COAL MINES (FINANCIAL ADJUSTMENTS). (Hansard, 22 December 1919)

§ Sir A. GEDDES

I have been asked to reply to this question on behalf of the Prime Minister. The statement is very long, and with the permission of the House I will have it circulated in the OFFICIAL REPORT. In substance it amounts to this, that the Government is discussing the financial position of the mining industry with the coal-owners, and will introduce legislation next Session to obtain powers to make necessary financial adjustments.

968 The following is the statement referred to:

1. It is not proposed to proceed with the Second Reading of the Coal Industry (Emergency) Bill. In the Debate on that measure, hon. Members opposite having intimated authoritatively that the Miners' Federation did not regard the Coal Industry (Emergency) Bill as the fulfilment of a Government pledge, and that they preferred the continuance of the existing Coal Mines Control Agreement, accordingly, the Leader of the House undertook that the Government would investigate what it would mean to the coal-owners and the general taxpayer if the agreement were adhered to. From both points of view, adhesion to the agreement would work such injustice as to be impossible.
2. First, from the. public point of view a considerable loss to the Treasury would be involved, because the coalmining industry during this financial year has been controlled on the basis of some limitations of profits becoming enforceable For example, the incidence of the cost involved in the increase of wages and reduction in hours under the Interim Sankey Report and the subsequent increase of 6s. per ton on all inland coal in July last were determined on this basis. So was the recent reduction of 10s. in the price of domestic coal, as was fully explained to the House. This reduction was made, not out of a surplus then in hand, but out of a surplus which would accrue before the end of the financial year because of the unexpectedly high export prices now ruling as a direct result of the dislocation produced by the War. Either to cancel the "Sankey" wage or to leave it as a charge on the Exchequer is unthinkable. To abandon the benefit to the consumer represented by the 10s. reduction in the price of domestic coal or to leave it as a charge on the Exchequer while such prodigious export profits are being made as a result of conditions which are inflicting great hardships on the community is, in the view of the Government, also unthinkable.
3. But, secondly, as a matter of fairness to the industry as a whole, adhesion to the agreement for this year is equally impossible. Briefly, the position is this: With a total output of coal far below the prewar output, the strictest control over the destination of supplies has been and still is essential. Even if the output were on the pre-war level some control of destina- 969 tion would continue to be necessary while the present level of export prices obtains, otherwise the country would not be able to retain home supplies except at world prices At the moment both inland quantity and inland prices are safeguarded with great benefit to the nation. Some collieries—favoured by geographical position —are allowed to export at, a price which is unregulated; the greater number of collieries are, however, compelled to supply inland requirements only at a regulated price, which is, on the average, below the cost of production. In the years 1917 and 1918 there was no very substantial difference between export prices and home prices, say 4s. on the average, there is now an enormous difference, say 30s. on the average, as compared with industrial price. If exporting collieries were to have the advantage of these prices—even subject to the limitations of the Coal Mines Control Agreement—they would be reaping an advantage from a valuable monopoly conferred upon them by the State, while collieries compelled to supply home consumers, whether industrial or domestic, would in spite of the provisions of the Agreement, stiffer financially not through any fault of their own, but because of emergency circumstances of which they are the victims.
4. It is impossible for the Government (in the exercise of its functions of safeguarding home supplies and home prices) to grant to selected exporting collieries a valuable monopoly without arranging for some special contribution from them, and to take from inland collieries the opportunity of making themselves even self supporting without in same way compensating them. It is contemplated that this special contribution and the compensation fairly payable should, as nearly as may be, balance. The readjustment of the finances of the industry is, therefore, imperative, and although the Government is no longer bound to adjust them in the manner provided in the Coal Industry (Emergency) Bill—a procedure which they would certainly not have adopted apart from the Sankey Report and pledge of 20th March—the readjustment in the light of present circumstances cannot be very different in its 'broad financial result.

The position is now being discussed and explored with the coal owners with a view to arriving at a fair and equitable distribution of the total profits of the industry but if agreement cannot be obtained in this way, the Government will formulate

970 proposals of their own. In either event, a Bill to give effect to the readjustment will be submitted to the House when it reassembles.

The effect of not proceeding with the Coal Industry (Emergency) Bill will, of course, be that there will be a cash deficit on this financial year, but as the readjustment will, in the end, be retrospective to the same date as the Bill prescribed, namely, the 1st April last, it will be a temporary deficit and not a permanent one.

Essential parts of any readjustment will be:

(a) that increased capital employed in the business in development or otherwise is remunerated;
(b) that the Sankey Wage shall be treated as a working expense of the colliery; and,
(c) that collieries whose coal is retained in the United Kingdom—whether for industrial or household and domestic purposes—are equitably and justly dealt with, as compared with collieries enjoying the export monopoly, so that they do not suffer by reason of the reduction in price of household and domestic coal.

5 So far as control of the industry is concerned, no new legislation requires to be introduced. Control of the industry has been exercised under certain of the Defence of the Realm Regulations, and these Regulations it is intended to continue by means of the Emergency Laws (Continuance) Bill until 31st August next. The Price of Coal (Limitation) Act, 1915, and the Orders made under that Act and under the Defence of the Realm Regulations will remain quite apart from financial legislation
6. The Government during the autumn has continued to consider the future of the mining industry and will, during the Recess, give further close consideration to this matter.