Coal Industry Bill

§ Madam Speaker

I have had to place a 10-minute limit on speeches between the hours of 6 and 8, because of the great interest in the Bill.

§ The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine)

I beg to move, That the Bill be now read a Second time.

In our election manifesto, we pledged to privatise British Coal. Last spring, in our White Paper "Prospects for Coal", we renewed that pledge. Before I deal with the specific measures in the Bill, it is worth spending a few moments on the wider issues of nationalisation.

The British coal industry is one of the last major industrial sectors left in the public sector. Nationalisation of our industries was a central feature of post-war Labour Governments. It was resisted fiercely by the Conservative Opposition of the day, and there are few people left who would deny that, as a policy, it imposed intolerable economic and legislative burdens on our country and contributed to the decline of our regional economies.

The policy was designed to transfer the commanding heights of the economy to state control. The naive political rationalisation at the time was that control would be vested in the people. In reality, power rapidly shifted to monopoly providers and monopoly producer unions. What power the people possessed was exercised by civil servants, who rapidly became both protector and confidant of the industries' self-interest, and, worse, by the political convenience of the party in power.

The traditional—and, in the end, the only effective—disciplines of the marketplace were replaced by ill-disciplined compromises and cash-consuming delay. The objectives of enhanced efficiency, increased productivity and a high quality of service played little part in the day-to-day practices or assumptions.

Industrial management, hitherto widely dispersed throughout the regions of the United Kingdom, was replaced by top-heavy bureaucracies that were located largely in London. Perhaps most damaging of all, in virtually every case our key industries withdrew from or were denied access to the markets of the world. I say this to reinforce the case for the Bill, if such reinforcement were necessary. Today, the concept of state ownership is bankrupt. Across the world, country after country is turning to the discipline of the marketplace as each seeks to dispose of its nationalised industies.

Even the Labour party has lost the will to fight for this arcane concept of industrial organisation and management. Of course it parades and re-parades the weary arguments that a tiny body of its constituents, and of course its union paymasters, want to hear, but it knows that the tide of freedom that we have brought to the nationalised industries is now as irreversible here as it is in so many countries, under Governments ranging from the socialists of China to the right-wing Government in France.

§ Mr. Dafydd Wigley (Caernarfon)

Does the Secretary of State accept that one of the worries of many 712 ex-coalminers and miners' widows is that the benefits and agreements that they had with the National Coal Board will not be continued after privatisation? Will he give a categorical assurance on the matter?

§ Mr. Heseltine

I shall deal with the specific objects of concern case by case, as I consider the detailed contents of the Bill.

Before I leave the overwhelming case in favour of privatisation at large, which rests behind the Bill, I must point out that, as hon. Members will know, the facts are stark. In 1979, the nationalised industries were costing the taxpayer £50 million per week in losses. Today, they pay £60 million per week in taxes on the profits that they earn as private sector companies and, most chilling of all for the Labour party, 6 million shareholders are willing to testify and to vote for the success that privatisation has brought.

What are the facts about the nationalisation of the mines? At the time of nationalisation in 1947, there were 720,000 mineworkers employed by the National Coal Board. By 1980, that figure was down to 230,000—a reduction on average of around 15,000 a year. The rundown was as much a characteristic of Labour as of Conservative Governments.

The number of operating pits also declined throughout that period. Opposition Members will recall, for example, that between 1964 and 1970, and between 1974 and 1979, the number of producing pits fell by 313. Indeed, since 1979, it is a Conservative Government who have injected by far the largest support for British Coal in the history of British Coal—nearly £20 billion.

§ Mr. Ronnie Campbell (Blyth Valley)

That was redundancy pay.

§ Mr. Heseltine

Yes, the Conservative Government made very generous redundancy payments. However, the hon. Gentleman is not prepared to face up to the fact that £8 billion of that £20 billion was capital investment in the industry. So, since the war—

§ Mr. Campbell

I can give the Secretary of State one example of what happened in my colliery. A transport system, which cost £300,000, was bought, put in the timber yard, hapt up and kept there, and charged to that colliery when it closed. That is only one example. What happened at the other collieries in which the Government invested?

§ Mr. Heseltine

The hon. Gentleman can quote his £300,000 example, but does the House seriously believe that it stands up against the £8 billion that has flowed into capital investment in the Coal Board since 1979? The Opposition talk as though they cared about the industry, but they ran it down. There has never been such a large investment programme in the coal industry as under Conservative Governments since 1979.

§ Mr. John Evans (St. Helens, North)

Is the Secretary of State aware that, at Parkside colliery in my constituency, a £6.5 million investment in a new face, which was in production for a fortnight before it was closed down under his regime, is now rotting in the ground?

§ Mr. Heseltine

The hon. Gentleman might ask himself whether the decision to invest such large sums of money was justified in the face of a falling market for the product. That is an example of precisely the lack of discipline that I have been referring to—a lack that was characteristic of nationalised industries throughout the post-war period.

§ Mr. Eric Clarke (Midlothian)

The accounts of the National Coal Board show that it repaid to the Government, at a very high interest rate, loans that it had received over some years. The money that the right hon. Gentleman was crediting the Government with investing in the industry was paid back before the so-called profit was decided. The Secretary of State can investigate that fact if he likes.

§ Mr. Heseltine

The hon. Gentleman must understand that most of the £20 billion invested in the National Coal Board since 1979 will be written off, which means that it will be charged in perpetuity to the taxpayer. I admire the fact, however, that he is now a director of a private sector coal company. I know that the House will wish him all the very best good fortune.

§ Mr. Clarke

I am not a director of a private company: the right hon. Gentleman has been misled. I am an adviser to a company which has the involvement of the Scottish trade union movement.

§ Mr. Heseltine

I would not wish to misrepresent the hon. Member. If his advice is successful, however, he might soon be a director of the company.

Since the war and nationalisation, the coal industry has lost its market for producing town gas, it no longer sells coal to the railways or mines coking coal, and it has lost the greater part of sales of coal for home heating and industrial use. During the debates of the past year or so, we have been all too familiar with the fact that British Coal is now very dependent on sales for electricity generation, and we are equally and starkly aware that it is coming under increasing pressure in that market as well.

§ Mr. Derek Enright (Hemsworth)

If there is no market whatsoever for coal, can the President please explain why five applications are being processed for opencast coal mining in my constituency, when the opencast coal will be dearer than that from Grimethorpe?

§ Mr. Heseltine

The explanation is entirely a matter for those people who have submitted the applications to carry out the mining. It seems extremely unlikely to me that people are bidding to take on onerous responsibilities for mining coal in an opencast field when they could get it cheaper from the deep-mined industry. However, that is a judgment for those people who are prepared to invest their money in the process.

The Government's position is clear. We have given an undertaking to ensure that the Coal Board offers to license the deep mines to the private sector, and I am glad that there are a number of cases in which agreements have been reached or the negotiations are well advanced. I much admire all those Opposition Members who are playing a role in facilitating negotiations and encouraging the prospects that those pits might find an alternative life in the private sector.

§ Several hon. Members

rose—

§ Mr. Heseltine

I cannot give way to three people at once, but the lady must of course have preference.

§ Ms Joan Walley (Stoke-on-Trent, North)

Will the President tell us exactly why he is not prepared to set up a target for the amount of opencast mining, and why it is that in, north Staffordshire, Trentham and Silverdale have been 714 closed, and we now expect even more opencast mining to go ahead? Why are not environmental issues at the heart of his energy policies?

§ Mr. Heseltine

The hon. Lady mentions a most important subject, and she must be aware that consultation is now under way on mineral planning guidance 3. It is a matter for my right hon. Friend the Secretary of State for the Environment, but it raises important issues of balancing the environmental and economic arguments that are—superficially at least—in conflict. I have great sympathy with the hon. Lady's arguments.

§ Mr. John Cummings (Easington)

The right hon. Gentleman has confused me. I agree with him that successive Governments, Labour and Tory, have invested heavily in the mining industry during the past 30 years. Indeed, with the closure of Easington colliery, tens of millions of pounds of taxpayers' money have been left in a flooded mine. Is it not obligatory for the President to underpin that £20 billion-worth of taxpayers' investment by assisting in working a market for the benefit of a British industry, providing British coal?

§ Mr. Heseltine

The hon. Member has obviously missed the point: that, with the approval of the House, we offered to put more taxpayers' money behind the production of deep-mined coal if people would come forward and find an additional market for that coal. In some cases, negotiations have been concluded or are proceeding. It would be wrong for me to give artificial assurances that I can sustain economic activities for which there is no market justification.

§ Mr. Terry Lewis (Worsley)

Will the President explain the logic of taxpayers' money subsidising the acknowledgedly inefficient Spanish coal industry through the European Union?

§ Mr. Heseltine

I challenge that logic constantly. My department, as the custodian of much of the trading interest of this country, has the responsibility of constantly challenging the existence of subsidies. The aim is not for us to introduce them into our economy; it is for us to try to eliminate them from the rest of the European Union. That is the task in which we are engaged.

§ Mr. Paddy Tipping (Sherwood)

rose—

§ Mr. Heseltine

Will the hon. Gentleman forgive me? Madam Speaker, you introduced a ten-minute limit, and I suspect that I am beginning to intrude into rather more speeches than I would wish to do. I must ask hon. Members to allow me get on to the detail of the Bill.

There is one last point that I wish to record about my judgments on the industry. I have not the slightest doubt that our coal industry would be in a much healthier position today if the adjustment which has taken place under every Government, and too late, had taken place in the post-war period of economic expansion, when the diversification of the economy could have proceeded faster and when the highly desirable employees of the coal industry could have found jobs in growth industries of that time.

I will go further. I have little doubt that, if the coal industry had had to face the challenge of the marketplace much earlier, it would have achieved productivity gains which recently, and under pressure, it has begun to achieve, but it would have achieved those productivity gains in time 715 to head off at least part of the dash for gas, and thus it would have secured for itself a larger share of the marketplace than is today realistic.

§ Mr. Simon Hughes (Southwark and Bermondsey)

If the President is arguing that a secure future for coal required privatisation some time ago, there have been 14 years of his government during which that could have happened. Is not the criticism the same—that a lack of strategic energy policy has been the consistent feature of every year of his Department and its predecessor since 1979? That is why coal is in difficulty; it has never known what place it would have and never been given any security as part of a diverse market supply, as the best resource that we have available.

§ Mr. Heseltine

That was an interesting intervention by the hon. Member from the Liberal party. I do not pretend to have been shadowing with great care Liberal policy statements for the earlier part of the past decade, but I do not remember, Madam Speaker—perhaps you do, and perhaps I owe the hon. Member an apology—the Liberals making a major demand in all those years that we should privatise the coal industry.

Indeed, if the Liberals had ever come forward with any firm demand at all, especially one that might contain any element of controversy, it would have come as a surprise to me. The Liberals would demand privatisation of the coal industry only in sections of industry, or of the electorate, where there was no coal industry, for fear that otherwise they might offend someone. That is a classic example of the Liberal Democrat party waiting until all the policy options have been closed, and then asking, "Why don't you do it some other way?"

§ Mr. Dennis Skinner (Bolsover)

Will the President of the Board of Trade give way?

§ Mr. Heseltine

I cannot resist.

§ Mr. Skinner

The right hon. Gentleman has not been following Liberal policy closely enough. I know that he has been ill and has been missing, and that for a long time he was not a Cabinet Minister. However, if he would check the facts, he would find that, in true Liberal Democratic fashion, that party was in favour of privatisation before the general election, but is now against it.

§ Mr. Heseltine

The hon. Gentleman reveals the sort of inconsistency on doctrine that we have come to expect from the modern Labour party. I congratulate him on having read the documents. It shows that he is preoccupied with "back to basics", and has learnt to read effectively after all this time.

§ Mr. Bill Etherington (Sunderland, North)

I took great note of the right hon. Gentleman's long diatribe against nationalisation. Is he prepared to tell the House how many private companies have made as many gains in productivity as the Coal Board has made over the past two years?

§ Mr. Heseltine

The hon. Gentleman will know that British Steel is now a world-class company, that British Gas is trading in more than 45 foreign countries, that British Airways is now one of the most successful airlines in the world, and that our electricity, our power and our telecommunications industries are straddling the world in the best interests of Britain.

716 Why? It is because we privatised the companies that have made that possible. Let us remember that we did that in the teeth of the opposition of the Labour party. If it had had its way, we would still have huge bureaucracies of politicians and civil servants suffocating the entrepreneurial zeal that the Conservative party has let loose on the world market.

§ Mr. Jack Thompson (Wansbeck)

Will the Secretary of State give way?

§ Mr. Heseltine

For the last time.

§ Mr. Thompson

I have followed the right hon. Gentleman's argument closely for the last few minutes, and he rightly claims that £20 billion has been put into the industry in the period concerned—£8 billion in capital investment. But does he recall that the Conservative party has been in power for the past 15 years, and that he and his predecessors were responsible for policy? Surely policies could have changed over those 15 years so as to accommodate the situation that has developed now.

§ Mr. Heseltine

If I had to plead guilty to the hon. Gentleman's accusations, I would have to say that I wish that we had privatised the coal industry in the early 1980s. I must make that clear. However, the implication is that, in doing so, we would have gained the serried support of the Labour party, whereas actually it was encouraging the National Union of Mineworkers in any obdurate political action that it could devise to stop the modernisation of the industry. The coal industry has found itself at the end of the queue. More's the pity, and, I suspect, more's the price that the coal industry has paid as a result.

The Bill contains the Government's proposals for restructuring and privatising British Coal. It sets out the necessary provisions for safeguarding pension rights and concessionary fuel entitlements, and those affected by mining subsidence. It also reflects our determination to ensure that the high safety standards in the industry are maintained or improved in the light of the advice of the Health and Safety Commission.

We believe that a competitive energy market is the best guarantee of secure, diverse and sustainable energy supplies in the forms that people and companies want, and at competitive prices. Electricity and gas privatisation have changed the nature of the energy market from a producer-led to a consumer-led market. We have made it a priority to establish a range of substantial privately owned energy companies free to take strategic decisions within a proper framework of regulation. The time has come for the coal industry to enjoy the same freedom.

We examined the prospects for coal within the energy market very carefully during the coal review. On the basis of all the evidence that was presented to us, we had to conclude that there was every prospect that the market would continue to be difficult.

Despite that, it remains the case that coal accounts for over half of all fuel used for electricity generation. On any calculation, coal will continue to be one of the chief sources of energy for the electricity supply industry in the years ahead. The House will remember that we accepted the key recommendation of the Select Committee and have introduced a subsidy for additional sales for electricity generation from deep mined coal. However, the real test is the rate at which the industry can improve its competitiveness.

717 The industry, as Opposition Members have said, has made considerable strides in improving productivity over recent years. It is only by building on those gains that the industry will compete effectively in future. Privatisation will best ensure that prospect. Time and again, privatisation has demonstrated the ability of industries which had previously lagged behind their international competitors to catch up and, increasingly to set the pace. That is true whether one looks at the docks, at steel, or at a whole range of public utilities. There is every reason to expect that the coal industry will do the same.

§ Mr. William O'Brien (Normanton)

Will the President give way?

§ Mr. Heseltine

If the hon. Gentleman will forgive me, I think that I have given way enough.

Our intention is to offer British Coal's assets for sale in five regional businesses. Those will be based on Scotland, Wales, the north-east, and two parts of the central coalfield. Potential purchasers will be able to bid for one or more packages, and all bids will be considered on their merits. Our proposals will attreact new outside management, and they will give the industry's existing managers and employees the chance to make proposals to take over their own industry.

The Government have made it clear that we are prepared to offer financial support to help potential management and employee buy-out teams to carry their proposals forward.

§ Mr. William O'Brien

Will the President of the Board of Trade give way?

§ Mr. Heseltine

No.

On receiving Royal Assent, the Bill will end immediately the existing statutory restrictions that limit the scale of operations of private sector mines that can be licensed by British Coal. It will provide for a new Coal Authority to carry out those functions of British Coal which would not be appropriate for the private sector.

The new Coal Authority will be based in Nottinghamshire. Its main functions will be licensing of coal mining, owning and granting access to our coal reserves, carrying out British Coal's responsibilities for the physical legacy of past mining to the extent that they are not taken over by the private sector, and making available mining records and geological information.

The Coal Authority must be fully impartial in carrying out its licensing duties, so it will not, therefore, be allowed itself to participate in commercial mining. British Coal will become a licensee of the Coal Authority prior to privatisation. The Bill contins scheme-making powers, similar to those in previous privatisations, for the transfer of property, rights and liabilities of British Coal to other parties as necessary for the privatisation of the business. The Bill provides for the dissolution of British Coal in due course.

I turn now to the critical issue of safety. The coal industry in the United Kingdom has one of the best safety records in the world. I made it clear as soon as I arrived at the DTI that I would do nothing to prejudice that record. I repeat that pledge today. In 1992, we sought—

§ Mr. Ronnie Campbell

Will the President give way?

§ Mr. Heseltine

The hon. Member has had a go.

In 1992, we sought the advice of the Health and Safety Commission on the safety implications of privatisation. The commission's full and considered advice was received in October. The Government published that advice, and accepted it in full.

The essence of the commission's advice is that it should continue to be the health and safety regulatory body for the coal industry, that the Health and Safety Executive should be the enforcement authority, and that the framework of legislation must be sufficiently robust to command the continued confidence of the industry and to ensure that health and safety standards are maintained or improved.

§ Mr. Ronnie Campbell

On that point—

§ Mr. Heseltine

The commission's advice is that there is already a comprehensive framework of law governing the mining industry, with a rigorous inspection and enforcement regime. The commission believes that the work that it has been doing since 1983 to modernise that framework will make an important contribution to ensuring that it is adequate to the demands of a privatised industry.

The commission has also taken steps to ensure that the best practice in British Coal's existing owners' instructions continues to be applied throughout the industry. The work to achieve that is now largely completed. Draft regulations were laid by my right hon. Friend the Secretary of State for Employment on 1 October last year to give legal status to a number of the most important requirements of British Coal's safety instructions.

The commission has also recommended that there should continue to be a national rescue service. The commission will consult widely about the way forward. The Bill reflects the advice that we have received from the commission.

Another issue of fundamental concern to employees and former employees of British Coal is pension provision. I am determined that the pension entitlements of those who have given their working lives to the industry, and their dependants, should be fully respected and safeguarded in the process of privatisation. A consultation paper on proposals for British Coal pensions after privatisation was published in September last year. Comments were received from the trustees of the British Coal schemes, from the corporation, from industry unions and from more than 1,000 individuals.

After careful consideration of all the responses to the consultation paper, on 2 December we announced our decisions. All pensioners and deferred pensioners of the mineworkers' pension scheme and the staff superannuation scheme and all currently contributing members will be able to leave their past service entitlements in the schemes, which, on privatisation, will be closed to new members. New industry-wide pension schemes will be created for employees of British Coal and its subsidiaries who are transferred to employment in successor companies.

The Bill provides for the closed schemes to be given a Government solvency guarantee that will ensure that pensions and deferred pensions are increased annually after privatisation, in line with the retail price index by reference to their level at privatisation. In addition, beneficiaries will be able to benefit from any fund surpluses through pension payment increases over and above RPI levels. The new industry-wide schemes will provide the same package of 719 benefits as the corresponding main scheme. Employees transferred to the new schemes will be given protected person status under the Bill.

The Government believe that those proposals meet in full our commitment to protect pensions under the two existing schemes. The proposals will provide security for pension entitlements earned from service with British Coal and will provide protection for pension entitlements from future service with successor companies. The Bill provides the necessary statutory underpinning for all the- safeguards proposed.

Next, I refer to concessionary fuel entitlements. I am again determined that they should be properly safeguarded. A consultation paper on this subject was published in October. My hon. Friend the Minister for Energy yesterday announced our conclusions. Responsibility for meeting the entitlements of former employees and their dependants will be transferred to the Government. Successor companies will be responsible for the entitlements of British Coal employees who transfer to them.

I believe that our policies for the treatment of pensions and concessionary fuel fully meet the Government's commitment to safeguard entitlements, and are fair to beneficiaries and to taxpayers. They will provide welcome and essential reassurance to many mining families that their hard-earned entitlements will not be jeopardised.

§ Mr. Eric Illsley (Barnsley, Central)

Will the right hon. Gentleman give way?

§ Mr. George Foulkes (Carrick, Cumnock and Doon Valley)

Will the right hon. Gentleman give way?

§ Mr. Heseltine

No. I have given many times.

The Bill addresses the issues of subsidence. There must be proper protection for the rights of householders and others who may be affected by coal-mining subsidence. A large part of the Bill is devoted to establishing a strong regulatory regime for that purpose.

The Coal Authority will take over all British Coal's existing responsibilities for subsidence, except in clearly defined areas where licensees will be responsible. Householders will therefore be in no doubt against whom to claim. It is an enabling power. We have yet to take final decisions as to the extent of the areas for which licensees will be responsible. Obviously, that will need careful consideration, bearing in mind the interests of the industry, the taxpayer, and, of course, the claimants.

The Coal Authority is given a strong duty to ensure that licensees make proper financial provisions for meeting claims, and the power to require that security, possibly in the form of a trust, is provided.

§ Mr. Foulkes

Can the President give an assurance that the beneficiaries of concessionary coal will continue to receive coal if that is what they wish, and will not be forced to take cash in lieu?

§ Mr. Heseltine

The answer is yes. But as happens now, there will be arrangements for a financial exchange of those rights if it is agreed with the individuals concerned. The hon. Gentleman's point is well made.

After nearly 50 years in the public sector, the coal industry has acquired exactly the same myths as those that used to haunt other nationalised industries. It is commonly suggested that they can never match the efficiency of their competitors; that their future lies only in an endless continuation of taxpayers' subsidies of one sort or another; 720 that somehow or other they cannot attract significantly worthy management for the task in their control; and that, in the end, only politicians are fit to take the strategic decisions affecting their future. Time and time again, all those myths have been exposed and exploded. In case after case, they are myths.

This Bill will give the coal industry the opportunity to demonstrate that it can compete, it can stand on its own feet, it can attract managers who are the best in the world, and it is fit and able to take control of its destiny. I do not have the slightest doubt that the industry will make good use of that opportunity.

I look forward to the day when private sector coal companies will join other privatised companies as free-standing, competitive enterprises, carrying a new entrepreneurial spirit into the marketplaces of the world. To enable that to happen, we will privatise the coal industry. We will set the industry free to meet the challenges of the marketplace, to innovate, to compete and to win its rightful share in the diversified energy market in the years ahead. That is the Government's policy, and I commend the Bill to the House.

§ Mr. Robin Cook (Livingston)

The President has presented the Bill to the House in a speech which began with a light essay in history in which he was willing—indeed, enthusiastic—to take interventions, followed by a presentation of the detail of the Bill in which, perhaps wisely, he appeared to be extremely reluctant to take interventions.

My hon. Friends who listened carefully to the speech noticed that there was a gap. We heard about the details of the device by which the Government will privatise the coal industry. We heard about the arrangements for the claims of subsidence. We heard how the Government propose to resolve the bill that will be left for the pensioners of the two coal industry pension funds. It was proper that the President went on at such length about the pension arrangements, as there are now 20 times as many people with a claim on the pension fund as there are left among the dwindling few people working in the pits.

There was a gap in the speech. Although the House heard all the details about how the Government propose to privatise the pits, we did not hear how many pits will be left in the coal industry when it is privatised. The President told us about the arrangements for concessionary coal, hut he could not tell us how many pits will be there to dig the coal in the first place. He knows perfectly well how many pits will still be there at privatisation. If he does not know, he should take the Bill away and come back when he is able to answer that question.

On Friday, the Chief Secretary provided us with a timely warning of the threat of this great institution of Parliament being undermined by cynicism. I wholeheartedly agree that there is a danger of the House being undermined by cynicism. What undermines the House is the cynicism of Ministers who will not tell us what is common knowledge within their Departments. It is worse cynicism than that: it is the cynicism of Ministers who think that it is all right to brief the press privately on what they are not prepared to share with the House.

I give the example of The Times last Thursday. Someone told The Times how many pits will survive privatisation. The Times is quite confident that it knows 721 how many pits will be closed in the future; the article has the confidence of being accompanied by a photograph of the President of the Board of Trade. It tells us that six pits will close next February. Whoever told The Times did a thorough job, because the article names seven pits out of which the six will be chosen.

The same story also appeared in The Independent, and the same seven pits are named. If all those pits go, there will be only two left of the famous 12 pits which we were told would be reprieved by the White Paper last March. That White Paper is now so discredited that it makes the Government's tax proposals at the election appear to be models of probity and candour.

A remarkable feature of the list is that most of the pits that are to be closed next month were not even on the President's list of the original 31 pits for closure. They are pits that received a clean bill of health for their financial viability, and where there is no pretence of coal reserves being exhausted. If those seven pits close, they will take with them the 114 years' working life of their coal reserves. That is the scale of the coal reserves which we will lose as a result of the vandalism of pit closures.

The Times obligingly tells us how the closures will be presented to us next month. Those pits, we are told, will be not closed but merged. The pits will be shut down, miners will be sacked and the shafts will be plugged. However, the pits will not be closed. They will become merger-seeking pits.

I would not want Ministers to be embarrassed as they sit on the Front Bench by appearing to be less well-informed than The Times. I therefore give them the chance to prove that they know as much as The Times. Will they tell the House whether it is true that six pits will shut next February? [HON. MEMBERS: "Give way."] If it is not true, I will give way also. Can Ministers deny it? Can they tell us how many pits will survive until privatisation? I will give way to anyone on the Government Front Bench who feels that he knows as much as appeared in The Times.

I must warn the President of the Board of Trade: if we are to be lectured on cynicism by Government Members, I believe that nothing would demonstrate greater cynicism than to invite Parliament in January to debate and give a Second Reading to a Bill to privatise 22 pits, to proceed to Committee to consider the Bill line by line and then to announce in February, "We are sorry, there are now only 15 pits." That is all that will be left.

If the number is not 15, I will give way. I will give way to anyone on the Government Benches who finds his tongue and who can tell us how many pits will be there, because they know. I would not wish them to think that we believe that they are ignorant or that, like the Prime Minister, they did not read the briefing note or, if they did read it, they did not take it in. We know that they know.

There were 50 pits in operation at the time of the general election. In the next month or two, there may be only 15. There were 44,000 miners employed at the time of the general election. After the next round of closures, there may be 10,300 miners left in the whole of Britain, from Longannet to Point of Ayr. In two years, the Government have closed two thirds of the remaining pits and destroyed three quarters of the remaining jobs.

After that smashing of the industry, how dare the Government pretend to us that privatisation is intended to 722 strengthen the industry? It was to privatise the industry that the Government ran it down to a tiny profitable core. Privatisation brings a new threat of more closures. There is only one real asset which they have to privatise in the Bill, and that is the contracts of British Coal with the generators. The Bill may be selling the jobs of 10,000 miners and the local economy of whole communities. The one thing that the bidder will want to buy is the contract to supply the generators.

The contracts expire in March 1998. By the time privatisation is well down the road, there will be only three years left of those contracts. There is no guarantee that they will be renewed. If they are, there will certainly be another cut in the volume of coal unless the Government act to tackle the rigged market in which those contracts are given.

That is why the President of the Board of Trade has been unable to come to the House today with any expressions of interest from the big private corporations in mining. That is why Rio Tinto Zinc and Hanson are not named in the press reports of what will happen after privatisation. The President was unwise enough to say at a press conference on the day the Bill was published: the short duration of contracts with the electricity industry would not deter buyers. He even mentioned Hanson as a possible buyer. Unfortunately for him, on the same day, the chief executive of Hanson ruled out making a bid on the pithy ground that short-term contracts are not our idea of fun. The President looks like being stuck with bids from second-rank mining companies.

The danger is obvious to those of my hon. Friends with knowledge of the mining industry. It is that companies that must borrow to buy out British Coal will then run the pits with a single objective—to get their money back within the three years left in the contracts. My hon. Friends who have been down mines know that, once it has been decided to run down a pit, a lot of money can be made for a couple of years. One has simply to halt the development work that costs the money and rip out the coal that can be reached easily. The mining equivalent of looting leaves pits robbed of a long-term future.

If Ministers want to assure us that that will not be the outcome of privatisation, they can do so simply by plugging the most obvious hole in the Bill. The Bill provides the scheme by which the new coal authority will privatise the industry by granting licences to operate the present pits.

The clauses contain provisions for all sorts of tests to be made on operators' financial standing and credit rating, just to ensure that the Government get their money out of the measure. Clause 26 makes it perfectly clear what comes first when the coal authority judges an application for a licence—the financial terms on which a mere bid is made for that licence. Nowhere in the Bill is there a requirement on the applicant for a licence to submit a mining plan for a long-term future for the pits.

The test that we shall lay down as to whether privatisation will provide a long-term future for the coal industry will be contained in amendments in which we shall require those who apply for licences to submit a mining plan that will keep a deep-mine coal industry alive into the next century. If Ministers really believe the promises that they have made today that privatisation will provide a long-term future for the coal industry, they will welcome our amendments. They may even offer us drafting assistance to ensure that we get them right. But if 723 they resist the amendments, they will confirm what everyone in the industry knows—privatisation is pathetically irrelevant to the real pressures on the coal industry.

§ Dr. Michael Clark (Rochford)

Does the hon. Gentleman really believe that, if he could have his way tonight and defeat the Bill, there would be a better and longer future for the coal industry in its present form, rather than if it were privatised so that it could compete and get a larger market?

§ Mr. Cook

The hon. Gentleman's intervention conveniently takes me on to what we must do if we are to give coal a long-term, healthier future than at present. The answer to his question is that, if the Government genuinely wanted a long-term future for the coal industry, they would tackle the rigged market that arises from their privatisation of the electricity industry.

§ Dr. Clark

The hon. Gentleman is ducking the question.

§ Mr. Cook

I am not ducking the question. The Government seek to duck the mistakes that they created when they privatised the electricity industry—mistakes that have given rise to the present pressures on the coal industry.

The problem for the coal industry is that it has been squeezed out of a fair share of electricity generation. The President talked of the long-term decline in electricity generation from coal. As recently as 1988—even under this Government—the Central Electricity Generating Board was planning to expand, not contract, coal generation. It applied for consent to build two new coal-fired stations and had prepared plans for a third.

The coal for those three power stations is equal to the output of the half dozen pits that the Government intend to close next month. Those plans were knocked on the head by the privatisation of electricity, a privatisation that opened the door to the dash for gas.

Last week we gained a new ally in our attempts to expose the fact that the privatised electricity market is rigged. The director of business planning at National Power, the biggest privatised electricity company of all, revealed its breakdown of generation costs. That shows that electricity from new gas-fired power stations is one third more expensive than electricity from the coal-fired stations that are being shut to make room for them. That does not even take account of the bogus subsidy offered in the White Paper. I do not take account of it, because the generators have not taken a penny of it.

I put to the President the question which I have asked in every debate on coal in the past year and to which I have received no answer. How can the Government pretend that there is not a rigged market when its effect is to reduce the market for coal even though it produces the cheapest electricity for the consumer? They should present a Bill not to privatise coal or to waste our time on another piece of their dogma but to end that rigged market. That is the way to provide a real future for coal.

The White Paper promised to take some measures to tackle that rigged market—not many, but one or two. One of the factors squeezing coal out of the market is that one of its biggest rivals, the nuclear industry, gets £1 billion subsidy a year. Subsidy is being poured into the most expensive source of electricity. Last month, the chief 724 executive of Scottish Power explained that electricity from nuclear power was now 50 per cent. more expensive than that from coal. However, so daft is the current market that nuclear power is being expanded and coal generation is being cut to make room for it.

§ Mr. Peter Hardy (Wentworth)

In addition to my hon. Friend's comparison, will he comment on the fact that last week British Nuclear Fuels issued figures showing that the cost of decommissioning new nuclear power stations is less than 1/100th of 1p per kWh? In that context, the justification for the levy against coal-fired generation is completely non-existent.

§ Mr. Cook

My hon. Friend will be aware that the Select Committee recommended that the nuclear power levy should be ring-fenced so that it was used specifically for decommissioning and not to subsidise current operations. The Committee also recommended that the nuclear review be brought forward to 1993. The Government accepted that, and the White Paper said that that review would be brought forward to 1993. In October, the Minister of State said that the nuclear review would be announced before the end of the year.

I may not carry the Minister of State with me on many issues, but I think that he will agree that we are past the end of 1993 and into 1994. The end of 1993 saw the end of another Government commitment, leaving the question as to how they can find the time, the energy and the priority to produce this thick Bill to privatise coal but cannot get down to the review of one of its main rivals and the biggest subsidised element in the energy industry.

Why cannot the Government do something about French imports, for which we are paying more than 3p per kWh—50 per cent. more than it costs to produce electricity from our own coal?

§ Mr. Richard Ottaway (Croydon, South)

We all know the answer to that.

§ Mr. Cook

Yes, we do. That is possible only because the Government extended the nuclear subsidy to French imports. Why are not they doing something to tackle that distortion of the rigged market instead of privatising coal? How can the privatisation of coal help in view of those blatant market distortions? Why should a privatised coal industry be any more successful than British Coal in selling coal in that rigged market? For that matter, why should a privatised coal industry be any more successful than British Coal in improving productivity? For the first time, the President acknowledged the remarkable productivity improvements under British Coal.

In the past 10 years, there has been a threefold increase in productivity and in the past year productivity has increased by more than one third. In nine of the past 10 months up to December, output per man shift broke all previous records. That is the achievement of the men down the pits who will be rewarded with closure next month —an achievement which outstrips that of any private industry. It is a public success story. Why can we not keep that success story in the public sector that made it possible in the first place?

One of the features that gives British Coal in the public sector an edge over private companies is that its gain in productivity did not go into private pockets or was not taken out in increased profits; it was passed on in reduced coal prices. In the 10 years to 1992, the price of coal came 725 down in real terms by 36 per cent. Since then, the new contract with the new price has reduced the price of coal by 27 per cent. in cash terms. The Government tell us that containing inflation is their top priority. How many private sector industries could claim to achieve the reduction in price that British Coal has achieved over the past five years?

The figures from National Power to which I referred earlier show that electricity can be generated from coal at a cost of 2.1p per kWh. It is currently sold at 2.8p per kWh. That is a mark-up of 33 per cent.—a rip-off produced by the last privatisation that Energy Ministers presented to the House. It is a rip-off at the expense of the consumer and the coal industry.

The President had the nerve to tell the House that nationalisation had created monopoly power. Privatisation will create monopoly power and the abuse of monopoly power. If the President is serious about monopoly power, why is he coming to the House today, not to privatise the coal industry, which has no power, but to address the mistakes made in the last privatisation by tackling the monopoly power of the two giant generators and sending them before the Monopolies and Mergers Commission to explain why they are keeping up their prices when the price of the main fuel has fallen so markedly?

The coal industry does not need privatisation to show it how to increase productivity or cut prices. Miners do not need privatisation and they do not want privatisation. How can privatisation improve the safety of the men who work 2,000 ft below the surface of the earth? When those men drop down in cages to work in that dangerous environment, they do not want to think that the people in charge up above are thinking first about the profits of the company. They come from coal communities and they remember when profit was the first priority of the pit owners.

The greatest achievement of the public coal industry was to make Britain's pits the safest in the world—an achievement that is most prized by the men who work in it. Australia has the next safest mining industry in the world and its fatal accident rate is double that of Britain. That is not due to the regulations that the President lays down. British Coal has achieved that safety record because throughout British Coal there is—and it is a story of achievement—a safety culture that permeates every coal-face.

The danger is that, by destroying the structure that created that culture, the Government will destroy the safety to which it gave rise. Why do they propose to tamper with that success story and put it at risk by destroying the structure of the industry that made it possible?

Privatisation will not improve the pensions of the men who have already been pensioned off. The trustees of the pension fund have registered 17 areas of concern about the Government proposals on pensions. They relate to the same issue.

Schedule 5, which deals with pensions, contains no fewer than 20 references to the powers of the Secretary of State. There has been an oversight here. It is about time that the President drew it to the attention of the parliamentary draftsmen that he is no longer Secretary of State but wishes legislation to refer to the powers of the President. Whatever name he chooses, for the first time a Secretary of State has 726 sweeping powers over the miners' pension funds—powers to sack the trustees and powers to require them to use the national interest to override the interests of the miners.

The issue is not whether the pensions will be index-linked to inflation but how any increase in the value of funds will be divided between the Secretary of State and the miners who have created that fund by paying into it. The last person that the members of those pension fund schemes will accept as capable of giving them a fair division of the fund is the person who has taken away their jobs.

I come to the final reason why the privatisation of coal does not make sense. To Conservative Members this may be the clinching reason. The final reason why privatisation does not make sense is that the Treasury will not benefit.

We always knew that, when we opposed the privatisation of electricity, we were wasting our breath. There was a great deal of money to be made from it and the Treasury would steamroller it through whatever the arguments. When the Government discovered that they would not make money out of privatising the nuclear industry, they left it in the private sector.

There is never much money in a fast sell and the Government will not get much money from selling off the rump of the much-reduced coal industry. They will be lucky to get back one third of the money they have poured out in redundancy payments in the past year alone. Not only will the Treasury not get much money, but it will be left with the liabilities for subsidence, for example. The Treasury will get the worst possible deal. It will be left with historic liabilities from the old coalfields without any of the revenue from the current operating pits to help pay for it.

Privatisation is not needed to get the gains in productivity that the coal industry has achieved for itself. It will not resolve the real problems of the coal industry which arise from the privatisation of the electric industry. It will not even make the Government money, so why are they pressing ahead with the privatisation of coal?

It has nothing to do with what is good for the coal industry. That came out strongly in the ideological preamble to the President's speech. The privatisation of the coal industry has everything to do with what is bad about the Government's dogma.

Lord Parkinson first told us that coal would be privatised in a speech to the 1988 Conservative party conference. He described it as the ultimate privatisation. It was also Lord Parkinson who in October 1992 told us the real reason for the closure of 31 pits with when he told "The World at One" that we should never forget that the miners brought down a Conservative Government. The Government never forgot it and as they sink lower in the polls, caught in a web of their own deceits and buried in the rubble of the industries they have destroyed and the public services they have run down, they are determined to take the miners with them.

The Bill is rich in symbolism. I began by reminding the House that the Chief Secretary had given us a sermon on cynicism. The deepest hypocrisy of the Chief Secretary lecturing us on the cynicism undermining national institutions is the fact that he has devoted his entire political career to undermining the national institutions of the post-war settlement—institutions that for 30 years fostered political consensus in a stable society.

A prominent part of the post-war settlement was the nationalisation of the coal industry. For 30 years until the 1970s we had full employment, an excellent national 727 health service and an education service of which we could be proud. Part of that settlement was the nationalisation of the mining industry. It offered an alternative way of running an industry based on respect for the rights of men who worked underground at the coal face. It was an alternative way of running the industry motivated by the need of the nation for energy, not the desire of owners for profit. The Government cannot comprehend those values. That is why they want to destroy the coal industry. That is why they have found time for this pathetic, irrelevant little Bill.

Of course the Government will win the vote tonight. But the Conservative party is so terrorised by the packs snapping at every straggler that they will all be found huddled together for safety in the same Lobby. I must tell the President that, long after today's speeches are forgotten and he and I are remembered only by our children and their children, the public ownership of coal will be remembered as a brave attempt to provide decency and dignity at work in the foulest conditions, to give expression to the common purpose of the nation by asserting the right of the nation to own the sources of its energy. The Government's betrayal of that great industry and the final insult of this mean little Bill will be remembered as a display of dogma and vindictiveness. We will reject their betrayal of the coal industry tonight, and history will reject that betrayal throughout the century.

§ Mr. Michael Alison (Selby)

Whatever else one might say about the speech that we have just heard from the hon. Member for Livingston (Mr. Cook), it cannot be construed by any stretch of the imagination as a welcome for the Coal Industry Bill. I am glad that, just before the Christmas recess last year, British Coal and its chairman, Neil Clarke; took a rather different line from that of the hon. Gentleman. Neil Clarke welcomed the introduction of legislation to return coal mining to the private sector. I echo his welcome unequivocally as one who represents the modern Selby complex of five integrated and interconnected mines employing some 3,500 people.

Neil Clarke observed realistically enough: The market realities will remain, whatever structure emerges from the privatisation process But he went on to say: Privatisation will help free the industry from some outdated restrictions. It will also allow the interests of coal mining in Britain and the people who work in it to be pursued separately from the interests of Government.

§ Ms Hilary Armstrong (Durham, North-West)

Will the right hon. Gentleman give way?

§ Mr. Alison

I shall make a little more progress and then I shall certainly give way to the hon. Lady.

That formal farewell wave by British Coal to the embrace of Government is worth dwelling on for a moment. No industry in Britain has demonstrated so vividly and starkly that state ownership is no panacea and cannot inoculate an industry, however venerable, however widespread, against the pervasive realities of costs, competitiveness and market alternatives.

As all hon. Members who are present will know, the coal industry has been clasped to the breast of Government for nearly half a century in Britain, and by an almost perverse reversal of nature, instead of a suckling infant becoming progressively bigger and stronger over those 728 post-war decades, a viable adult hitched to the paps of Government in 1947 has become progressively weaker and more infantile. The figures of decline are simply astonishing: 718,400 National Coal Board employees in 1947 down to 250,000 by the time Mrs. Thatcher came into office in 1979, with output down from 200 million tonnes in 1947 to about 120 million tonnes today.

§ Ms Armstrong

I want to ask the right hon. Gentleman a specific question about the public responsibility arising from the consequences of coal mining, whoever owns the mines. It is about the responsibility to the land and to the environment, which will continue for generations and for many a long year beyond anything that we do today. Does he agree that that responsibility, for example, for ensuring that water continues to be pumped from the redundant mines, must lie with Government and that the Bill must address that fully so that in constituencies such as mine someone will accept responsibility for ensuring that the real danger of serious environmental damage is not allowed to arise?

§ Mr. Alison

The hon. Lady's intervention strikes an echo in my mind and, I am sure, in the minds of many of my hon. Friends. Indeed, that is why the Bill as drafted, postulating the existence and future of the Coal Authority with an indefinate lifespan and with many responsibilities already spelt out, which no doubt will be further spelt out in Committee. This is precisely the mechanism that will ensure that her misgivings are properly attended to.

Even at its lowest evaluation, privatisation could hardly preside over a more dismal decline in a state-owned industry than that which is now on record in the decline from the 718,400 employees in 1947 to the 31,700—a tiny fraction of the original body—that exists today. In my view, privatisation offers an attractive and reassuring prospect of future stability and profitability to the five mines, at least in the Selby complex, into which huge sums of capital have been poured by the Conservative Government.

Productivity at Selby is about four times the British Coal average—30 tonnes output per man shift compared with about the 5 to 8 tonnes national average. If it was run as an independent mining enterprise, Selby could produce and sell coal at prices per tonne that could comfortably beat off any foreign coal at present on offer at any British port, let alone inland. Selby sits cheek by jowl with three of the largest power stations in the kingdom—Drax, Eggborough and Ferrybridge. Furthermore, its productivity and output can only get better under privatisation. Hence, its prospects are brighter.

§ Mr. Etherington

The right hon. Gentleman made reference to the 50 years of close contact between the Government and the coal industry. He stated that he thought that privatisation would be much better. Would he care to refer to the 50 years prior to that, when we had a privatised coal industry which was a blight and disgrace on any civilised nation? Does he accept that we are likely to revert back to those standards when we go back to the same criteria for operating an industry, which will surely come when private enterprise takes over again?

§ Mr. Alison

The hon. Gentleman undermines his own argument. If he looks back over the span of nationalisation, going right back to vesting day in 1947, he will see that there was then, as I argued recently, a manpower 729 dimension of 718,400 employees in the coal industry and an output of 200 million tonnes a year. That did not come just by flicking the fingers at the moment of nationalisation. It represents a long evolution of 50 years, which the hon. Gentleman attempts to discredit.

That was the treasure and the prize that was placed on the plate of Parliament to nationalise. If it had been such a discreditable, unconstructive and useless period, why was it that the point of nationalisation was the high point of output, quantity and quality in the coal industry? Since then, it has gone steadily and consistently down. That heritage is not to be discredited.

I was saying that the prospects already for Selby are very bright because of its astonishing capacity in terms of output per man shift. Even as one of British Coal's star performers at present, there are shortcomings in efficiency in the Selby complex, particularly in relation to the waste of materials and the somewhat cavalier attitude sometimes taken towards stock control. That shortcoming will be familiar to those whose employment has straddled both public and private sector industrial activity.

Experience of the electricity generating industry is a familiar guidepost in that respect. I received briefings on inefficiency and waste from miners who have worked overground and underground at the Selby complex, and believe that a yet better prospect for output, productivity and profitable coal sales will loom under privatisation.

I hope that an experienced, perhaps international mining or extraction company will perceive the jewel that glitters in the Selby coalfield and seek to bid for it. The hon. Member for Livingston mentioned National Power and PowerGen in particular. Local generators should not overlook the marvellous asset that lies so close to hand. National Power has just invested millions of pounds in a flue gas desulphurisation plant at Drax and is thus committed to coal for many years. It should certainly consider a bid for the hand, so to speak, of the Selby complex.

The closeness of that profitable mining operation to huge power stations suggests that one third of British Coal's entire prospective output of 30 million tonnes a year within the next few years could be produced at the Selby complex alone. That is a profitable and attractive basis not only for maintaining Selby's existing output but for increasing it. I believe that privatisation offers that.

I want my right hon. Friend the President to register one or two cautionary notes. The industry's effective restructuring will depend crucially on the skills and dedication of relatively few key miners and managers, whose services will be essential in putting privatisation in place.

In the worst scenario, one such miner or manager might deliberately forgo the option of early retirement or redundancy and suffer the loss of a huge redundancy payment out of his dedication to seeing the transition through to its conclusion—only to find that he had inadvertently done himself out of a subsequent long-term post in the new structure and had forgone his entitlement to the redundancy package to which he might have been eligible, had he chosen redundancy, and thus ends up with nothing.

I hope that my right hon. Friend will put such possibilities under a microscope. Without his action to 730 safeguard prospects and future employment, the maintenance of essential morale and motivation at all levels will falter—particularly among those who will be responsible for seeing through the transition.

I am deeply concerned about one or two narrower but significant aspects, and echo points made to me this afternoon by representatives of the Country Landowners Association. A compulsory rights order is a form of compulsory purchase order that applies to leases, with reversions at the end. CROs are used by British Coal for the acquisition, for example, of temporary rights for opencast operations. CROs are a familiar phenomenon at present, but it seems inappropriate for the new private companies or licence holders to enjoy the almost absolute, draconian power that British Coal currently enjoys through the CRO machinery. In the new privatised environment, normal private treaty negotiations should be the order of the day between private licensed holders and private landowners and the CRO procedure made redundant.

I am concerned also about the future of working rights agreements, which are used and operated by British Coal but which are apparently destined for transfer intact and unmodified to the new private licence holders and owners. The unqualified transfer of WRAs would be inappropriate. Most were concluded by British Coal and private landowners under the somewhat coercive shadow of the possible use of compulsory rights orders, so WRAs were reached under modest duress. Most made only cursory provisions for current payments, terminal payments or indemnity payments to make good damage done when the agreements come to an end.

The cursory character of such agreements has not mattered much in the past because behind the National Coal Board or British Coal lay the vast resources of the Exchequer. Everyone knew that the various payments for which WRAs provided would ultimately be available. No such basic security will exist in respect of the private company heirs and successors to British Coal, which may find themselves in real financial difficulty at certain points in their operation. Current WRAs should be updated and revised, and any that apply to prospective operations should be surrendered. It would not be appropriate to carry through that mechanism into the new structure without modification and amendment. I hope that my right hon. Friend will give that some thought.

Landowners should have the right of notification when licence bidders apply to the authority, in the same way as they receive information when a local authority causes a planning application to be made public and drawn to the attention of all and sundry in the surrounding countryside. The same should apply with prospective licence holders, so that people on the ground know what is in prospect. Two thirds of the Country Landowners Association's members are owners of fewer than 100 acres—mostly farmers. It is essential that their modest inhibitions and doubts should come under close scrutiny by my right hon. Friend and my hon. Friend the Minister for Energy, probably in Committee, and that appropriate amendments be made.

Unlike the hon. Member for Livingston, and on behalf of the Selby complex—which has a glittering future—I warmly welcome the provisions that my right hon. Friend has introduced today. I hope that the Bill will mark a new era for many miners and many mines throughout the United Kingdom.

§ Mr. Kevin Hughes (Doncaster, North)

I want to raise several matters of concern. It is a pity that the President of the Board of Trade is leaving the Chamber, because I wanted to refer to his typical performance this afternoon, which was long on rheto