COAL (EXPORTS) (Hansard, 14 May 1958)

§ Sir Peter Roberts (Sheffield, Heeley)

In raising tonight the question of coal exports, it is not my purpose to go into details or to try to tell the National Coal Board how to run its business. My intention is to ask the Minister if he will bear in mind certain political factors with regard to the export of coal, and to urge his right hon. Friend the Minister to make an announcement about the Government's policy in order not only to reassure people in this country but also those overseas whom we hope will buy our coal.

First, I want to give the House what I consider to be the relevant factors. The first is that we have at present in this country approximately 27 million tons of coal and coke. Of this, 7 million tons of coal and approximately l½ million tons of coke are unsold by the Coal Board. The rest has been sold by the Board and is in the hands of distributors. Much of this coal is small coal, but it is nevertheless a valuable commodity. The second relevant factor is that the United States of America last year exported to the Continent—and it is really the Continent with which I am most concerned—approximately 38 million tons of coal. That is an astonishing figure when one realises that these Continental markets were our traditional markets before the war.

The third relevant factor is that foreign Governments are now intervening more and more in the coal markets, either directly by an embargo on the importation of coal or by putting on tariffs, or even providing subsidies. These are the political factors which the Government must take into account when considering this matter; they are not the direct responsibility of the Coal Board.

I and others urged the Government to step up their coal export programme as long ago as June of last year. At that time it would have been possible for the Board to have made contracts at a reasonably satisfactory price, but I fear that nothing very much was done until October and November last year, by 569 which time surpluses were obvious and it was extremely difficult to sell the coal. Despite that, United States exporters sold coal to the Continent in October and November last year, and even in January of this year. The figures are slightly alarming. There were definite freight bookings for coal from the United States to the Continent in January of this year—they may have altered since, but these are the latest figures that I have—for 26 million tons in 1958; 19 million tons in 1959 and 10 million tons in 1960.

We have coal available in this country, but we are not selling it abroad, and I want to come to what I believe are the main reasons for our inability to sell this coal. I understand that the Coal Board is not prepared to give any firm guarantee of quality as that term is understood by coal importers on the Continent. The Minister should ask his advisers to arrange for some method of guaranteeing a quality satisfactory to those importers. I do not think there is sufficient confidence in the continuity of United Kingdom coal supplies. From time to time we have almost put an embargo on supplies of coal to the Continent, which to a certain extent has weakened the confidence of the Continental importers.

In December of last year, the Minister announced that we were prepared to consider three-year contracts. That was all to the good, but unfortunately it was a little late; and we must consider periods even longer than three years. We are hoping to win back markets which were traditionally ours for something like 100 years, and we must give confidence abroad regarding the continuity of supplies. The third reason why we are not getting the sales we need is the inflexibility of price. At the moment, we are not prepared to meet the competition which we have to face abroad.

What are the remedies which the Minister should employ? I feel it important that I should impress on the Minister that there are certain steps which should be taken immediately. The first is that the Government should announce a target figure for the export of coal for a period of years. This should be a firm figure and an indication of the type of policy we wish to pursue. I suggest that we should attain a figure of about 10 million tons a year.

570 The second remedy is for the Coal Board and the Ministry to concentrate on those areas of the Continent most favourable to us and whose custom is likely to remain with us. We have to face the competition of oil, and other forms of competition, and the areas which the Minister should invite the Board to study are North-West Germany, Holland, France and Denmark, where there may be demands from power stations.

Most important is that the Minister should be prepared to advise the Coal Board to reduce its prices on short-term deliveries. I do not believe that sufficient thought has been given to this aspect of the problem. Although there must be a long period of continuity of supply, prices tend to fluctuate in the markets of the world. We must be prepared to meet those price fluctuations. My feeling at the moment is that we are not flexible enough in this problem. I understand that in the last twelve years this country has earned a premium on the price at which is has sold coal abroad as compared with the price at home of something between £75 million and £100 million. That is the premium we have obtained in the past. If I am right in those figures, and there is some doubt, I think the time has come when we should use some of that premium in reducing our prices, on the short term, in dealing with our customers overseas.

Fourthly—and this is a point I have already stressed—we must build up confidence with our customers that once we have started we can continue to supply them with coal.

The fifth point I would urge on my hon. Friend is that the Government must play their part in negotiations for the sale of coal overseas. I say this rather reluctantly, because it is not the general principle that the Government should have to enter into negotiations to support the sale of commodities. But this is done more and more, and with coal particularly foreign Governments are entering this field. I will mention three countries as an example.

I understand that the Finnish Government have put an embargo on the importation of United Kingdom coal and coke. On the other hand, we buy from Finland wood pulp, paper and pit props. I believe that in these negotiations Her 571 Majesty's Government should give some help and support to the Coal Board and our exporters in trying to sell coal and coke to Finland. The Danish Government are quick enough to make representations to this country regarding the sale of butter. Our Government should help regarding the sale of coal and coke to Denmark. Finally, the Italian Government at the moment have a tariff of 10 per cent. on United Kingdom coke going into Italy. I should have thought that this was a field where Her Majesty's Government should get into negotiation with the Italian Government and the authorities under G.A.T.T. to see whether that position could be relieved.

I believe that the Government will have to support the exporters and the Coal Board in this sales drive.

The reason I have raised this matter is that I believe it is important, in relation to getting confidence abroad, for the Minister to make a statement and to give some guidance to those people who wish to purchase coal from this country.

It is a frightening thing to me that traditional markets for the export of coal—the Continent of Europe—have now apparently gone across the Atlantic to American coal supplies. It does not help us in our exchange control problems, or in anything else. I hope the Parliamentary Secretary will relay to his right hon. Friend the Minister these very sincere convictions which I hold, and I hope that, as a result, we shall be able to build up again the confidence of those people who wish to buy British coal.

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

My hon. Friend the Member for Heeley (Sir P. Roberts) has raised very important matters in this short debate. Even if time permitted, I am sure he would not expect me at this horrible hour to deal with them at length. Many of his points will certainly need consideration. Some are not primarily the concern of my Department; matters of trade negotiation, for instance, are not among those with which we are directly concerned.

My hon. Friend raised questions about which, I am afraid, I cannot be very hopeful—price concessions, for example. He said that we should use the premium 572 which we had earned in the past from coal exports. Unfortunately, in so far as the premium is relevant, it has all been used long ago, and the Coal Board has an accumulated deficit of £30 million, is still running a deficit, and is not, therefore, in a position to make price concessions very easily. I would also point out that some of the points that he raised, as he no doubt appreciates, are matters entirely for the Coal Board itself. Whether the Board was quick enough off the mark in seeing what was happening in the small coal market is a matter for consideration, but it is a matter entirely within the commercial responsibility of the Coal Board and is not a matter for the Ministry.

However, all that does not dispose of the very important question of coal exports from this country and their future. I think I can most usefully use a few moments in bringing out the point which I think is fundamental and which, with respect, my hon. Friend did not seem altogether to apprciate in the presentation which he made. It is a fact that all the contracts that have ever been entered into have been fulfilled and that the interest of the Board and the Government under both Administrations—Socialist up till 1951 and ourselves since—has broadly speaking coincided. Their views on what should be done in respect of coal available for export have been the same. That is not surprising, because although it is true—but not sufficiently recognised—that on balance the Coal Board has made very large sums of profit on imports and exports of coal, nevertheless ton for ton it loses very heavily if it imports one ton of coal and exports another. Therefore, the Board's finances are always in favour of pushing exports and reducing imports. Similarly, the interest of the Government, who throughout all these years have been so much concerned with balance of payments, goes the same way.

One of the most serious changes which caused the more recent cuts had just such a background, and I can give my hon. Friend the figures if he wishes. Whereas in 1949 and 1950, and again in 1952 and 1953, the balance of payments benefited on balance from coal imports and exports by about £50 million, in 1955 that £50 million credit was turned into a deficiency of £20 million. Therefore, 573 it is not surprising that the Coal Board and the Government have always been at one in what had to be done.

The coal export policy of this country since the war has, broadly speaking, imposed itself. I will remind my hon. Friend of some of the figures. In the year 1950, the then Administration and the Coal Board exported just under 13 million tons. In 1951, when so many things collapsed about the then Administration, a very savage cut had to be made in those exports by almost half, down to less than 8 million tons, due to the fact that they were drawing on stocks to such an extent that there was an imminent danger of a distribution breakdown and the Coal Board being unable to implement its main statutory duty of providing coal for home consumption.

What has happened since 1951 till this last year has been that coal production has been, broadly speaking, steady and, as a result of the great industrial expansion which has been going on all the time since 1951, consumption has increased from 212 million tons in 1951 to 220 million tons in 1956. If we put stable production against greatly increased home consumption, it does not require a great deal of arithmetic to realise that there is not a balance available for continued high exports unless—and that is what began to happen—at the same time as we export we import. That is disastrous to the Coal Board's finances and to the balance of payments. Broadly speaking, therefore, there has been no alternative. Without increased production, unless and until home consumption unhappily falls off, there just is not a margin for net exports.

We have the experience of last year. Last year, while production remained more or less stable, and we cut imports for the reason I have given, consumption went down for the first time for some years. Other things being equal, there would then have been a balance for export, but we could not export because there was no market, and the coal went into stock. Britain is not alone in that respect. Stocks on the Continent have gone up by about 8 million tons, and I agree with my hon. Friend that it is in Western Europe that we have to look for our main markets.

574 We have to face the fact that if coal production remains more or less stagnant and stable, as it has done for the last six or seven years, either we cannot sell the coal or we have not got it to sell. If business activity begins to grow again on the Continent we will be able to sell some coal, but if production is beginning to go up on the Continent we very much hope that it will begin to go up here as well. In that case, inland consumption will rise to the figure in 1955 or 1956, and, if production remains stable, we will no longer have a big surplus for export.

Unless production increases, and unless we can be sure that it will increase over a series of years ahead, it is quite impossible, it would be almost dishonest, for the Government or the Coal Board to make the kind of statement for which my hon. Friend asks, because, production being stable, we shall either not be able to sell coal for lack of a market, or we shall need it at home.

That is not to say that there is no likelihood of exports in future. As my hon. Friend has pointed out, the Coal Board has already said that it is prepared to consider longer contracts for certain quantities and qualities of available coal—chiefly the small coal, which is the kind that the power stations to which he referred will want. The Board will be given every assistance by the Government in doing that, because the interest of the Government in the balance of payments and the interest of the Board financially, run together.

It is the best advice of those technically concerned that there will be a continuing demand, which has been put as high as 40 million tons a year, for imports of coal into Western Europe. Freight rates at present are quite fantastically and uneconomically low, but when they come back to something like normal there is no reason why, if we keep our coal prices at an economic level we should not have the possibility of selling some of our coal to Western Europe. Whether a sufficiently active and intelligent sales policy has always been carried out by the Board, or will be in the future, is a matter for the Board itself.

It is the Government's policy to increase exports of coal to the Continent, which is our main market for it, but it 575 is useless to hold out any mirage to ourselves. If coal production remains at its present level, and if business, as we hope, goes back in this country to the boom conditions that we had been having up to quite recently, there will not be a surplus, taking one year with another. No analysis can alter that fact. The key to the situation is the produc- 576 tion of more coal more cheaply, and anything which the Government can do or the Board can do or the miners can do to that end will have a rich reward in exports and in the earnings we obtain from them.