HC Deb 25 July 1933 vol 280 cc2437-502

17. "That a sum, not exceeding £4,013,000, be granted to His Majesty, to defray the Charge which will come in course of payment during the year ending on the 31st day of March, 1934, for Expenditure in respect of the Air Services, namely:—

2. Quartering, Stores (except Technical), Supplies and Transportation 1,487,00
5 Medical Services 285,000
6 Technical Training and Educational Services 384,000
7 Auxiliary and Reserve Forces 464,000
9. Meteorological and Miscellaneous Effective Services 358,000
10 Air Ministry 645,000
11 Half-Pay, Pensions, and other Non-Effective Services 390,000

First Resolution read a Second time.

Motion made, and Question proposed," That this House doth agree with the Committee in the said Resolution."

3.43 p.m.


We make no apology for putting down the Mines Vote on the Report stage. When recently we had under consideration the Vote of the Secretary for Mines the Minister dealt very ably with the work of his Department, chiefly with questions of administration and safety, but whilst we endeavoured to draw him on the question of wages he was careful enough to avoid that question. Though we realise the need for continuing that discussion, in view of its importance, we do not propose to do so this afternoon. I want to deal with what is, after all, the larger problem with which the mining industry is confronted, and which I feel sure the Minister and his Department have constantly before them. He, with us, must realise that the condition of the industry is gradually becoming worse. Whole areas are becoming derelict, and the population, especially in the exporting areas, is filled with despair.

It is interesting to note the decline in the number of persons employed in the mining industry as compared, say, with 1924. The latest returns indicate that at the present time there are just two-thirds as many men employed in this industry as were employed in 1924. It may have been thought from a reply given by the Minister of Labour recently that the number of registered unemployed in the mining industries is less than it was 12 months ago, but the actual facts are these. On 1st of July, 1932, there were 799,000 men employed, whereas on 1st July this year there were 765,000, or a reduction of no fewer than 25,000. It is true to say that at present there are fewer men employed in the mining industry than have been employed at any time in the past 35 or 40 years, and in the exporting areas, especially South Wales, we have to go back nearly 50 years to find a time when there were so few men employed. The same thing can be said of output. Last year the output of coal was lower than at any time since 1900. The output of coal in 1900 was 225,000,000 tons, and in 1932 it was 208,000,000 and the figures for the first six months of this year show a further decline of no less than nearly 4,000,000 tons as compared with the first six months of last year. If that decline continues it must mean that the output of coal in this country during 1933 will not be very much in excess of some 200,000,000 tons.

The position is the same in the case of the export trade. In the first six months of this year there was a decline in the export trade, compared with the first six months of last year, of nearly 1,500,000 tons. It would be unfair to leave the figures just there, however. One must make some comparison with the decline in the world output of coal. In 1932 there was a falling off of something like 300,000,000 tons in the world's output as compared with 1913. Almost all coal-producing countries shared in that decline. There are three exceptions. In France the output was slightly in excess of 1913; in the Netherlands there was a considerable increase—from some 1,800,000 tons to 12,600,000 tons; and in Russia the output of coal doubled itself. The decline in the export trade is not alone responsible for the reduction in output in this country. Notwithstanding the development which has taken place, we find that the inland consumption of coal here is some 33,000,000 tons less than it was in 1913, and the decline is still continuing.

How the prophets of the pre-War years were misled as to the expansion of the coal output of this country. In 1913 it was estimated that if the rate of expansion of the export trade kept pace with the increase in the volume of the world's steam and motor tonnage the export trade of the United Kingdom would amount to about 100,000,000 tons. We, in South Wales, would have had an export trade of something like 40,000,000 tons. Such a prophet as Professor Jevons estimated in 1915 that in 1931 we should be exporting from this country 172,000,000 tons of coal; we actually exported 42,000,000 tons. What a difference there would have been if Professor Jevons' prophecy had been accurate, but unfortunately he, like a number of other people, did not take into account other factors which were gradually growing up for power production. He did not visualise the changes which were even then taking place. The scientist and the engineer have been at work, with the result that a revolution in power production has taken place. While it is true to say that king coal has not been entirely dethroned, the coal industry has, unfortunately, had a very bad shaking.

I do not wish to go too fully into the factors which are responsible for these changes, but I want to call the attention of the House to one or two of them. First of all, I will deal with power production generally. The energy production of the world in 1913 was almost entirely from coal. About 90 per cent. of all the power produced, for whatever purpose it was required—road, rail or marine transport, and industrial purposes—was from coal, and only 10 per cent. was produced from factors such as oil, gas, electricity and water. In 1918, we are told that just about 14 per cent. of power was produced from factors other than coal, and something like 86 per cent. was produced from coal. What a change has taken place. The latest figures that one has been able to obtain indicate that at present something like 70 per cent. of the energy produced in the world for all purposes is produced from coal, and 30 per cent. from oil, electricity and gas. By electricity I mean electricity generated from water power. There has been an increase in the power created by oil, during the last six years, of about 6 per cent.

Some other countries are suffering in a very much greater degree than we. The latest statistics that one has received from America—may I say in passing that if one wishes to get statistics in regard to the changes that are taking place in world power production, one has unfortunately to go to America for them, because there is not a department in this country which is kept up-to-date with regard to the changes that are taking place—show that in America the power produced from coal is down to just 63 per cent., and that power produced from other factors has increased to 37 per cent. In those other factors of power production we are not nearly as fortunate as some of the other industrial countries. We do not possess oilfields which give us natural oils, we have little or no natural gas, and little or no water power. It is interesting to make a comparison with America in this connection. There is that great industrial nation, possessing 65 per cent. of the known oil resources of the world, 90 per cent. of the world's natural gas, and something like 40 per cent. of the water power.

Upon an occasion like this, one must deal with the increase in the production of oil, because almost simultaneously with the reduction in the output of coal in this and in other industrial countries there has been a very great increase in the production of oil. Some 50 years ago oil was almost negligible from the point of view of power production. In 1920, the world's output of oil was about 94,000,000 tons, whereas in 1930 it had increased to 200,000,000 tons. There has been a slight decline in the world's production of oil in the years 1931 and 1932. No: country has suffered more seriously from these changes than we have, for the reason that the changes are not only those which have taken place internally but those which have affected the export and bunker trades which were such a valuable asset to this country when steamships were largely, or almost entirely, driven by coal. In 1913, 1,300,000 tons of shipping used oil as a fuel, whereas in 1932 nearly 50 per cent. of the world's shipping was using oil as fuel, thus displacing coal.

We know what inroads oil has made in connection with industrial production in this country. The predecessor of the present Secretary for Mines, in his speech introducing the Estimates last year, indicated the changes which have taken place. Unfortunately, we are not at the end of the inroads which oil is making in power production. We find that various industries in this country have not only had oil machinery installed for the purpose of using oil as against coal for power production. but that process is constantly going on. I think that the time has arrived when some definite and coordinated effort must be made to see whether we can, in some way or other, induce people to use coal for the purpose of power production, or else we must produce oil from the oil reservoirs which we have in this country, and then give those people the supply which they require.

May I refer to the statement which was made by Sir John Cadman in a speech which he delivered in February of last year? This is an indication of what is taking place year after year. Sir John Cadman, representing a very large oil company, referred to the fact that if the railway companies in this country put into operation an oil-electric engine they could with 2,000,000 tons of oil do that which requires 13,000,000 tons of coal at the present time. If that should happen, it would mean that no fewer than 40,000 miners, who are now employed in the production of coal for the use of the railways, would be thrown out of employment—displaced by oil. I have referred to the fact that we have no natural oil resources; the same thing can be said of the British Empire. Of the known oil resources of the world, only 2 per cent. are contained in the Empire. All that we can do, with regard to the production of oil in this country, is to produce between 25,000,000 and 30,000,000 gallons of benzol from high temperature coke ovens or gas works, or 240,000,000 to 250,000,000 gallons of cresote oils.

In view of the changes which have taken place, the British Navy is almost dependent for its fuel upon the importation of foreign supplies. The whole of the Air Service and the mechanised Army are also dependent upon the importation of motor spirit, which is their very life blood. The major portion of the mercantile marine, as I have pointed out, and road transport, are also dependent upon imported fuel. It is interesting to note the increase which has taken place in the importation of fuel in this country. In 1910, the amount of fuel spirit imported into this country was something like 55,000,000 gallons. In 1930, the importation had gone up to nearly 1,000,000,000 gallons, and, taking the first six months of this year, we find that, if the present rate of import of motor spirit is continued during the second six months of this year, the import into this country will amount to over 1,000,000,000 gallons. I could go on dealing with the question of fuel oil and the other oils upon which this nation is so dependent.

Much has been said regarding the extraction of oil from coal, and there have been a number of processes doing this work for some time in this country. I am pleased to note, from the reply given by my hon. Friend the Civil Lord of the Admiralty, that the Admiralty is gradually increasing the amount of oil produced from coal for naval purposes. In 1929 we did just make a start in this matter and produced or sampled 20 tons of oil from coal, and 1 think my hon. Friend will agree with me that in almost every way the fuel oil produced from coal gave results almost equal to naturally produced oil. The difficulty is not the quality of oil produced from coal, but the quantity, and there is no reason why, instead of the Navy being dependent, as it is almost entirely upon oil imported into this country, we should not produce from coal, oil quite suitable and satisfactory for the purpose. The same could be said with regard to the Air Force. I was very pleased that the Under-Secretary of State for Air, in reply to a question recently, said: As a full-scale experiment, one Home Defence Squadron is flying solely on petrol extracted from British coal."—[Official report, 19th July, 1933; col. 1801, Vol. 280.] Had the right hon. Member been present, very probably his reply to the ques- tion whether that petrol is satisfactory or not, would be similar to the reply which has been given by my hon. Friend the Civil Lord of the Admiralty. Seeing that oil can be produced from coal to do the work which is now being done by imported oil, one naturally asks why this oil extraction is not exploited, and let me say that all my hon. Friends on this side of the Roust were naturally interested in the announcement made by the Prime Minister when dealing with this matter on Monday last week. We have for long advocated the erection of plant for the purpose of large-scale experiments, though we disagree with the method which is being adopted regarding these experiments. I am sure that my hon. Friend the Secretary for Mines will understand me when I say that we think it is wrong, and that the setting up of what, after all, is likely to be a new industry, ought not to be left in the hands of one private company, however powerful that company might be. Taking not only the condition of the coalfields into consideration, and the suffering of the miners, but, from the point of view of national interest, we think it is the work of the nation to face up to the changes which are taking place, and that the nation itself should make itself responsible for the experiments and exploiting of this process.

It is desirable, I think, that the proposals of the Government should be clearly understood. So far as I understand them, in the first place they involve a preference of at least 4d. per gallon for motor spirit manufactured from home-produced coal, shale, peat, or from the derivatives of those fuels. This preference may extend over a period of nine years from 1935, but if the present duty of 8d. per gallon is reduced to 4d., then, of course, it will spread over a very much shorter period—some four and a-half years. In other words, the home manufacture of petrol is to be guaranteed for a period of not less than four and a-half years and not more than nine years—a preference in the aggregate of no less than 3s. a gallon, that is, if 30,000,000 gallons of petrol per annum are produced, a sum of something like £4,500,000 will be lost to the Treasury in duty upon this oil as a result of this proposal. It is estimated that 4d. a gallon on petrol is equivalent to £4 16s. a ton, or, roughly, seven times the current pit-head price of coal produced at the present time in the United Kingdom.

It will be seen, in the light of these facts, that the Government scheme is a very costly one. A petrol output of 100,000 tons per annum, which, after all, is negligible from the point of view of the amount of petrol which will be used in this country, and the amount of coal which we have been given to understand will be used in this process, represents just 0.016 per cent. of the present total production of coal in this country. The experiment may be justified if it is for the benefit of the coal trade and the nation as a, whole, but we are of opinion that the Government themselves, as I have already pointed out, should have shouldered the responsibility. May I say that those of us who come from the mining districts are just a little apprehensive as to what might take place in the transfer price of coal from the pit to any process which might be developed? Some of my hon. Friends may say," Ah, but there is a minimum price in operation, and the coal cannot be sold below the minimum price. "We have had same experience of what has happened with regard to gas, electrical and other industrial undertakings before Part I of the 1930 Act came into operation.

I would ask the Secretary for Mines, in his reply, to deal with a few questions in which we are interested. Might I ask the hon. Member whether there has been any agreement entered into between the Government arid Imperial Chemical Industries or the owners of any other process for the extraction of oil from coal? Have any of the owners of the other processes been consulted with regard to these terms, or have the negotiations simply been carried on with the representatives of Imperial Chemical Industries? Then might I ask the hon. Member whether the persons who have for years been working upon the question of low temperature carbonisation have been consulted as to whether they would be prepared to produce, say, a fuel oil or a heavy oil under processes of that kind, or is the effort to be limited to the production of petrol under the auspices of Imperial Chemical Industries? May I ask whether any effective arrangement is being arrived at with regard to the price of petrol? We must remember that last year and this year the price of petrol is only 50 per cent. of what it was in 1929, and, if I understand rightly, it is the desire of the Government that the price of all raw materials should be restored to what it was in 1929, and the price of petrol in 1929 at the Thames mouth was 6d. per gallon, whereas at the present time it is something like 3d. per gallon. I would like the hon. Member to reply to that question.

There is another question. Has any provision been made, or any discussion taken place during the negotiations with regard to the site of the proposed works Is the site to be left entirely to Imperial Chemical Industries, or are the Government insisting that the site for the proposed works should be placed in the coal-fields? Ts the Secretary for Mines, or are those negotiating, considering the question, in the event of the industry being established, of it being situated in such a position on the coalfield that it could be linked up with other processes which might be developed such as hydrogenation? Then we might ask whether the Government themselves—and perhaps my hon. Friend the Civil Lord could answer that question later on—are giving any definite promise to take from Imperial Chemical Industries a supply of petrol for the Services, or will the petrol which will be produced as a result of these experiments be distributed in the ordinary way by the petrol, distributors throughout the country? It is a question to which I would like the hon. Member to reply. Although the Financial Secretary to the Treasury hedged round it yesterday, could the hon. Gentleman tell us what is going to be the actual cost to the Treasury of this process, and is it to be confined to petrol hydrogenated from coal? Because we must remember that the hydrogenation of petrol can be as successfully carried out when petrol is hydrogenated from heavy oil as it can be from coal.

As the Secretary for Mines must know, the Anglo-American Oil Company at the present time in America, where they have an abundance of oil, have formed very large hydrogenating plant, hydrogenating nothing but heavy oil, and converting it into petrol. Is there anything in the agreement which will indicate that the preference will be given only to oil produced from coal by that process or by the process of low temperature carbonisation? We certainly object, as I have already pointed out, to Imperial Chemical Industries being given a monopoly in this matter. While I do not desire to take from the company any credit for the work which they have done in the research and development of the Bergius process, upon which, I understand, they have spent a considerable sum of money, in our opinion it is a great pity that the nation, through the Fuel Research Board, did riot continue the work which it did in 1925, without allowing this process to pass out of the hands of the nation into the hands of this private company, which at the present time, I understand, not only possesses the rights for this country but the British Empire rights as well. I also regret that the colliery owners, through the British Colliery Owners' Research Association, are not now conducting the experiments which were financed by them at Birmingham University. As I have pointed out, Imperial Chemical Industries have not only a monopoly, but since 1928 they have had all the rights, and no one company, however powerful it may be, should have the monopoly of what in our opinion is going to be a new industry, and may well be, if properly managed and controlled, a very important industry.

It is true that Imperial Chemical Industries have from time to time published details of the work which has been carried out by their research engineers and chemists at Billingham, and we know that on several occasions mining and other engineers have visited those works. At the same time, I feel sure that the Secretary for Mines will remember that this is not the only process for the production of oil from coal, but that a large amount of work has been carried out by those who have taken a keen interest in low-temperature carbonisation. In that process, unlike the hydrogenation process, the main product is coke, and the difficulty is in regard to the disposal of that fuel. The main product of hydrogenation is petrol. I would like, however, to call the attention of the Secretary for Mines to the changes which are taking place in regard to heavy lorries and passenger vehicles in this country. There is scarcely an omnibus company, or a municipality which is running omnibuses, that has not during the last two years tried out the Diesel engine, and we find that the Diesel engine is rapidly becoming popular. The Diesel engine, instead of using petrol, uses heavy oil, and, whatever may be said regarding the advantages of the Bergius process for hydrogenating coal for the production of petrol, we know that it is not nearly so suitable for the production of the heavy oils from which Diesel oil can be produced.

I am not going into the economics of the one process as compared with the other, but we are very much concerned regarding the present development by the Government. As I have already said, we are pleased that a large-scale experiment on these lines is being carried out, but we feel that we ought not to allow the opportunity to pass without registering our protest that this matter should be left in the hands of private enterprise. One has only to look back at the development which has taken place in the power-producing industries of this country to see that we cannot deal with 1920 problems by 1919 methods. Take the question of the coal industry, the gas industry, and the electrical industry. In this country the gas industry was introduced very largely for the purpose of providing an artificial illuminant. No one ever anticipated that the gas industry would grow to its present size, and, while gas is entirely dependent upon coal as its raw material, as soon as coal is converted into gas the gas at once competes with coal. The same can be said with regard to electricity. It was introduced, in the first instance, for the purpose of providing an improved artificial illuminant. The hon. Member for Newport (Mr. Clarry) will not agree with me when I say" improved artificial illuminant," but there it is, and to-day we find that the three great power-producing industries in this country are the coal industry, the gas industry and the electrical industry.

It is true to say that the gas industry and the electrical industry were developed under a system of semi-public control, and it is also true to say that these three industries, until quite recently, could be regarded, as being, owing to their organisation, entirely inefficient for dealing with the demands made upon them. That has been pointed out on numerous occasions with regard to the coal industry, and I do not want to go into that question here: while the Con- servative Government itself, in 1925, had to introduce a scheme for the purpose of organising the electrical industry in this country so that the nation should have full advantage from it. We find that the gas industry is almost in the same condition. I am not suggesting that all the gas plants in this country are not efficient; it would be wrong to say so; but there is a very strong desire throughout the country that the gas industry should be organised on the kind of grid system on which the electrical industry is organised at the present time.


Purely by private enterprise, without interference from the State.


That may be the hon. Member's point of view; it is not our point of view, and it is not what took place in the case of the electrical industry. I am sure that my hon. Friend who was in the House in 1925, will remember what took place in connection with the electrical industry. Our complaint is that, as long as these industries develop separately, and quite apart from any regard one for the other, we are not going to have an efficient power-producing industry in this country. Why cannot a National Government, in the year 1933, plan power production in this country I Coal, as I have already pointed out, is the basis of the electrical industry and of the gas industry; only a very small percentage of electricity is generated in this country by water power; and in the case of both electricity and gas, as soon as the Goal is changed in form, the gas or electricity produced from it at once enters into competition with coal for the purpose of power production.

The proposals announced by the Prime Minister last week represent the beginning of a new industry, the dimensions of which we cannot foresee here this afternoon, and, in our view, instead of the hon. Gentleman being Secretary for Mines, he really aught to be Minister for Power and Fuel in this country, coordinating all these power-producing industries under one head and under the control of a Minister responsible to this House. Last week we were dealing with a Road Transport Bill. We have a Minister of Transport dealing with the question of rail traffic, road traffic, and coast wise shipping. Is it not as important that we should have a Minister of Power and Fuel, bringing all these light and power proposals under his Department? The need for such a plan is obvious. We say that it -should include the coal mines, the gas industry, and the electrical industry, together with the new carbonisation and hydrogenation industries. These should be set up in the coalfields, which have suffered almost entirely as a result of the changes which have taken place, and all of which are now depressed. These industries should be set up where the coal can be converted into the various kinds of power at the pithead.

There is no difficulty to-day in the conveying of power from the coalfields to other industrial centres in the country. There is no industrial country in the world where the coalfields are so conveniently situated as they are in this country. Industrial South Wales has its coalfields; the industrial Midlands have their coalfields; industrial Durham and Lancashire have their coalfields; industrial Scotland has its coalfield; within 50 miles of London there is a great coalfield in Kent, and Somerset and Bristol have their coalfields. When one sees, as I have seen, high tension electric mains conveying electricity some 300 or 400 miles from the Niagara Falls down to Southern Ontario and the Ontario Peninsula, one can see how this nation could be linked up in one power-producing scheme of that kind, in which coal, gas, electricity and oil would all play their part. If that were done, it would bring a new hope and a new prosperity into those districts such as is desperately needed at the present time, for, granting that it would not put all the miners back to work, it would, if developed with vision and enterprise, provide a number with alternative work much more congenial and less dangerous than underground work; it would make this nation self-supporting in all that is necessary for power production; it would save the tens of millions of pounds which are now spent on the importation of oil into this country, and it would do much to restore the nation to prosperity.

4.19 p.m.


This Debate was arranged for the purpose of discussing an announcement made by the Prime Minister on Monday of last week, in answer to a question put by myself, and I am extremely gratified to have this opportunity of congratulating the Government on the decision which they have taken. I should also like to congratulate Imperial Chemical Industries. I think we owe them a debt of gratitude for the untiring research work which they have conducted on the hydrogenation of coal during the last six years—research work which has satisfied that company at least that it is now in a position to go forward and build a plant to produce petrol from coal on a commercial basis. It was, I think, suggested by the hon. Member for. Aberdare (Mr. G. Hall) that there is some sort of unholy alliance between the Government and Imperial Chemical Industries, and that the Government have in fact given a special monopolistic privilege to Imperial Chemical Industries in this matter. Later on in his remarks, however, the hon. Member pointed out, quite rightly, that hydrogenation is not the only way of producing petrol from coal, but that there are other processes, and it is only fair to say that the special guarantee which the Government have given to Imperial Chemical Industries will also be given to any other company endeavouring to produce petrol from coal, no matter what process they use.

In point of fact, so far as I know, petrol produced in this country has always been exempt from excise duty. The Scottish shale oil industry would probably not have been in existence to-day had it not been for the Petrol Duty in the past, and it is a fact that, as a result of the last increase in the Petrol Duty, Scottish Oils were able to re-employ 800 shale miners who, a year previously, had lost their employment as a result of the low world price of petrol at that time. It is stated that this process of hydrogenation is obsolete and does not pay. I was sent a memorandum this morning which says: Direct hydrogenation of coal does not pay. If it did pay, there would be no need for the chairman of Imperial Chemical Industries to write to the" Times" suggesting that the process should be financed by the British Government.


Who said that?


I am not able to give a satisfactory reply to the hon. Member, because the memorandum is not signed, but accompanying it was a cutting of 8th April giving a letter signed by Commander Bernard Akworth. Further on it said: If any Government was so foolish as to accept the advice of the Department of Scientific and Industrial Research and em- bark on a scheme for the hydrogenation of coal, it is almost certain that by the time the scheme was under way the consumer would be using a cheaper fuel than could possibly be supplied from the hydrogenation plant. In the course of the last 12 months, even with a comparatively small laboratory plant, Imperial Chemicals have been able to reduce their operation costs by 50 per cent. It is not difficult to imagine that, when larger plant is set up on a commercial basis, it will be possible to make further economies with overheads and it will also be possible to make economies in the actual construction of the plant itself. In fact, I do not consider that it would be without the bounds of possibility, say in 10 years, that the price of petrol produced from coal would be at least as cheap as the petrol which we now have to import.


The point has been made that hydrogenation is possible from heavy oils, and the product would have the same benefit as petrol extracted by hydrogenation. It is, therefore, untrue that this would directly benefit the coal trade.


I do not quite follow the relevancy of the hon. Member's interruption.


The point is that this is going to be of immense benefit to the coal industry and that hydrogenation from coal will develop. But hydrogenation from imported heavy oils will receive the benefit as well.


In that case, as far as I have succeeded in following the interruption, which is one of general criticism of the entire purport of my speech, if it is a question of hydrogenation from imported heavy oils, those oils will bear a revenue duty. In regard to the cost of this scheme, the Prime Minister stated that the cost to the Treasury would be inconsiderable. As far as I can see, the only cost that the Treasury may have to bear is one of loss of revenue, and that loss of revenue could only take place as and when the home industry could produce a sufficient quantity of coal to reduce the demand for the petrol which we now import. It is estimated that the erection of the plant will employ 7,000 men directly and another 7,000 indirectly and that it will give employment to 1,000 miners. Taking the cost of an unemployed man at a week, I have worked out that in the case of one year alone the saving to the Unemployment Insurance Fund would be no less than £780,000, which would be sufficient to offset any temporary loss which the Exchequer might have to incur as the result of having guaranteed this scheme.

I have seen other criticisms of the proposal which come from Free Traders who cannot see why the consumer should be asked to pay more for his petrol than he would have to pay if there was no duty on the imported fuel. It is the same line of argument which always insists that you must buy in the cheapest market and sell in the dearest. But what the Free Trader will not face up to is that the choice of our export market, let alone the dearest market, is no longer our own. In the last century, in my opinion, the industrial pre-eminence of this country was based to a large extent on coal. Coal was our basic asset. It was the foundation of our mercantile marine. Since the War our export markets have, for a variety of reasons, dwindled very considerably. Furthermore, the demand for British coal has dwindled on account of the increasing use of oil which, as the hon. Member for Aberdare pointed out, we are now obliged to import in increasing and alarming quantities. In a completely Free Trade world that might have been a matter of no particular importance. We might have been able to pay for these imports of foreign oils by increased exports of manufactured goods, but the Board of Trade figures show that in the world in which we are living to-day, in a world of economic nationalism and self-sufficiency, we have a very hard time of it to export enough to pay for what we have to import, and every gallon of fuel oil or petrol imported has to be paid for by some manufactured goods. Since the War the quantities of petrol which we have had to import have, therefore, created an increasing burden on the industrial community. I think, therefore, that there is everything to be said for the encouragement which the Government is giving to the production of petrol from coal, and I hope that encouragement will continue until such time as we are able to produce sufficient oil to meet the requirements of the day.

Those are merely a few observations on the economic side of the proposal. There is another side to it on which I should like to lay some emphasis, and that is the security of national defence. We are obliged to import vast quantities of fuel oil for our Navy, our Air Force, and the mechanised part of our Army, and who knows but that, when another great war comes along, we might not find ourselves shut off from foreign sources of supply, and then what good would be our Army to us and what value in defence would be our Air Force, or even our Navy? I feel that the extra price which may have to be paid by the consumer for petrol in the years to come is insignificant compared with the defence of the Realm and the defence of the Empire. I should like to congratulate the Government on the fillip which it has given to the industry, which is sufficient to induce Imperial Chemicals to erect this plant, and I should Ike to congratulate them, further, on being able to do this without incurring any financial responsibility. This experiment can be tried out without in any way endangering the finances of the State. As to quantity, of course at present it is very small. It may seem insignificant. So far as employment in the mining industry is concerned it is merely a 1,000 men. I understand that Imperial Chemicals have already inspected 20 other sites up and down the country, and it is quite clear that they will find them somewhere in the area of the coalfields. With that knowledge in mind, I feel that, while this may be just the thin end of the wedge, nevertheless it is a very good wedge, and I look forward to the time when, as the result of the encouragement given by the Government, we shall be able to be entirely self-sufficient as regards petrol.

4.42 p.m.


I do not wish to follow the hon. Member for Aberdare (Mr. G. Hall) in his wide and very interesting review of the condition of the coal industry, leading up to the very thoughtful and instructive picture which he drew of the possibility of co-ordinating our coal resources with our other sources of power, a suggestion which was foreshadowed by the Royal Commission on the Coal Industry. Nor do I wish to follow him in the field in which he speaks with particular knowledge and experience, but I could not but be struck with the fact that, after pointing out that there are only two-thirds of the men now enmployed in the coalfield who were so employed in 1924, he added that, although the coal industry is at that low ebb to-day, it is by no means stabilised at that position and that developments which are by no means impossible might reduce its condition to one much more deplorable than it is at present. I admire the way in which he, as the representative of a mining constituency, did not blink the fact that this new process is a costly one and that there are difficulties in the way.

There are, I think, many aspects of this new proposal for the hydrogenation of coal which must appeal to all parties in the House. The mere fact that it is advocated as a means of bringing some help to a sorely pressed industry should be sufficient to secure it sympathetic consideration. We who have long advocated a policy of national development and investment are, naturally, favourably predisposed to consider it, and we are not alone in that view. Apart from the House, there is a great and growing volume of opinion in the country that greater efforts should be made at this time to give an impetus to trade, which seems to be slowly recovering, by the development of idle resources. The Government, however, have adopted a very rigid attitude on that particular policy of development. I might go further and say that it is almost 8, frigid attitude, and in some quarters I see that they are being described as if their motto is "Faith without works" or, at all events, faith without public works. Be that as it may, I am sure that the fact that the Government, having now considered, as we know they must have considered, many proposals of one sort or another, have now come to the House with a proposal which they do not wish to turn down, must naturally influence the House to give it the careful consideration it certainly deserves.

One of the first considerations is that it has a definite and an unfortunate resemblance to other schemes of national planning upon which we have already embarked. I think that all the national planning which we have so far entered upon in this country has had the result of adding to the supply of some product which is already in excessive supply and is not wanted. I am speaking in general terms. I think that if an impartial arbitrator or authority had been asked to consider our national planning and development he would have said, "You had better get rid of some of the national planning you have already done." I do not mention this to condemn out of hand any proposal which comes here on such grounds as this, but in order to point out that it has an unfortunate resemblance, for example, to the beet-sugar industry. I will not discuss this matter further, except to say that if the same impartial observer had been advising us he would have said: "The whole world is bursting with sugar. Some of your Colonies are producing it. They are hard hit, and, at all events, the one thing you must leave out of your national planning is sugar." I think that arguments of the same kind might be advanced in regard to the national planning of the wheat industry. We have to look at the present proposal with some regard to costs and in relation to what has gone before, which fact, I think, is not adequately realised certainly in the country, and I am inclined to doubt whether it is realised by the House. I am not sure that it was realised by the hon. Gentleman the Member for Linlithgow (Sir A. Baillie), who said that the cost of the proposal would be comparatively small. I think that he quoted figures and said that the total cost to the Treasury might be £750,000 a year.


I said that it would cost the Treasury a negligible amount. and I made no reference to what it was likely to cost the company which constructed the plant.


We are a little at cross-purposes. The hon. Gentleman suggests that the cost to the Treasury will be a negligible amount, or very small.


Loss of revenue.


It is very important that it should be understood both in this House and in the country that a loss of revenue which is arrived at by remission of tax is just as much a loss to the taxpayer and the Revenue as if it had been paid out in a direct subsidy.


I recognise the loss to the Treasury, but I said that it would be to a large extent counter-balanced by the saving in Unemployment Insurance benefit.


I intended in my next sentence or two to refer to that matter. This brings me to another point with regard to the announcement which was made by the Prime Minister last week when the project was first mooted in the House. He gave certain figures with regard to employment, and hon. Members are entitled to ask for a little more information with regard to them. The whole thing is somewhat nebulous. The Prime Minister mentioned certain figures of employment, and now the hon. Gentleman has based himself on the Prime Minister and says that the savings to the Unemployment Insurance Fund will be considerable. Undoubtedly there will be some saving to the fund, but I would ask my hon. Friend the Secretary for Mines whether, in the figures officially given to the House, allowance was also made in respect of men who will lose their employment and who up to the present time have been engaged in transporting the oil into this country and in the tankers and so forth, which will be put out of operation. That is a point which must not be lost sight of. I feel profoundly that the matter has not been sufficiently thought out. If it has, and the details are available, those details have not been produced to this House in order that Members may decide whether they can whole-heartedly support this particular proposition.

I should like to address another question to the Secretary for Mines on the same point. It has been suggested, on the basis of the plant unit which is contemplated with the help of Imperial Chemical Industries, that work will be provided for 1,000 miners. Incidentally, the work which will be provided for 1,000 miners would, on the basis of the production of petrol and oil by that particular unit of plant, cost the Treasury the sum of £1,000,000 a year, and would work out—I have seen various estimates—to a sum of between £800 and £1,000 per miner per annum. That is a figure which everybody must take into account when we are invited to consider this project, however anxious we may be that it should go forward. It has been stated to me and to others that the actual number of miners to be employed is far less than the 1,000 which the Prime Minister suggested. [An HON. MEMBER: "No."] I am not asserting it myself, but it is a point of some substance. The statement has been made that the number of miners to be employed in order to produce the coal for this plant will be very much below 1,000. The actual material used in the hydrogenation process is small coal and dust and hydrogenation can be started and carried on without the employment of a single extra miner. I neither confirm that of my own knowledge nor am I in a position to deny it. I should like hon. Members who can speak with a wider and more practical acquaintance with the subject to clear up that point which is likely materially to affect the judgment of many Members in coming to a decision upon this very important matter.

With regard to the question of the magnitude and cost of those processes. If they were pursued to their natural conclusion and met with complete success; if by the various processes of low carbonisation and hydrogenation all the oil fuel required by this country were produced domestically, the loss to the Treasury would amount to £35,000,000. That is a point of very great consideration, especially coupled with the fact that the coal, on the basis of the Prime Minister's statement, would only amount to from 2½ to 3 weeks' production on the basis of the figures of production for 1931. Again, we must relate that fact to the question of the cost which the nation as a whole will have to bear. Those who are embarking upon this important experiment will have to compete with the oil which is bubbling up from natural sources and which can be produced and brought to this country at a cost of about 3d. per gallon, as against a cost of production, on such information as is available to me, of the oil produced by the hydrogenation or any other process of something like 8d. or 9d. a gallon. It must, therefore, be clear to everybody that it is not an economic process or even a business process on the basis of the present values of petrol. That is a very important fact which should be borne in mind and pondered over.


Has the hon. Gentleman taken into consideration the cost of storing oil at Singapore and at other places?


No. I am not dealing with the matter in such detail as that: I am trying to present to the House a broad case of the difficulties and costs which the House have to consider. Furthermore, the cost of storing, I imagine, will be very much the same whether the oil is produced in this country or whether it is brought from Persia or from anywhere else. I wish to say a few words about the actual carrying out of the work. The hon. Member for Linlithgow congratulated the Imperial Chemical Industries upon the enterprise which they have shown in coming forward with this proposal. The Imperial Chemical Industries is a company well known as a leader of scientific work in this country. I do not know of any other company in this country which has devoted more time and money to the prosecution of research. They have taken risks, and they are prepared to take business risks. But clearly they now come to a risk which they do not regard as a business risk, because they are not prepared to set up a plant without a guarantee of some kind. That raises a further issue of the risk which is involved.

The hon. Member behind me referred to the fact that the hydrogenation process had started in the laboratory and had been transferred to the trial unit stage. Everybody knows that in transferring from the laboratory stage to the first commercial unit or the pilot plant there is a great deal of difficulty and loss. If it works out satisfactorily, naturally the results will show an improvement upon the laboratory scale. That is all to the good. When you take into consideration the risks which the Imperial Chemical Industries are called upon to run, it has to be borne in mind that they have to face risks in carrying on and in transferring from a small pilot plant to a process on a vast commercial scale. The Imperial Chemical Industries cannot tell us, nor can anyone else, what the result will be when these comparatively small reactions are produced on a vast scale. Carried on that basis, the results might be far better than expected. But the last reaction might be much more costly and might not work out. The whole thing might be a substantial failure, and the Imperial Chemical Industries would therefore be mulcted in very heavy loss for the plant which they had put up, and which, as far as I know, might not be utilisable for anything else.

There are one or two other things I wish to point out in connection with the risk. It is not only the risk of process which is involved but the development of other processes. We know that there are very optimistic views held by Members in this House who speak with authority that compressed gas or compressed hydrogen may very likely supersede petrol for many purposes for which it is now employed. Imperial Chemical Industries having embarked upon this great expenditure may not find it a profitable venture by any means. I must comment on the great uncertainty in regard to the whole of this proposition. The financial result is clearly uncertain. The result to the taxpayers is uncertain and maybe as costly as the sugar subsidy has proved to be. There is also uncertainty in regard to the operation of carrying out the process. It can only be described from the point of view of the taxpayers as a very hazardous speculation, and I would say myself—from the letters I have received from some of the shareholders in Imperial Chemical Industries they take a similar view—that it is a very hazardous speculation from the point of view of the shareholders in Imperial Chemical Industries. The whole thing is so uncertain and difficult that we ought to be very careful before we embark upon it large sums of public money, which may be irrecoverable.

The conclusion to which I have been led by a careful consideration of such facts as were available to me in the somewhat nebulous presentation of the case, and from such other sources, not very wide, and from such experience as I have in these matters, which I must confess is not very recent, is that the House should ponder this matter very carefully. From the point of view of the taxpayer it is clearly hazardous, and it may well be a costly experiment. From the point of view of those undertaking the work it is also very hazardous. It is clearly the duty of Parliament to consider the matter very carefully in all its aspects. I do not feel that the House has had presented to it sufficient evidence upon which to form a reliable judgment and therefore I think that it should receive further consideration, which should take the form suggested in the Resolution on the Order Paper that the matter should be committed to a Select Committee of the House.

5.2 p.m.

Major OWEN

We have listened with a great deal of interest and a great deal of misgiving to the very exhaustive address from the hon. Member for Aberdare (Mr. G. Hall). I do not think there can be any hon. Member who would not welcome any scheme that might bring some measure of hope to the coal industry. If I have a criticism to make of the proposal it must not he taken to mean that I am in any way opposed to schemes for the furtherance and betterment of the lot of the coalminers of this country and of the coalmining industry but there are certain reasons and considerations with reference to the proposal which was announced by the Prime Minister last month which require very careful consideration. Those who advocate the establishment of a hydrogenation industry in this country do so mainly for three reasons, (1) to give employment to workmen, (2) that it will help to restore the trade balance of prosperity and (3) that it will give security in time of war.

Let us examine those three reasons one by one. The first reason is, that it would give employment to workmen. On that point I should like to call the attention of the House to the official statement that was made by the chairman of Imperial Chemical Industries on are 18th of this month, after the announcement was made by the Prime Minister in this House. This is what Sir Harry McGowan said on that occasion: For six years Imperial Chemical Industries, Limited, have conducted research on the hydrogenation of coal, tar and other materials. In view of the undertaking given in the House of Commons by the Prime Minister, the directors of Imperial Chemical Industries, Limited, have now authorised a scheme for the erection of a large commercial plant, which is to be located at the company's works at Billingham-on-Tees, County Durham, where special facilities are available. An initial output of 100,000 tons a year of first grade petrol is aimed at by processing 400 tons of coal a day, and using altogether about 1,000 tons a day of coal. The point to which I would draw special attention is contained in the following paragraph: The operation of the plant will give permanent direct employment to 2,500 miners and other workmen, as well as much indirect employment. The construction of the plant itself, estimated to take about years, will call for much activity in the iron and steel and heavy industries. Seven thousand men will find direct employment for those 1½ years, and it is expected that there will be indirect employment for a further 5,000 men. That is the official statement. It is true that for a period of 1½ years employment will be found directly for 7,500 men and indirectly for another 5,000. That employment will be found directly by Imperial Chemical Industries Limited, who are prepared to spend a sum of £2,500,000 on the erection of this plant at Bellingham. Actually the number to be permanently employed is about 2,500, 1,000 of whom will be miners and the others will be employed on the plant itself in the production of the oil. The point made by the hon. Member for Birkenhead East (Mr. White) has been put to me by several engineers who know both the coal and the oil industries. I believe it to be a fact that in most of the coalmines of this country the miner is only paid for the large coal which he produces. It is the custom in some coalmines for the miners to put their coal into a. sort of basket arrangement, to ensure that only the large coal shall be brought to the surface. The small coal which the miner already produces remains at the bottom of the pit. It is called duff, and names of that sort. Every pit in this country is capable of hauling to the surface a far greater amount of coal than is actually brought to the surface by the machinery every day.

Mr. SLATER indicated dissent.

Major OWEN

The hon. Member shakes his head. I know that it is so. I can give the hon. Member facts in regard to the matter. Practically every coal mine is in that position; it is a general statement. Practically every coalmine that produces coal on any scale can haul to the surface a far greater amount of coal than it does at the present time. Therefore, it will be merely a matter of putting in the container which is brought to the surface the small coal which is there already, which will be in the main used in this particular process. There is considerable variation in the quality of the coal. It may be that the oil content of some coal in. certain areas is far better suited for this process than coal in other districts. In those particular areas I am not prepared to say that there will not be a, certain small increase in the number of miners employed.

The second point usually made is that this process will help to restore the trade balance of prosperity. May I draw the attention of the House to a statement that was made by Lord Bearsted, chairman of the Shell Trading Company, Limited, at the annual meeting of that company on the 20th June. Speaking of the oil industry he said: I doubt whether any prime commodity is, or ever has been, so heavily mulcted. On the trade of our group for 1932, the direct taxation, exclusive of Income Tax on profits, was about £50,000,000. Against this the shareholders received in dividends just under £6,000,000, on most of which they have to pay Income Tax. He went on to say: There seems to be great confusion in the public mind on this question of so-called foreign oil, and I will take this opportunity of stating the facts which should be, but apparently are not, well known. In the first place, let us take petrol. The retail price to-day is ls. 5d. per gallon. Of the ls. 5d. 8d. is tax, which is obviously all spent in this country and has no effect on the trade balance. Of the remaining 9d. only 21d. represents c.i.f. cost, and the balance of 6¼d. covers landing and storage charges and losses, inland freight, delivery charges and losses, and selling costs. Thus, 84 per cent-of the total retail selling price represents. tax and what I may call selling costs, every-penny of which is spent in this country. Further to that statement, I may add—the figures are well known—that the company pays 2½d. a gallon on inland distribution, and 2d. to the dealer who sells, the petrol to the consumer. Therefore, there is very little margin left for profit in that way. The truth of the matter is that a very large proportion of the money invested in the oil producing companies is British money. Although the British Empire itself does not produce much oil, many of these oil companies are British, British owned, British run. The refineries are British, they are run by British capital and by British employés. The oil is brought to this country in British tankers, and the profits, whenever they are made, are distributed in this country. Therefore the talk about oil being a foreign product is not accurate. The oil producing companies which have their head offices in this country spend practically 75 per cent. of the cost of production in this country in the purchase of machinery and other articles necessary for carrying on in the foreign countries. It is idle to say that this is a question of a foreign product, when it is produced actually by British labour, by British capital, is brought to this country by British tankers and is distributed in this country by British firms. That is the position in regard to oil.

The third point made is that in case of war it is extremely essential that we should have our supply of oil safeguarded. What does this process mean? It involves the putting up of great plant and buildings at certain specified places near colliery areas. If this country should ever go to war, which Gad forbid, these large plants would immediately be the centres of attack, and however well they were protected by the military they would still be open to attack from the air. Once they were destroyed in any vital part where is this country going to get its oil supplies? Meanwhile the organisation which has hitherto brought oil from abroad has gone; and we should be left without anything at all. There is another inherent weakness in the argument. The great question during the last war was not so much the supply of oil as the supply of food, and if our navy cannot guarantee a supply of oil neither can it guarantee our supply of food.

What about the cost? I have here a copy of the" Petroleum Times" for 7th November, 1931, in which there is a report of an address given by Mr. Gordon of Imperial Chemical Industries to the Oil Industries Club at the Great Western Hotel on the 3rd November, 1931. He was giving that company a description of a process of hydrogenation and of the work which had been done by Imperial Chemical Industries as well, who had put up great works at Billingham at a cost of £7,500,000 for the manufacture of nitrates. That manufacture is not really required. In the meantime—and credit is due to Imperial Chemical Industries—they devoted a great deal of money and time to experimenting on a process of hydrogenation, and about a years ago set up a plant capable of dealing with 15 tons of coal per day. Mr. Gordon was in charge of all this work, and this is what he told the Oil Industries Club:" To try out that process"— That is the Bergius process— they had built at Billingham a plant treating 15 tons per day of coal, which had now been operating for nearly two years. This is what Mr. Gordon said in regard to costs to which I want hon. Members to pay particular attention: Their estimates for the cost of production of petrol including obsolescence, but excluding retailers' profit and return on capital, was 7d. per gallon, and, of course, petrol produced at that price could be retailed at to-day's selling price with a reasonable margin of profit. That figure referred, of course, to a very much larger plant than they had at Billingham. The size they had selected for economic production was a unit producing 200,000 tons per year of petrol, which was 8 per cent. of the present consumption. As time went on, no doubt it would be found possible to reduce the cost of production of oil from coal, but there did not seem to be any hope of obtaining, for example, the present day's price of imported petrol of 2½d. per gallon, because, since the coal which was required for the process, in all 3½ tons per ton of petrol, would alone cost 2d. per gallon. That is only one of the articles required in the process, and it would cost 2d. per gallon as against 2¾d. c.i.f., the price of petrol produced from natural petroleum. Mr. Gordon went on to say: But there was little doubt that the price of imported petrol would rise and although they could not see when the day would arrive when they would be able to produce petrol from coal in open competition with natural petroleum such a day was bound to come. He had sufficient confidence that it would come some day, but when he did not know. I read very carefully the address delivered by Mr. Gordon to the World Petroleum Conference. He did not refer in that address to the price of production, but he say here, and it is an important point, that 7d. per gallon is the cost of production at the works and that that price provides for the obsolescence of machinery, but does not provide for the cost of retailing oil or for a return on capital. That, in itself, is a proof that oil produced in this way at the present moment, I am not saying anything about the future, cannot compete with petrol from natural sources; and Mr. Gordon, who is in charge of this plant and who has done all the work for the last 31 years, cannot himself promise when it will be possible to produce petrol from coal in competition with petrol from natural sources.


Was it in that speech that Mr. Gordon predicted that the world's natural supply of petroleum would run out in about 30 years, and that the world would then have to rely on oil from coal?

Major OWEN

I cannot say definitely that it was in that speech. The report I read does not mention it, but I have seen statements to that, effect. The extraordinary thing to me is that the Government of this country is the chief shareholder in a great oil producing company, the Anglo-Persian Oil Company, which produces oil at a lower cost than any other oil company in the world. It can produce almost any amount; its production is only limited by the amount of petrol it can sell. What does the present Government do? They throw it on one side; they are prepared to drop £1,000,000 per annum in import duties in order to bolster up what I consider is an experiment, which has been continued by Imperial Chemical Industries. I disagree with my hon. Friend; I do not think that this is a matter for the nation. It has been started by private enterprise and is more likely to succeed under private enterprise. There has been undoubtedly a great development in hydrogenation processes within the last eight or nine years and it has been proved in the case of petroleum to be a very valuable process. A low grade oil can be made into a good grade oil by the infusion of hydrogen, but I maintain that as far as the production of oil from coal is concerned hydrogenation is still in an experimental stage.

The question the House has to decide is whether it is prepared to sacrifice the ratepayers' money in order to give this support for a period of four and a-half years at, 8d. a gallon or a period of nine years at 4d. per gallon. It involves a loss to the country in revenue of £4,500,000. What the exact cost is going to be I do not know, but if you assume that the 2,500 men who will be employed by this process were receiving unemployment pay at the rate of; LI per 'head, that is £125,000 a year, therefore, the net loss to the Government is something like £875,000. The whole thing, as it stands at the moment, is experimental in character, is costly and uneconomic, and I feel sure that the Government, if they give further consideration to the matter, will take steps to secure that the process is carried out with great care and that the taxpayers' money is. not wasted, as it has been on other schemes. You can produce any amount of oil from coal, just as you can produce any amount of sugar from beet; but at what cost? When the first subsidy was granted to sugar-beet it was to be only for a period; but what happened They came again for a little more. That is the danger. I fear that at the end of the four and a-half years if the 8d. import duty is still in existence Imperial Chemical Industries and others will come along and ask for an extension of the period. I ask the House to give careful consideration to this matter because on the question of employment the number you put on by this process will be displaced in the oil industry. Let me put this question to the Secretary for Mines. Is it a fact that there is a petroleum department attached to the Government? Is it or is it not the fact that the petroleum department was consulted on this matter? Has not the whole process been one of hush, hush, and that the whole thing has been carried on by the Mines Department without any consultation or co-operation with the Department of Petroleum?

The SECRETARY for MINES (Mr. Ernest Brown)

I will answer that question at once. My Department is responsible for mines and petroleum.

5.30 p.m.


I listened with very great care to the speech of the hon. Member for Birkenhead, East (Mr. White). It seemed to me that he was wandering about in a maze of misunderstandings. Perhaps the net result of his speech was this: He was afraid to praise the Governments' proposals for fear they should fail, and he was afraid to condemn them for fear they should succeed. Logically, if he carries the arguments that he used to the proper conclusion, they mean that it is to the advantage of this nation to buy our commodities abroad, so that we can get a tariff. revenue from them. That is a fair conclusion to draw from his speech. Indeed the hon. Member condemned the Government because they were giving a preference to some- thing produced in this country and said how unfair it was that we should lose revenue, because in effect it was equal to the lowering of a tariff. I need only say that perhaps his argument has proved that the most expensive experiment ever made in this country was Free Trade.

I was interested in the speech of the hon. and gallant Member for Carnarvonshire (Major Owen), and was amazed at the way he was able to prove that foreign oil was British oil, and that it was to the advantage of this country to continue to buy and use it. It seems to me that during the past year or so there has come about a most startling change in the condition of the coal industry. From the point of view of production it seemed to me that coal was rapidly becoming forgotten. I believe that now the coal industry, so far as production is concerned, is becoming the darling of the gods. I need only remind the House of the trade treaties and how they have helped coal; the Government's proposals for a tax on fuel oil, for which I assume that the Secretary for Mines was largely responsible; and, lastly, this effort to produce petrol from coal. I think that the last is the most outstanding thing that has so far been done to help the coal industry. I want to pay my tribute to the Secretary for Mines, who has shown such vigour since he has taken charge of this Department. I think that that has largely resulted in the tremendous improvement in the prospects of the coal industry.

The announcement of the Prime Minister last week was the most encouraging one that it has been my privilege to hear since I have been a Member of this House. It was well backed up two days later when, in answer to a question, we were told that this year the Admiralty were going to use five times as much fuel produced from coal as they used last year. I understand that that referred to the low temperature carbonisation process. It was an excellent thing. Then we heard from the Under-Secretary of State for Air that in order to help this process the Air Ministry was arranging that one of the home defence squadrons should use the same fuel.

I have special reasons for blessing this effort to help the coal industry. The House knows that at the end of June there were 384,000 men unemployed in that industry, or 36 per cent. of the insured workers. That in itself is a cogent reason why the Government should devote their attention to the-industry. It has been said on reliable authority that the depression in the coal industry is costing this country £17,000,000 a year in payments from the Unemployment Insurance Fund. When things have come to that pass it is only right that the Government should try to find some new use for coal, and to open some new sphere of development in the industry. It will be interesting to know something more of the cost of this proposal to the country. It is generally understood that the Government's proposals mean a loss of £1,000,000 in revenue from the tariff which would have been levied on the imported spirit. I am wondering whether the Secretary for Mines can get figures which would show what will be the saving to the Unemployment Insurance Fund through the decrease in unemployment in the coal industry. I believe that such an estimate could be obtained. Eventually, when that is taken into account, when the returns of the profits of this industry come in, it will be seen that a large proportion of the money which has been remitted will find its way back into the pockets of the Government, so that the cost of the proposal will be negligible.

I commend the proposals, too, because I believe that they will result in a considerable relieving of the situation in the home market. Those of us who have studied the Coal Mines Act know full well the trouble there has been because the exporters on the North-East Coast, having lost their market, have turned round and come to the other home markets, for instance, the Lancashire market. If the North-East Coast can get some market for their coal it may relieve the pressure in the home market. The Prime Minister said that in building these new factories there will be employment for nearly 15,000 men, directly and indirectly. His remarks were backed up by the Chairman of the Imperial Chemical Industries, who announced that after six years of research they had brought their process to such a state that they could now come to the Government and ask for some concrete proposals. It must be a great satisfaction to the House to know that about £2,500,000 is to be spent on plant. It is much more important that money should be spent in that way than that £2,500,000 should be spent on schemes of relief. This £2,500,000 will result, not in a mere monument being built and finished with, but in the setting up of a new industry which is bound to give employment as the work goes on.

I welcome these proposals, too, because I believe they will go a long way towards redressing the balance of trade. That was one of the purposes for which we were returned. We ought to make sure as far as possible that we are not dependent on the fluctuations of exchange, so that we can become more and more self-sufficient. In regard to national defence I believe the proposal is a good one. After all petrol is one of the most vital things in our national economy. I do not agree with the remark of the hon. and gallant Member for Carnarvonshire that if we do build a plant for the production of fuel in this country it will be destroyed by any possible enemy in time of war. That holds good whatever happens, wherever the production is; the potential enemy will at once go for it and try to destroy it, whether it is in this country or elsewhere. The enemy would try to sink our ships if the petrol came from abroad. It is just as well to have the thing in our own country. It is well, too, to have it within our own control, so that we shall be no longer dependent on the good will of other nations. It is only necessary to recall the Anglo-Persian oil dispute and the loss it might have meant to this country if the matter had not been quickly handled by the Government. We do not want to be dependent on the United States for our oil. Still less do we want to be dependent on Soviet Russia, which is one of the other sources on which we rely for our supplies.

I feel, too, that these proposals are the natural result of the policy of Imperial Preference which has been put forward by the Government. It follows that we must push that policy to its logical conclusion, and this is one of the ways of doing it. There is one important point about this preference, and that is that it is a guaranteed preference. I think it is splendid that the Government should give a guarantee for 10 years. I remember that when I made my maiden speech in this House I said that no industry could carry on under an uncertainty. Perhaps I would welcome an extension of the principle of a guaranteed preference to remove some of the uncertainty under which the industries of this country suffer. I believe that this industry is bound to grow. The larger the output eventually, the lower the cost; behind the shelter of this preference it will be able to lower the cost of production so that eventually it may not need the preference which has been given by the Government.

As against that I think we must honestly recognise that the price of petrol is bound to rise. Policies all over the world are tending to raise the price of commodities. We have the President of the United States pledged to do everything possible to put into effect a policy which is bound to raise the price of petrol. That is one reason why I believe that this experiment will be successful. I hope that when its success has been proved we shall see extensions of this new industry all over the country. If only we could make ourselves self-sufficient we should be able to give employment to 82,500 men, of whom 49,000 would be coal miners. I would express the hope that when the time comes for Imperial Chemical Industries to extend their plant to other parts of the country they will remember Lancashire, where there are flourishing coalfields and skilled chemical workers who are only too anxious to have an opportunity of assisting in this great experiment.

Private enterprise has done well. There is no risk at all to the Government in this matter. If the experiment fails it will cost the Government nothing, because the Treasury will continue to get revenue from the imported petrol. The guarantee of a preference amounting to £1,000,000 is not too large for such a tremendously important stimulus to industry as will be given in this case. I congratulate the Government on their success, on their negotiations with Imperial Chemical Industries, and I congratulate our manufacturers and our scientists on their enterprise. I believe that there is nothing more stimulating than to see the Government and science marching together hand-in-hand for the common good of our people.

5.43 p.m.


I would like to add my meed of praise and congratulation to what the hon. Member for Widnes (Mr. Robinson) has just said regarding the Government and this far-reaching legislation. The Government have undoubtedly taken, in this assistance to the producers of petrol from coal, the second greatest step in the history of the National Government. I think it is only second to the great conversion of War Loan. It has in it elements so far-reaching in their importance, that even we who have a very intimate connection with the industry can have but small conception of. There has been to-day from the Liberal benches a doubt expressed as to whether this is a wise departure on the part of the Government. Personally, I share the feeling of the hon. Member for Widnes in regard to that matter. Looking at the coal industry as a whole it is quite clear that something is necessary to bring that industry from despair into some reasonable hope for the future, and the step now proposed by the Government has certainly filled those intimately connected with the industry with hope and encouragement.

Those who have practical knowledge of the oil question as well as the coal question ought at this stage to be perfectly honest and frank on this subject, and candidly I do not think that at this stage the production of oil from coal, as compared with importing it, can be strictly justified on a basis of comparable costs. It is better to face the facts, and we shall make no progress by hiding our heads in the sand when considering that aspect of the subject. It is clear that in order to get a proper conception of what is involved in the Government's proposals it is necessary to take into consideration what may possibly happen when this scheme has been developed for some little time. The real point to be kept in mind is this. I think oil experts throughout the world are clear that between 3d. and 4d. per gallon for petrol more or less represents the economic cost of production. But producers have been selling it at considerably less than that, and one wonders where the profits of the oil companies have come from during this period of selling oil at a price which is said to be less than the cost of production.

At any rate, the point is that the Imperial Chemical Industries and the people who are exploiting the low-temperature carbonisation process each have an equal opportunity at this stage to advance, with the knowledge that the Government have come to the conclusion, having taken all the circumstances into account, that it is better for us in this country that we should produce petrol from our own resources. That provides something which is necessary in any industry. As the hon. Member for Widnes rightly said, industry needs to have a goal, and if everybody is to work to attain the goal and do their best for all concerned, they must see some profit at the end of their efforts. The heads of this great industrial concern have decided, after considerable research, to risk their money in the exploitation of this plant. Previous speakers have expressed some doubt as to whether it is wise of them to do so or not. After all these are business people. Why should we show any special anxiety if they have decided that it is competent for them and is within the terms of their trusteeship for their shareholders, to put down plants for the extraction of petrol from coal? Why should hon. Members here raise any difficulty about it?

We in this House have to decide this as a question of national economy. For us it is a question of what this proposal will mean to the nation. We are told that it will put into work 1,000 miners in addition to 7,000, or perhaps 12,000, other workers directly and indirectly engaged in connection with manufacturing the plant. Some people have spurned this suggestion and have said that this is no great contribution to employment in this country. I cannot regard those people as serious in that view. Anything that puts any iron and steel workers into work. thereby creates work for our coal industry, and it must be in our interests to use every possible effort in that direction. Taking the long view, I believe that the Government are sowing the seed of what may prove to be the greatest industry which this country will have in 10 years or 15 years time.

Of course there are difficulties. I could mention many. One which has occupied the attention of hon. Members to-day has been the possibility that we are not giving those who are exploiting the process of low temperature carbonisation the same assistance as is being given to the other process. I think we can dismiss that suggestion at once. The Government are giving no preference to one plant or the other. They are simply saying to both:" Go ahead; do what you can to produce petrol from coal; each will have an equal opportunity." But when we come to make comparison, as to the incidence of success, of hydrogenation and low temperature carbonisation respectively, we find this important point of difference. One process produces coke or smokeless fuel which immediately becomes a competitor with coal, and as that coke is produced so miners are put out of work who have hitherto been providing house coal for consumers. We may have a purer atmosphere as the result of the substitution of smokeless fuel for coal but there is also the consideration to which I have referred.

I think it was in the second speech which I made here that I said the process of hydrogenation had always attracted me, because it left no residue or by-product which was competitive with any other type of production. I feel that the Government have largely in mind the success of this plant of Imperial Chemical Industries, but I am sure they also wish success, as do all hon. Members, to any other type of production, whether low temperature carbonisation or any other process. Many things may happen in the next few years. Mr. Henry Ford, discussing this question recently, said the future fuel for the internal combustion engine would be alcohol, and that the farmers were going to produce it. We may see many things happen and changed circumstances all over the world.

What we here have to consider now is the question: Is this step by the Government going to produce a credit in the national budget or a deficit I That is how we must judge it. My opinion is that for the moment it is not strictly economic as compared with the cost of imported petrol, but I would also say that the cost of producing petrol from coal by hydrogenation which has been given, namely 7d. per gallon, is capable of reduction. In fact I understand, though I cannot give details, that enormous economies have been made since that estimate was given. But whether or not those estimates are cor- rect, there is also the question of national defence to be considered. I am sure that it will be a relief and a comfort to the Secretary of State for War, in the great anxieties of his office, to feel that we are laying the foundation of something which may give him an entirely different view of his task in the event of any national emergency.

There is another point involved. There is all the difference between a nation which has an instrument in its own hands for the production of fuel for the internal combustion engine and a nation which has none, when it comes to dealing with the possibilities of the future and with the large monopoly rings which exist in the oil world. The knowledge that this country can produce petrol in serious competition with the imported product is so important that we cannot calculate the result of this step in our national economy in terms of the first immediate saving. It must be calculated on a wider basis. If the oil companies of the world know that the slightest endeavour to exploit this country in the price of imported oil will be met instantly—once this industry is on a firm foundation—by the putting down of further plant, the result is obvious.

The importance of that consideration in connection with the question of our paying moneys abroad will be readily recognised by hon. Members. It might easily mean a difference of £15,000,000 or £20,000,000 saved in the cost of the imported production over a comparatively short period of years. Therefore, it is not the direct saving that we ought to consider so much as the fact that this would be an instrument of strength to us. We should have the knowledge in future that we could depend on ourselves in a time of emergency whereas hitherto we were dependent on others for the production of this petrol. Speaking as a business man rather than as a politician I think we ought to be in a position to say "No" to the foreign producing countries should the necessity arise. I agree that a large proportion of the money which we pay abroad for petrol comes back home to our own people but we had an example in the Anglo-Persian Oil Company's dispute recently of the fact that we are not sure of foreign supplies. We never know whether in some national emergency circumstances may not arise to cut off our supply. There may be revolutions. Large quantities of this oil comes from Mexico. Now we have the President of the United States making the greatest endeavours to bring the oil producing companies in that country as he says to common sense and causing them to raise their prices. We know that they produce 60 per cent. of the world supply and on that subject I would commend to all hon. Members the facts which were given by the hon. Member for Aberdare (Mr. G. Hall) in his speech.

It is the policy of the United States Government to force up prices. Is this not the psychological moment for our Government to make a gesture 1 Is this not the time for us to take a step, not only to relieve our internal distress in regard to employment and give hope to the coalfields, but also to give a, message to the rest, of the world that Britain's policy in regard Ito this fuel is to be one of providing it for herself. As I say. I regard this as the second most important thing which this Government has done, and I am sure that coal owners and coalminers alike will bless them for doing it. I want to record my appreciation of the untiring energy of the Secretary for Mines who has put all his strength into the task of forcing the Cabinet to bring this matter to a head. We owe him a great debt of gratitude, and I believe I am speaking for the coalowners of the country in tendering him sincere congratulations. I am sure that view is shared not only by the miners, but by the steel workers and by all the other people who will benefit from this outstanding piece of legislation which is projected by the Government.

5.59 p.m.


With all respect, it seems to me that hon. Members in this Debate are in some danger of losing a sense of proportion regarding this proposal. Some hon. Members speak of it in lyrical terms, as though this country were about to embark upon a new industrial revolution. They speak in a strain which suggests that, once this proposal has been carried out, we have only to sit down and the industrial millennium will have been achieved. There are others who have spoken and who have made it clear that this is so colossal a blunder that the nation will be ruined as a consequence and that taxation will be mountains high. As a matter of fact, the truth does not even lie between these two extremes, as it sometimes does. The truth is of an entirely different, character. It seems to me that when hon. Members speak about the large numbers of miners who will be put in employment by this project, they are really losing all sense of proportion. The Prime Minister, who certainly would not be guilty of understatement in a matter of this kind, puts it at 1,000 miners, when there are in Great Britain over 300,000 miners out of employment, and Mr. Garvin has a huge article in the "Observer," with all those pompous and flambuoyant headings of which he is a master, asking the nation to hold up its hands in admiration, and stating that at last the National Government is justifying its existence. It is the travail of an elephant giving birth to a flea.

The reason why there is all this fuss about this matter is that it is the only thing that the National Government have done, and it is necessary at this time, in order to prepare the public mind for the complete collapse of the World Economic Conference, that something should be done. Some flag must be waved. If hon. Members, however, want to get this proposal in its right proportion, let them remember that the little quarrel which the Secretary of State for Dominion Affairs is carrying on with Ireland has already put more than four times the number of miners out of work that this project will ever put into work. That has been cheered by every Tory in the House of Commons, and they ask us to rejoice because of this marvellous proposal of the Government. Not merely that, but the tariff policy of the Government is regarded as principally responsible for this benefit, because otherwise there would not be any preference to give; but that tariff policy has put out of work more than six or seven times more miners than this is likely to put into work for many years to come.


It cannot be so. We have put 400,000 more into work.


That is all very well for election speeches in Eastbourne, but it will not do in this House.


It is true, and what the hon. Member says is not.


Many other hon. Members want to speak, and so I will not continue the argument with the hon. Member. What has actually happened is that the processes of coal distillation have reached a point where they need to have spent upon them larger sums of money than unsupported private interests can bear. That seems to be the position. There are certain industries that can be started with a very small amount of capital and which are able to pioneer their way to commercial success without the expenditure of any large sum of money. A product can be commercially exploited, and therefore large sums of capital are attracted for its further production after its commercial possibilities have been fully realised; but in the case of coal distillation a very, very large sum of money requires to be spent upon plant before the possibilities of its commercial exploitation have been fully ascertained, and in modern circumstances that expenditure cannot be undertaken by private concerns without some sort of collective safeguard or protection. That is not merely the case with coal distillation; it has been the case with many other commercial proposals that the amount of capital involved is entirely out of proportion to the risks that have to be undertaken.

That is the complete answer to the Members of the Liberal party who are continually complaining about Government intervention in these matters. It is very often necessary for the State to provide some form of safeguard if new industries are to have a sufficient atmosphere of security in which to proceed with their experiments. It was not the case in the nineteenth century, when industry was on a small scale, when capital equipment was comparatively small and the amount of capital expenditure was very little. Private industry could then go on with experimentation and the opening up of new industries without any form of collective organisation. But we have reached now the scale of millions of pounds' worth of expenditure upon equipment, and private enterprise cannot carry it. That is the position, as I understand it, with regard to Imperial Chemical Industries, Limited. I believe that they are undertaking an experiment in which it may be that they will lose money, but that is not the aspect of the problem which I want to bring before the House.

We take up this view, that if private enterprise is in a position where it requires State support for its further exploitation, the State is entitled to lay down the conditions under which that support is to be given. Private enterprise is certainly entitled, on the basis of existing economic laws, to take the fullest measure of freedom in the direction of its affairs if it undertakes all the risks involved and does not come to the State for any assistance. Profit, I was told in my economic textbook, is the reward of risks. It is not merely the goal, as the hon. Member for Eastbourne (Mr. Slater) quite frankly said it was it is the reward too.


The miners' wages should be very high, then.


Of course. It is an old Socialist contention, that a man risks more when he risks his life than when he risks his money, and therefore his wages ought to be very much higher than the profits. But the point that I am making to the House is that it is making the worst of both worlds. It has not the comparative wholesomeness of competitive private enterprise, carrying its own risks and producing whatever benefits for the community it can produce, nor has it the benefit of collective State planning. This is a particularly vicious example of the same process, because this is an attempt to organise by bribery. You give Imperial Chemical Industries, Limited, and the holding company which holds all the patents for this distillation process the protection of communal security. You are not entitled to do it, of course. When an hon. Member behind me said that we were going to provide them with eight to 10 years' preference, he was speaking quite beside the mark, because this House cannot give such a guarantee beyond the next Finance Bill. This Government cannot pledge future Governments, nor indeed can one year pledge another. Imperial Chemical Industries, Limited, is basing its expectations upon the hope that the National Government will be in office for 10 years, but what it hopes for the Government would be disastrous for the nation.

The point that I am emphasising is that if the State has to go to the assistance of private enterprise in this way, we are indeed entitled to say," The considerations upon which you earn your profit have now disappeared. You are unable to earn your dividends in the old ways in which you formerly earned them. If you are to be allowed the private ownership of this concern, you must be allowed it only as a steward and no longer as an exploiter. It is only when you were in possession of this property and bore all the risks involved that you were entitled to do what you liked with your own, but having to come to the community for help, you must now become partners in this arrangement." What are we asking Imperial Chemical Industries, Limited, to do 7 We did not start off with the advantage of a statement from the Minister of Mines, and therefore I must anticipate, not having heard it from the Prime Minister, that all that we have said is this:" We are prepared to give you a preference upon petrol distilled from home-produced fuels, and you go on with the job. We do not ask you to do anything more." Is that true 7 Is that the kind of bargain which has been struck? If Imperial Chemical Industries, Limited, succeeds, it will, as has been pointed out, succeed at the expense to the Exchequer of a very considerable sum of money. It is perfectly true that additional miners will have been put in work, but not in anything like the proportion of the money which will be extracted from the national revenues. I am striving to point out that if, as is admitted on all sides, it is necessary for the State to give a preference of this kind, we are entitled to obtain our pound of flesh, we are entitled to exact from these beneficiaries some benefit for ourselves.

The point of view which this party is striving to put in this Debate is that here is something which may grow into a very important industry. We can put it no higher than that. If it becomes an important industry, its efficient exploitation will change the physical character of British industry, and it will have a profound effect upon the location of our sources of power. One of the gravest problems with which this country is confronted is the growing dereliction of the old centres of extraction of power, the dereliction of Durham, portions of Lancashire, Lanarkshire, and South Wales, a growing dereliction which is causing the most frightful social problems in those areas, which is disorganising local government, and which is causing a drift of the population to the south and south-east which, if allowed to continue, will have the consequence in a quarter of a century of destroying all the beauties of rural England and leaving dereliction in the north and the west.

I submit, therefore, that if there is any person in this House who has any genuine love for Great Britain and the countryside, he should be attempting to exact from the Government, when proposals like these are before the House, some guarantees and some assurances that if these new industries are to be set up, they should be set up in the old centres of industry, where the large masses of population are at present situated, and arrest the drift of population which is not merely disorganising local government but destroying most of the beauties of rural England. This is one of the points which we would put to the Minister in this Debate, that the Government should insist that governmental assistance should be accompanied by governmental direction. I do not believe this House minds paying a greater price for its part, provided that that greater price is accompanied, among other advantages, by intelligently organised distribution of our labour forces in Great Britain.

I do not subscribe to the point of view which has been put from the Liberal benches that this is an entirely uneconomic proposition. What I cannot understand about Liberal economics is this: They will admit that a new product might put out of production a rival product which cannot be produced at the same price, but they will not admit that that process is entirely uneconomic if the persons who produced the first product are not put in employment in sufficient numbers producing some substituted product. What has happened in this country is that the growth of imported oil has put out of work many colliery workmen. That process would be perfectly economic if you succeeded in putting those idle colliers to work producing something else, but as you have failed to put them to work producing something else, the cost of their idleness must be an addition to the price of imported fuel oil. The doctrine of laissez faire is all wrong, for it does not take into consideration many of the costs that ought to be charged to the new product that has come on to the market.

I would ask my hon. Friends who applauded that principle to carry it to its logical conclusion, which is that if products are to be charged with social costs, they should be charged also with social burdens. If they are to have a social price, they must pay for social obligations. That is a principle which is so fundamentally opposed to the policy of hon. Members opposite, that I am quite satisfied that in this case and in many other cases they will refuse to carry their own beliefs to their logical conclusion. I would like to ask the Minister of Mines, when he replies, to furnish the House with what the interests which are being safeguarded are to secure in return for the concessions which we are giving to them, so that we may be able to judge the whole thing from that basis. If they are giving nothing for what they are taking, this is not national planning, but simply a further example of Conservative bribery.

6.18 p.m.


I desire to extend to the Government and to the Minister of Mines my cordial congratulations on the action they have taken, and the proposals they have made for bringing some increased measure of prosperity to the mining industry. Many of us who represent mining constituencies have been advocating something of this kind for very many years, and I think it will be true to say that in doing so Members of all parties have been actuated only by a single desire to get the best out of what is our greatest raw material and our greatest national asset. For 10 years, Coalition Governments, Socialist Governments and Conservative Governments have been investigating this problem, and to those who are supporters of the National Government, and who represent mining constituencies, there was no more pleasing announcement than that which was made by the Prime Minister last week. To Liberal supporters of the Government it is even more gratifying not only because it is the work of the National Government, but because that work has been carried out by a Liberal President of the Board of Trade and the task of seeing the scheme carried through to practical fruition is in the hands of a Liberal Secretary for Mines.

The introduction of these proposals marks the culmination of something like eight years' advocacy of proposals which the Liberal party has laid before the country and the House, for doing the very thing which we are considering today. During the lifetime of the first Socialist Government in 1924, the Liberal party published a little volume entitled" Coal and Power," in which great emphasis was laid on the question which we are discussing and on the vital necessity of getting to grips with this problem and finding some solution of it. At a later stage we had the report of the Samuel Commission, which produced one of the most valuable documents relating to any industry. That report also laid down the urgent necessity for scientific development in the direction which we are considering to-day. In that respect I cannot do better than quote from the report of the Commission, which was presided over by the right hon. Gentleman the Member for Darwen (Sir H. Samuel), who, I am sorry to say, is not in his place. The Commission pointed out that only one-quarter of the coal used in this country is treated so as to obtain from it the value of the substances which it contains. After having spoken of the more scientific utilisation of coal, the report goes on to say that; linked up with this subject is the question of extracting oil from coal by various processes. Successful application of these processes on a large scale would help to eliminate smoke from the atmosphere, improve the health of the people, exercise a beneficial effect upon temperament, give greater scope to the Acts, and add to the amenities of towns. The report goes on to point out that the country would be less dependent upon imported oil, and low-grade coal could be put to profitable use, bringing a proportionate gain to the miners and mineowners.

The report proceeds to urge that greater attention should be given by the State to this problem, and insists on a more intensive research in this direction. In the interval these recommendations have been acted upon, and to-day, as a result of long and patient research, we are on the eve of great achievements. Instead of finding fault with these proposals, the right hon. Gentleman the Member for Darwen ought to be proud that he is seeing the fructification of his labours as Chairman of that important Commission. There was an interpolation about the Yellow Book this afternoon. That followed the report of the Samuel Commission, and was a result of an industry presided over by one of our greatest economists, Sir Walter Leyton. On the Committee were the present Foreign Secretary, the right hon. Gentleman the Member for Carnarvon Boroughs (Mr. Lloyd George), the right hon. Gentleman the Member for Darwen, and the present Secretary for Mines. That Committee was even more emphatic, and it pointed to the need for embarking on an inquiry and for commercial exploitation in the direction which we are considering to-day. The Liberal Inquiry Report used these words: It is this sphere which offers the largest scope for the measures which will raise the coal mining industry from the slough in which it now finds itself. The more scientific utilisation of coal, the full exploitation of every one of its valuable constituents the utilisation of grades that have hitherto been regarded as little better than waste, the efficient preparation of the products for the market—here lies in the long run the best hope for the future. In view of all this, and in view of the number of committees and commissions that have inquired into the state of the mining industry, and having regard to the enormous amount of work which has been done by the Fuel Research Board and by private firms, I submit. that it is utterly futile to suggest that we should have another committee to inquire further into this matter.


The hon. Member does not agree with the first speaker on his side?


There are two types of Liberals.


The Liberal party will he in a bad way when there are as many types of Liberalism as there are types of Socialism. No case has been made out for any further inquiry. Moreover, time is pressing. The industry cannot wait. Coal production has fallen from 287,000,000 tons in 1913, to 209,000,000 tons last year. Exports have fallen from 98,000,000 tons to 53,000,000 tons, and the number of men employed—by far the most vital factor—has fallen from 1,208,000 in 1913, to 756,000. In one part of my constituency alone there are something like 16,000 people registered, and over 8,000 are out-of-work miners. In the county of Durham there are something like 40,000 miners out of employment through no fault of their own.

The hon. Member for Ebbw Vale (Mr. A. Bevan) asked me 11 1 did not agree with the criticism that came from Liberal speakers. I am definitely of the opinion that those criticisms are unjustified. They can only be explained either by lack of knowledge, or lack of appreciation of the real plight of the workers in the coalfield, or by the fact that those who make these criticisms are blinded by prejudice and a doctrinaire opposition to State assistance to any industry, no matter what that industry may be. One of the things which startles me, and which I submit to the consideration of the House, is that the Government are providing no money in this case. All that they are doing is to provide a guarantee. The Government can give a guarantee of £4,000,000 to Austria, £2,000,000 to Palestine and £500,000 to Newfoundland with hardly anybody protesting, but the moment they proceed to give a guarantee, limited both in period of time arid in the amount of money, for the development of oil from coal, there is a loud outcry from various sections of the House. That is a form of mentality which I cannot understand. Whatever other Members on these benches may say, I want the Government to realise that these proposals have my whole-hearted approval, and I think I can say that also for the section of the Liberal party for which I have the honour to speak.

I would like to say a word in reply to criticisms from the Labour party. We have had a number of speeches from the other side of the House, but there has not been one constructive criticism. Here we have something which does at least bring a gleam of hope into the coalfields of this country and into the distressed areas, where there are thousands of miners out of work, and except for vague references to nationalisation, public ownership and democratic control, we have had nothing of a practical nature from hon. Members opposite.


Will the hon. Member do the House the honour of replying to the Debate instead of giving the speech which he prepared before the Debate started?


The hon. Member spoke about truth. If he will wait until these experiments have been carried out, he will find that truth is like oil—it always comes out on top. I am old enough to have seen democratic control in practice. We had nationalisation only a few years ago, and during the period it was in operation the number of men employed in the mining industry increased by 100,000 and the output decreased by 47,000,000 tons per annum. It was little wonder that the Coalition Government of the day found themselves faced under nationalisation with the loss of £5,000,000 per month, and that they were compelled to decontrol the industry, which they speedily did.

I would like to know, in the interests of the miners themselves—my miners just as well as theirs—what is the proposal they have to make? Only on Saturday the ex-Secretary for Mines, speaking in Durham, dismissed this proposition, if you please, as a pure ramp. The ex-Secretary for Mines! He spoke with greater responsibility when he stood at that Box. He sneered at the fact that the first instalment—the mere instalment—of the plan was going to give employment only to some 1,000 miners. We who have to live among miners are grateful for anything which will give employment even to 100 more—and this is only the beginning. There have been many unfortunate pronouncements, and this statesmanlike utterance of the ex-Secretary for Mines is not in any way singular. He wound up by saying that the miners need a repetition of the events of 1926. In the interests of my constituency I do not want to see any repetition of 1926, and I would urge hon. Members opposite, if they have nothing better than that to suggest, to set their intelligences and their brains to work to see whether they cannot bring forward some proposal of a more practical character which will be a benefit to those who, they continually tell us, they, and they alone, rightfully represent.

Very little has been said about one aspect of the problem. We have in this country already a very valuable by-product industry, and it is a very satisfactory feature of these proposals that the position of that industry will be stabilised and secured. In conclusion, I would like to say that nationalisation, as advocated by the hon. Member for Aberdare, has been tried, weighed in the balance and found wanting wherever it has been applied. It does not appeal to me in so far as this particular industry is concerned. I very much prefer the method adopted by His Majesty's Government, arid I hope there will be no undue delay in the matter, but that they will press forward with this scheme, and I hope that it will speedily bring in its train a new era of prosperity for the mining industry in this country.

6.32 p.m.


The House must regret that a Debate of this importance has been limited to the short time that we have to-day, and feel sorry that we shall be deprived of further stages of the entertainment we have had from the Liberal benches, when hon. Members there state exactly what their policy is. The hon. Member for Consett (Mr. Dickie) asked us what our policy is. He had better ask the friends who sit beside him and who moved this Amendment about their policy. As I heard that Amendment being moved from the Liberal benches, it struck me that the greatest pity about it was that it diverted attention from one of the ablest speeches on the mining situation and on oil which we have heard in this House for some time. My hon. Friend the Member for Aberdare (Mr. G. Hall) made a speech of a type which only he, with his peculiar knowledge, is able to make. In that speech he revealed not only an understanding of the industry and of the problems it has to face, but also a vision of the possibilities of the industry, if organised, such as is seldom presented to this House.

It is necessary to underline one or two of the points made by the hon. Member for Aberdare. In the first place, the House and the country ought clearly to understand that whatever there is in this scheme, taking the most optimistic statements made up to the present time, it will meet hardly a fraction of the real mining problem. If I have a fault, it is a tendency to undue optimism, and I can understand why the Government should make a great deal of this present they are giving to Imperial Chemical Industries. I can understand why they should try to give this scheme a good send-off, and use it as a means of creating optimism in industry throughout the country beyond the range of the immediate value of the scheme; but if hon. Members will only realise how the hopes of the unemployed miners round the pits have been raised unduly at the prospect of something immediately happening—and there are 400,000 who are unemployed—I think they will agree that the effect of it from that aspect has been almost cruel in view of the little which will be done in the next few years.


It is rattling the speakers on your side.


I will leave that observation to the hon. Member's own interpretation. What is the position? We understand that at the most there are about 1,000, or perhaps 2,500, who will be directly employed at the outset. I do not want to belittle such an achievement, but the work which will be found for 2,500 extra men would not really be sufficient to give regular employment to those who are already working. That is the real truth of the business—and there are 400,000 wholly unemployed in the industry. However successful, this scheme will not meet the natural reduction, the wastage, due to speeding-up and machinery. The point I want to make clear is that it is no real, fundamental solution of the coal industry's problem.


Who ever said it was?


It is being put forward as though it were an alternative, and the only alternative, to other means of meeting the problem of the mining industry. In the last 12 months, 34,000 miners have been thrown permanently out of work, and that is a process which is going on to an increasing extent. I want to put very clearly the point that this position of affairs can only be met by the general easing of those who sometimes have to work overtime and the lowering of the hours generally of the men in the industry. Incidentally, I appreciate the fact that Imperial Chemical Industries established itself, and has developed in one of the old mining areas. If it is a question of balancing their action and that of other private concerns, well, there is a good deal to be said for Imperial Chemical Industries. There is a lot of talk about light industries coming to the South because rates are lower and costs are less, but those who know the facts know that that is not the real reason at all. I have become somewhat cynical about some of these gentlemen. As a matter of fact, they are more interested in long week-ends in London—some of them—than they are in business. [HON. MEMBERS: "No."] Business men who have tested the difference in rates and costs as between the North and the South do not agree that there is any justification, from that point of view, for people moving to the South. I may say that the hon. Member for East Birkenhead (Mr. White), whose speeches I often appreciate, reminded me very much of the famous story—it is famous in the North, at any rate—of the first engine that ran from Shildon to Darlington, and the old gentleman who was walking around it and who said, in his Durham dialect, that he was sure it would "never gang," and when he saw it going and had got his breath again, yelled that it would never stop. I think that is pretty much the position of the Liberals who are moving this Amendment. The Miners' Federation has discussed this matter, and says: While welcoming the declaration of the Government to encourage the production of oil from British coal, a proposal that has long been advocated by the Federation, it deplores the effect of the Government's proposals in so far as it leaves the development of the new industry to several private concerns with conflicting processes and policies. It then goes on to urge the point put forward by the hon. Member for Aberdare that there should be public ownership and control, with a national authority charged with the responsibility of the conduct and development of the industry and its integration with the coal byproduct industry. There is a very real danger in the absolute lack of control that accompanies the subsidy to be given to this particular firm. Problematical amounts have been mentioned, based upon the assumed output. I think the hon. Gentleman ought to tell us how much the Government estimate that this is going to cost them, and tell us more about the agreement which has been made. Has an agreement been made?


If the hon. Member has seen the published announcement by the Prime Minister, he knows all that the Government know about the matter.


I think the astonishment of the House will be reflected in the country. The statement made by the Prime Minister told us nothing, except that a subsidy of 4d. a gallon was to be given, without any understanding, any agreement, or any control whatever. There is no particular credit to Imperial Chemical Industries in this matter, because the Government's own experimental station made considerable advance in the same direction, and towards the end at which Imperial Chemical Industries have arrived. Other industrial organisations have done the same. The main question that occupies us to-night is not merely: Is it going to employ more miners? but: Is it going to improve the position of the miners who are at work? Those of us in the industry know very well that the by-products industries have increased the real value of coal, but have not added much to the comfort or standards of life of the miners. The position is not only open to the just complaint that we made long ago—during last year this has been a strong case—originally in the county from which I come, and in which we used to have coal taken into the sum total of the pool. Everyone knows that thereby the total income of the trade is measured up, and that the wages are largely based upon that.

We always argued that the byproducts that came out of coal, particularly when colliery companies were interested in them, should give opportunities for increasing the value of coal in that district, and for improving the position of the miners. The owners may not have accepted that, but commissions have regularly accepted the proposition that those who work in the production of the raw material should benefit to some extent by the increase in the value of that raw material, when by-products are taken from it. They have gone further than that, and we hold the very firm conviction that by-products have been used to squeeze prices down, in order to reduce the miners' wages. The Commission that investigated this matter had no doubt whatever that certain companies had sold themselves coal below price. I assure hon. Members that this is a fact. In my experience as a member of a conciliation board with the hon. Member for Spennymoor (Mr. Batey), I can say that the coalowners did not challenge that allegation, because they said that they had a right to do what they liked with their own coal. We say that it ought to go into the general pool.

Here is something which, it is claimed, is going to produce a great revolution. That is potential. It is easy to understand that, in the early part of the 19th century we had not sufficient experience to enable us to adapt ourselves, in the chaotic condition of industry and of the mining industry and because of the lack of knowledge about that industry. It was difficult to bring the valuable products of coal into the general pool of wages with a view to raising the standards of the miners. Those who are concerned with by-products are very often in a better position than those who are in the industry itself. The men who are working the by-products are in a better position, so far as wages are concerned, than men who work in the pit. It is now assented to, throughout the country, that the men who do the rough and dangerous work below are entitled, not merely to an improved position, but to a share in any scientific improvements that add to the real value of the product.

If this subsidy is to go on, and if oil is produced from coal by the chaotic methods which were characteristic of the 19th century, the result will not merely be that the miners' position is not improved, but that the pressure for cheap coal will have the effect of depressing the condition of the miners who are already working. I do not take any joy in expressing such a view, but I hold it simply as the result of experience in the increase of by-products during the past years. The Government ought to have some controlling hand in this matter. It is all very well to encourage production, but the Government have no right to let the social advances of science, which have been gained not merely from their own discoveries but which are the common contribution from many sources to which the State has made a contribution, go into the hands of a private company, and to subsidise that company without any control or understanding as to the conditions upon which that industry is to be run.

I warn the House that you cannot expect agreement to that from men of great intelligence in the twentieth century, who are working under worse conditions than some of us did. Some of us had longer hours, but we had a sort of little patch to ourselves, and we were not driven by a machine, or by a whole set of processes, taking away what little bit of independ- ence there used to be in the industry. Bad as it was before—and it was bad enough—this is worse. I am no lover of the machine, as it has impinged itself on the men who work in the mines under very great economic pressure. Is the new condition of things to be uncontrolled, to he used by a private company, or by other private companies, and helped by the Government with a subsidy, in order to increase that economic pressure for cheaper coal? If the Secretary for Mines has nothing more to tell the House than what the Prime Minister told it, the Government have not made any bargain, and have not made any contribution towards the unemployed problem in the way in which an impression was given to the country during the last few days.

The hon. Member for Consett spoke about the question of wages. I do not mind telling the House that, so far as wages are concerned, the wonder to me is not that there has been trouble in the coalfield, but that there has not been more trouble. I have sometimes heard rude remarks about 1926, and sometimes there has seemed to be an attempt from our own side to try to apologise for it. It is a poor soldier who looks back upon a battle and does not see where a mistake in moves has been made, out one thing I never regret is that the miners had sufficient pluck and courage to stand up for improving their conditions, which not only this country but the world admits are unworthy of the men who have to risk their lives in working in dangerous and disagreeable conditions all the days of their lives. This House may take it for granted, that if the Government are to give full and free control to private capitalism helped by a Government subsidy, using the results of what has been practically social scientific research, we are in for more trouble in the days to come. Men are not likely to allow to continue a state of things which is unworthy of the House and of the country. There was an excuse in the nineteenth century, but such a state of things is inexcusable in the twentieth century. An opportunity like this ought to have been taken by the Government for some sort of control, even if they were allowing the matter to go into private hands. There should have been some sort of direction with a view to planning the industry, so that while more employment might have been given, some contribution would have been made towards improving the conditions and the wages of those who get the raw material in the mines.

6.58 p.m.


It is obvious from the discussion that I am in the happy position of having to defend a policy which, as regards its desired end, has the general approval of the House—with one exception, to which I will refer a little later. It will not have escaped notice, by those who have listened to the Debate, that the objections which have been raised are not to the announcement that was made of this great experiment in a new form of getting oil from coal, but rather as to the form that it should take, and as to the method that the Government have employed in consultation with Imperial Chemical Industries, in order to see that a start is made. I have not to debate whether it is desirable, because that is generally agreed. The announcement of 17th July by the Prime Minister is not merely welcomed in all quarters of the House, but it has had a wide welcome in the country. will go further and say, that as I sat here and heard many hon. Members this afternoon, I have, in the intervals of reflecting upon the questions which have been put to me, interested myself by imagining the kind of speeches that would have been made if this experiment had been started by a Labour Secretary for Mines, instead of by a Minister in a National Government. [Interruptions] That may be the opinion of the hon. and learned Gentleman.


I said that it would not have been in this form.


It might be, if the lion. and learned Gentleman were responsible for some other form, that there would be nothing at all. I propose in a moment or two to discuss that very thing, because he himself called attention to this problem just over a year ago. I am. therefore, happy to be here to explain this policy and to clear up any doubts there may be. The scheme announced sounded complicated, but it is, in essence. quite simple. Anyone, not merely Imperial Chemical Industries, not merely any low temperature carbonisation firm, not merely any gas company, not merely the shale oil companies, but anyone who by any process cares to manufacture motor spirit from home-produced coal, shale, peat, or derivatives thereof—not heavy petroleum oil,. as my hon. Friend seemed to understand just now—is guaranteed a preference of 4d. per gallon. It may last nine years from 1st April, 1935. If the present tax of 8d. a gallon should continue to be imposed without an excise duty, then the guarantee would last 10 years from that date. If there is any intermediate rate of preference, the period of the guarantee will vary in proportion. The guarantee is to be made statutory in the autumn, by legislation.

We are quite aware of the point made by one hon. Member, that no Government can bind successive Governments. We are quite content to believe that once this experiment is started upon, and the Act is on the Statute Book, it will be interesting to see the body of men, concerned in the well-being of this nation and the coalfields of this country, who will attempt to repeal it. Imperial Chemical Industries have announced, through their chairman, that they propose to start this big new experiment on the basis of the announcement by the Prime Minister. That is a proof that they regard the risk to which the hon. Member referred, added to the other risks—and they are not few—as risks which they are prepared to undertake. It has these advantages, as well as disadvantages, that, first of all, it avoids any direct contribution from the Treasury; secondly, that it encourages a great enterprise in a form without risk of additional cost to the consumer, and it is, as a matter of fact, breaking a monopoly conferred by the caprice of nature and enhances the wealth conferred upon us by that same caprice. That is the policy in essence. We are a coal-producing country, and few will seriously challenge the wisdom of doing everything practicable to produce at least a proportion of oil products from our greatest national asset, coal. That is common ground, I think, with one exception.

We have to argue three issues—two issues in terms of theory, and one issue in terms of fact. What are the arguments about theory? The theory of the hon. Member for Aberdare (Mr. G. Hall), who put it very clearly—and which was supplemented by the hon. Member who has just sat down—is that this thing should be done only on one of two conditions—either as a national monopoly euphemistically called by the hon. Member" national planning,' or that it should take the form of control by the Government over those who are taking advantage of the guarantee. I do not think I have unfairly stated the point of view hon. Members hold. There is a short answer to that. I will give it in one sentence. The answer is, that if that had been the line of policy pursued, there would be no Minister standing here announcing that a new experiment is to be carried out. That is the short and, I think, the sufficient answer. I go further. Take the theoretical ground. The hon. Member for Aberdare makes able speeches about national plans. As far as I am aware, I have not seen any details of any national plan for getting oil from coal. I have seen some suggestions for a combination of the Government and industry—a measure of joint control. If the Miners' Federation of Great Britain have any detailed plan for solving this problem by means of joint control or national monopoly, the mining industry, and their supporters, are entitled to see it. It has never been brought forward. It has not been discussed, and we do not know what it is.

That is all I wish to say about that point, except that it seems to be assumed that it would be an easy matter for a Socialist Government to get agreement on this subject. The main process in which the country is interested was not invented in this country, and it might not have been as easy as hon. Members opposite suggest to get an agreement as to joint control, joint ownership, or joint working of the process. The process is a highly specialised one, and I should have thought that this is not the sort of case in which hon. Members would try out a national scheme. I wonder if any such scheme is ready or whether plans have been considered for overcoming difficulties which arise from the fact that the process was not invented in this country, and that its present position has only been reached as a result of international arrangements. I wonder whether that has been considered. If it has been, hon. Members opposite are optimistic in think- ing they would get agreement on that basis.

The position that Imperial Chemical Industries are in of being able to proceed was only created by favourable conditions which were the result of arrangements by four large groups in the United States, Germany, Holland and our own country. A large number of hydrogenation patents were in existence, and much work had been done on the process in other countries. Two years ago the parties referred to decided to pool their patent rights, and in place of friction, and probably protracted litigation, each group was thereby able to secure the benefit of the work done by the others. Suppose the British Government desired a Government monopoly, or national control, and had not been able to secure the rights in this country, I imagine they would have had serious difficulty in coming to an arrangement with the international interests concerned. The other theoretical objection comes from below the Gangway. I have not heard any objection to the preference definitely raised by any Member.

At the moment, what is the actual position? Ever since the imposition of the first 4d. duty on imported spirit there has been no Excise Duty on oil products raised in this country from indigenous materials. Last year 40,000,000 gallons were produced, and there was no duty on that. This proposal is not new; what is new is that it is being given a definite form—a promised statutory form for a definite period, and on a definite basis. I was surprised to bear my hon. Friend talk about a Select Committee. I did not take it quite as seriously as I might have done when I read the names of hon. Members supporting his Motion. They are numerous, and we respect them, but for issues concerning coal mining, and the iron and steel industry—basic industries in the distressed areas—if my hon. Friend below the Gangway sincerely wanted a Select Committee, surely the name of the right hon. Gentleman the Member for Darwen (Sir H. Samuel), who was persuaded that hydrogenation is right, the name of my predecessor, the names of the two Members who sit for Durham coal constituencies, and the names of the two Members for Middlesbrough ought to have been down on this Motion if the House was expected to take it seriously.

My hon. Friend spoke about making the best of both worlds. There was a famous preacher in the City Temple who was accused of exhorting young people to make the best of both worlds. The Motion for a Select Committee seems to he making the best of three worlds. That Motion does three things. It enables hon. Members below the Gangway to avoid any pronouncement on the main issue as to whether they are in favour of this policy; it enables them to maintain an abstract conviction about preference and, therefore, to say they are against preference; and, thirdly, because the names of those hon. Members really interested in these big industrial constituencies are not on the Motion, it enables them to remain discreetly silent, although their friends want a Select Committee of the House. I do not think that the House will take the Motion seriously. Whatever our views may be about this matter, we are agreed that something should be done as quickly as possible; we want no delaying action.

Delay means risk, and risk to the country. A Select Committee does not run any risk—not even the risk of having its report accepted. We are now considering a very big issue—the result in the political sphere of a great process of chemical development. The right hon. Gentleman opposite will remember seeing outside gasworks notices saying" waste products sold here." "Waste products" is a term which has been replaced by" by-products," and that is now being replaced by" derivatives"—a much more far-reaching and fundamental term. I say this because I want the House and the country to understand that this guarantee is not to be construed in terms of one company or one process. There are four principal ways of getting motor spirit from home-produced materials: from shale, benzol, by the gasworks and coke ovens, by the process known as" scrubbing"—last year the gasworks and coke ovens obtained some 26,000,000 to 30,000,000 gallons of benzol by that means; by low-temperature carbonisation plants of various kinds—and some of them are beginning to work them very successfully—and, lastly, there is this new process of hydrogenation.

May I say about the low-temperature carbonisation industry that it has had many disappointments in the past, but some of the processes have turned the corner? At the Fuel Research Station most promising results have been obtained, and Low Temperature Carbonisation Company, Ltd., have extended their works at Askern. The House will be aware, from the answers of my hon. Friends representing the Admiralty and the Air Ministry, that that company has been supplying fuel both to the Admiralty and to the Royal Air Force with good results and in growing amounts. Mention has been made of the statement of the Chairman of Imperial Chemical Industries, but nothing has been said about a statement which was made by Colonel Bristow, the Chairman of Low Temperature Carbonisation Company, Ltd. Colonel Bristow, it will be noted, has optimistic views about the effect of this guarantee. I have not time to quote from the actual speech that he delivered, but, if hon. Members will turn to it, they will find that he thinks that the guarantee, in terms of low temperature carbonisation, may mean an extension of that process. He also referred to certain parts of the country where it is possible that developments may take place. As regards benzol, the production of benzol has been established in this country for a number of years. At the Beckton Gas Works alone, about 10 per cent. of the 30,000,000 gallons is produced.

I mention these processes, as I have mentioned the names of some of the prominent men connected with them, in order that the House may clearly understand, arid the country may clearly understand, that this guarantee cannot be discussed merely in terms of one process or of one company. There is no monopoly in the guarantee. All processes undertaken by people in this country who are working on coal, peat, shale or their derivatives which are indigenous in this country will be covered by the guarantee.

Now let me turn to the issue which has attracted most attention, namely, that of hydrogenation. That simply means, of course, the addition of hydrogen to an unsaturated body. It is the treatment of coal or coal tar with hydrogen in the presence of a catalyst at a temperature of about 450 degrees Centigrade and under great pressure. [Interruption.] If the hon. Member wants to know what a catalyst is, T can tell him. It is an element which is neutral, which produces reactions upon other elements, but which does not itself suffer any permanent change. May I say a word or two about the issue which has been raised in connection with the question of hydrogenation? The House must understand that for years the Government have kept closely in touch with the development of the process. Consultations have taken place over and over again, and successive Governments have had full information about the working of the process. Indeed, just over two years ago Imperial Chemical Industries gave full facilities to the Director of Fuel Research to investigate the work which was being done at Billingham, and, from that investigation and the work done independently at our own station at Greenwich, the Director of Fuel Research expressed himself as satisfied with the hydrogenation process technically. Certain investigations were also made on the financial aspect of the question.

The Government have been assured that considerable advances in technique have been made since then, and they are satisfied that they are justified in giving a measure of assistance which will enable the commercial possibilities of the process to be tried out on a competent scale. As a result of the advances which have been made the company, as the Chairman has announced, is now willing itself to provide all the capital required and to take all the technical and economic risks, provided that it is safeguarded against the uncertainties of the tax position. The Government proposal which, as I have said, will later on be given statutory form, places a limit upon those uncertainties by providing a guaranteed preference of 4d. per gallon on all motor spirit produced from indigenous sources for a period of 10 years from April, 1934, or of nine years from the 1st April, 1835, and I may say that it is the intention of the company to proceed with a scheme for the production of 100,000 tons per annum—that is to say, 30,000,000 gallons—of petrol from British -coal. New capital to the amount of £2,500,000 will be found by the company themselves; they take that risk. It is to be understood that, with the ancillary plant which is now being used at Billingham, and the working capital, a further £1,500,000 to £2,000,000 will be involved. The orders for new plant which will be placed will give rise to considerable activity in the iron and steel and heavy industries.

What does this mean in development of the coal industry and in cost to the country? It means that for every ton of petrol produced about 3½ tons of coal are required for the process and for ancillary operations, for the production of hydrogen and the generation of power and for other purposes. If 100,000 tons are produced per annum the new plant will require about 350,000 tons of coal a year. That is an entirely new demand; and I may say that the statement about" duff" which was made in two quarters of the House is, I think, the result of a misunderstanding as to how the process is carried out. I do not think I need go into it in detail, except to say that all this coal must naturally be clean coal. That is the answer both to my hon. Friend the Member for East Birkenhead (Mr. White) and to the hon. and gallant Member for Carnarvon (Major Owen).

Since so many authorities have been. quoted to-day, dubious and otherwise, perhaps I might quote the chief chemist of one of the largest oil companies, who, perhaps, in regard to this matter, may not be thought to be a biased observer in favour of the scheme. Dr. Dunstan said only a few days ago: The announcement of the Prime Minister deserves the most careful consideration. It means that Great Britain is about to enter the world's oil producing countries. It is true that the necessary plant will only produce 3 per cent. of the total petrol consumed, but the experiment is a big one, and the result will be of consummate importance. My hon. Friend the Member for Chesterle-Street (Mr. Lawson) talked about extravagant speeches being made by the Government on this matter, but that is not so. I myself in this House have specifically said that Members would be wise not to raise extravagant hopes at the beginning, and the Prime Minister's announcement in the House does not afford any ground for that statement; but he would be a small man with a small mind who would regard this as a small thing. It is in my judgment, and in the judgment of the Government, a small beginning, but a brave beginning, a very fine beginning, for which the company deserves the thanks, not merely of this House, but of the country. They know that they are incurring risks, but they have counted the risks, and, surely, the attitude to be taken by Members of the House who desire to see this process carried through is to say to them," Good luck and may success follow you."

I will now say a word about the question of cost. In the House yesterday, my hon. Friend the Financial Secretary to the Treasury used these words: It is not possible to make a reliable estimate of any loss of revenue under the proposed guarantee, as this will depend on a number of uncertain factors, including the extent to which home-produced motor spirit displaces imported spirit, the quantity of spirit produced, the amount of preference actually in operation, and the length of the period over which the guarantee extends. As regards cost to the Exchequer, further considerations, such as the relief of the burden of unemployment, have to be taken into account."—[OFFICIAL REPORT, 24th July, 1933; cols. 2233–4, Vol. 280.] That statement, of course, is drawn in those terms, not because, as Members seem to suggest, the Government have not counted the cost, but because it is impossible for the Government at this moment to give a definite figure which may be quoted as their figure. With regard to the statement that it will cost £500,000 a year or £1,000,000 a year, of course any Member can make that calculation if certain assumptions be granted. For instance, granting that the oil produced is 30,000,000 gallons, and that, after 1935, this all replaces imported oil, and granted that the tax remains at 8d. and there is no excise duty, it is obvious that 4½ years at £1,000,000 would be the figure. It is equally obvious that, if the average of 4d. for nine years be taken, and again assuming that this oil does not take a place in a growing market—and there is a growing market at the present moment—but replaces imported spirit, the calculation may be made on the basis of £500,000 a year being the cost, granting that that is the amount of the preference given in both cases and there is no excise duty. But the Government would be very unwise, in my judgment, not to take other factors into account or to commit themselves to a definite figure.

Let the House consider these other factors. Let me give the following figures. In 1927, the year before the petrol duty was imposed, the estimated consumption of motor spirit in this country was 688,000,000 gallons. In 1928 it was 813,000,000 gallons; in 1929 it was 849,000,000 gallons; in 1930, 1,038,000,000; in 1931, 998,000,000; in 1932, 1,048,000,000; and in the six months of 1933 so far there has been a rise of 70,000,000 gallons over the first six months of the previous year. These are figures which might be borne in mind by hon. Members who are making their calculations. Some Members talk about it costing £33,000,000 a year, but it is very amusing to find that those Members who say that there is no chance of the thing succeeding' then begin to argue that it will cost £33,000,000. It can only cost any large sum of money on the assumption that the thing succeeds fully, and replaces a large amount of imported motor spirit, and, if that happens we shall not be talking in terms of such figures as I am going to give to the House, but in terms of much larger figures representing miners and other workers employed on many other plants besides the one experimental plant which is now being started.

Moreover, we must not overlook the fact that the process can be used for making heavy oils and experience in this direction when a commercial plant is in operation will be of great value to the country from a defence point of view. Fuel oil produced by this process has been tested by the Admiralty with very promising results. Let me add two other points. At present the production of motor spirit in this country from indigenous materials is about 40,000,000 gallons per annum. Benzol represents 30,000,000 gallons the remainder being produced from shale and by low temperature carbonisation. That is about 4 per cent. of our consumption and there is no duty upon that. If 8d. per gallon were put upon that, it would mean £1,333,000 on the other side.

In answer to questions by my hon. Friends it has been estimated that 12,000 persons will be employed directly and indirectly on the construction of the plant, which will take about 18 months to erect, and this represents a saving on unemployment benefit, according to our calculations, of nearly £1,000,000. When the plant is completed, it is estimated—and I give this estimate to the House after consultation with the industry concerned—that 1,400 miners will be employed in producing the coal, that 1,280 men will be employed on the plant, and that another 1,280 will be employed in secondary employments, or a total of 3,960.

Sir STAFFORD CRIPPS: Is that number of 1,280 men employed based on the expenditure of 2,500,000 in construction?


As regards the plant it is 1,280.


For an expenditure of L2,500,0007


I must not be taken to commit myself to that figure; there may be other points to be taken into consideration. I am giving the exact calculation on the basis on which I was asked about cost. I should like to give the House a good many more facts and figures, but I do not think that the House or the country at the moment are interested in nicely calculated propositions, but are glad that action is to be taken, and I am sure it will be wise for those who really want the experiment to succeed to cease from exercising, as some of them do to-day, the art of political "crab."

Question," That this House doth agree with the Committee in the said Resolution," put, and agreed to.

It being half-past Seven, of the clock, and there being Private Business set down by direction of the CHAIRMAN OF WAYS AND MEANS, under Standing Order No. 8, further Proceeding was postponed without Question put.