COAL INDUSTRY (BORROWING POWERS)

HC Deb 03 December 1958 vol 596 cc1190-313

3.35 p.m.

The Parliamentary Secretary to the Ministry of Power (Sir Ian Horobin)

I beg to move, That the Coal Industry Nationalisation (Borrowing Powers) Order, 1958, a draft of which was laid before this House on 25th November, be approved. In some respects, the financial arrangements of the coal industry are unique. I must make it plain that we are not here concerned with the total borrowing of the industry. Unlike some nationalised industries, the coal industry is well within the total amount of borrowing authorised by Parliament. However, by a provision unique to nationalised industries, the coal industry has to come to Parliament if it takes more than £75 million of what it is authorised to take in any one year.

This provision was purposely made to satisfy Members on both sides of the House, certainly on this side, who felt that the coal industry merited fairly frequent consideration by Parliament. I therefore make no apology for introducing this Order. It was foreseen and it is fulfilling its purpose. The Order substitutes the figure of £130 million for that of £75 million as the maximum which the industry can take from its total.

In fairness to the industry, and to be clear about what we are doing, I must start by categorically stating that this is not deficit financing in any sense. In fact, the revenue loss this year, I am happy to say, will almost certainly be very substantially less than was feared at the beginning of the year. I remind hon. Members that the coal industry's financial year is the calendar year, while ours runs from March to March. The House will recall that the industry began its year with an accumulated deficit of approximately £30 million, and that in 1957 alone it had lost £5 minion.

It began the year with a prospect of perhaps doubling that accumulated deficit in twelve months. I need not detail the drastic steps which the National Coal Board took to deal with that serious prospect—the restrictions on recruitment, cessation of Saturday working, and various administrative economies.

Again in fairness to all concerned, and in view of its fundamental importance to the industry and its financial out-turn, I must refer to the response of miners in most United Kingdom coalfields to the pleas for an improvement of productivity. Output per man-shift is fundamental to the industry and at present—we do not know whether it will continue—it is running at a record rate of about 26 cwt., as compared with the best pre-war figure of 24 cwt. It is only fair to say that the Board and the industry have met what was a very serious situation at the beginning of the year with some success.

Even with only a few weeks to go until the end of the year, it is difficult to give precise figures for the industry, but it looks as though the probable revenue loss for 1958 will not be very different from the £5 million loss of last year. Compared with the prospect at the beginning of the year, it might have been a lot worse. It is only fair to note that the Board has been assisted this year by a nonrecurring Income Tax windfall. I know that some hon. Members opposite do not like the Government taking credit for good luck, but perhaps they will not mind the Coal Board doing so. Anybody who can get money out of the Inland Revenue without actually going to prison is a friend of mine. [HON. MEMBERS: "Oh."] The Coal Board has, in fact—

Mr. Emrys Hughes (South Ayrshire)

On a point of order. The last remark of the Parliamentary Secretary was hardly heard in this part of the House. Could it be repeated?

Sir I. Horobin

I do not think that it needs repetition. Most hon. Members heard it, and seemed to find it somewhat encouraging.

The Coal Board has, in one way or another, got through this year very much better—

Mr. Alfred Robens (Blyth)

Having made that gaff, will the Parliamentary Secretary return to the point he was making, which he has not yet finished? He was about to tell us of a windfall which the Coal Board got by receiving an Income Tax repayment. The Board had provided for Income Tax payments which must necessarily have been part of its previous deficit. The Parliamentary Secretary might be good enough to explain that this is not money from heaven. [HON. MEMBERS: "Oh."] Oh, yes; it has already been provided for in the losses of the Coal Board, about which hon. Members opposite have had so much to say.

Sir I. Horobin

The point is quite plain to everybody, even to the right hon. Member. The deficit this year would have been bigger if it had not been for the very satisfactory fact that the Board has succeeded in getting money which it had had to put aside for Income Tax. The figures will be given, as usual, in the Board's accounts, when they are published [HON. MEMBERS: "What are they?"] I do not know what all this fuss is about.

Mr. Robens

Shall I explain?

Sir I. Horobin

The Board's financial position this year is very much more satisfactory than anyone thought it would be, partly, but not solely, or even mainly, because certain provisions for Income Tax will no longer be necessary.

I now come to the breakdown of the £130 million for which we are now asking. First, we have to allow for an increase in stocks. In the Order we have allowed for £57 million, which will finance an increase, since April, of an extra 13 million tons of coal and 2 million tons of coke, with a possible further rise of 3 million tons of coal, for which we have thought it prudent to allow.

At this point I ought to make it clear that we have satisfied ourselves that the valuation which the Board puts upon the stocks is a prudent one. It is sometimes suggested that proper allowances have not been made for laying down, picking up, de-gradation, and so on. We have allowed for a capital investment of £108 million, which is not greatly different from the figure for the previous year. These two sums together make the £165 million needed, but we estimate that the Board will be able to make available, from its internal funds, about £35 million, mainly in depreciation, and the difference between the £165 million and the £35 million which it will be able to get from its internal resources accounts for the £130 million in the Order.

Before I leave this purely arithmetical part of my task I would remind the House that in calculating ahead, even for four months, as we are doing here, we cannot be very accurate, for the reason which I have pointed out on previous occasions, namely, that the position of the Board fluctuates in the most extraordinary manner. There may be a fluctuation of between £30 million and £40 million in the course of a fortnight, for reasons which are not material. It will, therefore, be seen that we must leave a certain margin for contingencies.

So much for the arithmetic of the Order.

Mr. Gerald Nabarro (Kidderminster)

May I ask my hon. Friend an arithmetical question? It was announced three hours ago, in a Press statement from Sir James Bowman's office, that a wage increase equal to 7s. 6d. a week has been awarded to 350,000 men in the industry. I am not disputing whether that award is right or wrong, but the cost will be about £10 million per annum. Does my hon. Friend's arithmetic take account of the incidence of that one increase during the remainder of this financial year?

Sir I. Horobin

I hope that I may be allowed to continue my exposition. Most of the points being raised are fairly well known, and they will be considered in the course of my speech. If I have to keep giving way I shall detain the House for a much longer time than I wish to do—and I would prefer to deal with the points in a certain order.

Having started by pointing out that the need for the Order stems largely from stocks, I ought to say something about the stock problem itself. It has sometimes been suggested that the Board and the Minister were too late in appreciating the very rapid change which took place in the coal industry position this year and last year.

I would put it simply in this way. In 1955, we were importing over 11 million tons of coal, over 4 million tons of which were going to power stations. The landed value of that coal was £70 million. Even in 1956 we were importing between 5 m Ilion and 6 million tons, which cost the Board about £17 million. It was not until 1957 that a very serious shortage of coal began to disappear. It was early in the summer of that year that steps were first taken by the Ministry to endeavour to renegotiate the contracts for oil used in power stations, which had been entered into when the power position was as serious as the figures I have given indicate.

Early in 1958 the Board began to take steps—which could not have been taken without much consideration—to cut down production. Therefore, in fairness to all concerned we must realise that if we complain that the steps should have been taken earlier—and looking back I think that they might have been taken a few months earlier—we are 'talking of a period of only six months in which to alter the whole basis upon which the coal industry has been working for ten years. We cannot criticise the Board or the Government for taking that period of time to investigate and consider a fundamental change which, even when it is made, provokes very serious and natural repercussions. No change could possibly have been considered earlier than the first half of 1957, and the most drastic steps were taken in the winter of 1957–58.

My next point about stocks is that there is a good deal of exaggeration in the views sometimes expressed. To begin with, they amount to four weeks' production undistributed. They are less than in the European Coal and Steel Community; and less than half of the stocks of things like rubber, timber, cotton and so on. In the matter of coal we have become used for so many years to living in hand-to-mouth fashion that sometimes we take quite an exaggerated and unbalanced attitude towards having available a few weeks' supply of that valuable commodity. I repeat that these stocks are a valuable asset. They require financing, but they are extremely valuable.

What I have to say about stocks may be put most clearly in this way. Would the country rather have stocks of a few weeks' supply, rising output per man-shift and a small profit, or a situation such as exists in Scotland, where there are no stocks, a falling output per man-shift and a coalfield which is costing the Coal Board £1 million a month? We should not take an unreasonable attitude towards the policy of the Coal Board, which is allowing a certain rise in stocks in this country. That does not alter the fact that there is now a gap between demand and supply. Exports are substantially down, but, nevertheless, demand, which is always particularly important to the coal industry, is down.

There is no denying the fact that an increase in coal prices has priced the industry out of several markets. I will give one illustration. It is by no means the strongest, but it will show what I have in mind, and, clearly, it has nothing at all to do with a recession. Deliveries of house coal in the London area in the last four years have fallen by about one-third. This is not due to any recession, but to people choosing alternative sources of fuel for various reasons.

Mr. William Hamilton (Fife, West)

Distribution costs account for half the total price.

Sir I. Horobin

That may well be, but we must not take the view that people will still buy coal at any price.

Mr. Robens

That also applies to electricity.

Sir I. Horobin

To some extent.

I am pointing out that people will no longer buy coal at any price. It is not a monopoly, and the industry must carefully consider its competitive position.

Let us see what this boils down to in terms of the prospects for 1959. With the best will in the world, we cannot be tied down to the odd million tons, but the most careful estimate which the Coal Board and the Ministry can make is that the total demand in 1959 will probably be about 200 million tons. If nothing were done, and things went on just as they are, the total coal production in this country would be about 209 million tons.

Mr. Robens

Deep mined?

Sir I. Horobin

No, that is the total. In other words, if nothing were done, stocks would rise by another 9 million tons, and that, of course, is quite unacceptable.

If that be so, the first point which arises is: can anything be done to increase demand? We cannot enter into a general economic debate now—even though it is not Question Time. I shall go no further than refer to the fact that, rightly or wrongly—this is outside the scope of this debate and my Department—the Government have a great many measures under consideration, and are pledged to the view and policy that such conditions of recession as exist—not only in this country, but elsewhere—are of a temporary nature; and we do not feel that the situation calls for the taking of any panic measures.

Apart from that, the suggestion is frequently made that a direct step to increase the demand for coal should be taken by making it over-expensive or impossible to use alternative fuels, particularly oil. The Government feel very strongly that any action of that sort would not be in the best interests of British industry. People do not move from the use of coal to the use of oil for fun. If the use of oil in any industrial process is the most economical way to carry out that process, it would be a most dangerous thing, in our opinion, to increase the difficulties facing our great export industries by adding in any way to their net fuel costs.

If we cannot increase the demand for coal, what can we do about production, to bring it into balance? I think that there are three criteria, if I may so put it, that we ought to have in mind in laying down any production policy. The first, and perhaps the most important in the interests of everyone, is that any policy should, so far as possible, improve the financial position of the industry, and thereby improve its competitive position. It is for that reason that one cannot, for instance, contemplate a further general increase in coal prices.

Remarkable advances have been made by some of our competitors in improving their production efficiency. In America —admittedly, the geological conditions, and so on, are very different—the daily output per man has increased by over 60 per cent, during the last ten years; with the result that the price at pithead has remained practically stable while our price has more than doubled. I am not making a point about whether anybody is to blame for that. It is fact. We are competitors their price has remained stable; ours has gone up.

It may interest the House to refer to some recent events in Germany, another of our great competitors. There, it will be seen that their problem and their way of dealing with it is similar to ours. Only last week the Ruhr coal industry formally decided to suspend recruitment. The numbers employed have fallen drastically and their output per man-shift has gone up by about 6 per cent. That is the first point. Anything we do must, if possible, improve the competitive and financial position of the coal industry.

The other two things will not take me so long to deal with, but they are important. In reducing its output to deal with this temporary situation, the coal industry should be careful not to reduce output to such an extent that it cannot be increased later, so that we run into a coal shortage again, with all that that implies. The other thing—here I am sure that I shall carry everyone with me—is that so far as possible, and to the fullest extent, any changes should minimise social disturbances both from the point of view of unemployment and the amenities of the countryside.

If these are the broad lines on which we should move in dealing with a situation where output looks like being about 9 million tons more than demand in the corning year, how does the Coal Board and the Minister envisage policy in the next twelve months? I feel that this is the line upon which our discussions should proceed this afternoon. There can be little doubt that the money must be forthcoming. I cannot imagine that anyone would vote against it. What the House and the country wish to know is what the Board will do with the money, and how the Board proposes to run the industry if it gets it.

Manpower has been reduced already from an approximate figure of 712,000 to under 690,000, and that decline will continue. Fortunately, as I pointed out in an earlier debate, broadly speaking, that can be done, and is being done, without redundancy, because, naturally, wastage in the industry is high; so that merely by holding back on recruitment we can achieve the level we require. I want to point out that the present total is still appreciably greater than the original estimate the Coal Board had for 1960 of 682,000.

So much for manpower. I come to the question of opencast working. Opencast working is far and away the cheapest and generally the most profitable of all the ways open to the Coal Board for getting coal. The average profit is about 14s. a ton, and output per man-shift is 50 per cent. better than in the best divisions, deep-mined, and nearly five times the national average. Therefore, in the light of what I have said about the importance of preserving the financial position, one can appreciate the Coal Board's anxiety in this respect.

The next thing about opencast is that we cannot turn it on and off like a tap. Companies have come in employing most expensive and heavy specialised machines which are practically useless for doing anything else. In the light of the principle I was enunciating earlier, of ensuring that we are in a position to boost production later if we need to, we must be sure that we do not wreck the opencast industry. I could, of course, elaborate on all these things, but I do not want to keep the House too long in surveying the whole field. The great bulk of next year's output is, in any case, largely covered by strict commercial contracts. I do not think that anyone in the House would lightly ask the Coal Board, or anyone else, to embark on a policy of breaking contracts.

Finally, and this is of some importance, there are 12,000 men engaged in opencast coal and their jobs are as sacred as those of anyone else. Nevertheless, as we all know—and I need not enunciate them—there are on both sides of the House very grave objections to opencast working. I shall not enumerate them. On a balance of advantage, the Coal Board proposes, with the utmost approval, that opencast production next year shall be cut to about 11 million tons, which is a cut of nearly one quarter.

Sir Albert Braithwaite (Harrow, West)

Shame.

Mr. Nabarro

It is a jolly good thing.

Sir I. Horobin

I think that other hon. Members might make their speeches later.

Mr. Roy Mason (Barnsley)

Is that not what would happen in any case? Will there not be a slowing down of opencast working because it will be more difficult to get authorisations under the Opencast Coal Act?

Sir I. Horobin

No, that is very exaggerated.

Passing from manpower and opencast working, I come to the closure of certain high cost pits. Next year, the Coal Board proposes to close an additional 36 collieries. That is over and above those which will be coming to an end any way as part of the long term programme. Broadly speaking, they are collieries which cannot be made economic. The number of men affected will be approximately 12,000. Of those, I am very happy to say—I got the very latest figure only a few hours before this debate —the Coal Board says that it will be able to find immediate jobs for two-thirds.

I think that that is much more satisfactory than some people may perhaps have feared. For those who cannot get jobs, redundancy compensation up to 26 weeks will be provided. The details of that, of course, are a matter for the Coal Board and I shall not go into them.

Mr. Hamilton

Could the hon. Gentleman break down the number into areas?

Sir I. Horobin

I think that the details of the redundancy compensation had better be left to the Coal Board. That is primarily a matter for the Board, which does, in fact, propose to make redundancy compensation payable up to 26 weeks. If hon. Members opposite would like more details, I shall see that they are given by my right hon. Friend in the winding-up speech.

Mr. Robens

Apart from the details, I am wondering whether this is a special redundancy scheme, as there is already a redundancy scheme provided for 26 weeks.

Sir I. Horobin

Whether this will vary from the existing one I do not know. I have not seen the details beyond the statement that the Board undertakes to do that. Whether it will be more attractive I should not like to say.

Mr. A. Woodburn (Clackmannan and East Stirlingshire)

I understand from rumours that a great deal of this redundancy is to occur in Scotland, that more pits are to be closed in Scotland than anywhere else. Can the hon. Gentleman give us any information about that?

Sir I. Horobin

I have a long list of pits, but I think that the details about that are primarily a matter for the Coal Board.

Mr. James Griffiths (Llanelly)

The Parliamentary Secretary has said that 36 collieries are to be closed. If he says no more than that he will appreciate that the B.B.C. will broadcast the news all over the coalfields in an hour or two and that there will be fear everywhere. Are we to understand that he is not going to tell us where these pits are which are to be closed? Does he realise that there will be deep concern? It has been rumoured that South Wales and Scotland will be badly hit. Does he realise that in my area 8 per cent. to 9 per cent, of the men are already unemployed and this is a matter of great importance? Do the Government consider that they have a responsibility for finding alternative employment for men put out of work?

Sir I. Horobin

I do not think we can get into a general debate on unemployment. What I am putting to the House is the broad outlines of the policy the Coal Board has agreed with the Government for dealing with the situation. What I want to draw the attention of the House to, before leaving this part of the survey, is the extreme degree of uneconomicalness—if I may coin a horrible word—of some of these pits. One I have in mind, for instance, lost last year over 63s. a ton. [HON. MEMBERS: "Where is that?"] Another lost 64s. a ton. [HON. MEMBERS: "Where is that?"] That is not relevant to the argument I am putting. When a pit is losing 60s. a ton on coal it makes no difference if it is in Scotland, South Wales or Lancashire.

Hon. Members

Of course it does.

Mr. Robens

Will the hon. Gentleman tell us whether the pits are producing good coking coal?

Sir I. Horobin

These I have mentioned are producing general purpose coal.

Mr. Robens

Will the hon. Gentleman permit another interruption?

Sir I. Horobin

I have given way a great deal.

Mr. Robens

That is only because the Parliamentary Secretary is confusing all of us who have some knowledge of the industry by the statements he is making. He must know that losses of coal production are justified by shortage of a particular kind of coal. That is why we are anxious to know what kind of coal is being produced at these pits.

Mr. Geoffrey Hirst (Shipley)

Losses are never justified.

Mr. Robens

Losses are justified if they have to be produced to maintain the steel industry. I would not expect the hon. Member to understand that, because the greatest contribution he makes is that of sitting grinning like a jackanapes and acting in that stupid way.

The statements made by the Parliamentary Secretary are very serious to those representing coal mining areas. When he brings forward the loss of 63s. a ton as justification for closing a pit it is natural to ask where the pit is and what kind of coal it produces.

Sir I. Horobin

I cannot, offhand, answer that long intervention—[HON. MEMBERS: "Oh!"] I do not think that we want this ill-feeling. Everything I have said is perfectly factual. These are pits producing general purpose coal. The Coal Board which, after all, is a nationalised body, ought to know. I am merely stating that the Board has had to pick out some of the pits that are incurring quite impossible losses. I am merely stating a fact and not blaming anyone at all—not the workers in the pits or anyone else. These are simple facts which the Coal Board has to face.

All the pits that I have mentioned are general purpose pits. One is making a loss of over 60s. a ton, another 64s. a ton, another 60s. a ton, another 65s. a ton, and of two—I shall not pursue this, because these are anthracite pits—one is losing 87s. a ton and the other 90s. a ton. Ignoring the anthracite ones, these are general purpose pits that are losing these very large sums. Six pits lost £2 million between them in the last twelve months. That is a fact, and one cannot get away from it. I cannot say that the Coal Board, faced with this difficult situation, is not right in saying that a contribution towards this problem must come —only a contribution —from closing some of these grossly uneconomic collieries.

Mr. Tom Brown (Ince)

What is worrying me at the moment is that we are embarking on a very serious era and the hon. Gentleman is keeping back, definitely and specifically, information which would be of value to us. If there is some purpose in maintaining a high degree of secrecy over the names of these pits, will he tell us what it is?

Sir I. Horobin

The only reason that I have in mind is that of courtesy to the Coal Board. I was proposing immediately I had sat down to find out whether the Coal Board has any objection to the announcement of the names of these pits. I feel that it is simply a matter of confidence with the Board. I have not yet acquired from the Board consent to announce the names, but I cannot imagine that there will be any difficulty. If there is none, as soon as I can get the matter cleared up with the Coal Board, my right hon. Friend will either announce it in his winding-up speech, or possibly the Coal Board will itself announce it this afternoon. I think that that is fair enough. There is no question of secrecy about the information. It is purely a matter of proper courtesy and confidence with the Coal Board.

To sum up this matter of policy, it boils down to this. We had to find 9 million tons and we are finding it roughly in three bits—3 million tons from closures, 3 million tons from a cut in opencast and 3 million tons which we are expecting will have to be added to stocks. So much for that. I am leaving out some of what I intended to say because I have been rather delayed and I will now come straight to another point.

Here, I take up the point put by my hon. Friend the Member for Kidderminster (Mr. Nabarro), of the award which we have only just heard. I ought to say to the House that when these measures were discussed between the Coal Board and Her Majesty's Government it appeared that, provided there was co-operation from all concerned and productivity continued to improve—as of course it should with the very large sums being invested in the industry—and provided that no further burdens fell on the Board, there was at least some prospect of avoiding substantial losses in the coming year.

We have today heard the announcement of the new wage award, the direct effect of which—and for once I do not quarrel with the figures of my hon. Friend, though I often do—will be to increase the Board's costs by perhaps about £10 million in the next year. The Board will need to consider how it is to meet this new situation, but, clearly, it underlines the need for co-operation on the part of all engaged in the industry to increase still further its productivity if the Coal Board is to be able to avoid unpleasant measures which cannot be long delayed, for any general rise in the price of coal, even if that were acceptable, would be liable to defeat its own object.

There is one important matter which I should refer to in outlining the position of the Board and the Government to the House. That is the question of capital expenditure. The House will remember that £108 million of this sum which we are talking about is for long-term capital investment. It is often asked—and I have inquired into it very carefully myself since I have been in the Ministry —whether the present scale of long-term capital investment in the industry is any longer realistic.

It is certainly no longer realistic to expect the demand for coal to go up to the higher figures which were envisaged in the Coal Board's last investment programme. The Board is now making a review of its present investment programme from the point of view, agreed with Her Majesty's Government, that the emphasis now must be on productivity and not on production. We must bear in mind that it is only comparatively recently that investment in the coal industry has been anything like a proper figure. From 1947 to 1951—and, again, I am not at this stage criticising anyone; I am merely stating the fact—investment in the coal industry averaged only £27 million a year, which is completely inadequate on any basis. [HON. MEMBERS: "Hear, hear."] Do not let us get into politics.

Whatever we think about it, that fact remains. Between 1947 and 1951—we can have our own views whether it ought to have been more or could have been more—the coal industry had only the derisory sum, on average, of £27 million a year.

Since 1952 and up to date that average has gone up from £27 million to £85 million. I do not think that anyone can establish the view that the "wicked" Tory Government have been starving the industry.

Mr. Nabarro

That is just my point.

Sir I. Horobin

When we consider whether this can now be cut, we have to bear in mind one or two developments. First, the original plan assumed continuance of full opencast workings, the continuance of Saturday working and very limited closure of these very uneconomic high cost pits. Although the original figures of production are no longer realistic, many of them would not have happened anyway, because of the changes that have taken place in these three respects. The original plan provided that about three-quarters of production would be from modern collieries. All that amount, on any calculation of probable demand, will still be required.

Having given perhaps some depressing figures for certain collieries, I should now like to give more encouraging figures for other collieries. It must be appreciated that a very great deal of improvement has occurred in collieries in which large sums of money have been invested. I hope that I shall not in any case be asked to give the names here, because that might be invidious. There is a colliery—I will go so far as to say that it is in Scotland —where the O.M.S., before substantial schemes were carried out, was the shocking figure of 14.4 cwt, and, afterwards, it was 24.6 cwt., nearly double. There is a new pit, where the present O.M.S. is as high as 50 cwt. In another pit it is as high as 64 cwt. and in another the O.M.S. has risen from 28.9 cwt., before the work was done, to 47.3 cwt.

The point which I make is, first, that a large amount of continued capital investment must go into the coal industry even though we no longer expect to need such a large amount of coal and, secondly, that there is substantial evidence, at any rate in certain parts of the country—I will put it no higher than that—that where we have spent a lot of money we have had good results. [HON. MEMBERS: "Hear, hear."] I am glad that that meets with the approval of hon. Members opposite, but the next point which I am about to make may not be quite as acceptable to them. If we are to face, as I think we probably shall have to face, a smaller demand for coal than we originally expected, the sensible thing is not to cut the capital investment in the economic pits but to speed up the closing of the uneconomic pits.

I have taken rather longer than I intended. I have attempted to give a reasonably balanced picture of how the coal industry and the Government face this very serious problem. In conclusion, I am absolutely convinced that the future of this industry, and, indeed, the future of the country, in which for many years it must contribute the major part of our fuel supply, depends on increasing its productivity quickly. There is no hope of doing that if the industry is torn by fratricidal struggles. Only by the cooperation of all concerned can the present level of output be continued and improved.

If that is done, while I have no doubt that we shall have many difficult years ahead of us, I believe that there is hope for a perhaps smaller but more efficient coal industry in filling a vital part in the country's economy. I believe that the money which I am asking Parliament to authorise today will be well spent if devoted to that end.

4.22 p.m.

Mr. Alfred Robens (Blyth)

There has never been any lack on this side of the House of enthusiasm for increasing production and increasing efficiency in the coal mines. I would, however, add one further point, perhaps the most important, to what the Parliamentary Secretary said at the end of his speech about the importance of increased production. He must not forget that the way in which to get increased production in this industry, as in most others, is to maintain the confidence of the people working in it, to let them know that they are in an industry which will provide them with security of employment over many years.

That is particularly so in the coal industry, where miners are recruited only from miners' homes. We cannot look to the whole of the United Kingdom for recruits to the mining industry—only to miners' homes; and when we say a few words about the pit closures there are some aspects to which we shall have to draw the Parliamentary Secretary's attention.

The Parliamentary Secretary began by telling us that output per man-shift had improved considerably, and we were glad to hear the latest figure of 26 cwt. which he gave us. Later, he confused a number of us by talking about the deficits and surpluses of the Board. In a newspaper report last week there was a suggestion that the Government were being asked to subsidise the mining industry, and I thought that the Parliamentary Secretary would perhaps put it on record that this is not an industry which has been subsidised in any way, nor is it asking to be subsidised. It is paying its way and carrying out its statutory obligations. The fact that it has deficits today is due very largely to circumstances imposed upon it by reason of Government policy.

That is why I was particularly quick, if I may say so, without being offensive to the Parliamentary Secretary, to jump to my feet when he talked rather airily about the mysterious windfall which had come from the Inland Revenue. He did not tell us how much it was, nor do I know how much it was, but he said that this year, instead of having a very large deficit, the Board might have a deficit of only £5 million, but we were very lucky in this because we had had a windfall. He said that some money which had been placed presumably on one side to pay taxation has no longer to be used for that purpose, by whatever arrangements have been made, and, therefore, it has been brought back into the accounts. That is the situation as I understand it.

But if it is now to be brought back into the accounts, it is not a windfall. Provision has been made for it and it must have appeared at some stage in the past years, when the fund has been accumulated, as a deficit in the years when we were running a deficit or as a reduction of the surplus in the years when we were running a surplus.

I am glad that I provided myself with these figures; I did not think that they would be required, but in view of what the Parliamentary Secretary said it is worth noting that the net deficit is about £28.9 million. The Parliamentary Secretary said that it is £30 million, which probably includes this year's figures. I calculate the deficits to be £61.7 million in the years when we have had deficits and the surpluses to be £32.8 million, giving a net deficit of £28.9 million.

The losses on imported coal were £71 million, and they were imposed upon the Coal Board by the Government. It was never the business of the Board to act as an importer of coal. When the coal industry had to buy steel abroad because the British steel industry was unable to supply the steel which it wanted, it had to pay the increased cost of foreign steel, but when the steel industry wanted coal the Coal Board bought the coal from the United States and subsidised it in order to sell it to the steel industry at home-produced prices. We must, therefore, take into account, when looking at the overall figures, that there was an enormous loss of £71 million due entirely to Government policy and not to Coal Board policy.

Sir I. Horobin

If the right hon. Gentleman intends to take into account the losses on imported coal, then to keep the record straight he should also take into account the profits on exports. Over the years, considering all its trade in imports and exports, the Coal Board made a very substantial profit.

Mr. Robens

That is where the Parliamentary Secretary is wrong. It is part of the function of the coal trade, and has been for 100 years, to export coal; it has never been a coal importer. Its function is to dig coal here and to sell it both here and abroad. The importation of coal has been artificially brought about by circumstances which have never occurred in this country before, except during the 1926 General Strike, when Polish coal was imported but for a very different reason. The Parliamentary Secretary shakes his head. Can he, then, explain to me why the steel industry should not have paid the imported price for its coal if the Coal Board had to pay the imported price for its steel?

Sir I. Horobin

I am not talking about steel. I am talking about coal, and I am simply putting the record straight. This question of loss on imports was raised by the right hon. Gentleman and not by me. I have made no reference to it. The right hon. Gentleman said that a deficit has been accumulated over the years, but that we ought not to regard that as a correct statement of the financial position because many losses were made when we could not produce enough coal and had to import some. I merely make the obvious comment that, if we do that, then we must, in fairness, bear in mind the other side of the account—the profits when we export coal.

Mr. Robens

I will leave it to the record and to people to judge. All I say is that the Coal Board was compelled by Government order to do a job which it is not obliged under Statute to do—to import coal at a loss. It was prevented from passing on the loss. I will leave the point there, except to say that the whole of the outgoings of the Coal Board, all its obligations to the former coal owners in interest and the interest on its borrowing, have been fully met. That has been done throughout the period in which the Board has been in operation.

If he had taken into consideration the artificial loss on imported coal, the Parliamentary Secretary would have told us today that after ten years of operation the Coal Board was showing a surplus of £40 million. To that extent these borrowings would not have been necessary, because the Board could have self-financed itself to the extent of £40 million, plus the £35 million about which the Parliamentary Secretary spoke, giving, £75 million of self-financing.

I make these points only to keep the record straight. I am only sorry that the Parliamentary Secretary himself did not feel it right to reply to a good deal of the uninformed criticism, coming both from outside and from his own benches behind him, which continually tries to label the Coal Board as a subsidised industry, which is not what it is at all—

Sir William Robson Brown (Esher)

The right hon. Gentleman has mentioned the steel trade. Would he state the tonnage of imported steel that the Coal Board was compelled to bring into the country? Would he say whether it bore any relation to the overall value of the imported coal? I submit that it was infinitesimal. Would he also admit that if we had had the level of output that we have today we might well not have wanted to import coal at all, but could have financed it ourselves without harm to the balance of payments?

Finally—and I am speaking slowly, because these are important matters—would he not also admit that if the Coal Board has the power, the absolute monopoly in the control of price and supply of coal, it also has responsibility to maintain supplies? Private industry was for years quite prepared to buy its own coal from outside, but was prevented from doing so.

Mr. Robens

The point that I am making is simple enough. It is that the Coal Board subsidised the price of coal for the steel industry, but had to pay higher prices for foreign steel when our private steel industry could not provide the steel from its own production.

What the Parliamentary Secretary has told us today is that about £57 million is required for stocks; £108 million for capital investment—a total of £165 million—but that as the Coal Board is providing £35 million, we are invited to agree to the amount shown in the Order. I say immediately, on behalf of this side of the House, that we accept the suggestion and approve these extra borrowing powers.

It is, however, what the new pattern of the industry is to be that attracts our attention much more than the arguments that the hon. Gentleman has used in defence of the increased borrowing powers. Not one single word of his argument about the necessity for stocks need have been addressed to this side, because we put forward the same arguments in July last, and we made them during the debate on the Gracious Speech.

We then made it perfectly clear that we thought that stocking was right, but, recognising that there would come a time when it would be quite physically impossible to continue stocking, because stocking grounds would not be available anywhere, we asked what was to be the pattern for the future. Therefore, this long argument justifying the capital invested in stocks must be addressed elsewhere—certainly not to this side of the House.

As I understand the Parliamentary Secretary, we shall have a surplus of supply over demand of 9 million tons next year. The proposal of the Coal Board, which, presumably, the Government are now underwriting, is that opencast production will be cut back by 3 million tons; the closure of pits will account for, roughly, another 3 million tons, and that the Board will agree to the stocking of a further 3 million tons, thus equating demand with supply.

When we last debated the coal industry, the Parliamentary Secretary referred to the competition from oil, and he made a slight reference to it today, in which he has, again, vehemently laid down the doctrine that consumers, whether industrial or private, must be perfectly free to have the fuel of their choice; that competition must be the deciding factor as to who gets the business. I shall come back to that a little later, but there are, of course, two reasons for the present sate of the coal industry.

The first is competition from oil. The increase in the amount of oil used is far higher than was originally estimated when the long-scale plans and estimates were made for our fuel requirements. Speaking from memory, the estimate was of a fuel requirement of about 310 million tons of coal equivalent by 1965. Those figures have to be revised, with the figure for indigenous coal coming down rather heavily, and the oil proportion of our coal-equivalent fuel requirements increasing rather more quickly than was thought would be so at the time when the estimates were made.

The second reason for this peculiar position in the fuel and power industry as a whole—of which coal is part—is, undoubtedly, the stagnation of production. This is Government policy. I do not have to quote from HANSARD. It has been announced by more than one Chancellor of the Exchequer and by other Ministers, from the Treasury Bench, that production was permitted, indeed, was compelled, to come down to prevent inflation. That is the choice that was made, but as we are not now having an economic debate we are not discussing whether it was right or wrong.

What we do say is that the Parliamentary Secretary cannot escape from the fact that one of the two reasons for the decline in the use of indigenous coal is that Government policy created stagnation in industry. It is very interesting to note that the surplus of 9 million tons with which we are concerned is almost accounted for, comparing 1956 with 1958, by the reduction in the demands of the steel industry of 1.7 million tons; coke ovens, 1.1 million tons; railways, 1.9 million tons; while the reduction in the demand of industry generally is 4 million tons. That makes a total of 8.7 million tons, of which 4.7 million tons is in those three industries that have relied upon the coal industry very extensively—,steel, coke ovens and railways—

Mr. Nabarro rose—

Mr. Robens

I will give way if what the hon. Gentleman wants to say is germane, but I may say that I will not make any more of this except just to say that the stagnation in production has undoubtedly reduced the need for the amount of coal we estimated that we should need.

All or most of the estimates have been based very largely on an average increase in production of 3 per cent. per annum. It was on that figure that the Lord Privy Seal based his famous pronouncement of a few years ago that we were to double the standard of living in twenty-five years. It is because we have not increased production at the rate of 3 per cent. per annum—and the figures that I have given merely indicate it in tons of coal—that we have the present situation.

What I say to the Parliamentary Secretary and to the Government is that this problem of surplus production need not—must not—be at the expense of the miners in terms of unemployment and short-time working. We on this side stand for full employment not merely as a symbol, not merely as a figure of speech from a political platform, but because we believe that full employment is fundamental to our economic prosperity and to the happiness of our people.

Therefore, when looking at the problem of over-production of coal, we say that the answer cannot lie in putting this burden upon the miner, either by unemployment or by short-time working. Month after month, year after year, for ten years, in the mining constituencies, in this House, from public platformseverywhere—we have been urging and encouraging our miners to produce more coal. We have been telling them—and I am as guilty of this as anybody—

Mr. J. Griffiths

And the young men went back to the mines.

Mr. Robens

Exactly. We told the miners that the demand was more than they could possibly meet in a lifetime. As my right hon. Friend the Member for Llanelly (Mr. J. Griffiths) has said, we have encouraged miners' sons not to teach in the schools but to go back into the mines, to become technicians, mine managers, and the like. We have been doing this for ten years. The Government cannot come here today and simply say that 12,000 or 14,000 men are to be affected by some pit closures, and expect the mining industry to take it as calmly as the Parliamentary Secretary thought it might when he said that it is only a little contribution. It is a little contribution if one is not one of the 12,000 or 14,000, but it is a very big contribution if one is.

Sir A. Braithwaite

I am obliged to the right hon. Gentleman for giving way. I am sure that he would be the last Member in the House to advocate the production of coal which was entirely uneconomic, and that he appreciates that there are phases of production which are uneconomic, and should be cut out, because they are at present to the detriment of the Coal Board. What we all want to see is that the Coal Board is successful, but the Board cannot carry people; everyone must pull his weight and make the industry prosperous.

Mr. Robens

The hon. Gentleman can be satisfied that I shall not leave the question of uneconomic pits alone. I am making this position clear.

I say that we cannot suddenly, overnight, change a 10-year policy of full employment and encouragement to get the last ounce. These miners agreed to work Saturday morning shifts and they worked longer hours than any miners in Europe. They gave up a week's holiday. Instead of taking their full holiday, they sacrificed a week. In every sort of way miners have been encouraged to dig as much coal as possible.

Last July, the hon. Member for Kidderminster (Mr. Nabarro) was saying that this country needs as much coal as it could get. It is all here on the record, and others have said it. The Government cannot change—

Sir Peter Roberts (Sheffield, Heeley) rose—

Mr. Robens

If I may finish this point, may I say that we cannot have this quick change. Therefore, there must be rather a different approach to this question to the closure of mines.

Sir P. Roberts

I am much obliged to to right hon. Gentleman. We appreciate what he and his friends have said in encouraging recruitment in the industry over the years. I would only suggest that he might put out a warning that all this is no good if the miners are to price themselves out of the market.

Mr. Robens

I do not accept that the miners have priced themselves out of the market, but I am concerned with the average miner, who gets about one-third or a quarter of the income which the hon. Member receives. I would not say that that was an undue reward for working in the bowels of the earth. Personally, I would not go down into the bowels of the earth to dig coal. I would not work in a mine for what a miner is paid, nor would the hon. Member. Do not let us talk about the miners pricing themselves out of the market. The average pay of the miner is 51s. 10d. per ton, and I pay £12 per ton at my home.

Let us look at the difference between those figures and see where the money goes. It is absurd. The hon. Gentleman has been associated with the mining industry, and he knows full well the conditions of that industry. This is not a question of miners pricing themselves out of the industry. The miners are getting a fair return for the work they put into the mining of coal, and if the hon. Gentleman does not think so let him send his sons or relatives into the mines, where they will be very gladly received. We know that he will not do so, because they will be put into a much better, cushier job and earn a good deal more.

When the Parliamentary Secretary tells us that the miners are now increasing their output to 26 cwt. per man-shift I say that that is the sort of encouragement that is required. The miners will go on increasing their output to meet the needs of the country, and, in a period of mechanisation, have welcomed that mechanisation and the introduction of new machines into the mines. We cannot say that of any other industry. The miners have welcomed the machines, and have done everything they possibly could to increase output per man-shift. I repeat what I have said before—that the British miner has given British industry the cheapest coal in Europe. He cannot do more than that.

Mr. J. Griffiths

And given it particularly to the steel owners.

Mr. Robens

I resent very much this attack on men who work down in the bowels of the earth in an industry which is not pleasant in any circumstances for the wages they get. It would be a very bad thing for the country if we failed to maintain the capacity of the mining industry at a high rate, merely because. of this stagnation which the Government themselves have produced. It would be foolish to run the other way and drag down the capacity. Who knows when the Middle East oil will be stopped next?

Mr. Griffiths

If we have another Suez, what then?

Mr. Robens

People should read Randolph Churchill today. If the mining industry is now to be panicked into reducing its capacity the country will be in a very sad way indeed if there is an interruption of supplies of oil. We cannot run the other way.

I approve very much of what the Parliamentary Secretary said when advocating the use of £108 million, which, I think he said, is a further investment in the industry. We ought to know, and I am surprised that the Parliamentary Secretary did not tell us, what is the position of the coal industry now and what are the energy requirements of the country. Mining is not like an industry in which one can put on more machines to increase production or in which you can turn off production like a tap. The capacity has to be there, the face room has to be there and it is not possible, therefore, to have the flexibility at the speed which we can get it in an ordinary engineering industry.

The industry as a whole ought to know where it stands. We are probably not now thinking in terms of 240 million tons maximum which was estimated some years ago in the coal plan, but is it 240 million tons, 220 million tons, 200 million tons, or even 180 million tons? Surely the industry must know, and must be protected to this extent. If it is told that the figure is either 200 million tons or 210 million tons, the industry can safely invest and organise its manpower and everything else to produce that amount for the country. It seems to me that the Government must look again at their fuel and power policy, and determine just what position the mining industry is to occupy in our economy as a whole.

Now we come to the question of the closing of pits. The Parliamentary Secretary addressed our attention very properly to the fact that the pits which have been closed are pits which would have been closed any way, either because of the shortness of their lives—and I doubt whether some of them had a life of not more than five years—because of the exhaustion of their reserves, or because they are high-cost pits. Quite frankly, I would not dream of saying that we should maintain high-cost pits at any price, but the truth is that on vesting day, over half of the pits taken over were losing money.

If we had been merely looking at surpluses, we would have shut down half the pits, and the country would have gone bankrupt. But these high-cost pits were maintained only and solely for the reason that the coal they were producing was necessary. The hon. Member for Shipley (Mr. Hirst), who interrupted me earlier, is not now in his place, which is a pity, because he might have learned something. It was essential to maintain these high-cost pits in production because the coal was more valuable than the money which was lost.

Now, however, we have come to a different stage—the stage when capacity is no longer required, and we look round and consider how we can get rid of 3 million tons of surplus capacity. It is very proper, in the circumstances, to look at the high-cost pits, and, having looked at them, the Parliamentary Secretary tells us that there are 30 or 36 of them and that 12,000 or 14,000 men are likely to be affected. He then gave us the rather good news, at this stage, that only about a quarter of these men are likely to find themselves redundant, that about 9,000 of them will, presumably, he transferred.

Sir I. Horobin

I said about one-third. I think that the figure of redundancies will be between 3,000 and 4,000.

Mr. Robens

Obviously, the figures are in the air at the moment. We could say that about like 8,000 men will be found employment out of the 12,000, and about 4,000 will be redundant. It may be that a large number of men are over retirement age and that wastage, and so on, will take care of a good deal of these. But, as I understand, these pits are largely centred in South Wales and Scotland, in areas where there is already a high incidence of unemployment. There are no alternative jobs to go to. Therefore, if these closures are to take place it becomes for the Govern- ment a matter of high policy and speed in order to make sure that alternative work is made available in those areas where the pits are being closed.

I believe that to make the normal redundancy agreement payment in these circumstances is not good enough. The agreement, which covered 26 weeks, was intended to provide for the normal redundancies which inevitably arose when a pit was closed because the seams were exhausted and the reserves had gone. The agreement provided for 26 weeks during which period other work might possibly be found.

In many of the pits to which the Parliamentary Secretary referred, normally these men could have been expected to carry on for another four or five years. In that time men of 60 would have reached retirement age. Now, they will not reach retirement age; they will be out of work. It is difficult enough for men of 60 to get another job when there are other jobs available, when there are men of 40 competing with them, but when a man of 60 is out of a job in Scotland, for example, where unemployment is at the rate of 8 per cent. or more, his chances of getting a job are negligible. At the age of 60 it is difficult to move from the South Wales coalfield and start life anew in the Midlands or somewhere else. That being so, some special arrangements ought to be made for redundancy payments in excess of 26 weeks for those who cannot be found alternative employment either in the industry or in other employment by the Ministry of Labour.

As the Government know that these pits are to be closed, they should make it a matter of prior importance, in relation to the President of the Board of Trade and in the distribution of industry, to begin now to make some arrangements to mop up the unemployment which will follow.

Sir I. Horobin

I thought that the right hon. Gentleman would like to know that I have now heard from the Coal Board that a list of pits has just been issued.

Mr. Robens

We are obliged for that information. Without the list a good many anxieties would be expressed by miners everywhere and by Members representing mining constituencies. Now they will know what the position is. I am hoping to make some proposals, before I reach the end of my speech, which will obviate the premature closing of these pits and will make the closures much slower so that more time is given to deal with the social consequences from the closures.

I should like to take up the point mentioned by the Parliamentary Secretary, about competition from oil—

Mr. Bernard Taylor (Mansfield)

If, as my right hon. Friend has stated, long-term unemployment persists and men 60 years of age and over are unable to get work, with the lapse of Section 62 of the National Insurance Act, 1946, at some time and after not more than 19 months. their unemployment benefit ceases as well.

Mr. Robens

I am glad that my hon. Friend has drawn attention to that aspect of social insurance on which he is an authority. I hope the Government have taken note of that fact. It is extremely serious when an industry is closed down over people's heads and they cannot help it. We must protect them from absolute poverty, the means test or public assistance if at all possible.

Mr. Cyril Osborne (Louth)

Is the right hon. Gentleman going to deal with the question, as he promised he would, when he said that the miner was getting on average 51s. a ton and that he himself was paying £12 a ton? Is he going to deal with the difference and state how it can be obviated?

Mr. Robens

No, because we have discussed this question in the House before and it is not germane to this debate. However, I shall be happy to discuss the difference between pithead and consumer prices on a suitable occasion.

I now want to deal with the question of competition from oil. The House should remember that total coal consumption in the last two years has dropped by 16.7 million tons, but fuel requirements have not dropped by that amount. Undoubtedly oil has taken the place of a good deal of coal. The Parliamentary Secretary has said—and, indeed, I think this has been echoed by many speakers—that the consumer must have complete freedom of choice and—I think I am quoting him correctly—that competition is the best stimulus. I would not quarrel too much with either of those assertions. The consumer chooses for a number of different reasons; convenience, cleanliness and price enter into the matter to a considerable extent.

All I would say is this: if it is the Government's policy that competition is the best stimulus, they must permit the Coal Board to be competitive, because the Coal Board is fighting oil with one hand tied behind its back. Oil companies can go anywhere they like. They can give all sorts of discounts and they can undercut coal at any time to suit themselves.

Sir I. Horobin

I do not differ from the right hon. Gentleman at all, but in fairness he ought to point out that if the Coal Board is tied it is tied by the Statute which he and his friends passed.

Mr. Robens

Certainly. If the Parliamentary Secretary wants to enter into polemics I will engage in such a discussion by all means, but I thought we were discussing a serious letter. Certainly the Statute says that there shall be nondiscrimination, but at the time when nondiscrimination was safeguarded there was no question of competition with oil. It was a question of supplying coal or any fuel at all. I hope the Parliamentary Secretary did not mean that ten years later we are still to be bound by what we were thinking then. I hope he did not mean, because we had a Statute which provided non-discrimination to protect consumers of coal from monopoly practices ten years ago, that the same should apply today.

It is very important for the Government and other people to understand this. The oil industry is not competing with coal on a fair basis. It is able to undercut by all sorts and manners of devious means. The number of times that representatives of the industry were going round to the garages on the subject of petrol, the number of garage overalls they supplied, the number of times the garages were painted and the special terms they put on the pumps is nobody's business. Let us make no mistake that if the coal industry were as free as the oil industry to compete, the oil industry would not have had such a great success.

This is not peculiar to this country. It is happening all over the Continent. The Schumann group are making the same complaint about oil, that whilst there are non-discriminatory clauses in their agreements oil is coming into Europe and unfair competition is taking place while coal stocks are mounting. I say to the Government that if they are not prepared to protect coal production at a certain level they must free the Coal Board to enable it to fight oil on a fair basis.

I turn now to another aspect of oil—

Mr. Dudley Williams (Exeter)

I am sorry to interrupt the right hon. Gentleman, but I am trying to follow his argument. Would he be good enough to expand on his suggestion about how the Coal Board could fight oil if it had freedom?

Mr. Robens

I do not want to expand that at all.

Mr. J. C. George (Glasgow, Pollok)

Why not?

Mr. Robens

I will tell hon. Members why not. I could go on until 7 o'clock this evening talking about this, but neither the hon. Member for Glasgow, Pollok (Mr. George) nor the hon. Member for Exeter (Mr. Dudley Williams) would like that, nor, I am sure, would anybody else. I have made the point, and the Parliamentary Secretary and the Paymaster-General know very well what it is. I have no doubt that it can be expanded and, within the next few days, no doubt the matter will be discussed in the Financial Times and other newspapers, because it is a subject of vital importance.

Mr. George

We are not trying to make difficulties at all; we are genuinely asking about it. We should greatly appreciate an explanation.

Mr. Robens

I am sorry that the hon. Gentleman should be genuinely puzzled. This is not a primary class; it is a debating Chamber.

Mr. George

Oh.

Mr. Robens

Indeed, yes. This is really a little bit of nonsense. If the hon. Member for Glasgow, Pollok, who knows all about the coal industry, has the impertinence to ask me an elementary question like that, all I can do is to tell him to go back to his books. I am not here to act as his teacher. I have made a statement which the Parliamentary Secretary knows is perfectly correct; the Coal Board is not free to compete with oil. I demand that, if the Government take the view that the oil industry is free to compete with coal, they must free the Coal Board to compete with oil.

I come now to another aspect of the same problem, namely, the policy with regard to power stations. This is where one could save a good many of the problems produced by pit closures, not by saying that at no time must pits ever close, but by taking the process over a somewhat longer time.

There is something here that I do not understand. In his speech this afternoon, the Parliamentary Secretary took us back to 1956. That was the time when production was moving up and consumption was moving up. Estimates were made on that basis. In 1957 came the first feeling of uncertainty. The hon. Gentleman was right to tell us that all the problems came upon us in six months. Why was it that in 1958, with millions of tons of coal lying on the ground, the Government went on ordering the conversion of power stations from coal to oil? Why was that done? I can understand that one cannot break off commercial contracts immediately, but the conversion of power stations to oil was never done on the basis of competition; it was not done on the basis that the coal industry could not provide a cheaper fuel for making electricity. It was done, quite properly in order to bridge the gap between demand and supply. It has no commercial basis at all. Why did the Government go on allowing these conversions?

Does the Parliamentary Secretary know, or has he been made aware, that four power stations, Brunswick Wharf, Belvedere, Plymouth and Portishead, are now, as we sit here in this Chamber, being converted to oil from coal?

Sir I. Horobin indicated assent.

Mr. Robens

Does it make sense? With 12,000 jobs in the industry about to disappear, why is it that while we sit here engineers are busy converting power stations from coal to oil, and not on a commercial basis? I am told by the leaders of the National Union of Mineworkers that, on a commercial basis, coal can beat oil at most power stations in the country.

The Parliamentary Secretary said the problem was 9 million tons of coal. Three millions we were going to stock. Three millions were to be cut back from opencast mining. Three millions were to be saved by pulling production down as a result of pit closures. By 1959, power stations which have been converted from coal to oil, not on a commercial basis but on the instructions of the Government as deliberate policy to bridge the gap, will be burning 6 million tons of coal equivalent. If one adds 6 million tons of coal equivalent to 3 million cut back in opencast, there are the 9 million tons without closing a pit.

The Paymaster-General (Mr. Reginald Maudling)

I want to deal with this when I speak later, but may I ask the right hon. Gentleman now whether he appreciates, when he speaks of things being done on a commercial basis or not on a commercial basis, that the important consideration is the contractual basis?

Mr. Robens

I agree.

Mr. Maudling

Does the right hon. Gentleman adhere to the point he used to stand by, that contracts must not be broken?

Mr. Robens

Of course. I want to show the House the difference between the two. This is not competition between coal and oil. This was not done on a commercial basis but on a contractual basis, to bridge the gap. I am saying that these stations should be converted back. These things are not done overnight. Just as one cannot cut back the opencast coal programme by more than 3 million tons because of contractual obligations, so one cannot turn the power stations back overnight. But there was no word today from the Parliamentary Secretary to suggest that the Government were even considering it. Even at the risk of breaking contracts or even at the risk of paying an indemnity for having broken contracts, it is absolutely absurd to go on permitting further work on four power stations, which are now burning coal, in order to turn them over to oil.

The work could go on so that we should have dual-fired power stations. That is a sensible programme. Let us have as many power stations as possible capable of dual firing, in order to give flexibility; when we have more coal than oil, let us burn coal, and when we have more oil than coal available, let us burn oil. That is surely sensible. All I am saying is that, in discussing this matter today, the Parliamentary Secretary did not mention this policy once. This is one of the ways in which the cut could have been made and should have been made, not to the full 6 million tons in a short time, but by a start being made in turning the stations back.

To cut back opencast production by 3 million tons is inevitable in the circumstances, and no one will complain very much about that.

Sir A. Braithwaite

A good many people will complain.

Mr. Robens

Power stations should be converted back to coal, just as we are cutting back opencast production. The Coal Board should be free to fight oil competitively in general industry. The Government should define the plan whereby indigenous coal is to fit into the fuel and power policy of the nation and provide a proper investment plan accordingly.

Lastly, we must not destroy the confidence of the miners in long-term employment in the industry. For as long as this nation lasts and we have coal reserves we shall never be safe unless we maximise the use of indigenous materials. For that purpose, we shall always need men. Men will go to industries which will provide them with jobs and security. On this side of the House, we accept the Motion moved by the Parliamentary Secretary, but in doing so, we have in mind the views which have been expressed from this Despatch Box and others which will, no doubt, be expressed during the course of the debate.

5.8 p.m.

Mr. Gerald Nabarro (Kidderminster)

This is the first time the House of Commons has debated, on a Statutory Instrument, the annual investment programme of the National Coal Board, or, indeed, the annual investment programme of any of the nationalised industries. The reason that we are debating it today, of course, is traceable back to the 10th May, 1956, when 26 of my hon. Friends and I voted against the Conservative Government on the matter of accountability of the nationalised industries, notably the National Coal Board.

On that occasion, the Second Reading of the Coal Industry Bill, as it then was. Her Majesty's Government came to the House to increase the borrowing powers of the industry from £350 million to £650 million. I said that that was too much to be granted under one Bill. I said that I wanted about half that amount to be granted, and, concurrently, I wanted an annual scrutiny of the industry's investment. The Government resisted that. They came only a short distance with my hon. Friends and myself, by saying that there would be a Statutory Instrument if or when the borrowing requirements of the Board exceeded by £75 million the borrowing of the preceding year. The financial year we are here discussing is the financial year of the nation, not of the National Coal Board. The Order deals with borrowing powers up to 31st March, 1959, and is of special significance on that account.

The situation is, I think, a little quixotic, in that my hon. Friend the Parliamentary Secretary voted with me on 10th May, 1956, and against the Government, in favour of a Statutory Instrument of this kind. My hon. Friend is honourable indeed. He has pledged himself in support of a particular line of policy, and it falls to him today to move the acceptance of this important Instrument.

I want to get down to plain language and fundamentals. This debate means something to me that, I think, is not perhaps shared by right hon. Members or hon. Members on either side of the House. The issue in my mind is whether the National Coal Board is to be run as a social welfare club or as a commercial organisation. If it is to be run as a social welfare club, Parliament must give it a subsidy. If it is not so to be run, Parliament must not give it a subsidy.

Mr. Robens

It does not subsidise it.

Mr. Nabarro

I did not say that it did. The right hon. Gentleman is a little more impetuous than usual.

What I am saying is that if the National Coal Board is to be regarded as a social welfare club, then we shall have to subsidise it. But Parliament has always so far decided that the Board should pay its way taking year with year. There seated below the Gangway is the right hon. Member for Easington (Mr. Shinwell), the progenitor of nationalised coal, who insisted from the inception that the National Coal Board should pay its way within the Statutes, taking year with year.

The right hon. Member for Easington was right. The Board is a commercial organisation and should pay its way, taking year with year. It follows, therefore—and I think this will be supported in all parts of the House—that if we accept the proposition that it should pay its way all necessary steps must now be enjoined to ensure that uneconomic production is eliminated, that the industry is made progressive, efficient and solvent, and that the taxpayers of the country should not be called upon to continue to finance losses which are inherent in any demand to Parliament for increased borrowing powers.

My right hon. Friend the Member for Hall Green (Mr. Aubrey Jones), who was then the Minister of Fuel and Power, said on 10th May, 1956: What happens when a nationalised undertaking increases its deficit? [HON. MEMBERS: "It puts up prices."]"— they were Tory Members who interpolated— It does not pass them on immediately; it carries on adding to its borrowing. I can see no justification for leaning on the assumption that the deficit is to continue indefinitely."—[OFFICIAL REPORT, 10th May. 1956; Vol. 552. c. 1440.] My right hon. Friend was verbose on that occasion. What he might have said in simple, homely terms was that he expected the industry to make a profit at an early date. But he put it the other way round. What is meant by "indefinitely"?

This all took place two years ago. The industry is still in deficit and is likely to go on making a deficit, or loss. As I understand it, the deficit is getting larger, not smaller. My right hon. Friend must really apply himself to this problem. Under the Statutory Instrument he is only dealing with finance up to 31st March next, but the losses are going to continue long after that date. How does he propose to finance this continuing deficit, and does he accept the fact that deficits are likely to continue after 31st March? Has he looked any further ahead than that date?

Surely, when my right hon. Friend comes to the House for these huge sums of taxpayers' money he has an obligation and a responsibility to tell the House and the taxpayers how the money is to be employed in the future and what are the prospects of the industry being made solvent.

My hon. Friend the Parliamentary Secretary was kind enough to say in the course of his speech that sometimes he agreed with me. It is notorious that more often than not he disagrees with me.

Mr. Robens

Not when he voted with the hon. Gentleman.

Mr. Nabarro

The right hon. Gentleman is exactly right, of course, but that was a matter of two and a half years ago.

As recently as 17th November last, an interesting exchange took place at Question Time. I want to put this financial matter into the perspective as I see it, because a lot of my hon. Friends see it in the same way. In the course of a supplementary question, I asked my hon. Friend the Parliamentary Secretary: Could my hon. Friend say whether the Board will continue to be in a position to finance losses from its own resources, having regard to the fact that the accummulated losses by the end of this calendar year will probably be of the order of £40 million, added to a figure of £60 million, being the value of the large quantities of unsold stocks, and as that represents in aggregation a figure of £100 million, can my hon. Friend say whether the Minister views with equanimity such a large sum of capital being sterilised? That is the issue before us today; £100 million is sterilised. The hon. Member for Neath (Mr. D. J. Williams), I think it is, is nodding his head. It is indubitably the fact that £100 million is sterilised. My hon. Friend the Parliamentary Secretary responded in the most scornful way. He said: I do not think we would view it with equanimity if it existed anywhere but in my hon. Friend's brain."—[OFFICIAL REPORT, 17th November, 1958; Vol. 595, c. 832.] That is very funny. My hon. Friend scored a debating point at Question Time. But the fact is, whether one sterilises capital or effects a diminution of the liquid resources of the National Coal Board, it is still £100 million—£40 million in respect of accumulated losses up to the end of this year, plus £60 million in stocks. It is £100 million which could have been applied, had the losses not been earned and had stocks not been necessary, to further capital investment.

I am a modest fellow. I quote from the pamphlet "The Future Labour Offers You". [HON. MEMBERS: "Hear, hear."] I am quoting from it in the context of the matter which we are discussing, for written in the document are these words: £70 million worth of unsold coal piled up at pitheads, in quarries and in dumps all over the country. As I say, I am a modest fellow. I put the figure at £60 million in respect of those stocks.

Sir I. Horobin

My hon. Friend and the Labour Party are wrong.

Mr. Nabarro

I am grateful to my hon. Friend. I will deal with him in one moment.

The Labour Party's manifesto calls it £70 million and I called it £60 million. Now my hon. Friend the Parliamentary Secretary says that we are both wrong. Let us have a look at the average pithead cost of coal. On the latest published figures, the average cost is £4 3s. 1½d. per ton—I commend this to my hon. Friend the Parliamentary Secretary; he said that I was wrong so perhaps he will listen to the figure—but most of the accumulated stocks are fines and low grade coal. It would not be fair to take them in at the average cost.

I have consulted experts in the matter within the National Coal Board, and they have told me that the proper figure at which to average these 18 million tons is £3 15s. per ton. Eighteen million times £3 15s. is £67.5 million. I put £60 million on the stocks and the Labour Party puts £70 million on them. The correct figure is £67.5 million. The Labour Party is a little closer to it than I am. I hope that before the debate is finished my hon. Friend will have the kindness and generosity to admit that the £100 million of sterilised capital, or, perhaps, a diminution of liquid financial resources, is a grave matter and one of the major considerations inherent in the Borrowing Order.

How are we to deal with the situation? I am not sure that the policy of the Government is entirely correct. There are bound to be differences of view on how we should deal with the situation. I readily concede to the right hon. Member for Blyth (Mr. Robens) that I have always warmly supported him in public debates, on the radio and in this House and elsewhere on two desiderata. First, we should mine the maximum economic tonnage of coal, and secondly, we should always use that coal as efficiently as possible. I do not think anybody would quarrel with those twin desiderata. We have all been trying to achieve them in the last few years.

From 1951 to 1957 we mined an annual average of 223 million tons of deep mined coal and opencast coal. This year, the total production of the two will be about 215 million tons. I think that it is correct to say that in 1959 production may be of the order of 209 million tons if we make no immediate changes. Having regard to all the present circumstances, coal production next year, and possibly in the ensuing two years, should be rationalised to 200 million tons annually, which is a good deal lower than the figure the Parliamentary Secretary suggested.

I would not make the reduction in deep mined coal. I would make it in opencast coal. This year opencast coal production is at a very high level. It is at the highest level in our history. My right hon. Friend, who is now Minister of Supply, will remember that on 10th May, 1956, on Second Reading of the Coal Industry Bill, he said that as far as could be envisaged 10 million tons of opencast coal per annum would be mined over the next ten years. That was his estimate. But this year we are mining 14 million tons—the highest level in our history. In view of the fact that, in the last five or six years, average opencast output has been of the order of 10 to 11 million tons a year, all that my hon. Friend is doing by saying that he proposes to take 3 million tons off opencast production is to revert to the position of 1956. That is not sensible.

We have had reasonably good weather and other favourable factors this year for opencast production, and that is why it has been at such a high level. I am downright on this matter. My hon. Friend the Member for Harrow, West (Sir A. Braithwaite) introduced opencast coal mining from America during the war, and he was right in doing it then. He has been concerned with opencast coal mining for many years past. He has a direct interest in it; I have not. I say emphatically and in downright fashion that if I had to make the decision I would do two things in opencast coal mining. Because it is responsible, the National Coal Board should say to opencast coal mining contractors, "We will guarantee to take from you 6 million tons of opencast coal in each of the seven years from 1959 to 1965, inclusive", thereby ensuring that those contractors know what commitments they can enter into in respect of their valuable machinery and plant.

My hon. Friend the Parliamentary Secretary said, I thought in quite the wrong context, that 12,000 persons are engaged in opencast coal mining. That is correct; but opencast coal mining is a civil engineering process. Most of those men could be diverted with 50 per cent. of the plant and be employed on building roads which, in the present coal situation, would be much better than carrying on at the present high level of opencast mining. I would reduce opencast coal mining from 14 million tons this year to 6 million tons, and I would give the contractors a seven-year guarantee to take 6 million tons per annum, all of which would avoid wholesale sackings from some of the deep mine pits.

Sir A. Braithwaite

I should like to say to my hon. Friend that if I were reviewing the position I would increase opencast coal mining by at least 100 per cent. and would endeavour to sell the 40 million tons of coal in the export market, thereby improving the position in the mines and the economic position of the whole country. If my hon. Friend's policy were pursued, the Coal Board would have lost in the last four years at least £30 million and my hon. Friend would have had to provide a bigger estimate than his present one.

Mr. Nabarro

My hon. Friend is not such a good businessman as I thought. His arithmetic is faulty. He said that there would be a loss of £30 million in four years had there been no opencast mining.

Sir A. Braithwaite

I did not.

Mr. Nabarro

What did my hon. Friend say then?

Sir A. Braithwaite

A profit of £9 million this year was made on opencast mining, which was the only profit shown in the National Coal Board's account. An average of over £7 million profit has been made each year for several years.

Mr. Nabarro

I must take up at once the error in my hon. Friend's argument. As I said, his arithmetic is faulty, and he should look at the profits in the accounts of, for example, the East Midlands Division or the Yorkshire Division.

Sir A. Braithwaite

I am talking about the National Coal Board as a whole, not divisions.

Mr. Nabarro

My hon. Friend should study these matters more closely. The fact is that a profit has been made in opencast mining, and if he had allowed me to continue my argument—he pressed me to give way—I would have dealt with the point about diminished profits from opencast mining if my suggestion of making a reduction to 6 million tons annually were followed. But the proper way to offset that loss surely is to shut down some of the most grossly uneconomic deep pits. The one should balance the other, and with a little intelligent handling and manipulation they will balance one another.

The right hon. Member for Blyth has often referred to the many pits which have been kept in production in the last five or seven years simply because of the pressing and overwhelming need to mine every possible ton of coal. It is those pits that now ought to be closed. I do not think the number need be as great as forty, which is the figure that Sir James Bowman suggests. But he ought to know because he is the Chairman of the National Coal Board and I am not. Whatever may be the number of uneconomic pits which should be shut down, I suggest that the most grossly uneconomic should be selected for closure. The avoidance of losses from those pits should balance the loss of profits arising from the substantial reduction of 8 million tons annually in open-cast mining which I contemplate. The one should balance the other without causing the National Coal Board further losses.

I want to say a word about the decline in coal consumption. The right hon. Member for Blyth, as a Labour politician, world say that most of the decline in consumption is due to the wicked economic and financial policy of the Tory Government.

Mr. Robens

Hear, hear.

Mr. Nabarro

That is Socialist Party polemics.

Mr. Arthur Palmer (Cleveland)

That is correct.

Mr. Nabarro

I am surprised that the hon. Member for Cleveland (Mr. Palmer) is interpolating that it is correct. It is a half truth or, perhaps, a one-third truth.

The right hon. Member for Blyth spoke of it as the stagnation of industrial production. My right hon. Friend the Paymaster-General is winding up this debate. He is an economist of no mean order. He will confirm that the general production of the country is approximately 4 per cent. below last year. That 4 per cent. drop in general production has certainly led to a decline of coal consumption of a few million tons per annum. It might be 4 million or 5 million tons in a full year directly attributable to a declined national production.

There is, however, also the issue that we have now spent years in this House, all of us on both sides, passing legislation to increase the efficiency with which fuel is used, thus diminishing consumption. Neither side has mentioned this. The clean air legislation is leading to large savings in fuels all over the country. We all intended that it should, but please do not let us forget to mention it today. It is the second contributory factor in the declined demand and consumption for coal. The first contributory factor is the 4 per cent. fall in national production and the second is the great increase in fuel efficiency. The third, however, is the most important and powerful—

Mr. Palmer

Is it not a fact that steel, another basic industry, is suffering in just the same way as the coal industry for the same reason: that is, a general fall in industrial productivity?

Mr. Nabarro

Yes, I took that into account in my 4 per cent. I will deal with steel presently, for I know of the hon. Member's special interest, in his Cleveland constituency in Yorkshire, in the steel industry.

The third factor is the powerful intervention of oil. Let us look at some of these figures, starting with steel. In 1958 compared with 1957, coal consumption in the steel industry dropped by 18.6 per cent.; oil consumption rose by 9.5 per cent. In engineering, coal consumption dropped by 1.5 per cent.; oil consumption rose by 30.6 per cent. In food, drink and tobacco, in 1958 as compared with 1957, coal consumption dropped by 7.7 per cent.; oil consumption rose by 35.5 per cent. In the chemical industry, coal consumption dropped by 15.2 per cent.; oil consumption rose by 23.6 per cent. I could go on through the whole gamut of industries. They all have one thing in common; coal consumption has dropped and oil consumption has risen. These figures are extracted from the Economist of 29th November, 1958, published four days ago. I think we would all accept them as correct.

While that process is going on, however, does anybody deny that my rationalisation of coal production at 200 million tons for 1959 forward for the next two or three years is not more realistic than the figure given by the Front Bench? This competition from oil is virulent I would not in any way deny it.

The policy of the Labour Party is misplaced. Its policy is to limit the use of oil. Does the right hon. Member for Blyth say "No"? Would he like to say that it is not the policy of the Labour Party?

Mr. Robens

No.

Mr. Nabarro

On 3rd October last, a resolution was moved by the President of the National Union of Mineworkers. calling for the adoption of a national fuel policy designed to secure the maximum use of indigenous fuel and the limiting of unnecessary fuel imports".

Mr. Robens

That is right.

Mr. Nabarro

I am not at present suggesting whether it is right or wrong; I will come to that. What I am saying is that that resolution was moved at the Labour Party Conference by the President of the National Union of Mineworkers. It called for limitation in imported fuels. There is only one imported fuel and that is oil.

Mr. Robens

We are still importing coal.

Mr. Nabarro

We are importing no coal this year.

Mr. Robens

We are importing coal this year—this week.

Mr. Nabarro

It might be the dreg ends of contracts, but the quantity is so infinitesimal as to be of no consequence. What I am saying is that the Labour Party has pledged itself to a policy of limiting fuel imports. There is at present only one major imported fuel and that is oil. One cannot do two things at one and the same time. We cannot limit oil imports without restricting consumer choice, and we cannot limit consumer choice while supporting maximum efficiency in industry, for only industry knows which fuel for which purpose is best, most efficient and cheapest in its own interests.

The one thing I want powerfully reinforced by my right hon. Friend the Paymaster-General is that nothing is contained in the present policy of Her Majesty's Government which would in any way restrict the full competition and the free interplay of forces between oil and coal.

Mr. Robens

Does the hon. Member subscribe to the view which I expressed that in those circumstances the Coal Board should be completely free to compete with oil?

Mr. Nabarro

I must confess that one of my hon. Friends behind me spoke of being puzzled by the right hon. Member. I was equally puzzled by the words he used. He said, "free the coal industry to compete with oil". I do not understand—I hope that the right hon. Gentleman will tell me some time—in what way coal is at present hampered in its competition with oil. I do not understand that. [Interruption.] The right hon. Member talks about petrol stations, but petrol does not compete with coal. Fuel oil competes with coal.

Mr. Robens

I was giving an indication that when the oil industry wants to enter a market, it will use all sorts of devious ways of undercutting its competitors. Today, the oil industry is using devious ways of undercutting coal. If the Coal Board were as free as the oil industry in relation to pricing policy, it could oust oil from many of the markets which oil possesses in this country.

Mr. Nabarro

I am an obtuse and simple-minded man and I do not understand this at all. The right hon. Gentleman was at one time Parliamentary Secretary to the Ministry of Fuel and Power. He knows as well as anybody in this Chamber that it is not possible to produce motor spirit and aviation spirit without producing in balanced quantities fuel oil and other products from the crude. The petrol companies are fully justified in penetrating to the utmost the market for the sale of aviation and motor spirit and balancing that against their production and sales of fuel oil. The more motor cars there are on our roads, the more motor spirit is wanted, and the more fuel oil that the oil companies must sell as an essential derivative from the crude, and sell it in direct competition with coal. [Interruption.] I am glad that the right hon. Member for Easington so warmly supports what I am saying.

Mr. E. Shinwell (Easington)

The last thing anyone would expect of me is that I should concede any support to the hon. Member. I am not, however, quarrelling with his suggestion that we cannot dispose of oil imports. I am not suggesting that for one moment, because I agree that crude oil must be converted into fuel oil and fuel oil into petrol and aviation spirit, but I do not believe that that is tackling the problem in the right way. The hon. Member for Kidderrninster (Mr. Nabarro) was quite right in some of his other observations, but on this matter I do not think that he is approaching a solution at all.

Mr. Nabarro

I am sorry the right hon. Gentleman should say that. I am really pained by that confession on his part. I thought he was about to rise to support me in condemning his right hon. Friend. My optimism was obviously misplaced.

What I am saying is that it is inescapable in the years ahead, if we are to have adequate motor and aviation spirit, that we produce balancing quantities of fuel oil as well, and that fuel oil will compete directly with coal. The drug on the market at the present time is the 18 million tons of undistributed coal stocks, of which 9 million tons is normal. We need not worry about that anyway. There is only a temporary excess of 9 million tons of fines and of small, low-grade coals. The way to sell it is the way any commercial business disposes of temporarily surplus and unwanted stocks. It marks them down to bargain basement prices and sells them off as fast as they can go. Then it will be up to the National Coal Board to see that it does not replace in its stocks material of a kind which has no ready sale.

Mr. Iorwerth Thomas (Rhondda, West)

Does the hon. Member remember the speech he made in this House on 14th July last, when he argued with the House—

Mr. Nabarro

Would the hon. Gentleman give me the reference for that speech? I have it here, of course.

Mr. Thomas

In the OFFICIAL REPORT, c. 909 of 14th July. I shall not bore the House by quoting the hon. Member's speech, but I want to know whether he is still of the same opinion he was then, when he was making the point that for strategical purposes and military purposes there should be a restriction on the quantities of oil coming from the Middle East.

Mr. Nabarro

I know my own speeches by heart. I cannot see any reference in c. 909 to strategical purposes requiring a limitation.

Mr. Thomas

Shall I quote the speech?

Mr. Nabarro

The hon. Gentleman says, c. 909 on 14th July, 1958. I cannot see any reference to what the hon. Gentleman says. No doubt he can explain.

Mr. Thomas

Perhaps the hon. Gentleman will allow me that freedom. The hon. Member had been discussing the question of surplus coal, and then he said: Iraq is in a state of revolution. Britain's principal ally in the Middle East is prostrate and her Prime Minister murdered. Nuri Al Said was here just eleven days ago. A substantial part of Britain's imported oil comes from Iraq. Suppose that source of supply is lost to us? The next step would be the grave imperilling of our supplies of fuel oil.… In view of this new political crisis in the Middle East, we would be ill advised to place increasing dependence on fuel oil. Rather would I have a policy here at home of continuing to mine the maximum tonnage of coal even if it means storing increasing quantities."—[OFFICIAL REPORT, 14th July, 1958; Vol. 591, c. 905.] I think that it is sufficiently clear to theHouse—[HON. MEMBERS: "Hear, hear."]—that the hon. Member was arguing for a limitation on importing oil from the Middle East, and having regard to the numbers of coups d'état and murders which have happened in the last six months, the point of view he expressed then is stronger today.

Mr. Nabarro

I think the quotation which the hon. Gentleman has made from my speech of 14th July, 1958, is an impeccable statement of fact. I spoke of maximum tonnage of coal and increasing stocks, if necessary. If the hon. Member will go back to that date and look up our stocks at that time he will find that the total stocks of coal then were of the order of—[HON. MEMBERS: ""Oh."] Let me finish this. They were of the order of 15 million tons, compared with 38 million today.

I go a great deal further than that. It may not be possible in the next year or two to avoid coal stocks rising still further. We may want all that coal within a year or two. [HON. MEMBERS: "Why sell it off?"] Why sell it off? Because certain parts of the coal stocks at present are very, very low in quality and are deteriorating. It is those I would get rid of. If we are to mine 200 million tons of coal a year, the rationalised figure I referred to, I would not regard it as unreasonable to have an aggregation of distributed and undistributed stocks of 50 million tons, which is one-quarter of a year's production. Any prudent business engaged in large-scale operations normally keeps about three months' stocks in hand at any one time, and 50 million tons is 12 million tons more than the 38 million tons which we have today. So I claim, in response to the hon. Gentleman's intervention, that there is nothing incompatible between what I then said five months ago and what I said today.

Finally, very large sums of money are now involved in the National Coal Board's investment programme. Nearly all this money is being provided by below-the-line surplus in the Budget. It is directly raised year by year from the taxpayers. I am not satisfied that there is adequate scrutiny over the expenditure of that money. I believe the time has now come in the case of the National Coal Board as in the case of expenditure by Government Departments, to have an Auditor and Comptroller-General who will go around these industries and bring to light in periodical reports the worst cases of extravagance which are evident to many members of the general public. No reply has ever been given by my right hon. Friend on this point. If we should do it with Government expenditure involving taxpayers' funds I see no reason at all why we should not do it in the nationalised industries which are similarly consuming year by year large sums of taxpayers' money.

I am not going to repeat my performance of 10th May, 1956 and vote against the Government tonight. I cannot amend by the rules of order of this House, the amount of money in this Order. I should be tempted to do that if I could. I cannot amend it. I can only support the Order or vote against the Order. As, quite clearly, the Coal Board in its present financial dilemma must have more money to finance stocks and must keep as many skilled miners in employment as it possibly can, I believe there are thus powerful and valid reasons for supporting the Order. As this money only provides for a period up to 31st March, 1959, only a matter of four months hence, we shall have to deal with another of these orders within the next six or eight months, and I may take a very different attitude to my attitude today unless my right hon. Friend persuades the members of the National Coal Board to put their house in good order financially, during the next few months.

5.48 p.m.

Mr. John Timmons (Bothwell)

I do not propose to follow the speech of the hon. Member for Kidderminster (Mr. Nabarro), as I think that hon. Members are becoming dizzy with statistics. I propose to deal with various other aspects of the matter, aspects which will affect seriously the everyday life of the people of Scotland.

I think that right hon. and hon. Members will very well remember that I never did find myself in entire agreement with the National Coal Board. Nevertheless, I have to pay a tribute to the Board for the tasks that it has carried out since vesting day. It has done a great deal. It has carried out that job. With the co-operation of the Miners' Union and the men employed in the industry it has reorganised the industry to meet the needs of the nation at a most difficult period in our history.

The Coal Board took over the industry in 1947. It was an industry which was obsolescent and running down to its lowest possible level of production. The Board also had to carry huge financial burdens which never should have been placed upon it. The compensation claimed against the Board, on behalf of the colliery owners, was £338 million and the interest charges are in the region of £13 or £14 million annually. The Board has made a capital repayment of £21 million since 1947, and that does not take into account the loss of £70 million which it has had to meet on imported coal.

I am particularly interested in the Scottish coalfield. I have good reason to be. I have had cause to study the compensation payments made to the Scottish coal owners. Many of my hon. Friends who represent Scottish constituencies will possibly remember that early in 1947 the Scottish Regional Coal Board summoned us to Edinburgh to tell us how many pits it was intended to close within a matter of months. The Board has closed 70 pits out of a total of 196 pits in Scotland, and most of these were closed within two years of vesting day.

The reasons given for the closures were, first, that the pits were uneconomic and, secondly, that their reserves of coal had been exhausted. If these pits were uneconomic, and the reserves of many of them had been exhausted, why should the Board continue to pay interest charges to coal owners for something from which we receive no value? Like all my fellow Scots, I like to have value for money. People are not getting value for the obsolescent mines and the mines which have gone out of existence in Scotland.

The time is long overdue for a general review of the compensation payments which the Coal Board must continue to make. I think that everyone will agree that if the capital repayments, interest charges and subsidy payments made by the Board were disregarded, it would be found that, instead of running at a loss, the Board has been making fairly substantial profits. During the past year I have watched the general trend very carefully. The new situation in which the Board, the industry and the miners find themselves is nothing strange to me. I have foreseen this situation, and I had thought that it would have come about long before now.

Apart from the trade recession with which we have been faced, I firmly believe that the policy of the Government, which is causing stagnation in industry has aggravated to a great extent the present crisis in the coalfields. Steel production is down, as can be plainly seen in the industrial areas of Lanarkshire and Western Scotland. Heavy engineering production has gone down, and many other industries have suffered considerably as a result of the Government's financial and economic policies. The plans of the Central Electricity Authority to use fuel oil is part of this same policy. Is it the Government's policy to continue to encourage the use of oil fuels and to restrict the use of solid fuels? The miners and those who live in the mining communities are entitled to have that question answered. The Government should make up their mind to adopt a national fuel policy.

Last year, in a debate on the coal industry, the Paymaster-General said that Britain would require all the coal that the industry could provide. Quite apart from the contributions which industrial atomic energy would offer, we should have to bring in oil to bridge the gap. Apparently, it was intended that only atomic energy and oil should bridge the gap between demand and supply.

I understand that the Coal Board's proposals for further closures in the mining industry will affect Scotland far more than any other part of the British coalfield. My own county, Lanark, is already one of the worst affected, and it will be one of the worst affected again when further closures are effected. We shall have few, if any, pits left in our coalfield if the Board's new reorganisation plans are put into effect. All this is coming at a time when unemployment in Lanarkshire is standing at 9 per cent. or 10 per cent. The Parliamentary Secretary has said that two-thirds of the redundant miners will be absorbed inside the industry, but that just will not apply to Lanarkshire. Pits are closing down in the constituency of my hon. Friend the Member for Lanarkshire, North (Miss Herbison) as well as in mine.

I know the conditions in which these people are living in Lanarkshire. It is not easy to ask a miner to transfer to another area when members of his family are being educated and employed in a certain district. I have resisted this policy on the part of the Board ever since it began to transfer miners from Lanarkshire and send them to Fife and Midlothian. I notice that 20 mines are to be closed and among them are mines in the Fife coalfield. Therefore, there will be a number of redundant miners in Fife, and any vacancies which may occur in the better areas of Fife will be filled by the redudant miners already in the area. The same applies in The Lothians and in Ayrshire.

I cannot, therefore, see redundant miners moving from Lanarkshire into any of those areas. Incidentally, men employed in some of the pits on the border of Lanarkshire travel 20 miles to and from work each day. This adds at least two hours to their working day. These men cannot be absorbed into the industry within the county.

What are the intentions of the Government? Yesterday, from Questions put in the House to the Parliamentary Secretary to the Board of Trade, we heard about factories standing empty, and attempts to get new industries for the Development Areas. The general impression that the Front Bench gave me was that the Government were far too complacent. The figures I have here are alarming. The total manpower in the 20 pits that are to be closed in Scotland represents almost 50 per cent. of the total of 12,000, of whom 5,630 are to be thrown out of work. This leaves Scotland with half the redundant manpower involved in the reorganisation scheme of the Coal Board. That is serious, and since we have the highest unemployment figures throughout the United Kingdom, I am entitled to ask the Government what they will do about it.

We have had a bitter experience in the past, but it is true that a certain amount of progress was made in absorbing those miners who were made redundant years ago. Many of those men went into new industries which came to the West of Scotland, some from the South, some from the United States. Since then, there has been stagnation. I know the difficulties with which we were confronted. I myself made a great effort to try to induce industrialists to come to the West of Scotland, but because of the lack of principal raw materials, strip steel and sheet steel, they went to other parts of Europe.

I was glad to learn from the statement of the Prime Minister, a fortnight ago, that the Government have decided to give the Lanarkshire area a strip and sheet mill. During that statement I was sitting here thinking that it was exactly four years ago, during a debate on Scottish affairs, that I appealed to the Government to realise that a strip and sheet mill was needed to attract new industries to this area. I appealed to them then to do something about it, but nothing was done. Had this decision been taken then, that strip mill would have been in production today, and we might have had a greater opportunity of attracting new industries to the West of Scotland. However, we must be thankful. We hope that progress will be made, and made rapidly, with the development of the new mill.

Finally, may I ask the Government this question: should the country find itself in another trade boom, with a heavy demand for coal, what will be the position? Have we the necessary manpower on which we can rely to produce that coal? I say that we have not and that we shall not be able to get it, for the following reason. In the mining industry today, there are 187,960 men over 50 and 57,033 men over 60. Roughly, that is a total of 245,000 men who will be going out of the industry shortly and there has been no recruitment to it during the past few years.

Does the Coal Board believe that we shall attract young men to an industry which gives no guarantee of continuity of employment and no guarantee for the future? If the Government or the Coal Board believe that they will get young men to go into such an industry, they are making a big mistake and we shall find ourselves again in the position in which we were during 1945, 1946 and 1947. with a shortage of manpower.

That is the situation as I see it. I have asked the Government a number of questions to which I am entitled to receive answers, because our people who are becoming redundant in the coalfields of Scotland, particularly in Lanarkshire, and their dependants are awaiting an answer. Must they queue at the employment exchanges, where there are already large queues? Must they go to the National Assistance Board to get supplementation to enable them to live? These are all problems to which our people want to know the answers. As I see the situation, their fate lies in the hands of the Government, and we would like the Government to tell us what the future holds for redundant miners in the mining areas.

6.7 p.m.

Colonel Richard H. Glyn (Dorset, North)

I feel that the hon. Member for Bothwell (Mr. Timmons) has put forward very clearly the difficulties of those miners and constituents of his who may suffer as a result of the redundancy which may be coming, and in some cases has come. I wish to examine how we have got into this position. It seems to me that we are having a fuel crisis in reverse. The National Coal Board is saddled with a large amount of low grade coal which it is not in a position to sell because, frankly, so we have been told, it has cost between £60 million and £70 million. I think it is right to say that it could not be sold for more than perhaps one-half or two-thirds of that amount.

It has been said in this debate that the coal is worth £60 million or £70 million. I think that to be a mistake because any article is worth only what it will fetch and not what it cost. Many hon. Members will know the story of the rich woman who went to a picture sale. She brought home a picture which her husband did not like, and she said, "This picture is worth £200". He replied, "I do not think so." She said, "Yes, it must be, because I have just paid £200 for it." However, it was not worth £200, at all events not in the open market. I think that is the position of this coal which it is said has cost £60 million or £70 million; it is not worth that amount.

I welcome one thing in the announcements made today, namely, the cut in opencast working. I join with my hon. Friend the Member for Kidderminster (Mr. Nabarro) in saying that I could wish this cut had been heavier. I think that would be a proper step. Of course, one cannot judge these things without having all the official statistics and without having the full information before one, but I would have liked to see a bigger cut in opencast mining.

It seems to me to be essential that the problem should be looked on as a national one. Our coal mining industry is nationalised and it is vital to us all that we should have an efficient coal mining industry in Britain. By tradition, this nation is a great user of coal. Before the war, coal was our principal source of power for nearly all industries, and for hundreds of years it was a traditional source of heat for warmth and cooking for the household. Since the war this has to some extent changed. First, the shortage of coal led to an official drive to substitute other fuels. We had the coal-oil conversion scheme and other conversion schemes. The quality of some of the fuel supplied offended manufacturers and housewives while the relatively high price of the coal enabled other fuels to compete. That is how oil really began to get the hold which it at present has in many places.

All these dangers were foreseen, and the National Union of Mineworkers was warned of them at the very beginning of nationalisation by the right hon. Member for Leeds, South (Mr. Gaitskell) who made a speech in July, 1948—it is very relevant today—to delegates of the union at Whitley Bay. He warned them fairly and squarely that the man in the street, who is directly involved—the money that we are considering today will, in the long run, come from the man in the street—would judge the nationalised coal industry by six tests.

Dealing with the first test, the right hon. Member said: First of all, the man in the street expects that the nationalised coal industry should produce enough coal for the rest of our industry. Unfortunately, that did not happen. There was a need to import expensive foreign coal to make up for the coal which our mining industry did not provide. The expense of importing that foreign coal has bedevilled the National Coal Board's finances ever since and contributed substantially to the difficulties that it is now in.

It is worth remembering that before the war our imports of coal were absolutely negligible. By 1948 they were nine times the pre-war tonnage, by 1951 130 times the pre-war figure, and by 1955 1,200 times the pre-war tonnage. Those enormous imports of coal, which at that time were necessary, have gone a long way towards producing the present unfortunate position.

The right hon. Gentleman went on to say in his warning to the industry: Secondly, I think the ordinary man-in-the-street expects that the coal industry should meet its export commitments, steadily expanding sales of coal abroad until our customers' needs are met. It is within the knowledge of the House that that simply did not happen. Our exports before the war were between 30 and 40 million tons. In 1949 they were 14 million tons, and they went down in the next two years, in 1951 they were under 8 million tons and since 1951 we have done a little better but never more than 40 per cent. of pre-war. If we had held our pre-war markets the present position might have been very different.

The right hon. Gentleman continued: Thirdly, the man in the street expects that there should be a progressive improvement in the supply of coal for domestic consumers so that before long they, too, will be able to get all the coal they require. It took ten years to get away from coal rationing.

The fourth test was: The man in the street expects everything possible should be done to get the dirt out of coal, and by 'dirt' I mean the same thing as he does, not just dirt but stone, rock and slate as well. The housewife would say that that has not been done.

The right hon. Gentleman went on: Fifthly, the man in the street expects the industry to pay its way financially so that if there are losses in one year they must be paid off by profits in other years. We all know that that simply has not happened.

The last test is perhaps one of the most significant. The right hon. Gentleman went on: Finally, the ordinary man does not expect prices to rise much more, if at all. On the contrary, as technical improvements take place in the pits, he expects that part at least of the benefits from these improvements should go in the form of reduced prices to consumers. At the time the right hon. Gentleman was speaking the cost of pit-head coal was about two and three-quarter times the 1938 cost, and since then it has more than doubled, being nearly six times the 1938 figure.

I believe this increase in cost is a big factor in the sales resistance to coal both among industrialists, who are much the most important on a national scale, and among housewives. It is because the price has continued to go up that coal is no longer easily able to compete against other fuels. I take the view—it is a gloomy one—that the nationalised coal industry has failed every one of those six tests which the right hon. Gentleman put forward ten years ago. He bowled six balls by delayed action and every one has knocked out the Board's middle stump.

Mr. Bernard Taylor (Mansfield)

While on the question of the price of the commodity, will the hon. and gallant Gentleman tell the House what the average pithead price for a ton of coal is at the moment and the price at which it is retailed to the ordinary domestic consumer?

Colonel Glyn

That is a very interesting question. The hon. Gentleman must tell me what area he has in mind because prices vary. The News Chronicle today published a pit-head price of £4 5s. per ton, and I think that is right within a shilling or two. The point of the hon. Gentleman's intervention is that the retail price is too high and that it should not be as high as it is. That is something which very few people will seriously dispute. It is the pit-head price of which I speak as having more than doubled since the right hon. Member for Leeds. South said that it must not increase and should go down. It has more than doubled since then because the pit-head price then was £2 Is. per ton and it is now £4 5s.

Mr. E. Fernyhough (Jarrow)

Can the hon. and gallant Gentleman tell me how the increase in the price of coal compares with the increase in the price of potatoes?

Colonel Glyn

If the hon. Gentleman really wants to go into the facts of agricultural life, I should be delighted to give him a number of figures in that respect. He must take average current prices against the pre-war prices, and in making that comparison he will find that potatoes are not a happy commodity for him to choose.

The point is that the right hon. Member for Leeds, South warned the National Union of Mineworkers in July, 1948, what would happen if the price of coal went up very much more and pointed out that it ought to come down, the price of coal then being nearly three times the pre-war price. But instead of the price being held steady or even being brought down, it has been allowed to double itself. I should be delighted to talk about agricultural subjects, but I should not be in order in doing so in this debate.

Mr. Emrys Hughes

Surely an analogy between agriculture and coal is in order. The hon. and gallant Gentleman and I are both interested in agriculture. Does he not think that agricultural prices have also gone up, and would he argue that the agricultural subsidies should not be paid because agricultural prices have gone up?

Colonel Glyn

The facts of agricultural life are complicated. This is not a debate in which one can fully deploy the facts of agricultural life. Although I am willing to do so, I might be drawn into a great number of issues which would be sadly out of order, but I am very willing to meet the hon. Gentleman in the Library with reference books for two and coffee for one and we will see how far we can get with the subject. I am not ashamed of agricultural prices, which can be defended, but I am now pointing out that, instead of being held steady and if possible reduced, as the right hon. Member for Leeds, South said should happen—and he was warning the delegates of the National Union of Mineworkers—the price of pithead coal has rather more than doubled.

Mr. T. Brown

The hon. and gallant Member has quoted increases in pithead prices. Will he tell the House the percentage increases since 1947 in the cost of materials used in the pits? Is he aware that some of those increases have been 155 per cent. and have had to be met out of the price of coal? Is not that one of the reasons why the pit-head price has had to be increased?

Colonel Glyn

I appreciate the point of the hon. Member's intervention, but it does not in any way detract from my argument. The right hon. Member for Leeds, South was warning the delegates of the National Union of Mineworkers of the consequences of failing any of those six tests, and, on the figures I have given to the House, all those tests have been failed. That is the important point.

It is the duty of the Government to regard this very important industry from the national point of view. It is a nationalised industry and thus the business of the nation. It must be run in the best interests of the nation as a whole. It must be made efficient, and by that I mean that it must be able to sell its products at an economic price. That is absolutely essential.

I am a little surprised by the criticism which seems to be seeping through from hon. Members opposite. It will be within the memory of hon. Members that the nationalisation of this important industry was put through at a rather fast pace when hon. Members opposite formed the Government. Among my notes I have an interesting quotation. It will be remembered that in the 1945 General Election there was great talk of a blueprint for the nationalisation of the coal mines. In a very revealing and frank statement, the right hon. Member for Easington (Mr. Shinwell)—and I regret that he is no longer in his place—said in page 172 of his book "Conflict Without Malice": For the whole of my political life I have listened to the party speakers advocating State ownership and control of the coal mines and I have myself spoken of it as the primary task once the Labour Party was in power. I believed, as other members had, that in the Party archives a blue-print was ready. Now, as Minister of Fuel and Power, I found that nothing practical and tangible existed. There were some pamphlets, some memoranda produced for private circulation, and nothing else. That is how nationalisation was done. It was put through hurriedly and without due preparation. There was no blueprint. What the right hon. Member for Easington found on his desk was not a blue-print, but a pink smudge. From that he had to do his best. The present position has grown from that position. The tests put forward by the right hon. Member for Leeds, South have all failed. Now the Government are faced with the difficult but necessary task of putting this vital industry into shape.

6.24 p.m.

Miss Jennie Lee (Cannock)

One would have hoped that by now it would be possible to discuss such issues as the selling price of coal and the quality and grading of coal with a certain amount of common knowledge in all parts of the House, and with some measure of fair play in the arguments. At one time hon. Members opposite resisted the nationalisation of the coal mining industry, but that is a long time ago. I do not think that any of them would now advocate that coal should again return to the realm of private enterprise. There is not the slightest likelihood of any take-over bids for the coal mines of Great Britain.

When we last had a debate on the Coal Board's affairs, I was interested to hear hon. Members opposite beginning to get down to the realities of the issues. Instead of having a knockabout turn from the hon. Member for Kidderminster (Mr. Nabarro), about stones in coal and lazy miners, we applied ourselves to the problem: how was it possible for a compact, highly exposed industrial community like Great Britain, so sensitively dependent on its export trade, to run its major industries if some products—steel products and those of I.C.I., for instance—could command an economic price, while coal was sold at a social price.

That is the essence of the issue. How absurd it is, remembering this, for us to be treated to the kind of homily which we have had from several hon. Members opposite who have talked about coal not paying. In the last ten years, there have been at least ten occasions when the Government and not the Coal Board have decided the price of coal. Those decisions have been made while coal still commanded a seller's market. I go back to 1947 and include events which took place during a Labour Government as well as during Conservative Governments.

On the first occasion when the Coal Board asked that the price of its commodity should be raised, it was refused. There were four occasions on which it asked for an increase to be considered, but instead of getting the increase for which it asked, it was given less than it asked. I do not want to weary the House with too many details, but I have every date in my possession at this moment and can give any hon. Member who wants it specific information.

There were at least four occasions when the Coal Board asked for an upward adjustment and was given not all it asked for and not when it asked. There was more than a suspicion of dirty politics once or twice in the adjustment of the date of increases. What nonsense it is for the House of Commons at this time to talk about whether coal pays! Whether it has paid has depended on the price it commanded back through the last seven, eight or nine years, and that price was determined by the Government.

If the price over those years had been higher, instead of showing a deficit it would have been showing a profit and would have been able to compare fairly with other industries when it came to providing money for capital development. The first thing I want to say to my farmer friend opposite who has just spoken is that no one can make a profit by selling coal, or potatoes or turnips if the price of the commodity is fixed by the Government, and if the Government deliberately fix that price below what the market would bear.

Successive Governments, Conservative and Labour, have behaved in that way because when we are dealing with a nationalised industry we have a different morality from when we are dealing with private industry. Once an industry is nationalised, no one wants it to profiteer. Everyone wants it to give good service, and efficiently to produce at the minimum price, not the maximum, while also making allowance for development capital. Our post-war Governments did not want to make a great profit out of coal.

The hon. and gallant Member for Dorset, North (Colonel Glyn) knows a great deal about agriculture. He will forgive me if I say that he does not seem to know very much about mining. He knows that there are many obsolete farms, and many small farmers who cannot make a go of it, and that successive Governments have carried out a policy, which they claim to be in the national interests, of providing money for agriculture to build up its resources. I have never heard of any hon. Member opposite who considered it a reproach to the farmer, the agricultural labourer or the farming industry in general that millions of pounds of public money have been shovelled into the industry. Why is there one morality for farming and another for coal mining?

Mr. J. E. B. Hill (Norfolk, South)

Surely agriculture differs from coal mining in that the latter is an extractive industry and the former a productive one. Also, in the case of agriculture we are supporting a home industry against large world surpluses which may temporarily be available. That is not the case with the coal industry. Coal imports have been very expensive.

Miss Lee

I am afraid that the truth is the exact opposite. We can buy cheaper food from abroad than we can grow at home, but we cannot buy cheaper coal from abroad. There is no substance in the hon. Member's point.

I want to talk as simply as I can, and I apologise to those of my colleagues who are intimately acquainted with this problem if they feel that I talk too simply. But I do not apologise to those hon. Members opposite who, year after year, bring out points of prejudice in these debates and do not attempt to give the public the true facts of the situation. I have dealt fully enough with the fact that it is the Government who decide the selling price of coal and who, therefore, during all these years of a seller's market, have decided whether the industry shall make a large or a small profit, or no profit at all.

Just as, under the beneficent rule of the party opposite in the years before the war, many of our farms were allowed to get into a derelict condition, so were our coal mines. It ought not to be necessary to make these primitive and elementary points, but. I repeat, I must make them for the sake of some hon. Members opposite.

One reason why private enterprise has no wish to take the coal industry back again is that it was allowed to get into such a derelict condition that not sufficient private capital was available to put it on its feet again. We had reached the stage where there were no easy profits in coal. Therefore, the nation had to come to the rescue. When hon. Members complain about the price of coal they should bear in mind, as was pointed out by my hon. Friend the Member for Ince (Mr. T. Brown) and others, the expenditure that has been necessary to bring many of our obsolete coal pits up to date. I should have thought that that was fairly obvious, and that hon. Members opposite would be taking a little more pride than they are in some of the figures given today, which show how immensely greater is the output per man shift in many of the collieries which are now being modernised.

I now turn to the haunting sadness of the fact that, once again, the colliery towns are frightened by the shadow of unemployment. I grew up in the Scottish coalfields; I have certain associations with the Welsh coalfields, and I am fortunate enough to be the Member of Parliament for a Midlands coalfield constituency, where the coalfield is expanding, and we do not have the problem of derelict pits to the extent that that exists in Scotland and South Wales. The Parliamentary Secretary tells us that on his reckoning, by closing down the least efficient of the pits 4,000 miners will be put out of work. That is a very large figure in terms of human suffering, but a very small one in terms of the resources required to provide the men concerned with alternative employment.

Hon. Members on this side of the House have never stated that it is the responsibility of a Government to promise any man or woman that he or she can go on forever with the same job. As Socialists we do not believe that. But we have said that it is the Government's responsibility to see that a job is available. Miners will not man the barricades in order to keep obsolete pits open if they can be provided with satisfactory alternative work.

There are two ways of tackling the problem of providing this work. One is to bring light industry right to the points where unemployment exists; the other is to see that there is an adequate transport system in the area, so that the men who are caught in a village where no work is available can travel in comfort to a new place of work even though it may be five, ten, fifteen or twenty miles away. In terms of social furniture this would mean far less expense than uprooting them, for they would still have their homes and schools, and all their normal community associations.

The Chancellor's predecessor came to the House in an hysterical condition more than a year ago and told us that we had to cut back on every front. Nobody would question the fact that, last year, we produced roughly £1,500 million worth of goods less than we could have produced if we had been using our coal, steel and other resources to the maximum. Why ask a Government who are responsible for economic turpitude on that scale to deal with the problem of 3,000 or 4,000 miners? It is too much for them.

The whole background of this debate is simple. We do not have a surplus of coal. Would anyone say, in the month of December—when we all have personal knowledge of families who have not enough coal to burn—that we have surplus coal in this country? We could use up our surplus overnight if we had a Labour Government. One way of doing this would be to carry out the Labour Party's pledge to the old-age pensioners straight away. Many of them could use more coal than they are using now. The answer in respect of the coal industry is the answer for British industry as a whole: we must have a Government with a planned economy, and that planned economy cannot stop at coal.

Sir I. Horobin

To be fair, not a single ton of these undistributed surplus stocks of coal could be burned in any old-age pensioner's grate; it is all smalls.

Miss Lee

I understood a previous hon. Member to say that the surplus coal consisted of two categories; about 50 per cent. of it was the lowest quality coal but about half was coal which could be consumed domestically in one form or another.

Sir L Horobin

I am not making any debating point. This surplus is all smalls and fines. It cannot be used, or no appreciable proportion of it could be used, in domestic grates. Sooner or later, and I think sooner rather than later, it will be burnt in its proper place, which is in the power stations of this country.

Mr. William Blyton (Houghtonle Spring)

The Minister cannot have seen the Durham coalfield, where there is any amount of good class coal which could be used in any grate.

Miss Lee

If the hon. Gentleman had seen some of the coal which we picked up and used in 1926, he would be astonished at what can be burnt. I do not want to exaggerate and to talk about millions, but certainly there are hundreds of thousands of families in this country who, if they had just a little extra purchasing power, would buy a little extra warmth, an electric fire may be. That is one way of absorbing this inferior coal. It is all a matter of social planning and caring about such human needs.

I wish to attempt to answer the question, that has been asked today repeatedly, how can we bring down the price of coal? To begin with, I am disturbed about what is being done by some coal merchants. The Coal Board and the Government advise the price at which grades of coal should be sold. An investigation into this situation is urgently needed. We have every reason to know that there are coal merchants who mix the various grades of coal and sell it at top price. If the Government are concerned about the coal industry, about the good name of the Coal Board and the reputation of our miners, they should set about rescuing the industry from this situation. Nothing causes more heartache among housewives than to find that they have paid the top price for top-grade coal and have received something which is nothing like the commodity which they thought they were purchasing. I suggest that we should look carefully into everything that happens from the moment the coal leaves the pit surface until it has been burned in the industrial furnaces or at domestic firesides. In that way, we should discover means of closing a number of gaps.

Coal cannot be produced without the use of steel, and too high a price has been charged for the steel used in the coal industry. We have had an expansionist policy for coal. The Government, in their wisdom, have been encouraging coal miners to go all out. They have told the miners that they would never be unemployed again, and that there should be maximum production and minimum prices.

The Steel Board has been very "canny". We are in trouble, and unless the Government keep up a sufficient margin of unemployment, we shall be in greater trouble; because our steel production is not keeping pace with what ought to be our industrial needs in the next year or two. Why is it that almost every time the Coal Board has asked for an upward adjustment of prices the Government have refused its application? Why have the Coal Board's finances been cut and why have there been repeated postponements? Why, when the steel industry has asked for an upward adjustment in prices, has it been given generous consideration by the Government? Why is that? I am making allowance for the complication resulting from the fact that the steel industry is partly publicly and partly privately-owned, but it has been given generous consideration.

If we look up the figures, what do we find? We find that the steel industry is sharply over-charging the coal industry. We find, for instance, that the Steel Company of Wales made £19 million in 1957 against £14 million in 1956, and that its dividend money went up from £589,000 to £1,380,000. That is too much. It is profiteering. I suggest that the reason why hon. Members opposite are so keen to keep the steel industry in private hands is that they, somehow, have an arrangement—although the industry is semi-publicly owned—by which they can get the prices they want for steel and Government sanction for upward adjustments in the price of steel which cannot be obtained in the case of coal.

The United Steel Company made £20,470,000 in 1957 against a figure of £14,700.000 in 1956 and the dividend went up from 8½ per cent. to 11½ per cent. Colville's made £11,861,000 in 1957, which was £3 million more than in 1956, and the dividend went up from 10 per cent. to 13 per cent. South Durham Steel made £3,760,000 last year against £2,120,000 in 1956 and the dividend went up from 7½ per cent. to per cent. This represents only a small corner of what is going on.

If Great Britain is to keep the place that she should occupy in the world; if she is to play the game, not by some, but by all of her citizens, it is intolerable that we should have an economic price for some commodities and a social price for others. I think it was the hon. Member for Kidderminster—I apologise if it was not him this time, but he is usually the whipping boy—who said that we must have another investigation and make quite certain that we are getting our money's worth.

It is not so long ago that Sir Alexander Fleck, the leader of I.C.I., acted as chairman of a board of investigation into the coal industry. Sir Alexander Fleck is a high priest of private industry. He does not believe in nationalisation and economic planning. On the grounds of elementary fair play, I suggest that it is about time we had a board to investigate the affairs of I.C.I., and a great many other large monopolies in this country, which we have every reason to believe are over-charging.

Mr. Hamilton

Let the leader be a trade union leader.

Miss Lee

Certainly, and let us pick a good one, someone who is just as keen on nationalisation and economic planning and the economic good of our whole community as is Sir Alexander Fleck on keeping the profitable sections of British industry in private hands.

If we could make that kind of approach, we might begin to inject a little sense into these matters. We are living in a strange, transitional society, in an in-between world. There is one law for the nationalised industry and another for private industry. It is all very well for the State to have to take over obsolete rolling stock and railways and mines, and to be constantly criticised, but all the nice juicy plums from which profit can still be easily extracted have to remain in the hands of private enterprise. That is the kind of world in which hon. Members opposite believe; it is the kind of world which we on these benches detest, and that we will do all in our power to change.

6.48 p.m.

Colonel C. G. Lancaster (South Fylde)

The hon. Member for Cannock (Miss Lee) speaks with charm and sincerity about an industry with which she has been associated for many years. I do not agree with all that the hon. Lady says, but I propose to give her support on one point to which I will refer later in my speech. I wish, first, to get back to the basic problem of the situation we are discussing. It is, of course, the change-over from the conditions of a sellers' market to that of a buyers' market, with all the problems that that involves.

I recognise that the Coal Board has tackled this matter with the best of its means, both in relation to costs and regarding more sensible proportions of the large and small coal which it is producing. Having said that, I must also say a word of criticism. Sellers' and buyers' markets are part and parcel of the normal economic laws. They are bound to happen from time to time. No prudent board of management, whether nationalised or otherwise, can assume that it will live continuously in a world of sellers' markets. If we look back over the years, it is surprising to see how all the plans and proposals of the Coal Board seem to be based on the assumption that a sellers' market will continue for ever and a day.

Of course, that could not happen. Indeed, eighteen months ago it was becoming obvious, first in the drop of world commodity prices, and then in a recession in this country and elsewhere, that the end of a sellers' market had been reached and we were in for a period—I hope not a very long period, but certainly a period —of a buyers' market. It is only prudent, when we anticipate such a situation, to take such steps as are possible to cushion the economy or the industry against this possibility, but what, in fact, happened in the industry? It was production at any price, and costs rose.

There was the introduction of the type of power loading machinery which was most wasteful of the coal itself, an immense increase in shot firing, the introduction of skip winding and vertical chutes, all of which were making for the degradation of the article and were going to create immense difficulties when the change over had to occur. Now the Coal Board is faced with these difficulties.

Mr. R. Moss (Meriden)

Is it not true that those difficulties were anticipated to occur in the late 1960s and the fact that they have to be faced now has deceived both the Coal Board and the Government?

Colonel Lancaster

I do not quite follow that point. Until we emerged into a buyers' market few, if any, of those steps were taken. That is one of the main reasons why we find ourselves in the particular difficulties we have today. During this period there was an almost total disregard of export markets. The effect of these things has been twofold. First, there has been the building up of stocks. Here I want to try to get the problem into reasonable proportions. We need have no worry over the distributed stocks. They are coals for which there is already a known sale. In undistributed stocks there seems to be some variation, certainly in opinion and in regard to facts.

In this, I find myself on the side of the hon. Lady the Member for Cannock. I was discussing this matter today with members of the Coal Merchants' Federation. It gave as its opinion that 50 per cent. of the stocks were, as the hon. Lady said, untreated smalls, fines, and the like, and the other 50 per cent. were the normal range of coals, although they did not include the larger sizes. I think that that is probably nearer the mark. I cannot believe that these men, who have spent their working lives in the industry, can be very wide of the mark.

We have to look at those stocks with a great deal of care. I do not think that the 50 per cent., about 9 million tons, of untreated smalls will lose their quality, which, in the first instance, is not very high, but nevertheless, they will represent a very real problem of sales. There are only a certain number of directions in which those untreated small can be sold. First, and by far the largest consumer is the electrical industry, which already has its commitments before it for a long period ahead, and a certain range of the bigger industries which pulverise coal and burn it under water tube boilers.

The market for that is small and I see no immediate prospect of any of that coal going, short of dispensing with it at cut prices in the export market. I do not think that that is necessarily a very wise thing to do, but it would ease the burden on the requirement for moneys, although it would have a very injurious effect on the trading accounts of the coal industry.

As to the other 50 per cent.—I am still of the opinion that it is not confined to untreated smalls—there must be a considerable degree of degradation and loss occurring. There have been a number of articles recently in technical papers seeking to claim that the loss in calorific values and the like is of an insignificant nature. That goes against all experience I have had. I believe that, from the process of oxidation, combustion, fragmentation and the like, it will be found that when these coals are brought up very real loss will have occurred. I am wondering how much longer the auditors to the Coal Board can go on accepting these stocks at the prices at which they were originally put down. I know that there are considerable allowances being made for various matters in regard to laying this coal down and taking it up and to the loss of revenue, and so on, but on top of that I believe that there are very real losses occurring. When the time comes it will be found when taking up 50 per cent. of the stocks which have accumulated a big gap will appear in the accounts of the industry for that reason.

I want for a moment to deal with the debate we had in July, which is the annual review of the previous year's working of the coal industry. I find it quite extraordinary that no reference whatever was made from the Government Front Bench to the question of costs or proceeds. If the ordinary board of a company, in its annual review, particularly during bad time—when referring to the year's results—could,get away with leaving out any reference either to costs or proceeds it would be making a great mistake. My hon. Friend the Parliamentary Secretary need not feel unduly humble about this, because during a period of more than four years in debates in this House, spokesmen from neither Front Bench have mentioned the word "costs" in the annual review, so this is in line with past precedent.

Nevertheless, it is important at this time because the question of costs comes very drastically into the matter we are considering today. The loss on the year is, very fortunately, no more than about £5 million, but costs are showing themselves in the proceeds of the industry and it is in the proceeds of the industry that the competitive aspect emerges. We find ourselves today with the rise in the importation of oil at the expense of coal for use in an increasing number of industrial concerns.

We cannot reasonably oppose that. For many years before the war I was on the Coal Utilisation Council. One of our main purposes in those days was to see that coal held its place as against imported oil. In those days there was a wide margin. We had prices on our side almost to the tune of four times. Unfortunately, the margin today, the gap, is narrowed. The difference between the price of oil and the price of coal is a very narrow one.

I would not myself be altogether despondent about this because I believe that, in many instances, coal could hold the field as against oil. I think that the right hon. Gentleman the Member for Blyth (Mr. Robens) was perfectly justified in saying that particularly in power stations it could be shown, and can be shown, that pulverised fuel burned under water tube boilers can be not only as efficient, but as cheap a commodity as oil. I very much hope that the process, at the time inevitable, of the installation of oil-burning appliances in power stations can, in due course, be reversed and some part of the low-grade fuel can once again find its natural market.

While talking about markets, I wonder whether a small advantage could not be obtained if the Minister of Housing and Local Government, who, the other day, made a statement about grants which could be given for the improvement of house property, would, not in the areas which are clean areas but throughout the country, be prepared to allow some part of those grants to be directed towards coal-burning appliances, which would enable the householder to make use of the less expensive qualities to burn in the household grates. That might mean some improvement in the direction of these very large stocks which we hold.

I want to say a word about exports. It was emphasised the time that we discussed the coal industry that it was wholly unrealistic to imagine that we could have maintained the export market at a time when every ton of coal we produced was required for our own use and when, indeed, we were importing expensive dollar coal. On the face of it, that looks a very reasonable argument. But it is not the first time in the history of industry that export markets have to be retained at a high cost during periods of a sellers' market. It is not always wholly unwise to expend money in that way. It forms a natural cushion to meet the change-over from the sellers' to the buyers' market and, indeed, it would have formed on this occasion a basis for further expansion in the export market.

What is wholly unrealistic is to imagine that we can get into the export market by dumping unwanted coal. That is not the way to build up the export market. It is a long-term matter. If it has to cost us money during the period of a sellers' market, it is not a wholly unwise thing to do. Indeed, money, whether in the form of capital or otherwise, is as wisely spent in building up markets as it is in reconstruction or new development. It is unsound to think that this is otherwise.

I ask the Government to recognise that the expansion of our export markets must be a primary consideration in the interest of the coal industry as a whole. We have talked today about the effect of these quite reasonable cuts which have been made by closing down wholly uneconomic pits and the like, but, as has been rightly said, this results in many human tragedies. It means possibly only 4,000 men, but 4,000 men having to lose their livelihood in their traditional work. A few of these 4,000 men may find jobs elsewhere, but the great majority of them have now to face a phase of unemployment which may continue for the rest of their lives. Rather than do that, I feel that every effort should be made in creating a natural market for our surplus coal, which alone is by export.

I know that it is said that it is impossible now to export to the Continent of Europe. It has already its own piles of coal and coal coming in from America. I know all that, but it has been coming from America because we neglected this export market. Although it may not be possible now to do it, there will come a time when it will be possible, at the end of these long-term American contracts, once again to get into that market and I hope that we shall spend all our energies in doing so.

Finally, I must say a word about the capital expenditure in this industry of £108 million. Of course, we must go ahead with capital expenditure. Of course, we must develop new mines and reconstruct old ones. But we are justified in saying, "Is that money being spent efficiently?"

We hear in these debates a good deal about O.M.S., but we hear very little about O.M.Y. O.M.S., on its own, can be, and very often is, a fictitious guide. O.M.Y. is a figure on which, in the last resort, all industry must depend. Based on that factor, when we look at the second plan, "Investing for Coal", I very much regret to say that at this stage of development the plan is further behind than was the first plan for coal at a comparable date.

We are aiming for a figure of 319 tons O.M.Y. by 1960, twelve months' hence. I very much doubt whether we are travelling now at any better figure than 294. It is pure pie in the sky whether we are in hail of what we are aiming at. It does not matter whether the level of production in the country is 210, 200 or 190 million tons per annum. What does matter is the level of efficiency with which we are expending these large sums of money. I imagine that every hon. Member in the House feels that it is essential that we should go on with development. It is equally essential that we should scrutinise this expenditure very closely and discover why we are falling so far behind in the second plan. It behoves us to take a very careful look at how that money is being spent.

I want to end on this note. I have been interested in the coal industry for many years and I do not for a moment despair of it. But great changes have to occur, not changes of ownership but changes of control and of organisation. I believe that the Government and my right hon. and hon. Friends are well seized of this point. I believe that they recognise the problem, the complexity and deep severity of the situation in which we find ourselves. I hope that they will grasp the nettle before it is too late.

7.10 p.m.

Mr. Joseph Slater (Sedgefield)

We have listened to a very interesting speech by the hon. and gallant Member for South Fylde (Colonel Lancaster). Many of us on this side of the House are aware of the interest which he had in the industry before nationalisation. I shall seek to develop some of the points he raised as I proceed with my speech.

First, I should like to compliment my right hon. Friend the Member for Blyth (Mr. Robens) and my two hon. Friends, the hon. Lady the Member for Cannock (Miss Lee) and my hon. Friend the Member for Bothwell (Mr. Timmons), on their speeches. Many debates have taken place on this industry during the last eleven years of nationalisation. Pleas have been made in the past by hon. Members opposite that we ought to take the subject of coal out of politics. Criticisms have been made of those responsible for the operation of the industry and their praises have been sung. I do not doubt that the pattern will continue to be the same as long as these debates are held in this Chamber.

Over the last eleven years agitation for increased production to meet the demand of the home market has ever been to the fore. The response to that appeal has been shown in the figures of the yearly returns which we have had presented to us. In my opinion, the National Coal Board ought to be complimented on the way in which it has used the existing capacity of the industry to increase production since nationalisation. It ought not to be forgotten—and I remind the House of it—that increased mechanisation and general improvements in working succeeded in raising output from this industry by no less than 12 per cent., and this took place in spite of the technical difficulties which have had to be overcome.

The industry has been able to show an impressive financial record, which has upset the pessimists, and this was mentioned by my hon. Friend the Member for Cannock in her speech. They never believed that this nationalised industry could have the success which it has had since vesting day. Profits totalling over £100 million over the period of nationalisation to some of the critics have not been of great importance in view of the heavy capital expenditure involved. That may be a fair criticism, but it is important that we should bear in mind the technical difficulties which have had to be overcome in the industry. In the circumstances, I do not believe that this is unreasonable. If we have now reached the position in which we are making comparisons with the rest of Europe, let us not forget that since nationalisation British coal has been the cheapest.

We can expect criticism in an industry like this. I am one of those who believes in criticism, if it is constructive, but to criticise for the sake of criticising leads us nowhere. I therefore ask that the House should reflect a little, should see what has taken place and should see what is the cause of the present position and the reason for the application for this money for which we have been asked today.

Before 1945 the consumption of coal in this country was running at the rate of 179.4 million tons a year. By 1956 it had risen from that figure to 218 million tons a year. In other words, the consumption of coal was on average rising by 3 million tons a year. It may be argued that we have had full employment and that full employment has brought with it an increased consumption of coal. It was accepted by all parties interested in the great project of the nationalisation of this industry that the total fuel consumption of the country would reach no less a figure than 300 million tons a year of coal equivalent by 1965. The mining industry was earmarked to find 240 million tons of that and atomic energy 18 million tons, and the oil industry was to provide the balance in order to meet the deficiency.

What is the position today? Coal consumption dropped by no less than 5 million tons in 1957, which was a complete reversal of what had been expected in the first place. Instead of a national agitation for more output to meet consumer demands, we have a recession in consumption. The importation of coal has almost ceased, after it had been a heavy burden imposed on the National Coal Board, carrying into its accounts £70 million to meet a liability imposed upon it by the Government of the day.

Certain reasons have been given for this recession in the consumption of coal. Many are based on external factors. I want to emphasise one of the points which my hon. Friends have made. As I see it, the Government's policy over the last two years to meet world economic difficulties has been responsible in a very large measure for the aggravation of the problems confronting not only the mining industry but the whole economy of the country. The unemployment figures are still rising and it naturally follows, if we contract employment, that there is a smaller demand for coal. It must be understood that we on this side of the House, as representatives from the mining industry, will not stand for a cheap labour market, nor will we stand for the worsening of the conditions of our people within the mining industry.

In the last few days we have seen reports in the Press to the effect that forty pits are to be closed. We have now been told that the number will be thirty-six. I understand that 12,000 men are to be affected. What a different picture from that of eighteen months to two years ago. What was then the cry? The cry raised in the House then was for men to go into the pits. We were told that we ought to attract the younger element of our towns, cities and villages into making a career within this industry. Now extended hours of work and overtime, which the nation has called upon the men in the industry to work in the years of shortage, are almost extinct and we have been told that over 30 million tons of coal is in stock. Of that total, over 18 million tons is on the ground and it is costing up to 13s. 6d. a ton to put it on the ground and to lift it up again. Side by side with this situation, the use of oil is growing apace.

It is easy for me to understand the reason for the conclusions reached by the oil industry. What has been said is that the present circumstances of the mining industry, with a stock of 18 million tons of coal on the surface, are only temporary and that before long the fuel demands of the country will increase at a rate which will allow plenty of room for expansion of both oil and coal. By the industry and to those responsible for running it the position is not viewed in that context. The conditions of the early postwar years are unlikely to be repeated. We shall be faced with competition, and it may be that some tonnage will have to be sacrificed.

Because of the coal shortage, the Government's policy over the last few years has been to encourage the use of alternative fuels, but in view of the present position in the use of oil at power stations, in my opinion the policy of conversion should at this stage be reversed. I know that I shall not take everyone with me in that opinion. I would, however, point out that nine power stations have gone over to oil and that four more will complete the programme of converting to oil in the next few months. When this has been completed, the annual oil consumption by these power stations will have reached a rate equivalent to 6 million tons of coal.

I pose this question: are we to stand by and see this natural fuel—natural to our own country—being put to one side in the interests of the oil companies? Are we to stand aside and to see our men put on the dole because there is no work for them? Is village life and all that it means to be broken up again, as it was in the past, because of the lack of a fuel policy?

If I feel heated about this, it is because of my past experience inside the industry. Hon. Members will understand why I ask those questions, when I tell them that I worked below for over 30 years and know the conditions that prevail there.

Why have the Government not come to a political decision to turn over these new generators to coal? We are told that 12,000 to 14,000 men are likely to be finished when these pits close, but to make those generators coal-fired would give employment to 8,000 miners. This country owes something to the men in the industry. When other industries were working a five-day week the miners worked Saturday shifts to give the increased production then being asked for, and that production ran at a rate of over 11 million tons a year.

The closing of these collieries will throw out of work the 12,000 men who have been referred to, but, in addition, other collieries are carrying on with a smaller manpower than they had two years ago. My own colliery is to reduce its manpower by no less than 250 men at the end of this year. If that is happening at that colliery the same will be happening at others.

If these pits close, what is to happen to the men who worked in them? Are they just to be discarded? Whatever may be our opinions about the closing of these mines, there is a good case for compensating the men for loss of their employment. It should also be remembered that just a little over twelve months ago the plea was for the young people to go into the mines, to make mining a career. What of the promises then made?

It will be generally agreed that opencast mining has played a very important part in increasing our production of coal. I do not suggest that we could have done without it, and I appreciate that a great deal of capital has gone into it. It is true that profits have been made, but it is also true that, since 1952, 80 million tons of coal have been extracted by this method. I readily concede that had it not been for opencast mining we would have had to increase our imports of coal in order to meet the home demand. Again, had it not been for opencast production, we could not have supported even our limited export trade.

Let us not forget, however, that opencast mining was brought in to meet an emergency. The argument now advanced is that this type of mining should be allowed to continue because of the heavy investment in machinery, etc., and the profits accruing from it. Since this form of mining was introduced in 1952, it has brought in about £42 million profit to the industry, and has, no doubt, helped to balance unprofitable production from deep mines.

Nevertheless, we must remember that opencast mining was an emergency measure, and, bearing in mind the numbers of men likely to be thrown out of work in the near future, we must seriously consider whether it is sound economics to continue this form of operation because of its profitability, and to finish men who will later be required should the industry expand. I understand that opencast production is to be cut by 3 million tons. When I think of the present situation, I wish that the cut was to be twice as big.

I should like the Minister to tell us what it would cost to compensate the opencast contractors if their agreements were ended, and I should also like him to tell us what are the hopes for the export trade. In this month's Colliery Guardian it is stated that the Board has recently decided to reduce the export prices of many of our coals for 1959—in some cases reducing them even below the inland prices.

We all know what is happening on the Continent as the result of long-term contracts with America. What are our hopes of recapturing what were our traditional markets?

At one time, various countries were always ready to take our coal, even at prices that they regarded as rather high. As a result of our heavy home demand we had to let those markets go, and we have probably very little hope of recapturing them until those long-term American contracts end. My own County of Durham once depended, as did South Wales and Scotland, mainly on exports. We were called the exporting areas, and we are, therefore, naturally very interested in the export position.

We all appreciate that the Board's present problems are not easy of solution. For instance, in 1956 we were able to sell 1(1 million tons for export and foreign bunkers. The forecast is that this year we will be very fortunate indeed if we export 5 million tons. We must be honest about this. If 1959 does not see an upturn in our economy, sales of coal could slip further back, with devastating results.

Therefore, the Government have here a responsibility that they cannot shirk—unless, of course, they still feel that to balance the economy we should let things rip with a resultant increase in unemployment, which already stands at half a million workers. That policy is not new to us. We have seen it in operation in other industries. We have heard appeals in this House from Lancashire and elsewhere for action to be taken to offset rising unemployment. Overproduction is not something new. We have it in America and in Europe.

Everything possible must be done to stimulate the sales of this great commodity. I remember that when the late Ernest Bevin was Foreign Secretary he addressed my mining colleagues at the Durham Miners' Gala, saying "You give me an extra 3 million tons of coal, and I will be able to negotiate much better in the councils of the world on these great matters that now confront us." Today, we have too much coal. Therefore, we must learn to sell it. I believe that the marketing section of the Board will have to make a much more vigorous approach to the sales problem than it has done in the past.

Mr. Nabarro

Hear, hear.

Mr. Slater

Bearing in mind all these economic factors, we must look again at our fuel policy, make the greatest possible use of our indigenous supplies, and vigorously tackle the problem of the disposal of our coal.

As I see it, the Government ought to go ahead with a national fuel policy designed to secure the maximum use of our indigenous fuel and the limiting of unnecessary oil imports. A policy of this nature, I believe, apart from making the maximum use of our indigenous resources, would help the country at the moment in its balance of payments. I know that these views have been expressed previously through the union of which I am a member. If the Government are not prepared to proceed along these lines, then we ought to be told from the Government if they have any policy for fuel at all, and what it is.

It is not only us here today who are asking this of the Government, but the men in the industry as well. I believe that the men are awaiting the result of this debate, and that they will want to know why it is that the Government are prepared to see the inland consumption of coal going down much more than it did last year and oil consumption going up. We shall want to know why oil imports should reach the figure of £440 million for last year against the better utilisation of the home product. I say to the Minister and to the Government that these are the questions which will be asked by the men who are in danger of losing their jobs. Because of that danger, they want to know why.

The News Chronicle, in its caption chart today, said that miners' wages had gone up from £6 13s. in 1947 to £14 2s. 9d. in the second quarter of 1958. As it is set out, it would appear that our men are receiving this figure of £14 2s. 9d. a week. I want to place on record the fact that, even though the News Chronicle may really believe that it may have been doing a good job to present this chart in regard to the National Coal Board and the production of coal, inside this industry over 350,000 of our men working on the surface and underground have a fixed rate. Surface workers, before today's announcement, were paid £8 10s. a week, and those working below £9 10s. The announcement of the Tribunal will raise these rates by 7s. 6d. Therefore, the average figure today—although the News Chronicle does not say that it is the average figure—could be very misleading, both to the general public and the people inside the industry.

I want to say, in conclusion, that hon. Members ought to remember that two important Acts have been placed upon the Statute Book since this Government came into power. One is the new Mines and Quarries Act, for which we are very grateful, because it does not allow young boys to work underground until they reach the age of 16 years. The other is the Mining Subsidence Act of 1957. Both of these Acts have increased the liabilities of the National Coal Board, but little or no reference has been made to these Acts today.

I heard very little objection from hon. Members opposite when these Acts were going through the House, or of the effect which they would have upon the National Coal Board and its administration. I wonder what their reactions would have been if it had been suggested that, out of the global figure of compensation of £338 million which was earmarked for the old coalowners on taking over this industry, a certain amount ought to have been set aside to meet contingencies that might arise, as they are arising under the Mining Subsidence Act. I wonder what hon. Members opposite would have had to say to that. Instead of that, they threw all these responsibilities on to the National Coal Board.

Today, we have to accept the position as it is. The industry is faced with problems which even the National Coal Board cannot solve by itself. The National Union of Mineworkers, I have no doubt, through its representatives, will assist wherever possible, if they are given the full facts of the situation. I believe that they are big enough to face up to their responsibilities as a trade union, but, having said that, I must point out that this is not a one-way traffic, and that the union cannot be expected to make its contribution to the solution of these problems unless it is provided with all the available evidence, which the Minister has, whereby it can judge what is the best to be done in the circumstances. I hope that, as the position is developed, we shall see better prospects for those people who at this moment are looking with great suspicion because of the attitude that has been adopted in regard to the closing of pits.

7.35 p.m.

Mr. J. C. George (Glasgow, Pollok)

The hon. Member for Sedgefield (Mr. Slater) put his case with great feeling, and I can fully appreciate the strength of his feelings towards these collieries which are to be closed down. I come from a mining village, and I, too, know the pain that can be caused in these circumstances.

I will take up at the moment only one point which the hon. Member made, and I think it was a good point. It is what we are to do about fighting back and regaining our original export markets. Indeed, I would go further and say that that is not the whole question facing us, that there is one to which we should give even more attention. That is how we are to recapture the home markets —on merit, and not by any restrictions on the use of any form of fuel.

The hon. and gallant Member for South Fylde (Col. Lancaster) said, I thought very wisely, that at this time we should not be completely concerned with the present day, but should be very much more concerned with what is being got for the money being spent. The fate of the industry will not be settled here today. It will be settled underground, with the success or failure of the new coal plan, and by the results of mechanisation which will flow from it. I propose to look at what is happening with investment, because I think that is where the success of this industry will lie in the future.

There should be no doubt about where we on this side stand in relation to this great industry. It should be made quite clear from this side of the House that, whatever has been said in the past, no one here wants to see it become a failure. Everybody wants it to be a success. The nation has willingly poured out hundreds of millions of pounds in order to have an up-to-date and efficient industry, and the country is wondering today whether it will get it. It is also nervous about what is going to happen as the result of the expenditure of the £1,000 million, whether all the benefits which may accrue from mechanisation are to be absorbed along the road, with nothing left flowing to the consumer or the country.

I want to make it plain, first of all—and here I take up another point made by the hon. Member for Sedgefield—that we give full credit to the National Coal Board for the burdens, which ought to be incentives, which it has had to bear since nationalisation. The five-day week presented a heavy problem, and there is the two weeks' holiday, with the Coal Board having to make up the loss of one week's coal. Then there are the pensions schemes, welfare facilities and the new safety regulations, which are much more expensive than I think the House realises, and involve the labour of many more men than we imagine. Then we have the burden of subsidence, dust suppression and capital benefits still to come. I want to get the position of the National Coal Board in proper perspective and to give it full credit for what it has done.

I want to impress upon the House that I am aware of these burdens on the Coal Board, but, now, I want to look at the benefits from the money that has been spent. We have engaged in a very necessary campaign of reconstruction and mechanisation. This House has very willingly voted £1,000 million for that purpose, and that scheme involves the reconstruction of haulage systems, roadways, mining works, new shafts and tunnels and the installation of new machinery. We all know what is happening at the present time, and I want to see if it gives us a guide to the hopes we have for the future.

Let us look, first of all, at shafts, and I spoke very strongly on shafts some time ago. At the present time, 26 new shafts have been completed, 26 are in the process of being sunk and 14 others have not yet been started. In the last few years, substantial progress has been made in shaft sinking methods, but even today —we must not deceive ourselves—with the improved ways of sinking shafts, it is still done more slowly than in any other mining country in the world. The National Coal Board last year mentioned a figure of 40 yards a month in Seafield Colliery in Scotland, and that was much above the average. It is, in fact, 11 yards a day.

When I was a young man of 20 I was working in a shaft. We were in the charge of a brutal Irishman with a choice flow of foul language, and we had to get four feet a shift. That was over thirty years ago. That represented four yards per day. Yet at Seafield Colliery the advance which is commended is only 1½ yards a day. The speed of shaft sinking all over should and could be doubled. I should like my right hon. Friend to tell us what is happening to the experiment in which a South African contractor has been brought to this country to sink shafts. I understand that this contractor has been sinking shafts here for some time, and it would be useful to know what progress is being made.

The shaft is one limiting factor. While it is being sunk, costly buildings are being erected on the surface, washeries, pithead baths and cleaning plants, etc., costing a great deal of money, and no return will be achieved until the coal is produced. The link between the shaft and the coal, and between the coal and the customer, is the tunnel. In the Report for 1955 the National Coal Board said that the new scheme involved driving 3,000 miles of tunnels in fifteen years, a gigantic operation. I estimate that that will cost £150 million, and I do not think it will be far out. Tunnels cannot normally be driven until the shafts are dug. Therefore, it is absolutely vital that the greatest vigour should be applied to driving these tunnels quickly in order to get coal as soon as possible and get a return on the capital invested.

The National Coal Board, in my view, has done all it can. In the 1957 Report it outlines what it has done. It states that it has used the most efficient methods of tunnel driving. It has created a demonstration mine in England, down which teams of men have gone to see how tunnels should be driven efficiently and speedily. Last year 90 per cent, of all the tunnels in Britain were power-loaded.

The Coal Board is not failing in its efforts to supply the requisite plant and demonstrate the proper methods. But in that same Report we are told that in 260 major tunnels 52 miles were driven last year. That is 7½ yards a week. The average rate of driving tunnels in Britain today is under 10 yards a week. At the rate of progress which is experienced today, with the most up-to-date and efficient methods, it will not take 15 years to drive 3,000 miles of tunnels; it will take 60 years.

It is right that we should examine these figures. In 1944 I was driving a tunnel in Scotland and I employed power loading. The Ministry of Fuel and Power hired the machines, and this system was employed in this country for the first time. We got the men interested in the job and they put their backs into it. Nine months afterwards we celebrated the achievement of a distance of 48 yards driven in one week. That was in 1944. Yet fourteen years later the average rate is 10 yards a week over Britain as a whole.

There is a great gap which must be filled. The present director of production of the National Coal Board said a fortnight ago in a report that 40 yards was easily obtainable with the present apparatus. That gap between 10 yards and 40 yards must be filled. If we can drive 40 yards a week, the job can be done in 15 years. If we can only get 10 yards a week it will take 60 years. This is a great problem which must be solved rapidly. Two of the fifteen years have already passed. This slow rate of tunnel driving is menacing the future of "Investment in Coal" and the whole success of the great venture.

After we sink our shafts and drive our tunnels we get into production, and we hope and pray that in these majestic new mines which we are driving—and they are lovely jobs; they are beautiful examples of fine engineering, though they are slow and costly—we shall be able to use modern appliances to obtain high output per man. I thought that the Parliamentary Secretary was particularly unfortunate in the example which he gave of the effect of modernisation on output. He chose a place with an output of 13 cwt. which when modernised was increased to 24 cwt. But 13 cwt. is a remarkably low figure, and 24 cwt. is not what we would expect after modernisation. This will not do. It must be substantially higher than 24 cwt., or we shall have no chance whatever of recapturing the markets.

Mr. David Griffiths (Rother Valley)

I agree that 24 cwt. will not do under modernisation, but I should like to know who is responsible for the fact that output is not higher. Is it the fault of the men, or the colliery managers? Whose fault is it?

Mr. George

I agree with the hon. Gentleman. It is not the fault of the National Coal Board, which has made all the facilities available. It may be that both management and men are to blame. The fact remains that 24 cwt. will not do.

Let me turn to the question of production. In the last twelve years there has been a campaign to modernise existing mines and create new ones, and it is right to examine what has been done in those twelve years and see what hopes there are for the future. As hon. Members opposite know, we have installed large numbers of locomotives, and wherever they are used they reduce the number of men needed and make work easier. In such mines one would expect to find fewer men employed, or more production. We are told in the Annual Report that every conveyor face in Britain today has a belt taking the coal away. That should mean a substantial cut in men employed, and those collieries possessing those advantages ought to have shown a reduction in the number of men employed or else a transfer of men to production.

We have seen an expansion in the use of face conveyors, and this, too, should have resulted in a reduction in men or greater output. In addition, in recent years power loading has been introduced, and its use has increased rapidly. Now we get 55 million tons from power loading and 30 million tons from new shafts and reconstructed pits. All these—loco-motives, gate conveyors, power loading, new shafts and so on—are benefits which one would have hoped would show results. We should expect either a higher output with the same number of men or the same output with fewer men. But neither of these things has happened. In spite of mechanisation, power loading and new shafts, we have the same output with the same number of men.

Mr. D. Griffiths

I am following the hon. Gentleman's argument with close attention. I appreciate that output is not as much as one would like, but can we have an explanation from him as to why it is not?

Mr. George

I am about to make certain suggestions. I have made a statement that, with all these benefits and all the millions we have expended on new systems and machines, we have the same output for the same number of men.

Mr. D. Griffiths

No, with fewer men.

Mr. George

Just a moment. I will remind the hon. Gentleman that the yardstick of comparison, a very sound yardstick, is found in the number of manshifts needed to produce 1,000 tons of coal. During the last four years, all these things I have enumerated have come to fruition and have begun to yield results. The effect ought to have been that the number of manshifts to produce 1,000 tons fell appreciably. Yet here are the figures, the Coal Board's own figures, not mine. They show a staggering consistency throughout the period when all these improvements took place.

In 1954, 629 shifts were needed underground to produce 1,000 tons of coal. In 1955, 634 shifts ware needed. In 1956, 634 shifts were needed. In 1957, 635 shifts were needed. Those are the figures for the period when we ought to have saved in the number of men required underground or produced more output. During that time, power-loaded coal went from 16 million tons in 1954 to 55 million tons in 1957, and we had 30 million tons in 1957 from new schemes.

Mr. D. Griffiths

Will the hon. Gentleman break down those figures and tell us the number of men producing the coal, the number of men doing development work, and the increase in the number of juvenile personnel, taking the management side of it?

Mr. George

No. Of course, I cannot break those figures down in that detail, although I admit that it would be useful. I have only the figures which come to us from the National Coal Board, which does not break the figures down. I can break them down to this extent, which would be useful; I can give the number of men at the face and the number of men elsewhere underground. The Coal Board did not give these figures in 1954, but, in 1955, the figures were 295 at the coal face and 339 elsewhere underground. In 1956, the figures were 291 at the coal face and 343 elswhere underground. In 1957, the figures were 290 at the face and 345 elswhere underground. That is all I can do to break the figures down, and those are the figures which the Coal Board give. They do help a little, as the hon. Gentleman will admit.

Something is plainly being lost along the line. The benefits are being absorbed. I shall be quite frank; it may be, of course—the hon. Member for Rother Valley (Mr. D. Griffiths) raised a valid point—that there is a vast number of men on development. I do not know, and I should be glad to have that information. Perhaps my right hon. Friend can help us, or perhaps we can find out from the National Coal Board. The fact remains that there is a substantial leak somewhere along the line. The saving is not coming from the money which has been spent underground in mechanisation.

The saving can be tremendous. I have been speaking of the number of manshifts per thousand tons produced. In Britain, the saving of one manshift per thousand tons produced represents a saving of £540,000 per annum. The prizes are glittering prizes, yet they are being lost. The Coal Board must find out why. There is a great reward for finding out and putting things right. These are Important matters. I am not trying to colour the facts. I am a technician, a mining engineer. I want to put the position clearly before the Minister and the Coal Board in the hope that they will be helped to focus attention upon the shortcomings.

Mr. Emrys Hughes

Before the hon. Gentleman leaves that technical point, may I remind him of the visit that he and I paid to one of the great new collieries in South Ayrshire, at Killoch? Is he satisfied with the rate of development at this colliery? Has he any constructive proposals to make?

Mr. George

The shaft is now down, and there is no rate of development at all. I have no idea of the rate at which the tunnels are moving. I have given the rate of advance of tunnels in Britain as a whole, including the colliery to which the hon. Gentleman refers. I am merely putting the facts. I have said that it has been ten yards. The Director of Production says that forty yards is possible. A rate of forty yards is needed to drive 3,000 miles in fifteen years. That is the gap.

Mr. Emrys Hughes

The hon. Gentleman made certain allegations about this colliery two years ago. Is it not a fact that it is now going into production, before the time which was expected?

Mr. George

I made no allegations against the management whatever. I made the broad, general statement about the shafts being sunk in Scotland, and I said that, in every shaft except one, there had been a fundamental blunder which condemned those shafts to being sunk far too slowly. In every shaft in Scotland —the hon. Gentleman has forced me into this; I had no intention of discussing it —the people there had only one bucket, and the farther they went down the slower their rate of travel. But that has been rectified. It was no criticism of the management.

Mr. Emrys Hughes

It is rectified.

Mr. George

That pit, of course, will not be in production for a number of years, so it cannot be said to be coming into production earlier than expected, though I very much hope that it will.

I want now to look at the broad picture of the industry. It is an industry in which I have spent many years, and it is an industry which hon. Members opposite know very well. I do not want it to be felt that the industry, because it is in trouble, must lie down and accept permanent defeat under the onslaught of oil, electricity, and now, even nuclear power. That is not the way to face the future, and it need not be. We can fight that onslaught. There is one nation which has fought back in its coal mining industry. In this century, coal mining in America has been on its back, in dire poverty, twice.

Mr. W. R. Williams (Manchester, Openshaw)

It very nearly is now.

Mr. George

Twice during this century the coal mining industry of America has been on its back, faced with the onslaught of the terrible three, electricty, natural gas and oil. The people in coal mining in America did not say that they had lost their markets and the advance of their three competitors was inevitable. They said, "We shall get together with the engineering firms which supply us and try to find a way out." They did do so. New contrivances were invented and were willingly accepted by the trade unions. This is the point, and everyone who has worked in the mines knows it. The miners of America said, "Yes, we will gladly accept your new machines", but, very forcibly, they said, "We must have a share of the proceeds".

Thus began what we know as the American methods. There is sometimes confusion between American machines and American methods. The American methods gave success, the methods which meant that one had the highest output possible from the machines in an atmosphere of co-operation. That is the reason for the great American success in raising output per manshift.

I do not underestimate the difference in conditions. I know American conditions very well; every year, I go down American mines. Of course, there is a vast difference, but if we take the last ten years, as Mr. H. E. Longden did in the Cadman Memorial Lecture a week or two ago, we find this comparison. Ten years ago, working in those good conditions, the Americans thought that they had reached the peak, and we thought that we were in more or less the same position. We thought that we were reasonably making use of our conditions. Yet what has happened during those ten years?

In America, the O.M.S. has risen by 60 per cent. Ours has risen by 13 per cent. The American miners today are producing eight tons per shift approximately, and we are producing roughly one and a quarter tons. Earnings in the American mines have risen 84 per cent. with a 60 per cent. increase in output. Ours have risen 107 per cent. with a 13 per cent. increase in output. The American miner is earning £8 a shift. The British miner is earning roughly £3 a shift. But the big J point, and the Parliamentary Secretary made it today, is that prices in America in the last ten years have risen 23 per cent.; prices here have risen 104 per cent. American coal is costing £2 a ton. Our coal is costing £4 2s. a ton.

I think there is a tremendous lesson to be learned from this. The atmosphere in America is one of co-operation. Small teams are working together. Small teams do not quarrel as much as big teams in our big pits. Small teams in America are making the best use of their machinery, sometimes getting fantastic results. In America the overlying atmosphere is one of getting the best out of the machinery, and getting the highest income possible.

That is what is wanted here. I believe that in this country today—I say this in all seriousness—the mines are not operating much above 50 per cent. efficiency. There is an immense gap in which gains can be made if we decide in this industry that it is co-operation and not conflict which we want. Let the National Coal Board set up a small team to estimate the rewards which could be won by the men getting together and making the best use of our pits and our machinery. That can save this industry, as the Americans saved their industry.

Our trade union leaders might take a lesson from John Lewis. Let the National Coal Board send them out to John Lewis and see him, or bring him here. He found the right way. He faced the situation the right way. He saw that his men got a high reward. The owners got maximum output. Prices were stable. When it was a question of closing down pits, just as we today have been sadly discussing closing down our pits, he did not raise the issues which hon. Members opposite have raised here. He said, "I will gladly look at contracting the industry and having far fewer pits and fewer men, but the men who remain must be more highly paid, the others can get a good reward elsewhere." That was his view. He was right.

What we have to do is to get back our market at home. I say we can have success if we can induce—I know it may sound a cliché—the men to agree to seek the high rewards from co-operation rather than from puny gains of conflict with the Board. Let us paint a new picture. The Vice-President of the United States told us the other day that we should think less of fears of Communism and more of the profits of free enterprise. Let us do likewise in our coal industry and think more of the rewards of co-operation and less of the puny gains from conflict. There are great rewards to be picked up. I hope the Board can get that atmosphere in the days that lie ahead, the result can be dramatic.

Mr. Woodburn

It looks as though many pits will be closed down, and the hon. Gentleman knows the situation very well. Would he say whether, if that atmosphere of which he speaks could be got in those pits, they could be saved from being closed down?

Mr. George

I have not the faintest conception of what pits are being closed down or what the conditions are.

8.3 p.m.

Mr. Iorwerth Thomas (Rhondda, West)

I have no desire to follow the hon. Member for Glasgow, Pollok (Mr. George) in all the matters he discussed, but there was one thing he said which is calculated to leave a very bad and wrong impression. It was something he said about the relations between the miners and the National Coal Board since nationalisation began.

I do not know whether the hon. Member meant it to be thought—but he said—that what we want is a greater measure of co-operation, and the eradication of all the bitterness and hate that permeates industrial relations in many industries in this country. On that I just want to make this very important correction. The miners' unions have shown a greater degree of responsibility and moderation than any other organised union during the post-war period.

To have asked the miners in pre-war days to submit their wage claims to compulsory arbitration would have been to have asked for what at that time one may say would have been impossible. The moderation which has been shown all along by the miners in their relations with the Coal Board has been of an exemplary character. They have been prepared to submit their wage claims from time to time to arbitration, though had they wished—and this is the important point —in the post-war period to have exercised the power which they held they would have reached their present wage levels very much earlier than they have through the processes of compulsory arbitration.

The hon. Member is wrong in his inference or suggestion that what we want is a better spirit of co-operation. The record shows, it is in the official records of the Coal Board, that a very happy relationship has existed between the Coal Board and the unions. Successive Governments have paid compliments to it. It is true we have had a lot of go-slows and walk-outs, but I am speaking about the official unions of the miners.

I believe that in our discussion of the immediate problem tonight we are limiting our sight to a canvas which is really too small. One would be entitled to ask whether the present situation, ugly as it is, is not a portent of worse to come. We must, in this debate, relate the present position of the coal industry to the anticipations and calculations and all the plans of the past few years, for which we are all responsible, and which both Governments believed, from the facts in their possession, were accurate. Whether or not events have overtaken us, we are likely to remain within the long shadows cast by the new social forces which are now emerging. When we have the basic industries cutting back production and the consumer industries expanding, every economist will agree, I think, that there is something really socially contradictory in the occurrence.

To deal with the coal industry in its present plight we must take not only the short view and adopt policies to meet the present situation, but take very serious thought for the long view. We are likely to be so bogged down in and bedevilled by statistics as to lose the principles which are involved in this debate, but I must quote just one or two figures. Just to show what I have in mind, the Manchester Guardian or the News Chronicle today stated that by 1965 the increased consumption of oil would be equivalent to the displacement of 20 million tons of coal and that the production of energy by atomic power is also calculated to displace the equivalent of 20 million tons of coal. Therefore, we can say that, on those two counts alone, in 1965 the demand for coal will have dropped by 40 million tons.

We must also give full value to the fact that atomic energy is still in its infancy, and as the years roll by—ten years is a very short period in the life of an industry or a nation—with the development of more efficient and more prolific atomic energy power stations side by side with increased quantities of oil consumed by industries and domestic users, what is likely to be the picture in 1970 or 1975?

We cannot predict with any degree of accuracy. I wonder whether, if present trends continue, we are not facing a new industrial revolution. Oil is now coming to the forefront, because it is important and because of the military and strategic considerations mentioned by the hon. Member for Kidderminster (Mr. Nabarro) in his speech on 14th July, 1944—

Mr. Nabarro

It was 1958. The hon. Member is fourteen years out.

Mr. Thomas

Yes, it was 1958. The development of atomic power in this country will push even oil out of the way, as well as other fuels. Technical writers say that the future inevitably lies with the production of atomic power, eventually at a competitive price.

In the light of all these circumstances and trends—I intend to do no more than mention a third factor, the famous Zeta project, now in the hands of the back-room boys—we have some forms of fuel production which will challenge our present power and fuel policy. Not only must we take a very short-term view of the situation, but we must plan ahead to meet the new social forces which are emerging. The view of hon. Members on this side of the House is that in dealing with the immediate problem and the long-term prospects no Government can permit those forces to affect our society and economy by drifting blindly. There must be some kind of political interference. In the light of the changes which will inevitably take place, the Government have a responsibility. They must produce a fuel policy for the nation. If the changes I visualise are inevitable, the transition, in twenty or thirty years' time in my view, will be fundamental, and the Government have a responsibility to plan the future of the coal industry against that background.

To return to the present situation, the keynote of most of the speeches delivered from the Government benches has been an insistence that if the coal industry is to survive and to avoid deficits and coming to the House for additional borrowing powers, it must make itself competitive. Having regard to the financial burdens with which the Coal Beard is saddled—they have been mentioned by some hon. Members opposite—and the extra burdens which will be put on it as a result of the present crisis, I believe that in the foreseeable future the Board will be unable, through its own efforts, to fight for markets at a competitive price on an equal basis with oil or any other fuel. I believe that the time is now opportune for the Government to consider that problem from this point of view.

The hon. Member for Kidderminster always wants to test the financial success or the efficiency of the mining industry by applying the slide rule which is applied to private enterprise.

Mr. Nabarro

Hear, hear.

Mr. Thomas

I am very glad that the hon. Member has echoed his sentiments with a very melodious "Hear, hear." Let us assume that the Board was prepared to accept his advice. Let us assume that he was the Minister of Power.

Mr. Nabarro

The hon. Gentleman must not make these prognostications. Does he suppose that after my speech today, which was listened to by the Parliamentary Secretary, I could ever be the Minister of Power?

Mr. Thomas

The hon. Gentleman always applies the slide rule test which applies to private industry. Let us assume, by the wildest stretch of imagination, that the hon. Member became Minister of Power. Let us assume that he had the statutory right to give directions to the Board on the lines that he has been arguing. What would have been the result if he had been the Minister of Power for the last ten years?

Mr. Nabarro

Efficiency.

Mr. Thomas

For ten years we have had 167 pits showing a loss of more than £1 per ton, and another 40 or 50 have been showing a loss of between 5s. and £l a ton. Let us say that the total number of pits in that category has been about 220. If the hon. Member applies strict commercial standards to the coal industry, those 220 pits should have closed in the last ten years.

Mr. Nabarro indicated dissent.

Mr. Thomas

What would have been the result? Deprived of the production of those 220 pits, the country would have faced a grave shortage of coal. Instead of possibly 12,000 more men out of work in the mining industry, there would have been a problem of mass unemployment and short-time working throughout industry. To have avoided such mass unemployment, we would have had to buy coal from America, and thus be faced year after year with a balance of payments problem.

Let us take another test of the hon. Member's obsession with applying private enterprise standards to a nationalised industry. Would he be prepared to apply those standards to price policy? This is a basic industry which in the post-war period has powered the country's industries with the cheapest coal in Europe. To have followed commercial practice, the Coal Board would have had to raise the price of coal. Assuming that the Board had been able to market coal at an economic price, it would have had to charge 5s. a ton more, and it could have charged 5s. a ton more to industry but excluded the domestic consumers from that price increase—and even the Federation of British Industries has admitted that British coal is too cheap.

The Board would have had no trouble in selling coal at 5s. a ton more to industrial users who take about 170 million tons a year. Scarcity would have compelled them to pay the extra money. If the Coal Board had been allowed the latitude given to private industry, the 5s. a ton extra for industrial coal would have resulted in the Board getting £400 million more revenue than it received, and there would then have been no need for the Board to ask Parliament for more borrowing powers.

The hon. Member for Pollok said that the American coal industry was on its back. Unfortunately, Britain's coal industry and the Coal Board have been crawling on their bellies to obtain permission from the Government to get higher prices. It is not Hobart House which has been controlling the post-war situation. The controlling hand has been that of the Treasury, and the industry has provided a hidden subsidy for the British economy.

Mr. Nabarro indicated dissent.

Mr. Thomas

In conclusion, I want to eradicate certain impressions which have been deliberately given to domestic consumers. As we all know, the pithead cost of coal for the second quarter of 1958 was 83s. a ton.

Mr. Nabarro

83s. 1½d.

Mr. Thomas

Let us leave the lid. It is no good the hon. Member objecting to a gnat if he swallows elephants. Wages represent 48s. a ton, or about 57 per cent. of the pithead price, and 35s. represents the cost of materials and depreciation. The Board cannot put by a few hundred thousand pounds as a general reserve to finance new developments, for reasons which have been explained.

The woman who has to pay £8 a ton has always been under the impression—because of Press articles and the speeches of hon. Members opposite—that the in-ability of the Board to make profits, the rise of its deficits, and the Board's constant requests for increased borrowing powers were due to the wages of the men in the pits being so high. She has believed that the miners take the biggest share of that £8 a ton. The figure of 48s. is only 30 per cent. of the average price of ES per ton. The other 70 per cent. of the price is due to something else. In fact, the cost of distribution of coal is equal to that of its production.

Mr. Nabarro

British Railways!

Mr. Thomas

Therefore, when the public read the report of this debate, and read the speech of the hon. Member for Kidderminster—

Mr. Nabarro

A jolly good speech.

Mr. Thomas

—they should realise that the reason they have to pay £8 per ton is not the high cost of wages.

The agricultural industry has been mentioned by some hon. Members. Every time the Coal Board's annual report shows a slight deficiency, or the Board requires more borrowing powers, the hon. Member for Kidderminster and his hon. Friends raise a howl about the inefficiency of the industry. We must realise that its twin sister industry—agriculture—which is also a basic industry, has had thousands of millions of pounds pumped into it by the Government from time to time during the past ten years to maintain its economy and to keep prices low for the consumer.

I do not disagree with that policy; it is the right one. It is a very healthy and sober attitude to adopt to a basic industry. But when hon. Members opposite howl because the Coal Board shows a deficit of £30 million they should remember the way in which the private industry of farming has been treated by the Treasury in post-war years. The Coal Board would not want thousands of millions of pounds from the Treasury to help it out of its difficulties.

Hon. Members have referred to the importation of coal and the question of compensation. Compensation is still being paid in respect of 200 collieries which have gone out of existence. But what about the miners who will be "turfed out" of those collieries which the Government propose to close? There will be no compensation for them.

I now turn to the question of stocks. The hon. Member for Kidderminster and his hon. Friends want the Board to show a profit and to eliminate its deficiencies but, at the same time, to write down the value of its stocks, which are now spread all over the country. Who will bear the cost of that? Is it fair that the Board, which, in response to the appeals made by the present Government and the Labour Government, has so planned its industry to meet their requirements and has been overtaken by unpredictable events, so that it is now in the dilemma of having £60 million worth of coal on the floor, should be asked to sell that coal at cut prices, thus increasing its financial responsibility?

As for the immediate position, unless the closure of the collieries is well planned and phased, and provided that the Government do not, by irresponsible action, close down collieries too hurriedly, thereby putting a substantial number of miners on the dole, we can expect our miners to demand the restoration of a privilege which they enjoyed up to 1926—the seven-hour day. The miners can help to cure this situation by insisting upon a seven-hour day if the number of unemployed miners warrants such action. The closing of the pits must be phased and planned, and those miners who have to travel to neighbouring collieries should be assisted in the matter of transport. The Coal Board has its own transport for these people.

There are men who have given forty years and forty-five years to the service of the mining industry. There are even some men who have given fifty years or more, but let us deal with those who have spent forty-five years in the industry. What chance have they in the labour market? I suggest that the Government consider in what way these men may be compensated and how far other men can be helped. There are about 14,000 men in the industry who are over 65, and thousands of them continue working only to reach a higher pension level.

How far are the Government prepared to consider the purchasing of credits for these men so that they may leave the industry voluntarily with the hope and expectation of obtaining a pension at a higher level than is merited by their present age? How far can we extend the period of 26 weeks' redundancy pay so that it may be continued far beyond the present limits imposed by regulation?

I trust that the Government will face their responsibilities. If they argue that the present position is temporary and that, when the investment policy of the Coal Board brings forth its full results, the industry will be established again on a sound financial basis, then there is an obligation on the Government to help the Board until it stands on a firmer financial footing and to help to bring about the economic stability which we all desire to see.

8.36 p.m.

Mr. R. W. Elliott (Newcastle-upon-Tyne, North)

I am very pleased to follow the hon. Member for Rhondda, West (Mr. Iorwerth Thomas). The hon. Gentleman, like myself, comes from an area famed for its coal production. He has spoken with great sincerity and against a background of long experience of the industry and a great knowledge of it. I wish to take up the first and most important point which he made regarding the long-term future for the industry, and I agree with a great deal of what he said about the future of those men at present employed in it who may become redundant.

Regarding the remarks of the hon. Member about housewives and how much they pay for coal, I suggest—and here I am open to correction—that in some areas, I believe in the North-West, the National Coal Board sells directly to the consumer without profit. Housewives in such areas will have a very good idea of the exact cost of production and, in consequence, firm views upon it.

I appreciated many of the speeches from the benches opposite because so many of them were made by hon. Members who have a lengthy experience of coal-mining. The only criticism I would make is that in many cases the speakers were not facing the problems of the present time. There was a great deal of harking back to days and to periods when the selling of coal was much easier. There is a tremendous difference between a seller's market and a buyer's market which we must recognise, and we should attempt to see the problems of the industry from that point of view.

I come from and have the honour to represent a constituency within the City of Newcastle, the traditional capital of a great coal-producing area. The present problems regarding the future of coal production are closely associated with the future of my city.

As I see it, there is a short-term and a long-term problem in the coal industry of the United Kingdom. The short-term problem is that of effecting quickly, efficient production. I appreciate the very great need for a continuation of the encouragement of efficient production. It has already been stated that falling consumption and mounting coal stocks are caused by a number of factors, not least being the fact that we have quite deliberately improved conditions of health by our Clean Air Act. That has caused a fall off in coal consumption in certain ways.

We have also converted to oil. I was very interested in the remarks of the right hon. Member for Blyth (Mr. Robens) at the beginning of the debate about the possibility of going back to coal from oil. In listening to one speech from the benches opposite, I felt that there has not been enough appreciation of the need to convert to oil in the past. We heard tonight a recollection of the late Ernest Bevin, when Foreign Secretary, appealing for an increase in the production of coal as a means of strengthening his position at that time as Foreign Secretary. Of course, an increase in the production of coal at that time would, and did, have that effect. The Foreign Secretary needed the basis of a sound economy at home from which to work. An increase of coal production at that time was essential. By the same token it was sound policy also to convert to oil in some cases. I hope the possibility of a cessation of conversion to oil might be considered by the Government in the light of our mounting existing stocks of coal.

The other all-important factor which has led to mounting stocks of coal is the fact that we have lost much of our export trade. Coal and coke exports from the Tyne have fallen steadily over the past few years. I notice with some regret that in the nine months of 1958 11.4 per cent. less coal and coke has gone from the Tyne, which, it once was said, would only prosper so long as coal was shipped from it. It is my hope and, I am sure, the hope of us all that the National Coal Board investment programme will produce greater efficiency. It is our hope that coal will be produced and put on sale as the consumer wants it, whether the consumer is abroad or here at home. I was very pleased indeed to hear from the benches opposite a new appreciation of the need for the N.C.B. to think in terms of efficient marketing; and in these days when it is much more difficult to sell coal to think in terms of making the product saleable.

The reorganisation of the industry means the closing of pits. That has been made very clear to us. We are to have thirty-six pits closed, and possibly that will mean an extension of unemployment—temporarily we hope—in my part of the world and other parts where coal is mined. That brings me to the second point I wish to make, a point on which I wish to follow the hon. Member for Rhondda, West. That is the long-term problem of the coal industry of this country. We must face the fact that we are moving out of the coal age as we have known it just as surely as we moved out of the bronze age. To blind ourselves to the advance of atomic power is a failure to recognise the major problem for the coal industry at this time and in the future. To ignore the advance of atomic power would be like destroying the railway to save the stage coach.

Atomic power, when it comes to us cheaply, as it will with fusion, will not only be cheap but clean, and one cannot help confessing that there is a great deal to be said for the eventual removal in such areas of the country as mine of the age-long dread of men meeting death and mutilation in deep mining underground. It will eliminate danger to life and limb; it will bring cheap power and efficient power. I feel that we should take due regard of its advance. It will be with us probably before twenty years have elapsed. Therefore, as a representative in this House of a city which is the capital of a coal-producing area, and as a representative of a coal-producing area, I express the hope that the Government will have due regard to what, I believe, will be the gradual passing of coal mining and will, in consequence, take constant measures to alleviate the possible increasing unemployment in the North-East and other coalfields of the country.

The record of Conservative Governments in bringing employment to areas where unemployment has come is extremely good, and in the North-East we are proud indeed of our Team Valley Trading Estate. I believe that we should have due regard to the possible advance of unemployment in the North-East by bringing such estates as the Team Valley Estate again to the North-East and extending existing ones.

8.47 p.m.

Mr. Arthur Palmer (Cleveland)

In the short time now left before the winding up speeches, I want to make three main points. In the first place, as one who has followed fuel and power matters fairly closely over a number of years, I cannot help contrasting the situation in fuel and power, particularly coal, with the position only three years ago. The emphasis then was on the scarcity of coal. But today it seems that there is too much coal, or at any rate too much industrial coal, for comfort. Many of us had hoped, thinking that this change would eventually come about, that the industry might move through a period when things came roughly into balance, but it has not worked out that way.

Looking at the situation as objectively as I can and allowing for all my natural and proper political prejudices, I cannot help thinking that there are three principal reasons for things not coming into balance. The first is the one that has been discussed already by my hon. Friends —the fact that the Government have reduced the alleged inflation in the economy by damping down production. That seems to me to be one primary reason for the change in the situation, and in that sense the Government are to blame.

One cannot help contrasting the coal position with that in steel, because the steel industry also has been feeling the draught brought about by the same restrictionist policies of the Government. It has unemployment, short-time working, and there is the same reluctance in the new situation by customers to hold stocks. But there is this financial difference between the position of the steel industry in relation to the general fallback in industrial productivity and the position of the coal industry, that in recent rather better times the steel industry was not obliged to import steel at its own expense and sell it at a lower cost to the consumer at home. That is a tremendous difference. The steel industry at the time when domestic consumers were short was actually exporting.

The second reason why we are in the present embarrassment of too much small coal—and here the Government are at least partly to blame—is the failure in forward planning to foresee the effect of improved utilisation efficiency on energy consumption in this country. After a very slow start, fuel-saving propaganda is now making tremendous headway. I also agree that the higher prices of coal have contributed something, but so has the work of the National Industrial Fuel Efficiency Service, among others. It is ironical to know that the work of this service is being subsidised by the nationalised fuel and power industries, and yet it is the nationalised fuel and power industries which, in the commercial sense—I am not talking about the value of the work as such —tend to lose by the operations of the National Industrial Fuel Efficiency Service. It seems to me that in their forward planning the Ministry should have seen the possibility of this occurring. It is not the slightest good blaming the National Coal Board, which in its position cannot necessarily see the whole fuel and power picture.

We have not had the extra production which was expected, but even had we had that extra production I think that the assumptions which have been made until fairly recently about 6 million tons of extra coal or coal equivalent being needed each year for the next twenty-five years are obviously already being falsified by the march of events.

As I have said. I have much shortened what was intended to be a longer speech. But finally, may I give another reason for the present embarrassment of small coal—and here I think the major fault can be placed at the Government's door. Conservative Ministers have greatly neglected their obvious obligations to develop a broad fuel and power policy, while at the same time they have tended to meddle unnecessarily on occasion in the operations of the boards. For instance, in spite of the recommendation of the Select Committee on the Nationalised Industries that the coal industry should have commercial freedom subject to general Ministerial direction, they have continued to control prices, and in advertising the nationalised boards have generally been greatly inhibited by the Government's outlook.

There are matters in which the Minister could probably have guide policy—but from which he apparently shrinks. I will list them. The first is that power stations were switched to oil—the point has been made, but it is worth repeating—by the former Minister because of the shortage of small coal. Surely now that there is a surplus of small coal the present Minister should have the courage to switch them back. There must be escape clauses in the contracts. Also, the railways and municipal authorities should be advised to concentrate on direct electrification for traction and to avoid the use of oil. That at least could be done. The gas industry should be urged to concentrate its efforts on making use of indigenous small coal instead of importing methane gas from across the world.

I have been an advocate and, in the ultimate, I remain a firm advocate of the nuclear power programme, but as we have a surplus of small coal and as at the moment the capital cost of nuclear power stations tends to climb in relation to the lower cost now of coal-fired power stations, I think that there is at least a case to be examined for rephasing and retiming the development of the nuclear power programme. There might be a case for rephasing its development at least until industrial production picks up again. As to hopes that production will pick up again, perhaps it is no good expecting the reformation of present Ministers. The best way in which we could improve production, and so indirectly help the coal industry, would be to change the politics of the Government.

8.56 p.m.

Mr. Harold Neal (Bolsover)

Our debate has covered many aspects of the coal industry. We have heard some excellent speeches from both sides of the House, many of which have revealed widespread concern over the plight of the industry. I hope to deal with some of the criticisms that have been made.

I was surprised to learn that the Parliamentary Secretary was to open the debate, because he brings to the discussion a much more burdened conscience than does the Paymaster-General. Two years ago, when the Bill that fixed the present borrowing powers of the Board was before us, the Parliamentary Secretary was one of the 23 rebels who voted against the Government. I listened carefully to him today, in the expectation of hearing some recantation before he took on the rôle of poacher turned gamekeeper. Instead of a recantation, we heard a most unusual tribute to the tax dodgers, which seemed altogether irrelevant to his case.

When the present Minister of Supply was moving the Second Reading of the 1956 Bill, he said that he had come to the …inescapable conclusion that coal must remain the foundation of our fuel economy, and no Government, having come to that conclusion, could do other than seek sanction for continued investment in the coal industry."—[OFFICIAL REPORT, 10th May, 1956; Vol. 552, c. 1127.] Most of us, at some time or other, have indulged in similar platitudes, but our faith is worth just what we are prepared to venture on it, and we should like to know how far the Government have departed from the belief that coal is to remain the foundation of the country's fuel economy.

The position was very different when that Bill was introduced. Demand was rising, there was a fuel gap that had to be bridged by oil and by imported coal, and the miners were working a six-day week. There were many miscalculations made by those managing the industry, and by Government spokesmen. It is only eighteen months since the Paymaster-General indulged in some impossible calculations about the future coal output, but I shall not embarrass him by quoting those figures.

We do not condemn his optimism, nor do we quarrel with the reasons given by the Parliamentary Secretary for these borrowing powers. Where we part company with the hon. Gentleman is when he describes the events that have led to the present financial position of the industry. The real reasons are being concealed from the House and from the country.

The Explanatory Note to the draft Order says that these borrowing powers are necessary to make advances to the National Coal Board to enable them to defray expenditure properly chargeable to capital account. That is a surprising understatement, but one thing must be made abundantly clear. This is not a subsidy; it is only a loan for working capital.

What the Government are, in effect, saying to us today is, "Here is a simple problem of arithmetic. The present borrowing powers are at their maximum of £75 million. Raise them to £130 million, and, hey presto, all the troubles are ended." I profoundly wish that the mere concession of an extra £55 million in borrowing powers would solve the problems of this industry, but it is more than a matter of tinkling cymbals. It is a problem of grave economic and social import, involving the readjustment of our ideas about the nation's fuel policy.

The distressing feature about today's debate to me is the absence of a plan. We have not been told what the production is calculated to be for 1959. The hon. Member for Kidderminster (Mr. Nabarro) sought, by means of a Question a week last Monday, to extract from the Paymaster-General what the calculations were for production for 1959. There was no adequate answer to his Question. It is significant that, in the last two Economic Surveys, the Government have not fixed a coal target at all. We have not been told today how much the Government intend to encourage the use of indigenous fuels. We have not been told whether there are any concrete proposals for reducing stocks. Neither have we been told how the Government are to encourage the export programme.

The Parliamentary Secretary, in his opening speech, spoke as though a meteorite had hit the coal industry from out of the economic stratosphere, and all that we could do about it was to pray that the calamity would not be repeated. Any keen observer of the coal industry knows that we have been moving into this crisis for the last two years. To increase the borrowing powers now, without having, alongside that borrowing power, a plan for the future, is merely buying time, and nothing more.

What is the matter with the coal industry? What strange malady has overtaken this once virile giant? The disease is easy to diagnose, but he would be a bold practitioner who would prescribe a quick and easy cure. Four years ago, I would not have hesitated to advise any parent to send his or her boy into the pits to carve out a career. I should do so today with considerable perturbation. Four years ago, this industry was booming and demand was rising. Today, it is in danger of deceleration into a state reminiscent of the 1930s, when, in South Wales and in other coalfields, the gaunt, silent headgear was a symbol of desolation.

There is always a danger in these things of spreading alarm and despondency, but I should be insincere if I said that anybody could entertain arty confident hopes of a quick recovery of the coal industry. When we have made all allowances for the general coal recession in Europe, we are bound to admit that, after all, much of our trouble is of our own making. Though I do not absolve the Coal Board from all responsibility, I do say that the main responsibility for the present plight of the coal industry rests mainly on the shoulders of the Government. There are the guilty men.

It was not until the miners made their demand for increased wages and a sick pay scheme, in March of this year, that we began to hear the doleful stories of the bankruptcy and decline of the industry. Sir James Bowman, in introducing the four-point programme arising out of that demand, suddenly discovered that production was out of balance. Both he and the Government ought to have made the discovery that distribution was also out of balance.

I should like to comment upon the policy which I have just mentioned. Three of its points were selective recruitment, the closing of uneconomic pits and the reduction in capital expenditure. Mr. Ernest Jones, the President of the National Union of Mineworkers, whom I always regard as a pillar of sanity in the trade union movement—and let me say, in parenthesis, that he and his colleagues have used their great economic power over the past ten years with commendable moderation—when this policy was announced, in language which was unusual for him to use, called it the "cockeyed policy of the Coal Board".

I should like to offer one or two comments upon it. Let us take, first, selective recruitment. I content myself by saying this about that point in the programme. Any industry which declines to accept the infusion of young blood will very soon lose its economic health. There have been complaints for years that the average age of miners was rising and that that was the reason why output per man-shift was declining. Now we are saying that there are too many men. I opposed the policy at the time when it was discussed in this House and outside, but how right the miners were in refusing to accept the infiltration of Hungarians into the pits.

Secondly, let us consider the question of the closing of uneconomic pits. I accept at once that little valid argument can be adduced in favour of keeping pits open that are losing enormous sums of money.

Mr. Nabarro

Hear, hear.

Mr. Neal

Yes, but if we are to close pits that are uneconomic it should be as a result of a planned operation and not as a result of panic measures which are now being followed.

Some of my hon. Friends and I have advocated for years a policy of concentration—concentration on the better and more remunerative seams. But if we are going to close pit A, as we have been told will be done, and transfer men to pit B, we should ensure that the housing should be diverted to the area where the men are being transferred, that cultural centres, schools and chapels should be provided for them so that they will not be without the social amenities in the new areas to which they go.

What is more, in the areas where the pits are being closed we ought to have the co-operation of the Government Departments to ensure that new industries will be settled in the areas that are going to be derelict. In my own and in many of my colleagues' constituencies there are villages and small towns which are dependent entirely upon a colliery, and when that is closed there is nothing of an industrial nature to which men can go to find employment. It is those, areas which ought to receive the attention of the Government, or else I fear there will be a social convulsion arising out of the closing of these pits such as we have not seen for thirty years in this country.

Let me now turn to capital expenditure, and in this connection I hope that we shall be careful not to lessen the efficiency which the industry has gained since vesting day. After all, in an extractive industry like coal we have always got to be putting capital into it to regain lost capacity. The roads get further out, the seams become worked out, the transport system and the shaft capacity depreciate. We have always got to be putting new capital in, not to improve output but to maintain it. I hope that we shall not see economy run mad as far as capital expenditure is concerned.

I know that some hon. Members opposite have lifted their hands in holy horror and have said, "£661 million have been invested in this industry in ten years." Yes, and it has been a good investment, especially when one compares it with other industries. I am all in favour of putting capital into the atomic energy industry in this country. I am proud of the fact that we lead the world in the peaceful uses of atomic energy, and I hope that we shall continue to invest in that industry and keep our lead in the world.

Let us, however, compare the atomic energy industry with the coal industry. The plan to erect atomic power stations began in 1955 with a capital of £300 million, and that figure has increased considerably since. It was to be £300 million in ten years. What do we have at the end of it?—the coal equivalent of 18 million tons. That is all. Compared with the coal industry, it is a much more costly investment.

In response to the programme which the Coal Board put forward, through Sir James Bowman, the reply of the miners, at first, was to say, "Abandon opencast mining". I am glad to see now that the National Union of Mineworkers has secured a recruit for its platform in the person of the hon. Gentleman the Member for Kidderminster.

Mr. Nabarro

I have always been there. Really, the hon. Gentleman must not impute these things to me. He was sitting in his place on 24th March, 1950, when I made my maiden speech in the House. On that occasion, I had a great deal to say in condemnation of the policy of continued opencast mining. Who was it who most stoutly defended that policy? None other than the right hon. Gentleman the Member for Blyth (Mr. Robens). The hon. Member for Bolsover (Mr. Neal) should put the blame in the right place, on his own Front Bench.

Mr. Neal

I never said that the hon. Member for Kidderminster was a recent convert to opposition against opencast mining. I said that the National Union of Mineworkers had secured a recruit for its platform, and I am very glad indeed to know it. I have a distinction shared by few. I have conducted the hon. Member for Kidderminster down a deep mine pit, and I am glad that I convinced him in favour of deep-mined coal.

What is the reply of the Coal Board and the Parliamentary Secretary to the contention of the National Union of Mineworkers that opencast mining should be discontinued—that a profit is being made of about 13s. or 14s. a ton, and that, on those grounds, the Coal Board cannot afford to stop opencast mining? I would remind the Parliamentary Secretary that the Coal Board made its biggest profit when it bore no responsibility at all from opencast mining.

Today, we have 5¾ million tons of opencast coal in stock. That is about half the annual output. What sense is there in continuing this production at the rate of 11 million tons a year when so much of it is unsold? I can think of nothing more likely to exacerbate the feelings of a miner on the dole than the sight of his pit closed and opencast working in the adjoining meadow. Yet that is what will happen if this policy is pursued.

I come now to exports, a subject very closely related to the stocks which, we have been told, have rendered necessary these additional borrowing powers. In 1947, when the Labour Government nationalised the coal industry, they, together with the first Coal Board—in response, perhaps, to pleas from the Tory benches at the time—recognised that we must export to live, and the Coal Board recognised that it must obtain a foothold on the Continent, and, what is more, sell coal to our traditional customers.

We began exporting coal not long after vesting date, and the export programme was painfully built up, often at the sacrifice of the domestic and industrial consumer in this country, until it reached 13 million tons. Burt what did the present Government do in 1955? They began, in their panic, to slash the export programme, and now, as one of my hon. Friends said, we shall be lucky if we export 5 million tons this year. The wheel has turned full circle. We are now looking for customers, and we cannot find them on the Continent, as the Parliamentary Secretary admits.

What the foreign importer wants is two things. He wants good quality coal and continuity of supply. It is no good going to one of the continental countries and saying, "We will let you have half a million tons this year," and then, next year, saying, "We cannot let you have any," and the following year saying, "Please do buy our coal." I was recently one of an all-party group of Members who met representatives of importers' organisations 'in many countries on the Continent. Those importers told us that because we refused them supplies two or three years ago they had to go elsewhere and had placed many long-term contracts and, as a consequence, could not buy British coal.

The result is easily seen in the records. This year, 26 million tons of coal from the United States of America is being sent into continental countries, coal coming a haul of 3,500 miles and competing with coal from this country which would have only to cross the narrow English Channel. And that is the result of the policy of the Government.

The Prime Minister recently made a statement which was very agreeable on this subject. He said: We intend to remain in the export market for a long time to come. In view of that statement is it unfair to ask the Government what they are doing to recover the markets they have lost? The Paymaster-General is now an accepted authority on European trade. Perhaps, when he is winding up the debate, he will tell us what prospects there are of increasing the exports to the countries of Europe.

I want to say a word or two about stocks of coal. The question has been much debated today and I do not want to labour it too much. For a long time the Opposition have been putting Questions to Government spokesmen about stocks, and repeatedly they have told us that they are not perturbed about stocks. We have heard today that they are only four weeks' production, and that it does not matter very much. The real problem of stocks they have said, is the small coal.

I have said many times in the House, and I shall go on saying it until somebody takes notice, that small coal has the same calorific value as large coal in proportion to its size. What we need is a proper use of small coal. It is the job of the colliery manager to produce coal. It is the job of the combustion engineer and scientist to find means of using it. Of course, the electricity industry has saved us a good deal in this respect; the electricity industry, a nationalised industry, please observe. That is the only industry which has adapted its firing equipment to use inferior and small coal which the Coal Board has to dispose of.

But what is the situation today? I gather that the Parliamentary Secretary is in favour of a change-over from oil to coal. We hope that it will soon take place, but at present there is a plan for 14 stations to be using oil which could have been using coal. No evidence has yet been submitted to prove that oil is cheaper than coal to generate electricity. For that reason those dual firing stations should at present be using small coal and using some of those stocks of smalls which are embarrassing the Government and the Coal Board.

Another way of using small coal is briquetting. It is not very popular in this country, but it is on the Continent. The trouble with making briquettes is that one requires a binder, and the binder has often to be pitch. Here is where we come into conflict with the hon. Member for Kidderminster once more, and his colleagues who are supporters of the Clean Air Act. The briquette makes so much smoke when it is bound with pitch. A good deal of research has been done on this subject by the Coal Board, and attempts have been made to produce a briquette without a binder. Last year, £290,000 was spent on research into briquetting, and a loss of £172,000 was made on the manufacture of briquettes. After all this research and expenditure we ought to be getting some result, and the people concerned ought to be stirred up to produce some means of using up small coal.

Turning to oil competition, I support the remarks of my right hon. Friend the Member for Blyth when he said that oil lacks the continuity of supply which coal can provide. It only requires some fool to blow up a pipeline or pumping station in the Middle East or Colonel Nasser to block the Suez Canal to cut off our supplies of oil. Yet, despite this danger, we are allowing oil competition to proceed at such a pace that by 1965 it will be taking the place of 40 million tons of coal.

Can the Government look with equanimity upon this competition? Can they look with equanimity on the tremendous amount of capital expenditure which has gone into the oil distributive industry over the past few years, which is out of all proportion to the capital investment in productive industry? Without taking a Luddite viewpoint on this subject, I believe that the Government cannot permit this competition to proceed without regulation. They ought to take steps to regulate the consumption of oil when the coal industry is in such a depressed condition.

The Opposition accept the calculation of £130 million as the requirement of the Coal Board for the current year. As my right hon. Friend indicated, we do not propose to divide the House on this Order.

Mr. Nabarro

Nor do I.

Mr. Neal

Perhaps the hon. Member dare not risk the danger a second time.

Our complaint about today's debate is the sparseness of information. We want to know what are the spheres of influence in fuel in the future. The gas and electricity industries have a right to know how they fit into the picture of the Government's fuel policy. The miners want to know what future is in store for them. I know that they are sometimes in a turbulent mood, but I have not lived a life-time among them without knowing their characteristics. Generally speaking, they are good, hard-working citizens. I assert that nothing can assail the belief of the miners in nationalisation, but at present they are very perturbed about the policy of the Government and the Board. They wonder what the consequences will be in short-time working and the closing of pits, and they have a right to know.

For these reasons, while expressing our concern, we give general approval to the borrowing powers, because we admit that they are necessary. But the greater need is for a national fuel policy, a policy in which coal has an accepted place and a policy which will make the maximum use of our indigenous products.

9.25 p.m.

The Paymaster-General (Mr. Reginald Maudling)

We have had a most interesting debate on a most important subject, and the only disappointment has been that so few hon. Members have thought it necessary or desirable to attend the later stages of the debate. Coal is a basic industry of great importance to the country and I noted that throughout the speech of the hon. Member for Bolsover (Mr. Neal), who has a lifetime's experience in the industry, there were never more than thirty or forty Members in the Chamber.

That suggests to me that the concern about the policy of the National Coal Board and the Government, which, according to the newspapers, is so widespread and intense, is by no means so acute as one might think. To judge by some recent Press reports, my hon. Friend and I were to be subjected to a violent barrage from both sides of the Chamber—and I shall have a few kind words for my hon. Friend the Member for Kidderminster (Mr. Nabarro) in a moment. There has not been a violent barrage. Perhaps, as sometimes happens, the warning of an exterior fog has driven Members to their homes before transport becomes too difficult and no doubt the fact that the official Opposition and my hon. Friend the Member for Kidderminster have announced that they do not intend to divide the House has had something to do with it. Perhaps for those reasons, there has not been that atmosphere of urgency and passion which some of us had been led to expect.

Nevertheless, to come to the serious substance of what I have to say, there is no doubt that the coal industry's position must give concern to everyone who has a proper interest in the affairs of the country and this great industry. I want to deal with a wide range of problems which have been raised. I must apologise to those Members whose speeches I was not able to hear, although I have been given a note of what they said and I shall carefully study HANSARD tomorrow to see the exact details of their speeches. I was sorry, in particular, to have missed the speeches of my hon. and gallant Friend the Member for Dorset, North (Colonel R. H. Glyn) and my hon. Friend the Member for Newcastle-upon-Tyne, North (Mr. R. W. Elliott). Many important matters have been raised, and I shall try to deal with them.

The debate divides into two separate topics. There is the narrow issue of the Order relating to the borrowing powers of the Coal Board, and there is the wide general issue of the present position of the coal industry. Both matters are intimately inter-related. It is impossible to challenge the need for the Order. Were it possible to challenge it, no doubt my hon. Friend the Member for Kidderminster would have done so, but, since even he has restrained himself, we all recognise that it is essential for the Board to have these extended borrowing powers.

The reason for the Order is well known. The Board is under an obligation, which is peculiar to the National Coal Board, relating to the level of its net outstanding borrowings in any one year. Under the 1956 Act, if the Board's net borrowings at any given time exceed by more than £75 million the peak of its net borrowings in the preceding financial year, an Order such as this must be laid before the House of Commons.

I should point out that this is a question of net borrowings and not of the level of investment, which is a quite different matter. When we last debated the subject, in July, my hon. Friend the Member for Kidderminster suggested that the matter in concern was the level of investment. It is not; it is the level of net borrowing. This is the first time that it has been necessary to introduce an Order under the 1956 Act and the first time that net borrowings have risen to the point at which it has been necessary to bring the matter to the House.

As my hon. Friend the Parliamentary Secretary explained, it is essentially a problem of stocks. The cost of additional stockpiling in this financial year, at £57 million, is more than the figure of £55 million, which is the difference between £75 million, which is the normal limit, and £130 million for which we are asking today. The whole excess over the statutory limit of £75 million is accounted for by the increase in the stockpiling programme upon which the Board has been forced to embark.

Reference has been made to the loss which the Board is suffering in the course of the present financial year, and the fact that, to the extent to which it makes a loss, its borrowing requirements to finance its working capital are increased. But, as my hon. Friend the Parliamentary Secretary pointed out, it now looks as if the financial experience of the Board for the current period will be less difficult than was at one time feared.

I now turn to the arguments put forward about the necessity for the Order. In justifying the case for the Order I must try to deal with such criticisms as have been made of the necessity for this large additional borrowing. First, it may be argued that the Board should never have allowed its stocks to rise to their present level. That is not a fair criticism of the Board. It took action early this year, by way of stopping recruitment and cutting out Saturday working—action designed to reduce production and, thereby, the accumulation of stocks. It would have been very difficult for the Board to go any further at the time.

We must recognise that there is a certain inflexibility in the coal industry, which is peculiar to that industry. Most industries, faced with an accumulation of stocks, would go on to short-time working. The right hon. Member for Blyth (Mr. Robens) referred to the importance of avoiding short-time working, but in any event, in the peculiar circumstances of the coal industry—both in relation to the overheads involved in short-time working, and the guaranteed week—the Board has not the flexibility available to industry generally. If it had wanted to do more to curtail production than it did in stopping recruitment and Saturday working it could not have embarked upon a policy of short-time working.

The only thing it could have done was to cut back production by taking certain units of production out of action. That, surely, would be a very difficult step to take, both on social grounds, which have been rightly stressed in the debate, and on economic grounds. The effect of taking pits out of action or closing collieries has been stressed by hon. Members on both sides of the House, including my hon. Friend the Member for Glasgow, Pollok (Mr. George). We are all aware of the difficulties involved.

Similarly, once we decide to close a colliery we must remember that it is not practicable to reopen it in a short time if the demand for coal increases. Therefore, the step of closing collieries is a very serious one, to be taken by the Board only after very prolonged and serious consideration. The Board was absolutely right to restrict the measures it took early this year to the stopping of recruitment and Saturday working. It is therefore in no way to be blamed for the fact that stocks have piled up to their present level.

Several hon. Members, including the hon. Member for Sedgefield (Mr. Slater) and my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster), referred to the importance of trying to sell a greater amount of coal by more aggressive selling methods. The question of exports was raised by the hon. Member for Bolsover. I agree with him that continuity of supply may very often be more important than a matter of a few shillings per ton in price, but I would ask him to bear in mind the fact that in 1955, when the Government took action to restrict coal exports, we were having to import coal to the tune of over £70 million a year. Most of that would be paid for in dollars. To a great extent we imported coal at high prices, and often dollar prices, in order to export it, sometimes, at lower prices, in exchange for soft currencies, because we wanted to retain our markets.

I think that that was wise. But there is a limit to the extent to which that can be done, bearing in mind the large imports of coal in 1955, although I agree with the hon. Member for Bolsover and with my hon. and gallant Friend the Member for South Fylde that we must not look at this matter merely in terms of immediate profit or loss in coal exports this year, but in terms of maintaining markets for the future, because of the great importance of continuity of supply.

At present, the prospects of resuming large-scale exports to the Continent of Europe are not very great. This is a matter to which several hon. Members referred. The fact is that the position regarding coal stocks with many of our European customers is, on the whole, rather worse than in this country. They have great stocks of coal. My hon. Friend the Parliamentary Secretary referred to the position in Germany. Belgium too is experiencing difficulty and is having to cut back production and large stocks of coal are piling up there. They also have long-term contracts with the United States to which a number of references have been made in today's debate.

We must bear in mind that competition is intense. The level of Atlantic freight rates is extremely low and that, coupled with a remarkable increase in productivity by the American coal miners, means that America can deliver in Europe at prices which are extremely competitive. We have also to face the competition of Poland. The Poles are pursuing a vigorous policy of cutting export prices. So we must recognise that at the moment the prospects of re-entering the European market on a large scale are not very great. The Coal Board is making great efforts in this matter. It has recently fixed contracts for the sale of steam coal which I think is encouraging.

I should refer to the question of prices because the right hon. Member for Blyth, in a supplementary question the other day asked whether there was any control over the export prices charged by the Coal Board. I can confirm that there is not. It charges what it likes in the export markets. I agree with my hon. and gallant Friend the Member for South Fylde that it would not be a wise policy to try to increase exports now by dumping coal on the European market at cut prices.

Mr. J. Griffiths

I must declare an interest, as this question affects my constituency, but will the Government discuss with the Coal Board the possibility of resuming the export of anthracite to Canada on a large scale? At one time this was a very profitable export.

Mr. Maudling

It would be excellent if that could be done, and I am sure that the Coal Board will do everything possible to sell anthracite. I do not know what is the position in Canada, but I am sure that the Board will make every effort to sell anthracite.

Other uses are also being actively examined by the Coal Board, and there is, in addition, the question of selling more on the home market. I suggest to my hon. Friends who have mentioned this matter that no advantage would be gained by disposing of these stocks at drastically cut prices on the home market. By and large, industrial consumers of coal buy as much as they need to carry out their processes. The amount is determined by the demand for steel, motor cars or anything else. If the Board sells more coal to the steel industry this month, it merely means that so much less will be sold in a few months' time. I do not see how in the long term the Coal Board can sell more coal by cutting prices at the present time.

What would be effective in encouraging a long-term demand for coal would be an indication that the long-term trend of coal prices was likely to be a downward trend, but that is another matter. To cut prices now would not increase the total consumption over a period, it would merely make greater financial difficulties for the Coal Board.

Mr. Osborne

Surely, if the price of coal on the domestic market were cut by as much as it costs to stock it and then picked it up again, the Coal Board would be no worse off in its net receipts; and that would tend to cause sections of industry which otherwise would be going over to oil to refrain from doing so, and thereby create a wider market for coal?

Mr. Maudling

I do not think so. I do not think that the conversion from coal to oil would be affected by what is done now in the case of a particular class of coal. If the Coal Board offered coal at £1 a ton cheaper to dispose of stocks, that would not sell more coal to the steel industry in the long run, because the demand for coal by that industry is settled by the demand for steel. I suggest that what matters is the long-term trend of coal prices, and that a short-term price cut would defer purchases rather than increase them.

Mr. Nabarro

Would my hon. Friend allow me to put a question? He has referred to the steel industry. This coal in stock is of no use to the steel industry. This coal in stock is only applicable to power stations. It is all fines and low-grade coal. I had that confirmed at a luncheon only today.

Mr. Maudling

It is an extraordinary thing, but two of my hon. Friends went to the same lunch and they received information in opposite directions. It must have been a very good lunch. One says that the stocks are entirely fines and my other hon. Friend says they are not entirely fines. The actual figures I have asked for from the Coal Board are 90 per cent., either small or unscreened, 4½ per cent. large coal, I per cent. anthracite and 4½ per cent. graded.

One of the large problems recently for the Coal Board has been the fall in demand from the steel industry for coking coals. I have been trying to put before the House the argument that these borrowing powers are essential because the Coal Board must carry these stocks. I think that now we must look both at the short-term and the long-term problem of the coal industry. There are three problems affecting the industry at present. There is the competition from oil, the increase in fuel efficiency to which my hon. Friend the Member for Kidderminster so rightly referred, and the decline in the total consumption of energy.

I would hesitate to allocate exactly the proportions which should be assigned to each cause in the decline of the consumption of coal, but these are the three causes, decline in total industrial consumption, the increase in fuel efficiency and competition of oil. Looking at the future demands for coal, the right hon. Member for Blyth referred to the estimates I made last year of the probable demand for energy in 1965, which I put at about 300 million tons of coal equivalent, plus 10 million tons additional exports. I still see no reason why those targets should not be achieved, although I agree that their fulfilment will depend now on the speed and timing at which the re-expansion of industrial production takes place.

As a long-term target, I think we should still hold to that. The question was raised this afternoon of what should be the share of the coal industry in achieving that target. The plan was that the Coal Board should supply 228 million tons in 1960 and 240 million tons in 1965. I agree with what so many hon. Members have said today, that it is unlikely that that will be fully realised, particularly in view of the growing competition of oil. That there will be an increase from the low level at present envisaged I am confident, but the extent of that increase is clearly bound to depend upon the competitive position of coal relative to other fuels, and particularly relative to oil.

I take up a very important point raised by the right hon. Member for Blyth when he said that the coal industry was inhibited to some extent from competing with oil. I think he was on a good point there. That is a point which has been made about other industries which are subject to statutory limitations. For example, in a rather different way the railway industry is competing with the roads. It can be argued that the Coal Board, because of obligations upon it, is inhibited and cannot discriminate, and therefore has far less freedom in discounts than the oil industry. This is a matter which the Coal Board is studying. It is a difficult and complex matter, and I can assure the House that any proposals the Coal Board likes to put to the Government, whether or not they would involve legislation, will be most seriously considered. I cannot go further than that today.

Mr. S. O. Davies (Merthyr Tydvil)

Does the right hon. Gentleman mean sympathetically as well as seriously?

Mr. Maudling

It depends on the meaning of "sympathetically". Another point which was echoed in many speeches and with which I wish particularly to deal is the question of competition with oil. A number of hon. Members opposite seem to think that action should be taken to restrict the competition of oil with coal. I think we should be quite clear about what they really want in this context. We often hear the phrase "a national fuel policy". That is a phrase which conceals a great deal of mystification and muddle on the whole subject. I think it means looking into some of the statements made on limitations of imports of oil or, to use the phrase of the hon. Member for Bolsover, the regulation of competition. That can mean nothing else than limiting the competition of oil with coal. I take first the power station contracts, a very important point raised by the right hon. Member.

The position of the power station contracts is this. In 1955 when I said that our coal imports were costing us £73 million, the electricity industry, with the support of the Government, embarked upon a series of contracts for the purchase of oil for use in power stations. These contracts involved purchasing certain quantities of oil for the period of the middle sixties.

Obviously, the oil companies were involved in very large capital expenditure, and as a result of these long-term contracts they quoted prices which, I think, were regarded by the electricity industry as very reasonable. So there were these contracts in 1955 to expand consumption of oil at the power stations up to something like a peak figure of 9 million tons of coal equivalent annually in the sixties, and the programme for conversion of power stations was entirely geared to the consumption of oil under those contracts.

When the coal position changed last year, discussion took place with the oil companies to reduce the amount of oil to be delivered under those long-term contracts. The oil companies were prepared to accept a reduction of 3 million tons coal equivalent, from 9 million to 6 million tons a year. After the great co-operation of the oil companies with us in these matters, it would be unfair to ask them to go further; because these are definite contracts and, on the basis of those contracts, they have engaged in very substantial capital expenditure.

To go beyond this and to reduce even further the consumption of oil must involve a breach of contract. I understood very clearly from the right hon. Member for Blyth that he would not advocate a breach of contract in this manner. Surely he would not advocate reducing still further the consumption of oil in the power stations, and as the conversion of power stations to oil is entirely geared to the consumption of oil, I do not see how he could possibly complain of the conversion programme. The scaling down from the original standards is in line with the scaling down of total oil consumption, and the total conversion is, in fact, very nearly completed.

Apart from the power stations, what do the Opposition want? How would they restrict competition and limit the imports? Would they put on quotas? That would be breaking their international agreements signed in the last few years of their Government. Would they control its use by having a system of licensing, saying that one factory should use oil and not another factory and so on? Would they put a tax on oil to discourage its use? That is the only possible way of regulating competition. If they want to limit imports and regulate competition they must either impose quotas, have a system of licensing, or impose a tax. I think we are entitled to know which is their policy. That is what I wanted to say about the question of oil, because I think that it is a very important matter.

I now turn to the long-term investment plans of the National Coal Board. I am sure that the Coal Board was right not to cut back drastically its long-term investment plans because of a temporary surplus of coal. The Board is reviewing its investment plans, particularly any plans designed to increase total output. The whole emphasis of the Board's investment is increasingly being concentrated on the reduction of costs and on increasing efficiency within the existing level of output, and from what I have heard today I am sure that both sides of the House will endorse that policy. The Board applies very stringent tests of profitability to the investment projects which come before it. This was a matter discussed by the Select Committee in its Second Report, which we discussed a little while ago, and in which it recommended that the major schemes showing a very low level of profitability should be subject to special review by the Ministry of Power. That has been arranged.

There is no doubt that the right line for the Coal Board to take towards fixed investment is to review the situation in the light of the probability that the peak output at which the Board was aiming in 1965 will not be fully attained and to concentrate as much as it can on increasing the profitability of the mines, increasing efficiency and increasing output per man-shift.

We have the short-term problem of a period of slack demand and high stocks. I should like to go into the question of the policy of stagnation which I am told that the Government are following. It is one of those slogans which once again conceals a great deal of misunderstanding. If I had to choose I should prefer a policy of stagnation to a policy of ruination, but in any case ours is not a policy of stagnation. If the Opposition have a method of running the economy flat out indefinitely they ought to tell us, because they certainly could not do so when they were in power. If they have some mystic formula for the rapid expansion of the economy without any strain on the balance of payments, on exports, imports or prices, they ought to tell us, because they have never produced a policy capable of doing that. I will, however, resist the temptation of embarking on a general economic debate, even in the presence of the Leader of the Opposition, because I fear that that would be outside the rules of order on this occasion.

May I therefore return to what has been proposed to meet the short-term problems. I suggest that the Coal Board is right to concentrate on reducing output in the immediate future without reducing the efficient capacity available for long-term production. I am sure that that is right. Secondly, the Board should concentrate, as it is concentrating, on reducing costs. In all these things it must have regard for both the economic and the social factors involved.

The Board is reducing output from the deep mines by closing a number of very uneconomic pits rather ahead of their normal period of exhaustion. Many of these pits are running at a very high loss per ton indeed, and most of them would, in any case, have been exhausted within the next two to four years. Their earlier closure will not affect the long-term productive capacity of the industry.

The Board is also substantially reducing opencast production. The problem of opencast production is that it is a very profitable occupation for the Coal Board, which is important, while on the other hand it creates great amenity problems, which many hon. Members have often brought to the Government's notice. We must also recognise that the opencast industry is not as flexible as we should like to think it is; as my hon. Friend the Parliamentary Secretary has said, we cannot turn it on and off like a tap. The contracting organisations built up to support opencast production would collapse if drastic and extreme reductions were forced upon opencast mining at the present moment.

The Coal Board has tried to reach a balance in trying to cover this gap of 9 million tons between prospective demand and prospective supply next year, and it has done this by dividing the 9 million tons between stocking—another 3 million tons of additional stocks—a reduction of 3 million tons in deep-mined output and a reduction of 3 million tons in opencast output. I suggest that overall this is a very reasonable plan.

The increase of 3 million tons in stocks is about as much as can be financially and physically tolerated in the course of the next year. The reduction in deep-mined output, represents only 1½ per cent. of total deep-mined output, and it both helps the financial position of the Coal Board by eliminating very uneconomic production and also does nothing to harm the long-term productive capacity of the industry, because most of the pits concerned would have gone out of production in any case in the next four or five years.

The reduction in opencast output is as much as 25 per cent., and I think that reasonably reflects the social considerations which underlie this decision. I do not think the House should underestimate the financial sacrifice which is involved by the Coal Board in making such a large reduction in opencast production—25 per cent. compared with 1½ per cent. reduction in production from the deep mines.

I would, therefore, suggest to the House that in facing this problem of surpluses next year the Board has acted wisely in deciding to divide its policy between the stocks held, deep-mined coal —concentrating on the least economic production—and a quite substantial reduction in opencast. The Board, as I am sure the whole House appreciates, recognises the serious problems created socially for the individuals concerned and for the communities in which they live and work. It is encouraging that it hopes to find alternative employment for, I think, at least two-thirds of the men affected; and for those men for whom there is not alternative employment within the Board's activities there are, of course, both the pensions and compensation schemes of the Board and the full facilities of the Government—the Ministry of Labour, the Board of Trade and so on, all of whom are concerned in those matters—

Mr. Osborne

Before my right hon. Friend finishes, will he deal for just a moment with the point raised by the right hon. Gentleman the Member for Blyth (Mr. Robens) about whether we could sell more coal at home? The right hon. Gentleman told the House that the miners got, on average, 51s. per ton, while he himself was paying £12 a ton at his own home? Can the Board do nothing to narrow that difference? If it could, we could expand the home market.

Mr. Maudling

I think that the right hon. Gentleman was quoting a sort of general figure of pithead prices for all grades of coal and quoting, possibly, a high price for the coal delivered at his home, which is some distance from the pithead—and the coal, is, I hope, good coal. However, the question of the distributors' margins has been fairly dealt with and well covered by the Report of the Robson Committee. That Report is an excellent document produced by a distinguished Committee after much study, and I doubt whether there is much scope for a reduction in the price to the consumer through a reduction of the distributors' margins. Indeed, the Robson Committee rather suggested that justice might lie in the other direction. In any case, distributors' margins have been fairly well held in the last year or two.

Miss Margaret Herbison (Lanarkshire, North)

Before he was interrupted by his hon. Friend, the Paymaster-General was talking about the 4,000 miners for whom no work will be found—and, of course, the hon. Member for Glasgow, Pollok (Mr. George) made it very clear that the majority of those men would be from Lanarkshire. Have there been discussions between the Ministers responsible for fuel and power, the President of the Board of Trade and the Minister of Labour? Scottish Members have bean raising this matter for several years now, but so far the Ministries that the right hon. Gentleman has mentioned have done nothing at all.

Mr. Maudling

Of course, these prospective closures are notified as soon as possible to the other Departments—the Ministry of Labour, the Department of my right hon. Friend the Secretary of State for Scotland, the Board of Trade and so on—and today, the Board was discussing with the National Union of Mineworkers the details of the closures, as I understand they do in the normal way whenever these closures take place and redundancies are threatened.

The debate has ranged very wide over the whole industry, and we have looked at both the short-term and the long-term problem. Perhaps I could conclude by saying that, as has been said earlier today, we must take as a basic principle that the future of the industry is still a very great one, and an encouraging one. There must be and will be more concentration on efficiency and costs, but in the context of the new developments that are taking place, I have no doubt that coal will continue to be in the future, as it is now, the greatest source of energy for the British economy.

Question put and agreed to.

Resolved, That the Coal Industry Nationalisation (Borrowing Powers) Order, 1958, a draft of which was laid before this House on 25th November, be approved.