COAL INDUSTRY BILL

HC Deb 16 February 1960 vol 617 cc1155-205

As amended (in the Standing Cornmittee), considered.

4.31 p.m.

The Minister of Power (Mr. Richard Wood)

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

This Motion will give me the opportunity, as far as it is in order, to look again at the progress of the industry, because it is nearly three months since we had our general debate on the Second Reading of the Bill, and these are three months in a year that everyone agrees to be of immense importance to the industry.

I made it clear in my speech on Second Reading, on 23rd November last, that my Department had co-operated in the estimate that the Coal Board made in its "Revised Plan for Coal"—an estimate on which the provisions of the Bill are based—which put the likely demand for coal in 1965 at between 200 million and 215 million tons. On that occasion, I said that the Government had accepted that estimate as a "reasonable basis for planning."

I went on to say that for this year, 1960, the Board had planned to produce 188 million tons of deep-mined coal, and 7 million tons of opencast—a total of 195 million tons against a demand estimated by the Board at 196 million tons. I still remain of the opinion, three months later, that the Board's estimates represent now, in February, the best basis for our future plans, but in the intervening three months I have had certain doubts cast on these figures from both sides of the House and I would very much like to say something about those doubts.

I am the first to agree that forecasting the demand for any product—indeed, any kind of prophecy at all—is a very dangerous thing to do, but I have constantly re-examined these Coal Board estimates, which I stated last year to be a reasonable basis for planning, I shall continue to re-examine them in the future, and my opinion at the moment is that the evidence for the estimates is a good deal stronger than the evidence against them.

They are based on several assumptions, none of which, I think, is unreasonable to make. The first assumption is that in the coming year there will be less run-down in distributed stocks. The second is that the present economic activity will continue at a high level. The third concerns something that none can know—whether or not it is likely that the weather in 1960 will be less warm than it was in 1959. The last assumption is that exports of coal will be rather above the very low level at which they ran last year.

My hon. Friend the Member for Kidderminster (Mr. Nabarro), who may try to catch your eye, Mr. Deputy-Speaker, in the debate, has suggested that, in 1960, 25 million tons of coal will be added to the stocks, and has thus implied that, in spite of all the measures the Board is taking to bring that production more into line with demand, production in 1960 will, in fact, be 8 million tons greater than last year. My hon. Friend is certainly entitled to his opinions, but he will be aware that the Board has taken steps to reduce production by about 11 million tons. I would, therefore, be surprised, to say the least, if the Board over-produced on the scale suggested by my hon. Friend—

Mr Gerald Nabarro (Kidderminster)

My right hon. Friend will not assume from my silence at this moment that I accept his interpretation of the interpretation that I previously placed on the situation, or that he is correctly stating my figures.

Mr. Wood

I certainly never base any assumptions on the silence of my hon. Friend. I would merely state that, at the moment, both production and consumption are broadly in line with the Coal Board's estimates.

I am aware, and I should like to deal with the matter at once, that hon. Gentlemen may point out that inland consumption in the first four weeks of this year, is, I understand, about 3½ per cent. less than it was last year. They may suggest that this vitiates the premises on which the estimates are based, but I think that it is true to say that in 1959 the one cold period occurred in the first few weeks of the year, and that consumption in January, 1959, was inflated as a result. I honestly do not think that we can base any reliable comparison between the two years on comparisons of these four weeks alone, when the weather played quite a considerable part.

Some hon. Members rightly attach considerable importance to the speed of the run-down of stocks. My hon. Friend, among others, attaches importance to the speed at which the stocks are diminished. I am glad to say that the total run-down of both distributed and undistributed stocks was quicker in December and January—that is to say, in the eight weeks—than in a comparable period in any recent year. Perhaps I may give the figures for the last five or six years of the stock-lift of undistributed stocks—and it is of the stock-lift of undistributed stocks that I am talking for the moment.

The figures are quite interesting. In December, 1953, and January, 1954, the figure was 10,000 tons. In the next year, stocks increased in this period by 32,000 tons, and in the next three years there were stock-lifts varying between 83,000 tans and 243,000 tons. Last year the stock-build, the addition to stocks, in these two months was 782,000 tons. The comparison with this year is that there has been a stock-lift in this period of 1½ million tons, which is of a completely different order than the stock-lift or stock-build in previous years.

I know that my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) is interested in this problem. The figures I have given refer to undistributed stocks only. In addition, there has been a lifting in December and January last of more than 3 million tons of distributed stocks. The total stock-lift in this period has averaged a little over ½ million tons a week. It is obviously normal to have a fall in distributed stocks at this time the winter, which is balanced by a corresponding increase in the summer, but the fall in total stocks in recent weeks has been fully in accord with expectations that undistributed stocks at the end of 1960 will, in fact, be lower than they were at the beginning of the year.

Mr. Bernard Taylor (Mansfield)

The right hon. Gentleman gave us an illustration only a week ago yesterday, when he said that the undistributed stocks, for instance, of the east Midland coalfields were 3.8 million tons more for January this year than for January, 1959.

Mr. Wood

I should have to look at the exact figures, but I have been trying to compare the run-down of stocks in the country as a whole in December and January compared with the figure at which they stood at the beginning of December, the global figure. It is a comparison from the beginning of December to the end of January of this year with other years. That is not strictly comparable with the figures I gave the hon. Member the other day.

During the last few weeks I have discovered a matter which is causing some of my hon. Friends—and, no doubt, some hon. Members opposite—a certain amount of concern. It is the question of safety from deterioration of coal stocks which are at present on the ground. I noticed that my hon. Friend the Member for Kidderminster recently suggested that the coal at present in stock will deteriorate by about 25 per cent. over a two-year period. I have made very careful inquiries into this and should like to give the House the result of those inquiries. I have discovered, not greatly to my surprise, that the extra handling involved in stocking the coal certainly results in some degradation, which reduces the market value of the coal stocked. There is also—again, not greatly to my surprise—some loss in calorific value due to oxidisation.

I have discovered that my Scientific Advisory Council advised my predecessor that it was perfectly satisfied that under good storage conditions the average loss of calorific value of coal stocked was less than 2 per cent. a year. It said at the same time—here I wish to be perfectly fair and honest with the House that—with bad storage coal might deteriorate a great deal more quickly. In fact, the Fuel Research Station had records of a 10 per cent. loss in two months where spontaneous combustion was taking place.

I know that my hon. Friend is considerably interested in spontaneous combustion, but I wish to assure him that it takes place most infrequently and that where it does take place—I think that he was interested in one particular dump of coal—the hot coal is very quickly removed. The average loss in calorific value, taking the stocks over the country as a whole, is consequently small.

The advice I have received from the Scientific Advisory Committee is borne out by three investigations carried out before the war by Coal Survey, the Fuel Research Station and I.C.I. These experiments extended over a period of up to five years, covering a considerable variety of different kinds of coal. Their discoveries bore out what I suggested to be true about deterioration, that the loss of calorific value is between 15 per cent. to 1 per cent. a year. That is very very much below the figure mentioned by my hon. Friend, but they found that in the very smallest coal—less than 1/20th of an inch—there was a greater deterioration. That does not apply to the situation at the moment, because only a very small proportion of the stocks is of coal of this very small size.

I am convinced that the correct techniques of storing coal are well understood nowadays and are being applied by the National Coal Board. It is carefully watching the temperature of this coal and is prepared quickly to take action with any part of a dump of coal which shows signs of overheating. The Board tells me that it is quite satisfied that over the stocks as a whole the average deterioration in calorific value is not more than 1 per cent. a year. On the basis not only of my own inquiries, but of earlier experiments carried out before the war, I see no reason to dispute the Board's figure.

Another matter which has exercised hon. Members is the allied question of the value of these stocks of coal. When the Board values stocks for its published balance sheet, it subtracts from current market value an allowance to cover degradation and expected loss of calorific value based on the estimates to which I have referred. Secondly, it allows something for all double handling and marketing expenses and adds a general contingency provision. Therefore, the average valuation—I think it important that we should have the figure quite clear—which the Board places on its coal stocks is about £3 6s. a ton. The valuation of its stocks of coke is rather higher, £5 4s. a ton—making the average for stocks of coal and coke about £4 a ton.

I have no wish to keep the House, but merely to commend the Bill. Its purpose is to try to increase the efficiency of the industry and to increase during the next few years the competitive power of coal. Things have been said in earlier debates which have suggested that some hon. Members, particularly hon. Friends of mine, are not anxious to make the nationalised industries efficient. I certainly cannot speak for all hon. Members, but I can speak for myself. I have come to the firm conclusion that there is nothing which could conceivably be gained—economically, politically or in any other way—from the inefficiency of any industry.

We very resolutely opposed nationalisation. We still oppose nationalisation—and I understand that even some hon. Members opposite are beginning to have some doubts about nationalisation—but we do not intend to denationalise the coal industry. I am convinced, and I believe that the nation agrees, that our object must be to help the industry and the other nationalised industries towards greater efficiency. That is, as I see it, the object of the Bill, and I therefore ask the House to give it its Third Reading.

4.48 p.m.

Mr. Harold Finch (Bedwellty)

We had a very full discussion of this Bill both on Second Reading and in Cornmittee, when we debated the various aspects of the problems facing the mining industry at this time. It is not my intention to speak at any length on Third Reading, but it is necessary now to draw the attention of the House to some important features connected with the Bill.

I must point out that this Measure merely provides for a loan to the industry, a loan which has to be repaid with interest. It is a matter of raising a loan for the industry. Even so, the Bill provides for only about one-quarter of the capital investment for the next five years. The remaining three-quarters will be found from the resources of the Coal Board.

These borrowing powers must be distinguished from subsidies. A line must be drawn between a loan and a subsidy, such as that which is being given to the agricultural, aircraft and cotton industries. This matter of subsidy and loan will, I am sure, have the attention of the House in months to come. Here we are asking only for a loan, not for national assistance to private industry, such as agriculture, aircraft and cotton. The Bill will not cost the taxpayer one penny. This is a loan.

That cannot be said of some of the subsidies given to private enterprise, which are costing the taxpayer money. Right from the inception of nationalisation, this industry has not cost the taxpayer a penny. During private ownership, there were times when the coal owners came to the Government for assistance and got it and the mining industry, under private ownership, did cost the nation money. Under nationalisation, it has not done so.

As I said in Committee, and as the Minister has pointed out, the Bill is to enable the Coal Board to fulfil its "Revised Plan for Coal". It will enable the Board further to increase its efficiency and productivity and to reduce costs and will help it in its efforts to compete with oil. That is the purpose of the revised plan on which the borrowing powers in the Bill are based. In advocating the need for a fuel policy, some hon. Members opposite said that the industry must make itself efficient to compete with oil. The Bill proposes to add to the efficiency of the programme of the Coal Board. Yet, some hon. Members opposite were prepared to diminish the borrowing powers of the Board and thus cripple it in its efforts to fight oil.

Hon. Members opposite have argued that these loans for capital expenditure are not getting results. The House will, I am sure, appreciate that the coal industry must have long-term planning. It is not possible to reconstruct pits, or to sink new ones in a few months. This takes years. However, past capital expenditure is now bearing results. Output per man-shift overall increased by well over 5 per cent. in 1959 compared with the previous year. At the face, output went up by 6 per cent., the highest increase for more than thirty years. We are now reaping the fruits of capital expenditure.

Since nationalisation, productivity has risen by 30 per cent. This improvement in productivity has helped to lower production costs by 1s. 9d. a ton compared with 1958. These are substantial achievements. If the demand for coal equals approximately that estimated by the Board during the next five years, there are good prospects of productivity rising still further.

On these results, the Government should congratulate the Coal Board. They should congratulate the miners on their achievements during the past few years. The results are a credit to the coal mining industry. It must be realised that coal mining is an extractive industry. Considerable investment is required each year simply to maintain existing capacity. Every ton of coal which is taken out of a pit makes it more difficult to mine the next ton. The law of diminishing returns must operate in this industry. Therefore, a part of this capital expenditure under the Bill must be used for maintaining as well as increasing output.

Much capital expenditure has been involved in reconstruction and the sinking of new pits. Such expenditure was essential because there was very little reconstruction for years prior to nationalisation. Much of this capital expenditure has been necessary, because, as it is stated in the Reid Report, the industry was suffering from age and bad planning. Prior to nationalisation, not one pit was sunk for thirty years. The industry generally was in a derelict condition. Huge sums of money had to be spent to put the industry on anything like a normal footing.

Pits have been sunk in recent years and these borrowing powers will give the Board the opportunity to proceed with its programme and to construct further pits similar to that which Sir James Bowman opened recently, the Brynlliw Colliery, near Swansea. This is a classic example. The work has been completed nine months ahead of schedule. The industrial correspondent of the Western Mail and South Wales News said on Saturday: I toured the colliery yesterday and saw how coal is being mined the modern way, untouched by hand. Mine cars pull electric motors travelling at 15 miles per hour, taking miners to the coal face, and unload coal by remote control at pit bottom. That is a different sort of colliery from the ones which we had in the inter-war years.

Mr. James Griffiths (Llanelly)

If I may remind my hon. Friend, this is one of the pits which was closed in the early 'twenties by private enterprise. It has been reopened under nationalisation.

Mr. Finch

This is the way to make the industry efficient. More collieries of this kind will be opened in the near future.

During 1959, 25 major colliery reconstructions were substantially completed, making the total 127 since the reconstruction programme began in 1947. The number of schemes for new collieries and drift mines and the construction of new collieries in progress at the end of the year was 146. A lot of money has been spent on improving working conditions and the safety of the men in the industry, and I am sure that the House will agree that this capital expenditure is essential. I am confident that the Coal Board's plan will produce results in the near future.

We are all concerned about the stocking of coal, but had coal not been stocked we should have been faced with considerable unemployment in the coalfield. Large sums of money would have had to be paid in unemployment benefit. The lower purchasing power of the £ would have percolated through the economy generally and we should have been faced with serious social and industrial consequences if coal had not been stocked, however regrettable that may be.

The Coal Board has taken the burden from the country. The Board need not have stocked coal. It could have put men on short time, but it preferred not to do so. It bore the brunt of the burden by paying for the stocking of coal. If it had not been for the stocking of coal, there is no doubt that the industry would have shown a profit this year. While we are very much concerned about the position, we are glad to hear from the Minister that there is some decline in the stocking of coal.

I know that the hon. Member for Kidderminster (Mr. Nabarro) has always been interested in the question of stocking, but I have always had difficulty in following him in this matter. Not so long ago, he thought that that was a proper and efficient course to take. Yet, on Second Reading, or in Committee, he was very critical of the increase in stocking. What did he say on 1st December, 1958? 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."—[OFFICIAL REPORT, 3rd December, 1958; Vol. 596, c. 1235.]

Mr. Nabarro

The hon. Gentleman has omitted to refer to my response to that point on 27th January, 1960. I said: I have been absolutely consistent. I have with me the speech that I made on 3rd December, 1958. I said that three months' stocks would be about the right figure and that 50 million tons would be reasonable as an aggregation of distributed and undistributed stocks. I still hold this view. These Amendments are designed to prevent a further increase in the stocks after next April"— that is, April, 1960— above 50 million tons."—[OFFICIAL REPORT, 27th January, 1960; Vol. 616, c. 262.] The whole of my efforts in Committee were devoted to preventing a rise in stocks above 50 million tons, which I regard as the maximum that the nation may prudently and judiciously hold.

Mr. Finch

The hon. Member must now be satisfied with the position.

Mr. Nabarro

I am.

Mr. Finch

I am very pleased to know that, because throughout the Committee stage of the Bill a great deal of criticism was levelled against the Coal Board in such circumstances.

We support the Bill. It is essential to the industry to enable it to get on with its programme, not that we regard the Bill as meeting the situation. We do not. We do not think that this Measure in itself is sufficient. We are still faced with a very serious position in the industry. We should be glad if the Government would underpin the Coal Board plan and help it by adopting a fuel policy in which the demand for coal can be sustained in these circumstances.

5.3 p.m.

Mr. Gerald Nabarro (Kidderminster)

I am so surprised to have been called at this stage of our deliberations that I have not quite overtaken the intervention I made a few moments ago in the speech of the hon. Member for Bedwellty (Mr. Finch). Throughout our deliberations on the Bill there has been a cleavage of opinion between my right hon. Friend the Minister of Power and myself.

Mr. J. B. Symonds (Whitehaven)

That is normal.

Mr. Nabarro

The hon. Member says that it is normal, and he is right. It has been normal during the last few years.

In my speech on Second reading I drew attention to the fact that the corpses of former Ministers of Fuel and Power littered the Tory benches. They litter the Tory benches because successive Ministers of Fuel and Power have consistently been wrong in their future estimates concerning the coal mining industry. That is why there has been a cleavage of opinion between my right hon. Friend and myself dating from our respective Second Reading speeches on 23rd November last and the Committee stage speeches on 27th January; and I have no doubt that there will be a cleavage of opinion this afternoon.

I stress the word "opinion". My right hon. Friend is advised by the senior officers of the National Coal Board. I take no exception to the fact that they give him advice.

Mr. E. G. Willis (Edinburgh, East)

That is very good of the hon. Gentleman.

Mr. Nabarro

Yes, it is very good of me. I take no exception to the fact that they give advice to my right hon. Friend, but I do not think that they are always as accurate as they might be.

My right hon. Friend maintains a small coterie of ministerial advisers who act as liaison officers between himself and the heads of the nationalised fuel and power boards. As was so clearly demonstrated in the book published a few months ago by Mr. Kelf-Cohen, who was for many years the second senior civil servant at the Ministry of Fuel and Power, those ministerial officers are very largely bound by the advice, in the context of coal, which comes to them from Hobart House.

The cleavage of opinion between my right hon. Friend and myself on the Bill has been fundamental. First, my right hon. Friend has vouchsafed to the House that in 1960 there will be a consumption of coal of 196 million tons, a production of coal of 195 million tons, and, therefore, stocks of coal will decline by only 1 million tons. We are at the coldest time of the winter at present. We have about six weeks of the coal winter to run.

From 1st April stocks will begin to rise. [An HON. MEMBER: "The hon. Member said that last week."] I said it last week and I say it again, because in the Bill we are dealing with very large sums of money which, contrary to the view expressed by the hon. Member for Bedwellty, ultimately have to be found not from the Consolidated Fund resources but from the taxpayers' purse. They may be losses, but the Bill is an exercise in deficit financing for a nationalised industry. It is exactly analogous to deficit financing on the railways.

It is no good my right hon. Friend shaking his head in disagreement. He is disagreeing with me already, thus demonstrating once again the cleavage of opinion between us. A few weeks ago I had to drag an admission from his entrails, and reluctantly he gave way to me. He had said that the losses on the Coal Board's accounts up to the end of 1958 were about £28 million. I told him that I calculated that by the end of 1959 the losses forward would rise to £50 million. He indicated dissent at first, shaking his head as he has shaken it this afternoon. Finally, he capitulated and wrote me a letter confirming that they would be about £50 million up to the end of 1959.

Our cleavage of opinion is the extent of the losses in the current year. My right hon. Friend will not even confide to the House—I regard it as a dereliction of his duty that he refuses to do so—[HON. MEMBERS: "Oh."] Yes, I repeat the words. I regard it as a dereliction of his duty that he refuses to do so. He will not give the House an opinion on whether the Board is likely to make a profit or a loss this year. My interpretation of the position is that the Board will make a substantial loss during the year 1960, having regard to the level of stocks—

Mr. B. Taylor

Does the hon. Gentleman mean an operating loss or a loss after commitments, such as interest payments—not only to the old coal owners, but to the royalty owners—and subsidence charges and other added burdens? I am anxious that we should have a clear picture.

Mr. Nabarro

I will be perfectly clear. The Board will make a trading loss this year after all charges. The right hon. Member for Easington (Mr. Shinwell) framed the Statute in 1947 and wrote into it the provision that the Board should pay its way, taking year by year. He was responsible for putting interest charges to the account of the Board. Do not let any of us be mealy-mouthed about it. We are all agreed about the basis, that the Board should pay its way taking year with year. The losses forward up to the end of 1959 were £50 million.

My right hon. Friend will not tell the House his estimate of the loss for the current year. He is shaking his head again, indicating that he will not do so. I believe that it is a dereliction of duty on his part not to tell the House that the Board is likely to add to its £50 million losses in the current year. That is the first cleavage of opinion between us.

The second cleavage of opinion between us is in regard to stocks. Of course, I have said that a proper stock at the beginning of the coal winter, that is to say, November in each year, should be a quarter's reserve. That is 50 million tons on an annual production of 200 million tons. My Amendments in Committee were designed to prevent the very real danger of these stocks rising above 50 million tons after 1st April next.

My right hon. Friend says that stocks will be reduced by 1 million tons during the whole of 1960. I say that stocks are much more likely to rise during 1960. I have said that, if production proved to be higher than 195 million tons and consumption proved to be lower than 196 million tons—the ministerial estimates—then stocks would rise sharply. I estimated that they might possibly rise to 75 million tons.

Mr. Finch

rose—

Mr. Nabarro

I ask the hon. Gentleman to let me finish.

The Minister pooh-poohs that. His Parliamentary Secretary had the impertinence to say that statements of that kind were wild. The Parliamentary Secretary, as an earnest of his personal faith in the nationalisation of the coal industry, promptly left the coal industry on nationalisation. That is how much he supports nationalised coal.

Mr. Finch

rose—

Mr. Nabarro

I will give way in a moment.

Mr. B. Taylor

It is a long moment.

Mr. Nabarro

The effluxion of time will show whether the Parliamentary Secretary is the wilder of the two of us. I rest content that I have always been opposed to deficit financing of nationalised industries. I have always taken the view that these large sums in deficit on State boards, supported by unlimited borrowing powers, are a burden on the taxpayer. The Parliamentary Secretary outdoes the Socialists themselves by the glib and specious reply that it is not taxpayers' money. He says that it comes from the Consolidated Fund. Pray, who furnishes the Consolidated Fund?

Mr. J. Griffiths

I am sorry to interrupt the hon. Gentleman, but—

Mr. Nabarro

Will the right hon. Gentleman please let me finish this passage? I will give way. At least, I am purer in my Tory beliefs than the Parliamentary Secretary.

Mr. Taylor

Purer?

Mr. Nabarro

I said purer—purer in my Tory beliefs than the Parliamentary Secretary, who is more Socialist than the Socialist Front Bench itself.

Mr. Griffiths

I was trying to charge my memory, and, so far as I recall, the hon. Member for Kidderminster was not in his place yesterday when the Government were proposing to give public money, taxpayers' money, to the private aircraft industry.

Mr. Nabarro

I cannot go into that.

Mr. Deputy-Speaker (Sir Gordon Touche)

We cannot discuss that on the Third Reading of this Bill.

Mr. Nabarro

I entirely agree with that, Mr. Deputy-Speaker. You will have observed my purity in Parliamentary procedure in that I have not even mentioned the aircraft industry in my speech.

May I reply, not in terms of the aircraft industry, to the point of principle which the right hon. Member for Llanelly (Mr. J. Griffiths) has raised? On Thursday, we shall debate iron and steel. I shall express my view about subventions by the State to private industry on that occasion, which is the proper time to do it. My Tory faith will outshine even the demonstration of Tory faith and beliefs which I am giving today.

Mr. Deputy-Speaker

That has very little to do with this Bill.

Mr. Nabarro

I apologise to you, Mr. Deputy-Speaker, on this occasion. I have been misled.

The second cleavage of opinion between my right hon. Friend and myself concerns the extent of stocks.

Mr. Finch

rose—

Mr. Nabarro

Very well. In weariness, I give way.

Mr. Finch

I do not understand the hon Member at all. He has supported the policy of having stocks and more stocks time after time in speeches he has made in the House of Commons. I have quoted one of his speeches, and I will quote another. On 14th July, 1958, he said: 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. 910.]

Mr. Nabarro

I shall deal with all these points in the course of my speech. I am at the moment addressing myself to my right hon. Friend. I have given two fundamental cleavages of opinion between us.

I come now to the third fundamental cleavage of opinion. My right hon. Friend believes that the rate of deterioration and degradation of these huge stocks of coal is 1 per cent. per annum. Yet 16 million tons of these stocks are represented by unscreened, unwashed, low grade coals with a high ash content. I believe that it is manifest nonsense to say that coals of that type and nature deteriorate by only 1 per cent. per annum.

Mr. Woodrow Wyatt (Bosworth)

rose—

Mr. Nabarro

I do ask hon. Members to let me finish.

None of us can be absolutely sure about the rate of deterioration, but what I am quite convinced about—here lies the third major cleavage of opinion between my right hon. Friend and myself—is that the Coal Board is "cooking the books" by writing into its accounts—[HON. MEMBERS: "Oh."] Yes, "cooking the books", I said, in writing into its accounts the sum of £141 million—

Mr. J. Griffiths

On a point of order, Mr. Deputy-Speaker. A deliberate charge has been made by the hon. Member for Kidderminster against the Coal Board, for which the Minister is responsible. He says that the Board is cooking its books. Since the Minister is, under the Act, responsible for the industry, may I ask whether he will now rise, as I think it is his duty, and say that, as Minister responsible, he refutes that gross charge?

Mr. Wood

I should like to take the opportunity of pointing out to my hon. Friend the Member for Kidderminster (Mr. Nabarro) that he is not only making accusations against the National Coal Board, but he is making accusations of a very serious character indeed against its accountants and auditors.

Mr. B. Taylor

Will the hon. Member for Kidderminster make outside the House the statement that he has just made?

Mr. Nabarro

Surely, there cannot be any point of order in this matter, Mr. Deputy-Speaker. I used those words to Mr. Speaker on 8th February last. I said to my right hon. Friend—

Mr. Deputy-Speaker

I have not suggested that there was a point of order in it.

Mr. Nabarro

Thank you, Mr. Deputy-Speaker, for your protection.

Mr. Wyatt

On a point of order, Mr. Deputy-Speaker. Is it not very much against the traditions of the House to make accusations of that kind against accountants and auditors who are quite unable to defend themselves, quite apart from accusations against the Minister and the Coal Board?

Mr. Deputy-Speaker

It is not out of order. The responsibility rests with the hon. Member who makes them.

Mr. J. Griffiths

Is it not in accordance with the traditions of the House that, if an hon. Member makes a charge which reflects upon the honour of persons who are not here to defend themselves, for example, auditors, he ought to make the statement outside so that the people so charged can have their own remedy, which is not open to them so long as such statements are made within the House?

Mr. Deputy-Speaker

That is a matter for the hon. Member.

Mr. Nabarro

I am conscious of the heavy responsibilities which rest upon my shoulders, Mr. Deputy-Speaker.

Referring to the accountancy practice of the Board's accountants, I said to my right hon. Friend on 8th February—he did not deign to reply—that … the best accountancy practice requires that these stocks shall be put into the accounts at cost or market value, whichever is the lower. Will my right hon. Friend be precise on that point as more than £140 million is involved?"—[OFFICIAL REPORT, 8th February, 1960; Vol. 617, c. 13.] Cost or market value, whichever is the lower, is the accepted formula throughout industry, commerce and the accountancy profession in this country for the evaluation of stocks. I believe that the cost of these stocks is higher and the market value is certainly much lower than the figures which the Board has written into its accounts. For this reason, I believe—

Mr. Griffiths

That is different from "cooking the books".

Mr. Nabarro

The Board is seeking to minimise its loss forward and when the true evaluation of these stocks is taken, that is, when they are sold—if ever—and when they have to be sold at a greatly written down figure, if ever, then the losses forward will be greatly increased. I give way now to the hon. Member for Bosworth (Mr. Wyatt).

Mr. Wyatt

Is the hon. Gentleman saying that he does not believe the figures given by the Minister this afternoon, based on the expert and scientific advice which he has received on the rate of deterioration of stocks, because it can only be on that basis that the hon. Gentleman is saying that the stocks are valued wrongly in the accounts? Will the hon. Gentleman look at the Iron and Coal Trades Review of 14th November, 1958, where he will find the whole of these investigations set out very carefully, calculated by the best experts in the land?

Mr. Nabarro

I will consult the document to which the hon. Gentleman refers after I have finished my speech. I do not carry it around with me in my waistcoat pocket.

I am sorry that this afternoon the hon. Gentleman was trying to foist on the Royal Family at Windsor Castle a deluge of "nutty slack". Poor souls, why should they suffer!

Mr. Deputy-Speaker

This has nothing to do with the Third Reading of the Bill.

Mr. Nabarro

I am sorry, Mr. Deputy-Speaker. I shall relate it in a moment to the Third Reading.

My right hon. Friend referred to the stocks of coal and to minimising those stocks. The hon. Gentleman's question this afternoon was directed to keeping Windsor Castle on coal burning.

Mr. Deputy-Speaker

That has nothing to do with the Bill.

Mr. Nabarro

I will not pursue the point about Windsor Castle.

I have mentioned the three main cleavages of opinion between my right hon. Friend and myself. There is a ministerial hypothesis in this regard and also a hypothesis expounded by the hon. Member for Kidderminster. I believe that, in the event, my hypothesis will be more accurate than the ministerial hypothesis. I believe, therefore, that the losses of the Coal Board will increase during 1960, for the reasons I have stated. That will undermine the probity of the Bill before the House today and it will cause my right hon. Friend to come back to the House for additional borrowing powers at a substantially earlier date than he envisaged in his Second Reading speech.

My right hon. Friend's predecessors at the Ministry of Fuel and Power, in Conservative Administrations, were invariably obliged to come to the House for more and more borrowing powers at earlier and earlier dates than they estimated.

I shall not oppose the Bill in the Division Lobby.

Mr. Sydney Silverman (Nelson and Colne)

Why not?

Mr. Nabarro

Why not? I will tell the hon. Gentleman why not. I do not suppose that he was present during the debate on 27th January, 1960—

Mr. Silverman

Why does the hon. Gentleman suppose that?

Mr. Nabarro

—to vote on that date. And he did not vote.

Mr. Deputy-Speaker

Order. May I remind the hon. Member that this is the Third Reading debate?

Mr. Nabarro

I am grateful to you, Mr. Deputy-Speaker.

I was saying when I was interrupted that I shall not vote against the Third Reading of the Bill because a part of the increased borrowing powers is necessary to the Coal Board. I sought in Committee to reduce the extent of the additional borrowing powers. I was defeated in the Lobby on that count, but that does not make me any the less right, and I counsel my Conservative colleagues—I would not expect acceptance of this view by Socialists—to note the marked analogy between the two nationalised industries to which I have referred and the words written in The Times by my right hon. Friend the Member for Monmouth (Mr. P. Thorneycroft) on 15th February, with all the authority of an ex Chancellor of the Exchequer, [HON. MEMBERS: "Oh."] Oh, yes. I am a faithful disciple of his. My right hon. Friend said: Wage fixing without regard to profitability is the method applied in the Civil Service. If it is to be applied to railways it might be applied to coal mines, also. That is the danger with deficit financing for State boards—endless borrowing without profitability. That is the policy of my right hon. Friend and the Parliamentary Secretary, endless borrowing—

Mr. Silverman

rose—

Mr. Nabarro

—without profitability. And hanging over my right hon. Friend's head—I hope that he will look this way—is the £75 million pay claim of the National Union of Mineworkers. It goes to arbitration. If it is conceded wholly or in part it cannot be met by advancing or increasing the price of coal, because if the price of coal in increased further it will lead to a diminution of demand and to the greater use of oil. If the miners wage claim is conceded on arbitration it would increase the losses of the Coal Board further, and it will cause my right hon. Friend to come back to the House even earlier to seek a renewal of increased borrowing powers.

My right hon. Friend would not respond to that point which I made on Second Reading of the Bill. He took the view, haughtily, that these matters were none of his concern. They are the concern of all taxpayers, because it is the taxpayers who are having to underwrite the huge sums of money in the Bill. As I have said, I shall not vote against the Bill. [Laughter.] It is all very well for the hon. Member for Central Ayrshire (Mr. Manuel) to sneer, but I voted with 12 of my hon. Friends in Committee against the Government on the extent of the borrowing powers. I took 26 hon. Members on this side of the House into the Lobby against the Government on the same issue on 10th May, 1956.

The Board needs some extra borrowing powers, but it does not need borrowing powers to the great extent to which my right hon. Friend is demanding in the Bill.

Mr. Silverman

I am interested in the hon. Gentleman's statement that he does not propose to vote against the Bill. No one doubts his courage; he has, as he has said, frequently voted with a minority against his own side. I would further concede to him that many of us have voted for things with which we do not entirely agree because something is there with which we cannot dispense. But the hon. Gentleman has used strange language. He has talked about "cooking the books". That means a fraudulent prospectus. If the Bill proposes to borrow money on a fraudulent prospectus, ought not the hon. Gentleman to vote against it?

Mr. Nabarro

The trouble is that the whole of nationalisation is a fraudulent prospectus. It is a source of great grief to me that hon. Members who sit on this side of the House, and who masquerade as Conservative Members of Parliament, such as my hon. Friend the Parliamentary Secretary to the Ministry of Power, should support such a fraudulent prospectus as that contained in the Bill which we are discussing today.

5.29 p.m.

Mr. James Boyden (Bishop Auckland)

I was very pleased to find the Minister supporting nationalisation in this Measure, but I was disappointed that he did not mention some of the achievements of the National Coal Board in making itself more efficient, thus demonstrating the exact opposite to what the hon. Member for Kidderminster (Mr. Nabarro) has been saying. The Board has achieved a very fine record in the last year or two in increasing its efficiency, and this money is to be devoted precisely to that.

If one looks, for example, at improvements made in power loading, one finds that in 1947 only 2 per cent. of coal was power-loaded whereas in 1959 it was 32 per cent. Again, if one looks at mechanical cleaning plants, one finds that in 1958 22 new plants were brought into operation with a capacity of 12 million tons. At the moment, 63 new plants are in the process of being constructed to deal with a further 48 million tons. This money is being devoted to improving the efficiency of the coal industry. One of the weaknesses of the Conservative Party's economic policy for the last two or three years has been that not enough capital has been devoted to increased capital investment or increased efficiency. Here we have a nationalised industry which has set an example in increased productivity, investment and efficiency.

If we take some standard techniques of mining, shaft sinking for example, we find shaft sinking techniques have become faster, safer and leading to greater capacity. Nine new shafts have been sunk during 1958, more than in any other year since vesting day, and 20 new shafts are in process of being sunk. Tunnelling has become more efficient. In that respect, too, 1958 was a record year for length of tunnelling leading to more efficient methods and faster and cheaper production.

The proving of reserves has taken on a new aspect. Off-shore boring towers have provided additional information. The one in Scotland has added considerably to the knowledge and ultimate efficiency of the Scottish coalfield. There is, at the moment, one operating off the Durham coast which has been doing precisely the same for the East Durham coalfield. Six new coke ovens were operating by the end of 1958 at a cost of about £48 million. This has borne hardly on the constituencies of my hon. Friends the Members for Durham, North-West (Mr. Ainsley) and Durham (Mr. Grey). Men are being sacked as a result of improvements in efficiency, but the National Union of Mineworkers has not been protesting about that. It accepts, particularly in Durham, the efforts of the Board to improve efficiency.

In addition, the Coal Board has been reducing its overhead costs. There has been a reduction in the holding stocks of materials of £6 million in 1958 and there have been improved methods of stock control. Five new central stores were brought into operation in 1958, and now there are 28. There have been central purchasing economies. Standard procedures were introduced for letting constructional and engineering contracts in 1959. There have been electronic data processing machines for pay bills and so on. We have one in Durham. All these are signs of a great increase in efficiency and productivity on the part of the Coal Board partly based on these loans.

One of the striking facts which has emerged in the speech of my hon. Friend the Member for Bedwellty (Mr. Finch) was the fall in production costs of 1s. 9d. a ton in 1959. This is quite remarkable when set against the biggest fall in the demand for coal since 1932. With this fall in demand there have been the biggest increases in productivity because the Board has been playing the game by the nation. At the same time the workers have not suffered. If one recalls the slumps and crises of pre-war days, it will be remembered that the first people who bore the brunt were the miners. Fortunately, in 1958 and 1959 conditions for miners improved. The pay award of September, 1958, gave £10 million in 1959 to the miners and this well-deserved pay award was based on increased productivity.

In September, 1958, there were improvements in miners' sickness benefit amounting to 30s. a week for 30 days' sickness absence and 15s. a week for a further 30 days absence at a cost of £2 million a year, which was borne out of increasing productivity. Widows' benefits were increased by one-third to £200, and who would argue against that? I do not think that the most reactionary of Tories would criticise that benefit. The Coal Industry Social Welfare Organisation spent £1 million in benefits throughout the industry, and several of my former students have benefited enormously from schemes supported by this organisation. Now 95 per cent. of the industry is provided with pithead baths, which has helped to improve the self-respect and general demeanour of the coal miners. In 1958 one-third of a million pounds was spent on canteens.

It is all very well to look at the question of profit in terms of a balance-sheet and judge it from the point of view of private enterprise. But one of the public obligations of the Board is to raise the standard of conditions for the miners in addition to increasing productivity. It has done that, and I hope it will continue to do so.

Mr. B. Taylor

I am sure my hon. Fiend would agree that quite as important as the provision of pithead baths and canteens is the provision of medical centres at quite a number of collieries during the past few years.

Mr. Boyden

I am grateful for that intervention. In my notes I have spelt out "pneumoconiosis" so that I should be quite sure to pronounce it properly, though I am familiar with the disease. There has been a great improvement. In 1958, there were 2,902 cases compared with 3,756 in 1957 and 4,853 in 1956. I think that is conclusive proof of the point made by my hon. Friend the Member for Mansfield (Mr. B. Taylor).

There has also been an improvement in industrial relations. There were fewer stoppages in 1959. When one recalls that in those black days, the five years before the war, 44 per cent. to 68 per cent. of the industrial stoppages were in the coalfields, one can appreciate the considerable improvement which has taken place, not only in productivity and social conditions, but also in industrial relations within the industry. All these things have been accomplished with considerable difficulty not only over the stocking of coal but also what the economist might call frictional disturbances outside the control of the Board.

For example, during the last quarter of 1959 450,000 tons of coal had to be stocked because of a shortage of railway wagons and in the same quarter 60,000 tons of production were lost for the same reason. In January of this year 360,000 tons of coal could not be delivered to the consumers who required it because of the shortage of railway wagons. In the first week of this month 120,000 tons could not be delivered. That makes a total of almost 1 million tons of coal required by consumers which it was not possible to deliver because of the shortage of railway rolling stock. If ever there was a matter requiring Government intervention and remedies, both immediate and long-term, it is the question of co-ordinating transport and the policies of British Railways.

I think it fair to say that the blame for the fact that nearly 1 million tons of coal has not been delivered to consumers in the last few months lies fairly and squarely on the Government. I understand that the situation in the Midlands is that the National Coal Board has been negotiating with the British Transport Commission to deliver 50,000 tons of coal a week by road.

Mr. Deputy-Speaker (Sir Gordon Touche)

Order. I am sorry to interrupt the hon. Member, but I find it difficult to relate what he is saying to the Third Reading of the Bill.

Mr. Boyden

I am sorry, Mr. Deputy-Speaker. I will return to the vital point. I was trying to stress that these difficulties are within the control of the Government and this investment will enable the Coal Board to become still more efficient.

Great play has been made with the argument that the public is bearing some of these costs, but in fact the miners are bearing the cost. It is a tribute to nationalisation that a blow which in the past would have been dealt against the miners has been cushioned by stocking.

Nevertheless, the miner still bears the cost. Old men who want to work are unable to work. Young men are transferred and, while they are provided with a job, they often have to work at lower wages and in a strange environment. There is loss of pay, loss of Saturday working and loss of overtime. There is considerable inconvenience to them in travelling, and many of them have to migrate. What is worse, the prospects for their sons and the prospects for those who are sick or only partially fit are particularly poor in the coal-mining areas.

It therefore ill behoves some hon. Members opposite to criticise the measures which are being taken by the Government, because the Coal Board, the mining industry and the men in the industry have risen very well to the demand for increased productivity and increased efficiency in the last few years. This is the smallest measure which can be taken to help them to continue the viability of the industry and the maintenance of this reserve of energy in the country which in the last few years has rescued us from industrial crises of shortages.

5.41 p.m.

Colonel C. G. Lancaster (South Fylde)

Nobody would quarrel with the speeches of the hon. Members for Bedwellty (Mr. Finch) and Bishop Auckland (Mr. Boyden), in which they have drawn attention to the definite improvement which is occurring in the coal industry as a result of the very large infusion of money over the last ten or fifteen years. This is beginning to show results. It is because we are satisfied that this improvement is occurring and because we want it to continue that hon. Members in all parts of the House will give the Bill a Third Reading.

We are, however, concerned and worried about the stocks, and if I dwell for a few minutes on this subject it is because I want to give a slightly different slant to it from that which my right hon. Friend gave when he was making his very clear explanation of the situation as he saw it.

The coal winter is a period of five months extending from 31st October to the end of March. During those five months it is normal to have a run-down of stocks. During the remaining seven months of the year it is normal for the stocks to increase. What is causing me some concern is that the run-down of stocks from 31st October to date has been about 5 million tons.

I think that perhaps a little confusion has arisen between distributed and undistributed stocks in that respect, because when there are large undistributed stocks it is quite normal for the distributed stocks to be somewhat lower than usual. In the old days, it was normal to have distributed stocks of 19 million to 23 million tons. This year we started with about 16 million tons. This was because both merchants and industry realised that there was available at a moment's notice in undistributed stocks all the additional coal they might want. We have to look at the whole picture.

During the four months which have elapsed since 31st October about 5 million tons has been raised from stocks. If we continue at roughly the same rate, then by the end of the coal winter about 6 million or 6½ million tons will have been raised from stocks, both distributed and undistributed.

We then have to face seven months during which it is normal for stocks to start rising again. Whereas in the old days there was some flexibility between winter production and summer production, there is now none at all. We have the guaranteed week and the guaranteed wage. The days of the bull weeks and Saturday working are over. We must therefore assume that production during the subsequent seven months will be on the same level as has been occurring during the five months to which I have referred.

There will be the gradual effect of pits going out of production which have been earmarked to end their days, but against that there is the additional productivity which is occurring in the industry day by day. That is not a constant. It is bound to be on a rising scale. If a great mass of machinery is introduced, as has been done, and if all the improvements which have been mentioned this afternoon are occurring, and continue to occur, then the ratio of productivity will continue to rise. Where I find myself a little at variance with my right hon. Friend is that I am not as sanguine as he is that there will be no rise in stocks. I do not join my hon. Friend the Member for Kidderminster (Mr. Nabarro) in the level which he thought likely, but I am inclined to think that there is bound to be some rise in 1960.

What are the possibilities before the National Coal Board in that respect? If productivity continues to rise, as I think it will, the Board will have three possibilities before it. First, it can work short time, but, as I said a few weeks ago, that would make the Board's new recruiting campaign a hopeless proposition. I assume that the Board would not do that. Secondly, it can say to management, "Go easy" That is a very difficult thing to do. Once an industry is tooled up, to ask management not to work at the maximum production within the limits which have been ascribed to it is excessively difficult, because it affects the morale of management and in due course the morale of he men. I do not think that that is a practical proposition. The third possibility is to close down more pits. We want to see that avoided at any cost until the right moment arrives.

If none of these three methods is applied, there is no alternative to seeing some additional stocking take place. I read today in one of the trade journals that one of the Coal Board's divisions has made arrangements to take an additional 170 acres of land for additional stocking. I do not believe that that sort of thing happens unless it is envisaged that some stocking will occur. I ask hon. Members in all parts of the House to consider for a moment how much land is represnted by 170 acres. It is a very large area. If it is envisaged in one division that it is necessary to take so much additional land for stocking, there must be some doubts within the industry of the likelihood of the diminution in stocks by 1 million tons in 1960 to which reference has been made. I hope that I shall be found wrong, but I should certainly be wrong if I did not utter my warning of the possibility of a rise in stocks during the ensuing year, in the light of what I have said.

May I say a word about the condition of these stocks? When the findings of the Minister's Scientific Committee declare that it is satisfied that the effect of deterioration is only about 1 per cent., it is difficult for anyone to say that the Committee is giving us incorrect information, but I ask hon. Members opposite, in particular, who are familiar with the properties of coal, to recognise that in many of our best seams—the top hard, the Barnsley Bed and many of our coking coals—there is an element of pyrites which creates a risk of oxidisation, and that that has a bearing on the condition of these stocks unless in all these cases they are very carefully watched. In any event, that would be a small matter. As has been said, the important aspect of stocking is the condition of these untreated smalls, of both types, the unscreened and the untreated, amounting to about 16 or 17 million tons.

During the Select Committee's inquiry into the coal industry a year ago, we tried to get a satisfactory answer concerning the ash content of the coal then being mined, but we never got any satisfaction in that regard. I am inclined to think that the ash content has gone up considerably over the last few years. That is no reflection on the Coal Board which has introduced methods which in their very nature increase the ash content. Apart from that, however, we are mining a great many seams which, possibly, are not of the same quality as those mined twenty or thirty years ago.

Generally speaking, these untreated smalls have a large ash content. I do not say that that in itself brings about deterioration. What I am saying is that the coal, apart from what is taken by power stations, is not an acceptable commodity to the great mass of industrial consumers. It will inevitably have to be taken and treated before it is a saleable article. The double handling required for that purpose in putting it through the preparation plants and the like is a costly affair.

What we must also remember is that quite a proportion of this coal has inevitably been dumped at positions outside the normal channel of its use. It will have to be lifted and brought back, in many cases by road haulage, into the areas where it is to be sold, and in a great majority of cases it must be retreated also.

I find it difficult to believe that within the orbit of 4s., which is the figure that is applied after the first two years to our stocks of coal, it will be practicable both to bring that coal back into its proper channels and to retreat with the double handling which is thereby involved. I find it difficult to believe that all this can be done within the orbit of the 4s.

Although it is difficult to ignore the advice on which my right hon. Friend, quite properly, is basing his opinion of a very low figure for actual deterioration, nevertheless the incidence of what I have mentioned—the factor of pyrites in one direction and the high ash content in another direction—is such that the requirement to put the article on to the market in an acceptable condition will be expensive.

Those are the two points I wanted to make. I have made them not so much to try to suggest that I am necessarily right in my forecast, but to sound a note of warning to my right hon. Friend, who is faced in these matters with a difficult situation. Inevitably, he has to accept the advice of those who, in many ways, are best able to give it. Nevertheless, we should be wrong to ignore all past experience in these matters. Stocking took place in the years before nationalisation and we had experience of what it cost in the long run. Often, anything over six months turned out to be a costly affair, not only in degradation, but in the condition in which stocks were lifted and in the necessary additional double handling that was needed for the coal. There is quite a wealth of experience, which, on the whole, is somewhat disturbed by the forecasts which are being made. Here again, I hope I shall be proved wrong, but, equally, I should be wrong in not giving this note of warning to my right hon. Friend. I know that he will give the matter careful attention.

Having said that, I want to get back to the fact that I, like, I think, almost everybody in the House, am anxious to see that my right hon. Friend has the money to go forward with the good work which is being done by way of reconstruction, development and the like, which not only will put the mines into first-class order, but will give them a fair chance of competing with other forms of fuel.

5.56 p.m.

Mr. Woodrow Wyatt (Bosworth)

One always listens with interest to the hon. and gallant Member for South Fylde (Colonel Lancaster), because one knows that not only has he had great experience in these matters but that he really cares about what happens. When he makes suggestions to the Minister I am sure that he makes them with the most sincere intention.

I am not quite so sure that that applies to the hon. Member for Kidderminster (Mr. Nabarro), whose convolutions are so extraordinary that it is always difficult to follow them or to fathom which way he is going. This afternoon the hon. Member reached a new low in his juggling when he attacked the Coal Board and its auditors for dishonesty. That was not the right thing to do, and the hon. Member did it, I think, on a misapprehension of his facts.

The last time that we had one of these debates, to take a leaf from the hon. Member's book, I had to correct his figures, which were wrong and out of date. He had not read the corrections. The Minister confirmed that I was right and that the hon. Member was wrong.

Mr. Nabarro

Nothing of the sort.

Mr. Wyatt

The hon. Member is not, therefore, the infallible oracle that he sometimes makes himself out to be. If only he would look at the Iron and Coal Trades Review of 14th November, 1958, he would find set out in the utmost detail the calculations on which the Minister has partly based his statement this afternoon that the deterioration in the stocks is somewhere beween 15 per cent. and 1 per cent. a year for most of the coal, whereas for coal of less than one-twentieth of an inch it may be as much as 3 per cent. in a year. As, however, that type of coal is less than 5 per cent. of all the current stocks this does not very much affect the issue.

That survey lasted for five years. It was carried out by experts of considerable standing, some of them from private enterprise, which may console the hon. Member for Kidderminster. It was thoroughly exhaustive. As nobody has yet disproved the proposition on which it was based, there is no reason to suppose that it was wrongly based.

It is wrong, therefore, to accuse the Coal Board and its auditors of dishonesty when they value the stocks in the Board's books on the basis of that sort of figure. They have made more allowance for deterioration, I think, than they would be entitled to do on the basis of those surveys in the report.

The hon. Member for Kidderminster ought, in decency, to withdraw his accusation. He is not infallible. He is very funny when he gets up, waves his arms and juggles with papers. He makes many amusing remarks, but it is not very funny when he makes an accusation of dishonesty against people who are trying to do their job properly, particularly when it cannot he substantiated. In fact, if the hon. Member is right the Minister this afternoon has been dishonest, and I do not believe that. I do not believe that his advisers, either from the Coal Board or from the Ministry of Power, are engaged in trying to "cook the books", which is what the hon. Member for Kidderminster has said. He ought to withdraw this accusation, and I will give him the chance to do so.

Mr. Nabarro

That is kind and generous of the hon. Member. I do not propose to withdraw anything. What I said was that the National Coal Board had not followed the widely accepted accountancy practice—[HON. MEMBERS: "No."]—of evaluating its stocks on the basis of cost or market value, whichever is the lower. If the Board has not done that, it results in a cooking of the books.

Mr. Wyatt

The hon. Member is wrong again, because the Board has done that. It has included handling and deterioration in the stocks in assessing value. Does the hon. Member ever inquire from the Coal Board about these matters, or is all this a figment of his imagination and little bits of gossip picked up in the bar or from local newspapers?

Mr. J. Griffiths

The hon. Member for Kidderminster (Mr. Nabarro) has his adviser by him on the benches opposite, the hon. and gallant Member for Knutsford (Lieut.-Colonel Bromley-Davenport).

Mr. Nabarro

I willingly answer the hon. Member for Bosworth (Mr. Wyatt). What is the market value of unsaleable coal? A lot of this coal will never be sold. It is unwashed, unscreened and unsaleable. Therefore, its market value is nil, and it is wholly wrong and misleading to the taxpayers to put it in the books at £3 6s. a ton, as has been suggested.

Mr. Wyatt

The hon. Member makes the wildest accusations that a considerable amount of this coal is unscreened and unwashed. It is perfectly saleable. He never listens when he is answered. No wonder he never faces the true facts on "Panorama." I think that an investigation by the hon. Member would be a very wild affair.

The Coal Board is now aware of the enormous danger that faces it. It is trying as hard as it can to modernise its systems of sale and research and so on. I hope that it will use this money to further competition with oil. I listened to the hon. Member for Kidderminster and others saying that a nationalised industry should be run on a commercial basis. It is interesting to note the split in the party opposite on the issue of nationalisation.

Hon. and right hon. Members opposite have had more experience of nationalisation than any other party. They have been running the nationalised industries for the last ten years, and if there is anything wrong with those industries it is entirely due to the failure of the party opposite to put them right. I can see the quarrel in the Conservative Party about nationalisation becoming a very serious and fundamental one, of which, no doubt, we shall hear a great deal more in the future.

The hon. Member for Kidderminster may be right. He wants the coal industry to be run as a commercial institution. I do not think that that was done sufficiently in the past when there was an easy market for coal. I hope that the Coal Board will use some of this money to counter the insidious propaganda on the part of the oil companies which seem to have found their way into the ears of advisers at the Ministry of Power. When the Clean Air Act was passed, owing to the inadequacy of propaganda and of the funds available to the Coal Board, automatic exemption was given under that Act to appliances burning oil, even when that oil was Middle East oil which has a 3 per cent. sulphur content—and 70 per cent. of oil burned in this country comes from the Middle East.

The oil contains twice as high a proportion of sulphur as is contained in coal. When it is remembered that when coal is burned a good deal of the sulphur is left in the ash, it can be clearly seen that oil from the Middle East is far more dangerous to the health of the population than is coal, yet because the Coal Board did not have the funds to engage in the propaganda which the oil companies were able to carry out, this extraordinary provision was put in the Act giving exemption automatically to oil-burning appliances.

The Minister was not sufficiently well briefed the other day on this matter. Perhaps the Coal Board could not afford to send him leaflets to explain it, but the money provided under the Bill will now allow the Board to do much more propaganda on this subject. The right hon. Gentleman told us that it is impossible to have legislation to apply to oil-burning appliances which discharge great quantities of sulphur into the air. This is not true. There is legislation in Los Angeles which prohibits during the winter months the burning of oil containing ½ per cent. of sulphur. That legislation was passed in Los Angeles to save lives. Owing to the Coal Board not having resources to do its own propaganda, not only have the Government allowed the coal industry to be partly throttled but they have done that at the expense of the safety of the lives of the population in allowing installations to burn this sulphur-bearing oil.

Mr. Deputy-Speaker

I find some difficulty in connecting this with Third Reading.

Mr. Wyatt

The point is that if the Board had been able to borrow more money it might have been able to counteract the insidious effect of the propaganda put out by the oil companies and might have been able to afford to print leaflets which might have reached the Minister's desk.

Mr. Deputy-Speaker

That is far from the Third Reading, and I hope that the hon. Member will not pursue it too long.

Mr. Wyatt

I think that I have made that point clear.

There is a great project on foot on which, I hope, some of the money provided under the Bill can be spent. It is the creation of a high pressure gas grid system from Manchester to London. That is not entirely the responsibility of the Coal Board, but research into this project could well be part of its responsibility. It is certainly the Board's responsibility to see that it sells coal for use in such a system, and 70 per cent. of the low-grade coal of the country lies on the line of the proposed grid. It is the type of coal required for gasification to work a high-pressure gas grid system. It is also the fact that 70 per cent. of the gas used in the country today is used by consumers on the same line.

It is very bad that the Government have not done far more about this already and have not done more to help the Board to do something about it, because the ideal way of using coal is in the production of gas. It is much the cheaper way of using coal for heating purposes, for domestic cooking and for industrial use by small firms. If only some of the money provided under the Bill were spent on this project one could have such a scheme working within three years. A scheme of this kind is working already in America.

Sir William Robson Brown (Esher)

The hon. Member is doing scant justice to the Gas Council which for a number of years has been making the closest investigation into the very matter about which the hon. Member is talking. It has a glorious record, and I pay high tribute to the Council. It has nothing to learn from America or anywhere else.

Mr. Wyatt

I admire the hon. Member's patriotism, but I do not follow his logic. The Council has been dithering about this for years. The best scheme was propounded by Mr. Burns of the North Thames Gas Board, but nothing has been done about it, although the scheme has been available for development for four or five years. The Coal Board should now spend a great deal of money on this. It should also subscribe money to the institution at Leatherhead where research is being carried out into the gasification of coal.

Another matter on which the Board should spend money is that of alerting the country to the appalling dangers inherent in the rising imports of fuel. The Minister should understand this. I put a Question to him not long ago and asked what the annual increase in production in United Kingdom refineries had been since 1953 and what had been the annual increase of inland consumption of fuel oil in the same period. The Answer was that whereas production had gone up by only 5 million tons, the inland consumption had gone up by 10 million tons. There is no way round this, however much the Minister argues about it. Fuel oil is being imported at the rate of 5 million tons in excess of United Kingdom refinery production and this at a time when the coal industry is suffering severely. I want the Coal Board to be able to spend a little more money explaining the facts—

Mr. Deputy-Speaker

This is very ingenious, but the hon. Member is not keeping within the rules on Third Reading.

Mr. Wyatt

I will try again, Mr. Deputy-Speaker, as I have one or two other points that I want to make.

Another thing which I think needs to be done by the Minister of Power, with the aid of the Coal Board, is to provide quickly some sort of co-ordination between Government Departments in order to see that any proposal which suggests a conversion from coke or coal to oil is notified at once to the Minister of Power so that he can do something about it. We had an instance this afternoon about Windsor Castle, where the Ministry of Power and the National Coal Board knew nothing whatever about the proposed conversion until it was too late to do anything about it. Mere we have—

Mr. Deputy-Speaker

That does not come within the scope of this debate.

Mr. Wyatt

I respectfully suggest that if the National Coal Board got more money it would be able to set up a bigger staff in order to keep in touch with all these developments going on in Government Departments about converting heating appliances from coke and coal to oil. It is up to the Minister to see that he gets the best advice on how to find out about these things, and if that can be done a great deal of loss to the Coal Board will be saved. If the conversion of Government-owned installations goes on at the present rate it is quite true that the estimates of coal production by the National Coal Board may not be reached. The Government themselves are making it impossible for the Board to fulfil its own estimates of coal production by allowing Government Departments to change over from coke and coal to oil. I think that the Minister has got the point, and I hope that something will be done about it.

I do not wish to say anything more, except that the Minister may have been referring to me when he said that some of us on this side of the House thought that the Government did not want to make nationalisation work. I think that is true of the Government as a whole. It is obviously logical, from the Conservative Party's point of view, to keep every nationalised industry ticking over, producing to the bare minimum needed by the country, thus making nationalisation unpopular in the country and saying that it is all the Labour Party's fault. How they get away with it I do not know, because they have been running the nationalised industries for ten years and we ran them for only three years.

I would except both the Minister and his Parliamentary Secretary from this charge, because I know that their conduct in debate and at Question Time over the last few months has shown their great anxiety to help the coal industry, the miners and the Coal Board. Those of us on this side of the House who take an interest in this subject will back them up all we can in their efforts to make a success of the National Coal Board and the coal mining industry.

6.13 p.m.

Mr. Raymond Gower (Barry)

I listened to the hon. Member for Bosworth (Mr. Wyatt) with considerable interest, but I thought that his last suggestion, that the Government have sought not to establish the success of the nationalised industries, was less than worthy of him. I should have thought that there is evidence which could disprove that assertion on his part. It is notable that some of the nationalised industries have been considerably more successful than others.

Mr. Deputy-Speaker

I am sorry to interrupt the hon. Member, but this is the Third Reading of the Coal Industry Bill.

Mr. Gower

I was replying to a point made by a previous speaker, Mr. Deputy-Speaker, but I will certainly leave it now and proceed with what I sought to say about the Bill.

I hope that my right hon. Friend the Minister will appreciate that, on these benches, as well as on the benches opposite, and outside this House, there is a general recognition of the extraordinarily difficult task with which he is confronted, as well as the tremendous task with which the Coal Board is faced. I think that my right hon. Friend will also appreciate that there is on these benches, as well as elsewhere, a realisation that the increased borrowing powers provided for in the Bill should be granted. Nevertheless, it is true to say that, while my hon. Friend the Member for Kidderminster (Mr. Nabarro) spoke in extremely exaggerated terms, there was a germ of truth in some of his observations which reflect some apprehensions in the country.

The hon. Member for Bedwellty (Mr. Finch), in opening this debate for the Opposition, said that this money will enable the Coal Board to carry out at least three tasks, namely, to fulfil its "Revised Plan for Coal", to increase its efficiency, and to enable it to compete with oil. I am not quite sure whether this revised plan will be the final word or not. It is possible, indeed probable, that this plan may have to be revised again. I fear that we are by no means near the end of the road, and that the Bill may be an interim Measure rather than the final one which we shall have to discuss on this and similar subjects.

I agree with the hon. Member that this money will enable the Coal Board to increase its efficiency. It has done so already, and, like my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster), I agree with hon. Members opposite who have given examples of how that efficiency has been increased. I would only observe, in passing, that it would be very strange if any industry were not more efficient today than twenty or thirty years ago. This is something which is happening in practically every industry.

The Board is, then, increasing its efficiency. If we are to advance this large sum of money we must be concerned to know whether that efficiency is increasing quickly enough, because the task of, and the challenge to, this industry is very great. While we welcome every evidence of increased efficiency, it is absolutely essential that both my right hon. Friend and the Board should not tire of well-doing in this field. Efficiency here is synonymous with continued existence and with meeting this tremendous challenge.

The third point is how it is to compete with oil, and here I would be out of order if I developed this point unduly.

Mr. Boyden

rose—

Mr. Deputy-Speaker

If the hon. Member who is speaking does not give way, the hon. Member for Bishop Auckland (Mr. Boyden) must resume his seat.

Mr. Gower

I did not know that any hon. Member was on his feet, Mr. Deputy-Speaker, but I willingly give way.

Mr. Boyden

Would not the hon. Gentleman regard the saving in cost of 1s. 9d. a ton in one year as a successful achievement?

Mr. Gower

Yes, I said I appreciated, like many of my hon. Friends, the marked increase in efficiency. I merely wish to emphasise that the tremendous challenge which faces the industry is of such dimensions that we may have to look for even greater efficiency, because it has to meet the challenge of what may possibly be a more efficient and more suitable fuel for the needs of the modern world. This is not only happening in Britain, but in practically every highly industrialised country. It is not an isolated phenomenon, but something we are seeing all the world over. For that reason, we cannot fail to stress its importance.

There has been an increase in output. That, again, is also essential, but on this side of the House the anxieties expressed in exaggerated terms by my hon. Friend the Member for Kidderminster are not confined to him. There are anxieties about the growth in stocks. It would be unreasonable if there were not. We want as soon as possible to see some prospect not merely of not increasing the stocks, but also that the deterioration in them will not be greater than my right hon. Friend believes. I do not think for a moment that there has been any dishonesty or misrepresentation here, but, on the other hand, there may be some over-optimism about the amount of deterioration, and that would be just as dangerous as the broad assertion which has been made.

Having made those points in a relatively abridged form, to enable other hon. Members to speak, may I add that I am sure that my right hon. Friend has the support and good wishes of all hon. Members in the extraordinary task which he and the National Coal Board have to face.

6.19 p.m.

Mr. Bernard Taylor (Mansfield)

I do not want to interfere with the expedition or business at this hour, but I do want to say that I support the Bill, because since vesting day the National Coal Board has done a good job from every point of view, sometimes under great difficulties.

I should not have ventured to intervene if it had not been for some of the remarks made by the hon. Gentleman the Member for Kidderminster (Mr. Nabarro), not only in this debate but in previous ones. It mystifies me whether the hon. Gentleman is an expert on coal, carpets or camouflage. After his remarks today, I have come to the conclusion that perhaps he is most expert in the last named. I thought that his remarks about the Minister, who fortunately, is able to defend himself, were wide of the mark.

On the question of the efficiency of the industry since vesting day in 1947, when output per man-shift was 21.5 cwt., in 1958, the last year for which we have had the figures, it has risen by 25 per cent. to 25.6 per cent. This is the justification for the great amount of money invested in the coal industry since vesting day. I believe that the overall figure spent by the Coal Board on improving efficiency with a view to increasing productivity has been no less than £760 million.

I was interested in the point made by the hon. Member for Kidderminster about the losses made by the Board. During the last few days I have looked up some figures, one or two of which are illuminating. Since vesting day there has been an operating profit of no less than £185 million and in the light of that operating profit I draw the attention of the House to some of the burdens carried by the Board. It may be that in the not-too-distant future we shall have to consider these with a view to easing some of those burdens.

Since vesting day there has been paid by way of interest to the Government, through the Minister of Power, £221 million. I was alarmed yesterday at some information I received in reply to Questions regarding the liability which the Coal Board is carrying in respect of compensation to the old royalty owners. I learned from the figures given to me by the Minister yesterday that there has been paid £12 million, reducing the capital liability from £78 million to £66 million. Then there is the increasing cost of subsidence, the loss of imported coal and the question of stocking. All these burdens are being carried by the Board and they have made it necessary for the Minister in charge of the Department to come to the House and ask for increased borrowing powers.

I come to my final point. During the Second Reading of the Bill, in reply to an intervention of mine, the Minister said that he was glad to announce that this was a borrowing Bill. As my hon. Friend the Member for Bedwellty (Mr. Finch) said, since vesting day not one penny piece has been given by the Government to the Board. The help given has been in the form of loans, and upon those loans substantial interest has been paid. It is my submission that the House and the country should know these facts, since the Coal Board is the subject of so much criticism. For those reasons I suport strongly the Bill, which the Minister has recommended to us this afternoon.

6.26 p.m.

Mr. Tom Brown (Ince)

In a few words I want to emphasise what my hon. Friend the Member for Mansfield (Mr. B. Taylor) has said in paying his tribute to the National Coal Board. It goes without saying that since 1951—not 1947—we have had constantly severe "digs" at the mining industry, and particularly at the Coal Board, as I said a week or two ago.

We have just listened to a speech from the hon. Gentleman the Member for Barry (Mr. Gower), who has more or less changed his attitude. The hon. Gentleman has been praising the Coal Board and has been asking that more money should be allocated to it so that it may continue with the work it started in 1957. In my opinion, some of the criticisms that we have had, both inside this Chamber and outside, particularly from the hon. Member for Kidderminster (Mr. Nabarro), would have been much better left unsaid.

From time to time, on the Order Paper, and in his speeches, not only in this Chamber but also outside, the hon. Gentleman has had a "dig" at the Board. It does not matter who is the Minister of Power; every time, it is said, the Board is to blame. Now, however, we are reaching the stage when there is a change of front. I ask myself, why this change of front? Why could not words of encouragement and inspiration have been given in the past to a body of men who have been trying their best to produce what the nation requires?

As I listen to the speeches that are made here, I sometimes think that hon. Gentleman opposite underestimate the problem facing the Coal Board. Throughout the years since its inception it has been facing a problem which no private industry has ever faced. To repeat what I said three or four weeks ago, if the old owners of the coal mines had done what they should have done—I know that I am skating on thin ice, Mr. Speaker—according to the Reid Report, the problem would not have been as severe as it is today.

The hon. Member for Kidderminster fails to realise the costs of maintenance. The Parliamentary Secretary, as a mining man, would fully realise that if underground work were stagnant this would not be so much of a problem, but work is taking place during all of the 24 hours of the day and there has to be constant maintenance. In 1958, total output was 216 million tons, valued at £900 million. Now we have an hon. Member opposite, assisted by two colleagues, trying to bring down to the lowest possible depths the work that the Board has done.

I support the Bill wholeheartedly and I hope that we shall hear no more, either in the Chamber or outside, castigation and condemnation and criticism of the Board, who are facing up to the problem magnificently after all the difficulties with which they were confronted in 1947.

6.31 p.m.

Mr. James Griffiths (Llanelly)

I shall be very brief, because I want to give the Parliamentary Secretary ample time to reply to the various attacks that have been made upon him and his right hon. Friend from the benches behind him. These Tories attack each other with venom. Talk about controversy within the Labour Party! It is not in it. We have heard from the benches opposite today references to "cooked accounts", "cooked books" and Ministers who do not tell the truth. What a revelation for the country! We have never had it so bad.

The purpose of the Bill is to provide the money, by which the Board will be enabled to carry out its revised plan, finance stocking, increase efficiency and find itself a secure place in the future. Why a revised plan? The fact is that all Governments since the end of the war and until recently have made tremendous demands upon the coal industry. It began in 1945 with an industry which was run down after thirty years of neglect. Suddenly for the first time in peacetime during my life, the industry was asked to respond to the demands of an economy working to full pressure. Over a very short period it had to meet an increased demand of 30 million to 35 million tons per annum, and met it.

I was a Minister at the time and I remember being asked by the then Prime Minister to go to the miners and ask them to increase their output. I went to them as an old miner and they did it. They did it with broken-down tools and a broken industry. Not only was machinery broken, but the spirit of the men was broken and it all had to be repaired.

Then, suddenly, there was this change. This is not the first time that the industry has been confronted with a sudden adjustment and an almost catastrophic reduction in demand. It has happened before, but what a difference in the way it was done in past years and the way it has been done now. Think of the size of the problem with which the Board was confronted. From 1956 to 1959 there was a reduction in demand of 33½ million tons—28 million tons in the domestic market and 5½ million tons in the export trade. This was a tremendous reduction.

We had this situation in the 1920s and 1930s, and we all know what was done then. Pits were closed, communities were made derelict, miners were put on short time, wages were cut to £2 a week. By the end of 1932 there were nearly 400,000 miners out of work. That is the other way of treating this situation. At that time the hon. Member for Kidderminster (Mr. Nabarro) was not here, nor was I.

Mr. Nabarro

It must have been a long time ago.

Mr. Griffiths

The then Conservative Government—a true Blue Tory Government—gave an open subsidy to the industry of £25 million. It all went down the drain. The hon. and gallant Member for South Fylde (Colonel Lancaster), who made a constructive speech, will not deny that. The money was used in nine months by the coal owners in intense competition in the domestic market and in the export market, and at the end we were in a worse position than at the beginning. Now the present Government, like previous Tory Governments, are building up a record on subsidies.

The Government would not dare to adopt the methods of 1925 to deal with this problem. We have to meet the situation in this new way. I compliment the Board on the way it has handled it in consultation with the National Union of Mineworkers. The falling demand to which they have had to adjust themselves is equal to the output of South Wales, Northumberland and Cumberland put together. That was a problem, after many years in which we all asked them to get the coal out, no matter what the size or shape.

Because of these circumstances the capital investment in the coal mines has been distorted. I should like to have seen a better relationship between the amount of capital spent on production and the amount spent on cleaning, but at the time both sides of this House, all Governments and industry generally asked the coal industry to get out the coal anyhow.

Now the Board has to meet this problem. It has met it during the last four years and I pay tribute to it and the union and the Ministers who co-operated. There are 70,000 fewer miners than before. The whole of this terrific problem has been got through smoothly. I come, of course, from an area which has paid part of the price, but I think that we ought to pass a vote of thanks to everybody in the industry for the way in which they have handled this task.

In circumstances of this kind it is almost natural, where an industry meets a falling demand, to cut down output. I remember that the first president of the South Wales miners, Mr. William Abraham, whom I eventually succeeded, and who sat in this House for many years, had his own way of dealing with the situation. He went to a conference and said that the demand for coal was falling, and that if they allowed it to fall their labour would become cheap and wages would be cut down. The only way to deal with that, he said, was to stop producing. He suggested that they stop work on the first Monday of every month. He was known also as "Mabon" and these days became known as "Mabon days."

That was the old method, but what has happened now? With all the fears, in 1959 output per man-shift at the coalface rose by 6 per cent. and o.m.s. overall rose by 5.3 per cent., while the cost of production came down by 1s. 9d. per cent. Let us occasionally pat on the back the men who, faced with a threat to their livelihood, have made such efforts. It may be said that there has been an enormous injection of capital, but it need not have been as large in the last few years if it had been larger in the 'twenties and 'thirties. The Board deserves our full support.

I am disturbed about stocks and I now come to the constructive speech of the hon. and gallant Member for South Fylde, whose speeches of pre-1939 days I remember. I listened with much interest to what he had to say today, that unless we reduced stocks by increasing industrial production, we had to face three possibilities, with which I do not quarrel—short time, "going easy" and closing pits.

The hon. and gallant Gentleman knows that in the coalfield with which he was closely associated one method of dealing with this sort of problem was to have short-time working, three days a week, in the summer months. Most pits in the Midlands worked only three days a week in the summer. That remedy is now closed to us. It is closed because the men have a guaranteed working week and because the National Union of Mineworkers would not tolerate it for a moment—and nor would I.

As the hon. and gallant Member appreciated, in the 1930s men in pits in the Midlands and South Wales had to work only three days a week, for they had nowhere else to go, but nowadays it would not be possible to have men working in the pits for three days and in a factory for three days a week. If we are to keep miners in the industry, we must provide them with a full working week in the industry. Short time is no longer a remedy; "going easy" would be impossible, for this momentum of increased productivity must be kept up.

We are, therefore, left with the choice of helping the industry, and I throw out a few suggestions. I ask the Government whether they will allow the Coal Board, unaided and uphelped, to face the competition of fuel oil, which is dumping of the worst kind? Will they now ensure that there is closer co-operation among the fuel and power industries, notably electricity, gas and coke? Thirdly, it is essential that the Government should give every encouragement to the Board to meet what is a new problem which has arisen from the Clean Air Act, which was piloted through the House by the hon. Member for Kidderminster.

I was recently told that by 1965 we should need ½ million tons more smokeless fuel than we are now producing if we were to meet the demands arising from the gradual extension of clean air legislation. The best smokeless fuel in the world—and I declare my interest—is anthracite, and we can produce more of it. We are not stocking anthracite. I hope that we are well on the way to solving the problem of how to mix coal so that it does not give off so much sulphur, and so on.

The export trade is declining and in the European market we are facing Polish exports. In the 1930s we tried the policy of beggaring each other and we should not start that again. The Poles are selling coal almost certainly for shillings below the cost of production, because they must, somehow, get foreign currency. In this modern world, we have a nation driven to sell a product which is dearly bought with life so that it can get foreign currency! Can we not do something about that? Poland is making bilateral agreements with Denmark. What are our Government doing?

The mining industry has thrown up some very fine men, and I speak with personal pride of a contemporary of mine who started working life very much in the way that I did—he started at fourteen years of age and I started a little earlier—Jim Bowman. He has proved to be one of the ablest administrators which the country has seen in post-war years. I am proud of that and I pay my tribute to him. I hope that his work continues. I hope that he will be asked to continue it. The industry needs his constructive leadership as well as the co-operation of the union. I hope that he will go on to face this crucial situation in the industry to which he has given so many years of his life and which, given the help of the Government and the House of Commons, will come through the crisis.

We shall need coal and coal miners for many years. They have not always had a square deal from Governments. If they are given a square deal now, they will give a square deal to the nation.

6.46 p.m.

The Parliamentary Secretary to the Ministry of Power (Mr. J. C. George)

The right hon. Member for Llanelly (Mr. J. Griffiths) has given me at the last moment a catalogue of important questions and I am sure that he will not expect me to make widespread policy pronouncements on the Third Reading of a Bill of this kind. I assure him that the Minister is constantly trying to induce greater co-operation among the three power industries which he mentioned, electricity, gas and coal, and that that will be his continuing objective.

Plans are going ahead to provide increased output of smokeless fuels for the years immediately to come. I am sure that the right hon. Gentleman knows that two great new anthracite collieries are nearly ready in South Wales to help with that important problem.

Exports are a very wide subject. We are facing intense Polish competition. In 1959 the Poles were selling at £2 a ton f.o.b., which scarcely covers the cost of transport from the pit to the port. We are selling at very cut prices ourselves. But neither the Poles nor we, even together, could rule the foreign selling prices of coal, for we are faced with competition from American coal and cheap oil and even Russian oil. It is not a practical proposition to think that we can fix the prices at which coal will sell. Nevertheless, this is a matter for serious consideration, which it is now having.

Since there has been general support for the Bill, I shall confine myself to answering the questions which have been put to the Government. The hon. Member for Bedwellty (Mr. Finch) stressed that the Bill dealt with loans and not subsidies. That should be made absolutely clear. The National Coal Board has not defaulted on any of the loans made to it or on any of the interest payments which it was due to make. The Bill is a continuation of the policy of financing the Board by Government loans which are repayable at proper rates of interest. The purpose is to raise the efficiency of the industry in accordance with the "Revised Plan for Coal".

It would be churlish not to recognise that some of the results are now becoming apparent. I have criticised the National Coal Board as much as anybody when I have thought that it needed criticism, but I shall give the Board credit when I think that credit is due to it, and I shall not be restrained from doing that by anyone behind me calling it a Socialist action.

The improvement in the results from deep mines has been noticeably rising in recent months. The hon. Member for Mansfield (Mr. B. Taylor) quoted figures of production from 1941 onwards and concluded by saying that in 1958 output per man-shift was 25.6 cwt. as against 21.5 cwt. in 1947. I am sure that he and other hon. Members will be glad to know that in the week ended 6th February, this year, overall output in the industry was approximately 28 cwt. per man-shift. That is the fruit of the policy of providing finance to create greater efficiency within the industry. The "Revised Plan for Coal" envisages that in 1965 output per man-shift will be 30–31 cwt. It is obvious that that is easily attainable at the rate we are going now.

My hon. Friend the Member for Kidderminster (Mr. Nabarro) said that this was a case of endless borrowing without profitability. The N.C.B., and here I quote from the "Revised Plan for Coal", has said: It is the Board's objective to secure a substantial reduction in the accumulated deficit over the period 1960–1965 as a whole, by reason of improvements in productivity and reductions in costs. It seems obvious that improvements in productivity will be forthcoming—for that is what is needed to allow the Board to square the books and not cook them.

The hon. Member for Bedwellty was right when he said that about half the capital expenditure so far incurred has been met from inside the industry. It has reached a point where the National Coal Board can look forward with confidence to seeing 80 per cent. of its output coming from new or reconstructed collieries by 1965. The industry can look forward to a sound future if productivity is allowed to rise.

My hon. and gallant Friend the Member for South Fylde (Colonel Lancaster) raised a point with which I should like to deal. Targets have been sent out to the coalfields which will limit output this year. It is not an easy task to decide whether that should be done. The right hon. Member for Llanelly recited three conditions necessary to achieve the target output and not to exceed it. First, working short time. That is "out," because of the guaranteed five-day week agreement. Secondly, closing more pits. The National Coal Board has set its face against that. It has entered into settlements in good faith and intends to keep them.

We must reluctantly look at the third suggestion. It is a moral destroyer. It would be inadvisable to take such action, but if output is to be fixed for the year at a certain level it may well be necessary. It may, regrettably, be necessary to tell the management to go slow on productivity. There is no other way. It is regrettable, but it may have to be done because it is the intention of the Board not to increase stocking in 1960.

My hon. and gallant Friend the Member for South Fylde also made another important observation. He shared the natural worry about the position of stocks. He thought that my right hon. Friend was too sanguine when he said that there would be no rise in 1960. He gave a warning that 16 million tons of untreated smalls might undergo deterioration at a greater rate than that mentioned by my right hon. Friend. We must pay attention to the wide experience of my hon. Friend on these matters, but I am sure that he would agree that my right hon. Friend can do nothing better than take the best possible advice on the deterioration of coal stocks. My right hon. Friend has the best possible advice, and he is bound to accept it. My hon. Friend went on to say that he doubted whether the 4s. allowed by the National Coal Board after the first two years—I should correct that; it is, in fact, after the first year that the charge becomes 4s.—would be enough to bring back the untreated coal for treatment.

That is not the purpose of the 4s. That meets the interest charges and nothing else. The allowance for treating coal is part of the original £1 a ton, so the National Coal Board has made arrangements for the treatment of untreated coal and allowed money for that purpose.

I now turn to deal with efficiency. I hope that hon. Members who raised this matter during the debate will feel that the improved efficiency justifies the money that has been spent.

My hon. Friend the Member for Kidderminster suggested that the estimates accepted by my right hon. Friend were made by officials in the Ministry who were more or less under instructions from the National Coal Board.

Mr. Nabarro

Not instructions.

Mr. George

The estimating of future demand for coal is treated as a serious matter both by the National Coal Board and by the Ministry. The Board does not pluck figures out of thin air and set them before the Chairman of the Board. It engages in widespread consultations with the largest customers and from its experience, and, after allowing for optimism or pessimism, it produces figures which will approximate to the real demand. There are experts in Hobart House who deal with this, but that is not the end of the matter. Our experts in the Ministry make their own estimates of future demand. With their experience and close contact with all new methods in industry they estimate the future consumption of coal. The estimates are prepared along parallel lines, and these two sets of experts then come together, look at each other's estimates, trim them and then put them before the Minister. They do not pretend that they are forecasting with complete accuracy the demand for coal in the future. They cannot do that. No one can do that because there are too many imponderables.

My right hon. Friend is getting the best possible advice. The estimates are prepared by people best qualified to make them, and I am sure that the House would agree that my right hon. Friend has no course open to him other than to base his plans on those estimates. He cannot accept suggestions about consumption which are put forward from this side or the other side of the House which are not backed by experience and consultations like those which I have mentioned. They are real estimates in many cases, but others are simply hunches which are unacceptable to the Minister.

My hon. Friend went on to make some serious charges He said that the loans made to the Board were ultimately payable by the taxpayer. That is wrong. He asked me who finances the Consolidated Fund. I expect that he knows the answer, or he should do. The Consolidated Fund borrows its money on the market and it lends it to the National Coal Board at proper rates of interest and with stipulated times for repayment.

As I said at the beginning of my speech, the National Coal Board has not defaulted in any repayments. It is wrong to suggest that it is being financed by taxpayers' money. My hon. Friend went on to charge the Minister with deficit financing. That would be a dereliction of duty. It would be wrong for the Minister to indulge in deficit financing. The deficits incurred by the Board have been, and will be this year, financed by reserves within the Board itself, and not by the Minister.

My hon. Friend charged the Minister with dereliction of duty for not guessing the results for 1960. How unwise and unhelpful it would be if a Minister of the Crown stood up and guessed what the results of the Board would be in 1960. My right hon. Friend replied to that proposition earlier. It would be unwise and unhelpful, and we have no intention of trying to forecast results for 1960.

My hon. Friend further charged the Board with cooking the books. I think that my hon. Friend should give that matter serious consideration because he has charged not only the Board but the accountants with cooking the books. That is regrettable.

If there are any questions which I have not answered I hope that I will be excused. I ask the House to give the Bill its Third Reading.

Question put and agreed to.

Bill accordingly read the Third time and passed.