 we discussed the draft Coal Industry (Limit on Grants) Order. The Under-Secretary of State for Energy referred to the Point of Ayr scheme, and said:In all areas of government we want more taxpayers' money to be spent, but taxpayers' money is a rare resource. Let us see what progress is made."—[Official Report,27 July 1981; Vol. 9, c. 955.]All hon. Members say "Alleluia" to that. However, we often hear that the Government pride themselves on entrepreneurial initiative and backing the so-called "sunrise" industries. The conversion of coal to oil is now a proven process. The programme has been criticised, but nothing has been said about South Africa, where commercial production has been maintained for many years. Therefore, the process is known. We need not the caution continually shown by the Government, but push and drive. Coal liquefaction is a winner, and Britain, with its vast resources of coal and expertise, could be the world leader. I implore the Minister and the Government to take it much more seriously.
I must draw attention to a glaring omission in the Bill. It is astonishing that no reference is made to any action to 150 be taken on a major report issued as long ago as July 1981. I refer to the Flowers report—"Coal and the Environment". Without doubt it is the most comprehensive and important report of its type to have been issued. Even at £23 net, the Government should consider it seriously. When the coal industry is debated, the economics of production take the centre of the stage. That is of great importance. However, people often forget that those of us who live in mining areas suffer some inconvenience because of the very nature of the industry. There are pit heaps, and dirt and dust resulting from the transport of coal. Incidentally, I was interested to hear the suggestion about containers; it is a matter to which the Government should give some attention. Unfortunately, at present there are huge stocks of coal defacing the landscape. Coal mines, with all their pithead gear and equipment, are not the prettiest of sights.
Much has been done, of course, to improve the situation. I frequently pay tribute to the excellent reclamation work that is done in my area by the Easington district council and the Durham county council. I hope that there will be no cutting back on that expenditure. I realise that it is a matter for the Department of the Environment, but I hope that the Energy Ministers will make their views felt. I am pleased to see the Under-Secretary indicate his agreement. This is an important matter for coal mining areas. If a cut in that expenditure is being considered, I hope that there will be second thoughts about it.
I draw particular attention to a constituency problem which is mentioned in the report. For years, some of the magnificent beaches in the North-East have been desecrated by the tipping of colliery waste into the sea. In 1974, the Labour Government decided that tipping should cease and that the beaches should be reclaimed. A working party was established to consider how that could be achieved. It recommended the use of pipelines to deposit waste out at sea. So far, half of one pipeline has been constructed. Do right hon. and hon. Members wonder why half a pipeline? It is because the Government, the Department of Energy and the Department of the Environment refuse to give a penny to complete it. I am sure that it is a long time since the House heard such nonsense. I realise that the prime responsibility is with the Department of the Environment, which is now dealing with the matter, but neither I nor my constituents understand the bureaucracy which prevents the Department of Energy from making a contribution to the work. It is a ludicrous situation. I hope that the Under-Secretary will confer with his opposite number at the Department of the Environment to see whether any money is available to complete what is, after all, only one pipeline—although at least three have been proposed.
The Bill involves the authorisation of millions of pounds. The sum that is required to clean our beaches is trivial in comparison. I urge the Government to give priority to the Flowers report, which recommends:We support attempts to bring beach tipping to an end and restore the areas concerned.The people in the areas concerned are entitled to that consideration.
I end by paying tribute again to our miners. Even Conservative Members have been magnanimous enough to compliment them. I am proud to be the son of a miner and the brother of miners. Miners, in an arduous and dangerous occupation, welcome the figures that the Minister gave at the beginning of his speech about the 151 reduction in the number of deaths in the mines. We should remember, although the Under-Secretary did not say so, that the number of seriously injured miners was 512 in the year in question. That figure cannot be lightly dismissed. Miners have played a full part in contributing to the progress of our country. I remind the House of "Plan for Coal", which has been mentioned several times in the debate. It was agreed in 1974, and the miners continue to fulfil their part of the bargain. It is up to the Government not to let them down.
§ Sir Anthony Meyer (Flint, West)
I welcome the Bill, as I am sure do all contributors to the debate, as evidence of the Government's commitment to the coal industry. Of course, there is not much choice. Our vast coal reserves are about the only national asset that we have not yet squandered. Indeed, it would be difficult to do so over the coming period. Moreover, it is about the only advantage that we have over all our competitors that no one can take away from us.
With less equivocation, I congratulate my hon. Friend the Under-Secretary, in whom the coal industry at all levels has the most extraordinary trust—as have both sides of the House. I welcome the tone of his speech, which was broader and more forward-looking than the speeches that we usually hear from Ministers at his Department. I want to make it plain that I exclude him from what, from now on, will be a highly critical speech.
Before I embark on my criticisms I wish to make it plain that I am not criticising Government policy about the oil from coal pilot plant at the Point of Ayr. I am watching it like a hawk. If there is any evidence that the project may fail because or insufficient Government support, I shall be swift to say so. However, for the time being I am satisfied that it is a proper scheme to be financed mainly by private capital. I am satisfied that the Government are giving such support as is necessary to prime the pump of private capital investment. I see no reason whatever to suppose that these pilot plants will not be constructed in due date and carry out their functions. Whether we should then move to the commercial exploitation process is another matter and one which will enter into the main body of the argument that I am about to deploy.
My charge against the Department of Energy—a charge which I have already levelled at the Department in an Adjournement debate on 18 January—is that under successive Governmens it has had what I regard as a damaging obsession with short-term and narrow interests. I find it extraordinary that members of a Government who rightly advocate collective Western defence against Sovict pressure should apparently feel no absurdity in talking in purely British terms about the need, on strategic grounds, to maintain a British coal industry. I cannot imagine a Secretary of State for Defence—certainly a Conservative Secretary of State for Defence—coming to the House and saying "I am pleased to say that we have a defence policy which will stop the Russians dead in their tracks on a line from Calais to Antwerp". However, that seems to be the policy of the Department of Energy.
It is a terrifying fact that the rest of Western Europe is becoming increasingly dependent for its energy resources on supplies from outside free Europe, and in particular from the Soviet Union and Algeria. That dependence is seen most dramatically and most alarmingly in the so-called Yamal agreement between the Soviet Union and the 152 German gas companies to build a pipeline which, when it is operational, will supply the Federal Republic of Germany with one-third of its total gas needs and the EEC as a whole with one-fifth of its total gas needs.
Supplies by pipeline are especially vulnerable to pressure from suppliers, as the Italians have found to their cost. They built a 2,500 km pipeline to get what they fondly hoped would be cheap natural gas from Algeria. Having committed themselves to that source of supply, the Algerians have pushed up the price of gas to parity with oil, and the Italians are faced with the choice of writing off their investment or having to buy gas at a price that is well above its real value.
That amount of dependence means that the Soviet Union alone, or worse still, the Soviet Union and Algeria acting in concert—frankly, it does not need much imagination to envisage circumstances in which the Soviet Union and Algeria might get together to put pressure on Europe—could exert almost irresistible pressure on Western Europe simply by turning off a tap.
Dr. Nigel Lucas, in an article in Coal and Energy Quarterly, said:There are asymmetrics in the balance of powers between East and West. In conventional military power the USSR. predominates, possibly in nuclear capacity also; the only clear advantage of the West is the greater economic dependence of the East; this dependence permits the West to contemplate economic sanctions as a political measure, as in the case of Afghanistan. The force of this threat will be weakened if the USSR can retaliate with almost instantaneous effect. One should also not overlook the possibility that Soviet and OPEC political interests may lead them simultaneously to intervene in the supply of energy to Western Europe.The United Kingdom should be helping to reduce Western Europe's dependence on such chancy supplies, not just by making or promising to make our jealously guarded national resources available to any of our allies. I recognise that the Department of Energy has carried out all its international commitments in the narrow sphere, but we can help by exploiting resources and developing techniques that are not justified on purely economic or purely British strategic grounds.
When I say that we should consider the British coal industry as a basic strategic reserve not just for the United Kingdom but for Western Europe as a whole, I do not mean that we should regard our huge underground reserves as reserves for the security of Europe. Nor do I mean that we should regard our reserves of opencast coal is that light. However, considered in that perspective, we should be thinking of opencast coal not as a means of reducing the overall costs of the National Coal Board and thus the price of coal for the domestic consumer, but as an instantly accessible strategic reserve for use in emergencies as a vast underground storage scheme.
It is important to realise that Britain's highly skilled miners and mining engineers—perhaps the most highly skilled and the most devoted in Europe—are every bit a; much a part of Europe's first line of defence as a man in uniform. I do not draw any lessons about the threat to national security from strikes or the possibility of depriving miners of the right to strike by treating them as Service men.
When calculations are made about whether one should open a new pit, such as the proposed vast new pit at Margam in South Wales, to modernise existing pits, to embark on new processes such as the proposal to extract oil from coal at the Point of Ayr, or the subsequent commercial exploitation of that process or 153 whether—taking us into larger fields—we should lay a spinal pipeline in the North Sea to connect the Norwegian gas fields via the United Kingdom with the Continent and also encourage the exploration for gas much further north than at present, there should be built into them a factor for the defence needs of Western Europe.
Apart from a general energy shortage, Europe has, and will have for a long time, more and more shortages of certain fuels at certain times. Therefore, we must develop conversion and transmission facilities. We must be able to convert coal into oil and to transmit gas, whether natural or derived from coal, in large volume, cheaply and reliably from one part of Western Europe to another. Those needs, which are every bit as real and urgent as the need for ammunition and weapons, are not only not being met at present, but are not being assessed.
I quote Dr. Lucas againUnfortunately there is no real means at present by which the value of security is transmitted into fuel planning. SNG development is still largely seen as dependent on the product being cheaper than natural gas in a straightforward comparison. The true appraisal should include the probable frequency and duration of interruptions in various sources of supply and their resulting cost. Preliminary work at Imperial College suggests that if the economic consequences of security are built into fuel planning, then the effects on the volume and timing of investment in coal conversion can be large.The case has not been studied in anywhere near sufficient detail. I hope that when the Minister replies to the debate he will tell me whether any consideration is being given to those factors within the Department and whether he considers that at least a research section of his Department should be charged with constantly monitoring the need and feeding the input into every decision made by his Department.
This debate is not one to approve the Government's energy policy. If it were, I would have difficulty in supporting the Government, although I could not oppose them if it involved voting in the same Lobby as the Labour Party on the issue. The Labour Party, as I have discovered on previous occasions, completely supports the Government in their determination to put short-term, national economic interests first and to ignore long-term, European strategic interests. If my criticisms fail to shake the self-satisfaction of the Department of Energy, I do not suppose that it will be shaken by the total and uncritical support of the Labour Party, which is as keen to strip Britain of its defences as it is to wreck our chances of economic recovery, merely to win the applause and the votes of narrow-minded and short-sighted nationalism. We must take a much wider, longer and more international view of the problem.
I shall not go far down the avenues explored by the hon. Member for Flint, West (Sir A. Meyer), save to say that the Government must embrace in their energy planning a much closer co-ordination with our European partners. It would be quite wrong however, if in that co-ordination they neglected the proper use that Britain must make of the resources that have been won by the efforts of British miners or that lie close to our shores and have been won by British enterprise in the North Sea.
In this debate we are considering large sums of money. In the main, they are not subsidies but borrowing powers, 154 as the hon. Membercontribution>ember for Midlothian (Mr. Eadie) pointed out, although there are also some subsidies. Yesterday we discussed even bigger sums of £1 billion to £1.5 billion a year for nuclear power stations. Nuclear energy investment involves much larger sums than this Bill. What the Bill does is to bring about that level of investment in the coal which the Government themselves recognise is necessary if that industry is to make the contribution it needs to make to our future energy policy. By the very nature of the industry, if we allow existing pits to be closed, they are lost permanently and we lose part of the opportunity of winning deep-mined coal which we need as an element in our future energy policy.
I do not believe that we can move from deep-mined coal wholly into opencast coal. If we did that, the destruction of our environment would be catastrophic. Environmental pressures will also begin to play a part in some of the other countries where cheap opencasting of coal is now proving relatively easy and enables coal to be put on to the market at low prices. No part of the world can ignore indefinitely some of the environmental problems associated with what is, on the face of it, a cheaper method of winning coal. Opencast mining has a contribution to make, but it may be more limited than has been recognised.
§ Mr. John Moore
Despite the lack of environmental protection in some instances and the additional costs that some nations do not add to their coal, it is important to take thermal equivalent values into account. Wyoming produces the cheapest possible opencast coal in the United States, but when the cost of transporting that coal to an inland power station in Britain is considered, it would be more expensive in thermal equivalent terms than our deep-mined coal. The average cost of production is an important fact to add to the debate, although I accept what the hon. Gentleman is saying.
§ Mr. Beith
I am glad that the Minister has made some cost calculations and that he realises some of the problems that will arise if we make ourselves dependent on overseas opencast coal supplies.
The debate is also taking place in the context of the recent vote by members of the National Union of Mineworkers. That vote was a further reminder that the NUM is a democratically run union, which in many respects leads the way and can show an example to many other trade unions. Miners acted responsibly in the way they voted because they believed that it was more important to secure the future of their industry than to secure a short-term wage increase for which they might pay a high price in lost jobs.
What happened there underlines my view, and the view of Liberals generally, that the more responsibility is given to people for the decisions that face their industries, the more likely they are to behave responsibly. The more closely those who work in industries are associated with the fundamental decisions that their industries have to take, the more likely it is that responsible views will prevail. Through the machinery of the NUM's ballot its members had that opportunity and, in my view, they used it wisely.
Coal must have an important future. As the Minister said, oil will have to be concentrated on the uses for which it is difficult to replace, especially petrochemical uses, and not for heating or electricity generation. Whatever may happen in the short term, its price is bound to rise and its availability be restricted in the future.
155 As my hon. Friend the Member for Truro (Mr. Penhaligon) argued yesterday, nuclear power will turn out to be more costly than was first expected. After all, that is what has happened at Invergordon, where the expected bonanza of a cheap electricity supply from nuclear power to sustain the aluminium smelter has not materialised. We shall have problems in future with the cost of nuclear power. We have seen the delays that can arise in bringing nuclear power stations into the system and having them perform effectively.
Our views on the problems of nuclear power mean that Liberals are committed to having available coal resources play a major part in our energy policy. It is important to see the Bill as part of an energy policy and not as merely a means of buying our way temporarily out of trouble and staving off some of the immediate problems. If it is to be part of our energy policy, it must be part of a package in which there are other important elements.
Energy pricing for industry must be examined more carefully if our industries are to prosper and if the industries in the chain of coal, electricity production and steel making are to make their contributions. More attention must also be given to combined heat and power schemes so that we can make better use of the fuels that we now use solely in electricity generation. All this must be part of a more coherent energy policy than the country felt it necessary to adopt in earlier years.
In my constituency I see the industry going through the difficulties of modernising. We have lost 450 jobs in a small group of communities through the merger of Shilbottle and Whittle collieries. Most people will agree that the merger was necessary in order to ensure that we have a viable and economic pit in the area. I was rather aggrieved when some Conservative Members, particularly the hon. Member for Tynemouth (Mr. Trotter), thought it necessary to attack the National Coal Board for its system of payments to miners who were involved in merger schemes such as the one for Shilbottle and Whittle. The NCB rightly agreed that scheme with the union as a basis for ensuring that trained men were kept in the industry. The men at the Shilbottle colliery have had years of experience in handfilling in low seams and should not be lost to the industry at this stage. The NCB is right to insist, as the NUM will, that that national agreement should be maintained.
It is time that job losses in my constituency were offset by some promise for the future and some real prospects that the considerable coal reserves on the Northumberland coast can be exploited in future. It is increasingly clear from the NCB's surveys and from general knowledge that there are extensive resources of coal under the sea at Amble and the area of the coast immediately north of it. There is already considerable exploitation of the coal reserves under the sea to the south of Amble. Ellington and Lynemouth collieries have impressive production records. I wish to see some sign that the Government are prepared to encourage the development of the reserves under the sea to the north by means of a new pit sunk near Amble. It may be that an alternative approach has to be taken, but I should prefer to see a new pit. I should like to see a programme of investment for the future.
On the other hand, we do not wish to see the approach that was taken recently when a private concern indicated that it wanted to dredge coal from the bay outside Alnmouth. That would be a short-sighted way to get at a limited part of the coal reserves which are available under 156 the North Sea and it would involve serious environmental problems. It would be very damaging to a beautiful area of coastline and would destroy the fishing industry along that section of coast. Therefore, I hope that that type of short-term grabbing of coal without regard to environmental considerations will not be the method by which we approach the problem. The scheme has not made any progress so far.
Furthermore, we do not wish to see this area of the North East of England, which has so much to contribute to the future of coal, become a centre for nuclear power generation. It would be particularly inappropriate to go ahead with the Druridge Bay nuclear power station proposal, involving a green field site in an area of particular coastal beauty, instead of developing existing coal-fired power stations that are within reach of the coalfield and which have the added advantages of being close enough to urban communities to make heat and power developments and district heating schemes worth while. As I said in an intervention yesterday, one of the disadvantages of the green field site nuclear power station is that it cannot be used for district heating because it is too far from the community for that to be useful. However, power stations such as Blyth can be developed and made the basis for district heating schemes.
Therefore, examining the matter from the point of view of my own area with its special problems, and from that of the development of a sensible energy policy, I see the coal industry having an important future. The Bill should be part of a strategy to ensure that we prepare for that.
§ Mr. Richard Alexander (Newark)
Like most hon. Members, I welcome the Bill. I welcome it as a measure of support for one of our great nationalised industries. However, I suggest to my hon. Friend the Under-Secretary of State for Energy that it envisages a cautious short-term expansion and falls a little short of the longer-term view for which the industry asks and which it deserves.
Most hon. Members were delighted by the restraint and moderation shown by the majority of members of the National Union of Mineworkers in rejecting their president-elect's call for a strike against the Government. Miners are not basically in the business of striking against anybody; but they are in the business of ensuring that they get a fair reward for their labours and just recognition of the fact that they do an essential, dirty, dangerous and necessary job.
Many people who go down a coal mine for the first time come up saying "I am sure, having seen that, that the miners deserve every penny they get". Few would challenge that, but few would agree that it necessarily follows that everyone in the industry should get the same increase, when one is awarded, or the same productivity bonus as the men working down the pit. When we talk of proper increases for the miners, is it necessary also to talk of similar increases for the clerks, typists and office boys, whose connection with the miners' dangerous.lob is minimal? If the coal industry could solve that anomaly, it would carry public opinion along with it more than it does now.
I have the honour to represent a constituency containing six pits. I represent more pits and mining villages than any other Conservative Member. Indeed, I speak for more pits 157 than many Labour Members who are traditionally thought of as representing miners. Therefore, I have an interest in a thriving and expanding mining industry.
The Bill makes financial arrangements for pit closures. It is generally agreed that many pits are almost worked out. I refer particularly to the north-east Leicestershire coalfield. Those working in the industry in that area are entitled to know about its future—particularly the possible expansion of the Vale of Belvoir coalfield. I am not arguing for or against the development of that coalfield, but we ought to know exactly what the chairman of the inquiry recommends and we should have an early statement from my right hon. Friend the Secretary of State for the Environment of his conclusions on the report of that inquiry.
The industry has shown over the years that man-management relations at pit level are the finest in any of Britain's industries. The managers talk the same language as the workers, usually having been trained and started their working lives at the coalface. That has been of benefit to the industry.
If other nationalised industries had the same good labour relations as have traditionally existed in the mining industry, we would not have had to spend so much public money over the years to prop up inefficient nationalised industries. The miners' dedication and responsibility were shown in the recent ballot. An hon. Member referred to the generally democratic method by which their decisions are reached. The industry demands a similar commitment to a long-term view from the Government, and that is what I ask for.
We know that "Plan for Coal" was instigated in 1974—eight years ago. I suggest to my right hon. Friend that it is time for a new "Plan for Coal" and that it is his duty and ours to establish it.
The threat of anarchy within the industry has now been removed, as has the threat to the industry's immediate profitability. Therefore, we ought to know where coal will fit into the long-term scheme of our national resources. There need be no conflict with the nuclear lobby, since the nuclear industry can only produce electricity, as my hon. Friend made clear in his opening remarks.
We shall need coal so long as our oil remains finite, as it now is. Therefore, I welcome the expansion of the nuclear industry just as I welcome the expansion of the coal industry. As the Minister said, coal can do things that the nuclear industry cannot do, because coal is a fossil fuel. At the moment, it is dirty, difficult and costly to produce, but we have reserves for 300 years or more. If we can get the coal that we know is under the North Sea, we shall have sufficient for getting on for a thousand years. It is an enormous asset. If we plan our coal industry correctly, we shall get it cheaply, cleanly, safely and profitably.
§ Mr. Dormand
The hon. Gentleman said that there are six pits in his constituency. I hope that he is not deliberately avoiding the crucial point of his main argument. Is he prepared to tell the miners at his six pits that, for the forseeable future, they ought to be kept open, even though making a loss?
§ Mr. Alexander
I am not prepared to do that, because the pits in my constituency are highly profitable. The miners would tell me and the hon. Member for Easington 158 (Mr. Dormand)that the pits in other areas, where productivity records are not one quarter as good as theirs, ought to be closed. The hon. Gentleman would not find a great deal of support from my constituents in the mining industry.
I plead with my hon. Friend to plan a little beyond 1983–84. If we plan the Belvoir coalfield properly, the environmental problems will be minimal.
Anyone who has visited Selby knows that, when it was started, many people were concerned about the possible desecration of an area of north Yorkshire. Having seen it, I am not entirely happy that it was an area of great beauty anyway, but I have been extremely impressed by the attractiveness of Selby and the work done there deliberately to deal with the environmental aspect. All credit to those who did that.
§ Mr. Alexander
I accept my hon. Friend's argument. We look forward to the inquiry's report on that aspect to see how it proposes to deal with it. The report will help Conservative Members to decide whether to support development there or not. That is a major factor.
I ask my right hon. Friend to plan the financial aspects of the industry a little further ahead than is being done now. I ask him to take a more businesslike attitude towards the industry.
Some NCB areas believe that they could raise capital on the open market, service it and keep it growing out of their expansion and resulting profitability. One area director suggested to me—I shall not reveal who it was as I do not have his authority to do so—that if he were allowed to borrow £100 million on the open market, he could expand faster and more profitably than under the present financial arrangements from the Treasury. Think of the job opportunities that would be brought to one area if the director were allowed to raise that amount of capital. The prospect is exciting.
The area director went further than making that suggestion to a Back-Bencher. He went through the correct channels to the Treasury. It said that he could borrow the money, but that it would come off his permitted borrowing limit. That is a short-sighted attitude towards trying to get some of the business ethic into one of our great nationalised industries.
§ Mr. Beith
I wonder whether the hon. Gentleman has been more successful than any of the rest of us in trying to persuade the Government to explain why investment in British Nuclear Fuels Ltd. raised in the private sector does not count against the public sector borrowing requirement, whereas that in the coal industry does.
§ Mr. Alexander
That aspect is beyond the argument that I am making, but the point is equally valid.
§ Mr. George Grant (Morpeth)
The hon. Gentleman referred to an area borrowing money on the open market. I should like to couple that remark with his earlier statement about miners in his constituency and what they think about pit closures. It has been recently proved by the National Union of Mineworkers that that is not the attitude. Only last February when the National Coal Board 159 asked for a reduction of 10 per cent. in operating pits, the Government and the NCB had to change their views. As the hon. Member for Berwick-upon-Tweed (Mr. Beith) said, there are assets throughout the country. The Government and the National Coal Board cannot look for the cream in one area and ignore other areas. There are more important considerations than just looking for the cream. The hon. Member for Newark (Mr. Alexander) said that miners in his area were concerned only about their future and that they were in favour of closing uneconomic pits and those that were the worst performers. I do not believe it.
§ Mr. Alexander
The hon. Gentleman must make his own argument. I assure him that miners in my constituency are proud of their productivity. They do not see the same objections to closing unprofitable pits as the hon. Gentleman. His argument was not particularly relevant to the point that I was making.
I shall quote the example of 100 business men wanting to raise £10,000 on the open market to service or expand their industries. They would get Government encouragement and, in many instances, grants and incentives. However, one of our greatest nationalised industries asked for the opportunity to expand in the normal business way, but the Treasury said that it could not do so. I ask for a more enlightened attitude towards the finances of the mining industry.
My plea to my hon. Friend throughout my remarks has been that there should be a longer-sighted commitment towards the industry than the Bill contemplates and a new "Plan for Coal" for the latter part of the century invoking the Departments of Energy and Industry and, above all, the Treasury. We have a unique opportunity. We are now self-sufficient in energy. We have a thriving mining industry and a commitment to it at all levels from those who work in it. En supporting the Bill, I hope that I hear from the Minister a similar exciting response to the prospects for the future.
§ 6.6 pm
§ Mr. Raymond Ellis (Derbyshire, North-East)
Whatever else the Bill is likely to do and is intended to do, it is bound to drive the nation's coal mining industry further into debt. That is the main point of my speech. The coal industry's interest payments are running at £1 million per working day and are increasing, which is having a retarding and almost crippling effect on the one industry that could trigger off the rejuvenation and revival of the British economy.
All the loans described in the Bill should be converted to outright grants. Even so, the total amounts specified are nowhere near enough to enable the National Coal Board to fulfill its true potential in the interests of the nation. People could ask why the coal industry in isolation should be exempt from standard financial loan charges that apply to some of the sectors of industry. I justify the assertion that the NCB should be exempt from loan charges by quoting its history. It is a history of Government misuse. It is a history of the chopping and changing of long-term directives in the interest of short-term and short-sighted expediency.
When the coal industry was nationalised in 1947, that was not done as an act of Socialism. On the contrary, it was the key act in the rescue operation that was being mounted to save and restructure British capitalism after six 160 years of war. Not only was our entire manufacturing, wealth-producing sector ravaged by the war effort, but our only energy producer had gone into the war deprived of capital equipment, with lack of investment and devoid of any sort of comprehensive or cohesive planning. After the war the coal industry, like the miners it employed, was well and truly on its knees. The nation was well aware of that. After the general election in 1945 Sir Winston Churchill is reputed to have said that the owners of Britain's coal mines had for long been a millstone around the neck of the Conservative Party and that they had now sunk it. Therefore, by an act of national emergency the affairs of the coal industry were vested in the central body of the NCB.
That was done not only because private enterprise could not and would not find the sums necessary to produce the output that the nation needed, but for the important reason that, given the enormous energy crisis of that time, the capitalists would have charged the last penny that the market would stand and pocketed the profits from the exploitation and production of coal. That is their enduring, if not endearing, custom. Given the opportunity, they would have driven the restructuring of British industry into further decay.
The NCB was given clear, hard and inflexible instructions to charge no more than the cost of production. It was forbidden to take advantage of an almost uniquely favourable seller's market. It was to make no profits and no surplus. It had to do no more than break even, without provision for capital investment, research into new techniques or contingency funding in any shape or form. Those aspects were supposed to be the function of the Government.
§ Mr. Barry Henderson (Fife, East)
Does the hon. Gentleman agree that the board neither made a profit nor supplied a market desperately wanting coal and that to some extent we are still suffering from the concept of rationing which began then and has prevailed almost ever since?
§ Mr. Ellis
One must remember also that the industry picked up from being flat on its back and managed to bring many people from the Armed Services back into civilian work. My point is that the coal was artificially priced. The world market price would have enabled the board to make a bomb.
I remember standing at the top of Orgreave pit, in the constituency of my hon. Friend the Member for Rother Valley (Mr. Hardy), on 1 January 1947, which we thought might be closed. We listened to all the fine speeches and the new National Coal Board flag was unfurled. It was as blue as a bilberry, which should perhaps have been a warning to us of what was coming. Nevertheless, we swallowed all the fine speeches. We were told that there would be no more exploitation, that the mines were being placed in our custody on behalf of the nation and that after we had been paid a decent wage the profit made by the board would be used to finance the new concept of the Welfare State.
We were not told, however, that as soon as market conditions changed the rules would be changed as well. In the first 10 years of nationalisation, the difference between the true price of free market coal and the lower price imposed upon the industry has been reliably estimated at £3,000 million. That estimate was made 25 years ago.
161 Taking account of a quarter of a century's inflation and interest rates, it is clear that if the board had been allowed from the outset to let the price of coal find its own level on the free market at that time it could have used the surpluses to fund all its capital investment and research projects, with plenty to spare, from then until the present day. It would have been worth a bomb, but the board was not allowed to do that.
When the oil glut came in the mid-1950s and the market changed, the rules were changed. The then Conservative Government not only imposed limits upon coal stocking, forcing the closure of many pits that the nation might wish it still had today, but said that from that time onwards the industry must be run as an ordinary business, in that it would have to borrow to invest. All that was done deliberately to drive the industry firmly and inextricably into the hands of the loan sharks in the Treasury.
The Bill intensifies that process. In the beginning the cheap coal was supposed to be used to enable our manufacturing industries to price themselves back into the world market, but it did not work out like that. The British entrepreneurs simply charged the full market price and cheerfully pocketed the surplus. Today, however, the British miner has to pay the interest on the money borrowed to improve the industry for the benefit of the nation. That is why I describe this as a three card trick played twice.
Although the Government may think that we should be grateful because we have to grab anything that will allow the industry to keep operating, the truth is that the coal mining industry owes no debt of gratitude to anybody. The industry and all those who have worked in it have been grossly misused. From time to time we hear unfounded assertions that nationalised industries do not work, yet this one has certainly worked. Over the years, despite all the odds, the story of coal in Britain has been the greatest success story of all time and no one can deny that. It rescued the British economy after the war, and now, as it becomes clear that another major world energy crisis is approaching, the British coal industry stands poised and ready to rescue Britain again. Moreover, there will soon be an ever-growing export market open to it.
I do not ask the House to accept my word for that. I shall quote from Government Executive, the magazine for top decision-makers, which we all receive. The magazine refers to an important report distributed by the Association of the Coal Producers of the European Community, saying:Despite all warnings, in the eight years since the first Middle East oil crisis, the Community continues to rely for more than 70 per cent. of total energy requirements on oil and natural gas.The report adds that a consensus has now emerged on the need to return to coal, and continues:The goal is clear. There should be no further delay at any level in taking decisions and in defining a suitable policy for the financing of all the links of the coal chain that stretches from the pit to the final consumer.Furthermore, the association recommends that Europe shouldMaintain indigenous coal production capacities and promote investment in new mines within the community. As long term commitments require substantial capital outlay, the investments should be maintained even in times of market weakness.That is what always happens with the trade cycle. It is important to invest at the bottom of the trade cycle, because a pit takes 10 years to come into production and 162 the capacity will not be there until the top of the trade cycle is reached again. The time of slump is not the time to cut back. It is the time to give hope for the future and that is how one gets out of the slump.
The Bill does not take full and true account of the situation. In the interests of the country, the industry must expand. As well as maintaining existing coalfields we must develop not only the potentially extremely productive virgin coalfields at Selby and the Vale of Belvoir, but many more. The Bill does not provide for such necessary expansion. It has other major shortcomings, which have been mentioned. The most important is the lack of provision for improvements in early retirement schemes. I am not a pro—Marketeer, but miners throughout the country were coaxed into voting "Yes" in the referendum to join the EEC on the ground that British industry would be forced to abide by the rules of the EEC and that retirement would be possible at 50 or 55 as in the rest of Europe.
How long do we have to wait for that? If we cannot achieve early retirement now, when more than one person in eight is looking for work, when can we have it? Early retirement would cut unemployment. Moreover, if the so-called oppressed miners in Russia can retire on full wages at 50, at least some provision should be made to finance improvements in Britain, especially if the Government take into account the fact that miners have earned it by taking a cut in real wages.
All authoritative sources agree that a major world energy crisis is on its way. Now is the time to invest for when the world moves out of recession. Investment must be made not only in new pits, new techniques and in the production of coal, but in the cracking of coal for the production of gas, oil and petrochemicals. None of this can be financed by the industry itself. Only the Government can do that. Moreover, the Government owe it to the industry, if only because of the constant year by year improvement in attendance and productivity. The real way forward is to convert all the loans envisaged in the Bill into straightforward grants, to intensify the necessary investment and to write off all the existing debts in the interests of the nation.
§ Mr. John Hannam (Exeter)
I join the hon. Member for Midlothian (Mr. Eadie) in congratulating my hon. Friend the Under-Secretary on his excellent and informative opening speech and on the general success that he has had in his important role as Minister responsible for the coal industry. No one will deny that ensuring the growth and modernisation of our largest energy industry is one of the most difficult tasks that a Minister has to face.
Both sides of the House agree that my hon. Friend has presented a realistic picture of the gains and losses in the coal industry programme. The recession has hit the coal industry extremely hard, causing a sharp decline in energy demand and, therefore, a sharp decline in coal sales. I agree with those hon. Members who have said that the scheme proposed by the Chancellor of the Exchequer for industrial conversion from oil to coal has not been a great success. It has not got off the ground, and there is a general view that improvements in the scheme are necessary to make it more attractive to industry.
Another problem has been the higher-than-inflation costs imposed on consumers by the nationalised energy industries. If those industries had trimmed their overheads, 163 as private industry has had to do, their charges would not have increased so dramatically and consumption would not have dropped so sharply. However, since the Government took office there have been improvements in productivity and output. The recent decision on pay by the miners was a very encouraging step towards the creation of the kind of cost-effective and efficient coal industry that everyone wants to see.
The welcome drop in mining deaths in recent years belies the arguments so often used by Mr. Scargill and the militant Left that increased productivity would result in reduced safety standards. A few years ago the hon. Member for Midlothian argued strong and hard that the productivity deal would not impair safety standards. That and similar arguments by hon. Members have been borne out by the facts.
The background to the debate is respect for the common sense of the mineworkers over the recent pay award, regret that this common sense did not apply last February when the dispute over pit closures put back the coal industry several years, and realism that the industry, while having to make many difficult decisions in the years ahead, has the full backing of the Government for the role of coal in the energy equation for the coming half century.
It has been said that Britain is fortunate in having self-sufficiency in energy, but there are many complications inherent in that simple statement. For example, vast investments have been plunged into oil and gas developments over a comparatively short span of years. Nuclear power has been developed which can only be used for the production of electricity and which is unlikely to contribute more than 20 per cent. to electricity generation in the foreseeable future. Long lead times are necessary for decisions if energy is to be made available for succeeding generations at the right competitive price.
Coal is the resource that will be needed for our chemical feedstocks when oil runs out, for the supply of fuel, as a substitute for gas, and, later, for the supply of oil from coal. As my hon. Friend the Member for New Forest (Mr. McNair-Wilson) has said, the question that arises is whether this change in the use of coal can be accommodated in the present coal industry structure.
In Europe, a doubling of demand and, therefore, of production—I fear that the latter is unlikely to be achieved—is forecast during the next 20 years. At the same time, world potential for coal exports and new technologies is immense, while in the United Kingdom the coalburn of our electricity generating stations has increased from under 70 per cent. 10 years ago, to over 80 per cent. in the past year, and coal exports more than doubled during the last two years.
Only the most foolishly optimisic observer would claim that the present structure of the coal industry, with its constant confrontation between national management and labour, betokens well for the future. The taxpayer, through the Government, contributes his side of the bargain. It is small wonder that feelings should be expressed that the country given the vast support accorded the coal industry, is entitled to expect more progress to be made in improving the industry's long-term management structure to break down the monolithic, political confrontation that has existed from generation to generation throughout the industry.
However, anyone who knows the industry is aware that it is not over-managed and over-bureaucratic. Nor are its salary levels out of line. Looking ahead 15 or 20 years to 164 the time when new coal technologies are developed and when the massive investment world-wide in oil industries is re-diverted to coal-based energy resources, we should be asking ourselves questions about the structure of this historic mineral extractive industry and whether it is equipped to deal with vast changes.
I support the Bill as a means of carrying the coal industry through the short-term difficult recessionary times that lie ahead. Like my hon. Friend the Member for New Forest, I expressed doubts in 1980 about whether the revised EFL targets laid down by the Government could be met during a period when falling demand was obvious to everyone. The February debacle last year precipitated a revision of the financing limits. With hindsight it can be seen that we might have avoided such a large subsequent increase in financial support if the Coal Industry Act 1980 had been more realistic about the future.
I have been involved in the proceedings on most Bills affecting the coal industry since the early 1970s. It was a Conservative Government who, in 1973, reversed the long decline that had occurred since 1958, during which time there was a two-thirds reduction in the number of pits and men. The main damage during the rundown was caused by lack of investment in new pits. This caused the problem of high cost coal and too many uneconomic pits. The period was also marked by a gap of 23 years between the opening of our last big deep pit at Kellingley and the new Selby pit. During that time miners' wages dropped from first to twentieth in the industrial league and extremism was born again in the industry.
In 1973 the OPEC oil crisis caused a rethink of policies. Since then a cohesive investment plan has grown with borrowing limits rising from £550 million in 1973 to today's limit of £4,500 million. These vast investments cause not a little resentment among hard-pressed industrialists. It is important to ensure that people understand the nature of coal investment and that they see the coal industry giving good value for the large support received from taxpayers.
The "Plan for Coal" laid down targets for productivity and pit closures. The need expressed in the 1974 plan, was for a 4 per cent. improvement in productivity each year and the closure of 4 million tons a year of old uneconomic capacity. The Labour Government achieved only a quarter or one-fifth of these aims. The National Coal Board's financial performance has been seriously impaired because of that failure. The mishandling of the pit closure programme last February landed the NCB in a further crisis for which the taxpayer is now picking up the bill. The Opposition leapt at the chance, in our state of politics, to cause discomfiture to the Government by helping to stir up the miners over that emotive issue. As usual, in the final event, industry and the British taxpayer foot the cost.
In the context of new and efficient coal extraction, should like to mention a matter that has already been raised. I refer to the Vale of Belvoir. If we talk about competitive coal and the opportunities ahead, we must face the question of new pits and the Belvoir problem. Just as the anti-nuclear brigade argues against Sizewell or, indeed, any other proposed nuclear station on the ground of low electricity demand, so the anti-Belvoir environmentalists use the same demand forecasts to argue against any new coal mines in the foreseeable future.
I fully understand, and feel some sympathy for, the campaign at Belvoir against the original NCB proposals for three pits in that valley. It is a lovely valley. As my 165 hon. Friend the Member for Melton (Mr. Latham) said, there are two sides to all stories of industrial development against protection of the environment. However, I do not believe that we can survive in the longer term without the development of that valuable coal seam. Nor do I believe that a satisfactory compromise cannot be found, albeit possible at higher cost.
By the 1990s the extraction of the Belvoir coal will be essential if we are even to maintain the 120 million to 130 million tonnes production that we are now aiming for, let alone try to achieve the 170 million tonnes by 2000 laid down in "Plan for Coal".
The other factor that must be taken into account is the rundown and exhaustion of the other Leicestershire pits throughout the decade. About 4,000 Leicestershire miners will seek other work, and their expertise and moderation will be desperately needed in the industry of the future. Before we allow the Secretary of State for the Environment or any other Minister to throw out the Belvoir plan en bloc, all of us who understand the need for the coal industry on energy and employment grounds should exert the maximum pressure on the board and the Department of Energy to reach a compromise solution. One example is reducing the number of pits from the proposed three to two and excluding the Hose village pit proposal, which seems to be the most provocative from the environmental point of view.
It must be possible to extract the coal in a manner that will not destroy the Belvoir environment. While there is a case for some delay in developing there, it would be wrong to delay for too long. That would cause severe difficulties in the 1990s as coal began to replace oil as the base feedstock.
I believe in the coal industry. Despite the reservations that I have expressed about last February's nonsense, I support the Bill as evidence of the Government's determination to maintain investment in coal. I hope that the coal industry will put politics aside in the coming years and set out upon a determined path of improvement and investment so that we may produce the coal that we shall need in the years to come, at a price that we and the world can afford to pay.
§ Mr. Alan Fitch (Wigan)
I find it difficult to disagree with the contents of the Minister's speech, but I was concerned about its emphasis, which seemed to suggest that the coal industry did not have the future that I and many of my hon. Friends believe that it has. The hon. Gentleman was pessimistic, but I should add, to be fair to him, that as his speech went on he became a little more enthusiastic.
We are discussing a very important subject—the use of our one indigenous fuel. It is a reliable fuel—probably the most reliable—and one that is not subject to the whims of international politics. It is our duty to do everything that we can to see that the industry thrives.
I have no quarrel with the Minister about the Bill. Indeed, I welcome it. It is both necessary, because I am sure that the National Coal Board can always do with more money, and timely. Perhaps it is a coincidence, but there has just been a ballot among the miners. I personally believe that the result was good for the industry's stability and for the country in general. If the result of the ballot 166 had been different, the speeches today might not have been as constructive as they have been. It is very important that we have a stable coal industry for the foreseeable future, and I believe that the ballot has gone quite a long way towards ensuring that.
We must concentrate on the immediate problem, which is—though this may not be the best way to express it—a return to a coal economy. During the 1960s coal lost a large part of the market as a result of the influx of cheap oil from the Middle East. The change was so rapid that European Community consumption of oil is now two and a half times that of coal. The danger of excessive dependence on oil has been apparent in the past decade. There has been a series of price explosions. With oil reserves falling behind consumption, I believe that prices will continue to rise. Some Conservative hon. Members have argued that oil prices are likely to go down, but I do not think that they are.
It follows that coal must play a great part in the replacement of oil—in fact, it has a vital part to play—through our increasing our demands, not in two or three years, but now. Future energy supply may fall short of requirements. What is at stake is a viable coal industry ready to fill any gap in our energy supplies.
A report by Cambridge Information and Research Services puts in a nutshell what I am saying, and probably says it better. It says that a substantial switch to coal would bring considerable benefits to the United Kingdom, reducing oil demand by 12 million tonnes per year. Fuel oil price increases since 1979 mean that coal has had an unprecedented advantage of more than 10p a therm and is more than a third cheaper than oil. Even though coal will continue to be prone to upward tariff pressures, its significant price advantage is likely to be maintained. The report also says that the average payback period of four years for industrial coal conversion schemes can be reduced by the £50 million Government grants scheme. Although increasingly aware of coal's advantages for bulk heat needs, industry continues to be constrained from converting by lack of funds. That is important. Funds must be made available to industry to undertake the necessary conversion.
The matter has been summed up by Sir Derek Ezra. As has been said in the debate, we in this country have enough coal for the next three centuries, though our oil is likely to last for only about 28 years. The case is made for a viable coal industry needing all the protecton and encouragement that any Government can give it.
Research has been touched on during this debate, but in my opinion research must be encouraged by increasing the amount of aid available for coal research under article 55 of the European Coal and Steel Community treaty in coal mining and coal utilisation, by stipulating and accelerating research on the gasification and liquefaction of coal to facilitate the application of this technology at the industrial level.
Does the Minister or his officials meet members of the National Coal Board to discuss research into new methods of mining and of conversion? If so, is this on a regular basis, because I think, that it is extremely important that the Government discuss this with the coal industry. After all, part of our "Plan for Coal" is based on adequate research.
I want to go back briefly to the subject that was raised by my hon. Friend the Member for Midlothian (Mr. Eadie), when he mentioned the Vale of Belvoir. This is 167 very important indeed, I do not want to go over the argument, which he put extremely well, about the losses likely to occur over the next 10 years in the Leicester coalfields and some coalfields in Nottingham. I want to deal with the point about the environmentalists.
We are all environmentalists up to a point, or we should be. We should want to preserve the environment at the highest level of quality, but I wonder sometimes whether some of or friends in the environmentalist movement know exactly what is going on. It is possible to undertake opencast coal operations today in such a way that there is virtually no sign when the operation has finished that it has ever taken place. There are new and modern methods of extracting coal which do not mark or mar the countryside. I understand that the lignite field along the Rhine in the Federal Republic of Germany is an outstanding example of how to recultivate opencast areas.
I am not personally familiar with the Vale of Belvoir project, but I think that the modern methods at the disposal of the National Coal Board mean that very little damage will be done. I say to our environmentalist friends, who sometimes get carried away by what they regard as the rightness of their cause, that, generally speaking, we must protect the environment, but they must not be carried away. We must consider every project as it comes along.
I do not want to digress, but I have had a little experience of the problem through my interest in the roads study campaign, where we have had quite a lot of opposition from environmentalists to the building of motorways.:In my opinion, and that of many other hon. Members, some of the motorways built have not harmed the environment, but have improved it. I shall not suggest that opencast mining will improve the environment, but I do not believe that it will be detrimental to it. Certainly the need to keep our people at work far outweighs any temporary inconvenience.
The Vale of Belvoir inquiry was concluded in May, I believe, and ask the Minister to tell us tonight when the Government will let us know their decision. It is important. This matter has been going on for nearly two years.
Like my hon. Friend the Member for Ince (Mr. McGuire)—we both come from the Lancashire coalfield—I should like to pay a tribute to the efforts and work of the miners, not only in Lancashire, but in the country in general. Little is heard of the quite astonishing decrease in absenteeism. It is a very difficult job, and to have a 100 per cent. record of attendance in the coal mining industry is something of which to be extremely proud. There has been a decline in absenteeism and an increase in productivity, and there has certainly been an improvement in safety methods.
I know that there may be disagreement on this side of the House about the outcome of the miners' ballot, but there is no disagreement as far as I am concerned. Had I still been working as an underground miner in Lancashire I should have voted for the Coal Board's offer, but I realise that some of my hon. Friends think differently. I believe that the miners, by their recent action, have given great stability to this industry. I am very proud indeed of my connection with it and I want to see the industry grow in power and strength, because it has a tremendous contribution lo make to the economy of this country if we are to be a really first-class industrial power in Europe.
§ Mr. T. H. H. Skeet (Bedford)
I listened with considerable interest to the hon. Member for Wigan (Mr. Fitch). When he said that coal was our only indigenous fuel I thought it surprising that he had not heard of oil, natural gas, depleted uranium and plutonium. The last two would, in a fast reactor, produce the energy equivalent of all the reserves of coal in the United Kingdom. However, he made a very good speech, and he did mention the Vale of Belvoir.
Curiously enough, I can see the point that where we have pit closures—and I have been in favour of pit closures—they should be coupled with the opening of new and prosperous pits. I see no sense in having an output per man-shift in a pit of, say 1 tonne when there is Selby which will produce 10 tonnes OMS. It seems to make sense that we should take this route towards highly economic pits.
I want to ask the Minister one or two questions. He is here to answer such points. When are we going to have a decision on the Vale of Belvoir? We have had to wait so long. It is in the interests of the Department of Energy that we should know the decision, so is he prepared to make an announcement? I assume that he has had consultations with his right hon. Friend, and something must surely be coming along.
If we have to get rid of the colliery waste, whether it is to be transported down to the potholes of Bedfordshire or to the coast to lie on the beach, this of course, is going to put up the price of coal. What are the economics of the Vale of Belvoir coal? Is it going to be worth while in the absence of markets? When is it likely to be in production? These are the questions that I should like answered. My hon. Friend has ushered in the Coal Industry Bill 1981. Last year he took the troops up the hill and he took the troops down again. He raised expectations for 1983 and 1984, and still the NCB has not broken even.
I wonder whether next year we shall have to pay further dane-geld to the miners. I wonder whether we shall have to pay a high price when the time comes.
When I look at the terms of this Bill, I am amazed at the amount of money which is being spent. Of course, this is the result of what happened in February last year, and now the price has to be paid—the cheques have to be written. Between 1973–74 and 1981–82 the capital investment in the mines, according to the Minister's calculation, was £3 billion. I have worked it out as £3.6 billion. When we look at the period 1973 to 1981, social grants, operating grants and deficit grants add up to £1.2 billion. I agree that most of these come in the period of a Conservative Government, when significant sums were involved, but what is going to be the end to all this? In the very good speech which the Minister made—and I pay a tribute to him for it—he virtually inferred that we have a diminished domestic market and had increased exports at a lower yield per tonne. Between 8 million and 10 million tonnes is being exported. The NCB has 124 tonnes of coal to dispose of. The market is contracting year by year. Money is being poured into the great coal vortex, and a substantial part of the money secured from the North Sea goes straight into the NCB's requirements. I agree that coal has a golden future, but not tomorrow.
I agree with my hon. Friend the Member for the New Forest (Mr. McNair-Wilson) that it might not be United Kingdom costs that have fallen out of line, but those of South Africa, Australia and the United States. The 169 Minister feeds us on hopes, but it is difficult to argue that we must have more money year after year and that eventually we shall reach the halycon days. It will not be 1982, 1983, 1984, 1985, 1986, or even the early 1990s. It may well be the next century.
§ Mr. Hardy
Every time that the hon. Gentleman speaks about coal he ignores the fact that the British coal industry provides a secure home base and a vital test base for the mining engineering industry. The coal industry may not make a profit in the years that he mentioned, but it is essential for development programmes to proceed to back that winner. If the hon. Gentleman had his way, we should have no industrial winners at all.
§ Mr. Skeet
I am for a viable mining industry. I pay tribute to the miners. In 1947 we had 704,000; in 1981 we had only 226,000. The industry has been slimmed down over the years by Labour Governments. About 76 per cent. of the pit closures occurred under the Labour Governments of 1965 to 1970 and 1974 to 1979. We want a viable industry, but we shall not get one by pumping in money when there is only a limited market for the Industry's product.
In a publication by Colin Robinson and Eileen Marshall "What Future for Coal?" the conclusion is that the market is considerably diminished. They say it will be between 75 million and 110 million tonnes per annum, although that may be wide of the mark. Quintin Hilton has come to the conclusion that in the year 2000 the market will be 107 million to 123 million tonnes. One has to be careful about this. If we continue to invest in the industry and make it too large for our requirements, someone will lose a lot of money, and that somebody will be the taxpayer. I hope that someone will argue the taxpayer's case.
I turn to the subject of pit closures. In 1981 there were 13 closures. The controversial list of 30 March 1981 totals 23. Ten from the controversial list were closed in 1981. The severe injuries at Cardowan would possibly not have occurred had the pit closure taken place at the time that the Government ordered.
I find it difficult to understand the case of the Molcais colliery near Llanelli, a constituency which I fought many years ago when I reduced the number of votes for the then right hon. Member for Llanelli, Mr. James Griffiths, by 5,000. The Financial Times of 12 May 1981 stated:Controversy over the colliery's future was brought to a head last week by roof falls and near floods in the mine. Mr. Williams— the South Wales miners leader—said that they did not necessarily accept that men working in water was sufficient reason for a pit to close.What inhumanity to man! Even though an economic deposit may be left, there can be other reasons for closure. It is an extraordinary suggestion that men should work in water to recover what coal is left. Other reasons for closure should include serious fracturing of rock, fire damp, uncontrollable water and so forth. There may also be good engineering reasons for closure.
§ Mr. Allen McKay (Penistone)
The colliery where I cut my teeth is in the evening of its life. It has between 2 and 8 years left. The area director promised that he would not close the colliery because of the work done over the past years and the contribution made to the NCB's finances. It was always profitable. Water was a problem 170 which could have caused the colliery to be closed, but miracles do happen. The pit cannot now make the drivages fast enough for the amount of coal that is coming out. The water has been left behind, and the men are working in quite a dry place.
§ Mr. Skeet
There are also cases in the new mines in Selby which are not yet producing coal but will be shortly. One of the big problems is water. Water has been excluded from the drift mine, but a great difficulty is that the subsidence may alter the water table. The Yorkshire water authority is concerned about the impact on local people's property. I hope that the problem can be solved. The output of coal per man-shift is expected to be 10 tonnes, which is a great improvement on the national average.
I feel strongly about the pits. I want a viable industry. I pay tribute to the men who are prepared to do a job that I and many of my colleagues in the House are not prepared to do. We hear that the number of fatalities is down to 34, but that is 34 too many. I, too, should like to see firing underground with no men involved and no lives at risk.
I mention closures because perhaps we can see the beginning of a solution. For example, if the controversial list is taken into account, and we take the average output per man-shift of the 23 pits, it works out at 1.518 tonnes output per man-shift. Selby has 10 tonnes per man-shift. The national average is 2.3 tonnes per man-shift. To take an improved mine, Thoresby has 45 tonnes per man-shift and Betws in Wales 3.5. The conclusion is obvious. A greater return from the new pits will mean unit costs will be reduced and the industry will gradually become more profitable. The recent production cost figure for Selby has been £18.50 per tonne, which is well below the costs in the rest of the United Kingdom. It is in such pits that opportunities are growing.
In 1981 the NCB delivered price to the power stations was about £40 per tonne. This was because of price increases in January and November 1981.
National Coal Board deliveries on Tameside were at £45 per tonne. According to a parliamentary answer, the production cost of hard coal in 1980 was £34 per tonne. The NCB prices on Tameside are between 10 per cent. and 20 per cent. dearer than imports from Australia, although, as the Minister said, it is more expensive to take the coal to inland power stations. However, because Australian and Japanese contracts are not going through, more coal is being dumped on the world market, which could result in even lower prices. I learnt from another parliamentary answer that between January and September 1981 the average cost or value of coal per tonne cif from Australia was £31.
The conclusion is interesting. Our costs are too high because of unprofitable pits, many of which should be closed. In passing, I pay tribute to the chairman of the NCB. The chairman issued a list of 23 pits. It would have been in the NCB's long-term interest to close those pits. The situation is unique. The industry is producing too much coal. The market is deteriorating. Some argue that by the year 2000 the yearly production will be 80 million, 90 million or 100 million tonnes. The NCB and perhaps the TUC may put it as high as 170 million tonnes. As legislators, we must see that the Government's money is not wasted. My hon. Friend the Member for Newark (Mr. Alexander) suggested that we should have a new "Plan for Coal". If it came after an inquiry, it would make a lot of sense.
171 About 124 million tonnes of coal are produced in the United Kingdom. Imports are down to 750,000 tonnes. The CEGB contracted to import 2.5 million tonnes, and now has to stock the remainder on the Continent or sell it to another buyer. It is a ridiculous arrangement. Consumers do not want to pay high prices. Expensive coal makes expensive electricity. The report on the CEGB shows that it could import 10 million tonnes a year, but that would make further difficulties for the NCB, which we wish to avoid.
I hope that the Chancellor will pay heed to our arguments. His £50 million plan is not working. The Under-Secretary of State tells us that £17 million has been committed, but a commitment is not enough. The incentives must be strengthened. Our indigenous coal industry must be of a viable size. Its future will not be realised next year or even in the next decade. Liquefaction will not be fully realised until the next century. We are wasting a considerable amount of money on it. Licensing from abroad may be the cheapest way to proceed with it, although I do not wish to remove the opportunity to participate with the private sector to get the answers right.
I am probably the only hon. Member on the Government Benches to say that I am not entirely satisfied with the Bill An enormous amount of money has been laid out as the pay-off for the trouble last February. Doubtless we shall have another Coal Bill in 1982 or 1983. We shall hear the same old arguments from the Front Bench-how magnificent the miners are, how good production is, that absenteeism has gone down from 18 per cent. to 11 per cent. and how we have blocked imports, with the exception of 750,000 tonnes for the CEGB. I concede all that.
The hon. Member for Midlothian (Mr. Eadie) made a long speech about the merits of the miners and the NCB, but he said nothing about the market. He did not reply to my intervention. He knows that there is a limited market for coal. Had the NCB been in the private sector, it would have gone bust years ago. We are pouring money into the nationalised industries from every side. Money is going to the British Steel Corporation and to BL. That is why our taxes are so high.
I shall support the Bill and the Government's initiative. The Minister talks of a golden future, but if he examines our arguments he will see that the proposals are no solution. They are danegeld, and more will be called for. It may mean satisfaction for the miner but not for United Kingdom Ltd.
§ 7.6 pm
§ Mr. Albert Roberts. (Normanton)
It was interesting to listen to the hon. Member for Bedford (Mr. Skeet). I wish that the late Sir Gerald Nabarro were here. The hon. Gentleman will have read "Ten Steps to Power".
The hon. Member for New Forest (Mr. McNair-Wilson) said that the Minister's presentation was good. I agree. I have been in the House since 1951 and have been connected with the pits for 60 years. I have listened to similar debates over many years. My hon. Friend the Member for Midlothian (Mr. Eadie) also made an exceedingly good speech. The academic points made by the hon. Member for Bedford were amusing.
In the 1950s the late Sir John Cockcroft said that nuclear energy would be on a par with coal in 1965. The 1951–64 Government poured millions of pounds into nuclear energy. We never knew how much. The hon. 172 Gentleman talked about money going to the NCB. I appreciate the Bill, although it is lamentable that we have to pay interest. When the pits were in private ownership, one coal owner said that he wanted to produce coal so cheaply that he could afford to give it away and still make a profit. I do not know whether that is the hon. Gentleman's philosophy. At that time, we were all cheap miners. I was in the pits in 1922.
The hon. Member for New Forest wanted to see more private enterprise in the industry. He would not say that if he had had the experience that I and some of my hon. Friends have had. The pits were nationalised in 1946. The NCB was formed in January 1947, as my hon. Friend the Member for Derbyshire, North-East (Mr. Ellis) said. I was then a mines inspector. Safety has improved gradually over the years. The NCB made it the paramount consideration.
I am sorry that over the past few years we have not had an annual debate on the annual report of the National Coal Board. We always had such a debate in the 1950s and early 1960s and it gave us a marvellous opportunity to discuss matters on which we cannot ask questions. Coal industry debates are always good debates; they are fair and there is no acrimony. I should like in future time to be provided for a debate on the National Coal Board report, and on the gas and electricity industries, annual reports as well.
The Minister referred to the reduction in accidents and fatalities, and we are all pleased to hear about that. However, I wish to digress for a moment on the question of pneumonconiosis. At the moment the National Union of Mineworkers is in contact with the National Coal Board. This does not mean a lot. I know that some miners have commuted their rights, but the NUM is asking that a £600 settlement should be made across the board. It will not cost a lot of money. The miners are asking for that money because black lung disease was discovered 150 years ago and since then thousands of miners have died without compensation being paid. I was off work for 16 weeks and received £16.
I hope that the Minister will get in touch with the National Coal Board on this important point to see whether the matter can be settled. It will show that there may be some magnanimity in the Government if the question can be settled once and for all.
Like the hon. Member for Bedford, I shall deal with the question of coal stocks. In 1957 there was a recession. We must bear in mind, although I say this objectively, that the Comservative Government came to power in 1951, when the cupboard was full. Britain had just gone through the war in Korea and it was pretty well stocked. In 1957, there was a recession and coal stocking. At that time it cost 10s. a ton. It is now about £12 a ton. This is why I should like to see coal exports developed, and why I pleaded for no industrial confrontation. The miners have voted for no confrontation for 12 months. If we are to develop our export markets there must be continuity.
§ Mr. Roberts
I accept the hon. Gentleman' point. Unless we have continuity of coal exports-and I am sure we can achieve that, although it is difficult-there will be a loss to the mining industry. I have already pointed out how much it costs to stock coal.
§ Mr. Roberts
We have to concede to the Europeans. I do not mind subsidising coal exports in one sense if it will keep the pits going. If they are viable, they should be kept open. To keep pits such as Selby and Kellingley open while closing some of the small ones is a short-sighted policy. I cannot believe in it.
If we are to be far-sighted we must preserve something for posterity. When talking about coal plants we must talk about the next 40 to 50 years. It is futile to talk about five and six years. Hon. Members have been talking about the glut of oil and coal, and of energy in general. However, while the grass is growing the horse is starving. People are dying because they cannot meet their bills. What kind of world are we living in?
I am a believer in a cheap energy policy, although not at the expense of the workers. Energy to industry should be at a reasonable price. One can go into any home or industry and find that they are all complaining about the excessive cost of energy. Can we put this right? We have nuclear energy, 80 per cent. of electricity is produced by oil, there is gas and now there is a glut of oil as well. Yet we have a dear energy policy.
There is a way out of this dilemma. The Government should try to bring something out of this muddle, even if it means subsidising, if it will help industry. This is where the coal industry can play a very important part.
The hon. Member for Bedford spoke about the cost under the Bill of pouring in millions to the coal industry. I do not mind the money, provided that the maximum number of industries can benefit. This is the important consideration. If subsidised fuel is being provided-and I do not mind that-and everybody is having the maximum benefit from it, it will help our economy tremendously. My knowledge and experience of the question of energy may not be as good as that of some. However, it is elementary that if people cannot afford a commodity there will be contraction of the market. That is what is happening in this country and possibly in other parts of the world as well.
I have visited industrialists in my constituency and they tell me that one of the things which hamper them is the cost of energy. Yet what do we do? We are floating on energy—we have coal reserves which in my part of the world extend from Selby down to the Lincolnshire Wash basin. Coal is there to be extracted. I have no worry over that. There is research into new energy fields, and I am sure it is not beyond the ingenuity of man to bring out more in the next 30 years which will help us. So why should we be starving ourselves of the heat that we need and of benefits we can derive from energy? I was always taught that in importance heat and energy come next to food.
There has been opencast mining in my constituency since 1940. I have some sympathy with the complaints of the environmentalists. The technique in opencast mining has been improved tremendously. I knew the hon. Member who first raised in the House the question of opencast mining. He worked for McAlpines. I know that a good job is done in opencast mining and in restoration, which is important. However, we have had opencast mining since 1940 and that is enough.
174 It has been suggested that coal is a reserve which should be kept unmined. I plead with the Minister not to allow opencast mining to exceed more than 15 million tons a year. I know that the argument in favour of it is that it is cheaper than deep mining. That is beside the point. I live where I was born and bred and we are surrounded by opencast mining. It started in 1940, it still continues and is developing, and is likely to go on for the next 20 years. There is no reason why the coal should not stay in the ground. If we need it in 600 years, it will still be there. Why extract it now when we have a glut?
I now turn to the subject of the Flowers report. My part of the world has suffered tremendously from what has been left behind by industry. West Yorkshire county council has written to me about this. It is anxious to play its part in an efficient coal industry and in supporting a national energy policy, but at the same time it believes that opencast mining has been over-stretched, and this has left the area with many residual problems.
What about the old spoil banks that are left? I hope that some money will be diverted to deal with those. We have already been told about the Vale of Belvoir and the spoil banks there. Spoil banks have been with us for generations, but some have been magnificently restored. I hope that the Minister will give some help in implementing the Flowers report.
I make my plea on behalf of West Yorkshire, because much restoration work needs to be done there. The people in the area have a right to decent environmental surroundings.
§ Mr. Barry Henderson (Fife, East)
I declare an interest, in that I am connected with a firm that is involved with the coal industry. About 20 years ago I gave some of the best years of my life to help with the computerisation of the payroll for mineworkers in the Durham and Northumberland divisions of the NCB-in the piping days of Conservative prosperity when there were about 120,000 miners in the coalfields.
I listened with great interest to what the hon. Member for Normanton (Mr. Roberts) said, and before coming to my principal remarks I wish to touch on two points that he raised. The hon. Gentleman seemed to think that a decision about whether private enterprise was good or bad compared with State enterprise should be based on a judgment about whether life in the 1920s is a reliable measure for private enterprise working conditions in the 1980s. In all sincerity, I do not believe that that is a sensible comparison.
Perhaps I can give the hon. Gentleman a fairer comparison in another energy industry. Within the last few months, I have visited a platform drilling oil in the North Sea. I promise the hon. Gentleman that the standard of food and conditions of service of every worker on that platform compare favourably with anything found in the House of Commons. They are certainly better than anything that the hon. Gentleman will find in the coal industry. That platform is run by a private enterprise company. I shall not labour the point, except to say that the hon. Gentleman's comparison between public and private enterprise should be made in present-day terms.
The hon. Gentleman also referred to exports. I agree with him about the importance of seeking to develop an export market for coal. If the hon. Gentleman knows anyone from abroad who is looking at British attempts to 175 export coal, I hope that he will try to persuade him to believe what his hon. Friend the Member for Midlothian (Mr. Eadie) said about subsidies. If it were believed that we were subsidising exports of coal below the cost of production, there would be a lot of trouble for all our trade with many countries. I therefore hope that what the hon. Member for Midlothian said will be believed.
Apart from the hon. Member for Midlothian, I am the only Scottish Member attending the debate. I am grateful to the Minister for visiting the Cardowan pit last weekend. What he said while there, and his remarks this afternoon, will be greatly appreciated in Scotland, particularly by those concerned with the mining industry. It was encouraging to hear the hon. Member for Midlothian support what the Minister said on that occasion about the safety aspects and the effectiveness of the operations.
The discussions arising out of that kind of disaster relate mainly to the safety conditions, the environment in which miners work and the fact that it is a horrible and dangerous job. That sometimes means that Labour Members suffer from a sort of schizophrenia. I suppose that that is simply a posh way of saying "two-facedness". On the one hand they point to all the horrors of a miner's work, yet the moment someone proposes to stop putting men down a dirty hole to do the work they say "You must not stop any miners from going underground. You must not have any pit closures or improved mechanisation." There is a confusion o f argument. I look forward to the day when we can have an effective coal industry without anyone burrowing underground.
§ Mr. George Grant
The hon. Gentleman said that he had worked for the NCB and referred to 120,000 miners in the Northern region. Perhaps he will understand the attitude of Labour Members to pit closures when he remembers that because of pit closures that have taken place over the past two decades the unemployment rate in the Northern region is now 18 per cent.
§ Mr. Henderson
I accept what the hon. Gentleman says about the loss of jobs. Heaven knows, we do not want to see any jobs lost. I was talking about 20 years ago, when I worked with the NCB, not for it. At that time many other jobs were available. It was the period of full employment. People resisted the closures then, even though alternative employment: for miners was available. At that time miners were proving how skilled they were at adapting to other jobs. Had that action taken place, there would be fewer problems in the coal industry today.
I recognise that the Government were in honour bound to bring the Bill before the House, but that does not mean that one must like it. It was good to hear my hon. Friend reaffirm the Government's commitment to the coal industry. It is right that we should congratulate the miners on their wisdom in the recent ballot. It is only fair to congratulate the NCB and its employees on achieving some increased productivity for the first time in years. Like the Minister, I believe that there is a great future for coal and for those who work in the industry. If that potential future can be brought to fruition, it will be of enormous benefit to the country. I am sceptical about the industry's achieving anything like its full potential as long as control of it is in the hands of a State monopoly producer.
§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)
Do I understand from the hon. Gentleman's last remark 176 that he advocates selling off profitable parts of the NCB on the same lines as the Department of Energy has recommended for the oil industry?
§ Mr. Henderson
There have been many calls for even more investment in the National Coal Board. The Opposition say "Let us have more investment". At the moment they are demanding that investment from a reluctant taxpayer. People are falling over themselves to invest and they could get that investment if only they would let private investors contribute to the future of the coal industry. That could be done without selling off anything. Let the National Coal Board carry on, but let others have a go as well and provide an alternative source of employment for those who have no potential emloyer other than the National Coal Board.
§ Mr. Henderson
My hon. Friend the Member for Bedford (Mr. Skeet) raised the question of markets and marketing. He went further than I would go and said that the market was shrinking. I do not accept that but the National Coal Board must orientate itself to the market place far more than it has done in my working lifetime. It is oriented not to the market but to satisfying itself and its employees, in one way or another before it considers its customers. The NCB must consider its customers in order to ensure that there is a real future for the industry.
§ Mr. Allen McKay
The hon. Gentleman has evidently not looked at the structure of the National Coal Board. If he had, he would realise that the NCB has a vast marketing organisation that goes out to obtain customers and ensures that the product is exactly what the customer wants. The hon. Gentleman has evidently forgotten the marketing organisation.
§ Mr. Henderson
I had not forgotten it, but I was not expressing a precise view of it. At times there have been substantial shortages of coal. The board could not produce what the customer wanted although that is part of marketing. Its marketing department was an allocator of a rationed product. I submit, and I hope that the hon. Gentleman, in all fairness, will accept, that there is something in what I say, that a mentality still floats around the National Coal Boards marketing dept that is concerned more with allocations than with selling and creating and developing new market places.
It is disappointing that the Government have not taken the opportunity provided in the Bill to loosen, however slightly, the stranglehold of monopoly and restrictive trade practices that prevent the industry from achieving its potential as a key national resource.
This year the taxpayer will hand over £550 million to the National Coal Board. According to my arithmetic, that is about £35 per week for every employee of the National Coal Board. That is the taxpayer's contribution this year to the NCB. Many firms in my constituency would be very glad to have a source of capital, income, subsidy, or whatever one calls it, at the rate of £35 per employee per week during the coming year. That is the equivalent of nearly 1 per cent. on value added tax. That is a substantial sum of money, and that is only for this year. We should have more confidence in taxpayers getting better value for money if the industry had a better track record. While Governments, representing taxpayers and consumers, 177 have stuck to their commitments on previous deals, the response from the National Coal Board has, at times, been dismal. I accept that that has improved in the last year.
The "Plan for Coal" was introduced in 1974, and I understand that it was drafted largely by a Conservative Government. Part of the compact between the different parties that agreed to the plan, and one of the key aspects, was that productivity—measured as output per man-shift—should increase by 4 per cent. per annum. If the plan had been carried out and the deal adhered to, that should have resulted in a 32 per cent. increase in productivity after the plan's announcement. However, there has been no increase in productivity. Therefore, that part of the plan has not been adhered to. Until this year there had been no increase in productivity, and even now productivity will reach only the level found in 1972–73. Therefore, the taxpayer has been disappointed to the tune of 32 per cent. about his side of the "Plan for Coal".
The other important aspect of that plan was that uneconomic capacity was to be reduced by 4 million tonnes per annum so that more resources could be invested in new, modernised units. That would have suggested a total of 24 million tonnes during the period of the Labour Government. However, we received only one-sixth of that switch. The "Plan for Coal" represented a great effort on the part of the Government—with taxpayers' money-to work with the coal industry and set a future course for it.
The Government have responded and made substantial investments over the years, but the coal industry has not delivered its side of the bargain. As I have said, at times the NCB's record has been dismal, but in this context it can be described only as pathetic. Any hard-pressed company with that record that went today to its backers for new support would get very short shrift. The NCB has received this generous Bill.
This nationalised industry's performance has been damaging to a potentially great industry, but it has been more damaging for the nation as a whole and for electricity consumers in particular. I understand that electricity prices increase by 2 per cent. for every 5 per cent. increase in the price of coal. On average, coal prices exceeded the retail price index by 3.5 per cent. throughout the 1970s—a period of unprecedented inflation in Britain. It could be said that the coal industry has added fuel to the fire of inflation.
Last week the Opposition initiated a debate on fuel bills, which reflected the concern that many hon. Members feel about the effects of such bills on their less well-off constituents, but they said nothing about the way in which Socialism, with its doctrine of nationalisation and support for trade union muscle, had contributed to that very situation. In Britain, 80 per cent. of electricity is produced from coal.
I visited my hon. Friend the Under-Secretary of State to talk about the problem of energy prices faced by some industries in my constituency, including the paper industry, and I was told that one problem was that it was very expensive to produce electricity. Electricity was referred to as high-cost energy. The reason for that is the price of coal. Until we create the conditions in which the coal industry can be more efficient, it will continue to hinder the efforts of manufacturing industry to be competitive. That is at the root of the job problem in Britain.
178 Now we are told—for the first time in a long time—that the supply of coal appears to be exceeding demand. There would be a better market now for coal if the NCB had ensured the greatest possible customer satisfaction in the past in terms of price, quality, delivery, continuity, and so on.
We have had a decade of rising unemployment. There would be more jobs today if the "Plan for Coal" had been fulfilled in all respects. In view of the public sector's failure to respond to earlier stimuli, I wonder whether the Minister should take out some insurance by announcing measures to give the small private sector greater confidence for the future and the opportunity to exploit profitably new sources and new markets which the National Coal Board cannot or will not do.
In the Bill the Government are giving an enormous injection of cash to the National Coal Board. If the patient does not show signs of a livelier performance, it will be a tragedy for every man, woman and child in the country who consumes energy and a betrayal of the taxpayers who have played their part in providing their share of the future opportunities for coal.
§ Mr. Tom Ellis (Wrexham)
I welcome the Bill on behalf of the Social Democratic Party, and I personally pay tribute to the Minister's speech in introducing it. It was a sensible and realistic speech. Moreover, it was fair-minded, and to that extent, it was refreshing. It was doubly refreshing in that it came from a Minister at a Department of which the new head is reputed to be one of the most slavish adherents to the doctrines of the free market economy in their purest form. I do not know whether I do the Under-Secretary of State a disservice, but I take it that his speech, which represents the view of his Department and that of the Government, might denote a change towards greater social, political and even economic realism.
The Under-Secretary spelt out some of the problems that face the coal industry—they were spelt out in the board's annual report for the last financial year—stemming primarily from the present market weakness of the industry and the consequential need to stock coal, involving the cost of such stocking, and other extraneous matters such as interest rates, and so on. It is clear that steps must be taken if the industry is to keep within its external financing limits.
It was interesting to read in the annual report that the board was contemplating going to a banking syndicate. I do not know all the factors that lie behind that proposal, but it is fascinating because of the consequential long-term implications.
It is clear from the Bill that the coal mining industry is to have what I call a structured market economy. I suppose that is similar to what in the Federal Republic of Germany is called a social market economy. That is different from either the State command economy or what in my view is the outmoded free market economy. I am sure that no one would advocate the command economy. It is possible that some Conservative Members-indeed, some have already implied it-still advocate a market economy basis, even for the coal industry. However, anyone who studies the problems of the mining industry objectively will see at once that it is not responsive enough in the short-term to the application of a socially acceptable market economy.
§ Mr. Ellis
I shall give way in a moment.
It is necessary to set limits and stick to them. I am sorry that the hon. Member for Bedford (Mr. Skeet) is not present. He made a somewhat strident speech, but he did not say precisely what he wanted. The key question in setting limits and sticking to them is the judiciousness with which we set such limits and the time intervals between them. That is what I call the political fine tuning of the coal industry. If the hon. Member for Bedford believed what he said, it is incumbent on him in Committee to spell out in quantitative terms the precise limits that he would set and the time intervals between them within the structured market economy that I have described.
§ Mr. Marlow
I thank the hon. Gentleman for giving way. I realise that he is looking hard for a hole in the middle—a distinct area of policy that he can latch on to in this as in other measures—but he should not give the West Germany economy as something that is between the Labour Party and the Conservative Party, because the free market rules rather more in West Germany than it does here with a Conservative Government.
§ Mr. Ellis
I am sorry that the hon. Gentleman does not understand what I am talking about. I was talking about what I specifically explained was a structured market economy. The structure will vary from industry to industry, especially when it involves substantial industries or sectors of industry. I do not appreciate the hon. Gentleman's intervention.
The fact that limits are set—the limits are to be adhered to, and the Government are rightly determined to stick to the limits, provided that they are properly set—implies that responsibilities fall not only on the Government, but on the National Coal Board and on the mineworkers. A number of hon. Members have mentioned the responsibility that has been shown over a number of years by mineworkers.
I want to refer to one aspect of the responsible approach of mine workers to the new or comparatively new wage payment settlements. I hope that I shall not be considered immodest if I say that the system which has been introduced is based on one that was used in a colliery with which I was associated over 20 years ago, and which at the time was anathema both to the union and to the NCB. Thus, it gives me particular pleasure. Of course, performance has improved. I am not sufficiently in touch with the industry to know whether the system of technical arrangements used in various collieries provides enough slack to be taken up to give increased productivity over the next few years. I doubt it—certainly not a sufficient increase to yield the productivity that we all wish.
If that is correct, we have to look to the only other alternative—capital investment. As I said earlier, I was intrigued to know that the Board was approaching banking syndicates. I understand that at present the board's self-financing is down to about 20 per cent. The annual report says that the Government's grants and subsidies in real terms are down about 13 per cent. compared with the previous year. I neither criticise nor approve that fact. I hope, however, that it reflects the use of the fine tuning, about which I spoke, to attempt to regulate a nationalised industry at arm's length. That is perhaps a hopeful approach. I am sure that it was difficult to work out the figure but, even so, I approve in principle, although the figure itself may be right or wrong.
180 The message that comes from the need to improve productivity by increasing capacity in a technical way by capital investment was spelt out by a number of hon. Members. In a nutshell, investment implies change in human terms. Over many years it has irked me to hear friends and colleagues arguing for greater investment in a range of industries and criticising people for not investing, while at the same time refusing to accept the human changes that are bound to result from the investment.
Reading the annual report for the previous financial year, I found great encouragement in the fact that the consequences of many years of substantial investment are now beginning to come through. For example, with modern coalfaces, slightly more than one-tenth of the deep mine output comes from under one-twentieth of the coalfaces. It means that 10.2 per cent. of the output comes from 4.5 per cent. of the coalfaces. In addition, one-fifth of the coalfaces are on the retreat mining system. That is an extraordinary achievement, which I am not sure that everyone appreciates. We should realise that there are 650 coalfaces, that this year 400 must be replaced, and that each has an average life of 18 months. That is equivalent, in modern manufacturing terms, to knocking down a factory, transporting it and reproducing and knocking it down again in one and a half years. The fact that one-fifth of the faces are on the new system, which is technically a better system and leads to higher productivity, is very heartening.
The trend is also beginning to reflect itself in that the output per man shift for new mines of about 4.25 tonnes is roughly twice the average for the coal industry. The pay-off is beginning to come through. Of the 160 major projects since plant recall, including five new mines. we can look forward to a successful future for the industry despite some of the gloomy prognostications that have been made by one or two Conservative Members. We can look forward-I shall welcome it when it comes-to what I call realistic pricing. The industry has suffered for many years because of unrealistic pricing, brought about more often than not by the capriciousness of political intervention. The principle of judiciously setting limits and keeping an arm's-length relationship cannot bode anything but good for the future of the industry.
Whereas in the past it was well known that one must run hard to stay in the same place in the mining industry—for many years running hard involved going backwards-we are now in a position for the first time for many years to run hard to make advances. The advances may be small in the first instance, but we can begin to see that there is a genuine future for the industry in increased competitiveness, assuming that we have responsible leadership by the Government, the NCB, the National Union of Mineworkers and the other unions in the industry.
I wish to add a word of thanks for the past services of both Sir Derek Ezra, whom I did not have the pleasure of knowing, and Mr. Gormley, whom I am proud to claim as an old friend.
§ Mr. Tony Marlow (Northampton, North)
As I am surrounded by many experts on the coal industry, I rise with a certain amount of, if not much, trepidation. We do not dig for much coal in Northampton, although we use it either directly or indirectly.
181 One reason why I wish to speak in the debate is that for one and a half years I was prospective parliamentary candidate for Normanton, in Yorkshire. The hon. Member for Normanton (Mr. Roberts) spoke a few moments ago. That was one of the most satisfying and happy parts of my political career. It was a lovely constituency and they were the most friendly, direct and wonderful people. I look back on that experience with much pride, happiness and gratitude.
The Bill provides for grant payments to the coal industry. I ask my hon. Friend the Under-Secretary of State timorously whether he would consider the possibility of introducing an amendment that I believe would not only strengthen the coal industry but might eventually reduce the amount of money that we would wish to bring forward in subsequent Bills if not in this one.
If one stands back and considers from afar some of the characteristics of the coal industry, one is bound to notice that much public money is invested in it. We are talking about a possible limit of £4.5 billion, which may be increased by order to £5 billion. That is about £100 for every man, woman and child in Britain, or £400 for a family of four. We are talking tonight about a lot of money. If we compare the coal industry with the oil industry-which is in private hands-the oil industry does not ask for taxpayers' money. It pays a great deal into the public coffers through taxation. That leads me to ask whether there is anything that we can do, both for the benefit of Britain and the people who work in the industry, to go towards some privatisation, which is being considered by the Government in other area's of policy.
Another characteristic of the coal industry is that it is a monopoly which most right hon. and hon. Members would be prepared to do without.
We do not generally like monopolies and we have sound reasons for not doing so. First, there is more than a tendency—it is a proven fact—that with a monopoly the price increases and the customer does not get as good a deal as he might otherwise get. When we talk about coal, we talk also about energy and electricity and about prices being higher than they might otherwise need to be for heating.
The old-age pensioner, the one-parent family and the poorer members of our society are affected much more individually by energy prices as a proportion of their family budget than are richer members of society.
A monopoly is bad for the investor. If we are trying to get more funds into the coal industry, whether it is provided by the Government or by anyone else, one matter that investors will consider squarely is the return on their investment. I know that Opposition Members have been asking the Government to put forward even more money. I, too, wish that we could get more money forward, but I am not sure whether it should come from the Government.
I wonder whether, in the final resort, monopolies provide the best working environment and the best prospects for those who work in them. My hon. Friend the Member for Fife, East (Mr. Henderson) mentioned the conditions of employment and catering that are available in the oil industry on the North Sea oil rigs. He unarguably made the point that it was better than is available to hon. Members and to many people who work in the coal industry. If one considers new machinery and new 182 techniques, is there the same pressure in a nationalised monopoly as in private enterprise? I do not wish to press and alarm Opposition Members, because I know that there is grave concern—and rightly so—about safety in coal mines. If one is rushing for profit and private investment, there is concern that safety will suffer. I accept that point. Safety must be the first consideration.
§ Mr. Henderson
I agree with my hon. Friend, and I am grateful to him for emphasising the importance of safety. Does he not agree that in airline travel, which could be hazardous and in which there is much competition, safety is assured despite the private enterprise system?
§ Mr. Marlow
I accept my hon. Friend's point, which helps my point. Safety is paramount, but I believe that one can achieve safety in coal mines without continuing to have a completely nationalised monopoly.
Another characteristic is the power of the mining industry as it is now set up. That power can almost override Government economic policy. When the miners voted to accept the pay offer that was put to them a few days ago, in many respects that was the most significant economic event of the past six months. The miners' decisions on pay have been seen to be vital to the national economy for a long time. Not only is there economic power, but in the past—although it is less likely to develop in the future—there has been overwhelming political power that has affected the ability of Governments to continue in office.
An important characteristic of the coal industry is the work force. When I was a candidate in Normanton I was impressed with the coal mining community. It was the time of the coal strike in February 1974. I spent much time discussing policies and politics with the community and I was impressed by their friendliness, independence, directness, patriotism, vigour and courage. I had spent time in the Armed Forces and I thought that the people working in the coal mines exhibited all the best characteristics of those I met in the Armed Forces and of the British people as a whole.
§ Mr. Marlow
I would not wish to do that. I shall advance my arguments. Perhaps the hon. Gentleman will not agree with them, but I shall not press a major case on that.
§ Mr. Henderson
During the 1974 general election, I was also a candidate in a mining area; only a stone's throw from the Cardowan pit. Does my hon. Friend recall that the miners then said that they recognised that under Conservative Governments they had done substantially better in their standards of living than they had done under Labour Governments? That recognition caused them anxiety when striking later that year.
§ Mr. Marlow
I hesitate to make a political point because I believe that that aspect applies to any work force. There is a tremendous spirit among those working in the mining industry, yet, as has been said twice during the debate, productivity in terms of output per man-shift is now the same as it was nine years ago. There must be 183 something wrong with motivation and organisation if these people have not, as they would have wished in the right circumstances, been able to achieve much better results.
I told the Minister that I should like him to consider—I said it gingerly and with a great deal of timidity—the possibility of bringing forward an amendment that would allow for the privatisation of part of the coal industry. Being specific, the Minister should take powers which would enable him to hand over individual coal mines and coal mining areas to those working in the industry. We have done that with the National Freight Corporation and it seems to have been popular with its workers.
I suggest that the Minister takes powers to say to those working in a coal mine "If you wish to, we will let you, the workers, have this mine—buy it from us or have it on lease. Some sort of financial mechanism can be devised. You will then be the owners, controllers and managers of your own pit. You will be the controllers of your own future. You will have your life and livelihood in your own hands and will be able to hire who you wish as managers of your pit. You will be able to go where you like to raise money for investment in your pit and decide how many people to have on any activity within it. You will be able to decide your future and life."
I do not say that the Minister should say that the miners must do that. All I say is that he should have the powers so that if any mine or group of them or area wished to take advantage of the opportunity he could deal with them accordingly. He does not have those powers now. If he had the powers, he would not be forced to use them. It would not cause any wrinkles, trouble or disruption if he had them. Such powers have been used with the National Freight Corporation and with other nationalised industries to a greater or lesser extent. Why not give the workers in the coal mining industry the same opportunities enjoyed by workers in other industries?
It will be said that the National Union of Mineworkers and, in particular, Arthur Scargill would have nothing to do with this idea and like the position as it is. On being elected recently by a large majority, Mr. Scargill argued that his workers should reject the National Coal Board's pay offer. In the event, the industry's workers had the good sense to accept that offer.
Workers at certain coal mines and other groups may wish to take advantage of an amendment if the Minister brings it forward. I earnestly beseech him to give the matter due consideration.
§ 8.8 pm
§ Mr. Peter Hardy (Rother Valley)
I do not wish to take much time, so I shall not follow far along the trail of the hon. Member for Northampton, North (Mr. Marlow), save to say that if ever referendums become fashionable—I do not know whether they will—I doubt whether a referendum on that subject would receive much response in Normanton. Indeed, I would not recommend such a waste of public expenditure to provide the paper on which the question could be printed.
I join my hon. Friends in thanking the Minister for the Bill and to say to him, as the only neo-Keynesian on the Government Front Bench, that we appreciate his good fortune in the Secretary of State being so busy upstairs, pursuing his obsession to rob the nation of a substantial part of its oil and gas interests, that we have managed to see the coal industry escape a much harsher fate. We enjoy his good fortune and are glad that he has managed to please 184 the House today. I hope that the Bill can get through Parliament quickly and that, before the Oil and Gas (Enterprise) Bill leaves the Standing Committee the Minister's right hon. Friend, the Secretary of State, will not have an opportunity to carry his energy deprivations any more irresponsibly than he has.
As my hon. Friend the Member for Midlothian (Mr. Eadie) and other hon. Members have referred to the delay over Belvoir. It is essential that we have a decision and that the Minister spells out to those who have complained and objected to the Blevoir proposal that very tight environmental protection will apply. Indeed, he could tell them that the environmental protection that will be available if and when the Belvoir project is approved will be much tighter than in any of the existing colliery and coalfield areas of Britain. I should like the advantages that will apply to Belvoir, if the Government have the sense to approve the scheme, to be extended to other areas with older collieries.
The closure of old pits is no novelty. On Sunday I went for a walk with my wife, boys and dogs for a couple of hours and we walked past five former colliery sites. Many people, including those in the locality, would not recognise four of the sites as having once been collieries. I think that my hon. Friend the Member for Penistone (Mr. McKay) will agree with me. In his constituency and mine there are probably about 200 former collieries.
Some collieries were very small in the eighteenth century. There has never been resistance to or a horror of closing, there is concern about unemployment. There is 27 per cent. unemployoment in the Dinnington area in my constituency and that should not be further increased. High unemployment has led to resentment in the coalfields. I think that all of them have above-average rates of unemployment. Closures, old capacity and exhaustion are inevitable. If we are to maintain the new investment and productivity about which Conservatives Members are so concerned, new orders and new developments are essential. Therefore, Belvoir is important. If the Under-Secretary of State is to address the House again, I hope that he will comment on that factor.
It would be churlish of me to refer to Belvoir and not to say that in Yorkshire there is substantial investment. At Maltby in my constituency approval has recently been given for the largest investment programme at any existing colliery. Orgreave is closed, but Maltby is to double its present capacity. It will contribute to the upsurge in productivity because of the new investment.
I resent the highly selective Conservative Central Office handout, which appears to present a rather peculiar assessment of the National Coal Board's productivity record. Apart from agriculture—I accept that agriculture is to be treated separately and as a superior achievement—no industry in Britain has exceeded the improvements in productivity which have been secured by the coal industry since the war. Often improvements have been made when rich and thick seams have been exhausted and the yield per yard of work has obviously diminished. I shall not go too far along that path, because I do not wish the Minister to be in any further difficulty with his hon. Friends.
I notice that the hon. Member for Bedford (Mr. Skeet) has returned to the Chamber. We are accustomed to the light-hearted speeches that the hon. Gentleman makes in every coal Bill debate. He has contributed to every one that I have attended since I entered the House in 1970. On 185 every occasion we have heard the hon. Gentleman's views. They are not always the same. He seems to perceive his error five years after he has perpetrated it and then he begins to shift ground. I hope that in about 1995—
§ Mr. Hardy
—he will realise what his view should be. By that time the holes in Bedford will have been filled by the spoil from the Belvoir coalfield. I do not suggest that he should eat the spoil, but I hope that he will be eating his words by then.
It has been said that our oil and gas reserves will begin to diminish in the 1990s. These reserves are puny compared with the coal reserves. Our North Sea oil output will begin to decline from about 1992 or 1993. Our gas output may begin to decline before then, especially if the Government have their way and encourage a rather more reckless use of gas than is wise and prudent. We have enormously greater reserves of coal.
I have been reading recently a quarterly journal which includes an article by Mr. Kenneth Moses, who is the director of the north Derbyshire area of the National Coal Board. Usually I do not like to refer to Derbyshire, but my constituency extends to the Derbyshire border and Mr. Moses' collieries in north Derbyshire sometimes cause subsidence in the Rother Valley constituency. I am grateful to him not so much for the subsidence as for the article.
In his article Mr. Moses observes that there were 250 billion tonnes of coal in Britain in seams which were at least 2 ft. thick with an ash content of below 40 per cent. and at no greater depth than 4,000 ft. That means that in theory we have an enormous amount of coal. Throughout our history we have taken or sterilised only 48 billion tonnes of coal. Much of that which remains cannot be extracted easily, or it may not be possible to extract it in the light of present and known technology. However, we have at least as much extractable or workable coal ahead of us as we have taken throughout the nation's history or which has been left sterilised.
Further investment will greatly improve the industry's capacity to win. Possibly we can go deeper. It may be that thinner seams will be more easily worked. Perhaps less even and geologically less certain seams will be able to be worked as the price of energy rises, as it will, despite temporary hiccups. At the same time, the incentive to develop new technologies will be that much greater.
For these reasons, the National Coal Board must remain the head of a viable industry. Our technology in the extraction, use and consumption of coal must develop. We have to rely on high technology for the future and it is vital that we remain at the forefront of mining engineering and relevant civil engineering industries. We are being given a better opportunity than perhaps we deserve, because, foolishly, the French and the Belgian industries have been contracted severely. Similarly, the German industry is shrinking. If their industries shrink, it is inevitable that their mining industries and other related industries will be affected. I do not want the British industry to be similarly affected. We must ensure industrial growth and job creation. That is why Belvoir is important and that is why the Bill is important.
186 The Government have an obligation to ensure that the industry succeeds for reasons not merely of social history but because someone has to provide a capacity to improve the environment in the mining areas. Recently the Members of Parliament representing coalfield areas met local authorities in Barnsley. The West Yorkshire, North Yorkshire and South Yorkshire county councils were represented. The Flowers report was considered. It was noted that some of the figures in the report may not be particularly accurate. I hope that the Minister has been made aware of the corrections.
The Government are becoming extremely worried about the cities because of the riots at Toxteth, Brixton and elsewhere. It worries me that the Government may be so afraid of the cities that they may decide to shift resources from the older industrial areas, which may not be entirely metropolitan conurbations in the city sense, to established cities.
We cannot expect the people in Yorkshire to accept high unemployment and reduced public spending if that means that the environment cannot be protected. The Minister will be aware that the position in Yorkshire is critical. Unlike all the other coalfield areas of Britain, Yorkshire is a net loser in the colliery spoil areas. I hope that the Minister will advise the NCB that after the slight improvement in its finances that he has provided it will be able to take a rather more helpful and generous view in its co-operation with the local authorities, will be able to stimulate and assist them in their work in reclamation and environmental improvement and be able to recognise that those who work underground need a decent surface area in which to live.
§ Mr. Allen McKay (Penistone)
I should like to comment on one or two of the points made by Conservative Members. The hon. Member for Bedford (Mr. Skeet) talked about colliery closures and said that not long ago there was a hit list of about 23 collieries. He said that 10 collieries had closed in the last 12 months, which is not too bad a rate of colliery closures, if they are needed at all. On that assessment, nearly half of those collieries have been closed, so we are half way towards getting things right.
The hon. Member for Fife, East (Mr. Henderson) talked about the Tory pamphlet that refers to a subsidy of £35 per miner. If that £35 per miner is not paid, we would have to pay unemployment pay of about £47 with a loss in tax of £20 and national insurance contributions, which would be about £80 altogether.
I assure the hon. Member for Northampton, North (Mr. Marlow) that the National Coal Board is an excellent employer. I have worked for it for about 40 years. The hon. Gentleman asked whether we would get better machinery from a monopoly. The monopoly has made advancement possible in the coal industry. Later in my speech I shall refer to that advancement in the British coal mining industry, to the investment that we have been able to make abroad and to the opportunities that have been given to British industry because of the expertise of the NCB.
No debate on the coal industry could take place without a reference to the disaster at Cardowan, to which many hon. Members have referred. Our thoughts should not be far away from the injured and their families at this time. The coal mining fraternity can fully appreciate the 187 anxieties and feelings of all in the mining industry when such an incident occurs. More than most, I can appreciate those feelings because one of my duties when I worked on the industrial relations side of the NCB was to break to families the news following a fatal accident and to see as far as possible to their immediate welfare.
The hon. Member for Northampton, North brought out the fact, perhaps inadvertently, that when one miner bleeds, we all bleed, when a pit bleeds, all pits bleed and when the coal industry bleeds, the country bleeds. That is what makes the mining industry unique and different from any other industry. It is what unites the mine workers into a force that fuses together when under great stress.
The industry has three trade unions. One is the National Union of Mineworkers, to which I belonged and of which I was branch president. The second is the National Association of Colliery Overmen, Deputies and Shotfirers. I pay tribute to one of its leaders, Gilbert Fellowes, who died recently. Thirdly, there is the British Association of Colliery Management to which I and my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) belong and of which I have been a member for 14 years.
The BACM, being an organisation of all political persuasions, has no sponsored Members of Parliament. It co-operates with the other trade unions in the industry 98 per cent. of the time, and when incidents, such as at Cardowan, occur, it co-operates 100 per cent. of the time. Therefore, I believe that I can safely say on behalf of all members of the BACM that we extend our deepest sympathy to all concerned and to all their families and that we wish the injured a speedy and full recovery.
When we last discussed the mining industry, the Minister said that he wanted a strong and viable industry. He has one. In my area of Barnsley the drift mines at Royston and Riddings regularly make new output records. South Kirkby is now a 1 million tonne pit. Grimethorpe, which is known as the sleeping giant, has now come alive. It produces so much coal there is not sufficient shaft capacity at Houghton to draw the coal out of the pit. Therefore, there are problems there, which we are overcoming.
That area was once virtually written off. Therefore, when people talk of colliery closures and the output of various pits, they should be careful about the way in which they approach the subject. There was a plan at one time to run down the area to four large pits.
John Kiers, the area director, arrived and gathered round him a team of specialists in higher management, expert planners and project engineers and built on the already good relations in the Barnsley area between the management and the trade unions. Each year the representatives of all the trade unions were brought to the headquarters so that they could be shown what was planned for the area. Each year they were informed how far that planning had proceeded and the results. They passed on that information to union level. That fostered further the spirit of co-operation.
The projects linked the mines in the area into three groups. A special drivage machine—one of only two in the world when we installed it—used the underground galleries on the west side of the area to link the collieries together. More convenient and conventional methods linked the other parts to make the mines into three major groups.
When the hon. Member for Bedford talked about investment in the coal industry and related it to output, I 188 said that that was wrong. The investment in the Barnsley area has been for the drivages to link together the collieries in more viable and profitable units and to build three large washery plants at Grimethorpe, Woolley and Houghton. All the products will come into those three plants. That means that we shall produce a better quality of coal. We shall be able to mix coals at any time to suit any customer. We shall be able to switch from coking coals to power station coals at any time. Therefore, the area has become one of the most viable areas in the NCB.
I shall quote the performance figures for the area to answer some of the criticisms of the NCB. The investment that Governments have ploughed into the NCB is now coming to fruition.
In 1976–77 saleable output was 7.3 million tonnes. In 1980–81 it rose to 8.2 million tonnes. In 1985 it will be 8.7 million tonnes. In 1976 there were 16,521 employees. In 1985 the manpower will be reduced to 14,300. Therefore, there will be greater production with a loss of manpower. The output per man shift in 1976 was 6.84 tonnes. In 1981 that will rise to 10.96 tonnes. The number of coalfaces dropped from 46 to 42. The annual proceeds are also interesting. In 1976, the proceeds were £140 million. In 1981–82, they will be £289.96 million—an increase of £149 million in that area alone. But there is a twist to the tale. Much capital investment has been poured into the industry, so the capital return will present a different picture. Nevertheless, the trend can be seen. In 1976, the total capital invested was £16.7 million, in 1980–81 it had risen to £17.6 million, and by 198.5 the increase will taper off at about £37 million.
On the profit and loss account, as a result of that investment in 1979–80, the area lost £28 million. By 1985, however, it will have come on stream again and will once again make a profit. Therefore, the whole area, which at one time was to be closed down, will be one of the most profitable areas of National Coal Board activity. Great credit must be given not just to the board but to every person working in the collieries for that effort, because only through that effort could such a result be achieved.
The possibility of a drive to the east from the Barnsley coalfield could also be investigated. It could drive from three of the major collieries straight to the east coast, opening up a great quantity of coal. Shafts could be sunk at Drax so that, without transport problems, coal could be transferred underground direct to power stations, and facilities could be made to run the dirt back to reclamation schemes on the east coast. There would then be a self-contained coalfield. It is a simple plan, and there must be some snags, but it should be looked at.
The National Coal Board has gone further east—to India. The interest in India ceased in 1965, but it has been rejuvenated, and the NCB has played a large part in creating the commercial opportunities that have arisen in India. It has introduced United Kingdom technology to India and advised on long haul mining which has led to the export of mining machinery and supplies from Britain. The equipment now being installed in those projects in India is almost wholly British. India has become interested in control equipment. The NCB leads in this area and is now training the future operatives of those mines. Training courses have been set up for management, strata engineers, mechanisation engineers, geologists and project planners.
India invited the NCB to plan two major projects—the Ashapani mine, which is a green field project, and the 189 Gusick mine, which is a major construction. The work was undertaken by some of my former colleagues from the Barnsley area—a team of specialists who, through training from the nationalised monopoly of the NCB, have acquired the expertise to deal with major projects. They are now in India. When the project comes to life, we hope that the interest generated will carry through to developing and advising the operation of the coalfield, thus opening further opportunities for Anglo-Indian co-operation and creating great commercial opportunities for the British mining machine industry. The House should congratulate the NCB on its efforts in making the project possible.
There is therefore a need for continued Government investment on a scale which some people have criticised. Without that investment, such a project would not be possible. Without that possibility, the team would not have been in India. Without that presence in India, the NCB could not present to Britain the commercial possibilities arising from the opportunity that it has taken and been able to exploit.
People ask what the NCB has done to make itself efficient. Between 1965 and 1981, 344 collieries closed and manpower was reduced by 261,200. As has been said, colliery closures are nothing new to the board or to the men themselves. Reference was made to people saying that they should work in water. Matters of that kind are taken care of by the men themselves. When it was decided that Rockingham colliery should close, the NUM fought to keep the colliery open—rightly, as that was the union's remit—but, as conditions worsened, the men themselves came to the view that enough was enough and that it was time for the colliery to close. They are sensible enough to know when a colliery is not viable.
The NEDC report of 6 November 1981 shows that Britain produces the cheapest produced coal in Europe. Aid to production is shown as £175 million in the United Kingdom, £182 million in Belgium, £281 million in France and £670 million in Germany. Social security aid in the United Kingdom amounts to £41 million, in Belgium £388 million, in France £817 million and in Germany £1,617 million.
The total figures are £233 million in the United Kingdom, £570 million in Belgium, £1,157 million in France, and £2,843 million in Germany.
The subsidy per tonne for the mining industries of those countries is £1.9 in the United Kingdom, £90.5 in Belgium, £64.3 in France and £30.4 in Germany. British coal is among the finest and cheapest in Europe. Cheaper coal is produced in Australia and sometimes in Poland. It would be wrong, however, to depend on imported coal because that will eventually cease.
Our coal industry has tremendous potential. Reference has been made to the 190 billion tonnes of coal in the ground, 45 billion tonnes of which can be extracted. The industry may have its problems, but running out of coal is not one of them.
The Minister referred to the future of the coal industry. Fluidised bed combustion, coal liquefaction, gasification, metallurgical fuels, pyrolysis and conversion schemes are all available.
It is important to know the future of the Vale of Belvoir coalfield, not because of the coal but because of the miners' jobs in the Leicester coalfields. The run-up to the development of the coalfield will take about 10 or 12 190 years. I understand that within 13 years there will be no collieries left in the Leicester coalfields. It is important, therefore, that development should start now.
There is a problem that I should like the Minister to investigate. The chairman of British Steel, Mr. MacGregor, has said that there is a problem with the quality of the coking coal supplied by the National Coal Board and that British Steel might need to obtain supplies from abroad unless the quality is improved. That would be a great blow to the North-East mining industry. Does the Minister know about this problem? If not, he should take up the matter with Mr. MacGregor to ascertain the extent of it.
The British coal industry has a great future. It is a vibrant industry and it is ready to take off. I am glad that the Bill provides the investment needed. I am sure that when we consider the subject again in 1984 there will be a different picture and a different coal industry. I am equally sure that we shall have problems then, but at least someone has come to the Dispatch Box and said that help will be given to the coal industry.
§ Mr. Tim Eggar (Enfield, North)
I shall not seek to emulate the hon. Member for Penistone (Mr. McKay) in his knowledge of the industry. My knowledge of mining comes mainly from opencast mining outside the United Kingdom. Everyone recognises the significant differences between opencast and underground coal mining techniques.
I join the hon. Gentleman in wishing the miners and their families involved in the recent pit disaster well. Such disasters are a tragedy to the mining community and to the whole country. The people of this country, despite the past 10 years of troubles and whatever feelings they may have as a result of that history, have a tremendous respect for the work of the miners. Anyone who tries to detract from that respect as, I feel, Conservative Members, in some ways, tried to do in 1974, does so at his own risk. There is an affinity with miners among British people, even those who live hundreds of miles from a pit. They have respect for those who have traditionally provided the economic strength of our country.
The hon. Gentleman also described the team approach that exists within the NCB among management and workers. I have been horrified on visits to mining sites in other parts of the world to find significant numbers of highly skilled managers and mining engineers who received their training from the National Coal Board and who have found, for one reason or another, that the career opportunities they want do not exist in their own country. I visited recently a nickel mine in Western Australia. Most of the miners and the mine management were former NCB employees. Several of the miners to whom I spoke—all were from the same area of South Wales—had gone to Australia to work at the mine when it opened 15 years ago for one simple reason. They told me that they had wanted an incentive to work. This they had found. A tremendous amount of importance at the nickel mine was placed on productivity performance and productivity pay, to a far greater extent than even now exists within the NCB.
I am not surprised that NUM members, when the facts have been put before them, have consistently voted for productivity payments. There is a feeling among miners that this is the direction in which the industry must move. With one or two possible exceptions on the Conservative 191 Benches, those hon. Members who take an active interest in coal debates are united by a belief in the future of the British coal industry. It is a belief held just as fiercely by Conservative Members interested in the subject as Labour Members, although perhaps for slightly different reasons—possibly for more harsh economic reasons rather than emotional reasons. I do not make that remark in any derogatory manner towards Labour Members.
We share a commitment to the coal industry. Conservative Members fight just as hard against the myopic reasoning of some of our colleagues as, I believe, Labour Members fight. I fight because I recognise that oil and gas, which are not providing the prosperity that they should, will represent only a temporary feature on the graph of our economic history and our energy development. Oil and gas will run out more quickly than many people might expect or realise.
When historians look back, perhaps in 100 years, they will say, I believe, that the two or three decades during which the mining industry of this country had to be massively subsidised were anomalous. I suspect that the tremendous profitability of the mining industry, on which this country's economic strength was founded at the end of the nineteenth century and the beginning of this century, will be repeated in the next century.
History will judge us to have made some appalling mistakes collectively—all of us, on both sides of the House, were responsible—in the 1940s, the 1950s and the early 1960s. But it will also judge that we began to realise the troubles that the country was getting itself into in the 1970s and to have made the commitment in the 1970s, 1980s and early 1990s to develop a strong and powerful coal industry.
What ha happened in the past 30 years has caused considerable problems for the industry. We are all aware of that. We are aware of the bitterness in the mining community, which saw its industry starved of funds and run down in a way in which no other industry in this country has been run down. The members of that community are understandably determined never again to allow themselves to be put into that position.
There is still a great need for flexibility to be shown by the National Union of Mineworkers and mining communities generally. If we examine the problems in the vast majority of the South Wales pits and those in other areas—Kent, Yorkshire and parts of Scotland—we must recognise, if we are honest, that the long—term future of those pits and communities is, to say the least, very uncertain. The Government must be able to create, I hope in a bipartisan way, an atmosphere that will enable the miners concerned to consider leaving the pits or, as is to be hoped, moving with as much of their communities as possible to the new pits that will assuredly be developed, in the Vale of Belvoir or elsewhere.
I hope that the House will forgive me if I repeat the Government's commitment to the coal industry. This year alone £550 million will be given to the National Coal Board in grants. That is £35 per week per employee of the NCB. Nobody in the industry can detract from that figure, which represents a considerable commitment.
It is worth recording the figures of total capital expenditure over the past three years: 1978–79, the last year of the Labour Government, £454 million; 1979–80, £617 million; and 1980–81, £736 million. The amount approved for the next financial year is £805 million. That, too, is a considerable commitment.
192 As the Government have made that commitment, the least that can be expected is that the other side of the bargain will be kept. Labour Members who know much more about the domestic industry than I do will acknowledge that "Plan for Coal" called for closures of around 4 million tonnes of capacity a year. In the three years during which "Plan for Coal" was operative under the Labour Government a total of just under 4 million tonnes was closed—a third of what had been expected under the plan.
The hon. Member for Rother Valley (Mr. Hardy) was upset at some of the remarks about the productivity performance in the industry. It is not very impressi%e when we see that in 1980–81 productivity per man shift was about 2.3 tonnes and that that was below the productivity per man shift in 1972–73, after a massive injection of capital investment. The trend is definitely in the right direction. The acceptance of productivity payments, and so on, is moving things in the right direction. But all of us who are committed to the coal industry have to be aware that it is a reciprocal arrangement, and we have to continue getting productivity agreements and improvements in productivity if we are to be able to justify the kind of sums that are being committed from the public purse because there are always competing claims.
I am sure that I am not alone among hon. Members in having had extensive lobbying from energy—intensive industries. The one area which the Government have been able to do very little about is that of electricity prices, because the generation of electricity in this country is basically 80 per cent. reliant on coal, and coal is expensive compared with continental methods of generating electricity.
Vis-à-vis people employed in the energy—intensive industries, electricity costs are high and that is partly —I accept only partly—because of the high cost of coal. But we are making the investment and we are getting the productivity increases, so that in time we can hope to move towards more competitive coal—fired electricity generation. That leaves aside the argument about moving to nuclear energy, to which I am also committed.
My hon. Friend the Member for Northampton, North (Mr. Marlow) commented on a plan, obviously dear to his heart, to pass the pits over to the miners—a miners' cooperative. There are clearly certain attractions in that route. We are aware of some very small independent operators who operate extremely profitably, employing fewer than 30 people, and whose employees seem to be very happy with the circumstances of their employment. But I look to the other end of the spectrum. It has always seemed crazy to me that some of the companies which are making the biggest commitment to coal world—wide are British companies—for example, BP and Shell. Tremendous funds are going into coal development. Yet here in their home territory, not for any illegal reasons but for obvious industrial relations reasons, they are unable to develop fields as they would like.
I share the belief that, whatever else happens, we must press ahead with the development of Belvoir. That is absolutely essential. We have finished considering the environmental arguments and I accept the strength of feeling of those who believe that that beautiful part of the country should not be disturbed, but I hope that the Government will at least examine the possibility of considering whether the NCB could go into some form of joint venture with one of the major coal companies. I have 193 BP particularly in mind. It would be a very significant capital investment. It would be using different up-to-date mining techniques on a scale that has not yet been seen, with the possible exception of Selby, which, however, has a number of important geological differences. I would hope that there would be cross—fertilisation and the addition of capital from private sector participation. I trust that the Minister will encourage the NCB at least to explore the possibilities. At the same time, he should assure the NUM and the other mining unions that this is not part of a plan to privatise the whole of the NCB but an attempt to introduce another angle and area of expertise into the development of a major mine. The accretion of capital from the private sector might allow the mine to be developed at a faster rate.
I make one comment on the mining supply industry. We probably have unmatched expertise in the development of underground mining machinery and ancillary equipment. One problem has been that the companies involved, for reasons that I have never fully understood, have not been willing to export as aggressively as one might have hoped, especially in view of their tremendous technological lead and advantage. This has undoubtedly partly been because they have been tied to the NCB purchasing patterns, design specifications and so on. They have traditionally geared their output and work force to the likely requirements, as they have seen them, of the NCB.
The position has now changed. There has undoubtedly been considerable concern in the mining supply industry about the lack of orders from the NCB. With the recession, over the past year they have become a great deal more aggresive overseas. It is a problem or all suppliers to nationalised industries—British Rail, the British Gas Corporation and so on. There is an unfortunate tendency for too cosy a relationship to develop with their major and in many cases only customer. In too many cases there has not been enough emphasis placed on exporting, getting away from NCB specifications and requirements, looking at the demand for mining equipment world—wide and developing products suitable not only for the domestic industry.
The situation is now changing quite fast. Unfortunately, the change has come a little too slowly for us to take advantage of the tremendous increase in investment in underground mines in the United States. The pace of investment has slowed over the past year because of the fall in coal prices.
I welcome the Bill. It is a tremendous commitment by the Government to the future of the coal industry. It is up to all hon. Members and both sides of the mining industry to make sure that this act of faith by the Government reaps dividends for us all.
§ Mr. Michael McGuire (Ince)
I am usually complimentary to hon. Members who precede me, but I must tell the hon. Member for Enfield, North (Mr. Eggar) that to come in at the last minute and make a speech of 20 minutes is pushing the boat out a wee bit. He is testing the good temper of hon. Members who have waited a long time.
That is not to say that I have been in the Chamber for the whole debate. I apologise to the Under—Secretary of State and to my hon. Friend the Member for Midlothian
§ (Mr. Eadie)
For good reasons which I do not wish to detail, I missed their speeches and the first Back—Bench speeches.
I, too, welcome the Bill. Although I missed the opening speeches, I believe that everyone is broadly in favour of the Bill.
I declare an interest as a Member sponsored by the NUM. In addition to my hon. Friend the Member for Midlothian three others of my colleagues who have spoken are also sponsored Members. My hon. Friend the Member for Midlothian always enjoys the cut and thrust of our debates on the coal industry, and like me looks back on past debates on this subject.
It is said that we need a new "Plan for Coal", new incentives and a new directive. I look back on the previous plans with wry amusement. Had the forcasts and plans envisaged for the mining industry, including those of my party, come to pass, we should be in a sorry state. We can look back on past follies. Whatever short—term advantages various proposals offer, we must remember that our overriding interest is to have a prosperous and viable mining industry. The industry will be a storehouse of riches in the future, as it has been in the past.
Once there were about 30 mining Members in the House. When I first became a Member there were 27. Sadly, there are now only 16 or 17. We have none from South Wales, although there used to be seven. I believe that there is no mining Member now from Durham and only one from Northumberland. However, we are reinforced by colleagues such as my hon. Friend the Member for Easington (Mr. Dormand), who, although not a miner, has mining in his veins. It is something that people take in with their mother's milk. In the area, if people are not miners, they are the sons, grandsons or brothers of miners. A great deal of expertise and knowledge are brought to our debates. Although the number of miners in the House is dwindling, the common sense continues.
The development of the Vale of Belvoir is important. The birds whisper that the public inquiry is in favour of development but that there is organised resistance to it from the Tory Benches. I pay tribute to the mining lobby, but it may have something to learn from the organised lobby of agricultural interests. That is no more powerful lobby. The whisper is that the Minister will contradict the inspector's findings. We want an announcement soon. The national interest must not be overridden by sectional interests. Some people believe that mining development in somewhere like Ince is all right but not in pretty rural areas like the Vale of Belvoir. Our coal is, unfortunately, exhausted.
Private development has been mentioned. There is nothing to stop a person from developing a pit, although it cannot have more than about 30 people working in it. In my constituency there used to be a field full of "day eyes" as we call them in Lancashire. They have nearly all gone. I helped one man develop a small mine after one or two he previously owned became exhausted. Such private owners face the same problems as the larger mining industry. They need capital to overcome the geological problems, but they are not able to do so. If people wish to develop with private capital there is nothing to stop them, but they need a licence and cannot employ more than a certain number of people. Even so, they still face considerable difficulties and it is a risky business.
195 I return to the Vale of Belvoir. The impression will be given that the long—term national interest is being overridden in the Vale of Belvoir. According to the plan, coal will not be produced until 1995. It will be claimed that coal should not be produced in such areas. I do not know whether it is designated an area of outstanding beauty, but it is obviously a pretty, rural area of the country. We need an answer from the Minister, if not tonight, as quickly as possible. It has to be understood that mining does not take place only in the less beautiful parts of the country. The national interest must be paramount, and the people in the mining industry and elsewhere will take it badly if the Minister ducks this issue.
My hon. Friend the Member for Wigan (Mr. Fitch) summed up when he said that we are all environmentalists to a certain extent, but there is a practical application as well. He rightly quoted the record of the opencast executive, which not only restored land to its previous state, but in many cases improved it. He will know that on the border between our constituencies there was an opencast mining area. The old landowner told me that he fought to the bitter end to stop an opencast development of about 700 acres in what he considered to be an area of outstanding beauty in an area that does not have many. He told me that he was glad that he had lost and wished that there had been another 1,000 acres to develop, because not only had there been a magnificent job on restoration, but the quality of the land was improved.
Let us not run away with the environmental issue. My hon. Friend the Member for Wigan is right. There must be a practical side to this and I believe that the fears of environmentalists, understandable though they are, are unfounded. The NCB has great technology to restore land and improve it. A famous Labour politician once asked, "Why gaze in the crystal when you can read it in the book?" Well the book can be read in Selby. Nobody could argue that mining there has despoiled and disfigured the land.
I hope that the Minister will take on board the problem of commuted compensation for pneumoconiosis, which was mentioned by my hon. Friend the Member for Normanton (Mr. Roberts). The sum of about £7 million that has been set aside could be called a contingency fund. In answer to a request from Lawrence Daly, the secretary of the NUM, the NCB said that, without being too unkind to the person who answered for it, there is a legal quibble. There seems to be an element of legality, in that commuted cases occur when a sum is settled for and the claimant puts himself out of court for any further prospects for damages in other settlements.
Since 1948 the cases could not be settled on a commuted basis because even if an assessment of less than 20 per cent. was taken as a lump sum payment there was always the avenue of unforeseen aggravation to re—open the case. Under the old compensation scheme, the settlement made is for ever. That has caused some disquiet and concern in the union. It is asking for a modest measure so that it can tap into the fund, which according to the NCB can be granted only by the Government.
We have talked of large sums today. I am talking about a relatively small sum. It will not assuage the human suffering of the widows, but we know that money can be something of a compensation. Quite often such cases are settled on the basis of how much money is given, and all that we require is a relatively small sum. This will reinforce the feeling that the Government, the union and 196 the NCB wish to cement. They have common interests that they are seeking to satisfy. Having read the correspondence, I should like the Minister to take that point on board.
I referred earlier to the many debates that we have had on the mining industry. It is a unique fact that all hon. Members who represent miners' interests have worked in the mines. In our post—salad days we may look more prosperous than we used to—perhaps some of us are even chubbier—but we have all worked in the mines and we know what it is like to be "buggered" about trying to earn a living on piecework.
I am grateful for the fact that even in my short time in the House there have been tremendous changes in the mining industry, which have all been for the better. I entered the House in 1964 at the time of the power loading agreement. At that time the miners' wage was about £25 or £27 a week. There was tremendous uproar from people who did not know the industry over the fact that the miners intended to use their industrial muscle to try to get a better agreement. There used to be individual price lists, but they then went into a national scheme.
is its solidarity. I remember that when we were discussing the so—called wage structure and trying to get improvements in the industry someone said that the miners were using their muscle to bring down the Government. As the Government were reminded in 1974 by the right hon. Member for Down, South (Mr. Powell), they brought it on themselves, because when they went to the country and asked "Who rules the country—the miners or the Government?" Wilberforce gave them their answer. Conditions in the mining industry at that time were so terrible, given the modern conditions and wages in other industries, that it was laughable. Wilberforce was staggered to find that the Nottinghamshire miners, located in a prolific coal—producing area, were willing to accept almost no increase for several years so that their colleagues in less prolific coal—producing areas could have a share of the cake. That reinforces and demonstrates the solidarity in the mining industry.
An hon. Member said that it was terrible to put men down the pits, although I do not suggest that he used the recent explosion in the Scottish colliery as justification for that. Another of his hon. Friends referred To men burrowing underground and thought that that was terrible.
When I was pit secretary, I organised visits to various outside industries. On one occasion we went to the Ford motor company at Halewood. We saw how a car was produced. A sheet of metal moulded on a press went through a sophisticated machinery and emerged as a car. When we had a cup of tea and a bun with the plant manager he told me "Well, Michael you have some bonnie lads here and I would like to employ some of them". Although he was short of men and the wages were much better, he did not get a volunteer. The men said that, for a variety of reasons, they would sooner work in the pits. The conditions in the pits are much better now than they were when I left the industry, and in so far as further improvements can be made I am sure that the national executive at the NUM will try to make them.
This is a good Bill, which paves the way for future investment in the industry. I hope that the Minister, whose speech I missed, will reinforce his commitment to a viable and prosperous coal industry. I welcome the Bil to that extent.
§ Mr. Geoffrey Lofthouse (Pontefract and Castleford)
I shall be brief. I had not intended to speak in the debate, but having—unlike some hon. Members—sat through the debate and listened to Conservative Members, I thought that I should like some assurances from the Minister about certain speeches—notably those of the hon. Members for Fife, East (Mr. Henderson) and Northampton, North (Mr. Marlow).
Like many of my hon. Friends, I spent 40 years in the mining industry. In the short time that I have had the privilege to be a Member of Parliament, I have realised what little knowledge Conservative Members have of the practical side of the mining industry. That is very worrying when hon. Members are able to legislate for that industry.
I said that I would be brief because, in my early days in the mining industry, if a young man went on the coalface and spent a lot of his time "chit chatting", the old colliers would say "Don't speak when you've nothing to say, lad. You'll need all your breath down here." I realise that some hon. Members did not receive similar advice in their younger days. This might have been a better House if they had done so.
I was pleased to hear the kind comments made by hon. Members on both sides of the House about the miners and the mining industry. I fully appreciate that they have come from sincere minds. However, I was alarmed at the reference made by the hon. Members for Fife, East and Northampton, North to the privatisation of the mining industry. The House has a right to some answers tonight. Miners in my constituency and throughout Britain will want some answers. It has been accepted that miners are trustworthy and responsible. They never allow themselves to be led by the nose, as has been proved recently. Their word is their bond and they expect the same of everyone else.
I shall be interested to hear the Minister's reply to the hon. Member for Northampton, North regarding privatisation. I hope that his answer will be in the negative. However, there are rumours going around and sparks are being set off. Some Tory Members believe that certain profitable parts of the industry should receive the same treatment as the oil and gas industries are about to receive.
Do the Government intend to introduce a Bill to privatise certain sections of the mining industry? If so, the miners will want to know. I suggest that the Government will be very foolish if they attempt to deceive them. The miners will not tolerate being deceived.
The hon. Member for Fife, East said that miners had been objecting to pit closures for the past 20 years. How wrong could he be? Twenty years ago, I was employed by the NCB as a manpower officer in north Yorkshire when the mining industry was being raped. I spent much of my time in the Scottish and northern coalfields recruiting for Kelliney colliery. Families did not welcome the upheavals that resulted from such closures, but they acted responsibly and appreciated the difficulties. Looking back, I often think that some of the decisions were wrong, but those involved did not create upheavals or scream for industrial action.
Despite the massive pit closure programme and all the social upheaval and hardship, I am not aware of any industrial action in the mining industry during those 20 years. I often saw people in Scotland and in the North who were torn by the decision whether to go. They could not 198 decide whether to leave their mothers alone or to take their kids from school half—way through their education. Such decisions are not easy, but they had to be made. Miners acted responsibly and will continue to do so. They have a right to know about the future of their industry and whether the Government intend to privatise part of it.
§ Mr. Eadie
With the leave of the House, I should like to reply to the debate.
My hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) should not apologise for speaking in the debate. As a result of his experience in the industry, he has enriched it. Opposition Members have great knowledge of the industry because they have worked in or been associated with it. From that point of view, the debate has been good.
I regret that the hon. Member for Northampton, North (Mr. Marlow) is not in the Chamber. He raised a very old Aunt Sally, as if it was a new idea. I hope that he will read Hansard, because someone now resident in the Treasury once introduced a private Members' Bill to, as the slogan said, "Give the pits back to the miners". I once had a slight altercation with the Duke of Edinburgh, because I described the idea that he was then pedalling as crazy. The more the proposition is examined, the more clear it becomes that given the world we live in—and, as the Minister said, the marketing and expertise needed—it does not make sense.
That slogan wass born of compassion, not reality. Sir Gerald Nabarro used to say that we would get nothing for the pits and that we could give them back for nothing. In that era, people believed that coal was finished and that it had no contribution to make to our energy requirements. We now know that that is nonsense. My hon. Friend the Member for Ince (Mr. McGuire) will remember the days when we stressed that to pursue that policy would be to embark on social and economic madness.
I come now tothe subject of privatisation. To some extent, I am pleased that it has been raised, but I am not pleased that the hon. Member for Fife, East (Mr. Henderson) should speak to a Conservative brief which is out of date and in which the figures are wrong. People are now beginning to understand that the mining industry can be profitable and lucrative. They say "If it is profitable and lucrative, let us introduce privatisation, because it will mean a fast buck for some people". We have demolished the argument that the mining industry is getting a subsidy. We pointed out that the coal industry has to pay interest on the money that it borrows. So the argument about privatisation is nonsense, in that people are saying "We have peace and tranquillity in the industry and we do not want to disturb it. We do not want to antagonise the miners by introducing privatisation, which miners and their unions would bitterly resent".
§ Mr. Henderson
The hon. Gentleman will recall that, in response to an intervention by one of his hon. Friends, I said that I was not advocating taking anything away from the NCB. Rather, I said that there was a possibility that other people would also invest in the future of the industry.
§ Mr. Eadie
I am well aware that the hon. Gentleman was looking at the "lolly" lying around and advocating restricting public investment by saying "Private investment can have that 'lolly—. The hon. Gentleman, in an 199 intervention in the speech of his hon. Friend the Member for Northampton, North (Mr. Marlow), told the story about the miners in Normanton who were so good and loyal to the Conservative Government, but the hon. Member for Northampton, North lost the election there. The hon. Member for Northampton, North should not listen to political advice from his hon. Friend the Member for Fife, East.
One of the arguments in the debate related to the Vale of Belvoir. We should remember, in discussing the time scale involved, that by the time it starts it will be perhaps 10 years hence, and that in those 10 years, as the hon. Member for Bedford (Mr. Skeet) said, the United Kingdom sector of North Sea oil will start to diminish. The investment is needed now, because the peak of North Sea oil for us as an indigenous resource will be past.
The same argument can be applied to liquefaction. The hon. Member for Flint, West (Sir A. Meyer) said that he was watching the Point of Ayr "like a hawk". He had better do so, because arguments for liquefaction are being advanced by people who advanced he same arguments in the 1970s, an even in the 1960s. At that time the argument was "Just let's wait. If we need that technology, we shall buy it". They concentrated on denigrating British technology.
When we talk about liquefaction we are talking about two British invented processes which received world—wide recognition, despite what the scientists at the Department of Energy may say. Sasol is a successful concern in South Africa, but it is a wasteful process. The precesses that we invented by our own genius should be developed by us to assist the whole of Britain's technology. We are not talking about going commercial; we are talking about pilot plants. The sooner we start the pilot plants, the sooner we shall be in a position to decide the commercial road that we are to take, and might even manage to sell some licences. I repeat that by the time we get to that stage, the peak of North Sea oil production will be past. So it is important to plan for the future.
I promised the Minister that I would give him as much time as he wished to reply and I made a long opening speech, so I shall be brief. Many valuable and constructive points have been raised in the debate. Many of them can be dealt with in Committee. That is the appropriate place for them. However, the Minister will be pleased with the response to the Bill. To some extent, hon. Members are responding to him because of the speech that he made in arguing his party's case. It is not the first time that the hon. Gentleman has made a good speech. In Committee on the Energy Conservation Bill, the hon. Gentleman made as good a speech in arguing his party's case as I have heard.
We welcome the Bill. We shall address ourselves to the details in Committee, but I assure the House that we shall in no way delay its progress. We wish it to have speedy acceptance so that the industry may make the progress to which the Minister referred in his speech.
§ Mr. John Moore
We have had a wide debate and I join the hon. Member for Midlothian (Mr. Eadie) in saying that those of us who are interested in the success of the coal industry believe that the debate has had an excellent tone. I thank, almost with embarrassment, those on both sides of the House who have been kind enough to make any personal references to me. I regard those kind references as applying also to the coal industry, with which I am 200 privileged to have my present position. 1 shall try to cover as many points as possible in the time allowed and I hope that many other points will be considered in Committee.
My hon. Friend the Member for New Forest (Mr. McNair—Wilson), who is unable to be with us now arid apologises to the House, made an excellent speech, as he always does in coal industry debates, and asked many questions about the potential to improve the long—term marketing of coal. We must all address ourselves to that question, because of the potential over—supply of coal. Two of his points about price guarantees and availability of supply can be developed later, although I draw his attention to the fact that the price differential in favour of coal is probably the best for generations. It is in all of our interests to maintain that relationship.
The availability of supply, beyond the simple practical suggestions that my hon. Friend made about the National Coal Board, to which I shall draw its attention, is something about which we should be concerned when we discuss the possibility of business men trying to make long—term decisions about introducing coal into their fuel patterns. Container usage was an interesting new suggestion to which I am sure we look forward to discussing in Committee.
The hon. Member for Easington (Mr. Do—mand) mentioned the size of the pit closure grants under the relevant clause. That is essentially related to the improved terms, but obviously he will wish to develop the point and I can pursue it in more detail in Committee.
Joined by his hon. Friends the Members for Rother Valley (Mr. Hardy) and for Normanton (Mr. Roberts), the hon. Gentleman also raised some points about the Flowers report, with specific reference to Yorkshire. The Government are aware of the importance of the report. let alone the price at which it was published. I remind the House that the report was published on 30 September 1981, and that the Secretaries of State for the Environment, Energy, Scotland and Wales stated jointly that they welcomed the report. They said that they would give the study their careful consideration and publish a response to the recommendations in due course.
My right hon.Friends invited the organisations that gave evidence, other interested organisations and the general public to make comments. The hon. Member for Rother Valley (Mr. Hardy) told the House that his area has taken up that invitation and is pursuing it in detail. Over 50 organisations have commented so far and others are known to be about to respond or are in the process of responding. The Government will take all those views into account. It is an extremely important document which bears close attention by all those who are interested in the coal industry.
My hon. Friend the Member for Newark (Mr. Alexander) made a thoughtful speech. 1 tried in my opening speech to express my understanding of the dilemmas that face us all in trying to examine the longer—term pattern and programme for the industry. My hon. Friend mentioned the extraordinarily good industrial relations in the industry. That is something that those outside the industry do not understand and it is a point that cannot be made enough times during coal industry debates.
Many hon. Members referred specifically to the coal—fired boiler scheme or the coal conversion scheme, and the hon. Member for Easington asked a specific question. The 201 applications that have been received amount to £17 million and so the scheme is even more limited than some might have thought from what I said earlier.
My hon. Friends the Members for Bedford (Mr. Skeet), for New Forest and for Exeter (Mr. Hannam) and the hon. Members for Easington and for Wigan (Mr. Fitch) all said "It is a good starter, but we need a lot more and we need it to be developed further and faster. There should be extensions to the scheme."
I listened with great care to their comments but the scheme is the Department of Industry's responsibility. The Department of Energy is clarifying the issues for it and it will make an announcement in due course. The questions raised in the debate will be brought home to it by those who wish to see added coal burn.
The hon. Members for Midlothian, for Wigan, for Rother Valley, for Penistone (Mr. McKay) and for Ince (Mr. McGuire), and my hon. Friends the Members for Enfield, North (Mr. Eggar), for Bedford, for Melton (Mr. Latham), for Exeter and for Newark all mentioned the Vale of Belvoir inquiry. Whatever I would wish to say at the Dispatch Box about timing, I must draw the attention of all Members to the fact that this is a matter for my right hon. Friend the Secretary of State for the Environment. My right hon. Friend is considering the report of the inspector who conducted the public inquiry into the National Coal Board's proposals. He will announce his decision as soon as possible. Hon. Members on both sides of the House who mentioned this matter made it clear that I should bring this matter to the attention of all those concerned.
Many hon. Members mentioned liquefaction. The hon. Member for Midlothian rightly drew attention to the fact that my hon. Friend the Member for Flint, West (Sir A. Meyer) is watching the issue like a hawk. That is more than the truth. My hon. Friend ensures that he pursues his constituents' attitudes as well as the coal industry's attitudes on this issue.
The hon. Member for Easington raised an issue which was answered partially by the hon. Member for Midlothian. It was slightly unfortunate that he sought to compare the type of advanced technology development potential that is seen in advanced liquefaction processes with that of the Sasol process in South Africa which is very different in capital and coal cost content and radically different in terms of energy efficiency.
However, I recognise that the hon. Members for Midlothian and for Easington and my hon. Friend the Member for the New Forest have a legitimate interest in raising the matter.
With respect to the hon. Member for Midlothian, who has a fine history and record of support for the research activities and development of the coal industry, I greatly regret that one of the senior civil servants in my Department has been referred to again. My colleagues and I have full and absolute confidence in the chief scientist at the Department of Energy. His advice to Ministers, based on a wide background of process engineering, is very relevant to coal conversion. He has gained our greatest respect. I shall go on to say what is important and relevant to the debate about liquefaction and its future and, as the hon. Member for Midlothian rightly said, the future of the pilot development—not the long—term potential for commercial development but development of the pilot.
202 The Government have never swerved from their commitment to the board's oil—from—coal project. In May last year we announced, in a detailed debate, support of £5 million for the cost of construction and commission of a pilot facility. A decision to concentrate on a single process facility, based on liquid solvent extraction technology, was then made by the board in the light of commercial interest. We fully accept the board's decision. We committed funds to extend the process design studies and we agreed to pay 53 per cent. of the cost of a three—month proving run on the small scale equipment at the board's coal research establishment.
The written answer I gave the other day to the hon. Member for Morpeth (Mr. Grant) shows how incorrect one can be. That was an indication of the process advancing. This run was carried out in the September—December period last year to test the performance of the liquid solvent extraction process in conditions comparable with commercial activity. The results of this proving run have been encouraging in showing satisfactory catalyst life and further tests will be carried out this spring with Government support to assess process changes and also to confirm the performance of different coals.
In addition to support from this Department and the European Community, the NCB is holding discussions with the private sector—I have said all this before—with a view towards its financial support and participation in the project. It is no secret that British Petroleum and Phillips Petroleum are interested in the process. BP participated in the proving run last year and made a valuable, technical and financial contribution. Both BP and Phillips are considering support for this further proving run which should provide the information they require before a decision to support construction of the pilot plant can be taken.
The board has a full rein in the negotiations to form an industrial consortium to manage the project. The Government believes that the commercial discipline and technical experience of private industry is vital to the success of the project, and we endorse and encourage such participation.
As I understand it, a good working relationship exists between the board and its prospective partners and I am more than satisfied with the progress being made. Mistakes in this form of development could be very expensive indeed, and I believe that we have struck the right balance to reduce the risk attendant in a project of this nature.
§ Mr. Eadie
I expect the Minister to defend his departmental officials. He knows that I have seen a paper from the chief scientist and others which, to some extent, leads me to believe that the chief scientist was not all that enthusiastic about the project.
Secondly, the Minister must be aware—I hope he will answer this point—that the NCB has dropped the other plant or scheme because of the lack of funds. There has been a delay of two and a half years by the Government on this. The Minister cannot argue that there has been great expedition by the Government.
§ Mr. Moore
There is no point in pursuing matters beyond the points I made. I tried to put on record the position as it is. I am not in the habit of reading documents that I do not believe carry the truth.
The hon. Member for Wigan, in an extremely thoughtful, instructive and helpful speech, spoke about a similar area of research and development in the coal industry. Essentially he asked to what extent I, as the Minister responsible, had had experience in this area. I, like the hon. Member for Midlothian, who started the tripartite research and development working party, picked up and continued that process with a series of extensive and regular meetings examining all methods of development prospects for coal utilisation and unconventional mining. Beyond that, I have sought to visit all the liquefaction gasification potential projects in, for example, the United States and West Germany over the past two and a half years or more. I made extensive visits to Bretby and Stoke Orchard.
There is no question about the interest not just in my Department but within the whole coal industry in the whole area of advanced coal utilisation techniques. I welcomed the tone and tenor of the constructive remarks made by the hon. Member for Wigan.
My hon. Friends the Members for Bedford and New Forest raised the subject of in situ gasification. I visited some of the in situ gasification test areas in Colorado more than a year ago to look at the slanted bed in situ gasification work. The NCB advanced mining evaluation unit at Bretby is maintaining contact with the underground gasification trials in the EEC and the United States. The board is considering a report. The unit at Bretby is examining the prospects for underground gasification in the United Kingdom. Considering the levels of evolution as a layman, there seems to be a long way to go.
The hon. Members for Ince and for Normanton (Mr. Roberts) raised the subject of pneumoconiosis commuted cases. I am conscious of the importance of that issue and of the details. I have been in direct contact with Lawrence Daly, the general secretary of the National Union of Mineworkers, who has written to me on that point. The question of eligibility for benefit under the NCB pneumoconiosis compensation scheme of the men who commuted their claims for compensation under the Pneumoconiosis Etc. (Workers' Compensation) Act in return for a lump sum was raised. I am sure that it is realised that pneumoconiosis compensation is a complex area. We shall look carefully at the question in conjunction with the NCB. I fully recognise and understand the points made by the hon. Members, whatever the exact legal position. I assure them that I shall look at the matter with great sympathy.
In an interesting speech, my hon. Friend the Member for Flint, West talked of subjects that were not directly connected with the coal industry, but in reply to his strategic argument I can tell him that my Department has a number of officials whose primary concern is the development of the Community energy policy. The United Kingdom plays an active part in the formulation of EEC energy policy as a Community member with the greatest resources and expertise in energy. I am not sure whether my hon. Friend will be content with those remarks. I shall draw his remarks to the attention of my right hon. Friend the Secretary of State.
A point was raised almost extraneously, although it was connected with the debate, by the hon. Member for 204 Easington (Mr.Dormand), who has been legitimately belabouring me for a while, because we are talking about the greater uses of coal. He has been asking about the way in which further railway electrification would increase our use of coal and reduce our oil usage. Substituting electricity for oil would result in an increase of three quarters of 1 per cent in electricity demand if the maximum electrification programme could be put into action. That was published in the report of the review on main line electrification, which suggested that an extra 1–8 terawatt hours of electricity consumption would be produced, which would be translated into the not inconsiderable sum of 1 million extra tonnes of coalburn a year if all the electricity was generated from coal. I shall make sure that the hon. Gentleman receives the details.
I shall refer to two other main matters. I apologise to hon. Members whose points I have not been able to deal with. I shall return to them in Committee or I shall write to them before the Committee stage begins, depending on when it assembles, which is not in my hands. The first the hon. Member for Midlothian legitimately raised as a main factor in the nature of our examination of coal—the relativity between the subsidies given by the British Government to the coal industry and those given by foreign Governments, specifically Belgium, France and West Germany. The hon. Members for Easington and for Penistone also raised that point and developed it at length.
I am not sure that those who constantly ask us about the continental level of subsidies have thought through the facts of the inevitable change and decline that I see occurring in the industries that are being subsidised and in the way in which they are subsidised. The hon. Member for Easington drew our attention to the way in which the subsidies were varied in kind. The Bill, with the general welcome that it has received from the House, gives substantial grant subsidies. I shall make the following points about the character of the subsidies to which the continental coal industries have become accustomed.
First, I draw the attention of hon. Members who are interested in the long—term future of coal to the figures for 1981—they are approximate, as they are a first estimate—for the comparative coal investment in the countries concerned. In that year, £27; million was invested in Belgium, £34; million in France, £265 million in the Federal Republic of Germany and £698 million in the United Kingdom. The point that I am trying to make, and have tried consistently to make in a non—partisan fashion, is that the character of the subsidies must be examined. The United Kingdom is the only country, with Germany very much in second place, which has a major commitment to investment in the future of the coal industry. That key distinction in the nature of the investment must be borne in mind by all hon. Members who share the genuine, non—partisan interest in the future of the coal industry that has been shown in today's debate.
Secondly, the nature of those coal industries must be considered. After all, there are 39 pits in West Germany, 21 in France and six in Belgium, compared with about 211 in the United Kingdom. The point that attaches to that—and this is common ground in coal debates—is that we respect the productive work carried out by miners in Britain and we understand why they are at the top of the industrial wage league. That is not the case in countries that have stagnant or declining coal industries. In West Germany, for example, miners receive only just over the average industrial wage and collieries are unable to get 205 young Germans into the mining industry. That important reality should be understood when we discuss comparisons.
Thirdly, those countries have now reached the point where imports dominate coal consumption. In Belgium, 63 per cent. of coal is imported. In France the figure is now 61 per cent., compared with only 26 per cent. 12 years ago. Moreover, West Germany, which has major plans for increasing its domestic coalburn, also has major plans for increasing coal imports. I submit that that is not the route that those of us who are concerned with our coal industry would wish to follow, and it is not the route that I assume we shall take if we continue to manage our coal industry well within the strategy that we have been discussing today.
I touch on one last major item. The hon. Member for Midlothian, with his background and experience in the matter, rightly drew attention to the nature of future investment in the coal industry and the structure and strategy of the industry. Again, I was delighted at the tenor of so much of the debate, reflecting the way in which many of us who try to take a longer view of the industry can see what has actually occurred since 1974.
I make just three points. The view is legitimately expressed by many people that more investment is needed. The pattern established in the 1974 massive investment programme and confirmed in the Labour Government's 1979 White Paper involved a peaking of capital investment in the coal industry by 1980–81, followed by a modest dip and a continuing plateau. How long the plateau will continue is a debatable question which I hope will be discussed in Committee, but it is interesting to see how the pattern has been retained in the way in which investment has continued.
As requested by some of my hon. Friends, and because I considered it relevant to a longer view of the coal industry investment, in preparation for the debate I tried to establish what had actually happened in relation to the expectations of "Plan for Coal" investment up until today. It was a 10–year programme. We are eight years into it.
§ Mr. Moore
That is a slightly different point. I hope that there will be an opportunity for me to address myself to it in more detail in Committee. The point that I was making is fundamental to investment in the coal industry. The "Plan for Coal", which the hon. Member for Midlothian had prime responsibility for developing, envisaged capital expenditure of £1.4 billion over the 10–year period to 1985. Any comparison with actual expenditure so far requires certain assumptions to be made about the phasing of projects. However, a broad comparison between actual expenditure and planned expenditure, revalued to take account of inflation, suggests that expenditure of about £2.5 billion at outturn prices was planned by March 1982. So far as these matters can be turned into money of the day, one should have seen about £2.5 billion expended by March 1982. In fact, as hon. Members know from my opening speech, about £3 billion will have been spent to March 1982. It is interesting to see that more money has been committed to the 10-year investment programme.
206 The House understands the difficulties of structural change in an extractive industry. The reality is that not all the capital investment is necessarily going to the areas that many hon. Members would wish. Very different energy demand assumptions exist in relation to the industry than was the case eight to 10 years ago when "Plan for Coal" was in creation.
§ Mr. Albert Roberts
Does the Minister agree that a National Coal Board report should be debated every year?
§ Mr. Moore
I had intended to deal with that point if sufficient time had been available. I am a newcomer to the House, but I thought the idea attractive when the hon. Member mentioned it. It is not within my ability to say what the Leader of the House may decide in terms of a debate. I shall, however draw my right hon. Friend's attention to the point.
I have tried to show that the massive investment under "Plan for Coal" has gone beyond the plan. A coal industry examination interim report produced by the Labour Government in June 1974 contains definite assumptions relating to the pattern of closures due to excessive capacity during the period when new capacity came on stream. The assumption was that 3 million to 4 million tonnes of capacity a year would disappear during the period. I am not unaware of the difficulties or the social problems. I am merely trying to illustrate the reality of what has occurred in the two sides of "Plan for Coal".
It seems to me that all those with a legitimate interest in trying to argue for the long—term success of the coal industry would understand the two parts of the equation. Although the pace of one side has been slower, the other has produced just as much capital as expected. I shall not belabour the point. I expect that we can return to it in Committee.
The House has shown its concern for the success of the coal industry, not only for the benefit of miners, but as a gain from which the whole country will benefit. In that spirit, I commend the Bill to the House.
§ 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).